Chai-Na-Ta Corp. Reports 2003 Third Quarter Results.Business Editors/Health/Medical Writers RICHMOND Richmond, cities, United States Richmond. 1 City (1990 pop. 87,425), Contra Costa co., W Calif., on San Pablo Bay, an inlet of San Francisco Bay; inc. 1905. , British Columbia--(BUSINESS WIRE)--Nov. 17, 2003 Chai-Na-Ta Corp. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). : CCCFF)(TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : CC), the world's largest supplier of North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. ginseng ginseng (jĭn`sĕng), common name for the Araliaceae, a family of tropical herbs, shrubs, and trees that are often prickly and sometimes grow as climbing forms. , today announced a smaller net loss of $53,000 ($0.00 per basic share) in the quarter ended September September: see month. 30, 2003 compared to a net loss of $249,000 ($0.02 per basic share) in the same period last year. Revenue decreased to $0.5 million in the 2003 third quarter from $3.8 million in the quarter ended September 30, 2002. Third quarter revenue this year resulted mainly from seed sales, since nearly all of the 2002 fall harvest (tool, networking) Harvest - A highly scalable, customisable system for discovering resources on the Internet. Version: 1.3. http://tardis.ed.ac.uk/harvest/. was sold in the first half of 2003. The gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. rose to 71% in the third quarter of 2003 from a negative gross margin of 1% in the same period last year. "We continue to anticipate that Chai-Na-Ta will be significantly more profitable on an operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before basis this year than it was in 2002 - and that net earnings will rise substantially year over year," said William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack Zen Zen Important school of Buddhism that claims to transmit the experience of enlightenment achieved by the Buddha Gautama. Arising as Chan in China in the 6th century (introduced by Bodhidharma), it divided into two schools, the Southern school, which believed in sudden , Chairman and Chief Executive Officer. "As we expected, ginseng root prices have moved above the $17 per pound range and we believe that they will continue to rise." "Moreover, our financial position remains very strong, despite the seasonal impact of lower third quarter sales. Our fall harvest is about half completed and it is going well. We anticipate selling some of this root in the fourth quarter of 2003," Mr. Zen added. During the first nine months of 2003, revenue fell to $11.8 million from $12.7 million in the same period of the prior year. The gross profit margin was 33% in the nine months ended September 30, 2003 compared to a gross profit margin of 5% in the same period last year. Net earnings were $1.4 million ($0.10 per basic share) in the nine months ended September 30, 2003 compared to a net loss of $0.4 million ($0.02 per basic share) in the prior year period. Chai-Na-Ta's cash position at September 30, 2003 was $0.2 million compared to $2.8 million at December December: see month. 31, 2002. The Company's working capital position at the end of the 2003 third quarter was a surplus of $9.1 million, compared to a surplus of $12.1 million at December 31, 2002. "I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in pleased to note that early this month, Chai-Na-Ta moved its headquarters from leased premises premises n. 1) in real estate, land and the improvements on it, a building, store, shop, apartment, or other designated structure. The exact premises may be important in determining if an outbuilding (shed, cabana, detached garage) is insured or whether a person in Langley Lang·ley , Mount A peak, 4,227.9 m (14,026 ft) high, in the Sierra Nevada of southern California. lang·ley n. pl. to office space that we bought in nearby Richmond, British Columbia This page is for the city of Richmond, British Columbia. For the federal electoral district in this locality see Richmond (electoral district); for the provincial electoral district see Richmond (provincial electoral district). ," said Mr. Zen. "Not only do we have the financial flexibility required to handle this purchase but it represents significant savings in rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. payments over the long term. Furthermore, we now have the right premises to set up our first showroom, as we pursue plans to enhance Chai-Na-Ta's profile." Chai-Na-Ta Corp., based in Richmond, British Columbia, is the world's largest supplier of North American ginseng. The Company farms, processes and distributes North American ginseng as bulk root, and supplies processed material for the manufacture of value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: ginseng-based products. This news release 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 reflect the Company's expectations regarding future events. These forward-looking statements involve risks and uncertainties, and actual events could differ materially from those projected. Such risks and uncertainties include, but are not limited to, the success of the Company's ongoing research programs, general business conditions, and other risks as outlined in the Company's periodic filings, Annual Report, and Form 20-F. 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 For the nine months ended September 30, 2003 The following discussion and analysis should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. 