SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
TRI-NATIONAL DEVELOPMENT CORP.
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(Name of Small Business Issuer in its charter)
Wyoming 22-362638
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(State of other Jurisdiction I.R.S. Employer
of incorporation or organization) Identification No.
480 Camino Del Rio S., Suite 140
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San Diego, California 92108
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(Address of principal executive officers) (Zip Code)
Issuer's telephone number, 619-718-6370
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Securities to be registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on
to be so registered which each class is to be
registered
None Over the Counter BB
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
Common Stock, no par value
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TABLE OF CONTENTS
INTRODUCTION PAGE
Item 1 Description of Business . . . . . . . . . . . . . . . . 3
Item 2 Management's Discussion and Analysis or
Plan of Operation. . . . . . . . . . . . . . . . . . . . 7
Item 3 Description of Property . . . . . . . . . . . . . . . . 7
Item 4 Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . . 8
Item 5 Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . . . . . . . 10
Item 6 Executive Compensation . . . . . . . . . . . . . . . . . 10
Item 7 Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . . . . . . 12
Item 8 Legal Proceedings. . . . . . . . . . . . . . . . . . . . 13
Item 9 Market for Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . . 13
Item 10 Recent Sales of Unregistered Securities. . . . . . . . . 14
Item 11 Description of Securities. . . . . . . . . . . . . . . . 14
Item 12 Indemnification of Directors and Officers. . . . . . . . 15
Item 13 Financial Statements . . . . . . . . . . . . . . . . . . 16
Item 14 Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . . . . . 17
Item 15 Financial Statements and Exhibits. . . . . . . . . . . . 17
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Exhibits:
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Item 1. Description of Business
Tri-National Development Corp. ("TND" or the "Company") was incorporated on
July 31, 1979 as Rocket Energy Resources Ltd. under the laws of the
Province of British Columbia, Canada by registration of its Memorandum and
Articles. The Company changed its name to MRI Medical Technologies, Inc.
in April of 1989. On December 7, 1992, the Company changed its name to
Tri-National Development Corp. on the basis of five (5) common shares of
MRI Medical Technologies, Inc. for (1) common share of Tri-National
Development Corp. The shareholders of the Company approved a resolution to
change the corporate domicile from British Columbia, Canada to the State of
Wyoming at the Annual General Meeting held on January 20, 1997.
Tri-National Development Corp. ("TND") is a publicly traded corporation
which develops and manages real estate projects in the U.S., Canada and
Mexico. TND's present projects are:
TND/MEDICAL INTERNATIONAL, INC. - a wholly owned U.S. subsidiary, was
formed to acquire, develop and/or manage medically related businesses. The
initial geographic region for this company to focus on will be California
and Baja California, Mexico. TND/Medical International, Inc. has acquired
an existing entity in California, the Greater San Diego Imaging Center,
described below.
THE GREATER SAN DIEGO IMAGING CENTER - has provided magnetic resonance
imaging (MRI) services in the San Diego area since 1990. The Company has
acquired the assets of the Greater San Diego Imaging Center, including the
Fonar magnetic resonance imaging (MRI) equipment, the space lease,
goodwill, including the name and other assets. This facility, with build
outs, was originally financed for $2.5 million. The equipment has a
current appraisal of $1.2 million and tenant improvements of $241,000. An
"open unit" upgrade was recently completed for claustrophobic and large
patients, which gives the Company the only open unit MRI facility in San
Diego, California.
The closing on this facility occurred in November of 1996 for a combination
of cash and stock for $600,000. The Company provided the 857,142 shares in
the capital of the Company for stock portion of the acquisition and First
Colonial Ventures, Ltd., a Nevada publicly traded company, is to provide
the cash portion. First Colonial Ventures, Ltd. is to receive one third of
TND/Medical International, Inc. for its contribution.
TRI-NATIONAL MEDICAL MANAGEMENT, INC. - Tri-National Development Corp. has
acquired a 39% interest in this Vancouver, B.C. company. Tri-National
Medical Management, Inc. was incorporated to establish and manage
diagnostic imaging centers and other medical facilities in various areas of
Canada. This company is still in its development stage and expects its
first operations in 1997.
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MRI MEDICAL DIAGNOSTICS, INC. - is an Over the Counter Bulletin Board
listed company under the symbol, MRMD. This company emerged from
bankruptcy in January of 1996 and as part of its Reorganization Plan, TND
received 7.3 million common shares (which represents almost 25% of the
total outstanding) in exchange for a $2.9 million claim against the estate
and reimbursement of ongoing expenses. The Board of Directors of MRI
Medical Diagnostics, Inc. are currently reviewing various acquisition
targets in medical industry. The stock has been trading under $.10 per
share for the past several months.
As a result of the Reorganization Plan, the Company also acquired all of
the common stock of MRI Grand Terrace, Inc. MRI Grand Terrace, Inc. was
originally a joint venture between MRI Medical Diagnostics, Inc. and the
Company and previously owned the Grand Terrace Retirement Hotel. This
hotel is an 87 bed retirement facility located in San Bernardino,
California. The sole asset of this corporation is a lawsuit against Chino
Valley Bank, the seller of the retirement hotel. The litigation involves
a claim by MRI Grand Terrace, Inc. and the joint venture partners that the
seller bank did not disclose the existence of an encroachment which
hindered the build out of the property. Thus, MRI Grand Terrace, Inc., the
hotel, went into foreclosure and MRI Medical Diagnostics, Inc. and the
Company instituted the litigation seeking several million dollars in
damages. Chino Valley Bank has answered the suit and there can be no
assurance that the Company will benefit in any fashion from the outcome of
the litigation.
HILLS OF BAJAMAR - TND currently owns 51% of Pacific Medical International,
Inc., a Nevada corporation, and has just executed a contract to acquire the
remaining 49% for a combination of cash and stock. Pacific Medical
International, Inc. was formed for the sole purpose of owning and
developing the Hills of Bajamar, formerly known as, the Santa Fe Ranch.
The Hills of Bajamar is an approximate 1,000 hectare (roughly 2,500 acre)
parcel of real property located in the Municipality of Ensenada, on the
Pacific Ocean side of Baja, Mexico, 50 miles south of San Diego,
California.
Pacific Medical International, Inc. has succeeded to a land purchase
contract which provides for an overall purchase price of $5,000,000 for the
2,500 acres ($2,000 per acre). The terms are $600,000 per year for 8
years. There is no interest until the sixth year, when interest on the
remaining balance begins at 6% per annum. Pacific Medical International,
Inc. has title to 237 acres and is currently taking title to 247 additional
acres.
The property is located in the region that has become known as "the Gold
Coast" because of the current and planned developments. Bajamar (see
below), a 1,600 acre master-planned oceanfront resort, is located directly
across the highway from the property. Bajamar is currently owned by
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Grupo Situr, the largest resort developer in Mexico and the owner of the
Kona Kai Hotel in San Diego. Bajamar consists of 1,600 acres, which
include 27 holes of championship golf, with land set aside for an
additional 9 holes, hotel, condominiums and luxury family homes. Grupo
Situr was in the process of an announced $100,000,000 in improvements.
The region caters primarily to Southern California travelers already
visiting Baja California, and provides an alternative attraction for the
snowbirds visiting Palm Springs, Phoenix and Las Vegas. Where these desert
communities are only viable six months of the year due to extreme heat in
the summer, Baja California offers a year round temperate climate averaging
75 degrees Fahrenheit. Additionally, Baja California offers the amenities
available from its oceanfront location including fishing, sailing,
swimming, surfing and other water sports, a competitive advantage that
desert communities cannot provide. Each month more than 2 million visitors
cross the border into Baja California for recreation and shopping,
including 500,000 people that cross for work and business. To further
enhance this region, there are two international airports located within a
60 minute drive of the property.
As indicated, the Hills of Bajamar was purchased for $2,000 per acre ($.50
per sq. meter). The purchase terms were negotiated in 1991 prior to four
events. The four events were: (1) the passage of NAFTA; (2) the
liberalization of foreign ownership of land in Mexico; (3) the California
Department of Real Estate issuing a decree that the advertisement in
California for sale of foreign homes and land is no longer subject to their
jurisdiction; and (4) the mega-developments in the area. A bank appraisal
in 1996 showed the property valued in excess of $60,000 per acre or
$30,000,000 for the 500 acres Pacific Medical International, Inc. is
currently taking title.
Other new developments in the region include: (1) a $200 million plan to
privatize and expand the port of Ensenada, which is planned to include a 70
mile railroad link to the United States, Baja California's first container-
handling facility, and a new passenger cruise ship terminal, which is
already under construction; (2) a $400 million power plant that will
generate 440 megawatts, enough to power one million homes, to be built in
the Rosarito and Ensenada area; (3) the possible legislation of casino
gaming will be a tremendous windfall for the Mexican economy and the Baja
California coast; (4) construction is under way on Puerto Salina, a
reported $150 million, 600-boat marina that is located just one mile north
of the Hills of Bajamar or 46 nautical miles south of San Diego; (5) Beacon
Studios, a Canadian movie production company, in conjunction with Fox
Studios, has built a movie studio located on a 150-acre site just north of
the Hills of Bajamar with a project cost in excess of $55 million for the
filming of the movie, the Titanic.
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TND entered into escrow in June of 1996 to purchase the Bajamar Golf
Courses, 81 room hotel, clubhouse with restaurant, tennis courts, driving
range and approximately 100 acres of assorted residential properties on the
golf courses amounting to $39,500,000. The escrow, which had an original
expected closing by October 5, 1996, has been mutually extended to April 1,
1997.
The properties in escrow are in addition to a timeshare and commercial
property at Bajamar, which the Company is negotiating to acquire for a
combination of cash and stock. The timeshare and commerical property is on
a bluff overlooking both golf courses and the Pacific Ocean with a purchase
value of $9,500,000, and is approved for 326 timeshare units and 20,000
square feet of retail facilities.
LAS VEGAS HOTEL, CASINO AND TIME SHARE COMPLEX - On August 31, 1996, the
Company entered into an agreement with a Nevada holding corporation, SW
Holding Corporation, to acquire a hotel, casino and time share complex on
five acres in Las Vegas, Nevada. The hotel has a guaranteed net income of
at least $1.2 million annually against 25% of sales from the operator. The
acquisition price was $19,000,000 to be paid in cash and stock. Mortgages
and equity valued at $8,000,000 held by the seller will be exchanged for
2,000,000 shares of the Company's preferred convertible stock. This
transaction is subject to a completion of a placement of the Company's
preferred convertible stock, with an expected closing no later than April
1, 1997. Financing is also being sought to build an additional new high
rise hotel and casino tower, with 500 time share suites and a new 35,000
square foot casino. The advantage to such an addition to the Company's
base, will be to secure a Nevada gaming license to compliment our resort
properties in Baja, California in the event that casino licenses are issued
in Mexico.
Item 2. Plan of Operation
The Company plans to develop a medical campus, utilizing the attractiveness
of the lower cost for support available in Mexico, combined with the
historic quality of medicine in the United States, located just miles south
of the San Diego-Baja, California border. The target group for the
Company's services would be tourists and ex-patriots who presently must
rely on the Mexican health care system, which is designed primarily for
Mexican Nationals. The Company's medical campus would serve the 75,000
Americans in the region and the 2 million people crossing the border each
month access to U.S. quality healthcare.
Tri-National Development Corp. plans to develop a 200+ acre medical campus
on the 500 acre parcel at the Hills of Bajamar. Tri-National Development
Corp. is to create the concept and develop the medical campus. The medical
campus is planned to
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consist of the following four components: (1) a continuing medical
educational facility; (2) a pharmaceutical research and development center,
allowing pharmaceutical companies to do clinical studies with treatment not
yet available in the U.S. due to delays and hold backs from the Food and
Drug Administration (FDA); (3) an 80 to 100 bed hospital; and (4) a 500,000
square foot year-round medical exhibition center and merchandise mart for
major manufacturers of medical equipment.
Discussions have also been held regarding the development of a Children's
Hospital accompanied by a Burn Unit, Urgent Care and Chemical Dependency
Treatment. The entire region will benefit from this new, state-of-the-art
hospital and medical facility.
Item 3. Properties
The Company leases 600 square feet of office space in Ensenada, Mexico for
$475 and 900 square feet of office space in San Diego, California for
$1,600.
Item 4. Security Ownership of Certain Beneficial Owners and Management
NUMBER OF PERCENTAGE
SHARES OF SHARES
NAME OWNED OWNED
- ---- ----- -----
Paul Goss 50,000 .5%
410 17th St., #1940
Denver, Co 80202
V.P. Legal Counsel
Jay Pasternak 81,287 .9%
4383 Bathhurst St.
North York, Ont. M3H 3P8
Director
Dr. Robert Rosen 40,000 .4%
Mid South Eye Center
1731 Memorial Dr., #208
Clarksville, Tenn 37043
Director
Jason Sunstein 20,000 .2%
1666 Garnet #212
San Diego, Ca 92109
Assist. Secretary,
V.P. Investor Relations
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Michael A. Sunstein 1,354,222 10.78%
2640 Del Mar Heights, #355
Del Mar, Ca 92014
Director, CEO
Shares are held by beneficial holders named above (2) based upon the
October 31, 1996 unaudited financial statement, the issued and outstanding
common shares were 12,111,117 (3) there are no options issued to the
Officers and Directors of the Company at the date of this filing.
Item 5. Directors and Executive Officers
POSITIONS HELD
NAME AGE WITH THE CORPORATION
- ---- --- --------------------
Michael A. Sunstein 54 Director, CEO & President
Shane Kennedy 33 Director
Arthur Lilly 65 Director
Jay Pasternak 40 Director
Dr. Robert Rosen 50 Director
Ted Takacs 50 Director
Jason Sunstein 25 Assist. Secretary,
V.P. Investor Relations
Paul Goss 54 V.P. Legal Counsel
Dr. Jerry Parker 60 V.P. Medical Development
Michael A. Sunstein. Mr. Sunstein has been the Chief Executive Officer and
a Director of the Company since 1989. Prior to joining the Company Mr.
Sunstein spent 15 years in the housing industry, primarily with Kaufman and
Broad Homes, Inc., a New York Stock Exchange listed company, where he
served as President of the Midwestern Division. In that capacity he was
responsible for the financial, building and delivery of approximately
$30,000,000 in housing sales annually. He resigned from Kaufman and Broad
and started his own firm in the building and materials and single-family
home industry in Michigan. Mr. Sunstein built and sold more than 200 homes
prior to founding Tri-National Development Corp. in 1989.
Paul Goss. Mr. Goss has been a Vice Resident and General Counsel to the
Company since September of 1996. Mr. Goss has been the Executive Vice
President and General Counsel for One Capital Corporation, a private
merchant bank with offices in New York and Denver since 1990. Prior to
joining One Capital Corporation, Mr. Goss was engaged in the private
practice of
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law in Denver, Colorado. He is a member of the Denver and Colorado Bar
Associations, the Denver Petroleum Club and Denver Athletic Club.
Shane Kennedy. Mr. Kennedy has been a Director of the Company since 1994.
Mr. Kennedy has been an insurance adjuster for the Insurance Corporation of
British Columbia since 1990 and is also President of Northern Trader
Incorporated, which is an import and export company. He is Canadian
citizen. Mr. Kennedy received his B.A. degree in Political Science from
the University of British Columbia.
Jay Pasternak. Mr. Pasternak has been a Director of the Company since
1994. He is a Canadian citizen who has spent the last ten years in the
private practice of mental health counseling at the Denwood Institute in
Toronto, Canada, Ontario Hydro, Futures Ontario and the Hubar Memorial
Hospital, all Canadian government facilities. Mr. Pasternak is a C.L.S.
graduate from McMaster University in Hamilton, Ontario (1994) and a Human
Services Counselor graduate from George Brown University 1996.
Dr. Robert Rosen. Dr. Rosen has been a Director of the Company since 1989.
Dr. Rosen is an opthamologist and is presently Executive Director of MAC-IPA,
a 47 physician multi-specialty IPA in Montgomery County, Tennessee,
where he is responsible for policy, long range strategic planning,
physician recruitment, contracting and utilization review. From 1993 to
1995 he was Medical Director of the MidSouth Eye Center in Clarksville,
Tennessee, a private practice, and Medical Director of EYE PA, a nationwide
integrated delivery system for eyecare, a subsidiary of EYECORP/PRG. From
1992 to 1993 he was Associate Medical Director of East County Physician
Medical Group (IPA) in San Diego, California and from 1977 to 1993 he was
President and Medical Director of Eye Care Professionals in San Diego, a
single specialty medical corporation. He was also Medical Director of the
Pearle Eye Foundation from 1987 to 1993, a non-profit corporation and he
also served as Medical Director for Pearle Visioncare, a California
Knox-Keane HMO from 1986 until 1993. Dr. Rosen was Assistant Clinical
Professor of Opthamology at the University of California, San Diego from
1977 until 1993.
Ted Takacs. Mr. Takacs has been a Director of the Company since 1994. Mr.
Takacs is a Canadian citizen who for the last ten years has been engaged in
labor relations consulting and negotiation. He is presently a Constituency
Assistant to the Honorable Bill Barlee in Osoyoos, British Columbia where
he also owns and operates an orchard.
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Jason Sunstein. Mr. Sunstein has been Vice President of Investor Relations
for the Company since 1989 and for MRI Medical Diagnostics, Inc. since
1992. He attended San Diego State University where he majored in Finance
and is a licensed securities broker. He is the son of Michael Sunstein.
Dr. Jerry Parker. Dr. Parker is currently Medical Director and Director of
Radiology for several MRI centers and breast imaging centers in Northern
California since 1973. He was previously Chief of Radiology and Nuclear
Medicine at Ross General Hospital, Clinical Professor of Radiology at the
University of California, Irvine, and Instructor of Radiology at the
University of Southern California Medical Center from 1970 to 1988. Dr.
Parker received his M.D. from the University of Manitoba, Canada in 1962.
ITEM 6. EXECUTIVE COMPENSATION
Currently, all officers and directors of Tri-National Development Corp.
serve with minimum compensation and have so served since they have joined
the Company. The total compensation of all officers and directors during
the last fiscal year was $48,000.
Item 7. Certain Relationships and Related Transactions
None.
Item 8. Legal Proceedings
The Company is not engaged in any pending or threatened legal proceedings.
Item 9. Market Price and Dividends of the Registrant's Common Equity and
Related Stockholder Matters
There is presently a public trading market for the Company's common equity.
In January of 1996, the Company activated its symbol, TNAV, on the Over the
Counter Bulletin Board. The following table sets forth the trading history:
1996 Quarter High Bid Low Bid
First $0.21 $0.18
Second $0.31 $0.25
Third $0.34 $0.25
Fourth $0.34 $0.25
Until March of 1994, the Company's common stock was traded on the Vancouver
Stock Exchange.
Of the total issued and outstanding shares of the Company, roughly
2,000,000 outstanding shares are held by officers and directors of the
Company. These shares are available for sale without restriction in
accordance with Rule 144. Of the total
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issued and outstanding shares there are 749,483 Escrow Shares held by the
Company's transfer agent, Montreal Trust. Rule 144 provides, in essence,
that a shareholder who is an affiliate of the Company, after holding
restricted securities for a period of two years, may every three months,
sell them in an unsolicited brokerage transaction in an amount equal to 1%
of the Company's outstanding common shares, or the average weekly trading
volume, if any, during the four weeks preceding the sale. Non-affiliated
shareholders holding restricted securities are not subject to the 1%
limitation and may sell unlimited amounts of shares they own, under certain
circumstances, after a three year holding period. If a substantial part of
the shares which can be sold were so sold, the price of the Company's
common shares might be adversely affected.
Holders.
The Company has approximately 716 registered holders of its common stock.
Of these, roughly 704 or 98% are residents in the United States.
Dividend Policy.
The Company has never declared or paid cash dividends on its common stock,
and may elect to retain its net income in the future to increase its
capital base. The Company does not currently anticipate paying cash
dividends on its common stock in the foreseeable future.
Item 10. Recent Sales of Unregistered Securities
In the last three years the Company has issued unregistered securities
through a Private Placement at $.28 Cdn., a Private Placement at $.47 Cdn.
and a Shares for Debt program at $.33 Cdn. The sale of units in both
private placements were made almost entirely to existing shareholders. The
Shares for Debt were issued to companies and individuals with monies owed
by the Company.
Item 11. Description of Securities
The capital stock being registered is the Company's shares of common stock.
The common stock has full voting rights on all matters for which
shareholder approval is required or permitted.
The common stock does not possess any preferential right to dividends and
therefore is entitled to dividends only when and if dividends on such
common stock are declared by the Board of Directors, and only from funds
legally available therefore.
Upon liquidation of the Company, the holders of shares of common stock are
entitled to share pro-rata in any
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distribution to common stock holders. There are no preemptive, conversion,
or redemption privileges, nor sinking fund provisions, with respect to the
common stock. All of the outstanding shares of the stock are duly
authorized, validly issued, fully paid, and nonassessable. There are no
restrictions on the alienability of the securities being registered.
Common Stock.
The authorized common stock of the Company consists of 100,000,000 shares
of common stock without par value. At the end of the Company's quarter
end, October 31, 1996, there were 12,111,117 issued and outstanding common
shares. The holders of common stock have equal ratable rights to dividends
from funds legally available therefore, when, as and if declared by the
Board of Directors of the Company; are entitled to shares ratably in all of
the assets of the Company available for distribution to holders of common
stock upon liquidation, dissolution or winding up of the affairs of the
Company; do not have preemptive, subscription or conversion rights and
there are no redemption or sinking fund provisions applicable thereto.
Such shares are entitled to one vote per share on all matters which
stockholders may vote on at all meetings of shareholders. All shares of
common stock are fully paid and nonassessable.
Non-Cumulative Voting.
The holders of shares of common stock of the Company do not have cumulative
voting rights. Thus, the holders of more than 50% of such outstanding
shares, voting for the election of directors can elect all of the directors
to be elected, and in such event, the holders of the remaining shares will
not be able to elect any of the Company's directors.
Class A Preferred Stock.
100,000 Class A Preferred shares authorized with a par value of $1.00 each.
None issued.
Class B Preferred Stock.
10,000,000 Class B Convertible Preferred shares authorized with a par value
of $1.00. None issued.
Item 12. Indemnification of Directors and Officers
The By-Laws of the Company provide for indemnification of officers and
directors. The specific provision of the By-Laws related to such
indemnification is as follows:
PART 19
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INDEMNITY AND PROTECTION
DIRECTORS, OFFICERS AND EMPLOYEES
19.1 Subject to the provisions of the Company Act, the Directors shall
cause the Company to indemnify a Director or former Director of the Company
and the Directors may cause the Company to the Company is or was a
shareholder the heirs or personal representatives of any such person
against all costs, charges and judgment, actually and reasonably incurred
by him or them including an amount paid to settle an action or satisfy a
judgment in a civil, criminal or administrative action or proceeding to
which he is or they are made a party by reason of his being or having been
a Director of the Company or a director of any such corporation. Each
Director of the Company on being elected or appointed shall be deemed to
have contracted with the Company on the terms of the foregoing indemnity.
