6-K 1 doc1.txt PHINDER TECHNOLOGIES 6-K 12-31-2004 FORM 6-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the Month of DECEMBER 2004 PHINDER TECHNOLOGIES INC. (Exact name of registrant's name in English) 366 BAY STREET, 12TH FLOOR, TORONTO, ONTARIO M5H 4B2 -------------------------------------------------------------------------------- (Address of principal executive offices) (416) 815-1771 (Registrant's telephone number) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F. |.X| . Form 40-F . . . Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes . . No |.X | . . . If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________ This Form 6-K Report of Foreign Issuer is incorporate by reference into the Registration Statement on Form 20-F of Digital Rooster.com Inc. (Commission File No. 00032559). Attached hereto as Exhibits 99.1 are the Consolidated Financial Statements as of DECEMBER 31, 2004. Also enclosed, as Exhibit 99.2 and 99.3 are the Certifications Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. PHINDER TECHNOLOGIES INC. Attached hereto are the following exhibits: 12.1 Certificate of the Chief Executive Officer pursuant to S302 of the Sarbanes Oxley Act of 2002 12.2 Certificate of the Chief Financial officer pursuant to S302 of the Sarbanes Oxley Act of 2002 13.1 Certificate of the Chief Executive Officer pursuant to S906 of the Sarbanes Oxley Act of 2002 13.2 Certificate of the Chief Financial officer pursuant to S906 of the Sarbanes Oxley Act of 2002 SIGNATURE The registrant hereby certifies that it meets all of the requirements for filing on Form 6-k and that it has duly caused and authorized the undersigned to sign this registration (quarterly report) on its behalf "John A. van Arem" Chief Executive Officer of Phinder Technologies Inc. -------------------------- Registrant "John A. van Arem" Chief Financial Officer of Phinder Technologies Inc. -------------------------- Registrant Date: February 14, 2005 FHINDER TECHNOLOGIES INC. DECEMBER 31, 2004 AND 2003 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED) CONTENTS Consolidated Financial Statements: Consolidated Balance Sheets 1 Consolidated Statements of Operations 2 Consolidated Statements of Cash Flows 3 Notes to Consolidated Financial Statements 4

See accompanying notes to unaudited consolidated financial statements. On behalf of the Board: "Brad Estra" , Director of the Board --------------------------- "Wayne Doss" , Director of the Board --------------------------- 1.

See accompanying notes to unaudited consolidated financial statements. 2.

