U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
(X) Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1998
( ) Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ____________________ to ________________
Commission File Number: 028836
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Paradigm Advanced Technologies, Inc.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 33-0692466
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1 Concorde Gate, Suite 201, Toronto, Ontario, M3C 3N6, CANADA
-------------------------------------------------------------
(Address of Principal Executive Offices)
(416) 447-3235
---------------
(Issuer's Telephone Number, Including Area Code)
N/A
---
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes ____ No __X__
As of August 12, 1998, the issuer had 29,796,662 shares of its common
stock issued and outstanding.
Traditional Small Business Disclosure Format (check one):
Yes ___ No __X__
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
PARADIGM ADVANCED TECHNOLOGIES, INC.
INTERIM BALANCE SHEET
(UNAUDITED)
(Unaudited)
JUNE 30,1998 DEC 31,1997
ASSETS
Current
Cash at Bank and in trust $109,975 $0
Miscellaneous Receivables $33,925 $35,515
--------- ---------
$143,900 $35,515
Long Term:
Capital Assets (Note 1, $12,584 $13,982
Note 4)
========= =========
Total Assets $156,484 $49,497
========= =========
LIABILITIES
Current:
Bank Indebtedness $0 $139
Accounts payable $463,352 $422,008
Loan payable $346,315 $356,772
--------- ---------
Total Liabilities $809,667 $778,919
--------- ---------
SHAREHOLDERS' EQUITY
Share Capital (Note 6)
Authorized 30,000,000 $3,395,303 $2,218,180
Common Stock at $0.0001
par value
Issued and outstanding stock
25,752,662 as of Jun 30, 1998
16,140,445 as of Dec 31, 1997
Deficit ($4,048,486) ($2,947,602)
--------- ---------
Total Shareholders' Equity ($653,183) ($729,422)
--------- ---------
Total Liabilities & $156,484 $49,497
Shareholder's Equity ======== =======
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PARADIGM ADVANCED TECHNOLOGIES, INC.
INTERIM STATEMENT OF INCOME
For the Three months For the Six months
Ended June 30 Ended June 30
--------------------------------------------
1998 1997 1998 1997
---- ---- ----- ----
REVENUE
Sales Revenue (Note 1, Note 3) $0 $9,710 $0 $521,179
---------------------------------------------
Cost of Sales
Inventory -Beginning of Period $0 $209,696 $0 $309,696
Purchases $0 $2,140 $0 $24,231
---------------------------------------------
$0 $211,836 $0 $333,927
Inventory-End of Period $0 $209,696 $0 $209,696
---------------------------------------------
Cost of Sales $0 $2,140 $0 $124,231
---------------------------------------------
Gross Profit $0 $7,570 $0 $396,948
---------------------------------------------
Operating Expenses
Selling, General and $95,747 $349,211 $159,536 $675,498
Administration
Research & Development $0 $67,131 $0 $86,935
Interest Expense $5,000 $0 $9,950 $0
Depreciation and amortization 699 $2,574 $1,398 $5,141
--- ------- ------- ------
Total Expenses $101,446 $418,916 $170,884 $767,574
--------- -------- -------- --------
Net Profit / (Loss) for ($101,446) ($411,346) ($170,884) ($370,626)
the period
Write off of Investment in $0 $0 $930,000 $0
Subsidiary
=============================================
Net Profit/(Loss) after ($101,446) ($411,346) ($1,100,884) ($370,626)
extraordinary item ========== ========== ============ =========
Earnings per Share - before (0.0045) (0.0265) (0.0084) (0.0250)
extraordinary item
=========================================
Earnings per Share - after (0.0045) (0.0265) (0.0540) (0.0250)
extraordinary item
=========================================
Average common shares 22,631,673 15,510,445 20,402,409 14,852,107
outstanding during period
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PARADIGM ADVANCED TECHNOLOGIES, INC.
