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AND EXCHANGE COMMISSION
FORM 6-K
CURRENT REPORT
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
FOR JUNE 30, 2004
- ----------------------------------
SHEP TECHNOLOGIES INC.
Suite 504, 595 Howe Street, Vancouver, BC, V6C 2T5 Canada
- --------------------------------------------------------------------
(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]
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):
Copy of the Interim Financial Statements, Management Discussions and Certificate of Filing for September 30, 2004 quarterly financials as filed with the Yukon Territories and BC Securities Commission is attached hereto and filed as Exhibit 99.a, 99.b and 99.c to this filing on Form 6-K
Exhibit No. Document
- -------------------------
99.a September 30, 2004 Interim Financial Statements
99.b September 30, 2004 FORM 51-102F1 Management Discussion and Analysis
99.c FORM 52-109FT2 - Certificate of Interim Filing
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 under-signed, thereunto duly authorized.
S
HEP TECHNOLOIGES INC.Malcolm P. Burke
-----------------------------------------
Name: Malcolm P. Burke
Title: President and CEO
Date: November 22, 2004
SHEP TECHNOLOGIES INC.
The following discussion and analysis, prepared as of November 10, 2004, should be read together with the unaudited consolidated financial statements for the nine-month period ended September 30, 2004 and related notes, which are prepared in conformity with accounting principles generally accepted in the United States. The financial statements have not been reviewed by an external firm of accountants. All amounts are stated in US dollars unless otherwise indicated.
The reader should also refer to the annual audited financial statements for the year ended December 31, 2003 and 2002, and the management discussion and analysis for those years.
Statements in this report that are not historical facts are forward-looking statements involving known and unknown risks and uncertainties, which could cause actual results to vary considerably from these statements. Readers are cautioned not to put undue reliance on forward-looking statements.
Additional information related to us is available for view on SEDAR, EDGAR and on our website at www.shepinc.com.
DESCRIPTION OF THE BUSINESS
On September 12, 2002, we completed the acquisition of SHEP Limited by way of reverse takeover, including SHEP Limited's subsidiaries and certain assets, and subsequently changed our name to SHEP Technologies Inc. (the "Company").
We are a development stage company with proprietary "Stored Hydraulic Energy Propulsion" intellectual property. The SHEP System is designed for wide-ranging applications in the global transportation sector. The SHEP System uses electronics, a proprietary hydraulic pump/motor and a proprietary accumulator to capture kinetic energy otherwise lost during vehicle braking. It utilizes the recovered energy for vehicle acceleration during the low-speed acceleration phase. This use of recovered and stored energy results in decreased fuel consumption and harmful emissions, added acceleration and reduced noise and maintenance costs in transportation applications. The main components of the SHEP System are:
We are currently working on a third generation prototype that could be completed in the spring of 2005 if we obtain sufficient funding. We plan to use the third generation prototype as a showcase for our technology and intend to then adapt our technology for specific applications in conjunction with industry partners.
As of the date of this report, we have substantially completed the hydro-mechanical (Ifield pump/motor, UAS and the vehicle gearbox) work for the prototype. The remaining work involves completing the ECS and integrating all of the elements into the vehicle. Pi Technology has suspended work on the ECS and integration work as we have fallen behind in our payment obligations as set out in our contract with Pi.
In the absence of funding, we expected to spend, at most, $400,000 further on product development in the current fiscal year.
We have pursued a number of financing opportunities but we have not been successful in raising money since June and we are dependent on our suppliers extending terms to us. Our ability to continue in business is jeopardized by our weak financial position and lack of funding. The only significant suppliers still providing goods or services are related parties that have been prepared to continue without any certainty as to the timing of payment.
DISCUSSION OF OPERATIONS AND FINANCIAL CONDITIONS
Our attached financial statements were prepared in conformity with accounting principles generally accepted in the United States of America. They also comply, in all material respects with accounting principles generally accepted in Canada.
We are in the development stage and have recorded limited revenues. In the past, we have obtained necessary capital through the limited issuance of our common shares, increasing indebtedness and through advances from related parties and others. There is no assurance that these sources will continue to be available to us in future operating periods.
SELECTED ANNUAL AND QUARTERLY INFORMATION
The following table provides a brief summary of the Company's financial operations. For more detailed information, refer to our financial statements.
Year Ended December 31, 2003 |
Year Ended December 31, 2002 |
Year Ended December 31, 2001 |
|
Total revenues |
$ - |
$ 30,681 |
$ 374,836 |
Net loss before extraordinary items |
3,291,730 |
1,125,506 |
413,349 |
Net loss |
3,297,730 |
1,125,506 |
413,349 |
Basic and diluted loss per share |
(0.14) |
(0.09) |
(0.10) |
Total assets |
515,581 |
496,920 |
95,791 |
Total long-term liabilities |
- |
- |
- |
Cash dividends |
- |
- |
- |
Three months ended |
Sales |
Net Loss |
Loss per Share |
September 30, 2002 |
$ - |
$ (112,333) |
$ (0.01) |
December 31, 2002 |
8,249 |
(504,367) |
(0.04) |
March 31, 2003 |
- |
(306,847) |
(0.01) |
June 30, 2003 |
- |
(1,248,073) |
(0.06) |
September 30, 2003 |
- |
(868,471) |
(0.04) |
December 31, 2003 |
- |
(868,339) |
(0.04) |
March 31, 2004 |
- |
(918,128) |
(0.04) |
June 30, 2004 |
- |
(739,452) |
(0.03) |
September 30, 2004 |
- |
(381,515) |
(0.01) |
In 2002, our activities were primarily concerned with reorganizing our affairs through the reverse takeover of Inside Holdings Inc. (the Company's former name) and related fundraising initiatives. In the second quarter of 2003, we began a product development program with Pi Technology, a UK-based automotive engineering specialist, with a commensurate increase in our operating costs. Pi continued to develop our technology through June 2004, when it suspended work.