See accompanying notes to unaudited consolidated financial statements. 3. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 1. NATURE OF COMPANY'S OPERATIONS AND BASIS OF PRESENTATION Phinder Technologies Inc and its wholly owned subsidiaries Avrada Inc., Axcess Internet Solutions Inc, Web Dream Inc., Bill Media Inc. and Pizay Investments Inc. ("the Group") derive their revenues from the generation and sale of Internet traffic, the license of video content, monthly subscriptions to the website content, advertisements displayed on its website and development and distribution of interactive one-on-one entertainment. As at November 1, 2002 the Company changed its name from Digital Rooster.com Inc. to Digital Rooster.com Ltd. As at February 1, 2005 the Company changed its name from Digital Rooster.com Ltd to Phinder Technologies Inc. GOING CONCERN BASIS OF PRESENTATION These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and the payment of liabilities in the ordinary course of business. Accordingly, they do not give effect to adjustments that would be necessary should the company be unable to continue as a going concern. In other than the normal course of business, the Company may be required to realize its assets and liquidate its liabilities and commitments at amounts different from those in the accompanying financial statements. Because of the operating losses of the past three years and the working capital deficiency as at March 31, 2004, the Company's continuance as a going concern is dependent upon its ability to obtain adequate financing or to reach profitable levels of operation. It is not possible to predict whether financing efforts will be successful or if the company will attain profitable levels of operations. 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION a) Basis of presentation These consolidated financial statements have been prepared in accordance with Canadian Generally Accepted Accounting Principles. Significant differences between Canadian Generally Accepted Accounting Principles and United States Generally Accepted Accounting Principles, as they relate to these consolidated financial statements, are explained in Note 21. b) Use of estimates The preparation of these consolidated financial statements, in conformity with Canadian Generally Accepted Accounting Principles, has required management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at December 31, 2004 and 2003 and the revenue and expenses reported for the periods then ended. Actual results may differ from those estimates. ================================================================================ / Continued 4. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION - CONTINUED c) Revenue recognition Revenue from monthly subscriptions to the website is deferred upon receipt of payment and is recognized as revenue as the services are provided. Revenue from the license of video contents and access to the Company's website to wholesale customers is recognized as the services are provided under the terms of the contract. Revenue from advertisements on the website of the Company is recognized when all the significant obligations have been completed, the fees are fixed and determinable and collectability of such fees is reasonably assured. Revenue from an advertising barter transaction is recorded only if the fair value of the advertising surrendered in the transaction is determinable based on the entity's own historical practice of receiving cash for the similar barter transactions within the preceding six month period. If the fair value of the advertising surrendered in the barter transaction is not determinable, the advertising income from the barter transaction is recorded based on the carrying amount of the advertising surrendered, which is generally nil. Revenue from web traffic is recognised when all significant obligations are completed, the fees are fixed and determinable and collect ability of the fees is reasonable assured. d) Property and equipment Property and equipment are recorded at cost, less accumulated amortization. Amortization is provided over the estimated useful lives of the assets as follows: Furniture and fixtures - 20% declining balance Leasehold improvements - 20% straight line Computer hardware - 30% declining balance Computer software - 100% declining balance Property and equipment purchased during the period are amortized at one-half of the above stated rates. e) Goodwill No Goodwill was recorded in December 31, 2004 and December 31, 2003. ================================================================================ / Continued 5. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION - CONTINUED f) Income taxes The Company follows the asset and liability approach to accounting and reporting for income taxes. The income tax provision differs from that calculated by applying the statutory rates to the changes in current or future income tax assets or liabilities during the period. The Company provides a valuation allowance to reduce future income tax assets when it is more likely than not that the asset will not be realized. Foreign currency translation The reporting currency in these consolidated financial statements is the Canadian dollar. Accordingly, assets and liabilities denominated in U.S. dollars have been translated into Canadian dollars at the exchange rate prevailing at the balance sheet date other than common stock, whichhas been translated at historical rates. Results of operations have been translated at the average exchange rate for the period. Costs of raising capital Incremental costs incurred in respect of raising capital are charged against equity proceeds raised. Intangible assets Intangible assets consist of in process research and development and business concept for the interactive one-on-one adult video entertainment industry. The Company regularly reviews the carrying values of its intangible assets for any impairment. The Company supports the carrying value of these assets based on the undiscounted value of expected future cash flows. If the Company determines impairment in value of the intangible assets, an appropriate amount will be charged to the consolidated statements of operations. Non-monetary transactions Transactions in which shares or other non-cash consideration are exchanged for assets or services are valued at the fair value of the assets or services involved in accordance with Section 3830 ("Non-monetary transactions") of the CICA Handbook. ================================================================================ / Continued 6. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION - CONTINUED Stock-based compensation Effective June 1, 2002 the company adopted Section 3870 ("Stock-based Compensation and Other Stock-based payments") of the CICA Handbook. As permitted by Section 3870, the company has applied this change awards granted on or after June 1, 2002. The company has chosen to recognize no compensation when stock options are granted to employees and directors under stock option plans with no cash settlement features. However, direct awards of stock to employees and stock and stock option awards granted to non-employees will be accounted for in accordance with the fair value method of accounting for stock-based compensation. The fair value of direct awards of stock will be determined by the quoted market price of the company's stock. l) Loss per share The Company has adopted the treasury stock method of calculating diluted earnings/loss per share. Under this method, the exercise of options is assumed to have occurred at the beginning of the period and the related common shares are assumed to have been issued at that time. The proceeds from the exercise are assumed to have purchased common shares of the Company for cancellation at the average market price during the period. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) are included in the denominator of the diluted earnings/loss per share calculation. Fully diluted loss per share will not be calculated, as the effect on the loss per share would be anti-dilutive ================================================================================ / Continued 7. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 3. PROPERTY AND EQUIPMENT

================================================================================ / Continued 8. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 4. GOODWILL No Goodwill was presented in December 31, 2004 and December 31, 2003 financial statements. 5. CONVERTIBLE NOTES PAYABLE The convertible notes payable are non-interest bearing, unsecured and payable within one year from the date of the note payable. The notes are convertible, at the option of the lenders, at a conversion rate of US $7.14 per common share for a total of approximately 11,200 common shares. 6. LOANS PAYABLE The loans payable are unsecured, bear no interest and have no fixed terms of repayment. 7. NOTE PAYABLE The company's wholly-owned subsidiary, Pizay Investments Inc. ("Pizay"), entered into an agreement with ProAm Exploration Corporation with an exclusive option to acquire an undivided 10% interest in the property. As a part of the agreement, a non-interest bearing demand note payable of $90,000 was issued. The agreement was terminated in 1999. The non-interest bearing note arising from a dispute in 1999 was settled for $15,000 in cash in July 2003. 8. DUE TO SHAREHOLDERS Shareholders' advances are unsecured, bear no interest and while there are no fixed terms of repayment, the lenders have agreed not to demand payment before July 1, 2006. ================================================================================ / Continued 9.

