Cell-Loc Location Technologies Reports Interim Financial Results.CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Alberta Alberta (ălbûr`tə), province (2001 pop. 2,974,807), 255,285 sq mi (661,188 sq km), including 6,485 sq mi (16,796 sq km) of water surface, W Canada. -- Cell-Loc Location Technologies Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension VENTURE:LTI LTI Linear Time Invariant LTI Long Term Incentive (NZ) LTI Lingua Tertii Imperii (language of the NAZI empire, Latin) LTI Lost Time Injury LTI Leadership Training Institute LTI Lost Time Incident ): For the period ended September September: see month. 30, 2004 Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations Management's discussion and analysis (MD&A) should be read in conjunction with the unaudited interim consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge of Cell-Loc Location Technologies Inc. (the "Company" or "CLTI") for the periods ended September 30, 2004. This discussion contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are not historical in nature and involve risks and uncertainties. Forward-looking statements are not guarantees as to the Company's future results since there are inherent difficulties in predicting future results. Accordingly, actual results could differ from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in the forward-looking statements. Brazilian Contracts Subsequent to the end of the period, on November November: see month. 22, 2004, the Company announced the signing of a major contract with insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. ITAU ITAU IN-TINA Adaptation Unit Seguros S.A., a subsidiary of Banco ITAU (NYSE NYSE See: New York Stock Exchange ), Brazil's biggest bank by market value, to deploy its Beacon Beacon, city (1990 pop. 13,243), Dutchess co., SE N.Y., on the E bank of the Hudson River; settled 1663, inc. in 1913 when Fishkill Landing and Matteawan villages were united. Location Network in Sao Paulo Paulo is the Portuguese form of the given name Paul:
tr.v. dis·a·bled, dis·a·bling, dis·a·bles 1. To deprive of capability or effectiveness, especially to impair the physical abilities of. 2. Law To render legally disqualified. , and recovery. The ITAU contract provides for minimum revenue of US$ 18 million during its term. Deployment of the network will commence immediately and it is anticipated that the network will be completed and operating by the third quarter of 2005, subject to a technical audit and other requisite approvals. The Company has licensed its proprietary Beacon technology for the entire country of Brazil to X3 Tecnologia Ltda. ("X3"). CLTI will, through a holding company, own 74% of X3, the Brazilian operating company operating company A business that engages in transactions with outsiders. that will deploy the network. In addition to its ownership interest in X3, CLTI will receive a top line royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. of 5% of the revenue from X3, will receive US$3 million as a license fee, and will sell equipment, currently held in inventory by the Company, to X3 that is required to deploy the network. The estimated cost of the deployment and operation start-up Start-up The earliest stage of a new business venture. is US$3.5 million in addition to the Cell-Loc equipment. CLTI has entered into an agreement to provide financing for this project in the form of the private placement of a convertible secured debenture debenture (dəbĕn`chər), document acknowledging indebtedness. In Great Britain a debenture is practically the same as a bond, and debenture stock is similar to preferred stock. to an arm's length arm's length adj. the description of an agreement made by two parties freely and independently of each other, and without some special relationship, such as being a relative, having another deal on the side or one party having complete control of the other. private equity fund. The debenture carries interest at 10% per annum Per annum Yearly. and is convertible, at the Lender's discretion, into common shares of CLTI based on the market price of CLTI's shares at the time of any conversion. The Company also has entered into an agreement with a Brazilian company to manufacture its proprietary Beacon device, which it designed and developed. This strategic manufacturing relationship and the economies of scale provided by the deployment of Sao Paulo will allow CLTI to produce a substantially lower cost Beacon for the project and any existing or subsequent network deployment. The Company has a focused program to continue to significantly reduce the cost of the Beacon device and network hardware as management believes a lower cost strategy is a critical prerequisite pre·req·ui·site adj. Required or necessary as a prior condition: Competence is prerequisite to promotion. n. to deep market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" for all the various applications this technology offers in the location based services space, particularly in countries such as Brazil. In addition, the economies of scale and lower manufacturing costs will allow the Company to continue its research to integrate the Beacon circuits on to a single chip (System on Chip). The execution of the ITAU Seguros contract and the manufacturing arrangement represents the successful transition from the Company's proprietary cellular location technology model developed in the mid 1990s, which the Company has concluded is an emerging market, to the ubiquitous Found in large quantities everywhere. This English word means "all over the place." Beacon model which provides multifaceted mul·ti·fac·et·ed adj. Having many facets or aspects. See Synonyms at versatile. Adj. 1. multifaceted - having many aspects; "a many-sided subject"; "a multifaceted undertaking"; "multifarious interests"; "the multifarious applications in an existing location based services market. The deployment in Sao Paulo is believed to be one of the largest wireless location contracts ever commenced on a global basis. The choice of CLTI's technology was the result of its ability to offer the location based services at price points that would offer significant market depth along with the successful deployment of a test bed in Sao Paulo. It also serves to highlight the competitive and technological advantages that the Company has been able to display to the marketplace. The Company continues to investigate opportunities in other geographic regions that are of similar scale and magnitude to the Sao Paulo project. Promissory Note promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. Conversion Subsequent to the end of the period, on November 24, 2004, CLTI announced that Ansen Corporation, the holder of a US$2.5 million Convertible Promissory Note, has elected e·lect v. e·lect·ed, e·lect·ing, e·lects v.tr. 1. To select by vote for an office or for membership. 