-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EggpIH3e4tHbKj6BL6j4GNcKIaxRXeAa4scs6Gmj6MN+XYp3F+4n2AXxlXBpKCrh 6YCpu/yXXmB59z3rT70ujw== 0001169232-05-004940.txt : 20051017 0001169232-05-004940.hdr.sgml : 20051017 20051017134549 ACCESSION NUMBER: 0001169232-05-004940 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050731 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051017 DATE AS OF CHANGE: 20051017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WIRELESS AGE COMMUNICATIONS INC CENTRAL INDEX KEY: 0001130131 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RADIO TV & CONSUMER ELECTRONICS STORES [5731] IRS NUMBER: 980336674 STATE OF INCORPORATION: NV FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-31338 FILM NUMBER: 051140596 BUSINESS ADDRESS: STREET 1: 1150 ROSE STREET STREET 2: REGINA CITY: REGINA STATE: A9 ZIP: S49 1Z6 BUSINESS PHONE: (306) 539-1666 MAIL ADDRESS: STREET 1: 1150 ROSE STREET STREET 2: REGINA CITY: REGINA STATE: A9 ZIP: S49 1Z6 FORMER COMPANY: FORMER CONFORMED NAME: LENNOC VENTURES INC DATE OF NAME CHANGE: 20001215 8-K/A 1 d65604_8-ka.txt AMENDED 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 8-K/A Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) July 31, 2005 WIRELESS AGE COMMUNICATIONS, INC. (Exact name of registrant as specified in its charter) Nevada 001-313338 98-0336674 State or other jurisdiction of (Commission (IRS Employer Incorporation or organization File No.) Identification No.) 765 15th Sideroad, King City, Ontario, Canada, L7B 1K5 (Address of principal executive offices) (Zip Code) (905) 773-3529 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below): |_| Written communication pursuant to Rule 425 under the Securities Ac (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c)) TABLE OF CONTENTS Item 2.01 Completion of Acquisition or Disposition of Assets. Item 9.01 Financial Statements, Pro Forma Financial Information and Exhibits SIGNATURE 2 Item 2.01 Completion of Acquisition or Disposition of Assets. On August 4, 2005 Wireless Age Communications, Inc. (the "Company") filed Form 8-K announcing that one of the Company's wholly owned subsidiaries, Marlon Distributors Ltd. ("Marlon"), entered into an agreement to acquire Knowlton Pass Electronics Inc. ("Knowlton Pass"). It had previously been announced (on July 26, 2004) that the Company and Knowlton Pass had entered into an agreement (the "Knowlton Pass Agreement") to fund the development of the business plan of Knowlton Pass. The Knowlton Pass Agreement provided that Knowlton Pass would receive a loan from the Company. Under the terms of the Knowlton Pass Agreement, the Company agreed to allow Knowlton Pass to make draws of up to $80,000 (CAD$100,000). Pursuant to the Knowlton Pass Agreement, the Company also had an option (but not the obligation) (the "Option") to acquire all of the issued and outstanding common shares of Knowlton Pass, between September 1, 2004 and January 2, 2005 in exchange for 540,000 shares of the Company's common stock. Subsequently both parties agreed to extend the expiration date of the Option to July 31, 2005. The Company exercised the Option through its wholly-owned subsidiary, Marlon, to acquire all of the outstanding common shares of Knowlton Pass. A Stock Purchase Agreement (the "Stock Purchase Agreement") between the owners of the issued and outstanding shares of Knowlton Pass and Marlon was executed as of July 31, 2005. All of the issued and outstanding shares of Knowlton Pass and 540,000 shares of the Company's stock were placed in escrow, pending the completion of certain closing conditions, including the receipt by the Company of the audited financial statements of Knowlton Pass, pursuant to an Escrow Agreement between Marlon and the owners of Knowlton Pass. In connection with the execution of the Stock Purchase Agreement, a Management Services Agreement has entered into, pursuant to which 2078198 Ontario Limited will provide management services to Knowlton Pass. On October 14, 2005, the closing conditions of the Escrow Agreement were completed and the 540,000 shares of the Company's common stock were released to the former shareholders of Knowlton Pass. The Company hereby amends Form 8-K filed on August 4, 2005 to append historical financial statements of Knowlton Pass and proforma financial information with respect to such acquisition. Item 9.01 Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Businesses Acquired. 