During the 2003 Fiscal Year, the Company consolidated its common shares on 50:1 basis. The issued common shares disclosed above are presented on a consolidated basis and reflect the 75 per cent stock dividend declared on March 17, 2004. ================================================================================ / Continued 10. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 9. CAPITAL STOCK - CONTINUED ii) Stock Options The Company currently issues stock options at the direction of the Board of Directors. These options have been granted to employees, directors, and consultants under the Company's stock option plan and any other terms and conditions determined by the Board of Directors at the time the options are issued. These options are granted with an exercise price equal to the market price of the Company's stock on the date of the grant. Presented below is a summary of stock option plan activity adjusted for the stock dividend declared on March 17, 2004:

Options outstanding and exercisable at December, 2004 are as follows:

As a result of the stock dividend declared on March 17, 2004 the number of stock options increased by 75 per cent and accordingly the exercise price decreased by 75 per cent. ================================================================================ / Continued 11. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 9. CAPITAL STOCK - CONTINUED iii) Fair value In accordance with Section 3870 of the CICA Handbook, the company discloses pro forma information regarding net income as if the company had accounted for its employees and directors stock options granted after June 1, 2002 under the fair value method. The fair value of stock options issued by the company during the year has been determined using the Black-Scholes option pricing model with the following assumptions: weighted-average risk-free interest rate of 4%; dividend yield of 0%; weighted-average volatility factor of the expected market price of the Company's common shares of 170%; and a weighted-average expected life of the options of 2 years. The weighted average fair value of stock options granted during the year ended March 31, 2003 was $0.15 per share (after 75 per cent stock dividend). For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting periods. The Company's pro forma net income under Canadian GAAP, including the proforma effect of awards granted prior to June 1, 2002, would be reduced by $44,280 for the year ended March 31, 2003. Basic earnings-per-share figures would not have changed. No stock options were granted during the quarter ended December 31, 2004. 10. INVESTMENT IN AVRADA During 2004 fiscal year, the Company's wholly owned subsidiary, Avarda Inc. ("Avrada"), issued from treasury 4,187,000 common shares for proceeds of $559,144. On April 30, 2004, additional 250,000 common shares were issued for proceeds of $33,750, giving the total of 4,437,000 common shares issued for the proceeds of $592.894 as at September 30, 2004. Each share of Avrada was issued with one common share purchase warrant attached, given the holder the option to purchase one additional common share of the subsidiary at the cost of US$0.20, for the period of one year from the date of agreement. The 4,437,000 shares of Avrada were issued on May 17, 2004. In addition, on February 27, 2004, the Company issued by way of dividend 1,335,869 common shares of Avrada to its shareholders. Subsequent to these events, the Company held 4,007,607 common shares of Avrada or 41 per cent of 9,818,291 total issued and outstanding shares of Avrada. 11. REVENUE - BARTER TRANSACTION There were no barter transactions in the quarter ended December 31, 2004 and year ended March 31, 2004. 12. ACQUISITION OF REAL 1-ON-1 INC AND IMPAIRMENT OF INTANGIBLES During the year 2003, the Company acquired certain assets of Real 1-on-1 Inc., a Toronto based online adult entertainment company, by issuing 235,000 common shares for a consideration of $58,750 representing a 50% discount from its trading value of the common share at the date of the transaction. Such common shares are not free trading as they are subject to restriction as to when they may be sold. Accordingly, this discount was applied to reflect the fair value of the share consideration. All consideration was in respect of customer contacts, business concepts and related intangible assets. At the year end, the Company assessed the value of its intangible assets acquired and determined that the value of these assets were impaired due to insignificant revenue generated and significant doubts on the Company's ability to successfully integrate the acquired assets with the existing business and achieve positive operating and cash flow results within a predictable time. Accordingly, the assets have been written down to $Nil. There were no such assets acquisition in the year ended March 31, 2004 and quarter ended December 31, 2004. ================================================================================ / Continued 12. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 13. LOSS PER SHARE Basic loss per share is calculated on the basis of the weighted average number of common shares outstanding for the year. Loss per share has not been presented on a fully diluted basis, as the effect would be anti-dilutive. 14. CHANGES IN NON-CASH OPERATING ITEMS AND SUPPLEMENTAL CASH FLOW DISCLOSURE Changes in non-cash operating items:

15. CONTINGENT LIABILITIES a) In 1998, a claim was filed against the Company and its subsidiary seeking damages of $2,000,000 resulting from a breach of a contract. The Company has defended the claim on the basis that the contract was properly terminated. Management believes this action will not have a material adverse effect on the financial position of the Company and no provision has been accrued in these financial statements. There has been no activity on this claim in the last 12 months. b) In 2002, a claim for constructive dismissal was filed against the Company and its subsidiary seeking damages. The claim was settled in December 2003. The difference from amount accrued was recorded in the year ended March 31, 2004. c) In 2001, a claim was filed against the Company seeking return of the sum of $82,115 plus interest plaintiff claimed to have advanced by way of loan to the Company, whereas the monies clearly appear to have advanced to Jazz Monkey Media Inc so that Phinder Technologies Inc. should have no liability. There was little activity in the claim and the outcome of the case is uncertain. ================================================================================ / Continued 13. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 16. LEASE COMMITMENTS The subsidiary of the Company is obligated under operating leases for its premises, vehicles and equipment. The lease of premises expires on May 31st 2006. Future minimum payments for its operating leases as at March 31, 2004 are approximately as follows: 2005 $ 83,000 2006 $ 75,000 2007 $ 12,000 17. NCOME TAXES The provision for income taxes differs from the expense that would be obtained by applying statutory rates as a result of the following:

The Company has available non-capital losses, the benefits of which have not been recorded, of approximately $3,140,000 to be applied against future taxable incomes. The losses expire as follows: 2005 $ 80,000 2006 133,000 2007 614,000 2008 771,000 2009 1,052,000 2010 490,000 2011 960,000 ------------ $ 4,100,000 ============ The nature and effects of the temporary differences that give rise to significant portions of the future income tax asset is as follows:

No future income tax asset has been recorded in respect of the above because the company cannot determine whether it is more likely than not that it will be able to realize the future income tax assets during the carry forward period. ================================================================================ /Continued 14. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 18. FAIR VALUE OF FINANCIAL STATEMENTS The Company's financial assets and liabilities are valued at management's best estimates of fair values as follows: (i) Accounts receivable The carrying amount is equal to the fair value due to the liquidity of the assets. (ii) Notes payable, loans payable Based on maturity and interest at fixed rates, the estimated fair value is approximately equal to the carrying value. (iii) Accounts payable The carrying value is equal to the fair value due to the requirements to extinguish the liabilities on demand. 19. RELATED PARTY TRANSACTIONS No related party transactions incurred in quarters ended December 31, 2004 and 2003. 20. BUSINESS SEGMENTS AND GEOGRAPHICAL INFORMATION The subsidiary of the Company has been operating in one business segment only, being monthly subscription to, and license of, website and video contents. Geographical information Information as to sales and accounts receivable by reportable geographic segments is:

================================================================================ /Continued 15. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 21. CANADIAN AND UNITED STATES ACCOUNTING PRINCIPLES DIFFERENCES The consolidated financial statements of the Company have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). In certain respects, Canadian GAAP differs from United States generally accepted accounting principles ("U.S. GAAP"). The effects on the Company's financial statements resulting from these differences are summarized as follows: STATEMENT OF SHAREHOLDERS' EQUITY In accordance with U.S. GAAP, a statement of shareholders' equity is presented as follows:

================================================================================ /Continued 16. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 21. CANADIAN AND UNITED STATES ACCOUNTING PRINCIPLES DIFFERENCES - continued STATEMENTS OF CASH FLOWS There are no material differences between the Canadian GAAP used in preparing the statements of cash flows and those that would apply had the statements been prepared in accordance with U.S. GAAP. DIFFERENCE BETWEEN CANADIAN AND U.S. GAAP AND ADDITIONAL DISCLOSURES a) Goodwill on reverse takeover In accordance with Canadian GAAP at the time of the reverse takeover transaction (EIC 10), the excess of purchase consideration paid in a reverse takeover transaction over the sum of the amounts assigned to the assets acquired and liabilities assumed was recorded as goodwill as described in Note 4. In accordance with U.S. GAAP, the purchase consideration paid on the merger of a public shell and a private operating company is accounted for as a recapitalization of the private operating company and no goodwill is recorded. During 2003, Canadian GAAP was changed to be substantially similar to US GAAP in this circumstance. Accordingly, the audited balance sheets for 2002 prepared in accordance with Canadian GAAP would have been restated under U.S. GAAP to reduce the goodwill and share capital recorded. Balance sheet under US GAAP for 2003 is not restated as goodwill was considered impaired and written down to $nil. In addition, the statements of operations for 2003 and 2002 are also adjusted to reverse the annual amortization of goodwill. ================================================================================ /Continued 17. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 21. CANADIAN AND UNITED STATES ACCOUNTING PRINCIPLES DIFFERENCES - continued b) Stock options Valuation of outstanding stock options United States GAAP (FAS 123) requires certain disclosures regarding stock options granted to employees as compensation under stock option plans. Because the company applies principles of APB 25, accounting for stock issued to employees, which are the same as Canadian generally accepted accounting principles, there are no differences noted in respect of the options granted. However, in accordance with FAS 123, the company would be required, in any event, to disclose the following: The company is required to adopt FAS 123, Accounting for Stock-Based Compensation. In accordance with the provisions of FAS 123, therefore, the company applied APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its employee stock option plans, the company would not recognize compensation expense for its stock-based compensation plans as the exercise price of options granted under the plan was not less then the current fair market value of common shares. FAS 123 requires entities that account for awards for stock based compensation to employees in accordance with APB 25 to present pro-forma disclosure of net income and earnings per share as if compensation cost was measured at the date of grant based on fair value of the award. The company has followed the disclosures requirement of Section 3870 of the CICA Handbook, which is substantially similar to U.S. GAAP (FAS 123). c) Accounts receivable U.S. GAAP requires disclosure of allowance for doubtful account in the financial statements. The Company has not recorded any such allowance for the periods presented in these financial statements. d) Information as to products, geographic markets, significant estimates and concentrations United States GAAP requires information as to products, geographic markets, significant estimates and concentrations, to be disclosed in the notes to financial statements. This information is usually disclosed with the summary of significant accounting policies. Such information is provided in Note 19. ================================================================================ /Continued 18. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 21. CANADIAN AND UNITED STATES ACCOUNTING PRINCIPLES DIFFERENCES - continued e) Differences in various accounting terms used in U.S. GAAP and Canadian GAAP The following is a summary: U.S. GAAP Canadian GAAP --------- ------------- Deferred income taxes Future income taxes Depreciation of tangible Amortization capital assets Excess of cost over fair Goodwill value of net assets acquired Reverse acquisition Reverse takeover f) Recent accounting pronouncements U.S. GAAP (Securities and Exchange Commission Staff Accounting Bulletin 74) requires that recently enacted pronouncements that may have an impact on financial statements be discussed and the impact, if known, disclosed. Accordingly, under U.S. GAAP, the following disclosures are required: ================================================================================ /Continued 19. PHINDER TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 (UNAUDITED) ================================================================================ 21. CANADIAN AND UNITED STATES ACCOUNTING PRINCIPLES DIFFERENCES - continued (i) In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations ("SFAS No. 143"). SFAS No. 143 requires the Company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The Company also records a corresponding asset which is depreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. The company has adopted SFAS No. 143 on January 1, 2003. The adoption of SFAS 143 did not have a material impact on our financial position or results of operations. (ii) On April 30, 2002, the FASB issued Statement of Financial Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ("SFAS 145"). Among other amendments and rescissions, SFAS No.145 eliminates the requirement that gains and losses from the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect, unless such gains and losses meet the criteria in paragraph 20 of Accounting Principles Board Opinion No. 30, Reporting the Results of Operations, Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. The adoption of SFAS 145 did not have a material impact on our financial position or results of operations. (iii) In July 2002, the Financial Accounting Standards Board issued SFAS No. 146, Accounting for Exit or Disposal Activities. SFAS No. 146 addresses the recognition, measurement, and reporting of costs that are associated with exit and disposal activities, including costs related to terminating a contract that is not a capital lease and termination benefits that employees who are involuntarily terminated receive under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. SFAS No. 146 supersedes Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146 will be effective for exit or disposal activities of the Company that are initiated after December 31, 2002 and is not expected to have a material impact on our financial position or results of operations. ================================================================================ /Continued 20.

Phinder Technologies Inc 6-K