2. To pick out; select: elect an art course. to convert the outstanding balance of the Note into common shares of CLTI. Under the terms of the Note, Ansen will convert outstanding amounts to CLTI common shares at a price of US$0.50 per share. As a result of this conversion, CLTI will issue 5 million common shares in payment of the principal amount and 458,336 shares in payment of accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. of US$ 229,168. As a result of this conversion, the Company has removed all debt from its balance sheet in advance of the Brazil deployment. General Presentation As more fully described in Note 1 to the interim consolidated financial statements, CLTI commenced operations as a result of the transfer to it of substantially all of the assets and liabilities related to its business from its former parent, Cell-Loc Inc. under a plan of arrangement approved December December: see month. 1, 2003. Because the arrangement has been accounted for under the continuity of interests basis of accounting, amounts shown in the financial statements for periods commencing prior to the date of the plan of arrangement include the results of Cell-Loc Inc. for the relevant periods. On June June: see month. 28, 2004, the Company announced that it had changed its year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. to December 31. As a result, comparative quarterly financial information is provided based on the calendar year. Prior to the plan of arrangement, Cell-Loc Inc. had made a concerted effort to reduce its ongoing operating costs operating costs npl → gastos mpl operacionales . As a result, the operating costs and general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. for the current periods are lower than for comparative periods. During the ten months ended September 30, 2004 the Company incurred a net loss of $2,396,000 including a net loss of $467,000 for the quarter. Overview Operations Operations expenses for the quarter of $80,000 resulted from operating the Calgary network ($70,000) as well as the Saskatoon Saskatoon (săskət  n`), city (1991 pop. 186,058), S central Sask., Canada, on the South Saskatchewan River. network
($10,000) through the Company's subsidiary, CityTrac Ltd.General and Administrative Expenses for general and administrative costs for the quarter were $468,000. The direct cost of the Brazilian venture was $30,000 with the remaining $438,000 incurred to operate and staff the corporate office. Liquidity and Capital Resources The Company had a cash balance of $960,000 at September 30, 2004. The Company's monthly use of cash continues to be scrutinized to ensure optimal use of cash resources. Note Payable During the quarter ended March 31, 2004, the Company entered into an amending agreement with the holder of a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. Note payable. Under this amending agreement the Note holder relinquished re·lin·quish tr.v. re·lin·quished, re·lin·quish·ing, re·lin·quish·es 1. To retire from; give up or abandon. 2. To put aside or desist from (something practiced, professed, or intended). 3. all previously granted rights to commercial license use of the Company's product in the event of default and transferred title to the inventory free and clear of any lien lien, claim or charge held by one party, on property owned by a second party, as security for payment of some debt, obligation, or duty owed by that second party. , security interest or other encumbrance A burden, obstruction, or impediment on property that lessens its value or makes it less marketable. An encumbrance (also spelled incumbrance) is any right or interest that exists in someone other than the owner of an estate and that restricts or impairs the transfer of the estate or . As a result of this amendment, the related assets have been reclassified to Network assets. The Note holder has the option to convert the Note to common shares of the Company at an exercise price of US $0.50 per share. The Company has reserved 5 million shares relative to this obligation. Business Risks and Prospects The Company is actively negotiating commercial contracts. The Company's ability to continue to generate revenue and achieve positive cash flow in the future is dependent upon various factors, including the level of market acceptance of its services, the degree of competition encountered by the Company, the cost of acquiring new partners, technology risks, the ability to fund continued network deployment and operations, general economic conditions and regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. . The market for location-based services See mobile positioning. is just beginning to develop and is subject to rapid technological change. The Company's business plan in focused on attracting and contracting other entities to apply its patented technology in city, regional or national networks. These third parties will be required to operate the project and invest funds in the infrastructure, working capital and staff to develop the potential of their contracted area. The Company's continuing research, development and testing may cause significant strain on the Company's management, technical, financial and other resources. To remain competitive the Company must be able to keep pace with the technological developments and change its product lines to meet new demands. The Company will depend on designing and developing products that have not been commercially tested to achieve much of its future growth. The wireless location solution that the Company plans to offer is an emerging technology, and the application of existing, proposed or future regulation to the Company's offering cannot be reliably determined at this stage of development. The Company's ability to continue ongoing operations is dependent upon contracting parties to license the Company's technology and then implementing a commercialize service business. The Company's ability to generate net income and positive cash flow in the future is dependent upon various factors, including: - the level of market acceptance of its technology; - the ability to enter into license agreement to deploy and operate the Company's proprietary wireless location network technology; - the degree of competition encountered by the Company; and - the Company's ability to manage growth.
Consolidated Financial Statements of
CELL-LOC LOCATION TECHNOLOGIES INC.
For the period ended September 30, 2004
CELL-LOC LOCATION TECHNOLOGIES INC.
