SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
AZTEK INC.
(Exact Name of Registrant as Specified in its Charter)
NEVADA
(State or Other Jurisdiction of Incorporation or organization)
7371
(Primary Standard Industrial Classification Code Number)
88 0324260
(I.R.S. Employer Identification Number)
1575 DELUCCCHI LANE, SUITE #40, RENO, NEVADA 89502, (702) 827-3639
(Address, including zip code, and telephone number,
including area code, or registrant's principal executive offices)
COPIES OF ALL COMMUNICATIONS TO:
STEVE LARSON-JACKSON, ESQUIRE
W. KWAME ANTHONY, ESQUIRE
LAW FIRM OF LARSON-JACKSON, P.C.
1275 K STREET, N.W., SUITE 1101
WASHINGTON, D.C. 20005
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of the registration
statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of each Proposed maximum Proposed maximum Amount of
each class of Amount to be offering price aggregate offering registra-
securities to be registered(2) per unit(1) price(3) tion fee
Registered
<S> <C> <C> <C>
<C>
Common stock,
$.001 par
value per
share 2,457,613 .995 2,445,325
$721.37
</TABLE>
(1) The basis for calculating the fee is Rule 457(f). The market for the
securities to be received by Aztek, Inc. on July 31, 1998 was C$1.50. The
exchange rate on that date was 1 Canadian dollar = 0.6636 US Dollar.
(2) Represents the estimated maximum number of shares of common stock, par
value $.001 per share, of Aztek, Inc. (the "Company"), expected to be issued
in exchange for up to 2,458,613 shares of common stock, no par value per
share, of the Aztek Technologies Inc. ("ATI"), upon consummation of the
merger of ATI with the Company, described herein.
(3) Estimated solely for the purpose of calculating the registration fee. The
registration fee has been computed pursuant to Rule 457(f) under the
Securities Act of 1933, as amended.
The registrant hereby amends this registration statement on such date or
dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a)
of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section
8(a),
may determine.
<PAGE>
AZTEK TECHNOLOGIES INC.
246 LAWRENCE AVENUE, SUITE #5
KELOWNA, BRITISH COLUMBIA, CANADA V1Y 6L3
(250) 762-2333
_____________,
1998
Dear Stockholder:
You are invited to attend the Annual and Extraordinary Meeting of
stockholders (the "Special Meeting") of the Aztek Technologies Inc. ("ATI")
to be held on October 1, 1998 at the offices of Steven K. Winters at 1010
Burrard Building, 1030 West Georgia St., Vancouver, B.C. V6E 2Y3, Canada at
9:00 a.m. local time. Notice of the Annual and Extraordinary Meeting, a
Joint
Proxy Statement-Prospectus and a Proxy Card are enclosed.
The Special Meeting has been called in connection with the proposed
acquisition of ATI by Aztek, Inc. (the "Company") through the merger of ATI
with the Company in accordance with the Merger Agreement dated as of July 2,
1998 by and between ATI and the Company (the "Merger Agreement"). Pursuant to
the Merger Agreement, ATI will merge with and into the Company with the
Company being the surviving corporation and each outstanding share of ATI's
common stock will be automatically converted into the right to receive shares
of the Company's Common Stock, based upon an exchange ratio of one-to-one.
The transaction is referred to herein as the "Merger."
Following the Merger, the Company will operate the business that is
presently known as the Aztek Technologies Inc. Consummation of the Merger is
conditioned upon approval by ATI's stockholders.
At the Special Meeting, stockholders of ATI will consider and
vote upon approval of the Merger and the Merger Agreement. Your Board of
Directors has approved the Merger Agreement, including the Merger, and
believes that the Merger and the Merger Agreement are in the best interests
of
ATI and its stockholders. Accordingly, your Board of Directors unanimously
recommends that you vote FOR approval of the Merger and the Merger Agreement.
You are urged to read the accompanying Joint Proxy
Statement-Prospectus, which provides detailed information concerning the
Merger and related matters.
Your vote is important, regardless of the number of shares you own.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD AS SOON AS POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND
THE SPECIAL MEETING. This will not prevent you from voting in person but will
assure that your vote is counted if you are unable to attend the Special
Meeting.
Sincerely,
Mike Sintichakis
President
<PAGE>
* PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME *
AZTEK TECHNOLOGIES INC.
246 LAWRENCE AVENUE, SUITE #5
KELOWNA, BRITISH COLUMBIA, CANADA V1Y 6L3
(250) 762-2333
-----------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 1, 1998
------------------------------
NOTICE IS HEREBY GIVEN that the Annual and Extraordinary Meeting of
stockholders (the "Special Meeting") of Aztek Technologies Inc. ("ATI") will
be held at the offices of Steven K Winters at 1010 Burrard Building, 1030
West Georgia St., Vancouver, B.C. V6E 2Y3, Canada at 9:00 a.m. local time,
for
the following purposes:
(1) To approve the acquisition of ATI by Aztek, Inc. (the
"Company") through the merger of ATI with the Company, with the Company
continuing as the surviving corporation, pursuant to which each outstanding
share of ATI Common Stock will be converted into one share of the Company's
common stock, par value $.001 per share ("the Company Common Stock"), the
Merger Consideration and to approve the Merger Agreement by and between ATI
and the Company, dated as of July 2, 1998 (the "Merger Agreement") which sets
forth the terms and conditions of the Merger.
NOTE: The Board of Directors of ATI is not aware of any other business to
come before the Special Meeting.
The Board of Directors of ATI has fixed the close of business on
August 21, 1998 as the record date for the determination of stockholders
entitled to notice of and to vote at the Special Meeting. Only stockholders of
record at the close of business on that date will be entitled to notice of and
to vote at the Special Meeting.
By Order of the Board of Directors,
Mike Sintichakis
President
- -----------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE SPECIAL MEETING, PLEASE DATE, SIGN AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME
JOINT PROXY STATEMENT-PROSPECTUS
------------------------
AZTEK INC.
PROSPECTUS
2,457,613
SHARES OF COMMON STOCK
PAR VALUE $.001 PER SHARE
------------------------
------------------------
AZTEK TECHNOLOGIES INC.
PROXY STATEMENT
FOR ANNUAL AND EXTRAORDINARY MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 1, 1998
------------------------
This Joint Proxy Statement-Prospectus is being furnished to the
stockholders of Aztek Technologies Inc. ("ATI") in connection with the
solicitation of proxies by the Board of directors of ATI for use at its
Annual and Extraordinary Meeting of Stockholders to be held on October 1,
1998. This Joint Proxy Statement-Prospectus was first mailed to security
holders of ATI on or about September 11, 1998.
At their Meeting, the holders of common stock of ATI will be asked to
approve the Plan of Merger and the Merger Agreement, dated as of July 2, 1998
providing for a merger pursuant to which Aztek, Inc., a Nevada corporation
(the "Company") will be the surviving corporation and ATI will cease to exist
(the transaction is referred to hereinafter as the "Merger"). The Merger
Agreement is incorporated by reference and is not presented herein or
delivered herewith. The Company will provide without charge to each person
who receives a prospectus, upon written or oral request of such person, a
copy of the Merger Agreement. Upon consummation of the Merger, each
outstanding share of ATI common stock, no par value ("ATI Common Stock"),
other than shares held by ATI shareholders who perfect dissenters' rights,
will be converted into one share of The Company's common stock, par value
$.001 per share ("Company Common Stock"). The receipt of the Company Common
Stock pursuant to the Merger will be tax-free to holders of ATI Common
Stock.
The Company has filed a Registration Statement on Form S-4 pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), for 2,457,613
shares of the Company Common Stock to be issued in connection with the
Merger. This Joint Proxy Statement-Prospectus also constitutes the
Prospectus of the Company filed as part of the Registration Statement. All
information concerning the Company included in this Joint Proxy
Statement-Prospectus has been furnished by the Company and all information
concerning ATI has been furnished by ATI.
THE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
PROSPECTIVE
PURCHASERS SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER THE SECTION
"RISK FACTORS."
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Price Underwriting Discounts Proceeds to issuer
to public(1) and commissions or other persons
<S> <C> <C> <C>
Per share One share N/A One share
Total 2,457,613 shares N/A 2,457,613 shares
</TABLE>
(1) The Company is issuing the shares in a one-for-one exchange such that the
price for one share of the Company's Common Stock is one share of ATI Common
Stock. Upon consummation of the Merger, the Company will receive all the
outstanding shares of ATI and ATI will cease to exist.
(2) This Joint Proxy Statement-Prospectus includes the following expenses:
Registration fees. . . . . . . . . . . . . . . $721.37
Transfer agents' fees . . . . . . . . . . $ 4,800
Printing and engraving cots. . . . . . . . $ 1,000
Legal and accounting . . . . . . . . . . . $25,000
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS JOINT PROXY STATEMENT-PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS JOINT PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE THE COMPANY COMMON
STOCK OFFERED BY THIS JOINT PROXY STATEMENT-PROSPECTUS, OR THE SOLICITATION
OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
JOINT PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR ATI SINCE THE DATE OF
THIS JOINT PROXY STATEMENT-PROSPECTUS.
The date of this Joint Proxy Statement-Prospectus is September 11, 1998.
<PAGE>
AVAILABLE INFORMATION AND INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
This prospectus incorporates documents by reference which are not presented
herein or delivered herewith. ATI will provide without charge to each person
who receives a prospectus, upon written or oral request of such person, a
copy of any of the information that is incorporated by reference in the Joint
Proxy Statement-Prospectus (not including exhibits to the information that is
incorporated by reference unless the exhibits are themselves specifically
incorporated by reference). Such request should be made to Mike Sintichakis,
#5-246 Lawrence Avenue, Kelowna, British Columbia, Canada V1Y 6L3, (250)
762-2333. In order to ensure timely delivery of the documents, any request
should be made by September 26, 1998. The Company is not subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and therefore does not file proxy statements or any
other information with the Securities and Exchange Commission (the
"Commission"). ATI is subject to the informational requirements of the
Exchange Act and, in accordance therewith, ATI files reports and other
information with the Commission. The document filed with the Commission and
incorporated herein by reference is ATI's Registration Statement filed on
Form
10-SB. Reports and other information filed by ATI can be inspected and
copied
at the Commission's public reference room located at 450 Fifth Street, NW,
Washington, DC 20549, and requested at the following public reference
facilities in the Commission's regional offices: 7 World Trade Center, Suite
1300, New York, NY 10048; and City Corp. Center, 500 West Madison Street,
Suite 1400, Chicago, IL 60661-2511. Copies of such material can be obtained
at prescribed rates by writing to the Securities and Exchange Commission,
Public Reference section, 450 Fifth Street, NW, Washington, D.C. 20549. This
Joint Proxy Statement-Prospectus does not contain all of the information set
forth in the Registration Statement on Form S-4 and exhibits thereto (the
"Registration Statement") which the Company has filed with the Commission
under the Securities Act and to which reference is hereby made.
All documents filed by ATI pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Exchange Act subsequent to the date hereof and prior to the date of the
last of the Meetings of its security holders shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of
such filing to the extent permissible by the federal securities laws. Any
statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes
of this Joint Proxy Statement-Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
deemed to be incorporated herein by reference modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Joint Proxy
Statement-Prospectus.
The Company's shares are not listed on any U.S. exchange. The public market
for ATI's securities in Canada is on the Vancouver Stock Exchange under the
symbol "VSE-AZT." The public market for ATI's securities in the United States
is on the Over-the-Counter Bulletin Board (the "OTC Bulletin Board") under
the symbol "AZTKF."
<PAGE>
TABLE OF CONTENTS
Letter To Stockholders
Notice Of Special Meeting
Available Information And Incorporation Of Certain Documents By Reference
Summary
The Companies
Risk Factors
The Transaction
Terms Of The Transaction
Description Of Securities
Pro Forma Financial Information
Material Contracts With The Company Being Acquired
Disclosure Of Commission Position On Indemnification For Securities Act
Liabilities
Description Of The Business Of The Acquiring Company
Description Of Property
Legal Proceedings
Market For Common Equity And Related Stockholder Matters
Holders
Dividends
Management's Discussion And Analysis Or Plan Of Operation
Year 2000 Issues
External Funding
Changes In And Disagreements With Accountants On Accounting And Financial
Disclosure
PART C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
Description Of Business
Description Of Property
Legal Proceedings
Market For Common Equity And Related Stockholder Matters
Holders Of Common Stock
Dividends
Management's Discussion And Analysis Or Plan Of Operation
External Funding
Disagreements With Accountants On Accounting And Financial Dislosure
PART D VOTING AND MANAGEMENT INFORMATION
Date, Time and Place Information
Revocability of Proxy
Dissenters' Rights of Appraisal
Persons Making the Solicitation
Interest Of Certain Person in Matters To Be Acted Upon
Voting Securities and Principal Holders Thereof
Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Shareholders
Voting Procedures
Directors, Executive Officers, Promoters And Control Persons Of The
Surviving or Acquiring Company
Executive Compensation Of The Directors And Executive Officers Of The
Surviving or Acquiring Company
Certain Relationships and Related Transactions
<PAGE>
SUMMARY
This Joint Proxy Statement-Prospectus is being issued by Aztek, Inc., a
Nevada Corporation, and Aztek Technologies Inc., a British Columbia
corporation, to effect a merger of the two companies with the Nevada
corporation being the surviving entity. Aztek, Inc. is a dormant corporation
that has been in existence for four years. Aztek Technologies Inc. is a
company that develops and sells computer software and computer systems and
provides support services for its customers. Aztek, Inc. will issue one
common share of its stock for each outstanding share of Aztek Technologies
Inc. The shareholders of Aztek, Inc. presently consist of Aztek Technologies
Inc. and the directors of Aztek Technologies Inc. The net effect of the
merger is that the business and operations of Aztek Technologies Inc. will
move from being a Canadian company to being a U.S. Company.
<PAGE>
The primary addresses of the companies that are the parties to the
transaction for which the securities described in this Joint Proxy
Statement-Prospectus are being issued are as follows:
Aztek, Inc.
Suite #40 - 1575 Delucchi Lane
Reno, Nevada 89502
(702) 827-3639
Aztek Technologies Inc.
#5-246 Lawrence Ave.
Kelowna, B.C. V1Y 6L3
Canada
(250) 762-2333
THE COMPANIES
Aztek, Inc. (the "Company") has been dormant since its inception in
1994. After the merger, ATI's business operations will become the business
operations of the Company.
ATI was incorporated on July 11, 1979, by filing and registering its
articles with the British Columbia Registar of Companies. Over the last four
years, ATI has expanded its business focus and capabilities following
acquisitions. On September 30, 1994, ATI acquired all of the issued and
outstanding shares of ResponseWare Corporation, a developer of municipal
government software including general accounting and payroll systems and
specialized systems such as property taxation, utility billing and building
permits. This acquisition allowed the ATI to further diversify its operations
within the computer hardware, software and telecommunications market and to
expand the existing forty-five (45) municipal and private sector clients of
ResponseWare. ATI continues to support and service the ResponseWare software
and client base as its primary source of revenue. On August 21, 1995, ATI
acquired the assets and business of Helix Technologies Limited, a consulting
and systems integration firm specializing in technology for mobile work force
automation. ATI has completed contracted projects from the acquisition and
currently has no contracts for work in this area. Mobile work force
automation technologies will be incorporated into future ATI products that
have yet to be developed. ATI also continues to pursue further project-based
contracts in the area of mobile work force automation technologies.
RISK FACTORS
The securities offered hereby are speculative in nature and involve a
high degree of risk. Prospective investors should consider carefully the
following factors, among others, prior to making an investment decision.
Operating History. The Company has no operating history. The Company
was incorporated in the State of Nevada in 1994 as Spectral Innovations
(1994), Inc., but has been dormant since its inception. On June 8, 1998,
Spectral Innovations (1994) Inc. changed its name to Aztek Inc. by filing
with the State of Nevada an amendment to its articles of incorporation.
Following the merger, the Company will assume the business activities of ATI.
Change in Business Focus. ATI has been incorporated since July 11,
1979. Nevertheless, it has undergone several major changes in ownership and
its primary business focus. Following its inception, ATI was involved in the
exploration of oil, gas, and gold properties in North America. From 1989 to
1991 the ATI was dormant. ATI's name has changed several times since its
inception to reflect its changing emphasis. On September 1991, the current
president, Mr. Mike Sintichakis, became a director and president ATI.
During the last six years, ATI has experienced substantial structural and
fiscal changes necessitated by the acquisition of other companies and
external
capital raising efforts. As a result of the Merger, ATI will cease to exist,
the Company will be the surviving corporation, and all of ATI's operations
will be the business of the Company.
Expectation of Losses. The Company's management and ATI's management
believes the Company and its software and services will be a profitable
enterprise after the Merger. However, the company to be acquired is still in
the developmental stage. Therefore, the Company anticipates experiencing
future operating losses resulting primarily from marketing and recruitment of
Value Added Resellers ("VARs") and associated training costs. ATI has
operated at a loss for several years. To limit and reverse anticipated
operating losses the Company must successfully develop its distribution
network of VARs in the United States and Canada.
Working Capital Requirements. After the Merger, the Company will
require a substantial investment in working capital, principally to finance
its marketing activities, recruitment of VARs, hardware and software
development, and to increase its existing staff. ATI recently is in the
process of raising one million dollars in an offering. The capital raising
efforts of ATI will pass through to the Company after the Merger. However,
without additional capital generated from sale of the Company's stock or
operations, the Company will be unable to fund its business and will be
unable
to offer its services on an extensive basis. Thus, the Company will be
unable
to expand its business. There can be no assurance that capital from private
and public offerings will be available or, if available, can be obtained on
terms advantageous to the Company. If the Company is unable to raise
sufficient capital either externally or from operations it will not be able
to
sustain its operations.
Arbitrary Offering Price. No public market presently exists for the
Company's Common Stock and only a limited prior market has existed for ATI's
Common Stock. On a daily basis, ATI's trading volume on the Vancouver Stock
Exchange and the OTC Bulletin Board generally did not exceed 1,500 shares.
The one-for-one exchange offered in this Joint Proxy Statement-Prospectus
bears no relationship to the assets, book value, earnings, net worth, or any
other recognized criteria of value of ATI. Consequently, the share exchange
ratio, which can be deemed an offering price for ATI's securities, was
determined arbitrarily and solely by the Boards of Directors of the Company
and ATI. In establishing the offering price, the Boards considered such
matters as the limited financial resources of the Company and ATI and the
general condition of the securities markets. The exchange ratio of the
Merger
should not, however, be considered an indication of the actual value ATI.
Centralized Management. The Company's Board of Directors consists
solely of the directors of ATI and one of the relatives of a director. The
Company has no other management. Upon completion of the Merger, ATI's
management will become the Company's management. The Company's key
management
functions will be concentrated with ATI's current president, Mr. Mike
Sintichakis. The loss of Mr. Sintichakis' services could significantly
impact
the Company's future operations and profitability. ATI currently does not
have key management insurance on Mr. Mike Sintichakis.
Indemnification of Directors and Officers. The articles of
incorporation for both the Company and ATI indemnify directors and officers
of
ATI and the Company and allow for ATI and the Company to secure insurance for
the liability of their respective directors and officers.
No Public Market for Shares. At the present time, no public market
exists for the Company's Common Stock and no market will, in fact, develop
after completion of the Merger. Although ATI's Common Stock was traded on
the Vancouver Stock Exchange, the daily volume is approximately 1,500
shares.
ATI's listing on the OTC Bulletin Board is relatively recent, that no
reliable historical data exists upon which to project daily trading volume of
ATI's Common Stock.
No Dividends. Neither the Company nor ATI has paid any dividends to
date and the Company has no plans to pay dividends in the foreseeable future.
Dilution to New Investors. The Company's directors and officers have
acquired the Company's Common Stock at a cost substantially less than what
ATI's shareholders tendering their shares will have paid per share upon
completion of the Merger. Upon the effective date of the merger, Assuming
ATI's pending offering is fully subscribed, the investors in ATI will suffer
an immediate substantial dilution of $0.21 to $0.14 from the net tangible
book value of their ATI Common Stock when compared to the resulting net
tangible book value of the Company's Common Stock after the Merger. Due to
the substantial dilution to be borne by ATI's investors, they will bear most
of the risk of loss while control of the Company will remain in the hands of
its current stockholders.
Limited Financial Resources and Need for Additional Financing. Other
than the proceeds of ATI's recent offering and possible future revenues from
the sale of the Company's services, the Company does not at this time, and
may not in the future, have any additional sources of funds such as operating
funds or significant credit arrangements, from which to pay the costs of its
proposed operations. Although the Company believes that the external fund
raising efforts will be sufficient for the Company's short-term needs after
the Merger, the conduct of the Company's business will require additional
funds.
The Company also plans to arrange financing of $10 million. The Company
will use $6 million to acquire and develop two properties, both Hi-Tech
plazas, one in the U.S. and one in Canada. The Company will acquire the
properties at locations for sales and support for the Company's customers.
The Company will lease available space to other Hi-Tech companies.
The Company will use the remaining $4 million for acquisitions,
completion of products under development, financing expenses, marketing and
working capital. The Company cannot assure it will be able to raise
additional capital in the future to support its operations, either from
operations or from external sources external.
Debt. Pursuant to the Merger, the Company will assume ATI's debt. ATI
currently has approximately $132,707 in long-term debt, an accounts payable
balance of $287,166, and total debt of $657,759. The debt is at a
commercially reasonable rate and although ATI is current in its payment
obligations, the debt impacts ATI's profitability.
Substantial Competition. ATI currently competes in a rigorous and
demanding business environment. The primary source of competition comes from
small to mid-sized municipal government marketers, regional vendors,
specialized departmental solution providers and in-house developed systems.
Approximately 100 significant regional software vendors are in the United
States and approximately 10 significant regional software vendors are in
Canada. The Company and ATI expect competition to increase in the
foreseeable future, which may or may not impact the Company's profitability
after the Merger. Mounting pressure to deliver current technology is
increasing at a time when funding for new development is difficult for the
Company to achieve. The Company's products are designed to take advantage of
business intelligence tools and software. Frequently, municipalities create
and maintain information and data with limited support staff. ATI's software
applications can accommodate customer-developed enhancements better than
alternative technologies.
Voting Control by Insiders. The Company's articles of incorporation and
ATI's articles prohibit cumulative voting in electing directors. The
Company's directors are presently the largest stockholders in ATI and all of
ATI's directors presently serve on the Company's Board of Directors. In this
regard, Mr. Mike Sintichakis, president and director, will continue to be the
largest single shareholder.
THE TRANSACTION
The Company has entered into an agreement with ATI whereby each one
outstanding share of ATI Common Stock will be exchanged for one common share,
par value $.001 of the Company resulting in all shareholders of ATI becoming
shareholders of the Company. The transaction is subject to regulatory
acceptance and the approval of the shareholders of ATI and all regulatory
bodies having jurisdiction over the Company.
TERMS OF THE TRANSACTION
Terms Of The Acquisition Agreement. The Merger Agreement provides for
the acquisition of ATI by the Company by ATI merging into the Company with
the Company being the surviving corporation. Each outstanding share of ATI's
common stock will be automatically converted into the right to one share of
the Company's Common Stock. This transaction is referred herein as the
"Merger."
Treatment of Stock Options and Escrow Shares. At the Effective Date,
each option outstanding under ATI's stock option plan shall be converted into
an option to purchase the number of shares of Company Common Stock equal to
the number of shares of ATI Common Stock issuable immediately prior to the
Effective Date upon exercise of such option (without regard to restrictions on
exercisability) upon the same terms and conditions under the relevant option
as were applicable immediately prior to the Effective Time. At the Effective
Date, each ATI escrow share outstanding shall be converted into the number of
escrow shares of Company Common Stock equal to the number of escrow shares of
ATI Common Stock issuable immediately prior to the Effective Date upon the
same terms and conditions under the relevant escrow plan as were applicable
immediately prior to the Effective Time.
ATI currently has stock options outstanding and shares allotted
accordingly. Directors or employees may exercise the options for the total
shares allotted or a portion of the shares allotted. Directors and employees
are not under any obligation to take up and pay for any of the optioned
shares. The stock options are non-transferable and become null and void
thirty days after the director or employee ceases to be a director or
employee of ATI. 185,000 options with an exercise price of $1.82 are
outstanding and expire on March 20, 1999. 40,000 options with an exercise
price of $0.85 per share are outstanding and expire on September 22, 1998.
Of the total shares of ATI Common Stock outstanding, 354,000 shares are
escrow shares that will be released to their owners at the rate of 1 share
for each $0.31 of cash flow from operations. Shares not released prior to
September 17, 2001 will be cancelled and returned to the treasury.
Reasons for the Transaction. The Board of Directors of ATI considered
the Merger and the terms of the Merger Agreement, including the Exchange
Ratio, in light of economic, financial, legal, market and other factors and
concluded that the Merger is in the best interests of ATI and its
stockholders. By merging, the Company will acquire a going concern and move
from being a dormant corporation to an active corporation. The Company will
own all of ATI's assets, receive all its revenues and assume its liabilities
and expenses. In exchange for all the Common Stock of ATI, the Company will
issue its stock to ATI's shareholders. Upon completing the Merger, the
shareholders of ATI will become shareholders in an American corporation with
all the assets, future revenues, liabilities and expenses previously
associated with ATI. Concurrent with the Merger, the Company will acquire
the assets of Qdata Software Inc., a Barbados corporation that distributes
computer software internationally. To date, the terms of the asset
acquisition of Qdata Software Inc., have not been finalized. The Company
will not acquire or assume the liabilities, if any, of Qdata. ATI's
shareholders are tendering their stock for the Company Common Stock in a
one-for-one exchange. Thus, ATI's shareholders will own stock in a company
with combined assets and revenues of ATI and Qdata software. THE BOARD OF
DIRECTORS OF ATI UNANIMOUSLY RECOMMENDS THAT ATI'S STOCKHOLDERS VOTE FOR
APPROVAL OF THE MERGER AND THE MERGER AGREEMENT.
Exchange of Stock Certificates. Prior to the Effective Date, the
Company will appoint a stock transfer agent (the "Exchange Agent") to effect
the exchange of stock certificates in connection with the Merger. As soon as
practicable after the Effective Date, the Exchange Agent will send a notice
and letter of transmittal to each ATI stockholder of record at such date
advising such stockholder of the effectiveness of the Merger and the procedure
for surrendering to the Exchange Agent outstanding certificates formerly
evidencing ATI Common Stock in exchange for new certificates of Company
Common Stock. Promptly following receipt of such notice and transmittal form,
holders of ATI Common Stock certificates should surrender their certificates
in accordance with the specified procedures. Upon surrender, each ATI Common
Stock certificate will be canceled.