STATEMENT OF DEFICIT
For the Six months For the Six months
Ended June 30 Ended June 30
------------------------------------
1998 1997 1998 1997
---- ---- ----- ----
Deficit-Beginning of the period ($3,947,040)($1,394,666)($2,947,602)($1,435,386)
Net Profit / (Deficit) - ($101,446)($411,346) ($1,100,884)($370,626)
Current Period
====================================
Deficit - end of period ($4,048,486)($1,806,012)($4,048,486)($1,806,012)
====================================
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PARADIGM ADVANCED TECHNOLOGIES, INC.
INTERIM STATEMENT OF CASH FLOW
For the Three months For the Six months
Ended June 30 Ended June 30
------------------------------------
1998 1997 1998 1997
---- ---- ----- ----
Cash provided by (used in) operations
Net gain (loss) for the period $(101,446)$(411,346)$(1,100,884)$(370,626)
Items not requiring an outlay of cash:
Amortization of fixed assets 699 2,574 1,398 5,141
Write-off of Investment in 0 0 930,000 0
Subsidiary
Net changes in non-cash working capital
items related to operations 0 (19,195) 0 76,897
Inventory
Accounts Receivable 0 (9,062) 0 (474,917)
Miscellaneous Receivable 591 2,440 1,590 (1,324)
Share Subscriber Receivable 0 54,000 0 202,500
Accounts Payable 33,099 72,469 41,344 128,872
Loans Payable (3,891) 215,823 (10,457) 215,823
------------------------------------------
TOTAL CASH FLOW USED IN OPERATIONS ($70,948) ($92,297) ($137,009)($217,634)
Cash From Financing Activities
Proceeds of Common Stock Issuance 158,576 7,000 1,177,123 7,000
Less Write-off of Subsidiary 0 0 (930,000) 0
------------------------------------------
TOTAL CASH FROM FINANCING ACTIVITIES 158,576 7,000 247,123 7,000
Cash Used In Investing Activities
Acquisition of fixed assets 0 (69) 0 (3,124)
------------------------------------------
NET INCREASE (DECREASE) IN CASH
FOR THE PERIOD $87,628 ($85,366) $110,114 ($213,758)
Cash - beginning of the period $22,347 $26,310 ($139) $154,702
==========================================
Cash - end of the period $109,975 ($59,056) $109,975 ($59,056)
==========================================
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PARADIGM ADVANCED TECHNOLOGIES INC.
NOTES TO INTERIM STATEMENT FOR THE PERIOD ENDED JUNE 30, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) FINANCIAL STATEMENTS
The accompanying condensed financial statements are not audited for the
interim period, but include all adjustments (consisting of only normal recurring
accruals) which management considers necessary for the fair representation of
results at June 30, 1998.
These financial statements do not purport to contain complete disclosures
in conformity with generally accepted accounting principles and should be read
in conjunction with the audited financial statements of Paradigm Advanced
Technologies, Inc. (the "Company") for the year ended December 31, 1997
contained in the Company's Annual Report on Form 10-KSB. The results for the six
months ended June 30, 1998 are not necessarily indications of the results for
the fiscal year ending December 31, 1998.
The Company is a development stage company formed on January 12, 1996 and
does not purport to contain complete disclosures in conformity with generally
accepted accounting principles.
b) CAPITAL ASSETS
Capital assets are recorded at cost less accumulated depreciation.
Depreciation is provided using the declining balance basis at the following
rate:
Furniture and fixtures - 20%
c) METHOD OF ACCOUNTING
The Company maintains its books and prepares its financial statements on
the accrual basis of accounting.
2. INCORPORATION
The Company was incorporated on January 12, 1996 in the State of Delaware
and has elected a December 31 fiscal year end for book and tax purposes.
3. REVENUE
In the first quarter of 1997, the Company recorded a sale of software on
the basis of a barter agreement with Primary Response in Toronto for $450,000,
inclusive of a discount of 10%. This sale was reversed in the fourth quarter of
1997.
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4. CAPITAL ASSETS
Accumulatd Net Book Net Book
Cost Depreciation Value Value
1998 1998 1998 1997
---- ---- ---- ----
Furniture and Fixtures $21,847 -$9,263 $12,584 $13,982
5. LOANS PAYABLE
Loans payable include loans amounting to $258,842 which are secured by a
pledge over all the assets of the Company. Interest is payable on these loans at
a rate of prime plus 4%.