19.2 Subject to the provisions of the Company Act, the Directors may cause
the Company to indemnify any officer, employee or agent of the Company or
of a corporation of which the Company is or was a shareholder
(notwithstanding that he is also a Director) and the heirs or personal
representatives against all costs, charges and expenses whatsoever incurred
by him or them and resulting from his acting as of officer, employee or
agent of the Company (if he shall not be a full time employee of the
Company and notwithstanding that he is also a Director), and his heirs and
legal representatives against all costs, charges and expenses whatsoever
incurred by him or them and Secretary by the Company Act or these Articles
and each such Secretary and Assistant Secretary shall on being appointed be
deemed to have contracted with the Company on the terms of the foregoing
indemnity.
19.3 The failure of a Director or officer of the Company to comply with the
provisions of the Company Act or of the Memorandum or these Articles shall
not invalidate any indemnity to which he is entitled under this Part.
19.4 The Directors may cause the Company to purchase and maintain insurance
for the benefit of any person who is or was serving as a Director, officer,
employee or agent of any corporation of which the Company is or was a
shareholder and his heirs or personal representatives against any liability
incurred by him as such Director, officer, employee or agent.
Item 13. Financial Statements
The financial statements, for the fiscal years ending April 30, 1994, 1995,
1996 and the six months ended October 31, 1995 and 1996, including the
independent accountant's report, are attached hereto and appear
sequentiall.
Item 14. Changes in and Disagreements with Accountants on
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Accounting and Financial Disclosure
During the Company's last five fiscal years and the subsequent interim
period, no independent accountant who was previously engaged as the
principal accountant to audit the Company's financial statements, resigned.
The Company's accountant's financial statements did not contain an adverse
opinion or disclaimer of opinion, or modification. The decision to change
accountants is to be approved by the Board of Directors. There are no
disagreements with the current accountant on any matter of accounting
principals or practices, financial statement disclosure, or auditing scope
or procedure.
Item 15. Financial Statements and Exhibits
The financial statements provided pursuant to Item 13 begin on the next
page.
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Amendment No. 1 to the
Registration Statement upon From 10-SB to be signed on its behalf by this
undersigned, thereunto duly authorized.
Tri-National Development Corp.
a Wyoming Corporation
BY: s/Michael A. Sunstein DATED: February 22, 1997
Michael A. Sunstein
Chief Executive Officer, President
Director
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TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1996 and APRIL 30, 1996
<PAGE>
[LETTERHEAD]
AUDITORS' REPORT
To the Shareholders
Tri-National Development Corp.
We have audited the consolidated balance sheets of Tri-National Development
Corp. as at July 31, 1996 and April 30, 1996 and the consolidated
statements of operations and deficit and changes in financial position for
the three months ended July 31, 1996 and the year ended April 30, 1996.
These consolidated financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the company as at July 31,
1996 and April 30, 1996 and the results of its operations and the changes
in its financial position for the three months ended July 31, 1996 and the
year ended April 30, 1996 in accordance with generally accepted accounting
principles. As required by the Company Act of British Columbia, we report
that, in our opinion, these principles have been applied on a basis
consistent with that of the preceding years.
Vancouver, B.C. /s/ JOHANNESSON McWILLIAMS
October 16, 1996 Chartered Accountants
COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA -
UNITED STATES REPORTING CONFLICT
In the United States, reporting standards for auditors require the addition
of an explanatory paragraph (following the opinion paragraph) when the
financial statements are affected by significant uncertainties such as that
referred to in the attached balance sheets as at July 31, 1996 and April
30, 1996 and as described in Note 1 of the consolidated financial
statements. Our report to the shareholders dated October 16, 1996 is
expressed in accordance with Canadian reporting standards which do not
permit a reference to such an uncertainty in the auditor's report when the
uncertainty is adequately disclosed in the financial statements.
Vancouver, B.C. /s/ JOHANNESSON McWILLIAMS
October 16, 1996 Chartered Accountants
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED BALANCE SHEETS
JULY 31, 1996 and APRIL 30, 1996
(Canadian Funds)
JULY APRIL
NOTES 1996 1995
----- ---- ----
ASSETS
CURRENT ASSETS
Cash $ 3,714 $ 9,701
Accounts receivable 8,751 16,020
Deposit to acquire
MRI Grand Terrace, Inc. 2 - 109,056
Deposit to acquire Greater
San Diego Imaging Center 3 20,448 20,448
Note receivable -
MRI Grand Terrace, Inc. 4 1 1
Prepaid expense 2,093 5,160
- ----------------------------------------------------------------------------
35,007 160,386
REAL ESTATE DEVELOPMENT PROPERTY 5 1,202,866 1,203,113
INVESTMENTS SUBJECT TO SIGNIFICANT INFLUENCE
Tri-National Medical
Management Inc. 6 1 1
PORTFOLIO INVESTMENTS
MRI Medical Diagnostics, Inc. 7 195,029 753,262
Investment in Oro Blanco Cal
S.A. de C.V. 8 1 1
- ----------------------------------------------------------------------------
$1,432,904 $2,116,763
============================================================================
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 853,666 $ 820,641
Accrued interest payable 53,073 49,157
Loans payable 137,616 137,616
Guarantees payable 13 163,200 163,200
Private placement shares
subscribed but not issued 9 519,238 510,457
- ----------------------------------------------------------------------------
1,726,793 1,681,071
NON-CONTROLLING INTEREST IN
CONSOLIDATED SUBSIDIARY 787,971 785,579
- ----------------------------------------------------------------------------
2,514,764 2,466,650
- ----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY (DEFICIENCY)
SHARE CAPITAL 9 5,084,182 5,084,182
SHARES PURCHASED FOR RESALE (63,060) (54,255)
DEFICIT (6,102,982) (5,379,814)
- ----------------------------------------------------------------------------
(1,081,860) (349,887)
- ----------------------------------------------------------------------------
$1,432,904 $2,116,763
============================================================================
APPROVED BY THE DIRECTORS
"Michael A. Sunstein" Director
- --------------------------------
"Arthur W. Lilly" Director
- --------------------------------
See accompanying notes.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE QUARTER ENDED JULY 1996 and THE YEAR ENDED APRIL 30, 1996
(Canadian Funds)
JULY APRIL
1996 1996
---- ----
EXPENSES
Accounting fees $ 6,498 $ 8,861
Consulting and management fees 8,744 37,583
Interest 5,622 26,821
Office, delivery, printing and other 8,862 28,954
Promotion and travel 22,121 58,626
Professional fees 35,002 213,382
Rent and utilities - 14,559
Technical report - 13,632
Telephone 6,496 17,319
Transfer agent and regulatory fees 6,888 35,687
Wages 318 10,439
- ----------------------------------------------------------------------------
OPERATING LOSS 100,551 465,863
- ----------------------------------------------------------------------------
OTHER REVENUE (EXPENSE)
Litigation settlements (Note 13) - 4.005,203
Write-down of shares received
in litigation settlement (Note 13) (488,696) (3,217,152)
Write-down of significant
influence investment (Note 6) - (113,631)
Write-down of wholly-owned
subsidiary (Note 2) (136,790) -
Gain on sale of MRI Medical
Diagnostics Inc. shares (Note 7) 9,461 4,258
Exchange gain (loss) (6,592) (76,387)
- ----------------------------------------------------------------------------
Total other revenue (622,617) 602,291
- ----------------------------------------------------------------------------
NET EARNINGS (LOSS) (723,168) 136,428
DEFICIT, BEGINNING (5,379,814) (5,514,766)
Organization expenses of subsidiary - (1,476)
- ----------------------------------------------------------------------------
DEFICIT, ENDING $(6,102,982) $(5,379,814)
============================================================================
EARNINGS (LOSS) PER SHARE - BASIC $ (0.12) $ 0.02
- ----------------------------------------------------------------------------
See accompanying notes.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
FOR THE QUARTER ENDED JULY 1996 and THE YEAR ENDED APRIL 30, 1996
(Canadian Funds)
JULY APRIL
1996 1996
---- ----
OPERATING ACTIVITIES
Net earnings (loss) from continuing
operations $ (723,168) $ 136,428
Items not using (providing) cash:
Settlement on reorganization of
MRI Medical Diagnostics Inc. - (4,005,203)
Write-down of investment in
MRI Medical Diagnostics Inc. 488,696 3,217,152
Write-down of significant influence
investment - 113,631
Write-down of wholly-owned subsidiary 136,790 -
Gain on sale of MRI Medical
Diagnostics Inc. shares (9,461) (4,258)
- ----------------------------------------------------------------------------
(107,143) (542,250)
Non-cash working capital items
providing (using) cash:
Increase (decrease) in accounts
receivable 7,269 (14,796)
(Purchase) sale of temporary investment - 7,700
Deposit on MRI Grand Terrace, Inc. (27,734) (100,656)
Deposit on Greater San Diego
Imaging Center LLC - (20,448)
Increase (decrease) in prepaid expenses 3,067 (5,160)
Increase in accounts payable 33,025 207,919
Increase in accrued interest payable 3,916 7,062
Increase (decrease) in loans payable - (67,830)
Increase (decrease) in convertible
note payable - (218,445)
Settlements of loans to affiliates - (80,082)
- ----------------------------------------------------------------------------
Funds provided ( used) by
operating activities (87,600) (826,986)
- ----------------------------------------------------------------------------
INVESTING ACTIVITIES
Increase(decrease) in Santa Fe
Ranch Property 247 (476,773)
Increase in Tri-National Medical
Management, Inc. - (13,632)
Organization expense of subsidiary - (1,476)
Proceeds from sale of MRI Medical
Diagnostics, Inc. shares 78,998 39,047
- ----------------------------------------------------------------------------
Funds used by investing activities 79,245 (452,834)
- ----------------------------------------------------------------------------
FINANCING ACTIVITIES
Non-controlling interest in
consolidated subsidiary 2,392 785,579
Share subscriptions sold 8,781 510,457
Shares of the company purchased for resale (8,805) (54,255)
- ----------------------------------------------------------------------------
Funds provided by financing activities 2,368 1,241,781
- ----------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH (5,987) (38,039)
CASH, BEGINNING 9,701 47,740
- ----------------------------------------------------------------------------
CASH, ENDING $ 3,714 $ 9,701
============================================================================
See accompanying notes.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
NOTES TO THE FINANCIAL STATEMENTS
JULY 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF ACCOUNTING PRESENTATION
The Company was incorporated under the Company Act of the Province of
British Columbia and follows accounting principles generally accepted
in Canada when preparing its financial statements.
* Basis of Accounting Presentation - Going Concern Assumption
The financial statements are prepared on the assumption that the
Company will be able to realize its assets and discharge its
liabilities in the normal course of operations for the
foreseeable future, which is dependent on its ability to obtain
financing for its continuing operations and to a restructuring of
the Company's debts. Restructuring discussions with the
Company's lenders are currently in progress (see Note 14). In
the event the Company is unable to restructure its debt, the
Company's existence as a going concern is uncertain as cash flows
from continuing operations are not sufficient to service the
Company's debt obligations. A restructuring will likely result
in a capital and debt structure different from that which
presently exists, and accordingly, historical earnings and cash
flow from continuing operations may not be indicative of future
earnings and cash flows. The common shares are listed on the
Vancouver Stock Exchange, however, trading of the shares has been
suspended until the Company is in a positive working capital
position and completes certain filings with the regulatory
authorities.
* Principles of Consolidation
These consolidated financial statements are prepared in
accordance with generally accepted accounting principles in
Canada and include the accounts of the Company and its
subsidiaries, MRI Grand Terrace, Inc (100% owned) and Pacific
Medical International, Inc. (51% owned) whose acquisitions were
accounted for by the purchase method The consolidated financial
statements include all adjustments consisting of normal recurring
accruals that management believes are necessary for a fair
presentation of the company's financial position as at July 31,
1996 and April 30, 1996 and the results of its operations for the
three months ended July 31, 1996 and the year ended April 30,
1996. All significant inter-company balances and transactions
have been eliminated on consolidation.
* Foreign Currency Translation
Accounts in United States currency have been translated into
Canadian currency as follows:
- monetary items are translated at the rate prevailing at the
balance sheet date;
- non-monetary items are translated at the rates prevailing at
the dates the assets were acquired or liabilities incurred;
- revenues and expenses are translated at the average rate for
the year.
The resulting foreign currency translation gain or loss is
included in operations.
* Earnings Per Share
Earnings per share is computed by dividing net income by the
weighted average number of common shares and common share
equivalents outstanding during the period. Fully dilutive
earnings per share has not been computed because the effect would
be anti-dilutive.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
NOTES TO THE FINANCIAL STATEMENTS
JULY 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF ACCOUNTING PRESENTATION
(CONTINUED)
* Discontinued Operations
The financial statements do not include the accounts of Pacific
Wellness Inc. which is 75.5% owned and Wellness International
Partnership, Ltd. which is 51% owned since these companies ceased
operations during 1993. The Company's investments have been
written-off and operations and guarantees have been recorded as
a loss from discontinued operations. During the fiscal year
ended April 30, 1995 the Company assumed various accounts payable
of Pacific Wellness Inc. which resulted in a loss of $185,733.
2. MRI GRAND TERRACE, INC.
Pursuant to an agreement with the United States Bankruptcy Court,
Central District of California, the Company acquired the common stock
of MRI Grand Terrace Inc. for a total consideration of $100,000 U.S.
Under the agreement, the trustee is to receive 30% of the net
proceeds, if any, of the litigation presently pending against the
Chino Valley Bank to which MRI Grand Terrace Inc. would otherwise be
entitled. MRI Grand Terrace, Inc. has no assets, liabilities or
operations. The Company is acquiring the stock of MRI Grand Terrace,
Inc. in an effort to control both lawsuits pending against the Chino
Valley Bank (See Note 5). The Company wrote its investment in MRI
Grand Terrace, Inc. down to a nominal value of $1 at July 31, 1996 as
it has no assets and its worth is dependant on the outcome of the
aforementioned litigation.
3. GREATER SAN DIEGO IMAGING CENTER LLC
By letter of agreement dated August 2, 1995, the Company (TND) offered
to acquire an interest in Greater San Diego Imaging Center LLC (GSDIC)
on the following terms and conditions:
* TND to pay GSDIC $75,000 U.S. by no later than October 31, 1995,
with $15,000 U.S. upon signing of the agreement (paid). Upon
payment in full of the $75,000 U.S. TND would receive a 25%
interest in GSDIC.
* TND to secure financing prior to September 30, 1995 in the amount
of $375,000 U.S. to finance equipment, receivables and working
capital. Upon successful completion of the financing, TND would
receive an additional 36% interest in GSDIC for a total of 51%.
The Company paid the $15,000 U.S. on signing of the agreement, but did
not make the required total payment of $75,000 U.S. by October 31,
1995 and the agreement was vacated.
On June 4, 1996 the Company entered into an Asset Purchase Agreement
with Greater San Diego Imaging Center, LLC with an effective date of
November 1, 1996. GSDIC owns and operates a magnetic resonance
imaging center in San Diego, California. The Company agreed to
purchase the fixed assets, trade accounts receivable, certain
assignable contracts, leases and agreements, prepaid expenses and the
goodwill of the business. The purchase price is to be $599,999 U.S.
for the fixed assets and $1.00 U.S. for all other assets and is
payable as follows:
(a) by payment of $300,000 U.S., of which $25,000 U.S. is
payable upon execution of the agreement (partially paid from
deposit on letter agreement), and
(b) by the issuance of 857,142 common shares in the capital of
TND based upon a value of $0.35 U.S. per share for total
share consideration having a value of $300,000 U.S.
A condition precedent requires that TND shall have received the
approval of the Vancouver Stock Exchange to complete the transaction
contemplated by the agreement.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
NOTES TO THE FINANCIAL STATEMENTS
JULY 31, 1996
4. NOTE RECEIVABLE
In March 1992, the Company advanced $383,064 to MRI Medical
Diagnostics, Inc. (MRI MD) to enable MRI Grand Terrace Inc. (Grand
Terrace) to acquire a retirement hotel located in Grand Terrace,
California. The loan was evidenced by a 15% note receivable from
MRIMD and a second trust deed and an assignment of rents from MRI
Grand Terrace, Inc. On March 22, 1993, Grand Terrace filed a
complaint against Chino Valley Bank, as a result of the purchase of
the residential retirement hotel in Grand Terrace from the Chino
Valley Bank. MRI claimed that the sellers of the property (Chino
Valley Bank) had failed to disclose that the property's parking lot
encroached on the property of the adjacent parcel of land. Grand
Terrace stopped making mortgage payments to the mortgage holder (the
same Chino Valley Bank), which then filed a Notice of Default as an
initial step to foreclosure on the property. Grand Terrace then
sought Bankruptcy protection in July of 1993, and was ultimately
dismissed from Bankruptcy in May of 1995. The Chino Valley Bank
subsequently sold the property in foreclosure to itself. Tri-National
filed it's own action against the Chino Valley Bank in early 1995,
claiming that it was defrauded and misrepresented when it advanced the
$383,064 for the closing in 1992. The case is still pending and has
not come to trial. The Company purchased the remaining stock of MRI
Grand Terrace, Inc., as described in Note 3 to these financial
statements, in an effort to control both lawsuits against the Chino
Valley Bank. As a result of the uncertainty of the final results of
the lawsuits, the Company wrote the note receivable down to a nominal
$1 during the fiscal year ended April 30, 1994.
5. REAL ESTATE DEVELOPMENT PROPERTY: SANTA FE RANCH
The Santa Fe Ranch consists of approximately 2,470 acres (divided into
ten 247 acres parcels) of undeveloped land located fifty miles south
of San Diego, California on the Pacific Coast of the State of Northern
Baja, Mexico, in the Municipality of Ensenada. The Company originally
had a right to acquire a 100% interest in the property pursuant to a
series of agreements requiring ongoing payments for each 247 acres
parcel released by the vendor.
The Company subsequently entered into an agreement with Pacific
Medical International, Inc. (PMI) whereby, subject to shareholder
approval, it divested itself of all of its rights in consideration
for:
* retention of 86.45 acres of the first parcel of the Santa Fe
Ranch to be released by the original vendor, and
* the greater of:
- a one percent royalty on the gross proceeds from the
sale of any land that is part of the said Santa Fe
Ranch, or
- $150,000 U.S. for each 247 acres parcel released by the
vendor, beginning with the release of the fourth parcel
and continuing with each release thereafter.
Prior to receiving shareholder approval, the Board renegotiated the
agreement and, on June 23, 1995, the Company held an Extraordinary
General Meeting that approved the renegotiated agreement. Under the
renegotiated agreement, the Company was granted 51% of the issued and
outstanding shares of PMI with any dilution of stock to raise further
funding to come from the shareholdings of the minority shareholders of
PMI and not their treasury. PMI also agreed to assume the Yates
convertible promissory note on renegotiated terms and Yates agreed to
such assumption by PMI. The Yates note was originally secured by the
Company's rights to its 86.45 acres of the Santa Fe Ranch. The
renegotiated note with PMI provides for Yates to receive the greater
of US$2,000 or 50% of the sale price for each acre of the Santa Fe
Ranch sold until all funds due to him are paid, with Yates also to
receive a lien against the first 250 acres of the Santa Fe Ranch as
security.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
NOTES TO THE FINANCIAL STATEMENTS
JULY 31, 1996
6. TRI-NATIONAL MEDICAL MANAGEMENT INC.
Pursuant to a letter agreement, the Company acquired a 39% interest in
Tri-National Medical Management Inc. (TMMI) by executing and
delivering a non-interest bearing promissory note in the principal
amount of $100,000. The Company paid the principal amount owing on
the promissory note by delivering 686,100 MRI Medical Diagnostics,
Inc. shares at a deemed price of $0.05 U.S. totalling $46,998 towards
this purchase price and the balance in cash.
TMMI is a newly incorporated Canadian company which proposes to carry
on the business of establishing magnetic resonance imaging and related
facilities in Canada. Since incorporation, this company has incurred
various office and related expenses and has depleted its working
capital. As it has not yet commenced the business for which it was
incorporated, has no capital assets or working capital, the investment
has been written-down to a nominal value of $1.
7. INVESTMENT IN MRI MEDICAL DIAGNOSTICS INC.
In 1992 the Company sold its wholly owned subsidiary, MRI Medical
Diagnostics Inc., a California corporation. In return the Company
received 6,000,000 restricted common shares of the purchaser, MRI
Medical Diagnostics Inc. (MRI-Med), a Colorado public corporation
(formerly Petro-Global, Inc.), plus certain mineral properties and
leases. The mineral properties were written down to a nil value in
the records of the Company. MRI-Med filed for Chapter 11 bankruptcy
protection on July 22, 1993. After dividends in kind totalling
2,000,000 shares in 1992 and 1993, and due to uncertainty in the
underlying value of the remaining 4,000,000 MRI-Colorado shares held
by the Company, the carrying cost of these shares was written-off in
1994. Tri-National Development Corp. filed a reorganization plan on
behalf of MRI-Med in August 1995 and, in settlement of the litigation
described in Note 14, the Company received 5,900,000 shares of MRI-Med
at a deemed value of $0.50 U.S.
Continuity summary of MRI Medical Diagnostics, Inc. shareholdings:
Number of Book
Shares Value
------ -----
Acquisition cost, 1992 6,000,000 $3,795,000
Deduct - property dividends declared
in 1992 and 1993 (2,000,000) (1,265,000)
Deduct write down of investment, 1994 - (1,806,182)
Equity loss - (723,818)
Shares sold to April 30, 1995 @
$0.05 U.S. per share (2,957,730) -
Shares transferred to TMMI @ $0.05
U.S. per share (Note 4) (686,100) -
-----------------------------------------------------------------------
Balance - April 30, 1995 356,170 $ 0.00
Shares received from MRI Med
bankruptcy settlement (Note 13) 5,900,000 4,021,440
Deduct write down of investment
April, 1996 (Note 13) - (3,217,152)
Shares sold to April 30, 1996 (396,910) (51,026)
-----------------------------------------------------------------------
Balance - April 30, 1996 5,859,260 $ 753,262
Deduct write down of investment
July, 1996 (Note 13) - (488,696)
Shares sold during three months
ended July 31, 1996 (1,567,258) (68,865)
-----------------------------------------------------------------------
Balance - July 31, 1996 4,292,002 $ 195,701
=======================================================================
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
NOTES TO THE FINANCIAL STATEMENTS
JULY 31, 1996
8. INVESTMENT ORO BLANCO CAL S.A. DE C.V. ("BLANCO")
The Company acquired 1/2 of 1 percent of the total issued and
outstanding shares of Blanco and 50,000 shares of Bonaventure
Resources Ltd. for 20,000 common shares of the Company. Blanco mines
high quality calcium carbonate from the Garduno carbonate mines at La
Rumerosa in Baja, California in Northern Mexico. The shares of Blanco
and Bonaventure have not yet been received by the Company despite the
fact that the Company has been negotiating with such companies for the
delivery of the said shares. Due to the continuing inability of the
Company to obtain the shares, the original cost of the investment has
been written down to a nominal value in 1995.
