part 5 (last)terms to maturity.ഊWIREDMERCHANT.COM INC.
Notes to Financial Statements, (continued)
Year ended March 31, 2000
12. Subsequent event:
On February 23, 2000, the Company entered into a non-binding letter of intent with Luxmatic, a
Dutch company listed on the CDNX, whereby the companies agreed to merge subject to
shareholder and regulatory approval and closing conditions and continue as WiredMerchant (the
“Luxmatic transaction”). On July 21, 2000 the Company entered into a lock-up agreement with
respect to the offer. Under the terms of the transaction, WiredMerchant has agreed to purchase
each of the 26,407,304 Luxmatic common shares in exchange for 26,407,304 common shares of
WiredMerchant. Although WiredMerchant will have less than 50% ownership, they have been
identified as the acquirer as under the terms of the agreement, they will have the ability to control
five out of six seats on the Board of Directors. The transaction will be accounted for under the
purchase method of accounting. The WiredMerchant common shares will be issued at fair value
which is $1.5 million at June 30, 2000. The net assets of Luxmatic at June 30, 2000 are $1.3
million and consist primarily of cash and the advance to WiredMerchant (note 3)
Yorkton will receive a finder’s fee of $670,000 to be paid by the issuance of 893,333 finder’s
special warrants. Each finder’s special warrant entitles the holder to acquire one common share
for no additional consideration on or before one year from date of issuance of the finder’s special
warrants. Completion of this transaction is subject to regulatory approval, shareholder approval
and closing conditions.ഊ58
FINANCIAL STATEMENTS OF LUXMATIC
The following are the audited financial statements of Luxmatic for the financial years ended June 30,
1998, 1999 and 2000.ഊLUXMATIC TECHNOLOGIES N.V.
FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
JUNE 30, 2000ഊAUDITORS' REPORT
To the Shareholders of
Luxmatic Technologies N.V.
We have audited the balance sheets of Luxmatic Technologies N.V. as at June 30, 2000 and 1999 and the statements of
operations and deficit and cash flows for the years ended June 30, 2000, 1999 and 1998. These financial statements, expressed
in Canadian dollars, are the responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
In our opinion, these financial statements, expressed in Canadian dollars, present fairly, in all material respects, the financial
position of the Company as at June 30, 2000 and 1999 and the results of its operations and its cash flows for the years ended
June 30, 2000, 1999 and 1998 in accordance with generally accepted accounting principles.
Vancouver, Canada Chartered Accountants
July 24, 2000ഊLUXMATIC TECHNOLOGIES N.V.
BALANCE SHEETS
(Expressed in Canadian Dollars)
AS AT JUNE 30
2000 1999
ASSETS
Current
Cash and equivalents $ 561,638 $ 495,821
Prepaid expenses - 5,579
Deposit (Note 1) 750,000 -
$ 1,311,638 $ 501,400
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 19,243 $ 18,876
Shareholders' equity
Capital stock (Note 3) 355,650 305,650
Contributed surplus (Note 3) 6,132,153 5,282,153
Cumulative translation adjustment 310,298 310,298
Deficit (5,505,706) (5,415,577)
1,292,395 482,524
$ 1,311,638 $ 501,400
Nature and continuance of operations (Note 1)
Subsequent event (Note 7)
On behalf of the Board:
“John R Hislop” Director “Michel K. Schoenmakers” Director
The accompanying notes are an integral part of these financial statements.ഊLUXMATIC TECHNOLOGIES N.V.
