NORTHCORE TECHNOLOGIES INC.
(Exact name of Registrant)
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302 The East Mall, Suite 300, Toronto, Ontario Canada M9B 6C7
(Address of principal executive offices)
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Form 20-F
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x
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Form 40-F
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o
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Yes
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o
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No
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x |
Exhibit
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Description
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99.1
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Press Release dated March 21, 2012
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99.2 | Interim Financial Statements | |
99.3 | Management's Discussion and Analysis | |
99.4 | CEO Certificate | |
99.5 | CFO Certificate |
NORTHCORE TECHNOLOGIES INC.
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Date: March 21, 2012 | By: | /s/ Amit Monga |
Name: Amit Monga |
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Title: Chief Executive Officer
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Northcore Technologies Inc.
302 The East Mall, Suite 300
Toronto, ON M9B 6C7
Tel: 416 640-0400 / Fax: 416 640-0412
www.northcore.com
(TSX: NTI; OTCBB: NTLNF)
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Recruited a new CEO, Chairman and two Board of Directors members to assist with corporate realignment and growth initiatives;
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Completed the acquisition of the Discount This asset base, inclusive of unique Intellectual Property, to serve as the basis for a coordinated IP strategy;
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Opened a U.S. based office in Naples, Florida to facilitate greater access to American market opportunities;
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Completed major upgrades to production information technology infrastructure, including Server Architecture, Database Management Systems and Operating Environments;
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Launched a strategic initiative with Pellegrino and Associates to position Northcore to take advantage of high growth domains with its proprietary Working Capital Engine and Dutch Auction IP portfolio;
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Closed an equity private placement, generating net proceeds of $713,000 through the issuance of common shares and warrants;
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Secured $3,574,000 in proceeds through the exercise of warrants and options by current holders; and
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Continued to strengthen our balance sheet through the conversion of all remaining secured subordinated notes into equity and repayment of notes payable.
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Successful deployment of Northcore’s e-tendering technology for the Irish Government Health Services Executive’s initial online acquisition pilot, resulting in a 30 percent savings on a €30 million acquisition;
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Launch of the Home Hardware Dealer-Owners Connect website at the bi-annual Home Hardware market showcase;
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Formation of a Social Commerce Group to focus on helping corporations leverage social media to accelerate buying and selling;
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Contractual renewal of multiple long-term enterprise clients;
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Execution of new contractual agreements with customers in multiple industry segments;
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Implementation of an “Intelligent Agent” data extraction initiative for a major strategic partner; and
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Award of Vendor of Record status by Ontario Government.
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Northcore Technologies Inc.
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Consolidated Statements of Financial Position
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(expressed in thousands of Canadian dollars)
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||||||||
(IFRS, Unaudited)
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||||||||
December 31,
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December 31,
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|||||||
2011
|
2010
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|||||||
Cash
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$ | 1,760 | $ | 51 | ||||
Accounts receivable
|
187 | 151 | ||||||
Deposits and prepaid expenses
|
40 | 36 | ||||||
Investment in GE Asset Manager, LLC
|
24 | 15 | ||||||
Capital assets
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91 | 31 | ||||||
Intangible assets
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807 | - | ||||||
Total assets
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$ | 2,909 | $ | 284 | ||||
Accounts payable
|
$ | 239 | $ | 400 | ||||
Accrued liabilities
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173 | 219 | ||||||
Deferred revenue
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3 | 3 | ||||||
Current portion of long term debts
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- | 1,031 | ||||||
Non-current portion of long term debts
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- | 204 | ||||||
Total shareholders' equity (deficiency)
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2,494 | (1,573 | ) | |||||
Total liabilities and shareholders' equity
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$ | 2,909 | $ | 284 |
Northcore Technologies Inc.
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Consolidated Statements of Operations and Comprehensive Income
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||||||||||||||||
(expressed in thousands of Canadian dollars, except per share amounts)
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(IFRS, Unaudited)
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Three Months Ended
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Year Ended
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December 31,
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December 31,
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|||||||||||||||
2011
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2010
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2011
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2010
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Revenues
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$ | 212 | $ | 176 | $ | 785 | $ | 582 | ||||||||
Other income:
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||||||||||||||||
Income from GE Asset Manager, LLC
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15 | 11 | 69 | 43 | ||||||||||||
Operating expenses:
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||||||||||||||||
General and administrative
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362 | 391 | 1,670 | 1,440 | ||||||||||||
Customer service and technology
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183 | 184 | 726 | 734 | ||||||||||||
Sales and marketing
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51 | 54 | 260 | 188 | ||||||||||||
Employee stock options
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248 | 143 | 1,873 | 517 | ||||||||||||
Depreciation
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12 | 6 | 32 | 22 | ||||||||||||
Total operating expenses
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856 | 778 | 4,561 | 2,901 | ||||||||||||
Loss from operations
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(629 | ) | (591 | ) | (3,707 | ) | (2,276 | ) | ||||||||
Finance costs:
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||||||||||||||||
Cash interest expense
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10 | 54 | 103 | 154 | ||||||||||||
Accretion of secured subordinated notes
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21 | 32 | 124 | 115 | ||||||||||||
Total finance costs
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31 | 86 | 227 | 269 | ||||||||||||
Other expenses:
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||||||||||||||||
Gain on settlement of debt
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- | - | - | (57 | ) | |||||||||||
Provision for impaired investment
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- | - | - | 544 | ||||||||||||
Total other expenses
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- | - | - | 487 | ||||||||||||
Loss and comprehensive loss for the period
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$ | (660 | ) | $ | (677 | ) | $ | (3,934 | ) | $ | (3,032 | ) | ||||
Loss per share, basic and diluted
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$ | (0.003 | ) | $ | (0.004 | ) | $ | (0.020 | ) | $ | (0.019 | ) | ||||
Weighted average number of shares outstanding, basic and diluted (000's)
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213,732 | 165,118 | 196,180 | 162,899 |
Northcore Technologies Inc.
