SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarter ended January 31, 1998
Commission File No. 0-29164
TRI-NATIONAL DEVELOPMENT CORP.
(Name of Small Business Issuer in its charter)
Wyoming 33-0741573
(State of other Jurisdiction I.R.S. Employer
of incorporation or organization) Identification No.
480 Camino Del Rio S., Suite 140
San Diego, California 92108
(Address of principal executive officers)
Securities registered pursuant to section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value Per Share
(Title of Class)
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
----- -----
As of February 12, 1998, 18,750,156 shares of the registrant's common stock
were outstanding. The aggregate market value of the Registrants's free-
trading common stock, held by non-affiliates on February 2, 1998 was
approximately $7,155,000, based on the closing price of the stock on
February 12, 1998.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORPORATION
CONSOLIDATED UNAUDITED BALANCE SHEETS
ASSETS:
- -------
JAN 31, JAN 31,
1998 1997
-------- --------
Current Assets:
- ----------------
Cash $ 85,051 $ 36,011
U. S. Treasury Bills 258,855 -
Certificates of Deposit 29,110 -
Accounts Receivable 377,048 138,791
Notes Receivable (Note 2) 357,748 239,332
---------- ----------
Total Current Assets 1,107,811 414,134
Investments-NetRom, Inc. Convertible
Preferred Stock (Note 3) 3,000,000 -
Investments-MRI Medical Diagnostics,
Inc. (Note 4) 496,994 496,994
Investments-Hills of Bajamar (Note 5) 3,723,661 3,841,661
Investments-Plaza Resort Timeshares
(Note 6) 13,279,055 13,279,055
Notes Receivable-Baja Promocion
Internacional (Note 7) 4,200,000 4,200,000
Property, Furniture, and Equipment
(Note 8) 637,062 644,934
---------- ----------
Total Assets $26,444,582 $22,876,778
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
- -------------------------------------
Current Liabilities:
- --------------------
Accounts Payable $ 360,513 $ 206,117
Loans Payable-Short Term (Note 9) 394,378
Notes Payable-Current Portion 7,441 7,458
---------- ----------
Total Current Liabilities 762,331 213,575
Notes Payable-Net of Current Portion
(Note 10) 9,302,828 10,198,974
Accrued Taxes on Income (Note 11) 339,496
---------- ----------
Total Liabilities 10,404,656 10,412,549
---------- ----------
STOCKHOLDERS' EQUITY:
- ---------------------
Common Stock,no par value; authorized
100,000,000; issued 15,955,292 9,098,508 7,482,888
Preferred Stock, $1 par value;
authorized 10,100,000; issued 1,500,000 6,000,000 6,000,000
Minority Interest, 1/3 of GSDIC is owned
by First Colonial Ventures Ltd. 268,800 (350,720)
Retained Earnings ( Deficit ) 672,618 (667,939)
---------- ----------
Total Stockholders' Equity 16,039,926 12,464,229
---------- ----------
Total Liabilities and Stockholders'
Equity $26,444,582 $22,876,778
========== ==========
See accompanying notes to financial statements.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORPORATION
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED
JAN 31, JAN 31,
1998 1997
-------- --------
REVENUES:
- ---------
Revenues $ 349,118 $ 30,450
Gain on Sale of Assets 2,880,000 3,726,917
---------- ----------
Total Revenues 3,229,118 3,757,367
EXPENSES:
- ---------
General and Administrative Expenses 1,006,538 419,588
---------- ----------
Income Before Unusual Items 2,222,580 3,337,779
---------- ----------
UNUSUAL ITEMS:
- --------------
Gain (Loss) on Debt Settlement - 23,819
Gain on Sale of MRI Medical
Diagnostics Inc. shares - -
Write-Down of Investments - (100,000)
---------- ----------
Total Unusual Items - (76,181)
---------- ----------
Minority Interest (12,435) -
Income Before Income Taxes 2,210,145 3,261,598
Income Taxes 339,496 -
---------- ----------
Net Income $1,870,650 $3,261,598
---------- ----------
Earnings per share-Primary 0.110 0.230
Earnings per share-Fully Diluted 0.110 0.230
See accompanying notes to financial statements.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORPORATION
CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED
JAN 31, JAN 31,
1998 1997
-------- --------
CASH FROM OPERATING ACTIVITIES:
- -------------------------------
Net Income $1,870,650 $3,287,807
Add (deduct) items not using
