-----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, Iq4Ig06lpSrWgG7E2qFj4jMgFepLuu0tw8xk1xjKMgEDDodQfUXec5/eg/TnF7Ub RkRLTDQiew+IY8AllWsmFA== 0000950130-02-006320.txt : 20020830 0000950130-02-006320.hdr.sgml : 20020830 20020830144802 ACCESSION NUMBER: 0000950130-02-006320 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20020830 FILED AS OF DATE: 20020830 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADB SYSTEMS INTERNATIONAL INC CENTRAL INDEX KEY: 0001079171 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14835 FILM NUMBER: 02754142 BUSINESS ADDRESS: STREET 1: 6725 AIRPORT RD STE 201 STREET 2: MISSISSAUGA ONTARIO CITY: CANADA L4V 1V2 BUSINESS PHONE: 9056727469 MAIL ADDRESS: STREET 1: 6725 AIRPORT RD STE 201 STREET 2: MISSISSAUGA ONTARIO CITY: CANADA L4V 1V2 FORMER COMPANY: FORMER CONFORMED NAME: BID COM INTERNATIONAL INC DATE OF NAME CHANGE: 19990210 6-K 1 d6k.htm FORM 6-K Prepared by R.R. Donnelley Financial -- FORM 6-K
 
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 6-K
 
Report of Foreign Issuer
 
Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
 
Filing No. 2 for the Month of August, 2002
 
 
ADB Systems International Inc.
(Exact name of Registrant)
 
6725 Airport Road, Suite 201, Mississauga ON, Canada L4V 1V2
(Address of principal executive offices)
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F
 
Form 20-F  x     Form 40-F  ¨
 
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.    Yes    ¨    No    x
 
 

 
ADB SYSTEMS INTERNATIONAL INC.
 
All figures in this report are in Canadian dollars. As at June 30, 2002, the exchange rate was CDN $1.5190 to US$ 1.00.
 
 
Second Quarter 2002 Financial Results
 
On August 29, 2002, ADB Systems International Inc. (“ADB” or the “Company”) mailed to all registered shareholders its Second Quarter 2002 Report. The Second Quarter 2002 Report is attached to this Form 6-K as Exhibit 1.
 
On August 30, 2002, the Company announced its financial results for the second quarter ended June 30, 2002. Full financial tables are attached to this Form 6-K as Exhibit 2.
 
Consistent with previously announced revised forecasts, ADB reported gross revenue in the second quarter of $1.54 million, an increase of three percent when compared to the $1.49 million achieved in the first quarter of 2002. Revenue was comprised of software license sales, service fees for software implementation, application hosting, support and training, and transaction fees from on-line activities performed for customers.
 
ADB recorded a net loss for the period of $2.47 million or $0.06 per share. Due to a number of unplanned expenses relating to operations, the net loss for the second quarter increased by $199,000 over the previous quarter.
 
ADB also reported a loss from operations of $2.41 million or $0.06 per share. This compares to an operating loss of $2.27 million or $0.06 per share in the first quarter of 2002. Operating loss is calculated as net loss excluding restructuring costs and the effects of gains and losses from asset disposals, asset impairments and marketable securities. Operating expenses include all personnel, occupancy, sales and marketing, and technology related costs, including depreciation and amortization inherent in providing software and related services to customers. Operating expenses do not reflect realized and unrealized gains and losses on assets as well as restructuring costs. Operating loss and operating expense are not measures of performance calculated in accordance with Canadian generally accepted accounting principles (GAAP).
 
As at June 30, 2002, ADB held cash and marketable securities totaling $1.45 million.
 
In addition to its financial performance, the Company experienced a number of operating achievements in the quarter:
 
 
•
 
ADB signed an agreement with Vesta, a Norway-based insurance company, to provide electronic procurement capabilities that will result in streamlined purchasing activities and reduced procurement costs.
 
 
•
 
ADB entered into a global licensing agreement with NCR that enables both companies to access specific technology patents relating to on-line capabilities, and to use these technologies for increased sales opportunities.
 
 
•
 
ADB received a private equity placement with gross proceeds of $1.1 million from Stonestreet LP in April, 2002.

 
 
Additional Funding
 
On August 30, 2002, the Company announced that it has obtained $3 million (CDN) in new funding through a series of financial agreements with The Brick Warehouse Corporation, Canada’s largest volume retailer of home furnishings, mattresses, appliances, and home electronics, Stonestreet LP, a Toronto-based investment management firm, and a group of private investors.
 
ADB and The Brick have entered into a long-term agreement for the on-line retailing of home furnishings, mattresses, home electronics and assorted products. This agreement will combine the synergies of ADB’s www.bid.com auction functionality, The Brick’s current web presence at www.thebrick.com, and The Brick’s fulfillment logistics.
 
ADB Systems will receive a secured loan totaling $2 million from The Brick. Proceeds from the loan will be used to sustain the Company’s day-to-day activities and long-term operations. The loan is repayable by ADB on or before June 30, 2003 in cash or, at ADB’s option, by way of transfer of ADB’s interests in the on-line retail venture to The Brick.
 
As part of a related agreement, ADB has entered into a private placement agreement of convertible debt with Stonestreet LP and a group of private investors that will result in an infusion of approximately $1 million into the Company.
 
Subject to shareholder approval, this debt will be convertible into units priced at $0.12 per unit. Each unit will entitle the holder to one common share and one-half warrant. Each warrant will be convertible into a common share at an exercise price of $0.14.
 
To assist in closing the funding, insiders of the Company, Jeff Lymburner, Paul Godin, and Aidan Rowsome, will take up approximately 12 percent of the private placement.
 
Shareholders of ADB Systems will be asked to approve key aspects of the transaction at a special meeting scheduled in Toronto for later this year. ADB’s Board of Directors has already approved the transactions.
 
These transactions are also subject to regulatory, exchange and, in part, court approvals.
 
The convertible debt was sold in a private placement which was not registered under the United States Securities Act of 1933 as amended, and neither the debt nor the underlying shares or warrants may be resold in the United States of America or, for a period of four months, in Canada unless registered or an exemption from registration is available.
 
This report shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any jusrisdiction.

