TriNorth Capital Inc.
TSX : TRT

TriNorth Capital Inc.

November 11, 2005 13:09 ET

TriNorth Capital Announces Third Quarter 2005 Results

TORONTO, ONTARIO--(CCNMatthews - Nov. 11, 2005) - TriNorth Capital Inc. (TSX:TRT) reported a net loss of $206,437 ($0.01 per share) for the three months ended September 30, 2005,compared with a net gain of $399,523 ($0.02 per share) for the same period in 2004. The results reflected gains on the sale of marketable securities of $21,685 (2004: $5,100) and interest and other income of $27,130 (2004: $46,164), offset by general and administrative costs of $155,895 (2004: $345,108). The net gain in the third quarter of 2004 included a foreign exchange gain of $8,177 and a recovery of $851,744 for accounts receivable previously written off.

For the nine months ended September 30, 2005 the net loss was $443,544 ($0.02 per share) compared with a net loss of $1,545,389 ($0.09 per share) in the same period in 2004.

At September 30, 2005, TriNorth had $2,872,529 in cash and marketable securities (at quoted market value) and investments in technology-based businesses of $3,238,902.

Venture Investments

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

- Business.ca and its affiliate Teragrid Solutions posted revenue that was 136% higher than the third quarter last year, reflecting the added contribution of the new affiliate that was established in the second quarter. Business.ca is developing an expansion strategy that will allow it to grow through acquisitions of other software developers that have synergies with Business.ca.

- VFM Interactive ("VFM") continued to add new clients, solidifying its position as one of the leading producers and distributors of rich media marketing content for the hotel and travel industry. In the past year, VFM hospitality clients have grown more than 1,000 per cent from 800 hotel properties to more than 8,000.

- IMS expects to successfully complete all OCS testing with an OEM by year end at which time it is expected that the OCS will be qualified for vehicle platforms of the OEM beginning with model year 2009. Several automotive insurance companies are currently testing prototypes of iPaid, a user-based product that allows drivers to control the cost of their automotive insurance based on how much they drive and other driving characteristics, in pilot programs.

TriNorth Capital Inc. is a Canadian-based investment company that has investments in privately held and publicly traded high growth potential companies, cash resources and substantial tax losses to shelter future income and investment gains.

This release contains forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct, and such forward looking statements should not be unduly relied upon. These statements speak only as of the date of this release, and are subject to a number of risks and uncertainties, including the factors discussed in the Company's current and previous filings with the Canadian securities regulatory authorities. Actual results could differ materially from these forward-looking statements.



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

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

ASSETS

CURRENT
Cash and cash equivalents $ 16,616 $ 954,768
Marketable securities (quoted market
value - September 30, 2005 -
$2,855,913, December 31, 2004
- $3,121,658) 2,698,645 2,849,671
Other receivables 5,898 5,650
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2,721,159 3,810,089

INVESTMENTS (Note 2) 3,238,902 2,913,400
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$ 5,960,061 $ 6,723,489
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LIABILITIES

CURRENT
Accounts payable and accrued
liabilities $ 54,232 $ 380,162
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SHAREHOLDERS' EQUITY

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

CONTRIBUTED SURPLUS 32,972,470 32,966,424

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

DEFICIT (70,266,940) (69,823,396)
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5,905,829 6,343,327
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$ 5,960,061 $ 6,723,489
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TRINORTH CAPITAL INC.
Consolidated Statements of Operations and Deficit
For the three-month and nine-month periods ended
September 30 (Unaudited)

Three months ended Nine months ended
September 30 September 30
------------------ -------------------
2005 2004 2005 2004
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Revenue
Interest and
other income $ 27,130 $ 46,164 $ 93,056 $ 112,179
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Expenses
General and
administrative 155,895 345,108 477,212 638,195
Dilution gain - - - (656,000)
Gain on sale
of marketable
securities (21,685) (5,100) (314,886) (38,901)
Depreciation - - - 81
Write down of
accounts
receivable - - - 2,238,468
Recovery of
accounts
receivable
written off (851,744) (851,744)
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134,210 (511,736) 162,326 1,330,099
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Gain (Loss)
before the
undernoted (107,080) 557,900 (69,270) (1,217,920)

Foreign Exchange
Gain (Loss) - (8,177) - 80,274

Share of Gain
(Loss) of
Equity-Accounted
investees
Share of income
(loss) reported
by
equity-accounted
investees 34,514 (16,330) 27,337 (6,133)
Amortization of
purchase
discrepancy (133,871) (133,870) (401,611) (401,610)
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Net income
(loss) for
the period (206,437) 399,523 (443,544) (1,545,389)

Deficit,
beginning
of
period (70,060,503) (71,394,246) (69,823,396) (69,449,334)
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Deficit, end
of period $(70,266,940) $(70,994,723) $(70,266,940) $(70,994,723)
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Income (loss)
per share
- basic $ (0.01) $ (0.02) $ (0.02) $ (0.09)
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TRINORTH CAPITAL INC.
Consolidated Statements of Cash Flows
For the three-month and nine-month periods ended
September 30 (Unaudited)

Three months ended Nine months ended
September 30 September 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 $ (206,437) $ 399,523 $ (443,544) $ (1,545,389)
Items not affecting
cash
Share of loss of
equity-accounted
investees 99,357 150,200 374,274 407,743
Gain on sale of
marketable
securities (21,685) (5,100) (314,886) (38,901)
Depreciation - - - 81
Stock-based
compensation 2,598 - 6,046 -
Dilution (Gain) - - - (656,000)
Write down of
accounts receivable - - - 2,238,468
Foreign exchange
gain - 8,177 - (80,274)
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(126,167) 552,800 (378,110) 325,728

Net change in
non-cash working
capital balances
Accounts receivable 6,483 261,246 (248) 399,334
Accounts payable and
accrued liabilities (626) (119,071) (325,930) (25,819)
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(120,310) 694,975 (704,288) 699,243
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Investing
Acquisition of
investment (100,006) (116,000) (699,777) (233,630)
Collection of
Debenture receivable - 100,000 - 100,000
Dividend from
equity-accounted
investees - 74,000 - 74,000
Proceeds from sale
of marketable
securities 738,688 189,469 5,094,728 625,286
Purchase of
marketable
securities (552,121) (893,750) (4,628,815) (1,079,109)
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86,561 (646,281) (233,864) (513,453)
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Increase (Decrease)
in cash position
during the period (33,749) 48,694 (938,152) 185,790
Cash and cash
equivalents,
beginning of period 50,365 141,152 954,768 4,056
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Cash and cash
equivalents, end of
period $ 16,616 $ 189,846 $ 16,616 $ 189,846
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TRINORTH CAPITAL INC.

Notes to the Consolidated Financial Statements

September 30, 2005

1. 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.



2. INVESTMENTS

September 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 investees
Balance, beginning of the 9
month period 2,296,414 1,820,169
Share of loss (income) for the
9 month period (15,917) (59,236)
Amortization of excess
purchase price for the 9 month
period 401,611 535,481
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Balance, end of the 9 month period 2,682,108 2,296,414
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Investment, at equity 140,926 526,620
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b) Teragrid Solutions Inc.
Investment, at cost $ 37 -
Share of income for the 6
month period since inception 11,420 -
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11,457 -
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Investments accounted for
using the cost method
c) VFM Interative Inc. $ 1,156,000 $ 1,056,032
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d) Intelligent Mechatronic
Systems Inc. 1,930,519 1,330,748
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$ 3,238,902 $ 2,913,400
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The Company has the following investments:

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

b) A 37% interest in Teragrid Solutions Inc., a company that provides web-based services to small and medium size enterprises.

c) A 17% ownership interest in VFM Interactive Inc. ("VFM") a Toronto-based provider of technology driven rich media solutions, connectivity and interactivity for the hotel 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, 360º 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.

d) A 14.4% 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 As at and As at and
for the period the period the period
ended ended ended
September 30, September 30, December 31,
2005 2004 2004
(3 months) (3 months)
--------------- ------------ ------------

Total Revenue $ 533,241 $ 362,460 $2,026,334
Total Expenses 472,320 406,205 1,864,497
Net Earnings 60,291 (43,745) 161,837
Current Assets 328,030 189,643 154,336
Non Current Assets 890,808 1,024,530 949,567
Current Liabilities 106,374 361,993 277,868
Long-term Liabilities 470,208 256,577 225,508

Summary Financial Information for Teragrid Solutions Inc.:


As at and for the
period ended
September 30, 2005
(3 months)
------------------
Total Revenue $ 320,282
Total Expenses 289,417
Net Earnings 30,865
Current Assets 150,057
Non Current Assets 825,417
Current Liabilities 846,797
Long-term Liabilities 97,712


3. 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.

4. DIRECTORS DEFERRED STOCK UNIT PLAN

Effective May 30, 2005, the Corporation adopted a Directors Deferred Stock Unit Plan (DDSU Plan) which permits directors to defer the payment to them of directors fees. Under the DDSU Plan, directors may elect to receive any or all of their directors' fees in deferred stock units. DDSUs are calculated on the last business day of each fiscal quarter by dividing the amount of any directors fees that are deferred by the market value of a common share of the Corporation, averaged over the previous ten trading days and rounded up to the nearest unit. A director may convert DDSUs to cash only when the director ceases to be a director of the Corporation. The value of a converted DDSU is equal to the market value of a common share of the Corporation at the time of conversion.

At September 30, 2005, a total of 97,199 DDSUs had been recorded under the DDSU Plan representing the conversion of directors' fees in the amount of $20,500 for the period to September 30, 2005 in accordance with the provisions of the Plan.

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