-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RnEtpntU9K27KVPniimzi/sdMbgMui1eon5/x7Vpv0uye5O9MxlyJkmKAe0TfjRD jXy71mvOV3Vyxwrf1dNq6w== 0001016295-98-000104.txt : 19980814 0001016295-98-000104.hdr.sgml : 19980814 ACCESSION NUMBER: 0001016295-98-000104 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980813 ITEM INFORMATION: FILED AS OF DATE: 19980813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRANDEUR INC CENTRAL INDEX KEY: 0000894498 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 870434294 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 033-55254-15 FILM NUMBER: 98684783 BUSINESS ADDRESS: STREET 1: 3098 S HIGHLAND DR STREET 2: STE 460 CITY: SALT LAKE CITY STATE: UT ZIP: 84106 BUSINESS PHONE: 8014857775 MAIL ADDRESS: STREET 1: 3098 S HIGHLAND DR STE 460 CITY: SALT LAKE CITY STATE: UT ZIP: 84106 8-K/A 1 AMENDMENT NO. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Report of Event occurring on February 26, 1998 Commission File No. 33-55254-15 GRANDEUR, INC. NEVADA 87-043851 (State or other jurisdiction (I.R.S. Employer Identification of incorporation or organization) Number) 1800 E. Sahara, Suite 107 LAS VEGAS, NEVADA 89104 (Address of principal executive offices) Registrant's telephone number, including area code (702) 693-5744 AMENDMENT NO. 1 The undersigned registrant hereby amends the following items, financial statements, exhibits, or other portions of its CURRENT REPORT on Form 8-K/A dated March 9, 1998 as follows: Attached are unaudited financial statements as of February 28, 1998 and audited financial statements as of May 31, 1997, 1996, and 1995 for 3127575 Canada Inc., a subsidiary that was acquired on February 26, 1998. Pro forma information on a consolidated basis would be the same as the separate statements of the subsidiary as the Registrant had no assets or operations for the periods presented. 1 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Grandeur, Inc. (Registrant) Date: August 11, 1998 By: /s/ Pierre DeLanauze President and Director Grandeur, Inc. 2 3127575 Canada Inc. (a development stage enterprise) FINANCIAL STATEMENTS May 31, 1997, May 31,1996 and May 31, 1995 (expressed in Canadian dollars) April 9, 1998 AUDITORS' REPORT To the Board of Directors of 3127575 Canada Inc. (a development stage enterprise) We have audited the balance sheet of 3127575 Canada Inc. (a development stage enterprise) as at May 31, 1997, May 31, 1996 and May 31, 1995 and the statements of loss and deficit and changes in financial position for each of the years in the three-year period ended May 31, 1997. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at May 31, 1997, May 31, 1996 and May 31, 1995 and the results of its operations and the changes in its financial position for each of the years in the three-year period ended May 31, 1997 in accordance with generally accepted accounting principles in Canada. /s/ Price Waterhouse Chartered Accountants 3127575 CANADA INC. (a development stage enterprise) BALANCE SHEET (expressed in Canadian dollars)
May 31 May 31 May 31 February 28 1995 1996 1997 1998 ----------------------------------------------------------------------- (unaudited) Assets Current assets Cash $ 811 $ 82 $ 80,661 $ - Sales taxes receivable - - 71,731 112,066 Prepaid expenses - - 62,020 87,364 Advances to a common control 49,289 52,792 228,722 116,655 company, without interest (Note 3) Shareholder loan, without interest - 17,381 233,241 ----------------------------------------------------------------------- 50,100 52,874 460,515 549,326 Capital assets (Note 4) - - 119,734 187,080 Other asset License (Note 5) - - - 1 ----------------------------------------------------------------------- $ 50,100 $ 52,874 $ 580,249 $ 736,407 ----------------------------------------------------------------------- Liabilities Current liabilities Bank overdraft $ - $ - $ - $ 39,869 Accounts payable and accrued - 3,000 61,332 281,796 liabilities Advances from a common control - - 101,912 137,688 company, without interest Due to a shareholder (Note 5) - - - 1,413,300 ----------------------------------------------------------------------- - 3,000 163,244 1,872,653 Long-term debt (Note 6) 50,000 50,000 239,350 354,350 Loan from a shareholder, without - - 1,000,000 - interest or repayment terms Share Capital and Deficit Share capital (Note 7) 100 100 100 100 Deficit - (226) (822,445) (1,490,696) ----------------------------------------------------------------------- 100 (126) (822,345) (1,490,596) ----------------------------------------------------------------------- $ 50,100 $ 52,874 $ 580,249 $ 736,407 ----------------------------------------------------------------------- Approved by the Board Director Director