 
This Form 6-K may include comments that do not refer strictly to historical results or actions and may be deemed to be forward-looking within the meaning of the Safe Harbor provisions of the U.S. federal securities laws. These include, among others, statements about expectations of future revenues, cash flows, and cash requirements. Forward-looking statements are subject to risks and uncertainties that may cause ADB’s results to differ materially from expectations. These risks include ADB’s ability to raise additional funding, obtain regulatory exchange, shareholder and court approvals for the transactions described herein, develop its business-to-business sales and operations, develop appropriate strategic alliances and successful development and implementation of technology, acceptance of ADB’s products and services, competitive factors, new products and technological changes, and other such risks as ADB may identify and discuss from time to time, including those risks disclosed in ADB’s most recent Form 20-F filed with the Securities and Exchange Commission. Accordingly, there is no certainty that ADB’s plans will be achieved.
 
The Company hereby incorporates by reference this Form 6-K into its Registration Statement on Form F-3, and into the prospectus contained therein (File No. 333-40888).
 
 
Exhibits
Exhibit 1 — Second Quarter 2002 Report
Exhibit 2 — Second Quarter Financial Results

 
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.
 
 
        
ADB SYSTEMS INTERNATIONAL INC.
Date: August 30, 2002
   
By:
  
/S/  JOHN MACKIE
        
Name:
  
John Mackie
        
Title:
  
Vice-President, General Counsel and Corporate Secretary
EX-1 3 dex1.htm SECOND QUARTER 2002 REPORT Prepared by R.R. Donnelley Financial -- SECOND QUARTER 2002 REPORT
EXHIBIT 1
 
 
 
 
 
LOGO
 
Maximizing
the Value of Assets
 
Second Quarter 2002 Report
 

PROFILE
 
ADB Systems International Inc. is a leading provider of asset lifecycle management solutions. Based in Toronto, we have more than 70 employees located in offices around the world serving customers across a range of industries.
 
ADB Systems delivers innovative technology solutions that enable our customers to:
 
 
•
 
Source assets at reduced costs
 
 
•
 
Track assets ensuring that capital equipment is available and properly utilized
 
 
•
 
Monitor assets ensuring that they are operating at optimum performance
 
 
•
 
Schedule preventative and corrective maintenance to reduce down-time
 
 
•
 
Procure goods on-line at improved savings
 
 
•
 
Sell surplus assets while generating highest yield.
 
ADB works with organizations in:
 
 
•
 
Asset-intensive industries, such as oil and gas and utilities, to improve operational efficiencies and reduce operational
down-time
 
 
•
 
The public sector and the financial services sector to reduce purchasing costs and improve procurement processes.
 
Current customers include BP, GE Capital, Forest Oil, Halliburton Energy Resources, HFK, permanent TSB, ShopNBC, TotalFinaElf and Vesta.
 
ADB shares are traded on the Toronto Stock Exchange (Symbol: ADY) and OTCBB (Symbol: ADBI).

i

 
LETTER TO SHAREHOLDERS
 
Dear Shareholders,
 
Against a backdrop of unfavorable economic conditions in each of our primary markets, ADB Systems generated an increase in revenue in the second quarter. Consistent with previous guidance, our revenue totaled $1.54 million, an improvement of three percent over the $1.49 million generated in the first quarter. While our sales pipeline continues to be favorable, we are unable to provide revenue expectations for the balance of the year, given ongoing economic uncertainties.
 
Our loss for the quarter was $2.47 million, slightly higher than the $2.27 million reported in first quarter. The modest increase was attributable to costs relating to such operating activities as the annual general meeting and our annual report and additional expenses previously unanticipated. We are pleased that in the first six months of 2002, we have generated a 13 per cent improvement in revenues and a 64 per cent improvement in cash flow from operations, over the same period in 2001.
 
To protect our shareholders’ interests, we have recently undertaken a number of fund-raising activities that will result in an infusion of $3 million gross of secured debt into the Company. Combined with our existing cash and marketable securities, we have significantly enhanced our long term viability.
 
In addition to our financial performance, the Company experienced a number of operating achievements in the quarter:
 
 
•
 
ADB signed an agreement with Vesta, a Norway-based insurance company, to provide electronic procurement capabilities that will result in streamlined purchasing activities and reduced procurement costs.
 
 
•
 
ADB entered into a global licensing agreement with NCR that enables both companies to access specific technology patents relating to on-line capabilities, and to use these technologies for increased sales opportunities.
 
 
•
 
ADB received a private equity placement from Stonestreet LP of a gross $1.1 million, in April 2002.
 
While our second quarter was one of modest improvement, we believe that the recently completed financing arrangements coupled with new customer activities solidify our position and strengthen our ability to deliver long-term shareholder value.
 
 
Yours truly,
 
 
/s/    JEFF LYMBURNER
 
Jeff Lymburner, CEO
August 29, 2002

ii

 
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars) (Unaudited)
 
    
June 30 2002
     
December 31 2001
  
ASSETS
                  
CURRENT
                  
Cash
   
$
957
 
   
$
2,557
 
Marketable securities
   
 
494
 
   
 
1,658
 
Accounts receivable
   
 
1,000
 
   
 
1,288
 
Deposits and prepaid expenses
   
 
398
 
   
 
131
 
    
  
    
 
2,849
 
   
 
5,634
 
CAPITAL ASSETS (Note 2)
   
 
888
 
   
 
1,332
 
STRATEGIC INVESTMENTS
   
 
80
 
   
 
173
 
CAPITALIZED SOFTWARE
   
 
69
 
   
 
202
 
ACQUIRED SOFTWARE
   
 
2,538
 
   
 
3,102
 
ACQUIRED AGREEMENTS
   
 
93
 
   
 
149
 
    
  
    
$
6,517
 
   
$
10,592
 
    
  
LIABILITIES
                  
CURRENT
                  
Accounts payable
   
$
1,081
 
   
$
841
 
Accrued liabilities
   
 
656
 
   
 
813
 
Current portion of capital lease obligation
   
 
23
 
   
 
42
 
Current portion of deferred revenue
   
 
514
 
   
 
823
 
    
  
    
 
2,274
 
   
 
2,519
 
DEFERRED REVENUE
   
 
—
 
   
 
33
 
CAPITAL LEASE OBLIGATION
   
 
—
 
   
 
18
 
    
  
    
 
2,274
 
   
 
2,570
 
    
  
MINORITY INTEREST
   
 
3
 
   
 
8
 
SHAREHOLDERS’ EQUITY
                  
Share capital
   
 
94,516
 
   
 
93,568
 
Warrants
   
 
1,349
 
   
 
1,349
 
Stock options
   
 
691
 
   
 
691
 
Foreign currency translation
   
 
—
 
   
 
(11
)
Deficit
   
 
(92,316
)
   
 
(87,583
)
    
  
    
 
4,240
 
   
 
8,014
 
    
  
    
$
6,517
 
   
$
10,592
 
    
  
 
See accompanying notes to interim consolidated financial statements. These interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements.

