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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Intercept Energy Services Inc (CE) | USOTC:IESCF | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0048 | 0.00 | 01:00:00 |
PART I
|
|
ITEM 1. Identity of Directors, Senior Management and Advisors
|
5
|
ITEM 2. Offer Statistics and Expected Timetable
|
5
|
ITEM 3. Key Information
|
5
|
ITEM 4. Information on the Company
|
7
|
ITEM 5. Operating and Financial Review and Prospects
|
10
|
ITEM 6. Directors, Senior Management and Employees
|
22
|
ITEM 7. Major Shareholders and Related Party Transactions
|
26
|
ITEM 8. Financial Information
|
26
|
ITEM 9. The Offer and Listing
|
27
|
ITEM 10. Additional Information
|
28
|
ITEM 11. Quantitative and Qualitative Disclosures about Market Risk
|
31
|
ITEM 12. Description of Securities other than Equity Securities
|
31
|
PART II
|
|
ITEM 13. Defaults, Dividend Arrearages and Delinquencies
|
31
|
ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
|
31
|
ITEM 15. Controls and Procedures
|
31
|
ITEM 16. [Reserved]
|
32
|
ITEM 16A. Audit Committee Financial Expert
|
32
|
ITEM 16B. Code of Ethics
|
32
|
ITEM 16C. Principal Accountant Fees and Services
|
36
|
ITEM 16D. Exemptions from the Listings Standard for Audit Committees
|
36
|
ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
36
|
ITEM 16F. Change in Registrants Certifying Accountant
|
36
|
ITEM 16G. Corporate Governance
|
37
|
PART III
|
|
ITEM 17. Financial Statements
|
40
|
ITEM 18. Financial Statements
|
40
|
ITEM 19. Exhibits
|
75
|
SIGNATURES
|
76
|
|
·
|
In
Item 3A
, various amounts in the four-year table of financial information have been corrected.
|
|
·
|
In
Item 3D
, the Company has provided additional information on Liquidity Risk.
|
|
·
|
In
Item 4B
, the Company has added additional information on market drivers and characteristics.
|
|
·
|
In
Item 4C,
the Company has provided additional information on the acquisition of Intercept Rentals.
|
|
·
|
In
Item 5A,
the Company has corrected various amounts in the table of financial information for the years ended December 31, 2013 and 2012 and has included the year ended December 31, 2011. The Company has also augmented disclosure and discussion of 2013 Highlights and Future Plans and Outlook.
|
|
·
|
In
Item 5D
, the Company has provided additional information on the industry.
|
|
·
|
In
Item 5F
, the Company has provided additional information on financial commitments and obligations as well as the impact of critical accounting estimates.
|
|
·
|
In
Item 6A,
the Company has corrected information on current and former directors.
|
|
·
|
In
Item 6B
, the Company has corrected executive compensation information.
|
|
·
|
In
Item 11
, the Company has referenced the required information as found in the audited consolidated financial statements.
|
|
·
|
In
Item 15
, the Company has added a statement as to whether or not internal control over financial reporting is effective.
|
|
·
|
In
Item 16C
, the Company has updated for estimated audit fees in connection with the 2013 fiscal year.
|
|
·
|
In
Item 16B
, the Company has provided its Code of Ethics.
|
|
·
|
In
Item 16F
, the Company has included required disclosures regarding the change in its Certifying Accountant.
|
|
·
|
In
Item 16G
, the Company has provided additional information on its Corporate Governance policies.
|
|
·
|
In
Item 18
, a typographical error in the dating of the Grant Thornton LLP report of the independent registered public accounting firm has been corrected.
|
|
·
|
In
Item 18
, the Company has added the audited results of operations for the year ended December 31, 2011. The report of K.R. Margetson Ltd., Chartered Accountants, has been amended to note that the 2011 period has been audited.
|
|
·
|
In
Exhibits 12.1, 12.2, 13.1 and 13.2,
typographical errors relating to the dating and the signatory have been corrected.
|
|
·
|
Ex
hibit 13.3
has been added.
|
|
·
|
Exhibit 13.4
has been added.
|
Years Ended December 31
|
||||||||||||||||
2013
|
2012
|
2011
|
2010
|
|||||||||||||
Total Revenues
|
2,103,514
|
$
|
518,733
|
$
|
-
|
$
|
-
|
|||||||||
Total Expenses
|
5,150,17
|
5
|
$
|
1,757,589
|
$
|
541,446
|
$
|
422,240
|
||||||||
Other Items
|
12,680
|
$
|
(2,894,170)
|
$
|
11,409
|
$
|
200,104
|
|||||||||
Net Income (Loss) available to Common Shareholders
|
(3,033,981)
|
)
|
$
|
(4,133,026
|
)
|
$
|
(552,855
|
)
|
$
|
(622,344
|
)
|
|||||
Net Income (Loss) per share
|
(0.03)
|
$
|
(0.06
|
)
|
$
|
(0.02
|
)
|
$
|
(0.05
|
)
|
||||||
Diluted Net Income (Loss) per share
|
(0.03)
|
$
|
(0.06
|
)
|
$
|
(0.02
|
)
|
$
|
(0.05
|
)
|
||||||
Dividends Declared per share
|
-
|
$ |
|
-
|
$
|
-
|
$
|
-
|
||||||||
Total Assets
|
4,779,477
|
$
|
1,761,801
|
$
|
1,118,873
|
$
|
35,861
|
|||||||||
Total Liabilities
|
(6,414,202)
|
$
|
(2,967,633
|
)
|
$
|
(286,997
|
)
|
$
|
(313,447
|
)
|
||||||
Net Assets
|
(1,634,725)
|
$
|
(1,205,832)
|
$
|
831,876
|
$
|
(277,586
|
)
|
||||||||
Additional Paid in Capital
|
5,646,571
|
$
|
4,855,250
|
$
|
4,075,087
|
$
|
4,075,087
|
|||||||||
Accumulated Comprehensive Income
|
-
|
$
|
-
|
$
|
53,195
|
$
|
53,195
|
|||||||||
Common Shares Capital
|
11,117,213
|
$
|
9,293,446
|
$
|
7,501,691
|
$
|
6,325,974
|
|||||||||
Shares To Be Issued
|
-
|
$
|
10,000
|
$
|
486,600
|
$
|
-
|
|||||||||
Accumulated Deficit
|
(18,398,509
|
)
|
$
|
(15,364,528
|
)
|
$
|
(11,284,697
|
)
|
$
|
(10,731,842
|
)
|
|||||
Total Shareholders’ Equity (Deficit)
|
(1,634,725)
|
$
|
(1,205,832
|
)
|
$
|
831,876
|
$
|
(277,586
|
)
|
|||||||
Common Shares outstanding (1)
|
109,289,794
|
80,966,462
|
45,382,697
|
21,243,055
|
||||||||||||
Weighted Average – Diluted Shares
|
92,417,996
|
68,038,758
|
23,574,760
|
13,058,736
|
||||||||||||
Share Purchase Warrants (2)
|
44,038,663
|
40,388,663
|
15,398,333
|
15,398,333
|
1)
|
110,185,794 at April 30, 2014
|
2)
|
44,038,663 at April 30, 2014
|
Previous Six Months
|
Dec/13
|
Apr/13
|
Mar/13
|
Feb/13
|
Jan/13
|
Dec/12
|
||||||||||||||||||
High Rate
|
1.0697
|
1.0270
|
1.0314
|
1.0286
|
1.0078
|
0.9958
|
||||||||||||||||||
Low Rate
|
1.0237
|
1.0107
|
1.0155
|
0.9959
|
0.9839
|
0.9841
|
Years Ended December 31
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||
Average rate during the period
|
1.0439
|
0.9858
|
0.9858
|
1.0353
|
1.1373
|
·
|
2 Diesel Powered, Air over Hydraulic Driven
|
·
|
2 Diesel Powered, Electric over Hydraulic Driven
|
·
|
2 Diesel over Hydraulic Driven
|
§
|
Increase work efficiency
|
§
|
Decrease service costs (eliminating potential Fishing)
|
§
|
Reduce lost man-hours due to injury
|
§
|
Comply with all OHS rules and regulations
|
|
·
|
7 Little Jerk Mini Power Tong Units
|
|
·
|
2008 Chevy Silverado
|
Years Ended December 31
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Total Revenues
|
$
|
2,103,514
|
$
|
518,733
|
$
|
-
|
||||||
Total Expenses
|
$
|
5,150,175
|
$
|
1,757,589
|
$
|
541,446
|
||||||
Other Items
|
$
|
12,680
|
$
|
(2,894,170)
|
$
|
11,409
|
||||||
Net Income (Loss) available to Common Shareholders
|
$
|
(3,033,981
|
) |
$
|
(4,133,026
|
) |
$
|
(552,855
|
) | |||
Net Income (Loss) per share
|
$
|
(0.03
|
) |
$
|
(0.060
|
) |
$
|
(0.02
|
) | |||
Diluted Net Income (Loss) per share
|
$
|
(0.03
|
) |
$
|
(0.060
|
) |
$
|
(0.02
|
) | |||
Dividends Declared per share
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Total Assets
|
$
|
4,779,477
|
$
|
1,761,801
|
$
|
1,118,873
|
Total Liabilities
|
$
|
(6,414,202
|
) |
$
|
(2,967,633
|
) |
$
|
(286,997
|
) | |||
Net Assets
|
$
|
(1,634,725
|
) |
$
|
(1,205,832
|
) |
$
|
831,876
|
||||
Additional Paid in Capital
|
$
|
11,117,213
|
$
|
4,855,250
|
$
|
4,075,087
|
||||||
Common Shares Capital
|
$
|
5,646,571
|
$
|
9,293,446
|
$
|
53,195
|
||||||
Shares To Be Issued
|
$
|
-
|
$
|
10,000
|
$
|
7,501,691
|
||||||
Accumulated Deficit
|
$
|
(18,398,509
|
) |
$
|
(15,364,528
|
) |
$
|
486,600
|
||||
Total Shareholders’ Equity (Deficit)
|
$
|
(1,634,725
|
) |
$
|
(1,205,832
