TriNorth Capital Inc.
TSX : TRT

TriNorth Capital Inc.

August 11, 2005 17:56 ET

TriNorth Capital Announces Second Quarter 2005 Results

TORONTO, ONTARIO--(CCNMatthews - Aug. 11, 2005) - TriNorth Capital Inc. (TSX:TRT) reported a net loss of $54,370 ($0.003 per share) for the three months ended June 30, 2005 compared with a net loss of $1,809,119 ($0.10 per share) for the same period in 2004. Before its share of income from investee companies of $9,106 (2004: $1,047 loss) and amortization of purchase discrepancy of $133,870 (2004: $133,870), TriNorth reported a gain of $70,394 for the second quarter compared with a loss in the same period last year of $1,726,996. The results reflected gains on the sale of marketable securities of $188,911 (2004: $11,352) and interest and other income of $33,373 (2004: $33,299), offset by general and administrative costs of $151,890 (2004: $189,179). The net loss in the second quarter of 2004, in addition to the above comparative figures, included a foreign exchange gain of $52,794, a dilution gain of $656,000 and a write down of accounts receivable of $2,238,468.

For the six months ended June 30, 2005 the net loss was $237,107 ($0.01 per share) compared with a net loss of $1,944,912 ($0.11 per share) in the same period in 2004.

At June 30, 2005, TriNorth had $2,897,173 in cash and marketable securities (at quoted market value) and investments in three technology-based businesses of $3,238,254.

Investee Companies

TriNorth's President & Chief Executive Officer, John Pennal, reported on the progress made by TriNorth's three investee companies - Business.ca, VFM Interactive ("VFMI"), and Intelligent Mechatronic Systems ("IMS") - during the quarter and the year-to-date as follows:

- Business.ca posted revenue that was slightly lower than the second quarter last year, but ahead on a year-to-date basis.

- VFMI made significant progress in building out the distribution arm of its business along with continued development of the technology for its content distribution and management systems. The company also entered into a significant new relationship with 2,400 hotels with Best Western during the period, and new relationships with Sol Melia Hotels & Resorts and Le Meridien since the end of the period.

- At IMS, shipments of RideTones, a fully programmable device that allows owners to personalize their vehicles in a manner similar to ring tones for mobile telephones, commenced at the end of the quarter to major auto after-market suppliers and selected electronics stores in North America. Visit www.ridetones.com for more details on the product. IMS has also unveiled another new product, iPaid, which is a user-based automotive insurance product that allows drivers to control the cost of their automotive insurance based on how much they drive and other driving characteristics. Several automotive insurance companies are currently testing prototypes of the product in pilot programs. Visit www.ipaid-insurance for more details on the product.

Testing of IMS's Occupant Classification System ("OCS") continues to encounter delays. Based on the latest information received from the licensee IMS now expects final testing to be completed by the end of 2005. At this point it is not clear if or when the OEM will select the OCS for vehicle platforms.

Mr. Pennal noted that during the quarter, TriNorth acquired additional equity in IMS for $300,000. At the end of the second quarter, TriNorth's fully diluted equity interest in IMS declined to 14.5% as a result of the dilution from additional equity financing and the issue of options to purchase shares to employees and directors by IMS in the quarter.

TriNorth Capital Inc. is a Canadian-based investment company that has investments in three technology-based businesses, cash resources and substantial tax losses to shelter future income and investment gains.



TRINORTH CAPITAL INC.
Consolidated Balance Sheets
As at June 30, 2005 and December 31, 2004

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June 30 December 31
2005 2004
----------- -------------
(unaudited)

ASSETS

CURRENT
Cash and cash equivalents $ 50,365 $ 954,768
Marketable securities
(quoted market value -
June 30, 2005 - $2,846,808;
December 31, 2004 - $3,121,658) 2,863,526 2,849,671
Other receivables 12,381 5,650
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2,926,272 3,810,089

INVESTMENTS (Note 2) 3,238,254 2,913,400
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$ 6,164,526 $ 6,723,489
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LIABILITIES

CURRENT
Accounts payable and accrued liabilities $ 54,858 $ 380,162
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SHAREHOLDERS' EQUITY

SHARE CAPITAL 43,520,299 43,520,299

CONTRIBUTED SURPLUS 32,969,872 32,966,424

SHARE PURCHASE LOAN (320,000) (320,000)

DEFICIT (70,060,503) (69,823,396)
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6,109,668 6,343,327
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$ 6,164,526 $ 6,723,489
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TRINORTH CAPITAL INC.
Consolidated Statements of Operations and Deficit
For the three-month and six-month periods ended June 30 (Unaudited)

Three months ended Six months ended
June 30 June 30
--------------------- -----------------------
2005 2004 2005 2004
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Revenue
Interest and
other income $ 33,373 $ 33,299 $ 65,926 $ 66,015
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Expenses
General and
administ-
rative 151,890 189,179 321,317 293,087
Dilution gain - (656,000) - (656,000)
Gain on
sale of
marketable
securities (188,911) (11,352) (293,201) (33,801)
Depreciation - - - 81
Write
down of
accounts
receivable - 2,238,468 - 2,238,468
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(37,021) 1,760,295 28,116 1,841,835
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Gain
(Loss)
before
the
undernoted 70,394 (1,726,996) 37,810 (1,775,820)
Foreign
Exchange
Gain - 52,794 - 88,451
Share of Gain
(Loss) of
Equity-Accounted
investee(s)
Share of
income (loss)
reported
by equity-
accounted
investee(s) 9,106 (1,047) (7,177) 10,197