1

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of Canadian dollars, except per share amount) (Unaudited)
 
    
Three Months Ended June 30
     
Six Months Ended
June 30
  
    
2002
     
2001
     
2002
     
2001
  
Revenue (Note 5)
   
$
1,538
 
   
$
1,415
 
   
$
3,025
 
   
$
2,670
 
Less: Customer acquisition costs
   
 
—
 
   
 
—
 
   
 
—
 
   
 
(19
)
    
  
  
  
Net revenue
   
 
1,538
 
   
 
1,415
 
   
 
3,025
 
   
 
2,651
 
    
  
  
  
General and administrative
   
 
1,971
 
   
 
3,610
 
   
 
3,463
 
   
 
5,523
 
Sales and marketing costs
   
 
506
 
   
 
935
 
   
 
995
 
   
 
2,340
 
Software development and technology
   
 
864
 
   
 
787
 
   
 
2,037
 
   
 
1,774
 
Depreciation and amortization
   
 
617
 
   
 
329
 
   
 
1,239
 
   
 
638
 
Interest income
   
 
(14
)
   
 
(160
)
   
 
(32
)
   
 
(273
)
    
  
  
  
    
 
3,944
 
   
 
5,501
 
   
 
7,702
 
   
 
10,002
 
    
  
  
  
Loss before the undernoted
   
 
(2,406
)
   
 
(4,086
)
   
 
(4,677
)
   
 
(7,351
)
Realized gains and losses on disposal of marketable securities, strategic investments, capital assets, and recovery of assets (Note 3)
   
 
4
 
   
 
3,060
 
   
 
(98
)
   
 
6,746
 
Unrealized gains and losses on revaluation of marketable securities and strategic investments, and provision for impairment of assets (Note 4)
   
 
(50
)
   
 
(234
)
   
 
56
 
   
 
(1,134
)
Retail activities settlement (Note 6)
   
 
—
 
   
 
(274
)
   
 
—
 
   
 
(404
)
Goodwill impairment (Note 8)
   
 
(14
)
   
 
—
 
   
 
(14
)
   
 
—
 
Restructuring charge (Note 7)
   
 
—
 
   
 
(613
)
   
 
—
 
   
 
(613
)
    
  
  
  
    
 
(60
)
   
 
1,939
 
   
 
(56
)
   
 
4,595
 
    
  
  
  
NET LOSS FOR THE PERIOD
   
$
(2,466
)
   
$
(2,147
)
   
$
(4,733
)
   
$
(2,756
)
    
  
  
  
BASIC AND DILUTED LOSS PER SHARE
   
$
(0.06
)
   
$
(0.08
)
   
$
(0.11
)
   
$
(0.10
)
    
  
  
  
 
CONSOLIDATED STATEMENTS OF DEFICIT
(in thousands of Canadian dollars) (Unaudited)
 
    
June 30 2002
     
June 30 2001
  
DEFICIT, BEGINNING OF PERIOD
   
$
(87,583
)
   
$
(68,869
)
NET LOSS FOR THE PERIOD
   
 
(4,733
)
   
 
(2,756
)
    
  
DEFICIT, END OF PERIOD
   
$
(92,316
)
   
$
(71,625
)
    
  
 
See accompanying notes to interim consolidated financial statements. These interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements.

2

 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian Dollars) (Unaudited)
 
    
Three Months Ended June 30
     
Six Months Ended
June 30
  
    
2002
     
2001
     
2002
     
2001
  
NET INFLOW (OUTFLOW) OF CASH
                                    
RELATED TO THE FOLLOWING ACTIVITIES
                                    
OPERATING
                                    
Net loss for the period
   
$
(2,466
)
   
$
(2,147
)
   
$
(4,733
)
   
$
(2,756
)
Items not affecting cash:
                                    
Depreciation and amortization
   
 
617
 
   
 
329
 
   
 
1,239
 
   
 
638
 
Non cash customer acquisition costs
   
 
—
 
   
 
(7
)
   
 
—
 
   
 
11
 
Goodwill impairment
   
 
14
 
   
 
—
 
   
 
14
 
   
 
—
 
Realized gains and losses on disposal of marketable securities, strategic investments, capital assets and recovery of assets (Note 3)
   
 
(4
)
   
 
(3,060
)
   
 
98
 
   
 
(6,746
)
Unrealized gains and losses on revaluation of marketable securities and strategic investments, and provision for impairment of assets (Note 4)
   
 
50
 
   
 
234
 
   
 
(56
)
   
 
1,134
 
Foreign currency revaluation
   
 
—
 
   
 
612
 
   
 
—
 
   
 
164
 
    
  
  
  
    
 
(1,789
)
   
 
(4,039
)
   
 
(3,438
)
   
 
(7,555
)
Changes in non-cash operating working capital items
   
 
(199
)
   
 
(1,131
)
   
 
(257
)
   
 
(2,808
)
    
  
  
  
    
 
(1,988
)
   
 
(5,170
)
   
 
(3,695
)
   
 
(10,363
)
    
  
  
  
INVESTING
                                    
Capital assets
   
 
(8
)
   
 
(58
)
   
 
(18
)
   
 
(258
)
Strategic investments
   
 
—
 
   
 
—
 
   
 
—
 
   
 
(152
)
Proceeds from disposal of strategic investments
   
 
—
 
   
 
—
 
   
 
126
 
   
 
—
 
Capitalized software, trademarks and intellectual property
   
 
(1
)
   
 
—
 
   
 
(3
)
   
 
(5
)
Marketable securities (Note 3(a))
   
 
—
 
   
 
—
 
   
 
1,087
 
   
 
9,815
 
Proceeds from disposal of joint venture
   
 
—
 
   
 
2,603
 
   
 
—
 
   
 
2,603
 
Proceeds from disposal of capital assets
   
 
6
 
   
 
—
 
   
 
6
 
   
 
—
 
Purchase from minority interest
   
 
(11
)
   
 
—
 
   
 
(11
)
   
 
—
 
    
  
  
  
    
 
(14
)
   
 
2,545
 
   
 
1,187
 
   
 
12,003
 
    
  
  
  
FINANCING
                                    
Issuance of common shares (net)
   
 
945
 
   
 
—
 
   
 
945
 
   
 
—
 
Repayment of capital leases
   
 
(18
)
   
 
(54
)
   
 
(37
)
   
 
(55
)
    
  
  
  
    