Consolidated Balance Sheet
(Unaudited)
September 30, December
(in thousands of dollars) 2004 2003
---------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents $ 960 $ 2,686
Restricted cash 75 -
Accounts receivable 16 45
Other current assets 30 37
---------------------------------------------------------------------
1,081 2,768
Network assets (note 4) 10,989 7,756
Interest in assets held by supplier
(Note 6) - 3,256
Capital assets (note 4) 347 461
Intellectual property and other
intangible assets (note 4) 380 379
---------------------------------------------------------------------
$ 12,797 $ 14,620
---------------------------------------------------------------------
---------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 102 $ 157
Note payable to supplier - current (note 6) 383 234
---------------------------------------------------------------------
485 391
Note payable to supplier
- long term (note 6) 3,033 3,101
Deferred revenue 5 -
Government assistance (note 5) 551 551
Shareholders' equity:
Share capital (note 7) 11,119 10,950
Deficit (2,396) (373)
---------------------------------------------------------------------
8,723 10,577
Future operations (note 2)
Commitments and contingencies (note 11)
---------------------------------------------------------------------
$ 12,797 $ 14,620
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
CELL-LOC LOCATION TECHNOLOGIES INC.
Consolidated Statements of Operations
(Unaudited)
For the ten, nine and three month periods ended September 30, 2004,
with comparative combined financial statements of operations for the
three months and the nine month periods ended September 30, 2003.
(See note 1)
---------------------------------------------------------------------
(in Three months Nine months
thousands Ten months ended ended
of dollars ended September 30, September 30,
except per September 30, --------------------------------------
share data) 2004 2004 2003 2004 2003
---------------------------------------------------------------------
Revenues $ 101 $ 1 $ 50 $ 1 $ 55
Operating expenses:
Operations 354 80 75 323 725
Marketing and
business
development 47 1 46 118
General and
administrative 1,775 468 490 1,367 1,398
Research and
development 527
Loss on sale
of assets 11 244
Foreign exchange (103) (204) (39) (77) (39)
Depreciation and
amortization 251 76 156 225 604
---------------------------------------------------------------------
Total operating
expenses 2,324 420 694 1,884 3,577
---------------------------------------------------------------------
Loss from
operations 2,223 419 644 1,883 3,522
Less:
Asset impairment 2,458
Gain on settlement
of trade liability (836)
Settlement of
lawsuit 428
Interest expense 197 53 77 164 120
Interest income (23) (5) (23) (1)
Income taxes (1) (1) 21
---------------------------------------------------------------------
Net loss $ (2,396) $ (467) $ (721) $ (2,023) $ (5,712)
---------------------------------------------------------------------
---------------------------------------------------------------------
Net loss
per share $ (0.07) $ (0.01) $ (0.02) $ (0.06) $ (0.18)
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted average
number of shares
outstanding:
Basic
and
diluted 35,492,700 35,843,558 33,289,219 35,568,149 31,808,174
Shares
issued
and
outstanding 35,492,700 35,843,558 33,339,297 35,568,149 33,339,297
Consolidated Statements of Deficit
(Unaudited)
(in thousands of dollars)
---------------------------------------------------------------------
Deficit,
beginning of
the period $ - $ (1,929) $ (80,562) $ (373) $ (75,571)
Net loss
for the period (2,396) (467) (721) (2,023) (5,712)
---------------------------------------------------------------------
Deficit, end
of period $ (2,396) $ (2,396) $ (81,283) $ (2,396) $ (81,283)
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
CELL-LOC LOCATION TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(Unaudited)
For ten, nine and three month periods ended September 30, 2004, with
comparative combined financial statements of operations for the
three months and the nine month periods ended September 30, 2003.
Three months Nine months
(in Ten months ended ended
thousands ended September 30, September 30,
of September 30, --------------------------------------
dollars) 2004 2004 2003 2004 2003
---------------------------------------------------------------------
Cash provided
by (used in):
Operating:
Net loss for
the period $ (2,396) $ (467) $ (721) $ (2,023) $ (5,712)
Items not
affecting cash:
Deferred
revenue (100)
Interest accrued
on Note 162 36 144
Asset impairment 2,458
Depreciation and
amortization 251 76 156 225 604
Network assets
used in research
and development 11
Unrealized
foreign exchange (89) (190) (30) (63) (30)
Loss on sale
of assets 11 244
Fair value of
stock options
charged
(note 7(c)) 164 36 69 -
Expenses paid
with shares 84 512
---------------------------------------------------------------------
(2,008) (509) (500) (1,648) (1,913)
Changes in
non-cash
working capital 70 (83) 116 (20) (361)
---------------------------------------------------------------------
(1,938) (592) (384) (1,668) (2,274)
Financing:
Cash acquired
in plan of
arrangement 2,956
Issue of common
stock in payment
of debt 13 13 -
Issue of common
stock, net of
issue costs 150 16 150 1,682
Restricted cash (75) (75) 34
Deferred revenue 5 5 5 100
Repayment of
government
assistance 1
Cash paid to
dissenting warrant
holder (62) (62) -
---------------------------------------------------------------------
2,987 5 16 31 1,817
---------------------------------------------------------------------
Investing:
Network assets (92) (5) (92) (5)
Capital assets (6)
Intellectual
property and
other assets (1) (1) (1) (1)
Proceeds on sale
of assets 4 2 4 204
Non-cash working
capital (246)
---------------------------------------------------------------------
(89) (6) 2 (89) (54)
---------------------------------------------------------------------
Increase (decrease)
in cash and
equivalents 960 (593) (366) (1,726) (511)
Cash and
equivalents,
beginning of
period - 1,553 417 2,686 562
---------------------------------------------------------------------
Cash and
equivalents, end
of period 960 960 51 960 51
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
CELL-LOC LOCATION TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
Period ended September 30, 2004
(In thousands of dollars except per share data)