1996 1995
---- ----
20,000 Common Shares $ 1 $ 1
=======================================================================
9. SHARE CAPITAL
* The authorized capital of the Company consists of 110,100,000
shares divided into 100,000,000 common shares without par value,
100,000 Class A Preferred shares with a par value of $1.00 each
and 10,000,000 Convertible Preferred shares with a par value of
$1.00 each of which 5,832,546 common shares are outstanding as
follows:
<TABLE>
<CAPTION>
Price Per
Shares Type No. Shares Amount
------ ---- ---------- ------
<S> <C> <C> <C> <C>
Balance April 30, 1992 4,163,458 $4,307,151
------------------------------------------------------------------------------
Issued during the year ended April 30, 1993:
May 19, 1992 $ 5.00 Acquisition 20,000 100,000
May 21, 1992 $ 2.50 Options 10,000 25,000
June 16, 1992 $ 2.50 Options 10,000 25,000
July 22, 1992 $ 1.86 Private placement 89,426 166,332
July 28, 1992 $ 1.50 Warrants 19,933 29,899
August 5, 1992 $ 1.50 Warrants 7,178 10,770
February 4, 1993 $ 1.05 Options 2,000 2,100
February 4, 1993 Share subscriptions - (1,680)
February 19, 1993 $ 2.50 Options 15,000 37,500
February 19, 1993 Share subscriptions - (30,000)
April 30, 1993 $ 1.05 Shares returned to
treasury (50,000) (52,620)
------------------------------------------------------------------------------
123,537 312,301
------------------------------------------------------------------------------
Balance April 30, 1993 4,286,995 $4,619,452
------------------------------------------------------------------------------
Issued during the year ended April 30, 1994:
July 14, 1993 $ 1.05 Options 7,000 7,350
July 14, 1993 Share subscriptions - (5,950)
October 20, 1993 $ 0.32 Options 200,000 64,000
November 3, 1993 $ 0.62 Options 10,000 6,200
November 11, 1993 $ 0.25 Debt settlement 300,640 75,160
November 16, 1993 $ 0.32 Options 10,000 3,200
November 18, 1993 $ 0.25 Private placement 770,000 192,500
November 18, 1993 $ 0.35 Debt settlement 157,626 55,169
November 18, 1993 $ 0.75 Debt settlement 85,335 64,001
January 28, 1994 $ 0.62 Options 5,000 3,100
------------------------------------------------------------------------------
1,545,601 464,730
------------------------------------------------------------------------------
Balance April 30, 1994, 1995, 1996
and July 31, 1996 (unchanged) 5,832,596 $5,084,182
==============================================================================
</TABLE>
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
NOTES TO THE FINANCIAL STATEMENTS
JULY 31, 1996
9. SHARE CAPITAL (CONTINUED)
* Issued and outstanding shares are held by residents of:
Canada 1,777,895
USA 4,054,701
* Escrow Shares
749,483 common shares are held in escrow and may not be
released, traded in or dealt with in any manner whatsoever
without the consent of the regulatory authorities.
* There were no stock options to purchase common shares of the
Company outstanding at July 31, 1996 or April 30, 1996.
* The Company proposes to carry out a private placement of
1,600,000 units of the Company at a price of $0.285 Cdn. per unit
for gross proceeds of $456,000 Cdn. Each unit consists of one
common share in the capital of the Company and a two year non-
transferable share purchase warrant. Each non-transferable share
purchase warrants entitle the holder thereof to purchase one
common share in the capital of the Company at any time during the
first six months of the term of the warrant at a price of $0.285,
at any time during the second six months of the term of the
warrant at a price of $0.40, at any time during the third six
months of the term of the warrant at a price of $0.55 or at any
time during the final six months of the term of the warrant at a
price of $0.75. The term of the warrant commences on the closing
date.
* In October, 1996 the Company issued 6,278,520 common shares from
treasury.
10. GEOGRAPHIC SEGMENTED INFORMATION
United
Canada States Mexico Total
------ ------ ------ -----
Gross revenue $ - $ - $ - $ -
Operating expenses 7,331 93,221 - 100,552
Other revenues
(expenses) - 621,866 - 621,866
Discontinued
operations - - - -
------------------------------------------------------------------------
Net earnings (loss) $ 7,331 $715,087 $ - $ 722,418
========================================================================
Identifiable assets $ 5,211 $225,578 $1,202,866 $1,433,655
========================================================================
11. INCOME TAXES
As at April 30, 1996, the Company had Canadian non-capital loss
carryforwards of $1,294,674. The tax benefit of the losses and timing
differences have not been recognized in the accounts. The non-capital
loss carryforwards expire as follows:
2000 $ 318,862
2001 527,682
2002 448,130
-----------------------------------------------------------------------
$1,294,674
=======================================================================
In addition, the company has net capital losses of approximately
$1,841,115 which can be carried forward indefinitely.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
NOTES TO THE FINANCIAL STATEMENTS
JULY 31, 1996
12. RELATED PARTY TRANSACTIONS
The aggregate payments paid and accrued to related parties during the
year are as follows:
JULY APRIL
---- -----
Accounting fees $ 6,498 $ 8,861
Management and consulting fees $ 8,744 $37,583
======================================================================
The Company was indebted to directors of the Company in the amount of
$130,884 at April 30, 1996 and July 31, 1996 (unchanged) for unpaid
fees and expenses.
13. CONTINGENCIES AND LITIGATIONS
* During 1992, MRI Medical Diagnostics Inc., a California
corporation ("MRI"), then a wholly owned subsidiary of the
Company, was sold to MRI Medical Diagnostics Inc., a Colorado
corporation ("MRI Med"). In 1993 MRI filed Chapter VII
bankruptcy and MRI Med filed for reorganization under Chapter XI
bankruptcy rules. While MRI was a subsidiary of the Company, the
Company guaranteed certain equipment leases which MRI had made
with Linc Scientific Leasing ("Linc"). MRI defaulted on certain
financial obligations pursuant to the leases, and as a
consequence, Linc commenced two actions against the Company as
guarantor and was subsequently awarded default judgements for
$2,373,286 U.S. The Company has offered a settlement with Linc
for 300,000 common shares of the Company, subject to regulatory
approval, and such offer has been accepted. This obligation has
been recorded in these financial statements as a guarantee
payable and was expensed in 1994 as guarantee fees of a former
subsidiary.
As a consequence of the judgement against the Company arising
from the guarantee of the Linc equipment leases, the Company
commenced an action against MRI Med and filed a proof of claim in
the bankruptcy case in the amount of $2,799,466 U.S. The action
was successful and the Company ultimately agreed with the
bankruptcy trustee to settle the claim and all other inter-company
indebtedness for 5,900,000 MRI Med shares at a deemed price
of $0.50 U.S. As the Company sold 396,910 of these shares
in the fiscal year ended April 30,1996 at a price of $0.10 U.S.
per share, the book value of the remaining shares was written
down to $0.10 U.S. per share. In July, 1996 the Company wrote
the shares down further to $0.03 U.S. per share.
* During 1990, MRI entered into a joint venture agreement with the
Center for Neurological Studies ("Center"). The Center alleges
damages of $160,000 U.S. since it is alleged that the venture
failed because MRI did not meet its obligations. The Center
alleges that the Company was the alter-ego of MRI although the
Company denies this and other allegations. The Center, however,
obtained default judgement on July 19,1994 for $100,000 U.S.
which may or may not be enforceable. The Company has offered a
settlement with the Center for 180,000 common shares of the
Company, subject to regulatory approval. Such offer has been
accepted. This obligation has been recorded in these financial
statements as a guarantee payable and expensed in 1994 as
guarantee fees of a former subsidiary.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
NOTES TO THE FINANCIAL STATEMENTS
JULY 31, 1996
13. CONTINGENCIES AND LITIGATIONS (CONTINUED)
* Under an employment settlement with a former employee, the
Company agreed to return to him 187,000 shares of the Company he
had pledged as security for a loan. The former employee
subsequently assigned such shares to his attorneys who, on not
receiving such shares from the Company, commenced an action
against the Company. The action concluded in March, 1996 with an
assessment against the Company for $42,500 U.S.
14. SHARES FOR DEBT
The Company has entered into debt settlement agreements with various
creditors representing a total indebtedness of approximately $834,768
Cdn. ($613,800 U.S.). Pursuant to the agreements, each creditor will
receive shares in the capital of the Company at a deemed price of
$0.25 U.S. per share. These debt settlement agreements are subject
to regulatory approval.
15. DIFFERENCE BETWEEN CANADIAN AND UNITED STATES ACCOUNTING PRINCIPLES
AND PRACTICES
These financial statements have been prepared in accordance with
accounting principles generally accepted in Canada (Canadian Basis)
which could differ in certain material respects from those principles
and practices that the Company would have followed had its financial
statements been prepared in accordance with accounting principles and
practices generally accepted in the United States and required by the
Securities and Exchange Commission (SEC) (U.S. Basis).
There are no differences to report on the balance sheets as at July
31, 1996 or April 30, 1996 or on the statements of operations for the
three months ended July 31, 1996 or the year ended April 30, 1996.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP. SCHEDULE B
QUARTERLY REPORT
JULY 31, 1996
1996 1995
---- ----
Aggregate payments and accruals to
related parties during quarter $15,242 $12,321
Share capital information as at July 31, 1996.
The authorized capital of the Company consists of 110,100,000 shares
divided into:
(a) 100,000,000 common shares without par value;
(b) 100,000 Class A Preferred shares with par value of $1.00 each;
(c) 10,000,000 Class B Convertible Preferred shares with a par value
of $1.00 each;
Issued and Outstanding Shares:
5,832,596 common shares - $5,084,182 (1995 - 5,832,596 shares -
$5,084,182)
Stock options granted during the quarter:
Nil
Warrants granted during the quarter:
Nil
No stock options and warrants to purchase common shares of Company are
outstanding.
Directors: M.A. Sunstein
Jay Pasternack
Ted Takacs
Shane Kennedy
Dr. Robert Rosen
Arthur Lilly
<PAGE>
SCHEDULE "C"
MANAGEMENT DISCUSSION
December 10, 1996
The Company has undergone many changes and is in the process of
implementing more changes, which are included in this years proxy
statement.
* As previously announced, the Company has control of the Santa Fe Ranch
through a 51% ownership of Pacific Medical International, Inc. and is
currently negotiating to acquire the remaining 49% of Pacific Medical
International, Inc. for a combination of cash and stock. The Santa Fe
Ranch is a 2,500 acre parcel in Baja, California, 45 minutes from San
Diego, that was originally purchased for $2,000US per acre in 1991 and
currently has certified bank appraisals of $60,000US per acre.
Pacific Medical International, Inc. has title to 237 acres and is in
the process of taking title to an additional 257 acres. The remaining
2,000 acres are under contract for annual payments over the next 8
years. The master plan is in design and plans include a 400 acre
motor sports R & D facility and a 200 acre medical campus with medical
school, as well as, an international retirement community.
* The reorganization Plan for MRI Medical Diagnostics, Inc. (Over the
Counter: MRMD) was confirmed by the U.S. Bankruptcy Court in January
of 1996, giving the Company a total of approximately 7 million common
shares of MRMD, including shares received in exchange for its 2.9
million $US claim against the estate. This company is currently
trading in the under $.10US range, however, it is a clean shell
available for a takeover by an ongoing entity. It has no debts or
liabilities and has a $6,000,000US net operating loss carry forward
for tax benefits. Tri-National Development Corp. was the proponent
and funding source for the Reorganization Plan. Two major goals were
achieved. Number one, the opportunity to regain stock value for all
of the shareholders and number two, it allowed Tri-National
Development Corp. the opportunity of proceeding, on a consolidated
basis, against the Chino Valley Bank for damages regarding their sale
of the MRI Grand Terrace Hotel to MRMD. The banks failure to disclose
a major encroachment to the buyer, which the bank was aware of, led
MRMD to bankruptcy court and created the ensuing damages for
shareholders of both companies. The board of directors of MRMD have
reviewed numerous opportunities for the shell and believe a
satisfactory suitor will be identified in the first quarter of 1997.
* The Company announced a contract for the acquisition of the Greater
San Diego Imaging Center through its U.S. subsidiary, TND/Medical
International, Inc. (TNDMI), a California corporation. The closing
occurred in October of 1996 for $300,000 cash and the issuance of
857,142 common shares. The Company provided the stock portion of the
acquisition and First Colonial Ventures, Ltd., a Nevada publicly
traded corporation, is to provide the cash portion of the acquisition.
First Colonial Ventures, Ltd. is to receive one third of TNDMI for its
contribution. The Greater San Diego Imaging Center has proceeded with
the completion of an "open unit" upgrade, thus giving the Company the
only open unit magnetic resonance imaging (MRI) center in San Diego
for large and claustrophobic patients.
<PAGE>
* The Company announced in June of 1996 that it entered into an escrow
on behalf of Baja Pacific International, Inc. to purchase a
significant portion of the 1,600 acre Bajamar Resort in Baja
California, Mexico for $39,500,000US. Bajamar is a world class resort
located directly across the street from the Company's Santa Fe Ranch
property. The primary focus of the acquisition consists of 27 holes
of championship golf, 80 acres for an additional 9 holes, a 81 room
hotel, a clubhouse with restaurant, tennis courts, driving range and
assorted residential properties surrounding the golf courses amounting
to an additional 200 acres. The Company was to have received an
interest in Baja Pacific International, Inc. and compensation for its
role in the acquisition, however, it has since renegotiated the
contract with Baja Pacific International, Inc. so that Tri-National
Development Corp. is now scheduled to proceed to close by March 1,
1997, for its own account.
* TND has also contracted with a Mexican corporation for an additional
parcel at Bajamar, which they originally purchased for $9,500,000US
and is approved for 326 timeshare units and 20,000 square feet of
commercial space. The plans are already drawn and all of the
infrastructure for the site is in place. The 103 year old Wall Street
real estate investment banking firm, Sonnenblick-Goldman Co., has been
retained as the exclusive procurer for debt and equity financing.
* In September of 1996, the Company announced the formation of a real
estate and resort development subsidiary. Simultaneously, the Company
entered into a first right of refusal agreement for the possible
acquisition of a timeshare, hotel and casino complex in Las Vegas,
Nevada. The advantage of such an addition to the Company's base, will
be to secure a Nevada gaming license to compliment our resort
properties in Baja, California in the event that casino licenses are
issued in Mexico. The Nevada property that is the subject of the
contract is currently earning approximately $1,000,000US annually from
the hotel portion only.
* Starting in June of 1995, the Company began a private placement, which
finally closed in October 1996, for $551,971Cdn. for 1,936,740 units
at $0.28Cdn. per unit. Each unit consisted of one common share and
one share purchase warrant. In August of this year, the Company
announced it was offering an additional private placement of
$175,000US for 500,000 units which was closed in October of 1996 at
442,896 units at $0.25US per unit for proceeds to the Company of
$155,014US. Each unit also consists of one common share and one share
purchase warrant.
* The use of proceeds for the both private placements included
approximately $200,000US to close the acquisition of MRI Grand
Terrace, Inc. and the Greater San Diego Imaging Center. In addition,
over $200,000US in legal and professional fees were used for these
acquisitions, as well as, the MRI Medical Diagnostics, Inc.
reorganization plan. The balance of approximately $150,000US was used
for general working capital over the last two years.
<PAGE>
* The Company's shareholders approved, in 1994, a share for debt
exchange with its creditors. The majority of the Company's creditors
accepted the exchange for approximately $871,160US of debt, thus
leaving the Company virtually debt free. This enhances our balance
sheet allowing us to attract other possible acquisitions, as well as,
outside financing. 3,484,640 common shares of the Company were issued
in October of 1996 to satisfy this obligation.
* Included in this year's proxy statement for shareholder vote is a
change of corporate domicile from Vancouver, B.C. to Wyoming. The
Company chose Wyoming because it has a reciprocal arrangement with
British Columbia that will allow us to change domicile but retain our
existing Corporation Articles and free trading stock positions. Any
other change of domicile would require a new two year hold period on
our existing share holdings. The other major reason for change of
domicile is the stringent controls of the VSE, which has kept us from
trading in Canada for the last two years. Once our change of domicile
is completed we intent to file a Form 10 registration statement, which
will make us a fully reporting U.S. company. The Company also plans
to make application for a NASDAQ listing in early 1997, which is a
step up from our current Over the Counter listing, TNAV.
* Management of the Company has also determined that it is in the best
interests of the Company to delist from the VSE and has instructed its
solicitors to forthwith make an application for delisting from the
VSE. Management of the Company has determined that the current
business of the Company is not suited to the VSE due to the fact that
its main focuses are on health care in the United States and Mexico
and real estate that is located in the United States and Mexico, and
its shareholder base is primarily located in the United States. Also,
the Company anticipates that future financings will be conducted
through brokerage houses or financiers located in the United States.
ON BEHALF OF THE
BOARD OF DIRECTORS
/s/ MICHAEL A. SUNSTEIN
Michael A. Sunstein, President
Tri-National Development Corp.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996 & 1995
(UNAUDITED - SEE NOTICE TO READER)
<PAGE>
[LETTERHEAD]
NOTICE TO READER
To the Directors
Tri-National Development Corp.
We have compiled the interim financial information of Tri-National
Development Corp. consisting of summary balance sheets as at October 31,
1996 and 1995 and the interim statements of operations and deficit and
changes in financial position for each of the six month periods then ended
from information provided by management. We have not audited, reviewed or
otherwise attempted to verify the accuracy or completeness of such
information. Readers are cautioned that these statements may not be
appropriate for their purposes.
Vancouver, B.C. /s/ JOHANNESSON McWILLIAMS
January 28, 1997 Chartered Accountants
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 1996 & 1995
(UNAUDITED - SEE NOTICE TO READER)
(Canadian Funds)
1996 1995
---- ----
ASSETS
CURRENT ASSETS
Cash $ 13,299 $ 4,589
Due from director 9,990 -
Deposit to acquire
MRI Grand Terrace, Inc. - 28,800
Deposit to acquire assets of
Greater San Diego Imaging Center 506,163 -
Temporary investment - 7,700
Note receivable -
MRI Grand Terrace, Inc. 1 1
Prepaid expense 15,343 -
- ----------------------------------------------------------------------------
544,796 41,090
REAL ESTATE DEVELOPMENT PROPERTY 1,244,430 726,340
OPTION TO ACQUIRE SHARES - 100,000
INVESTMENTS SUBJECT TO SIGNIFICANT INFLUENCE
Tri-National Medical Management Inc. 1 -
PORTFOLIO INVESTMENTS
MRI Medical Diagnostics, Inc. 195,029 -
Investment in Oro Blanco Cal
S.A. de C.V. 1 1
CAPITAL ASSETS 2,524 -
- ----------------------------------------------------------------------------
$1,986,781 $ 867,431
============================================================================
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 118,504 $ 658,880
Convertible note payable - 228,079
Loans payable and accrued interest - 237,177
Guarantees payable - 163,200
Private placement shares subscribed
but not issued 196,603 203,635
Due to affiliates - 27,080
- ----------------------------------------------------------------------------
315,107 1,518,051
NON-CONTROLLING INTEREST IN
CONSOLIDATED SUBSIDIARY 787,971 -
- ----------------------------------------------------------------------------
1,103,078 1,518,051
- ----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY (DEFICIENCY)
SHARE CAPITAL 7,179,002 5,084,182
SHARES PURCHASED FOR RESALE (91,935) -
DEFICIT (6,203,364) (5,734,802)
- ----------------------------------------------------------------------------
883,703 (650,620)
- ----------------------------------------------------------------------------
$1,986,781 $ 867,431
============================================================================
APPROVED BY THE DIRECTORS
"Michael A. Sunstein" Director
- --------------------------------
"Shane Kennedy" Director
- --------------------------------
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE SIX MONTH PERIODS ENDED OCTOBER 31, 1996 & OCTOBER 31, 1995
(UNAUDITED - SEE NOTICE TO READER)
(Canadian Funds)
1996 1995
---- ----
EXPENSES
Accounting fees $ 26,730 $ -
Bad debts 11,933 -
Commissions - 13,600
Consulting and management fees 18,214 33,551
Depreciation 280 -
Interest 5,981 17,647
Office, delivery, printing and other 17,866 5,281
Promotion and travel 34,238 28,171
Professional fees 57,057 92,231
Rent and utilities 2,828 2,162
Telephone 12,024 6,373
Transfer agent and regulatory fees 4,258 18,698
Wages 3,013 3,500
- ----------------------------------------------------------------------------
OPERATING LOSS 194,422 221,214
- ----------------------------------------------------------------------------
OTHER REVENUE (EXPENSE)
Litigation settlements (Note 13) - -
Write-down of shares received in
litigation settlement (Note 13) (482,301) -
Write-down of significant
influence investment (Note 6) - -
Write-down of wholly-owned
subsidiary (Note 2) (134,999) -
Gain on sale of MRI Medical
Diagnostics Inc. shares (Note 7) 9,337 1,178
Exchange gain (loss) (21,165) -
- ----------------------------------------------------------------------------
Total other revenue (629,128) 1,178
- ----------------------------------------------------------------------------
NET LOSS (823,550) (220,036)
DEFICIT, BEGINNING (5,379,814) (5,514,766)
- ----------------------------------------------------------------------------
DEFICIT, ENDING $(6,203,364) $(5,734,802)
============================================================================
EARNINGS (LOSS) PER SHARE - BASIC $ (0.07) $ (0.04)
============================================================================
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
FOR THE SIX MONTH PERIODS ENDED OCTOBER 31, 1996 & OCTOBER 31, 1995
(UNAUDITED - SEE NOTICE TO READER)
(Canadian Funds)
1996 1995
---- ----
OPERATING ACTIVITIES
Net loss from continuing operations $ (823,550) $ (220,036)
Items not using (providing) cash:
Settlement on reorganization of
MRI Medical Diagnostics Inc. - -
Write-down of investment in
MRI Medical Diagnostics Inc. 482,301 -
Write-down of significant
influence investment - -
Gain on sale of MRI Medical
Diagnostics Inc. shares (9,337) (1,178)
Depreciation 280 -
- ----------------------------------------------------------------------------
(350,306) (221,214)
Net change in non-cash working
capital items (1,746,776) (15,837)
- ----------------------------------------------------------------------------
Funds provided (used) by operating
activities (2,097,082) (237,051)
- ----------------------------------------------------------------------------
INVESTING ACTIVITIES
Increase in Santa Fe Ranch Property (41,317) -
Purchase of capital assets (2,804) -
Non-controlling interest in
consolidated subsidiary 2,392 -
Proceeds from sale of
MRI Medical Diagnostics, Inc. shares 85,269 1,178
- ----------------------------------------------------------------------------
Funds used by investing activities 43,540 1,178
- ----------------------------------------------------------------------------
FINANCING ACTIVITIES
Share capital issued 2,094,820 203,635
Shares of the company purchased
for resale (37,680) -
Decrease in loans payable (10,913)
- ----------------------------------------------------------------------------
Funds provided by financing activities 2,057,140 192,722
- ----------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH 3,598 (43,151)
CASH, BEGINNING 9,701 47,740
- ----------------------------------------------------------------------------
CASH, ENDING $ 13,299 $ 4,589
============================================================================
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP. SCHEDULE B
QUARTERLY REPORT
OCTOBER 31, 1996
1996 1995
---- ----
Aggregate payments and accruals to related
parties during quarter
Consulting and management fees $ 9,585 $ 4,800
Accounting fees 14,917 -
Salaries - -
- -----------------------------------------------------------------------------
$ 24,502 $ 4,800
=============================================================================
Share capital information as at October 31, 1996:
The authorized capital of the Company consists of 110,100,000 shares
divided into:
(a) 100,000,000 common shares without par value;
(b) 100,000 Class A Preferred shares with par value of $1.00 each;
(c) 10,000,000 Class B Convertible Preferred shares with a par value
of $1.00 each;
Issued and Outstanding Shares:
12,111,117 common shares - $7,179,002 (1995 - 5,832,596 shares -
$5,084,182)
Changes during the quarter:
* Share consideration for assets of
Greater San Diego Imaging Center 857,142 $300,000 U.S.