 
927
 
   
 
(54
)
   
 
908
 
   
 
(55
)
    
  
  
  
Foreign exchange loss on cash in foreign currency
   
 
—
 
   
 
(612
)
   
 
—
 
   
 
(164
)
NET CASH INFLOW (OUTFLOW) DURING THE PERIOD
   
 
(1,075
)
   
 
(3,291
)
   
 
(1,600
)
   
 
1,421
 
CASH, BEGINNING OF PERIOD
   
 
2,032
 
   
 
12,075
 
   
 
2,557
 
   
 
7,363
 
    
  
  
  
CASH, END OF PERIOD
   
$
957
 
   
$
8,784
 
   
$
957
 
   
$
8,784
 
    
  
  
  
SUPPLEMENTAL DISCLOSURE OF CASH PAYMENTS
                                    
Income taxes
   
$
—
 
   
$
—
 
   
$
—
 
   
$
—
 
Interest
   
 
—
 
   
 
—
 
   
 
—
 
   
 
—
 
 
See accompanying notes to interim consolidated financial statements. These interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements.

3

 
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 
1.    
 
SIGNIFICANT ACCOUNTING POLICIES
 
    
 
The interim consolidated financial statements of ADB Systems International Inc. (formerly Bid.Com International Inc. (the “Company”)) should be read in conjunction with the Company’s most recent annual audited financial statements.
 
    
 
The interim consolidated financial statements follow the same accounting policies and methods of application as the most recent annual consolidated financial statements except for the following:
 
    
 
Stock-based Compensation.    We have adopted handbook section 3870, “Stock-based Compensation and Other Stock-based Payments,” implemented by the Canadian Institute of Chartered Accountants effective January 1, 2002. Please see Note 10: Stock Based Compensation for application of this new accounting standard.
 
2.
 
CAPITAL ASSETS
 
    
June 30, 2002
   
December 31, 2001
    
Cost
   
Accumulated Depreciation
   
Net Book Value
   
Cost
   
Accumulated Depreciation
   
Net Book Value
    
(in thousands)
Computer hardware
   
$
2,859
   
$
2,323
   
$
536
   
$
2,889
   
$
1,949
   
$
940
Furniture and fixtures
   
 
488
   
 
252
   
 
236
   
 
468
   
 
201
   
 
267
Leasehold improvements
   
 
151
   
 
135
   
 
16
   
 
151
   
 
129
   
 
22
Building
   
 
105
   
 
5
   
 
100
   
 
105
   
 
2
   
 
103
    
  
  
  
  
  
    
$
3,603
   
$
2,715
   
$
888
   
$
3,613
   
$
2,281
   
$
1,332
    
  
  
  
  
  
 
3.
 
REALIZED GAINS AND LOSSES ON DISPOSAL OF MARKETABLE SECURITIES, STRATEGIC INVESTMENTS, CAPITAL ASSETS AND RECOVERY OF ASSETS
 
    
Three Months
Ended June 30
   
Six Months
Ended June 30
    
2002
   
2001
   
2002
     
2001
    
(in thousands)
(Loss) gain on disposal of marketable securities (Note 3(a))
   
$
—
   
$
—
   
$
(143
)
   
$
3,686
Gain on disposal of strategic investments (Note 3(b))
   
 
—
   
 
—
   
 
41
 
   
 
—
Gain on disposal on Point2 (Note 3(c))
   
 
—
   
 
2,249
   
 
—
 
   
 
2,249
Recovery of Point2 receivable (Note 3(c))
   
 
—
   
 
811
   
 
—
 
   
 
811
Gain on disposal of capital assets (Note 3(d))
   
 
4
   
 
—
   
 
4
 
   
 
—
    
  
  
  
    
$
4
   
$
3,060
   
$
(98
)
   
$
6,746
    
  
  
  
 
 
(a)
 
In January 2002, the Company sold its remaining shares held in America Online Inc. (AOL) for gross proceeds of $1.3 million, and realized a loss of $143,000. In January 2001, the Company sold 122,801 shares of AOL for gross proceeds of $10.0 million, realizing a gain of $3.7 million.
 
 
(b)
 
Throughout the first quarter the Company disposed of a portion of its strategic investments. This resulted in cash proceeds of $126,000 and a realized gain of $41,000.
 
 
(c)
 
In May 2001, the Company sold its interest in Point2 Internet Systems Inc. for $2.6 million in cash. The Company realized a gain of $2.2 million, and recovered a receivable from Point2 provided for in previous quarters.
 
 
(d)
 
Throughout the first six months of 2002 the Company has disposed of redundant capital assets not utilized since last year’s restructuring.
 
4.
 
UNREALIZED GAINS AND LOSSES ON REVALUATION OF MARKETABLE SECURITIES AND STRATEGIC INVESTMENTS, AND PROVISION FOR IMPAIRMENT OF ASSETS
 
    
Three Months Ending June 30
     
Six Months
Ending June 30
  
    
2002
     
2001
     
2002
   
2001
  
    
(in thousands)
  
Revaluation of impaired strategic investments (Note 4(a))
   
$
(50
)
   
$
(803
)
   
$
56
   
$
(1,161
)
Revaluation of marketable securities (Note 4(b))
   
 
—
 
   
 
569
 
   
 
—
   
 
952
 
Provision for impairment of assets (Note 4(c))
   
 
—
 
   
 
—
 
   
 
—
   
 
(925
)
    
  
  
  
    
$
(50
)
   
$
(234
)
   
$
56
   
$
(1,134
)
    
  
  
  

4

 
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
 
 
(a)
 
The Company reviewed the carrying value of its strategic investments and determined a provision should be recorded given the recent financial performance of securities held.
 
 
(b)
 
During 2001 the Company reviewed the market value of its shares in America Online Inc. and determined that a mark-to-market adjustment was required.
 
 
(c)
 
At March 31, 2001 the Company determined the net realizable value of prepaid advertising assets had been significantly reduced as a result of market conditions.
 
5.
 
SEGMENTED INFORMATION
 
    
 
The Company operates in several reportable geographic segments: North America, Ireland and the United Kingdom, and Norway.
 
Net Revenue by Geographic Region
 
    
    
Three Months
Ending June 30
   
Six Months
Ending June 30
    
2002
   
2001
   
2002
   
2001
    
(in thousands)
North America
   
$
500
   
$
1,181
   
$
997
   
$
2,320
Ireland and U.K.
   