Conditions to the Merger. The obligations of the Company and ATI
to effect the Merger are solely and jointly subject to a number of conditions
including, among other things, the receipt of ATI stockholder and regulatory
approval of the Merger.
Required Regulatory Approvals. The Merger is subject to the approval of
the Vancouver Stock Exchange.
Interests of Certain Persons in the Merger. Certain members of
ATI's management and Board of Directors have interests in the Merger in
addition to their interests as stockholders of ATI generally. Those
interests relate to an increase in the directors' and officers' percentage
share of ownership in the surviving company relative to their percentage
share of ownership in ATI before the Merger. For additional information, see
"The Merger Interests of Certain Persons in the Merger" herein.
ATI's shares are currently listed on the Vancouver Stock Exchange. The
Merger is subject to approval by the Vancouver Stock Exchange. If such
approval is not granted, ATI will voluntarily seek de-listing so that it may
proceed with the Merger. In addition to issuing one common share of the
Company's Common Stock for each share of ATI's Common Stock, the Company will
issue one share option and escrow share for each share of ATI's option shares
and escrow shares respectively such that the option shares and escrow shares
in the Company as the survivor will enjoy the same rights, privileges and
obligations as the option and escrow shares in ATI.
DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 100,000,000 shares of
Common Stock, $.001 par value. The securities to be registered pursuant to
the Form S-4 and issued pursuant to this Joint Proxy Statement-Prospectus are
all of the authorized common stock of the Company. On June 30, 1998,
2,025,000 shares of Common Stock were outstanding and held of record by six
shareholders. Immediately following the Merger and upon the tender of all of
ATI's shares, 4,482,613 shares of Common Stock will be outstanding and held
of record by approximately three hundred forty-seven shareholders.
The holders of the Company's Common Stock are entitled to one vote per
share on all matters to be voted on by the shareholders and to receive
ratably dividends when and as declared by the Board of Directors from funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of the Company, holders of its Common Stock are entitled to share
ratably in all assets available for distribution to stockholders after
payment
of all liabilities. No preemptive, subscription, or redemption rights
relating to the Common Stock exists other than the Bonus shares disclosed
below. No cumulative voting rights in the election of directors exist for
the
Company's Common Stock. The Company has no preferred shares.
No material differences exist with respect to the rights of securities
holders of ATI and the rights of securities holders of the securities of the
Company.
ATI will merge with and into the Company with the Company being the
surviving corporation. ATI, as of the date of the merger, will have
2,457,613 shares issued and outstanding. ATI's shareholders will receive one
fully paid and non-assessable share of the Company's Common Stock.
Accounting Treatment. The Merger will be accounted for as a pooling of
interests transaction, in accordance with generally accepted accounting
principles, so that there will not be any adjustments to the carrying value of
ATI's assets and liabilities reflecting their fair values at the date of
the Merger.
Federal Income Tax Consequences of the Transaction. The tax
consequences of the Merger are as follows: (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code (the "Code"); (ii) no gain or loss will be recognized by ATI or the
Company as a result of the Merger, (iii) no gain or loss will be recognized
by
a stockholder of ATI who exchanges all of such stockholder's ATI Common Stock
solely for shares of Company Common Stock; (iv) the basis of shares of
Company Common Stock to be received by a stockholder of ATI will be the same
as the basis of the ATI Common Stock surrendered in exchange therefor; and
(v)
the holding period of the shares of Company Common Stock to be received by a
stockholder of ATI will include the period during which the stockholder held
the shares of ATI Common Stock surrendered in exchange therefor, provided
that such ATI Common Stock is held as a capital asset by such stockholder at
the Effective Date.
Cash payments made to the U.S. residents who are holders of ATI
Common Stock upon the exchange thereof in connection with the Merger for
Dissenting Shares (other than certain exempt entities and persons) will be
subject to a 31.0% backup withholding tax under federal income tax law unless
certain requirements are met. Generally, the Company will be required to
deduct and withhold the tax upon the following events: (i) the stockholder
fails to furnish a taxpayer identification number ("TIN") or fails to certify
under penalty of perjury that such TIN is correct; (ii) the Internal Revenue
Service ("IRS") notifies the Company that the TIN furnished by the
stockholder is incorrect; (iii) the IRS notifies the Company that the
stockholder has failed to report interest, dividends or original issue
discount in the past, or (iv) there has been a failure by the stockholder to
certify under penalty of perjury that such stockholder is not subject to the
31.0% backup withholding tax. Any amounts withheld in collection of the 31.0%
backup withholding tax will reduce the federal income tax liability of the
stockholders from whom such tax was withheld. The TIN of an individual
stockholder is that stockholder's Social Security number.
The Company has not obtained any reports, opinions or appraisals from
any third parties with respect to this transaction.
THE FOREGOING CONSTITUTES ONLY A GENERAL DESCRIPTION OF THE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER, WITHOUT CONSIDERATION OF THE PARTICULAR
FACTS AND CIRCUMSTANCES OF EACH STOCKHOLDER'S SITUATION INCLUDING TAXES THAT
MAY OR MAY NOT BE IMPOSED IN CANADA. A GENERAL DESCRIPTION OF THE TAX
CONSEQUENCES TO CANADIAN SHAREHOLDERS WITHOUT CONSIDERATION OF THE PARTICULAR
FACTS AND CIRCUMSTANCES OF EACH CANADIAN STOCKHOLDER'S SITUATION CAN BE FOUND
IN THE OPINION OF THE INDEPENDENT ACCOUNTANTS ATTACHED HERETO. EACH
STOCKHOLDER IS ENCOURAGED TO CONSULT HIS OR HER OWN TAX AND FINANCIAL
ADVISORS
AS TO PARTICULAR FACTS AND CIRCUMSTANCES WHICH MAY BE UNIQUE TO SUCH
STOCKHOLDER AND NOT COMMON TO STOCKHOLDERS AS A WHOLE AND ALSO AS TO ANY
ESTATE, GIFT, STATE, LOCAL OR FOREIGN TAX CONSEQUENCES ARISING OUT OF THE
MERGER AND/OR ANY SALE THEREAFTER OF THE COMPANY COMMON STOCK RECEIVED IN THE
MERGER.
PRO FORMA FINANCIAL INFORMATION
PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 30, 1998
(Unaudited)
The following pro forma combined condensed balance sheet gives effect to
the proposed Merger between the Company and ATI described elsewhere herein.
This statement combines the audited June 30, 1998, balance sheet of the
Company and the audited June 30, 1998, balance sheet of ATI and assumes the
Merger was accounted for as a pooling of interests. The terms of the Merger
call for the Company to exchange one share of its Common Stock for each ATI
common share. The pro forma data does not purport to be indicative of the
results that would actually have been reported if the Merger had been in
effect or which may be reported in the future. This statement should be read
in conjunction with the accompanying note, the pro forma combined condensed
statements of income and the respective historical consolidated financial
statements and related notes of the Company and ATI included elsewhere herein.
<TABLE>
ASSETS
<CAPTION>
June 30, 1998
______________________________________________________________________________
(U.S. Dollars)
Pro
Forma
The Company ATI Combined
________________________________________________________
<S> <C> <C> <C>
CURRENT ASSETS:
Cash 60,000 2,957 62,957
Receivables and 25,000 67,693 92,693
prepaid expenses 1,904 1,904
Total current ------- -------
Assets 85,000 72,554 157,554
CAPITAL ASSETS 105,860 105,860
------- -------
Total 85,000 178,414 263,414
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and
accrued liabilities 0 287,166 287,166
Deferred revenue 0 102,686 102,686
Current portion
of long-term debt 0 100,000 100,000
Current portion
of capital lease 0 33,095 33,095
Total current ------- ------- -------
Liabilities 0 522,947 522,947
LONG TERM DEBT 132,707 132,707
Deferred revenue and
Obligation 0 2,105 2,105
-------- ------- -------
Total liabilities 0 657,759 657,759
SHAREHOLDERS' EQUITY
(DEFICIENCY)
Share capital 85,000 4,179,522 4,264,522
Deficit 0 (4,658,867)
(4,658,867)
Total shareholders' ------- -----------
- -----------
Equity 85,000 (479,345)
(394,345)
</TABLE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME YEAR ENDED JUNE 30, 1998
(Unaudited)
The following pro forma combined condensed statement of income combines
the historical statements of income of ATI and the Company for the year ended
June 30, 1998. This pro forma statement assumes the Merger described
elsewhere herein was effective as of July 1, 1998, and that the Merger was
accounted for as a pooling of interests. The pro forma data do not purport
to be indicative of the results that would actually have been reported if the
Merger had been in effect or which may be reported in the future. This
statement should be read in conjunction with the accompanying note, the pro
forma combined condensed balance sheet and the respective historical
consolidated financial statements and related notes of ATI and the Company
included elsewhere herein.
<TABLE>
<CAPTION>
Year Ended June 30, 1998
Pro
The Forma
Company ATI Combined
--------- ------ -----------
<S> <C> <C> <C>
REVENUES:
Sales 0 339,784 339,784
EXPENSES
Selling, general
and administrative,
depreciation and Other 0 705,507 705,507
Interest and other
Income 0 297 297
--------- --------- --------
Income from continuing
Operations 0 (365,426) (365,426)
</TABLE>
Note To Pro Forma Combined Condensed Statement Of Income
Nonrecurring charges or credits directly attributable to the Merger
were not considered in the pro forma condensed income statement. Such
charges
or credits and related tax effects which result directly from the Merger and
which will be included in the income of the Company within the 12 months
succeeding the transaction will be disclosed separately.
Material Contracts with the Company Being Acquired
Other than the Merger Agreement, no material contracts exist between the
Company and ATI. However, of the four directors of the Company, three are
directors of ATI and are the only directors of ATI. The common directors are
Mike Sintichakis, Edson Ng, and Eileen Keogh. The only remaining director of
the Company is Mr. Nick Sintichakis who is the son of Mike Sintichakis.
Moreover, Mike Sintichakis and Edson Ng own a controlling interest in ATI.
The Company has not hired an expert or counsel on a contingent basis in
connection with this Joint Proxy Statement-Prospectus or the Merger.
Disclosure Of Commission Position On Indemnification
For Securities Act Liabilities
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.
DESCRIPTION OF THE BUSINESS OF THE ACQUIRING COMPANY
The Company was organized under the laws of the State of Nevada on
August 19, 1994 as Spectral Innovations (1994), Inc. and was organized as a
closely held corporation. Mike Sintichakis became the President at the
Company's inception and ATI was its sole shareholder until 1998.
The directors of the Company are Mike Sintichakis, Nick Sintichakis,
Edson Ng, and Eileen Keogh. Mike Sintichakis is the President and Nick
Sintichakis is the Secretary. On May 28, 1998, the directors and the sole
shareholder passed a resolution to change the name of Spectral Innovations
(1994), Inc. to Aztek Inc. The Amended and Restated Articles of
Incorporation effecting the name change were filed with the Secretary of
State
of the State of Nevada and accepted on June 8, 1998. In addition to
effecting
the name changes, the Amended and Restated Articles increased the amount of
shares authorized from twenty-five thousand shares to one hundred million
shares.
The Company has not transacted any business since its inception. It
currently has no principal products or services, no competition, no
customers, no intellectual property and is not subject to any governmental
regulations. After the Merger and the date its Registration Statement filed
on this Form S-4 becomes effective, the Company will be subject to the state
and federal securities laws. The Company has no employees other than its
officers and directors. Currently, the officers and directors receive no
salary.
Description Of Property
The Company's headquarters is at 1575 Delucchi Lane, Suite #40, Reno,
Nevada 89502. The headquarters consist of approximately 150 square feet of
office space. The lease is on a month to month basis and is paid to Meadow
Wood Crown Plaza. The office is in a new office building located
conveniently to downtown Reno and the local airport.
Legal Proceedings
The Company is not aware of any legal proceedings involving any
director, director nominee, promoter or control person including criminal
convictions, pending criminal matters, pending or concluded administrative or
civil proceedings limiting one's participation in the securities or banking
industries, or findings of securities or commodities law violations.
Market For Common Equity And
Related Stockholder Matters
No public trading market exists for the Company's securities. The
Company was initially incorporated as a closely held corporation and became a
standard Corporation in June 1998. Subsequent to the Merger, the
shareholders of ATI will be the shareholders of record of the Company and the
Company will seek to have its shares traded on the OTC Bulletin Board.
Approximately one million shares of the Company's Common Stock are
allotted as Bonus Shares to be issued to the following directors: Mike
Sintichakis; Edson Ng; Eileen Keogh; and Nick Sintichakis. The Bonus Shares
will be issued at US$.01 per share to individual directors at intervals based
on the individual's performance and upon the Company reaching working capital
in the following amounts per share at the following times:
Year one: $.05 per share of working capital
Year two: $.10 per share of working capital
Year three: $.20 per share of working capital
Year four: $.30 per share of working capital
Year five: $.40 per share of working capital
The maximum amount of Bonus Shares that may be issued in any one year is
two hundred thousand shares or twenty percent of each director's allotted
share.
The Company's shares for which there is no established public market
cannot be sold pursuant to Rule 144 under the Securities Act. The Company
has not agreed to register such shares under the Securities Act for sale by
security holders. The shares that are currently issued and outstanding are
not and have not been proposed to be publicly offered by the Company and
therefore, cannot have a material effect on the market price of the Company's
common equity.
Holders
On July 22, 1998, there were six holders of record of the Company's Common
Stock.
Dividends
The Company has declared no dividends, cash or otherwise, in the last
two fiscal years and does not plan to pay any dividends in the foreseeable
future. The payment of dividends will depend upon the Company's assumption
of ATI's debt and short-term and long-term cash availability, working capital
needs and other factors as determined by the Company's Board of Directors.
Management's Discussion And
Analysis Or Plan Of Operation
THIS JOINT PROXY STATEMENT-PROSPECTUS AND REGISTRATION STATEMENT ON FORM
S-4 CONTAINS FORWARD LOOKING REPRESENTATIONS THAT INVOLVE CERTAIN RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE
RESULTS DISCUSSED IN THE FORWARD LOOKING REPRESENTATIONS.
After the Merger, the Company will assume the obligations of ATI and
proceed in the course of business initiated by ATI. The Company anticipates
that after the Merger, sales will increase through the 1998-1999 Period upon
meeting the following objectives: the Company completes new product
development initiated by ATI; the Company acquires the assets of Qdata
Software Inc.; and the Company completes the acquisitions of two small
vendors as initiated by ATI. The financial statements of the companies to be
acquired are not material. The acquisitions are in progress to the extent
that brief letters of intent have been signed by ATI and the companies to be
acquired. The acquisitions are in progress to the extent that the parties
have come to terms with respect to the fact that one company has agreed, in
principle, to be acquired by another.
The Company will pursue a market consolidation strategy initiated by
ATI. ATI has initiated several acquisitions. The Company will proceed with
each acquisition that ATI has initiated. As such, it will continue to
acquire independent software companies such as ResponseWare Corp. The
independent software companies develop, market, and support their own
proprietary products. Once an acquired company is consolidated, the Company
must execute the preexisting contractual obligations of the former
independent
company. Through the consolidation process, the various proprietary products
inherited through acquisition will be replaced by the Company's new
products.
By consolidating products, the Company will centralize product development
and
secondary support. The acquired companies will focus on new sales, systems
implementation, training and primary support within their sales territories.
The consolidation strategy also includes centralized marketing programs and
administration. The Company will assume the obligations of two letters of
intent signed by ATI to acquire to independent computer software companies.
The letters of intent require ATI to complete its financing which should be
complete prior to the Merger. Then the Company and the companies to be
acquired must complete their respective due diligence and finalize the terms
and conditions of the purchase agreements.
At the present time, ATI has executed two letters of intent with
independent software producers, Concord Consultants Limited of Richmond,
British Columbia and Harrison Muirhead Systems Inc. of Edmonton, Alberta.
Negotiations are continuing with both companies. The Company has been in
negotiations with a third company to acquire that company's assets. A copy
of the two letters of intent are attached as exhibits to the registration
statement on Form S-4 as material contracts. Two of the companies to be
acquired are two closely held non-public Canadian companies. These companies
do not have audited financial statements and they have not released financial
statements to ATI. The acquisitions with the two Canadian companies are
contingent upon ATI's success in raising capital through a pending private
placement.
The third acquisition will be an acquisition of assets from a closely
held Barbados corporation. The Company will issue its shares as
consideration for the assets. The assets consist of software that can be
marketed by the Company. The Company will not assume the liabilities or
ongoing expenses of the Barbados company.
Year 2000 Issues
ATI acquired ResponseWare Corp., the producer of ResponseWare software
applications. The ResponseWare software as acquired by ATI was not Year 2000
compliant. Pursuant to software maintenance contracts, ATI continues to
service customers that purchased the software. ATI has developed a system to
address the Year 2000 issues and therefore does not anticipate any adverse
impact on the Company after the Merger. A key component of the conversion
effort is development of a conversion utility program to automate the
process. The conversion tool has been completed and is currently in use to
convert the ResponseWare applications. After the Merger, the Company will
assume ATI's obligations to supply the Year 2000 compliant products to all
ResponseWare customers who are under the software maintenance contracts. ATI
began supplying these products in March 1998 and the Company anticipates that
it will fulfill the obligations by June 1999.
External Funding
The Company will benefit from a pending ATI offering under Regulation
D. In this offering, ATI is seeking to sale 406,504 shares of ATI Common
Stock
that were registered under Section 12(g) of the Securities Exchange Act of
1934. The Company should ultimately net approximately US$1,000,000. The
cash infusion will enhance the Company's efforts to resolve the deficiency in
operating capital that will exist after the Merger. The injection will
finance the recruitment of VARs and enhance marketing efforts. The injection
of capital will allow the Company to substantially reduce existing debt,
complete the rewriting of existing software programs, and result in a
material improvement in the financial condition of the Company.
Changes In And Disagreements With Accountants
On Accounting And Financial Disclosure
The Company has not transacted any business since its inception. As
such, the Company first engaged its accounting firm to audit its financial
statements for this Joint Proxy Statement-Prospectus and registration on Form
S-4. Thus, there has been no change in or disagreement with accountants.
PART C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
Description Of Business
ATI was incorporated on July 11, 1979, by filing and registering its
articles with the British Columbia Registar of Companies. Over the last
three years, ATI has expanded its business focus and capabilities following
several acquisitions. On September 30, 1994, ATI acquired all of the issued
and outstanding shares of ResponseWare Corporation, a developer of municipal
government software including general accounting and payroll systems and
specialized systems such as property taxation, utility billing and building
permits. This acquisition allowed ATI to further diversify its operations
within the computer hardware, software and telecommunications market and to
expand the existing forty-five (45) municipal and private sector clients of
ResponseWare. The software license agreement is the same for all forty-five
municipalities and does not differ in any material respects. ATI continues
to support and service the ResponseWare software and client base as its
primary source of revenue. On August 21, 1995, ATI acquired the assets and
business of Helix Technologies Limited, a consulting and systems integration
firm specializing in technology for mobile work force automation. ATI has
completed contracted projects from the acquisition and currently has no
contracts for work in this area. After the Merger, mobile work force
automation technologies will be incorporated into future products which have
yet to be developed. The Company also continues to pursue further
project-based contracts in the area of work force automation technologies.
ATI is a small Canadian computer software company with its headquarters
located in Kelona, British Columbia, Canada. ATI employs fourteen people on
a full time basis. On December 9, 1996, ATI's name changed to Aztek
Technologies, Inc. from Consolidated McKinney Resources, Inc. On December 9,
1996, ATI received approval from the Vancouver Stock Exchange to resume
trading following a change in business focus. ATI changed it business focus
from mining to high technology. ATI develops and markets computer software
applications to municipal governments and to a lesser extent, the private
sector in Western Canada. In the private sector ATI's focus is primarily
human resources and payroll related software, service and maintenance. ATI
distributes its products through direct sales.
Competition. The primary source of competition comes from small to
mid-sized municipal government marketers and regional vendors, specialized
departmental solution providers and in-house developed systems. The majority
of the market is dominated by regional venders. However, mounting pressure
to deliver current technology is increasing at a time when funding for new
development is difficult to achieve. ATI's products are designed to take
advantage of business intelligence tools and software. Frequently,
municipalities create and maintain information and data with limited support
staff. ATI's software applications can accommodate customer-developed
enhancements better than alternative technologies.
Customer base. ATI's customer base consists of diverse small
municipalities in various parts of western Canada. ATI is not dependent on a
few customers to generate revenue. ATI intends to expand its customer base
beyond its current level. The typical client for ATI is a municipality with
10,000 to 250,000 residents. Even though ATI works with municipal
governments, its principal products and services are not subject to
governmental approval. The effects of existing or probable existing
governmental regulations is not expected to have a material effect.
Current Business Status. ATI has on-going contracts with municipal
vendors that were initially negotiated between ResponseWare and
ResponseWare's customers. Following the consolidation between ATI and
ResponseWare, ATI incurred the responsibility for performance of the duties
of
the licensor pursuant to the terms and conditions set forth in the
agreements.
The contact permits the licensees the nonexclusive use of ATI's software in
exchange for payment of fees. The license agreement also addresses delivery
of the software, installation and training, warranties, and confidentiality
provisions prohibiting the user from disclosing trade secrets to any third
parties.
ATI's current products, which consist solely of computer programs, were
developed by ResponseWare. Currently, these products are not being
manufactured because they cannot take advantage of personal computer
environments; however, ATI continues to provide support and maintenance for
the current product line. ATI's products are sold directly to the current
customers. ATI continues to develop new products. After the Merger, the
Company will market and distribute the products through direct sales, value
added resellers, telemarketing and advertising through print media.
ATI is also pursuing financing through agreements with Equitrade
Securities Corporation for $1,000,000.00 (One Million Dollars) to be used
towards new product development and acquisitions. ATI expects to receive the
one million dollars prior to the Merger.
Operating Divisions. ATI has four operating divisions. Unless
otherwise specified, the description of the services and products are
explained in the content of their usage in various Canadian municipalities.
Although ATI intends to expand to the U.S. markets, its products and services
are primarily used by Canadian municipalities. The business activities of
each division of ATI are set forth below.
Business Solutions Division
The Business Solutions Division is responsible for development and
support of core business software products. Products included are accounting
systems, payroll/human resource management systems, and specialized municipal
government systems such as utility billing, property taxation, building
permits, and tracking the issuance of various items for municipal
governments. This division maintains and supports the ResponseWare software
since they are all core business applications. The division is also
responsible for development of new products to replace ResponseWare products
and other proprietary software products that the Company will inherit through
future acquisitions. At present, the Business Solutions Division generates
over 90% of ATI's revenue.
Mobile Technologies Division
The Mobile Technologies Division is focused on software for workers in
field operations such as building code inspectors, parking and bylaws
enforcement officers and maintenance crews. Mobile technologies include
handheld computers, pen-based computers, bar code devices and wireless
communications. The division provides consulting and custom developed
software on a time and materials basis. No contracts for these services
exist at this time although ATI actively pursues opportunities. ATI intends
to develop mobile work force systems in the future to complement the new
systems developed by the Business Solutions Division. ATI has no completed
products at this time. Funding for these products will come from either cash
flow or future investment financing.
Electronic Commerce Division
ATI has pursued, and continues to pursue opportunities to develop
systems for electronic commerce using Internet and Electronic Data
Interchange
("EDI") technologies. To date, ATI has not secured contracts in this area.
ATI plans to enhance the capabilities of the existing and future products
from
the Business Solutions Division to include support for electronic commerce.
For example, the Parking and Bylaw Enforcement system could be enhanced to
allow payments of fines on the Internet. Building permits could be applied
for and paid on the Internet. Funding for these products will come from
either
cash flow or future investment financing. ATI has not finalized the funding
requirements.
Professional Services Division
The Professional Services Division is responsible for general
consulting, project management, and custom software development services.
ATI
markets these services to its own clients that use products from the Business
Solutions Division. The division also pursues general consulting and software
development opportunities to customers that use products from the Business
Solutions Division but are not in ATI's client base. The division also
pursues general consulting and software development opportunities outside of
its client base. At present, the Professional Services Division generates
less than 10% of ATI's revenues.
Current Status of ATI. On September 30, 1994, ATI acquired all of the
issued and outstanding shares of ResponseWare Corp. This acquisition allowed
ATI to further diversify its operations with the computer hardware, software
and telecommunications market to expand the existing forty-five (45)
municipal and private sector clients of ResponseWare. ResponsWare designed
its software primarily for use by small to medium-sized municipal governments
and corporations to meet their human resources and payroll applications.
ATI is proceeding to rewrite its existing municipal applications using
client server and object oriented technologies. Client server technology
refers to the relationship between two types of computers - a server computer
and a client computer. The server is a high-powered computer that stores
both software applications and files. The server can be a mainframe,
mini-computer, or a personal computer. The client computer is a personal
computer with software that handles functions such as the appearance on the
computer screen, sorting data, and performing calculations.
In client server technology, the software runs on both the server and
client computers. Software on the server allows client computers to access
information, and sometimes applications, on the server. The server software
manages the client computers' access to information. Multiple client
computers can access the server at the same time. Client server technology
takes advantage of the power and flexibility of personal computers while
providing centralized control of data. The technology also allows a client
computer to pass on "heavy duty" computing tasks to the server. Object
oriented technology is a computer software programming technique supported by
a number of common programming technologies. The most common technology is
known as Java. The benefit of object oriented technology is increased
productivity through building programs by copying or modifying existing parts
and easier software maintenance.
ATI's products are based on a 3-Tier client server architecture. The
3-Tier architecture extends the client server concept such that a client
computer may access multiple servers simultaneously. A client computer may
access certain information from a corporate server, other information from a
departmental server, and integrate the information from both sources.
Customers use certain mouse and graphical user interface oriented
applications. A graphical user interface is a technology that gives software
programs a user-friendly appearance on the computer screen. An example of a
graphical user interface is the commonly used Windows operating system. A
commonly known non-graphical user interface is MS-DOS. The products are
designed to operate as independent systems and together as integrated
solutions. The products offer ease of use and flexible configuration to meet
customer demands and expectations. Configuration refers to a specific
combination of software programs contained in a specific software
application. The new products are designed to address both public and private
sector markets.
