IDG Holdings Inc. Files Audited Annual Report And Interim Unaudited Quarterly Report With SEDAR

IDG Holdings Inc. [NEX: IDH.H] has filed its annual report for fiscal year 2007, ended June 30th 2007 [PDF file], which has also been split into the financial statements for that fiscal year [PDF file] and the accompanying Management Discussion and Analysis [PDF file]. The financials received an unqualified opinion from the auditors.

Cash shrunk quite a bit from FY '06 to FY '07 - specifically, from $355,503 to $20,399. Short-term investments, though, ballooned from $140,070 in FY '06 to $671,879 in FY '07; additionally, a loan receivable of $109,000 was added to current assets. Despite those two increases, total current assets shrunk from $1,119,057 to $826,305 because of the disappearance of accounts receivable and inventories from the balance sheet. Because current liabilities decreased from $155,865 to $21,441, working capital decreased only $205,058 from FY '06's figure of $1,009,922 to FY '07's $804,864. Book value decreased from 10.4 cents/share to 7.88 cents/share.

Since IDG was actively in business during FY 2006, it reported income and expenses in the regular way; that format was used for FY '07's results even though there was no business activity during that time. For FY '07, the only income received was $23,932 in interest income. Operating expenses for the year came to $96,995, resulting in a net loss before interest, taxes, depreciation and amortization of $73,063.

With ITDA added, the net loss shrunk to $39,814. This occurred because of a tax recovery in the amount of $25,027 and the accreted interest received "on loan advanced on sale of Integral Designs" of $11,000. $97,155 worth of the shrinkage of the book value resulted from a dividend paid out.

The cash flow statement shows a cash loss of $48,036 for FY '07, and total cash used in operating activities of $86,088. Investing activities, as is usual for this category in general, used up $63,234 in cash. This use was due to significantly more than the $408,575 cash component of the sale price of Integral Designs, plus the $60,000 in loan payments received, being plowed into short-term investments, as noted above. The financing part of the cash flow statement showed a decrease of $98,240 in cash, almost all of which went to the dividend payment. The other $1,085 was spent by IDG on its own shares. Also noted in the cash-flow statement is the non-cash component of the sale proceeds of Integrated Designs, which was $430,060. $270,000 of it was in the form of a loan advanced; $160,060 was in the form of shares of IDG handed over to the company and cancelled, as explained in Note 13. Note 5, "Related Party Transactions," notes the Integrated Designs was sold to a (now-former) director of IDG Holdings. The accompanying M D & A explains that the price was verifiably fair: "The transaction was approved by all of the non-related directors, and by shareholders, and accepted by the TSX Venture Exchange as the fair market value." It also notes that $20,000 of the expenses were "in connection with the preparation for, negotiation and closing of the sale of its former business."

The interim and unaudited report for the first quarter of FY '08 has the M D & A in front of the financial statements [PDF file] with a separate copy of the M D & A filed as well [PDF file]. According to the financial statements, cash increased by $16,805 in the first quarter, but loans receivable decreased by $30,000. Increases in two other categories helped shrink the decline in current assets to $7,104. A shrinkage of current liabilities in the amount of $7,941 resulted in a slight increase in working capital, to $886,701.

IDG has managed to be one of the few NEX companies that has reported net income, as opposed to a net loss, in a quarter. Investment income of $7,404 more than covered the quarterly expenses of $6,567, leaving net income in the amount of $837. As a result, book value increased slightly. The accompanying M D & A states, under Related-Party Transactions, that "[c]osts for accounting and administrative services reported in the financial statements comprise amounts paid to director Glynn Jones and his wife for statutory record-keeping and financial reporting for the company at less cost than available elsewhere." IDH.H last traded on Wednesday, and closed at 24.5 cents/share, its 52-week high.