In May 2004, we signed a letter of intent to acquire Marshalsea Hydraulics Ltd. ("Marshalsea") and subsequently we agreed to extend the closing date of this transaction. We have been unable to arrange the financing required to complete the acquisition of Marshalsea and accordingly have let the letter of intent lapse. We are seeking alternative ways of combining our technology with Marshalsea's operations and hydraulics expertise. One option that we are considering is that Marshalsea or another party will obtain financing and fund development of the SHEP technology through one of our subsidiaries, although we have not entered into any formal arrangements. If we were to enter into an arrangement to fund development of our technology through a subsidiary, it would dilute our interest in the SHEP technology, while alleviating the immediate need to fund the business through the public company.
OPERATING RESULTS
Comparison of the three and nine months ended September 30, 2004 compared to the three and nine months ended September 30, 2003 (all amounts rounded to the nearest thousand dollars):
SALES. Sales represent revenue generated from the sale of prototype units. We did not generate any revenue during either the nine months ended September 30, 2004 or September 30, 2003. In fiscal 2001 we generated sales to a customer, but the customer's program completed early in fiscal 2002. Since then we have been focusing on developing a third generation prototype which could be completed in the spring of 2005, if we can obtain financing.
COST OF GOODS SOLD. Our cost of goods sold represents the cost of direct labour and materials consumed to earn sales revenue. Since we did not have any sales in the current period or the comparative period we did not incur any cost of goods sold.
RESEARCH AND DEVELOPMENT. Research and development expense represents contract fees paid to develop our technology. The bulk of our research and development expenditures were made with Pi Technology, a UK-based company that specializes in the design and development of electronics and software for the volume automotive and automotive-related markets. We have been unable to follow the required payment schedule with Pi, which has suspended development work until we can work out a new arrangement.
We incurred research and development expense with related parties of $nil and $683,000 for the three and nine months ended September 30, 2004 respectively, and $280,000 and $401,000 in the three and nine months ended September 30, 2003, respectively. The expense reflects a reinstatement of our research and development activities in the second quarter of 2003 and the subsequent suspension of development activities by Pi. If we are successful in reaching new terms with Pi and raise the necessary funding, we expect that our current development initiatives will extend into the spring of 2005.
In the three and nine months ended September 30, 2004, we also incurred $118,000 and $161,000 respectively in development-related purchases from Marshalsea Hydraulics Ltd., a company owned by certain insiders. These expenditures related to production of four UAS units and related parts for our prototype program.
SELLING, GENERAL AND ADMINISTRATIVE. Selling general and administrative expenses reflect the general expenses required to maintain our operations. The most significant categories comprise management, consulting and professional fees. We have historically relied on the efforts of consultants and contractors and this is likely to continue until we are able to demonstrate sufficient funds to complete development and commercialization of our technology.
We incurred selling, general and administrative expenses with unrelated parties of $128,000 in the three months ended September 30, 2004 compared to $297,000 in the comparative quarter ended September 30, 2004. The decrease was attributable to a concerted effort to contain all our costs and, in particular, to decrease the role of consultants and instead relying more on the efforts of the Company's officers. Our selling, general and administrative expenses included $12,500 in fees associated with prospective financings that did not complete. Our selling, general and administrative expenses incurred with unrelated parties decreased to $631,000 for the nine months ended September 30, 2004 from $796,000 for the comparative period.
We incurred selling, general and administrative expenses with related parties of $127,000 in the three months ended September 30, 2004, compared to $180,000 in the comparative period. The decrease reflects revised compensation terms with our directors and officers, as discussed in further detail below. Selling, general and administrative expense incurred with related parties decreased from $1,077,000 in the nine months ended September 30, 2003 to $424,000 in the nine months ended September 30, 2004. The high level of expenses in the prior period was primarily due to a charge from the cashless exercise of stock options which accounted for $648,000 of the expense. Setting aside this stock option charge, the nine-month expense decreased from $429,000 to $424,000.
DEPRECIATION. We record depreciation on our capital assets. Depreciation expense was $7,000 and $23,000 for the three and nine months ended September 30, 2004 compared to $109,000 and $144,000 for the comparative periods.
INTEREST INCOME. We did not earn any interest income in the three months ended September 30, 2004 but earned interest income of $2,000 in the nine months ended September 30, 2003, from funds held in trust.
INTEREST EXPENSE. Interest expense represents borrowing costs on notes payable and also a deemed interest component on certain convertible debentures. We expect that our interest costs associated with notes payable will not increase significantly but that we may continue to raise funds through the use of convertible debentures, which could result in significant interest charges.
We incurred interest expense of $2,000 in the three months ended September 30, 2004, essentially unchanged from the comparative period. Our interest expense for the nine months ended September 30, 2004 was $121,000 compared to $6,000 for the comparative period in 2003. In the first quarter of this year, we incurred interest expense of about $115,000 on a convertible debenture that we issued in February 2004. The face value of the interest applicable to the debenture was $4,000, however, United States generally accepted accounting principles require that issue costs and the value associated with certain warrants and conversion privileges be allocated between interest expense and share issue costs. The interest component of these costs was $111,000 while we recorded share issue costs of $297,000 as an offset against additional paid-in capital.
TRANSACTIONS WITH RELATED PARTIES
Transactions with related parties are disclosed in Notes 7 and 8 of our financial statements. A number of our officers and directors charge the Company for their services through management or consulting companies. These are considered related party transactions whereas payments made directly to such persons are not, according to United States general accepted accounting principles. In the current or comparative periods, we paid fees to Balco Holdings Inc. and Bravo Alpha Enterprises in respect of corporate administration. Amounts paid to Primary Venture Corp. and SOPO Investments were in respect of the services of our CEO and office rent. We paid Ifield Technologies on account of engineering services. Amounts paid to Marshalsea Hydraulics Ltd. were in respect of rent and administration, engineering and management services. We paid MCSI Consulting Services Inc. in respect of the services of our CFO and corporate finance services provided by personnel of MCSI.
We believe that amounts to be paid in the future subject to the following comments will be less than amounts paid in the quarter as the reduced level of activity and director resignations have resulted in lower contractual obligations. Monthly amounts expended on fees to related parties were typically $60,000 in the first and second quarters of this year and we expect that this will decrease to about $40,000 in the fourth quarter.