6. SHARE CAPITAL
On February 19, 1998, the Company issued 3,720,000 shares to the vendors of
North York Leasing Limited and HOJ Franchise Systems Ltd. - see Note 8. On May
28, 1998, the Company issued 2,500,000 shares for net proceeds of $112,500.
During the First Quarter of 1998, options at a price of $0.01 to $0.125 per
share were exercised, resulting in the issuance of 852,217 Common Shares. During
the second quarter of 1998, options at a price of $0.01 to $0.10 per share were
exercised resulting in the issuance of 2,535,000 Common Shares.
7. STOCK OPTIONS AND WARRANTS
a) Options to purchase Common Shares have been issued under the Company's
stock option plan to directors, officers, employees and consultants of the
Company. Options outstanding at March 31, 1998 were as follows:
Year Granted Expiry Date No. of Shares
1996 Jan-01 7,583,334
1997 Nov-00 45,000
1997 Nov-00 125,000
1997 Oct-00 40,000
1997 Nov-00 50,000
1997 Dec-00 300,000
1998 Mar-01 2,350,000
1998 May-01 150,000
=========
TOTAL STOCK OPTIONS OUTSTANDING 10,643,334
=========
b) As at March 31,1998, 3,607,111 warrants were issued at an exercise price
of $0.30 per share for each warrant owned. These warrants are exercisable over a
3 year period and expire three years from the date of issue.
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8. PURCHASE OF 1280884 ONTARIO INC.
In February 1998, the Company acquired all the shares of 1280884 Ontario
Inc. and its wholly owned subsidiary North York Leasing Limited. The Company
issued 3,720,000 Common Shares to the vendors of these companies at a price of
25 cents per share representing a cost of $930,000 and is required to issue
additional shares to these vendors, if during any one consecutive 60-day trading
period between April 1998 and February 1999, the average closing price of the
Company's Common Shares is less than 25 cents, so that the total consideration
is the equivalent of $930,000. The Company has instituted legal action against
the legal firm that represented all the parties in the above transaction and
that acted as escrow agent for the above shares and is claiming that these
shares should be cancelled and that damages be paid to the Company. No provision
has been made for the issue of any additional shares to the vendors of these
companies.
The Company sold the above companies in June 1998 to an unrelated party for
a nominal sum. Under the terms of the purchase agreement, the purchaser and the
secured creditors of 1280884 Ontario Inc. and North York Leasing Limited granted
the Company a full release of all its obligations concerning 1280884 Ontario
Inc. and North York Leasing Limited. The Company wrote off its investment in
these companies at the end of March 1998.
Item 2. Management's Discussion and Analysis of Plan of Operation
Results of Operations
The following discussion contains forward-looking statements and
projections. Because these forward-looking statements and projections are based
on a number of assumptions and are subject to significant uncertainties and
contingencies, many of which are beyond the Company's control, there is no
assurance that they will be realized, and actual results may vary significantly
from those shown.
Three Months Ended June 30, 1998
The Company is a development stage company with a limited history of
operations. It was incorporated on January 12, 1996.
The Company recorded no revenues for the quarter ended June 30, 1998 as
compared to sales of $9,710 for the three months ended June 30, 1997. The sales
for the prior year were comprised of the sale of certain VideoBank products.
Selling, general and administrative expenses for the three months ended
June 30, 1998 were $95,747 as compared to $349,211 for the three months ended
June 30, 1997. This decrease is due to the closing of the California office in
September 1997 and a reduction in staff due to the outsourcing of research and
development activities.
The net loss before extraordinary items for the three months ended June 30,
1998 was $101,446 compared to a loss of $411,346 for the three months ended June
30, 1997. The loss for 1998 is due to the lack of revenue, as the Company was
not able to sell any products during this period and, accordingly, was unable to
recover any of its expenses. The loss for the three months ended June 30, 1998
was lower than the loss for the corresponding period for the prior year, because
the Company had lower operating costs as a result of the closing of the
California office in September 1997 and the outsourcing of research and
development activities.