99.1 Financial statements of Knowlton Pass Electronics Inc. 99.2 Pro Forma Financial information regarding Knowlton Pass Electronics Inc. (b) Exhibits 23.1 Consent of Auditors. [Signature Page Follows] 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: October 14, 2005 WIRELESS AGE COMMUNICATIONS, INC. By /s/ Gary N. Hokkanen --------------------------------- Gary N. Hokkanen Chief Financial Officer 4 EX-23.1 2 d65604_ex23-1.txt CONSENT OF AUDITORS Exhibit 23.1 MINTZ & PARTNERS LLP INDEPENDENT AUDITORS' CONSENT We consent to the incorporation in this Form 8-K/A of Wireless Age Communications, Inc. of our report dated September 23, 2005, appearing in the audited financial statements of Knowlton Pass Electronics Inc. as at April 30, 2005 and for the year then ended. Toronto, Canada Dated: October 14, 2005 /s/ MINTZ & PARTNERS LLP - ------------------------ MINTZ & PARTNERS LLP Chartered Accountant EX-99.1 3 d65604_ex99-1.txt FINANCIAL STATEMENTS Exhibit 99.1 KNOWLTON PASS ELECTRONICS INC. FINANCIAL STATEMENTS April 30, 2005 and 2004 (Stated in CDN Dollars) REPORT OF INDEPENDENT REGISTERED AUDITORS To the Directors, Knowlton Pass Electronics Inc. We have audited the accompanying balance sheets of Knowlton Pass Electronics Inc. as of April 30, 2005 and 2004 and the related statements of operations and deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about 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. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Knowlton Pass Electronics Inc. as of April 30, 2005 and 2004 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles in the United States of America. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. At April 30, 2005 the Company had a working capital deficiency of $843,380 and accumulated deficit of $811,360. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Toronto, Canada "MINTZ & PARTNERS LLP" September 23, 2005 CHARTERED ACCOUNTANTS KNOWLTON PASS ELECTRONICS INC. BALANCE SHEET April 30, 2005 and 2004 (Stated in CDN Dollars) - --------------------------------------------------------------------------------
ASSETS 2005 2004 ---- ---- Current Cash $ -- $ 375 Accounts receivable (net of allowance for doubtful accounts of nil) 6,483 -- Inventories 22,743 -- ----------- ----------- 29,226 375 Property, plant and equipment - Note 4 32,395 -- ----------- ----------- $ 61,621 $ 375 =========== =========== LIABILITIES Current Bank indebtedness $ 22,732 $ -- Accounts payable and accrued liabilities 254,361 -- Due to shareholders - Note 3 14,609 -- Due to related parties - Note 3 580,904 ----------- ----------- 872,606 ----------- ----------- STOCKHOLDERS' DEFICIENCY Common stock, no par value - Note 5 Unlimited shares authorized 1000 shares issued and outstanding 375 375 Deficit (811,360) -- ----------- ----------- (810,985) 375 ----------- ----------- $ 61,621 $ 375 =========== ===========
SEE ACCOMPANYING NOTES KNOWLTON PASS ELECTRONICS INC. STATEMENTS OF OPERATIONS AND DEFICIT for the years ended April 30, 2005 and 2004 (Stated in CDN Dollars) - --------------------------------------------------------------------------------
2005 2004 ---- ---- Revenues $ 284,228 $ -- Cost of sales 307,706 -- ------------ ------------ Gross loss (23,478) -- ------------ ------------ Selling and administrative expenses Accounting and legal 47,599 -- Advertising and promotion 43,787 -- Bad debts 6,566 -- Bank charges and interest 1,514 -- Insurance, licenses and taxes 25,299 -- Office and general 9,092 -- Rent 16,924 -- Repairs and maintenance 247 -- Telephone and utilities 10,624 -- Travel and auto 11,773 -- Wages and benefits 368,507 -- Write down of loan receivable 224,919 -- ------------ ------------ Total selling and administrative expenses 766,851 -- Loss before amortization and interest (790,329) -- ------------ ------------ Amortization 6,756 -- Interest 14,275 -- ------------ ------------ Net loss before income taxes (811,360) -- Income tax - Note 6 -- -- ------------ ------------ Net loss for year (811,360) -- Retained earnings (deficit) - beginning of year -- -- ------------ ------------ Retained earnings (deficit) - end of year $ (811,360) $ -- ============ ============