MATERIAL CONTRACTS
In our last quarterly report, we described the principal terms of our letter of intent with
Marshalsea Hydraulics Ltd. In October 2004, the letter of intent lapsed as we could not raise sufficient funds to complete the acquisition. In the letter of intent, we had agreed, subject to certain conditions, to issue 500,000 shares of stock (valued at approximately $135,000 at the time) as a deposit. The conditions required to issue this stock were never satisfied and the stock was never issued.
Although not explicitly acknowledged in writing, we have reached an agreement with a number of insiders to amend their contract terms so as to reduce our financial commitments until we have sufficient funding:
CONTINGENT LIABILITIES AND COMMITMENTS
We did not have any contingent liabilities at September 30, 2004. We are, however, committed to Pi Technology pursuant to a development contract for a total amount of approximately $1.5 million.
INVESTOR RELATIONS
In 2003, we engaged PacWest Group to undertake investor relations, internet marketing and manage SHEP's investor database at a cost of C$5,000 per month. Effective April 2004, the Company retained Pacific Communications Group to develop and implement a communication plan focused on potential customers and investors. The engagement is for a period of one year with a monthly fee of $10,000.
During the period, officers of the Company have also communicated directly with shareholders, prospective shareholders and financiers.
DEFAULT UNDER DEBT OR OTHER CONTRACTUAL OBLIGATIONS
We have two loans payable, one for $60,000 and one for $40,000. The $60,000 loan bears interest at 8% per annum, is unsecured and was due on the earlier of January 31, 2004 or on the date we received debt or equity financing of at least $1,000,000. It is now past January 31, 2004 and we have raised equity financing of at least $1,000,000 and so the loan is due, but we have not yet made payment. The lender has not demanded repayment of the $60,000 loan.
The lender for the $40,000 loan has not executed final loan documents. We have accrued interest based on the draft loan agreement that provides for terms that are the same as for the $60,000 loan. Similarly, while we believe that the loan is due, we have not repaid the principal and accrued interest. The lender has not demanded repayment of the $40,000 loan.
Based on the terms of the $60,000 loan and the assumed terms of the $40,000 loan, both of these amounts are currently due and payable and are accordingly included in current liabilities.
LIQUIDITY AND SOLVENCY
As at September 30, 2004, our total cash was $10,000, our working capital deficiency was $1,731,000, and our stockholders' deficiency was $1,690,000. Since inception, we have incurred cumulative losses of $7,193,000.
Our Company is in the development stage and expects to remain in the development stage for the foreseeable future including the current operating year. We do not expect to generate cash flow from operations in the present year.
Our current working capital is not sufficient to meet our business operating objectives. Our ability to satisfy projected working capital requirements is entirely dependent upon our ability to secure additional funding through public or private sales of securities, including equity securities and by debt. There is no assurance that we will be able to secure the necessary capital on terms acceptable to us or at all.
We have been actively seeking new investment to further operations. Earlier this year, we received $135,000 in share subscriptions which is currently disclosed as debt although we expect to convert this amount to equity. In the first quarter of 2004, we completed a convertible debt financing for gross proceeds of $500,000, which netted $435,000. In the comparative period, we generated of $2,138,000, primarily through private equity placements.
We have planned capital expenditures, including the completion of our Jaguar-based prototype platform vehicle, for the next 12 months amounting to $2,500,000. At this time we are continuing discussions with a number of potential sources of funding for this and for other operating requirements, although there currently exist no agreements, commitments or understandings with respect to any financing.
In the three months ended September 30, 2004, our operations consumed $38,000 of cash. Our net loss of $382,000 was partially offset by depreciation expense of $7,000 that did not consume cash in the current period. We generated $337,000 of cash from working capital, primarily through the increase of accounts payable. In the three months ended September 30, 2003, our operations consumed $557,000 of cash.
We did not have any cash flows from investing activities in the three month ended September 30, 2004 or 2003.
In the three months ended September 30, 2004, we did not generate any cash from financing activities, while in the comparative quarter we generated $792,000 from financing activities.
Our Company has been funded primarily by the issuance of equity and, to a lesser extent, by suppliers and short-term debt instruments denominated in US dollars. Our Company generally keeps cash on hand in US dollars but we expect increasingly to move our holdings to Pounds Sterling as the UK operations become more firmly established. Our Company does not currently hold financial instruments for hedging purposes, but we may do so in the future to manage currency risk associated with funding our UK operations.
Our ability to fund our ongoing obligations as they become due is dependent on our capacity for raising financing. From time to time our liquidity is severely compromised and the expensive nature of our monthly obligations means that investors should be aware that there is considerable risk associated with our ability to maintain or improve our financial position.
Form 52-109FT2 - Certification of Interim Filings during Transition Period
We, Malcolm P. Burke, Chief Executive Officer and Simon J. Anderson, Chief Financial Officer of SHEP Technologies Inc. (the "Issuer"), certify that:
1. We have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings) of SHEP Technologies Inc., for the interim period ending September 30, 2004;
2. Based on our knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings; and
3. Based on our knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer, as of the date and for the periods presented in the interim filings.
Date: November 15, 2004
Malcolm P. Burke |
Simon J. Anderson _______________________ Simon J. Anderson Chief Financial Officer |
SHEP TECHNOLOGIES INC.
_________________________________________________________________________________________________________________________________
NOTICE TO READER
Our auditors, Davidson & Company Chartered Accountants, have not reviewed these unaudited consolidated financial statements for the third financial quarter ended September 30, 2004. They have been prepared by SHEP Technologies Inc.'s management in conformity with accounting principles generally accepted in the United States, consistent with previous quarters and years. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2003.
Page 2
_________________________________________________________________________________________________________________________________
SHEP TECHNOLOGIES INC.