3127575 CANADA INC. (a development stage enterprise) STATEMENT OF LOSS AND DEFICIT (expressed in Canadian dollars)
Year ended Year ended Year ended Nine-month May 31 May 31 May 31 period ended February 28 1995 1996 1997 1998 ----------------------------------------------------------------------- (unaudited) Revenue Interest $ - $ 5,000 $ - $ - Management income - 3,000 - - ----------------------------------------------------------------------- - 8,000 - - Expenses Research and development costs - - 135,348 62,581 Salaries and fringe benefits - - 110,561 237,057 Publicity - - 17,208 12,119 Travel and entertainment - - 8,976 28,619 Repairs on and lease of vehicles - - 17,442 30,688 Rent - - 59,897 49,836 Heat and electricity - - 1,762 1,348 Repairs and maintenance - - 28,580 - Insurance and license - - 31,497 14,717 Office expenses - - 20,642 19,643 Professional fees - 3,000 75,904 100,576 Interest on long-term debt - 5,044 - 7,900 Bank charges - 182 2,871 9,389 Provision on common control - - 290,402 - company advances Amortization of capital assets - - 21,129 50,512 ----------------------------------------------------------------------- - 8,226 822,219 624,985 ----------------------------------------------------------------------- Net loss - (226) (822,219) (624,985) Deficit at beginning of period - - 226 822,445 Amount from contributed - - - 43,266 surplus (Note 8) ----------------------------------------------------------------------- Deficit at end of period $ - $ 226 $ 822,445 $ 1,490,696 -----------------------------------------------------------------------
3127575 CANADA INC. (a development stage enterprise) STATEMENT OF CHANGES IN FINANCIAL POSITION (expressed in Canadian dollars)
Year ended Year ended Year ended Nine-month May 31 May 31 May 31 period ended February 28 1995 1996 1997 1998 ----------------------------------------------------------------------- (unaudited) Operating activities Net loss $ - $ (226) $ (822,219) $ (624,985) Items not affecting cash Amortization of capital assets - - 21,129 50,512 Provision on common control - - 290,402 - company advances ----------------------------------------------------------------------- - (226) (510,688) (574,473) Changes in non-cash operating - 3,000 9,112 (25,299) working capital ----------------------------------------------------------------------- - 2,774 (501,576) (599,772) Financing activities Long-term debt 50,000 - 239,350 115,000 Repayment of long-term debt - - (50,000) - Loan from a shareholder - - 1,000,000 370,033 Due to a shareholder - - - 1,413,300 Repayment of loan to a shareholder - - - (1,370,033) Increase in contributed surplus - - - 1,370,033 Share issues 100 - - - ----------------------------------------------------------------------- 50,100 - 1,189,350 1,898,333 Investing activities Advances from a common control (49,289) (3,503) (466,332) 112,067 company Additions to capital assets - - (140,863) (117,858) License - - - (1,413,300) ----------------------------------------------------------------------- (49,289) (3,503) (607,195) (1,419,091) ----------------------------------------------------------------------- Increase (decrease) in cash during 811 (729) 80,579 (120,530) the period Cash, beginning of period - 811 82 80,661 ----------------------------------------------------------------------- Cash (bank overdraft), end of period $ 811 $ 82 $ 80,661 $ (39,869) -----------------------------------------------------------------------
3127575 CANADA INC. (a development stage enterprise) NOTES TO FINANCIAL STATEMENTS For the three-year period ended May 31, 1997 (All information as at and for the nine-month period ended February 28, 1998 is unaudited.) (expressed in Canadian dollars) 1 Incorporation and nature of operations 3127575 Canada Inc., a development stage enterprise, was incorporated under the Canada Business Corporations Act on March 13, 1995 and operates under the name of DelSecur. The company is involved in the research, development and commercialization of the "DEL ID" project. 