SEE ACCOMPANYING NOTES KNOWLTON PASS ELECTRONICS INC. STATEMENTS OF CASH FLOW for the years ended April 30, 2005 and 2004 (Stated in CDN Dollars) - --------------------------------------------------------------------------------
2005 2004 ---- ---- Operating Activities Net loss for the year $ (811,360) $ -- Items not involving cash: Amortization of property, plant and equipment 6,756 -- Changes in operating assets and liabilities: Decrease (increase) in accounts receivable (6,483) -- Decrease (increase) in inventories (22,743) -- Increase (decrease) in accounts payable and accrued liabilities 254,361 -- ------------ ------------ Cash used in operating activities (579,469) -- ------------ ------------ Investing Activities Purchase of property, plant and equipment (39,151) -- ------------ ------------ Cash provided by (used in) investing activities (39,151) -- ------------ ------------ Financing Activities Increase (decrease) in bank indebtedness 22,732 -- Increase (decrease) in due to related parties 580,904 -- Increase (decrease) in due to shareholders 14,609 -- ------------ ------------ Cash provided by (used in) financing activities 618,245 -- ------------ ------------ Increase (decrease) in cash during the year (375) -- Cash, beginning of year 375 375 ------------ ------------ Cash, end of year $ -- $ 375 ============ ============
The company did not pay any interest or incomes taxes during the year. Knowlton Pass Electronics Inc. Notes to the Financial Statements April 30, 2005 and 2004 (Stated in CDN Dollars) KNOWLTON PASS ELECTRONICS INC. NOTES TO THE FINANCIAL STATEMENTS April 30, 2005 and 2004 (Stated in CDN Dollars) - -------------------------------------------------------------------------------- Note 1 Nature of operations and going concern basis of presentation Going concern basis of presentation The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. As shown in the accompanying financial statements, the Company has assets of $61,621, has a working capital deficiency of $843,380 and an accumulated deficit of $811,360 at April 30, 2005. As a result, substantial doubt exists about the Company's ability to continue to fund future operations using its existing resources. For part of the year ended April 30, 2005, the Company's operations were funded by Wireless Age Communications, Inc., ("Wireless Age") a company with management in common. The amounts due to Wireless Age have no specific repayment terms and Wireless Age has committed to continue to fund the cash needs of the Company going forward. In order to ensure the success of the new business, the Company will have to raise additional financing to satisfy existing liabilities and to provide the necessary funding for future operations. Nature of operations Knowlton Pass Electronics Inc. ("Knowlton") operates and maintains land mobile radio and microwave networks supplying governmental and industrial clients with wireless products and services. Note 2 Summary of Significant Accounting Policies Basis of Presentation The financial statements are stated in Canadian dollars and have been prepared in accordance with generally accepted accounting principles in the United States of America. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from these amounts. Allowance for Doubtful Accounts The Company records an allowance for doubtful accounts based on any specifically identified amounts that management believes to be uncollectible. The criteria for allowance provision are Knowlton Pass Electronics Inc. Notes to the Financial Statements April 30, 2005 and 2004 (Stated in CDN Dollars) determined based on the Company's assessment of the general financial conditions affecting its customer base. If the Company's actual collections experience changes, revisions to the allowance may be required. Inventories Telecommunications equipment and accessories inventories are recorded at the lower of cost and net realizable value with cost being determined by the first-in, first-out method. Property, plant and equipment Property, plant and equipment are recorded at cost less accumulated amortization. Amortization is provided over estimated useful life of the assets using the following annual rates: Computer hardware 30% declining balance Computer software 100% declining balance Office furniture and fixtures 20% declining balance Network infrastructure 30% declining balance Property, plant and equipment are reviewed for impairment in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets", which was adopted effective January 1, 2005. Under SFAS No. 144, these assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment charge is recognized for the amount, if any, which the carrying value of the asset exceeds the fair value. Revenue Recognition The Company recognizes revenue from the sale of telecommunications equipment, accessories and other electronics products when the products are delivered and accepted by the customer. The company recognizes airtime contracts on as the services are provided. Income Taxes The Company follows Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes"("FAS 109") which requires the use of the asset and liability method of accounting of income taxes. Under the assets and liability method of FAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. Fair Value of Financial Instruments The carrying value of accounts receivable, bank indebtedness and accounts payable and accrued liabilities approximates fair value because of the short maturity of these instruments. The carrying value of due to shareholders and due to related parties also approximates fair value. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risk arising from these financial instruments. Knowlton Pass Electronics Inc. Notes to the Financial Statements April 30, 2005 and 2004 (Stated in CDN Dollars) Note 3 Due to related parties and shareholders Due to related parties amounts are all due to Wireless Age Communications, Inc. which is a company that utilizes similar management and also controls the funding required by Knowlton Pass Electronics Inc. to continue operating. The terms of the due to related parties and shareholders are non-interest bearing with no specific terms of repayment. Amounts due to related and shareholders at April 30, 2005 and 2004 were as follows: 2005 2004 -------------------------- Shareholders $ 14,609 -- Wireless Age Communications, Inc. 580,904 -- -------------------------- $ 595,513 -- ========================== Note 4 Property, Plant and Equipment
2005 2004 --------------------------------------------------- ------------- Accumulated Cost Amortization Net Net ---- ------------ --- --- Computer hardware $ 5,827 $ 874 $ 4,953 $ -- Computer software 2,548 1,274 1,274 -- Office furniture and fixtures 173 17 156 -- Network infrastructure 30,603 4,591 26,012 -- ------------- ------------- ------------- ------------- $ 39,151 $ 6,756 $ 32,395 $ -- ============= ============= ============= =============
Note 5 Capital Structure Capital Stock The Company is authorized to issue an unlimited number of common shares and an unlimited number of Class A special shares. Voting Rights The holders of shares of common stock are entitled to receive notice of, attend and vote at all meetings of stockholders. Each share of common stock carries one vote at such meetings. Note 6 Income taxes At April 30, 2005 the Company has net operating loss carryforwards of approximately $586,000. If not used, the carryforwards will expire as follows: 2012 $586,000 -------- $586,000 ======== Knowlton Pass Electronics Inc. Notes to the Financial Statements April 30, 2005 and 2004 (Stated in CDN Dollars) Note 7 Economic Dependence The Company is economically dependent on certain companies for its survival because a single customer makes up 45% of the revenues, one supplier makes up 40% of the cost of sales and one related party continues to fund the operating losses being generated (Note 