SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT
Current Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of earliest event reported: March 11, 1999
Stockgroup.com Holdings, Inc.
Colorado 0-23687 84-1379282
(State of Incorporation) (Commission File Number) (IRS Identification No.)
1000-789 W. Pender Street, Vancouver, British Columbia, Canada V6C 1H2
(Address of principal executive offices)(Zip Code)
(604) 331-0995
(Registrant's telephone number, including area code)
Former address: 1622 York Street, Denver, Colorado 80206
Former name: I-Tech Holdings Group, Inc.
(Former name or address, if changed since last report)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
This 8-K/A filing amends an 8-K/A filed on March 24,1999. Item 5 has been
added and Item 7 is hereby amended to incorporate the 3 year audited Financial
Statements for 1998, 1997 and 1996; a Pro Forma Financial Statement for 1998;
and information statements which translate these statements to U.S. Dollars.
Item 5. Other Events.
Effective May 6, 1999 the name of the Company was changed from I-Tech
Holdings Group, Inc. to Stockgroup.com Holdings, Inc. As a consequence of this
name change, the common share capital of the Company has been assigned the
following new identification numbers:
CUSIP number: 861273 10 0
ISIN Number: US8612731005
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
The audited financial statements of Stock Group for the periods ending
December 31, 1998, 1997 and 1996 are filed by this amendment. These statements
include:
1. Independent Auditors' Report pertaining to audit of statements for
1998, 1997 and 1996
2. Balance Sheets - December 31, 1998, 1997 and 1996 (In Canadian
Dollars)
3. Statements of Income and Retained Earnings (Deficit) Years Ended
December 31, 1998, 1997 and 1996 (In Canadian Dollars)
4. Statements of Changes in Financial Position Years Ended December 31,
1998, 1997 and 1996 (In Canadian Dollars)
5. Notes To Financial Statements Years Ended December 31, 1998, 1997 and
1996 (In Canadian Dollars)
(b) Pro forma Financial Statements
The Pro forma financial statements for the period ending December 31, 1998
are filed by this amendment. These statements include:
1. Compilation Report regarding Pro-Forma Consolidated Statements
2. Pro-Forma Consolidated Balance Sheet - December 31, 1998 (In Canadian
Dollars)
3. Pro-Forma Consolidated Statement of Income and Retained Earnings
(Deficit) Year Ended December 31, 1998 (In Canadian Dollars)
4. Pro-Forma Consolidated Statement of Changes in Financial Position Year
Ended December 31, 1998 (In Canadian Dollars)
5. Notes To Consolidated Financial Statements Year Ended December 31,
1998 (In Canadian Dollars)
<PAGE>
(c) Information addendum
The Financial Statements and Pro-Forma Statements included in this filing
are presented in Canadian Dollars and were prepared using Canadian Generally
Accepted Accounting Principles (Canadian GAAP). Canadian GAAP is highly similar,
but not identical, to U.S. GAAP. For information purposes the following
information addendum provides statements which are converted into U.S. Dollars
at the exchange rates prevailing at the end of each period. They are provided
for information purposes only and were not prepared using U.S. GAAP. These
information statements include:
1. Balance Sheets - December 31, 1998, 1997 and 1996 (In U.S. Dollars)
2. Statements of Income and Retained Earnings (Deficit) Years Ended
December 31, 1998, 1997 and 1996 (In U.S. Dollars)
3. Statements of Changes in Financial Position Years Ended December 31,
1998, 1997 and 1996 (In U.S. Dollars)
4. Pro-Forma Consolidated Balance Sheet - December 31, 1998 (In U.S.
Dollars)
5. Pro-Forma Consolidated Statement of Income and Retained Earnings
(Deficit) Year Ended December 31, 1998 (In U.S. Dollars)
6. Pro-Forma Consolidated Statement of Changes in Financial Position Year
Ended December 31, 1998 (In U.S. Dollars)
7. Conversion table for Canadian to U.S. Dollar Exchange
<PAGE>
(a) Financial Statements of Business Acquired
1. Independent Auditors' Report pertaining to audit of statements for 1998,
1997 and 1996
[LETTERHEAD OF DALE, MATHESON, CARR-HILTON]
AUDITORS' REPORT
To the Directors of
Stock Research Group Inc.
We have audited the balance sheets of Stock Research Group Inc. as at December
31, 1998, 1997 and 1996 and the statements of income and retained earnings and
changes in financial position for each of the years then ended. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1998, 1997
and 1996 and the results of its operations and changes in its financial position
for each of the years then ended in accordance with generally accepted
accounting principles applied on a consistent basis with prior years.
/s/ DALE, MATHESON, CARR-HILTON
CHARTERED ACCOUNTANTS
Vancouver, B.C.
February 28, 1999
Except for Note 11 which is
as of April 2, 1999
<PAGE>
2. Balance Sheets for December 31, 1998, 1997 and 1996 (In Canadian Dollars)
STOCK RESEARCH GROUP INC.
BALANCE SHEETS - DECEMBER 31, 1998, 1997 and 1996
(IN CANADIAN DOLLARS)
- --------------------------------------------------------------------------------
1998 1997 1996
$ $ $
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents -- 45,325 44,951
Short term investments (Note 5) 2,000 40,006 7,471
Accounts receivable, net 151,241 177,200 54,486
Prepaids and other current assets (Note 3) 58,596 10,302 3,172
Due from related company -- 56,000 --
------- ------- -------
211,837 328,833 110,080
PROPERTY AND EQUIPMENT, NET (Note 2) 79,817 77,395 39,488
OTHER ASSETS (Note 3) 26,700 27,900 29,100
- --------------------------------------------------------------------------------
318,354 434,128 178,668
================================================================================
APPROVED BY THE DIRECTORS:
/s/ Marcus New Director
- ------------------------
/s/ Craig Faulkner Director
- ------------------------
- See Accompanying Notes -
<PAGE>
2. Balance Sheets for December 31, 1998, 1997 and 1996 (In Canadian Dollars)
STOCK RESEARCH GROUP INC.