STATEMENTS OF OPERATIONS AND DEFICIT
(Expressed in Canadian Dollars)
YEAR ENDED JUNE 30
2000 1999 1998
EXPENSES
Accounting $ 8,350 $ 6,309 $ 43,823
Administration 38,520 36,000 18,000
Bank charges and interest 228 82 3,461
Directors fees 3,353 19,802 -
Filing fees 1,337 2,722 11,200
Legal fees 34,094 13,569 31,257
Management fees 15,078 10,446 14,005
Office and miscellaneous 6,403 12,997 1,791
Postage and courier 267 77 -
Printing and photocopies 560 370 -
Transfer agent fees 5,440 4,007 6,550
Travel costs - 4,475 7,343
Loss before other items 113,630 110,856 137,430
OTHER ITEMS
Foreign exchange gain/loss (282) (919) 10,032
Interest income 23,783 14,585 11,216
23,501 13,666 21,248
Loss for the year (90,129) (97,190) (116,182)
Deficit, beginning of year (5,415,577) (5,318,387) (5,202,205)
Deficit, end of year $ (5,505,706) $ (5,415,577) $ (5,318,387)
Loss per share $ (0.01) $ (0.01) $ (0.01)
The accompanying notes are an integral part of these financial statements.ഊLUXMATIC TECHNOLOGIES N.V.
STATEMENTS OF CASH FLOWS
(Expressed in Canadian Dollars)
YEAR ENDED JUNE 30
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year $ (90,129) $ (97,190) $ (116,182)
Changes in non-cash working capital items:
(Increase) decrease in prepaid expense 5,579 (5,579) -
Increase (decrease) in accounts payable and accrued liabilities 367 (5,382) 16,099
Net cash used in operating activities (84,183) (108,151) (100,083)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition deposit (750,000) - -
Net cash used in investing activities (750,000) - -
CASH FLOWS FROM FINANCING ACTIVITIES
Capital stock issued 900,000 180,000 900,000
Loan payable - - (295,758)
Net cash provided by financing activities 900,000 180,000 604,242
Increase in cash position 65,817 71,849 504,159
Cash position, beginning of year 495,821 423,972 (80,187)
Cash position, end of year $ 561,638 $ 495,821 $ 423,972
Cash paid during the year for income taxes $ - $ - $ -
Cash paid during the year for interest $ - $ - $ -
Supplemental disclosure for non-cash operating, investing and financing activities (Note 6)
The accompanying notes are an integral part of these financial statements.ഊLUXMATIC TECHNOLOGIES N.V.
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
JUNE 30, 2000
1. NATURE AND CONTINUANCE OF OPERATIONS
The Company was incorporated on June 1, 1993 under the Corporate Law in The Netherlands.
These financial statements have been prepared in accordance with generally accepted accounting principles with the
assumption that the company will be able to realize its assets and discharge its liabilities in the normal course of
business rather than through a process of forced liquidation. The Company has incurred substantial operating
losses to date and has an accumulated deficit of $5,505,706. Continued operations of the Company are dependent on
the Company's ability to both develop or acquire a viable business and to receive continued financial support,
complete public equity financing or generate profitable operations in the future. There can be no assurance that the
Company will be able to make such arrangements, or that the terms of any arrangements it is able to make will be
favourable to the Company. These 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 Company is unable to continue as a going concern.
On February 23, 2000, the Company signed a letter of intent with WiredMerchant.com Inc. ("WiredMerchant") to
enter into a business combination. Subsequent to year end (Note 7), the Company and WiredMerchant signed a
lock-up and merger agreement, whereby WiredMerchant has agreed to purchase all of the issued and outstanding
shares of the Company by an exchange of shares on a one for one basis. This agreement is subject to regulatory and
shareholder approval. Pursuant to the letter agreement, the Company advanced $750,000 to WiredMerchant. In the
event that the Offer is not completed: (a) by reason of a material misrepresentation or failure to disclose a material fact
by Luxmatic to WiredMerchant, Luxmatic will pay to WiredMerchant a non-completion fee of $250,000; (b) by reason
that CDNX does not approve of the terms of the Offer and the listing of the resulting issuer on CDNX, Luxmatic will
pay to WiredMerchant its reasonable expenses, including legal and accounting fees, in undertaking the Offer, not to
exceed $250,000; and (c) by reason of fewer than ninety (90) percent of Luxmatic Shares being tendered pursuant to
the Offer, Luxmatic will pay to WiredMerchant a non-completion fee of $250,000.