302 The East Mall, Suite 300
Toronto, Ontario, Canada
M9B 6C7
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Tel: 416-640-0400
Fax: 416-640-0412
www.northcore.com
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Amit Monga
CEO
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Tam Nguyen
CFO
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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31, 2011, December 31, 2010 and January 1, 2010
(in thousands of Canadian dollars)
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December 31, 2011 | December 31, 2010 | January 1, 2010 | ||||||||||
(Note 20)
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(Note 20)
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ASSETS
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||||||||||||
CURRENT
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||||||||||||
Cash
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$ | 1,760 | $ | 51 | $ | 210 | ||||||
Accounts receivable
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187 | 151 | 214 | |||||||||
Deposits and prepaid expenses
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40 | 36 | 35 | |||||||||
1,987 | 238 | 459 | ||||||||||
INVESTMENT IN GE ASSET MANAGER, LLC (Note 4)
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24 | 15 | 31 | |||||||||
INVESTMENT IN SOUTHCORE (Note 4)
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- | - | 544 | |||||||||
CAPITAL ASSETS (Note 5)
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91 | 31 | 47 | |||||||||
INTANGIBLE ASSETS (Note 6)
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807 | - | - | |||||||||
$ | 2,909 | $ | 284 | $ | 1,081 | |||||||
LIABILITIES
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||||||||||||
CURRENT
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||||||||||||
Accounts payable
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$ | 239 | $ | 400 | $ | 331 | ||||||
Accrued liabilities
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173 | 219 | 161 | |||||||||
Deferred revenue
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3 | 3 | 3 | |||||||||
Notes payable (Note 7)
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- | 530 | 156 | |||||||||
Current portion of secured subordinated notes (Note 8)
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- | 501 | - | |||||||||
415 | 1,653 | 651 | ||||||||||
SECURED SUBORDINATED NOTES (Note 8)
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- | 204 | 658 | |||||||||
415 | 1,857 | 1,309 | ||||||||||
SHAREHOLDERS’ EQUITY (DEFICIENCY)
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||||||||||||
Share capital (Note 10)
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117,359 | 110,767 | 110,240 | |||||||||
Contributed surplus
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3,586 | 3,462 | 3,071 | |||||||||
Warrants (Note 11)
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836 | 834 | 490 | |||||||||
Stock options (Note 12)
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3,690 | 1,949 | 1,435 | |||||||||
Conversion feature on secured subordinated notes (Note 8)
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- | 458 | 547 | |||||||||
Deficit
|
(122,977 | ) | (119,043 | ) | (116,011 | ) | ||||||
2,494 | (1,573 | ) | (228 | ) | ||||||||
$ | 2,909 | $ | 284 | $ | 1,081 |
Amit Monga
Director
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Christopher Bulger
Director
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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the years ended December 31, 2011 and 2010
(in thousands of Canadian dollars, except per share amounts)
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2011
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2010
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|||||||
(Note 20)
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||||||||
Revenues (Note 13)
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$ | 785 | $ | 582 | ||||
Other income:
|
||||||||
Income from GE Asset Manager, LLC (Note 4)
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69 | 43 | ||||||
Operating expenses:
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||||||||
General and administrative
|
1,670 | 1,440 | ||||||
Customer service and technology
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726 | 734 | ||||||
Sales and marketing
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260 | 188 | ||||||
Stock-based compensation (Note 12 (b))
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1,873 | 517 | ||||||
Depreciation
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32 | 22 | ||||||
Total operating expenses
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4,561 | 2,901 | ||||||
Loss from operations
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(3,707 | ) | (2,276 | ) | ||||
Finance costs:
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||||||||
Cash interest expense (Note 8)
|
103 | 154 | ||||||
Accretion of secured subordinated notes (Note 8)
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124 | 115 | ||||||
Total finance costs
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227 | 269 | ||||||
Other expenses:
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||||||||
Gain on settlement of debt (Note 7 (c))
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- | (57 | ) | |||||
Provision for impaired investment (Note 4)
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- | 544 | ||||||
Total other expenses
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- | 487 | ||||||
LOSS AND COMPREHENSIVE LOSS FOR THE YEAR
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$ | (3,934 | ) | $ | (3,032 | ) | ||
LOSS PER SHARE, BASIC AND DILUTED
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$ | (0.020 | ) | $ | (0.019 | ) | ||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED (000’s)
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196,180 | 162,899 |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
As at December 31, 2011 and 2010
(in thousands of Canadian dollars)
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||||||||
Share
Capital
|
Contributed
Surplus
|
Warrants
|
Stock
Options
|
Other
Options
|
Conversion
Feature on
Secured Notes
|
Deficit |
Total
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Opening balance - January 1, 2010 (Note 20)
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$110,240
|
$ 3,071
|
$ 490
|
$ 1,435
|
$ -
|
$ 547
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$(116,011)
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$ (228)
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Changes:
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||||||||
Conversion of notes
|
117
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-
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41
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-
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-
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(89)
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-
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69
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Equity private placement
|
461
|
-
|
164
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-
|
-
|
-
|
-
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625
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Equity line of credit
|
(308)
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-
|
562
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-
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-
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-
|
-
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254
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Exercise of warrants
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202
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-
|
(32)
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-
|
-
|
-
|
-
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170
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Expiry of warrants
|
-
|
391
|
(391)
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-
|
-
|
-
|
-
|
-
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Payment of interest
|
48
|
-
|
-
|
-
|
-
|
-
|
-
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48
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Exercise of stock options | 7 |
-
|
-
|
(3)
|
-
|
-
|
-
|
4
|
Stock-based compensation
|
-
|
-
|
-
|
517
|
-
|
-
|
-
|
517
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Loss for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,032)
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(3,032)
|
Closing balance –
December 31, 2010 (Note 20)
|
$110,767
|
$ 3,462
|
$ 834
|
$ 1,949
|
$ -
|
$ 458
|
$(119,043)
|
$ (1,573)
|
Share
Capital
|
Contributed
Surplus
|
Warrants
|
Stock
Options
|
Other
Options
|
Conversion
Feature on
Secured Notes
|
Deficit |
Total
|
|
Opening balance - January 1, 2011
|
$110,767
|
$ 3,462
|
$ 834
|
$ 1,949
|
$ -
|
$ 458
|
$(119,043)
|
$ (1,573)
|
Changes:
|
||||||||
Conversion of notes
|
1,081
|
-
|
207
|
-
|
-
|
(458)
|
-
|
830
|
Equity private placement
|
456
|
-
|
149
|
-
|
108
|
-
|
-
|
713
|
Acquisition of intellectual properties
|
630
|
-
|
-
|
-
|
-
|
-
|
-
|
630
|
Warrants issued for debt settlement
|
-
|
-
|
200
|
-
|
-
|
-
|
-
|
200
|
Exercise of warrants
|
3,854
|
-
|
(477)
|
-
|
-
|
-
|
-
|
3,377
|
Exercise of compensation options
|
241
|
-
|
47
|
-
|
(108)
|
-
|
-
|
180
|
Expiry of warrants
|
-
|
124
|
(124)
|
-
|
-
|
-
|
-
|
-
|
Payment of interest
|
1
|
-
|
-
|
-
|
-
|
-
|
-
|
1
|
Exercise of stock options
|
329 |
-
|
-
|
(132)
|
-
|
-
|
-
|
197
|
Stock-based compensation
|
-
|
-
|
-
|
1,873
|
-
|
-
|
-
|
1,873
|
Loss for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,934)
|
(3,934)
|
Closing balance –
December 31, 2011
|
$117,359
|
$ 3,586
|
$ 836
|
$ 3,690
|
$ -
|
$ -
|
$(122,977)
|
$ 2,494
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2011 and 2010
(in thousands of Canadian dollars)
|
2011
|
2010
|
|||||||
NET INFLOW (OUTFLOW) OF CASH
RELATED TO THE FOLLOWING ACTIVITIES
|
(Note 20)
|
|||||||
OPERATING
|
||||||||
Loss for the year
|
$ | (3,934 | ) | $ | (3,032 | ) | ||
Adjustments for:
|
||||||||
Income from GE Asset Manager, LLC (Note 4)
|
(69 | ) | (43 | ) | ||||
Stock-based compensation
|
1,873 | 517 | ||||||
Depreciation
|
32 | 22 | ||||||
Cash interest expense
|
103 | 154 | ||||||
Accretion of secured subordinated notes
|
124 | 115 | ||||||
Gain on settlement of debt (Note 7 (c))
|
- | (57 | ) | |||||
Provision for impaired investment (Note 4)
|
- | 544 | ||||||
(1,871 | ) | (1,780 | ) | |||||
Changes in non-cash operating working capital (Note 17)
|
(19 | ) | 200 | |||||
(1,890 | ) | (1,580 | ) | |||||
INVESTING
|
||||||||
Cash distribution from investment in GE Asset Manager, LLC (Note 4)
|
60 | 60 | ||||||
Purchase of capital assets
|
(92 | ) | (6 | ) | ||||
Acquisition of intangible assets (Note 6)
|
(177 | ) | - | |||||
(209 | ) | 54 | ||||||
FINANCING
|
||||||||
Repayment of notes payable (Note 7)
|
(530 | ) | (465 | ) | ||||
Proceeds from issuance of notes payable (Note 7)
|
- | 859 | ||||||
Issuance of equity and compensation units (Note 10)
|
1,018 | 1,008 | ||||||
Share issuance costs (Note 10 (d))
|
(125 | ) | (129 | ) | ||||
Warrants exercised (Note 11 (c))
|
3,377 | 170 | ||||||
Options exercised (Notes 12 (c))
|
197 | 4 | ||||||
Interest paid
|
(129 | ) | (80 | ) | ||||
3,808 | 1,367 | |||||||
NET CASH INFLOW (OUTFLOW) DURING THE YEAR
|
1,709 | (159 | ) | |||||
CASH, BEGINNING OF YEAR
|
51 | 210 | ||||||
CASH, END OF YEAR
|
$ | 1,760 | $ | 51 |
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·
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Provided comparative financial information;
|
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·
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Applied the same accounting policies throughout all periods presented;
|
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·
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Retrospectively applied all effective IFRS standards as of December 31, 2011, as required; and
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Applied certain mandatory exceptions and optional exemptions as applicable for first time IFRS adopters.