|
) |
$
|
(11,284,697
|
) | |||
Common Shares outstanding (1)
|
109,289,794
|
80,966,462
|
$
|
831,876
|
||||||||
Weighted Average – Diluted Shares
|
92,417,996
|
68,038,758
|
45,382,697
|
|||||||||
Share Purchase Warrants (2)
|
44,038,663
|
40,388,663
|
23,574,760
|
1)
|
109,2897,874 at April 30, 2014
|
2)
|
44,038,663 at April 30, 2014
|
Following is the summary of expenses:
|
Q4 2013 | Q4 2012 | (1) | Q4 2011 | 2013 | 2012 | (1) | 2011 | ||||||||||||||||
Consulting fees
|
(147,338 | ) | 27,409 | 84,660 | 312,659 | 148,668 | 158,286 | |||||||||||||||||
Equipment maintenance and rental
|
45,806 | (5,243 | ) | - | 129,642 | 48,821 | - | |||||||||||||||||
Fuel and sundry direct operation costs
|
215,793 | 78,077 | - | 508,157 | 78,077 | - | ||||||||||||||||||
Management fees
|
30,000 | 30,000 | 37,500 | 167,000 | 120,000 | 150,000 | ||||||||||||||||||
Occupancy costs
|
135,267 | 4,860 | 10,163 | 26,856 | 28,939 | 19.376 | ||||||||||||||||||
Office and sundry
|
75,013 | (17,080 | ) | 3,822 | 220,654 | 102,388 | 14,855 | |||||||||||||||||
Professional fees
|
38,305 | 59,520 | 46,866 | 115,192 | 183,753 | 76,554 | ||||||||||||||||||
Royalties
|
902,121 | 89,375 | - | 1,109,285 | 89,375 | - | ||||||||||||||||||
Salaries and wages
|
257,898 | 162,768 | - | 822,671 | 463,618 | - | ||||||||||||||||||
Transfer agent and filing fees
|
5,900 | 11,574 | 21,107 | 55,720 | 49,043 | 32,737 | ||||||||||||||||||
Travel, marketing and conferences
|
231,825 | 164,279 | 4,120 | 434,755 | 273,224 | 16,399 | ||||||||||||||||||
Write off of loans receivable
|
133,963 | - | - | 133,963 | - | - | ||||||||||||||||||
Waste removal
|
- | - | 62,625 | - | - | 62,625 | ||||||||||||||||||
Depreciation
|
30,103 | 77,321 | 11,270 | 366,283 | 167,957 | 11,270 | ||||||||||||||||||
Share based Compensation
|
381,859 | 3,726 | - | 747,338 | 3,726 | - | ||||||||||||||||||
Total expenses before other items
|
2,336,515 | 686,586 | 282,133 | 5,150,175 | 1,757,589 | 542,102 |
Three months ended December 31
|
Year Ended December 31
|
|||||||||||||||||||||||
2013
|
2012
(1)
|
2011
|
2013
|
2012
(1)
|
2011
|
|||||||||||||||||||
Net Loss and Comprehensive Loss for the Period
|
(1,474,599 | ) | (3,058,053 | ) | (286,031 | ) | (3,033,981 | ) | (4,133,026 | ) | (552,855 | ) | ||||||||||||
Add back:
|
||||||||||||||||||||||||
Finance Costs
|
83,953 | 13,736 | 4,132 | 136,018 | 41,017 | 11,653 | ||||||||||||||||||
Depreciation
|
30,103 | 77,321 | 11,270 | 366,283 | 167,957 | 11,270 | ||||||||||||||||||
Impairment of technology asset
|
- | 2,056,729 | - | - | 2,056,729 | - | ||||||||||||||||||
Impairment of licenses
|
- | 493,808 | - | - | 493,808 | - | ||||||||||||||||||
Impairment of equipment
|
- | 309,174 | - | - | 309,174 | - | ||||||||||||||||||
Amortization of Intangibles
|
- | - | - | - | - | - | ||||||||||||||||||
Income Taxes
|
- | - | - | - | - | - | ||||||||||||||||||
EBITDA
|
(1,360,543 | ) | (107,285 | ) | (270,629 | ) | (2,531,680 | ) | (1,064,341 | ) | (541,202 | ) | ||||||||||||
Add back:
|
||||||||||||||||||||||||
Stock-based Compensation
|
381,859 | 3,726 | - | 747,338 | 3,726 | - | ||||||||||||||||||
Gain on extinguishment of debt
|
(161,500 | ) | - | - | (161,500 | ) | - | - | ||||||||||||||||
Adjusted EBITDA
|
(1,140,184 | ) | (103,559 | ) | (270,629 | ) | (1,945,842 | ) | (1,060,615 | ) | (541,202 | ) |
|
·
|
On April 29, 2014, the Company entered into a loan agreement with an arm’s length third party lender. Pursuant to the loan agreement, the lender has agreed to make revolving credit loans to the Company in the principal amount of up to $1,000,000, of which $686,500 had already been advanced to Intercept. The amount of the loan is unsecured and bears interest at the rate of 12% per annum. The term of the agreement is for two years and provides that at any time after July 29, 2014, the lender is entitled to demand repayment of the outstanding amount of the loan. The proceeds from the loan will be used to retire accounts payable. In consideration for the lender agreeing to provide the loan, the Company has issued 900,000 common shares at a deemed price of $0.05 per share, subject to final approval of the TSX Venture Exchange. The Bonus Shares will be subject to a hold period that expires on August 30, 2014.
|
|
·
|
On February 28, 2014 Company entered into a lease arrangement to lease a truck and heating unit for 50% of the operating income of the unit.
|
|
1)
|
On December 10, 2011, the Company signed a definitive Distribution/Dealer License Agreement with Inergy Plus Technologies Inc. (“Inergy Plus”). The agreement provides the Company with the exclusive right to utilize Inergy Plus’ technologies for Canada including the right to license, sell, operate and provide warranty services. The primary technology is called the ReCyclone Advanced Gyroscopic Mill, also called the “PowerMaster.” The license to the Company includes all current and future applications for the Power Master as registered with the United States Patent and Trademark office and all present and future intellectual property rights related to Inergy’s technologies during the 10 year term of the agreement. At December 31, 2012 the Company did not expect to derive any further economic benefit from the Power Master license and decided to write off the net book value of $101,555 to nil.
|
|
2)
|
On December 23, 2011, the Company signed a Distribution Agreement with I-Des Inc. and DryVac Services Canada Inc. (“I-Des and DryVac”). The Distribution Agreement gives the Company the exclusive right to exploit the technologies developed and owned by I-Des and DryVac for a period of 2 years for all of Canada, in return for a onetime payment in the amount of $250,000. The Distribution Agreement allows for renewal of the term for an additional two (2) years provided that 60 days notice is given by the Company and that it is not in default with any terms of the agreement, one of which states that the Company will sell a minimum of four (4) DryVac units per year.
|
|
|
On January 23, 2012, the Company signed an amendment to the Distribution Agreement to obtain additional rights to sell DryVac units in the State of Utah, USA. In consideration of the additional territory, the Company paid an additional distributor fee to I-Des and DryVac in the amount of US$150,000.
|
|
3)
|
On March 20, 2012, the Company acquired all of the issued and outstanding shares of 1503826 Alberta Ltd. carrying on the business as “Intercept Rentals” from arm’s length third parties pursuant to a share purchase agreement. The purchase price included a technology asset valued at $2,714,886 related to “BIG HEAT” technology. As at December 31, 2012 the Company tested the carrying value of the technology asset and as the carrying value of this technology asset was higher than the recoverable value, the Company decided to write off the carrying value of $2,714,886 to $nil.
|
|
·
|
Mid-November through mid-March – winter drilling season; this is the period when the majority of industry activity takes place as exploration and production (“
E&P
”) companies take advantage of the frozen landscape to access northern winter locations. This is typically the busiest season for completions and workovers.
|
|
·
|
Mid-March through mid-May – spring break-up; the locations typically thaw and become impractical for travel due to wet road conditions. Work can continue where equipment is already on location. Completion and workover activity is generally low with companies planning for the summer programs.
|
|
·
|
Mid-May through mid-October – summer and fall drilling season; generally focused on non-northern areas that are accessible in the summer. Completion and workover activity generally increases.
|
|
·
|
Mid-October through mid-November – pre-winter drilling season; many companies move off summer drilling locations and prepare winter drilling leases for delivery of equipment. Completion and workover activity generally increases further.
