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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO -------------------
-----------------
ALTAIR INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
Province of
Ontario,
Canada 1-12497 None
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (307) 587-8245
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 |X| NO |_|.
As of March 31, 1999, the registrant had 15,424,915 Common Shares outstanding.
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
ALTAIR INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in United States Dollars)
<CAPTION>
March 31, December 31,
1999 1998
(unaudited) (audited)
------------ ------------
ASSETS
<S> <C> <C>
Current
Cash and short-term investments $ 4,085,622 $ 3,100,577
Other current assets 103,195 130,642
------------ ------------
4,188,817 3,231,219
Capital
Office equipment, vehicles, jigs and testing
equipment (Cost, net of amortization) 579,901 462,417
Centrifugal jig patents and related expenditures
(Cost, net of amortization) 3,532,596 3,609,024
Mineral properties and related deferred exploration
expenditures 1,553,049 1,399,802
Goodwill, net 9,440 9,590
------------ ------------
Total Assets $ 9,863,803 $ 8,712,052
============ ============
LIABILITIES
Current
Accounts payable and accrued liabilities $ 99,299 $ 165,979
Current portion of notes payable 67,533 73,533
------------ ------------
Total Liabilities 166,832 239,512
------------ ------------
SHAREHOLDERS' EQUITY
Capital stock issued
15,424,915 common shares at March 31, 1999; 15,174,915
shares at December 31, 1998 18,212,463 16,462,463
------------ ------------
Contributed Surplus 655,098 655,098
------------ ------------
Deficit
Balance, beginning of period (8,645,021) (6,303,879)
Accretion of equity element of convertible debentures -- (144,801)
Premium on conversion of convertible debentures -- (244,915)
Convertible debenture issuance costs -- (21,887)
Capital stock issuance costs (87,500) --
Net loss for the period (438,069) (1,929,539)
------------ ------------
Balance, end of period (9,170,590) (8,645,021)
------------ ------------
Total Shareholders' Equity 9,696,971 8,472,540
------------ ------------
Total Liabilities and Shareholders' Equity $ 9,863,803 $ 8,712,052
============ ============
</TABLE>
<PAGE>
<TABLE>
ALTAIR INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in United States Dollars)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
------------------------
1999 1998
--------- ---------
<S> <C> <C>
Operating Expenses
Testing, research and development $ 79,937 $ 67,050
Wages and administration 83,047 27,770
Professional fees 26,332 39,615
Shareholder relations 41,267 22,896
Shareholders' meetings and reports 20,953 23,889
General and office 29,394 15,867
Travel 17,218 12,087
Occupancy costs 17,251 16,551
Stock exchange fees 18,505 78,974
Insurance 15,200 15,694
Government fees and taxes 20,680 2,906
Loss (Gain) on foreign exchange (1,105) 6,471
Transfer agent's fees 518 1,521
Corporate services 2,096 2,115
Bank charges 177 712
Loss on disposal of fixed assets -- 4,417
Amortization 98,841 152,725
--------- ---------
470,311 491,260
Interest expense -- 11,816
Interest income (32,242) (119,672)
--------- ---------
Net loss for the period $ 438,069 $ 383,404
========= =========
Basic loss per share $ 0.03 $ 0.02
========= =========
</TABLE>
<PAGE>
<TABLE>
ALTAIR INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net loss for the period $ (438,069) $ (383,404)
Adjustment to reconcile net loss for the period
to net cash (used):
Amortization 98,841 152,725
----------- -----------
(339,228) (230,679)
Changes in assets and liabilities:
Other current assets 27,447 8,803
Accounts payable and accrued liabilities (66,680) 31,790
----------- -----------
Net cash used in operating activities (378,461) (190,086)
----------- -----------
Cash flows from investing activities
Purchase of mineral properties and related
deferred exploration expenditures (153,247) (126,447)
Purchase of capital assets (137,898) --
Purchase of centrifugal jig patents and related
expenditures (1,849) (27,429)
----------- -----------
Net cash used in investing activities (292,994) (153,876)
----------- -----------
Cash flows from financing activities
Issuance of common shares for cash 1,750,000 113,664
Payment of notes payable (6,000) (206,888)
Increase in convertible debentures -- 16,560
Convertible debenture issuance costs -- (22,702)
Capital stock issuance costs (87,500) --
----------- -----------
Net cash provided by (used in) financing activities 1,656,500 (99,366)
----------- -----------
Net increase (decrease) in cash and short-term investments 985,045 (443,328)
Cash and short-term investments, beginning of period 3,100,577 8,161,770
----------- -----------
Cash and short-term investments, end of period $ 4,085,622 $ 7,718,442
=========== ===========
</TABLE>
<PAGE>
ALTAIR INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Preparation of Financial Statements
These unaudited interim financial statements of Altair International Inc.
and its subsidiaries (collectively, the "Company") have been prepared in
accordance with the rules and regulations of the United States Securities and
Exchange Commission (the "Commission"). Such rules and regulations allow the
omission of certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles, so long as the statements are not misleading. In the opinion of
Company management, these financial statements and accompanying notes contain
all adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position and results of operations for the periods
shown. These interim financial statements should be read in conjunction with the
audited financial statements and notes thereto contained in the Company's Annual
Report filed on Form 10-K for the year ended December 31, 1998 filed with the
Commission on March 18, 1999.