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in United States Dollars)
As at September 30, 2004
(Unaudited, Prepared by Management)
|
December 31, 2003 |
||
ASSETS |
|||
Current |
|||
Cash and cash equivalents |
$ 10,422 |
$ 60,246 |
|
Other amounts receivable, net of allowance of $Nil (2003 - $Nil) |
52,365 |
30,820 |
|
Inventory |
81,365 |
101,897 |
|
Prepaid expenses |
331 |
110,800 |
|
Total current assets |
144,483 |
303,763 |
|
Funds held in trust |
- |
151,122 |
|
Equipment (note 4) |
40,571 |
60,696 |
|
Total assets |
$ 185,054 |
$ 515,581 |
|
LIABILITIES AND STOCKHOLDERS' DEFICIENCY |
|||
Current liabilities |
|||
Accounts payable and accrued liabilities |
$ 875,863 |
$ 742,963 |
|
Accounts payable and accrued liabilities - related parties (note 7, 8) |
764,346 |
111,048 |
|
Loans payable (note 5) |
235,000 |
100,000 |
|
Total current liabilities |
1,875,209 |
954,011 |
|
Stockholders' equity (deficiency) |
|||
Capital stock (note 6) |
|||
Authorized |
|||
100,000,000 common shares, without par value |
|||
Issued |
|||
2 26,255,571 common shares (2003 - 24,768,956) |
26,256 |
24,769 |
|
Additional paid-in capital |
5,482,508 |
4,735,828 |
|
Cumulative translation adjustment |
(5,479) |
(44,682) |
|
Deficit accumulated during the development stage |
(7,193,440) |
(5,154,345) |
|
Total stockholders' deficiency |
(1,690,155) |
(438,430) |
|
Total liabilities and stockholders' deficiency |
$ 185,054 |
$ 515,581 |
On behalf of the Board: Director |
Director |
The accompanying notes are an integral part of these consolidated financial statements.
SHEP TECHNOLOGIES INC.
|
|
|
|||
September 30, |
September 30, |
September 30, |
September 30, |
||
Sales |
$ 405,517 |
$ - |
$ - |
$ - |
$ - |
Cost of goods sold |
185,093 |
- |
- |
- |
- |
Gross profit |
220,424 |
- |
- |
- |
- |
Expenses |
|||||
Research and development |
1,729,689 |
- |
280,316 |
682,611 |
400,609 |
Research and development - related parties |
|
|
|
|
|
Selling, general and administrative - (note 9) |
2,784,661 |
127,582 |
296,906 |
630,773 |
795,877 |
Selling, general & administrative - related |
|
|
|
|
|
Depreciation |
102,755 |
6,841 |
109,421 |
23,097 |
144,158 |
Intangible impairment loss |
87,124 |
- |
- |
- |
- |
7,291,729 |
379,562 |
866,473 |
1,921,556 |
2,417,753 |
|
Loss from operations |
(7,071,305) |
(379,562) |
(866,473) |
(1,921,556) |
(2,417,753) |
|
|||||
Gain on wind-up of subsidiary |
1,472 |
- |
- |
1,472 |
- |
Interest income |
4,878 |
- |
2 |
1,772 |
211 |
Interest expense |
(128,485) |
(1,953) |
(2,000) |
(120,783) |
(5,850) |
(122,135) |
(1,953) |
(1,998) |
(117,539) |
(5,639) |
|
Loss for the period |
(7,193,440) |
(381,515) |
(868,471) |
(2,039,095) |
(2,423,392) |
Other comprehensive income (loss) |
|||||
Foreign currency translation adjustment |
(5,479) |
3,335 |
(24,036) |
39,203 |
1,244 |
Comprehensive loss for the period |
$ (7,198,919) |
$ (378,180) |
$ (892,507) |
$ (1,999,892) |
$ 2,422,148) |
Basic and diluted loss per share |
$ (0.01) |
$ (0.04) |
$ (0.08) |
$ (0.11) |
|
Weighted average number of shares of |
26,255,571 |
24,351,899 |
25,682,747 |
22,948,518 |
The accompanying notes are an integral part of these consolidated financial statements.
Page 4
_________________________________________________________________________________________________________________________________
SHEP TECHNOLOGIES INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficiency)
(Expressed in United States Dollars)
Common Stock |
Additional Paid-in Capital |
Cumulative Translation Adjustment |
Deficit Accumulated During the Development Stage |
Total |
||
Number of Shares |
Amount |
|||||
Balance, January 6, 2000 (date of inception) |
- |
$ - |
$ - |
$ - |
$ - |
$ - |
Common stock issued in January 2000 for cash at $0.1309 per share |
4,000,000 |
4,000 |
519,532 |
- |
- |
523,532 |
Loss for the period |
- |
- |
- |
- |
(323,760) |
(323,760) |
Balance, December 31, 2000 |
4,000,000 |
4,000 |
519,532 |
- |
(323,760) |
199,772 |
Cumulative translation adjustment |
- |
- |
- |
(5,618) |
- |
(5,618) |
Loss for the year |
- |
- |
- |
- |
(413,349) |
(413,349) |
Balance, December 31, 2001 |
4,000,000 |
4,000 |
519,532 |
(5,618) |
(737,109) |
(219,195) |
Assumption of liabilities on acquisition of subsidiary |
- |
- |
(325,267) |
- |
- |
(325,267) |
Forgiveness of debt |
- |
- |
166,177 |
- |
- |
166,177 |
Common stock issued in August 2002 for settlement of debts at $0.0764 per share |
6,600,000 |
6,600 |
497,691 |
- |
- |
504,291 |
Common stock issued in September 2002 on recapitalization |
9,747,948 |
9,748 |
(131,983) |
- |
- |
(122,235) |
Common stock issued in October 2002 at a price of $0.75 per share |
1,289,332 |
1,289 |
965,711 |
- |
- |
967,000 |
Issuance of stock options for consulting fees |
- |
- |
86,000 |
- |
- |
86,000 |
Cumulative translation adjustment |
- |
- |
- |
(28,125) |
- |
(28,125) |
Loss for the year |
- |
- |
- |
- |
(1,125,506) |
(1,125,506) |
Balance, December 31, 2002 |
21,637,280 |
$ 21,637 |
$ 1,777,861 |
$ (33,743) |
$ (1,862,615) |
$ (96,860) |
- Continued -
The accompanying notes are an integral part of these consolidated financial statements.