|
|
a)
|
The Company has entered into an operating lease commitment exclusive of occupancy costs for premises as follows:
|
2014
|
$
|
96,772
|
2015-2017
|
$
|
282,252
|
Total
|
$
|
379,024
|
|
b)
|
Loans and Borrowings
|
December 31, 2013 |
December 31, 2012
|
|||||||
Restated (Note 23)
|
||||||||
Automotive loan payable
|
$
|
7,715
|
$
|
18,003
|
||||
Loans payable
|
-
|
754
|
||||||
Notes payable
|
643,951
|
353,506
|
||||||
Convertible debentures payable
|
313,039
|
153,000
|
||||||
964,705
|
525,263
|
|||||||
Less: current portion
|
(651,666
|
)
|
(517,546
|
)
|
||||
$
|
313,039
|
$
|
7,717
|
Debenture
|
||||
Balance, December 31, 2011
|
$
|
144,500
|
||
Accrued interest expense
|
8,500
|
|||
Balance, December 31, 2012
|
153,000
|
|||
Accrued interest expense
|
8,500
|
|||
Extinguishment of debenture
|
(161,500
|
)
|
||
Issuance of Debenture, March 22, 2013
|
245,000
|
|||
Derivative liability component
|
(62,473
|
)
|
||
Issuance of Debenture, April 15, 2013
|
200,000
|
|||
Derivative liability component
|
(50,998
|
)
|
||
Unamortized portion of cost of issuance
|
(26,706
|
)
|
||
Accretion of liability component
|
8,216
|
|||
Balance, December 31, 2013
|
$
|
313,039
|
|
c) Finance lease obligations
|
December 31, 2013
|
Future minimum lease payments 2013
|
Interest 2013
|
Principal value of minimum lease payments 2013
|
|||||||||
Less than one year
|
$
|
787,297
|
$
|
83,791
|
$
|
703,506
|
||||||
Between one and five years
|
1,180,946
|
50,492
|
1,130,454
|
|||||||||
More than five years
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
1,968,243
|
$
|
134,283
|
$
|
1,833,960
|
December 31, 2012
|
Future minimum lease payments 2012
|
Interest 2012
|
Principal value of minimum lease payments 2012
|
|||||||||
Less than one year
|
$
|
13,005
|
$
|
315
|
$
|
12,690
|
||||||
Between one and five years
|
-
|
-
|
-
|
|||||||||
More than five years
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
13,005
|
$
|
315
|
$
|
12,690
|
i)
|
Consolidated Financial Statements
|
ii)
|
Joint Arrangements
|
iii)
|
Disclosure of Interests in Other Entities
|
iv)
|
Separate Financial Statements
|
v)
|
Investments in Associates and Joint Ventures
|
vi)
|
IFRS 13 Fair Value Measurement (“IFRS 13”)
|
vii)
|
IFRS 9 Financial Instruments (“IFRS 9”)
|
Name and Principal Position
|
Period Ended December 31
|
Salary
(C$)
|
Bonus
(C$)
|
Stock
Awards
(C$)
|
Option
Awards
(C$)
|
Non-Equity
Incentive
Plan
Compensation
(C$)
|
All Other Compensation
(C$)
|
Total
(C$)
|
|||||||||||||||||||||
Randy Hayward,
Director and Chief Executive Officer
|
2013
|
168,000
|
-
|
-
|
156,237
|
-
|
-
|
324,237
|
|||||||||||||||||||||
William Cromb, Chief Financial Officer
(1)
|
2013
|
24,000
|
-
|
-
|
20,171
|
-
|
-
|
44,171
|
|||||||||||||||||||||
Greg Pendura Former Chief Financial Officer
(2)
|
2013
|
-
|
-
|
-
|
68,302
|
-
|
-
|
68,302
|
|
(1)
|
Mr. Cromb was appointed as the CFO on July 1, 2013
|
|
(2)
|
Mr. Pendura resigned as the CFO on July 1, 2013 and as a Director on March 18, 2014
|
Years ended
|
||||||||
December 31,
2013
|
December 31,
2012
|
|||||||
Short-term employee benefits - management
|
$ | 192,000 | $ | 120,000 | ||||
Stock based compensation - management
|
20,717 | - | ||||||
Stock based compensation - directors
|
406,217 | - | ||||||
Office rent
|
3,800 | 3,800 | ||||||
$ | 622,734 | $ | 123,800 |
December 31,
2013
|
December 31,
2012
|
|||||||
Due to an officer of the Company
|
$ | 3,048 | $ | 1,044 | ||||
Due to a director of the Company
|
24,150 | - | ||||||
$ | 27,198 | $ | 1,044 |
Year Ended
|
High
|
Low
|
||||||
1-Dec-08
|
$ | 2.10 | $ | 0.15 | ||||
31-Dec-09
|
$ | 0.90 | $ | 0.15 | ||||
31-Dec-10
|
$ | 0.30 | $ | 0.06 | ||||
31-Dec-11
|
$ | 0.19 | $ | 0.02 | ||||
31-Dec-12
|
$ | 0.04 | $ | 0.04 | ||||
31-Dec-13
|
$ | 0.12 | $ | 0.04 |
Quarter
Ended
|
High
|
Low
|
||||||
31-Mar-11
|
$ | 0.10 | $ | 0.06 | ||||
30-Jun-11
|
$ | 0.085 | $ | 0.06 | ||||
30-Sep-11
|
$ | 0.065 | $ | 0.03 | ||||
31-Dec-11
|
$ | 0.19 | $ | 0.02 | ||||
31-Mar-12
|
$ | 0.13 | $ | 0.13 | ||||
30-Jun-12
|
$ | 0.10 | $ | 0.10 | ||||
30-Sep-12
|
$ | 0.05 | $ | 0.05 | ||||
31-Dec-12
|
$ | 0.04 | $ | 0.04 | ||||
31-Mar-13
|
$ | 0.09 | $ | 0.04 | ||||
30-Jun-13
|
$ | 0.12 | $ | 0.07 | ||||
30-Sep-13
|
$ | 0.12 | $ | 0.08 | ||||
31-Dec-13
|
$ | 0.11 | $ | 0.06 |
Month Ended
|
High
|
Low
|
||||||
31-Dec-12
|
$ | 0.04 | $ | 0.04 | ||||
31-Jan-13
|
$ | 0.05 | $ | 0.05 | ||||
28-Feb-13
|
$ | 0.08 | $ | 0.08 | ||||
31-Mar-13
|
$ | 0.07 | $ | 0.07 | ||||
30-Apr-13
|
$ | 0.10 | $ | 0.09 | ||||
31-May-13
|
$ | 0.10 | $ | 0.07 | ||||
31-June -13
|
$ | 0.10 | $ | 0.07 | ||||
30-July – 13
|
$ | 0.10 | $ | 0.08 | ||||
31-Aug-13
|
$ | 0.10 | $ | 0.09 | ||||
30-Sept -13
|
$ | 0.12 | $ | 0.09 | ||||
31-Oct -13
|
$ | 0.11 | $ | 0.09 | ||||
30-Nov -13
|
$ | 0.10 | $ | 0.08 | ||||
31-Dec-13
|
$ | 0.09 | $ | 0.06 |
·
|
an acquisition of common shares by a person in the ordinary course of that person’s business as a trader or dealer in securities;
|
|
·
|
an acquisition of control of the Company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the Investment Act; and
|
|
·
|
an acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization, following which the ultimate direct or indirect control in fact of the Company, through the ownership of common shares, remained unchanged.
|
(i)
|
aggregate gross assets in Canada that exceed $400,000,000 in value, as shown on their audited financial statements for the most recently completed fiscal year (which must be within the last fifteen (15) months); or
|
|
(ii)
|
aggregate gross revenue from sales in, from or into Canada that exceed $400,000,000 for the most recently completed fiscal year shown on the said financial statements; and
|
|
(iii)
|
the party being acquired or corporations controlled by that party must have gross assets in Canada, or gross revenues from sales in or from Canada, exceeding $35,000,000 as shown on the said financial statements. Acquisition of shares carrying up to 20% of the votes of a publicly-traded corporation, or 35% of the votes in a private corporation, will not be subject to pre-notification, regardless of the above thresholds. However, exceeding the 20% or the 35% threshold, and again exceeding the 50% threshold, gives rise to an obligation of notification if the size threshold is met.
|
|
(i)
|
Act with honesty and integrity, handle actual or apparent conflicts of interest in personal and professional relationships in accordance with this Code.
|
|
(ii)
|
Produce full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, any Securities Regulatory Bodies and in other public communications made by the Company.
|
|
(iii)
|
Comply with applicable rules and regulations of federal, state, provincial and local governments, and other appropriate private and public regulatory agencies.
|
|
(iv)
|
Promptly report known or suspected violations of this Code in accordance with this Code.
|
|
(v)
|
Be accountable for adhering to this Code.
|
Financial Year Ending
|
Audit Fees
|
Audit Related Fees
|
Tax Fees
|
All Other Fees
|
2013
|
$140,000
|
Nil
|
$2,500
|
Nil
|
2012
|
$25,000
|
Nil
|
$2,500
|
Nil
|
|
a)
|
The resignation of K R Margetson Ltd, Chartered Accountant, to be effective November 15, 2013 , as auditors of the Company be accepted, and
|
|
b)
|
Grant Thornton LLP, Chartered Accountants, be appointed as auditors of the Company to be effective November 15, 2013, to hold office until the next annual meeting at remuneration to be fixed by the directors.
|
|
a)
|
K R Margetson Ltd Chartered Accountant, resigned on its own initiative as auditor of the Company;
|
|
b)
|
K R Margetson Ltd., Chartered Accountant, has not expressed any reservation in its reports for the two most recently completed fiscal years of the Company, nor for the period from the most recently completed period for which K R Margetson Ltd., Chartered Accountant, issued an audit report in respect of the Company and the date of this notice;
|
|
c)
|
The resignation of K R Margetson Ltd., Chartered Accountants, and appointment of Grant Thornton LLP, Chartered Accountants, as auditors of the Company were both considered by the audit committee and approved by the Board of Directors of the Company;
|
|
d)
|
in the opinion of Corporation, and the Board of Directors of the Company, there have been no Reportable Events” as defined in
NI 51-102
in connection with the audits of the two most recently completed financial years of the Company, nor any period from the most recently completed period for which K R Margetson Ltd., Chartered Accountant, issued an audit report in respect of the Company and the date of this notice; and
|
|
e)
|
the notice, resignation, and letters of the auditors have been reviewed by the Audit Committee and the Board of Directors.
|
Name(s)
|
Other Reporting issuers (or None)
|
John Anderson
|
Mannix Resources Inc., Northern Freegold Resources Ltd., Sona Resources Corp., Blue Note Mining Inc., Passport Energy Ltd., Simba Gold Corporation. Telson Resources Inc., and SOHO Resources
|
Dwight (Randy) Hayward
|
Solid Resources Ltd.