* Private placement at
$0.285 Cdn. 1,936,739 $551,971 Cdn.
* Shares for debt at $0.25 U.S. 3,484,640 $871,160 U.S.
Stock options granted during the quarter:
Nil
Warrants granted during the quarter:
1,936,739 two year non-transferable share purchase warrants (attached
to each unit of the private placement) entitling the holder to
purchase one common share at any time during the first six months of
the term of the warrant at a price of $0.285, at any time during the
second six months of the term of the warrant at a price of $0.40, at
any time during the third six months of the term of the warrant at a
price of $0.55 or at any time during the final six months of the term
of the warrant at a price of $0.75. The term of the warrant commences
on the closing date.
<PAGE>
-2-
- -------------------------------------------------------------------------
Stock options and warrants to purchase common shares of Company are
outstanding as follows:
Stock Options: Nil
Warrants: As above
Shares held in escrow at October 31, 1996 - 750,000 common shares
Directors: M.A. Sunstein
Jay Pasternack
Ted Takacs
Shane Kennedy
Dr. Robert Rosen
Arthur Lilly
<PAGE>
SCHEDULE "C"
MANAGEMENT DISCUSSION
For the Quarter ended October 31, 1996
* As previously announced, the Company has control of the Santa Fe Ranch
through a 51% ownership of Pacific Medical International, Inc. and is
currently negotiating to acquire the remaining 49% of Pacific Medical
International, Inc. for a combination of cash and stock. The Santa Fe
Ranch is a 2,500 acre parcel in Baja, California, 45 minutes from San
Diego, that was originally purchased for $2,000US per acre in 1991 and
currently has certified bank appraisals of $60,000US per acre.
Pacific Medical International, Inc. has title to 237 acres and is in
the process of taking title to an additional 257 acres. The remaining
2,000 acres are under contract for annual payments over the next 8
years. The master plan is in design and plans include a 400 acre
motor sports R & D facility and a 200 acre medical campus with medical
school, as well as, an international retirement community.
* The reorganization Plan for MRI Medical Diagnostics, Inc. (Over the
Counter: MRMD) was confirmed by the U.S. Bankruptcy Court in January
of 1996, giving the Company a total of approximately 7 million common
shares of MRMD, including shares received in exchange for its 2.9
million $US claim against the estate. This company is currently
trading in the under $.10US range, however, it is a clean shell
available for a takeover by an ongoing entity. It has no debts or
liabilities and has a $6,000,000US net operating loss carry forward
for tax benefits. Tri-National Development Corp. was the proponent
and funding source for the Reorganization Plan. Two major goals were
achieved. Number one, the opportunity to regain stock value for all
of the shareholders and number two, it allowed Tri-National
Development Corp. the opportunity of proceeding, on a consolidated
basis, against the Chino Valley Bank for damages regarding their sale
of the MRI Grand Terrace Hotel to MRMD. The banks failure to disclose
a major encroachment to the buyer, which the bank was aware of, led
MRMD to bankruptcy court and created the ensuing damages for
shareholders of both companies. The board of directors of MRMD have
reviewed numerous opportunities for the shell and believe a
satisfactory suitor will be identified in the first quarter of 1997.
* The Company announced a contract for the acquisition of the Greater
San Diego Imaging Center through its U.S. subsidiary, TND/Medical
International, Inc. (TNDMI), a California corporation. The closing
occurred in December of 1996 for $300,000US cash and the issuance of
857,142 common shares. The Company provided the stock portion of the
acquisition and First Colonial Ventures, Ltd., a Nevada publicly
traded corporation, is to provide the cash portion of the acquisition.
First Colonial Ventures, Ltd. is to receive one third of TNDMI for its
contribution. The Greater San Diego Imaging Center has proceeded with
the completion of an "open unit" upgrade, thus giving the Company the
only open unit magnetic resonance imaging (MRI) center in San Diego
for large and claustrophobic patients.
* The Company announced in June of 1996 that it entered into an escrow
on behalf of Baja Pacific International, Inc. to purchase a
significant portion of the 1,600 acre Bajamar Resort in Baja
California, Mexico for $39,500,000US. Bajamar is a world class resort
located
<PAGE>
directly across the street from the Company's Santa Fe Ranch property.
The primary focus of the acquisition consists of 27 holes of
championship golf, 80 acres for an additional 9 holes, a 81 room
hotel, a clubhouse with restaurant, tennis courts, driving range and
assorted residential properties surrounding the golf courses amounting
to an additional 200 acres. The Company was to have received an
interest in Baja Pacific International, Inc. and compensation for its
role in the acquisition, however, it has since renegotiated the
contract with Baja Pacific International, Inc. so that Tri-National
Development Corp. is now scheduled to proceed to close by March 1,
1997, for its own account.
* TND has also contracted with a Mexican corporation for an additional
parcel at Bajamar, which they originally purchased for $9,500,000US
and is approved for 326 timeshare units and 20,000 square feet of
commercial space. The plans are already drawn and all of the
infrastructure for the site is in place. The 103 year old Wall Street
real estate investment banking firm, Sonnenblick-Goldman Co., has been
retained as the exclusive procurer for debt and equity financing.
* In September of 1996, the Company announced the formation of a real
estate and resort development subsidiary. Simultaneously, the Company
entered into a first right of refusal agreement for the possible
acquisition of a timeshare, hotel and casino complex in Las Vegas,
Nevada. The advantage of such an addition to the Company's base, will
be to secure a Nevada gaming license to compliment our resort
properties in Baja, California in the event that casino licenses are
issued in Mexico. The Nevada property that is the subject of the
contract is currently earning approximately $1,000,000US annually from
the hotel portion only.
* Starting in June of 1995, the Company began a private placement, which
finally closed in October 1996, for $551,971Cdn. for 1,936,740 units
at $0.28Cdn. per unit. Each unit consisted of one common share and
one share purchase warrant. In August of this year, the Company
announced it was offering an additional private placement of
$175,000US for 500,000 units which was closed in October of 1996 at
442,896 units at $0.25US per unit for proceeds to the Company of
$155,014US. Each unit also consists of one common share and one share
purchase warrant.
* The use of proceeds for the both private placements included
approximately $200,000US to close the acquisition of MRI Grand
Terrace, Inc. and the Greater San Diego Imaging Center. In addition,
over $200,000US in legal and professional fees were used for these
acquisitions, as well as, the MRI Medical Diagnostics, Inc.
reorganization plan. The balance of approximately $150,000US was used
for general working capital over the last two years.
* The Company's shareholders approved, in 1994, a share for debt
exchange with its creditors. The majority of the Company's creditors
accepted the exchange for approximately $871,160US of debt, thus
leaving the Company virtually debt free. This enhances our balance
sheet allowing us to attract other possible acquisitions, as well as,
outside financing.
<PAGE>
3,484,640 common shares of the Company were issued in October of 1996
to satisfy this obligation.
* Included in this year's proxy statement for shareholder vote is a
change of corporate domicile from Vancouver, B.C. to Wyoming. The
Company chose Wyoming because it has a reciprocal arrangement with
British Columbia that will allow us to change domicile but retain our
existing Corporation Articles and free trading stock positions. Any
other change of domicile would require a new two year hold period on
our existing share holdings. The other major reason for change of
domicile is the stringent controls of the VSE, which has kept us from
trading in Canada for the last two years. Once our change of domicile
is completed we intent to file a Form 10 registration statement, which
will make us a fully reporting U.S. company. The Company also plans
to make application for a NASDAQ listing in early 1997, which is a
step up from our current Over the Counter listing, TNAV.
* Management of the Company has also determined that it is in the best
interests of the Company to delist from the VSE and has instructed its
solicitors to forthwith make an application for delisting from the
VSE. Management of the Company has determined that the current
business of the Company is not suited to the VSE due to the fact that
its main focuses are on health care in the United States and Mexico
and real estate that is located in the United States and Mexico, and
its shareholder base is primarily located in the United States. Also,
the Company anticipates that future financings will be conducted
through brokerage houses or financiers located in the United States.
The Company has no investor relation contracts outstanding and did not
pay any amounts for investor relations during the quarter.
EXHIBIT 3.1
ARTICLES
--------
OF
ROCKET ENERGY RESOURCES LTD.
TABLE OF CONTENTS
-----------------
PART ARTICLE SUBJECT
- ---- ------- -------
1 INTERPRETATION
1.1. Definition
Construction of Words
1.2. Definitions same as Company Act
1.3. Interpretation Act Rules of
Construction apply
2 SHARES
2.1. Member entitled to Certificate
2.2. Replacement of Lost or Defaced
Certificate
2.3. Execution of Certificate
2.4. recognition of Trusts
3 ISSUE OF SHARES
3.1. Directors Authorized
3.2. Conditions of Allotment
3.3. Commissions and Brokerage
3.4. Conditions of Issue
4 SHARE REGISTERS
4.1. Registers of Members, Transfers
and Allotments
4.2. Branch Registers of Members
4.3. No Closing of Register of Members
<PAGE>
II
PART ARTICLE SUBJECT
- ---- ------- -------
5 TRANSFER AND TRANSMISSION
OF SHARES
5.1. Transfer of Shares
5.2. Execution of Instrument of Transfer
5.3. Enquiry as to Title not required
5.4. Submission of Instruments of Transfer
5.5. Transfer Fee
5.6. Personal Representative Recognized
on Death
5.7. Death or Bankruptcy
5.8 Persons in Representative Capacity
6 ALTERATION OF CAPITAL
6.1. Increase of Authorized Capital
6.2. Other Capital Alterations
6.3. Creation, Variation and Abrogation
of Special Rights and Restrictions
6.4. Consent of Class Required
6.5. Special Rights of Conversion
6.6 Class Meetings of Members
7 PURCHASE AND REDEMPTION OF SHARES
7.1. Company Authorized to purchase or
Redeem its Shares
7.2. & 7.3. Redemption of Shares
8 Borrowing Powers
8.1. Powers of Directors
8.2. Special Rights Attached to and
Negotiability of Debt Obligations
8.3. Register of Debentureholders
8.4. Execution of Debt Obligations
8.5. Register of Indebtedness
<PAGE>
III
PART ARTICLE SUBJECT
- ---- ------- -------
9 GENERAL MEETINGS
9.1. Annual General Meetings
9.2. Waiver of Annual General Meetings
9.3. Classification of General Meetings
9.4. Calling of Meetings
9.5. Advance notice for Election of
Directors
9.6. Notice for General Meeting
9.7. Waiver or Reduction of Notice
9.8. Notice of Special Business at
General Meeting
10 PROCEEDINGS AT GENERAL MEETINGS
10.1. Special Business
10.2. Requirements of Quorum
10.3. Quorum
10.4. Lack of Quorum
10.5. Chairman
10.6. Alternate Chairman
10.7. Adjournments
10.8. Resolutions Need Not be Seconded
10.9. Decisions by Show of Hands or Poll
10.10. Casting Vote
10.11. Manner of Taking Poll
10.12. Retention of Ballots Cast on a Poll
10.13. Casting of Votes
10.14. Ordinary resolution Sufficient
11 VOTES OF MEMBERS
11.1. Number of Votes Per Share or Member
11.2. Votes of Persons in Representative
Capacity
11.3. Representative of a Corporate Member
11.4. Votes by Joint Holders
11.5. Votes by Committee for Member
11.6. Appointment of Proxyholders
11.7. Execution of Form of Proxy
11.8. Deposit of Proxy
11.9. Form of Proxy
11.10. Validity of Proxy Vote
11.11. Revocation of Proxy
<PAGE>
IV
PART ARTICLE SUBJECT
- ---- ------- -------
12 DIRECTORS
12.1. Number of Directors
12.2. Remuneration and Expenses of
Directors
12.3. Qualification of Directors
13 ELECTION AND REMOVAL OF DIRECTORS
13.1. Election at Annual General Meetings
13.2. Eligibility of Retiring Director
13.3. Continuance of Directors
13.4. Election of Less than Required
Number of directors
13.5. Filling a Casual Vacancy
13.6. Additional Directors
13.7. Alternate Directors
13.8. Termination of Directorship
13.9. Removal of Directors
14 POWERS AND DUTIES OF DIRECTORS
14.1. Management of Affairs and Business
14.2. Appointment of Attorney
15 DISCLOSURE OF INTEREST OF DIRECTORS
15.1. Disclosure of Conflicting Interest
15.2. Voting and Quorum re Proposed
Contract
15.3. Directors May Hold Office or Place
of Profit with Company
15.4. Director Acting in Professional
Capacity
15.5. Director Receiving Remuneration from
Other Interests
<PAGE>
V
PART ARTICLE SUBJECT
- ---- ------- -------
16 PROCEEDINGS OF DIRECTORS
16.1. Chairman and Alternate
16.2. Meetings - Procedure
16.3. Meeting by Conference Telephone
16.4. Notice of Meeting
16.5. Waiver of Notice of Meetings
16.6. Quorum
16.7. Continuing Directors may Act
During Vacancy
16.8. Validity of Acts of Directors
16.9. Resolution in Writing Effective
17 EXECUTIVE AND OTHER COMMITTEES
17.1. Appointment of Executive Committee
17.2. Appointment of Committees
17.3. Procedure at Meetings
18 OFFICERS
18.1. President and Secretary Required
18.2. Persons Holding More than One
Office and Remuneration
18.3. Disclosure of Conflicting Interest
19 INDEMNITY AND PROTECTION OF
DIRECTORS, OFFICERS AND EMPLOYEES
19.1. Indemnification of Directors
19.2. Indemnification of officers,
Employees, Agents
19.3. Indemnification not invalidated
by non-compliance
19.4. Company May Purchase Insurance
20 DIVIDENDS AND RESERVES
20.1. Declaration of Dividends
20.2. Declared Dividends Date
<PAGE>
VI
PART ARTICLE SUBJECT
- ---- ------- -------
20.3. Proportion to Number of
Shares Held
20.4. Reserves
20.5. Receipts from Joint Holders
20.6. No Interest on Dividends
20.7. Payment of Dividends
20.8. Capitalization of Undistributed
Surplus
21 DOCUMENTS, RECORDS AND REPORTS
21.1. Documents to be Kept
21.2. Accounts to be Kept
21.3. Inspection of Accounts
21.4. & 21.5. Financial Statements and Reports
22 NOTICES
22.1. Method of giving Notice
22.2. Notice to Joint Holder
22.3. Notice to Personal Representative
22.4. Persons to Receive Notice
23 RECORD DATES
23.1. Record Date
23.2. No Closure of Register of Members
24 SEAL
24.1. Affixation of Seal to Documents
24.2. Mechanical Reproduction of Signature
24.3. Official Seal for Other Jurisdictions
<PAGE>
PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
ARTICLES
of
ROCKET ENERGY RESOURCES LTD.
PART 1
INTERPRETATION
--------------
1.1. In these Articles, unless there is something in the subject
or context inconsistent therewith:
"Board" and "the Directors" or "the directors" mean the Directors or
sole Director of the Company for the time being.
"Company Act" means the Company Act of the Province of British
Columbia as from time to time enacted and all amendments thereto and
includes the regulations made pursuant thereto.
"seal" means calendar month.
"month" means calendar month.
"registered owner" or "registered holder" when used with respect to a
share in the authorized capital of the Company means the person
registered in the register of members in respect of such share.
Expressions referring to writing shall be construed as including
references to printing, lithography, typewriting, photography and other
modes of representing or reproducing words in a visible form.
Words importing the singular include the plural and vice versa; and
words importing male persons include female persons and words importing
persons shall include corporations.
1.2. The meaning of any words or phrases defined in the Company
Act shall, if not inconsistent with the subject or context, bear the same
meaning in these Articles.
<PAGE>
2
1.3. The Rules of Construction contained in the Interpretation
Act shall apply, mutatis mutandis, to the interpretation of these Articles.
PART 2
SHARES AND SHARE CERTIFICATES
-----------------------------
2.1. Every member is entitled, without charge, to one certificate
representing the share or shares of each class held by him; providing that,
in respect of a share or shares held jointly by several persons, the
Company shall not be bound to issue more than one certificate, and delivery
of a certificate for a share of one of several joint registered holders or
to his duly authorized agent shall be sufficient delivery to all; and
provided further that the Company shall not be bound to issue certificates
representing redeemable shares, if such shares are to be redeemed within
one month of the date on which they were allotted. Any share certificates
may be sent through the mail by registered prepaid mail to the member
entitled thereto, and any loss occasioned to the member owing to any such
share certificate so sent being lost in the mail or stolen.
2.2. If a share certificate
(i) is worn out or defaced, the Directors shall, upon production to
them of the said certificate and upon such other terms, if any,
as they think fit, order the said certificate to be cancelled and
shall issue a new certificate in lieu thereof;
(ii) is lost, stolen or destroyed, then, upon proof thereof to the
satisfaction of the Directors and upon such indemnity, if any, as
the Directors deem a adequate being given, a new share
certificate in lieu thereof shall be issued to the person
entitled to such lost, stolen destroyed certificate; or
(iii) represents more than one share and the registered owner thereof
surrenders it to the Company with a written request that the
Company issue in his name two or more certificates each
representing a specified number of shares and in the aggregate
representing the same number of shares as the certificate so
surrendered, the Company shall cancel the certificate so
surrendered and issue in lieu thereof certificates in accordance
with such request.
<PAGE>
3
Such sum, not exceeding one dollar, as the Directors may form time to time
fix, shall be paid to the Company for each certificate to be issued under
this Article.
2.3. Every share certifier shall be signed manually by at least
one officer or Director of the Company, or by or on behalf of a registrar,
branch registrar, transfer agent or branch transfer agent of the Company
and any additional signatures may be printed or otherwise mechanically
reproduced and, in such event, a certificate so signed is as valid as if
signed manually, notwithstanding that any person whose signature is so
printed or mechanically reproduced shall have ceased to hold the office
that he is stated on such certificate to hold at the date of the issue of
the share certificate.
2.4. Except as required by law, statute or these Articles, no
person shall be recognized by the Company as holding or compelled in any
way to recognize (even when having notice thereof) any equitable,
contingent, future or partial interest in any share or in any fractional
part of a share or (except only as by law, statue or these Articles
provided or as orders by a court of competent jurisdiction) any other
rights in respect any share except an absolute right to the entirety
thereof in its registered holder.
PART 3
ISSUE OF SHARES
---------------
3.1. Subject to Article 3.2. and to any direction to the contrary
contained in a resolution passed at a general meeting authorizing any
increase or alteration of capital, the shares shall be under the control of
the Directors who may, subject to the rights of the holders of the shares
of the Company for the time being outstanding, issue, allot, sell or
otherwise dispose of, and/or grant options on or otherwise deal in, shares
authorized but not outstanding, and outstanding shares held by the Company,
at such times, to such persons (including Directors), in such manner, upon
such terms and conditions, and at such price or for such consideration, as
they, in their absolute discretion, any determine.
3.2. If the Company is, or becomes, a company which is not
reporting company and all the Directors are required by the Company Act
before allotting any shares to offer the pro rata to the members, the
Directors shall, before allotting any shares, comply with the applicable
provisions of the Company Act.
<PAGE>
4
3.3. Subject to the provisions of the Company Act, the Company,
or the Directors on behalf of the Company, may pay a commission or allow a
discount to any person in consideration of his subscribing or agreeing to
subscribe, whether absolutely or conditionally, for any shares in the
Company, or procuring or agreeing to procure subscriptions, whether
absolutely or conditionally, for any such shares, provided that, if the
Company is not a specially limited company, the rate or the commission and
discount shall not in the aggregate exceed 25 per centum of the amount of
the subscription price such shares.
3.4. No shares may be issued until it is fully paid and the
Company shall have received the full consideration therefor in cash,
property or past services actually performed for the Company. The value of
property or services for the purpose of this Article shall be an amount
determined by the Directors to be, in all circumstances of the transaction,
no greater than the fair market value thereof.
PART 4
SHARE REGISTERS
---------------
4.1. The Company shall keep or cause to be kept a register of
member, a register of transfers and a register of allotments within British
Columbia, all as required by the Company Act, and may combine one or more
of such registers. If the Company's capital shall consist of one or more
than one class of shares, a separate register of members, register of
transfers and register of allotments may be kept in respect of each class
of shares. The Directors on behalf of the Company may appoint a trust
company to keep the register of members, register of transfers and register
of allotments may be kept in respect of each class of shares, the Directors
may appoint a trust company, which need not be the same trust company, to
keep the register of members, the register of transfers and the register of
allotments for each class of shares. The Directors on behalf of the
Company may also appoint one or more trust companies, including the trust
company which keeps the said registers of its shares or of a class thereof,
as the case may be, and the same or another trust company or companies as
registrar for its shares or such class thereof, as the case may be. The
Directors may terminate the appointment of any such trust company at any
time and may appoint another trust company in its place.
4.2. Unless prohibited by the Company Act, the Company may keep
or cause to be kept one or more branch registers of members at such place
or places as the Directors may from time to time determine.
<PAGE>
5
4.3. The Company shall not at any time close its register of
members.
PART 5
TRANSFER AND TRANSMISSION
OF SHARES
------------------------
5.1. Subject to the provisions of the Memorandum and of these
Articles that may be applicable, any member may transfer any of his shares
by instrument in writing executed by or on behalf of such member and
delivered to the Company or its transfer agent. The instrument of transfer
of any share of the Company shall be in the form, if any, on the back of
the Company's share certificates or in such other form as the Directors may
from time to time approve. Except to the extent that the Company Act may
otherwise provide, the transferor shall be deemed to remain the holder of
the shares until the name of the transferee is entered in the register of
the members or a branch register of members in respect thereof.
5.2. The signature of the registered owner of any shares, or of
his duly authorized attorney, upon an authorized instrument of transfer
shall constitute a complete and sufficient register, in the name of the
transferee as named in the instrument of transfer, the number if shares
specified therein or, if no number is specified, all the shares of
registered owner represented by share certificates deposited with the
instrument of transfer. If no transferee is named in the instrument of
transfer, the instrument of transfer shall constitute a complete and
sufficient authority to the Company, its Directors, officers and agents to
register, in the name of the person on whose behalf any certificate for the
shares to be transferred is deposited with the Company for the purpose of
having the transfer registered, the number of shares specified in the
instrument of transfer or, if no number is specified, all the shares
represented by all share certificates deposited with the instrument of
transfer.