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Six Months Ended June 30, 1998
The Company recorded no revenues for the six months ended June 30, 1998 as
compared to sales of $521,179 for the six months ended June 30, 1997. Most of
the sales for the prior year arose from a one-time barter sale which was
reversed at the end of 1997. The Company was unable to recover the proceeds of
this sale and credited the sale in the fourth quarter of the 1997 fiscal year.
Selling, general and administrative expenses for the six months ended June
30, 1998 were $170,884 as compared to $370,626 for the six months ended June 30,
1997. This decrease is due to the closing of the California office in September
1997 and a reduction in staff due to the outsourcing of research and development
activities.
The net loss before extraordinary items for the six months ended June 30,
1998 was $170,884 as compared to a loss of $370,626 for the six months ended
June 30, 1997. The loss for 1998 is due to the lack of revenue, as the Company
was not able to sell any products during this period and, accordingly, was
unable to recover any of its expenses.
Liquidity and Capital Resources
The Company had cash on hand and in trust of $109,975 at June 30, 1998. In
order to finance future operations, the Company needs to raise additional funds
through the issue of additional shares and debt.
Plan of Operation
The Company's efforts continue to center on the development and
distribution of its Global Positioning Satellite tracking devices and VideoBank
and VideoBank-Remote video surveillance products. The Company has worked on
developing and solidifying its manufacturer's representative network by entering
into distribution or sales representation agreements with manufacturers and
developers of software-based video surveillance systems, developing its
advertising and promotional materials and customer database, and planning a
public relations campaign, and will continue to work on all of these activities.
The Company currently plans to continue using its existing marketing and
distribution methods; but, also is reviewing and evaluating these methods in
order to determine whether better or more efficient practices may be available.
The Company also will continue to concentrate on generating revenues from
existing relationships with businesses that are already familiar with the
Company's products and have expressed a willingness to buy. The Company will
continue to concentrate particularly on consolidating its distribution networks,
cementing its client relationships, and establishing an image and brand-name
recognition for the Company in the marketplace in which it competes.
The Company does not currently have any intentions to acquire a plant or
any significant equipment, as the Company's warehouse and production facility
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requirements are minimal. The Company may increase the number of its employees
as it continues to grow and further solidifies and consolidates its distribution
networks.
The Company intends to raise additional funds on an as-needed basis to
finance its future activities through the issuance and sale of additional shares
of stock, the sale of new products and assumption of additional debt.
Purchase of 1280884 Ontario Inc.
In February 1998, the Company acquired all the shares of 1280884 Ontario
Inc. and its wholly owned subsidiary North York Leasing Limited (collectively,
the "1280884 Group"). The Company issued 3,720,000 Common Shares to the vendors
of the 1280884 Group at a price of 25 cents per share representing a cost of
$930,000 and is required to issue additional shares to these vendors if during
any one consecutive 60 day trading period between April 1998 and February 1999,
the average closing price of the Company's shares is less than 25 cents, so that
the total consideration is the equivalent of $930,000. The Company has
instituted a legal action against the legal firm that represented all the
parties in the above transaction and that acted as the escrow agent for the
above shares and is claiming that these shares should be canceled and that
damages be paid to the Company.
The Company sold the 1280884 Group in June 1998 to an unrelated party for a
nominal sum. Under the terms of the purchase agreement, the purchaser and the
secured creditors of the 1280884 Group granted the Company a full release from
all its obligations concerning the 1280884 Group. The Company wrote off its
investment in the 1280884 Group at the end of March 1998.
PART II
OTHER INFORMATION
Item 5. Other Information
On February 10, 1998, the Company acquired all of the shares of 1280884
Ontario Inc. and its wholly owned subsidiary North York Leasing Limited in
exchange for 3,720,000 of the Company's Common Stock. On June 10, 1998, the
Company entered into an agreement with HOJ Theta Realty Inc. pursuant to which
the Company transferred to it all of the capital stock of 1280884 Ontario Inc.
Accordingly, the results of 1280884 Ontario Inc. are not consolidated in the
financial statements appearing in this 10-QSB filing. The Company has reported a
net loss of $930,000 on the disposal of 1280884 Ontario Inc. There were no
revenues from the discontinued operations of 1280884 Ontario Inc. during the six
months ended June 30, 1998.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
10.1 Share Purchase Agreement between the
Company and HOJ Theta Realty Inc. dated
June 10, 1998.