SHEP TECHNOLOGIES INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficiency)
(Expressed in United States Dollars)
Common Stock |
Additional Paid-in Capital |
Cumulative Translation Adjustment |
Deficit Accumulated During the Development Stage |
Total |
||
Number of Shares |
Amount |
|||||
Balance, December 31, 2002 |
21,637,280 |
$ 21,637 |
$ 1,777,861 |
$ (33,743) |
$ (1,862,615) |
$ (96,860) |
Common stock issued in February 2003 for cash at $0.75 per share |
245,667 |
246 |
170,187 |
- |
- |
170,433 |
Common stock issued in April 2003 for cash at $0.85 per share |
588,235 |
588 |
434,412 |
- |
- |
435,000 |
Common stock issued in May 2003 for cash at $0.57 per share |
438,597 |
439 |
217,061 |
- |
- |
217,500 |
Common stock issued in June 2003 as consideration for consulting services at $0.69 per share |
50,000 |
50 |
34,450 |
- |
- |
34,500 |
Common stock issued in June 2003 for cash at $0.57 per share |
614,036 |
614 |
304,386 |
- |
- |
305,000 |
Common stock issued in June 2003 on the exercise of warrants at $1.25 per share |
133,333 |
133 |
166,533 |
- |
- |
166,666 |
Cashless exercise of stock options in June 2003 |
227,193 |
227 |
647,273 |
- |
- |
647,500 |
Common stock issued in July 2003 for cash at $1.30 per share |
384,615 |
385 |
437,115 |
- |
- |
437,500 |
Common stock issued in September 2003 for cash at $1.00 per share |
400,000 |
400 |
354,600 |
- |
- |
355,000 |
Common stock issued in December 2003 for settlement of debt at $0.60 per share |
50,000 |
50 |
29,950 |
- |
- |
30,000 |
Issuance of stock options for consulting fees |
- |
- |
162,000 |
- |
- |
162,000 |
Cumulative translation adjustment |
- |
- |
- |
(10,939) |
- |
(10,939) |
Loss for the year |
- |
- |
- |
- |
(3,291,730) |
(3,291,730) |
Balance, December 31, 2003 |
24,768,956 |
$ 24,769 |
$ 4,735,828 |
$ (44,682) |
$ (5,154,345) |
$ (438,430) |
- Continued -
The accompanying notes are an integral part of these consolidated financial statements.
SHEP TECHNOLOGIES INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficiency)
(Expressed in United States Dollars)
(Unaudited, Prepared by Management)
Common Stock |
Additional Paid-in Capital |
Cumulative Translation Adjustment |
Deficit Accumulated During the Development Stage |
Total |
||
Number of Shares |
Amount |
|||||
Balance, December 31, 2003 |
24,768,956 |
$ 24,769 |
$ 4,735,828 |
$ (44,682) |
$ (5,154,345) |
$ (438,430) |
Issuance of 500,000 financing warrants in February 2004 |
- |
- |
142,000 |
- |
- |
142,000 |
Issuance of 100,000 finder's fee warrants in February 2004 |
- |
- |
39,800 |
- |
- |
39,800 |
Value attributable to the conversion feature of a convertible debenture issued in February 2004 |
- |
- |
164,000 |
- |
- |
164,000 |
Issuance of common stock on conversion of the convertible debenture in March 2004 at $0.41 per share |
1,221,615 |
1,222 |
202,895 |
- |
- |
204,117 |
Issuance of stock options for consulting fees |
- |
- |
132,000 |
- |
- |
132,000 |
Common stock issued in June 2004 for settlement of debt at $0.25 per share |
240,000 |
240 |
59,760 |
- |
- |
60,000 |
Common stock issued in June 2004 for legal services at $0.25 per share |
25,000 |
25 |
6,225 |
- |
- |
6,250 |
Cumulative translation adjustment |
- |
- |
- |
39,203 |
- |
39,203 |
Loss for the period |
- |
- |
- |
- |
(2,039,095) |
(2,039,095) |
Balance, September 30, 2004 |
26,255,571 |
$ 26,256 |
$ 5,482,508 |
$ (5,479) |
$ (7,193,440) |
$ (1,690,155) |
The accompanying notes are an integral part of these consolidated financial statements.
Page 7
_________________________________________________________________________________________________________________________________
SHEP TECHNOLOGIES INC.
Cumulative |
|
|
|||
|
To |
September 30, |
September 30, |
September 30, |
September 30, |
CASH FLOWS FROM OPERATING ACTIVITIES |
|||||
Loss for the period |
$ (7,193,440) |
$ (381,515) |
$ (868,471) |
$ (2,039,095) |
$ (2,423,392) |
Adjustment to reconcile loss to net cash used in |
|||||
Depreciation |
102,755 |
6,841 |
109,421 |
23,097 |
144,158 |
Gain on wind-up of subsidiary |
(1,943) |
- |
- |
(1,943) |
- |
Intangible impairment loss |
87,124 |
- |
- |
- |
- |
Inventory valuation adjustment |
85,383 |
- |
- |
- |
- |
Cashless exercise of stock options |
647,500 |
- |
- |
- |
- |
Consulting fees paid by issuance of stock |
380,000 |
- |
- |
132,000 |
- |
Expenses paid by issuance of common stock |
40,750 |
- |
- |
6,250 |
- |
Interest paid by issuance of common stock |
114,917 |
- |
- |
114,917 |
- |
Stock-based compensation |
- |
- |
80,000 |
- |
794,000 |
Changes in non-cash working capital items: |
|||||
Increase in GST and VAT recoverable |
- |
- |
(16,059) |
- |
(16,407) |
(Increase) decrease in other amounts |
(49,997) |
(19,088) |
- |
(21,617) |
- |
Decrease (increase) in inventory |
(149,598) |
- |
(93) |
22,042 |
13,247 |
Decrease (increase) in prepaid expenses |
8,144 |
5,188 |
(43,852) |
113,085 |
(51,836) |
Increase (decrease) in accounts payable and |
|
|
|
|
|
Net cash used in operating activities |
(4,419,766) |
(37,692) |
(557,481) |
(798,378) |
(1,425,501) |
CASH FLOWS FROM INVESTING ACTIVITIES |
|||||
Funds held in trust |
- |
- |
(141,636) |
151,122 |
(141,636) |
Acquisition of capital assets |
(122,954) |
- |
- |
(1,927) |
- |
Acquisition of patents and designs |
(80,321) |
- |
- |
- |
- |
Net cash used in investing activities |
(203,275) |
- |
(141,636) |
149,195 |
(141,636) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|||||
Capital stock issued for cash |
2,660,631 |
- |
792,500 |
- |
2,098,416 |
Net proceeds on issuance of debt |
435,000 |
- |
- |
435,000 |
- |
Cash acquired on recapitalization and acquisitions |
- |
- |
- |
- |
|
Advances received from the Company prior to |
|
|
|
|
|
Loans payable |
235,000 |
- |
- |
135,000 |
- |
Amounts received from related parties |
494,900 |
- |
- |
- |
- |
Cash acquired on recapitalization and acquisition |
382,586 |
- |
|||
Net cash provided by financing activities |
4,660,556 |
- |
792,500 |
570,000 |
2,098,416 |
Effect of exchange rate changes on cash |
(27,093) |
(226) |
(27,992) |
29,370 |
(270) |
Change in cash and cash equivalents |
|
|
|
|
|
Cash and equivalents, beginning of period |
- |
48,340 |
510,411 |
60,246 |
4,253 |
Cash and cash equivalents, end of period |
$ 10,422 |
$ 10,422 |
$ 575,802 |
$ 10,422 |
$ 575,802 |
Cash paid during the period for: |
|||||
Interest expense |
$ - |
$ - |
$ - |
$ - |
$ - |
Income taxes |
$ - |
$ - |
$ - |
$ - |
$ - |
Supplemental disclosure with respect to cash flows (note 11)
The accompanying notes are an integral part of these consolidated financial statements.