ATI's products are software applications commonly referred to as
computer programs. The software programs are designed to execute tasks
described by the name of the program. The names of ATI's computer software
programs are as follows: General Accounting & Fund Accounting; Accounts
Payable; Purchase Order Control; Payroll; Cash Receipts, Job & Project
Accounting; Budgeting; Financial Reporting; Taxation; Personnel Data; Human
Resource Management; Property Information System; Street Guide; Geographic
Information System Interface; Facilities Booking; Parks and Recreation
Management; Utility Customer Information; Inspection Management; Permit
Systems; Animal Licenses; Business Licenses; Election Management; Parking
Enforcement; Maintenance Management; Request for Service; Voter Registration
and Local Improvement.
Description Of Property
ATI's headquarters is located at 246 Lawrence Avenue, Kelowna, British
Columbia V1Y 6L3, Canada. The headquarters consist of approximately 1,500
square feet. The lease is month-to-month and ATI pays rent to a company
controlled by the spouse of an ATI director. ATI also leases 4,000 square
feet of office space at 6450 Roberts Street, Burnaby, British Columbia V5G
4EI, Canada.
Legal Proceedings
ATI is not a party to any legal proceedings.
Market For Common Equity And
Related Stockholder Matters
On September 12, 1980, ATI's Common Stock began trading on the Vancouver
Stock Exchange under the symbol CKY. On July 29, 1997, ATI obtained the
approval to trade on the OTC Bulletin Board under the symbol AZTKF.
Management decided to list ATI on the OTC Bulletin Board because of a
combination of the perceived prestige factor, the potential for a greater
investor base and the possibility of participation in a new market. The dual
listing on the Vancouver Stock Exchange and the OTC Bulletin Board allows
investors to trade the securities in Canada and the United States. With
respect to the OTC Bulletin Board, there is no established public trading
market for ATI's Common Stock notwithstanding limited or sporadic quotes.
The following table sets forth the high and low sales prices for each quarter
within the last two fiscal years. The prices are depicted in Canadian
dollars.
<TABLE>
<CAPTION>
Common Stock
Period Low Bid High Bid
<S> <C> <C>
Fiscal 1998
First Quarter 1.06 2.45
Second Quarter 0.72 1.75
Third Quarter .75 1.26
Fourth Quarter .62 1.80
Fiscal 1997
First Quarter No trading
Second Quarter 1.20 1.55
Third Quarter 1.75 2.40
Fourth Quarter 1.25 1.80
</TABLE>
ATI's stock was listed on the OTC Bulletin Board on September 30, 1997,
at $1.50. The quotation reflects inter-dealer prices, without retail
mark-ups, mark-down or commission and may not represent and actual
transaction.
Holders Of Common Stock
On June 30, 1998, there were approximately 347 holders of record of ATI's
Common Stock. Some shares are held in trust by broker-dealers for the
shareholders of ATI's predecessor, Consolidated McKinney. Following the name
change and business reorganization, several shareholders failed to tender
their Consolidated McKinney stock certificates in exchange for ATI stock
certificates.
Dividends
ATI has declared no dividends, cash or otherwise, in the last five years
and does not plan to pay any dividends prior to the Merger.
Management's Discussion And
Analysis Or Plan Of Operation
IN REVIEWING THE MANAGEMENT'S DISCUSSION AND ANALYSIS, REFERENCE SHOULD BE
MADE TO ATI'S FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED AS AN EXHIBIT
TO THIS JOINT PROXY STATEMENT-PROSPECTUS. THE REFERENCES TO MONETARY UNITS
OR
DOLLARS IN THE INSTANT JOINT PROXY STATEMENT-PROSPECTUS AND SUPPORTING
FINANCIAL STATEMENTS SHALL MEAN CANADIAN DOLLARS UNLESS OTHERWISE SPECIFIED.
THE FINANCIAL STATEMENTS FOR ATI ARE PREPARED IN ACCORDANCE WITH CANADIAN
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. PROVISIONS FOR DIFFERENCES IN
REPORTING IN CANADA AND THE UNITED STATES ARE PROVIDED FOR BELOW THE
AUDITOR'S REPORT IN THE FINANCIAL STATEMENTS.
TWELVE MONTHS ENDED JUNE 30, 1998 (THE "1998 PERIOD"), COMPARED WITH TWELVE
MONTHS ENDED JUNE 30, 1997 (THE "1997 PERIOD"). THE 1998 PERIOD IS DEFINED AS
THE FISCAL YEAR FOR ATI, WHICH IS JULY 1,1997, TO JUNE 30, 1998.
A loss in the 1998 Period decreased to ($365,426) from ($557,906) in the
1997 Period. Loss per share decreased to ($.18) in the 1998 Period from a
loss of ($.38) in the 1997 Period. The 1998 period is ATI's fiscal year which
is July 1, 1997, to June 30, 1998. The 1997 period is July 1, 1996, to June
30, 1997.
REVENUES
Net sales decreased $120,153 (26%) to $339,784 in the 1998 Period, from
$459,937 in the 1997 Period. Sales declined because ATI has discontinued the
sales of existing ResponseWare computer systems due to maintenance costs and
the system's inability to take advantage of personal computer environments.
The maintenance cost is the expense incurred by ATI to support existing
ResponseWare Products. Even though ATI is not selling new ResponseWare
products, it continues to service, support, and develop product enhancements
(software upgrades) for the ResponseWare product line. The ResponseWare
products are software applications designed to address various financial and
operational needs of municipal governments such as general ledger and funding
accounting, accounts payable, purchase order control, payroll, budgeting,
human resource management and voter registration in Canada. ATI is
contractually obligated to provide maintenance services for the products
already sold. Customers pay an annual fee for computer system maintenance.
Despite the outdated nature of the ResponseWare products, they are reliable
and ATI has a stable customer base that continues to pay the annual support
fees. For those customers who are not parties to an annual service contract,
ATI provides support and is compensated on a time and material basis.
Support and maintenance of ResponseWare products generate approximately, 90%
of ATI's revenues. The revenues generated from the maintenance software is
substantially less than the revenue generated by the sale of the software.
Management's decision to cease the sales of new ResponseWare systems resulted
in the loss of 26% or $120,153 of ATI's revenue for the last fiscal year.
ATI has purposefully and substantially reduced its efforts to market its
current software because of the rewriting of the new software under current
development.
Moreover, the additional expenses of developing the new systems continue
to be substantial relative to the current revenue generated by ATI. ATI has
also incurred additional expenses including but not limited to legal and
accounting fees in connection with the listing on the OTC Bulletin Board.
As discussed above, the Company, as the surviving entity of the Merger,
anticipates that sales will increase in the 1998-1999 Period once the new
product development is completed and after the pending acquisitions of small
vendors.
OPERATING INCOME
ATI experienced a decrease in operating expenses. Advertising and
promotion expenses decreased to $4,382 (84%) for the 1998 Period from $27,770
for the 1997 Period. Prior to the 1997 Period, ATI did not advertise in the
U.S. markets. Management decided to advertise its services and products in
the U.S. print media causing a substantial increase in the advertising
expense in the 1997 Period. In the 1998 Period, ATI discontinued its product
advertising in all publications causing the substantial decrease in
advertising expense. Filing and transfer fees decreased by $34,285 (82%) for
the 1998 Period from $41,641 for the 1997 Period. The 1997 figure was
extraordinary due to one-time fees paid to Standard and Poor's and the
Vancouver Stock Exchange.
Selling and marketing expenses decreased by $60,873 (98%) in the 1998
Period, from $61,914 for the 1997 Period. In 1997, ATI had attempted to
market a product called Cognos, an accounting software program, and thereby
incurred additional selling and marketing expenses. ATI reduced office and
administration expenses by $19,217 (45%) for the 1998 Period, from $42,823
for the 1997 Period. The 1997 figure resulted from a reinstatement of
trading
on the Vancouver Stock Exchange.
Management fees increased by $108,467 (119%) to $199,589 during the 1998
Period. The increased management fees resulted from a change in accounting
for the work of ATI's managers. Previously, certain managers were on ATI's
payroll. The expenses for paying these employees were accounted for as
"wages, salaries and benefits." In the 1998 Period, these expenses were
transferred to the account for management fees, causing the increase in
management fees and part of the reduction in the "wages, salaries and
benefits" account. The total reduction in "wages, salaries and benefits" was
$152,147 (51%) from $298,082 during the 1997 Period. The balance of the
reduction was from layoffs. When ATI discontinued development of its new
systems, some employees were laid off due to a shortage of funds with which
to pay those employees.
As part of its efforts to make the existence of the ATI known to the
investing public, ATI paid $32,309 to investor relations firms. ATI incurred
the major portion of the expense during the 1998 Period.
OTHER INCOME (DEDUCTIONS) AND TAXES.
The total interest ATI received decreased to $297 (95%) for the 1998
Period, from $5,629 for the 1997 Period. This is the interest charged on the
outstanding accounts receivable. ATI was more aggressive in collecting
receivables. ATI has losses available for income tax purposes totaling,
approximately $1,252,000. The losses can be used to reduce taxable income of
future years. The tax losses have not been used for the 1998 Period or the
1997 Period.
ASSETS AND LIABILITIES
Cash and receivables changes resulted from several transactions. Though
ATI ceased selling computer systems, it continues to provide support services
for the systems it has already sold. ATI has support contracts with its
customers, each expiring on a date certain. Upon the expiration of the
support services contract, ATI receives a cash payment from the customer.
Prior to receiving the payment, ATI carries the amount due on the contract as
a receivable.
Prepaid expenses included software consultants' fees, insurance
premiums, storage, etc. In several cases, ATI prepays expenses by 12
months. ATI's major prepaid expense, insurance, begins in February.
The changes in accounts payable resulted from ATI's liability to its
president for salary. Though ATI incurs the salary expense, it has not paid
Mr. Sintichakis. ATI carries the unpaid salary as an account payable. ATI
rents space from its president's spouse. ATI has not paid its rent expense
and thus, has carried the rent it owes as an account payable.
Since the 1997 Period, ATI's current liability for royalties payable
increased by $30,000 (30%) to $100,000 in the 1998 Period. ATI did not incur
any additional royalties period. Rather, the $30,000 that caused the
increase had been carried as a long-term debt in the 1997 Period. ATI is
presently in default on repayment and is currently negotiating a revised
payment schedule. ATI does not believe the debt will have an adverse effect
on ATI's financial position or the results of future operations. ATI's
long-term obligation under capital lease was reduced by $32,832 (98%) to $800
in the 1998 Period. The change in ATI's came as a result of $33,095 becoming
due in the current year.
ATI reduced its current portion of long-term debt by $136,241 (58%) by
repaying its debt to ATI's president's spouse. The principal on the debt was
C$150,000. ATI satisfied the debt by issuing 120,465 shares at C$1.38. The
Vancouver Stock Exchange approved the transaction on July 30, 1997, and the
Company paid the debt on July 30, 1997.
The amount due to related parties increased $129,018 to $132,707
(3,497%) from $3,689 the previous year. The amount due represents loans made
by Mr. Mike Sintichakis and members of his family to ATI to maintain levels
of
working capital sufficient for ATI to continue operating. The loans are not
repayable prior to July 1999.
When ATI acquired ResponseWare, it assumed ResponseWare's debt to
International Business Machines ("IBM"). IBM financed the cost of
ResponseWare installing new systems. The debt is $100,000 payable over ten
months. ATI began paying the debt in December 1997. As of September 1997
the total amount of the debt was due within one year.
LIQUIDITY AND CAPITAL RESOURCES
In the 1998 Period, ATI used $212,823 for operating activities. In
addition to the net loss in the 1998 Period (365,426), the loss per share
decreased to (0.18) from (0.38). In the 1998 Period, the end of year deficit
increased to (4,658,867) compared to ($4,293,440) for the 1997 Period.
ATI made a commitment to spend $75,000 to $100,000 for capital
expenditures in connection with research and development of its new products
for the 1998 Period. Actual expenditures totaled $61,235.80. Of this
amount, ATI spent $20,533 for development of the Year 2000 tool. These
expenditures are accounted for as part of wages, salaries and benefits. The
products are expected to be completed and commercially available within 18
months subject to additional financing. ATI plans to operate exclusively
through the support and maintenance of its existing software programs. There
are 45 municipal and private sector customers using the existing programs.
The first component of the external funding via Equitrade Securities
Corp. has not materialized to date, and ATI cannot be certain such funding
will become available to ATI in the 1999 Period. ATI estimates the
anticipated cost of the acquisitions to be less than $200,000. ATI and the
companies to be acquired have agreed, in principal, to the acquisitions.
But, the specific terms or purchase price amounts have yet to be negotiated.
In the absence of the equity funding through external funding sources, ATI
will not be able to complete two of the three acquisitions.
TWELVE MONTHS ENDED JUNE 30, 1997 (THE "1997 PERIOD"), COMPARED WITH TWELVE
MONTHS ENDED JUNE 30, 1996 (THE "1996 PERIOD"). THE 1997 PERIOD IS DEFINED AS
THE FISCAL YEAR FOR THE COMPANY, WHICH IS JULY 1,1996, TO JUNE 30, 1997.
RESULTS OF OPERATIONS
The loss in the 1997 Period increased to ($557,906) from (227,656) in
the 1996 Period. Loss per share increased to ($.38) in the 1997 Period from
a
loss of ($.04) in the 1996 Period. The 1997 period is ATI's fiscal year which
is July 1, 1996, to June 30, 1997. The 1996 period is defined as July 1,
1995, to June 30, 1996.
REVENUES
Net sales decreased $68,985 (13%) to $459,937 in the 1997 Period, from
$528,922 in the 1996 Period. Sales declined because ATI discontinued the
sales of existing ResponseWare computer systems due to the cost of
maintenance
and the inability of the systems to take advantage of personal computer
environments. Even though ATI was not selling new ResponseWare products, it
continued to service, support, and develop product enhancements (software
upgrades) for the ResponseWare product line. Management's decision to cease
the sales of new ResponseWare systems resulted in the loss of 13% or $68,895
of the ATI's revenue for the 1997 Period.
OPERATING INCOME
The Company incurred a loss of ($564,538) from continuing operations
before Other Income (Deductions) and Taxes in the 1997 Period compared with
($219,474) in the 1996 Period, an increase in losses of ($345,064). The
primary reason for the increase in loss was increased advertising expenses,
filing fees to Standard & Poor's and the Vancouver Stock Exchange and
discontinuing sales of then-existing computer software programs.
OTHER INCOME (DEDUCTIONS) AND TAXES
The total interest ATI received decreased to $5,629 (70%) for the 1997
Period, from $19,079 for the 1996 Period. ATI was more aggressive than in the
past with respect to collecting amounts due ATI. ATI had losses available
for income tax purposes totaling, approximately $1,343,000. The losses can
be used to reduce taxable income of future years. The tax losses had not
been
used for the 1997 Period or the 1996 Period.
LIQUIDITY AND CAPITAL RESOURCES
In the 1997 Period, $491,653 was used for operating activities of ATI.
(Due to a clerical error, ATI reported in its SB-10 that $1,024,472 was used
during this period.) In addition to the net loss in the 1997 Period
($557,906), the loss per share increased to ($.38) from ($.04). In the 1997
Period, the end of year deficit increased to ($4,293,440) compared to
($3,735,534) for the 1996 Period.
Financing activities in the 1997 Period provided cash of $754,870
through the issuance of share capital in the amount of 1,042,130 shares. In
the 1997 Period ATI received approval from the Vancouver Stock Exchange to
convert the total loan amount of $166,243 into 120,465 shares of ATI's Common
Stock. The loan was incurred to provide the necessary capital to acquire a
small computer company in Canada. The shares have been issued and the debt
has been fully satisfied. ATI did not incur any other long-term debt in the
1997 Period. As of September 30, 1997, ATI's long term debt was $13,196.
ATI
had also incurred expenses of $105,000 for legal and accounting fees related
to registration and the sale of its shares, listing on the OTC Bulletin
Board,
and other offering costs.
External Funding
ATI entered into an underwriting agreement with Equitrade Securities
Corp. to infuse capital into ATI in an equity offering subject to the
provisions of Regulation D. ATI has offered 406,504 of its Common Shares.
If the offering is fully subscribed, the shares sold will constitute 20% of
the issued and outstanding Common Shares prior to the Merger. Pursuant to
the
Merger, the subscribers of those shares will receive one share of the Company
Common Stock.
Disagreements With Accountants
On Accounting And Financial Dislosure
ATI has not had any changes in or disagreements with its accountants.
PART D VOTING AND MANAGEMENT INFORMATION
Date, Time And Place Information
The meeting of security holders of ATI Common Stock will be on October
1,1998, in the offices of Stephen K. Winters Law Corporation, 1010 Burrard
Building, 1030 West Georgia St., Vancouver, B.C. V6E 2Y3, Canada at 9:00
a.m.
The address of ATI is as follows: #5-246 Lawrence Ave., Kelowna, British
Columbia, V1Y 6L3. On June 30, 1998, the shareholders and directors of the
Company held their annual and special meetings and unanimously approved the
Merger.
The approximate date on which the proxy statement and form of proxy are
first to be sent or given to security holders is September 11, 1998.
Proposals of stockholders intended to be presented at the 1999 annual meeting
of Stockholders of the Company must be received by the Company no later than
May 14, 1999, in order to be included in the proxy statement and form of
proxy relating to such annual meeting. After July 28, 1998, a notice of a
shareholder proposal submitted to the Company outside the processes of Rule
14a-8 of the Exchange Act shall be considered untimely.
Revocability Of Proxy
If the enclosed Proxy is executed and returned, it will be voted on the
proposals as indicated by the shareholder. The Proxy may be revoked by the
shareholder at any time prior to its use by notice in writing to the Secretary
of ATI, by executing a later dated proxy and delivering it to the ATI prior
to the meeting or by voting in person at the meeting.
Dissenters' Rights of Appraisal
Any shareholder of ATI on August 21, 1998, (the record date for purposes
of determining who is entitled to notice of and to vote at the Annual and
Extraordinary Meeting of Shareholders of the Company) who objects to the
merger may dissent from the merger. Any such shareholder may demand in
writing prior to the shareholders' meeting that, if the merger is
consummated, ATI pay to him or her in cash the value of his or her present
common stock. The shareholder must not then vote in favor of the Merger.
The
cash value to which such shareholder will be entitled is the value agreed
upon
or court determined, in the manner set forth below ("Dissenter's Value").
This statutory dissenter's right to payment of the Dissenter's Value of his
or
her common stock is mandated by section 207 of the British Columbia Company
Act (the "Company Act") a copy of which is attached to this Joint Proxy
Statement-Prospectus.
ATI will provide the funds necessary to pay any holders of Common Stock
who perfect their statutory dissenter's rights.
Any such shareholder who contemplates the exercise of such dissenter's
rights is urged to review carefully the provisions of the Company Act,
particularly the procedural steps required to perfect the right to
Dissenter's Value. The rights of dissenting shareholders to Dissenter's
Value
will be lost if the procedural requirements of the Company Act are not fully
and precisely satisfied. If the right to Dissenter's Value is lost, the
shareholder will be entitled to receive for each share of ATI Common Stock
the number of shares of the Company's Common Stock as provided in the Merger
Agreement.
The procedural steps are set forth in the legal opinion of Mr. Steven K.
Winters attached hereto as Annex A (to be read in conjunction with the full
text of the Company Act and is qualified in its entirety by reference to the
statute.
Persons Making the Solicitation
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Aztek Technologies Inc. ("ATI") of proxies for use
at the Annual and Extraordinary Meeting of Stockholders of the Company to be
held on October 1, 1998, and any adjournments thereof.
There were outstanding at the close of business on August 21, 1998, the
record date for determination of the stockholders of ATI entitled to notice
of and to vote at the Annual Meeting, 2,457,613 shares of Common Stock of ATI
entitled to one vote per share. Only stockholders of record on August 21,
1998, are entitled to notice of and to vote at the meeting. The proxy does
not affect the right to vote in person at the meeting, and may be revoked at
any time prior to the voting thereof. The presence in person or by proxy of
the holders of shares representing a majority of all outstanding shares will
constitute a quorum. The affirmative vote of the holders of a majority of
the shares present or represented by proxy at the meeting is required for the
adoption of the proposals described in this Proxy Statement.
The Board of Directors knows of no other matters likely to be brought
before the Annual Meeting other than those mentioned above. However, if any
other matters not now known or determined, properly come before the meeting
or any adjournments thereof, the persons named in the enclosed form of proxy
will vote such proxy in accordance with their best judgment in such matters
pursuant to discretionary authority granted in the proxy.
Stockholders are urged to sign the accompanying form of proxy, solicited
on behalf of the Board of Directors of ATI, and to return it at once in the
envelope provided for that purpose. Proxies will be voted in accordance with
the stockholders directions. If no direction is given, proxies will be voted
in accordance with the recommendations of the Board of Directors set forth in
this Proxy Statement. A stockholder who wishes to designate a person or
persons to act as his or her proxy at the meeting, other than the proxies
designated by the Board of Directors, may strike out the names appearing on
the enclosed form of proxy, insert the name of any other such person or
person, sign the form and transmit it directly to such other designated
person or persons for use at the meeting.
The expense of the Board of Directors' proxy solicitation will be borne
by ATI. In addition to the solicitation of proxies by use of the mails, some
of the officers, directors and regular employees of ATI (none of whom will
receive additional compensation therefor) may solicit proxies by telephone,
telegraph or personal interview. ATI will, upon request, reimburse nominees,
custodians, and fiduciaries for the expenses in forwarding proxy material to
their principals.
Interest Of Certain Person In Matters To Be Acted Upon
Certain members of ATI's management and its Board of Directors may be
deemed to have certain interests in the Merger in addition to their interests
as stockholders of ATI generally. ATI's Board of Directors was aware of
these
interests and considered them, among other matters, in unanimously approving
the Merger Agreement.
Officers and Board of Directors. Mike Sintichakis, Edson Ng, and Eileen
Keogh constitute the entire Board of Directors of ATI and are also directors
of the Company. The sole remaining director of the Company is Nick
Sintichakis who is the son of Mike Sintichakis.
Common Shares. In June 1998, the directors and officers named in the
preceding paragraph purchased one million shares of the common stock of the
Company at $.05 per share. The shares are to be distributed in twenty-four
monthly installments beginning in June 1998. The total number of shares that
will be distributed pursuant to the purchase constitute the total amount of
shares that are issued and outstanding. The Company has no existing business
at this time and will begin transacting business when it assumes the
operations of ATI upon consummation of the Merger. Since ATI will cease to
exist upon completion of the Merger, the net result will be that the
above-named directors will each own a larger percentage in the combined
company than they previously owned in ATI.
Indemnification. To the extent permitted by law, the Articles of
Incorporation of the Company and ATI contain an indemnification clause such
that the Company or ATI will indemnify all directors and officers of the
Company or ATI if any such directors or officers are named as a party or
parties to a law suit as a result of serving as officers or directors of the
Company or ATI. For limitations on indemnification, see "Disclosure of
Commission Position on Indemnification for Securities Act Liabilities.
Voting Securities And Principal Holders Thereof
Shareholders of record at the close of business on August 21, 1998 will
be entitled to vote on all matters. On the record date ATI had 2,457,613
shares of ATI Common Stock outstanding. The holders of ATI Common
Stock are entitled to one vote per share. ATI has no class of voting
securities outstanding other than the ATI Common Stock.
Security Ownership Of Certain
Beneficial Owners And Management
Security Ownership of Certain Beneficial Shareholders
The Company
See "See Security Ownership of Management" below.
<TABLE>
ATI
<CAPTION>
(1) (2) (3) (4)
Title of Name and Address of Amount and Nature Percentage
of
Class Beneficial Owner of Beneficial Owner Class
________________________________________________________________________________
<S> <C> <C> <C>
Voting Mike Sintichakis
Common 1802 Lipsett Crt.
Kelowna, BC V1V 1X3 462,190 27%
" Maria Sintichakis
1802 Lipsett Crt.
Kelowna, BC V1V 1X3 255,928 12%
" Edson Ng
623 Alpine Court
North Vancouver, BC V7R 2L7 104,700 7%
- --------------------------------------------------------------------------------
822,818 46%
</TABLE>
Mike Sintichakis has the right to acquire 90,000 shares at the exercise price
of $1.82 within sixty days.
Edson Ng has the right to acquire 40,000 shares at the exercise price of
$1.82
within sixty days.
Security Ownership of Management as of June 30,
1998.
<TABLE>
The Company
<CAPTION>
(1) (2) (3) (4)
Title of Name and Address of Amount and Nature Percentage
of
Class Beneficial Owner of Beneficial Owner Class
________________________________________________________________________________
<S> <C> <C> <C>
Voting Mike Sintichakis
Common 1802 Lipsett Crt.
Kelowna, BC V1V 1X3 400,000 40%
" Nick Sintichakis
1802 Lipsett Crt.
Kelowna, BC V1V 1X3 230,000 23%
" Dauna Potts
882 Toovey Rd.
Kelowna, BC 10,000 1%
" Eileen Keogh
508-2012 Fullerton Ave.
Vancouver, BC V7P 3E3 120,000 12%
" Edson Ng
623 Alpine Court
North Vancouver, BC V7R 2L7 240,000 24%
- --------------------------------------------------------------------------------
Directors and Management as a Group 1,000,000 100%
</TABLE>
Under the terms of the subscription agreements, the Company will place the
shares in a trust and distribute the shares in twenty-four monthly
installments beginning in June 1998.
<TABLE>
ATI
<CAPTION>
(1) (2) (3) (4)
Title of Name and Address of Amount and Nature Percentage
of
Class Beneficial Owner of Beneficial Owner Class
________________________________________________________________________________
<S> <C> <C> <C>
Voting Mike Sintichakis
Common 1802 Lipsett Crt.
Kelowna, BC V1V 1X3 462,190 27%
" Eileen Keogh
508-2012 Fullerton Ave.
Vancouver, BC V7P 3E3 37,000 4%
" Edson Ng
623 Alpine Court
North Vancouver, BC V7R 2L7 104,700 7%
- --------------------------------------------------------------------------------
Directors and Management as a Group 603,890 38%
</TABLE>
Eileen Keogh has the right to acquire 40,000 shares at the exercise
price of $1.82 in sixty days. For Mike Sintichakis and Edson Ng, see
"Security Ownership of Certain Beneficial Owners" above.