BALANCE SHEETS - DECEMBER 31, 1998, 1997 and 1996
(IN CANADIAN DOLLARS)
- --------------------------------------------------------------------------------
1998 1997 1996
$ $ $
- --------------------------------------------------------------------------------
LIABILITIES
CURRENT LIABILITIES
Bank line of credit (Note 7) 116,050 -- --
Accounts payable and accrued liabilities 103,383 49,917 27,189
Deferred revenue 63,825 116,750 39,975
Income taxes payable -- 285 28,918
Current portion of long-term debt (Note 7) 20,230 20,447 --
-------- -------- --------
303,488 187,399 96,082
LONG-TERM DEBT (Note 7) 31,061 51,891 --
SHAREHOLDER LOANS (Note 9) 18,471 8,658 2,802
-------- -------- --------
353,020 247,948 98,884
-------- -------- --------
STOCKHOLDERS' EQUITY (DEFICIENCY)
CAPITAL STOCK (Note 4) 134 134 134
RETAINED EARNINGS (34,800) 186,046 79,650
-------- -------- --------
(34,666) 186,180 79,784
- --------------------------------------------------------------------------------
318,354 434,128 178,668
================================================================================
- See Accompanying Notes -
<PAGE>
3. Statements of Income and Retained Earnings (Deficit) - Years Ended December
31, 1998, 1997 and 1996 (In Canadian Dollars)
STOCK RESEARCH GROUP INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS (DEFICIT)
YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
1998 1997 1996
$ $ $
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE
Revenues 1,271,894 1,340,613 423,357
Cost of revenues 255,602 190,337 59,618
---------- ---------- ----------
Gross profit 1,016,292 1,150,276 363,739
---------- ---------- ----------
EXPENSES
Operating expenses:
Sales and marketing 394,267 330,917 105,257
Product development 174,195 107,264 14,376
General and administrative 656,747 577,981 161,081
---------- ---------- ----------
1,225,209 1,016,162 280,714
---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS (208,917) 134,114 83,025
OTHER ITEMS, NET (Notes 6) (63,543) 3,896 27,022
---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (272,460) 138,010 110,047
INCOME TAX PROVISION (RECOVERY) (51,614) 31,614 28,918
---------- ---------- ----------
NET INCOME (LOSS) (220,846) 106,396 81,129
RETAINED EARNINGS (DEFICIT), beginning of year 186,046 79,650 (1,479)
- ---------------------------------------------------------------------------------------
RETAINED EARNINGS (DEFICIT), end of year (34,800) 186,046 79,650
=======================================================================================
- ---------------------------------------------------------------------------------------
(LOSS) INCOME PER SHARE (0.06) 0.03 0.02
=======================================================================================
</TABLE>
- See Accompanying Notes -
<PAGE>
4. Statements of Changes in Financial Position - Years Ended December 31,
1998, 1997 and 1996 (In Canadian Dollars)
STOCK RESEARCH GROUP INC.
STATEMENTS OF CHANGES IN FINANCIAL POSITION
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1998 1997 1996
$ $ $
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Net (loss) income (220,846) 106,396 81,129
Add (deduct) non-cash items:
Write down of marketable securities 34,454 -- --
Amortization 24,860 18,860 8,272
-------- -------- --------
(161,532) 125,256 89,401
Net changes in other non-cash operating accounts
Accounts receivable 25,959 (122,714) (37,921)
Short term investments 2,920 (32,535) 2,992
Prepaid expenses and other current assets (47,379) (34,562) (3,049)
Accounts payable 54,098 22,727 11,686
Deferred revenue (52,925) 76,775 34,225
-------- -------- --------
(178,859) 34,947 97,334
-------- -------- --------
FINANCING ACTIVITIES
Advances from shareholders 9,813 5,856 (6,445)
Long-term debt (21,047) 72,338 --
-------- -------- --------
(11,234) 78,194 (6,445)
-------- -------- --------
INVESTING ACTIVITIES
Due to (from) related company 56,000 (56,000) --
Purchase of property and equipment (27,282) (56,767) (36,446)
-------- -------- --------
28,718 (112,767) (36,446)
-------- -------- --------
INCREASE (DECREASE) IN CASH (161,375) 374 54,443
CASH (DEFICIENCY), beginning of year 45,325 44,951 (9,492)
- ------------------------------------------------------------------------------------------
CASH (DEFICIENCY), end of year (116,050) 45,325 44,951
==========================================================================================
</TABLE>
- See Accompanying Notes -
<PAGE>
5. Notes To Financial Statements - Years Ended December 31, 1998, 1997 and
1996 (In Canadian Dollars)
STOCK RESEARCH GROUP INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN CANADIAN DOLLARS)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
a) Amortization
Amortization is provided at the following annual rates. (Except in the
year of purchase in which the Company uses 1/2 the normal rate):
Computer equipment 30% Declining balance
Office furniture and equipment 20% Declining balance
Leasehold improvements 20% Straight line
Amortization policies are reviewed on a regular basis to ensure the
carrying value of capital assets is equal to or greater than their net
recoverable amount with reference to the present value of future
expected cash flows from such assets. Adjustments, if any, to carrying
value are recorded in the period of determination of an impairment in
value.
b) Financial instruments
The Company's financial instruments consist of accounts receivable,
marketable securities, shareholder loans and associated company loans,
the fair value of which approximates their carrying value.
c) Deferred revenue
Deferred revenue consists of deposits paid in advance for future
services. The company regularly receives deposits for six months to
twelve months in respect of future services.
d) Measurement uncertainty
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Significant areas requiring
the use of management estimates relate to the determination of
impairment of assets, useful lives for depreciation and amortization
and income taxes. Financial results as determined by actual events
could differ from those estimates.
e) Risk management
The Company deals with numerous customers and is not exposed to
concentrations of credit or foreign exchange risk.
The Company is in the process of converting its internal software and
data management systems to be year 2000 compliant. Management does not
anticipate significant cost or down time resulting from the year 2000
issue.