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 the Company and notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. . Amounts are expressed 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 , unless otherwise specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. . OPERATING RESULTS For the three months ended September 30, 2003, revenue decreased 87% to $0.5 million from $3.8 million for the same period last year. Revenue in the third quarter of 2003 was mostly seeds sales and nearly all of the 2002 fall harvest was sold in the previous two quarters. For the nine months ended September 30, 2003, revenue decreased 7% to $11.8 million from $12.7 million for the same period last year. The Company recorded a gross profit margin of 71% in the third quarter of 2003 compared to a negative gross margin of 1% in the third quarter of 2002. For the nine months ended September 30, 2003 the Company recorded a gross margin of 33%, as compared to a gross margin of 5% for the nine months ended September 30, 2002. The lower gross margin in 2002 was mainly due to the 2001 harvest in British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography being hard hit by rust that reduced the prices of lower grade root. For the three months ended September 30, 2003, selling, general and administrative expenses were $0.4 million, or 78% of revenue, compared to $0.3 million, or 9% of revenue, for the same period last year. These expenditures were $1.3 million, or 11% of revenue for the nine months ended September 30, 2003, compared to $1.3 million, or 10% of revenue for the same period last year. The $1 million write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of crop cost in the nine months ended September 30, 2003 was due to an unusually late frost at one of the Company's farms in British Columbia, which severely damaged 57 acres of ginseng plants. The surviving plants represent insufficient in·suf·fi·cient adj. 1. Not sufficient. 2. Incapable of proper functioning. return on investment to warrant ongoing cultivation cultivation, tilling or manipulation of the soil, done primarily to eliminate weeds that compete with crops for water and nutrients. Cultivation may be used in crusted soils to increase soil aeration and infiltration of water; it may also be used to move soil to or . The net loss was $53,000 ($0.00 per share) and $249,000 ($0.02 per share) for the three months ended September 30, 2003 and 2002, respectively. Net earnings were $1.4 million ($0.10 per share) for the nine months ended September 30, 2003, compared to net loss of $0.4 million ($0.02 per share) for the corresponding period last year. FINANCIAL POSITION AND LIQUIDITY The cash deficit from operations was $2.7 million for the three months ended September 30, 2003, compared to a surplus of $0.4 million for the same period in 2002. The cash surplus from operations was $2.6 million for the nine months ended September 30, 2003, compared to a surplus of $4.5 million for the same period in 2002. The Company's cash position as at September 30, 2003 was $0.2 million, compared to $2.8 million as at December 31, 2002. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses during the nine months period was used for the repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of 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. borrowings and to finance the increase in ginseng crops and capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) . The working capital position of the Company as at September 30, 2003 was a surplus of $9.1 million, compared to a surplus of $12.1 million as at December 31, 2002. Current and non-current crop costs totaled $24.4 million at September 30, 2003, a net increase of 5.9 million during the nine months ended September 30, 2003 as compared to $18.5 million at December 31, 2002. RISKS AND UNCERTAINTIES The Company has not had any significant changes to its risks and uncertainties from those that were disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in the Company's fiscal 2002 Management's Discussion and Analysis included in the 2002 Annual Report. OUTLOOK With 1,221 acres currently under cultivation, the Company remains the market leader in ginseng farming and will continue to focus on reducing costs, increasing efficiency and maximizing max·i·mize tr.v. max·i·mized, max·i·miz·ing, max·i·miz·es 1. To increase or make as great as possible: production. The Company will also continue its balanced planting strategy A strategy is 'a long term plan of action designed to achieve a particular goal'. For planting, this is the achievement of design objectives. The strategy will also comprise information on the species to be used and the planting techniques to be employed. in both Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. and British Columbia growing regions A growing region is an area suited by climate and soil conditions to the cultivation of a certain type of crop. Most crops are cultivated not in one place only, but in several distinct regions in diverse parts of the world. and to explore opportunities to direct bulk roots into value-added markets. FORWARD-LOOKING STATEMENTS As a cautionary note, this MD&A contains forward-looking statements that reflect the Company's expectations regarding future events. Since forward- looking statements address future events and conditions by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements, by reasons of factors such as future changes in root prices.
CHAI-NA-TA CORP.
Interim Consolidated Financial Statements
Nine-month period ended September 30, 2003
(Unaudited - Prepared by Management)
CHAI-NA-TA CORP.