Voting Procedures
Two persons present and entitled to vote constitute a quorum at any
general shareholders' meeting. A member may by proxy appoint a proxy holder
to vote for him on a poll. Every shareholder who is present in person and
entitled to vote at that occurrence shall have one vote and on a poll every
member present in person or represented by proxy or other proper authority
shall have one vote for each share of which he is the registered holder. The
Company has no class of voting securities outstanding other than the Company
Common Stock. Adoption of the Merger and the Merger Agreement will require
that the votes cast favoring the Merger must exceed the votes cast opposing
the Merger. The failure to return a properly executed proxy card or to vote
in person ("abstention") at the Special Meeting will have the same effect as
a vote in favor of the Merger. Similarly, "broker non-votes" (referring to
instances where a broker or other nominee physically indicates on the proxy
that, because it has not received instructions from beneficial owners, it
does not have discretionary authority as to certain shares of ATI's Common
Stock to vote on the proposal) will have the same effect as a vote in favor
of
the Merger. The proxies named in the enclosed proxy card may, at the
direction of the Board, vote to adjourn or postpone the Special Meeting to
another time or place for the purpose of soliciting additional proxies
necessary for approval of a proposal or otherwise.
If the accompanying proxy card is properly executed and returned to ATI
in time to be voted at the Special Meeting, the shares represented thereby
will be voted in accordance with the instructions marked thereon. EXECUTED
BUT UNMARKED PROXIES WILL BE VOTED FOR APPROVAL OF THE MERGER AND THE MERGER
AGREEMENT. Except for procedural matters incident to the conduct of the
Special Meeting, the Board of Directors of ATI does not know of any matters
other than those described in the Notice of Special Meeting that are to come
before the Special Meeting. If any other matters are properly brought before
the Special Meeting, the persons named in the ATI proxy will vote the shares
represented by such proxy on such matters as determined by a majority of
ATI's Board of Directors.
<TABLE>
Directors, Executive Officers, Promoters And
Control Persons Of The Surviving Or Acquiring Company
<CAPTION>
Name Age Position Director Since
<S> <C> <C> <C>
Mike Sintichakis 60 Director August 1994
President
Nick Sintichakis 33 Director July 1994
Secretary
Treasurer
Edson Ng 34 Director July 1998
Eileen Keogh 51 Director July 1998
</TABLE>
Each director serves for a term of one year and is elected at the annual
meeting of shareholders. The Company's officers are appointed by the Board
of Directors and hold office at the discretion of the Board.
Mike Sintichakis. Mr. Sintichakis has over 27 years of experience as an
entrepreneur and professional business manager. He has owned and operated
seven corporations and presided as president of three other corporations. He
received an Industrial Electrician Diploma from Greece in 1958. He has since
specialized in acquiring, restructuring and growing small and mid-sized
businesses in the hospitality, consumer services, automotive, leisure and
manufacturing industries. He recently managed over 450 employees and
consistently guided companies successfully through tremendous revenue growth.
Edson Ng. Mr. Ng has earned a B.Sc. Degree in Mechanical Engineering from
the University of Alberta. He is a registered Professional Engineer (P.Eng.)
and a Certified Management Consultant. His career includes 7 years of
systems engineering, marketing, consulting experience with IBM Canada Ltd.,
and 4 years as founder and president of Advance Mobility Systems Integration
Inc. Mr. Ng has been involved with various business ventures throughout his
career.
Eileen Keogh. Ms. Keogh received a B.A. degree in Mathematics from Dickinson
College, Pennsylvania. She has over 29 years of consulting experience in
information systems design, development, and implementation. Throughout her
career in the computer industry she has served as Director of Development,
Systems Architect, Project Manager, Team Leader, Data and Press Modeler,
Methodologies Expert, Technical Designer, Systems and Applications
Programmer/analyst, Trainer and Mentor. Ms. Keogh is an expert in
client/server and object oriented software design and development on a
variety of platforms. She gained seven years of software development
experience with IBM Canada Ltd., IBM UK and IBM Corporation in New York. Her
consulting projects include working for Prologic Computer Company, Solutions
for Government, Fletcher Challenge, Alcan Canada, Insurance Bureau of Canada,
Toronto Stock Exchange and the Bank of Montreal.
Nick Sintichakis. Mr. Nick Sintichakis is the Secretary of Aztek Inc. He
presently serves as President of Christopher's Steak & Seafood Restaurant
and has held that position for over nine years. He was also a director of
Yamas Taverna Inc., a restaurant in Kelowna, British Columbia for over five
year
s. For ten years he was the manager of Caribou Restaurant.
Executive Compensation Of The Directors And
Executive Officers of The Surviving Or Acquiring Company
The members of the Board of Directors of the Company and the officers of
the Company presently do not receive compensation for serving as directors
and officers. Upon consummation of the Merger, the Company will assume the
obligations of ATI for executive compensation. The table below sets forth
the compensation of the key executives of ATI.
<TABLE>
<CAPTION>
Long Term
Compensation
- --------------------------------------------------------------------------------
Annual Compensation Awards Payouts
- --------------------------------------------------------------------------------
Securities
&
Name and Other Restricted Underlying
Compen-
Principal Salary Annual Stock Options LTIP
sation
Position Year (1) Bonus Compensation Awards /SARS(#) Payouts
(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mike
Sintichakis 1997 $72,000 0 0 0 90,000 0
none
President, options
Director
Edson Ng 1997 $60,000 0 0 0 40,000 0
none
Vice Pres. options
President of
Operations
Eileen
Keogh 1997 $60,000 0 0 0 40,000 0
none
Director options
R&D
</TABLE>
(1) The salary is reflected in Canadian dollars and was paid in Canadian
dollars.
Retirement plan. ATI does not have a retirement plan at present, but
the Company intends to implement one after the Merger once the Company
becomes
profitable.
Employment contracts, Termination of Employment and Change in Control
Agreements. At present, ATI has no employment contract with any of its
employees.
Compensation Committee, Interlocks and Insider Participation. Neither
ATI or the Company has a compensation committee; rather the Boards of
Directors perform the functions that would otherwise be performed by a
compensation committee.
Certain Relationships And Related Transactions
Nick Sintichakis, a director of the Company, is the son of Mike
Sintichakis, the president and a director of the Company. No other family
relationships exist among directors, executive officers or persons nominated
or chosen by the Company to become officers or executive officers and no such
relationships exist among the directors and officers of ATI.
No transactions exists with respect to the Company in which a director or
immediate family member of a director had a material interest. With respect
to ATI, in 1995 the spouse of the president of the ATI loaned approximately
$150,000 (plus interest of $16,241) for a sum total of $166,241 to ATI, who
used the loan proceeds to acquire a small Canadian computer vendor. ATI
sought the approval of the Vancouver Stock Exchange to issue 120,465 shares
of common stock at $1.38 CND to satisfy the then existing debt. The
Vancouver
Stock Exchange granted approval on July 30, 1997 and the debt was satisfied
on July 30, 1997.
Transactions with Promoters. The promoters of the Company are Mike
Sintichakis, Nick Sintichakis, Dauna Potts, Eileen Keogh and Edson Ng. The
following table sets forth the amounts received by the promoters and the
Company.
<TABLE>
<CAPTION>
Name and address of Amount of Amount of
Of Promoter Shares Bonus Shares
<S> <C> <C>
Mike Sintichakis
1802 Lipsett Crt.
Kelowna, BC V1V 1X3 400,000 400,000
Nick Sintichakis
1802 Lipsett Crt.
Kelowna, BC V1V 1X3 230,000 200,000
Dauna Potts
882 Toovey Rd.
Kelowna, BC 10,000 0
Eileen Keogh
508-2012 Fullerton Ave.
Vancouver, BC V7P 3E3 120,000 200,000
Edson Ng
623 Alpine Court
North Vancouver, BC V7R 2L7 240,000 200,000
</TABLE>
The promoters purchased the Shares, par value $.001, at $.05 per share.
Though the shares were fully paid for in advance, they are subject to a
restriction by which the shares are placed into a trust to be released in
twenty-four monthly installments. Each promoter is serving as a director or
officer. If a promoter leaves for any reason including termination, the
undistributed shares can be distributed to another employee, director or
officer. The recipient in such a transfer must pay the prior shareholder
US$.05 per share plus six percent interest per annum effective on the day of
transfer.
The promoters purchased the Bonus Shares, par value $.001, at $.01 per
share. The shares are only to be released upon specific conditions
consisting of the director's, officer's or employee's satisfactory
performance
and the Company's accumulation of working capital per share in the following
amounts
per year:
Year one: $.05
Year two: $.10
Year three: $.20
Year four: $.30
Year five: $.40
A maximum of 20% of each purchaser's Bonus Shares may be issued in any
one year. Unissued Bonus Shares expire June 12, 2003. If an owner of Bonus
Shares is no longer employed by the Company, including by termination, the
Board of Directors, in its discretion, may transfer any Bonus Shares that
have not been issued to a new director, officer or employee. The transferee
must pay the original purchaser US$.01 per share including six percent
interest per annum within thirty days.
There are no affiliates of the Company or ATI that have any material
interest, direct or indirect, by security holdings or otherwise, in the
proposed Merger.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company
Officers and Directors are indemnified and held harmless by the Company
to the fullest extent authorized by the Nevada General Corporation Law
against expense liability and loss where named a party or threatened to be
named a party to any type of action or proceeding. The officer or directors
who make such claim must be reimbursed by the Company within ninety days.
Failure by the Company to make such payment entitles the officer or director
to bring suit against the Company and if a judgment is rendered in favor of
the officer or director, the Company will be responsible for such costs. The
Company may claim as a defense that the officer of director did not meet the
standards of conduct which makes indemnification permissible under the Nevada
General Corporation Law but the burden of proving such a defense rests with
the Company.
Nevada General Corporation Law Section 78.7502 provides that a
corporation may indemnify a director or an officer against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with the action. The director
or officer must have acted in good faith or believed his or her actions were
not unlawful. The corporation cannot indemnify the officer or director where
the officer or director has been adjudged to be liable to the corporation.
If
the director or officer is successful on the merits or in defense of either
of
the aforementioned types of action, the corporation must indemnify that
officer of director.
ATI
Subject to the provisions of the Companies Act, British Columbia's
corporate law, ATI must indemnify its directors and former directors, and may
indemnify the directors of companies in which ATI is a shareholder, if the
director is named as a party in an action as a result of being a director.
ATI's board of directors may cause ATI to indemnify its officers or officers
of companies in which ATI is a shareholder, who are named as a party or as
parties in an action as result of serving as an officer or ATI. The articles
of incorporation also provide for mandatory indemnification of the Secretary
or Assistant Secretary if he or she is not a full time employee of ATI.
Failure of the directors or officers to comply with the Companies Act or the
articles of incorporation does not invalidate the indemnity clause.
ITEM 601. Exhibits
1. Underwriting Agreement Between ATI and Equitrade Securities Corporation
2.1 Minutes Approving the Merger
2.2 Plan of Reorganization through Merger
3(i).1 Articles of Incorporation of Aztek, Inc.
3(i).2 Amended And Restated Articles Of Incorporation Of Aztek, Inc.
3(ii). By-Laws Of Aztek Inc.
4.1 Minutes Approving Issuance Of Shares And Bonus Shares
4.2 Standard Subscription Agreement for Bonus Shares
4.3 Standard Subscription Agreement for Common Shares
5. Opinion re: legality
23.1 Consent Of Independent Accountants
23.2 Consent of Stephen K. Winters
24.1 Directors' Resolution of Signature by Power of Attorney
24.2 Power of attorney
27. Financial Data Schedule
99.1 Merger Agreement
99.2 Letter Of Intent For ATI To Acquire Harrison Muirhead Systems Inc. And
Q-
Smart Investments Inc.
99.3 Letter of Intent for ATI to acquire Concord Consultants
99.4 Minutes Of Shareholders Of Aztek Inc. To Approve Merger
99.5 Opinion Letter of Steve Winters in Reference to Dissenters' Rights
99.6 Dissenters' Rights Statute
99.7 Financial Statements of Aztek Technologies Inc. For the Years Ended
1998 and 1997
99.8 Opinion Letter of Independent Accountants in Reference to Canadian
Tax Consequences
99.9 Proxy
FINANCIAL STATEMENT SCHEDULES
AZTEK, INC.
Financial Statements
For the Years Ended June 30, 1996, 1997 and 1998
Contents
- --------------------------------------------------------------------------------
Auditors' Report 2
Financial Statements
Balance Sheet 3
Statements of Changes in Financial Position 4
Notes to Financial Statements 5
<AUDIT-REPORT>
Auditors' Report
To the Shareholders of Aztek, Inc.
We have audited the balance sheet of Aztek, Inc. as as June30, 1998,
1997 and 1996 and the statements of changes in financial position for the
years then ended. These 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 have conducted our audits in accordance with generally accepted auditing
standards. These 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 financial statements present fairly, in all material
respects, the financial position of the Company as at June 30, 1998, 1997
and 1996 and the results of its operations and the changes in its financial
position for the years the ended in accordance with generally accepted
accounting principles. As required by the British Columbia Companies Act we
report that, in our opinion, these principles have been applied on a
consistent basis.
Chartered Accountants
Penticton, British Columbia
July 23, 1998
</AUDIT-REPORT>
<TABLE>
<CAPTION>
Aztek, Inc.
Balance Sheet
(U.S. Dollars)
June 30 1998 1997 1996
Assets
<S> <C> <C> <C>
Current
Cash $ 60,000 $ - $ -
Share subscriptions receivable 25,000 25,000 25,000
--------- ---------- ---------
$ 85,000 $ 25,000 $25,000
---------------------------------------
Shareholders' Equity
Share capital (Note 2) $ 85,000 $ 25,000 $25,000
--------------------------------------
</TABLE>
Approved on behalf of the Board:
/s/ Director
/s/ Director
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Aztek, Inc.
Statements of Changes in Financial Position
(U.S. Dollars)
For the year ended June 30 1998 1997 1996
<S> <C> <C> <C>
Cash provided by (used in)
Operating activities
Changes in non-cash working capital balances
Share subscriptions receivable $ - $ - $ -
Financing activities
Issuance of share capital $ 60,000 $ - -
--------------------------------------
Increase in cash 60,000 - -
Cash, beginning of year - - -
--------------------------------------
Cash, end of year $ 60,000 $ - $
- -
</TABLE>
The accompanying notes are an integral part of these financial statements.
Aztek, Inc.
Notes to Financial Statements
(U.S. Dollars)
June 30, 1998, 1997 and 1996
- -----------------------------------------------------------------------------
1. Nature of Business
The company was incorporated under the laws of the state of Nevada on August
19, 1994, and has not carried on any business activities since incorporation.
- ----------------------------------------------------------------------------
2. Share Capital
Authorized
100,000,000 common shares with a par value of $0.001. During the year
ended June 30, 1998 the articles of incorporation were amended to increase
the authorized share capital to 100,000,000 common shares from 25,000 common
shares.
<TABLE>
<CAPTION>
1998 1997 1996
Number of Amount Number of Amount Number of
Amount
Shares Shares Shares
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issued and fully paid
Balance,
Beginning
Of year - $ - - $ - - $ -
Issued for cash
Private
Placement 2,000,000 60,000 - - - -
Balance
End of year 2,000,000 $ 60,000 - $ - - $ -
Subscribed and unpaid
Private
Placement 25,000 25,000 25,000 25,000 25,000 25,000
--------------------------------------------------------------------
2,025,000 $85,000 25,000 $ 25,000 25,000 $25,000
--------------------------------------------------------------------
</TABLE>
(a) Escrow Shares - The Issued share capital includes 1,000,000 escrow shares
(1997 and 1996 - nil). These shares will be released from escrow at the
following rate of 1 share for the following accumulated working capital, as
defined in the agreement:
Year one $0.05 per share of working capital
Year two $0.10 per share of working capital
Year three $0.20 per share of working capital
Year four $0.30 per share of working capital
Year five $0.40 per share of working capital
These escrow shares are due to expire June 12, 2003.
ITEM 22.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Reno State of Nevada
on, August 18, 1998.
AZTEK INC.
By: /s/ Mike Sintichakis
---------------------------
Mike Sintichakis
President
UNTIL NOVEMBER 21 ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATIONS OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
EXHIBIT 1. Underwriting Agreement between ATI and Equitrade Securities
Corporation.
UNDERWRITING AGREEMENT
406,504 Common Stock
July 2, 1998
Mr. Kim Carroll
Compliance Officer
Equitrade Securities Corporation
23736 Birtcher Drive
Lake Forest, California 92630
Dear Mr. Kim Carroll:
1. Introduction. AZTEK Technologies, Inc., a Vancouver, British
Columbia corporation (the "Company"), has an authorized capitalization of
100,000,000 shares of Common Stock, no par value. The Company has issued
and outstanding 2,072,109 shares of Common Stock. This Agreement
contemplates
that you will use your best efforts to sell, for the account of the Company,
406,504 Common Shares at a price of $ 2.46 per Common Share. The term
"Shares," as used herein, includes as many of the Common Shares as are issued
and sold pursuant to the terms hereof unless the context indicates otherwise.
The Company hereby agrees with you as follows:
2. Representations, Warranties and Agreements of the Company. The
Company represents and warrants to, and agrees with, you that:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a Registration Statement (File No.
0-29540) on Form 10-SB and prepared and filed one or more amendments thereto
covering the registration of the Shares under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(b) The Registration Statement (and any post effective
amendment thereto) will fully comply with the applicable provisions of the
Exchange Act and the Rules and Regulations thereunder, and that Registration
Statement does not contain any untrue statement of a material fact and does
not omit to state any material fact required to be stated therein or
necessary in order to make the statement therein not misleading, and at all
subsequent times thereto up to and including the Closing Date. The
Registration Statement (and the Offering Circular as amended or supplemented)
complies with the provisions of the Exchange Act and the Rules and Regulations
thereunder and does not contain any untrue statement of a material fact and
does not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Vancouver,
British Columbia and the Company has full power and authority (corporate and
other) to own its properties and conduct its business as described in the
Offering Circular and as being conducted, and is in compliance in all material
respects with the laws requiring its qualification to do business as a foreign
corporation in all other jurisdictions in which it owns or leases substantial
properties or in which the conduct of its business requires such
qualification.
(d) The Shares have been duly authorized, and when issued and
delivered as contemplated by this Agreement, will have been validly issued
and will be fully paid and nonassessable, and conform to the description
thereof contained in the Offering Circular. No further approval or authority
of the stockholders or the Board of Directors of the Company will be required
for the issuance and sale of the Shares as contemplated herein.
(e) This Agreement has been duly authorized, executed and
delivered by the Company and this Agreement constitutes a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms
and is in all respects in full compliance with all applicable provisions of
the securities laws.
(f) The execution and delivery of this Agreement, and the
performance by the Company hereunder and thereunder will not conflict with,
result in a breach or violation of or constitute a default under any
agreement or instrument to which the Company is a party or the corporate
charter or by-laws of the Company or any law, order, rule, regulation, decree
or injunction of any jurisdiction, court or governmental agency or body, and
no consent, approval, authorization or order of, or filing with any
governmental agency or body is required for the performance by the Company of
this Agreement, with the exception of the filing with the Vancouver Stock
Exchange.
(g) The Registration Statement, as originally filed or as
amended and supplemented, if the Company shall have filed with the Commission
any amendment thereof or supplement thereto complies with the applicable
provisions of the Securities Exchange Act and the Rules and Regulations
thereunder and does not contain any untrue statement of a material fact and
does not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(h) The Company has not given any information or made any
representations in connection with the offering of the Shares, written or
oral, other than as contained in the Offering Circular or the Registration
Statement.
3. Offering and Sale of the Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company appoints you as its
exclusive agent to effect sales of the Shares for the account of the Company
at the offering price of $2.46 per Share and upon the other terms and
conditions set forth herein and in the Offering Circular, and you agree to
use your best efforts as such agent to sell the Shares during the term of
this
Agreement upon the terms and conditions set forth herein and in the Offering
Circular.
As compensation for your services hereunder, the Company will, at the
Closing (as hereinafter defined), pay Equitrade commissions of $0.1476 per
Share (i.e., 6% percent of the gross proceeds of the offering) resulting from
the sale of Shares pursuant to the offering contemplated herein. Your
appointment shall commence upon the date of the execution of this Agreement,
and shall continue for a period (such period, including any extension thereof
as hereinafter provided, being herein called the "Offering Period") of 30
days (and for a period of up to 30 additional days if extended by agreement of
the Company and you), unless all of the Shares have previously been
subscribed
for.
The parties hereto specifically acknowledge the past role of a company
called Select Capital Advisors ("Select"). In a prior offering circular, as
well as the initial filing of the Form 10-SB with the U. S. Securities
Exchange Commission ("Commission"), the original agreement between the issuer
and Select was disclosed as a material agreement. The Commission raised
substantial concerns about the role of Select because the company is not an
NASD member firm, nor is the company registered with the Commission as a
broker-dealer/ underwriter and, as such, it is not authorized to sale
securities in the United States. The prior agreement between Aztek and Select
is null and void. The issuer herein recognizes and acknowledges Select has
extended considerable time, effort and funds on its behalf. Aztek agrees
reimburse Select for expenses in an amount not to exceed $40,000.00 (Forty
Thousand Dollars). Said reimbursement shall be paid from current or future
revenues of the Company and not from the proceeds of the instant offering.
Under no circumstances shall Select execute any trades or sales of the
Company's securities in connection with the instant offering. The issuer
believes the investors will be comprised of natural persons or corporate
entities that were initially identified by Select during the existence of the
former agreement, which is now null and void. The purchasers of the shares
must represent that they are "accredited investors" as that term is
understood pursuant to the federal securities laws (and set forth at 17
C.F.R.§ 230.501 (a)(1998)). Any and all sales or trades shall be
conducted and consummated by Equitrade The parties hereto expressly agree
Select is not an underwriter and shall not engage in conduct relative to the
instant offering that may cause one to consider its activities to be
consistent with those of an underwriter.
All checks received by you from applicants to purchase shall be made
payable to "AZTEK TECHNOLOGIES, INC. ACCOUNT. The brokerage account shall be
established by Aztek Technologies, Inc., after the execution of the instant
agreement by both parties hereto. Equitrade Securities Corporation shall
maintain insurance for the account for an amount not to exceed one million
dollars. You will promptly deliver to the Company one photocopy of each
Subscription Agreement, the Company will mail an interim receipt to each such
applicant to purchase for the amount deposited in the Account on behalf of
such applicant to purchase. Any entity selected by you to process orders for
Shares on behalf of applicants to purchase may deliver cash or checks and
Subscription Agreements received from such applicants and you deliver to the
company an executed photocopy of the Subscription Agreement and appendix 16
A of the offering circular.
It is understood that you shall have the right to refuse to forward any
Subscription Agreement, and in such event you shall promptly remit all funds
received by you to the person on whose behalf such funds were submitted to
you.
4. Closing. Subject to the prior termination of the offering as
provided herein, there shall be a closing (the "Closing") at the offices of,
Equitrade Securities Corporation located at 23736 Birtcher Drive, Lake
Forest, California 92630, or via international teleconference not later than
five days immediately following the termination of the Offering Period (the
"Closing Date"). Such Closing shall include the following: (i) payment for
the Shares to the Company by release of funds and delivery to the Company of
properly completed and executed Subscription Agreements to each purchaser;
(ii) deliver by the Company of certificates for the Shares purchased by each
purchaser; and (iii) payment by the Company to you, out of the proceeds of
the offering the commission referred to in Section 3 for each Share sold.
The
certificates for Shares to be delivered at the Closing will be in definitive
form in such denominations and registered in such names as you request at
least three business days prior to the Closing Date and will be made
available
at the above office for checking and packaging at least one full business day
prior to the Closing Date.
5. Covenants of the Company. The Company covenants and agrees with
you that:
(a) The Company has caused the registration statement as filed
and any subsequent amendments thereto to become effective.
(b) The Company has furnished to you true and accurate copies
of the Registration Statement filed with the U.S. Securities and Exchange
Commission.
(c) During the period of two years from the date hereof, the
Company will furnish to you, as soon as practicable after the end of each
fiscal year, a copy of its annual report to security holders for such fiscal
year, and during such period the Company will also furnish to you as soon as
available, a copy of each report and such other information concerning the
Company as you may reasonably request.
(d) The Company will apply the net proceeds from the sale of
the Shares to be sold by it hereunder for the purposes set forth in the
Offering Circular.
(e) During the course of the offering of the Shares the Company
will not take directly or indirectly any action designed to or that might, in
the future, reasonably be expected to cause or result in stabilization or
manipulation of the price of the Shares.
(f) The Company has been approved for listing on the over the
counter bulletin board.
6. Expenses. Any and all expenses of the offering shall be borne by
the underwriter.
7. This Agreement has been duly authorized, executed and delivered by the
Company, and (assuming due authorization, execution and delivery by you)
constitutes a legal, valid and binding agreement of the Company, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws affecting enforcement of
creditors rights generally and to equitable principles that may restrict the
availability of remedies and except as rights to indemnity hereunder may be
limited under the provisions of the federal securities laws.
8. The required action has been taken by the Company under the
Securities Exchange Act to make the public offering and consummate the sale
of the Shares pursuant to this Agreement; the issue and sale by the Company
of
the Shares and the execution and delivery of this Agreement and the
performance by the Company of its obligations hereunder and thereunder will
not conflict with, result in a breach of, or constitute a default under any
agreement or instrument known to such counsel to which the Company is a party
or any applicable law, order, rule, regulation, decree or injunction of any
jurisdiction, court or governmental agency or body or the corporate charter
or by-laws of the Company; and no consent, approval, authorization or order
of, or filing with, any court or body is required in connection with the
issuance or sale of the Shares by the Company or for the performance by the
Company of this Agreement.
No notice of disapproval has been issued or proceedings for that purpose
has been instituted by the Commission, the NASD, or any state securities or
Blue Sky authority with respect to the distribution arrangements relating to
the offering of the Shares.