2 Significant accounting policies The financial statements are expressed in Canadian dollars and have been prepared in accordance with accounting principles generally accepted in Canada. Capital assets and amortization Capital assets are recorded at cost. Amortization is calculated using the declining balance method at a rate of 30% for computer equipment. The carrying value of the capital assets is evaluated whenever significant events or changes occur that might indicate an impairment through comparison of the carrying value to the net recoverable amount. Research and development costs Research costs, which include all costs incurred to establish technological feasibility, are charged to operations in the year in which they are incurred. Development costs are evaluated for deferral and subsequent amortization. As at May 31, 1997, the company has not deferred any development costs. License Amortization of the capitalized license will commence at such time as related sales revenues are generated. The carrying value of the license is evaluated whenever significant events or changes occur that might indicate an impairment through comparison of the carrying value to the net recoverable amount. Use of estimates The financial statements have been prepared in conformity with generally accepted accounting principles and, as such, include amounts based on informed estimates and judgements of management with consideration given to materiality. Actual results could differ from those estimates. 3127575 CANADA INC. (a development stage enterprise) NOTES TO FINANCIAL STATEMENTS ...continued For the three-year period ended May 31, 1997 (All information as at and for the nine-month period ended February 28, 1998 is unaudited.) (expressed in Canadian dollars) 3 Advances to a common control company
May 31 May 31 May 31 February 28 1995 1996 1997 1998 ----------------------------------------------------------------------- (unaudited) Balance, beginning of period $ - $ 49,289 $ 52,792 $ 519,124 Advances during the period 49,289 3,503 466,332 - Charges net of payments - - - (112,067) ----------------------------------------------------------------------- 49,289 52,792 519,124 407,057 Provision on common - - (290,402) (290,402) control company advances ----------------------------------------------------------------------- Balance, end of period $ 49,289 $ 52,792 $ 228,722 $ 116,655 -----------------------------------------------------------------------
4 Capital assets
May 31, 1997 Cost Accumulated Net book amortization value ----------------------------------------------------- Computer equipment $ 140,863 $ 21,129 $ 119,734 -----------------------------------------------------
February 28, 1998 Cost Accumulated Net book amortization value ----------------------------------------------------- (unaudited) Computer equipment $ 258,721 $ 71,641 $ 187,080 -----------------------------------------------------
3127575 CANADA INC. (a development stage enterprise) NOTES TO FINANCIAL STATEMENTS ...continued For the three-year period ended May 31, 1997 (All information as at and for the nine-month period ended February 28, 1998 is unaudited.) (expressed in Canadian dollars) 5 License On November 12, 1997, the shareholder of the company and owner of an invention consisting of an apparatus and method, including related software, for scanning and storing an optical representation of a finger's capillary lines has entered into an agreement with the company whereby he has granted to the company the exclusive right to commercialize the invention which shall include, among other things, manufacturing and marketing the invention under the terms and conditions contained therein for the consideration of US$1,000,000 (CDN$1,413,300). This transaction was measured at its carrying value of $1. The excess of the consideration received and the carrying value was recorded against contributed surplus and deficit. 6 Long-term debt
May 31 May 31 May 31 February 28 1995 1996 1997 1998 ----------------------------------------------------------------------- (unaudited) Bank loan guaranteed by the $ 50,000 $ 50,000 $ - $ - Societe de Developpement Industriel du Quebec and by a general mortgage on debts, bearing interest at the prime rate plus 1 3/4%, repaid in 1997 Loan bearing interest at a - - 239,350 354,350 monthly rate of 0.5% to 1%, without specific repayment terms ----------------------------------------------------------------------- $ 50,000 $ 50,000 $ 239,350 $ 354,350 -----------------------------------------------------------------------
3127575 CANADA INC. (a development stage enterprise) NOTES TO FINANCIAL STATEMENTS ...continued For the three-year period ended May 31, 1997 (All information as at and for the nine-month period ended February 28, 1998 is unaudited.) (expressed in Canadian dollars) 7 Share capital