The Company is an Ontario corporation and, in the past, has prepared its
interim and year-end financial statements in accordance with generally accepted
accounting principles in Canada ("Canadian GAAP"). Because the Company's
operations are centered in the United States, the Company determined effective
January 1, 1997 that its functional currency is the U.S. Dollar and determined
effective January 1, 1998 to prepare its interim financial statements in
accordance with accounting principles ------- generally accepted in the United
States ("U.S. GAAP"). Accordingly, the foregoing unaudited interim financial
statements are denominated in U.S. Dollars and presented in accordance with U.S.
GAAP.
The results of operations for the three-month period ended March 31, 1999
are not necessarily indicative of the results to be expected for the full year.
Note 2. Capital Stock
On March 19, 1999, the Company issued 100,000 common shares of the Company
("Common Shares") and 50,000 Series J Warrants at the price of $7.00 per unit of
one Common Share and one-half Series J Warrant (a "Unit"). On March 23, 1999,
the Company issued an additional 150,000 Common Shares and 75,000 Series J
Warrants at the price of $7.00 per Unit. Each Series J Warrant entitles the
holder to acquire one Common Share at the price of $9.00 on or before 5:00 p.m.
(Mountain Standard Time) on the earlier of (i) March 19, 2002, and (ii) the date
thirty days following the fifth day (whether or not consecutive) the closing
price of the Common Shares on the Nasdaq National Market exceeds $14.00 per
share. Gross proceeds from the March 19 and March 23 sales were $1,750,000.
During the three months ended March 31, 1999, options to purchase 15,000
Common Shares were granted to employees at prices equal to the market price on
the Nasdaq Stock Market on the day prior to the date of issuance. During the
same period, no options were exercised. As of March 31, 1999, options to
purchase 1,980,000 Common Shares were outstanding.
<PAGE>
Note 3. Development Stage Company
As of March 31, 1999, the Company would be characterized as a development
stage enterprise under Statement of Financial Accounting Standards No. 7 ("SFAS
7"). The following is a summary of the deficit accumulated during the
development stage prepared in accordance with SFAS 7:
Accumulated deficit
during the
development stage
-------------------
Professional fees $ 1,378,544
Salaries and wages 1,955,276
Shareholders' expenses 1,011,886
Office and general 1,880,546
Loss on sale of mining claims 101,047
Amortization 1,636,393
Interest on long-term debt 95,035
Write off of mineral properties and related
deferred exploration expenditures 1,292,354
Write off of organization costs 8,563
-----------
9,359,645
Less:
Interest income (478,851)
Gain on sale of marketable securities (35,773)
Lease payments (143,754)
Gain on forgiveness of debt (728,531)
Option payments (70,906)
-----------
Total accumulated loss 7,901,830
Convertible debenture costs 537,731
Share issue costs 148,057
Accretion of equity element of convertible debentures 144,801
Premium on conversion of convertible debentures 244,915
Premium on redemption of convertible debentures 193,256
-----------
Accumulated deficit, March 31, 1999 $ 9,170,590
===========
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion summarizes the material changes in the Company's
financial condition between December 31, 1998 and March 31, 1999 and the
material changes in the results of operations and financial condition of the
Company between the three-month periods ended March 31, 1999 and March 31, 1998.
This discussion should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's Annual Report on Form 10-K for th year ended December 31, 1998.
Results of Operations
The Company has earned no operating revenues to date. Basic net losses
totaled $438,069 ($.03 per share) during the first three months of 1999 and
$383,404 ($.02 per share) during the same period of 1998. Principal factors
contributing to the losses during these periods were the absence of revenue
together with the incurrence of operating expenses.
Operating expenses for the three months ended March 31, 1999 decreased by
$20,949 from the comparable period of 1998. Stock exchange fees were a
contributing factor, decreasing by $60,469 from the same period in 1998. In
January 1998, the Company's common shares were initially listed on the Nasdaq
National Market System and certain initial listing fees were incurred. Similar
fees were not incurred during the quarter ended March 31, 1999. In addition to
this, the Company experienced a decrease in amortization of $53,884 caused by a
two-year extension in the life of the centrifugal jig patents. Amortization
expense has been reduced to account for the longer lives of the patents.