(providing) cash:
Depreciation and Amortization 49,722 -
Write-Down-Investment in MRI Medical
Diagnostics Inc. -
Net Change in Non-Cash Working
Capital Items -
Gain on Sale of MRI Medical Diagnostics -
Changes in Operating Assets and
Liabilities:
Increase in Notes and Accounts
Receivable (332,180) (366,342)
Decrease in Prepaid Expenses - 3,794
Increase (Decrease) in Accounts
Payable 133,200 (397,296)
Accrued Taxes on Income 339,497
Decrease in Accrued Interest Payable - (36,145)
---------- ----------
Net Cash Flow Provided From Operating
Activities 2,060,889 2,491,818
---------- ----------
CASH FROM INVESTING ACTIVITIES:
- -------------------------------
Decrease in Furniture and Equipment (12,229) (644,934)
Sale of Land to NetRom, Inc. for
preferred Stock (3,000,000)
Sale of Land to Baja Promocion
Internacional (4,200,000)
Decrease in MRI Medical Diagnostics
Investment - 56,875
Decrease in Grand Terrace Investment 80,188
Decrease in GSDIC Investment 15,035
Purchase U. S. Treasury Bills (258,855)
Purchase Certificates of Deposit (29,110)
Sale of Land - Hills of Bajamar 118,000 (3,534,651)
Purchase of Plaza Timeshares - (13,279,055)
---------- ----------
Net Cash Flow Used in Investing
Activities (3,182,194) (21,506,542)
---------- ----------
CASH FROM FINANCING ACTIVITIES:
- -------------------------------
Increase in Notes Payable-Net of
Current Portion (17) 10,198,974
Decrease in Notes, Loans, Guarantees
Payable (499,719) (213,730)
Proceeds from the sale of shares 1,660,100 3,744,519
Preferred Stock Issued - 6,000,000
Shares Subscribed but not issued (375,336)
Sales of Treasury Stock - 39,893
Proceeds from the sale of shares-
MRI Diagnostics - -
Minority Interest 12,435 (350,720)
---------- ----------
Net Cash Flow From Financing Activities 1,172,799 19,043,600
---------- ----------
Net Increase in Cash 51,494 28,876
Cash-Beginning of Fiscal Year 33,557 7,135
---------- ----------
Cash-End of Fiscal Year $ 85,051 $ 36,011
========== ==========
See accompanying notes to financial statements.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORPORATION
CONSOLIDATED UNAUDITED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
RETAINED
PREFERRED COMMON TREASURY MINORITY EARNINGS TOTAL
STOCK STOCK STOCK INTEREST (DEFICIT) EQUITY
----- ----- ----- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
BAL AS PREVIOUSLY
REPORTED
APRIL 30, 1997 $6,000,000 $7,720,982 $ - $ (350,720) $ (873,520) $12,496,742
CORRECTION OF
ERROR** - (282,574) - ** 607,085 (324,511) -
---------- ---------- -------- ---------- ---------- ----------
ADJUSTED BALANCES
AT APRIL 30, 1997 $6,000,000 7,438,408 - 256,365 (1,198,031) $12,496,742
========== ========== ======== ========== ========== ==========
ISSUANCE OF PREFERRED
STOCK - -
ISSUANCE OF COMMON
STOCK 1,660,100 1,660,100
SALE OF TREASURY STOCK - -
MINORITY INTEREST 12,435 12,435
NET INCOME 1,870,650 1,870,650
---------- ---------- -------- ---------- ---------- ----------
BALANCE AT
OCTOBER 31, 1997 $6,000,000 $9,098,508 $ - $ 268,800 $ 672,619 $16,039,927
========== ========== ======== ========== ========== ==========
</TABLE>
** PRIOR PERIOD CORRECTION OF ERROR DUE
TO UNDERSTATEMENT OF MINORITY INTEREST
See accompanying notes to financial statements.
<PAGE>
TRI-NATIONAL DEVELOPMENT CORP.
NOTES TO THE FINANCIAL STATEMENTS
January 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business Activity
Tri-National Development Corp. is a publicly traded international real
estate development and management company. 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 changes its name to
Tri-National Development Corp. and recapitalized on the basis of five (5)
common shares of MRI Medical Technologies, Inc. for one (1) common share of
Tri-National Development Corp. In January of 1997, the Shareholders
approved a special resolution to change the corporate domicile from
Vancouver, B.C. to the state of Wyoming. On February 24, 1997, the
Company's Article of Continuation were accepted by the state of Wyoming and
it is now incorporated under the laws of the state of Wyoming. The Company
maintains its executive offices in San Diego, California at 480 Camino Del
Rio S. in Suite 140 and its telephone number is 619-718-6370.