27 Financial Data Schedule
(b) Reports on form 8-K.
On April 1, 1998, the Company filed a Form 8-K to report (i) its
acquisition of all of the issued and outstanding capital stock and trade
indebtedness of North York Leasing Limited in exchange for 3,720,000 of the
Company's Common Stock; and (ii) its acquisition of the business of HOJ
Franchise Systems Ltd., which is the franchisor for a number of car rental and
leasing franchises in Canada.
No financial statements were filed in conjunction with this transaction.
See "Note 8 to Financial Statements," "Management Discussion and Analysis of
Plan of Operation," and "Other Information."
SIGNATURES
In accordance with the Exchange Act, the registrant caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
PARADIGM ADVANCED TECHNOLOGIES, INC.
Date: October 22, 1998
By: /s/ David Kerzner
----------------------------
David Kerzner
President and CEO
By: /s/ Selwyn Wener
-----------------------------
Selwyn Wener
Chief Financial Officer
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<PAGE>
Exhibit 10.1
SHARE PURCHASE AGREEMENT
THIS Agreement is made the 10th day of June, 1998
B E T W E E N:
PARADIGM ADVANCED TECHNOLOGIES, INC.
(the "Vendor")
- and -
HOJ THETA REALTY INC.
(the "Purchaser")
WHEREAS the Vendor is the owner of ONE HUNDRED (100) common shares of
1280884 ONTARIO INC. (the "Company") and desires to sell to the Purchaser its
shares of the Company, and the Purchaser desires to purchase the Vendor's shares
of the Company;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
payments and mutual covenants herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Article 1. - Interpretation
1.1 Definitions
In addition to other terms defined in this Agreement, the following terms shall
have the following meanings:
(a) "Business Day" means a day other than Saturday, Sunday or a statutory
holiday in the Province of Ontario;
(b) "Closing" means the completion of the purchase and sale of the
Purchased Shares in accordance with Article 10;
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(c) "Closing Date" means the date hereof;
(d) "Liens" means all mortgages, claims, charges, liens, pledges,
encumbrances, security interests, adverse claims and other restrictions of any
kind and nature whatsoever;
(e) "Purchased Indebtedness" means any and all indebtedness, liabilities
and obligations owing by the Company to the Vendor up to and including the
Closing Date;
(f) "Purchase Price" has the meaning set forth in Section 3.2;
(g) "Purchased Shares" means all of the issued and outstanding shares in
the capital of the Company owned and being sold by the Vendor, being ONE HUNDRED
(100) common shares of the Company, and being purchased by the Purchaser; and
(h) "Time of Closing" means 11:00 a.m. (Toronto time) on the Closing Date
or such other time as the parties hereto may agree in writing.
1.2 Certain definitions
"Agreement", "this Agreement", "hereto", "hereof", "herein", "hereunder"
and similar expressions refer to this Agreement and not to any particular
Article, Section, paragraph or other portion of this Agreement and include every
amendment or instrument supplementary hereto or in implementation hereof.
1.3 Number and Gender
Except where the context otherwise indicates, words importing the singular
number only shall include the plural, and vice versa, and words importing the
masculine gender shall include the feminine gender and "persons" shall include
individuals, partnerships, joint ventures, associations, corporations and all
other forms of business organizations, governments, regulatory or governmental
agencies, commissions, departments and instrumentalities.
Article 2. - General
2.1 Dollar Amounts
All dollar amounts referred to herein are in lawful currency of Canada.
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2.2 Accounting Terms
Each accounting term used herein, unless a contrary definition is
provided, shall have the meaning given to it under generally accepted accounting
principles in Canada existing at the date hereof.
Article 3. - Purchased Shares and purchased Indebtedness and Purchase Price
3.1 Purchased Shares
Subject to the terms and conditions contained in this Agreement, the
Vendor agrees to sell, assign, transfer and deliver to the Purchaser all of the
Vendor's right, title and interest in and to the Purchased Shares and the
Purchased Indebtedness (the "Vendor's Interest") and the Purchaser agrees to
purchase the Vendor's Interest.