|
|
a)
|
Corporate Governance and Compensation Committee
|
|
b)
|
Insider Trading policies
|
|
c)
|
Whistle Blower Policy
|
|
d)
|
Trading Blackout Policy
|
|
e)
|
Audit Committee Charter
|
Richard Oravec
Marvin J Jones
John Anderson
|
Independent
(1)
Independent
(1)
Independent
(1)
|
Financially literate
Financially literate
Financially literate
|
|
(1)
|
An individual is financially literate if he has the ability to read and understand a set of financial statements that present a breadth of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.
|
Page
|
|
Independent Auditor’s Report
|
43
|
Independent Auditor’s Report
|
45
|
Consolidated Statements of Financial Position at December 31, 2013 and 2012
|
47
|
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2013, 2012 and 2011
|
48
|
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2013, 2012 and 2011
|
49
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2013, 2012 and 2011
|
50
|
Notes to Consolidated Financial Statements, December 31, 2013, 2012 and 2011
|
51
|
“Randy Hayward” | “William Cromb” | |
President and Chief Executive Officer | Chief Financial Officer |
Grant Thornton LLP
Suite 1600, Grant Thornton Place
333 Seymour Street
Vancouver, BC
V6B 0A4
T +1 604 687 2711
F +1 604 685 6569
www.GrantThornton.ca
|
Vancouver, Canada
|
/s/
Grant Thornton LLP
|
||
May 14, 2014
|
Chartered accountants
|
||
K. R. MARGETSON LTD . | Chartered Accountants |
December 31,
|
December 31,
|
|||||||||||
Notes
|
2013
|
2012
|
||||||||||
ASSETS
|
Restated (Note 23)
|
|||||||||||
Current assets
|
||||||||||||
Cash
|
$
|
8,845
|
$
|
40,887
|
||||||||
Trade and other receivables
|
5
|
734,272
|
250,229
|
|||||||||
Prepaids and deposits
|
22,292
|
20,020
|
||||||||||
Income taxes recoverable
|
-
|
1,292
|
||||||||||
Total current assets
|
765,409
|
312,428
|
||||||||||
Non-current assets
|
||||||||||||
Loans receivable
|
5
|
-
|
95,963
|
|||||||||
Equipment
|
6
|
4,014,068
|
1,353,410
|
|||||||||
Total non-current assets
|
4,014,068
|
1,449,373
|
||||||||||
TOTAL ASSETS
|
$
|
4,779,477
|
$
|
1,761,801
|
||||||||
LIABILITIES
|
||||||||||||
Current liabilities
|
||||||||||||
Trade and other payables
|
8
|
$
|
969,223
|
$
|
714,648
|
|||||||
Loans and borrowings
|
9
|
651,666
|
517,546
|
|||||||||
Finance lease obligations
|
10
|
1,833,960
|
12,690
|
|||||||||
Current portion of royalty obligations
|
11
|
453,245
|
150,912
|
|||||||||
Current portion of derivative liability
|
12
|
40,163
|
-
|
|||||||||
Deferred gain on sale leaseback
|
6
|
-
|
1,070
|
|||||||||
Total current liabilities
|
3,948,257
|
1,396,866
|
||||||||||
Non-current liabilities
|
||||||||||||
Royalty obligations
|
11
|
2,064,601
|
1,563,050
|
|||||||||
Derivative liability
|
12
|
88,305
|
-
|
|||||||||
Loans and borrowings
|
9
|
313,039
|
7,717
|
|||||||||
Long term liabilities
|
2,465,945
|
1,570,767
|
||||||||||
TOTAL LIABILIITES
|
6,414,202
|
2,967,633
|
||||||||||
SHAREHOLDERS' DEFICIENCY
|
||||||||||||
Share capital
|
13
|
11,117,213
|
9,293,446
|
|||||||||
Contributed surplus
|
15
|
5,646,571
|
4,855,250
|
|||||||||
Subscription advances
|
-
|
10,000
|
||||||||||
Deficit
|
(18,398,509
|
)
|
(15,364,528
|
)
|
||||||||
TOTAL DEFICIENCY
|
(1,634,725
|
)
|
(1,205,832
|
)
|
||||||||
TOTAL LIABILITIES AND DEFICIENCY
|
$
|
4,779,477
|
$
|
1,761,801
|
On behalf of the Board:
|
|||||||||
“Randy Hayward”
|
Director
|
"Richard Oravec"
|
Director
|
Year ended
|
Year ended
|
Year ended
|
|||||||||||||
December 31,
|
December 31,
|
December 31,
|
|||||||||||||
Notes
|
2013
|
2012
|
2011
|
||||||||||||
(restated note 23)
|
|||||||||||||||
REVENUE
|
|||||||||||||||
Distribution fees
|
$ | - | $ | 100,000 | $ | - | |||||||||
Rental income
|
2,103,514 | 418,733 | - | ||||||||||||
2,103,514 | 518,733 | - | |||||||||||||
EXPENSES
|
|||||||||||||||
Consulting fees
|
312,659 | 148,668 | - | ||||||||||||
Depreciation
|
6 | 366,283 | 167,957 | 11,270 | |||||||||||
Equipment maintenance and rental
|
129,642 | 48,821 | - | ||||||||||||
Fuel and sundry direct operating costs
|
508,157 | 78,077 | 62,625 | ||||||||||||
Management fees
|
167,000 | 120,000 | - | ||||||||||||
Occupancy costs
|
26,857 | 28,939 | 19,376 | ||||||||||||
Office and sundry
|
220,654 | 102,388 | 338,884 | ||||||||||||
Professional fees
|
115,192 | 183,753 | 76,554 | ||||||||||||
Royalties
|
11 | 1,109,285 | 89,375 | - | |||||||||||
Salaries and wages
|
822,671 | 463,618 | - | ||||||||||||
Share based compensation
|
747,338 | 3,726 | - | ||||||||||||
Transfer agent and filing fees
|
55,720 | 49,043 | 32,737 | ||||||||||||
Travel, marketing and conferences
|
434,754 | 273,224 | - | ||||||||||||
Write off of loan receivable
|
5 | 133,963 | - | - | |||||||||||
5,150,175 | 1,757,589 | 541,446 | |||||||||||||
Loss before other items
|
(3,046,661 | ) | (1,238,856 | ) | (541,446 | ) | |||||||||
OTHER ITEMS
|
|||||||||||||||
Interest income
|
1,125 | 1,206 | 900 | ||||||||||||
Amortization of deferred gain on sale leaseback
|
1,070 | 5,352 | - | ||||||||||||
Impairment of technology asset
|
7 | - | (2,056,729 | ) | - | ||||||||||
Impairment of licenses
|
7 | - | (493,808 | ) | - | ||||||||||
Impairment of equipment
|
6 | - | (309,174 | ) | - | ||||||||||
Gain on extinguishment of debt
|
9 | 161,500 | - | - | |||||||||||
Loss on derivative liability
|
12 | (14,997 | ) | - | - | ||||||||||
Finance expense
|
(136,018 | ) | (41,017 | ) | (12,309 | ) | |||||||||
12,680 | (2,894,170 | ) | (11,409 | ) | |||||||||||
Net loss and comprehensive loss for the year
|
$ | (3,033,981 | ) | $ | (4,133,026 | ) | (552,855 | ) | |||||||
Basic and diluted loss per common share
|
(0.03 | ) | (0.06 | ) | (0.02 | ) | |||||||||
Weighted average number of common shares outstanding
|
92,417,996 | 68,038,758 | 23,574,760 |
Share Capital
|
||||||||||||||||||||||||||||
Number of
|
Contributed
|
Subscription
|
Other comprehensive
|
|||||||||||||||||||||||||
shares
|
Amount
|
surplus
|
advances
|
Income
|
Deficit
|
Total
|
||||||||||||||||||||||
Balance at December 31, 2010
|
21,243,055 | $ | 6,325,974 | $ | 4,075,087 | $ | - | $ | 53,195 | $ | (10,731,842 | ) | $ | (277,586 | ) | |||||||||||||
Private placements
|
20,000,000 | 1,000,000 | - | - | - | - | 1,000,000 | |||||||||||||||||||||
Share issue costs
|
- | (57,138 | ) | - | - | - | (57,138 | ) | ||||||||||||||||||||
Debt settlement
|
4,139,644 | 232,855 | - | - | - | - | 232,855 | |||||||||||||||||||||
Subscription advances
|
- | - | - | 486,600 | - | 486,600 | ||||||||||||||||||||||
Share issuance adjustment
|
(2 | ) | - | - | - | - | - | - | ||||||||||||||||||||
Loss for the year
|
- | - | - | - | (552,855 | ) | (552,855 | ) | ||||||||||||||||||||
Balance at December 31, 2011
|
45,382,697 | 7,501,691 | 4,075,087 | 486,600 | 53,195 | (11,284,697 | ) | 831,876 | ||||||||||||||||||||
Balance at December 31, 2011 (restated note 23)
|
45,382,697 | 7,501,691 | 4,075,087 | 486,600 | - | (11,231,502 | ) | 831,876 | ||||||||||||||||||||
Private placements
|
23,583,765 | 1,704,939 | - | (486,600 | ) | - | - | 1,218,339 | ||||||||||||||||||||
Warrants
|
- | (708,316 | ) | 708,316 | - | - | - | - | ||||||||||||||||||||
Share issue costs
|
- | (166,711 | ) | 68,121 | - | - | - | (98,590 | ) | |||||||||||||||||||
Issuance for acquisition of Intercept Rentals (note 4)
|
12,000,000 | 961,843 | - | - | - | - | 961,843 | |||||||||||||||||||||
Subscription advances
|
- | - | - | 10,000 | - | - | 10,000 | |||||||||||||||||||||
Share based compensation
|
- | - | 3,726 | - | - | - | 3,726 | |||||||||||||||||||||
Net loss and comprehensive loss for the year
|
- | - | - | - | - | (4,133,026 | ) | (4,133,026 | ) | |||||||||||||||||||
Balance at December 31, 2012 (restated note 23)
|
80,966,462 | 9,293,446 | 4,855,250 | 10,000 | - | (15,364,528 | ) | (1,205,832 | ) | |||||||||||||||||||
Private placements
|
22,523,332 | 1,604,250 | - | (10,000 | ) | - | - | 1,594,250 | ||||||||||||||||||||
Warrants
|
- | (57,200 | ) | 57,200 | - | - | - | - | ||||||||||||||||||||
Share issue costs
|
- | (189,783 | ) | 10,783 | - | - | - | (179,000 | ) | |||||||||||||||||||
Options exercised
|
300,000 | 54,000 | (24,000 | ) | - | - | - | 30,000 | ||||||||||||||||||||
Issued for purchase of equipment
|
5,500,000 | 412,500 | - | - | - | - | 412,500 | |||||||||||||||||||||
Share based compensation
|
- | - | 747,338 | - | - | - | 747,338 | |||||||||||||||||||||
Net loss and comprehensive loss for the year
|
- | - | - | - | (3,033,981 | ) | (3,033,981 | ) | ||||||||||||||||||||
Balance at December 31, 2013
|
109,289,794 | $ | 11,117,213 | $ | 5,646,571 | $ | - | $ | - | $ | (18,398,509 | ) | $ | (1,634,725 | ) |
Year ended
|
Year ended
|
Year ended
|
||||||||||
31-Dec-13
|
31-Dec-12
|
31-Dec-11
|
||||||||||
Restated (Note 23)
|
||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net loss and comprehensive loss
|
$ | (3,033,981 | ) | $ | (4,133,026 | ) | $ | (552,855 | ) | |||
Items not affecting cash:
|
||||||||||||
Amortization of deferred gain on sale leaseback
|
(1,070 | ) | (5,352 | ) | - | |||||||
Depreciation
|
366,283 | 167,957 | 11,270 | |||||||||
Impairment of technology asset
|
- | 2,056,729 | - | |||||||||
Management fees
|
- | - | 115,000 | |||||||||
Interest income
|
- | - | (900 | ) | ||||||||
Impairment of licenses