May 31 May 31 May 31 February 28 1995 1996 1997 1998 ----------------------------------------------------------------------- (unaudited) Authorized Unlimited number of Class A voting, participating shares, entitled to dividends, without par value, convertible at the option of the management of the company and of the majority Class D shareholders on the basis of one Class A share for one Class D share Unlimited number of Class B share, voting, participating, entitled to dividends, without par value
3127575 CANADA INC. (a development stage enterprise) NOTES TO FINANCIAL STATEMENTS ...continued For the three-year period ended May 31, 1997 (All information as at and for the nine-month period ended February 28, 1998 is unaudited.) (expressed in Canadian dollars) 7 Share capital ...continued
May 31 May 31 May 31 February 28 1995 1996 1997 1998 ----------------------------------------------------------------------- (unaudited) Unlimited number of Class C shares, voting, non-participating, not entitled to dividends and redeemable at the option of the company at the paid-up capital, without par value Unlimited number of Class D shares, non-voting, non-participating, entitled to a non-cumulative monthly dividend of 1% of the redeemable value as described hereinafter, ranking in priority to Class A, B, E, F and G shares, redeemable at the option of the holder at the paid-up capital plus an amount equal to the difference between their paid-up capital and the fair market value of Class A shares upon their exchange for Class D shares, without par value Unlimited number of Class E shares, non-voting, non-participating, entitled to a non-cumulative monthly dividend of 1% of the redeemable value described hereinafter, ranking in priority to Class A, B, F and G shares, redeemable at the option of the holder at the paid-up capital plus an amount equal to the difference between the fair market value received on the issuance of Class E shares and the paid-up capital, without par value
3127575 CANADA INC. (a development stage enterprise) NOTES TO FINANCIAL STATEMENTS ...continued For the three-year period ended May 31, 1997 (All information as at and for the nine-month period ended February 28, 1998 is unaudited.) (expressed in Canadian dollars) 7 Share capital ...continued
May 31 May 31 May 31 February 28 1995 1996 1997 1998 ----------------------------------------------------------------------- (unaudited) Unlimited number of Class F shares, non-voting, non-participating, entitled to a $1 non-cumulative dividend, ranking in priority to Class A, B and G shares, redeemable at the option of the holder at the paid-up capital plus declared but unpaid dividends, without par value Unlimited number of Class G shares, non-voting, non-participating, entitled to a $1 non-cumulative dividend, ranking in priority to Class A and B shares, redeemable at the option of the company at the paid-up capital plus declared but unpaid dividends, without par value Issued 100 Class B shares $ 100 $ 100 $ 100 $ 100 -----------------------------------------------------------------------
8 Contributed surplus
May 31 May 31 May 31 February 28 1995 1996 1997 1998 ----------------------------------------------------------------------- (unaudited) Balance, beginning of period $ - $ - $ - $ - Add: Shareholder loan * - - - 1,370,033 Deduct: License (Note 5) - - - (1,413,299) ----------------------------------------------------------------------- - - - (43,266) Amount transferred to deficit - - - 43,266 ----------------------------------------------------------------------- Balance, end of period $ - $ - $ - $ - -----------------------------------------------------------------------
3127575 CANADA INC. (a development stage enterprise) NOTES TO FINANCIAL STATEMENTS ...continued For the three-year period ended May 31, 1997 (All information as at and for the nine-month period ended February 28, 1998 is unaudited.) (expressed in Canadian dollars) 8 Contributed surplus ...continued * From June 1997 to February 24, 1998, further advances were made by the shareholder totalling $370,033. On February 24, the shareholder contributed the full amount of the loan outstanding of $1,370,033 to capital. Accordingly, the amount has been accounted for as contributed surplus. 9 Income tax The company has accumulated losses for income tax purposes totalling approximately $1,079,000 for which the benefits have not been recognized in the financial statements. These losses can be deducted from future years' taxable income and expire as follows: 2004 $566,000 2005 $513,000 10 Related party transactions During the period, the company made some transactions with two companies owned by the same shareholder. May 31 May 31 May 31 February 28 1995 1996 1997 1998 ------------------------------------------------------- (unaudited) Expenses $ - $ - $ 458,300 $ 116,128 ------------------------------------------------------- These transactions occurred in the normal course of the company's activities and are measured at fair value, which represents the exchange value. 