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
For the year ending 30 September 1999
PeakSoft Corporation
--------------------
(Translation of registrant's name into English)
1801 Roeder Avenue, Suite 144, Bellingham, WA 98225
---------------------------------------------------
(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
----------
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)
Date February 18, 2000
(Signature) By: /s/ T.W. Metz
----------------------
T.W. Metz
Chief Operating Officer
<PAGE>
Consolidated Financial Statements
PEAKSOFT CORPORATION
(in Canadian dollars)
Years ended September 30, 1999 and 1998
<PAGE>
PEAKSOFT CORPORATION
Consolidated Financial Statements
(in Canadian dollars)
Years ended September 30, 1999 and 1998
Auditor's Report 1
Financial Statements
Consolidated Balance Sheet 3
Consolidated Statement of Operations and Deficit 4
Consolidated Statement of Changes in Financial Position 5
Notes to the Consolidated Financial Statements 6
<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
1
<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
2
<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 debts 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 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)
3
<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 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>
4
<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 (26,742) (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>
5
<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,
notwithstanding 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.
6
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements
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.
7
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements
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
================================================================================
8
<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
- -----------------------------------------------------------------------------
9
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements
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.
10
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements
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 $0.35 each.
</TABLE>
(b) Warrants:
At September 30, 1999, the Company had 986,410 warrants outstanding.
500,000 warrants from a debt conversion entitling the holder to acquire one
additional share for $0.40 each. The warrants expire in March 2000.
422,060 warrants entitling the holder to acquire one additional share at $0.30
each. The warrants expire April 2000.
64,350 warrants from a private placement entitling the holder to acquire one
additional share at $1.60 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).
11
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements
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 S450,000).
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.
12
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements
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.
13
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements
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 - $ and 1997 -
$0.26 per option.
14
<PAGE>
PEAKSOFT MULTINET CORPORATION
Notes to the Consolidated Financial Statements
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.
15
<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.
16