Cell-Loc Location Technologies Inc. (the "Company" or "CLTI") was incorporated under the laws of Alberta, Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of under the name of 1073691 Alberta Ltd. on October October: see month. 29, 2003. On November 24, 2003, under the Alberta Business Corporate Act, a certificate of amendment was filed which renamed 1073691 Alberta Ltd. as Cell-Loc Location Technologies Inc. On December 5, 2003, CLTI common shares began trading on the TSX Venture Exchange TSX Venture Exchange Originally called the Canadian Venture Exchange (CDNX), this was a result of the merger of the Vancouver and Alberta stock exchanges. The goal of TSX Venture Exchange is to provide venture companies with effective access to capital while protecting investors. (the "TSX-V") under the trading symbol Trading symbol See: Ticker symbol LTI. On June 28, 2004, the Company announced that it had changed its year-end to December 31. As a result, comparative quarterly financial information is provided based on the calendar year. The Company is in the business of researching, developing and licensing its network-based wireless location technology, which integrates proprietary hardware, software and scientific algorithms The following is a list of the algorithms described in Wikipedia. See also the list of data structures, list of algorithm general topics and list of terms relating to algorithms and data structures. . CLTI is focused on its Beacon network technology, which enables location-based services such as fleet tracking, stolen vehicle recovery, inventory tracking, etc. With licensees and through joint ventures, CLTI's goal is to deploy wireless location networks and support the offering of location-based services. Using this model, revenue will come to the Company through upfront licensing fees and royalties as well as through its joint venture ownership of operating networks. 1. Basis of Presentation In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with a plan of arrangement (the "Plan") involving CLTI and CLTI's former parent company, Cell-Loc Inc. ("Cell-Loc"), and other parties, which was approved by the Court of Queen's Bench of Alberta The Court of Queen's Bench of Alberta is the superior court of the Canadian province of Alberta. Structure
(a) Transfer of assets The conveyance of something of value from one person, place, or situation to another. The law recognizes that persons are generally entitled to transfer their assets to whomever they wish and for whatever reason. The most common means of transfer are wills, trusts, and gifts. The transfer of Cell-Loc's technology business; related material assets; rights; liabilities; and obligations of Cell-Loc to CLTI for consideration of 35,052,168 shares of CLTI. These shares were subsequently distributed by Cell-Loc to its shareholders of record immediately preceding the plan of arrangement. The following is a summary of the transaction:
Net assets transferred:
Cash $ 2,956
Other current assets 82
Network assets 7,769
Interest in assets held by supplier 3,256
Capital assets 474
Intellectual property and other intangible assets 379
Current liabilities (68)
Long-term liabilities (3,994)
-------------------------------------------------------------------
$ 10,854
-------------------------------------------------------------------
-------------------------------------------------------------------
Consideration:
35,052,168 common shares issued $ 10,854
-------------------------------------------------------------------
-------------------------------------------------------------------
As the transfer of assets was between related parties, the transaction has been recorded at the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. transferred. This arrangement has been accounted for on the continuity of interest basis, whereby the Company's share capital is held by the Cell-Loc shareholders of record immediately preceding the Plan, and the Company is considered to have carried on the technology business of Cell-Loc. Accordingly, the statements of operations and cash flow of Cell-Loc for the three and nine months ended September 30, 2003 have been presented as prior year comparative amounts. Transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). amounting to $277 were paid by Cell-Loc on behalf of the Company at the time of the transaction, thereby reducing the net assets transferred. In addition, the Company subsequently reached a settlement with a third party holder of warrants of the former Cell-Loc Inc. in respect of the right of dissent An explicit disagreement by one or more judges with the decision of the majority on a case before them. A dissent is often accompanied by a written dissenting opinion, and the terms dissent and dissenting opinion are used interchangeably. exercised by that warrant holder and in connection with the Plan. The Company paid the dissenting dis·sent intr.v. dis·sent·ed, dis·sent·ing, dis·sents 1. To differ in opinion or feeling; disagree. 2. To withhold assent or approval. n. 1. warrant holder $62 and issued stock valued at $100. Share capital has been adjusted to report these costs. (b) Warrants In accordance with the Plan 2,294,447 the Company issued warrants to shareholders who held warrants in Cell-Loc Inc. on a one for one basis. The exercise prices of the warrants are the exercise prices of the Cell-Loc Inc. warrants. (c) Stock options In respect of Cell-Loc's outstanding stock options, each outstanding options holder was issued one option to purchase a CLTI share at the existing Cell-Loc Inc. option price and with the same term. There were 1,297,292 options issued under the Cell-Loc Inc. Plan. 2. Future operations The Company is focused on commercializing its Cellocate Beacon 3 product and has deployed a wireless location network in Saskatoon, Saskatchewan Saskatchewan, province, Canada Saskatchewan (səskăch`əwən, –wän', săs'–), province (2001 pop. 978,933), 251,700 sq mi (651,903 sq km), W Canada. . The Company and the holder of the license agreement have incorporated CityTrac Ltd. a subsidiary in which the Company owns a 75% interest. Through CityTrac Ltd. the Company has deployed existing assets and expertise to model the commercial viability of the service. CLTI intends to seek out other licensing business opportunities based under its licensing and joint venture model which focuses on identifying future partners which compliment Not to be confused with Complement. Compliment may be