2. SIGNIFICANT ACCOUNTING POLICIES
Cash and equivalents
Cash and equivalents include highly liquid market investments with original maturities of three months or less.
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
Foreign exchange
Assets and liabilities have been translated at the rate of exchange prevailing at the balance sheet date. Capital stock
has been translated at the rate prevailing at the time of the capital issue. Revenues and expenses are translated at the
average rate for the relevant period.
Loss per share
Loss per share is calculated using the weighted average number of common shares outstanding during the year.
Comparative figures
Certain comparative figures have been adjusted to conform with the current year's presentation.ഊLUXMATIC TECHNOLOGIES N.V.
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
JUNE 30, 2000
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd…)
Financial instruments
The Company's financial instruments consist of cash and equivalents, deposit, accounts payable and accrued
liabilities. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments
approximate their carrying value.
3. CAPITAL STOCK & CONTRIBUTED SURPLUS
Number
of Shares Par Value
Contributed
Surplus
Authorized
100,000,000 common shares with a par value of 0.03 Dutch
guilders per share
Issued
Balance as at June 30, 1998 20,407,304 $ 295,650 $ 5,112,153
Warrants exercised 1,000,000 10,000 170,000
Balance as at June 30, 1999 21,407,304 305,650 5,282,153
Warrants exercised 5,000,000 50,000 850,000
Balance as at June 30, 2000 26,407,304 $ 355,650 $ 6,132,153
As at June 30, 2000, there were no share purchase warrants or options outstanding.
Performance shares
On incorporation of Luxmatic Technologies N.V., 1,500,346 shares with par value of 0.03 Dutch guilders were issued
for cash. These shares are deemed to be "performance shares" and are subject to an escrow Agreement between the
shareholders, the Company and the R.M. Trust Company, Vancouver, who will hold the performance shares in
escrow pursuant to the terms of the above mentioned Escrow Agreement. The Escrow Agreement sets forth that the
escrowed shares are to be held in trust until the Company has earned an amount per share which complies with the
policies of the Canadian Venture Exchange.
4. RELATED PARTY TRANSACTIONS
The Company entered into the following transactions with related parties:
a) Paid or accrued management fees of $15,078 (1999 - $10,446; 1998 - $14,005) to companies controlled by directors
of the Company.
b) Paid directors fees of $3,353 (1999 - $19,802; 1998 - $Nil) to companies controlled by directors of the Company.
c) Paid or accrued administration and accounting fees of $38,520 (1999 – $36,000; 1998 - $18,000) to a company
controlled by a director of the Company.
d) Paid legal fees of $3,249 (1999 - $Nil; 1998 - $Nil) to a company controlled by a director of the Company.ഊLUXMATIC TECHNOLOGIES N.V.
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
JUNE 30, 2000
5. INCOME TAXES
The Company has incurred losses for Dutch income tax purposes of $1,620,110 Dutch Gilders (approximately
Cdn$2,500,000), which can be carried forward indefinitely to reduce taxable income in future years. The potential tax
benefits of the losses have not been recognized in these financial statements due to the uncertainty of realizabilty.
6. SUPPLEMENTAL DISCLOSURE FOR NON-CASH OPERATING, INVESTING,
AND FINANCING ACTIVITIES
There were no significant non-cash transactions for the years ended June 30, 2000 and 1999.
Significant non-cash transactions for the year ended June 30, 1998:
a) The Company issued 2,290,393 common shares to settle debts totalling $343,559.
b) The Company issued 4,582,402 common shares to settle loans payable totalling $687,361.
7. SUBSEQUENT EVENT
Subject to regulatory and shareholder approval, the Company has signed a lock-up and merger agreement with
WiredMerchant. The business combination proposed by WiredMerchant is a take over offer consisting of a share
exchange, whereby WiredMerchant has agreed to purchase each of the 26,407,304 common shares of the Company
that is issued and outstanding in exchange for 26,407,304, common shares of WiredMerchant. In addition, the
Company will issue 893,333 common shares as a finder's fee to Yorkton Securities Inc. prior to the expiry date of the
take over offer. These shares will also be acquired by WiredMerchant in exchange for 893,333 common shares of
WiredMerchant.ഊ67
PRO FORMA BALANCE SHEET OF THE CORPORATION
The following are the pro forma balance sheet of the Corporation, with the Corporation as at March
31, 2000, and Luxmatic as at June 30, 2000 after giving effect to the completion of the Offer.ഊPro Forma Consolidated Balance Sheet of
WIREDMERCHANT.COM INC.