5.3. Neither the Company nor any Director, officer or agent
thereof shall be bound to inquire into the title of the person named in the
form of the transfer as transferee, or, if no person is named therein as
transferee, of the person on whose behalf the certificate is deposited with
the Company for the purpose of having the transfer registered or be liable
to any claim by such registered owner or by any intermediate owner or
holder of the certificate of any of the shares represented thereby or any
interest therein for registering the transfer, and the
<PAGE>
6
transfer, when registered, shall confer upon the person in whose name the
shares have been registered a valid title to such shares.
5.4. Every instrument of transfer shall be executed by the
transferor shall be executed by the by the transferor and left at the
registered office of the Company or at the office of its transfer agent or
registrar for registration together with the share certificate for the
shares to be transferred and such other evidence, if any, as the Directors
or the transfer agent or registrar may require to prove the title of the
transferor or his right to transfer the shares and the right of the
transferee to have the transfer registered. All instruments of transfer
where the transfer is registered shall be retained by the Company or its
transfer agent or registrar and any instrument of transfer, where the
transfer is not registered, shall be returned to the person depositing the
same together with the share certificate which accompanied the same
tendered for registration.
5.5. There shall be paid to the Company in respect if the
registration of any transfer such sum, of any, as the Directors may from
time to time determine.
5.6. In the case of the death of a member, the survivor or
survivors where the deceased was a joint registered holder, and the legal
personal representative of the deceased where he was the sole holder, shall
be the only persons recognized by the Company as having any title to his
interest in the shares. Before recognizing any legal personal
representative the Directors may require him to deliver to the Company the
original or a court-certified copy of a grant of probate or letters of
administration in British Columbia or such other evidence and documents as
the Directors consider appropriate in order to establish the right of the
personal representative to such title to the interest in the shares of the
deceased member.
5.7. Upon death or bankruptcy of a member, his personal
representative or trustee in bankruptcy, although not a member, shall have
the same rights, privileges and obligations that attach to the shares
formerly held by the deceased or bankrupt member if the documents required
by the Company Act shall have been deposited with the Company. This
Article does not apply on the death of a member with respect to shares
registered in his name and the name of another person in joint tenancy.
5.8. Any person becoming entitled to a share in consequence of
the death or bankruptcy of a member shall, upon such document sand evidence
being produced to the Company as the Company Act require or who becomes
entitled to a share as a result of an order of a Court of competent
jurisdiction or a
<PAGE>
7
statute has the right either to by registered as a member in his
representative capacity in respect of such share, or, if he is a personal
representative, instead of being registered himself, to make such transfer
of the share as the deceased or bankrupt person could have made; but the
Directors shall, as regards a transfer by a personal representative or
trustee in bankruptcy, have the same right, if any, to decline or suspend
registration of a transferee as they would have in the case of a transfer
of a share by the deceased or bankrupt person before the death or
bankruptcy.
PART 6
ALTERATION OF CAPITAL
---------------------
6.1. The Company may be ordinary resolution filed with the
Registrar amend its Memorandum to increase the authorized capital of the
Company by:
(i) creating shares with par value or shares without par value, or
both; or
(ii) increasing the number of shares with par value or shares without
par value, or both; or
(iii) increasing the par value of a class of shares with par value, if
no shares of that class are issued.
6.2. The Company by special resolution alter its Memorandum to
subdivide, consolidate, change from shares with par value to shares without
par value, or from shares without par value to shares with par value, or
change the designation of, all or any of its shares but only of such
extent, in such manner and with such consents of members holding a class of
shares which is the subject if or affected by such alteration, as the
Company Act provides.
6.3. The Company may alter its Memorandum or these Articles:
(i) by special resolution, to create, to define and attach special
rights or restrictions to any shares; and
(ii) by special resolution and by otherwise complying with any
applicable provision of its Memorandum or these Articles, to vary
or abrogate any special rights and restrictions attached to any
shares;
<PAGE>
8
and in each case by filing a certified copy of such resolution with the
Registrar, but no right or special right attached to any issued shares
shall be prejudiced or interfered with unless all members holding shares of
each class whose right or special right is so prejudiced or interfered with
consent thereto in writing, or unless a resolution consenting thereto is
passed at a separate class meeting of the holders of the shares of each
such class by a majority of three-fourths, or such greater majority as may
be specified by the special right attached to the class of shares, of the
issued share of such class.
6.4. Notwithstanding such consent in writing or such resolution,
no such alteration shall be valid as to any part of issued shares of any
class unless the holders of the rest of the issued shares of any class
unless the holders of the rest of the issued shares of such class either
all consent thereto in writing or consent thereto by a resolution passed by
the votes of members holding three-fourths of the rest of such shares.
6.5. If the Company is or becomes a reporting company, no
resolution to create, vary or abrogate any special right of conversion
attaching to any class of shares shall be submitted to any meeting of
members unless, if so required by the Company Act, the Superintendent shall
have consented to the resolution.
6.6. Unless these Articles otherwise provided, the provisions of
these Articles relating to general meetings shall apply, with the necessary
changes and so far as they are applicable, to a class meeting of members
holding a particle class of shares but the quorum at a class meeting shall
be one person holding or representing by proxy one-thirds of the shares
affected.
PART 7
PURCHASE AND REDEMPTION
OF SHARES
-----------------------
7.1. Subject to the special rights and restrictions attached to
any class of share, the Company may, by a resolution of the Directors and
in compliance with the Company Act, purchase any of the shares at the price
upon the terms specified in such resolution or redeem any class of its
shares in accordance with the special rights and restrictions attaching
thereto. No such purchase or redemption shall be made if the Company is
insolvent at the time of the proposed purchase or redemption would render
the Company insolvent. Unless the shares are to be purchased through a
stock exchange, or from a bona fide employee or bone fide former employee
of the Company or of an affiliate of the Company, or his personal
<PAGE>
9
representative, in respect of shares beneficially owned by such employee or
former employee, or the Company is purchasing the shares from dissenting
members pursuant to the requirements of the Company Act, the Company shall
make its offer to purchase pro rata to every member who holds shares of the
class to be purchased.
7.2. If the Company proposes at its option to redeem some but not
all of the shares of any class, the Directors may, subject to the special
rights and restrictions attached to such redeemed shall be selected.
7.3. Subject to the provisions of the Company Act, any shares
purchased or redeemed by the Company may be sold or, if cancelled, reissued
by it, but, while such shares which have any vote in respect of these
shares and no dividend or other distribution shall be paid or made thereon.
PART 8
BORROWING POWERS
----------------
8.1. The Directors may from time to time on behalf of the
Company:
(i) borrow money in such manner and amount, on such security, from
such sources and upon such terms and conditions as they think
fit;
(ii) issue bonds, debentures, and other debt obligations either
outright or as security for any liability or obligation of the
Company or any other person; and
(iii) mortgage, charge, whether by way of specific or floating charge,
or give other security in the undertaking, or on the whole or any
part of the property and assets, of the Company (both present and
future).
8.2. Any bonds, debentures or other debt obligations of the
Company may be issued at a discount, premium or otherwise, and with any
special privileges as to redemption, surrender, drawing, allotment of or
conversion into or exchange for shares or other securities, attending and
voting at general meetings of the Company and the persons whom they were
issued or any subsequent holder thereof, all as the Directors may
determine.
<PAGE>
10
8.3. The Company shall keep or cause to be kept within the
Province of British Columbia in accordance with the Company Act a register
of its debentures and a register of debentureholders, which registers may
be combined, and, subject to the provisions of the Company Act, may keep or
cause to be kept one or more branch registers of its debentureholders at
such place or places as the Directors may from time to time determine and
the Directors may by resolution, regulation or otherwise make such
provisions as they think fit respecting the keeping of such branch
registers.
8.4. Every bond, debenture or other debt obligation of the
Company shall be signed manually by at least one Director or officer of the
Company or by on behalf of a trustee, registrar, branch registrar, transfer
agent or branch transfer agent for the bond, debenture or other debt
obligation appointed by the Company or under any instrument under which the
bond, debenture or other debt obligation is issued and any additional
signatures may be pointed or otherwise mechanically reproduced thereon and,
in such event, a bond, debenture or other debt obligation so signed is
valid as if signed manually notwithstanding that any person whose signature
is so printed or mechanically reproduced shall have ceased to hold the
office that he is stated on such bond, debenture or other debt obligation
to hold at the date of issue thereof.
8.5. If the Company is or becomes a reporting Company, the
Company shall keep or cause to be kept a register of its indebtedness to
every Director or Officer of the Company or an associate of any of them in
accordance with the provisions of the Company Act.
PART 9
GENERAL MEETINGS
----------------
9.1. Subject to any extensions of time permitted pursuant to the
Company Act, the first annual general meeting of the Company shall be held
within fifteen months from the date of incorporation and thereafter an
annual general meeting shall be held once in every calendar year at such
time (not being more than thirteen months after the holding of the last
preceding annual general meeting) and place as may be determined by the
Directors.
9.2. If the Company is, or becomes, a Company which is not a
reporting Company and all the members entitled to attend and vote at an
annual general meeting consent in writing to all
<PAGE>
11
the business which is required or desired to be transacted at the meeting,
the meeting not need to be held.
9.3. All general meetings other annual general meetings are
herein referred to as and may be called extraordinary general meetings.
9.4. The Directors may, whenever they think fit, convene an
extraordinary general meeting. An extraordinary general meeting, if
requisitioned in accordance with the company Act, shall be convened by the
Directors or, if not convened by the Directors, may be convened by the
requisitioned as provided in the Company Act.
9.5. If the Company is or becomes a reporting company, advance
notice of any general meeting at which Directors are to be elected shall
published in the manner required by the Company Act.
9.6. A notice convening a general meeting specifying the place,
the day, and the hour of the meeting, and, in case of special business, the
general nature of that business, shall be given as provided in the Company
Act and in the manner hereinafter in these Articles mentioned, or in such
other manner (if any) as may be prescribed by ordinary resolution, whether
previous notice thereof has been given or not, to such persons as are
entitled by law or under these Articles to receive such notice of a meeting
to, or the non-receipt of notice of a meeting, by any member shall not
invalidate the proceedings at that meeting.
9.7. All the member of the Company entitled to attend vote at a
general meeting may, by unanimous consent in writing given before, during
and after the meeting, or if they are present at the meeting by a unanimous
vote, waive or reduce the period of notice of such meeting and an entry in
the minute book of such waiver or reduction shall be sufficient evidence of
the due convening of the meeting.
9.8. Except as otherwise provided by the Company Act, where any
special business at a general meeting includes considering, approving,
ratifying, adopting or authorizing any document or the execution thereof or
the giving of effect thereto, the notice convening the meeting shall, with
respect to such document, be sufficient if it states that a copy of the
document or proposed document is or will be available for inspection by
members at the registered office or records office of the Company or at
such other place in British Columbia designated in the notice during usual
business hours up to the date of such general meeting.
<PAGE>
12
PART 10
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
10.1. All business shall be deemed special business which is
transacted at:
(i) an extraordinary general meeting other than the conduct of and
voting at, such meeting; and
(ii) an annual general meeting, with the exception of the conduct of,
and voting at, such meeting, the consideration of the financial
statement and of the respective reports of the Directors and
Auditor, fixing or changing the number of Directors, approval of
a motion to elect two or more directors by a single resolution,
the election of Directors, the appointment of the Auditor, the
fixing of the remuneration of the Auditor and such other business
as by these Articles or the Company Act may be transacted at a
general meeting without prior notice thereof being given to the
members or any business which is brought under consideration by
the report of the Directors.
10.2. No business, other than election of the chairman or the
adjournment of the meeting, shall be transacted at any general meeting
unless a quorum of members, entitled to attend and vote, is present at the
commencement of the meeting, but the quorum need not be present throughout
the meeting.
10.3. Save as herein otherwise provided, a quorum shall be
two persons present and being, or representing by proxy, member holding
not less than one-twentieth of the issued shares entitled to be voted at
the meeting. If there is only one member the quorum is one person present
being, or representing by proxy, such member. The Directors, the
Secretary, and the solicitors of the Company shall be entitled to attend at
any general meeting but no such person shall be counted in the in the
quorum or be entitled to vote at any general meeting unless he shall be a
member or proxyholder entitled to vote thereat
10.4. If within half an hour from the time appointed for a
general meeting a quorum is not present, the meeting, if convened upon the
requisition of members, shall be dissolved. In any other case it shall
stand adjourned to the same day in the next week, at the same time and
place, and, if at the adjourned meeting a quorum is not present within half
an hour from the time appointed for the meeting, the person or persons
present and
<PAGE>
13
being, or representing by proxy, a member or members entitled to attend and
vote at the meeting shall be a quorum.
10.5. The Chairman of the Board, if any, or in his absence
the President of the Company or in his absence a Vice-President of the
Company, if any, shall be entitled to preside as chairman at every general
meeting of the Company.
10.6. If at any general meeting neither the chairman of the
Board nor President nor a Vice-President is present within fifteen minutes
after the time appointed for holding the meeting or is willing to act as
chairman, the Directors present shall choose some one of their number to
decline to take the chair or shall fail to so choose or if no Director be
present, the members present shall choose one of their number to be
chairman.
10.7. The chairman may and shall, if so directed by the
meeting, adjourn the meeting from time to time and from place to place, but
no business shall be transacted at any adjourned meeting other than the
business left unfinished at the meeting from which the adjournment took
place. When a meeting is adjourned for thirty days or more, notice, but
not "advance notice", of the meeting. Save as aforesaid, it shall not be
necessary to give any notice of an adjourned meeting or of the business to
be transacted at an adjourned meeting.
10.8. No motion proposed at a general meeting need be
seconded and the chairman may prose or second a motion.
10.9. Subject to the provisions of the Company Act, at any
general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands, unless (before or on the declaration of the
result of the show of hands) a poll is directed by the chairman or demanded
by at lease one member entitled to vote who is present in person or by
proxy. The chairman shall declare to the meeting the decision on every
question in accordance with the result of the show of hands or the poll,
and such decisions shall be entered in the book of proceedings of the
Company. A declaration of by the chairman that a resolution has been
carried, or carried unanimously, or by a particular majority, or lost or
not carried by a particular majority and an entry that effect in the book
of the proceedings of the Company shall be conclusive evidence of the fact,
without proof of the number or proportion of the votes recorded in favor
of, or against, that resolution.
10.10. In the case of an equality of votes, whether a show of
hands or on a poll, the chairman of the meeting at
<PAGE>
14
which the show of hands takes place or at which the poll is demanded shall
not be entitled to a second or casting vote.
10.11. No poll may be demanded on the election of a chairman.
A poll demanded on a question of adjournment shall be taken forthwith. A
poll demanded on any other question shall be taken soon as, in the opinion
of the chairman, is reasonably convenient, but in no event later than seven
days after the meeting and such at such time and place an in such manner as
the chairman of the meeting directs. The results of the poll shall be
deemed to be the resolution of and passed with pending the taking of the
poll. A demand for a poll may be withdrawn. in any dispute as to the
admission or rejection of a vote the decision of the chairman made in good
faith shall be final and conclusive.
10.12. Every ballot cast upon a poll and every proxy
appointing a proxyholder who casts a ballot upon a poll shall be retained
by the Secretary for such period and be subject to such inspection as the
Company Act may provide.
10.13. On a poll a person entitled to cast more than one vote
need not, if he votes, use all his votes or cast all the votes he uses in
the same way.
10.14. Unless the Company Act, the Memorandum or these
Articles otherwise provide, any action to be taken by a resolution of the
members may be taken by an ordinary resolution.
PART 11
VOTES OF MEMBERS
----------------
11.1. Subject to any special voting rights or restrictions
attached to any class of shares and the restrictions on joint registered
holders of shares, on a vote by a show of hands at a general meeting every
member who is present in person and entitled to vote thereat shall have one
vote for each share of which he is the registered holder and may exercise
such vote either in person or by proxyholder.
11.2. Any person who is not registered as a member but is
entitled to a vote at any general meeting in respect of a share, may vote
the share in the manner as if he were a member; but, unless the Directors
have previously admitted his right to vote at meeting in respect to the
share, he shall satisfy the directors of his right to vote the share before
the
<PAGE>
15
time for holding the meeting, or adjourned meeting, as the case may be, at
which he proposes to vote.
11.3. Any corporation not being a subsidiary which is a
member of the company may by resolution of its directors or other governing
body authorize such person as it thinks fit to act as its representative at
any general meeting or class meeting. The person so authorized shall be
entitled to exercise in respect of and at such meeting the same powers on
behalf of the corporation which he represents as the corporation could
exercise if it were an individual member of the Company personally present,
including, without limitation, the right, unless restricted by such
resolution, to appoint a proxyholder to represent such corporation, and
shall be counted for the purpose of forming a quorum if present at the
meeting. Evidence of the appointment of any such representative may be
sent to the Company by written instrument, telegram, telex or any method of
transmitting legibly recorded messages. Notwithstanding the foregoing, a
corporation being a member may appoint a proxyholder.
11.4. In the case of joint registered holders of a share the
vote of the senior who exercises a vote, whether in person or by
proxyholder, shall be accepted to the exclusion of the votes of the other
joint registered holders; and for this purpose seniority shall be
determined by the order in which the names stand in the register of
members. Several legal personal representatives of a deceased member whose
shares are registered in his sole name shall for the purpose of this
Article be deemed joint registered holders.
11.5. A member if unsound mind entitled to attend and vote,
in respect of whom an order has been made by any court having jurisdiction,
may vote, whether on a show of hands or on a poll, by his committee or
curator bonis appointed by that court, and any such committee, curator
bonis, or other person may appoint a proxyholder.
11.6. A member holding more than one share in respect of
which he is entitled to vote shall be entitled to appoint one or more (but
not more than five) proxyholders to attend, act and vote for him on the
same occasion. If such a member should appoint more than one proxyholder
for the same occasion he shall specify the number of shares each
proxyholder shall be entitled to vote. A member may also appoint one or
more alternate proxyholders to act in the place and stead of an absent
proxyholder.
11.7. A proxy shall be in writing under the hand of the
appointor or of his attorney duly authorized in writing, or,
<PAGE>
16
if the appointor is a corporation, either under the seal of the corporation
or under the hand of a duly authorized officer or attorney. A proxyholder
need not be a member of the Company if:
(i) the Company is at the time a reporting company; or
(ii) the member appointing the proxyholder is a corporation; or
(iii) the Company shall have at the time only one member; or
(iv) the persons present in person or by the proxy and entitled to the
vote at the meeting by resolution permit the proxyholder to
attend and vote; for the purpose of such resolution the
proxyholder shall be counted in the quorum but shall not be
entitled to vote;
and in the other case a proxyholder must be a member.
11.8. A proxy and the power of attorney or other authority,
if any, under which it is signed or notarially certified copy thereof shall
be deposited at the registered office of the Company or at such other place
as is specified for that purpose in the notice convening the meeting, not
less than 24 hours (excluding Saturdays, Sundays and holidays) before the
time for holding the meeting or adjourned meeting in respect of which the
person named in the instrument is appointed. In addition to any other
method of depositing the proxies (if the Company is or becomes a reporting
company, not exceeding 48 hours (excluding Saturdays, Sundays and holidays)
preceding the meeting or adjourned meeting, specified in the notice calling
a meeting of members and providing for particulars of such proxies to be
sent to the company in writing or by letter, telegram, telex or arrive
before the commencement of the meeting or adjourned meeting at the office
if the Company or of any agent of the Company appointed for the purpose of
receiving such particulars and providing that proxies themselves were
deposited as required by this Part and votes given in accordance with such
regulations shall be valid and shall be counted.
11.9. Unless the Company Act or any other statue or law is
applicable to the Company or to any class of its shares requires any other
form of proxy, a proxy, whether for a specified meeting or otherwise, shall
be in the for following,
<PAGE>
17
but may also be in other form that the Directors or the chairman of the
meeting shall approve:
(Name of Company)
The undersigned, being a member of the above named Company,
hereby appoints or failing him as proxyholders for the undersigned to
attend, act and vote for and on behalf of the undersigned at the
general meeting of the Company to beheld on the___________________day
of _________________ and at any adjournment thereof.
Signed this _____________ day of_________________, 19____.
(Signature of member)
11.10 A vote given in accordance with the terms of a proxy is
valid notwithstanding the previous death or incapacity of the member giving
the Proxy or the revocation of the proxy or of the authority under which
the form of proxy was executed or the transfer of the shares in respect of
which the proxy is given, provided that no notification in writing of such
death, incapacity, revocation or transfer shall have been received at the
registered office of the Company or by the chairman of the meeting of
adjourned meeting for which the proxy was given before the vote is taken.
11.11. Every proxy may be revoked by an instrument in writing:
(i) executed by the member giving the same or by his attorney
authorized in writing or, where the member is a corporation, by
a duly authorized officer or attorney of the corporation; and
(ii) delivered either at the registered office of the Company at any
time up to and including the last business day preceding the day
of the meeting, or any adjournment thereof at which the proxy is
to be used, or to the chairman of the meeting on the day of the
meeting or any adjournment thereof before any vote in respect of
which the proxy is to be used shall have been taken;
or in any other manner provided by law.
<PAGE>
18
PART 12
DIRECTORS
---------
12.1. The subscribers to the Memorandum of the Company are
the first Directors. The Directors to succeed the first Directors may be
appointed in writing by a majority of the subscribers to the Memorandum or
at a meeting if the subscribers, or if not so appointed, they shall be
elected by the members entitled to vote on the election of Directors and
the number of Directors shall be the same as the number of Directors so
appointed or elected. The number of Directors, excluding additional
Directors, may be fixed or changed from time to time by ordinary
resolution, whether previous notice thereof has been given or not, and
Directors to fill any vacancies in the Board of Directs may be elected from
time to time by the members by ordinary resolution. Notwithstanding
anything contained in these Articles the number of Directors shall never be
less than one or, if the Company is or becomes a reporting Company, less
than three.
12.2. The remuneration of the Directors as such may from time
to time be determined by the Directors or, if the Directors shall so
decide, by the members. Such remuneration may be in addition to any salary
or other remuneration paid to any officer or employee of the Company as
such who is also a Director. The Directors shall be repaid such reasonable
travelling, hotel and other expenses as they incur in and about the
business of the Company and if any Director shall perform any professional
or other services for the Company that in the opinion of the Directors be
specially occupied in or about the Company's business, he may be paid a
remuneration to be fixed by the Board, or, at the option of such Director,
by the Company in the general meeting, and such remuneration may be either
in addition to, or in substitution for nay other remuneration that he may
be entitled to receive. The Directors on behalf of the Company, unless
otherwise determined by ordinary resolution, may pay a gratuity or pension
or allowance on retirement to any Director who has held any salaried office
or place of profit with the Company or to his spouse or dependents and may
make contributions to any fund and pay premiums for the purchase or
provisions of any such gratuity, pension or allowance.
12.3. A Director shall not be required to hold a share in the
capital of the Company as qualification for his office but shall be
qualified as required by the Company Act, to become or act as a Director.