3.2 Purchase Price and Allocation
The Purchase Price for the Vendor's Interest shall be the sum of $1.00
payable to the Vendor and other good and valuable consideration including the
Purchaser arranging for the delivery of the release in favour of the Vendor a
copy of which is annexed hereto as Schedule "A".
Article 4. - Representations and Warranties of the Vendor
The Vendor represents and warrants to the Purchaser as follows and
acknowledges that the Purchaser is relying upon such representations and
warranties in connection with this Agreement:
4.1 Share Ownership of the Company
The Vendor is the registered and beneficial owner of the Purchased Shares
with good and marketable title thereto, free and clear of all Liens.
4.2 Authorized and Issued Capital
The authorized capital of the Company consists of an unlimited number of
common shares, of which * common shares are issued and outstanding. The
Purchased Shares have been duly and validly authorized and issued and are
outstanding as fully paid and non-assessable shares.
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4.3 Incorporation and Organization
The Company is a corporation duly incorporated and organized and validly
subsisting under the laws of Ontario and is duly qualified as a corporation to
do business in Ontario.
4.4 Binding Agreement
This Agreement constitutes a legal, valid and binding obligation of the
Vendor, enforceable against her in accordance with its terms subject to:
(a) bankruptcy, insolvency, moratorium, reorganization and other laws
relating to or affecting the enforcement of creditor's rights generally; and
(b) the fact that equitable remedies, including the remedies of specific
performance and injunction, may only be granted in the discretion of a court.
4.5 Non-Contravention; Consents
The execution and delivery of this Agreement and the completion by the
Vendor of the transactions contemplated herein will not result in any material
violation or breach of any of the provisions of the constating documents or
by-laws of the Company, or to the Vendor's knowledge breach any material
contract or lease, written or oral, to which the Company or the Vendor is a
party or by which they are bound, nor to the Vendor's knowledge require the
Company or the Vendor to obtain any consents, authorizations or approvals, save
for the approval of the Corporation's directors, or to the Vendor's knowledge
result in the creation of any Lien on the Purchased Shares.
4.6 No Other Purchase Agreements
No person has any Agreement or option or any right or privilege capable of
becoming an Agreement for the purchase of the Purchased Shares save and except
as provided for in this Agreement.
4.7 Title to Assets
The assets owned or used by the Company (other than those leased by the
Company) are owned by the Company as the beneficial and legal owner thereof with
a good and marketable title therein and thereto and with full right of use
thereof subject to such Liens which may as of the date hereof exist.
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4.8 Residency of Vendor
The Vendor is not a non-resident of Canada within the meaning of the
Income Tax Act (Canada).
Article 5. - Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Vendor as follows and
acknowledge that the Vendor is relying upon such representations and warranties
in connection with this Agreement:
5.1 Binding Agreement
This Agreement constitutes a legal, valid and binding obligation of the
Purchaser enforceable against him in accordance with its terms subject to:
(a) bankruptcy, insolvency, moratorium, reorganization and other laws
relating to or affecting the enforcement of creditor's rights generally; and
(b) the fact that equitable remedies, including the remedies of specific
performance and injunction, may only be granted in the discretion of a court.
5.2 Non-Contravention
The execution and delivery of this Agreement and the consummation by the
Purchaser of the transactions contemplated hereby will not result in any
material violation or breach of any material contract or lease, written or oral,
to which the Purchaser is a party or by which he is bound.
Article 6. - Covenants of the Vendor
The Vendor hereby covenants with the Purchaser that the following will be
done or caused to be done at or prior to the Time of Closing or earlier as
herein provided:
6.1 Vendor's Compliance with Agreement
The Vendor shall have taken all steps necessary to ensure that the
representations and warranties contained in this Agreement are true and correct
on the Closing Date as if made on and as of such date and shall have done all
things necessary to facilitate the transactions provided for herein.
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6.2 Resignation of Vendor as Director and Officer
David Kerzner shall have resigned as a director(s) and officer(s) of the
Company, such resignation to be effective as of the Time of Closing.