SHEP TECHNOLOGIES INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
For the Period Ended September 30, 2004
(Unaudited, Prepared by Management)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements do not include all information and footnote disclosures required for an annual set of financial statements under accounting principles generally accepted in the United States. In the opinion of management, all adjustments (consisting solely of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows as at September 30, 2004 and for all periods presented, have been included. Interim results for the nine-month period ended September 30, 2004 are not necessarily indicative of the results that may be expected for the fiscal year as a whole.
The unaudited consolidated balance sheets, statements of operations and statements of cash flows include the accounts of the Company and its direct and indirect wholly-owned subsidiaries: SHEP Limited, an Isle of Man corporation; SHEP Technology, Inc., a Maine corporation; SHEP Technologies (UK) Limited, an England and Wales corporation; and SHEP Technologies, Inc., a Delaware corporation. These financial statements have been prepared in conformity with United States generally accepted accounting principles for interim financial information. The accounting principles used in these financial statements are those used in the preparation of the Company's audited financial statements for the year ended December 31, 2003.
These financial statements should be read in conjunction with the audited annual financial statements and related notes, as included in the Company's annual report for the fiscal year ended December 31, 2003. These consolidated financial statements also comply, in all material respects, with Canadian generally accepted accounting principles with respect to recognition, measurement and presentation.
Comparative figures have been reclassified where applicable to conform with the presentation used in the current period.
2. Going Concern
These consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America with the on-going assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation. However, certain conditions noted below currently exist which raise substantial doubt about the Company's ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
The operations of the Company have been primarily funded by the issuance of capital stock and debt. Continued operations of the Company are dependent on the Company's ability to complete additional equity and debt financings. Management's plan in this regard is to secure additional funds through future equity financings. Such financings may not be available or may not be available on reasonable terms.
Page 9
_________________________________________________________________________________________________________________________________
|
September 30, |
December 31, |
|
|
|
Deficit accumulated during the development stage |
$(7,193,440) |
$(5,154,345) |
Working capital (deficiency) |
(1,730,726) |
(650,248) |
3. Stock-based compensation
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value.
The Company has chosen to account for stock-based compensation for employees, directors and officers using Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). Accordingly, compensation cost for relevant stock options issued in the period is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee is required to pay for the stock.
The Company accounts for stock-based compensation issued to non-employees in accordance with the provisions of SFAS 123 and the consensus in Emerging Issues Task Force No. 96-18, "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services".
The following table illustrates the effect on loss and loss per common share if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based compensation for employee, directors and officers.
From |
|
|
|||
|
September 30, |
2004 |
2003 |
2004 |
2003 |
Loss, as reported |
$ (7,193,440) |
$ (381,515) |
$ (868,471) |
$ (2,039,095) |
$ (2,423,392) |
Add: |
|
|
|
|
|
Total stock-based employee compensation expense included in loss, as reported determined under APB 25, net of related tax effects |
|
|
|
|
|
Deduct: |
|
|
|
|
|
Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |
|
|
|
|
|
|
|
|
|
|
|
Pro-forma loss |
$ (8,125,440) |
$ (391,515) |
$ (833,471) |
$ (2,097,095) |
$ (1,723,892) |
|
|
|
|
|
|
Loss per common share, basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
Pro forma loss per common share, basic and diluted |
|
|
|
|
|
4. Equipment
|
|
|
|
|
|
|
|
|
|
Accumulated |
Net |
|
|
Accumulated |
Net |
Plant and equipment |
$ 146,653 |
$ 106,082 |
$ 40,571 |
$ 147,887 |
$ 87,191 |
$ 60,696 |
5. Loans Payable
September 30, |
December 31, |
|
Loan bearing interest at 8% per year, unsecured and due on the earlier of January 31, 2004 or on the date the Company received debt or equity financing of at least $1,000,000. |
|
|
Loan for which the lender has not executed final documents. The Company has accrued interest based on a draft loan agreement that provides for terms that are the same as for the $60,000 loan. |
|
|
Amounts received by the Company that are expected to be converted to equity. The amounts do not bear interest and have no specific terms of repayment. |
|
|
$ 235,000 |
$ 100,000 |
6. Capital Stock
Common stock
The common stock of the Company is all of the same class, is voting and entitles stockholders to receive dividends. In the event of liquidation, dissolution or winding up, the common stockholders are entitled to receive equal distributions of net assets or any dividends that may be declared.