<PAGE>
19
PART 13
ELECTION AND REMOVAL OF DIRECTORS
---------------------------------
13.1. At each annual general meeting of the Company all the
Directors shall retire and the members entitled to vote thereat shall elect
a Board of Directors consisting of the number of Directors for the time
being fixed pursuant to these Articles. If the company and the business to
be transacted at any annual general meeting is consented to in writing by
all the members who are entitled to attend and vote thereat such annual
general meeting shall be deemed for the purpose of this part to have been
held on such written consent becoming effective.
13.2. A retiring Director shall be eligible for reelection.
13.3. Where the Company fails to hold annual general meeting
accordance with the Company Act, the Directors then in office shall be
deemed to have been elected or appointed as Directors on the last day on
which the annual general meeting could have been held pursuant to these
Articles and they may hold office until other Directors are appointed or
elected or until the day on which the next annual general meeting is held.
13.4. If at any general meeting at which there should be an
election of Directors, the place of any of the retiring Directors are not
filled by such election, such of the retiring Directors who are not re-
elected as may be requested by the newly-elected Directors shall, if
willing to do so, continue in office to complete the number of Directors
for the time being fixed pursuant to these Articles until further new
Directors are elected at a general meeting convened for the purpose. If
any election or continuance of the number of Directors for the time being
fixed pursuant to these Articles such number shall be fixed at the number
of Directors actually elected or continued in office.
13.5. Any casual vacancy occurring in the Board of Directors
may be filled by the remaining Directors or Director.
13.6. Between successive annual general meetings the
Directors shall have power to appoint one or more additional Directors
shall have power to appoint one or more than one-third of the number of
Directors elected or appointed at the last annual general meeting at which
Directors were elected. Any Director so appointed shall hold office only
until the next following annual general meeting of the Company, but shall
be eligible for election at such meeting
<PAGE>
20
and so long as he his an additional Directors the number of Directors shall
be increased accordingly.
13.7. Any Director may instruct in writing delivered to the
Company appoint any person to be his alternate to act in his place at
meetings of the Directors at which he is not present unless the Directors
shall have reasonably disapproved the appointment of such person as an
alternate Director and shall have given notice to that effect to the
Director appointing the alternate Director within a reasonable time after
delivery of such instrument to the Company. Every such alternate shall be
entitled to notice of meetings of the Directors and to attend and vote as
Director at meeting at which the person appointing him is not personally
present, and, if he is a Director he is representing in addition to his
vote. A Director any at any time by instrument, telegram, telex or any
method of transmitting legibly recorded messages delivered to the company
revoke the appointment of an alternate appointed by him. The remuneration
payable to such an alternate shall be payable out of the remuneration of
the Directors appointing him.
13.8. The office of Director shall be vacated of the
Director:
(i) resigns his office by notice in writing delivered to the
registered office of the company; or
(ii) is convicted of an indictable offense and the other Directors
shall have resolved to remove him; or
(iii) ceases to be qualified to act as a Director pursuant to the
Company Act.
13.9. The Company may by special resolution remove any
Director before the expiration of his period of office, and may by an
ordinary resolution appoint another person in his stead.
PART 14
POWERS AND DUTIES OF DIRECTORS
------------------------------
14.1. The Directors shall manage, or supervise the management
of, the affairs and business of the Company and shall have the authority to
exercise all such powers of the Company as are not, by the Company Act or
by the Memorandum or these Articles, required to be exercised by the
Company in general meeting.
<PAGE>
21
14.2. The Directors may from time to time by power of
attorney or other instrument under the seal, appoint any person to be the
attorney of the Company for such purposes, and with such powers,
authorities and discretions (not exceeding those vested in or exercisable
by the Directors under these Articles and excepting the powers of the
Directors relating to the constitution of the Board and any of its
committee and the appointment or removal of officers and the power to
declare dividends) and for such period, with such remuneration and subject
to such conditions as the Directors may think fit, and any such appointment
may be made in favor of any corporation, or of any of the members,
directors, nominees or managers of any corporation, firm or joint venture
and any such power of attorney may contain such provisions for the
protection or convenience of persons dealing with such attorney as the
Directors think fit. Any such attorney may be authorized by the Directors
to sub-delegate all or any of the powers, authorities and discretions for
the time being vested in him.
PART 15
DISCLOSURE OF INTEREST OF DIRECTORS
-----------------------------------
15.1. A Director who is, in any way, directly or indirectly
interested in an existing or proposed contract or transaction with the
Company or who holds any office or possesses any property whereby, directly
or indirectly, a duty or interest might be created to conflict with this
duty or interest in such contract or transaction or of the conflict or
potential conflict with the duty and interest as a Director, as the cause
may be, in accordance with the provision of the Company Act.
15.2. A Director shall not vote in respect of the approval of
any such contract or transaction with the Company in which he is interested
and if he shall do so his vote shall not be counted, but shall be counted
in the quorum present st the meeting at which such vote is taken. This
Article and Article 15.1 shall not apply in those circumstances where a
Director is, under the provisions of the Company Act, deemed not to be
interested in a proposed contract or transaction,
15.3. A Director may hold any office or place of profit with
the Company (Other than the office of auditor of the Company) in
conjunction with hi office of Director for such period and on such terms
(as to remuneration or otherwise) as the
<PAGE>
22
Directors may determine and no Director or intended Director shall be
disqualified by his office from contracting with the Company either with
regard to his tenure of any such other office or place of profit or as
vendor, purchaser or otherwise, and, subject to compliance with the
provisions of the Company Act, no contract in which a Director is in any
way interested shall be liable to be voided by reason thereof.
15.4. Subject to compliance with the provisions of the
Company Act, a Director or his firm may act in a professional capacity for
the Company (except as auditor of the Company) and he or his firm shall be
entitled to remuneration for professional services as if he were not a
Director.
15.5. A Director may be or become a director or other officer
or employee of, and, subject to compliance with the provisions of the
Company Act, such Director shall not be accountable to the Company for nay
remuneration or other benefits received by him as director, officer or
employee of, or from his interest in, such other corporation or firm,
unless the Company in general meeting otherwise directs.
PART 16
PROCEEDINGS OF DIRECTORS
------------------------
16.1. The Chairman of the Board, if any, or in his absence,
the President shall preside as chairman of the Board or neither Chairman of
the Board nor the President is present within fifteen minutes of the time
appointed for holding meeting or is willing to act as chairman, or, if the
Chairman of the Board, if any, and the President have advised the Secretary
that they will not be present at the meeting, the Directors present shall
choose one of their number to be chairman of the meeting.
16.2. The Directors may meet together for the dispatch of
business, adjourn and otherwise regulate their meetings, as they think fit.
Questions arising at any meeting shall be decided by a majority of votes.
In case of an equality of votes the chairman shall not have a second or
casting of vote. Meetings of the Board held at a regular intervals may be
held at such place, at such time and upon such resolution from time to time
to determine.
<PAGE>
23
16.3. A Director may participate in a meeting of the Board
or of any committee of the Directors by means of conference telephones or
other communications facilities by means of which all Directors
participating in the meeting can hear each other and provided that all such
Directors agree to such participation. A Director participating in a
meeting in accordance with this Article shall be deemed to be present at
the meeting and to have so agreed and shall be counted in the quorum
therefor and be entitled to speak and vote thereat.
16.4. A Director may, and the Secretary or Assistant
Secretary upon request of a Director shall, call a meeting of the Board at
any time. Reasonable notice of such meeting specifying the place, day and
hour of such meeting given by mail, postage prepaid, addressed to each of
the Directors and alternate Directors at his address at it appears on the
books of the Company or by leaving it at his usual business or residential
address or by telephone, telegram, telex, or any method of transmitting
legibly recorded messages. It shall not be necessary to give notice of
meeting of Directors to any Director or Alternate Director (i) who is at
the time not in the Province of British Columbia (ii) if such meeting is to
be held immediately following a general meeting at which such Director
shall have ben elected or is the meeting of Directors at which such
Director is appointed. Accidental omission to give notice of a meeting to,
or the non-receipt of notice of a meeting by, any director or alternate
director shall not invalidate the proceedings at the meeting.
16.5. Any Director of the Company may file with the Secretary
a document executed by him waiving notice of any past, present or future
meeting or meetings of Directors being, or required to have been, sent to
him and may at any time withdraw such waiver with respect to meetings held
thereafter. After filing such waiver with respect to future meetings and
until such waiver is withdrawn no notice need be given to such Director and
unless the Director otherwise requires in writing to the Secretary, to his
alternate Director of any meeting if Directors and all meetings of the
Directors so held shall be deemed not to be improperly called or
constituted by reason of notice not having been given to such Director or
alternate Director.
16.6. The quorum necessary for the transaction of the
business of the Directors may be fixed by the Directors and if not so fixed
shall be two Directors or, if the number of Director is fixed at one, shall
be one Director.
16.7. The continuing Directors may act notwithstanding
vacancy in their body, but, if and so long as their number is reduced below
the number fixed pursuant to these Articles as the necessary quorum of
Directors, the continuing Director may act for the purpose of increasing
the number if Directors to that number, or of summoning a
<PAGE>
24
general meeting of the Company, but for no other purpose.
16.8. Subject to the provisions of the Company Act, all acts
done by any meeting of the Directors or of a committee of Directors, or by
any person acting as a Director, shall, notwithstanding that it be
afterwards discovered that there was some defect in the qualifications,
election or appointment of any such Directors or of the members of such
committee or person acting as aforesaid, or that they or any of them were
disqualified, be as valid as if every such person had been duly elected or
appointed and was qualified to be a director.
16.9. A resolution consented to in writing, whether by
document, telegram, telex or any method of transmitting legibly recorded
messages or other means, by all of the Directors shall be as valid and
effectual as if it had been passed at a meeting if the Directors duly
called and held. Such resolution may be in two or more counterparts which
together shall be deemed to constitute one resolution in writing. Such
resolution shall be filed with the minutes of the proceedings of the
Directors and shall be effective on the date stated thereon or on the
latest date stated on any counterparts.
PART 17
EXECUTIVE AND OTHER COMMITTEES
------------------------------
17.1. The Directors may be resolution appoint an Executive
Committee to consist of such member or members of their body as they think
fit, which committee shall have, and may exercise during the intervals
between the meetings of the Board, all the powers vested in the Board
except the power to fill vacancies in the Board, the power to change the
membership of, or fill vacancies in, said committee or any other committee
of the Board such powers, if any, as may specified in the transactions and
shall cause them to be recorded in books kept for that purpose, and shall
report the same to the Board of Directors at such times as the Board of
Directors may from time to time require. The Board shall have the power at
any time to revoke or override the authority given to or acts done by the
Executive Committee except as to acts done before such revocation or
overriding and to terminate the appointment or change the membership of
such committee and to fill vacancies in it. The Executive Committee may
make rules for the conduct of its business and may appoint such assistants
as it may deem necessary. A majority of the members of said Committee
shall constitute a quorum thereof.
<PAGE>
25
17.2. The Directors may be resolution appoint one or more
committees consisting of such member or members of their body as they think
fit and may delegate to any such committee between meetings of the Board
such powers of the Board (except the power to fill vacancies in the Board
and the power to change the membership of or fill vacancies in any
committee of the Board) subject to such conditions as may be prescribed in
such resolution, and all committees so appointed shall keep regular minutes
of their transactions and shall cause them to be recorded in books kept for
that purpose, and shall report the same to the Board of Directors at such
times as the Board of Directors may from time to time require. The
Directors shall also have power at any time to revoke override any
authority given to or acts to be done by any such committee except as to
acts done before such revocation or overriding and to terminate the
appointment or change the membership of a committee and to fill vacancies
in it. Committee may make rules for the conduct of their business and may
appoint such assistants as they may deem necessary. A majority of the
members of a committee shall constitute a quorum thereof.
17.3. The Executive Committee and any other committee may
meet and adjourn as they think proper. Questions arising at any meeting
shall be determined by a majority of votes of the members of the committee
present, and in case of an equality of votes the chairman shall not have a
second or casting vote. A resolution approved in writing by all the
members of the Executive Committee or any other committee shall be as valid
and effective as if it had been passed at a meeting of such committee duly
called and constituted. Such resolution may be in two or more counterparts
which together shall be deemed to constitute one resolution in writing.
Such resolution shall be filed with the minutes of the proceedings of the
committee and shall be effective on the date stated thereon or on the
latest date stated in any counterpart.
PART 18
OFFICERS
--------
18.1. The Directors shall, from time to time, appoint a
President and a Secretary and such other officers, if any, as the Directors
shall determine and the Directors may, at any time, terminate any such
appointment. No officer shall be appointed unless he is qualified in
accordance with the provisions of the Company Act.
18.2. One person may hold more than one of such offices
except that the offices of President and Secretary must
<PAGE>
26
be held by different persons unless the Company has only one member. Any
person appointed as the Chairman of the Board, the President or the
Managing Director shall be a Director. The other officers need not be
Directors. The remuneration of the officers of the Company as such and the
terms and conditions of their tenure of office or employment shall from
time to time be determined by the Directors; such remuneration may be by
way of salary, fees, wages, commission or participation in profits or any
other means or all of these modes and an officer may in addition to such
remuneration be entitled to receive after he ceases to hold such office or
leaves the employment of the Company a pension or gratuity. The Directors
may decide that functions and duties each officer shall perform and may
entrust to and confer upon him any of the powers exercisable by them upon
such terms and conditions and with such restrictions as they think fit and
may from time to time revoke, withdraw, alter or vary all or any of such
functions, duties and powers. The Secretary shall, inter alia, perform the
functions of the Secretary specified in the Company Act.
18.3. Every officer of the Company who holds any office or
possesses any property whereby, whether directly or indirectly, duties or
interests might be created in conflict with his duties or interests as an
officer of the Company shall, in writing, disclose to the President the
fact and the nature and the extent of the conflict.
PART 19
INDEMNITY AND PROTECTION OF
DIRECTORS, OFFICERS AND EMPLOYEES
---------------------------------
19.1. Subject to the provisions of the Company Act, the
Directors shall cause the Company to indemnify a Director or former
Director of the Company and the Directors may cause the Company to
indemnify a director or former director of a corporation of which the
Company is or was a shareholder and the heirs and personal representatives
of any such person against all costs, charges and expenses, including an
amount paid to settle an action or satisfy a judgment, actually and
reasonably incurred by him or them including the amount paid to settle an
action or satisfy a judgment in a civil, criminal or administrative action
or proceeding to which he is or they are made a partly by reason of his
being or having been a Director of the Company or a director of such
corporation. Each Director of the Company on being elected or appointed
shall be deemed to have contracted with the Company of the terms of the
foregoing indemnity.
<PAGE>
27
19.2. Subject to the provisions of the Company Act, the
Directors may cause the Company to indemnify any officer, employee or agent
of the Company or of a corporation of which the Company is or was a
shareholder (notwithstanding) that he is also a Director) and his heirs
and personal representative against all costs, charges and expenses
whatsoever incurred by him or them and resulting from his acting as an
officer, employee or agent of the Company (if he shall not be a full time
employee of the Company and notwithstanding that he is also a Director) and
his representative heirs and legal representatives against all costs,
charges and expenses whatsoever incurred by him or them and arising out of
the functions assigned to the Secretary by the Company Act or the functions
assigned to the Secretary by the Company Act or these Articles and each
such Secretary and Assistant Secretary shall on being appointed be deemed
to have contracted with the Company on the terms of the foregoing
indemnity.
19.3. The failure of a Director or officer of the Company to
comply with the provisions of the Company Act or of the Memorandum or these
Articles shall not invalidate any indemnity to which he is entitled under
this Part.
19.4. The Directors may cause the Company to purchase and
maintain insurance for the benefit of any person who is or was serving as
a Director, officer, employee or agent of the Company or as a director,
officer, employee or agent of any corporation of which the Company is or
was a shareholder and his heirs or personal representatives against any
liability incurred by him as such Director, director, officer, employee or
agent.
PART 20
DIVIDENDS AND RESERVE
---------------------
20.1. The Director may from time to time declare and
authorize payment of such dividends, if any, as they may deem advisable and
need not give notice of such declaration to any member. No dividend shall
be paid otherwise than out of funds and/or assets properly available for
the payment of dividends and a declaration by the Directors as to the
amount of such funds or assets available for dividends shall be conclusive.
The Company may pay any such dividend wholly or in part by the distribution
of specific assets and in particular by paid up shares, bonds debentures or
other securities of he Company or any other corporation or in any one or
more such ways as may be authorized by the Company of the Directors and
where any difficulty arises with regard to such distribution the Directors
may settle the same
<PAGE>
28
as they think expedient, and in particular may fix the value for
distribution of such specific assets not any part thereof, and may
determine that cash payments in substitution for all or any part of the
specific assets to which any members are entitled shall be made to any
members on the basis of the value so fixed in order to adjust the rights of
all parties and may vest any such specific assets in trustees for the
persons entitled to the dividend as may seem expedient to the Directors.
20.2. Any Dividend declared on shares of any class by the
Directors may be made payable on such date as is fixed by the Directors.
20.3. Subject to the rights of members (if any) holding
shares with special rights as to dividends, all dividends on shares of any
class shall be declared and paid according to the number of such shares
held.
20.4. The Directors may, before declaring any dividend , set
aside out of the funds properly available for the payment of dividends such
sums as they think proper as a reserve or reserves, which shall, at the
discretion of he Directors, be applicable for meeting contingencies, or for
equalizing dividends, or for any other purpose to which such funds of the
Company may be properly applied, and pending such application may, at the
like discretion, either be employed in the business of the Company or be
invested in such investments as the Directors may from time to time think
fit. The Directors may also, without placing the same in reserve, carry
forward such funds, which they think prudent not to divide.
20.5. If several persons are registered as joint holders of
any shares, any one of them may give an effective receipt for any dividend,
bonuses or other moneys payable in respect of the share.
20.6. No dividend shall bear interest against the Company.
Where the dividend to which a member is entitled includes a fraction of a
cent, such fraction shall be disregarded in making payment thereof and such
payment shall be deemed o be payment in full.
20.7. Any dividend, bonuses or other moneys payable in cash
in respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder, or in the case of joint
holders, to the registered address of that one of the joint holders who is
first named on the register, or to such person and to such address as the
holder or joint holders may direct in writing. Every such cheque or
warrant shall be made payable to the order of the person to whom it is
sent. The mailing of such cheque or warrant shall, to the extent
<PAGE>
29
of the sum represented thereby (plus the amount of any tax required by law
to be deducted) discharge all the liability for the dividend, unless such
cheque or warrant shall not be paid on presentation or the amount of tax so
deducted shall not be paid to the appropriate taxing authority.
20.8. Notwithstanding anything contained in these Articles
the Directors may from time to time capitalize any undistributed surplus on
hand of the Company and may from time to time issue as fully paid and non-
assessable any unissued shares, or any bonds, debentures or debt
obligations of the Company as a dividend representing such undistributed
surplus on hand or any part thereof.
PART 21
DOCUMENTS, RECORDS AND REPORTS
------------------------------
21.1. The Company shall keep at its records office or at such
other place as the Company Act may permit, the documents, copies,
registers, minutes, and records which the Company is required by the
Company Act to keep at its records office or such other place, as the case
may be.
21.2. The Company shall cause to be kept proper books of
amount and accounting records in respect of all financial and other
transactions of the Company in order properly to record the financial
affairs and condition of he Company and to comply with the Company Act.
21.3. Unless the Directors determine otherwise, or unless
otherwise determined by an ordinary resolution, no member of the Company
shall be entitled to inspect the accounting records of the Company.
21.4. The Directors shall from time to time at the expense of
the Company cause to be prepared and laid before the Company in general
meeting such financial statements and reports as are required by the
Company Act.
21.5. Every member shall be entitled to be furnished once
gratis on demand with a copy of the latest annual financial statement of
the Company and, if so required by the Company Act, a copy of each annual
financial statement and interim financial statement shall be mailed to each
member.
<PAGE>
30
PART 22
NOTICES
-------
22.1. A notice, statement or report may be given or delivered
by the Company to any member either by delivery to him personally or by
sending it by mail to him at his address as recorded in the register of
members. Where a notice, statement or report is sent by mail, service or
delivery of the notice, statements or report shall be deemed to be effected
by properly addressing, prepaying and mailing the notice, statement or
report and to have been given on the day, Saturdays, Sundays and Holidays
excepted, following the date of mailing. A certificate signed by the
Secretary or other officer of the Company or of any other corporation
acting in that behalf for the Company that the letter, envelope or wrapper
containing the notice, statement or report was so addressed, prepaid and
mailed shall be conclusive evidence thereof.
22.2. A notice, statement or report may be given or delivered
by the Company to the Joint holders of a share by giving the notice to the
joint holder first named in the register of members in respect of the
share.
22.3. A Notice, statement or report may be given or delivered
by the Company to the persons entitled to a share in consequence of the
death, bankruptcy or incapacity of a member by sending it through the mail
prepaid addresses to them by name or by the title of representatives of the
deceased or incapacitated person or trustee of the bankrupt, or by any like
description, at the address (if any) supplied to the Company for the
purpose by the persons claiming to be so entitled, or (until such address
has been so supplied) by giving the notice in a manner in which the same
might have been given if the death, bankruptcy or incapacity had not
occurred.
22.4. Notice of every general meeting or meeting of members
holding a class of shares shall be given in a manner hereinbefore
authorized to every member holding at the time of the issue of the notice
or the date fixed determining the members entitled to such notice,
whichever is the earlier, shares which confer the right to notice of and to
attend and vote at any such meeting. No other person except the auditor of
the Company and the Directors of the Company shall be entitled to receive
notices of any such meeting.
<PAGE>
31
PART 23
RECORD DATES
------------
23.1. The Directors may fix in advance a date, which shall
not be more than the maximum number of days permitted by the Company Act
preceding the date of any meeting of members or any class thereof or of the
payment of any dividend or of the proposed taking of any other proper
action requiring the determination of members as the record date for the
determination of the members entitled to notice of, or to attend and vote
at, any such meeting and any adjournment thereof, or entitled to receive
payment of any such dividend or for any other proper purpose and, in such
case, notwithstanding anything elsewhere contained in these Articles, only
members of record on the date so fixed shall be deemed to be members for
the purpose aforesaid.
23.2. Where no record date is so fixed for the determination
of members as provided in the preceding Article the date on which the
notice is mailed or on which the resolution declaring the dividend is
adopted, as the case may be, shall be record date for such determination.
PART 24
SEAL
----
24.1. The Directors may provide a seal for the Company and,
if they do so, shall provide for the safe custody of the seal which shall
not be affixed to any instrument except in the presence of the following
person, namely:
(i) any two Directors; or
(ii) one of the Chairman of the Board, the President, the Managing
Directors, a Director and a Vice-President together with one of
the Secretary, the Treasurer, the Secretary-Treasurer, an
Assistant Secretary, an Assistant Treasurer and an Assistant
Secretary-Treasurer; or
(iii) if the Company shall have only one member, the President or the
Secretary; or
(iv) such person or persons as the Directors may from time to time by
resolution appoint;
and the said Directors, officers, person or persons in whose presence the
seal is so affixed to an instrument shall sign such
<PAGE>
32
instrument. For the purpose of certifying under seal true copies of any
document or resolution the seal may be affixed in the presence of any one
of the foregoing persons.