These decreases in expense were partially offset by increases in other
expense categories. Wages and administration expense increased by $55,277 over
the same period in 1998 due to the addition of four new employees in the Reno
office which occurred in February, April and July 1998. Shareholder relations
expenses increased by $18,371 over the same period in 1998, as the Company has
increased its efforts to develop and maintain investor contacts. General and
office expenses increased by $13,527 over the comparable period of 1998 due
primarily to the addition of the new employees described above.
Interest income for the three-month period ended March 31, 1999 decreased
by $87,430 from the same period in 1998 due to a decrease in the amount of cash
invested in temporary investments following the redemption of the Company's
convertible debentures in August 1998.
Liquidity and Capital Resources
The Company has financed its operations since inception primarily by the
issuance of equity securities and convertible debt (common shares, convertible
debentures, and options and warrants to purchase common shares) with aggregate
net proceeds of $20,718,617 as of March 31, 1999. The Company received cash
proceeds of $1,662,500 from sales of 250,000 common shares and 125,000 warrants,
described below, during the first three months of 1999.
On March 19, 1999, the Company sold 100,000 common shares of the Company
and 50,000 Series J Warrants at the price of $7.00 per unit of one common share
and one-half Series J Warrant. On March 23, 1999, the Company sold an additional
150,000 common shares and 75,000 Series J Warrants at the price of $7.00 per
unit of one common share and one-half Series J Warrant. Each Series J Warrant
entitles the holder to acquire one common share at the price of $9.00 on or
before 5:00 p.m. (Mountain Standard Time) on the earlier of (i) March 19, 2002,
and (ii) the date thirty days following the fifth day (whether or not
consecutive) the closing price of the common shares on the Nasdaq National
Market exceeds $14.00 per share. Gross proceeds from the March 19 and March 23
sales were $1,750,000. Net proceeds from such sales were $1,622,500, which net
proceeds have been incorporated into the Company's working capital. During the
three-month period ended March 31, 1999, the Company's working capital was
invested primarily in the testing and development of the Jig and mineral
properties suitable for development and processing with the Jig, and in
<PAGE>
construction of additional Jigs. The Company has earned no revenues and has
incurred recurring losses. At December 31, 1998 the Company's accumulated
deficit was $8,645,021. The deficit increased by $525,569 to $9,170,590 during
the first three months of 1999, due to the net loss for the period of $438,069
and capital stock issuance costs of $87,500.
The Company currently maintains working capital which management believes
will be sufficient for the Company's needs through the end of the 1999 fiscal
year at the current level of operations. However, the Company's exploration and
development program may result in business opportunities that require additional
capital resources for development of mineral properties and construction of
Jigs. When and if such capital resources are required, the Company intends to
assess equity and/or debt financing sources. Nevertheless, there can be no
assurance that the Company will be able to continue to raise capital to fund its
long-term capital requirements. At March 31, 1999, the Company had $4,085,622 in
cash and short-term investments available to meet its near-term development and
operating needs.
The Company continues to use its working capital to invest in the testing
and development of the Jig and to invest in mineral properties suitable for
development and processing with the Jig. In addition, the Company is
constructing three Series 30 Jigs to be used for bulk sample testing at the
Company's Tennessee mineral property, or for potential commercial installation.
During the first three months of 1999, the Company invested $43,334 in
development of the Jig, $153,248 in the exploration of its Tennessee and
California mineral properties, and $103,552 in construction of additional Jigs.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Statements in
this report regarding the sufficiency of the Company's working capital,
development of the Jig or any mineral properties, and any future acquisition
activities are forward-looking statements. Words such as "expects", "intends",
"believes", "anticipates" and "likely" als identify forward-looking statements.
Actual results could differ materially from those anticipated for a number of
reasons, including, among others, the failure of the Jig to prove economically
attractive to end users, the development of a substitute for the Jig by a
competitor, the unforeseen need for and/or inability to raise capital to
complete testing and development of the Tennessee mineral property, the Jig, or
other ongoing or new projects. Risk factors, cautionary statements and other
conditions that could cause actual results to differ are contained in the
Company's filings with the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index attached hereto.
(b) No reports on Form 8-K have been filed during the first
quarter of 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Altair International Inc.
May 10, 1999 By: /s/ William P. Long
- ------------------------ -----------------------------------------------
Date William P. Long, President
May 10, 1999 By: /s/ C. Patrick Costin
- ------------------------ -----------------------------------------------
Date C. Patrick Costin, Vice-President
(Principal Financial or Accounting Officer)
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit Incorporated Filed
No. Exhibit by Reference Herewith
- --------- --------------------------------------------------------- -------------- ----------
<S> <C> <C> <C>
3.1 Articles of Incorporation of the Registrant (1)
3.2 Amendment to Articles of Incorporation of the Registrant (2)
dated November 6, 1996
3.3 Bylaws of the Registrant (1)
4.1 Form of Common Stock Certificate (1)
4.2 Form of Warrant (related to Convertible Debentures) (3)
4.3 Form of Series J Warrant (4)
27 Financial Data Schedule (4)
- -----------------------
</TABLE>
(1) Incorporated by reference to Registration Statement on Form 10 SB filed
with the Commission on November 25, 1996.