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Investments are initially recognized at cost;
|
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The Company’s share of post-acquisition profits or losses is recognized in the income statement and is adjusted against the carrying amount of the investments;
|
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·
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When the Company’s share of losses equals or exceeds its interest in the investee, the Company does not recognize further losses, unless it has incurred obligations or made payments on behalf of the investee; and
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·
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Gains and losses on transactions between the Company and its equity method investees are eliminated to the extent of the Company’s interest in these entities.
|
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·
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The amount of revenue can be measured reliably;
|
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·
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The stage of completion can be measured reliably;
|
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·
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The receipt of economic benefits is probable; and
|
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·
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The costs incurred or to be incurred can be measured reliably.
|
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·
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The amount of revenue can be measured reliably;
|
|
·
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The risks and rewards of ownership have been transferred to the buyer;
|
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·
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The receipt of economic benefits is probable; and
|
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·
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The costs incurred or to be incurred can be measured reliably.
|
·
|
Application Development Fees
|
·
|
Implementation, Training and Consulting Service Fees
|
·
|
Product Maintenance and Customer Support Fees
|
·
|
Hosting Fees
|
·
|
Multiple Deliverable Revenue Arrangements
|
|
·
|
IFRS 9, Financial Instruments was issued by the IASB in October 2010 and will replace IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2013. The IASB has proposed to move the effective date of IFRS 9 to January 1, 2015.
|
|
·
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IAS 1, Presentation of Financial Statements was amended by the IASB in June 2011 in order to align the presentation of items in other comprehensive income with US GAAP standards. Items in other comprehensive income will be required to be presented in two categories: items that will be reclassified into profit or loss and those that will not be reclassified. The flexibility to present a statement of comprehensive income as one statement or two separate statements of profit and loss and other comprehensive income remains unchanged. The amendments to IAS 1 are effective for annual periods beginning on or after July 1, 2012.
|
|
·
|
IAS 1, Presentation of Financial Statements was amended by the IASB in June 2011 in order to align the presentation of items in other comprehensive income with US GAAP standards. Items in other comprehensive income will be required to be presented in two categories: items that will be reclassified into profit or loss and those that will not be reclassified. The flexibility to present a statement of comprehensive income as one statement or two separate statements of profit and loss and other comprehensive income remains unchanged. The amendments to IAS 1 are effective for annual periods beginning on or after July 1, 2012.
|
GE ASSET MANAGER, LLC
|
December 31, 2011
|
December 31, 2010
|
January 1, 2010
|
|
(in thousands)
|
||||
Statement of Financial Position
|
||||
Assets
Cash
|
$ 91
|
$ 80
|
$ 30
|
|
Accounts receivable
|
13
|
14
|
30
|
|
Total assets
|
$ 104
|
$ 94
|
60
|
|
Liabilities and Equity
|
||||
Accounts payable
|
-
|
9
|
-
|
|
Deferred revenue
|
55
|
56
|
-
|
|
Equity
|
49
|
29
|
60
|
|
Total liabilities and equity
|
$ 104
|
$ 94
|
$ 60
|
|
Statement of Operations
|
||||
Operating revenue
|
$ 147
|
$ 104
|
||
Operating expenses
|
(9)
|
(18)
|
||
Net income
|
$ 138
|
$ 86
|
||
Statement of Cash Flows
|
||||
Operating activities
|
$ 11
|
$ 50
|
||
Investing activities
|
-
|
-
|
||
Financing activities
|
-
|
-
|
||
Net cash inflow
|
$ 11
|
$ 50
|
Computer
Hardware
|
Computer
Software
|
Furniture
and Fixtures
|
Leasehold Improvements | Total | |
(in thousands)
|
|||||
Cost:
|
|||||
January 1, 2010
|
$ 133
|
$ 15
|
$ -
|
$ 27
|
$ 175
|
Additions
|
6
|
-
|
-
|
-
|
6
|
December 31, 2010
|
$ 139
|
$ 15
|
$ -
|
$ 27
|
$ 181
|
Additions
|
38
|
-
|
11
|
43
|
92
|
December 31, 2011
|
$ 177
|
$ 15
|
$ 11
|
$ 70
|
$ 273
|
Accumulated depreciation:
|
|||||
January 1, 2010
|
$ 100
|
$ 1
|
$ -
|
$ 27
|
$ 128
|
Depreciation for the year
|
14
|
8
|
-
|
-
|
22
|
December 31, 2010
|
$ 114
|
$ 9
|
$ -
|
$ 27
|
$ 150
|
Amortization for the year
|
20
|
6
|
1
|
5
|
32
|
December 31, 2011
|
$ 134
|
$ 15
|
$ 1
|
$ 32
|
$ 182
|
Carrying amount:
|
|||||
January 1, 2010
|
$ 33
|
$ 14
|
$ -
|
$ -
|
$ 47
|
December 31, 2010
|
$ 25
|
$ 6
|
$ -
|
$ -
|
$ 31
|
December 31, 2011
|
$ 43
|
$ -
|
$ 10
|
$ 38
|
$ 91
|
|
a)
|
The Series H notes payable matured on December 31, 2009 and were secured as per the Series H security terms; however, the final installment had not been remitted and the Company was in negotiation with the debt holders over the timing of the final settlement amount of $30,000.
|
|
b)
|
On October 28, 2010, the Company received an operating loan from a private institution in the amount of $500,000. The loan bore interest at 18.75 percent, matured in six months from the closing date and was secured by a general security agreement and common shares pledged by certain shareholders of the Company. The balance outstanding as at December 31, 2010 was $500,000.
|
|
c)
|
The Series G notes payable matured on December 31, 2009 and were secured as per the Series G security terms; however, the final installment had not been remitted and the Company was in negotiation with the debt holders over the timing of the final settlement amount of $126,000.
|
|
a)
|
The following summarizes the face and carrying values of the secured subordinated notes.
|
Secured Subordinated Notes
|
December 31, 2011
|
December 31, 2010
|
January 1, 2010
|
|||
Face Value
|
Carrying Value
|
Face Value
|
Carrying Value
|
Face Value
|
Carrying Value
|
|
(in thousands)
|
||||||
Series N (Note 8 (b))
|
$ -
|
$ -
|
$ 600
|
$ 501
|
$ 600
|
$ 423
|
Series L (Note 8 (c))
|
-
|
-
|
360
|
204
|
525
|
235
|
Closing balance
|
$ -
|
$ -
|
$ 960
|
$ 705
|
$ 1,105
|
$ 658
|
Current portion of notes
|
$ -
|
$ -
|
$ 600
|
$ 501
|
$ -
|
$ -
|
Long-term portion of notes
|
$ -
|
$ -
|
$ 360
|
$ 204
|
$ 1,105
|
$ 658
|
|
b)
|
During the year ended December 31, 2008, the Company issued Series N secured subordinated notes with a face value of $600,000. The Series N notes matured on December 12, 2011, had an annual interest rate of 10 percent and were convertible into equity units at a price of $0.10 per unit. Interest was payable in cash upon the earlier of each quarter end, conversion, or maturity of the notes. Each equity unit consisted of one common share and one share-purchase warrant with an exercise price of $0.15 per warrant. The warrants expired on December 12, 2011. Dundee Securities Corporation received a brokerage commission of four percent on a portion of the private placement. The afore-mentioned conversion provisions were subject to a four month and one day hold period. The Series N notes were secured by a general security agreement on the assets of the Company, subordinated to the security claims provided to the holders of previously issued notes.