The Company's ability to generate net income and positive cash flows is dependent upon various factors including its ability to identify appropriate business partners, the degree of competition encountered by the Company, technology risks, the ability to fund continued network deployments and operations, general economic conditions and regulatory requirements. The Company's network assets are carried at their cost, less impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. arising due to obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. or to the likelihood that certain assets may not be used in deploying the networking technology. The net carrying value of these assets is $10,989. In addition, certain intellectual property, patent and trademark costs have been deferred and are awaiting product revenue streams against which they are to be amortized. The recoverability of these deferred costs and the carrying value of the Company's network assets is dependent upon successful deployment of the Company's network assets and the penetration of its service offering into viable markets. The timing and commercial success of network deployment remains uncertain. Should substantial deployment of the network assets not take place in the next 12 months, the value of these assets may become subject to impairment. These consolidated financial statements have been prepared on the basis that the Company will continue to raise sufficient financing and to realize its assets and discharge its obligations in the ordinary course of business and do not reflect adjustments, such as revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. to liquidation values Liquidation value Net amount that could be realized by selling the assets of a firm after paying the debt. and reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of balance sheet items, that would otherwise be necessary if the going concern assumption was not valid. 3. Significant accounting policies The consolidated financial statements of the Company and its subsidiary have been prepared in accordance with accounting principles generally accepted in Canada and are denominated in Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents . (a) Consolidation The consolidated financial statements include the accounts of Cell-Loc and its subsidiaries hereinafter here·in·af·ter adv. In a following part of this document, statement, or book. hereinafter Adverb Formal or law from this point on in this document, matter, or case Adv. 1. referred to as the "Company" or "CLTI". The consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements reflect a 25% minority interest in CityTrac Ltd. (b) Use of estimates The preparation of the financial statements in conformity with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets Contingent Asset An asset in which the possibility of ownership depends solely upon future events uncontrollable by the company. Notes: An example might be a settlement from a lawsuit. See also: Asset, Balance Sheet, Contingent Liability, Liability and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from estimates. (c) Cash and cash equivalents Cash and cash equivalents consist of cash balances with banks and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments with original maturities of less than three months. The fair value of cash and cash equivalents approximates the amounts shown in the financial statements. (d) Foreign currency Accounts of foreign operations, which are considered financially and operationally integrated, are translated to Canadian dollars using average exchange rates for the year for revenue and expenses. Monetary assets and liabilities Monetary assets and liabilities Assets and liabilities with contractual payoffs. are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical exchange rates. Transactions in foreign currencies are translated at average rates for the period, except for depreciation and amortization, which are translated on the same basis as the related assets. Exchange gains or losses are reflected in income. (e) Long term assets Network assets represent assets that have been deployed into networks, as well as components and in-process assets that are on hand to be manufactured into wireless location products and deployed within the Company's future networks. These network assets are depreciated Depreciated may refer to:
A common depreciation-calculation system that involves applying the depreciation rate against the non-depreciated balance. Instead of spreading the cost of the asset evenly over its life, this system expenses the asset at a constant rate, which results in once they have been deployed and are available for commercial use. Long-term assets Long-Term Assets 1. Reported on the balance sheet, it's the value of a company's property, equipment and other capital assets, less depreciation. 2. A stock, bond or other asset that you plan on holding in your portfolio for a lengthy period of time. are recorded at cost less related investment tax credits and impairment charges arising due to obsolescence or to the likelihood that certain assets may not be used, in which case they are written down to salvage value Salvage Value The estimated value that an asset will realize upon its sale at the end of its useful life. Notes: For example, the value of a computer after it depreciates over the number of years specified by the IRS. . These assets are depreciated over their estimated useful lives using following methods and annual rates: --------------------------------------------------------------------- Assets Method Rate --------------------------------------------------------------------- Network assets Declining balance 30% Capital assets Declining balance 30% Intellectual property Declining balance 40% - 60% Patents and trademarks Straight line 20% --------------------------------------------------------------------- --------------------------------------------------------------------- Amortization of costs related to network assets, intellectual property, patents and trademarks would begin once the Company commences commercial operations. When events and circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or warrant a review, the Company evaluates the carrying value of its long-term assets for potential impairment. An impairment loss is recognized when the estimated net recoverable amount of a long-term asset Long-term assets or noncurrent assets are those assets usually in service over one year such as lands and buildings, plants and equipment, and long-term investments. These often receive favorable tax treatment over current assets. is less than its carrying value. Any impairment in these assets is written off against earnings in the year that such impairment becomes evident. (f) Government contracts and assistance Government assistance relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc capital expenditures is reflected as a reduction of the cost of such assets. Government assistance relating to research and product development is recorded as a cost recovery when the expenditures are incurred. Government contracts relating to consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" for particular studies are recorded as revenue. Government advances containing commercial repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan provisions are recorded as repayable re·pay v. re·paid , re·pay·ing, re·pays v.tr. 1. To pay back: repaid a debt. 2. debt. (g) Income taxes The Company uses the liability method of tax allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as in accounting for income taxes. Under this method, future income tax liabilities and future income tax assets are determined based on differences between the financial reporting and tax bases of assets and liabilities, and measured using the substantively sub·stan·tive adj. 1. Substantial; considerable. 