|
- | 493,808 | - | |||||||||
Impairment of equipment
|
- | 309,174 | - | |||||||||
Write off of loans receivable
|
133,963 | - | ||||||||||
Interest expense
|
- | 7,600 | 9,174 | |||||||||
Accretion
|
8,215 | - | - | |||||||||
Gain on extinguishment of debt
|
(161,500 | ) | - | - | ||||||||
Non cash portion of royalty expense
|
803,884 | 39,082 | - | |||||||||
Non cash portion of (gain)/loss on financial instrument
|
14,997 | - | - | |||||||||
Share-based payments
|
747,338 | 3,726 | - | |||||||||
Changes in non-cash working capital items:
|
||||||||||||
Trade and other receivables
|
(484,043 | ) | (90,009 | ) | (63,599 | ) | ||||||
Prepaids and deposits
|
(2,272 | ) | 125,888 | - | ||||||||
Income taxes recoverable
|
1,292 | - | - | |||||||||
Trade and other payables
|
254,575 | 163,804 | 135,336 | |||||||||
(1,352,319 | ) | (860,619 | ) | (346,574 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Cash received on acquisition of Intercept Rentals
|
- | 21,734 | - | |||||||||
Loans receivable
|
(38,000 | ) | 23,412 | - | ||||||||
Acquisition of licenses
|
- | (152,670 | ) | (352,408 | ) | |||||||
Acquisition of Equipment
|
(247,242 | ) | (999,526 | ) | - | |||||||
(285,242 | ) | (1,107,050 | ) | (352,408 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Proceeds from issuance of shares
|
1,624,250 | 1,218,339 | 942,862 | |||||||||
Share issue costs
|
(179,000 | ) | (98,590 | ) | - | |||||||
Subscription advances received
|
- | 10,000 | 486,600 | |||||||||
Loans and borrowings
|
592,727 | 359,087 | 12,500 | |||||||||
Derivative liability
|
113,471 | - | - | |||||||||
Cash received on lease financing of equipment
|
988,134 | - | - | |||||||||
Due to related party
|
- | - | (65,605 | ) | ||||||||
Finance leases - paid
|
(1,534,063 | ) | (161,252 | ) | - | |||||||
1,605,519 | 1,327,584 | 1,376,357 | ||||||||||
Change in cash for the year
|
(32,042 | ) | (640,085 | ) | 677,375 | |||||||
Cash, beginning of year
|
40,887 | 680,972 | 3,597 | |||||||||
Cash, end of year
|
$ | 8,845 | $ | 40,887 | $ | 680,972 | ||||||
Supplemental disclosure with respect to cash flows (Note 22)
|
1.
|
Nature of operations and going concern
|
2.
|
Significant accounting policies
|
2.
|
Significant accounting policies (cont’d)
|
|
·
|
On April 29, 2014 the Company entered into a loan agreement with an arm’s length third party lender. Pursuant to the loan agreement, the lender has agreed to make revolving credit loans to the Company in the principal amount of up to $1,000,000, of which $608,000 had been advanced as at December 31, 2013 and is included in loans and borrowings, and $328,500 was advanced subsequent to the year end. The amount of the loan is unsecured and bears interest at the rate of 12% per annum. The term of the agreement is for two years and provides that at any time after July 29, 2014, the lender is entitled to demand repayment of the whole or any portion of the outstanding amount of the loan. The proceeds from the loan will be used to retire accounts payable. In consideration for the lender agreeing to provide the loan, the Company has issued 900,000 common shares at a deemed price of $0.05 per share, subject to final approval of the TSX Venture Exchange. The Bonus Shares will be subject to a hold period that expires on August 30, 2014.
|
|
·
|
On February 28, 2014, the Company entered into a lease arrangement to lease a truck and heating unit for 50% of the operating income of the unit. The term of the arrangement is indefinite. The entity which owns this truck is controlled by a person who was appointed Director of the Company subsequent to the year end.
|
|
In considering the collectability of accounts receivable, taken into account is the legal obligation for payment by the customer, as well as the financial capacity of the customer to fund its obligation to the Corporation.
|
|
Management uses judgment in determining whether a lease is a finance lease arrangement that transfers substantially all the risks and rewards of ownership
|
|
The cost less the residual value of each item of equipment is depreciated over its useful economic life. Depreciation is charged over the estimated life of the individual asset. Depreciation commences when assets are available for use. The assets’ useful lives and methods of depreciation are reviewed and adjusted if appropriate at each fiscal year end.
|
|
Significant judgment is involved in the determination of useful life and residual values for the computation of depreciation and no assurance can be given that the actual useful lives or residual values will not differ significantly from current assumptions.
|
|
Intangible assets and equipment are tested for impairment if there is an indication of impairment. The carrying value of equipment and intangible assets is reviewed each reporting period to determine whether there is any indication of impairment. If the carrying amount of an asset exceeds its recoverable amount, the asset is impaired and an impairment loss is recognized in profit or loss. The assessment of fair values less costs of disposal or value in use, including those of the cash-generating units for purposes of testing intangible assets require the use of estimates and assumptions for recoverable production, long-term commodity prices, discount rates, future capital requirements and operating performance. Changes in any of the assumptions or estimates used in determining the fair value of the assets could impact the impairment analysis.
|
2.
|
Significant accounting policies (cont’d)
|
|
The amount expensed for share-based compensation is based on the application of the Black-Scholes Option Pricing Model, which is highly dependent on the expected volatility of the Company’s share price and the expected life of the options. The Company used an expected volatility rate for its shares based on historical stock trading data adjusted for future expectations; actual volatility may be significantly different. While the estimate of share-based compensation can have a material impact on the operating results reported by the Company, it is a non-cash charge and as such has no impact on the Company’s cash position or future cash flows.
|
|
The Company has a royalty obligation liability. To estimate the fair value of the obligation, the Company makes estimates of future cash flows and discounts those cash flows at an estimated prevailing market rate of interest for a similar instrument. Management updates the estimated future cash flows by estimating future operating hours, revenues, future equipment purchases and other items required under the royalty agreement at each reporting date to assess whether the value of obligation should be adjusted. The effects of any change in the obligation are recognized in profit or loss in the current period.
|
|
The determination of the fair value of the liability component of the convertible debentures requires management to make estimates regarding the interest rate that the Company would have obtained for a similar secured loan without a conversion feature. Management takes into consideration the valuation of both components, historical data regarding issuances of warrants and the proceeds received upon issuance of the convertible debentures to determine the inputs used in the valuation models and the resulting fair value for each instrument.
|
|
The Company has a derivative liability embedded in its convertible debenture. To estimate the fair value of the derivative liability, the Company makes estimates of future cash flows and discounts those cash flows at an estimated discount rate. Management updates the estimated future cash flows by estimating future operating hours, revenues, operating costs, future equipment purchases and other items required under the royalty agreement at each reporting date to assess whether the value of derivative liability should be adjusted. The effects of any change in the obligation are recognized in profit or loss in the current period.
|
|
Foreign currency translation
|
|
The Company’s reporting currency and the functional currency is the Canadian dollar. The functional currency determinations were conducted by considering the primary economic environment that the entities operate in.
|
|
Transactions in foreign currencies are translated at the exchange rate in effect at the date of the transaction. Foreign currency denominated monetary assets and liabilities are translated to their Canadian dollar equivalents using foreign exchange rates prevailing at the financial position reporting date. Exchange gains or losses arising on foreign currency translation are reflected in profit or loss for the period.
|
|
Intangible assets
|
|
Intangible assets are recorded at cost. Intangible assets assessed by the Company with finite useful lives are amortized on a systematic basis over their useful lives. The amortization period and amortization method for an intangible asset with a finite useful life reflects the pattern in which the assets’ future economic benefits are expected to be consumed. Where the pattern cannot be reliably determined, the straight-line method is used. The amortization period and method is reviewed at least at each financial year end.