9. Indemnification and Contribution. (a) The Company will indemnify
and hold harmless you and each person, if any, who you control within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act against
any damages or liabilities to which the Company or any such director, officer
or controlling person may become subject, insofar as such losses, claims,
damages or liabilities or actions are caused by untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, the Offering Circular, or any amendment or supplement thereto or
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement
or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by
you specifically for use therein.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action, such indemnified party will,
if
a claim in respect thereof is to be made against the indemnifying party under
this Section 9, notify the indemnifying party of the commencement thereof;
but the omission to so notify the indemnifying party will relieve it from any
liability which it may have to any indemnified party otherwise than under
this Section 9. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof,
the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 9 for legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
10. Termination. You shall have the right to terminate this
Agreement and the offering of the Shares at any time prior to the Closing if,
between the date hereof and the Closing Date, there shall have been any
declaration of war by the Government of the United States, an event resulting
in (i) the general establishment of minimum prices by either the Commission
or the National Association of Securities Dealers, or (ii) the declaration of
a bank moratorium by authorities of the United States or of the State of
California, the effect of which in your judgment makes it impracticable or
inadvisable to proceed with the offering.
11. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of Company and its officers set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of and
investigation, or statement as to the results thereof, made by or on behalf
of you, the Company or any of its officers, directors or controlling persons,
and will survive payment to the Company for the Shares. If this Agreement is
terminated pursuant to Section 10 hereof or if for any reason the sale of the
Shares is not consummated, the Company shall not be responsible for the
expenses incurred by you.
12. Notices. All communications hereunder will be in writing and, if
sent to you, will be mailed, delivered, or faxed (714-699-1183) and confirmed
to you at Equitrade Securities Corporation, 23736 Birtcher Drive, Lake
Forest, California 92630. All communications hereunder to the issuer shall be
in writing and, will be mailed, delivered, or faxed (250) 762-7933 and
confirmed to you at Aztek Technologies, Inc. 246 Lawrence Avenue, Suite # 5,
Kelowna, British Columbia V1Y 6L3.
13. Successors. This Agreement will inure to the benefit and be
binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in Section 9, and no
other person will have any right or obligation hereunder.
14. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
15. Counterparts and Facsimile . This Agreement may be executed in
counterparts, all of which, taken together, shall constitute a single
agreement. In the event the appropriate parties execute the facsimile
version of the instant agreement, said facsimile shall have the same force and
effect as the hard copy.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the instant Agreement, whereupon it
will become a binding agreement among the Company and you in accordance with
its terms.
Very truly yours,
AZTEK TECHNOLOGIES, INC.
By: /s/ Mike Sintichakis
--------------------------------
Michael Sintichakis, President
The foregoing Underwriting Agreement is herein confirmed and accepted as of
the date first above written.
/s/ Kim F. Carroll
-------------------------------------------
Kim F. Carroll, Senior Compliance
Officers Equitrade Securities
Corporation
EXHIBIT 2.1 Minutes Approving the Merger
A meeting of the Directors of AZTEK, INC., a Nevada corporation, was held at
the Company's office on the 30th day of June, 1998, via teleconference at the
hour of 10:00 o'clock a.m., for the purpose of approving a merger between
Aztek, Inc. and Aztek Technologies Inc., a Canadian company.
Mike Sintichakis, Chairman of the Board, called the meeting to order and
Nick Sintichakis, Director and Secretary, recorded the minutes of the meeting.
Upon motion duly made, seconded and unanimously carried, the reading
correcting and approval of the minutes of the last meetings was waived.
Upon motion duly made, the Directors of the Company unanimously agreed to
an approved a merger between the Company and Aztek Technologies Inc., a
Canadian based company, by way of a share exchange. The Directors of the
Company further agreed that the exchange of shares will be on a one for one
basis, subject to the approval of the shareholders of Aztek, Inc. and subject
to the approval of the shareholders of Aztek Technologies Inc.
There being no further business to come before the meeting at this time,
the meeting was, upon motion duly made and seconded, adjourned at 11:30 a.m.
/s/ Mike Sintichakis
------------------------------
Mike Sintichakis, Director
EXHIBIT 2.2 Plan Of Acquisition
PLAN FOR REORGANIZATION THROUGH MERGER
This Plan of Reorganization through Merger dated as of October 1, 1998 (the
"Merger Plan"), among Aztek Technologies Inc., a Canadian corporation ("ATI"),
and Aztek Inc., a Nevada corporation (the "Company") (ATI and the Company
being sometimes referred to hereinafter collectively as the "Constituent
Corporations").
Witnesseth:
WHEREAS, ATI, as of this date, is authorized to issue an aggregate of
100,000,000 shares of stock, consisting wholly of shares of Common Stock,
without par value ("ATI Common Stock");
WHEREAS, ATI, as of this date, has issued and there are outstanding
2,457,613 shares of ATI Common Stock;
WHEREAS, as of this date, the Company is authorized to issue 100,000,000
shares of common stock, without par value (the "Company Common Stock"), of
which two million twenty-five thousand shares are issued and outstanding; and
WHEREAS, the Boards of Directors of the Constituent Corporations deem it
advisable and in the best interests of such corporations that a reorganization
of the corporate structure of such corporations as herein contemplated be
consummated; and, in accordance therewith, that ATI be merged with and into
the Company (the "Merger"), and that the Company, as the surviving corporation
(as such, the "Surviving Corporation"), shall keep the name "Aztek, Inc."
Now, therefore, the parties hereby plan an agree as follows:
ARTICLE I
MERGER
1.1. Merger. Subject to the terms and conditions of this Plan of
Merger, ATI shall be merged with and into the Company in accordance with the
92A.100 et seq. of the Nevada Mergers and Exchanges of Interest Law, the
separate existence of ATI shall cease, and the Company, as the Surviving
Corporation, shall continue its corporate existence under the laws of the
State of Nevada and the United States. The Company shall operate an office in
Reno, Nevada, offices where ATI currently operates, and such other places as
the Company deems appropriate. The Company, as the Surviving Corporation,
shall succeed, insofar as provided by law, to all rights, assets, liabilities
and obligations of ATI in accordance with the Nevada General Corporation Law.
1.2. Effective Date. Subject to the approval of the Merger by the
requisite resolution of the shareholders of ATI, the Merger shall become
effective as of the date and time on which this Plan of Merger or an
appropriate certificate of merger is filed with the Secretary of State of the
State of Nevada, as required by the Nevada Mergers and Exchanges of Interest
Law (the "Effective Date").
ARTICLE II
Name, Certificate of Incorporation, Bylaws
and Directors and Officers of the Surviving Corporation
2.1. Name. The name of the Surviving Corporation shall be "Aztek, Inc."
on the Effective Date.
2.2. Bylaws. The Bylaws of the Company in existence and in effect
immediately prior to the Effective Date shall be the Bylaws of the Surviving
Corporation.
2.3. Directors and Officers. The directors and officers of the Company
immediately prior to the Effective Date shall be the directors and officers,
respectively, of the Surviving Corporation until expiration of the current
terms as such, or prior resignation, removal or death.
ARTICLE III
CONVERSION AND EXCHANGE OF SECURITIES
3.1. Conversion. At the Effective Date, each of the following
transactions shall be deemed to occur simultaneously:
(a) Each share of ATI Common Stock issued and outstanding
immediately prior to the Effective Date shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
become one fully paid and non-assessable share of the Company Common Stock.
(b) Each share of the Company Common Stock issued and outstanding
immediately prior to the Effective Date shall remain unchanged.
3.2. Exchange.
(a) After the Effective Date, each certificate representing issued
and outstanding shares of ATI Common Stock, shall represent the same number of
shares of the Company Stock.
(b) At any time on or after the Effective Date, each holder of
certificates evidencing ownership of shares of ATI Common Stock, upon
surrender of such certificates to the Company, shall receive in exchange
therefor one or more new stock certificates evidencing ownership of the number
of shares of the Company Common Stock into which such securities shall have
been converted in the Merger.
AZTEK TECHNOLOGIES INC.
By:_/s/ Mike Sintichakis
---------------------------
Mike Sintichakis
Director
By: /s/ Eileen Keogh
---------------------------
Eileen Keogh
Director
By: /s/ Edson Ng
--------------------------
Edson Ng
Director
Corporate Seal
AZTEK INC.
By: /s/ Mike Sintichakis
-------------------------
Mike Sintichakis
Director
By: /s/ Nick Sintichakis
-------------------------
Nick Sintichakis
Director
By: /s/ Eileen Keogh
------------------------
Eileen Keogh
Director
By: /s/ Edson Ng
-----------------------
Edson Ng
Director
EXHIBIT 3(i).2
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF AZTEK, INC.
(formerly Spectral Innovations (1994), Inc.)
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
SPECTRAL INNOVATIONS (1994). INC.
The undersigned, being the President and Secretary of Spectral
Innovations (1994), Inc., hereby declare that the original Articles of the
corporation were filed with the Secretary of State of the State of Nevada on
August 19, 1994. Pursuant to the provisions of NRS 78.385-390, at a duly
noticed and convened meeting on May 28, 1998, the sole Shareholder of the
corporation, representing 100% of the of the voting power of the company's
common stock, unanimously voted for the following amendment to the Articles of
Incorporation.
FIRST. The name of the corporation is: AZTEK, INC.
SECOND. The location of the registered office of this corporation within
the State of Nevada is 1025 Ridgeview Drive, Suite 400, Reno, Nevada 89509;
this corporation may maintain an office or offices in such other place within
or without the State of Nevada as may be from time to time designated by the
Board of Directors or by the By-Laws of the corporation; and this corporation
may conduct all corporation business of every kind or nature including the
holding of any meetings of directors or shareholders, inside or outside the
State of Nevada as well as without the State of Nevada.
The Resident Agent for the corporation shall be Michael J. Morrison, Esq.
1025 Ridgeview Drive, Suite 400, Reno, Nevada 89509.
THIRD The purpose for which this corporation is formed is: To engage
in any lawful activity.
FOURTH The amount of the total authorized capital stock of the
corporation shall be One Hundred Thousand Dollars ($100,000.00), consisting of
One Hundred Million (100,000,000) shares of Common Stock, par value $.001 pre
share.
FIFTH The governing board of this corporation shall be known as
directors, and the Board shall consist of four (4) directors.
The number of directors may, pursuant to the By-Laws, be increased or
decreased by the board of Directors, provided there shall be no less than one
(1) nor more than nine (9) Directors.
The name and post office address of the four (4) Directors constituting the
Board of Directors is as follows:
NAME POST OFFICE ADDRESS
- ----- --------------------
Mike Sintichakis 246 Lawrence Avenue, Suite 5
Kelowna, B.C., Canada V1Y 6L3
Nick Sintichakis 246 Lawrence Avenue, Suite 5
Kelowna, B.C., Canada V1Y 6L3
Edson Ng 623 Alpine Court
N. Vancouver, B.C., Canada V7R 2L7
Eileen Keogh 3579 West 1st Avenue
Vancouver, B.C., Canada V7R 1G9
SIXTH The capital stock, or the holders thereof, after the amount of
the subscription price has been paid in shall not be subject to any
assessment whatsoever to pay the debts of the corporation.
SEVENTH No cumulative voting shall be permitted in the election of
directors.
EIGHTH The corporation is to have perpetual existence.
NINTH Shareholders shall not be entitled to preemptive rights.
TENTH. Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she, or a person for whom he or she is the
legal representative, is or was a director of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans whether the basis of such proceeding is
alleged action in an official capacity as an officer or director or in any
other capacity while serving as an officer or director shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
Nevada General Corporation Law, as the same exists or may hereafter be
amended, (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment),
against all expense, liability and loss (including attorney's fees, judgments,
fines, ERISA excise taxes or penalties and amounts to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and
such indemnification shall continue as to a person who has ceased to be an
officer or director and shall inure to the benefit of his or her heirs,
executors and administrators provided, however, that except as provided herein
with respect to proceedings seeking to enforce rights to indemnification, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board of Directors
of the Corporation. The right to indemnification conferred in this Section
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance
of its final disposition; provided however, that, if the Nevada General
Corporation Law requires the payment of such expenses incurred by an officer
or director in his or her capacity as an officer or director (and not in any
other capacity in which service was or is rendered by such person while an
officer or director, including without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding , payment
shall be made only upon delivery to the Corporation of an undertaking, by or
on behalf of such officer or director, to repay all amounts so advanced if it
shall ultimately be determined that such officer or director is not entitled
to be indemnified under this Section or otherwise.
If a claim hereunder is not paid in full by the Corporation within
ninety days after a written claim has been received by the Corporation, the
claimant may, at any time thereafter, bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful, in whole or in
part, the claimant shall be entitled to be paid the expenses of prosecuting
such claim. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any proceeding
in advance of its final disposition where the required undertaking, if any, is
required, has been tendered to the Corporation) that the claimant has not met
the standards of conduct which make it permissible under the Nevada General
Corporation Law for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the Nevada General Corporation Law, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
The right to indemnification and the payment of expenses incurred in defending
a proceeding in advance of its final disposition conferred in this Section
shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-Law, agreement, vote of Stockholders or disinterested
directors or otherwise.
The Corporation may maintain insurance, at its expense to protect itself and
any officer, director, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the corporation would have the
power to indemnify such person against such expense, liability or loss under
the Nevada General Corporation Law.
The Corporation may, to the extent authorized from time to time by the Board
of Directors, grant rights to indemnification to any employee or agent of the
Corporation to the fullest extent of the provisions of this section with
respect to the indemnification and advancement of expenses of officers and
directors of the Corporation or individuals serving at the request of the
Corporation as an officer, director, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise.
The UNDERSIGNED, being the President and Secretary of Spectral Innovations
(1994), Inc. hereby declare and certify that the facts herein stated are true
and, accordingly, have hereunto set their hands this 28th day of May, 1998.
/s/ Mike Sintichakis /s/ Nick Sintichakis
- -------------------------- -------------------------------
Mike Sintichakis, President Nick Sintichakis, Secretary
Province of British Columbia )
) ss:
County Yale )
On this 28th day of May, 1998, before me, a Notary Public, personally
appeared Mike Sintichakis, personally known to me, and who acknowledged to me
that he is the President of Spectral Innovations (1994), Inc. and that he
executed the above instrument.
/s/ Euan M. Gilmour
---------------------------------
Notary Public
Euan M. Gilmour
Barrister & Solicitor
207-478 Bernard Avenue
Kelowna, BC V1Y 6N7
Province of British Columbia )
) ss:
County Yale )
On this 28th day of May, 1998, before me, a Notary Public, personally
appeared Nick Sintichakis, personally known to me, and who acknowledged to me
that he is the Secretary of Spectral Innovations (1994), Inc. and that he
executed the above instrument.
/s/ Euan M. Gilmour
---------------------------------
Notary Public
Euan M. Gilmour
Barrister & Solicitor
207-478 Bernard Avenue
Kelowna, BC V1Y 6N7
THIS FORM SHOULD ACCOMPANY AMENDED AND/OR RESTATED
ARTICLES OF INCORPORATION FOR A NEVADA CORPORATION
SPECTRAL INNOVATIONS (1994) INC. !..q r.
1. Name of corporation: SPECTRAL INNOVATIONS (1994) INC.
2. Date of adoption of Amended and/or Restated Articles: Jun 08 1998
3. If the articles were amended, please indicate what changes have been made:
(a) Was there a name change? Yes [x] No [ ]. If yes, what is the new
name? AZTEK INC.
(b) Did you change your resident agent? Yes[ ] No [x]. If yes, please
indicate new address:
(c) Did you change the purposes? Yes[x] No [ ]. Did you add Banking? [ ],
Gaming? [ ], Insurance? [ ], None of these? [x].
(d) Did you change the capital stock? Yes [x] No [ ]. If yes, what is the
new capital stock? 100,000,000 Shares of Common Stock, par value $.001.
(e) Did you change the directors? Yes [x] No [ ]. If yes, indicate the
change: Increased the Board to 4 Directors from 2.
(f) Did you add the directors liability provision? Yes [x] No [ ].
(g) Did you change the period of existence? Yes [x] No [ ]. If yes, what is
the new existence? Perpetual
(h) If none of the above apply, and you have amended or modified the articles,
how did you change your articles? The status of the corporation was changed
from a close corporation to a statutory corporation under NRS Ch. 78.
/s/ Mike Sintichakis
------------------------------------
Mike Sintichakis, President
Date: May 28, 1998
Province of British Columbia)
) ss:
County of Yale )
On May 28th, 1998 personally appeared before me, a Notary Public, Mike
Sintichakis, who acknowledged that he executed the above document.
/s/ Euan M. Gilmour
---------------------------------
Notary Public
Euan M. Gilmour
Barrister & Solicitor
207-478 Bernard Avenue
Kelowna, BC V1Y 6N7
EXHIBIT 3(i).1
ARTICLES OF INCORPORATION OF AZTEK, INC.
(formerly Spectral Innovations (1994), Inc.)
ARTICLES OF INCORPORATION
OF
SPECTRAL INNOVATIONS (1994), INC.
A Close Corporation
The undersigned, to form a Nevada close corporation, pursuant to NRS 78A.020,
certifies that:
FIRST. The name of the corporation is Spectral Innovations (1994) Inc.
SECOND. Its principal office in the State of Nevada is located at 1025
Ridgeview Drive, Suite 400, Reno, Washoe County, Nevada 89509. The name and
address of its resident agent is Michael J. Morrison, Esq., 1025 Ridgeview
Drive, Suite 400, Reno, Nevada BC 89509.
THIRD. The nature of the business, or objects or purposes proposed to be
transacted, promoted or carried on are:
To engage in any lawful activity and to market, purchase or
otherwise acquire, invest in, own, mortgage, pledge, sell, assign
and transfer or otherwise dispose of, trade, deal in and deal with goods,
wares and merchandise and personal property of every class and
description.
To hold, purchase and convey real and personal estate and to mortgage or lease
any such real and personal estate with its franchises and to take the same by
devise or bequest.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage, or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks and trade names, relating
to or useful in connection with any business in this corporation.
To guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge or
otherwise dispose of the shares of the capital stock or of any bonds,
securities or evidences of the indebtedness created by another corporation or
corporations of this state, or any other state or government, and while owner
of such stock, bonds, securities or evidences of indebtedness, to exercise all
the rights, powers and privileges of ownership, including the right to vote,
if any.
To borrow money and contract debts when necessary for the transaction of its
business, or for the exercise of its corporate rights, privileges or
franchises, or for any other lawful purpose of its incorporation; to issue
bonds, promissory notes, bills of exchange, debentures and other obligations
and evidences of indebtedness, payable at specified time or times, or payable
upon the happening of a specified event or events, whether secured by
mortgage, pledge, or otherwise, or unsecured, for money borrowed, or in
payment for property purchased, or acquired, or for any other lawful objects.
To purchase, hold, sell and transfer shares of its own capital stock, and use
therefor its capital surplus, surplus or other property or funds; provided it
shall not use its funds or property for the purchase of its own shares of
capital stock when such use would cause any impairment of its capital; and
provided further, that shares of its own capital stock belonging to it shall
not be voted upon, directly or indirectly, nor counted as outstanding, for the
purpose of computing any stockholders' quorum or vote.
To conduct business, have one or more offices, and hold, purchase, mortgage
and convey real and personal property in this state, and in any of the several
states, territories, possessions and dependencies of the United States, the
District of Columbia and in any foreign countries.
To do all and everything necessary and proper for the accomplishment of the
objects hereinbefore enumerated or necessary or incidental to the protection
and benefit of the corporation and, in general, to carry on any lawful
business necessary or incidental to the attainment of the objects of the
corporation, whether, or not such business is similar in nature to the objects
hereinbefore set forth.
The objects and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in nowise limited or restricted by reference to,
or inference from, the terms of any other clause in these Articles of
Incorporation, but the objects and purposes specified in each of the foregoing
clauses of this Article shall be regarded as independent objects and purposes.
FOURTH. The amount of the total authorized capital stock of the corporation
is TWENTY-FIVE THOUSAND DOLLARS (S25,000.00). The total number of shares of
stock which the corporation shall have the authority to issue is TWENTY-FIVE
THOUSAND (25,000) shares, which will consist of the following:
A. Common Stock. Twenty-Five Thousand (25,000) shares with a
par value of Sl.00 each, amounting to an aggregate of Twenty-Five
Thousand Dollars ($25,000.00).
No holder of any shares of any class of the corporation shall be entitled to
the preemptive rights to subscribe for, purchase or receive any part of any
new or additional shares of any class, whether now or hereafter authorized, or
any securities exchangeable for or convertible into such shares, or any
warrants or other instruments evidencing rights or options to subscribe for,
purchase or otherwise acquire such shares.
No shares of stock shall have cumulative voting rights.
Any class of stock may be held by any person or entity.
The number of stockholders of the corporation may not exceed 30.
An interest in the shares may not be transferred except to the extent
permitted by NRS 78A.050.
FIFTH. The governing board of this corporation shall be known as directors
and the number of directors may from time to time be increased or decreased in
such manner as shall be provided by the By-laws of this corporation.
The names and post office addresses of the first Board of Directors, which
shall be three (3) in number, are as follows:
NAME POST OFFICE ADDRESS
----- -------------------
Mike Sintichakis 242 Lawrence Avenue
Kelowna, B.C., Canada VlY 6L3
Richard Evans 1400-400 Burrard Street
Vancouver, B.C., Canada V6C 3G2
Nick Sintichakis 242 Lawrence Avenue
Kelowna, B.C., Canada VlY 6L3
SIXTH. The capital stock, after the amount of the subscription price or par
value has been paid in, shall not be subject to assessment to pay the debts of
the corporation.
SEVENTH. The name and post office address of the Incorporator signing these
Articles of Incorporation is as follows:
Michael J. Morrison 1025 Ridgeview Drive, Suite 400
Reno, Nevada 8-0509
EIGHTH. The corporation is to have perpetual existence.
NINTH. In furtherance, and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
Subject to the By-laws, if any, adopted by the stockholders, to make, alter or
amend the By-laws of the corporation.
To fix the amount to be reserved as working capital over and above its capital
stock paid in, to authorize and cause to be executed, mortgages and liens upon
the real and personal property of this corporation.
By resolution passed by a majority of the whole board, to designate one or
more committees, each committee to consist of one or more of the directors of
the corporation, which, to the extent provided in the resolution or in the
By-laws of the corporation, shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to
all papers which may require it. Such committee or committees shall have
such name or names as may be stated in the By-laws of the corporation or as
may be determined from time to time by resolution adopted by the Board of
Directors.
When and as authorized by the affirmative vote of stockholders holding stock
entitling them to exercise at least a majority of the voting power given at a
stockholders' meeting called for that purpose, or when authorized by the
written consent of the holders of at least a majority of the voting stock
issued and outstanding, the Board of Directors shall have power and authority
at any meeting to sell, lease or exchange all of the property and assets of
the corporation, including its goodwill and its corporate franchises, upon
such terms and conditions as its Board of Directors deem expedient and for the
best interests of the corporation.
TENTH. The corporation shall indemnify and hold all of its officers,
directors, agents and employees harmless from and against any and all claims,
suits, actions, damages and liabilities of whatsoever nature arising from
their actions on behalf of the corporation. This indemnification shall be to
the fullest extent permitted under N.R.S. 78.751, as amended from time to
time.
THE UNDERSIGNED, being the Incorporator hereinbefore named for the purpose
of forming a corporation pursuant to the General Corporation Law of the State
of Nevada, does make and file these Articles of Incorporation, hereby
declaring and certifying the facts herein stated are true, and, accordingly,
has hereunto set his hand this 18th day of August, 1994.
/s/ Michael J. Morrison
------------------------
Michael J. Morrison
STATE OF NEVADA )
)ss
COUNTY OF WASHOE )
On this 18th day of August, 1994, before me, a Notary Public, personally
appeared, Rita S. Dickson, who acknowledged she executed the above instrument.
/s/ Rita Sue Dickson RITA SUE DICKSON
--------------------- Notary Public- State of Nevada
Notary Public Appointment Recorded in Washoe County
MY APPOINTMENT EXPIRES APRIL 21, 1997
ACCEPTANCE OF APPOINTMENT BY RESIDENT AGENT
IN THE MATTER OF Spectral Innovations (1994) Inc., I, Michael J. Morrison,
hereby certify that on the 18th day of August, 1994, 1 accepted the
appointment as Resident Agent of the above-entitled corporation in accordance
with Sec. 78.090, NRS 1957.
Furthermore, that the principal office in this State is located at 1025
Ridgeview Drive, Suite 400, Reno, Washoe County, Nevada 89509.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of August,
1994.
/s/ Michael J.
Morrison
-------------------------------------------
Michael J. Morrison, Resident Agent
I hereby certify that this is a true and complete copy of the document as
filed in this office
DATED: AUG 19 1994
/s/ Chaeryl A. Lau
---------------------
CHERYL A. LAU
Secretary of State
By: /s/ Margaret *****
EXHIBIT 3(ii)
BY-LAWS OF AZTEK INC.
(formerly Spectral Innovations (1994), Inc.)
BYLAWS
OF
SPECTRAL INNOVATIONS(1994), INC.
ARTICLE 1.
OFFICES
1.1 Business Office
The principal business office ("principal office") of the corporation
shall be located at any place either within or without the State of Nevada as
designated in the corporation's most current Annual Report filed with the
Nevada Secretary of State. The corporation may have such other offices,
either within or without the State of Nevada, as the Board of Directors may
designate or as the business of the corporation may require from time to
time. The corporation shall maintain at its principal office a copy of
certain records, as specified in Section 2.14 of Article 2.
1.2 Registered Office
The registered office of the corporation shall be located within Nevada
and may be, but need not be, identical with the principal office, provided the
principal office is located within Nevada. The address of the registered
office may be changed from time to time by the Board of Directors.
ARTICLE 2. SHAREHOLDERS
2.1 Annual Shareholder Meeting
The annual meeting of the shareholders shall be held on the 30th day of
June each year, beginning with the year 1995 or at such other time on such
other day within such month as shall be fixed by the Board of Directors, for
the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday in the State of Nevada, such meeting shall be
held on the next succeeding business day.
If the election of directors shall not be held on the day designated
herein for any annual meeting of the shareholders, or at any subsequent
continuation after adjournment thereof, the Board of Directors shall cause the
election to be held at a special meeting of the shareholders as soon
thereafter as convenient.
2.2 Special Shareholder Meetings.
Special meetings of the shareholders, for any purpose or purposes
described in the notice of meeting, may be called by the president, or by the
Board of Directors, and shall be called by the president at the request of the
holders of not less than one-tenth of all outstanding shares of the
corporation entitled to vote on any issue at the meeting.