(2) Incorporated by reference to Amendment No. 1 to Registration Statement on
Form 10 filed with the Commission on December 23, 1996.
(3) Incorporated by reference to the Current Report on Form 8-K filed with the
Commission on January 13, 1998, as amended by Amendment No. 1 to Current
Report on Form 8-K/A filed on January 21, 1998.
(4) Filed herewith
Exhibit 4.3
ALTAIR INTERNATIONAL INC.
COMMON SHARE PURCHASE WARRANT
______ Series J Warrants Warrant Certificate No. J-_
Void after 5:00 p.m., Mountain Standard Time
on March 19, 2002 or on such earlier date specified herein
ALTAIR INTERNATIONAL INC.
(Incorporated under the laws of Ontario)
This Series J Warrant Certificate ( Warrant Certificate ) is to certify that,
for value received, __________________, or registered assigns (the Holder )
shall have the right to purchase from Altair International Inc. (hereinafter
called the Corporation ) one fully paid and non-assessable Common Share of the
Corporation for each Series J Warrant (individually, a Warrant ) represented by
this Warrant Certificate at any time up to 5:00 p.m. (Mountain Standard time) on
the earlier of (i) March 19, 2002, and (ii) the date thirty days following the
fifth day (whether or not consecutive) the closing price of the Common Shares on
the Nasdaq National Market equals or exceeds U.S. $14.00 (the Expiry Time ). The
exercise price for the purchase of each such Common Share shall be U.S. $9.00
per share (the Exercise Price ). The number of Common Shares to be received upon
the exercise of each Warrant and the Exercise Price may be adjusted from time to
time as hereinafter set forth.
The Warrants shall be subject to the following terms and conditions:
1. For the purposes of this Warrant, the term Common Shares means common
shares without nominal or par value in the capital of the Corporation as
constituted on the date hereof; provided that in the event of a change,
subdivision, redivision, reduction, combination or consolidation thereof
or any other adjustment under clause 10 hereof, or successive such
changes, subdivisions, redivisions, reductions, combinations,
consolidations or other adjustments, then subject to the adjustments, if
any, having been made in accordance with the provisions of this Warrant
Certificate, Common Shares shall thereafter mean the shares, other
securities or other property resulting from such change, subdivision,
redivision, reduction, combination or consolidation or other adjustment.
2. This Warrant Certificate shall be signed by an officer of the Corporation
holding office at the time of signing, or any successor or replacement
person and notwithstanding any change in any of the persons holding said
offices between the time of actual signing and the delivery of the Warrant
Certificate and notwithstanding that such officer signing may not have
held office at the date of the delivery of the Warrant Certificate, the
Warrant Certificate so signed shall be valid and binding upon the
Corporation.
3. All rights under any of the Warrants in respect of which the right of
subscription and purchase therein provided for shall not theretofore have
been exercised shall wholly cease and determine and such Warrants shall be
wholly void and of no valid or binding effect after the Expiry Time.
<PAGE>
4. The right to purchase Common Shares pursuant to the Warrants may only be
exercised by the Holder at or before the Expiry Time by:
(a) duly completing and executing a Subscription Form substantially in
the form attached hereto, in the manner therein indicated; and
(b) surrendering this Warrant Certificate and the duly completed and
executed Subscription Form to the Corporation at the address
specified in clause 22 below together with payment of the purchase
price for the Common Shares subscribed for in the form of cash or a
certified cheque payable to the Corporation in an amount equal to
the then applicable Exercise Price multiplied by the number of
Common Shares subscribed for.
5. Upon receipt of the Subscription, this Warrant Certificate, and payment as
aforesaid, the Corporation shall cause to be issued to the Holder the
number of Common Shares to be issued and the Holder shall become a
shareholder of the Corporation in respect of such Common Shares, effective
as of the date of receipt by the Corporation of such Subscription Form,
Warrant Certificate, and payment and shall be entitled to delivery of a
certificate or certificates evidencing such shares. The Corporation shall
cause such certificate or certificates to be mailed to the Holder at the
address or addresses specified in such Subscription Form within five (5)
business days of such receipt and payment as herein provided or, if so
instructed by the Holder, held for pick-up by the Holder at the principal
office of the registrar and transfer agent of the Common Shares, Equity
Transfer Services Inc. (the Transfer Agent ).