 
183
   
 
234
   
 
340
   
 
331
Norway
   
 
855
   
 
—
   
 
1,688
   
 
—
    
  
  
  
    
$
1,538
   
$
1,415
   
$
3,025
   
$
2,651
    
  
  
  
 
Assets by Geographic Region
 
      
      
June 30, 2002
     
December 31, 2001
      
Capital Assets
     
Intangible and Other Assets
     
Capital Assets
     
Intangible and Other Assets
      
(in thousands)
North America
     
$
466
     
$
149
     
$
588
     
$
375
Ireland and U.K.
     
 
92
     
 
—
     
 
449
     
 
—
Norway
     
 
330
     
 
2,631
     
 
295
     
 
3,251
      
    
    
    
      
$
888
     
$
2,780
     
$
1,332
     
$
3,626
      
    
    
    
 
6.
 
RETAIL ACTIVITIES
 
The Company curtailed its on-line retail activities in October 2000, however it was required to settle certain amounts payable relating to product sales in previous years. These amounts were not previously anticipated.
 
7.
 
RESTRUCTURING CHARGE
 
In April 2001, the Company announced a restructuring plan to significantly curtail spending across all major areas. As part of the restructuring, the Company reduced its workforce and incurred a restructuring charge of $613,000 for severance and related employment costs.
 
8.
 
GOODWILL IMPAIRMENT
 
In October 2001, the Company acquired 98.3% of the outstanding common shares of ADB Systemer ASA. During the second quarter of 2002, the Company acquired a portion of the remaining minority interest. As a result of the transaction a goodwill amount of $14,000 was determined to be permanently impaired and the impairment loss was recorded.
 
9.
 
SUBSEQUENT EVENTS
 
In August 2002, the Company entered into an agreement with a national retailer whereby the Company is the national retailer’s online retailer of furniture, mattresses, electronics and computers. As part of this agreement, the Company will be advanced $2 million via secured debt by the national retailer. The Company will also enter into a plan of arrangement to facilitate the transaction.
 
In August 2002, the Company also entered into an agreement for private placements with several third parties for gross proceeds of $1 million by way of convertible debt. The debt will be convertible into units at an exchange rate of 12 cents per unit. Each unit entitles the holder to one share and one half warrant exercisable at 14 cents per warrant.
 
The Company will convene a shareholder’s meeting in the fourth quarter of 2002 to approve these transactions. These transactions are subject to regulatory, exchange, court, and shareholder approvals.

5

 
NOTES TO INTERIM CONSOLIDATED FINANCIAL
STATEMENTS (Unaudited) — (Continued)
 
10.
 
STOCK BASED COMPENSATION
 
The Company adopted the provisions of Canadian Institute of Chartered Accountants Handbook section 3870 effective January 1, 2002. This Section establishes standards for the recognition, measurement and disclosure of stock-based compensation and other stock-based payments made in exchange for goods and services and applies to transactions, including non-reciprocal transactions, in which an enterprise grants shares of common stock, stock options, or other equity instruments, or incurs liabilities based on the price of common stock or other equity instruments. The Company has applied the intrinsic value based method for stock-based compensation awards granted to employees. Accordingly, no compensation cost has been recognized for its stock option plan. The intrinsic value based method records as a compensation expense, the excess, if any, of the quoted market price of the Company’s common shares at the date of grant over the amount an employee must pay to acquire the common shares.
 
Under Canadian generally accepted accounting principles, the Company is required to disclose the pro-forma net income (loss) and pro-forma income (loss) per share had the Company adopted the fair value method of accounting for stock based compensation awarded on or after January 1, 2002. The following outlines the impact and assumptions used if the compensation cost for the Company’s stock-based employee compensation plans was determined under the fair value based method of accounting for awards granted on or after January 1, 2002 using the Cox-Rubinstein binomial valuation model:
 
      
Three Months Ended June 30
     
Six Months Ended June 30
      
2002
     
2002
Dividend yield
     
        —
     
        —
Risk free interest rate
     
    4.31%
     
    4.31%
Expected volatility
     
104.88%
     
104.88%
Expected term, in years
     
2.0    
     
2.0    
 
If the computed minimum values of the Company’s stock-based awards to employees had been amortized to expense over the vesting period of the awards as specified under CICA 3870, the loss attributable to common shareholders and the basic and diluted loss per share on a pro forma basis (as compared to such items as reported) would have been:
 
      
Three Months Ended June 30
     
Six Months Ended June 30
      
2002
     
2002
      
(in thousands)
Loss attributable to common shareholders
              
As reported
     
$(2,466)
     
$(4,733)
Pro forma
     
$(2,530)
     
$(4,797)
Basic and diluted loss per share
              
As reported
     
$  (0.06)
     
$  (0.11)
Pro forma
     
$  (0.06)
     
$  (0.11)
 
11.
 
RECLASSIFICATION OF PRIOR PERIODS
 
Certain prior period amounts have been re-classified to conform to the current period basis of presentation.

6

 
MANAGEMENT’S DISCUSSION AND ANALYSIS
 
Results of Operations
 
Comparison of the Quarters Ended June 30, 2002 and June 30, 2001.
 
This section compares the unaudited consolidated financial results for the three months ending June 30, 2002 and June 30, 2001 and analyzes significant changes in the financial statement components, which comprise the consolidated statement of operations, consolidated balance sheets and consolidated statements of cashflows.
 
Overview.    Net loss for the quarter was $2.5 million compared to a net loss of $2.1 million for the same quarter of 2001, however, the second quarter of 2001 included a significant non-operational gain from the disposition of a large portion of shares held in America Online Inc. Total expenses decreased $1.5 million or 28.1% this quarter when compared to the same quarter last year. The loss from operations in the second quarter was $2.4 million or $0.06 per share compared with a loss of $4.1 million and $0.15 per share for the same period of 2001. Operating loss is calculated as net loss excluding restructuring costs and the effects of gains and losses from asset disposals, asset impairments and marketable securities. Operating expenses include all personnel, occupancy, sales and marketing, and technology related costs, including depreciation and amortization inherent in providing software and related services to customers. Operating expenses do not reflect realized and unrealized gains and losses on assets as well as restructuring costs. Operating loss and operating expense are not measures of performance calculated in accordance with Canadian generally accepted accounting principles (“GAAP”).
 
Revenue.    Revenue is comprised of software license sales, service fees for software implementation, application hosting, support and training and transaction fees from on-line activities performed for customers. Overall revenue increased to $1.5 million for the quarter ended June 30, 2002 from $1.4 million for the quarter ended June 30, 2001.
 
