The financial statements for Toba Industries Ltd. [NEX: TBG.H] have been released, for the second quarter of fiscal year 2007 ending July 31st [PDF file.] As of July 31st, Toba has $689,635 in cash and cash equivalents, and $370,005 in working capital. Also listed on the books as an asset (a non-current one) is a $1,489,223 loan to Peking Marvel Cleansing Supplies Co., Ltd., which is actually the amount of the proceeds of a Special Warrant financing for the takeover of Peking Marvel. Should that takeover fall through, Peking Marvel shall be deemed to have borrowed the money from Toba.
The company had net expenses of $206,287, making for a loss of the same amount for the quarter. The loss in the same quarter of FY '06 was $370,428. The lessening of the loss is partially attributable to no stock-based compensation being granted this last quarter, and reductions in professional and management fees. Also included in the Statement of Expenses is interest income, in the amount of $7,696 for 2Q '07 as compared with $2,959 for 2Q '06. Loss per share was 0.4 cents in the more recent period, as compared to 0.8 cents/share for the latter period. The increase in cash for the latest quarter effectively came from the proceeds of exercised warrants; as noted above, the proceeds meant for the takeover of Peking Marvel have been accounted for as a loan to Peking Marvel. Book value of Toba as of July 31st is 3.31 cents/share, up from 1.36 cents/share as of Jan. 31st, 2007. The increase in book value is due to the above financing.
The accompanying Management Discussion and Analysis [another PDF file] discloses the takeover arrangement with Peking Marvel. Toba is set to take over 100% of the equity of Peking, in the form of a reverse takeover for "the number of treasury shares of the Company as is determined by the independent evaluation report prepared by Evans & Evans and approved by the TSX Venture Exchange on the business and assets of Peking Marvel and in no event shall be less than 58% of the Company’s issued and outstanding common shares after giving effect to a deemed financing of US$4,500,000 (US$2,000,000 of which must be completed on or before the completion of the acquisition of the Shareholder Equity by the Company and US$2,500,000 of which the Company and Peking Marvel plan to but are not obligated to raise following the Closing)." In other words, the present owner(s) of Peking Marvel could wind up with majority control of Toba - standard for a reverse takeover. The M D & A also cites a $27,558 reduction of travel and promotion expenses as the reason for the shrinking of the quarterly loss, and notes that another financing in the amount of $2,025,000 has been announced but not completed as yet.
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