6. No fractional shares or stock representing fractional shares shall be
issued upon the exercise of any Warrant. In lieu of any fractional shares
which would otherwise be issuable, the Corporation shall either pay cash
equal to the product of such fraction multiplied by the fair market value
of one share of Common Stock on the date of exercise, as determined in
good faith by the Corporation's Board of Directors, or issue the next
largest whole number of Common Shares at the Corporation s option.
7. The Warrants may not be exercised unless at the time of exercise (i) a
registration statement registering the Common Shares issuable upon such
exercise is effective under the Securities Act of 1933, as amended (the
"1933 Act"), or the transaction in which such shares are to be issued is
exempted from the application of the registration requirements of the 1933
Act, and (ii) the Warrant Shares have been registered or qualified under
any applicable Canadian, provincial, state securities laws or an exemption
from registration or qualification is available under such laws. The
Corporation has filed a Registration Statement on Form S-3 registering the
Common Shares issuable upon the exercise of the Warrants, which
Registration Statement is effective as of the date hereof.
8. The holding of a Warrant shall not constitute the Holder a shareholder of
the Corporation nor entitle him to any right or interest in respect
thereof except as herein expressly provided.
9. The Corporation covenants and agrees that until the Expiry Time, while any
of the Warrants shall be outstanding, it shall reserve and there shall
remain unissued out of its authorized capital a sufficient number of
Common Shares to satisfy the right of purchase herein provided, as such
right of purchase may be adjusted pursuant to clauses 10 and 11 hereof.
All Common Shares which shall be issued upon the exercise of the right to
-3-
<PAGE>
purchase herein provided for, upon payment therefor of the amount at which
such Common Shares may at the time be purchased pursuant to the provisions
hereof, shall be issued as fully paid and non-assessable shares and the
holders thereof shall not be liable to the Corporation or its creditors in
respect thereof.
10. (a) If and whenever at any time after the date hereof and prior to the
Expiry Time the Corporation shall (i) subdivide, redivide or change
its then outstanding Common Shares into a greater number of Common
Shares, (ii) reduce, combine or consolidate its then outstanding
Common Shares into a lesser number of Common Shares or (iii) issue
Common Shares (or securities exchangeable for or convertible into
Common Shares) to the holders of all or substantially all of its
then outstanding Common Shares by way of a stock dividend or other
distribution (any of such events herein called a Common Share
Reorganization ), then the Exercise Price shall be adjusted
effective immediately after the effective date of any such event in
(i) or (ii) above or the record date at which the holders of Common
Shares are determined for the purpose of any such dividend or
distribution in (iii) above, as the case may be, by multiplying the
Exercise Price in effect on such effectiv date or record date, as
the case may be, by a fraction, the numerator of which shall be the
number of Common Shares outstanding on such effective date or record
date, as the case may be, before giving effect to such Common Share
Reorganization and the denominator of which shall be the number of
Common Shares outstanding immediately after giving effect to such
Common Share Reorganization including, in the case where securities
exchangeable for or convertible into Common Shares are distributed,
the number of Common Shares that would be outstanding if such
securities were exchanged for or converted into Common Shares.
(b) If and whenever at any time after the date hereof and prior to the
Expiry Time, the Corporation shall distribute any class of shares or
rights, options or warrants or other securities (other than those
referred to in clause 10(a) above), evidences of indebtedness or
property (excluding cash dividends paid in the ordinary course) to
holders of all or substantially all of its then outstanding Common
Shares, the number of Common Shares to be issued by the Corporation
under this Warrant shall, at the time of exercise of the right of
subscription and purchase under this Warrant Certificate, be
appropriately adjusted and the Holder shall receive, in lieu of the
number of the Common Shares in respect of which the right to
purchase is then being exercised, the aggregate number of Common
Shares or other securities or property that the Holder would have
been entitled to receive as a result of such event, if, on the
record date thereof, the Holder had been the registered holder of
the number of Common Shares to which the Holder was theretofore
entitled upon the exercise of the rights of the Holder hereunder.
(c) If and whenever at any time after the date hereof and prior to the
Expiry Time there is a capital reorganization of the Corporation or
a reclassification or other change in the Common Shares (other than
a Common Share Reorganization) or a consolidation or merger or
amalgamation of the Corporation with or into any other corporation
or other entity (other than a consolidation, merger or amalgamation
which does not result in any reclassification of the outstanding
Common Shares or change of the Common Shares into other securities),
or a transfer of all or substantially all of the Corporation s
assets to another corporation or other entity in which the holders
of Common Shares are entitled to receive shares, other securities or
other property (any of such events being called a Capital
Reorganization ), the Holder, where he has not exercised the right
-4-
<PAGE>
of subscription and purchase under this Warrant Certificate prior to
the effective date of such Capital Reorganization, shall be entitled
to receive and shall accept, upon the exercise of such right, on
such date or any time thereafter, for the same aggregate
consideration in lieu of the number of Common shares to which he was
theretofore entitled to subscribe for and purchase, the aggregate
number of shares or other securities or property which the Holder
would have been entitled to receive as a result of such Capital
Reorganization if, on the effective date thereof, he had been the
registered holder of the number of Common Shares to which he was
theretofore entitled to subscribe for and purchase.