General and Administrative.    General and administrative expenses decreased to $2.0 million for the quarter ended June 30, 2002 from $3.6 million for the quarter ended June 30, 2001, a decrease of 45.1%. Decreased headcount and tighter budgets across all departments were the drivers behind lower general and administrative expenses. Major expense savings over the same period last year include salaries ($681,000), professional fees ($299,000), and investor relations ($93,000).
 
Sales and Marketing.    Sales and marketing costs include all salaries and related expenses for our sales and marketing personnel as well as business development expenses such as advertising, sales support materials, and trade show costs. For the quarter ended June 30, 2002 sales and marketing costs amounted to $506,000, as compared to $935,000 in the same period of 2001, a decrease of 45.8%. A refocusing of marketing initiatives coupled with significantly lower staffing levels resulted in lower costs. Salaries were down $225,000 over the same period last year.
 
Software Development and Technology.    For the quarter ended June 30, 2002 these costs amounted to $864,000 compared with $787,000 for the second quarter of 2001. The increase in costs is due to last year’s acquisition of ADB Systemer ASA. A large portion of the Norwegian subsidiary’s expenses relate to software development and technology.
 
Depreciation and Amortization.    Depreciation and amortization expense was $617,000 for the quarter ended June 30, 2002 as compared to $329,000 for the quarter ended June 30, 2001. This increase is due to the depreciation in the second quarter of 2002 of certain software acquired as a result of the ADB Systemer acquisition.
 
Interest Income.    Interest income was $14,000 for the quarter ended June 30, 2002, as compared to $160,000 for the quarter ended June 30, 2001. Interest income reflects interest from investments in cash and marketable securities, which have decreased significantly since 2001.
 
Realized Gains and Losses on Disposal of Marketable Securities, Strategic Investments, Capital Assets and Recovery of Assets.    Realized gains on disposal of marketable securities, strategic investments, capital assets and recovery of assets amounted to $4,000 for the quarter ended June 30, 2002 compared with realized gains of $3.1 million for the second quarter of 2001. During the quarter, the Company disposed of office furniture no longer required and realized a small gain. During the second quarter of 2001 the Company sold its interest in Point2 Internet Systems Inc. for $2.6 million in cash. The Company realized a gain of $2.249 million, and recovered a receivable from Point2 provided for in 2001.
 
Unrealized Gains and Losses on Revaluation of Marketable Securities and Strategic Investments, and Provision for Impairment of Assets.     Unrealized gains and losses on marketable securities and strategic investments are the result of an assessment by management as to the recoverability of value of certain assets and are not realized losses. Unrealized losses are outside the normal course of operations but are not considered extraordinary. We conducted an assessment of our strategic investment portfolio at quarter end by analyzing the financial performance of our investee companies and determined that a provision of $50,000 was required in the second quarter of 2002. In the second quarter of 2001, a provision of $234,000 was necessary.
 
Comparison of the Six-Month Periods Ended June 30, 2002 and June 30, 2001.
 
This section compares the unaudited consolidated financial results for the six months ending June 30, 2002 and June 30, 2001 and analyzes significant changes in the financial statement components, which comprise the consolidated statement of operations, consolidated balance sheets and consolidated statements of cashflows.
 
Overview.    The year-to-date net loss of $4.7 million for the current year has risen over the $2.8 million net loss set for the same period a year ago. The net loss for 2001, however, includes $6.7 million in non-operational gains from the disposition of a large portion of shares held in America Online Inc. Total expenses actually decreased $2.3 million or 22.9% for the six-month period ending June 30, 2002 when compared to the same period last year. The year-to-date loss from operations this year is $4.7 million or $0.11 per share compared with a loss of $7.4 million and $0.27 per share for the same period of 2001. Operating loss is calculated as net loss excluding restructuring costs and the effects of gains and losses from asset disposals, asset impairments and marketable securities. Operating expenses include all personnel, occupancy, sales and marketing, and technology related costs, including depreciation and amortization inherent in providing software and related services to customers. Operating expenses do not reflect realized and unrealized gains and losses on assets as well as restructuring costs. Operating loss and operating expense are not measures of performance calculated in accordance with Canadian generally accepted accounting principles (“GAAP”).
 
Revenue.    Revenue is comprised of software license sales, service fees for software implementation, application hosting, support and training and transaction fees from on-line activities performed for customers. Year-to-date revenue increased to $3.0 million for the current year compared with $2.7 million from the same period in 2001. The increase in revenue was largely attributed to the acquisition of ADB Systemer in the fourth quarter of 2001.

7

 
MANAGEMENT’S DISCUSSION AND ANALYSIS — (Continued)
 
General and Administrative.    General and administrative expenses decreased to $3.5 million for the six-month period ending June 30, 2002 from $5.5 million for the same period in 2001, a decrease of 37.1%. Decreased headcount and tighter budgets across all departments were the drivers behind lower general and administrative expenses. Major expense savings over the same period last year include salaries ($927,000) and professional fees ($573,000).
 
Sales and Marketing.    Sales and marketing costs include all salaries and related expenses for our sales and marketing personnel as well as business development expenses such as advertising, sales support materials, and trade show costs. For the six-month period ended June 30, 2002 sales and marketing costs amounted to $995,000, as compared to $2.3 million in the same period of 2001, a decrease of 57.5% . A refocusing of marketing initiatives coupled with significantly lower staffing levels resulted in lower costs. Salaries were down $933,000 over the same period last year.
 
Software Development and Technology.    For the six-month period ended June 30, 2002 software development and technology costs amounted to $2.0 million compared with $1.8 million for the same period of 2001. The increase in costs is due to last year’s acquisition of ADB Systemer ASA. A large portion of the Norwegian subsidiary’s expenses relate to software development and technology.
 
Depreciation and Amortization.    Depreciation and amortization expense was $1.2 million for the six-month period ended June 30, 2002 as compared to $638,000 for the same period in 2001. This increase is due to the depreciation of certain software acquired as a result of the ADB Systemer acquisition.
 
Interest Income.    Interest income was $32,000 for the six-month period ended June 30, 2002, as compared to $273,000 for the six-month period ended June 30, 2001. Interest income reflects interest from investments in cash and marketable securities, which have decreased significantly.
 
Realized Gains and Losses on Disposal of Marketable Securities, Strategic Investments, Capital Assets and Recovery of Assets.    Realized gains and losses on disposal of marketable securities, strategic investments, capital assets and recovery of assets amounted to $98,000 for the six-month period ended June 30, 2002 compared with realized gains of $6.7 million for the same period in 2001. During 2002 the Company has disposed of its remaining position in America Online Inc. (AOL) as well as holdings in certain strategic investments. Realized gains for the six months ended June 30, 2001 included the gain on disposal of our equity position in Point2 Internet Systems Inc. ($2.3 million) and gain on disposal of AOL shares ($3.7 million).
 