6.3 Transfers
The Vendor shall cause all necessary resolutions to be enacted and other
steps to be taken so as to validly and effectively transfer the Purchased Shares
to the Purchaser at the Time of Closing.
6.4 Third Party Consents
The Vendor shall co-operate with the Purchaser and his representatives to
obtain any third party consents which may be required.
Article 7. - Covenants of the Purchaser
The Purchaser hereby covenants with the Vendor that the following will be
done at or prior to the Time of Closing or earlier as herein provided:
7.1 Purchaser's Compliance with Agreement
The Purchaser shall have taken all steps necessary to ensure that his
representations and warranties contained herein are true and correct on the
Closing Date as if made on and as of such date and shall have done all things
necessary to facilitate the transactions herein provided for.
7.2 Third Party Consents
The Purchaser shall co-operate with the Vendor and her representatives to
obtain any further consents required by any third party.
Article 8. - Conditions in Favour of the Purchaser
The purchase and sale of the Purchased Shares is subject to the following
terms and conditions for the exclusive benefit of the Purchaser to be fulfilled
or performed by the Vendor or waived by the Purchaser at or prior to the Time of
Closing:
8.1 Full Performance
The Vendor shall have performed in all material respects all the terms,
covenants and conditions of the Vendor under this Agreement.
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Article 9. - Conditions in Favour of the Vendor
The purchase and sale of the Purchased Shares is subject to the following
terms and conditions for the exclusive benefit of the Vendor, to be fulfilled or
performed by the Purchaser or waived by the Vendor at or prior to the Time of
Closing:
9.1 Full Performance
The Purchaser shall have performed in all material respects all the terms,
covenants and conditions of the Purchaser under this Agreement.
9.2 Payment of Purchase Price
The Purchaser shall have paid the Purchase Price and other consideration
to the Vendor in accordance with Section 3.2 hereof.
Article 10. - Closing Arrangements
10.1 Place of Closing
The closing of the transactions contemplated by this Agreement shall take
place at the Time of Closing on the Closing Date at the offices of Gowling,
Strathy & Henderson, Suite 4900, Commerce Court West, Toronto, Ontario or at
such other place as the parties hereto may agree.
10.2 Deliveries by the Vendor
Subject to the satisfaction and fulfilment of all conditions provided for
in this Agreement (unless waived in writing by the Purchaser at or prior to the
Time of Closing) the Vendor shall deliver to the Purchaser the following
documents duly executed by all persons other than the Purchaser or do the
following acts or things which delivery and performance constitute a condition
precedent in favour of the Purchaser to the completion of the transactions
herein provided for:
(a) the share certificates representing the Purchased
Shares duly endorsed in blank for transfer to the Purchaser;
(b) a copy of a resolution of the board of directors of the
Company authorizing the transfer of the Purchased Shares to
the Purchaser;
(c) the resignations referred to in Section 6.2; and
-18-
<PAGE>
(d) the Company's minute book.
10.3 Deliveries by the Purchaser
Subject to the satisfaction and fulfilment of all conditions provided for
in this Agreement (unless waived in writing by the Vendor at or prior to the
Time of Closing), the Purchaser shall deliver to the Vendor the Purchase Price
payable to the Vendor in accordance with Section 3.2.
Article 11. - General Provisions
11.1 Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto
and supersedes all prior agreements, understandings, negotiations and
discussions between the parties hereto with respect to the subject matter of
this Agreement. There are not and shall not be any verbal statements,
representations, warranties, undertakings or agreements between the parties with
respect to the subject matter of this Agreement and this Agreement may not be
amended or modified in any respect except by written instrument signed by the
parties hereto.
11.2 Waiver
No waiver of any of the provisions of this Agreement shall be deemed to
constitute a waiver of any other provision (whether or not similar) nor shall
such waiver be effective or binding unless in writing and, unless otherwise
provided, shall be limited to the specific breach waived.
11.3 Applicable Law
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.
11.4 Enurement
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors and legal personal
representatives, and shall not be assignable by any of the parties hereto
without the written consent of the other parties hereto.