|
|
c)
|
During the year ended December 31, 2008, the Company issued Series L secured subordinated notes with a face value of $525,000. The Series L notes mature on March 31, 2013, have an annual interest rate of 10 percent and are convertible into equity units at a price of $0.10 per unit. Interest for the first two years is payable in shares upon the earlier of conversion or each anniversary date of the closing date. Interest payable for the remaining term of the notes is payable in cash upon the earlier of conversion, each anniversary date of the closing date, or maturity. Each equity unit consisted of one common share and one share-purchase warrant with an exercise price of $0.15 per warrant. The warrants expire on the earlier of (i) March 31, 2013 and (ii) the date which is sixty days following the issuance of a notice by the Company to holders confirming that the closing price of the Company’s common shares, on the TSX was
|
|
greater than or equal to $0.36 for any 10 consecutive trading days. Dundee Securities Corporation received a brokerage commission of four percent on a portion of the private placement. The afore-mentioned conversion provisions are subject to a four month and one day holding period. The Series L notes are secured by a general security agreement on the assets of the Company, subordinated to the security claims provided to the holders of previously issued notes.
|
|
d)
|
During the year ended December 31, 2011, the Company recorded cash interest expense aggregating $103,000 (2010 - $154,000) and interest accretion of $124,000 (2010 - $115,000).
|
|
e)
|
As at December 31, 2011, accrued liabilities include $nil (2010 - $62,000) of unpaid interest payable relating to the secured subordinated notes.
|
|
f)
|
The following summarizes the change in the face and carrying values of the liability and equity components of the secured subordinated notes.
|
Secured Subordinated Notes (liability component)
|
2011 | 2010 | ||
Face Value
|
Carrying Value
|
Face Value
|
Carrying Value
|
|
(in thousands)
|
||||
Opening balance
|
$ 960
|
$ 705
|
$ 1,105
|
$ 658
|
Accreted (non-cash) interest
|
-
|
124
|
-
|
115
|
Conversion of notes:
|
|
|
||
Series N (Note 8 (b))
|
(600)
|
(592)
|
-
|
-
|
Series L (Note 8 (c))
|
(360)
|
(237)
|
(145)
|
(68)
|
Closing balance
|
$ -
|
$ -
|
$ 960
|
$ 705
|
Conversion Features on Secured Subordinated Notes Including Conversion of Attached Warrants | 2011 |
2010
|
||
|
Carrying Value
|
Common Shares Issuable
|
Carrying Value
|
|
(in thousands of shares and dollars)
|
||||
Opening balance
|
19,200
|
$ 458
|
22,100
|
$ 547
|
Conversion of notes:
|
|
|
||
Series N (Note 8 (b))
|
(12,000)
|
(237)
|
-
|
-
|
Series L (Note 8 (c))
|
(7,200)
|
(221)
|
(2,900)
|
(89)
|
Closing balance
|
-
|
$ -
|
19,200
|
$ 458
|
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
DEFERRED TAX ASSET
|
||||||||
Tax losses carried forward
|
$ | 6,916 | $ | 6,454 | ||||
Difference in tax and accounting valuations
|
||||||||
for capital assets and investments
|
76 | 124 | ||||||
6,992 | 6,578 | |||||||
Temporary differences not recognized
|
(6,992 | ) | (6,578 | ) | ||||
Deferred tax asset
|
$ | - | $ | - |
2011
|
2010
|
|||||||
(in thousands)
|
||||||||
PROVISION FOR INCOME TAXES
|
||||||||
Income taxes at statutory rate
|
$ | (1,112 | ) | $ | (940 | ) | ||
Change in enacted rates
|
63 | 123 | ||||||
Non-deductible interest on subordinated notes
|
35 | 36 | ||||||
Stock-based compensation not deductible for tax
|
529 | 160 | ||||||
Write-down of investment
|
- | 169 | ||||||
Expiry of tax loss carry-forwards
|
- | 1,297 | ||||||
Loss carry-forwards not recognized
|
414 | (823 | ) | |||||
Other
|
71 | (22 | ) | |||||
Provision for income taxes
|
$ | - | $ | - |
Year
|
Amount
|
||
(in thousands)
|
|||
2014
|
$ 3,047
|
||
2015
|
3,351
|
||
2026
|
2,588
|
||
2027
|
2,050
|
||
2028
|
1,969
|
||
2029
|
1,700
|
||
2030
|
1,741
|
||
2031
|
1,892
|
||
Tax loss carry-forwards that do not expire
|
9,294
|
||
$ 27,632
|
|
a)
|
Authorized
|
Unlimited number of common shares
|
Unlimited number of preference shares – issuable in series
|
2011
|
2010
|
|||
Number
|
Amount
|
Number
|
Amount
|
|
(in thousands of shares and dollars)
|
||||
Opening balance
|
172,170
|
$ 110,767
|
159,353
|
$ 110,240
|
Shares issued pursuant to:
|
||||
Conversion of subordinated notes (Note 8 (b) and (c))
|
9,600 |
1,081
|
1,450
|
117
|
Payment of interest (Note 10 (c))
|
6
|
1
|
232
|
48
|
Equity private placements (Note 10 (d))
|
10,478
|
456
|
10,007
|
153
|
Exercise of compensation options (Note 10 (d))
|
2,250
|
241
|
-
|
-
|
Warrants exercised (Note 11 (c))
|
26,260
|
3,854
|
1,083
|
202
|
Stock options exercised (Note 12 (c))
|
1,334
|
329
|
45
|
7
|
Acquisition of intellectual properties (Note 6)
|
4,500
|
630
|
-
|
-
|
Closing balance
|
226,598
|
$ 117,359
|
172,170
|
$ 110,767
|
|
c)
|
Payment of Interest
|
|
d)
|
Equity Private Placements
|
|
11.
|
WARRANTS
|
|
a)
|
The following table summarizes the transactions within warrants.
|
2011
|
2010
|
|||
Number
|
Amount
|
Number
|
Amount
|
|
(in thousands of warrants and dollars)
|
||||
Opening balance
|
15,818
|
$ 834
|
10,249
|
$ 490
|
Warrants issued pursuant to:
|
||||
Conversion of subordinated notes (Note 8 (b) and (c)) | 9,600 |
207
|
1,450
|
41
|
Equity private placements (Note 10 (d))
|
10,478
|
149
|
13,816
|
726
|
Exercise of compensation options (Note 10 (d)) | 2,250 |
47
|
-
|
-
|
Debt settlement (Note 11 (b)) | 2,900 |
200
|
-
|
-
|
Warrants exercised (Note 11 (c))
|
(26,260)
|
(477)
|
(1,083)
|
(32)
|
Warrants expired (Note 11 (d))
|
(3,121)
|
(124)
|
(8,614)
|
(391)
|
Closing balance
|
11,665
|
$ 836
|
15,818
|
$ 834
|
|
b)
|
Warrants Issued For Debt Settlement
|
|
c)
|
Warrants Exercised
|
|
d)
|
Warrants Expired
|
|
e)
|
Fair Value of Warrants Issued
|
2011
|
2010
|
|
Share price
|
$ 0.16
|
$ 0.19
|
Dividend yield
|
-
|
-
|
Risk free interest rate
|
1.85%
|
1.68%
|
Volatility
|
103.57%
|
98.89%
|
Expected term, in years
|
2.00
|
2.43
|
|
a)
|
The following table summarizes the transactions within stock options.
|
2011
|
2010
|
|||
Number
|
Amount
|
Number
|
Amount
|
|
(in thousands of warrants and dollars)
|
||||
Opening balance
|
10,946
|
$ 1,949
|
5,036
|
$ 1,435
|
Granted
|
10,150
|
-
|
7,515
|
-
|
Exercised (Note 12 (c))
|
(1,334)
|
(132)
|
(45)
|
(3)
|
Cancelled
|
(472)
|
-
|
(1,560)
|
-
|
Stock-base compensation expense
|
-
|
1,873
|
-
|
517
|
Closing balance
|
19,290
|
$ 3,690
|
10,946
|
$ 1,949
|
|
b)
|
Employee Stock Options
|
Exercise Prices
|
Number of Options Outstanding
(in thousands)
|
Remaining Contractual Life
(in years)
|
Number of Options Exercisable
(in thousands)
|
$ 0.10
|
3,434
|
3.7
|
2,867
|
$ 0.12
|
1,406
|
1.1
|
1,406
|
$ 0.19
|
3,440
|
4.3
|
2,220
|
$ 0.20
|
4,660
|
3.2
|
4,660
|
$ 0.32
|
6,350
|
4.4
|
3,528
|
19,290
|
14,681
|
2011
|
2010
|
|
Share price
|
$ 0.27
|
$ 0.15
|
Dividend yield
|
-
|
-
|
Risk free interest rate
|
2.47%
|
2.63%
|
Volatility
|
100.32%
|
89.10%
|
Expected term, in years
|
5
|
5
|
|
c)
|
During the year ended December 31, 2011, total proceeds of $197,000 were realized from the exercise of 1,334,000 stock options (book value of $132,000) at an average exercise price of $0.15. The average trading price at the time of exercise of these options was $0.27.