|
|
Equipment is carried at cost, less accumulated depreciation and accumulated impairment losses.
|
|
The cost of an item consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
|
|
Depreciation is provided at rates calculated to write off the cost of equipment, less the estimated residual value over the useful life, using the straight line method over seven years for rental equipment and five years for vehicles. These useful life estimates were revised in the third quarter of 2013 prospectively from previously using the declining balance method at various rates ranging from 20% - 30% per annum This change in estimate decreased depreciation expense by approximately $49,000 in 2013.
|
2.
|
Significant accounting policies (cont’d)
|
|
An item is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss in the consolidated statements of comprehensive loss.
|
|
Where an item of equipment comprises major components with different useful lives, the components are accounted for as separate items of equipment. Expenditures incurred to replace a component of an item of equipment that is accounted for separately, including major inspection and overhaul expenditures are capitalized.
|
|
Impairment of assets
|
2.
|
Significant accounting policies (cont’d)
|
2.
|
Significant accounting policies (cont’d)
|
2.
|
Significant accounting policies (cont’d)
|
3.
|
New standards, amendments and interpretations
|
|
i)
|
Consolidated Financial Statements
|
|
ii)
|
Joint Arrangements
|
3.
|
New standards, amendments and interpretations (cont’d)
|
iii)
|
Disclosure of Interests in Other Entities
|
iv)
|
Separate Financial Statements
|
v)
|
Investments in Associates and Joint Ventures
|
vi)
|
IFRS 13 Fair Value Measurement (“IFRS 13”)
|
4.
|
Acquisition of Intercept Rentals
|
Cash
|
$
|
21,734
|
||
Trade and other receivables
|
62,557
|
|||
Prepaids and deposits
|
145,908
|
|||
Technology asset
|
2,056,729
|
|||
Income taxes recoverable
|
1,291
|
|||
Loans receivable
|
119,375
|
|||
Equipment
|
521,841
|
|||
Trade and other payables
|
(112,347
|
)
|
||
Finance lease obligations
|
(173,942
|
)
|
||
Deferred gain on sale leaseback
|
(6,422
|
)
|
||
Total net identifiable assets
|
$
|
2,636,724
|
Shares issued
|
961,843
|
|||
Royalty liability granted (note 11)
|
1,674,881
|
|||
Total consideration transferred
|
2,636,724
|
|||
Less: value of identifiable assets
|
(2,636,724
|
)
|
||
Difference
|
$
|
-
|
December 31, 2013
|
December 31, 2012
|
|||||||
Trade receivables
|
$
|
635,808
|
$
|
215,244
|
||||
Sales tax receivable
|
98,464
|
16,730
|
||||||
Loan receivable
|
-
|
18,255
|
||||||
Total
|
$
|
734,272
|
$
|
250,229
|
6.
|
Equipment (Restated (Note 23))
|
Computer | Rental Equipment | Vehicles | Leasehold Improvements | Total | ||||||||||||||||
Cost
|
||||||||||||||||||||
Balance, December 31, 2011
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
On acquisition of Intercept Rentals
|
592 | 489,616 | 31,633 | - | 521,841 | |||||||||||||||
Additions
|
1,796 | 1,158,992 | 146,424 | 1,488 | 1,308,700 | |||||||||||||||
Balance, December 31, 2012
|
$ | 2,388 | $ | 1,648,608 | $ | 178,057 | $ | 1,488 | $ | 1,830,541 | ||||||||||
Additions
|
4,197 | 2,394,651 | 628,093 | - | 3,026,941 | |||||||||||||||
Balance December 31, 2013
|
$ | 6,585 | $ | 4,043,259 | $ | 806,150 | $ | 1,488 | $ | 4,857,482 | ||||||||||
Depreciation
|
||||||||||||||||||||
Balance, December 31, 2011
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Impairment
|
- | 309,174 | - | - | 309,174 | |||||||||||||||
Additions
|
349 | 142,816 | 24,560 | 232 | 167,957 | |||||||||||||||
Balance, December 31, 2012
|
349 | 451,990 | 24,560 | 232 | 477,131 | |||||||||||||||
Additions
|
1,130 | 294,625 | 70,230 | 298 | 366,283 | |||||||||||||||
Balance December 31, 2013
|
$ | 1,479 | $ | 746,615 | $ | 94,790 | $ | 530 | $ | 843,414 | ||||||||||
Net book value
|
||||||||||||||||||||
Balance December 31, 2012
|
$ | 2,039 | $ | 1,196,618 | $ | 153,497 | $ | 1,256 | $ | 1,353,410 | ||||||||||
Balance December 31, 2013
|
$ | 5,106 | $ | 3,296,644 | $ | 711,360 | $ | 958 | $ | 4,014,068 |
7.
|
Licenses and technology asset (Restated (Note 23))
|
Powermaster
|
DryVac
|
Total
|
||||||||||
Cost
|
||||||||||||
Balance, December 31, 2011
|
$
|
102,408
|
$
|
250,000
|
$
|
352,408
|
||||||
Additions
|
-
|
152,670
|
152,670
|
|||||||||
Balance, December 31, 2012 before undernoted
|
$
|
102,408
|
$
|
402,670
|
$
|
505,078
|
||||||
Impairment
|
(102,408
|
)
|
(402,670
|
)
|
(505,078
|
)
|
||||||
Balance December 31, 2012
|
$
|
-
|
-
|
-
|
||||||||
Depreciation
|
||||||||||||
Balance, December 31, 2011
|
$
|
853
|
$
|
10,417
|
$
|
11,270
|
||||||
Additions
|
-
|
-
|
-
|
|||||||||
Balance, December 31, 2012 before undernoted
|
853
|
10,417
|
11,270
|
|||||||||
Impairment
|
(853
|
)
|
(10,417
|
)
|
(11,270
|
)
|
||||||
Balance December 31, 2012
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Carrying amounts
|
||||||||||||
At December 31, 2012
|
$
|
-
|
$
|
-
|
$
|
-
|
7.
|
Licenses and technology asset (Restated (Note 23)) (cont’d)
|
|
1)
|
On December 10, 2011, the Company signed a definitive Distribution/Dealer License Agreement with Inergy Plus Technologies Inc. (“Inergy Plus”). The agreement provides the Company with the exclusive right to utilize Inergy Plus’ technologies for Canada including the right to license, sell, operate and provide warranty services. The primary technology is called the ReCyclone Advanced Gyroscopic Mill, also called the “PowerMaster.” The license to the Company includes all current and future applications for the Power Master as registered with the United States Patent and Trademark office and all present and future intellectual property rights related to Inergy’s technologies during the 10 year term of the agreement. At December 31, 2012 the Company did not expect to derive any further economic benefit from the Power Master license and decided to write off the net book value of $101,555 to nil.
|
|
2)
|
On December 23, 2011, the Company signed a Distribution Agreement with I-Des Inc. and DryVac Services Canada Inc. (“I-Des and DryVac”). The Distribution Agreement gives the Company the exclusive right to exploit the technologies developed and owned by I-Des and DryVac for a period of 2 years for all of Canada, in return for a onetime payment in the amount of $250,000. The Distribution Agreement allows for renewal of the term for an additional two (2) years provided that 60 days notice is given by the Company and that it is not in default with any terms of the agreement, one of which states that the Company will sell a minimum of four (4) DryVac units per year.
|
Big Heat
|
||||
Cost
|
||||
Balance, December 31, 2011
|
$
|
-
|
||
Additions
|
2,056,729
|
|||
Balance, December 31, 2012 before undernoted
|
$
|
2,056,729
|
||
Impairment
|
(2,056,729
|
)
|
||
Balance December 31, 2012
|
$
|
-
|
||
Amortization
|
||||
Balance, December 31, 2011
|
$
|
-
|
||
Additions
|
-
|
|||
Balance, December 31, 2012 before undernoted
|
-
|
|||
Impairment
|
-
|
|||
Balance December 31, 2012
|
$
|
-
|
||
Carrying amounts
|
||||
At December 31, 2012
|
$
|
-
|
|
3)
|
On March 20, 2012, the Company acquired all of the issued and outstanding shares of 1503826 Alberta Ltd. carrying on the business as “Intercept Rentals” from arm’s length third parities pursuant to a share purchase agreement. The purchase price included a technology asset valued at $2,056,729 related to “BIG HEAT” technology. As at December 31, 2012 the Company tested the carrying value of the technology asset and recorded a full impairment of this asset.
|
8.
|
Trade and other payables
|
December 31, 2013
|
December 31, 2012
|
|||||||
Restated (Note 23)
|
||||||||
Trade payables
|
$
|
473,500
|
$
|
603,958
|
||||
Accrued liabilities
|
222,870
|
66,529
|
||||||
Royalties payable
|
235,532
|
-
|
||||||
Other payables
|
34,273
|
43,116
|
||||||
Due to related party
|
3,048
|
1,044
|
||||||
Total
|
$
|
969,223
|
$
|
714,647
|
9.
|
Loans and borrowings
|
December 31, 2013
|
December 31, 2012
|
|||||||
Restated (Note 23)
|
||||||||
Automotive loan payable
|
$
|
7,715
|
$
|
18,003
|
||||
Loans payable
|
-
|
754
|
||||||
Notes payable
|
643,951
|
353,506
|
||||||
Convertible debentures payable
|
313,039
|
153,000
|
||||||
964,705
|
525,263
|
|||||||
Less: current portion
|
(651,666
|
)
|
(517,546
|
)
|
||||
$
|
313,039
|
$
|
7,717
|
Debenture
|
||||
Balance, December 31, 2011
|
$
|
144,500
|
||
Accrued interest expense
|
8,500
|
|||
Balance, December 31, 2012
|
153,000
|
|||
Accrued interest expense
|
8,500
|
|||
Extinguishment of debenture
|
(161,500
|
)
|
||
Issuance of Debenture, March 22, 2013
|
245,000
|
|||
Derivative liability component
|
(62,473
|
)
|
||
Issuance of Debenture, April 15, 2013
|
200,000
|
|||
Derivative liability component
|
(50,998
|
)
|
||
Unamortized portion of cost of issuance
|
(26,706
|
)
|
||
Accretion of liability component
|
8,216
|
|||
Balance, December 31, 2013
|
$
|
313,039
|
9.