March 31, 2000
(Unaudited)ഊCOMPILATION REPORT
To the Directors of WiredMerchant.com Inc.
We have reviewed, as to compilation only, the accompanying pro forma consolidated balance sheet of
WiredMerchant.com Inc. as at March 31, 2000. This pro forma financial statement has been
prepared for inclusion in the prospectus of WiredMerchant.com Inc. dated __, 2000 to qualify the
distribution of 10,000,000 common shares and 10,000,000 share purchase warrants issuable without
additional payment upon conversion of 10,000,000 previously issued special warrants in the capital of
WiredMerchant.com Inc. In our opinion, the pro forma consolidated balance sheet has been properly
compiled to give effect to the transactions and assumptions described in the notes thereto.
Chartered Accountants
Toronto, Canada
July ___, 2000ഊWIREDMERCHANT.COM INC. Pro Forma Consolidated Balance Sheet
March 31, 2000
(Unaudited)
WiredMerchant
Luxmatic .com Inc.
WiredMerchant Technologies Consolidated
.com Inc. N.V. Pro forma
March 31, June 30, Pro forma March 31,
2000 2000 adjustments 2000
(note 2) (Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 4,189,726 $ 561,638 $ $ 4,751,364
Marketable securities 2,999,615 - 2,999,615
Accounts receivable 29,011 - 29,011
Prepaid expenses and
deposits 83,328 750,000 (750,000) (a) 83,328
7,301,680 1,311,638 (750,000) 7,863,318
Capital assets 272,800 - 272,800
Goodwill - - 200,000 (a) 200,000
$ 7,574,480 $ 1,311,638 $ (550,000) $ 8,336,118
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and
accrued liabilities $ 275,596 $ 19,243 $ 80,000 (c) $ 374,839
Advance from Luxmatic 750,000 - (750,000) (a) -
Advance from affiliated
company 223,594 223,594
1,249,190 19,243 (570,000) 598,433
Shareholders’ equity 6,325,290 1,292,395 200,000 (a) 7,737,685
(80,000)(c)
$ 7,574,480 $ 1,311,638 $ (550,000) $ 8,336,118
See accompanying notes to pro forma consolidated balance sheet.ഊWIREDMERCHANT.COM INC. Notes to Pro-Forma Consolidated Balance Sheet
March 31, 2000
(Unaudited)
1. Basis of presentation:
The accompanying pro forma consolidated balance sheet has been prepared by the
management of WiredMerchant.com Inc. (“WiredMerchant”) for inclusion in the Prospectus of
WiredMerchant dated July • 2000 relating to the distribution of 10,000,000 common shares in the
capital of the Company and 10,000,000 share purchase warrants of the Company issuable
without additional consideration, upon the conversion of 10,000,000 previously issued special
warrants. This pro forma consolidated balance sheet has been prepared in accordance with
Canadian generally accepted accounting principles and reflects the acquisition of Luxmatic
Technologies N.V. (“Luxmatic”) by WiredMerchant as if the transaction occurred on March 31,
2000. Completion of this transaction is subject to regulatory and shareholder approvals, and
closing conditions.
This pro forma consolidated balance sheet should be read in conjunction with the financial
statements of WiredMerchant as at March 31, 2000 and the financial statements of Luxmatic as
at June 30, 2000.
This pro forma consolidated balance sheet has been compiled from the audited balance sheet of
WiredMerchant as at March 31, 2000 and audited balance sheet of Luxmatic as at June 30,
2000. For the purposes of this pro forma consolidated balance sheet, no attempt has been
made to conform the accounting policies of these companies.
This pro forma consolidated balance sheet does not purport to represent the financial position
that might have occurred had the proposed transactions actually taken place on the date
indicated.
2. Pro forma assumptions and adjustments:
The pro forma consolidated balance sheet has been prepared to give effect to the following
transactions:
(a) Proposed acquisition of Luxmatic:
On July 4, 2000, WiredMerchant entered into a lock-up and merger agreement (the
“Agreement”) with Luxmatic and its principal shareholders whereby WiredMerchant will use
its best efforts to make a Take Over Bid for all the issued and outstanding shares of
Luxmatic.ഊWIREDMERCHANT.COM INC. Notes to Pro Forma Consolidated Balance Sheet (continued)
March 31, 2000
(Unaudited)
2. Pro forma assumptions and adjustments (continued):
WiredMerchant has agreed to purchase each of the 26,407,304 Luxmatic common shares
issued and outstanding in exchange for 26,407,304 common shares of WiredMerchant.
Although WiredMerchant will have less than 50% ownership of the Company they have been
identified as the acquirer, as pursuant to the terms of the Agreement they will have control of
five out of six seats on the Board of Directors.
The pro forma balance sheet reflects the following estimated allocation of the purchase
consideration, including costs of issuance, in accordance with the purchase method of
accounting and using balances at June 30, 2000. The WiredMerchant common shares will
be issued at fair value which is $1.5 million at June 30, 2000. The excess of the purchase
price over tangible net assets acquired has been allocated to goodwill as follows:
Current assets $ 1,311,638
Less current liabilities (19,243)
Goodwill 200,000
Issuance of common shares net of issuance costs $ 1,492,395
(b) Yorkton Securities Inc. (“Yorkton”) will receive a finder’s fee of $670,000 to be paid by the
issuance of 893,333 finder’s special warrants. Each finder’s special warrant entitles the
holder to acquire one common share for no additional consideration on or before one year
from date of issuance of the finder’s special warrants The issuance of these finder’s special
warrants will have no impact on capital stock at the date of issuance.
(c) Prospectus:
Costs related to the prospectus in the amount of $80,000 have been accrued.ഊ73
CERTIFICATE OF THE CORPORATION
Dated: July 31, 2000
The foregoing constitutes full, true and plain disclosure of all material facts relating to the securities
offered by this Prospectus as required by Part 8 of the Securities Act (Alberta), Part XV of the Securities
Act (Ontario) and Part 9 of the Securities Act (British Columbia), and the respective regulations thereunder.
"Donald R. Sanderson" "Christopher J. Hobbs"
Donald R. Sanderson Christopher J. Hobbs
Chief Executive Officer Chief Financial Officer
On behalf of the Board of Directors
"Douglas M. Stuve" "John A. McMahon"
DouglasM.Stuve John A. McMahon
Director Director
CERTIFICATE OF THE PROMOTERS
The foregoing constitutes full, true and plain disclosure of all material facts relating to the securities
offered by this Prospectus as required by Part 8 of the Securities Act (Alberta), Part XV of the Securities
Act (Ontario) and Part 9 of the Securities Act (British Columbia) and the respective regulations thereunder.
ECOMPARK INC.
Per: "Christopher J. Hobbs"
Christopher J. HobbsഊI:\DMS\PROS\25389 Prelim - 16.wpd
CERTIFICATE OF THE AGENT
Dated: July 31, 2000
To the best of our knowledge, information and belief, the foregoing constitutes full, true and plain
disclosure of all material facts relating to the securities offered by this Prospectus as required by Part 8 of
the Securities Act (Alberta), Part XV of the Securities Act (Ontario) and Part 9 of the Securities Act (British
Columbia), and the respective regulations thereunder.
YORKTON SECURITIES INC.
Per: "Nelson C. Smith"
Nelson C. Smith
The following includes the name of every person or company having an interest, either directly or
indirectly, to the extent of not less than 5% in the capital of Yorkton Securities Inc.: G. Scott Paterson and
Yorkton Holdings Ltd.