|
|
13.
|
REVENUES
|
2011
|
2010
|
|
(in thousands)
|
||
Services
|
$ 543
|
$ 317
|
Hosting fees
|
242
|
255
|
Royalty fees
|
-
|
10
|
$ 785
|
$ 582
|
|
14.
|
FINANCIAL INSTRUMENTS AND FINANCIAL RISK FACTORS
|
|
a)
|
Financial Instruments
|
|
December 31, 2011
|
December 31, 2010
|
January 31, 2010
|
(in thousands)
|
|||
Financial Assets:
|
|||
Fair value through profit and loss
|
|||
Cash
|
$ 1,760
|
$ 51
|
$ 210
|
Loans and receivables, recorded at amortized cost
|
|||
Accounts receivable
|
$ 187
|
$ 151
|
$ 214
|
Financial Liabilities:
|
|||
Financial liabilities measured at amortized cost
|
|||
Accounts payable and accrued liabilities
|
$ 412
|
$ 619
|
$ 492
|
Notes payable
|
-
|
530
|
156
|
Secured subordinated notes
|
-
|
705
|
658
|
|
b)
|
Financial Risk Factors
|
December 31, 2011
|
December 31, 2010
|
January 31, 2010
|
|
(in thousands)
|
|||
Current
|
$ 144
|
$ 93
|
$ 63
|
Past due (61-120 days)
|
36
|
46
|
91
|
Past due (> 120 days)
|
7
|
12
|
60
|
|
$ 187
|
$ 151
|
$ 214
|
|
a)
|
Minimum payments under operating leases are as follows:
|
Year
|
Amount
(in thousands)
|
||
2012
|
$ 156
|
||
2013
|
$ 156
|
||
2014
|
$ 130
|
||
|
b)
|
During the year ended December 31, 2009, the Company entered into a technology licensing agreement with a Fortune 500 company that provides Northcore with access to a portfolio of intellectual property patents over a six year period for a minimum fee of US $260,000 over the term of the agreement. Minimum payments over the remaining term are as follows: 2012 - $50,000, 2013 - $50,000, 2014 - $50,000.
|
|
c)
|
In connection with the acquisition of all the Intellectual Property of Discount This Holdings limited, the Company agreed to pay a 10 percent commission on all proceeds realized, if the Intellectual Property is sold or licensed to a third party within the two year period following the close date of December 28, 2011.
|
|
a)
|
Cash Flow
|
2011
|
2010
|
|
(in thousands) | ||
Accounts receivable
|
$ (36)
|
$ 63
|
Deposits and prepaid expenses
|
(4)
|
(1)
|
Accounts payable
|
(161)
|
69
|
Accrued liabilities
|
182
|
69
|
$ (19)
|
$ 200
|
2011
|
2010
|
|
(in thousands)
|
||
Issuance of common shares in settlement of interest payments (Note 10 (c))
|
$ 1
|
$ 48
|
Reduction in debt from conversion of secured subordinated notes (Note 8 (f))
|
(829)
|
(68)
|
Reduction in conversion feature from conversion of secured subordinated notes (Note 8 (f))
|
(458)
|
(89)
|
Issuance of common shares for acquisition of intangible assets (Note 6)
|
630
|
-
|
Issuance of warrants for settlement of trade payables (Note 12 (b))
|
200
|
-
|
|
b)
|
Employee Benefits
|
2011
|
2010
|
|
(in thousands)
|
||
Salaries and other benefits
|
$ 430
|
$ 355
|
Stock-based compensation
|
741
|
144
|
$ 1,171
|
$ 499
|
|
Subsequent to the year ended December 31, 2011, the Company entered into an agreement to acquire a software development firm.. The purchase price of $1,000,000 will be satisfied by $300,000 cash payment and $700,000 through the issuance of 7,777,777 common shares at $0.09. The cash payment will be satisfied by $100,000 cash payment at closing with the remaining $200,000 to be paid over the next two years, subject to achieving specific performance criteria. The financial effect of this transaction cannot be determined at this time.
|
|
IFRS 1 requires the presentation of comparative information as at the January 1, 2010 transition date and subsequent comparative periods as well as the consistent and retrospective application of IFRS accounting policies. To assist with the transition, the provisions of IFRS 1 allow for certain mandatory exceptions and optional exemptions for first-time adopters to alleviate the retrospective application of all IFRSs. The Company has applied the following exemptions in its consolidated financial statements at the transition date:
|
|
·
|
Share-Based Payments
|
|
·
|
Financial Instruments
|
|
·
|
Business Combinations
|
|
·
|
Estimates
|
IFRS OPENING CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at January 1, 2010
(in thousands of Canadian dollars)
|
|||||||
IFRS ADJUSTMENTS
|
|||||||
Previous GAAP
|
Stock-based
Compensation
|
Investment in
GEAM, LLC
|
Secured
Subordinated
Notes
|
IFRS
|
|||
(Note 20 (a))
|
(Note 20 (b))
|
(Note 20 (c))
|
|||||
ASSETS
|
|||||||
Cash
|
$ 226
|
$ -
|
$ (16)
|
$ -
|
$ 210
|
||
Accounts receivable
|
253
|
-
|
(39)
|
-
|
214
|
||
Deposits and prepaid expenses
|
35
|
-
|
-
|
-
|
35
|
||
514
|
-
|
(55)
|
-
|
459
|
|||
INVESTMENT IN GEAM, LLC
|
-
|
-
|
31
|
-
|
31
|
||
INVESTMENT IN SOUTHCORE
|
544
|
-
|
-
|
-
|
544
|
||
CAPITAL ASSETS
|
47
|
-
|
-
|
-
|
47
|
||
$ 1,105
|
$ -
|
$ (24)
|
$ -
|
$ 1,081
|
|||
LIABILITIES
|
|||||||
Accounts payable
|
$ 331
|
$ -
|
$ -
|
$ -
|
$ 331
|
||
Accrued liabilities
|
161
|
-
|
-
|
-
|
161
|
||
Deferred revenue
|
27
|
-
|
(24)
|
-
|
3
|
||
Notes payable
|
156
|
-
|
-
|
-
|
156
|
||
675
|
-
|
(24)
|
-
|
651
|
|||
SECURED SUBORDINATED NOTES
|
446
|
-
|
-
|
212
|
658
|
||
1,121
|
-
|
(24)
|
212
|
1,309
|
|||
SHAREHOLDERS’ DEFICIENCY
|
|||||||
Share capital
|
110,238
|
-
|
-
|
2
|
110,240
|
||
Contributed surplus
|
3,071
|
-
|
-
|
-
|
3,071
|
||
Warrants
|
492
|
-
|
-
|
(2)
|
490
|
||
Stock options
|
1,425
|
10
|
-
|
-
|
1,435
|
||
Conversion feature on secured subordinated notes
|
779
|
-
|
-
|
(232)
|
547
|
||
Deficit
|
(116,021)
|
(10)
|
-
|
20
|
(116,011)
|
||