|
Loans and borrowings (cont’d)
|
10.
|
Finance lease obligations
|
10.
|
Finance lease obligations (cont’d)
|
December 31, 2013
|
Future minimum lease payments 2013
|
Interest 2013
|
Principal value of minimum lease payments 2013
|
|||||||||
Less than one year
|
$
|
787,297
|
$
|
83,791
|
$
|
703,506
|
||||||
Between one and five years
|
1,180,946
|
50,492
|
1,130,454
|
|||||||||
More than five years
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
1,968,243
|
$
|
134,283
|
$
|
1,833,960
|
December 31, 2012
|
Future minimum lease payments 2012
|
Interest 2012
|
Principal value of minimum lease payments 2012
|
|||||||||
Less than one year
|
$
|
13,005
|
$
|
315
|
$
|
12,690
|
||||||
Between one and five years
|
-
|
-
|
-
|
|||||||||
More than five years
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
13,005
|
$
|
315
|
$
|
12,690
|
11.
|
Royalty obligation (Restated (Note 23))
|
Royalty obligation and expense
|
Royalty obligation balance
|
Royalty expense
|
||||||
Balance, December 31, 2011
|
$
|
-
|
$
|
-
|
||||
On acquisition of Intercept Rentals (Note 4)
|
1,674,881
|
-
|
||||||
Royalty expense (Note 21 (b))
|
-
|
16,765
|
||||||
Royalty obligation expense
|
-
|
33,529
|
||||||
Fair value adjustment of liability
|
39,081
|
39,081
|
||||||
Balance, December 31, 2012
|
$
|
1,713,962
|
$
|
89,375
|
||||
- Current portion
|
150,912
|
|||||||
- Long term portion
|
1,563,050
|
|||||||
$
|
1,713,962
|
|||||||
Royalty expense (Note 21 (b))
|
-
|
103,400
|
||||||
Royalty obligation expense
|
-
|
202,001
|
||||||
Fair value adjustment of liability
|
803,884
|
803,884
|
||||||
Balance, December 31, 2013
|
$
|
2,517,846
|
$
|
1,109,285
|
||||
- Current portion
|
453,245
|
|||||||
- Long term portion
|
2,064,601
|
|||||||
$
|
2,517,846
|
12.
|
Derivative liability
|
Derivative liability and gain (loss) on derivative liability
|
Derivative liability balance
|
Gain (loss) on derivative liability
|
||||||
Balance, December 31, 2012
|
$
|
-
|
$
|
-
|
||||
On issue of $245,00 convertible debenture (Note 9)
|
62,473
|
-
|
||||||
On issue of $200,000 convertible debenture (Note 9)
|
50,998
|
-
|
||||||
Fair value adjustment of liability
|
14,997
|
14,997
|
||||||
Balance, December 31, 2013
|
$
|
128,468
|
$
|
14,997
|
||||
- Current portion
|
40,163
|
|||||||
- Long term portion
|
88,305
|
|||||||
$
|
128,468
|
13.
|
Share capital (Restated (Note 23))
|
|
1)
|
On December 3, 2013 the Company completed the second tranche of the non-brokered placement for shares offered at $0.075 per share. A total of 773,333 shares were issued representing gross proceeds of $58,000.
|
|
2)
|
On October 8, 2013, the Company completed a non-brokered private placement for a total of 7,983,333 Shares. The offering consisted of common shares in the Company offered at a price of $0.075 per share. The Company received gross proceeds of $598,750. The Company further paid $58,750 for Finders fees.
|
|
3)
|
On November 11, 2013 the Company entered into an agreement with Energy Manufacturing LLC whereby they were issued 5,500,000 common shares of IES for a deemed value of $412,500 which was the trading price and as agreed with the seller towards the purchase price of an additional Water Heating Unit.
|
|
4)
|
On September 13, 2013 the Company issued 300,000 common shares on exercise of options by an insider for $0.10 per share for gross proceeds of $30,000. The fair value transferred from contributed surplus to share capital was $24,000.
|
|
5)
|
On May 31, 2013 the Company completed the first tranche of a non-brokered private placement for shares offered at a price of $0.075 per share. A total of 8,000,000 shares were issued representing gross proceeds of $600,000.
|
13.
|
Share capital (Restated (Note 23))
|
|
6)
|
On February 15, 2013, the Company completed a non-brokered private placement for a total of 3,400,000 units representing gross proceeds of $170,000. Each unit consists of one share and one share purchase warrant. Each warrant entitled the holder to purchase one additional common share for a period of 2 years from the closing date at an exercise price of $0.15 per share.
|
|
1)
|
On February 8, 2012, the Company completed private placement financing of 13,143,765 units for gross proceeds of $1,182,939. Each unit consists of one common share of the Company and one common share purchase warrant. Each warrant entitled the holder to purchase one additional common share for a period of 30 months from the closing date at an exercise price of $0.18 per share.
|
|
The Company paid finder's fees and commissions totalling $63,590 cash and 706,564 finder's warrants. Each finder's warrant is exercisable at $0.18 into one common share of the Company for 30 months from the issuance date.
|
|
The fair value of the finders’ warrants, being $51,257 was determined using the Black-Scholes option pricing model weighted average assumptions with a volatility of 159%, average risk free interest rate of 1.09%, expected life of 1.5 years and a dividend rate of 0%.
|
|
2)
|
As described in Note 4, the Company acquired Intercept Rentals for a purchase price of $961,843, which was satisfied by the issuance of 12 million common shares of the Company with a fair value of $0.08015 per share (determined by level 3 input). As required by the purchase agreement, the Company’s common shares will be held in escrow pursuant to the terms of a voluntary share escrow agreement and released, as to 1/3 of such amount, on the 4, 8 and 12 month anniversaries of the closing date.
|
|
3)
|
On November 6, 2012, the Company completed a private placement financing of 5,440,000 units at a price of $0.05 per unit for gross proceeds of $272,000. Each unit consists of one share and one share purchase warrant, with each warrant exercisable to acquire an additional share for a period of 2 years from the closing date at a price of $0.15.
|
|
The Company paid finder's fees and commissions totaling $12,500 cash and 250,000 finder's warrants. Each finder's warrant is exercisable at $0.15 into one common share of the Company for 2 years from the issuance date.
|
|
The fair value of the finders’ warrants, being $8,219 was determined using the Black-Scholes option pricing model weighted average assumptions with a volatility of 145%, average risk free interest rate of 1.07%, expected life of 2 years and a dividend rate of 0%.
|
|
4)
|
On December 27, 2012, the Company completed a private placement financing of 5,000,000 units at a price of $0.05 per unit for gross proceeds of $250,000. Each unit consists of one share and one share purchase warrant, with each warrant exercisable to acquire an additional share for a period of 2 years from the closing date at a price of $0.15.
|
|
The Company paid finder's fees and commissions totaling $22,500 cash and 450,000 finder's warrants. Each finder's warrant is exercisable at $0.15 into one common share of the Company for 2 years from the issuance date.
|
|
The fair value of the finders’ warrants, being $8,645 was determined using the Black-Scholes option pricing model weighted average assumptions with a volatility of 120%, average risk free interest rate of 1.12%, expected life of 2 years and a dividend rate of 0%.
|
13.
|
Share capital (Restated (Note 23)) (cont’d)
|
Expiry Date
|
Exercise Price
|
December 31, 2013
|
December 31, 2012
|
|||||||||
July 13, 2015
(1)
|
$
|
0.20
|
15,398,333
|
15,398,333
|
||||||||
July 24, 2014
|
$
|
0.18
|
7,831,569
|
7,831,569
|
||||||||
August 8, 2014
|
$
|
0.18
|
6,018,761
|
6,018,761
|
||||||||
September 20, 2014
|
$
|
0.15
|
1,480,000
|
1,480,000
|
||||||||
November 6, 2014
|
$
|
0.15
|
4,210,000
|
4,210,000
|
||||||||
December 14, 2014
|
$
|
0.15
|
3,250,000
|
3,250,000
|
||||||||
December 27, 2014
|
$
|
0.15
|
2,200,000
|
2,200,000
|
||||||||
January 25, 2015
|
$
|
0.15
|
2,000,000
|
--
|
||||||||
February 20, 2015
|
$
|
0.15
|
1,650,000
|
--
|
||||||||
44,038,663
|
40,388,663
|
14.
|
Finder’s warrants
|
Number of warrants
|
Weighted average price when granted
|
Weighted average exercise price
|
||||||||||
Balance outstanding, December 31, 2011
|
-
|
|||||||||||
Issued
|
1,406,565
|
$
|
0.09
|
$
|
0.16
|
|||||||
Balance outstanding, December 31, 2012
|
1,406,565
|
$
|
0.09
|
$
|
0.16
|
|||||||
Issued
|
250,000
|
$
|
0.08
|
$
|
0.15
|
|||||||
Balance outstanding, December 31, 2013
|
1,656,565
|
$
|
0.09
|
$
|
0.16
|
|||||||
Balance exercisable, December 31, 2013
|
1,656,565
|
$
|
0.09
|
$
|
0.16
|
|||||||
Balance exercisable, December 31, 2012
|
1,406,565
|
$
|
0.09
|
$
|
0.16
|
15.