<PAGE>
e) Risk management - Cont'd
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in
errors when information using year 2000 dates is processed. In
addition, similar problems may arise in some systems which use certain
dates in 1999 to represent something other than a date. The effects of
the Year 2000 Issue may be experienced before, on, or after January 1,
2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure
which could affect an entity's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the
Year 2000 Issue affecting the entity, including those related to the
efforts of customers, suppliers, or other third parties, will be fully
resolved.
f) Foreign exchange
Balance sheet items denominated in U.S. dollars are translated into
Canadian dollars at exchange rates prevailing at the balance sheet
date for monetary items and at exchange rates in effect at the
transaction date for non-monetary items.
Realized gains and losses from foreign currency transactions are
charged to income in the year.
g) Research and development costs
The company expenses all market research and product development costs
as incurred.
- --------------------------------------------------------------------------------
2. PROPERTY AND EQUIPMENT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
$ $ $
----------------------------------- ------- -------
Accumulated
Cost Amortization Net Net Net
---- ------------ --- --- ---
<S> <C> <C> <C> <C> <C>
Computer equipment 103,890 43,386 60,504 57,988 28,273
Computer software -- -- -- -- 264
Office furniture and equipment 27,985 9,167 18,818 19,407 10,951
Leasehold improvements 550 55 495 -- --
------- ------- ------- ------- -------
132,425 52,608 79,817 77,395 39,488
======= ======= ======= ======= =======
</TABLE>
(See Note 7)
<PAGE>
- --------------------------------------------------------------------------------
3. OTHER ASSETS
- --------------------------------------------------------------------------------
Other assets include a loan to an officer/employee for housing. This loan
is repayable over 25 years with interest at current interest rates. The
year end outstanding balances of the loan for the past three years are as
follows: 1998 - $26,400; 1997 - $27,600; 1996 - $28,800. The current
portion of the loan, included in prepaids and other current assets, was
$1,200 in each of the past three years.
- --------------------------------------------------------------------------------
4. CAPITAL STOCK
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
# $ # $ # $
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Authorized
100,000,000 (1997 and 1996 - 200)
Issued
Balance, beginning of year 200 134 200 134 200 134
Share split (18,300 for 1) 3,659,800 -- 3,659,800 -- 3,659,800 --
--------- --------- --------- --------- --------- ---------
3,660,000 134 3,660,000 134 3,660,000 134
========= ========= ========= ========= ========= =========
</TABLE>
During the year the Company's authorized and issued share capital was split
18,300 for 1. Authorized Class A common shares were then increased to
100,000,000 shares.
(See Note 11)
- --------------------------------------------------------------------------------
5. SHORT TERM INVESTMENTS
- --------------------------------------------------------------------------------
Marketable securities are recorded at lower of cost or market value.
1998 1997 1996
$ $ $
------ ------ ------
Cost 36,454 40,006 7,471
Market 2,000 40,006 20,280
------ ------ ------
Write-down to market 34,454 NIL NIL
====== ====== ======
<PAGE>
- --------------------------------------------------------------------------------
6. OTHER ITEMS
- --------------------------------------------------------------------------------
1998 1997 1996
$ $ $
------- ------- -------
Writedown of marketable securities (Note 5) (34,454) -- --
Loan loss provision (36,568) -- --
Gain on sale of marketable securities 7,479 3,896 27,022
------- ------- -------
(63,543) 3,896 27,022
======= ======= =======
- --------------------------------------------------------------------------------
7. LONG-TERM DEBT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
$ $ $
------ ------ ------
<S> <C> <C> <C>
Long-term debt consists of two separate bank loans,
each bearing interest at prime plus 1% 51,291 72,338 --
Less: current portion 20,230 20,447 --
------ ------ ------
31,061 51,891 --
====== ====== ======
</TABLE>
Loan 1 - Repayable on demand, with monthly payments of $915 including
interest, due November 30, 2002.
Loan 2 - Special term loan secured by a general security agreement on
all assets of the company, certain equipment and accounts
receivable. The loan is repayable at $1,183 per month including
interest.
Estimated principal payments required in each of the next five years are:
1999 $20,370
2000 10,031
2001 9,603
2002 10,349
2003 938
The security in Loan 2 above includes the company's line of credit.
<PAGE>
- --------------------------------------------------------------------------------
8. LEASE COMMITMENTS
- --------------------------------------------------------------------------------
The Company has entered into lease commitments for office premises. The
lease commitments for 1999 and expiry dates are as follows:
Estimated
Lease Lease Annual
# Expiry Payments
----- ------ ---------
1 - Calgary July, 2000 $17,050
2 - Vancouver January, 2000 52,413
3 - Vancouver January, 2002 67,680
4 - Toronto March, 1999 13,012
Annual estimated lease commitments:
$
-----
1997 65,864
1998 106,861
1999 140,396
2000 80,573
2001 67,680
2002 5,640
- --------------------------------------------------------------------------------
9. RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
i) By agreement dated August 1, 1999, the company contracted with a
previously unrelated company for the provision of comprehensive
operational management services. The contract extends for five years
and provides for monthly payments of $12,500. The contract includes
various termination and renewal clauses. The company can terminate the
contract without cause upon thirty days written notice and payment of
one year's contract fees.
ii) Included in accounts payable is an amount of $11,192 due to the
contracted company.
iii) Shareholder loans have no fixed terms of repayment and are
non-interest bearing.
<PAGE>
10. SUPPLEMENTAL INCOME STATEMENT INFORMATION
Included in expenses are the following:
1998 1997 1996
$ $ $
---- ---- ----
Interest on long-term debt 11,440 5,311 --
Amortization 24,860 18,860 8,272
- --------------------------------------------------------------------------------
11. SUBSEQUENT EVENTS
- --------------------------------------------------------------------------------
i) Subsequent to the year end, the company issued 240,000 shares from
treasury at a price of $2.50 per share for total cash proceeds of
$600,000.
ii) By a share exchange agreement dated March 11, 1999, the company
(S.R.G.) entered into a series of transactions whereby 3,900,000
issued and outstanding shares of S.R.G. were exchanged for 3,900,000
shares of 579818 B.C. Ltd. a Canadian subsidiary of I-Tech Holdings
Group Inc. a U.S. N.A.S.D. Bulletin Board listed company.
The exchanged shares are convertible into shares of the U.S. parent
company through a trustee "Stocktrans Inc." who holds the conversion
shares of the parent in trust for the company pursuant to a voting and
exchange agreement giving the S.R.G. shareholders effective control
over I-Tech. The transaction constitutes a reverse takeover for
accounting purposes. Under reverse takeover accounting S.R.G. is
deemed to be the continuing entity and parent company. The assets,
liabilities and operations of S.R.G. are accounted for at historical
cost and the number of shares outstanding of the public company, after
the transaction, will become the outstanding share capital of the
combined entity.
Neither the exchanged or exchangeable shares have been registered under
U.S. Securities Legislation and are restricted from trading until a
registration statement under the Securities Act is filed and accepted.
The registration statement was in process as at April 2, 1999 but was not
completed.
75,000 shares of I-Tech Holdings Group Inc. issued prior to the acquisition
became free trading pursuant to a registration filing on March 18, 1999
with Regulatory Authorities.
<PAGE>
- --------------------------------------------------------------------------------
12. RECONCILIATION OF CANADIAN TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING
POLICIES
- --------------------------------------------------------------------------------
These financial statements are prepared using Canadian Generally Accepted
Accounting Policies (GAAP) which do not differ materially from United
States GAAP principles with respect to the accounting and disclosures in
these financial statements except as set out below:
a) Accounting principles generally accepted in the United States require
disclosure of the amount of any allowance for doubtful accounts.
Balance sheet items under U.S. GAAP would be as follows:
<TABLE>
<CAPTION>
December December December
31, 1998 31, 1997 31, 1996
------- ------- -------
<S> <C> <C> <C>
Accounts receivable 243,283 199,242 76,528
Less: allowance for doubtful accounts 92,042 22,042 22,042
------- ------- -------
Accounts receivable as reported in accordance
with Canadian GAAP 151,241 177,200 54,486
======= ======= =======
</TABLE>
b) An analysis of doubtful accounts pursuant to Schedule II Regulation
S-X is as follows:
<TABLE>
<CAPTION>
Balance of Expense Written-off Balance of
beginning of during during end of
period period period period
$ $ $ $
------------ ------- ----------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1998 22,042 86,670 16,670 92,042
Year ended December 31, 1997 22,042 115,518 115,518 22,042
Year ended December 31, 1996 -- 31,116 9,074 22,042
</TABLE>
c) Under U.S. GAAP the statement of changes in financial position is
presented as a statement of cash flows. Under a cash flow format,
changes in balance sheet accounts, which are netted for Canadian GAAP
presentation, are shown as gross amounts in U.S. GAAP format. No
reconciliation is provided for these accounts.
Under U.S. GAAP significant non-cash transactions are excluded from
the statement of changes in financial position and are shown as
supplemental information.
<PAGE>
(b) Pro forma Financial Statements
The Pro forma financial statements for the period ending December 31, 1998
are filed by this amendment. These statements include:
1. Compilation Report regarding Pro-Forma Consolidated Statements
[LETTERHEAD OF DALE, MATHESON, CARR-HILTON]
COMPILATION REPORT
PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
To the Directors of STOCK RESEARCH GROUP INC.
We have reviewed, as to compilation only, the accompanying pro-forma
consolidated balance sheet of Stock Research Group Inc. as at December 31, 1998
and the pro-forma consolidated statement of income and retained earnings and
changes in financial position for the year then ended.
In our opinion, the pro-forma consolidated balance sheet and pro-forma
consolidated statements of income and retained earnings and changes in financial
position have been properly compiled to give effect to the proposed transaction
and the assumptions described in Note 1 to these financial statements.
/s/ DALE, MATHESON, CARR-HILTON
CHARTERED ACCOUNTANTS
Vancouver, B.C.
April 2, 1999
<PAGE>
2. Pro-Forma Consolidated Balance Sheet - December 31, 1998 (In Canadian
Dollars)
STOCK RESEARCH GROUP INC.
PRO-FORMA CONSOLIDATED BALANCE SHEET - DECEMBER 31, 1998
(IN CANADIAN DOLLARS)
- --------------------------------------------------------------------------------
1998 1997
$ $
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 3,272 45,325
Cash deemed received for share issuances (Note 1(b)(vi)) 600,750 --
Short term investments (Note 6) 2,000 40,006
Accounts receivable, net 151,241 177,200
Prepaids and other current assets (Note 4) 58,596 10,302
Due from related company -- 56,000
------- -------
815,859 328,833
PROPERTY AND EQUIPMENT, NET (Note 3) 79,817 77,395
OTHER ASSETS (Note 4) 26,700 27,900
- --------------------------------------------------------------------------------
922,376 434,128
================================================================================
APPROVED BY THE DIRECTORS:
/s/ Marcus New Director
- -----------------------
/s/ Craig Faulkner Director
- -----------------------
- See Accompanying Notes -
<PAGE>
2. Pro-Forma Consolidated Balance Sheet - December 31, 1998 (In Canadian
Dollars)
STOCK RESEARCH GROUP INC.
PRO-FORMA CONSOLIDATED BALANCE SHEET - DECEMBER 31, 1998
(IN CANADIAN DOLLARS)
- --------------------------------------------------------------------------------
1998 1997
$ $
- --------------------------------------------------------------------------------
LIABILITIES
CURRENT LIABILITIES
Bank line of credit (Note 8) 116,050 --
Accounts payable and accrued liabilities 105,983 49,917
Deferred revenue 63,825 116,750
Income taxes payable -- 285
Current portion of long-term debt (Note 8) 20,230 20,447
---------- ----------
306,088 187,399
LONG-TERM DEBT (Note 8) 31,061 51,891
SHAREHOLDER LOANS (Note 10) 18,471 8,658
---------- ----------
355,620 247,948
---------- ----------
STOCKHOLDERS' EQUITY
CAPITAL STOCK (Note 5) 4,113,224 134
ACQUISITION ADJUSTMENT (Note 1) (3,505,557) --
---------- ----------
607,667 134
DEFICIT (40,911) 186,046
---------- ----------
566,756 186,180
- --------------------------------------------------------------------------------
922,376 434,128
================================================================================
- See Accompanying Notes -
<PAGE>
3. Pro-Forma Consolidated Statement of Income and Retained Earnings (Deficit)
- Year Ended December 31, 1998 (In Canadian Dollars)
STOCK RESEARCH GROUP INC.
PRO-FORMA CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS (DEFICIT)
YEAR ENDED DECEMBER 31, 1998
(IN CANADIAN DOLLARS)
- --------------------------------------------------------------------------------
1998 1997
$ $
- --------------------------------------------------------------------------------
REVENUE
Revenues 1,272,394 1,340,613
Cost of revenues 255,602 190,337
---------- ----------
Gross profit 1,016,792 1,150,276
---------- ----------
EXPENSES
Operating expenses:
Sales and marketing 394,267 330,917
Product development 174,195 107,264
General and administrative 663,358 577,981
---------- ----------
1,231,820 1,016,162
INCOME (LOSS) BEFORE OTHER ITEMS (215,028) 134,114
OTHER ITEMS, NET (Notes 7) (63,543) 3,896
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (278,571) 138,010
INCOME TAX PROVISION (RECOVERY) (51,614) 31,614
---------- ----------
NET INCOME (LOSS) (226,957) 106,396
RETAINED EARNINGS, beginning of year 186,046 79,650
- --------------------------------------------------------------------------------
DEFICIT, end of year (40,911) 186,046
================================================================================
- --------------------------------------------------------------------------------
EARNINGS (LOSS) PER SHARE (0.03) 0.02
================================================================================
- See Accompanying Notes -
<PAGE>
4. Pro-Forma Consolidated Statement of Changes in Financial Position - Year
Ended December 31, 1998 (In Canadian Dollars)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
1998 1997
$ $
- ----------------------------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Net income (loss) (226,957) 106,396
Add (deduct) non-cash items:
Write down of marketable securities 34,454 --
Amortization 24,860 18,860
-------- --------
(167,643) 125,256
-------- --------
Net changes in other non-cash operating accounts
Accounts receivable 25,959 (122,714)
Short term investments 2,920 (32,535)
Prepaid expenses and other current assts (47,379) (34,562)
Accounts payable 56,698 22,727
Deferred revenue (52,925) 76,775
-------- --------
(182,370) 34,947
-------- --------
FINANCING ACTIVITIES
Advances from shareholders 9,813 5,856
Long-term debt (21,047) 72,338
Share issue for acquisition, net of acquisition adjustment 6,783 --
Share issue deemed received (Note 1(b)(vi)) 600,000 --
-------- --------
595,549 78,194
-------- --------
INVESTING ACTIVITIES
Due to (from) related company 56,000 (56,000)
Purchase of property and equipment (27,282) (56,767)
-------- --------
28,718 (112,767)
-------- --------
INCREASE IN CASH 441,897 374
CASH, beginning of year 45,325 44,951
- ----------------------------------------------------------------------------------------
CASH, end of year 487,222 45,325
========================================================================================
REPRESENTED BY:
Cash 3,272 45,325
Cash deemed received for share issuance (Note 1(b)(vi)) 600,000 --
Bank indebtedness (116,050) --
- ----------------------------------------------------------------------------------------
487,222 45,325
========================================================================================
</TABLE>
- See Accompanying Notes -
<PAGE>
5. Notes To Consolidated Financial Statements - Year Ended December 31, 1998
(In Canadian Dollars)
STOCK RESEARCH GROUP INC.
NOTES TO PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998
(IN CANADIAN DOLLARS)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
- --------------------------------------------------------------------------------
Under a share exchange agreement which became effective March 11, 1999, the
Company acquired all of the issued and outstanding shares of 579818 B.C.
Ltd., a newly incorporated Canadian subsidiary of I-Tech Holdings Group
Inc. ("I-Tech"), a N.A.S.D. Bulletin Board listed company.
These pro-forma consolidated financial statements reflect the combination
of Stock Research Group Inc. and I-Tech Holdings Group Inc., on a pro-forma
basis as if the share exchange had occurred on January 1, 1998.
The shares of the Canadian company are exchangeable for shares of the U.S.
parent company. The agreement provides for effective control of the U.S.
parent to pass to the shareholders of Stock Research Group Inc. ("SRG").
The share exchange is treated as a reverse takeover by Stock Research Group
Inc. Accordingly Stock Research Group Inc. is deemed to be the acquirer and
continuing entity.
These pro-forma financial statements are prepared using the purchase method
of business combination with Stock Research Group Inc. being the deemed
parent under reverse-takeover accounting. These pro-forma financial
statements reflect the consolidation as if Stock Research Group Inc. had
acquired I-Tech Holdings Group Inc. on January 1, 1998.
a) The application of reverse takeover accounting to these pro-forma
consolidated financial statements results in the following:
i) The pro-forma financial statements are issued under the name of
Stock Research Group Inc., as a continuation of the financial
statements of SRG.
ii) As SRG is deemed to be the acquirer for accounting purposes, its
assets and liabilities are included in the pro-forma consolidated
financial statements of the continuing entity at their historical
carrying value.
iii) The number and class of outstanding shares reported are those of
I-Tech Holdings Group Inc., after giving effect to the
transaction, while the dollar amounts of share capital and
deficit are those of SRG.
iv) The comparative figures reported are those of SRG, the continuing
entity.
v) The results of operations of I-Tech Holdings Inc. are included
from January 1, 1998 in these pro-forma consolidated financial
statements.
<PAGE>
b) Assumptions used in preparing these pro-forma consoldiated financial
statements are as follows:
i) Changes to authorized capital of each of the entities had been
completed as at January 1, 1998.
ii) A share split of I-Tech shares of 1.5 shares for 1 as provided in
the agreement is deemed to have occurred at January 1, 1998.
iii) A share split of S.R.G. shares of 18,300 for 1 is deemed to have
occurred on January 1, 1998 with retroactive effect to 1997 for
comparative purposes.
iv) The deemed consideration for the acquisition of I-Tech Holdings
Group Inc. has been measured at $3,513,090 Cdn. being the diluted
value of the shares issued by S.R.G. to the shareholders of
I-Tech.
v) 450,000 I-Tech preference shares outstanding were cancelled as
required in the share exchange agreement, effective as at January
1, 1997.
vi) 240,000 shares of S.R.G. issued subsequent to December 31, 1998
at a cash price of $2.50 per share are deemed to be issued as at
January 1, 1998. 75,000 shares of I-Tech were issued subsequent
to December 31, 1998 but prior to the acquisition, for cash
proceeds of $750. The total cash proceeds of $600,750 have been
included as a deemed asset at the balance sheet date.