11 Contingency An application was filed by a shareholder of Delsynchro Inc., a common control company, who has requested authorization from the Court to institute proceedings on behalf of Delsynchro Inc. requesting the Court to declare Delsynchro Inc. owner of the invention known as "DEL ID" and the related rights. Management believes that the resolution of the litigations in which Delsynchro Inc. is involved would not have a material adverse effect on the financial condition or results of operations of 3127575 Canada Inc. 3127575 CANADA INC. (a development stage enterprise) NOTES TO FINANCIAL STATEMENTS ...continued For the three-year period ended May 31, 1997 (All information as at and for the nine-month period ended February 28, 1998 is unaudited.) (expressed in Canadian dollars) 12 Financial instruments Fair value Due to their short-term maturity, the carrying values of certain financial instruments were assumed to approximate their fair values. The financial instruments include: sales taxes receivable, advances to a common control company and shareholder loan included in current assets, bank overdraft, accounts payable and accrued liabilities, advances from a common control company and due to a shareholder included in current liabilities, and long-term debt and loan from a shareholder included in long-term liabilities. The fair value of these financial instruments is not significantly different than their carrying amounts. Interest rate risk The company's exposure to interest rate risk is as follows: Sales taxes receivable Non-interest bearing Advances to a common control company Non-interest bearing Shareholder loan Non-interest bearing Accounts payable and accrued liabilities Non-interest bearing Advances from a common control company Non-interest bearing Due to a shareholder Non-interest bearing Long-term debt Monthly rate of 0.5% to 1% Loan from a shareholder Non-interest bearing Credit risk The company's exposure to credit risk is as indicated by the carrying amounts of the financial assets. The company may be exposed to losses in the future if the debtors fail to pay. Significant portions of amounts receivable are from related parties. 13 Subsequent event On February 26, 1998 all of the issued and outstanding shares of the company were acquired by Grandeur Inc., a U.S. development stage company incorporated as a Nevada corporation. 3127575 CANADA INC. (a development stage enterprise) NOTES TO FINANCIAL STATEMENTS ...continued For the three-year period ended May 31, 1997 (All information as at and for the nine-month period ended February 28, 1998 is unaudited.) (expressed in Canadian dollars) 14 United States generally accepted accounting principles The financial statements have been prepared in accordance with generally accepted accounting principles in Canada (Canadian GAAP) which, in the case of 3127575 Canada Inc., conform in all material respects with GAAP in the United States (U.S. GAAP), except as set forth below. Statement of operations Under Canadian GAAP, income taxes are accounted for using the deferral method whereas under U.S. GAAP, the liability method would be used. Under U.S. GAAP, 3127575 Canada Inc. would have recognized a deferred tax asset of $410,000 on net operating loss carryforwards. In addition, 3127575 Canada Inc. would have created a valuation allowance equal to this deferred tax asset to bring down its value to nil. Consequently, there are no material differences on net earnings with respect to income taxes. Change in financial position Under U.S. GAAP, the following amounts would be reported:
May 31 May 31 May 31 February 28 1995 1996 1997 1998 ------------------------------------------------------------------- (unaudited) Net cash provided by (used in) Operating activities $ - $ 2,774 $ (448,784) $ (599,772) Financing activities 50,100 - 1,189,350 524,902 Investing activities (49,289) (3,503) (659,987) (5,791) ------------------------------------------------------------------- Net increase (decrease) $ 811 $ (729) $ 80,579 $ (80,661) in cash --------------------------------------------------------------------------