Amortization
of purchase
discrepancy (133,870) (133,870) (267,740) (267,740)
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Net loss
for the
period (54,370) (1,809,119) (237,107) (1,944,912)
Deficit,
beginning
of period (70,006,133) (69,585,127) (69,823,396) (69,449,334)
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Deficit,
end of
period $ (70,060,503) $ (71,394,246) $ (70,060,503) $ (71,394,246)
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Loss per
share -
basic $ (0.003) $ (0.10) $ (0.01) $ (0.11)
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TRINORTH CAPITAL INC.
Consolidated Statements of Cash Flows
For the three-month and six-month periods ended June 30 (Unaudited)

Three months ended Six months ended
June 30 June 30
-------------------- -------------------
2005 2004 2005 2004
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Net inflow (outflow)
of cash related
to the following
activities

Operating
Net loss for
the period $ (54,370) $ (1,809,119) $ (237,107) $ (1,944,912)
Items not
affecting cash
Share of loss
of equity-
accounted
investee(s) 124,764 134,917 274,917 257,543
Gain on sale of
marketable
securities (188,911) (11,352) (293,201) (33,801)
Depreciation - - - 81
Stock-based
compensation 2,598 - 3,448 -
Dilution (Gain) - (656,000) - (656,000)
Write down of
accounts
receivable - 2,238,468 - 2,238,468
Foreign
exchange gain - (52,794) - (88,451)
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(115,919) (155,880) (251,943) (227,072)

Net change in
non-cash
working capital
balances
Accounts
receivable (1,698) 139,112 (6,731) 138,088
Accounts
payable and
accrued
liabilities (66,387) 88,996 (325,304) 93,252
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(184,004) 72,228 (583,978) 4,268
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Investing
Acquisition of
investment (300,000) (117,630) (599,771) (117,630)
Proceeds from
sale of
marketable
securities 2,340,277 133,946 4,356,040 435,817
Purchase of
marketable
securities (1,953,821) - (4,076,694) (185,359)
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86,456 16,316 (320,425) 132,828
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Increase
(Decrease) in
cash position
during the
period (97,548) 88,544 (904,403) 137,096
Cash and cash
equivalents,
beginning of
period 147,913 52,608 954,768 4,056
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Cash and cash
equivalents,
end of period $ 50,365 $ 141,152 $ 50,365 $ 141,152
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TRINORTH CAPITAL INC.

Notes to the Consolidated Financial Statements

June 30, 2005

ACCOUNTING POLICIES

The consolidated financial statements of TriNorth Capital Inc. (the "Company") have been prepared in accordance with Canadian generally accounting principles ("Canadian GAAP") and follow the same accounting principles and methods of application as those disclosed in Note 2 of the Company's consolidated financial statements for the year ended December 31, 2004 except for those indicated below.

The accompanying interim unaudited consolidated financial statements include all adjustments that are, in the opinion of management, necessary for a fair presentation. These interim consolidated financial statements do not conform in all respects to the requirements of generally accepted accounting principles for annual financial statements and accordingly should be read in conjunction with the Company's consolidated financial statements included in the 2004 Annual Report.



INVESTMENTS

June 30, December 31,
2005 2004
------------- --------------
Investments accounted for using the
equity method
a) Vitalink Worldwide Ltd.
Investment, at cost $ 2,934,034 $ 2,934,034

Dividend (111,000) (111,000)

Share of loss of equity - accounted
investee
Balance, beginning of the period 2,296,414 1,820,169
Share of loss (income) for the period 7,177 (59,236)
Amortization of excess purchase price 267,740 535,481
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Balance, end of the period 2,571,331 2,296,414
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Investment, at equity 251,703 526,620
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Investments accounted for using the
cost method
b) VFM Interative Inc. $ 1,056,032 $ 1,056,032
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c) Intelligent Mechatronic Systems Inc. 1,930,519 1,330,748
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$ 3,238,254 $ 2,913,400
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The Company has the following investments:

a) A 37% interest in Vitalink Worldwide Ltd. ("Vitalink"), which, operating through its principal subsidiary, Business.ca, is a provider of specialized web-based information technology systems for small to medium size enterprises cross a broad spectrum of industries.

b) A 15.8% ownership interest in VFM Interactive Inc. ("VFMI") a Toronto-based provider of technology driven rich media solutions, connectivity and interactivity for the lodging and travel industry. VFMI's end-to-end media management solution is a hub that aggregates hotel and travel-related digital rich media content such as videos, 360-degree virtual tour images and still pictures, and automates the distribution of such content to travel websites and any other online points of contact for potential consumers who are researching and booking hotel accommodations.

c) A 14.5% ownership interest in Intelligent Mechatronic Systems Inc. ("IMS"), a Waterloo, Ontario-based company that develops intelligent sensor systems for use in automotive vehicles, telematic devices for the automotive insurance industry and automotive aftermarket accessory products.



Summary Financial Information for Vitalink group:

As at and for As at and for As at and for
the period the period the year ended
ended June 30, ended June 30, December 31,
2005 (3 months) 2004 (3 months) 2004
----------------- --------------- --------------
Total Revenue $ 384,349 $ 399,247 $ 2,026,334

Total Expenses 359,294 370,667 1,864,497

Net Earnings 25,055 15,540 161,837

Current Assets (16,337) 132,578 154,336

Non Current Assets 952,452 977,243 949,567

Current Liabilities 93,085 181,777 277,868

Long-term Liabilities 261,065 214,694 225,508


LOSS PER SHARE

Loss per share has been calculated based on the weighted average number of shares outstanding of 17,978,817 during the periods.

The effect of the exercise of outstanding options is anti-dilutive in the period.

During the period, 100,000 stock options were granted to directors at an exercise price of $0.27 per share.

COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the current period's presentation.

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