3). A loss of any of these companies' support would have a dramatic effect on the Company's ability to continue in business. Note 8 Related party transactions During the year ended April 30, 2005, the Company earned income from a related party for providing them an office and use of the shared facilities in the Company's offices. Also the Company did not generate sufficient cash flow from operations to cover the amount of funds used. It was necessary to borrow cash from another related party of which $580,904 was outstanding as at April 30, 2005 (Note 3). The following income was charged by the Company to a related party with common ownership and management: 2005 ---- Income $ 4,497 ------------ $ 4,497 ============ All transactions involving related parties were recorded at the carrying values which reflected the approximate fair market value. Note 9 Commitment schedule The Company has made a significant 10 year commitment to MaxTel Wireless Inc. to lease its network infrastructure and service certain clients. Including the commitment made to MaxTel Wireless Inc. the Company has also made the following commitments going forward: Commitment ----------- 2006 $ 333,053 2007 322,739 2008 318,870 2009 315,000 2010 315,000 After 2010 1,350,000 ----------- $ 2,954,662 =========== Note 10 Subsequent event Prior to the year end the Company had granted the option to another company to purchase all of the outstanding shares of the Company. On July 29, 2005, Wireless Age Communications, Inc. a publicly listed company on the US over the counter bulletin board triggered the option and exchanged 540,000 of its common stock for all of the outstanding shares of Knowlton Pass Electronics Inc. EX-99.2 4 d65604_ex99-2.txt PRO FORMA FINANCIAL INFORMATION Exhibit 99.2 WIRELESS AGE COMMUNICATIONS, INC. PRO-FORMA INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2004 (in US dollars)
Wireless Age Knowlton Pass Communications Electronics Pro-forma Inc. Inc. Adjustments Pro-forma Product Sales - products 12,600,027 113,975 -- 12,714,002 Cost of sales - products 10,193,366 65,331 -- 10,258,697 ----------------------------------------------- ----------- Gross profit - product sales 2,406,661 48,644 -- 2,455,305 Activation commission and residual revenues 2,609,134 -- -- 2,609,134 ----------------------------------------------- ----------- Gross profit 5,015,795 48,644 -- 5,064,439 Selling and administrative expenses 5,072,689 405,313 -- 5,478,002 ----------------------------------------------- ----------- Loss from operations (56,894) (356,669) -- (413,563) Amortization 239,312 3,483 -- 242,795 Interest expense 102,076 9,281 -- 111,357 ----------------------------------------------- ----------- Loss before under-noted items (398,282) (369,433) -- (767,715) Other expenses (income) Foreign exchange losses (gains) (57,153) -- -- (57,153) Non-operating interest expense 131,580 -- -- 131,580 Loss on investments, net 138,572 -- -- 138,572 Writedown of goodwill and intangible assets 1,216,146 -- -- 1,216,146 Loss on termination of acquisition 179,635 -- -- 179,635 ----------------------------------------------- ----------- 1,608,780 -- -- 1,608,780 ----------------------------------------------- ----------- Loss before share of loss from equity accounted investment and non-controlling interest (2,007,062) (369,433) -- (2,376,495) Share of loss from equity accounted investment (34,775) -- -- (34,775) ----------------------------------------------- ----------- Loss before non-controlling interest (2,041,837) (369,433) -- (2,411,270) Non-controlling interest (1,535) -- -- (1,535) ----------------------------------------------- ----------- Loss for the year (2,043,372) (369,433) -- (2,412,805) =============================================== =========== Loss per share (0.09) (0.11) ============================= =========== Weighted average number of common shares outstanding 21,776,481 540,000 22,316,481 ============================= ===========
WIRELESS AGE COMMUNICATIONS, INC. PRO FORMA BALANCE SHEET AS AT JUNE 30, 2005 (in US dollars)