Consolidated Balance Sheets
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September 30 December 31
In thousands of 2003 2002
Canadian dollars (Unaudited) (Audited)
--------------------------------------------------------------------
$ $
ASSETS
Current assets
Cash and cash equivalents 180 2,757
Accounts receivable 92 137
Inventory 394 8,083
Ginseng crops 9,036 7,578
Prepaid expenses and other assets 76 86
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9,778 18,641
Ginseng crops 15,357 10,922
Capital assets 7,023 6,649
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32,158 36,212
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--------------------------------------------------------------------
LIABILITIES
Current liabilities
Short-term borrowings - 3,632
Accounts payable and accrued liabilities 667 772
Customer deposits - 1,994
Current portion of long-term debt 39 126
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706 6,524
Long-term debt 91 26
Future income taxes 1,444 1,130
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2,241 7,680
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SHAREHOLDERS' EQUITY
Share capital 38,200 38,200
Cumulative translation adjustments (61) (71)
Deficit (8,222) (9,597)
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29,917 28,532
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32,158 36,212
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On behalf of the Board:
William Zen Steven T.M. Hsieh
Director Director
CHAI-NA-TA CORP.
Consolidated Statements of Deficit
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Unaudited Three months ended Nine months ended
in thousands of September 30 September 30 September 30 September 30
Canadian dollars 2003 2002 2003 2002
--------------------------------------------------------------------
$ $ $ $
Balance,
beginning
of period (8,169) (10,032) (9,597) (9,931)
Net earnings (loss)
for the period (53) (249) 1,375 (350)
--------------------------------------------------------------------
Balance, end of
period (8,222) (10,281) (8,222) (10,281)
--------------------------------------------------------------------
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CHAI-NA-TA CORP.
Consolidated Statements of Operations
--------------------------------------------------------------------
Unaudited Three months ended Nine months ended
in thousands of September 30 September 30 September 30 September 30
Canadian dollars 2003 2002 2003 2002
--------------------------------------------------------------------
$ $ $ $
Revenue 485 3,835 11,781 12,689
Cost of goods
sold 142 3,860 7,857 12,086
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343 (25) 3,924 603
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Selling, general,
and administrative
expenses 376 345 1,265 1,278
Interest on
short-term debt - 7 - 20
Writedown of crop
costs - - 1,000 -
--------------------------------------------------------------------
376 352 2,265 1,298
--------------------------------------------------------------------
Operating
income/(loss) (33) (377) 1,659 (695)
Other income (loss) (6) 38 30 74
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Earnings/(loss)
before taxes (39) (339) 1,689 (621)
Provision for income
taxes (14) 90 (314) 271
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NET EARNINGS/(LOSS)
FOR THE PERIOD (53) (249) 1,375 (350)
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--------------------------------------------------------------------
--------------------------------------------------------------------
Basic
earnings/(loss)
per share ($0.00) ($0.02) $0.10 ($0.02)
--------------------------------------------------------------------
Fully diluted
earnings/(loss)
per share ($0.00) ($0.02) $0.04 ($0.02)
--------------------------------------------------------------------
Weighted
average number
of shares
used to calculate
basic earnings/
(loss) per share 14,264,508 14,264,508 14,264,508 14,264,508
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Weighted average
number of shares
used to calculate
fully diluted
earnings/(loss)
per share 34,663,657 14,264,508 34,663,657 14,264,508
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CHAI-NA-TA CORP.
Consolidated Statements of Cash Flows
--------------------------------------------------------------------
Unaudited Three months ended Nine months ended
in thousands of September 30 September 30 September 30 September 30
Canadian dollars 2003 2002 2003 2002
--------------------------------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
Net earnings/(loss)
for the period (53) (249) 1,375 (350)
Items not affecting
cash
Depreciation and
amortization 11 19 50 58
Gain on disposition
of subsidiaries - - - (20)
Future income taxes 14 (90) 314 (271)
Writedown of crop
costs - - 1,000 -
--------------------------------------------------------------------
Net earnings/(loss)
after items not
affecting cash (28) (320) 2,739 (583)
Changes in non-cash
operating assets
and liabilities
(Note 4) (305) 2,709 4,543 9,161
Changes in
non-current cash
crop costs (2,350) (2,008) (4,653) (4,076)
--------------------------------------------------------------------
(2,683) 381 2,629 4,502
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FINANCING ACTIVITIES
Line of credit - - - (1,650)
Short-term
borrowings - - (3,632) (2,982)
Repayment of long
term debt - net (4) (33) (22) (474)
--------------------------------------------------------------------
(4) (33) (3,654) (5,106)
--------------------------------------------------------------------
INVESTING ACTIVITIES
Net proceeds from
disposition of
subsidiaries - - - 459
Purchase of capital
assets, net (883) (70) (1,441) (480)
--------------------------------------------------------------------
(883) (70) (1,441) (21)
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EFFECT OF EXCHANGE
RATE CHANGES
ON CASH AND CASH
EQUIVALENTS (1) 6 (111) (23)
--------------------------------------------------------------------
NET INCREASE
(DECREASE) IN CASH
AND CASH EQUIVALENTS (3,571) 284 (2,577) (648)
CASH AND CASH
EQUIVALENTS
BEGINNING OF THE
PERIOD 3,751 1,155 2,757 2,087
--------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS
END OF THE PERIOD 180 1,439 180 1,439
--------------------------------------------------------------------
--------------------------------------------------------------------
Represented by:
Cash 180 1,079 180 1,079
Term deposits - 360 - 360
--------------------------------------------------------------------
180 1,439 180 1,439
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CHAI-NA-TA CORP.