In February 2004, the Company completed a convertible debenture financing and received gross proceeds of $500,000. The convertible debenture bore interest at 6% per year and could be converted to the Company's common stock at a 25% discount to market price, with a minimum conversion price of $0.30 per share of common stock and a maximum conversion price of $1.00 per share of common stock. As part of this financing, the Company also issued warrants to purchase 500,000 shares of common stock at $1.00 per share on or before February 12, 2006. The Company incurred $65,000 in share issuance costs associated with the offering and issued warrants to purchase 100,000 shares of common stock at $1.00 per share on or before February 12, 2006 as a finder's fee. The value of the 100,000 finder's fee warrants, calculated using the Black-Scholes method, was $39,800; the value of the 500,000 financing warrants, calculated using the Black-Scholes method, was $142,000; and the value associated with the bene ficial conversion feature was $164,000. The aggregate cost associated with the financing was $410,800.
On March 29, 2004, the holder of the debenture elected to convert the debenture, resulting in the issuance of 1,212,121 shares of common stock and an interest charge of $3,917 which was paid through the issuance of a further 9,494 shares of common stock. Of the $410,800 in total financing cost, $111,000 was allocated to interest expense and the balance applied to accumulated paid-in capital as a stock issuance cost.
On June 30, 2004, the Company issued 240,000 shares of stock at $0.25 per share and warrants to purchase up to 240,000 shares of common stock at a price of $0.50 per share on or before June 30, 2006. The stock and warrants were issued to settle $60,000 of accounts payable to companies owned by certain directors and officers of the Company.
On June 30, 2004, the Company issued 25,000 shares of stock at $0.25 per share in respect of legal services.
As discussed below, the Company entered into a letter of intent to acquire Marshalsea Hydraulics Ltd., a company in which two officers (one of which is also a director) own an interest. The letter of intent, as amended, could have resulted in the issuance of 500,000 shares of common stock to the shareholders of Marshalsea Hydraulics Ltd. as a deposit against the purchase of that company. The conditions precedent for the issuance of the shares were not met and the stock was not issued.
Warrants
A summary of share purchase warrant activity during nine months ended September 30, 2004 and 2003 follows:
2004 |
2003 |
|||
Number of Warrants |
Weighted Average Exercise Price |
Number of Warrants |
Weighted Average Exercise Price |
|
Warrants outstanding, beginning of the period |
1,846,907 |
$ 1.28 |
511,333 |
$ 1.25 |
Issued |
840,000 |
0.86 |
943,269 |
1.25 |
Exercised |
- |
- |
- |
- |
Expired |
(1,320,590) |
1.29 |
- |
- |
Warrants outstanding, end of the period |
1,366,317 |
$ 1.01 |
1,454,602 |
$ 1.25 |
A summary of share purchase warrants outstanding at September 30, 2004 follows:
Exercise |
Number |
Expiration |
$1.25 |
219,299 |
May 23, 2005 |
$1.25 |
307,018 |
June 11, 2005 |
$1.00 |
600,000 |
February 12, 2006 |
$0.50 |
240,000 |
June 30, 2006 |
1,366,317 |
Stock Options
On October 8, 2002, the Company adopted a stock incentive plan (the "2002 Stock Plan") to provide incentives to employees, directors and consultants. At the Company's annual general meeting, held November 22, 2002, the Company's shareholders approved the 2002 Stock Plan which provides for the issuance of up to 2,200,000 options of common stock with the maximum term of ten years. At the Company's annual general meeting held June 29, 2004, the Company's shareholders approved an increase of the total authorization under the 2002 Stock Plan from 2,200,000 to 5,000,000 shares. The board of directors has the exclusive power over the granting of options and their vesting provisions.
As of September 30, 2004, the Company had granted 1,975,000 options to employees, directors, officers and consultants of which 1,075,000 are still outstanding. The options have six-year terms and vest in varying amounts at the discretion of the board of directors. After taking account of the proposed increase in the total authorization under the 2002 Stock Plan, the directors may award rights that could result in the issuance of a further 3,575,000 shares of capital stock. The fair value of options granted to consultants and non-directors of the Company recognized during the three and nine months ended September 30, 2004 was $nil and $132,000 respectively, which amounts have been recorded as consulting fees in the period.
On June 24, 2003, an officer and director of the Company exercised his 350,000 vested stock options in a cashless exercise. The stock was trading at a price of $2.85 per share, and his exercise price was $1.00 per share, resulting in an issuance of 227,193 shares and stock-based compensation expense of $647,500.
A summary of the 2002 Stock Plan activity during the nine months ended September 30, 2004, with comparative figures for 2003, is as follows:
|
2004 |
|
2003 |
||
|
|
Weighted |
|
|
Weighted |
Options outstanding at January 1 |
1,525,000 |
1.00 |
1,000,000 |
$ 1.00 |
|
Granted |
100,000 |
0.75 |
875,000 |
1.00 |
|
Exercised |
- |
(350,000) |
1.00 |
||
Forfeited |
(550,000) |
1.00 |
- |
- |
|
Options outstanding at September 30 |
1,075,000 |
0.98 |
1,525,000 |
$ 1.00 |
|
Options exercisable at September 30 |
1,075,000 |
0.98 |
816,666 |
$ 1.00 |
A summary of stock options outstanding at September 30, 2004 is as follows:
|
Outstanding Options |
|
Exercisable Options |
|||
|
|
Weighted |
|
|
|
|
$0.75 |
100,000 |
5.4 years |
$ 0.75 |
|
100,000 |
$ 0.75 |
$1.00 |
975,000 |
4.4 years |
$ 1.00 |
|
975,000 |
$ 1.00 |
The Company uses the Black-Scholes option-pricing model to compute estimated fair value. The assumptions employed to quantify the fair value of options granted in the current fiscal year are:
Risk-free interest rate |
4.9% |
Dividend yield rate |
- % |
Price volatility |
116% |
Weighted average expected life of options |
6 years |
7. Related Party Transactions
The Company's consolidated results of operations include paid or accrued expenses, to companies with which related parties have an interest, as summarized below:
For the nine months ended September 30, 2004: |
||||
Fees |
Material Purchases |
Rent |
Total |
|
Balco Holdings Inc. |
$ 31,530 |
$ - |
$ - |
$ 31,530 |
Bravo Alpha Enterprises |
339 |
- |
339 |
|
Marshalsea Hydraulics Ltd. |
156,194 |
160,726 |
- |
316,920 |
MCSI Consulting Services Inc. |
133,565 |
- |
- |
133,565 |
Primary Ventures Corp. |
83,000 |
- |
19,721 |
102,721 |
Total |
$ 404,628 |
$ 160,726 |
$ 19,721 |
$ 585,075 |
For the nine months ended September 30, 2003: |
|||
Fees |
Rent |
Total |
|
Balco Holdings Inc. |
$ 25,450 |
$ - |
$ 25,450 |
Ifield Technologies |
104,550 |
- |
104,550 |
Marshalsea Hydraulics Ltd. |
67,500 |
- |
67,500 |
MCSI Consulting Services Inc. |
136,088 |
- |
136,088 |
Primary Ventures Corp. |
51,750 |
22,535 |
74,285 |
SOPO Investments |
22,500 |
- |
22,500 |
Total |
$ 407,838 |
$ 22,535 |
$ 430,373 |
Fees include management and consulting fees.