Wireless Age Communications, Knowlton Pass Pro-forma Pro-forma Pro-forma Inc. Electronics Inc. Adjustments Notes ASSETS Current Cash and cash equivalents 370,298 -- -- 370,298 Accounts receivable - trade 2,366,284 98,286 -- 2,464,570 Inventories 1,884,531 22,064 -- 1,906,595 Prepaid and deposits 60,214 -- -- 60,214 ----------------------------------------------- ----------- 4,681,327 120,350 -- 4,801,677 ----------------------------------------------- ----------- Capital Assets 453,134 31,458 -- 484,592 Due from related parties 985,885 -- -- 985,885 Notes receivable 532,999 -- (532,999)(2) -- Investments 56,177 -- -- 56,177 Intangible assets 1,338,654 -- -- 1,338,654 Goodwill 4,348,280 -- 934,618 (1) 5,282,898 ----------------------------------------------- ----------- 12,396,456 151,808 401,619 12,949,883 ----------------------------------------------- ----------- LIABILITIES Current Bank indebtedness 398,525 22,438 -- 420,963 Accounts payable and accruals 4,054,751 247,087 -- 4,301,838 Customer deposits 11,794 -- -- 11,794 Deferred revenue -- 64,908 -- 64,908 Current portion of long-term debt 268,990 -- -- 268,990 ----------------------------------------------- ----------- 4,734,060 334,433 5,068,493 ----------------------------------------------- ----------- Shareholder loans 92,509 3,264 -- 95,773 Due to related parties -- 532,999 (532,999)(2) -- Non controlling interest 1,283 -- -- 1,283 ----------------------------------------------- ----------- 4,827,852 870,696 (532,999) 5,165,549 ----------------------------------------------- ----------- SHAREHOLDERS' EQUITY Common stock 28,431 306 234 (1) 28,971 Additional paid in capital 9,194,549 -- 215,190 (1) 9,409,739 Retained earnings (deficit) (1,802,587) (719,194) 719,194 (1) (1,802,587) Other comprehensive income 148,211 -- -- 148,211 ----------------------------------------------- ----------- 7,568,604 (718,888) 934,618 7,784,334 ----------------------------------------------- ----------- 12,396,456 151,808 401,619 12,949,739 ----------------------------------------------- ----------- Check row -- -- -- --
WIRELESS AGE COMMUNICATIONS, INC. PRO-FORMA INCOME STATEMENT FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2005 (in US dollars)
Wireless Age Communications Knowlton Pass Pro-forma Pro-forma Inc. Electronics Inc. Adjustments Product Sales - product 5,450,315 160,163 (41,136) (3) 5,569,342 Cost of sales - product 4,259,313 201,494 (41,136) (3) 4,419,671 ---------------------------------------------- ------------ Gross profit - product 1,191,002 (41,331) -- 1,149,671 Commissions, residuals and royalties 915,539 -- -- 915,539 ---------------------------------------------- ------------ Gross profit 2,106,541 (41,331) -- 2,065,210 Selling and administrative expenses 1,688,040 281,546 1,969,586 ---------------------------------------------- ------------ Earnings (loss) from operations 418,501 (322,877) -- 95,624 Amortization 64,555 3,412 -- 67,967 Interest expense 5,838 -- -- 5,838 ---------------------------------------------- ------------ Loss before under-noted items 348,108 (326,289) -- 21,819 Other expenses Foreign exchange losses (gains) 10,368 -- 10,368 Non-operating interest expense, net -- -- -- -- (Gain) on disposal of investments (35,853) -- -- (35,853) ---------------------------------------------- ------------ (25,485) -- -- (25,485) ---------------------------------------------- ------------ Loss before non-controlling interest 373,593 (326,289) -- 47,304 Share of loss of equity accounted investment (32,616) -- -- (32,616) ---------------------------------------------- ------------ Loss before minority interest 340,977 (326,289) -- 14,688 Minority interest -- -- -- -- ---------------------------------------------- ------------ Net loss 340,977 (326,289) -- 14,688 ============================================== ============ Loss per share 0.012 0.001 ============================== ============ Weighted average number of common shares outstanding 28,394,782 540,000 28,934,782 ============================== ============