Consolidation
The consolidated financial statements include the accounts of Greater San
Diego Imaging Center LLC, a subsidiary owned 2/3 by the Company and
Activity Link, Inc.. Greater San Diego Imaging Center LLC sold 1/3
minority interest to First Colonial Ventures, Ltd., which has been provided
for in the financial statements. All material intercompany accounts and
transaction have been eliminated in the consolidation.
Earnings Per Share
Primary earnings per share have been computed based on the weighted average
number of shares and equivalent shares outstanding during each period. The
dilutive effect of stock options and warrants has been considered in the
computation of equivalent shares and is included from the respective dates
of issuance.
The fully diluted computation is based on the number of shares for the nine
months ended January 31, 1998 and 1997. The computation contemplates the
dilutive effects of common stock equivalent shares, as well as, conversion
of the convertible preferred stock, issued during the last nine months.
Since the date of issuance of the warrants and options, both primary and
fully diluted earnings per share computations limit the assumption of the
repurchase of treasury shares to a maximum of 20% of the outstanding shares
of the Company.
Furniture and Equipment
Furniture and equipment are stated at cost and depreciated over the
estimated useful lives of the assets (five to seven years) using the
straight line method.
<PAGE>
2. NOTES RECEIVABLE
On December 30, 1996, First Colonial Ventures, Ltd. signed a note to the
Company to purchase a 1/3 interest of Greater San Diego Imaging Center.
At January 31, 1998, the unpaid principal with interest and penalties is
$357,748. The note was due and payable together with interest and
penalties, by December 31, 1997.
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 been set for trial on March 6, 1998. The Company purchased
the remaining stock of MRI Grand Terrace, Inc., as described in Note 4 to
these financial statements, in an effort to control both lawsuits against
the Chino Valley Bank, which is also a publicly traded company. As a result
of the uncertainty of the final results of the lawsuits, the Company wrote
off the investment, which at the time was $100,000.
3. NETROM, INC. CONVERTIBLE PREFERRED STOCK
In January of 1998, the Company, on behalf of its wholly owned subsidiary,
Planificacion y Desarrollo Regional Jatay, S.A. de C.V., a Mexican
corporation, has sold 50 acres of its Hills of Bajamar property to NetRom,
Inc., a California corporation for $60,000 per acre, for a total purchase
price of $3,000,000, plus construction and management contracts on said 50
acres.
NetRom, Inc. shall deliver to Tri-National Development Corp. at closing,
1,000,000 shares of its preferred stock at a value of $3.00 per share for
a total value of $3,000,000. The preferred stock will cumulate interest at
a rate of 15% per annum and will be convertible into common stock at $3.00
per share or market price for the 10 day average prior to the date of
converstion, which ever is less, but in no event less than $1.50 per share.
The conversion date is at the option of Tri-National Development Corp.,
however, no sooner than 12 months from the date of closing and in no case
later than 15 days after the common stock of NetRom, Inc. trades at or
above $4.00 per share for a period of thirty consecutive days.
<PAGE>
Additionally, NetRom, Inc. will provide Tri-National Development Corp. will
warrants to purchase 1,000,000 common shares at a price of $1.25 per share,
presuming that NetRom, Inc. achieves its stated projection of $.31 per
share in earnings for the year ending December 31, 1998. In the event that
NetRom, Inc. falls below the $.31 per share earnings projection, but no
lower than $.21 in earnings for that period, then the warrant price will
fall to $1.00 per share. Further, if the earnings fall to between $.11 and
$.21, then the option price will be reduced to $.75 per share and in the
event the earnings fall below $.11 per share, the option price will be
reduced to $.50 per share. The price and terms for the property are based
on arms length negotiations between the parties and was approved by the
Board of Directors of Tri-National Development Corp. and the shareholders
of NetRom, Inc. at their Annual Meeting of Shareholders, held on January
19, 1998.
4. INVESTMENT IN MRI MEDICAL DIAGNOSTICS INC., A COLORADO CORPORATION
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 totaling 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 (2), the Company received 5,900,000 shares of MRI-Med at
a deemed value of $0.50 per share, ordered by the U.S. Federal Bankruptcy
Court, plus 1,400,000 for reimbursement of current expenses. MRI Medical
Diagnostics, Inc. is currently a publicly traded company, with shares
trading in the $.08 to $.15 range. The investment is recorded in the books
at a cost of $496,994. The Company declared and paid a stock dividend of
750,000 shares of MRI Medical Diagnostics,Inc. (OTC BB:MMDI)to shareholders
of record August 31, 1997 and declared a second stock dividend of an
additional 750,000 to shareholders of record January 27, 1998.