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<PAGE>
11.5 Counterparts
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, and each of which shall be
deemed an original.
11.6 Further Assurances
From time to time subsequent to the Closing Date, each of the parties
hereto shall, at the request and expense of the requesting party, execute and
deliver such additional conveyances, transfers and other assurances, as may, in
the opinion of counsel for such party, be required to effectually carry out the
intent of this Agreement in accordance with the terms hereof.
11.7 Severability
If any provision of this Agreement is determined to be invalid or
unenforceable by a court of competent jurisdiction from which no further appeal
lies or is taken, the provision shall be deemed to be severed herefrom, and the
remaining provisions of this Agreement shall not be affected thereby and shall
remain valid and enforceable.
IN WITNESS WHEREOF this Agreement has been executed and delivered by the
parties hereto on the date first above written.
PARADIGM ADVANCED TECHNOLOGIES, INC.
Per:
________/s/_________________________
Name: David Kerzner
Title: President
I have the authority to bind the corporation.
HOJ THETA REALTY INC.
Per:
_______/s/__________________________
Name:
Title: Authorized signing officer
I have the authority to bind the corporation.
-20-
<PAGE>
SCHEDULE "A"
FULL AND FINAL RELEASE
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
acknowledged by ANCONA INC. (the "Releasor"), subject to the terms hereof, the
Releasor remises, releases and forever discharges PARADIGM ADVANCED
TECHNOLOGIES, INC. ("Paradigm") its shareholders, officers, directors and
employees (collectively, the "Releasee") from all actions, causes of action,
suits, debts, duties, accounts, bonds, covenants, contracts, claims and demands
whatsoever, whether known or unknown, which the Releasor ever had, now has or
may in the future assert against the Releasee.
NOTWITHSTANDING THE FOREGOING or anything to the contrary, nothing herein
contained shall release or be deemed to have released Paradigm from any of its
indebtedness, liabilities or obligations to the Releasor in respect of the the
Guarantee and Postponement of Claim dated February 11, 1998 executed by Paradigm
and North York Leasing Ltd. in favour of the Releasor for the liabilities of
1280884 Ontario Inc. to the Releasor (the "Guarantee") provided that the
Releasor shall not take any steps to sue, take proceedings against or otherwise
enforce in any manner its rights and remedies under the Guarantee against the
Releasee and the Releasor shall and is forever estopped from so doing.
FOR THE SAME CONSIDERATION the Releasor covenants and agrees:
(a) not to join, assist and/or act in concert in any manner with any
person, firm or corporation in the making of any claim or demand or
the bringing of any claim, proceeding or action against the Releasee
arising out of or in relation to the matters hereinbefore remised,
released and/or discharged; and
(b) not to make any claim or demand or commence any action against any
third party who may claim contribution, indemnity or other relief
over against the Releasee other in relation to the matters
hereinbefore remised, released and/or discharged.
THE PROVISIONS HEREOF shall be effective as of the date of execution hereof and
shall enure to the benefit of, and shall be binding upon the heirs,
administrators, executors, successors and assigns of the Releasee and the
Releasor, respectively.
DATED this 10th day of June, 1998
ANCONA INC.
Per:
____________________________________________
David Luinenberg, Authorized Signing Officer
I have authority to bind the Corporation
-21-
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-1-1998
<PERIOD-END> JUN-30-1998
<CASH> 109,975
<SECURITIES> 0
<RECEIVABLES> 33,925
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 143,900
<PP&E> 21,847
<DEPRECIATION> (9,263)
<TOTAL-ASSETS> 156,484
<CURRENT-LIABILITIES> 809,667
<BONDS> 0
0
0
<COMMON> 3,395,303
<OTHER-SE> (4,048,486)
<TOTAL-LIABILITY-AND-EQUITY> 156,484
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 160,934
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,950
<INCOME-PRETAX> (170,884)
<INCOME-TAX> 0
<INCOME-CONTINUING> (170,884)
<DISCONTINUED> 0
<EXTRAORDINARY> (930,000)
<CHANGES> 0
<NET-INCOME> (1,100,884)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