WIRELESS AGE COMMUNICATIONS, INC. NOTES TO THE PRO-FORMA FINANCIAL STATEMENTS DECEMBER 31, 2004 AND JUNE 30, 2005 Note 1 BASIS OF PRESENTATION The unaudited pro forma condensed statement of operation of Wireless Age Communications, Inc. ("Wireless Age" or the "Company") for the year ended December 31, 2004 and six months ended June 30, 2005 give effect to the acquistion of Knowlton Pass Electronics, Inc. ("Knowlton") as if it had been completed on January 1, 2004. The unaudited pro forma balance sheet as at June 30, 2005 gives effect to the acquisition of Knowlton as if it had occurred on June 30, 2005. The unaudited pro forma statements of operations and unaudited pro forma balance sheet were derived by adjusting the historical financial statements of the Company for the acquisition of Knowlton. The unaudited pro forma balance sheet and statement of operations are provided for informational purposes only and should not be construed to be indicative of the Company's financial position or results of operations had the transaction been consummated on the date assumed and do not project the Company financial position or results of operations for any future period or date. The unaudited pro forma balance sheet and statement of operations and accompanying notes should be read in conjunction with the Company's historical financial statements and notes thereto included in the Company's Form 10-KSB for the year ended December 31, 2004, its quarterly report for the quarter ended June 30, 2005. Knowlton is a Canadian company, however the financial statements of Knowlton were prepared in accordance with generally accepted accounting principles from the United States. The financial statements of Knowlton have been converted from Canadian dollars ("CDN") to United States dollars ("US") as follows: - Revenue and expenses for the one year period ended December 31, 2004 at the average rate of exchange in effect for the period of one Canadian dollar equals $0.773389 US. - Revenue and expenses for the six month period ended June 30, 2005 at the average rate of exchange in effect for the period of one Canadian dollar equals $0.808406 US. - Assets and liabilities in the balance sheet as at June 30, 2005 are converted at the period close rate of one Canadian dollar equals $0.816060 US. Note 2 BUSINESS ACQUISITIONS KNOWLTON PASS ELECTRONICS INC. On July 31, 2005, Wireless Age acquired all of the issued and outstanding common shares of Knowlton Pass Electronics Inc. in exchange for 540,000 shares of Wireless Age. The consolidated financial statements of Wireless Age include the operating results of Knowton from the date of acquisition on July 31, 2005. The aggregate purchase price was $215,730 representing 540,000 common shares. The business combination is accounted for using the purchase method. The fair value of the assets and liabilities acquired are as follows: Current assets 120,350 Capital assets 31,458 Goodwill 934,618 Current liabilities (870,696) --------- Net assets acquired at fair values $ 215,730 ========= Total consideration: 540,000 common shares of the Company $ 215,730 ========= The excess of purchase price over net assets acquired amounted to $934,618 that which has temporarily been assigned to goodwill. Note 3 PRO-FORMA ADJUSTMENTS The unaudited pro-forma financial statements contain the following pro-forma adjustments:
(1) Goodwill 934,618 Common stock (234) Additional paid in capital (215,190) Retained earnings (719,194) --------- To record purchase of Knowlton and issuance of shares $ -- ========= (2) Due to related parties 532,999 Goodwill (532,999) --------- To eliminate note receivable upon consolidations $ -- ========= (3) Sales 41,136 Cost of sales (41,136) --------- To eliminate intercompany sales $ -- =========
Note 4 PRO-FORMA BASIC AND DILUTED EARNINGS (LOSS) PER SHARE Pro-forma basic and diluted earnings (loss) per share has been calculated using the historical weighted average number of shares previously reported and amended as if the pro-forma common shares of Wireless issued pursuant to the acquisition have been outstanding since the beginning of the periods. Diluted earnings per share include potentially dilutive effect of outstanding common stock options and warrants which are convertible to common shares. -----END PRIVACY-ENHANCED MESSAGE-----