Unrealized Gains and Losses on Revaluation of Marketable Securities and Strategic Investments, and Provision for Impairment of Assets.    Unrealized gains and losses on marketable securities and strategic investments are the result of an assessment by management as to the recoverability of value of certain assets and are not realized losses. Unrealized losses are outside the normal course of operations but are not considered extraordinary. For the six-month period ended June 30, 2002 the Company has an unrealized gain of $56,000 while provision for impairment of strategic investments amounted to an unrealized loss of $1.1 million for the same period in 2001.
 
Cash Flows
 
Comparison of the Quarters Ended June 30, 2002 and June 30, 2001 and Six-Month Periods ended June 30, 2002 and June 30, 2001.
 
Operating Activities.    Cash outflows from operating activities decreased to $2.0 million for the second quarter of 2002 from $5.2 million in the same period of 2001. For the six-month period ending June 30, 2002, cash outflows from operating activities were $3.7 million, while the same period in 2001 resulted in $10.4 million in cash outflow. Significant cost reductions as a result of the restructuring done in 2001 has resulted in the improved cash flow from operations.
 
Investing Activities.    Cash outflows from investing activities was $14,000 for the three months ending June 30, 2002, compared with cash inflows of $2.5 million recorded in the second quarter of 2001. For the six-month period ending June 30, 2002 cash inflow from investing activities declined to $1.2 million from $12.0 million in 2001. The sale of shares of America Online Inc. in 2002 resulted in cash proceeds of $1.1 million compared with cash proceeds of $9.8 million in the same period of 2001.
 
Financing Activities.    Cash inflow from financing activities was $927,000 for the three months ending June 30, 2002 compared to a cash outflow of $54,000 for the same period of 2001. For the six-month period ending June 30, 2002 cash inflow from financing activities was $908,000 compared with an outflow of $55,000 in 2001. The Company received $945,000 (net) as a result of the private placement agreement entered into with Stonestreet LP in April of 2002. Other financing activity relates to the continued repayment of capital leases.
 
Financial Condition
 
Comparisons of the Quarter Ended June 30, 2002 and Year Ended December 31, 2001.
 
Current Assets.    Cash and marketable securities decreased $2.8 million over the six-month period ended June 30, 2002. The Company realized $1.3 million in proceeds from the disposal of marketable securities and strategic investments. The Company also received $945,000 (net) in a private placement from Stonestreet LP. Deposits and prepaids increased due to the added operations of ADB Systemer ASA.
 
Other Assets.    There were no significant additions to fixed assets for the six-month period ended June 30, 2002. Strategic investments decreased $93,000 as a result of the liquidation of some of our holdings. Acquired software and acquired agreements realized from the ADB Systemer ASA acquisition are being amortized over the life of the respective assets.
 
Current Liabilities.    Accounts payable and accrued liabilities increased $83,000 over the six-month period ended June 30, 2002, as a result of annual shareholder meeting and mailing costs.
 
Present Status.    The Company has not earned profits to date and, at June 30, 2002, the Company had an accumulated deficit of $92.3 million. As of June 30, 2002 the Company had cash on hand and marketable securities of $1.5 million.
 
The Company’s short-term liquidity needs are expected to be met given the Company’s current cash balance and the gross $3.0 million in secured debt funding. However, the funds required by the Company in the short term are determined by many factors, some of which are beyond management’s control. As a result, the Company may require funds sooner or in greater amounts than currently anticipated in the short term.

8

 
MANAGEMENT’S DISCUSSION AND ANALYSIS — (Continued)
 
The Company’s long-term liquidity needs will be dependent on management’s ability to achieve the Company’s business plan. The Company may require additional funding in the long term to achieve its business plan.
 
This quarterly report may include comments that do not refer strictly to historical results or actions and may be deemed to be forward-looking within the meaning of the Safe Harbor provisions of US federal securities laws. These include, among others, statements about expectations of future revenues, cash flows and cash requirements. Forward looking statements are subject to risks and uncertainties that may cause the Company’s results to differ materially from expectations. These risks include the Company’s ability to raise additional funding, develop its business-to-business sales and operations, develop appropriate strategic alliances and the successful development and implementation of technology, acceptance of the Company’s products and services, competitive factors, new products and technological changes, and other such risks as the Company may identify and discuss from time to time, including those risks disclosed in the Company’s Form 20-F filed with the Securities and Exchange Commission, as it may be amended. Accordingly, there is no certainty that the Company’s plans will be achieved.

9

CORPORATE DIRECTORY
 
Directors                                                   
  
Officers
  
ADB Systems Offices
  
Additional Shareholder
Information
Jeffrey Lymburner
CEO
 
T. Christopher Bulger(2)
CEO, Megawheels
 
Paul Godin(2)
 
Jim Moskos
President,
ADB Technology Group
 
David Pamenter(1)(3)
Partner, Gowlings
 
Jan Edvin Pederson
President, ADB Systemer,
Norwegian Operations
 
Ken Sexton(1)
Executive Vice President,
and CFO Peregrine Systems
 
Jean-Pierre Soublière(1)
President, Anderson-Soublière






  
Jeffrey Lymburner
CEO
 
Mark Wallace
President
 
Jan Edvin Pederson
President, ADB Systemer,
Norwegian Operations
 
Jim Moskos
President,
ADB Technology Group
 
Aidan Rowsome,
Vice President,
Global Sales
 
John Mackie
Vice President,
General Counsel and
Corporate Secretary
 
David Pamenter
Assistant Secretary




  
North America
Corporate Headquarters
ADB Systems
International Inc.
6725 Airport Road,
Suite 201
Mississauga, Ontario
L4V 1V2
1 888 287 7467
 
ADB Systems
International Inc.
3001 North Rocky Point
Drive, Suite 200
Tampa, Florida
33607
1 888 750 7467
 
Europe
ADB Systemer AS
Vingveien 2, N-4050
Sola, Norway
+ 47 51 64 71 00
 
ADB Systems Limited
3000 Cathedral Hill
Guildford, Surrey
GU2 7YB
UK
+ 44 (0) 1483 243500
 