2. Independent in existence or function; not subordinate. 3. Not imaginary; actual; real. 4. enacted tax rates and laws that will be in effect when the differences are expected to reverse. (h) Per share data Basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings and net loss per share are calculated using the weighted average number of common shares outstanding during the period. The Company uses the treasury stock method for determining dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. , whereby all options whose average price is less than or equal to the daily weighted average share price of the period to date are considered outstanding and are deemed to have been converted at the average share price for the period. Diluted net loss per share is not presented, as the result would be anti-dilutive. (j) Stock-based compensation plans The Company has adopted fair value accounting for stock based compensation. Under this method, all equity instruments awarded to employees and the cost of the service received as considerations are measured and recognized based on the fair value of the equity instruments issued. Compensation expense is recognized over the period of related employee service, usually the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: period of the equity instrument awarded. (i) Revenue recognition The Company's revenues consist of technology license, option fee, royalty, consulting, and equipment sales revenues. Revenues for the sale of equipment are recognized upon shipment and when all significant contractual obligations have been satisfied and collection is reasonably assured. Accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. for warranty An assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party. Warranties are used in a variety of commercial situations. In many instances a business may voluntarily make a warranty. costs, sales returns and other allowances at the time of shipment are based on contract terms and anticipated claims. Revenues derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from multiple element licensing arrangements are recognized in earnings based on the relative fair values of the individual elements. Revenue from license fees derived from the licensing of use of Company technology and network access is recognized when all material services and conditions relating to the license have been satisfied and collection is reasonably assured, provided that the license fee is fixed and determinable Liable to come to an end upon the happening of a certain contingency. Susceptible of being determined, found out, definitely decided upon, or settled. determinable adj. . Option fee revenue is recognized when conditions relating to the option have been satisfied and collection in reasonably assured. Royalty revenues generally consist of fees earned based on a percentage of revenues earned by the Company's licensees and are recognized as the licensee licensee n. a person given a license by government or under private agreement. (See: license, licensor) LICENSEE. One to whom a license has been given. 1 M. Q. & S. 699 n. revenue is earned. Revenues from consulting services are recognized upon the provision of the services.
4. Long term Assets
September 30, 2004
-------------------------------
Net December 31,
Accumulated book 2003 Net
Cost amortization value book value
---------------------------------------------------------------------
Network assets:
Assets available
for network
deployment $ 10,532 $ 10,532 $ 7,272
Assets deployed
in networks 582 125 457 484
---------------------------------------------------------------------
11,114 125 10,989 7,756
Capital assets:
Equipment and
furniture 429 107 322 418
Leasehold
improvements 45 20 25 43
---------------------------------------------------------------------
474 127 347 461
Intellectual
property and
other intangibles:
Patents and
trademarks 380 380 379
---------------------------------------------------------------------
$ 11,968 $ 252 $ 11,716 $ 8,596
---------------------------------------------------------------------
---------------------------------------------------------------------
5. Government contracts and assistance The Company assumed obligations related to the contribution agreement dated September 1, 1999 with the National Research Council Industrial Research Assistance Program ("IRAP IRAP Industrial Research Assistance Program (National Research Council, Canada) IRAP Imposta Regionale sulle Attività Produttive (Italy) IRAP Interleukin-1 Receptor Antagonist Protein "). Pursuant to this agreement the Company is required to repay 150% of the amounts received through the IRAP to a maximum of $750. Payments are to be made at a rate of 4% of the Company's revenue until the earlier of full repayment or August 30, 2011. As a September 30, 2004, the Company has established a liability in the amount of $551. 6. Note payable to supplier The Company assumed the Convertible Promissory Note (the "Note") of US $2,500 with a supplier with the purchase of assets from the former Cell-Loc Inc. The Note bears interest of 6.5% which is payable in semi-annually installments of US $50 with the total balance payable not later than May 1, 2005. The supplier may convert, at any time prior to May 1, 2005, the outstanding balance of the Note into common shares of the Company at a conversion price of US $0.50 per share. Under an amending agreement dated March 5, 2004 the supplier relinquished all previously granted rights to commercial license use of the product in the event of default. Also, as a result of this amending agreement, the Note became a non-recourse instrument with its only security being the conversion rights. The Company has reserved 5 million shares in relation to this obligation.