(16)
|
-
|
-
|
(212)
|
(228)
|
|||
$ 1,105
|
$ -
|
$ (24)
|
$ -
|
$ 1,081
|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at December 31, 2010
(in thousands of Canadian dollars)
|
|||||||
IFRS ADJUSTMENTS
|
|||||||
Previous GAAP
|
Stock-based
Compensation
|
Investment in
GEAM, LLC
|
Secured
Subordinated
Notes
|
IFRS
|
|||
(Note 20 (a))
|
(Note 20 (b))
|
(Note 20 (c))
|
|||||
ASSETS
|
|||||||
Cash
|
$ 90
|
$ -
|
$ (39)
|
$ -
|
$ 51
|
||
Accounts receivable
|
157
|
-
|
(6)
|
-
|
151
|
||
Deposits and prepaid expenses
|
36
|
-
|
-
|
-
|
36
|
||
283
|
-
|
(45)
|
-
|
238
|
|||
INVESTMENT IN GEAM, LLC
|
-
|
-
|
15
|
-
|
15
|
||
CAPITAL ASSETS
|
31
|
-
|
-
|
-
|
31
|
||
$ 314
|
$ -
|
$ (30)
|
$ -
|
$ 284
|
|||
LIABILITIES
|
|||||||
Accounts payable
|
$ 404
|
$ -
|
$ (4)
|
$ -
|
$ 400
|
||
Accrued liabilities
|
219
|
-
|
-
|
-
|
219
|
||
Deferred revenue
|
29
|
-
|
(26)
|
-
|
3
|
||
Notes payable
|
530
|
-
|
-
|
-
|
530
|
||
Current portion of secured subordinated notes
|
412
|
-
|
-
|
89
|
501
|
||
1,594
|
-
|
(30)
|
89
|
1,653
|
|||
SECURED SUBORDINATED NOTES
|
149
|
-
|
-
|
55
|
204
|
||
1,743
|
-
|
(30)
|
144
|
1,857
|
|||
SHAREHOLDERS’ DEFICIENCY
|
|||||||
Share capital
|
110,762
|
-
|
-
|
5
|
110,767
|
||
Contributed surplus
|
3,462
|
-
|
-
|
-
|
3,462
|
||
Warrants
|
839
|
-
|
-
|
(5)
|
834
|
||
Stock options
|
1,780
|
169
|
-
|
-
|
1,949
|
||
Conversion feature on secured subordinated notes
|
667
|
-
|
-
|
(209)
|
458
|
||
Deficit
|
(118,939)
|
(169)
|
-
|
65
|
(119,043)
|
||
(1,429)
|
-
|
(144)
|
(1,573)
|
||||
$ 314
|
$ -
|
$ (30)
|
$ -
|
$ 284
|
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
Twelve Months Ended December 31, 2010
(in thousands of Canadian dollars, except per share amounts)
|
||||||
IFRS ADJUSTMENTS
|
||||||
Previous GAAP
|
Stock-based
Compensation
|
Investment in
GEAM, LLC
|
Secured
Subordinated
Notes
|
IFRS
|
||
(Note 20 (a))
|
(Note 20 (b))
|
(Note 20 (c))
|
||||
Revenues
|
$ 636
|
$ -
|
$ (54)
|
$ -
|
$ 582
|
|
Other income:
|
||||||
Income from GEAM, LLC
|
-
|
-
|
43
|
-
|
(43)
|
|
Operating expenses:
|
||||||
General and administrative
|
1,451
|
-
|
(11)
|
-
|
1,440
|
|
Customer service and technology
|
734
|
-
|
-
|
-
|
734
|
|
Sales and marketing
|
188
|
-
|
-
|
-
|
188
|
|
Stock-based compensation
|
358
|
159
|
-
|
-
|
517
|
|
Depreciation
|
22
|
-
|
-
|
-
|
22
|
|
Total operating expenses
|
2,753
|
159
|
(11)
|
-
|
2,901
|
|
Loss from operations before the under-noted
|
(2,117)
|
(159)
|
-
|
-
|
(2,319)
|
|
Finance costs:
|
||||||
Cash interest expense
|
154
|
-
|
-
|
-
|
154
|
|
Accretion of secured subordinated
notes
|
160
|
-
|
-
|
(45)
|
115
|
|
Total finance costs
|
314
|
-
|
-
|
(45)
|
269
|
|
Other expenses:
|
||||||
Gain on settlement of debt
|
(57)
|
-
|
-
|
-
|
(57)
|
|
Provision for impaired investment
|
544
|
-
|
-
|
-
|
544
|
|
Total other expenses
|
487
|
-
|
-
|
-
|
487
|
|
LOSS AND COMPREHENSIVE LOSS FOR THE YEAR
|
$ (2,918)
|
$ (159)
|
$ -
|
$ 45
|
$ 3,032
|
|
LOSS PER SHARE, BASIC AND
DILUTED
|
$ (0.018)
|
$ (0.019)
|
||||
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING,
BASIC AND DILUTED (000’s)
|
162,899
|
162,899
|
CONSOLIDATED STATEMENT OF CASH FLOWS
Twelve Months Ended December 31, 2010
(in thousands of Canadian dollars)
|
IFRS ADJUSTMENTS
|
|||||||
Previous GAAP
|
Stock-based
Compensation
|
Investment in
GEAM, LLC
|
Secured
Subordinated
Notes
|
IFRS
|
|||
NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES
|
(Note 20 (a))
|
(Note 20 (b))
|
(Note 20 (c))
|
||||
OPERATING
|
|||||||
Loss for the year
|
$ (2,918)
|
$ (159)
|
$ -
|
$ 45
|
$ (3,032)
|
||
Items not affecting cash:
|
|||||||
Income from GEAM, LLC
|
-
|
-
|
(43)
|
-
|
(43)
|
||
Stock-based compensation
|
358
|
159
|
-
|
-
|
517
|
||
Depreciation
|
22
|
-
|
-
|
-
|
22
|
||
Cash interest expense
|
154
|
-
|
-
|
-
|
154
|
||
Accretion of secured subordinated notes
|
160
|
-
|
-
|
(45)
|
115
|
||
Gain on settlement of debt
|
(57)
|
-
|
-
|
-
|
(57)
|
||
Provision for impaired investment
|
544
|
-
|
-
|
-
|
544
|
||
(1,737)
|
-
|
(43)
|
-
|
(1,780)
|
|||
Changes in non-cash operating working capital
|
240
|
-
|
(40)
|
-
|
200
|
||
(1,497)
|
-
|
(83)
|
-
|
(1,580)
|
|||
INVESTING
|
|||||||
Cash distributions from investment in GEAM, LLC
|
-
|
-
|
60
|
-
|
60
|
||
Capital assets
|
(6)
|
-
|
-
|
-
|
(6)
|
||
(6)
|
-
|
60
|
-
|
54
|
|||
FINANCING
|
|||||||
Repayment of notes payable
|
(465)
|
-
|
-
|
-
|
(465)
|
||
Proceeds from issuance of notes payable
|
859
|
-
|
-
|
-
|
859
|
||
Warrants exercised
|
170
|
-
|
-
|
-
|
170
|
||
Options exercised
|
4
|
-
|
-
|
-
|
4
|
||
Issuance of common shares and
warrants
|
1,008
|
-
|
-
|
-
|
1,008
|
||
Share issuance costs
|
(129)
|
-
|
-
|
-
|
(129)
|
||
Interest paid
|
(80)
|
-
|
-
|
-
|
(80)
|
||
1,367
|
-
|
-
|
-
|
1,367
|
|||
NET CASH OUTFLOW DURING THE
YEAR
|
(136)
|
-
|
(23)
|
-
|
(159)
|
||
CASH, BEGINNING OF YEAR
|
226
|
-
|
(16)
|
-
|
210
|
||
CASH, END OF YEAR
|
$ 90
|
$ -
|
$ (39)
|
$ -
|
$ 51
|
|
a)
|
Stock-Based Compensation
|
|
b)
|
Investment in GEAM, LLC
|
|
c)
|
Secured Subordinated Notes
|
DIRECTORS
T. Christopher Bulger
Chairman of the Audit Committee
Anthony DeCristofaro
Chairman of the Board
Ryan Deslippe
Board Member
Marvin Igelman
Board Member
Amit Monga
Chief Executive Officer and Board Member
Jim Moskos
Chief Operating Officer and Board Member
|
CORPORATE OFFICE
Northcore Technologies Inc.
302 The East Mall, Suite 300
Toronto, Ontario M9B 6C7
1 888 287 7467
AUDITORS
Collins Barrow Toronto LLP
11 King Street, West, Suite 700
Toronto, Ontario, M5H 4C7
ADDITIONAL SHAREHOLDER INFORMATION
Website:
www.northcore.com
Email:
investor-relations@northcore.com
|
SHARES OUTSTANDING
As at December 31, 2011:
226,597,702 common shares
REGISTRAR & TRANSFER AGENT
Equity Financial Trust Company
200 University Avenue, Suite 400
Toronto, ON M5H 4H1
STOCK EXCHANGE LISTINGS
Toronto Stock Exchange (TSX)
Symbol: NTI
OTC Bulletin Board (OTCBB)
Symbol: NTLNF
© 2011 Northcore Technologies Inc.
|
Northcore Technologies Inc.
302 The East Mall, Suite 300
Toronto, Ontario, Canada
M9B 6C7
|
Tel: 416-640-0400
Fax: 416-640-0412
www.northcore.com
|
|
·
|
Manage the appraisal of used equipment more effectively, resulting in a better understanding of fair market values; and
|
|
·
|
Recruited a new CEO, Chairman and two Board of Directors members to assist with corporate realignment and growth initiatives;
|
|
·
|
Completed the acquisition of the Discount This asset base, inclusive of unique Intellectual Property, to serve as the basis for a coordinated IP strategy;
|
|
·
|
Opened a U.S. based office in Naples, Florida to facilitate greater access to American market opportunities;
|
|
·
|
Completed major upgrades to production information technology infrastructure, including Server Architecture, Database Management Systems and Operating Environments;
|
|
·
|
Launched a strategic initiative with Pellegrino and Associates to position Northcore to take advantage of high growth domains with its proprietary Working Capital Engine and Dutch Auction IP portfolio;
|
|
·
|
Closed an equity private placement, generating net proceeds of $713,000 through the issuance of common shares and warrants;
|
|
·
|
Secured $3,574,000 in proceeds through the exercise of warrants and options by current holders; and
|
|
·
|
Continued to strengthen our balance sheet through the conversion of all remaining secured subordinated notes into equity and repayment of notes payable.
|
|
·
|
Successful deployment of Northcore’s e-tendering technology for the Irish Government Health Services Executive’s initial online acquisition pilot, resulting in a 30 percent savings on a €30 million acquisition;
|
|
·
|
Launch of the Home Hardware Dealer-Owners Connect website at the bi-annual Home Hardware market showcase;
|
|
·
|
Formation of a Social Commerce Group to focus on helping corporations leverage social media to accelerate buying and selling;
|
|
·
|
Contractual renewal of multiple long-term enterprise clients;
|
|
·
|
Execution of new contractual agreements with customers in multiple industry segments;
|
|
·
|
Implementation of an “Intelligent Agent” data extraction initiative for a major strategic partner; and
|
|
·
|
Awarded of Vendor of Record status by Ontario Government.
|
|
·
|
The timing of our future capital needs and our ability to raise additional capital when needed;
|
|
·
|
Increasingly longer sales cycles;
|
|
·
|
Potential fluctuations in our financial results and our difficulties in forecasting;
|
|
·
|
Volatility of the stock markets and fluctuations in the market price of our stock;
|
|
·
|
The ability to buy and sell our shares on the Over the Counter Bulletin Board;
|
|
·
|
Our ability to compete with other companies in our industry;
|
|
·
|
Our dependence upon a limited number of customers;
|
|
·
|
Our ability to retain and attract key personnel;
|
|
·
|
Risk of significant delays in product development;
|
|
·
|
Failure to timely develop or license new technologies;
|
|
·
|
Risks relating to any requirement to correct or delay the release of products due to software bugs or errors;
|
|
·
|
Risk of system failure or interruption;
|
|
·
|
Risks associated with any further dramatic expansions and retractions in the future;
|
|
·
|
Risks associated with international operations;
|
|
·
|
Problems which may arise in connection with the acquisition or integration of new businesses, products, services, technologies or other strategic relationships;
|
|
·
|
Risks associated with protecting our intellectual property, and potentially infringing the intellectual property rights of others;
|
|
·
|
Fluctuations in currency exchanges;
|
|
·
|
Risks to holders of our common shares following any issuance of our preferred shares; and
|
|
·
|
The ability to enforce legal claims against us or our officers or directors.
|
|
·
|
Fluctuations in currency exchanges;
|
|
·
|
Unexpected changes to foreign laws and regulations, and foreign tax laws;
|
|
·
|
Local residency requirements for our sales and professional service personnel; and
|
|
·
|
Fluctuations to local demand for asset management technology and services.
|
|
·
|
The amount of revenue can be measured reliably;
|
|
·
|
The stage of completion can be measured reliably;
|
|
·
|
The receipt of economic benefits is probable; and
|
|
·
|
The costs incurred or to be incurred can be measured reliably.
|
|
·
|
|
·
|
The amount of revenue can be measured reliably;
|
|
·
|
The risks and rewards of ownership have been transferred to the buyer;
|
|
·
|
The receipt of economic benefits is probable; and
|
|
·
|
The costs incurred or to be incurred can be measured reliably.
|
|
·
|
Application Development Fees
|
|
·
|
Implementation, Training and Consulting Service Fees
|
|
·
|
Product Maintenance and Customer Support Fees
|
|
·
|
Hosting Fees
|
|
·
|
Multiple Deliverable Revenue Arrangements
|
|
·
|
IFRS 9, Financial Instruments was issued by the IASB in October 2010 and will replace IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2013. The IASB has proposed to move the effective date of IFRS 9 to January 1, 2015.
|
|
·
|
IFRS 13, Fair Value Measurement was issued by the IASB in May 2011. IFRS 13 establishes new guidance on fair value measurement and disclosure requirements for IFRSs and U.S. generally accepted accounting principles (GAAP). The guidance, set out in IFRS 13 and an update to Topic 820 in the FASB’s Accounting Standards Codification (formerly referred to as SFAS 157), completes a major project of the boards’ joint work to improve IFRSs and US GAAP and to bring about their convergence.
|
|
The standard is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted.
|
|
·
|
IAS 1, Presentation of Financial Statements was amended by the IASB in June 2011 in order to align the presentation of items in other comprehensive income with US GAAP standards. Items in other comprehensive income will be required to be presented in two categories: items that will be reclassified into profit or loss and those that will not be reclassified. The flexibility to present a statement of comprehensive income as one statement or two separate statements of profit and loss and other comprehensive income remains unchanged. The amendments to IAS 1 are effective for annual periods beginning on or after July 1, 2012.
|
Year ended December 31,
|
2011
|
2010
|
||||||
(in thousands of Canadian dollars, except loss per share)
|
||||||||
Revenues
|
$ | 785 | $ | 582 | ||||
Other income:
|
||||||||
Income from GE Asset Manager, LLC
|
69 | 43 | ||||||
Operating expenses:
|
||||||||
General and administrative
|
1,670 | 1,440 | ||||||
Customer service and technology
|
726 | 734 | ||||||
Sales and marketing
|
260 | 188 | ||||||
Stock-based compensation
|
1,873 | 517 | ||||||
Depreciation
|
32 | 22 | ||||||
Total operating expenses
|
4,561 | 2,901 | ||||||
Loss from operations
|
(3,707 | ) | (2,276 | ) | ||||
Finance costs:
|
||||||||
Cash interest expense
|
103 | 154 | ||||||
Accretion of secured subordinated notes
|
124 | 115 | ||||||
Total finance costs
|
227 | 269 | ||||||
Other expenses:
|
||||||||
Gain on settlement of debt
|
- | (57 | ) | |||||
Provision for impaired investment
|
- | 544 | ||||||
Total other expenses
|
- | 487 | ||||||
LOSS AND COMPREHENSIVE LOSS FOR THE YEAR
|
$ | (3,934 | ) | $ | (3,032 | ) | ||
LOSS PER SHARE, BASIC AND DILUTED
|
$ | (0.020 | ) | $ | (0.019 | ) | ||
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING, BASIC AND DILUTED (000’s)
|
196,180 | 162,899 |
Year ended December 31,
|
2011
|
2010
|
||||||
(in thousands of Canadian dollars)
|
||||||||
Loss for the year, as per above
|
$ | (3,934 | ) | $ | (3,032 | ) | ||
Reconciling items:
|
||||||||
Stock-based compensation
|
1,873 | 517 | ||||||
Depreciation
|
32 | 22 | ||||||
Finance costs:
|
||||||||
Cash interest expense
|
103 | 154 | ||||||
Accretion of secured subordinated notes
|
124 | 115 | ||||||
Other Items:
|
||||||||
Professional fees (2)
|
235 | - | ||||||
Gain on settlement of debt
|
- | (57 | ) | |||||
Provision for impaired investment
|
- | 544 | ||||||
OPERATIONAL EBITDA
|
$ | (1,567 | ) | $ | (1,737 | ) |
(1)
|
Operational EBITDA is defined as the loss before interest, taxes, depreciation, stock-based compensation and other non-recurring expenses. The Company considers Operational EBITDA to be a meaningful performance measure as it provides an approximation of operating cash flows. Operational EBITDA should not be considered as a substitute or alternative for operating loss or loss for the year, in each case determined in accordance with IFRS.
|
(2)
|
Non-recurring professional fees relates to consulting fees paid in connection with the recruitment of new senior management and Board members, as well as engaging an Intellectual Property firm to help examine the applicability of the Company’s core technology.
|
Quarter ended
|
Dec 31,
2011
|
Sep 30,
2011
|
Jun 30,
2011
|
Mar 31,
2011
|
Dec 31,
2010
|
Sep 30,
2010
|
Jun 30,
2010
|
Mar 31,
2010
|
|||||||||||||||||||||||
(in thousands of Canadian dollars, except per share amounts) | |||||||||||||||||||||||||||||||
Revenues
|
$ | 212 | $ | 203 | $ | 187 | $ | 183 | $ | 176 | $ | 132 | $ | 124 | $ | 150 | |||||||||||||||
Other income:
|
|||||||||||||||||||||||||||||||
Income from GE Asset Manager
|
15 | 18 | 1 | 35 | 11 | 4 | 7 | 21 | |||||||||||||||||||||||
Operating expenses:
|
|||||||||||||||||||||||||||||||
General and administrative
|
362 | 351 | 585 | 372 | 391 | 311 | 351 | 387 | |||||||||||||||||||||||
Customer service and technology
|
183 | 181 | 181 | 181 | 184 | 174 | 184 | 192 | |||||||||||||||||||||||
Sales and marketing
|
51 | 75 | 65 | 69 | 54 | 42 | 41 | 51 | |||||||||||||||||||||||
Stock-based compensation
|
248 | 372 | 1,170 | 83 | 143 | 77 | 104 | 193 | |||||||||||||||||||||||
Depreciation
|
12 | 8 | 6 | 6 | 6 | 5 | 5 | 6 | |||||||||||||||||||||||
Total operating expenses
|
856 | 987 | 2,007 | 711 | 778 | 609 | 685 | 829 | |||||||||||||||||||||||
Loss from operations
|
(629 | ) | (766 | ) | (1,819 | ) | (493 | ) | (591 | ) | (473 | ) | (554 | ) | (658 | ) | |||||||||||||||
Finance costs:
|
|||||||||||||||||||||||||||||||
Interest on notes payable and secured subordinated notes
|
10 | 20 | 28 | 45 | 54 | 39 | 32 | 29 | |||||||||||||||||||||||
Accretion of secured subordinated notes
|
21 | 34 | 33 | 36 | 32 | 29 | 28 | 26 | |||||||||||||||||||||||
Total finance costs
|
31 | 54 | 61 | 81 | 86 | 68 | 60 | 55 | |||||||||||||||||||||||
Other expenses :
|
|||||||||||||||||||||||||||||||
Gain on settlement of debt
|
- | - | - | - | - | (57 | ) | - | - | ||||||||||||||||||||||
Provision for impaired investment
|
- | - | - | - | - | 544 | - | - | |||||||||||||||||||||||
Total other expenses
|
- | - | - | - | - | 487 | - | - | |||||||||||||||||||||||
Loss and comprehensive loss for the period
|
$ | (660 | ) | $ | (820 | ) | $ | (1,880 | ) | $ | ( 574 | ) | $ | ( 677 | ) | $ | (1,028 | ) | $ | (614 | ) | $ | (713 | ) | |||||||
Loss per share - basic and diluted
|
$ | (0.003 | ) | $ | (0.004 | ) | $ | (0.010 | ) | $ | (0.003 | ) | $ | (0.004 | ) | $ | (0.006 | ) | $ | (0.004 | ) | $ | (0.005 | ) |
2011
|
2010
|
Change
|
|
(in thousands of Canadian dollars)
|
|||
Accounts receivable
|
$ (36)
|
$ 63
|
$ (99)
|
Deposits and prepaid expenses
|
(4)
|
(1)
|
(3)
|
Accounts payable
|
(161)
|
69
|
(230)
|
Accrued liabilities
|
182
|
69
|
113
|
$ (19)
|
$ 200
|
$ 219
|
Total
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
(in thousands of Canadian dollars)
|
||||||
Operating leases
|
$ 442
|
$ 156
|
$ 156
|
$ 130
|
$ -
|
$ -
|
License agreements
|
150
|
50
|
50
|
50
|
-
|
-
|
$ 592
|
$ 206
|
$ 206
|
$ 180
|
$ -
|
$ -
|
2011
|
2010
|
|
(in thousands)
|
||
Salaries and other benefits
|
$ 430
|
$ 355
|
Stock-based compensation
|
741
|
144
|
$ 1,171
|
$ 499
|
|
·
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
|
·
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and
|
|
·
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
|
DIRECTORS
T. Christopher Bulger
Chairman of the Audit Committee
Anthony DeCristofaro
Chairman of the Board
Ryan Deslippe
Board Member
Marvin Igelman
Board Member
Amit Monga
Chief Executive Officer and Board Member
Jim Moskos
Chief Operating Officer and Board Member
|
CORPORATE OFFICE
Northcore Technologies Inc.
302 The East Mall, Suite 300
Toronto, Ontario M9B 6C7
1 888 287 7467
AUDITORS
Collins Barrow Toronto LLP
11 King Street, West, Suite 700
Toronto, Ontario, M5H 4C7
ADDITIONAL SHAREHOLDER INFORMATION
Website:
www.northcore.com
Email:
investor-relations@northcore.com
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SHARES OUTSTANDING
As at December 31, 2011:
226,597,702 common shares
REGISTRAR & TRANSFER AGENT
Equity Financial Trust Company
200 University Avenue, Suite 400
Toronto, ON M5H 4H1
STOCK EXCHANGE LISTINGS
Toronto Stock Exchange (TSX)
Symbol: NTI
OTC Bulletin Board (OTCBB)
Symbol: NTLNF
© 2011 Northcore Technologies Inc.
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(a)
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designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
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(i)
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material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and
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(ii)
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information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
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(b)
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designed ICFR, 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.
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5.1
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The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Committee of Sponsoring Organizations of the Treadway Commission (COSO).
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(b)
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evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's ICFR at the financial year end and the issuer has disclosed in its annual MD&A
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(a)
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designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
(i)
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material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and
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(ii)
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information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
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(b)
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designed ICFR, 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.
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5.1
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The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Committee of Sponsoring Organizations of the Treadway Commission (COSO).
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(b)
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evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's ICFR at the financial year end and the issuer has disclosed in its annual MD&A
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