ADB Systems
International Ltd.
VistaTEC House
700 South Circular Road
Kilmainham, Dublin 8
Ireland
+ 353 1 416 8188
  
www.adbsys.com
investor-relations@adbsys.com
 
Registrar and
Transfer Agent
CIBC Mellon Trust Company     
PO Box 70390
Toronto Station A
Toronto, Ontario,
M5W 2X5
 
Auditors
Deloitte & Touche LLP
Chartered Accountants
Toronto, Ontario, Canada
 
Lawyers
Gowlings, Toronto
Brown Raysman, New York
 
Stock Exchange Listings
Toronto Stock Exchange
Symbol: ADY
OTCBB
Symbol: ADBI
 
Shares Outstanding
(June 30, 2002)
Issued 41,583,628
Diluted 47,354,766
(1)
 
Member of Audit Committee
(2)
 
Member of the Management Resources and Compensation Committee
(3)
 
Member of the Corporate Governance Committee

10
EX-2 4 dex2.htm SECOND QUARETER FINANCIAL RESULTS Prepared by R.R. Donnelley Financial -- SECOND QUARETER FINANCIAL RESULTS
EXHIBIT 2
 
ADB Systems International Inc.
Consolidated Statement of Operations
(expressed in thousands of Canadian dollars, except per share amounts)
(Canadian GAAP, Unaudited)
 
    
Three Months Ended
June 30
     
Six Months Ended
June 30
  
    
2002
     
2002
     
2001
     
2002
     
2002
     
2001
  
           
translated into US$ at Cdn$  1.5190 for
convenience
                   
translated
into US$ at
Cdn$  1.5190
for convenience
         
Revenue
   
$
1,538
 
   
$
1,013
 
   
$
1,415
 
   
$
3,025
 
   
$
1,991
 
   
$
2,670
 
Customer acquisition costs
   
 
—
 
   
 
—
 
   
 
—
 
   
 
—
 
   
 
—
 
   
 
(19
)
    
  
  
  
  
  
Net revenue
   
$
1,538
 
   
$
1,013
 
   
$
1,415
 
   
$
3,025
 
   
$
1,991
 
   
$
2,651
 
    
  
  
  
  
  
General and administrative
   
$
1,971
 
   
$
1,298
 
   
$
3,610
 
   
$
3,463
 
   
$
2,280
 
   
$
5,523
 
Sales and marketing costs
   
 
506
 
   
 
333
 
   
 
935
 
   
 
995
 
   
 
655
 
   
 
2,340
 
Software development and technology
  
 
864
 
   
 
569
 
   
 
787
 
   
 
2,037
 
   
 
1,341
 
   
 
1,774
 
Depreciation and amortization
   
 
617
 
   
 
406
 
   
 
329
 
   
 
1,239
 
   
 
816
 
   
 
638
 
Interest income
   
 
(14
)
   
 
(9
)
   
 
(160
)
   
 
(32
)
   
 
(21
)
   
 
(273
)
    
  
  
  
  
  
    
$
3,944
 
   
$
2,597
 
   
$
5,501
 
   
$
7,702
 
   
$
5,070
 
   
$
10,002
 
    
  
  
  
  
  
Loss from the under-noted
   
$
(2,406
)
   
$
(1,584
)
   
$
(4,086
)
   
$
(4,677
)
   
$
(3,079
)
   
$
(7,351
)
    
  
  
  
  
  
                                                       
Realized gains/(losses) on disposals of marketable securities, stategic investments, and recovery of assets
   
$
4
 
   
$
3
 
   
$
3,060
 
   
$
(98
)
   
$
(65
)
   
$
6,746
 
Unrealized gains/(losses) on revaluation of marketable securities strategic investments and impairments of assets
   
 
(50
)
   
 
(33
)
   
 
(234
)
   
 
56
 
   
 
37
 
   
 
(1,134
)
Retail activities settlement
   
 
—
 
   
 
—
 
   
 
(274
)
   
 
—
 
   
 
—
 
   
 
(404
)
Goodwill impairment
   
 
(14
)
   
 
(9
)
   
 
—
 
   
 
(14
)
   
 
(9
)
   
 
—
 
Restructuring charge
   
 
—
 
   
 
—
 
   
 
(613
)
   
 
—
 
   
 
—
 
   
 
(613
)
    
  
  
  
  
  
    
$
(60
)
   
$
(39
)
   
$
1,939
 
   
$
(56
)
   
$
(38
)
   
$
4,595
 
    
  
  
  
  
  
Net loss for the period
   
$
(2,466
)
   
$
(1,623
)
   
$
(2,147
)
   
$
(4,733
)
   
$
(3,117
)
   
$
(2,756
)
    
  
  
  
  
  
Basic and diluted loss per share
   
$
(0.06
)
   
$
(0.04
)
   
$
(0.08
)
   
$
(0.11
)
   
$
(0.08
)
   
 
(0.10
)
    
  
  
  
  
  
Weighted average common shares
   
 
41,538
 
   
 
41,538
 
   
 
27,320
 
   
 
41,538
 
   
 
41,538
 
   
 
27,320
 
    
  
  
  
  
  
Loss per share from operations
   
$
(0.06
)
   
$
(0.04
)
   
$
(0.15
)
   
$
(0.11
)
   
$
(0.07
)
   
$
(0.27
)
    
  
  
  
  
  
 

1

 
ADB Systems International Inc.
Consolidated Balance Sheet
(expressed in thousands of Canadian dollars)
(Canadian GAAP, Unaudited)
 
    
June 30 2002
   
June 30
2002
   
December 31
2001
    
(unaudited)
   
(unaudited)
   
(audited)
         
(in US$)
     
                      
         
translated
     
         
into US$ at
     
         
Cdn$ 1.5190
     
         
for
     
         
convenience
     
Cash
   
$
957
   
$
630
   
$
2,557
Marketable securities
   
 
494
   
 
325
   
 
1,658
Other current assets
   
 
1,398
   
 
920
   
 
1,419
Other assets
   
 
3,668
   
 
2,415
   
 
4,958
    
  
  
Total assets
   
$
6,517
   
$
4,290
   
$
10,592
    
  
  
Current Liabilities
   
$
1,760
   
$
1,159
   
$
1,696
Short term and long term deferred revenue
   
 
514
   
 
338
   
 
856
Long Term Debt
   
 
—
   
 
—
   
 
18
Minority Interest
   
 
3
   
 
2
   
 
8
Total shareholders’ equity
   
 
4,240
   
 
2,791
   
 
8,014
    
  
  
Total liabilities and shareholder’s equity
   
$
6,517
   
$
4,290
   
$
10,592
    
  
  

2
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