7. Share capital
(a) Authorized: Unlimited number common shares
(b) Issued and outstanding:
---------------------------------------------------------------------
Common shares Amount
---------------------------------------------------------------------
Shares issued on incorporation 1 $ 1
Issued on purchase of assets
and liabilities (i) 35,052,168 11,130
Transaction costs (note 1(a)) (439)
Stock-based compensation 164
Issued for repayment of debt 40,000 13
Issued for settlement with
dissenting warrant holder 312,500 100
Issue for cash 790,000 150
---------------------------------------------------------------------
36,194,669 $ 11,119
---------------------------------------------------------------------
---------------------------------------------------------------------
(i) As part of the plan of arrangement Capitol Capitol, seat of the U.S. Congress Capitol, seat of the U.S. government at Washington, D.C. It is the city's dominating monument, built on an elevated site that was chosen by George Washington in consultation with Major Pierre L'Enfant. Energy Resources Limited (formerly Cell-Loc Inc.) distributed common shares on a one for one basis. (note 1) (ii) On December 3, 2003 the Company issued 2,294,447 warrants to shareholders who held the warrants in Cell-Loc Inc., on a one to one basis. The exercise prices of the new warrants are the same as the price in the preexisting pre·ex·ist or pre-ex·ist v. pre·ex·ist·ed, pre·ex·ist·ing, pre·ex·ists v.tr. To exist before (something); precede: Dinosaurs preexisted humans. v.intr. warrants in Cell-Loc Inc. (c) Stock option plan: The Company has a stock option plan (the "Option Plan") for directors, officers and employees. The estimated fair value of stock options at grant date has been determined using the Black-Scholes option-pricing model Black-Scholes option-pricing model A model for pricing call options based on arbitrage arguments. Uses the stock price, the exercise price, the risk-free interest rate, the time to expiration, and the expected standard deviation of the stock return. with the following assumptions: (i) the expected dividend rate of 0% and expected volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the ; (ii) risk-free interest rate Risk-Free Interest Rate Describes return available to an investor in a security somehow guaranteed to produce that return. The risk-free interest rate compensataes the investor for the temporary sacrifice of consumption. as based on comparable term Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. Government securities at the date of issue. Expected option life for the option used was equal to the lesser of the actual option life or 2 years. On December 2, 2003 the Company issued 1,297,292 stock options to holders in the former Cell-Loc Inc. options, on a one for one basis. The Company's option exercise price and terms are the same as those provided on the old Cell-Loc Inc. options. The value of these options under Black-Scholes option-pricing model varies between zero and 12 cents per option dependent on the option price and grant life. On December 12, 2003 the Company granted an 840,000 stock options to employees and contractors with an exercise price of 24 cents of which 1/3 were vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) on the grant date and the remaining vesting equally at the end of one and two years of service. The exercise price was based upon the market price of 24 cents at the stock option grant date. The fair value of the options using a volatility of 122.7% was 15.1 cents, 13.6 cents and 12.2 cents for the three vesting periods. On May 19, 2004 the Company granted an 100,000 stock options to an employee with an exercise price of 19 cents of which 1/3 were vested on the grant date and the remaining vest equally at the end of one and two years of service. The fair value of the options using a volatility of 128.5% was 12.2 cents, 11 cents and 10 cents for the three vesting periods. The Company granted 458,000 stock options on July July: see month. 27, 2004 and 20,000 stock options on August 2, 2004 to employees with an exercise price of 16 cents of which 1/3 were vested on the grant date and the remaining vest equally at the end of one and two years of service. The fair value of the options using a volatility of 121.9% was 9.9 cents, 9.0 cents and 8.1 cents for the three vesting periods.
A summary of option activity since December 1, 2003 is shown below:
---------------------------------------------------------------------
Weighted
average Black-Scholes
Range of exercise fair market
Number exercise prices price value range
---------------------------------------------------------------------
---------------------------------------------------------------------
Granted December
2, 2003 432,000 $ 3.30 $47.70 $ 15.96 $ - $ -
Granted December
2, 2003 185,007 1.74 2.75 2.55 - 0.057
Granted December
2, 2003 420,700 1.46 1.68 1.58 - 0.050
Granted December
2, 2003 259,585 0.43 0.60 0.47 0.106 0.122
Granted December
12, 2003 280,000 0.24 0.24 0.151
Granted December
12, 2003 280,000 0.24 0.24 0.136
Granted December
12, 2003 280,000 0.24 0.24 0.122
Granted May 19,
2004 33,334 0.19 0.19 0.122
Granted May 19,
2004 33,333 0.19 0.19 0.110
Granted May 19,
2004 33,333 0.19 0.19 0.100
Granted July 27,
2004 152,671 0.16 0.16 0.099
Granted July 27,
2004 152,666 0.16 0.16 0.090
Granted July 27,
2004 152,663 0.16 0.16 0.081
Granted August 2,
2004 6,667 0.16 0.16 0.099
Granted August 2,
2004 6,667 0.16 0.16 0.090
Granted August 2,
2004 6,666 0.16 0.16 0.081
Cancelled (386,530) 0.24 27.00 3.70 - 0.151
---------------------------------------------------------------------
Outstanding at
September 30,
2004 2,328,762 $ 0.16 $47.70 $ 5.74 $ - $0.151
---------------------------------------------------------------------
---------------------------------------------------------------------
A summary of outstanding options is shown below:
------------------------------------------------------------
Options Outstanding
------------------------------------------------------------
Weighted
Number average
outstanding remaining Weighted
at contractual average
Range of exercise September life exercise
price outstanding 30, 2004 (months) price
------------------------------------------------------------
$ 0.16 $ 0.24 1,398,000 52 $ 0.21
0.43 0.60 219,953 25 0.47
1.55 1.68 293,000 29 1.59
2.05 3.30 92,809 16 2.63
10.85 47.70 325,000 6 36.35
------------------------------------------------------------
$ 0.19 $47.70 2,328,762 37 $ 5.74
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
Options exercisable Compensation
------------------------------------------------------------
Number exercisable Weighted average Sep 30, Jun 30,
at September 30, 2004 exercise price 2004 2004