|
Share-based compensation
|
Number of options
|
Weighted average market price when granted
|
Weighted average exercise price
|
Weighted average share price at date of exercise
|
|||||||||||||
Balance outstanding, December 31, 2011
|
-
|
$
|
-
|
$
|
-
|
|||||||||||
Issued
|
500,000
|
.07
|
0.15
|
-
|
||||||||||||
Balance outstanding, December 31, 2012
|
500,000
|
.07
|
$
|
0.15
|
$
|
-
|
||||||||||
Issued
|
11,075,000
|
.07
|
0.10
|
-
|
||||||||||||
Exercised
|
(300,000
|
)
|
.07
|
0.10
|
0.10
|
|||||||||||
Cancelled
|
(2,000,000
|
)
|
.07
|
0.10
|
-
|
|||||||||||
Balance outstanding, December 31, 2013
|
9,275,000
|
.07
|
$
|
0.11
|
$
|
0.10
|
||||||||||
Balance exercisable, December 31, 2013
|
7,937,500
|
.07
|
$
|
0.10
|
||||||||||||
Balance exercisable, December 31, 2012
|
83,334
|
.07
|
$
|
0.15
|
Weighted average contractual life, December 31, 2013
|
3.28 years
|
Weighted average contractual life, December 31, 2012
|
4.93 years
|
Weighted average fair value of options issued, December 31, 2013
|
$0.0691
|
Weighted average fair value of options issued, December 31, 2012
|
$0.0669
|
15.
|
Share-based compensation (cont’d)
|
2013
|
2012
|
|||||||
Risk-free interest rate
|
1.25
|
%
|
1.04
|
%
|
||||
Expected life of options
|
4 years
|
5 years
|
||||||
Annualized volatility
|
162
|
%
|
165
|
%
|
||||
Average trading price
|
$
|
0.07
|
$
|
0.10
|
||||
Forfeiture rate
|
nil
|
nil
|
||||||
Dividend rate
|
nil
|
nil
|
16.
|
Income taxes
|
17.
|
Basic and diluted loss per share (Restated (Note 23))
|
18.
|
Related party transactions
|
Years ended | ||||||||||||
December 31,
2013
|
December 31,
2012
|
December 31,
2011
|
||||||||||
Short-term employee benefits - management
|
$ | 192,000 | $ | 120,000 | $ | 150,000 | ||||||
Stock based compensation - management
|
20,717 | - | - | |||||||||
Stock based compensation - directors
|
406,217 | - | - | |||||||||
Office rent
|
3,800 | 3,800 | - | |||||||||
$ | 622,734 | $ | 123,800 | $ | 150,000 |
December 31,
2013
|
December 31,
2012
|
|||||||
Due to an officer of the Company
|
$
|
3,048
|
$
|
1,044
|
||||
Due to a director of the Company
|
24,150
|
-
|
||||||
$
|
27,198
|
$
|
1,044
|
19.
|
Management of capital
|
20.
|
Financial risk management
|
|
·
|
Credit risk
|
|
·
|
Liquidity risk
|
|
·
|
Market risk
|
20.
|
Financial risk management (cont'd)
|
|
a)
|
Interest
risk
|
|
The Company has cash balances and interest-bearing loans payable. The Company’s loans and notes payable, convertible debentures and finance leases bear interest at fixed interest rates, and as such, the Company is not exposed to interest rate risk on its loans payable.
|
|
b)
|
Foreign currency risk
|
|
The Company does not have any balances denominated in a foreign currency and believes it has no significant foreign currency risk.
|
21.
|
Commitments
|
2014
|
$
|
96,772
|
|||
2015-2017 |
282,252
|
||||
Total
|
$
|
379,024
|
|
b)
|
During the year ended December 31, 2012, the Company became party to an agreement pay a royalty of 5% of gross sales realized utilizing the technology of the royalty holder, payable monthly. The agreement remains in force while the technology is being used.
|
22.
|
Supplemental disclosure with respect to cash flows
|
Year ended
|
||||||||
December 31,
2013
|
December 31,
2012
|
|||||||
Cash received for income taxes
|
$
|
(1,292
|
)
|
$
|
-
|
|||
Cash paid for interest
|
127,803
|
22,607
|
||||||
$
|
126,511
|
$
|
22,607
|
23.
|
Restatements
|
|
·
|
Goodwill
: Goodwill on the acquisition of Intercept Rentals has been restated to $Nil from $1,329,465. Intercept Rentals new heating technology called "BIG HEAT", is a patent pending propane powered Frac Water Heating System that provides a safer and more efficient heating method than the methods used today by the oil & gas companies and their fracking operations. An assessment was made and any excess consideration over the net identifiable assets was concluded to be be the value of the "BIG HEAT" technology and therefore goodwill was restated to $Nil.
|
|
·
|
Technology asset
,
impairment of technology asset and royalty liability
: Also as a result of this assessment a technology asset of $2,056,729 was recorded along with a royalty liability of $1,674,881 relating to the 10% contingent royalty payable to the former Intercept Rentals shareholders. This contingent consideration was not previously reported (Note 4). Technology asset was fully impaired at December 31, 2012. As at December 31, 2012 the royalty liability was recalculated at $1,713,962 an increase of $39,081(Note 11) that has been included in the consolidated statement of net loss and comprehensive loss for 2012.
|
|
·
|
Liability on acquisition of Intercept Rentals
: A liability of $289,400 erroneously recorded in the acquiree’s books as part of the Intercept Rentals acquisition has been reversed effective March 20, 2012.
|
|
·
|
Prepaids and deposits, trade and other liabilities and impairment of equipment
: An amount of $149,600 previously reported as prepaid deposit was capitalized to equipment. Also related to this equipment, trade and other payables were increased by $159,574 to correct for previously unrecorded obligations created on the acquisition of this equipment. These two adjustments resulted in increase in equipment by $309,174. At December 31, 2012 this equipment of $309,174 was impaired.
|
|
·
|
Share capital and contributed surplus
: Throughout 2012 the Company completed private placement financings of 23,583,765 units for gross proceeds of $1,704,939. Each unit consisted of one share and one share purchase warrant, with each warrant exercisable to acquire an additional share for a period of 18 to 24 months from the closing date at a price from $0.15 to $0.18. Based on the relative fair value of each of the components, the sales of these units during the year has resulted in $708,316 of the net proceeds being allocated to contributed surplus in respect to the warrants. As a result of this share capital has been reduced and contributed surplus has been increased by $708,316 to reflect the warrant portion of the value of these units that was not previously recorded (Note 13).
|
|
·
|
Accumulated other comprehensive income ("AOCI")
: Accumulated other comprehensive income (AOCI) of $53,195 has been reclassified to contributed surplus in the opening 2012 balances. This amount was erroneously classified as AOCI when the Company exited the United States and the translation adjustment giving rise to the AOCI was realized.
|
As previously reported
|
Adjustments
|
As restated
|
||||||||
$
|
December 31
|
December 31
|
||||||||
2012
|
2012
|
|||||||||
Prepaids and deposits
|
169,620
|
(149,600
|
)
|
20,020
|
||||||
Goodwill
|
1,329,465
|
(1,329,465
|
)
|
-
|
||||||
Trade and other payables
|
555,074
|
159,574
|
714,648
|
|||||||
Loans and borrowings (current portion)
|
807,006
|
(289,460
|
)
|
517,546
|
||||||
Royalty obligation
|
-
|
1,713,962
|
1,713,962
|
|||||||
Share capital
|
10,659,919
|
(708,316
|
)
|
9,951,603
|
||||||
Contributed surplus
|
4,146,934
|
708,316
|
4,855,250
|
|||||||
Deficit
|
(13,012,738
|
)
|
(3,009,947
|
)
|
(16,022,685
|
)
|
||||
Accumulated other comprehensive income
|
53,195
|
(53,195
|
)
|
-
|
23.
|
Restatements (cont’d)
|
As previously reported
|
Adjustments
|
As restated
|
||||||||||
$
|
December 31,
|
December 31,
|
||||||||||
2012
|
2012
|
|||||||||||
Impairment of technology asset
|
-
|
2,056,729
|
2,056,729
|
|||||||||
Impairment of equipment
|
-
|
309,174
|
309,174
|
|||||||||
Royalties
|
50,293
|
39,082
|
89,375
|
|||||||||
Net loss and comprehensive loss for the year
|
(1,728,041
|
)
|
(2,404,985
|
)
|
(4,133,026
|
)
|
||||||
Basic and diluted loss per common share
|
(0.03
|
)
|
(0.03
|
)
|
(0.06
|
)
|
As previously reported
|
Adjustments
|
As restated
|
||||||||||
$
|
December 31,
|
December 31,
|
||||||||||
2012
|
2012
|
|||||||||||
Cash flows from operating activities
|
||||||||||||
Net loss and comprehensive loss for the year
|
(1,728,041
|
)
|
(2,404,985
|
)
|
(4,133,026
|
)
|
||||||
Prepaids and deposits
|
(23,712
|
)
|
149,600
|
125,888
|
||||||||
Trade and other payables
|
23,944
|
139,860
|
163,804
|
|||||||||
Impairment of technology asset
|
-
|
2,056,729
|
2,056,729
|
|||||||||
Impairment of equipment
|
-
|
309,174
|
309,174
|
|||||||||
Royalty liability
|
-
|
39,082
|
39,082
|
|||||||||
Cash flows from financing activities
|
||||||||||||
Loans and borrowings (current portion)
|
648,547
|
(289,460
|
)
|
359,087
|
24.
|
Segmented disclosure
|
25.
|
Subsequent events
|
Number
|
||
Intercept Energy Services Inc.
(formerly Global Green Matrix Corp.)
|
||||
By:
|
||||
Date
|
Name and Signature
|
Title
|
||
June 11, 2014
|
/s/Randy Hayward
|
|||
Randy Hayward
|
President
|
1 Year Intercept Energy Services (CE) Chart |
1 Month Intercept Energy Services (CE) Chart |
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