24.2. To enable the seal of the Company to be affixed to any
bonds, debentures, share certificates, or other securities of the Company,
whether in definitive or interim form, on which facsimiles of any of the
signatures of the Directors or officers of the Company are, in accordance
with the Company Act and/or these Articles, printed or otherwise
mechanically reproduced there may be delivered to the firm or company
employed to engrave, lithograph or print such definitive or interim bonds,
debentures, share certificates or other securities one or more unmounted
dies reproducing the Company's seal and the Chairman of the Board, the
President, the Managing Directors or Vice-President and the Secretary,
Treasurer, Secretary-Treasurer, an Assistant Secretary, an Assistant
Treasurer or an Assistant Secretary-Treasurer may by a document authorize
such firm or company to cause the bonds, debentures, share certificates or
other securities by the use of such dies. Bonds, debentures, share
certificates or other securities to which the Company's seal has been so
affixed shall for all purposes be deemed to be under and to bear the
Company's seal lawfully affixed thereto.
24.3. The company may have for use in any other province,
state, territory or country an official seal which shall have on its face
the name of the province, state, territory or country where it is to be
used and all of the power conferred by the Company Act with respect thereto
may be exercised by the Directors or by a duly authorized agent of the
Company.
<PAGE>
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA 194848
PROVINCE OF BRITISH COLUMBIA
Ministry of Consumer and Corporate Affairs
REGISTRAR OF COMPANIES
COMPANY ACT
CERTIFICATE
I HEREBY CERTIFY THAT
ROCKET RESOURCES LTD.
HAS THIS DAY CHANGED ITS NAME TO THE NAME
ROCKET ENERGY RESOURCES LTD.
GIVEN UNDER MY HAND AND SEAL OF OFFICE
AT VICTORIA, BRITISH COLUMBIA,
THIS 12TH DAY OF JANUARY, 1981
/s/ L.G. HUCK
L.G. HUCK
DEPUTY REGISTRAR OF COMPANIES
<PAGE>
CANADA No. 194,848
Province of British Columbia
"Companies Act"
I hereby Certify that
ROCKET RESOURCES LTD.
has been incorporated under the "Companies Act"
GIVEN under my hand and Seal of office at Victoria,
Province of British Columbia, this -31st- day
of July, one thousand nine
hundred and seventy-nine
/s/
Deputy Registrar of Companies
<PAGE>
AMENDMENT NO. 1
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA
194848
Province of British Columbia
Ministry of Finance and Corporate Relations
REGISTRAR OF COMPANIES
COMPANY ACT
CERTIFICATE
I HEREBY CERTIFY THAT
ROCKET ENERGY RESOURCES LTD.
HAS THIS DAY CHANGED ITS NAME TO THE NAME
MRI MEDICAL TECHNOLOGIES INC.
GIVEN, UNDER MY HAND AND SEAL OF OFFICE
AT VICTORIA, BRITISH COLUMBIA
THIS 28TH DAY OF APRIL, 1989
/s/ B. W. WEBBER
B. W. WEBBER
ASST. DEPUTY REGISTRAR OF COMPANIES
<PAGE>
Province of British Columbia
--------
FORM 21
(SECTION 371)
--------
COMPANY ACT
--------
SPECIAL RESOLUTION
The following special resolution* was passed by the undermentioned
company on the date stated:
Name of company Rocket Energy Resources Ltd.
Date resolution passed February 27, 1989
Resolution*
"RESOLVED, as a special resolution, that the existing Articles of the
Company be cancelled and that the form of Articles submitted to the Annual
General Meeting of the Members of the Company held on February 27, 1989 and
attached to the Special Resolution, be adopted in substitution for, and to
the exclusion of, the existing Articles of the Company."
Certified a true copy the ________ day of May, 1989
LAWSON, LUNDELL, LAWSON & McINTOSH
Per:
(Signature)___________________
SOLICITORS
(RELATIONSHIP TO THE COMPANY)
<PAGE>
Province of British Columbia
--------
Form 21
(Section 371)
--------
COMPANY ACT
--------
SPECIAL RESOLUTION
The following special resolution* was passed by the undermentioned
company on the date stated:
Name of Company Rocket Energy Resources Ltd. (the "Company")
Date of resolution passed at the Annual General Meeting held on February
27, 1989.
Resolution*
RESOLVED, as a special resolution, that the authorized capital of the
company be increased by creating 40,000,000 additional common shares
without par value and that paragraph 2 of the Memorandum of the Company be
altered to read as follows:
"2. The authorized capital of the Company consist of 50,000,000
common shares without par value."
(The Memorandum is altered as attached)
Certified a true copy the 27th day of April, 1989
LAWSON, LUNDELL, LAWSON & McINTOSH
(Signature) Per: /s/ MICHAEL G. THOMSON
MICHAEL G. THOMSON
(RELATIONSHIP TO COMPANY) Solicitor
<PAGE>
AMENDMENT NO. 2
CERTIFICATE
OF
CHANGE OF NAME
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
I Hereby Certify that
MRI MEDICAL TECHNOLOGIES INC.
has this day changed its name to
TRI-NATIONAL DEVELOPMENT CORP.
Issued under my hand at Victoria, British Columbia
on December 07, 1992
/s/ JOHN S. POWELL
JOHN S. POWELL
A/Registrar of Companies
[SEAL]
<PAGE>
PROVINCE OF BRITISH COLUMBIA
FORM 21
(Section 371)
Certificate of
---------- Incorporation
No. 194848
COMPANY ACT
SPECIAL RESOLUTION
The following special resolution was passed by the undersigned Company
on the date stated:
Name of Company: MRI MEDICAL TECHNOLOGIES INC.
Date resolution passed: August 31, 1992
Resolution
"RESOLVED AS A SPECIAL RESOLUTION:
(a) to alter the authorized share capital of the Company by
consolidating all of the 75,000,000 common shares without par
value, of which 20,817,921 common shares are issued and
outstanding, into 15,000,000 common shares without par value, of
which 4,163,4558.2 common shares will be issued and outstanding,
every 5 shares without par value being consolidated into 1 share
without par value;
(b) to increase the authorized share capital of the Company from
15,000,000 common shares without par value to 100,000,000 common
shares without par value by creating an additional 85,000,000
common shares without par value and to amend Paragraph 2 of the
Memorandum of the Company to reflect such change; and
(c) to change the name of the Company from "MRI Medical Technologies
Inc." to "Tri-National Development Corp." and to amend Paragraph
1 of the Memorandum of the Company to reflect the name change."
The Memorandum as altered is attached.
Certified a true copy of the 6th day of November, 1992.
_________________________________________
Signature
Relationship to the Company: Solicitor
<PAGE>
SCHEDULE "A"
------------
FORM 1
(Section 5)
Company Act
-----------
Altered Memorandum
as altered by a Special Resolution
of MRI Medical Technologies Inc.
passed the 31st day of August, 1992
I wish to be formed into a Company with limited liability under the
Company Act in pursuance of this Memorandum.
1. The name of the Company is Tri-National Development Corp.
2. The authorized capital of the Company consists of 110,100,00 shares
divided into:
(a) 100,000,000 common shares without par value;
(b) 100,000 Class A preferred shares without par value of $1.00 each;
and
(c) 10,000,000 Class B Convertible Preferred shares with a par value
of $1.00 each.
3. I agree to take the number of shares in the Company set opposite my
name.
<PAGE>
FORM 21
(Section 371)
PROVINCE OF BRITISH COLUMBIA
Certificate of
Incorporation No. 194848
--------
COMPANY ACT
--------
SPECIAL RESOLUTION
The following special resolution was passed by the undermentioned
Company of the date stated:
Name of Company: MRI MEDICAL TECHNOLOGIES INC.
Date resolution passed: November 9, 1990
Resolution:
RESOLVED, AS A SPECIAL RESOLUTION, THAT:
(a) The authorized capital of the Company be increased by increasing
the number of authorized common shares without par value from
50,000,000 to 75,000,000 shares.
(b) The authorized capital of the Company be increased by the
creation of 100,000 Class A preferred shares with a par value of
$1.00 each;
(c) The authorized capital of the Company be increased by the
creation of 10,000,000 Class B Convertible Preferred shares with
a par value of $1.00 each;
(d) Special rights and restrictions be attached to the Class A
Preferred shares and the Class B Convertible preferred shares so
that the special rights and restrictions attached to the shares
in the capital of the Company will be as set out in the articles
of the Company as part 25;
(e) Paragraph 2 of the Memorandum of the Company be altered to read
as follows:
"2. The authorized capital of the Company consists of 85,100,00
shares divided into:
<PAGE>
-2-
(a) 75,000,000 common shares without par value;
(b) 100,000 Class A preferred shares with a par value of $1.00
each; and
(c) 10,000,000 Class B Convertible Preferred shares with a par
value of $1.00 each.
The special rights and restrictions attached to the said shares
are as set out in the Articles of the Company."
The Memorandum is in the form attaches hereto as Schedule "A".
(e) The Articles of the Company be altered by the addition of the new
part 25 in the form attached hereto as Schedule "B".
Certified a true copy the 11th day of December, 1990.
(Signature) _____________________________________
(Relationship to Company) Solicitor
-------------------------------------
<PAGE>
SCHEDULE "A"
COMPANY ACT
(R.S.B.C. 1979 CHAPTER 59)
ALTERED MEMORANDUM
OF
MRI MEDICAL TECHNOLOGIES INC.
(As altered by a Special Resolution passed November 9, 1990)
I wish to be formed into a Company with limited liability under
the Company Act in pursuance of this memorandum.
1. The name of the company is "MRI MEDICAL TECHNOLOGIES INC."
2. The authorized capital of the Company consists of 85,100,00 shares
divided into:
(a) 75,000,000 common shares without par value;
(b) 100,000 Class A Preferred shares with a par value of $1.00 each;
and
(c) 10,000,000 Class Be Convertible Preferred shares with a par value
of $1.00 each.
The special rights and restrictions attached to the said shares are as set
out in the Articles of the Company."
3. I agree to take the number and class of shares in the Company set
opposite my name.
<PAGE>
SCHEDULE "B"
33
PART 25
SPECIAL RIGHTS AND RESTRICTIONS
-------------------------------
25.1 The Class "A" Preference shares and the Class "B" Preference
shares of the Company shall have the rights and shall be subject to the
restrictions, conditions and limitations as follows:
(a) The directors may issue Class "A" Preference shares in one or
more series;
(b) The directors may alter by resolution the Memorandum of the
Company to fix the number of shares in, and to determine the
designation of the shares of, each series of Class "A"
Preferences shares by this Part;
(c) The directors may alter by resolution the Memorandum of the
Company or these Articles or both to create, define and attach
special rights and restrictions to the shares of each series of
Class "A: Preference shares, subject to the special rights and
restrictions attached to the Class "A" Preference shares by this
Part;
(d) Where the Class "A" Preference shares or one or more series of
Class "A" Preference shares are entitled to cumulative dividends,
and where cumulative dividends in respect of the Class "A"
Preference shares or series of Class "A" Preference shares and
a;; series of Class "A" Preference shares entitled to cumulative
dividends shall participate rateably in respect of accumulated
dividends in accordance with the amounts that t would be payable
on those shares if all the accumulated dividends were paid in
full;
(e) Where amounts payable on a winding-up, or on the occurrence of
any other event as a result of which the holders of the shares of
the Class "A" Preference shares and all series of Class "A"
Preference shares are then entitled to return of capital, are not
paid in full, Class "A" Preference shares and all series of Class
"A" Preference shares shall participate rateably in a return of
capital in respect of Class "A" Preference shares in accordance
with the amounts that would be payable on the return of capital
if all amounts so payable were paid in full;
(f) No special rights or restrictions attached to a series of Class
"A" Preference shares shall confer on the
<PAGE>
34
series priority over another series of Class "A" Preference
shares then outstanding respecting:
(i) dividends, or
(ii) a return of capital:
(A) on winding-up, or
(B) on the occurrence of another event that would
result in the holders of all series of Class "A"
Preference shares being entitled to a return of
capital;
(g) A directors' resolution pursuant to paragraphs (a), (b) or (c)
may only be passed prior to the issue of shares of the series to
which the resolution relates, and after the issue of shares of
that series, the number of shares in, the designation of and the
special rights and restrictions attached to, that series may be
added to, altered, varied or abrogated only pursuant to Sections
248, 249, 254 or 255 of the Company Act, as the case may be;
(h) Except as expressly provided in the special rights or
restrictions which the directors may create, define or attach to
any series of Class "A" Preference shares, shares of a series of
Class "A" Preference shares shall not confer on the holders
thereof any right to notice of or to be present to vote, either
in person or by proxy, at any general meeting other than a
separate meeting of the holders of the Class "A" Preference
shares, or of the holders of shares of a series of the Class "A"
Preference shares, as the case may be;
(i) All of the provisions of this Part with respect to the Class "A"
Preference shares shall apply, mutatis mutandis, to the class "B"
Preference shares, as if set out here in full;
(j) Except as expressly provided in the special rights or
restrictions which the directors may create, define or attach to
any series of Class "A" Preference shares or attach to any series
of Class "A" Preference shares or Class "B" Preference shares,
the directors may declare dividends with respect to the common
shares only or with respect to any series of Class "B" Preference
shares only or with respect to any combination of two or more
such classes or series of classes only.
<PAGE>
CERTIFICATE OF WAIVER
I, KAMRAN JAHANPANAH, a Director of MRI MEDICAL TECHNOLOGIES INC. (the
"Company"), do hereby certify that:
(a) the holders of less than 10% of all the issued shares in the
capital of the Company entitled to be voted on the hereinafter
referred to as special resolution voted against the said special
resolution and accordingly there is no person entitled to apply
to the court under section 251(1) of the COMPANY ACT; and
(b) the provisions of the COMPANY ACT have been complied with in
connection with the special resolution of the Company passed on
November 9, 1990, varying the special rights and restrictions
attached to the Class A Preferred shares and the Class B
Convertible Preferred shares of the Company, a certified copy of
which is attached hereto.
DATED this 14th day of November, 1990.
/s/ KAMRAN JAHANPANAH
---------------------------------------
KAMRAN JAHANPANAH
<PAGE>
AMENDMENT NO. 3
STATE OF WYOMING
Office of the
Secretary of State
United States of America, )
State of Wyoming ) ss.
I DIANA J. OHMAN, Secretary of State of the State of Wyoming, do
hereby certify
. . . . TRI-NATIONAL DEVELOPMENT CORP. . . . .
a corporation originally organized under the laws of the province of
British Columbia, Canada, did on February 24, 1997 apply for a Certificate
of Registration and filed Articles of Continuance in the office of the
Secretary of State of Wyoming.
I FURTHER CERTIFY that TRI-NATIONAL DEVELOPMENT CORP. has renounced
its original state of incorporation, and is now incorporated under the laws
of the state of Wyoming in accordance with W.S. 17-16-1710.
In TESTIMONY WHEREOF, I have hereunto set my hand and
affixed the Great Seal of the State of Wyoming. Done at
Cheyenne, the Capital, this 24th day of February A.D., 1997.
/s/ DIANA J. OHMAN
------------------------------------------
Secretary of State
By________________________________________
<PAGE>
STATE OF WYOMING
Office of the
Secretary of State
United States of America, )
State of Wyoming ) ss.
I DIANA J. OHMAN, Secretary of State of the State of Wyoming, do
hereby certify that TRI-NATIONAL DEVELOPMENT CORP., a corporation
originally organized under the laws of the province of British Columbia,
Canada on July 31, 1979 and thereafter requested to be continued into the
state of Wyoming. This corporation did on February 24, 1997, complete all
filings required of a continuing corporation to qualify and become a
Wyoming corporation without any break in corporate existence.
I FURTHER CERTIFY that this corporation has filed all annual reports
and paid all annual license taxes to date, or is not yet required to file
such annual reports; and that Articles of Dissolution have not been filed,
thus making the corporation in existence in the State of Wyoming.
In TESTIMONY WHEREOF, I have hereunto set my hand and
affixed the Great Seal of the State of Wyoming. Done at
Cheyenne, the Capital, this 24th day of February A.D., 1997.
/s/ DIANA J. OHMAN
------------------------------------------
Secretary of State
By________________________________________
<PAGE>
STATE OF WYOMING
Office of the
Secretary of State
United States of America, )
State of Wyoming ) ss.
I DIANA J. OHMAN, Secretary of State of the State of Wyoming, do
hereby certify
. . . . TRI-NATIONAL DEVELOPMENT CORP. . . . .
a corporation originally organized under the laws of the province of
British Columbia, Canada, did on February 24, 1997 apply for a Certificate
of Registration and filed Articles of Continuance in the office of the
Secretary of State of Wyoming.
I FURTHER CERTIFY that TRI-NATIONAL DEVELOPMENT CORP. has renounced
its original state of incorporation, and is now incorporated under the laws
of the state of Wyoming in accordance with W.S. 17-16-1710.
In TESTIMONY WHEREOF, I have hereunto set my hand and
affixed the Great Seal of the State of Wyoming. Done at
Cheyenne, the Capital, this 24th day of February A.D., 1997.
/s/ DIANA J. OHMAN
------------------------------------------
Secretary of State
By________________________________________
<PAGE>
[LETTERHEAD]
BY FACSIMILE
February 21, 1997
File X008372-4
Godinbo, Sinclair
Barrisers & Solicitors
10th Floor, Montreal Trust Centre
510 Burrard Street
Vancouver, BC V6C 3A8
Attention: Bruce Bragagnolo
- ---------------------------
Dear Sirs:
Re: Tri-National Development Corp. (the "Issuer")
- -------------------------------------------------
The Office of the Registrar of Companies has advised that they have
received an application regarding the proposed continuance of the Issuer.
We confirm that the Issuer is in full compliance with Part 10 of the
Securities Regulation, and hereby advise the Registrar of Companies that we
have no objection to the proposed continuation.
Yours truly,
/s/ BETTY ADEMA
--------------------------------
Betty Adema
Supervisor, Statutory Filings
cc: Ann Laming
Registrar of Companies
<PAGE>
February 24, 1997
Godinbo, Sinclair
10th Floor, Montreal Trust Centre
510 Burrard Street
VANCOUVER BC V6C 3A8
Dear John W. Legg:
Re: TRI-NATIONAL DEVELOPMENT CORP., Number 194848
---------------------------------------------
I hereby authorize the continuation of the above company to the
jurisdiction of the WYOMING BUSINESS: CORPORATION ACT.
My consent is valid for six months, ending August 24, 1997.
Yours truly,
/s/ JOHN S. POWELL
John S. Powell
Registrar of Companies
Enquiries: Dianne Mullin: (604) 356-8624
Barb Morrison: (604) 356-8625
Fax: (604) 356-6422
EXHIBIT 99
TRI-NATIONAL DEVELOPMENT CORP.
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting of the members of
TRI-NATIONAL DEVELOPMENT CORP. ("the Company") will be held at Suite 1020 -
510 Burrard Street, Vancouver, British Columbia, V6C 3A8, on the 20th day
of January, 1997 at the hour of 10:00 a.m. for the following purposes:
1. To receive and consider the minutes of the last annual general meeting
of the members of the Company, the audited financial statements for
the fiscal year ended April 30, 1996 and the audited financial
statements for the three month interim period ended July 31, 1996.
2. To approve an ordinary resolution to re-appoint Johannesson
McWilliams, Chartered Accountants, as auditors for the Company to hold
office until the next Annual General Meeting of the Company and to
authorize the directors to fix the remuneration to be paid to the
auditors for the Company.
3. To elect directors for the ensuing year.
4. To approve an ordinary resolution to grant to the directors, officers
and employees of the Company incentive stock options to purchase
common shares in the capital stock of the Company during the ensuing
year at prices and in amounts determined by the directors, including
any amendments thereto, in accordance with the policies of the
relevant regulatory authorities, and to approve the exercise of any
existing stock options granted to insiders and stock options granted
to insiders pursuant to this proposed resolution.
5. To approve an ordinary resolution approving the issuance of common
shares in the capital stock of the Company in amounts exceeding 20% of
the issued and outstanding common shares in the capital stock of the
Company on future public offerings, private placements, debt
settlements, property acquisitions or other transactions requiring the
issuance of common shares in the capital stock of the Company, at such
prices and such times as the directors of the Company deem to be in
the best interests of the Company, and in accordance with the policies
of the relevant regulatory authorities.
6. To consider and, if deemed advisable, pass the following resolution:
"RESOLVED, as a special resolution, that:
(a) the Company make application to the Secretary of State for
Wyoming in the United States of America for a Certificate of
Continuance continuing the Company under the WYOMING BUSINESS
CORPORATION ACT:
(b) the Company adopt the Articles of Continuance and By-Laws in the
form submitted to the Meeting in substitution for the existing
Memorandum and Articles of the Company; and
(c) the directors and officers of the Company be authorized to do
such further acts and file such further documents as may be
necessary to give full effect to the foregoing; and
<PAGE>
-2-
(d) the directors may, in their sole discretion, elect not to act on
or carry out this special resolution without further approval of
the members of the Company."
7. To transact any other business which may properly come before the
Meeting.
TAKE NOTICE THAT pursuant to the COMPANY ACT (British Columbia) you may
until two days before the Meeting give the Company a notice of dissent by
registered mail addressed to the Company at Suite 1020 - 510 Burrard
Street, Vancouver, British Columbia, V6C 3A8, with respect to the special
resolution approving the continuance of the Company under the WYOMING
BUSINESS CORPORATION ACT. As a result of giving a notice of dissent you
may, upon receiving a notice of intention to act under section 231 of the
COMPANY ACT (British Columbia), require the Company to purchase all your
shares in respect of which the notice of dissent was given.
It is important that your shares be represented at this Meeting to ensure
a quorum. If you cannot be present to vote in person, please ensure that
your proxy or, if a corporation, your representative, is appointed and
present to vote on your behalf at the Meeting. Instructions regarding the
appointment of a proxy or representative are contained in the Information
Circular.
DATED at Vancouver, British Columbia this 10th day of December, 1996.
BY ORDER OF THE BOARD
"MICHAEL A. SUNSTEIN"
PRESIDENT
<PAGE>
INFORMATION CIRCULAR
FOR THE MEETING OF MEMBERS
OF
TRI-NATIONAL DEVELOPMENT CORP.
TO BE HELD ON JANUARY 20, 1997
SOLICITATION OF PROXIES
This Information Circular is furnished in connection with the solicitation
of proxies by the management of Tri-National Development Corp. (the
"Company") for use at the annual general meeting (the "Meeting") of members
of the Company to be held at Suite 1020 - 510 Burrard Street, Vancouver,
British Columbia, V6C 3A8, on the 20th day of January, 1997 at the hour of
10:00 o'clock in the forenoon, for the purposes set forth in the Notice of
Meeting distributed with this Information Circular. Although it is
expected that the solicitation of proxies will be primarily by mail,
proxies may also be solicited personally or by telephone by directors or
officers of the Company. The cost of this solicitation will be borne by
the Company.
APPOINTMENT OF PROXYHOLDER
An instrument appointing a proxy shall be in writing and shall be executed
by the member or his attorney authorized in writing or, if this member is
a corporate entity, by a duly authorized officer or attorney thereof.
A member unable to attend the Meeting may appoint a proxyholder to vote his
shares at the Meeting by completing the form of proxy provided with this
Information Circular. The persons named as proxyholder on the accompanying
proxy have been provided by management for selection by the members. A
MEMBER DESIRING TO APPOINT SOME OTHER PERSON MAY DO SO BY STRIKING OUT THE
PRINTED NAMES AND INSERTING THE NAME OF THE DESIRED PERSON IN THE SPACE
PROVIDED IN THE FORM OF PROXY OR COMPLETING ANOTHER FORM OF PROXY. IF NO
CHOICE OF PROXYHOLDER IS MADE THEN THE FIRST NAMED PROXYHOLDER WILL
EXERCISE THE PROXY WITH AUTOMATIC SUBSTITUTION OF THE SUCCEEDING NAMED
PROXYHOLDER IF SUCH FIRST NAMED PROXYHOLDER IS NOT ABLE TO ATTEND THE
MEETING. A PERSON APPOINTED AS PROXYHOLDER NEED NOT BE A MEMBER OF THE
COMPANY. All completed proxy forms must, to be valid, be deposited at
Montreal Trust Company of Canada, 4th Floor, 510 Burrard Street, Vancouver,
British Columbia, V6C 3B9 not less than forty-eight (48) hours (excluding
Saturdays, Sundays and holidays) before the time fixed for the Meeting.
A proxy may be revoked either by signing a proxy bearing a later date and
depositing it at the place and within the time aforesaid or signing and
dating a written notice of revocation (in the same manner as the proxy is
required to be executed as set out in the notes to the proxy) and either
depositing the same at the place and within the time aforesaid or
registering with the Scrutineer at the Meeting as a member present in
person, or in any other manner provided by law, whereupon such proxy shall
be deemed to have been revoked. A revocation of a proxy does not affect
any matter on which a vote has been taken before the revocation.
<PAGE>
-2-
EXERCISE OF DISCRETION BY PROXY
The proxyholder named in the enclosed form of proxy will vote the shares in
respect of which he is so appointed in accordance with the direction of the
member appointing him. IN THE ABSENCE OF ANY SUCH DIRECTION SUCH SHARES
WILL BE VOTED IN FAVOUR OF THE MATTERS DESCRIBED ON THE PROXY.
The enclosed form of proxy confers discretionary authority upon the
proxyholder with respect to amendments or variations of matters identified
in the Notice of Meeting and other matters which may properly come before
the Meeting unless revoked by the member as provided in the form of proxy.
As at the date of this Information Circular, the Management of the Company
knows of no such amendments, variations, or other matters which are to be
presented for consideration at the Meeting, other than the matters referred
to in the Notice of Meeting.
Matters which may properly come before the Meeting shall be any matter not
effecting a change in the Memorandum or Articles of the Company, not
effecting a change of control of the Company, or not disposing of all or
substantially all of the assets of the Company.
VOTING OF COMMON SHARES
As at November 27, 1996 (the "Record Date") there were 12,554,012 common
shares without par value in the capital stock of the Company issued and
outstanding, each carrying the right to one vote per common share. Only
members registered on the Record Date are entitled to receive notice of and
to vote at the Meeting in person or by proxy.
THE COMPANY
The Company was incorporated under the laws of the Province of British
Columbia by registration of its Memorandum and Articles on July 31, 1979 as
"Rocket Resources Ltd." On January 12, 1981 the Company changed its name
to "Rocket Energy Resources Ltd." On April 28, 1989 the Company changed
its name to "MRI Medical Technologies Inc." On December 7, 1992 the
Company changed its name to "Tri-National Development Corp." and
consolidated its share capital on the basis of five old common shares for
one new common share. The Company's registered and records offices are
located at Suite 1020 - 510 Burrard Street, Vancouver, British Columbia,
V6C 3A8. Montreal Trust Company of Canada at its offices in Vancouver,
British Columbia is the Company's registrar and transfer agent. The
Company's head office and principal business office is located at 480
Camino Del Rio South, Suite 140 San Diego, California 92108 U.S.A. The
common shares of the Company are listed on the Vancouver Stock Exchange
under the trading symbol "TND", however the common shares of the Company
are currently not trading on the Vancouver Stock Exchange, trading having
been halted since May 5, 1994. The common shares of the Company currently
trade on the NASD OTC system under the trading symbol "TNAV"
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The Company is authorized to issue 110,100,000 shares, divided into
100,000,000 common shares without par value, 100,000 Class A Preferred
shares with a par value of $1.00 each and 10,000,000 Class B Convertible
Preferred shares with a par value of $1.00 each. Except as to matters
which affect the
<PAGE>
-3-
holders of the Class A Preferred shares and Class B Convertible Preferred
shares as a class, the Class A Preferred shares and Class B Convertible
Preferred shares do not carry the right to vote. 12,554,012 common shares
without par value in the capital stock of the Company were issued and
outstanding as at the Record Date. There were no Class A Preferred shares
or Class B Preferred shares outstanding as at the Record Date. The Company
has no other classes of voting securities.
Holders of the outstanding common shares without par value in the capital
stock of the Company on the Record Date will, on a poll or ballot, be
entitled to one vote per share as provided by the Memorandum and Articles
of the Company, provided they are present in person or by proxy. The
Articles of the Company provide that a quorum for a general meeting of
members shall be two members or proxyholders present.
To the knowledge of the directors and senior officers of the Company, the
only persons or entities which own, directly or indirectly, or exercise
control or direction over shares carrying more than 10% of the voting
rights attached to any class of voting securities of the Company as at the
Record Date are as follows:
NUMBER PERCENTAGE OF
MEMBER OF SHARES ISSUED SHARES
------ --------- -------------
Michael Sunstein 1,354,222 10.78%
Howe & Co.* 1,348,328 10.74%
*Depository for securities
The beneficial owners of the shares held by Howe & Co. are not known to the
Company.
ADVANCE NOTICE OF MEETING
An advance Notice of Meeting was published in the Vancouver Sun newspaper
on September 5, 1996.
STATEMENT OF EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The Company has two executive officers and six directors. The aggregate
cash compensation paid to the executive officers and directors by the
Company for management or other services rendered for the fiscal year ended
April 30, 1996 was $37,583. $8,744 has been paid to the executive officers
and directors of the Company for management or other services rendered for
the three month period ended July 31, 1996.
<PAGE>
-4-
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- -----------------------------------
AWARDS PAYOUTS
- --------------------------------------------------------------------------------------------------------
SECURITIES
GRANTED RESTRICTED
OTHER UNDER SHARES OR ALL
ANNUAL OPTIONS/ RESTRICTED OTHER
NAME AND COM- SARS(1) SHARE LTIP(2) COM-
PRINCIPAL SALARY BONUS PENSATION GRANTED UNITS PAYOUTS PENSATION
POSITION YEAR ($) ($) ($) # $ ($) ($)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MICHAEL A. SUNSTEIN, 1996 $25,180 Nil Nil Nil Nil Nil Nil
President
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) "SARS" or "stock appreciation right" means a right granted by the
Company, as compensation for services rendered, to receive a payment
of cash or an issue or transfer of securities based wholly or in part
on changes in the trading price of publicly traded securities of the
Company.
(2) "LTIP" or "long term incentive plan" means any plan which provides
compensation intended to serve as incentive for performance to occur
over a period longer than one financial year, but does not include
option or stock appreciation right plans or plans for compensation
through restricted shares or restricted share units.
OPTION/SAR GRANTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
MARKET VALUE
SECURITIES OF SECURITIES
UNDER %OF TOTAL UNDERLYING
OPTION/ OPTIONS/SARS OPTIONS/
SARS GRANTED TO EXERCISE OR SARS ON THE
GRANTED EMPLOYEES IN BASE PRICE DATE OF GRANT EXPIRATION
NAME (#) FINANCIAL YEAR $/SECURITY) ($/SECURITY) DATE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MICHAEL A. Nil N/A N/A N/A N/A
SUNSTEIN,
President
- ---------------------------------------------------------------------------------------------
</TABLE>
OPTIONS TO PURCHASE SECURITIES
During the last fiscal year of the Company, the Company did not grant its
directors, officers or employees options to purchase securities.
The Company does not have any outstanding options to purchase securities of
the Company.
PLANS AND OTHER COMPENSATION
No LTIP has been instituted by the Company and none are proposed at this
time. Accordingly, there is no LTIP Awards Table set out in this
Information Circular. The Company does not have a "Compensation
Committee".
No pension plans or retirement benefit plans have been instituted by the
Company and none are proposed at this time. Other than as disclosed
herein, the Company has not paid any additional
<PAGE>
-5-
compensation to its directors and senior officers for the fiscal year ended
April 30, 1996 or for the three month period to July 31, 1996.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
Since the beginning of the last completed fiscal year of the Company, no
director, senior officer, proposed nominee for director or any associate or
affiliate of any of them has been indebted to the Company for other than
routine indebtedness.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
None of the directors or senior officers of the Company, nor any proposed
nominee for election as a director of the Company, nor any person who
beneficially owns, directly or indirectly, shares carrying more than 10% of
the voting rights attached to all outstanding shares of the Company, nor
any associate or affiliate of the foregoing persons, has any material
interest, direct or indirect, in any transaction since the commencement of
the Company's last completed fiscal year, or in any proposed transaction
which, in either case, has affected or will materially affect the Company,
except as disclosed herein.
DIVIDEND RECORD AND POLICY
The Company has not paid any dividends to date and does not intend to pay
dividends in the foreseeable future.
AUDITOR, TRANSFER AGENT AND REGISTRAR
The auditor of the Company is Johannesson, McWilliams, Chartered
Accountant, of 1052 Richards Street, Vancouver, British Columbia, V6B 4Y6.
Montreal Trust Company of Canada is the transfer agent and registrar for
the common shares in the capital stock of the Company at its principal
offices in Vancouver.
MANAGEMENT CONTRACTS
The Company does not have any management contracts.
PERSONS SOLICITING PROXIES
The board of directors and officers of the Company are soliciting proxies
by issuance of this Information Circular. Those persons and their present
offices are Michael A. Sunstein, president and director, Shane Kennedy,
secretary and director, Jay Pasternack, director, Dr. Robert Rosen,
director, Ted Takacs, director and Arthur Lilly, director.
<PAGE>
-6-
PARTICULARS OF MATTERS TO BE ACTED UPON
RE-APPOINTMENT OF AUDITOR
At the Meeting the members will be asked to appoint an auditor to serve
until the close of the next annual meeting of the members of the Company,
and to authorize the directors to fix their remuneration.
The board of directors of the Company recommends that the members re-appoint
Johannesson, McWilliams, Chartered Accountants, as auditors of the
Company to hold office until the close of the next annual general meeting
at a remuneration to be fixed by the directors of the Company.
UNLESS OTHERWISE SPECIFIED, THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY
WILL VOTE FOR THE APPOINTMENT OF JOHANNESSON, MCWILLIAMS, CHARTERED
ACCOUNTANTS, VANCOUVER, BRITISH COLUMBIA, AS AUDITORS OF THE COMPANY TO
HOLD OFFICE UNTIL THE NEXT ANNUAL GENERAL MEETING OF MEMBERS OR UNTIL THEIR
SUCCESSOR IS APPOINTED AND TO AUTHORIZE THE DIRECTORS TO FIX THEIR
REMUNERATION.
ALL PROXIES RECEIVED BY MANAGEMENT WILL BE VOTED IN FAVOUR OF THE ELECTION
OF JOHANNESSON, MCWILLIAMS, CHARTERED ACCOUNTANTS, AS AUDITORS FOR THE
ENSURING YEAR UNLESS THE PROXIES ARE DIRECTED TO BE WITHHELD ON THE VOTING
FOR AUDITOR.
ELECTION OF DIRECTORS
The directors of the Company are currently elected annually and hold office
until the next annual general meeting of the members or until their
successors in office are duly elected or appointed.
Management of the Company proposes to nominate the persons listed below for
election as directors of the Company. THE MANAGEMENT DOES NOT CONTEMPLATE
THAT ANY OF THE NOMINEES WILL BE UNABLE TO SERVE AS A DIRECTOR. IN
ADDITION TO THE SLATE OF NOMINEES HEREIN LISTED, MEMBERS PRESENT AT THE
MEETING SHALL BE ENTITLED TO NOMINATE AND VOTE FOR THE ELECTION OF ANY
OTHER PERSON OR PERSONS AS A DIRECTOR. THE COMPANY HAS NOT RECEIVED NOTICE
OF AND MANAGEMENT IS NOT AWARE OF ANY PROPOSED NOMINEES ADDITIONAL TO THOSE
NAMED.
The following persons are proposed to be nominated by management for
election as directors at the Meeting:
NO. OF SHARES
BENEFICIALLY
OWNED, SHARES
CONTROLLED,
OR DIRECTED
PRINCIPAL DIRECTOR AS AT THE
NAME OF DIRECTOR OCCUPATION SINCE RECORD DATE
- ---------------- ---------- ----- -----------
Michael A. Sunstein President of the Company 1987 1,354,328
President/Director
Shane Kennedy Insurance Adjuster October 28, 1994 Nil
Secretary/Director for the Insurance
Corporation of
British Columbia
<PAGE>
-7-
Jay Pasternack Psychology Counsellor October 28, 1994 Nil
Director
Dr. Robert Rosen Doctor of Opthamology October 28, 1994 40,000
Director
Ted Takacs Government October 28, 1994 Nil
Director Administrator
Arthur Lilly Chartered Accountant November 28, 1995 Nil
Director
Messrs. Sunstein and Kennedy and Dr. Rosen are currently members of the
Company's audit committee.
GRANTING OF STOCK OPTIONS
Management proposes to seek approval for the exercise of stock options
previously granted to insiders and the granting and exercise of incentive
stock options (options may have special rights attached) which may be
granted during the ensuing year to directors, officers and employees of the
Company at prices and in amounts determined by the directors, including any
amendments thereto, in accordance with the policies of the relevant
regulatory authorities.
Accordingly, the members will be asked to pass an ordinary resolution
granting to the directors, officers and employees of the Company incentive
stock options to purchase common shares in the capital stock of the Company
during the ensuing year at prices and in amounts determined by the
directors, including any amendments thereto, in accordance with the
policies of the relevant regulatory authorities, and approving the exercise
of any existing stock options granted to insiders and stock options granted
to insiders pursuant to this resolution.
ADDITIONAL EQUITY ISSUANCES
Management of the Company has determined that current market conditions are
such that it may be in the best interest of the Company to undertake
further equity issuances.
Accordingly, the members will be asked to pass an ordinary resolution
approving the issuance of common shares in the capital stock of the Company
in amounts exceeding 20% of the issued and outstanding common shares in the
capital stock of the Company on future public offerings, private
placements, debt settlements, property acquisitions or other transactions
requiring the issuance of common shares in the capital stock of the
Company, at such prices and such times as the directors of the Company deem
to be in the best interests of the Company, and in accordance with the
policies of the relevant regulatory authorities.
CONTINUATION UNDER THE WYOMING BUSINESS CORPORATION ACT
The Company was incorporated under the COMPANY ACT (British Columbia) on
July 31, 1979. The extent to which the Company carries on business in
Canada is insignificant. The only connection to Canada is that its common
shares are listed for trading on the Vancouver Stock Exchange. The
Company's primary assets are its 51% interest in Pacific Medical
International, Inc., and its 20% interest in Baja Pacific International,
Inc. which both have interests in land in the Bajamar resort area between
Rosarito and Ensenada, Mexico, approximately 50 miles south of the San
Diego border. The Company's head office is located at 480 Camino Del Rio
South, Suite 140 San Diego, California 92108 U.S.A.
<PAGE>
-8-
The Company's management anticipates that future expansion of the Company's
business will be solely through the expansion of the subsidiaries' business
in the United States and Mexico. Such expansion will be facilitated by
different stock exchange listings, as well as strategic business
combinations and access to capital available in the domicile of the
Company's operations. In light of that, management believes that it is in
the best interest of the Company to transfer its jurisdiction of
incorporation to the United States. Accordingly, the members will be asked
at the Meeting to approve the Company's continuance into the State of
Wyoming.
The COMPANY ACT (British Columbia) currently governs the corporate affairs
of the Company and is very restrictive with respect to which jurisdictions
into which a company may continue. A company governed by the COMPANY ACT
(British Columbia) may only continue directly in the State of Wyoming.
However, once in Wyoming it is relatively easy to continue into various
other jurisdictions in the United States.
The continuation of the Company into the State of Wyoming will affect
certain of the rights of members as they currently exist under the COMPANY
ACT (British Columbia). The following is a summary of some of the changes
that will occur as a result of the transfer of the Company's jurisdiction
of incorporation from British Columbia to Wyoming.
* Wyoming corporations may issue fractional shares which entitle the
holder to all of the rights of a shareholder including the right to
vote and the right to dividends whereas British Columbia companies may
not issue fractional shares.
* Annual meetings need only be held once in a calendar year as is the
case with British Columbia companies, however, they need not be held
within 13 months of the last annual meeting as is required for British
Columbia companies.
* Directors may be removed as directors between annual meetings by a
simple majority of votes as opposed to a 75% majority of votes
required for British Columbia companies.
* The sale by a Wyoming corporation of all or substantially all of its
assets only requires approval by the Company's shareholders by a
simple majority whereas a British Columbia company requires the
approval by a 75% majority of the members.
* A Wyoming corporation need only furnish annual audited financial
statements to its shareholders upon their request while a British
Columbia corporation is obligated to furnish annual audited financial
statements to its members. However, as the Company will initially
continue to be a reporting issuer under the SECURITIES ACT (British
Columbia) it will initially continue to be under the obligation
imposed by that Act to furnish, on an annual basis, audited financial
statements within 140 days of the Company's fiscal year-end.
* Most resolutions for a Wyoming corporation need only be passed by a
simple majority whereas under the COMPANY ACT (British Columbia)
special business requires a majority of not less than 3/4 of the votes
cast.
* Certain remedies available under the COMPANY ACT (British Columbia)
such as the right to apply to the courts for relief on the grounds
that the Company is acting or proposing to act in a way that is
unfairly prejudicial or oppressive to the shareholder or for authority
to commence a legal action in the name of or on behalf of the Company
to enforce an obligation to the Company that could be enforced by the
Company itself or to obtain damages for any breach of such obligation
are not identical to the provisions under the WYOMING BUSINESS
CORPORATION ACT. Furthermore, the right of a director or officer or
employee to be indemnified against expenses, costs and damages
reasonably incurred by him in a legal proceeding to which he is made
a party by reason
<PAGE>
-9-
of having been a director, officer or employee of the Company under
the WYOMING BUSINESS CORPORATION ACT is not identical to the
provisions of the COMPANY ACT (British Columbia).
* Due to the low current market value of the Company's common shares,
which reflects the current state of the business with the Company,
management believes there will be no adverse tax consequences to the
Company or the U.S. or Canadian shareholders as a result of the
continuance. However, each shareholder should consult his own tax
counsel with regard to such matters.
This summary is not intended to be exhaustive and shareholders should
consult their legal advisers regarding differences between the two
jurisdictions as they affect their own particular circumstances.
Pursuant to the COMPANY ACT (British Columbia), a shareholder has the right
to dissent with respect to the special resolution respecting the
continuance of the Company into Wyoming. To exercise the right of dissent
a shareholder must give notice of this dissent by registered mail addressed
to the Company at Suite 1020 - 510 Burrard Street, Vancouver, British
Columbia, V6C 3A8 on or before January 18, 1997.
In the event that the special resolution is passed, the Company shall give
any dissenting shareholders notice of the Company's intention to act on the
special resolution. On receiving a notice of intention to act, a
dissenting shareholder is entitled to require the Company to purchase all
of his or her shares in respect of which the notice of dissent was given at
the fair value thereof as of the day before the date on which the
resolution is passed. The dissenting shareholder must exercise this right
by delivering to the registered office of the Company at Suite 1020 - 510
Burrard Street, Vancouver, British Columbia, V6C 3A8, within 14 days after
the Company gives the notice of intention to act, a notice that he requires
the Company to purchase all his shares with respect to which he is
dissenting and delivering the share certificates representing such shares
to the Company whereupon he is bound to sell such shares to the Company and
the Company is bound to purchase them. A dissenting shareholder may apply
to the Supreme Court of British Columbia for a determination of the price
and terms of such purchase and sale.
In view of the strict requirements of the COMPANY ACT (British Columbia)
relating to the rights and obligations of dissenting shareholders,
shareholders should seek their own legal counsel concerning any
consequences which may result from the filing of a notice of dissent or
concerning the procedures to be followed to exercise such rights.
Since the Board of directors may not wish to proceed with the continuance
of the Company into the State of Wyoming in the event that shareholders
holding a significant number of shares exercise their right of dissent
thereby possibly seriously impairing the Company's financial resources the
Board of directors are also seeking the shareholders' approval to not
proceed with the continuance if, in the directors' sole discretion, they
determine it not to be in the Company's best interests.
Members will be asked to pass the following special resolution:
"RESOLVED, as a special resolution, that:
(a) the Company make application to the Secretary of State for
Wyoming in the United States of America for a Certificate of
Continuance continuing the Company under the WYOMING
BUSINESS CORPORATION ACT:
(b) the Company adopt the Articles of Continuance and By-Laws in
the form submitted to the Meeting in substitution for the
existing Memorandum and articles of the Company; and
<PAGE>
-10-
(c) the directors and officers of the Company be authorized to
do such further acts and file such further documents as may
be necessary to give full effect to the foregoing; and
(d) the directors may, in their sole discretion, elect not to
act on or carry out his special resolution without further
approval of the members of the Company."
Under the COMPANY ACT (British Columbia), the continuance of the Company
into the State of Wyoming requires the approval of the members of the
Company by a special resolution, being "a resolution passed by a majority
of not less than 3/4 of the votes cast by those [members] of a company who,
being entitled to do so, vote in person or by proxy at a general meeting of
the company...".
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
The Company will consider and transact such other business as may properly
come before the Meeting or any adjournment thereof. The Management of the
Company knows of no other matters to come before the Meeting other than
those referred to in the Notice of Meeting. Should any other matters
properly come before the Meeting, the shares represented by the proxy
solicited hereby will be voted on such matters in accordance with the best
judgment of the persons voting by proxy.
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING SHALL BE ANY MATTER NOT
EFFECTING A CHANGE IN THE ARTICLES OR MEMORANDUM OF THE COMPANY, NOT
EFFECTING A CHANGE IN CONTROL OF THE COMPANY, OR NOT DISPOSING OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY.
BOARD APPROVAL
The contents of this Information Circular have been approved and its
mailing authorized by the board of directors of the Company by resolution
passed the 10th day of December, 1996.
DATED at Vancouver, British Columbia, this 10th day of December, 1996.
BY ORDER OF THE BOARD
"MICHAEL A. SUNSTEIN"
PRESIDENT