In May 2004, the Company signed a letter of intent to acquire the issued shares of Marshalsea Hydraulics Ltd. for cash consideration of GBP1,300,000 (approximately $2,400,000). The terms of the purchase were amended but, on October 15, 2004, the letter of intent lapsed. There are no plans to recommence purchase discussions.
In June 2004, the Company settled certain amounts due to companies owned by certain directors and shareholders of the Company, as described in note 6.
Except for the proposed purchase of Marshalsea Hydraulics Ltd., these transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
8. Accounts payable - related parties, as at September 30, 2004:
|
September 30, |
December 31, |
Balco Holdings Inc. |
$ 30,423 |
$ 3,799 |
Bravo Alpha Enterprises |
353 |
- |
Ifield Technology Ltd. |
102,012 |
34,788 |
Marshalsea Hydraulics Ltd. |
437,422 |
64,140 |
MCSI Consulting Services Inc. |
114,939 |
17,925 |
Primary Ventures Corp. |
79,197 |
3,098 |
|
|
|
|
$ 764,346 |
$ 123,750 |
9. Selling, General and Administrative Expenses
|
|
|
|
||
2004 |
2004 |
2003 |
2004 |
2003 |
|
|
|
|
|
|
|
Advertising and promotion |
$ 52,164 |
$ 225 |
$ 2,393 |
$ 962 |
$ 17,241 |
Business development |
110,227 |
15,000 |
40,047 |
50,000 |
40,047 |
Contractor and consulting fees |
626,860 |
5,496 |
7,219 |
184,800 |
112,972 |
Exchange loss (gain) |
64,722 |
8,154 |
- |
32,035 |
- |
Listing, filing and transfer agent fees |
27,640 |
3,131 |
- |
10,381 |
- |
Inventory write-down |
85,383 |
- |
- |
- |
- |
Investor relations |
431,645 |
41,579 |
24,360 |
88,807 |
139,873 |
Management fees |
1,356,370 |
114,530 |
140,023 |
374,321 |
345,139 |
Office and general |
273,718 |
18,422 |
(6,704) |
72,967 |
66,034 |
Professional fees |
516,031 |
21,088 |
133,579 |
110,764 |
231,217 |
Rent |
84,514 |
5,852 |
5,773 |
17,024 |
18,408 |
Salaries and benefits |
402,832 |
17,223 |
25,778 |
82,689 |
74,128 |
Stock based compensation |
647,500 |
- |
80,000 |
- |
759,500 |
Travel and related |
366,050 |
3,671 |
24,268 |
30,372 |
68,427 |
|
|
|
|
|
|
Total selling, general and administrative expenses |
|
|
|
|
|
Financial Statement Presentation:
|
|
|
|
|||
|
To |
September 30, |
September 30, |
September 30, |
September 30, |
|
|
|
|
|
|
|
|
Incurred with non-related parties |
$ 2,784,661 |
$ 127,582 |
$ 296,906 |
$ 630,773 |
$ 795,877 |
|
Incurred with related parties |
2,260,995 |
126,789 |
179,830 |
424,349 |
1,077,109 |
|
|
|
|
|
|
|
|
Total selling, general and administrative expenses |
|
|
|
|
|
10. Segment Information
The Company operates in one business segment being the development of stored hydraulic energy propulsion technology. The Company's operations are conducted in three geographic segments being the United Kingdom ("UK"), the United States of America ("USA") and Canada. The Company did not generate any sales in the nine months ended September 2004 or in the comparative period.
|
|
|
||
|
September 30, 2004 |
September 30, 2003 |
September 30, 2004 |
September 30, 2003 |
|
|
|
|
|
Depreciation |
|
|
|
|
Canada |
$ 173 |
$ - |
$ 748 |
$ - |
UK |
6,668 |
109,171 |
19,757 |
143,408 |
USA |
- |
250 |
2,592 |
750 |
|
|
|
|
|
|
$ 6,841 |
$ 109,421 |
$ 23,097 |
$ 144,158 |
|
|
|
|
|
Income (loss) |
|
|
|
|
Canada |
$ (167,989) |
$ (287,263) |
$ (851,348) |
$(1,407,183) |
UK |
(211,938) |
(513,254) |
(1,176,771) |
(921,391) |
USA |
(1,588) |
(67,954) |
(10,976) |
(94,818) |
|
|
|
|
|
|
$ (381,515) |
$ (868,471) |
$(2,039,095) |
$(2,423,392) |
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
December 31, |
Total assets |
|
|
|
|
Canada |
|
|
$ 25,443 |
$ 45,853 |
UK |
|
|
166,782 |
467,130 |
USA |
|
|
329 |
2,598 |
|
|
|
|
|
|
|
|
$ 192,554 |
$ 515,581 |
11. Supplemental Disclosure With Respect to Cash Flows
Significant non-cash transactions for the period ended September 30, 2004 consisted of:
Significant non-cash transactions for the period ended September 30, 2003 consisted of: