EX-99 4 sept2003-financials.txt EXH 99-5 FINANCIALS EXHIBIT 99.5 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF CIROND NETWORKS, INC. AS AT SEPTEMBER 30, 2003 AND FOR THE THREE MONTHS, NINE MONTHS AND PERIOD FROM INCEPTION (MARCH 7, 2001) THEN ENDED Consolidated Financial Statements of CIROND NETWORKS, INC. (A Development Stage Enterprise) (Expressed in United States dollars) Nine-months ended September 30, 2003 CIROND NETWORKS, INC. (A Development Stage Enterprise) Consolidated Balance Sheets (Expressed in United States dollars) September 30, 2003 and December 31 2002
=========================================================================================================== September 30, 2003 December 31, 2002 (unaudited) ----------------------------------------------------------------------------------------------------------- ASSETS Current assets: Cash $ 1,882 $ 60,135 Amounts receivable 8,446 3,513 Prepaid expenses and deposits 11,964 412 -------------------------------------------------------------------------------------------------------- 22,292 64,060 Property, plant and equipment 50,213 19,634 Website development 13,476 15,854 ----------------------------------------------------------------------------------------------------------- $ 85,981 $ 99,548 =========================================================================================================== LIABILITIES AND STOCKHOLDER'S DEFICIENCY Current liabilities: Accounts payable and accrued liabilities (note 3) $ 154,590 $ 114,521 Consulting fees payable 80,000 45,000 Deferred revenue 3,228 - Advances from related parties (note 3) 495,000 - Due to stockholder (note 4) 171,576 143,155 -------------------------------------------------------------------------------------------------------- 904,394 302,676 Stockholder's deficiency: Capital stock: 20,000,000 non-voting preferred shares with $0.0001 par value, issuable in series authorized, nil issued 80,000,000 voting common shares, with $0.0001 par value authorized, 14,740,250 issued (December 31, 2002 - 14,740,250) 1,474 1,474 Additional paid-in capital 298,898 298,898 Deficit accumulated during the development stage (1,118,785) (503,500) -------------------------------------------------------------------------------------------------------- (818,413) (203,128) Going concern (note 2(a)) Commitments (note 5) Subsequent events (notes 3(b) and 6) ----------------------------------------------------------------------------------------------------------- $ 85,981 $ 99,548 ===========================================================================================================
See accompanying notes to consolidated financial statements. CIROND NETWORKS, INC. (A Development Stage Enterprise) Consolidated Statements of Loss (Expressed in United States dollars) (Unaudited)
=============================================================================================================== From inception Nine months Nine months (March 7, 2001) ended ended to September 30, September 30, September 30, 2003 2003 2002 --------------------------------------------------------------------------------------------------------------- Revenue: Sales $ 7,315 $ 7,315 $ - Expenses: Advertising and promotion 78,835 36,232 - Amortization 15,235 8,358 2,803 Consulting fees (note 3) 465,747 241,679 109,665 Foreign currency gain (2,731) (6,237) (1,965) Interest 923 812 - Office and administrative 23,432 15,251 26,781 Professional fees 81,149 28,234 25,952 Rent 31,825 26,116 4,111 Salaries and benefits 348,205 212,476 97,164 Travel 83,747 59,684 7,068 --------------------------------------------------------------------------------------------------------------- 1,126,367 622,605 271,579 --------------------------------------------------------------------------------------------------------------- Loss before interest income (1,119,052) (615,290) (271,579) Interest income 267 5 170 --------------------------------------------------------------------------------------------------------------- Loss $ (1,118,785) $ (615,285) $ (271,409) =============================================================================================================== Weighted average number of common shares outstanding, basic and diluted 14,589,879 14,740,250 14,660,684 Loss per share, basic and diluted $ (0.08) $ (0.04) $ (0.02) ===============================================================================================================
See accompanying notes to consolidated financial statements. CIROND NETWORKS, INC. (A Development Stage Enterprise) Consolidated Statements of Loss $ United States Three months ended September 30, 2003 and 2002 (Unaudited) ================================================================================ 2003 2002 -------------------------------------------------------------------------------- Revenue: Sales $ 5,664 $ - Expenses: Advertising and promotion 8,306 - Amortization 4,180 1,328 Consulting fees 82,307 44,287 Foreign currency loss (gain) (6,205) 4,442 Interest 253 - Office and administrative 5,343 12,548 Professional fees 28,058 16,074 Rent 16,444 1,576 Salaries and benefits 47,603 40,997 Travel 14,418 408 -------------------------------------------------------------------------------- 200,707 121,660 -------------------------------------------------------------------------------- Loss before interest income (195,043) (121,660) Interest income - 170 -------------------------------------------------------------------------------- Loss $ (195,043) $ (121,490) ================================================================================ Weighted average number of common shares outstanding, basic and diluted 14,740,250 14,740,250 Loss per share, basic and diluted $ (0.01) $ (0.01) ================================================================================ See accompanying notes to consolidated financial statements. CIROND NETWORKS, INC. (A Development Stage Enterprise) Consolidated Statement of Stockholder's Deficiency and Comprehensive Loss (Expressed in United States dollars) From inception (March 7, 2001) to September 30, 2003 (Unaudited)
============================================================================================================== Deficit accumulated Total Additional during the stockholder's Common Stock paid-in development equity Shares Amount capital stage (deficiency) -------------------------------------------------------------------------------------------------------------- Shares issued for cash 14,341,667 $ 1,434 $ - $ - $ 1,434 on March 7, 2001 Comprehensive loss: Loss - - - (5,466) (5,466) -------------------------------------------------------------------------------------------------------------- Balance, December 31, 2001 14,341,667 1,434 - (5,466) (4,032) Shares issued for cash from February 12 to March 25, 2002 at $0.75 per share 398,583 40 298,898 - 298,938 Comprehensive loss: Loss - - - (498,034) (498,034) -------------------------------------------------------------------------------------------------------------- Balance, December 31, 2002 14,740,250 1,474 298,898 (503,500) (203,128) Comprehensive loss: Loss - - - (615,285) (615,285) -------------------------------------------------------------------------------------------------------------- Balance, September 30, 2003 14,740,250 $ 1,474 $ 298,898 $ (1,118,785) $ (818,413) ==============================================================================================================
See accompanying notes to consolidated financial statements. CIROND NETWORKS, INC. (A Development Stage Enterprise) Consolidated Statements of Cash Flows (Expressed in United States dollars) (Unaudited)
============================================================================================================== From inception Nine months Nine months (March 7, 2001) ended, ended to September 30, September 30, September 30, 2003 2003 2002 -------------------------------------------------------------------------------------------------------------- Cash provided by (used in): Operations: Loss $ (1,118,785) $ (615,285) $ (271,409) Item not involving cash: Amortization 15,235 8,358 2,803 Changes in non-cash working capital: Amounts receivable (8,446) (4,933) - Prepaid expenses and deposits (11,964) (11,552) (412) Accounts payable and accrued liabilities 154,590 40,069 5,392 Consulting fees payable 80,000 35,000 - Deferred revenue 3,228 3,228 - ----------------------------------------------------------------------------------------------------------- (886,142) (545,115) (263,626) Financing: Common shares issued for cash 300,372 - 300,372 Advances from related parties 495,000 495,000 - Advances from stockholder 171,576 28,421 108,024 ----------------------------------------------------------------------------------------------------------- 966,948 523,421 408,396 Investing: Expenditures on website development (19,025) - - Expenditures on property, plant and equipment (59,899) (36,559) (15,788) ----------------------------------------------------------------------------------------------------------- (78,924) (36,559) (15,788) -------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash 1,882 (58,253) 128,982 Cash, beginning of period - 60,135 - -------------------------------------------------------------------------------------------------------------- Cash, end of period $ 1,882 $ 1,882 $ 128,982 ============================================================================================================== Supplementary information: Interest paid $ - $ - $ - Income taxes paid $ - $ - $ - ==============================================================================================================
See accompanying notes to consolidated financial statements. CIROND NETWORKS, INC. (A Development Stage Enterprise) Notes to Consolidated Financial Statements (Expressed in United States dollars) Nine months ended September 30, 2003 (Unaudited) ================================================================================ 1. OPERATIONS: Cirond Networks, Inc. (the "Company") is incorporated under the laws of the State of Nevada. The Company's principle business activities include the development and marketing of solutions for wireless networking designed to enhance the usability, performance, and security of 802.11b and 802.11a (WiFi) Wireless Local Area Networks (WLAN). The Company is primarily targeting enterprises and institutional customers requiring the use of wireless networks. To September 30, 2003, the Company has not generated substantial revenues and is continuing to develop its business model. Accordingly, the Company is in the development stage for financial reporting purposes. 2. SIGNIFICANT ACCOUNTING POLICIES a) Going concern These financial statements have been prepared on the going concern basis, which assumes the realization of assets and liquidation of liabilities and commitments in the normal course of business for the foreseeable future. As shown in the consolidated financial statements, the Company has incurred a loss of $1,118,785 for the period from inception (March 7, 2001) to September 30, 2003, and has a working capital deficiency of $882,102 at September 30, 2003. These factors raise substantial doubt as to the Company's ability to continue as a going concern. The application of the going concern concept is dependent upon the Company's ability to receive continued financial support from its creditors, stockholder and external investors and attaining profitable operations through the sale of its software. These consolidated financial statements do not give effect to any adjustment should the Company be unable to continue as a going concern and, therefore, be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts differing from those reflected in the consolidated financial statements. Management plans to rely on its stockholder to obtain equity and debt financing from external investors and to actively market its wireless technology applications. Management believes the plan described above will be sufficient to meet the Company's liabilities and commitments as they become payable over the next twelve months. There can be no assurance that management's plan will be successful. Failure to obtain the support of additional external investors to finance the development and marketing of the Company's wireless technology applications will cause the Company to curtail operations and impair the Company's ability to continue as a going concern. CIROND NETWORKS, INC. (A Development Stage Enterprise) Notes to Consolidated Financial Statements (Expressed in United States dollars) Nine months ended September 30, 2003 (Unaudited) ================================================================================ 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) b) Basis of consolidation These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly-owned subsidiary Cirond Networks (Canada) Inc. All material intercompany balances and transactions have been eliminated. c) Revenue recognition In accordance with the provisions of the American Institute of Certified Public Accountant's Statement of Position 97-2 "Software Revenue Recognition", revenue from one-time software license sales is generally recognized once delivery has occurred, the fee is fixed and determined and collection of the fee is probable, provided there are no significant vendor obligations remaining. d) Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. 3. RELATED PARTY TRANSACTIONS: a) During the nine months ended September 30, 2003, the Company incurred consulting fees from a company controlled by the president totaling $90,000 (2002 - $90,000). At September 30, 2003, $70,000 (December 31, 2002 - $20,000) of these consulting fees were included in accounts payable and accrued liabilities. The amounts were not subject to a written agreement but were incurred in the normal course of operations and are recorded at the exchange amount, which is the amount established and agreed to by the related parties. CIROND NETWORKS, INC. (A Development Stage Enterprise) Notes to Consolidated Financial Statements (Expressed in United States dollars) Nine months ended September 30, 2003 (Unaudited) ================================================================================ 3. RELATED PARTY TRANSACTIONS (CONTINUED): b) During the nine months ended September 30, 2003, the Company received advances from related parties of $495,000 (refer to note 6). The related parties are shareholders of the Company's stockholder and associates of shareholders of the Company's stockholder. The advances are unsecured, do not bear interest and are not subject to a formal written agreement. On November 24, 2003, the Company issued promissory notes to the related parties for the advances. The promissory notes are unsecured, bear interest at 3% per annum commencing November 24, 2004 and are due November 24, 2006. 4. DUE TO STOCKHOLDER: Due to stockholder is unsecured, non-interest bearing and has no fixed terms of repayment. 5. COMMITMENTS: On May 1, 2003, the Company entered an operating lease for office premises that requires the following annual minimum lease payments: =========================================================================== 2003 $ 13,581 2004 $ 19,617 2005 $ 21,630 2006 $ 5,533 =========================================================================== 6. SUBSEQUENT EVENTS: a) Subsequent to September 30, 2003, the Company received additional advances from related parties of $155,000 with terms as disclosed in note 3(b). b) Effective November 25, 2003, pursuant to an amended stock exchange agreement, Cirond Corporation (formerly eXmailit.com) ("Cirond") acquired all of the issued and outstanding capital stock of the Company in exchange for 17,000,000 common shares of Cirond's common stock. In addition, pursuant to the terms of the agreement, Cirond issued 1,300,000 common shares in exchange for $650,000 of advances from related parties of the Company, $495,000 of which had been advanced as at September 30, 2003. As a result of the share exchange, the Company's former stockholder acquired control of Cirond. Accordingly, for accounting purposes, the acquisition of the Company has been accounted for using the purchase method as a recapitalization of the Company with the net tangible assets of Cirond. CIROND NETWORKS, INC. (A Development Stage Enterprise) Notes to Consolidated Financial Statements (Expressed in United States dollars) Nine months ended September 30, 2003 (Unaudited) ================================================================================ 6. SUBSEQUENT EVENTS (CONTINUED): c) In conjunction with the above share exchange, Cirond advanced bridge financing of $375,000 to the Company. The bridge financing is secured by a promissory note, which bears annual interest at 10% and is due on demand.