Under U.S. GAAP, the statement of changes in financial position would reconcile the opening balance of cash and cash equivalents to the amount of cash and cash equivalents at the end of the year without regard to bank overdraft not constituting cash equivalents. Consequently, under U.S. GAAP, the variation in bank overdraft not considering cash equivalents would be disclosed as a financing activity. Such amount is $39,869 for the nine-month period ended February 28, 1998. Canadian GAAP allows the disclosure of a subtotal of the amount of cash provided by operating activities before cash provided by non-cash operating working capital items. U.S. GAAP requires a statement of changes in financial position without subtotal. 3127575 CANADA INC. (a development stage enterprise) NOTES TO FINANCIAL STATEMENTS ...continued For the three-year period ended May 31, 1997 (All information as at and for the nine-month period ended February 28, 1998 is unaudited.) (expressed in Canadian dollars) 14 United States generally accepted accounting principles...continued Under U.S. GAAP, the statement of changes in financial position would not present transactions that are non-cash. Such elements would be presented in a note of changes in financial position. During the nine-month period ended February 28, 1998, the repayment of loan from a shareholder, the increase in contributed surplus, the acquisition of a license and the related due to a shareholder were non-cash transactions. The net change in non-cash operating working capital items is as follows:
May 31 May 31 May 31 February 28 1995 1996 1997 1998 ---------------------------------------------------------- (unaudited) Sales taxes receivable $ - $ - $ (71,731) $ (40,335) Prepaid expenses - - (62,020) (25,344) Shareholder loan - - (17,381) (215,860) Trade accounts payable - - 43,585 141,977 Accrued liabilities - 3,000 14,747 78,487 Advances from a common - - 101,912 35,776 control company ---------------------------------------------------------- $ - $ 3,000 $ 9,112 $ (25,299) ----------------------------------------------------------
Other disclosures The disclosure of the following amounts is required under U.S. GAAP:
May 31 May 31 May 31 February 28 1995 1996 1997 1998 -------------------------------------------------------------------------- (unaudited) Trade accounts payable $- $- $43,585 $185,562 Accrued liabilities - 3,000 17,747 96,234 -------------------------------------------------------------------------- $- $3,000 $61,332 $281,796 --------------------------------------------------------------------------
3127575 CANADA INC. (a development stage enterprise) NOTES TO FINANCIAL STATEMENTS ...continued For the three-year period ended May 31, 1997 (All information as at and for the nine-month period ended February 28, 1998 is unaudited.) (expressed in Canadian dollars) 14 United States generally accepted accounting principles...continued Development stage enterprise disclosure Statement of loss and deficit Year ended Nine-month May 31 period ended 1997 February 28 1998 ------------------------------------- (unaudited) Cumulative revenue $ 8,000 $ 8,000 ------------------------------------- Cumulative expenses $830,445 $1,455,430 ------------------------------------- Cumulative net loss $822,445 $1,447,430 ------------------------------------- Statement of changes in financial position Year ended Nine-month May 31 period ended 1997 February 28 1998 ------------------------------------- (unaudited) Operating activities $ (446,010) $(1,045,782) ------------------------------------- Financing activities $1,239,450 $ 1,764,352 ------------------------------------- Investing activities $ (712,779) $ (718,570) ------------------------------------- Balance sheet and statement of loss and deficit The deficit should read "Deficit accumulated during the development stage". 3127575 CANADA INC. (a development stage enterprise) NOTES TO FINANCIAL STATEMENTS ...continued For the three-year period ended May 31, 1997 (All information as at and for the nine-month period ended February 28, 1998 is unaudited.) (expressed in Canadian dollars) 14 United States generally accepted accounting principles...continued Unaudited interim financial statement presentation The unaudited interim balance sheet as of February 28, 1998 and the unaudited interim statements of loss and deficit and changes in financial position for the nine months ended February 28, 1998 have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results for the nine-month period ended February 28, 1998 are not necessarily indicative of the results that may be expected for the year ending May 31, 1998. -----END PRIVACY-ENHANCED MESSAGE-----