5. REAL ESTATE DEVELOPMENT PROPERTY: HILLS OF BAJAMAR
The Hills of Bajamar (formerly 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 Baja California, 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 (1) a one percent royalty on the gross
proceeds from the sale of any land that is part of the said Santa Fe Ranch,
or (2) $150,000 for each 247 acres parcel released by the vendor, beginning
with the release of the fourth parcel and continuing with each release
thereafter.
<PAGE>
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 a convertible promissory note to a Mr.
Yates 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 provided for
Yates to receive the greater of $2,000 or 50% of the sale price for each
acre of the Santa Fe Ranch sold until all funds due to him were paid, with
Yates also to receive a lien against the first 250 acres of the Santa Fe
Ranch as security.
The Company then entered into a new agreement in November of 1996 with PMI
to acquire all right and title to the 237 acres already in escrow, as well
as, the balance of the contract for the remaining 2,233 acres for a
$700,000 promissory note payable, 500,000 shares of TND Class B Series B
Preferred Stock at a value of $4.00 per share and the return of its 51%
interest in PMI. In January of 1998, the Company converted the $700,000
promissory note into 1,000,000 common shares of the Company. The Company's
basis in the Hills of Bajamar taking into account cash invested, stock
surrendered and notes given total, $3,843,661. PMI remains responsible for
its own debts, including Mr. Yates.
6. PLAZAS RESORT TIMESHARES AND COMMERCIAL PROPERTY
In December of 1996, the Company entered into an acquisition agreement with
Valcas International, S.A. de C.V., to acquire 100% of the stock of
Inmobilario Plaza Baja California, S.A. de C.V., a Mexican corporation,
including its existing assets, which include 16+ developed acres of ocean
front land with plans for 326 timeshare resort units, plus a 26,000 square
foot adjacent commercial building under construction for $13,279,055,
payable with notes for $9,279,055 and 1,000,000 Class B Series B
Convertible Preferred shares with a value of $4.00 per share.
7. BAJA PROMOCIONES INTERNATIONAL, S.A. de C.V.
On April 27, 1997, the Company entered into an agreement to sell 200 acres
in the very northern corner of the Hills of Bajamar to Baja Promociones
International, Inc. for use as a Indy style racing facility for $4,200,000
and retained 25% interest in the business. The Company has received a note
in the amount of $4,200,000. The buyer is to receive a credit of
$1,000,000 upon completion of the construction of the main road from the
toll road to the race facility property. The buyer is expecting to start
construction by April 1,1998. The original cost of this property was
$473,083, yielding a gain on sale of $3,726,917.
8. FURNITURE AND EQUIPMENT
Furniture and equipment consists of the following:
Furniture and equipment $ 712,671
Less accumulated depreciation (63,842)
----------
$ 649,189
==========
<PAGE>
9. LOANS PAYABLE-SHORT TERM
During the quarter, the Company issued nine month notes with 10% interest
per annum. The Company intends to repay the the principal and interest
with cash flow generated from the Plazas Resort timeshare sales at Bajamar.
10. LONG-TERM NOTES PAYABLE
Long-term notes payable at January 31, 1998, consisted of the following:
Note payable to Valcas Internacional,
S.A. de C.V. payable in semi-
annual installments of $927,905
with interest commencing after
May 1, 1999 at 6% per annum, with
the first installment due May 1,
1999 and final installment due
November 1, 2002 $9,279,055
Note payable to North County Bank
Guaranteed by a stockholder and
secured by equipment, due in
monthly installments of $864,
including interest at 10.5%,
through October, 2001 31,214
----------
9,310,269
Less current portion ( 7,441)
----------
Long-term debt, net at current portion $9,302,828
==========
Maturities at long-term debt are as follows:
Year ending
April 30 Amount
-------- ------
1998 $ 7,441
1999 1,870,470
2000 1,865,004
2001 1,866,017
2002 1,856,670
Thereafter 1,844,667
----------
$9,310,269
==========
11. INCOME TAXES
The Company began the year with loss carryforwards from prior years
totaling, $1,211,629. These losses partially offset the net income in the
current year of $2,210,145, leaving taxable income of $998,516 for the nine
months ending January 31, 1998. The federal income tax accrued on the
above taxable income amounted to $339,496 and since the Company was
incorporated in the state of Wyoming, it does not have to pay California
state income taxes.
<PAGE>
12. LEASES
The Company leases two office facilities in San Diego, California under
operating leases which expire in 1999 and the year 2,000, respectively.
The leases generally require the Company to pay all maintenance, insurance
and property taxes and are subject to certain minimum escalation
provisions. Rent expense for all operating leases was approximately
$85,031 for the nine months ended January 31, 1998.
Future minimum operating lease payments as of January 31, 1998 are as
follows:
1998 $ 113,375
1999 102,369
2000 30,452
----------
$ 246,196
==========
13. GREATER SAN DIEGO IMAGING CENTER LLC
On June 4, 1996 the Company entered into an Asset Purchase Agreement with
Greater San Diego Imaging Center, LLC (GSDIC) 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, certain trade accounts receivable, certain assignable contracts,
leases and agreements, prepaid expenses and the goodwill of the business.
The purchase price is $599,999 for the fixed assets and $1.00 for other
assets and is payable as follows:
(a) by payment of $300,000, of which $25,000 U.S. was paid 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., and
(c) subsequent to June 4, 1996, the Company agreed to purchase additional
accounts receivable in the amount of $102,700, in exchange for 291,935
common shares of TND, based on a price of $.35 per share, and
(d) on December 30, 1996, the Company entered into an agreement with First
Colonial Ventures, Ltd. to sell it 1/3 of GSDIC for $350,000 cash, payable
over 6 months. As of January 31, 1998, First Colonial had paid $112,367.
14. SHARE CAPITAL
The authorized capital of the Company consists of 110,100,000 shares
divided into,100,000 Class A Preferred shares with a par value of $1.00
each; 5,500,000 Class B Series A Convertible Preferred shares with a par
value of $1.00 each; 4,500,000 Class B Series B Convertible Preferred
shares with a par value of $1.00 each, of which 1,500,000 are issued and
outstanding; and 100,000,000 common shares without par value, of which
18,750,156 are issued and outstanding.
Included in the 18,750,156 common shares issued and outstanding are 749,483
common shares held in escrow and may not be released by the transfer agent,
traded in or dealt with in any manner whatsoever without the consent of the
regulatory authorities.
There were employee stock options to purchase 875,000 common shares of the
Company outstanding at January 31, 1998.
<PAGE>
In 1996,the Company carried out a private placement of 1,956,491 units of
the Company at a price of $0.285 per unit for gross proceeds of $521,971.
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 warrant entitles 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 commenced on the October 30,
1996. As of January 31, 1998, a total of 832,167 warrants had been exercised,
leaving 1,115,909 warrants unexercised.
In 1996, the Company also carried out a private placement of 968,020 units
of the Company at a price of $0.35 per unit for gross proceeds of $338,807.
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 warrant entitles the holder thereof to purchase one common
share in the capital of the Company at any time during the first year of
the term of the warrant at a price of $0.40 or at any time during the final
year of the term of the warrant at a price of $0.50. The term of the
warrant commenced on the October 30, 1996. As of January 31, 1998, a total
of 775,073 warrants had been exercised, leaving 192,947 unexercised.
15. RELATED PARTY TRANSACTIONS
The aggregate amounts paid and accrued to related parties during the
year follows:
Management Compensation and Consulting Fees $117,000.
16. OPTIONS AND WARRANTS
Stock Options Granted During the Year:
No Employee Stock Options were granted during the 9 months ended January
31, 1998. However, 975,000 Employee Stock Options were issued in December
of 1996 to purchase common shares in the capital of the Company at a price
of $.25 per share and expiring December 31, 1999. For the nine months
ended January 31, 1998, 100,000 Employee Stock Options had been exercised.
Warrants Granted During the Year:
During the quarter ended January 31, 1998, the Company carried out a
private placement of 1,320,384 units of the Company for gross proceeds of
$545,000. Each unit consists of one common share in the capital of the
Company and a one year non-transferable share purchase warrant. Each
non-transferable share purchase warrant entitles the holder thereof to
purchase one common share in the capital of the Company at any time during
the year of the term of the warrant at a price of $1.00.
Directors:
M.A. Sunstein Jay Pasternack
Ted Takacs Shane Kennedy
Dr. Robert Rosen Arthur Lilly
J.J. Parker, M.D.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> JAN-31-1998
<CASH> 85,051
<SECURITIES> 287,965
<RECEIVABLES> 734,796
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0
6,000,000
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