Notes to the Interim Consolidated Financial Statements
1. Summary of significant accounting policies a) Interim financial statements These consolidated financial statements have been prepared 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 the 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. Institute of Chartered Accountants' ("CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) ") recommendations for the preparation of interim financial statements. Certain information and note disclosures normally included in the Company's annual consolidated financial statements are not presented. These interim consolidated financial statements and notes should be read in conjunction with the Company's annual consolidated financial statements for the year ended December 31, 2002. These interim consolidated financial statements are not necessarily indicative indicative: see mood. of the results to be expected for the year ending December 31, 2003. b) Use of estimates The presentation of financial statements in conformity with Canadian 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, liabilities, revenues, expenses and other disclosures as at the end of or during the reporting periods. Significant estimates are used for, but not limited to, the accounting for doubtful accounts, net realizable value Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. of assets, future income taxes 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. . Actual results may differ from those estimates. c) These interim consolidated financial statements follow the same accounting policies and methods of their application as the Company's most recent annual consolidated financial statements except for the changes in accounting principles for the disclosure of guarantees described below. Disclosure of Guarantees The Company has adopted the recommendations of the Accounting Guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. AcG-14 with respect to Disclosure of Guarantees effective January January: see month. 1, 2002. This section describes the nature and types of guarantees, provides examples of those guarantees covered by the scope of AcG-14, and details the prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). disclosures. There is no material impact on the financial statements resulting from the adoption of AcG-14 either in the current period or the prior period presented. 2. Earnings (loss) per common share Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. 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 (loss) per share reflects the potential dilution potential dilution The decrease in the proportional equity position of a share of stock that will occur eventually if additional authorized shares are actually issued. of common shares by including other common shares equivalents in the weighted average number of common shares outstanding for a period, if dilutive. Common share equivalents consist of convertible preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. and the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. number of shares issuable upon the exercise of stock options and share purchase warrants.
--------------------------------------------------------------------
Net Earnings Number of
(Loss) shares Earnings
Unaudited in thousands in thousands (Loss)
Three months ended (numerator) (denominator) per share
--------------------------------------------------------------------
$ $
September 30, 2003
------------------
Basic (53) 14,265 (0.00)
Effect of common share
equivalents - - -
--------------------------------------------------------------------
Diluted (53) 14,265 (0.00)
--------------------------------------------------------------------
--------------------------------------------------------------------
September 30, 2002
------------------
Basic (249) 14,265 (0.02)
Effect of common share
equivalents - - -
--------------------------------------------------------------------
Diluted (249) 14,265 (0.02)
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Net Earnings Number of
(Loss) shares Earnings
Unaudited in thousands in thousands (Loss)
Nine months ended (numerator) (denominator) per share
--------------------------------------------------------------------
$ $
September 30, 2003
------------------
Basic 1,375 14,265 0.10
Effect of common share
equivalents - 20,399 (0.06)
--------------------------------------------------------------------
Diluted 1,375 34,664 0.04
--------------------------------------------------------------------
--------------------------------------------------------------------
September 30, 2002
------------------
Basic (350) 14,265 (0.02)
Effect of common share
equivalents - - -
--------------------------------------------------------------------
Diluted (350) 14,265 (0.02)
--------------------------------------------------------------------
--------------------------------------------------------------------
At September 30, 2003 there were 10,000 stock options outstanding
that could potentially dilute basic earnings per share in the future,
but were not included in the computation of diluted earnings per
share because the effects would have been anti-dilutive.