------------------------------------------------------------
466,009 $ 0.20 $ 116 $ 80
219,953 0.47 26 26
293,000 1.59 18 18
92,809 2.63 4 4
325,000 36.35
------------------------------------------------------------
1,396,771 $ 9.43 $ 164 $ 128
------------------------------------------------------------
------------------------------------------------------------
8. Income taxes Income tax expense varies from the amount that would be computed by applying the combined Federal and Provincial statutory tax rates of 38% as well as Barbados Barbados (bärbā`dōz), island state (2005 est. pop. 279,300), 166 sq mi (430 sq km), in the West Indies. The capital and largest city is Bridgetown. Land, People, and Economy The island, E of St. tax of 2%. Income tax disclosure has been provided only relating to the CLTI entity for the current period as comparative information for Cell-Loc was not considered relevant. The resulting income tax expense is determined as follows:
---------------------------------------------------------------------
September 30,
2004
---------------------------------------------------------------------
(ten months)
Recovery - 38% rate applied to a loss before income tax $ (910)
Decrease resulting from :
Benefit of future tax assets not recognized 848
Non-deductible stock option compensation expense 62
---------------------------------------------------------------------
$ -
---------------------------------------------------------------------
---------------------------------------------------------------------
The significant components of the Company's future income tax assets
and liabilities are as follows:
---------------------------------------------------------------------
September 30, 2004
------------------------------
Canada Barbados Total
---------------------------------------------------------------------
Future tax assets (liabilities):
Net operating losses $ 910 $ 2 $ 912
Stock option compensation (62) (62)
Capital and intangible assets - 125 125
---------------------------------------------------------------------
Net future tax assets before
valuation allowance 848 127 975
Future tax asset valuation allowance (848) (127) (975)
---------------------------------------------------------------------
Net future asset valuation allowance $ - $ - $ -
---------------------------------------------------------------------
---------------------------------------------------------------------
From the purchase of assets from the former Cell-Loc Inc., the Company has capital cost pools of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $11,000 for income tax purposes, which approximated the carrying value of the network and capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) for accounting purposes at the transaction date. 9. Revenue Revenue of $100 was realized in December 2003 relative to a license previously recorded as deferred revenue. 10. Financial instruments Financial instruments are comprised of cash and cash equivalents, accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying , accounts payable and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. . The carrying value of the Company's financial assets Financial assets Claims on real assets. and liabilities approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. their estimated fair values as at September 30, 2004 due to their short terms to maturity. The Company is exposed to interest rate risk to the extent that it carries cash and cash equivalents, and available market interest rates, from which the Company earns interest revenue, fluctuate. 11. Commitments and contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. (a) Future minimum annual lease payments under tower and office operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. are as follows:
---------------------------------------------------------------------
Operating Leases
---------------------------------------------------------------------
2004 $ 67
2005 289
2006 229
2007 179
2008 and subsequent 165
---------------------------------------------------------------------
Total future minimum lease payments $ 929
---------------------------------------------------------------------
---------------------------------------------------------------------
(b) Pursuant to funding received from a third party, the Company is obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to pay a royalty based upon 1% of commercial sales of the Cellocate product to a maximum of approximately $1,400. 12. Subsequent Events (a) Brazil Deployment On November 22, 2004, the Company announced that it had entered into agreements that will result in the deployment of a wireless location network in Sao Paulo, Brazil. The Company will own 74% of the Brazilian operating company (X3 Tecnologia Ltda. - "X3") that will deploy the network. The Company will receive a top line royalty of 5% of the revenue from X3, will receive US$3 million as a license fee, and will sell equipment, currently held as network assets available for deployment by the Company, to X3 that is required to deploy the network. The estimated cost of the deployment and operation start-up is US$3.5 million in addition to the Cell-Loc equipment. CLTI has also entered into an agreement to provide financing for this project in the form of the private placement of a US$3.5 million convertible secured debenture to an arm's length private equity fund. The debenture carries interest at 10% per annum and is convertible, at the Lender's discretion, into common shares of CLTI based on the market price of CLTI's shares at the time of any conversion. CLTI is required to issue 1.2 million common shares to the Lender as a commitment fee. An 8% finder's fee Finder's fee A fee a person or company charges for service as an intermediary in a transaction. finder's fee The charge levied by a person or firm for putting together a deal. is also being paid to an adviser to the Lender through the issuance of common shares. X3 has also entered into an agreement to supply wireless location services See mobile positioning. to a major Brazilian insurance company for a minimum period of 5 years. (b) Conversion of Promissory Note On November 24, 2004, the Company announced that the holder of a US$2.5 million Convertible Promissory Note (See Note 6) has elected to convert the outstanding balance of the Note into common shares of CLTI. Under the terms of the Note, outstanding amounts will be converted to CLTI common shares at a price of US$0.50 per share. As a result of this conversion, CLTI will issue 5 million common shares in payment of the principal amount and 458,336 shares in payment of accrued interest of US$ 229,168. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion