SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
NOTICE OF ANNUAL MEETING AND REPORT
PeakSoft Multinet Corp.
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(Translation of registrant's name into English)
1801 Roeder Avenue; Suite 144, Bellingham, WA 98225
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(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.]
Form 20-F ..X.. Form 40-F ____
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes ..X.. No ____
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-0-24069
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Signatures: T. W. Metz
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, thereunto duly authorized.
PeakSoft Multinet Corp.
(Registrant)
/s/ Timothy W. Metz
- ------------------------------
Timothy W. Metz
President
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PEAKSOFT MULTINET CORP.
INFORMATION CIRCULAR
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 28, 2000
SOLICITATION OF PROXIES
This information circular is furnished in connection with the solicitation of
proxies by the management of PeakSoft Multinet Corp. (the "Corporation") for use
at the annual general meeting (the "Meeting") of the shareholders of the
Corporation to be held at the time and place and for the purposes set forth in
the accompanying notice of Meeting and at any adjournment thereof. The
solicitation will be by mail and possibly supplemented by telephone or other
personal contact to be made without special compensation by regular officers and
employees of the Corporation. No solicitation will be made by specifically
engaged employees or soliciting agents. The cost of solicitation will be borne
by the Corporation. The Corporation does not reimburse shareholders, nominees or
agents for the costs incurred in obtaining from their principals authorization
to execute forms of proxy.
APPOINTMENT AND REVOCATION OF PROXIES
The persons referred to in the accompanying Instrument of Proxy are directors
and/or officers of the Corporation. A SHAREHOLDER HAS THE RIGHT TO APPOINT A
PERSON OTHER THAN THE PERSONS NAMED IN THE ENCLOSED INSTRUMENT OF PROXY TO
ATTEND AND TO ACT FOR HIM ON HIS BEHALF AT THE MEETING. TO EXERCISE THIS RIGHT A
SHAREHOLDER MUST STRIKE OUT THE NAMES OF THE PERSONS NAMED IN THE INSTRUMENT OF
PROXY AND INSERT THE NAME OF ITS NOMINEE IN THE BLANK SPACE PROVIDED, OR
COMPLETE ANOTHER INSTRUMENT OF PROXY. THE COMPLETED PROXY SHOULD BE DEPOSITED
WITH THE CORPORATION NOT LESS THAN 48 HOURS (EXCLUDING SATURDAYS, SUNDAYS AND
HOLIDAYS) PRIOR TO THE COMMENCEMENT OF THE MEETING OR ADJOURNMENT THEREOF.
The instrument of proxy must be signed by the shareholder or by his attorney in
writing, or, if the shareholder is a corporation, its instrument of proxy must
either be under its common seal or signed by a duly authorized officer of it.
A proxy may be revoked by:
(a) signing a proxy bearing a later date and depositing it
at the place and within the time aforesaid;
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(b) signing and dating a written notice of revocation (in
the same manner as the proxy is required to be
executed, as set out in the notes of the proxy) and
either delivering the same to the registered office of
the Corporation at any time up to and including the last
business day preceding the day of the Meeting, or any
adjournment of it at which the proxy is to be used, or
to the chairman of the Meeting on the day of the Meeting
or any adjournment thereof; or
(c) attending the Meeting or any adjournment thereof and
registering with the scrutineer thereat as a shareholder
present in person, whereupon such proxy shall be deemed
to have been revoked.
VOTING OF SHARES AND EXERCISE OF DISCRETION OF PROXIES
THE SHARES REPRESENTED BY PROXY WILL BE VOTED OR WITHHELD FROM VOTING BY THE
PROXY HOLDER IN ACCORDANCE WITH THE INSTRUCTIONS OF THE SHAREHOLDER ON ANY
BALLOT THAT MAY BE CALLED FOR AND, IF THE SHAREHOLDER SPECIFIES A CHOICE WITH
RESPECT TO ANY MATTER TO BE ACTED UPON, THE SHARES WILL BE VOTED ACCORDINGLY.
IN THE ABSENCE OF ANY INSTRUCTION IN THE PROXY, IT IS INTENDED THAT SUCH SHARES
WILL BE VOTED IN FAVOUR OF THE MOTIONS PROPOSED TO BE MADE AT THE MEETING AS
STATED UNDER THE HEADINGS IN THIS INFORMATION CIRCULAR. The instrument of proxy
enclosed, when properly signed, confers discretionary authority with respect to
amendments or variations to the matters identified herein and with respect to
any other matters which may properly be brought before the Meeting. At the time
of printing this information circular, management of the Corporation is not
aware that any such amendments, variations or other matters are to be presented
for action at the Meeting.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The only shares which the Corporation has issued and which are outstanding are
common voting shares, undifferentiated by class. On May 15, 2000, 3,830,974
common shares of the Corporation were issued and outstanding, each common share
carrying the right to one vote. Only those common shareholders of record on May
24, 2000 will be entitled to vote at the Meeting or at any adjournment thereof,
in person or by proxy, unless after that date a shareholder of record transfers
its shares and the transferee, upon producing properly endorsed certificates
evidencing such shares or otherwise establishing that it owns such shares,
requests not later than 10 days prior to the Meeting that the transferee's name
be included in the list of shareholders entitled to vote, in which case such
transferee will be entitled to vote such shares at the Meeting.
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To the knowledge of the directors and senior officers of the Corporation, only
the following shareholder own, directly or indirectly, or exercises control or
discretion over, common shares carrying more than 10 percent of the voting
rights attached to all outstanding common shares of the Corporation:
Name of Shareholder No. of Shares % of Issued and
Outstanding
The Liverpool
Limited Partnership 905,636 23.64
Westgate
International, L.P. 905,636 23.64
The above information was supplied by the management of the Corporation.
EXECUTIVE COMPENSATION
During the fiscal year ended September 30, 1999, the Corporation employed 2
executive officers (one of whom was also a director) who were paid an aggregate
of $155,908.28 in cash compensation. Other than the issuance of options pursuant
to the Stock Option Plan of the Corporation described below, the executive
officers of the Corporation received no other compensation from the Corporation
in its most recently completed fiscal year. These persons have agreed to defer
the payment by the Corporation of a portion of the salaries earned by them
during the Corporation's fiscal year 1999.
The Corporation has established a Stock Option Plan (the "Plan") under which the
Board of Directors or a committee appointed by the Board of Directors (the
"Committee") may, from time to time, grant options to purchase common shares to
directors, officers or key employees of the Corporation and to consultants
retained by the Corporation. Subject to regulatory approval, the options will
provide for the acquisition of common shares of the Corporation from the
treasury of the Corporation at a price to be determined by the Board of
Directors or the Committee at the time of granting the options, provided that
the exercise price of such options shall not be less than that permitted by any
stock exchange on which the Corporation's shares are listed for trading. The
Board of Directors or the Committee will determine the exercise period for the
options and the vesting provisions with respect to the options. A number of
common shares not exceeding in the aggregate 10 percent of the common shares
outstanding from time to time will be reserved under the Plan for issuance upon
the exercise of any options granted. The purpose of the Plan is to develop the
interest of the directors, officers, key employees and consultants of the
Corporation in the Corporation's growth and development by providing them with
the opportunity through options to purchase common shares to acquire an
increased financial interest in the Corporation.
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The following options held by executive officers were granted during the
financial year ended September 30, 1999:
Date Expiry Exercise
Name Number Granted Date Price (CDN $)
- ------------------------------------------------------------------------
Douglas Foster 50,000 02-24-99 02-23-01 1.77
Douglas Foster 10,000 02-24-99 02-23-01 1.44
Timothy Metz 50,000 02-24-99 02-23-01 1.77
The following options held by executive officers were exercised during the
financial year ended September 30, 1999:
Name Number Granted Price (CDN $)
- ------------------------------------------------------------
Douglas Foster 13,946 06-02-99 1.77
Douglas Foster 8,367 06-04-99 1.77
Tim Metz 13,946 06-02-99 1.77
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
During the financial year ending September 30, 1999 the Corporation engaged in
no material transactions in which any insider of the Corporation possessed an
interest.
ELECTION OF DIRECTORS
The current directors of the Corporation are Colin Robert Morse, Timothy Wallace
Metz, Peter Allen Janssen and Simon Geoffrey Arnison. Their term of office will
expire at the close of the Meeting. Messrs Janssen and Arnison are members of
the audit committee. Their term of office as members of the audit committee
expires at the close of the Meeting.
Management of the Corporation proposes to nominate, and the persons named in the
accompanying form of proxy intend to vote (if no choice is given), in favour of
the election as directors of the persons named below. Management of the
Corporation does not contemplate that any of the nominees will be unable to
serve as a director, but if this should occur for any reason prior to the
Meeting the persons named in the accompanying proxy reserve the right to vote
for another nominee at their discretion in the absence of a direction to the
contrary. Each director elected will hold office until the close of the next
annual general meeting or until his successor is duly elected, unless his office
is sooner vacated.
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The following table and the notes thereto state the names of the persons
proposed to be nominated for election as directors, all other positions and
offices with the Corporation now held by them, their principal occupations or
employments, the periods during which they have served as directors of the
Corporation, and the approximate numbers of shares of the Corporation
beneficially owned, directly or indirectly, by each of them as at the date
hereof. The information contained in the following table is provided by the
nominees:
Name, Place of Principal Occupation and
Residence and Director Positions During the Past No. of
Position Since 5 Years Shares
- -----------------------------------------------------------------------------
Simon Geoffrey Arnison 1999 President of Classwave 0
Ajax, ON, Canada Development Inc. Prior to
1998, founder, director
and Chief Technology Officer
of Innotech Multimedia
Corporation.
Peter Allen Janssen 1997 Principal of Peter Janssen 6,469
Bellevue, WA, USA & Associates, VP Merchand-
ising & Advertising for
Egghead Software, VP Sales
& Marketing for Acer America.
Timothy Wallace Metz 2000 Director, President & CEO 38,233
Bellingham, WA, USA of Leading-Edge Earth
Products
Colin Robert Morse 1999 Presidents of Feel Free 0
Vancouver, BC Charters Ltd., Alma Land
Canada Development Corporation,
Trubuilt Homes Ltd. and
Semper Construction Ltd.
Principal of AlterE-go.com
FINANCIAL STATEMENTS
The audited financial statements of the Corporation for the period ending
September 30, 2000 together with the auditor's report thereon (the "Financial
Statements"), will be presented to shareholders at the Meeting. The Corporation
anticipates mailing the Annual Report containing the Financial Statements,
notice of meeting, information circular and proxy to shareholders of record
prior to the Meeting. Copies of the Annual Report, notice of meeting,
information circular and proxy will also be available from the Corporation's
registrar and transfer agent, Montreal Trust Company of Canada.
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APPOINTMENT OF AUDITOR
It is proposed that Gordon K.W. Gee be re-appointed to serve as the
Corporation's auditor for its fiscal year ending September 30, 2000.
Gordon K.W. Gee has served as the Corporation's auditor for its fiscal years
1995, 1996 and 1999.
The Corporation confirms that there were no reservations in the audit reports
included in any of the financial statements of the Corporation for the 2 most
recently completed fiscal years. The Corporation further confirms that there
have been no reportable events during the 2 most recently completed fiscal
years, and, in its opinion, there are no reportable events pending.
OTHER MATTERS
Management of the Corporation knows of no amendments, variations or other
matters to come before the Meeting other than the matters referred to in the
notice of annual general meeting and this information circular. However, if any
other matter properly comes before the Meeting, the accompanying proxy will be
voted on such matter in accordance with the best judgment of the person or
persons voting the proxy.
APPROVAL AND CERTIFICATE
DATED: May 15, 2000
The contents of this information circular have been approved by the Board of
Directors of the Corporation.
The foregoing contains no untrue statement of material fact and does not omit to
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in the light of circumstances in which it was made.
/s/ Timothy W. Metz
- ------------------------------
Timothy W. Metz
President
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PEAKSOFT MULTINET CORP.
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that an annual general meeting of the
shareholders of PeakSoft Multinet Corp. ("PeakSoft") will be held
at
Suite 501 - 675 West Hastings Street, Vancouver, British Columbia
on Wednesday, the 28 day of June 2000, at the hour of 10:00 a.m.
for the following purposes:
(1) To receive the annual report and the audited financial
statements of PeakSoft, together with the auditor's
report in respect of the same for the fiscal year ended
September 30, 1999.
(2) To appoint PeakSoft's auditor for the ensuing year.
(3) To elect the directors of PeakSoft for the ensuing year.
(4) To transact such other business as may properly be
transacted at such meeting or at any adjournment thereof.
Shareholders who are unable to attend the annual general meeting
in person are requested to date, sign and return the accompanying
instrument of proxy in accordance with the instructions contained
in the accompanying information circular to the office of IICC,
6250 Kestrel Road, Missisauga, Ontario, L5T 1Y9, not less than 48
hours (excluding Saturdays, Sundays, and holidays) before the
time fixed for holding the meeting or any adjournment thereof, or
to the chairman of the meeting immediately prior to commencement
of the meeting, or any adjournment thereof. As set out in the
accompanying information circular, the enclosed proxy is
solicited by management of PeakSoft, but you may amend it, if you
so desire, by striking out the names listed therein and inserting
a space provided the name of the person you wish to represent you
at the meeting.
DATED at Bellingham, Washington, United States of America, this
15th day of May 2000.
BY ORDER OF THE BOARD
Timothy Metz
President
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PEAKSOFT MULTINET CORP.
PROXY
The undersigned shareholder of PeakSoft Multinet Corp. hereby appoints
Timothy Metz, the President and a director of PeakSoft, or failing him, Richard
Holcomb, a senior employee of PeakSoft, or instead of either of them:
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FULL NAME OF PROXY
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Proxy's Street Address
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Municipality State/Province Zip/Postal Code
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Telephone Number Fax Number
as proxy, or, as alternate proxy:
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FULL NAME OF ALTERNATE PROXY
---------------------------------------------
Alternate Proxy's Street Address
---------------------------------------------
Municipality State/Province Zip/Postal Code
---------------------------------------------
Telephone Number Fax Number
with power of substitution, to attend, to act and to vote all shares in the
capital stock of PeakSoft registered in the name of the undersigned for and on
behalf of the undersigned at the Annual General Meeting (the "AGM") to be held
on Wednesday, June 28, 2000, at 10:00 o'clock in the morning at:
Suite 501-675 West Hastings Street, Vancouver, British Columbia
and at any adjournment or adjournments thereof.
My proxy is instructed to vote as specified below:
1. __FOR __AGAINST (if no alternative is specified then FOR)
the ordinary resolution fixing the number of directors of the
Corporation at 4;
2. __FOR __TO BE WITHHELD FROM VOTING FOR (if no alternative is
specified then FOR) the election of directors for the ensuing
year of those nominees proposed by management as specified in the
Information Circular issued by PeakSoft on May 15, 2000;
3. __FOR __TO BE WITHHELD FROM VOTING FOR (if no alternative is
specified then FOR) the appointment of Gordon K.W. Gee, Chartered
Accountant, to be PeakSoft's auditor for the ensuing year and for
the authorization of the directors to fix its remuneration;
4. on any other matters which may properly come before the AGM
as my proxy may see fit.
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The shares represented by this proxy will be voted and, in particular,
will be voted in accordance with any instructions indicated on any ballot that
may be called for. Unless a contrary instruction is indicated, this proxy will
be voted at the AGM in favour of the matters referred to above.
If any amendment or variation to the matters identified in the notice
of meeting which accompanies this proxy is proposed at the AGM or at any
adjournment thereof, or any other matters properly come before such meeting or
any adjournment thereof, this proxy confers a discretionary authority to vote on
any such amendment or variation or such other matters according to the best
judgment of the person voting this proxy.
The undersigned hereby revokes any instrument of proxy previously given
to vote at the AGM or any adjournments thereof.
DATE: ______________________
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Signature of shareholder/authorized signatory
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Full Name (please type or print)
---------------------------------------------
Street Address
---------------------------------------------
Municipality State/Province Zip/Postal Code
---------------------------------------------
Telephone Number Fax Number
Number of shares: _______________________
NOTES:
(1) This forms of proxy must be dated and signed by shareholder or by his
attorney in writing, or if the shareholder is a body corporate this
form of proxy must be executed under its corporate seal or by an
officer or attorney thereof who has been duly authorized. If this proxy
is not dated it is deemed to bear the date on which it was delivered to
PeakSoft.
(2) A shareholder has the right to appoint a person (who need not be a
shareholder of PeakSoft) as his nominee to attend and to act for him
and on his behalf at the AGM. To exercise such right the shareholder
must insert the name of his nominee on the lines provided for that
purpose on the first page hereof or complete another form of proxy.
SHAREHOLDERS WHO ARE UNABLE TO ATTEND THE AGM ARE REQUESTED TO COMPLETE THIS
FROM OF PROXY AND TO RETURN IT TO PEAKSOFT IN THE ENVELOPE PROVIDED FOR THIS
PURPOSE.
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PeakSoft Multinet Corp.
1999 ANNUAL REPORT
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Letter to the Shareholders 3
Chief Operating Officer's Statement (Management Discussion & Analysis) 5
Auditor's Report 9
Financial Statements
Consolidated Balance Sheet 11
Consolidated Statement of Operations and Deficit 12
Consolidated Statement of Changes in Financial Position 13
Notes to the Consolidated Financial Statements 14
Corporate Information 25
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Dear Shareholders,
The only constant is change.
PeakSoft Multinet Corp. has continued to evolve its business plan, seeking to
align the important components that can create a winning business model. In 1999
the Company adopted an internet business model and focused its efforts on the
creation of a powerful community at http://www.peak.com/, a Web portal dedicated
to helping small business develop and grow in an internet economy. For the plan
to succeed we need to develop strong alliances for capital, membership and
revenue creation.
PeakSoft has demonstrated its ability to innovate and to deliver finished
products to market. Its original CD-ROM products won accolades and awards. Its
browser accelerator, PeakJet, was described as a "killer app", and was a runner
up for PC Computing Internet Utility of the Year. It created an entirely new
class of Internet utility products
Looking back through previous annual reports it is clear that liquidity and
capital have always been at the forefront of management's concerns. Often the
issue of its under-capitalization has forced the company to "make a bet" on one
strategy or another, eliminating the alternative of implementing a full
strategy. This is going to change in 2000.
The Company intends to bring in new management at a senior level, adding
business, finance and marketing experience to the team.
The Company intends to leverage its U.S. fully reporting issuer status, OTC and
CDNX listings, and to seek acquisitions, which will add shareholder value and
critical mass.
The Company is investigating joint venture, strategic investment, privatisation
of a business unit, and other forms of capital funding in order to afford
peak.com the greatest opportunity of success without impacting negatively upon
PeakSoft's share capital structure.
About Peak.com
In 1999 PeakSoft developed a plan to create a small business internet portal at
peak.com. We identified the market opportunity presented by e-business and by
business-to-business e-commerce. The small business community, largely lacking
in technical expertise, is ripe for solutions that will enable its members to
compete in the internet economy. A prototype website was developed over the
spring and summer of 1999, with the second generation of it subsequently having
been launched in October of 1999.
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Peak.com is nearing completion. As a shareholder you should visit the site,
register, and form your own opinion concerning this opportunity. The site
includes many powerful features. It is completely dynamic in design, allowing
users to customize it to their needs and interests. We have developed a
proprietary Peak News Division and have begun to deliver great original news and
content at peak.com. The site uses some of our best technology and concepts to
create powerful business libraries and search capabilities. We have developed a
vertical industry community structure that will allow the creation of many
individual, trading and business communities.
The Company is establishing powerful relationships and partnerships for
peak.com. Its objectives in entering into these partnerships are (a) to develop
infrastructure and capability, (b) to drive membership, and (c) to capture
revenue. Peak.com is ready to implement the commerce and revenue components of
the site and if properly capitalized can begin to deliver all the elements of
the business plan within one quarter.
I would like to thank all of you for your support over the years. PeakSoft has
always endeavoured to succeed and has never faltered in its dedication to the
task. PeakSoft and its shareholders have demonstrated a tenacity that should
produce positive results in 2000.
Best wishes
/s/ Doug Foster
- --------------------
Doug Foster
Chief Executive Officer
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MANAGEMENT'S DISCUSSION AND ANALYSIS
1999 was a year of change for PeakSoft. During the year, the Company directed
significant resources towards its online small business community portal located
at http://www.peak.com. PeakSoft developed a plan to "facilitate the formation,
growth, and prosperity of small businesses globally through leading internet
communications solutions which empower small businesses to compile knowledge
and to develop e-commerce and other commercial relationships."
Through http://www.peak.com, the Company will provide products, services,
information, and forums (to name a few of our offerings) to the Small Business
Community to assist its members in the task of achieving profitability and
prosperity. Peak.com plans to drive revenues initially from several diverse
sources: revenue sharing, business-to-business (B2B) e-commerce, and
advertising.
Management remains convinced that the vertical portal strategy adopted by the
Company early in the year has great potential. Electronic commerce is growing at
a staggering rate, particularly in business-to-business (B2B) sector. Peak.com
will continue to be the major focus of the Company during the coming year. New
alliances are being formed and existing ones are being expanded, such as Novell
and others. Operating capital continues to be difficult to obtain. Management is
investigating all possible avenues to raise sufficient operating capital in
order to commercialize http://www.peak.com in the shortest time to the greatest
benefit of the shareholders.
Management expects that the activity level for the Company will continue to
increase with operating expenses in excess of income until the third quarter of
calendar 2000. In order to reduce the overall costs of maintaining its presence
in the retail sales channel, the Company has entered into agreements with Real
Networks, Inc.; Software Builders, LLC; Peruzzo Informatica in Italy; Softline
AG in Germany; Boomerang Software Inc.; Cyenta, NetSales, Inc. and Group Micro
Serve in Belgium and Luxembourg as well as others.
Subsequent to the 1999 year-end, the beta version of http://www.peak.com was
released. We invite you to visit us at http://www.peak.com/ and to register.
The following discussion should be read in conjunction with the financial
statements and the notes thereto:
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Operations
Revenue decreased from CDN $1,246,381 for the year ended September 30, 1998 in
the comparable period in 1999 to CDN $536,339. This decrease is primarily due to
the change in product distribution from retail to e-commerce/partnering and the
focus of resources on peak.com. By utilizing e-commerce/partnering, cost of
goods sold decreased substantially from CDN $233,763 for the year ended
September 30, 1998 in the comparable period in 1999 to CDN $12,943, a 94.46%
decrease. Costs of goods sold accounted for 18.76% of gross sales for the year
ended September 30, 1998, this ratio plummeting to 2.41% during the comparable
period of 1999.
Amortization decreased from CDN $991,017 for the year ended September 30, 1998
to CDN $50,694 during the comparable period in 1999. This 94.88% decrease was
primarily due to the amortization of the research and development acquired from
Chameleon Bridge Technologies Corp., which expired in 1998. Amortization in 1999
consisted of normal amortization of fixed assets such as computer hardware and
furniture and fixtures.
General and administration expenses increased from CDN $1,392,633 for the year
ended September 30, 1998 in the comparable period in 1999 to CDN $1,502,132, an
increase of 7.29%. This increase was primarily due to consulting and
professional services used to develop our small business community portal,
http://www.peak.com. During the year, the Company entered into employment
contracts with three key management personnel with the approval of the
directors.
Selling and marketing expenses decreased from CDN $951,724 for the year ended
September 30, 1998 in the comparable period in 1999 to CDN $314,723 a decrease
of 66.93%. This was primarily due to management's continued reduction in
expenses and the developmental stage of its planned new products and services,
while continuing to focus on e-commerce/partnering as the preferred method of
software distribution.
Research and development expenses decreased from CDN $531,860 for the year ended
September 30, 1998 in the comparable period in 1999 to CDN $282,099, a decrease
of 46.96%. This decline was primarily due to management's continued focus on
reduction of expenses.
The loss for 1999 was CDN $1,895,013 ($0.50 per share post-consolidation) down
from, CDN $2,780,307 ($ 1.60 per share post-consolidation), a decrement of CDN $
885,294 or $ 1.10 per share post-consolidation. This decrease in the loss
resulted primarily from reduced expenses associated with the Company's
redirected sales activity focus of its utility products toward e-commerce and
strategic alliances, such as Real Networks, Software Builders and others, as
well as reductions in overall expenses. The post-consolidation loss of $0.50 per
share for the year 1999 includes a one-time loss on the sale of investment in
InfoBuild for CDN $217,500. Excluding this loss on the sale of investment, the
Company's loss per share would have been $0.44 for the year 1999.
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Liquidity and Capital Resources
As of September 30, 1999, the Company had a cash balance of CDN $55,995. During
the year, the Company issued promissory notes for cash proceeds of USD $890,000.
Subsequent to the year-end, an additional USD $450,000 was received and
supported by promissory notes.
During the year, the Company wrote off and destroyed all obsolete inventory.
With the Company's focus of software distribution using e-commerce/partnering,
raw materials that were used to create the software were no longer necessary.
Capital assets decreased from CDN $105,947 for the year ended September 30, 1998
in the comparable period in 1999 to CDN $71,100 due to amortization.
Net assets were reduced from CDN $522,533 for the year ended September 30, 1998
in the comparable period in 1999 to CDN $196,283. This decrease was primarily
due to the sale of our investment in InfoBuild which produced a one time loss on
investment of CDN $217,850. Overall current assets remained mostly unchanged.
Accounts payable and accrued liabilities decreased from CDN $1,034,312 for the
year ended September 30, 1998 to CDN $782,972 in the comparable period of 1999,
an abatement of 24.30%. This was primarily due to the reductions in overall
expenses along with debt settlement with creditors of CDN $131,463.
In November 1998, the Company relocated its premises to its current location.
This move had a large impact on operations as it saved the Company approximately
USD $100,000 in operating expenses per year. Under the terms of the lease
agreement on the former premises, the Company is liable for the lease payments
until the end of the lease, which expires on March 31, 2002. The maximum
liability is USD $310,000. Subsequent to the end of the year, the company
negotiated a settlement with the former landlord for USD $50,000, which
eliminated the Company's largest liability.
YEAR 2000
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue and has
developed an implementation plan to resolve the issue. The Year 2000 problem is
the result of computer programs being written using two digits rather than four
to define the applicable year. Time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in a
major system failure or the making of miscalculations. The Company completed
modifications to existing software and the conversion to new software. The
Company obtained Year 2000 compliance statements from vendors, suppliers, and
all other third parties that do business with the Company.
The Company experienced no operational problems relating to the "Year 2000"
issue.
7
Page 17 of 35
<PAGE>
For the reasons set out above, PeakSoft has not incurred, and does not expect to
incur, any costs relating to the remediation of Y2K issues.
PeakSoft has concluded that it faces no material Y2K implications to its
business operations because its computers and the programs being run on them are
of recent vintage, marketed as being Y2K compliant.
/s/ Tim Metz
- ------------------
Tim Metz
Chief Operating Officer
8
Page 18 of 35
<PAGE>
GORDON K.W. GEE
CHARTERED ACCOUNTANT 488 - 625 Howe Street
An incorporated professional Vancouver, BC V6C 2T6
- --------------------------------------------------------------------------------
Telephone: (604) 689-8815
Facsimile: (604) 689-8838
AUDITOR'S REPORT
To The Shareholders of PeakSoft Multinet Corporation (formerly PeakSoft
Corporation):
I have audited the consolidated balance sheet of PeakSoft Multinet Corporation
as at 30 September 1999 and 1998, the consolidated statements of operations and
deficit and changes in financial position for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these consolidated
financial statements based on my audit.
I conducted the audit in accordance with generally accepted auditing standards.
Those standards require that I 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 my opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at 30 September 1999
and 1998 and the consolidated results of its operations and the changes in its
financial position for the years then ended in accordance with generally
accepted accounting principles.
The consolidated financial statements as at 30 September 1997 were audited by
other auditors who expressed an opinion without reservation on those statements
in their report dated 12 December 1997.
Accounting principles generally accepted in Canada vary in certain significant
respects from accounting principles generally accepted in the United States.
Application of accounting principles generally accepted in the United States
would have affected results of operations for the year ended 30 September 1999
and shareholders' equity to the extent summarized in note 12 to the financial
statements.
/s/ Gordon K.W. Gee
- -------------------------
Gordon K.W. Gee
Chartered Accountant
Vancouver, B.C., Canada
15 January 2000
9
Page 19 of 35
<PAGE>
GORDON K.W. GEE
CHARTERED ACCOUNTANT 488 - 625 Howe Street
An incorporated professional Vancouver, BC V6C 2T6
- --------------------------------------------------------------------------------
Telephone: (604) 689-8815
Facsimile: (604) 689-8838
COMMENTS BY AUDITOR FOR U.S. READERS ON CANADIAN-U.S.
REPORTING DIFFERENCE
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the Company's ability to continue as a going concern, such as those described in
note 1 to the financial statements. My report to the shareholders dated 15
January 2000 is expressed in accordance with Canadian reporting standards which
do not permit a reference to such events and conditions in the auditor's report
when these are adequately disclosed in the financial statements.
/s/ Gordon K.W. Gee
- -------------------------
Gordon K.W. Gee
Chartered Accountant
Vancouver, B.C., Canada
15 January 2000
10
Page 20 of 35
<PAGE>
PEAKSOFT MULTINET CORPORATION
Consolidated Balance Sheet (In Canadian dollars)
As at 30 September
===========================================================================
1999 1998
$ $
- ---------------------------------------------------------------------------
ASSETS
Current Assets
Cash 55,995 22,824
Accounts receivable 36,168 26,479
Inventory - 43,284
Prepaids and deposits 33,020 39,999
------------------------------
125,183 132,586
Investment in InfoBuild (Note 2) - 284,000
Capital assets (Note 3) 71,100 105,947
- ---------------------------------------------------------------------------
196,283 522,533
===========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities 782,972 1,034,312
Interest payable on short-term debt 89,746 -
Notes payable (Note 5) 1,438,472 -
Current portion of obligations under 18,471 29,665
capital leases (Note 6)
------------------------------
2,329,661 1,063,977
Obligations under capital leases (Note 6) 1,897 28,639
------------------------------
2,331,558 1,092,616
------------------------------
Shareholders' Equity:
Share capital (Note 7) 8,955,445 6,555,704
Other Paid in Capital - 2,069,920
------------------------------
8,955,445 8,625,624
Accumulated deficit 11,090,720 9,195,707
------------------------------
(2,135,275) (570,083)
- ---------------------------------------------------------------------------
196,283 522,533
===========================================================================
ON BEHALF OF THE BOARD:
/s/ Doug Foster /s/ Pete Janssen
------------------------ ------------------
Doug Foster Pete Janssen
Director Director
-------------------------------------------------------
(See accompanying notes to the financial statements)
11
Page 21 of 35
<PAGE>
<TABLE>
PEAKSOFT MULTINET CORPORATION
Consolidated Statement of Operations and Deficit (In Canadian dollars)
For the years ending 30 September
=====================================================================================
<CAPTION>
1999 1998 1997
$ $ $
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales 536,339 1,246,381 1,340,200
Cost of goods sold 12,943 233,763 448,537
------------------------------------------------
523,396 1,012,618 891,663
------------------------------------------------
Operating Expenses:
Amortization 50,694 991,017 1,050,965
General and administration 1,502,132 1,392,633 1,245,114
Selling and marketing 314,723 951,724 1,682,437
Research and development 282,099 531,860 641,426
------------------------------------------------
2,149,648 3,867,234 4,619,942
------------------------------------------------
Earnings (loss) before the undernoted (1,626,252) (2,854,616) (3,728,279)
Debt settlement with creditors (Note 13) 131,463 259,618 -
Loss on inventory abandonment (42,234) - -
Interest on short-term debt (140,140) (237,188) -
Loss on sale of investment (217,850) - -
Gain on sale of subsidiary - 51,879 -
Loss on settlement of lawsuit - - (310,042)
Write-off assets - - (53,169)
-------------------------------------------------
Loss 1,895,013 2,780,307 4,091,490
Accumulated deficit, beginning of period 9,195,707 6,415,400 2,323,910
- ------------------------------------------------------------------------------------
Accumulated deficit, end of period 11,090,720 9,195,707 6,415,400
====================================================================================
</TABLE>
12
Page 22 of 35
<PAGE>
<TABLE>
PEAKSOFT MULTINET CORPORATION
Consolidated Statement of Changes in Financial Position (In Canadian dollars)
As at 30 September
===========================================================================================
<CAPTION>
1999 1998 1997
$ $ $
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH PROVIDED BY (USED IN):
Operations:
Net earnings (loss) (1,895,013) (2,780,307) (4,091,490)
Items not involving cash:
Amortization 50,694 991,017 1,050,965
Write-off of assets - 53,169
Loss on sale of investment 217,850
Change in non-cash operating (132,214) 181,719 253,980
working capital
---------------------------------------------
(1,758,683) (1,607,571) (2,733,376)
---------------------------------------------
Financing:
Repayments of long-term debt (1,179,805) (1,380,991) (21,273)
Increase (decrease) in
obligation under capital leases - (12,288) (1,661)
Issuance of long-term debt - 1,896,161 1,554,750
Increase (decrease) in
obligation to issue shares (26,472) (399,900) (55,408)
Issuance of share capital 2,948,098 776,249 2,380,551
---------------------------------------------
1,741,551 879,231 3,856,959
---------------------------------------------
Investments:
Acquisition of investment - (284,000) -
Proceeds of sale of investment 66,150
Purchase of capital assets (15,847) (36,202) (82,180)
---------------------------------------------
50,303 (320,202) (82,180)
---------------------------------------------
Increase (decrease) in cash position 33,171 (1,048,542) 1,041,403
Cash, beginning of period 22,824 1,071,366 29,963
---------------------------------------------
Cash, end of period 55,995 22,824 1,071,366
(See accompanying notes to the financial statements)
</TABLE>
13
Page 23 of 35
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements
Years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
The Company is incorporated under the laws of Alberta and its principal business
activities are providing internet software to corporate and individual users,
and providing internet portal facility.
1. Continuing operations:
These consolidated financial statements have been prepared using generally
accepted accounting principles that are applicable to a going concern, not-
withstanding that the Company incurred significant operating losses in the
current and prior years. This basis of preparation may be inappropriate because
significant doubt exists about the appropriateness of the going concern
assumption. The Company's ability to continue as a going concern is dependent
upon obtaining additional external financing and on the attainment of profitable
operations. Management is of the opinion that external financing will remain in
place and that as a result of their current product launches and concentration
on providing software for vertical markets, sufficient profits will be obtained
to meet the Company's obligations and commitments as they become due. For this
reason, the financial statements do not reflect adjustments in the carrying
values of the assets and liabilities, the reported revenues and expenses and the
balance sheet classifications used that would be necessary if the going concern
assumption were not appropriate.
2. Significant accounting policies:
(a) Principles of consolidation:
The consolidated financial statements include the accounts of the Company and
its wholly-owned American subsidiaries, PeakSoft Multinet Corporation (U.S.A.),
Peak Media, Inc. and its wholly-owned Canadian subsidiary Chameleon Bridge
Technologies Corporation. All significant inter-company transactions and
balances have been eliminated on consolidation.
(b) Revenue recognition:
Revenue from product sales is recognized as the products are sold and title to
the product is transferred. Revenue from service contracts is recognized when
the work is completed.
(c) Foreign currency translation:
Foreign currency transactions entered into directly by the Company as well as
the financial statements of the integrated foreign operations are translated
using the temporal method. Under this method, monetary assets and liabilities
are translated at year end exchange rates. Other balance sheet items are
translated at historical exchange rates. Income statement items are translated
at average rates of exchange prevailing during the year except for depreciation
expense which is translated at historical rates. Translation gains and losses
are included in income except for unrealized gains and losses arising from the
translation of long-term monetary assets and liabilities which are deferred and
amortized over the remaining lives of related items.
14
Page 24 of 35
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
2. Significant accounting policies (continued):
(d) Capital assets:
Capital assets are recorded at cost. Amortization is provided on the straight
line basis using the following annual rates:
- --------------------------------------------------------------------------------
Asset Rate
- --------------------------------------------------------------------------------
Furniture and equipment 4 years
Computer equipment 4 years
Computer software 3 years
Leasehold improvements 4 years
(e) Inventory:
Inventories are valued at the lower of cost and net realizable value. Cost is
determined on a first-in, first-out basis.
(f) Research and development:
Research costs are expensed as incurred. Development costs are expensed as
incurred unless they meet the criteria for deferral under generally accepted
accounting principles.
(g) Use of estimates:
The presentation 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 net recoverable value of assets, in particular as it relates to
acquired research and development, useful lives for amortization, recognition of
revenue and the determination of deferred revenue.
(h) Financial instruments:
The Company has applied retroactively the new accounting standard with respect
to the presentation of financial instruments.
15
Page 25 of 35
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
3. Capital assets:
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
Accumulated Net book Net book
Cost amortization value value
$ $ $ $
--------------------------------------------------------
Furniture and equipment 86,065 74,523 11,542 32,598
Computer equipment 157,299 115,191 42,108 57,398
Computer software 47,145 44,971 2,174
Leasehold improvements 24,194 8,918 15,276 15,951
--------------------------------------------------------
314,703 243,603 71,100 105,947
- --------------------------------------------------------------------------------
Assets acquired under capital leases included in furniture and equipment as well
as computer equipment are fully amortized.
4. Acquired research and development:
On May 16, 1996, the Company acquired research in the amount of $1,644,598
through the acquisition of Chameleon Bridge Technologies Corp. The Company
acquired all of the 1,950,000 issued and outstanding shares of Chameleon Bridge
Technologies Corporation in exchange for 1,500,000 shares of Peak Technologies
Inc. The fair market value of Peak Technologies Inc.'s shares at the date of
regulatory approval and exchange of shares was $1.11 per share. Accordingly, the
research and development is calculated as follows, and has been fully amortized:
Purchase value based on shares issued in May, 1996 1,665,000
Other net assets acquired (20,402)
- --------------------------------------------------------------------------------
Acquired research and development 1,644,598
================================================================================
16
Page 26 of 35
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements
Years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
5. Notes Payable: 1999 1998
$ $
- --------------------------------------------------------------------------------
Notes Payable, bearing interest at 12% per annum
and paid quarterly. 1,438,472 2,025,740
Less: other paid-in capital - (2,025,740)
- --------------------------------------------------------------------------------
1,438,472 -
- --------------------------------------------------------------------------------
6. Obligations under capital leases:
The Company has capital leases on equipment expiring at various dates through
2000 requiring the following minimum lease payments:
- -----------------------------------------------------------------------------
1999 1998
$ $
- -----------------------------------------------------------------------------
1999 - 39,385
2000 21,645 28,575
- -----------------------------------------------------------------------------
Total minimum lease payments 21,645 67,960
Less imputed interest at varying rates (1,277) (9,656)
- -----------------------------------------------------------------------------
Present value of net minimum capital lease payments 20,368 58,304
-------------------------
Current portion of obligations under capital lease 18,471 29,665
- -----------------------------------------------------------------------------
1,897 28,639
- -----------------------------------------------------------------------------
17
Page 27 of 35
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
7. Share Capital:
- --------------------------------------------------------------------------------
Shares Amount
# $
================================================================================
Authorized:
Unlimited voting common shares without par value
Unlimited non-voting preferred shares without par value
Issued:
Balance, 01 October 1994: 82,036 94,580
Issued amount year ended 30 September 1995:
Issued to founders 293,018 -
Issued for cash 324,287 948,865
Issue for services and technology 19,407 45,700
Less share issuance costs - (193,278)
Issued amount year ended 30 September 1996:
Issued for cash 143,893 667,500
Issued for services and technology 213,026 1,835,537
Issued amount year ended 30 September 1997:
Issued for cash 443,158 2,496,498
Issued for services and technology 11,855 75,969
Less share issuance costs - (191,916)
Issued amount year ended 30 September 1998:
Issued for cash 211,497 623,281
Issued amount year ended 30 September 1999:
Issued for cash 2,059,222 2,981,847
Less share issuance costs - (429,128)
- --------------------------------------------------------------------------------
3,801,399 8,955,455
- --------------------------------------------------------------------------------
Included in shares issued for cash during 1999 are 67,563 (1998 - 390,000, 1997
- - 833,541) shares for approximately $113,858 (1998 - $102,400, 1997 - $556,898)
issued pursuant to the exercise of management, employees and directors' stock
options. The remaining shares of 1,991,659 (1998 - 1,301,976, 1997 - 2,711,725)
for $2,867,989 (1998 - $520,881, 1997 - $1,940,000) were issued pursuant to
private placements.
18
Page 28 of 35
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
7. Share Capital (continued):
(a) Management, employees and directors' stock options:
At September 30, 1999, the Company had 379,492 management, employees and
directors' options outstanding:
<TABLE>
<S> <C> <C>
10,000 options expiring 16 June 2000, exercisable to acquire 10,000 shares at $1.80 each
20,000 options expiring 27 June 2000, exercisable to acquire 20,000 shares at $1.99 each.
31,697 options expiring 22 July 2000, exercisable to acquire 31,697 shares at $1.50 each.
135,000 options expiring 23 February 2001, exercisable to acquire 135,000 shares at $1.44 each.
99,795 options expiring 23 February 2001, exercisable to acquire 99,795 shares at $1.77 each.
73,000 options expiring 18 March 2001, exercisable to acquire 73,000 shares at $2.38 each.
10,000 options expiring 20 December 2001, exercisable to acquire 10,000 shares at $0.42 each.
</TABLE>
(b) Warrants:
At September 30, 1999, the Company had 123,302 warrants outstanding.
62,500 warrants from a debt conversion entitling the holder to acquire one
additional share for $3.20 each. The warrants expire in March 2000.
52,758 warrants entitling the holder to acquire one additional share at $2.40
each. The warrants expire April 2000.
8,044 warrants from a private placement entitling the holder to acquire one
additional share at $12.80 each. The warrants expire April 2000.
8. Fair value of financial instruments:
The methods and assumptions used to estimate the fair value of each class of
financial instruments for which it is practical to estimate a value are as
follows:
(a) Short-term financial assets and liabilities:
The carrying amount of these financial assets and liabilities are a reasonable
estimate of the fair values because of the short maturity of these instruments.
Short-term financial assets comprise cash and accounts receivable. Short-term
financial liabilities comprise accounts payable and accrued liabilities.
(b) Long-term financial liabilities:
The carrying value of long-term financial assets and liabilities are a
reasonable estimate of the fair values. Long-term financial liabilities comprise
long-term debt and obligations under capital leases and other paid-in capital
(see note 6).
19
Page 29 of 35
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
9. Subsequent events:
In November 1998, the Company relocated its premises. Under the Lease Agreement
for the abandoned premises, the Company is liable for the lease payments of the
abandoned premises until the premises are released by the landlord. Under this
Agreement, the minimum lease payments are USD $90,963 per annum until 31, March
2002.
In October of 1999, the Company settled this matter with the Leassor for
$50,000.
Subsequent to the year end, the Company has signed promissory notes for $660,240
(USD $450,000).
10. Loss per common share:
Loss per common share is based on the weighted average number of common shares
outstanding during the year.
1999 1998 1997
Loss per common share (Pre-Consolidation)* Non-comparable 0.20 0.33
Loss per common share (Post-Consolidation)** 0.50 1.60 2.67
*Loss per common share calculated on shares outstanding before consolidation.
**Loss per common share if calculated on shares outstanding after consolidation.
NUMBER OF SHARES OUTSTANDING # # #
Pre-Consolidation Non-comparable 13,937,439 12,245,463
Post-Consolidation 3,801,399 1,742,180 1,530,683
11. Related party transactions:
The following are related party transactions, not already disclosed elsewhere in
the notes to the financial statements:
- --------------------------------------------------------------------------------
1999 1998
$ $
================================================================================
Salaries to directors and officers 300,470 94,000
Consulting fees and expense reimbursements to directors 49,416 92,600
Salary paid to a relative of one of the directors 40,564 54,500
- --------------------------------------------------------------------------------
390,450 241,100
================================================================================
These transactions are in the normal course of operations and are measured at
the exchange amount which is the amount of consideration established and agreed
to by related parties.
20
Page 30 of 35
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
12. United States GAAP reconciliation:
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") in Canada. These principles
differ in the following material respects from those in the United States, as
summarized below:
(a) Loss and loss per share:
- --------------------------------------------------------------------------------
1999 1998 1997
$ $ $
================================================================================
Loss in accordance with Canadian GAAP (1,895,013) (2,780,307) (4,091,490)
Difference in accounting for acquired - 822,299 822,299
research and development (note d)
Stock options (note e) - - (85,470)
- --------------------------------------------------------------------------------
Loss in accordance with
United States GAAP (1,895,013) (1,958,008) (3,354,661)
================================================================================
Loss per common share 0.65 1.15 2.79
- --------------------------------------------------------------------------------
Weighted average number of shares used
for calculation 2,910,854 1,701,618 1,201,909
- --------------------------------------------------------------------------------
(b) Balance sheet:
The amounts in the consolidated balance sheet that differ from those reported
under Canadian GAAP are as follows:
================================================================================
September 30, 1999 September 30, 1998
Canadian United States Canadian United States
GAAP GAAP GAAP GAAP
$ $ $ $
---------------------------------------------------------------------------
Liabilities:
Other paid-in capital 173,759 264,229
Accumulated deficit 11,090,720 10,268,491 9,195,707 8,373,478
==========================================================================
(c) Statement of financial position (continued):
Cash used in operations and cash provided by financing activities would decrease
by 1999 - $nil and 1998 - $nil.
21
Page 31 of 35
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
12. United States GAAP reconciliation (continued):
(d) Research and development:
In accordance with United States GAAP, research and development costs, including
the costs of research and development acquired in a business combination are
expensed as it is incurred.
(e) Stock based compensation
The Company records compensation expense for United States GAAP purposes
following the intrinsic value principles of Accounting Principles Board Opinion
25, "Accounting for Stock Issued to Employees" (APB 25), in accounting for the
options issued under the Company's stock option plan. Under APB 25, no
compensation expense has been recognized for its stock based compensation plans
in 1999 (1998 - nil, 1997 - $85,470).
The Company has elected the disclosure provisions of Statement of Financial
Accounting Standards No. 123 ("FAS 123"), "Accounting for Stock-Based
Compensation", for United States GAAP purposes. Had compensation cost for the
Company's stock option plan been determined based on the fair value at the grant
date for awards under those plans consistent with the measurement provisions of
FAS 123, the Company's loss and loss per share under United States GAAP would
have been adjusted as follows:
- --------------------------------------------------------------------------
1999 1998 1997
$ $ $
- --------------------------------------------------------------------------
Loss - as reported 1,895,013 1,958,008 3,354,661
Loss - stock option value adjusted 2,545,486 2,052,578 3,475,718
Loss per common share - as reported 0.50 1.15 2.79
Loss per common share - adjusted 0.61 1.21 2.89
- --------------------------------------------------------------------------
================================================================================
The fair value of each option grant is estimated on the date of the grant using
the following assumptions:
================================================================================
1999 1998 1997
- --------------------------------------------------------------------------------
Expected dividend yield 0% 0% 0%
Expected stock price volatility 70% 70% 70%
Risk-free interest rate 5.5% 5.5% 5.5%
Expected life of options 1 yr. 2 yrs. 1 yr.
================================================================================
The weighted average fair value of the options granted is 1998 - nil and 1997 -
$0.26 per option.
22
Page 32 of 35
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements (continued)
Years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
(f) Taxation:
For U.S. GAAP purposes, income taxes are accounted for in accordance with
Statement of Financial Accounting Standards No. 109 ("FAS 109"), "Accounting for
Income Taxes". FAS 109 requires the asset and liability method whereby deferred
tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
in effect for the year in which those temporary differences are expected to be
recovered or settled. A valuation allowance is provided on deferred tax assets
to the extent it is not more likely than not that such deferred tax assets will
be realized. Under FAS 109, the effect on deferred tax assets and liabilities of
a change in tax rates are recognized in income in the period that includes the
enactment date.
The Company has deferred tax assets of approximately $5,000,000 (1998 -
$3,000,000 and 1997 - $2,140,000 ) arising from losses carried forward (see note
15). The Company has provided a valuation allowance against the entire deferred
tax asset amount as it is more likely than not that they will not be realized.
13. Debt Settlement with Creditors:
During the year, management negotiated with trade and other creditors to realize
a reduction of liabilities.
14. Commitments:
The Company has entered into a one year operating lease for facilities expiring
November 1999 for which the annual lease payments are USD $28,449. The lease is
renewable on an annual basis.
23
Page 33 of 35
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements
Years ended 30 September 1999 and 1998
- --------------------------------------------------------------------------------
15. Income taxes:
The Company has non-capital losses from foreign and Canadian operation available
for offset against future taxable income totaling approximately USD $4,743,000
in the United States and CDN $4,281,000 in Canada.
16. Comparative figures:
Certain of the comparative amounts have been reclassified to conform with the
financial presentation adopted in the current year.
17. 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 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 01
January 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect the company's ability to conduct normal business operations. However,
management does not anticipate difficulties with the company's compliance. It is
not possible to be certain that all aspects of the Year 2000 issue affecting the
company, including those related to the efforts of customers, suppliers, or
other third parties, will be fully resolved.
24
Page 34 of 35
<PAGE>
Company Information:
Corporate Headquarters
PeakSoft Multinet Corp.
1801 Roeder Ave., Suite 144
Bellingham, WA 98225
USA
Tel: (360)752-1100 Toll Free: (888)377-7325
Fax: (360)752-1110 / (360) 752-0086
http://www.peak.com
- -------------------
Investor Relations
PeakSoft Multinet Corp.
(360) 752-1100
[email protected]
- ---------------
Annual General Meeting
The annual general meeting of shareholders will be held at 10:00 am on June 28,
2000 at Suite 501, 675 West Hastings Street, Vancouver, British Columbia.
Stock Listing
PeakSoft Multinet Corp. common stock is traded on the Canadian Venture Exchange
under symbol PKS.V and in the US on the OTC:BB under the symbol PEAMF.
Auditor
Gordon K. W. Gee, Chartered Accountant
488-625 Howe Street
Vancouver, BC V6C 2T6
Tel: (604) 689-8815 Fax: (604) 689-8838
Transfer Agent and Registrar
Montreal Trust, Calgary Alberta
Directors
Douglas Foster, Chairman of the Board
Colin Morse, Director
Peter Janssen, Director
Simon Arnison, Director
Management
Douglas Foster, Chief Executive Officer
Timothy Metz, Chief Operating Officer
Calvin Patterson, Corporate Counsel
Simon Arnison, Chief Technical Officer
25
Page 35 of 35