3. Share capital
--------------------------------------------------------------------
Unaudited Number of
In thousands Shares Amount
--------------------------------------------------------------------
$
Common Shares
-------------
Balance as at December 31, 2002 and
September 30, 2003 14,265 24,321
Preferred Shares
----------------
Balance as at December 31, 2002 and
September 30, 2003 20,399 13,879
--------------------------------------------------------------------
38,200
--------------------------------------------------------------------
--------------------------------------------------------------------
4. Changes in non-cash operating items
--------------------------------------------------------------------
Unaudited Three months ended
in thousands of September 30 September 30
Canadian dollars 2003 2002
--------------------------------------------------------------------
$ $
Accounts receivable (46) (17)
Inventory 124 3,749
Ginseng crops (570) (514)
Prepaid expenses and other assets 100 4
Accounts payable and accrued liabilities 87 (5)
Customer deposits - (508)
--------------------------------------------------------------------
(305) 2,709
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Unaudited Nine months ended
in thousands of September 30 September 30
Canadian dollars 2003 2002
--------------------------------------------------------------------
Accounts receivable 45 169
Inventory 7,653 10,066
Ginseng crops (1,226) 388
Prepaid expenses and other assets 10 34
Accounts payable and accrued
liabilities (105) (140)
Customer deposits (1,834) (1,356)
--------------------------------------------------------------------
4,543 9,161
--------------------------------------------------------------------
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5. Segmented Information
The Company operates in one industry segment and three geographic
regions.
--------------------------------------------------------------------
Unaudited Three months ended
in thousands of September 30 September 30
Canadian dollars 2003 2002
--------------------------------------------------------------------
Revenue from operations located in: $ $
Canada 391 102
United States - 62
Asia 94 3,671
--------------------------------------------------------------------
485 3,835
--------------------------------------------------------------------
--------------------------------------------------------------------
Net earnings (loss) from operations
located in: $ $
Canada 9 333
United States (1) 24
Asia (61) (606)
--------------------------------------------------------------------
(53) (249)
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Unaudited Nine months ended
in thousands of September 30 September 30
Canadian dollars 2003 2002
--------------------------------------------------------------------
Revenue from operations located in: $ $
Canada 400 102
United States 169 145
Asia 11,212 12,442
--------------------------------------------------------------------
11,781 12,689
--------------------------------------------------------------------
--------------------------------------------------------------------
Net earnings (loss) from operations
located in: $ $
Canada 482 598
United States 68 57
Asia 825 (1,005)
--------------------------------------------------------------------
1,375 (350)
--------------------------------------------------------------------
--------------------------------------------------------------------
Long-lived assets comprise all assets not classified as current
assets.
--------------------------------------------------------------------
Unaudited
in thousands of September 30 September 30
Canadian dollars 2003 2002
--------------------------------------------------------------------
Long-lived assets from operations
located in: $ $
Canada 22,374 23,587
United States - -
Asia 6 24
--------------------------------------------------------------------
22,380 23,611
--------------------------------------------------------------------
--------------------------------------------------------------------
Major customers:
For the nine months ended September 30, 2003, the Company had sales
to two customers that accounted for $11,105,000 of revenue (September
30, 2002 - three customers, $11,606,000 ).
6. Reconciliation of earnings to U.S. GAAP
--------------------------------------------------------------------
Unaudited Three months ended
in thousands of September 30 September 30
Canadian dollars 2003 2002
--------------------------------------------------------------------
$ $
Net loss under Canadian GAAP (53) (249)
Adjustments to reflect GAAP differences:
Accounting for interest 4 44
Financial instruments - 38
--------------------------------------------------------------------
Net loss per US GAAP (49) (167)
--------------------------------------------------------------------
Basic loss per share - US GAAP ($0.00) ($0.01)
--------------------------------------------------------------------
--------------------------------------------------------------------
Fully diluted loss per share - US GAAP ($0.00) ($0.01)
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Unaudited Nine months ended
in thousands of September 30 September 30
Canadian dollars 2003 2002
--------------------------------------------------------------------
$ $
Net earnings/(loss) under Canadian GAAP 1,375 (350)
Adjustments to reflect GAAP differences:
Accounting for interest 637 705
Financial instruments 54 106
--------------------------------------------------------------------
Net income per US GAAP 2,066 461
--------------------------------------------------------------------
Basic earnings per share - US GAAP $0.14 $0.03
--------------------------------------------------------------------
--------------------------------------------------------------------
Fully diluted earnings per share - US
GAAP $0.06 $0.01
--------------------------------------------------------------------
--------------------------------------------------------------------
Basic earnings per share were diluted by the outstanding convertible
preferred shares and stock options as at September 30, 2003, except
where such a dilution would be anti-dilutive.
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