(d) If and whenever at any time after the date hereof and prior to the
Expiry Time, any of the events set out in clause 10(a), (b) or (c)
shall occur and the occurrence of such event results in an
adjustment of the Exercise Price pursuant to the provisions of this
clause 10, then the number of Common Shares purchaseable pursuant to
this Warrant shall be adjusted contemporaneously with the adjustment
of the Exercise Price by multiplying the number of Common Shares
then otherwise purchaseable on the exercise thereof by a fraction,
the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment and the denominator of which
shall be the Exercise Price resulting from such adjustment.
(e) If the Corporation takes any action affecting its Common Shares to
which the foregoing provisions of this clause 10, in the opinion of
the board of directors of the Corporation, acting in good faith, are
not strictly applicable, or if strictly applicable would not fairly
adjust the rights of the Holder against dilution in accordance with
the intent and purposes hereof, or would otherwise materially affect
the rights of the Holder hereunder, then the Corporation may execute
and deliver to the Holder an amendment hereto providing for an
adjustment in the application of such provisions so as to adjust
such rights as aforesaid in such manner as the board of directors of
the Corporation may determine to be equitable in the circumstances,
acting in good faith. The failure of the taking of action by the
board of directors of the Corporation to so provide for any
adjustment on or prior to the effective date of any action or
occurrence giving rise to such state of facts will be conclusive
evidence that the board of directors has determined that it is
equitable to make no adjustment in the circumstances.
11. The following rules and procedures shall be applicable to the adjustments
made pursuant to clause 10:
(a) any Common Shares owned or held by or for the account of the
Corporation shall be deemed not be to outstanding except that, for
the purposes of clause 10, any Common Shares owned by a pension plan
or profit sharing plan for employees of the Corporation or any of
its subsidiaries shall not be considered to be owned or held by or
for the account of the Corporation;
(b) no adjustment in the Exercise Price shall be required unless a
change of at least 1% of the prevailing Exercise Price would result,
provided, however, that any adjustment which, except for the
provisions of this clause 11(b), would otherwise have been required
to be made, shall be carried forward and taken into account in any
subsequent adjustment;
-5-
<PAGE>
(c) the adjustments provided for in clause 10 are cumulative and shall
apply to successive subdivisions, consolidations, dividends,
distributions and other events resulting in any adjustment under the
provisions of such clause;
(d) in the absence of a resolution of the board of directors of the
Corporation fixing a record date for any dividend or distribution
referred to in clause 10(a)(iii) above, the Corporation shall be
deemed to have fixed as the record date therefor the date on which
such dividend or distribution is effected;
(e) if the Corporation sets a record date to take any action and
thereafter and before the taking of such action abandons its plan to
take such action, then no adjustment to the Exercise Price will be
required by reason of the setting of such record date;
(f) forthwith after any adjustment to the Exercise Price or the number
of Common Shares purchaseable pursuant to the Warrants, the
Corporation shall provide to the Holder a certificate of an officer
of the Corporation certifying as to the amount of such adjustment
and, in reasonable detail, describing the event requiring and the
manner of computing or determining such adjustment; and
(g) any question that at any time or from time to time arises with
respect to the amount of any adjustment to the Exercise Price or
other adjustment pursuant to clause 10 shall be conclusively
determined by a firm of independent chartered accountants (who may
be the Corporation s auditors) selected by the board of directors of
the Corporation and shall be binding upon the Corporation and the
Holder.
12. At least 21 days prior to the latter of the effective date or record date,
as applicable, of any event referred to in clause 10, the Corporation
shall notify the Holder of the particulars of such event and the estimated
amount of any adjustment required as a result thereof.
13. On the happening of each and every such event set out in clause 10, the
applicable provisions of this Warrant, including the Exercise Price,
shall, ipso facto, be deemed to be amended accordingly and the Corporation
shall take all necessary action so as to comply with such provisions as so
amended.
14. The Corporation shall not be required to deliver certificates for Common
Shares while the share transfer books of the Corporation are properly
closed, having regard to the provisions of clauses 10 and 11 hereof, prior
to any meeting of shareholders or for the payment of dividends or for any
other purpose and in the event of the surrender of any Warrant in
accordance with the provisions hereof and the making of any subscription
and payment for the Common Shares called for thereby during any such
period delivery of certificates for Common Shares may be postponed for not
more than five (5) days after the date of the re-opening of said share
transfer books. Provided, however, that any such postponement of delivery
of certificates shall be without prejudice to the right of the Holder so
surrendering the same and making payment during such period to receive
after the share transfer books shall have been re-opened such certificates
for the Common Shares called for, as the same may be adjusted pursuant to
clauses 10 and 11 hereof as a result of the completion of the event in
respect of which the transfer books were closed.