The cost of the acquisition is allocated as follows:
$
----------
Cost of acquisition
Issuance of 3,660,000 common shares 3,513,090
Net identifiable assets acquired
Cash8,633
Accounts payable (1,100)
----------
7,533
----------
Excess purchase price (acquisition adjustment) 3,505,557
Less: adjustment for shares of S.R.G. issued
subsequent to year end included in exchange
of 240,000 shares 600,000
----------
2,905,557
==========
The excess purchase price represents the cost of acquiring the
N.A.S.D. Bulletin Board listing and access to capital markets. A
reliable basis of value is not available, no goodwill component has
been recorded for this transaction. The excess amount has been
reported as an acquisition adjustment as a separate component reducing
shareholders' equity.
<PAGE>
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
a) Amortization
Amortization is provided at the following annual rates. (Except in the
year of purchase in which the Company uses 1/2 the normal rate):
Computer equipment 30% Declining balance
Office furniture and equipment 20% Declining balance
Leasehold improvements 20% Straight line
b) Financial instruments
The Company's financial instruments consist of accounts receivable,
marketable securities, shareholder loans and associated company loans,
the fair value of which approximates their carrying value.
c) Deferred revenue
Deferred revenue consists of deposits paid in advance for future
services. The company regularly receives deposits for six months to
twelve months in respect of future services.
d) Measurement uncertainty
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Significant areas requiring
the use of management estimates relate to the determination of
impairment of assets, useful lives for depreciation and amortization
and income taxes. Financial results as determined by actual events
could differ from those estimates.
e) Risk management
The Company deals with numerous customers and is not exposed to
concentrations of credit or foreign exchange risk.
The Company is in the process of converting its internal software and
data management systems to be year 2000 compliant. Management does not
anticipate significant cost or down time resulting from the year 2000
issue.
<PAGE>
f) Uncertainty due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in
errors when information using year 2000 dates is processed. In
addition, similar problems may arise in some systems which use certain
dates in 1999 to represent something other than a date. The effects of
the Year 2000 Issue may be experienced before, on, or after January 1,
2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure
which could affect an entity's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the
Year 2000 Issue affecting the entity, including those related to the
efforts of customers, suppliers, or other third parties, will be fully
resolved.
g) Foreign exchange
Balance sheet items denominated in U.S. dollars are translated into
Canadian dollars at exchange rates prevailing at the balance sheet
date for monetary items and at exchange rates in effect at the
transaction date for non-monetary items.
Realized gains and losses from foreign currency transactions are
charged to income in the year.
h) Research and development costs
The company expenses all market research and product development costs
as incurred.
- --------------------------------------------------------------------------------
3. PROPERTY AND EQUIPMENT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
$ $
--------------------------------- -------
Accumulated
Cost Amortization Net Net
------- ------------ ------- -------
<S> <C> <C> <C> <C>
Computer equipment 103,890 43,386 60,504 57,988
Office furniture and equipment 27,985 9,167 18,818 19,407
Leasehold improvements 550 55 495 --
------- ------- ------- -------
132,425 52,608 79,817 77,395
======= ======= ======= =======
</TABLE>
(Note 8)
<PAGE>
- --------------------------------------------------------------------------------
4. OTHER ASSETS
- --------------------------------------------------------------------------------
Other assets include a loan to an officer/employee for housing. This loan
is repayable over 25 years with interest at current interest rates. The
year end outstanding balances of the loan for the past three years are as
follows: 1998: 1998- $26,400; 1997 - $27,600; 1996 - $28,800. The current
portion of the loan, included in prepaids and other current assets, was
$1,200 in each of the past three years.
- --------------------------------------------------------------------------------
5. CAPITAL STOCK
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
--------------------- ---------------------
# of # of
Shares $ Shares $
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Issued:
Balance, beginning of year 2,080,000 134 2,080,000 134
Adjusted for split 1.5 for 1 1,040,000 -- 1,040,000 --
--------- --------- --------- ---------
Issued during year for: 3,120,000 134 3,120,000 134
I-Tech Holdings Group Inc. 75,000 -- -- --
S.R.G shareholders re: acquisition 3,660,000 3,513,090 -- --
Issued for cash 240,000 600,000 -- --
--------- --------- --------- ---------
7,095,000 4,113,224 3,120,000 134
========= ========= ========= =========
</TABLE>
(See Note 1(b))
- --------------------------------------------------------------------------------
6. SHORT TERM INVESTMENTS
- --------------------------------------------------------------------------------
Marketable securities are recorded at lower of cost or market value.
1998 1997
$ $
------ ------
Cost 36,454 40,006
Market 2,000 40,006
------ ------
Write-down to market 34,454 --
====== ======
<PAGE>
- --------------------------------------------------------------------------------
7. OTHER ITEMS
- --------------------------------------------------------------------------------
1998 1997
$ $
------- -------
Writedown of marketable securities (Note 6) (34,454) --
Loan loss provision (36,568) --
Gain on sale of marketable securities 7,479 3,896
------- -------
(63,543) 3,896
======= =======
- --------------------------------------------------------------------------------
8. LONG-TERM DEBT
- --------------------------------------------------------------------------------
1998 1997
$ $
------- -------
Long-term debt consists of two separate bank loans
of $46,976 and $25,362 each bearing interest at
prime plus 1%. 51,291 72,338
Less: current portion 20,230 20,447
------ ------
31,061 51,891
====== ======
Loan 1 - Repayable on demand, with monthly payments of $915 including
interest due November 30, 2002.
Loan 2 - Special term loan secured by a general security agreement on
all assets of the company, certain equipment and accounts
receivable. The loan is repayable at $1,183 per month including
interest.
Estimated principal payments required in each of the next five years are:
1999 $20,370
2000 10,031
2001 9,603
2002 10,349
2003 938
The security in Loan 2 above includes the company's line of credit.
<PAGE>
- --------------------------------------------------------------------------------
9. LEASE COMMITMENTS
- --------------------------------------------------------------------------------
The Company has entered into lease commitments for office premises. The
lease commitments and expiry dates are as follows:
Estimated
Lease Lease Annual
# Expiry Payments
----- ------ ---------
1 - Calgary July, 2000 $17,050
2 - Vancouver January, 2000 52,413
3 - Vancouver January, 2002 67,680
4 - Toronto March, 1999 13,012
Annual estimated lease commitments:
$
-------
1999 140,396
2000 80,573
2001 67,680
2002 5,640
- --------------------------------------------------------------------------------
10. RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
i) By agreement dated August 1, 1999, the company contracted with a
previously unrelated company for the provision of comprehensive
operational management services. The contract extends for five years
and provides for monthly payments of $12,500. The contract includes
various termination and renewal clauses. The company can terminate the
contract without cause upon thirty days written notice and payment of
one year's contract fees.
ii) Included in accounts payable is an amount of $11,192 due to the
contracted company.
iii) Shareholder loans are non-interest bearing and have no fixed terms of
repayment.
<PAGE>
- --------------------------------------------------------------------------------
11. SUPPLEMENTAL INCOME STATEMENT INFORMATION
- --------------------------------------------------------------------------------
Included in expenses are the following:
1998 1997
$ $
------ ------
Interest on long term debt 11,440 5,311
Amortization 24,860 18,860
<PAGE>
(c) Information addendum
The Financial Statements and Pro-Forma Statements included in this filing
are presented in Canadian Dollars and were prepared using Canadian Generally
Accepted Accounting Principles (Canadian GAAP). Canadian GAAP is highly similar,
but not identical, to U.S. GAAP. For information purposes the following
information addendum provides statements which are converted into U.S. Dollars
at the exchange rates prevailing at the end of each period. They are provided
for information purposes only and were not prepared using U.S. GAAP. These
information statements include:
1. Balance Sheets - December 31, 1998, 1997 and 1996 (In U.S. Dollars)
STOCK RESEARCH GROUP INC.
BALANCE SHEETS - DECEMBER 31, 1998, 1997 and 1996
(IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
1998 1997 1996
$ $ $
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents -- 32,742 32,965
Short term investments 1,349 28,900 5,479
Accounts receivable, net 101,976 128,007 39,957
Prepaids and other current assets 39,509 7,442 2,326
Due from related company -- 40,454 --
-------- -------- --------
142,834 237,545 80,727
PROPERTY AND EQUIPMENT, NET 53,818 55,909 28,959
OTHER ASSETS 18,002 20,154 21,341
- --------------------------------------------------------------------------------
214,654 313,608 131,027
================================================================================
LIABILITIES
CURRENT LIABILITIES
Bank line of credit 78,248 -- --
Accounts payable and accrued liabilities 69,708 36,059 19,939
Deferred revenue 43,035 84,339 29,316
Income taxes payable -- 206 21,207
Current portion of long-term debt 13,640 14,771 --
-------- -------- --------
204,631 135,375 70,462
LONG-TERM DEBT 20,943 37,485 --
SHAREHOLDER LOANS 12,454 6,254 2,055
-------- -------- --------
238,028 179,114 72,517
-------- -------- --------
STOCKHOLDERS' EQUITY (DEFICIENCY)
CAPITAL STOCK (Note 4) 90 97 98
RETAINED EARNINGS (23,464) 134,397 58,412
-------- -------- --------
(23,374) 134,494 58,510
- --------------------------------------------------------------------------------
214,654 313,608 131,027
================================================================================
<PAGE>
2. Statements of Income and Retained Earnings (Deficit) - Years Ended December
31, 1998, 1997 and 1996 (In U.S. Dollars)
STOCK RESEARCH GROUP INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS (DEFICIT)
YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
1998 1997 1996
$ $ $
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE
Revenues 857,592 968,441 310,470
Cost of revenues 172,343 137,497 43,721
-------- -------- --------
685,249 830,944 266,749
-------- -------- --------
EXPENSES
Operating expenses:
Sales and marketing 265,840 239,050 77,190
Product development 117,454 77,486 10,543
General and administrative 442,820 417,526 118,129
-------- -------- --------
826,114 734,062 205,862
-------- -------- --------
INCOME (LOSS) FROM OPERATIONS (140,865) 96,882 60,887
OTHER ITEMS, NET (42,845) 2,815 19,816
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES (183,710) 99,697 80,703
INCOME TAX PROVISION (RECOVERY) (34,802) 22,838 21,207
-------- -------- --------
NET INCOME (LOSS) (148,908) 76,859 59,496
RETAINED EARNINGS (DEFICIT), beginning of year 134,397 58,412 (1,084)
FOREIGN CURRENCY FLUCTUATION
RETAINED EARNINGS (DEFICIT), NET (8,953) (874) --
-------- -------- --------
125,444 57,538 (1,084)
- ----------------------------------------------------------------------------------
RETAINED EARNINGS (DEFICIT), end of year (23,464) 134,397 58,412
==================================================================================
</TABLE>
<PAGE>
3. Statements of Changes in Financial Position - Years Ended December 31,
1998, 1997 and 1996 (In U.S. Dollars)
STOCK RESEARCH GROUP INC.
STATEMENTS OF CHANGES IN FINANCIAL POSITION
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1998 1997 1996
$ $ $
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Net (loss) income (148,908) 76,859 59,496
Add (deduct) non-cash items:
Write down of marketable securities 23,231 -- --
Amortization 16,762 13,624 6,066
-------- -------- --------
(108,915) 90,483 65,562
Net changes in other non-cash operating accounts
Accounts receivable 17,503 (88,647) (27,809)
Short term investments 1,969 (23,503) 2,194
Prepaid expenses and other current assets (31,946) (24,967) (2,236)
Accounts payable 36,476 16,418 8,570
Deferred revenue (35,685) 55,461 25,099
-------- -------- --------
(120,598) 25,245 71,380
-------- -------- --------
FINANCING ACTIVITIES
Advances from shareholders 6,616 4,230 (4,726)
Long-term debt (14,191) 52,256 --
-------- -------- --------
(7,575) 56,486 (4,726)
-------- -------- --------
INVESTING ACTIVITIES
Due to (from) related company 37,759 (40,453) --
Purchase of capital assets (18,395) (41,008) (26,728)
-------- -------- --------
19,364 (81,461) (26,728)
-------- -------- --------
INCREASE (DECREASE) IN CASH (108,809) 270 39,926
CASH (DEFICIENCY), beginning of year 32,742 32,965 (6,961)
FOREIGN CURRENCY ADJUSTMENT (2,181) (493) --
-------- -------- --------
30,561 32,472 (6,961)
- ------------------------------------------------------------------------------------------
CASH (DEFICIENCY), end of year (78,248) 32,742 32,965
==========================================================================================
</TABLE>
<PAGE>
4. Pro-Forma Consolidated Balance Sheet - December 31, 1998 (In U.S. Dollars)
STOCK RESEARCH GROUP INC.
PRO-FORMA CONSOLIDATED BALANCE SHEET - DECEMBER 31, 1998
(IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
1998 1997
$ $
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 2,206 32,742
Cash deemed received for share issuance 404,558 --
Short term investments 1,349 28,900
Accounts receivable, net 101,976 128,007
Prepaids and other current assets 39,509 7,442
Due from related company -- 40,454
---------- ----------
549,598 237,545
PROPERTY AND EQUIPMENT, NET 53,818 55,909
OTHER ASSETS 18,003 20,154
- --------------------------------------------------------------------------------
621,419 313,608
================================================================================
LIABILITIES
CURRENT LIABILITIES
Bank line of credit 78,248 --
Accounts payable and accrued liabilities 71,460 36,059
Deferred revenue 43,036 84,339
Income taxes payable -- 206
Current portion of long-term debt 13,640 14,771
---------- ----------
206,384 135,375
LONG-TERM DEBT 20,944 37,485
SHAREHOLDER LOANS 12,454 6,254
---------- ----------
239,782 179,114
---------- ----------
STOCKHOLDERS' EQUITY
CAPITAL STOCK (Note 5) 2,772,891 97
ACQUISITION ADJUSTMENT (Note 1) (2,363,669) --
---------- ----------
409,222 97
DEFICIT (27,585) 134,397
---------- ----------
381,637 134,494
- --------------------------------------------------------------------------------
621,419 313,608
================================================================================
<PAGE>
5. Pro-Forma Consolidated Statement of Income and Retained Earnings (Deficit)
- Year Ended December 31, 1998 (In U.S. Dollars)
STOCK RESEARCH GROUP INC.
PRO-FORMA CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS (DEFICIT)
YEAR ENDED DECEMBER 31, 1998
(IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
1998 1997
$ $
- --------------------------------------------------------------------------------
REVENUE
Revenues 857,929 968,441
Cost of revenues 172,343 137,497
-------- --------
685,586 830,944
-------- --------
EXPENSES
Operating expenses:
Sales and marketing 265,840 239,050
Product development 117,453 77,486
General and administrative 447,278 417,526
-------- --------
830,571 734,062
-------- --------
INCOME (LOSS) BEFORE OTHER ITEMS (144,985) 96,882
OTHER ITEMS, NET (42,845) 2,815
-------- --------
INCOME (LOSS) BEFORE INCOME TAXES (187,830) 99,697
INCOME TAX PROVISION (RECOVERY) (34,801) 22,838
-------- --------
NET INCOME (LOSS) (153,029) 76,859
RETAINED EARNINGS, beginning of year 134,397 57,538
FOREIGN CURRENCY FLUCTUATION
RETAINED EARNINGS, NET (8,953) --
-------- --------
125,444 57,538
- --------------------------------------------------------------------------------
DEFICIT, end of year (27,585) 134,397
================================================================================
<PAGE>
6. Pro-Forma Consolidated Statement of Changes in Financial Position - Year
Ended December 31, 1998 (In U.S. Dollars)
STOCK RESEARCH GROUP INC.
PRO-FORMA CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
YEAR ENDED DECEMBER 31, 1998
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
1998 1997
$ $
- ---------------------------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Net income (loss) (153,029) 76,859
Add (deduct) non-cash items:
Write down of marketable securities 23,231 --
Amortization 16,762 13,624
-------- --------
(113,036) 90,483
Net changes in other non-cash operating accounts
Accounts receivable 17,503 (88,647)
Short term investments 1,969 (23,503)
Prepaid expenses and other current assts (31,946) (24,967)
Accounts payable 38,229 16,418
Deferred revenue (35,685) 55,461
-------- --------
(122,966) 25,245
-------- --------
FINANCING ACTIVITIES
Advances from shareholders 6,617 4,230
Long-term debt (14,191) 52,256
Share issue for acquisition net of acquisition adjustment 4,574 --
Share issue deemed received (Note 1(b)(vi)) 404,558 --
-------- --------
401,558 56,486
-------- --------
INVESTING ACTIVITIES
Due to (from) related company 37,758 (40,453)
Purchase of capital assets (18,395) (41,008)
-------- --------
19,363 (81,461)
-------- --------
INCREASE IN CASH 297,955 270
CASH, beginning of year 32,742 32,472
FOREIGN CURRENCY ADJUSTMENT (2,181) --
-------- --------
30,561 32,472
- ---------------------------------------------------------------------------------------
CASH, end of year 328,516 32,742
=======================================================================================
REPRESENTED BY:
Cash 2,206 32,742
Cash deemed received for share issuance (Note 1(b)(vi)) 404,558 --
Bank indebtedness (78,248) --
- ---------------------------------------------------------------------------------------
328,516 32,742
=======================================================================================
</TABLE>
<PAGE>
Value of Canadian
Dollar
Date in U.S. Dollars
----------------- --------------
December 31, 1998 0.6743
December 31, 1997 0.7224
December 31, 1996 0.7334
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorised.
Stockgroup.com Holdings, Inc.
------------------------------------
(Registrant)
Dated: May 7, 1999 By: "/S/ MARCUS NEW"
------------------------------------
Marcus New, Chief Executive Officer