-6-
<PAGE>
15. Subject as hereinafter provided, all or any of the rights conferred upon
the Holder by the terms hereof may be enforced by the Holder by
appropriate legal proceedings. No recourse under or upon any obligation,
covenant or agreement contained herein shall be had against any
shareholder or officer of the Corporation either directly or through the
Corporation, it being expressly agreed and declared that the obligations
under the Warrants are solely corporate obligations and that no persona
liability whatever shall attach to or be incurred by the shareholders or
officers of the Corporation or any of them in respect thereof, any and all
rights and claims against every such shareholder, officer or director
being hereby expressly waived as a condition of and as a consideration for
the issue of the Warrants.
16. The Warrants may not be assigned or transferred except as provided herein
and in accordance with and subject to the provisions of the 1933 Act and
the Rules and Regulations promulgated thereunder and any applicable state,
Canadian, and provincial securities laws. Any purported transfer or
assignment made other than in accordance with this Section 16 shall be
null and void and of no force and effect. Any assignment permitted
hereunder shall be made by surrender of this Warrant Certificate to the
Corporation at its principal office with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any transfer tax. In such
event, the Corporation shall, without charge, execute and deliver a new
Warrant Certificate in the name of the assignee named in such Assignment
Form, and the Warrants represented by this Warrant Certificate shall
promptly be cancelled. This Warrant Certificate may be divided or combined
with other Warrants which carry the same rights upon presentation thereof
at the principal office of the Corporation together with a written notice
signed by the Holder thereof, specifying the names and denominations in
which new Warrants are to be issued. The terms "Warrant" and "Warrants" as
used herein include any Warrants in substitution for or replacement of
this Warrant, or into which the Warrant represented by this Warrant
Certificate may be divided or exchanged.
17. The Holder may subscribe for and purchase any lesser number of Common
Shares than the number of shares expressed in this Warrant Certificate. In
the case of any subscription for a lesser number of Common Shares than
expressed in this or any successor Warrant Certificate or a transfer of
any of the Warrants pursuant to clause 16, the Holder shall be entitled to
receive at no cost to the Holder a new Warrant Certificate in respect of
the balance of Warrants not then exercised or transferred. Any new Warrant
Certificate(s) shall be mailed to the Holder or assignee by the
Corporation or, at its direction, the Transfer Agent, within five (5)
business days of receipt by the Corporation of all materials required by
clauses 5 or 16, as applicable.
18. Each Holder of this Warrant, the Warrant Shares or any other security
issued or issuable upon exercise of this Warrant shall indemnify and hold
harmless the Corporation, its directors and officers, and each person, if
any, who controls the Corporation, against any losses, claims, damages or
liabilities, joint or several, to which the Corporation or any such
director, officer or any such person may become subject under the 1933 Act
or statute or common law, insofar as such losses, claims, damages or
liabilities, or actions in respect thereof, arise out of or are based upon
the disposition by such Holder of the Warrant the Common Shares issuable
upon the exercise of this Warrant in violation of the terms of this
Warrant Certificate.
19. If any Warrant Certificate becomes stolen, lost, mutilated or destroyed,
the Corporation shall, on such terms as it may in its discretion acting
-7-
<PAGE>
reasonably impose, issue and sign a new Warrant Certificate of like
denomination, tenor and date as the Warrant Certificate so stolen, lost,
mutilated or destroyed for delivery to the Holder.
20. The Corporation and the Transfer Agent may deem and treat the registered
holder of any Warrant Certificate as the absolute owner of the Warrants
represented thereby for all purposes, and the Corporation and neither the
Corporation nor the Transfer Agent shall be affected by any notice or
knowledge to the contrary except where the Corporation or the Transfer
Agent is required to take notice by statute or by order of a court of
competent jurisdiction. A Holder shall be entitled to the rights evidenced
by such Warrant Certificate free from all equities or rights of set-off or
counterclaim between the Corporation and the original or any intermediate
holder thereof and all persons may act accordingly and the receipt by any
such Holder of the Common Shares purchaseable pursuant to such Warrant
shall be a good discharge to the Corporation and the Transfer Agent for
the same and neither the Corporation nor the Transfer Agent shall be bound
to inquire into the title of any such Holde except where the Corporation
or the Transfer Agent is required to take notice by statute or by order of
a court of competent jurisdiction.
21. The Holders of Warrants shall have the power from time to time by an
extraordinary resolution (as hereinafter defined):
(a) to sanction any modification, abrogation, alteration or compromise
of the rights of the Holders of Warrants against the Corporation
which shall be agreed to by the Corporation; and/or
(b) to assent to any modification of or change in or omission from the
provisions contained herein or in any instrument ancillary or
supplemental hereto which shall be agreed to by the Corporation;
and/or
(c) to restrain any Holder of a Warrant from taking or instituting any
suit or proceedings against the Corporation for the enforcement of
any of the covenants on the part of the Corporation conferred upon
the Holders by the terms of the Warrants.
Any such extraordinary resolution as aforesaid shall be binding upon all
the Holders of Warrants whether or not assenting in writing to any such
extraordinary resolution, and each Holder of any of the Warrants shall be
bound to give effect thereto accordingly. Such extraordinary resolution
shall, where applicable, be binding on the Corporation which shall give
effect thereto accordingly.
The Corporation shall forthwith upon receipt of an extraordinary
resolution provide notice to all Holders of the date and text of such
resolution. The Holders of Warrants assenting to an extraordinary
resolution agree to provide the Corporation forthwith with a copy of any
extraordinary resolution passed.
The expression extraordinary resolution when used herein shall mean a
resolution assented to in writing, in one or more counterparts, by the
Holders of Warrants calling in the aggregate for not less than ninety per
cent (90%) of the aggregate number of shares called for by all of the
Warrants which are, at the applicable time, outstanding.
22. All notices to be sent hereunder shall be deemed to be validly given to
the Holders of the Warrants if delivered personally or if sent by
-8-
<PAGE>
registered letter through the post addressed to such holders at their post
office addresses appearing in the register of Warrant holders caused to be
maintained by the Corporation. All notices to be sent hereunder shall be
deemed to be validly given to the Corporation if delivered personally or
if sent by registered letter through the post addressed t the Corporation
at 1725 Sheridan Avenue, Suite 140, Cody, Wyoming 82414 or such other
address as the Corporation shall have designated by written notice to such
registered owner. Notice shall be deemed to have been given, if delivered
personally when so delivered, and if sent by post on the fifth business
day next following the post thereof.
23. This Warrant shall be governed by the laws of the State of Wyoming and the
federal laws of the United States applicable therein (within reference to
the conflict of laws provisions therof).
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to
be signed by its duly authorized officer.
DATED as of the day of March, 1999.
-------------
ALTAIR INTERNATIONAL INC.
By:
----------------------------------
William P. Long, President
Acknowledged and agreed to as of the day of March, 1999.
------------
)
- -------------------------------- ) ----------------------------------
Witness ) Witness
)
-9-
<PAGE>
SUBSCRIPTION FORM
TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED:
The undersigned hereby subscribes for ________________ common shares of Altair
International Inc. according to the terms and conditions set forth in the
annexed warrant certificate (or such number of other securities or property to
which such warrant entitles the undersigned to acquire under the terms and
conditions set forth in the annexed warrant certificate). The subscriber
acknowledges and agrees that any legend required by applicable law may be placed
on any certificates representing common shares delivered to the undersigned.
Address for Delivery of Shares:
------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
Attention:
----------------------------
Tendered (U.S. $9.00 per share) Exercise Price $
--------------------------
Dated at this day of
----------------, ------- -------------,-------.
Witness: ) ------------------------------
) Holder's Name
)
)
) ------------------------------
) Authorized Signature
)
)
) ------------------------------
) Title (if applicable)
Signature guaranteed:
-10
<PAGE>
ASSIGNMENT FORM
TO BE COMPLETED IF WARRANTS ARE TO BE ASSIGNED:
TO: ALTAIR INTERNATIONAL INC.
1725 Sheridan Avenue
Suite 140
Cody, Wyoming 82414
This Warrant Certificate is hereby transferred to
residing ----------------------
at for good and valuable consideration.
------------------------------------------
You are hereby instructed to take the necessary steps to effect this transfer.
Dated at this day of
-------------------, ------ -------------, -----.
Witness: ) ----------------------------------
) Holder s Name
)
)
) ----------------------------------
) Authorized Signature
)
)
) ----------------------------------
) Title (if applicable)
)
)
Signature guaranteed: )
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 4085622
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4188817
<PP&E> 797372
<DEPRECIATION> (217471)
<TOTAL-ASSETS> 9863803
<CURRENT-LIABILITIES> 166832
<BONDS> 0
0
0
<COMMON> 18212463
<OTHER-SE> (8515492)
<TOTAL-LIABILITY-AND-EQUITY> 9863803
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 470311
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (438069)
<INCOME-TAX> 0
<INCOME-CONTINUING> (438069)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (438069)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0 <F1>
<FN>
<F1>
Fully diluted EPS not computed on loss.
</FN>
</TABLE>