2.3 Place of Shareholder Meetings
The Board of Directors nay designate any place, either within or without
the State of Nevada, as the place for any annual or any special meeting of the
shareholders, unless by written consent, which nay be in the form of waivers
of notice or otherwise, all shareholders entitled to vote at the meeting
designate a different place, either within or without the State of Nevada, as
the place for the holding of such meeting. If no designation is made by
either the Board of Directors or unanimous action of the voting shareholders,
the place of meeting shall be the principal office of the corporation in the
State of Nevada.
2.4 Notice of Shareholder Meeting
(a) Required Notice. Written notice stating the place, day and hour of
any annual or special shareholder meeting shall be delivered not less than 10
nor more than 60 days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the Board of Directors, or
other persons calling the meeting, to each shareholder of record entitled to
vote at such meeting and to any other shareholder entitled by the laws of the
State of Nevada governing corporations (the "Act") or the Articles of
Incorporation to receive notice of the meeting. Notice shall be deemed to be
effective at the earlier of: (1) when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock
transfer books of the corporation, with postage thereon prepaid; (2) on the
date shown on the return receipt if sent by registered or certified mail,
return receipt requested, and the receipt is signed by or on behalf of the
addressee; (3) when received; or (4) 5 days after deposit in the United States
mail, if mailed postpaid and correctly addressed to an address, provided in
writing by the shareholder, which is different from that shown in the
corporation's current record of shareholders.
(b) Adjourned Meeting. If any shareholder meeting is adjourned to a
different date, time, or place, notice need not be given of the new date,
time, and place if the new date, time, and place is announced at the meeting
before adjournment. But if a new record date for the adjourned meeting is, or
must be fixed (see Section 2.5 of this Article 2) then notice must be given
pursuant to the requirements of paragraph (a) of this Section 2.4, to those
persons who are shareholders as of the new record date.
(c) Waiver of Notice. A shareholder may waive notice of the meeting (or
any notice required by the Act, Articles of Incorporation, or Bylaws), by a
writing signed by the shareholder entitled to the notice, which is delivered
to the corporation (either before or after the date and time stated in the
notice) for inclusion in the minutes of filing with the corporate records.
A shareholder's attendance at a meeting:
(1) waives objection to lack of notice or defective notice of the
meeting unless the shareholder, at the beginning of the meeting, objects to
holding the meeting or transacting business at the meeting; and
(2) waives objection to consideration of a particular matter at the
meeting that is not within the purpose or purposes described in the meeting
notice, unless the shareholder objects to consideration of the matter when it
is presented.
(d) Contents of Notice. The notice of each special shareholder meeting
shall include a description of the purpose or purposes for which the meeting
is called. Except as provided in this Section 2.4(d), or as provided in the
corporation's articles, or otherwise in the Act, the notice of an annual
shareholder meeting need not include a description of the purpose or purposes
for which the meeting is called.
If a purpose of any shareholder meeting is to consider either:(1) a
proposed amendment to the Articles of Incorporation(including any restated
articles requiring shareholder approval);(2) a plan of merger or share
exchange; (3) the sale, lease, exchange or other disposition of all, or
substantially all of the corporation's property; (4) the dissolution of the
corporation; or (5) the removal of a director, the notice must so state and be
accompanied by, respectively, a copy or summary of the: (a)articles of
amendment; (b) plan of merger or share exchange; and(c) transaction for
disposition of all, or substantially all, of the corporation's property. If
the proposed corporate action creates dissenters' rights, as provided in the
Act, the notice must state that shareholders are, or may be entitled to assert
dissenters' rights, and must be accompanied by a copy of relevant provisions
of the Act. If the corporation issues, or authorizes the issuance of shares
for promissory notes or for promises to render services in the future, the
corporation shall report in writing to all the shareholders the number of
shares authorized or issued, and the consideration received with or before the
notice of the next shareholder meeting. Likewise, if the corporation
indemnifies or advances expenses to an officer or a director, this shall be
reported to all the shareholders with or before notice of the next shareholder
meeting.
2.5 Fixing of Record Date
For the purpose of determining shareholders of any voting group entitled
to notice of or to vote at any meeting of shareholders, or shareholders
entitled to receive payment of any distribution or dividend, or in order to
make a determination of shareholders for any other proper purpose, the Board
of Directors may fix in advance a date as the record date. Such record date
shall not be more than 70 days prior to the date on which the particular
action requiring such determination of shareholders entitled to notice of, or
to vote at a meeting of shareholders, or shareholders entitled to receive a
share dividend or distribution. The record date f or determination of such
shareholders shall be at the close of business on:
(a) With respect to an annual shareholder meeting or any special
shareholder meeting called by the Board of Directors or any person
specifically authorized by the ' Board of Directors or these Bylaws to call a
meeting, the day before the first notice is given to shareholders;
(b) With respect to a special shareholder meeting demanded by the
shareholders, the date the first shareholder signs the demand;
(c) With respect to the payment of a share dividend, the date the Board of
Directors authorizes the share dividend;
(d) With respect to actions taken in writing without a meeting (pursuant to
Article 2, Section 2.12), the first date any shareholder signs a consent; and
(e) With respect to a distribution to shareholders, (other than one
involving a repurchase or reacquisition of shares), the date the Board of
Directors authorizes the distribution.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made, as provided in this section, such determination
shall apply to any adjournment thereof unless the Board of Directors fixes a
new record date, which it must do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
If no record date has been fixed, the record date shall be the date the
written notice of the meeting is given to shareholders.
2.6 Shareholder List
The officer or agent having charge of the stock transfer books for shares
of the corporation shall, at least ten (10) days before each meeting of
shareholders, make a complete record of the shareholders entitled to vote at
each meeting of shareholders, arranged in alphabetical order, with the address
of and the number of shares held by each. The list must be arranged by class
or series of shares. The shareholder list must be available for inspection by
any shareholder, beginning two business days after notice of the meeting is
given for which the list was prepared and continuing through the meeting. The
list shall be available at the corporation's principal office or at a place in
the city where the meeting is to be held, as set forth in the notice of
meeting. A shareholder, his agent, or attorney is entitled, on written
demand, to inspect and, subject to the requirements of Section 2.14 of this
Article 2, to copy the list during regular business hours and at his expense,
during the period it is available for inspection. The corporation shall
maintain the shareholder list in written form or in another form capable of
conversion into written form within a reasonable time.
2.7 Shareholder Quorum and Voting Requirements
A majority of the outstanding shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If less than a majority of the outstanding shares are
represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned
meeting at which quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting, unless a new record date is or must be set for
that adjourned meeting.
If a quorum exists, a majority vote of those shares present and voting at a
duly organized meeting shall suffice to defeat or enact any proposal unless
the Statutes of the State of Nevada, the Articles of Incorporation or these
Bylaws require a greater-than-majority vote, in which event the higher vote
shall be required for the action to constitute the action of the corporation.
2.8 Increasing Either quorum or Voting Requirements
For purposes of this Section 2.8, a "supermajority" quorum is a
requirement that more than a majority of the votes of the voting group be
present to constitute a quorum; and a "supermajority" voting requirement is
any requirement that requires the vote of more than a majority of the
affirmative votes of a voting group at a meeting.
The shareholders, but only if specifically authorized to do so by the
Articles of Incorporation, may adopt, amend, or delete a Bylaw which fixes a
"supermajority" quorum or "supermajority" voting requirement.
The adoption or amendment of a Bylaw that adds, changes, or deletes a
"supermajority" quorum or voting requirement for shareholders must meet the
same quorum requirement and be adopted by the same vote required to take
action under the quorum and voting requirement then if effect or proposed to
be adopted, whichever is greater.
A Bylaw that fixes a supermajority quorum or voting requirement for
shareholders may not be adopted, amended, or repealed by the Board of
Directors.
2.9 Proxies
At all meetings of shareholders, a shareholder may vote in person, or
vote by written proxy executed in writing by the shareholder or executed by
his duly authorized attorney-in fact. Such proxy shall be filed with the
secretary of the corporation or other person authorized to tabulate votes
before or at the time of the meeting. No proxy shall be valid after eleven
(11) months from the date of its execution unless otherwise specifically
provided in the proxy or coupled with an interest.
2.10 Voting of Shares
Unless otherwise provided in the articles, each outstanding share
entitled to vote shall be entitled to one vote upon each matter submitted to a
vote at a meeting of shareholders.
Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without the transfer of such
shares into his name. Shares standing in the name of a trustee may be voted
by him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver maybe voted by such
receiver without the transfer thereof into his name if authority to do so is
contained in an appropriate order of the Court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares are transferred into the name of the pledgee, and
thereafter, the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be v erectly or indirectly, at any meeting, and
shall not be counted in determining the total number of outstanding shares at
any given time.
Redeemable shares are not entitled to vote after notice of redemption is
mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company, or other financial institution under an
irrevocable obligation to pay the holders the redemption price on surrender of
the shares.
2.11 Corporation's Acceptance of Votes
(a) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation, if acting in good
faith, is entitled to accept the vote, consent, waiver, or proxy appointment
and give it effect as the act of the shareholder.
(b) If the name signed on a vote, consent, waiver, or proxy appointment does
not correspond to the name of its shareholder, the corporation, if acting in
good faith, is nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder if:
(1) the shareholder is an entity, as defined in the Act, and the name
signed purports to be that of an officer or agent of the entity;
(2) the name signed purports to be that of an administrator, executor,
guardian or conservator representing the shareholder and, if the corporation
requests, evidence of fiduciary status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, or proxy appointment;
(3) the name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the corporation requests, evidence of
this status acceptable to the corporation has been presented with respect to
the vote, consent, waiver or proxy appointment;
(4) the name signed purports to be that of a pledgee, beneficial owner,
or attorney-in- fact of the shareholder and, if the corporation requests,
evidence acceptable to the corporation of the signatory's authority to sign
for the shareholder has been presented with respect to the vote, consent,
waiver, or proxy appointment; or
(5) the shares are held in the name of two or more persons as co-tenants
or fiduciaries and the name signed purports to be the name of at least one of
the co-owners and the person signing appears to be acting on behalf of all the
co-owners.
(c) The corporation is entitled to reject a vote, consent, waiver, or proxy
appointment if the secretary or other officer or agent authorized to tabulate
votes, acting in good faith, has reasonable basis for doubt about the validity
of the signature on it or about the signatory's authority to sign for the
shareholder.
(d) The corporation and its officer or agent who accepts or rejects a vote,
consent, waiver, or proxy appointment in good faith and in accordance with the
standards of this Section 2.11 are not liable in damages to the shareholder
for the consequences of the acceptance or rejection.
(e) Corporation action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a
court of competent jurisdiction determines otherwise.
2.12 Informal Action by Shareholders
Any action required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if one or more written consents,
setting forth the action so taken, shall be signed by shareholders holding a
majority of the shares entitled to vote with respect to the subject matter
thereof, unless a "supermajority" vote is required by these Bylaws, in which
case a "supermajority" vote will be required. Such consent shall be delivered
to the corporation secretary for inclusion in the minute book. A consent
signed under this Section has the effect of a vote at a meeting and may be
described as such in any document.
2.13 Voting for Directors
Unless otherwise provided in the Articles of Incorporation, directors are
elected by a plurality of the votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present.
2.14 Shareholders' Rights to Inspect Corporate Records
Shareholders shall have the following rights regarding inspection of
corporate records:
(a) Minutes and Accounting Records - The corporation shall keep, as
permanent records, minutes of all meetings of its shareholders and Board of
Directors, a record of all actions taken by the shareholders or Board of
Directors without a meeting, and a record of all actions taken by a committee
of the Board of Directors in place of the Board of Directors on behalf of the
corporation. The corporation shall maintain appropriate accounting records.
(b) Absolute Inspection Rights of Records Required at Principal Office - If
a shareholder gives the corporation written notice of his demand at least five
business days before the date on which he wishes to inspect and copy, he, or
his agent or attorney, has the right to inspect and copy, during regular
business hours, any of the following records, all of which the corporation is
required to keep at its principal office:
(1) its Articles or restated Articles of Incorporation and all amendments
to them currently in effect;
(2) its Bylaws or restated Bylaws and all amendments to them currently in
effect;
(3) resolutions adopted by its Board of Directors creating one or more
classes or series of shares, and fixing their relative rights, preferences and
limitations, if shares issued pursuant to those resolutions are outstanding;
(4) the minutes of all shareholders' meetings, and records of all action
taken by shareholders without a meeting, for the past three years;
(5) all written communications to shareholders within the past three
years, including the financial statements furnished for the past three years
to the shareholders;
(6) a list of the names and business addresses of its current directors
and officers; and
(7) its most recent annual report delivered to the Nevada Secretary of
State.
(c) Conditional Inspection Right - In addition, if a shareholder gives the
corporation a written demand, made in good faith and for a proper purpose, at
least five business days before the date on which he wishes to inspect and
copy, describes with reasonable particularity his purpose and the records he
desires to inspect, and the records are directly connected to his purpose, a
shareholder of a corporation, or his duly authorized agent or attorney, is
entitled to inspect and copy, during regular business hours at a reasonable
location specified by the corporation, any of the following records of the
corporation:
(1) excerpts from minutes of any meeting of the Board of Directors;
records of any action of a committee of the Board of Directors on behalf of
the corporation; minutes of any meeting of the shareholders; and records of
action taken by the shareholders or Board of Directors without a meeting, to
the extent not subject to inspection under paragraph (a) of this Section 2.14;
(2) accounting records of the corporation; and
(3) the record of shareholders (compiled no earlier than the date of the
shareholder's demand).
(d) Copy Costs - The right to copy records includes, if reasonable, the
right to receive copies made by photographic, xerographic, or other means.
The corporation may impose a reasonable charge, to be paid by the shareholder
on terms set by the corporation, covering the costs of labor and material
incurred in making copies of any documents provided to the shareholder.
(e) "Shareholder" Includes Beneficial owner - For purposes of this Section
2.14, the term "shareholder" shall include a beneficial owner whose shares are
held in a voting trust or by a nominee on his behalf.
2.15 Financial Statements shall Be Furnished to the Shareholders.
(a) The corporation shall furnish its shareholders annual financial
statements, which may be consolidated or combined statements of corporation
and one or more of its subsidiaries, as appropriate, that include a balance
sheet as of the end of the fiscal year, an income statement for that year, and
a statement of changes in shareholders' equity for the year, unless that
information appears elsewhere in the financial statements. If financial
statements are prepared for the corporation on the basis of generally accepted
accounting principles, the annual financial statements for the shareholders
must also be prepared on that basis.
(b) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
corporation's accounting records:
(1) stating his reasonable belief that the statements were prepared on
the basis of generally accepted accounting principles and, if not, describing
the basis of preparation; and
(2) describing any respects in which the statements were not prepared on a
basis of accounting consistent with the Statements prepared for the preceding
year.
(c) A corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year. Thereafter,
on written request from a shareholder who was not mailed the statements, the
corporation shall mail him the latest financial statements.
2.16 Dissenters' Rights.
Each shareholder shall have the right to dissent from and obtain payment for
his shares when so authorized by the Act, Articles of Incorporation, these
Bylaws, or a resolution of the Board of Directors.
2.17 Order of Business.
The following order of business shall be observed at all meetings of the
shareholders, as applicable and so far as practicable:
(a) Calling the roll of officers and directors present and determining
shareholder quorum requirements;
(b) Reading, correcting and approving of minutes of previous meeting;
(c) Reports of officers;
(d) Reports of Committees;
(e) Election of Directors;
(f) Unfinished business;
(g) New business; and
(h) Adjournment.
ARTICLE 3. BOARD OF DIRECTORS
3.1 General Powers.
Unless the Articles of Incorporation have dispensed with or limited the
authority of the Board of Directors by describing who will perform some or all
of the duties of a Board of Directors, all corporate powers shall be exercised
by or under the authority of, and the business and affairs of the corporation
shall be managed under the direction of the Board of Directors.
3.2 Number, Tenure and Qualification of Directors.
Unless otherwise provided in the Articles of Incorporation, the authorized
number of directors shall be not less than 1 (minimum number) nor more than 11
(maximum number). The initial number of directors was established in the
original Articles of Incorporation. The number of directors shall always be
within the limits specified above, and as determined by resolution adopted by
the Board of Directors. After any shares of this corporation are issued,
neither the maximum nor minimum number of directors can be changed, nor can a
fixed number be substituted for the maximum and minimum numbers, except by a
duly adopted amendment to the Articles of Incorporation duly approved by a
majority of the outstanding shares entitled to vote. Each director shall hold
office until the next annual meeting of shareholders or until removed.
However, if his term expires, he shall continue to serve until his successor
shall have been elected and qualified, or until there is a decrease in the
number of directors. Unless required by the Articles of Incorporation,
directors do not need to be residents of Nevada or shareholders of the
corporation.
3.3 Regular Meetings of the Board of Directors.
A regular meeting of the Board of Directors shall be held without other
notice than this Bylaw immediately after, and at the same place as, the annual
meeting of shareholders. The Board of Directors may provide, by resolution,
the time and place for the holding of additional regular meetings without
other notice than such resolution. (If permitted by Section 3.7, any regular
meeting may be held by telephone).
3.4 Special Meeting of the Board of Directors.
Special meetings of the Board of Directors may be called by or at the request
of the president or any one director. The person or persons authorized to
call special meetings of the Board of Directors may fix any place, either
,within or without the State of Nevada, as the place for holding any special
meeting of the Board of Directors or, if permitted by Section 3.7, any special
meeting may be held by telephone.
3.5 Notice of, and Waiver of Notice of, Special Meetings of the Board of
Directors.
Unless the Articles of Incorporation provide for a longer or shorter
period, notice of any special meeting of the Board of Directors shall be given
at least two days prior thereto, either orally or in writing. If mailed,
notice of any director meeting shall be deemed to be effective at the earlier
of: (1) when received; (2) five days after deposited in the United States
mail, addressed to the director's business office, with postage thereon
prepaid; or (3) the date shown on the return receipt, if sent by registered or
certified mail, return receipt requested, and the receipt is signed by or on
behalf of the director. Notice may also be given by facsimile and, in such
event, notice shall be deemed effective upon, transmittal thereof to a
facsimile number of a compatible facsimile machine at the director's business
office. Any director may waive notice of any meeting. Except as otherwise
provided herein, the waiver must be in writing, signed by the director
entitled to the notice, and filed with the minutes or corporate records. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business and at the beginning
of the meeting, or promptly upon his arrival, objects to holding the meeting
or transacting business at the meeting, and does not thereafter vote for or
assent to action taken at the meeting. Unless required by the Articles of
Incorporation or the Act, neither the business to be transacted at, nor the
purpose of, any special meeting of the Board of Directors need be specified in
the notice or waiver of notice of such meeting.
3.6 Director Quorum.
A majority of the number of directors fixed, pursuant to Section3.2 of
this Article 3, shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors, unless the Articles of Incorporation or
the Act require a greater number for a quorum.
Any amendment to this quorum requirement is subject to the provisions of
Section 3.8 of this Article 3.
Once a quorum has been established at a duly organized meeting, the Board
of Directors may continue to transact corporate business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a
quorum.
3.7 Actions By Directors.
The act of the majority of the directors present at a meeting at which a
quorum is present when the vote is taken shall be the act of the Board of
Directors, unless the Articles of Incorporation or the Act require a greater
percentage. Any amendment which changes the number of directors needed to
take action is subject to the provisions of Section 3.8 of this Article 3.
Unless the Articles of Incorporation provide otherwise, any or all
directors may participate in a regular or special meeting by, or conduct the
meeting through the use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting. Minutes
of any such meeting shall be prepared and entered into the records of the
corporation. A director participating in a meeting by this means is deemed to
be present in person at the meeting.
A director who is present at a meeting of the Board of Directors or a
committee of the Board of Directors when corporate action is taken is deemed
to have assented to the action taken unless: (1)he objects at the beginning of
the meeting, or promptly upon his arrival, to holding it or transacting
business at the meeting; or(2) his dissent or abstention from the action taken
is entered in the minutes of the meeting; or (3) he delivers written notice of
his dissent or abstention to the presiding officer of the meeting before its
adjournment or to the corporation within 24 hours after adjournment of the
meeting. The right of dissent or abstention is not available to a director
who votes in favor of the action taken.
3.8 Establishing a "supermajority" Quorum or Voting Requirement for the
Board of Directors.
For purposes of this Section 3.8, a "supermajority" quorum is a
requirement that more than a majority of the directors in office constitute a
quorum; and a "supermajority" voting requirement is one which requires the
vote of more than a majority of those directors present at a meeting at which
a quorum is present to be the act of the directors.
A Bylaw that fixes a supermajority quorum or supermajority voting requirement
may be amended or repealed:
(1) if originally adopted by the shareholders, only by the shareholders
(unless otherwise provided by the shareholders); or
(2) if originally adopted by the Board of Directors, either by the
shareholders or by the Board of Directors.
A Bylaw adopted or amended by the shareholders that fixes a supermajority
quorum or supermajority voting requirement for the Board of Directors may
provide that it may be amended or repealed only by a specified vote of either
the shareholders or the Board of Directors.
Subject to the provisions of the preceding paragraph, action by the Board
of Directors to adopt, amend, or repeal a Bylaw that changes the quorum or
voting requirement for the Board of Directors must meet the same quorum
requirement and be adopted by the same vote required to take action under the
quorum and voting requirement then in effect or proposed to be adopted,
whichever is greater.
3.9 Director Action Without a Meeting
Unless the Articles of Incorporation provide otherwise, any action
required or permitted to be taken by the Board of Directors at a meeting may
be taken without a meeting if all the directors sign a written consent
describing the action taken. Such consents shall be filed with the records of
the corporation. Action taken by consent is effective when the last director
signs the consent, unless the consent specifies a different effective date. A
signed consent has the effect of a vote at a duly noticed and conducted
meeting of the Board of Directors and may be described as such in any
document.
3.10 Removal of Directors.
The shareholders may remove one or more directors at a meeting called for
that purpose if notice has been given that a purpose of the meeting is such
removal. The removal may be with or without cause unless the Articles of
Incorporation provide that directors may only be removed for cause. If
cumulative voting is not authorized, a director may be removed only if the
number of votes cast in favor of removal exceeds the number of votes cast
against removal.
3.11 Board of Director Vacancies.
Unless the Articles of Incorporation provide otherwise, if a vacancy
occurs on the Board of Directors, excluding a vacancy resulting from an
increase in the number of directors, the director(s) remaining in office shall
fill the vacancy. If the directors remaining in office constitute fewer than
a quorum of the Board of Directors, they may fill the vacancy by the
affirmative vote of a majority of all the directors remaining in office.
If a vacancy results from an increase in the number of directors, only
the shareholders may fill the vacancy.
A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date) may be filled by the Board of Directors
before the vacancy occurs, but the new director may not take office until the
vacancy occurs.
The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected. However, if his term
expires, he shall continue to serve until his successor is elected and
qualifies or until there is a decrease in the number of directors.
3.12 Director Compensation.
Unless otherwise provided in the Articles of Incorporation, by resolution of
the Board of Directors, each director may be paid his expenses, if any, of
attendance at each meeting of the Board of Directors, and may be paid a stated
salary as director or a fixed sum for attendance at each meeting of the Board
of Directors, or both. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
3.13 Director Committees.
(a) Creation of Committees. Unless the Articles of Incorporation
provide otherwise, the Board of Directors may create one or more committees
and appoint members of the Board of Directors to serve on them. Each
committee must have two or more members, who serve at the pleasure of the
Board of Directors.
(b) Selection of Members. The creation of a committee and appointment
of members to it must be approved by the greater of (1) a majority of all the
directors in office when the action is taken, or (2) the number of directors
required by the Articles of Incorporation to take such action.
(c) Required Procedures. Sections 3.4, 3.5, 3.6, 3.7, 3.8 and 3.9 of
this Article 3 apply to committees and their members.
(d) Authority. Unless limited by the Articles of Incorporation or the
Act, each committee may exercise those aspects of the authority of the Board
of Directors which the Board of Directors confers upon such committee in the
resolution creating the committee. Provided, however, a committee may not:
(1) authorize distributions to shareholders;
(2) approve or propose to shareholders any action that the Act
requires be approved by shareholders;
(3) fill vacancies on the Board of Directors or on any of its
committees;
(4) amend the Articles of Incorporation;
(5) adopt, amend, or repeal Bylaws;
(6) approve a plan of merger not requiring shareholder approval;
(7) authorize or approve reacquisition of shares, except according to
a formula or method prescribed by the Board of Directors; or
(8) authorize or approve the issuance or sale, or contract for sale
of shares, or determine the designation and relative rights, preferences, and
limitations of a class or series of shares; except -that the Board of
Directors may authorize a committee to do so within limits specifically
prescribed by the Board of Directors.
ARTICLE 4. OFFICERS
4.1 Designation of Officers.
The officers of the corporation shall be a president, a secretary, and a
treasurer, each of whom shall be appointed by the Board of Directors. Such
other officers and assistant officers as may be deemed necessary, including
any vice-presidents, may be appointed by the Board of Directors. The same
individual may simultaneously hold more than one office in the corporation.
4.2 Appointment and Term of office.
The officers of the corporation shall be appointed by the Board of Directors
for a term as determined by the Board of Directors. If no term is specified,
they shall hold office until the first meeting of the directors held after the
next annual meeting of share holders. If the appointment of officers is not
made at such meeting, such appointment shall be made as soon thereafter as is
convenient. Each officer shall hold office until his successor has been duly
appointed and qualified, until his death, or until here signs or has been
removed in the manner provided in Section 4.3of this Article 4.
The designation of a specified term does not grant to the officer any
contract rights, and the Board of Directors can remove the officer at any time
prior to the termination of such term. Appointment of an officer shall not of
itself create any contract rights.
4.3 Removal of officers.
Any officer may be removed by the Board of Directors at anytime, with or
without cause. Such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
4.4 President.
The president shall be the principal executive officer of the corporation
and, subject to the control of the Board of Directors, shall generally
supervise and control all of the business and affairs of the corporation. He
shall, when present, preside at all meetings of the shareholders. He may
sign, with the secretary or any other proper officer of the corporation
thereunto duly authorized by the Board of Directors, certificates for shares
of the corporation and deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be executed '
except in cases where the signing and execution thereof shall be expressly
delegated by the Board of Directors or by these Bylaws to some other officer
or agent of the corporation, or shall be required by law to be otherwise
signed or executed. The president shall generally perform all duties incident
to the office of president and such other duties as may be prescribed by the
Board of Directors from time to time.
4.5 Vice-President.
If appointed, in the absence of the president or in the event of the
president's death, inability or refusal to act, the vice-president (or in the
event there be more than one vice-president, the vice-presidents in the order
designated at the time of their election, or in the absence of any
designation, then in the order of their appointment) shall perform the duties
of the president, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the president. If there is no
vice-president, then the treasurer shall perform such duties of the
president. Any vice-president may sign with the secretary or an assistant
secretary, certificates for shares of the corporation the issuance of which
have been authorized by resolution of the Board of Directors. A
vice-president shall perform such other duties as from time to time may be
assigned to him by the president or by the Board of Directors.
4.6 Secretary.
The secretary shall (a) keep the minutes of the proceedings of the
shareholders and of the Board of Directors in one or more books provided for
that purpose; (b) see that all notices are duly given accordance with the
provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of any seal of the corporation and, if there is a seal
of the corporation, see that it is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d)when
requested or required, authenticate any records of the corporation; (e) keep a
register of the post office address of each shareholder, as provided to the
secretary by the shareholders; (f)sign with the president, or a vice-resident,
certificates for shares of the corporation, the issuance of which has been
authorized by resolution of the Board of Directors; (g) have general charge of
the stock transfer books of the corporation; and(h) generally perform all
duties incident to the office of secretary and such other duties as from time
to time may be assigned to him by the president or by the Board of Directors.
4.7 Treasurer.
The treasurer shall (a) have charge and custody of and be responsible for
all funds and securities of the corporation; (b) receive and give receipts for
moneys due and payable to the corporation from any source whatsoever, and
deposit all such moneys in the name of the corporation in such banks, trust
companies, or other depositaries as may be selected by the Board of Directors;
and (c) generally perform all of the duties incident to the office of
treasurer and such other duties as from time to time may be assigned to him by
the president or by the Board of Directors.
If required by the Board of Directors, the treasurer shall give a bond for
the faithful discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine.
4.8 Assistant Secretaries and Assistant Treasurers.
The assistant secretaries, when authorized by the Board of Directors, may
sign with the president, or a vice-president, certificates for shares of the
corporation, the issuance of which has been authorized by a resolution of the
Board of Directors. The assistant treasurers shall respectively, if required
by the Board of Directors, give bonds for the faithful discharge of their
duties in such sums and with such sureties as the Board of Directors shall
determine. The assistant secretaries and assistant treasurers, generally,
shall perform such duties as may be assigned to them by the secretary or the
treasurer, respectively, or by the president or the Board of Directors.
4.9 Salaries.
The salaries of the officers, if any, shall be fixed from time to time
by the Board of Directors.
ARTICLE 5. INDEMNIFICATION OF DIRECTORS,
OFFICERS, AGENTS, AND EMPLOYEES
5.1 Indemnification of officers, Directors, Employees and Agents.
Unless otherwise provided in the Articles of Incorporation, the
corporation shall indemnify any individual made a party to a proceeding
because he is or was an officer, director employee or agent of the corporation
against liability incurred in the proceeding, all pursuant to and consistent
with the provisions of NRS 78.751, as amended from time to time.
5.2 Advance Expenses for officers and Directors.
The expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding shall be paid by the corporation as they
are incurred and in advance of the final disposition of the action, suit or
proceeding, but only after receipt by the corporation of an undertaking by or
on behalf of the officer or director on terms set by the Board of Directors,
to repay the expenses advanced if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation.
5.3 Scope of Indemnification.
The indemnification permitted herein is intended to be to the fullest
extent permissible under the laws of the State of Nevada, and any amendments
thereto.
ARTICLE 6.CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares.
(a) Content
Certificates representing shares of the corporation shall at minimum,
state on their face the name of the issuing corporation; that the corporation
is formed under the laws of the State of Nevada; the name of the person to
whom issued; the certificate number; class and par value of shares; and the
designation of the series, if any, the certificate represents. The form of
the certificate shall be as determined by the Board of Directors. Such
certificates shall be signed (either manually or by facsimile) by the
president or a vice-president and by the secretary or an assistant secretary
and may be sealed with a corporate seal or a facsimile thereof. Each
certificate for shares shall be consecutively numbered or otherwise
identified.
(b) Legend as to Class or series
If the corporation is authorized to issue different classes of shares or
different series within a class, the designations, relative rights,
preferences, and limitations applicable to each class and the variations in
rights, preferences, and limitations determined for each series (and the
authority of the Board of Directors to determine variations for future series)
must be summarized on the front or back of the certificate indicating that the
corporation will furnish the shareholder this information on request in
writing and without charge.
(c) Shareholder List
The name and address of the person to whom the shares are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation.
(d) Transferring Shares
All certificates surrendered to the corporation for transfer shall be
canceled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in case of a lost, destroyed, or mutilated certificate, a new one may be
issued therefor upon such terms as the Board of Directors may prescribe,
including indemnification of the corporation and bond requirements.
6.2 Registration of the Transfer of Shares.
Registration of the transfer of shares of the corporation shall be made
only on the stock transfer books of the corporation. In order to register a
transfer, the record owner shall surrender the share certificate to the
corporation for cancellation, properly endorsed by the appropriate person or
persons with reasonable assurances that the endorsements are genuine and
effective. Unless the corporation has established a procedure by which a
beneficial owner of shares held by a nominee is to be recognized by the
corporation as the owner, the person in whose name shares stand on the books
of the corporation shall be deemed by the corporation to be the owner thereof
for all purposes.
6.3 Restrictions on Transfer of Shares Permitted.
The Board of Directors may impose restrictions on the transferor
registration of transfer of shares, including any security convertible into,
or carrying a right to subscribe for or acquire shares. A restriction does
not affect shares issued before the restriction was adopted unless the holders
of the shares are parties to the restriction agreement or voted in favor of
the restriction.
A restriction on the transfer or registration of transfer of shares may
be authorized:
(1) to maintain the corporation's status when it is dependent on the
number or identity of its shareholders;
(2) to preserve exemptions under federal or state securities law; or
(3) for any other reasonable purpose.
A restriction on the transfer or registration of transfer of shares may:
(1) obligate the shareholder first to offer the corporation or other
persons (separately, consecutively, or simultaneously) an opportunity to
acquire the restricted shares;
(2) obligate the corporation or other persons (separately,
consecutively, or simultaneously) to acquire the restricted shares;
(3) require the corporation, the holders or any class of its shares, or
another person to approve the transfer of the restricted shares, if the
requirement is not manifestly unreasonable; or
(4) prohibit the transfer of the restricted shares to designated persons
or classes of persons, if the prohibition is not manifestly unreasonable.
A restriction on the transfer or registration of transfer of shares is
valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this Section 6.3 and its existence is noted
conspicuously on the front or back of the certificate. Unless so noted, a
restriction is not enforceable against a person without knowledge of the
restriction.
6.4 Acquisition of Shares.
The corporation may acquire its own shares and unless otherwise provided
in the Articles of Incorporation, the shares so acquired constitute authorized
but unissued shares.
If the Articles of Incorporation prohibit the reissue of shares acquired
by the corporation, the number of authorized shares is reduced by the number
of shares acquired, effective upon amendment of the Articles of Incorporation,
which amendment shall be adopted by the shareholders, or the Board of
Directors without shareholder action (if permitted by the Act). The amendment
must be delivered to the Secretary of State and must set forth:
(1) the name of the corporation;
(2) the reduction in the number of authorized shares, itemized by class and
series; and
(3) the total number of authorized shares, itemized by class and series,
remaining after reduction of the shares.
ARTICLE 7. DISTRIBUTIONS
7.1 Distributions.
The Board of Directors may authorize, and the corporation may make,
distributions (including dividends on its outstanding shares) in the manner
and upon the terms and conditions provided by law.
ARTICLE 8. CORPORATE SEAL
8.1 Corporate Seal.
The Board of Directors may adopt a corporate seal which may be circular in
form and have inscribed thereon any designation, including the name of the
corporation, Nevada as the state of incorporation, and the words "Corporate
Seal."
ARTICLE 9. EMERGENCY BYLAWS
9.1 Emergency Bylaws.
Unless the Articles of Incorporation provide otherwise, the following
provisions shall be effective during an emergency, which is defined as a time
when a quorum of the corporation's directors cannot be readily assembled
because of some catastrophic event.
During such emergency:
(a) Notice of Board Meetings
Any one member of the Board of Directors or any one of the following
officers: president, any vice-president, secretary, or treasurer, may call a
meeting of the Board of Directors. Notice of such meeting need be given only
to' those directors whom it is practicable to reach, and may be given in any
practical manner, including by publication and radio. Such notice shall be
given at least six hours prior to commencement of the meeting.
(b) Temporary Directors and Quorum
One or more officers of the corporation present at the emergency board
meeting, as is necessary to achieve a quorum, shall be considered to be
directors for the meeting, and shall so serve in order of rank, and within the
same rank, in order of seniority. In the event that less than a quorum (as
determined by Section 3.6 of Article 3) of the directors are present
(including any officers who are to serve as directors for the meeting) , those
directors present (including the officers serving as directors) shall
constitute a quorum.
(c) Actions Permitted To Be Taken
The Board of Directors, as constituted in paragraph (b), and after
notice as set forth in paragraph (a), may:
(1) Officers' Powers
Prescribe emergency powers to any officer of the corporation;
(2) Delegation of Any Power
Delegate to any officer or director, any of the powers of the
Board of Directors;
(3) Lines of Succession
Designate lines of succession of officers and agents, in the event
that any of them are unable to discharge their duties;
(4) Relocate Principal Place of Business
Relocate the principal place of business, or designate successive
or simultaneous principal places of business;
(5) All Other Action Take any other action which is convenient,
helpful, or necessary to carry on the business of the corporation.
ARTICLE 10. AMENDMENTS
10.1 Amendments.
The Board of Directors may amend or repeal the corporation's Bylaws unless:
(1) the Articles of Incorporation or the Act reserve this power
exclusively to the shareholders, in whole or part; or
(2) the shareholders, in adopting, amending, or repealing a particular
Bylaw, provide expressly that the Board of Directors may not amend or repeal
that Bylaw; or
(3) the Bylaw either establishes, amends or deletes a "supermajority"
shareholder quorum or voting requirement, as defined in section 2.8 of Article
2.
Any amendment which changes the voting or quorum requirement for the Board
of Directors must comply with Section 3.8 of Article 3,and for the
shareholders, must comply with Section 2.8 of Article 2.
The corporation's shareholders may also amend or repeal the corporation's
Bylaws at any meeting held pursuant to Article 2.
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of SPECTRAL INNOVATIONS(1994),
INC. and that the foregoing Bylaws, consisting of twenty-seven (27) pages,
constitutes the Code of SPECTRAL INNOVATIONS(1994), INC. as duly adopted by
the Board of Directors of the corporation on this 30th day of August, 1994.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 30th day of
August, 1994
/s/ Nick Sintichakis
-------------------------------
Secretary
EXHIBIT 4.1. Minutes Approving Issuance Of Shares And Bonus Shares
MINUTES OF THE BOARD OF DIRECTORS
A meeting of the Directors of AZTEK, INC., a Nevada corporation, was held
at the Company's offices on the 12th day of June, 1998, at the hour of 10:00
o'clock a.m., for the purpose of the sale of a determined number of shares for
startup purposes.
Mike Sintichakis Chairman of the Board called the meeting to order and
Nick Sintichakis Director recorded the minutes of the meeting.
On motion duly made, seconded and unanimously carried the reading
correcting and approval of the minutes of the last meeting was waived.
Upon motion duly made it was resolved that the Company allot an aggregate
of 1,000,000 common shares par value $0.001 at a price of US$0.05 per share to
the following directors, officers and employees of the Company:
Name No. & Class of Shares
Mike Sintichakis (director) 400,000 common shares, par value $0.001
Edson Ng (director) 200,000 common shares, par value $0.001
Eileen Keogh (director) 200,000 common shares, par value $0.001
Nick Sintichakis (director) 190,000 common shares, par value $0.001
Dauna Potts (employee) 10,000 common shares, par value $0.001
the ("Shares")
Upon motion duly made, it was resolved that the issuance and release of
the Shares be subject to the following terms and conditions:
1. The total number of Shares shall be paid for in advance by the purchasers
prior to issuance at a price of $0.05 per share. The payment must be made by a
cashier's or certified cheque, payable to Aztek, Inc.
2. All purchasers agree to place all of their Shares in the Company's trust
account and the Shares will be released in 24 equal monthly installments. All
of the directors of the Company agree to sign a resignation letter which shall
be used if the board of directors decide to cease a director's services for
failure to execute his duties and to avoid additional expenses to the Company
for a director's dismissal through shareholder meetings.
3. In the event that any director, officer or employee is released by the
Company, based on the board of directors recommendations or leaves through
their own free will for any reason, the Company has the power and authority to
sell and transfer all remaining Shares held in the individual's trust account
to an existing or new employee, director or officer of the Company.
4. All purchasers agree to sign a power of attorney authorizing the Company to
sell the balance of the Shares remaining in their trust account as described
in paragraph 4 herein.
5. The new purchaser shall pay the original owner US$0.05 for each Share
transferred plus 6% per annum interest effective on the day of purchase. If
the Company fails to make a decision on the new purchaser within thirty days,
the Company will advance the funds to the seller on behalf of the future
purchaser.
Upon motion duly made, it was resolved that the Company allot an
aggregate of 1,000,000 common shares, par value $0.001, at a price of US$0.01
per share to be issued as Bonus Shares to the following directors of the
Company:
Name No. & Class of Shares
Mike Sintichakis 400,000 common shares, par value $0.001
Edson Ng 200,000 common shares, par value $0.001
Eileen Keogh 200,000 common shares, par value $0.001
Nick Sintichakis 200,000 common shares, par value $0.001
(the "Bonus Shares")
Upon motion duly made, it was resolved that issuance of any of the Bonus
Shares be subject to the following terms and conditions:
1. All of the Bonus Shares must be paid for in advance at a price of US$0.01
per Bonus Share. The payment must be made by a cashier's or certified cheque,
payable to Aztek, Inc.
2. The release of the Bonus Shares shall be subject to the director's,
officer's or employee's satisfactory performance and certain conditions being
met as described herein;
3. Any outstanding Bonus Shares will expire at the end of the term of five
(5) years from the date of the resolution of the board of directors approving
the granting of the Bonus Shares and shall be automatically cancelled;
4. The maximum number of Bonus Shares to be released to any director,
officer or employee in any one year shall be restricted to 20% of the original
amount of Bonus Shares awarded;
5. In order for the Company to authorize the issuance of any Bonus Shares
to any director, officer or employee the Bonus Shares shall be released only
if the Company accumulates the following working capital per year:
Year one: $0.05 per share of working capital
Year two: $0.10 per share of working capital
Year three: $0.20 per share of working capital
Year four: $0.30 per share of working capital
Year five: $0.40 per share of working capital
6. In the event that any director, officer or employee ceases to serve the
Company in any capacity for any reason, the remaining Bonus Shares shall be
transferred to a new director, officer or employee of the Company at the board
of director's discretion. The new purchaser shall, as a condition of
receiving the Bonus Shares, pay to the original beneficial owner US$0.01 for
each Bonus Share transferred to him including 6% interest effective on the day
of purchase within thirty days. In the event that the Company fails to make a
decision of the new beneficial owner within thirty days, the Company will
advance the funds and recover the same from the future beneficial owner.
7. All beneficiaries agree to sign a power of attorney authorizing the
Company to transfer the balance of the Bonus Shares remaining in their
account. The balance of the Bonus Shares described herein, at the board of
director's discretion, will be sold or transferred to several or one existing
or new director, employee or officer of the Company. The power of attorney
will be effective if a beneficiary, based on the board of director's
discretion, does not provide satisfactory services to the Company and in
result they cease their services to the Company.
Upon motion duly made, it was agreed that the funds collected from the
issuance of the Shares and the Bonus Shares be used for the Company's
start-up costs and working capital.
There being no further business to come before the meeting at this time,
the meeting was, upon motion duly made and seconded, adjourned at 11:30 a.m.
/s/ Mike Sintichakis
----------------------------
Mike Sintichakis, Director
EXHIBIT 4.2 Standard Subscription Agreement for Bonus Shares
Investment Letter
Aztek, Inc.
Suite #5 - 246 Lawrence Avenue
Kelowna, B.C.
V1Y 6L3
Dear Sirs:
In connection with the acquisition by the undersigned of ____________________
(_________) shares as Bonus of Common Stock (the "Bonus Shares") of Aztek,
Inc. a Nevada corporation ("Aztek" or the "Company"), at a price of US$0.01
per share, from the Company, the undersigned hereby covenants, represents and
warrants to you that:
1. The undersigned is acquiring the Bonus Shares in good faith for the purpose
of an investment in the Company and not for the purpose of distributing or
publicly selling the Bonus Shares to others, reselling, assigning, pledging or
hypothecating the Bonus Shares; or dividing his participation with others in
the Shares or any portion thereof except as described herein.
2. As of the date of this letter, the undersigned is not aware of any
particular occasion, event or circumstance upon the occurrence or happening of
which he or she intends to sell the Bonus Shares except as described herein.
3. The Bonus Shares are being acquired by the undersigned for his or her own
account and there is a present arrangement or agreement for the possible
transfer of the Bonus Shares to other persons employed by the Company.
4. The Shares covered by the above covenants, warranties and representations
shall also include any securities into which the above Bonus Shares may become
converted, subdivided, or split up, in connection with a merger,
re-classification, recapitalization or reorganization of the Company.
5. The undersigned further acknowledges that he is familiar with the
operations of the Company; that he has received information of the Company,
that he is capable of evaluating the merits and risks of the prospective
investment; and that he has had the opportunity to ask questions and receive
answers concerning the terms and conditions of the issuance of the Shares.
6. The undersigned understands that he or she will issue a cheque for the full
amount of the purchase price of the Bonus Shares of Common Stock purchased,
payable to the order of "Aztek, Inc." This investment letter must be executed
and delivered to Aztek, Inc., Suite #5 - 246 Lawrence Avenue, Kelowna, B.C.
V1Y 6L3.
7. The undersigned understands and agrees that the Bonus Shares shall be
released to a maximum number of 20% per year of the original number of Bonus
Shares purchased. The undersigned also understands that the Bonus Shares shall
only be released only if the Company accumulates the working capital per annum
as follows:
Year one: $0.05 per share of working capital
Year two: $0.10 per share of working capital
Year three: $0.20 per share of working capital
Year four: $0.30 per share of working capital
Year five: $0.40 per share of working capital
8. The undersigned acknowledges and agrees that any Bonus Shares not released
to the undersigned within five (5) years from the date of this letter shall be
returned to the Company for cancellation.
9. The undersigned acknowledges and agrees that in the event that he or she
ceases to be a director officer or employee of the Company, based on the board
of directors recommendations or for any other reason, the balance remaining of
the Bonus Shares not so released to the undersigned shall be transferred to a
new director, officer or employee. The undersigned hereby authorizes the
Company to transfer or assign the balance of Bonus Shares remaining in the
undersigned's account to a new director of the Company. The new beneficial
holder of the Bonus Shares shall cause to be paid to the undersigned US$0.01
for each share transferred or assigned together with 6% interest effective on
the day of approval by the Company of the share transfer or assignment.
10. The undersigned agrees to indemnify the Company against, and hold it harmles
s from, all losses, liabilities, costs and expenses (including reasonable
attorney's fees) which arise as a result of a sale, exchange or other transfer
of the Shares other than as permitted hereunder.
Yours truly,
By: ____________________________________
________________________________________
Address
Date____________________________________
Telephone No.____________________________
Accepted this ______ day of ________________________, 1998.
AZTEK, INC.
Per:____________________________________
EXHIBIT 4.3 Standard Subscription Agreement for Common Shares
Investment Letter
Aztek, Inc.
Suite #5 - 246 Lawrence Avenue
Kelowna, B.C.
V1Y 6L3
Dear Sirs:
In connection with the acquisition by the undersigned of ____________________
(_________) shares of Common Stock (the "Bonus Shares") of Aztek, Inc. a
Nevada corporation ("Aztek" or the "Company"), at a price of US$0.05 per
share, from the Company, the undersigned hereby covenants, represents and
warrants to you that:
1. The undersigned is acquiring the Shares in good faith for the purpose of an
investment in the Company and not for the purpose of distributing or publicly
selling the Shares to others, reselling, assigning, pledging or hypothecating
the Shares; or dividing his participation with others in the Shares or any
portion thereof except as described herein.
2. As of the date of this letter, the undersigned is not aware of any
particular occasion, event or circumstance upon the occurrence or happening of
which he or she intends to sell the Shares except as described herein.
3. The Shares are being acquired by the undersigned for his or her own account
and there is a present arrangement or agreement for the possible transfer of
the Shares to other persons employed by the Company.
4. The Shares covered by the above covenants, warranties and representations
shall also include any securities into which the above Shares may become
converted, subdivided, or split up, in connection with a merger,
re-classification, recapitalization or reorganization of the Company.
5. The undersigned further acknowledges that he is familiar with the
operations of the Company; that he has received information of the Company,
that he is capable of evaluating the merits and risks of the prospective
investment; and that he has had the opportunity to ask questions and receive
answers concerning the terms and conditions of the issuance of the Shares.
6. The undersigned understands that he or she will issue a cheque for the full
amount of the purchase price of the Shares of Common Stock purchased, payable
to the order of "Aztek, Inc." This investment letter must be executed and
delivered to Aztek, Inc., Suite #5 - 246 Lawrence Avenue, Kelowna, B.C. V1Y
6L3.
7. The undersigned understands and agrees that the Shares so purchased shall
be held in trust by Aztek, Inc. and released to the undersigned in 24 equal
monthly installments.
8. The undersigned acknowledges and agrees that in the event that he or she
ceases to be a director, officer or employee of the Company, or is released by
the Board of Directors for any reason, the balance remaining of the Shares not
so released to the undersigned shall be transferred to a new holder. The
undersigned hereby authorizes the Board of Directors of the Company to
transfer or assign the balance so remaining to a new director officer or
employee of the Company. As a condition of receiving the Shares, the new
beneficial holder of the Shares shall cause to be paid to the undersigned
US$0.05 for each share so transferred or assigned together with 6% interest.
9. The undersigned agrees to indemnify the Company against, and hold it
harmless from, all losses, liabilities, costs and expenses (including
reasonable attorney's fees) which arise as a result of a sale, exchange or
other transfer of the Shares other than as permitted hereunder.
Yours truly,
By: ____________________________________
________________________________________
Address
Date____________________________________
Telephone No.____________________________
Accepted this ______ day of ________________________, 1998.
AZTEK, INC.
Per:____________________________________
See also Articles six, seven and nine of the Company's Amended And
Restated Articles Of Incorporation set forth in this Form S-4 as Exhibit
3(i).2 and Article 2 of the Company's By-laws set forth in this Form S-4 as
Exhibit 3(ii).
EXHIBIT 5. Opinion On Legality
[LETTERHEAD OF LAW FIRM OF LARSON-JACKSON, P.C.]
August 1, 1998
Board of Directors
the Company Inc.
1575 Deluccchi Lane, Suite #40
Reno, Nevada 89502
RE: Registration Statement on Form S-4
Ladies and Gentlemen:
This opinion is rendered in connection with the Registration Statement on
Form S-4 (the "Registration Statement") filed by Aztek, Inc. (the "Company")
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended, and the Joint Proxy Statement-Prospectus (the "Prospectus"),
relating to the issuance by the Company of up to 2,478,613 shares of common
stock, par value $0.001 per share (the "Common Stock"), in the manner set
forth in the Registration Statement and the Prospectus. As counsel, we have
reviewed the Registration Statement, the Prospectus and the Company's Articles
of Incorporation and By-Laws, Records of the Company's corporate proceedings
relative to the issuance of the Common Stock and such other legal matters as
we have deemed appropriate for the purposes of this opinion. We are rendering
this opinion as of the time the Registration Statement becomes effective.
Based upon the foregoing, and having a regard for such legal
considerations as we have deemed relevant, we are of the opinion that the
shares of Common Stock will be, upon issuance, against full payment therefor
as contemplated in the Registration Statement and the Prospectus, legally
issued, fully paid and non-assessable shares of Common Stock of the Company.
We consent to the filing of our opinion as an exhibit to the Registration
Statement and to the reference to our firm and our opinion in the Registration
Statement and all amendments thereto.
Very truly yours,
LAW FIRM OF LARSON-JACKSON, P.C.
BY: /s/ Steve Larson-Jackson
- -------------------------------------
Steve Larson-Jackson
EXHIBIT 23.1 Consent Of Independent Accountants
[LETTERHEAD OF BDO DUNWOODY, CHARTERED ACCOUNTANTS APPEARS HERE]
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the use of our report to the shareholders of Aztek Inc.,
dated July 23, 1998 on the audit of the financial statements described
therein, in this Registration Statement on Form S-4, relating to shares of
Common Stock of Aztek, Inc., to be issued to shareholders of Aztek
Technologies Inc., as filed with the Securities and Exchange Commission.
We hereby consent to the use of our report to the shareholders of Aztek
Technologies Inc., dated July 10, 1998 on the audit of the financial
statements described therein, in this Registration Statement on Form S-4,
relating to the annual and extraordinary meeting of the shareholders of Aztek
Technologies Inc., as filed with the Securities and Exchange Commission.
We hereby consent to the use of our opinion on the income tax effect on
Canadian resident shareholders, of Aztek Technologies Inc., of the proposed
merger of Aztek Technologies Inc. with Aztek, Inc. described in this
Registration Statement on Form S-4.
/s/BDO Dunwoody
- ------------------
CHARTERED ACCOUNTANTS
Penticton, British Columbia
August 18, 1998
EXHIBIT 23.2 Consent of Stephen K. Winters
[LETTERHEAD OF STEPHEN K WINTERS LAW CORPORATION]
August 5, 1998
Board of Directors
Aztek Technologies Inc.
#5 - 246 Lawrence Ave.
Kelowna, B.C.
V1Y 6L3
Re: Aztek Technologies Inc. ("ATI") - Consent
Members of the Board:
We hereby consent to the use of our legal opinion dated August 5, 1998, on the
Dissenter's Rights described therein of ATI's Proxy Statement to be sent to
the shareholders of ATI as filed with the Securities and Exchange Commission.
We also consent to the reference to our firm under the caption "Experts" in
the Prospectus.
Yours truly,
STEPHEN K WINTERS
LAW CORPORATION
/s/ Stephen K. Winters
- ----------------------
Per: Stephen K. Winters
MINUTES OF PROCEEDING OF THE BOARD
CONSENT AND RESOLUTION OF
BOARD OF DIRECTORS
OF
AZTEK, INC.
Held on August 12, 1998
PRESENT: MIKE SINTICHAKIS
NICK SINTICHAKIS
EDSON NG
EILEEN KEOGH
Being all of the Directors of Aztek, Inc. (the "Company"). All of the
Directors being present in person and having waived notice of the meeting as
evidenced by their signatures at the bottom of these minutes, notice calling
the meeting was dispensed with and the meeting declared to be regularly
constituted.
WHEREAS, the Company will file a Registration Statement on Form S-4 with the
U.S. Securities & Exchange Commission in connection with the merger of the
Company and Aztek Technologies Inc. of Canada, to comply with the Securities
Act of 1933, as amended, and any rules, regulations and requirement of the
Securities and Exchange Commission, it is
RESOLVED, That Mike Sintichakis, as an officer of the Company, will sign the
registration statement for the directors and officers by power of attorney.
AZTEK, INC.
By:__________________________________ Date: ______________________
Mike Sintichakis, Director
By:__________________________________ Date: ______________________
Nick Sintichakis, Director
By:_________________________________ Date:_______________________
Edson Ng
By:_________________________________ Date:_______________________
Eileen Keogh
EXHIBIT 24.2 Power of Attorney
POWER OF ATTORNEY
We, the undersigned directors and officers of Aztek, Inc. (the Company),
do hereby severally constitute and appoint Mike Sintichakis, our true and
lawful attorney and agent, to do any and all things and acts in our names in
the capacities indicated below and to execute any and all instruments for us
and in our names in the capacities indicated below which said Mike Sintichakis
may deem necessary or advisable to enable the Company to comply with the
Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with the
registration statement on Form S-4 relating to the offering of the Company's
Common Stock, including specifically, but not limited to, power and authority
to sign for us in our names in the capacities indicated below the registration
statement and any and all amendments (including post-effective amendments)
thereto; and we hereby ratify and confirm all that said Mike Sintichakis shall
do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/ Mike Sintichakis August 12, 1998
- --------------------
Mike Sintichakis President, Director, principal
executive officer, principal
financial officer, and principal
accounting officer
/s/ Nick Sintichakis August 12, 1998
- --------------------
Nick Sintichakis Director, Treasurer and Secretary
/s/ Edson Ng August 12, 1998
- -------------------
Edson Ng Director
/s/ Eileen Keogh August 12, 1998
- -------------------
Eilieen Keogh Director
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SUMMARY CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S
ANNUAL FINANCIAL STATEMENTS SET FORTH IN THIS FORM S-4 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 60000
<SECURITIES> 0
<RECEIVABLES> 25000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 85000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 85000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 85000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 85000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 99.1 Merger Agreement
MERGER AGREEMENT
THIS AGREEMENT MADE THE 2nd DAY OF July, 1998.
BETWEEN:
AZTEK TECHNOLOGIES INC., a company incorporated under the laws of the
Province
of British Columbia, and having its registered office at 505 - 700 West
Pender
Street, Vancouver, British Columbia, V6C 1G8 ("ATI")
OF THE FIRST PART
AND:
AZTEK, INC., a company incorporated under the laws of the State of Nevada,
and
having its registered office at 1025 Ridgeview Drive, Suite 400 Reno,
Nevada,
89509 ("the Corporation")
OF THE SECOND PART
WHEREAS:
A. Aztek Technologies Inc. shareholders are legal and beneficial owners of
all the issued and outstanding shares in the capital stock of Aztek
Technologies Inc., a corporation incorporated under the laws of British
Columbia as follows:
<TABLE>
<CAPTION>
Description No. Of Registered Number of Shares
Shares Shareholders Outstanding
<S> <C>
<C>
Common 347 2,051,109
Escrow 1 354,000
Options 5 175,000
Total *347 2,051,109
</TABLE>
* The above shareholders are as of June 30, 1997. The current number of
shareholders is not available from the transfer agent at this time but will
be
made available at a later date.
(the "ATI Shares").
B. Aztek, Inc. shareholders are legal and beneficial owners of all of the
issued and outstanding shares in the capital stock of Aztek, Inc., a
corporation incorporated under the laws of Nevada as follows:
<TABLE>
<CAPTION>
Description No. of Shareholders Number of Shares
Shares
Outstanding
<S> <C> <C>
Common 6 1,025,000
Escrow 5 1,000,000
Options 0 0
Total 6 2,025,000
</TABLE>
(the "Corporation Shares").
C. ATI has agreed to merge with the Corporation and the Corporation has
agreed to merge with ATI, through a pooling of Shares, all of the assets and
liabilities of the respective parties, on the terms and conditions as set out
in this Agreement.
BASED ON WHAT HAS BEEN SET OUT ABOVE THIS AGREEMENT WITNESSES that in
consideration of the premises and the mutual representations, warranties,
agreements and covenants contained in this Agreement (the receipt and
adequacy
of such consideration is by this Agreement mutually admitted by each party),
the parties covenant and agree as follows:
1. INTERPRETATION
1.1 Definitions - In this Agreement the following words and phrases
shall have the meanings set out after each:
(a) "ATI" means Aztek Technologies Inc., a company incorporated under the
laws of the Province of British Columbia, and having its registered office at
505 - 700 West Pender Street, Vancouver, British Columbia, V6C 1G8;
(b) "ATI Shares" means all of the issued and outstanding shares in the
capital of ATI;
(c) "ATI's Certificates" means the stock certificates to be delivered at
Completion Date pursuant to paragraph 5.2(a).
(d) "ATI's Solicitor" means Stephen K. Winters Law Corporation, Barristers
and Solicitors, of #505 - 700 West Pender Street, Vancouver, British
Columbia,
V6C 1G8;
(e) "Business" means the business carried on by ATI which primarily involves
the development, sale, and servicing of computer software;
(f) "Completion Date" means October 1, 1998, or will become effective the
date of the registration statement date, or such other date as may be agreed
upon in writing by the parties to this Agreement and accepted be the
regulatory authorities;
(g) "Corporation" means Aztek, Inc., a company incorporated under the laws
of
the State of Nevada, and having its registered office at 1025 Ridgeview
Drive,
Suite 400 Reno, Nevada, 89509
(h) "Corporation Shares" means all of the issued and outstanding shares in
the capital of the Corporation;
(i) "Corporation's Solicitor" means Michael J. Morrison 1025 Ridgeview
Drive,
Suite # 400 Reno, Nevada 89509.
(j) "Financial Statements" means the Financial Statements of ATI for the
fiscal year of ATI ending on the 30th day of June, 1998 consisting of a
balance sheet, statement of retained earnings, an income statement and a
statement of changes in financial position of ATI including the notes to such
Financial Statements, a copy of which is attached to this Agreement as
Schedule "B";
(k) "Material Contracts" means those subsisting commitments, contracts,
agreements, instruments, leases or other documents entered into by ATI, by
which it is bound or to which it or its assets are subject which have total
payment obligations on the part of ATI in excess of $1,000;
(l) "Person" includes an individual, corporation, body corporate,
partnership, joint venture, association, trust or unincorporated organization
or any trustee, executor, administrator or other legal representative of such
entity;
(m) "Surviving Business" means the business to be carried on by the
Corporation.
1.2 Schedules - The following are the schedules to this Agreement:
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION
<S> <C>
"A" Authorized Share Capital and Issued Shares
"B" Financial Statements
"C" Material Contracts
"D" Encumbrances
"E" Assets other than Real Property
"F" Equipment Leases
"G" Real Property
"H" Tax Elections
"I" Service Marks, Trade Marks, Trade
Names,
Intellectual Property, Codes, Designs
"J" Litigation
"K" License, Agency & Distribution Agreements
</TABLE>
2. COVENANTS, REPRESENTATIONS AND WARRANTIES OF ATI
2.1 Representations and Warranties - In order to induce the Corporation to
enter into and to consummate the transactions contemplated by this Agreement,
ATI by this Agreement represents and warrants to the Corporation as follows:
(a) Organization and Good Standing of ATI - ATI is duly incorporated and is
validly existing and in good standing with respect to the filing of annual
reports under the British Columbia Company Act and has all necessary
corporate
power, authority and capacity to own its property and assets and to carry on
its business as presently conducted. Neither the nature of the business of
ATI
nor the location or character of the property owned or leased by it requires
that ATI be registered or otherwise qualified or to be in good standing in
any
other jurisdiction;
(b) Capitalization of ATI - The issued share capital of ATI together with the
names and the number, class and kind of shares held by each director,
officer,
insider, or major shareholders (greater than 10%) of ATI is as set out in
Schedule "A" to this Agreement;
(c) Authority - ATI has due and sufficient right and authority to enter into
this Agreement on the terms and conditions set out in this Agreement;
(d) Agreement Valid - This Agreement constitutes a valid and binding
obligation of ATI. On the Completion Date, ATI shall not be a party to, bound
by or subject to any indenture, mortgage, lease, agreement, instrument,
statute, regulation, order, judgment, decree or law which would be violated,
contravened or breached by or under which any default would occur as a result
of the execution and delivery by ATI of this Agreement or the performance by
ATI of any of the terms of this Agreement; (e) Absence of Options, etc. - The
Shares represent all of the issued and outstanding shares in the capital of
ATI and no Person has any agreement or option, present or future, contingent,
absolute or capable of becoming an agreement or option or which with the
passage of time or the occurrence of any event could become an agreement or
option:
(i) to require ATI to issue any further or other shares in its capital
or any other security convertible or exchangeable into shares in its capital
or to convert or exchange any securities into or for shares in the capital of
ATI;
(ii) for the issue and allotment of any of the authorized but unissued
shares in the capital of ATI;
(iii) to require ATI to purchase, redeem or otherwise acquire any of
the
issued and outstanding shares in the capital of ATI; or
(iv) to acquire the Shares or any of them;
(f) Absence of Other Interest - ATI does not own any shares in or other
securities of, or have any interest in the assets or business of any other
Person;
(g) Financial Statements - The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with that of prior fiscal years. To the best of the knowledge of
ATI, such Financial Statements present fairly the financial position of ATI
as
at the date of such Financial Statements and the results of ATI's operations
and the changes in ATI's financial position for the period then ending;
(h) Absence of Undisclosed Liabilities - Except to the extent reflected or
reserved against in the Financial Statements or the Schedules hereto or
incurred subsequent to the date of such Financial Statements in the ordinary
and usual course of the business of ATI, to the best of the knowledge of ATI,
ATI does not have any outstanding indebtedness or any liabilities or
obligations (whether accrued, absolute, contingent, or otherwise);
(i) Absence of Changes - To the best of the knowledge of ATI, prior to the
Completion Date, there has not been any damage, destruction or loss, labour
trouble or other event, development or condition, of any character (whether
or
not covered by insurance) which is not generally known or which has not been
disclosed to the Corporation, which has or may materially and adversely
affect
the business, assets, properties or future prospects of ATI;
(j) Accuracy of Records - To the best of the knowledge of ATI, all material
financial transactions of ATI have been accurately recorded in the books and
records of ATI and such books and records fairly present the financial
position and the corporate affairs of ATI;
(k) Absence of Unusual Transactions - Prior to the Completion Date, ATI has
not:
(i) transferred, assigned, sold or otherwise disposed of any of the
assets shown in the Financial Statements or canceled any debts or claims
except in each case in the ordinary and usual course of business;
(ii) incurred or assumed any obligation or liability (fixed or
contingent), except unsecured current obligations and liabilities incurred in
the ordinary and normal course of business;
(iii) issued or sold any shares in its capital stock or any warrants,
bonds, debentures or other corporate securities or issued, granted or
delivered any right, option or other commitment for the issuance of any such
or other securities;
(iv) discharged or satisfied any lien or encumbrance, or paid any
obligation or liability (fixed or contingent), other than current liabilities
in the ordinary and normal course of business;
(v) declared or made, or committed itself to make, any payment of any
dividend or other distribution in respect of any of its shares or purchased
or
redeemed any of its shares or split, consolidated or reclassified any of its
shares;
(vi) entered into any material commitment or transaction not in the
ordinary
and usual course of business;
(vii) waived or surrendered any right of substantial value;
(viii) made any gift of money or of any property or assets to any
Person;
(ix) purchased or sold any fixed assets;
(x) amended or changed or taken any action to amend or change its
memorandum or articles of incorporation;
(xi) increased or agreed to increase the pay of, or paid or agreed to
pay any pension, bonus, share of profits or other similar benefit of, any
director, employee or officer or former director, employee or officer of ATI;
(xii) made payments of any kind to or on behalf of ATI or any affiliate
or associate of ATI or under any management agreement with ATI save and
except
business related expenses and salaries in the ordinary course of business and
at the regular rates payable to them;
(xiii) mortgaged, pledged, subjected to lien, granted a security
interest in or otherwise encumbered any of its assets or property, whether
tangible or intangible; or
(xiv) authorized or agreed or otherwise have become committed to do any
of the foregoing;
(l) Title to Properties - ATI has good and marketable title to all of its
properties, interests in properties and assets, real and personal including
those referred to in Schedules "E" and "G" hereto, including those reflected
in the Financial Statements or acquired since the date of the Financial
Statements (except as since transferred, sold or otherwise disposed of in the
ordinary and usual course of business), free and clear of all mortgages,
pledges, liens, title retention agreements, encumbrances or charges of any
kind or character whatsoever except as shown in Schedule "D" to this
Agreement, and none of ATI's assets or properties are in the possession of or
under the control of any other Person;
(m) Leased Equipment - Schedule "F" sets out a true and complete list of
all
equipment, other personal property and fixtures in the possession or custody
of ATI which, as of the date of this Agreement, are leased or are held under
license or similar arrangement and accurately describes the leases, licenses,
agreements or other documentation relating to such personal property. Except
as set out in Schedule "B", all rental or other payments required to be paid
by ATI pursuant to such leases or licenses have been duly paid and ATI is not
otherwise in default in meeting its obligations under any such leases or
licenses;
(n) Collectability of Accounts Receivable - The accounts receivable shown in
the Financial Statements of ATI have been recorded by ATI in accordance with
its usual accounting practices. The reserves taken for doubtful or bad
accounts is adequate based on the past experience of ATI and is consistent
with the accounting procedures used by ATI in previous fiscal periods. There
is nothing which would indicate that such reserve is not adequate or that a
higher reserve should be taken;
(o) Real Property - Schedule "G" contains accurate descriptions of all real
property in respect of which ATI holds an interest, whether freehold,
leasehold or otherwise. ATI is not party to or bound by any leases of real
property other than those referred to in Schedule "G" to this Agreement and
all interests held by ATI whether as owner or as lessee are free and clear of
any and all liens, charges and encumbrances of any nature and kind whatsoever
except as set out in Schedule "D". All rental and other payments required to
be paid by ATI pursuant to such leases have been duly paid and ATI is not
otherwise in default in meeting its obligations under any such lease;
(p) Material Contracts - Except for the liens, charges and encumbrances
listed in Schedule "D", the equipment and other personal property leases and
agreements listed in Schedule "F", the real property leases listed in
Schedule
"G", and the contracts and agreements listed in Schedule "C", ATI is not
party
to or bound by any Material Contract, whether oral or written, and the
contracts and agreements listed in Schedule "C" are all in full force and
effect and unamended, no material default exists in respect of such
agreements
on the part of any of the other parties to such agreements, ATI is not aware
of any intention on the part of any of the other parties to such agreements
to
terminate or materially alter any such contracts or agreements, and Schedule
"C" lists all the present outstanding Material Contracts entered into by ATI
in the course of carrying on its business;
(q) Absence of Guarantees - ATI has no guarantees with respect to the
obligations of any other Person. ATI has no indemnities or contingent or
indirect obligations with respect to the obligation of any other Person
(including any obligation to service the debt of or otherwise acquire an
obligation of another Person or to supply funds to, or otherwise maintain any
working capital or other balance sheet condition of any other Person);
(r) Absence of Conflicting Agreements - ATI is not party to, bound by or
subject to any indenture, mortgage, lease, agreement, instrument, judgment or
decree which would be violated or breached by, or under which default would
occur or which could be terminated, cancelled or accelerated, in whole or in
part, as a result of the execution and delivery of this Agreement or the
consummation of any of the transactions provided for in this Agreement;
(s) Litigation - Other than as set out in Schedule "J", to the best of the
knowledge of ATI there is not any suit, action, litigation, arbitration
proceeding or governmental proceeding, including appeals and applications for
review, in progress, pending or threatened against, or relating to ATI or
affecting its assets, properties or business which might materially and
adversely affect the assets, properties, business, future prospects or
financial condition of ATI; and there is not presently outstanding against
any
of ATI any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator;
(t) Copies of Agreements, etc. - True, correct and complete copies of all
mortgages, leases, agreements, instruments and other documents listed in
Schedules "B", "C", "D", "F", "G", and "I" have been delivered to the
Corporation;
(u) Corporate Records - To the best of the knowledge of ATI, ATI has kept
the
records required to be kept by ATI and any other applicable corporate
legislation and such records are complete and accurate and contain all
minutes
of all meetings of directors and members of ATI;
(v) Absence of Approvals Required - Relying upon the Corporation's
representations and warranties with respect to the Investment Canada Act and
the Competition Act as set out in subsection 3.1(b) of this Agreement, no
authorization, approval, order, license, permit or consent of any
governmental
authority, regulatory body or court, and no registration, declaration or
filing by ATI with any such governmental authority, regulatory body or court
is required in order for ATI:
(i) to incur the obligations expressed to be incurred by ATI pursuant to
this Agreement;
(ii) to execute and deliver all of the documents and instruments to be
delivered by ATI pursuant to this Agreement;
(iii) to duly perform and observe the terms and provisions of this
Agreement; and
(iv) to render this Agreement legal, valid, binding and enforceable in
accordance with its terms;
(w) Permits and Licenses - ATI holds all permits, licenses, consents and
authorities issued by any governmental authority of Canada or any Province of
Canada, or any municipal, regional or other authority, or any subdivision of
the same, including without limitation, any governmental department,
commission, bureau, board or administrative agency, which are necessary or
desirable in connection with the conduct and operation of ATI's business and
the ownership or leasing of its assets and the conduct and operation of ATI's
business as the same are now owned, leased, conducted or operated is not in
breach of or in default under any term or condition of any such permits,
licenses, consents and authorities:
(x) Filings - ATI:
(i) has duly filed in a timely manner all federal and provincial income
tax returns and election forms and the tax returns of any other jurisdiction
required to be filed and to the best of the knowledge of ATI all such returns
and forms have been completed accurately and correctly in all respects;
(y) Additional Tax Matters - Except as specified in Schedule "H", ATI has
not:
(i) made any election under Section 85 of the Income Tax Act with
respect to the acquisition or disposition of any property;
(ii) made any election under Section 83 of the Income Tax Act with
respect to the payment out of the capital dividend account of ATI;
(iii) acquired or had the use of any property from a person with whom it
was not dealing at arm's length other than at fair market value;
(iv) disposed of anything to a person with whom it was not dealing at arm's
length for proceeds less than fair market value of such thing; or
(v) discontinued carrying on any business in respect of which non-capital
losses were incurred, and any non-capital losses which ATI has are not losses
from property or business investment losses;
(z) Tax Elections - ATI has made all elections required to be made pursuant
to Part III of the Income Tax Act in connection with any distributions by ATI
and all such elections were true and correct and in the prescribed form and
were made within the prescribed time periods;
(aa) Statements Attached to Tax Returns - To the best of the knowledge of
ATI, the financial statements and schedules attached to the corporate income
tax returns as filed by ATI for each of its taxation years reflect and
disclose all transactions to which ATI was party as required by the Income
Tax
Act or other applicable revenue laws and all of the transactions to which ATI
was or is a party are reflected or disclosed in such financial statements and
schedules and the corporate income tax returns and schedules have been duly
and accurately completed as required by such Act;
(bb) Intellectual Property -
(i) Schedule "I" attached hereto lists and contains a description of:
(1) all patents, patent applications and registrations, trade marks, trade
mark applications and registrations, copyrights, copyright applications and
registrations, trade names and industrial designs, domestic or foreign, owned
or used by ATI or relating to the operation of the Business,
(2) all trade secrets, know-how, inventions and other intellectual property
owned or used by ATI or relating to the Business, and
(3) all computer systems and application software, including without
limitation all documentation relating thereto and the latest revisions of all
related object and source codes therefor, owned or used by ATI or relating to
the Business,
(all of the foregoing being collectively called the "Intellectual Property");
(ii) ATI has good and valid title to all of the Intellectual Property, free
and clear of any and all encumbrances. Complete and correct copies of all
agreements whereby any rights in any of the Intellectual Property have been
granted or licensed to ATI have been provided to the Corporation. No royalty
or other fee is required to be paid by ATI to any other person in respect of
the use of any of the Intellectual Property except as provided in such
agreements delivered to the Corporation.
(iii) Except as disclosed in Schedule "I" or "K", there are no restrictions
on the ability of ATI or any successor to or assignee from ATI to use and
exploit all rights in the Intellectual Property. All statements contained in
all applications for registration of the Intellectual Property were true and
correct as of the date of such applications. Each of the trade marks and
trade
names included in the Intellectual Property is in use. None of the rights of
ATI in the Intellectual Property will be impaired or affected in any way by
the transactions contemplated by this Agreement;
(iv) To the best of the knowledge of ATI, the conduct of the Business and
the
use of the Intellectual Property does not infringe, and ATI has not received
any notice, complaint, threat or claim alleging infringement of, any patent,
trade mark, trade name, copyright, industrial design, trade secret or other
Intellectual Property or proprietary right of any other person, and the
conduct of the Business does not include any activity which may constitute
passing-off;
(v) Partnerships or Joint Ventures - Except as disclosed in the Schedules
hereto, ATI is not a partner or participant in any partnership, joint
venture,
profit-sharing arrangement or other association of any kind and is not party
to any agreement under which ATI agrees to carry on any part of the Business
or any other activity in such manner or by which ATI agrees to share any
revenue or profit with any other person;
(vi) Customers - ATI has previously delivered to the Corporation a true and
complete list of all customers of the Business as of the date hereof. ATI is
the sole and exclusive owner of, and has the unrestricted right to use, such
customer list. Neither the customer list nor any information relating to the
customers of the Business have, within three years prior to the date of this
Agreement, been made available to any person other than the Corporation and
ATI's User Group. ATI has no knowledge of any facts which could reasonably be
expected to result in the loss of any customers or sources of revenue of the
Business which, in the aggregate, would be material to the Business or the
condition of ATI;
(vii) Restrictions on Doing Business - Except as disclosed in the Schedules
hereto, ATI is not a party to or bound by any agreement which would restrict
or limit its right to carry on any business or activity or to solicit
business
from any person or in any geographical area or otherwise to conduct the
Business as ATI may determine.
(viii) No Breach of Material Contracts - All Material Contracts are valid
and
subsisting and no material default exists under the Material Contracts except
as disclosed in Schedule "B";
(ix) Indebtedness to ATI - The Business shall not at Completion be indebted
to ATI or any directors, officers, or employees of ATI or any affiliate or
associate of any of them, on any account whatsoever;
(x) Condition of Assets - All assets and all other plant, machinery,
facilities and equipment used by ATI in connection with its business is in
good operating condition and in a good state of maintenance and repair for
equipment of similar age relative to the standards of maintenance and repair
maintained by other companies carrying on similar Business in Canada;
(xi) Undisclosed Information - ATI has no specific information relating to
ATI which is not generally known or which has not been disclosed to the
Corporation and which if known could reasonably be expected to have a
materially adverse effect on the value of the Shares;
(xii) Conduct of Business - The conduct of business by ATI on any lands
from
which they operate their business is not subject to any restriction or
limitation other than those registered against title to the lands, contained
in applicable zoning regulations or that are of general application and the
conduct of any such business is not in contravention of any law, regulation
or
order or any court or other body having jurisdiction including zoning
requirements;
(xiii) Licenses, Agency and Distribution Agreements - Schedule "K" attached
hereto lists all agreements to which ATI is a party or by which it is bound
under which the right to manufacture, use or market any product, service,
technology, information, data, computer hardware or software or other
property
has been granted, licensed or otherwise provided to ATI or by ATI to any
other
person, or under which ATI has been appointed or any person has been
appointed
by ATI as an agent, distributor, licensee or franchisee for any of the
foregoing. Complete and correct copies of all of the agreements listed in
Schedule "K" have been provided to the Corporation. None of the agreements
listed in Schedule "K" grant to any person any authority to incur any
liability or obligation or to enter into any agreement on behalf of ATI;
(xiv) Outstanding Agreements - ATI is not a party to or bound by any
outstanding or executory agreement, contract or commitment, whether written
or
oral, except for:
(1) any contract, lease or agreement described or referred to in this
Agreement or in the Schedules hereto,
(2) any contract, lease or agreement made in the ordinary course of the
routine daily affairs of the Business under which ATI has a financial
obligation of less than One Thousand Dollars ($1,000) per annum and which can
be terminated by ATI without payment of any damages, penalty or other amount
by giving not more than thirty (30) days' notice, and
(3) the contracts, leases and agreements described in Schedule "K" attached
hereto. Complete and correct copies of each of the contracts, leases and
agreements described in Schedule "K" have been provided to the Corporation;
and ATI covenants, represents and warrants to the Corporation that all
of
the representations and warranties set forth in this paragraph shall be true
and correct at the Completion Time as if made on that date.
(cc) Guarantees, Warranties and Discounts
(i) ATI is not a party to or bound by any agreement of guarantee,
indemnification, assumption or endorsement or any other like commitment of
the
obligations, liabilities (contingent or otherwise) or indebtedness of any
person;
(ii) ATI has not given any guarantee or warranty in respect of any of the
products sold or the services provided by it, except warranties made in the
ordinary course of the Business and in the form of ATI's standard written
warranty, a copy of which has been provided to the Corporation, and except
for
warranties implied by law;
(iii) during each of the three fiscal years of ATI ended immediately
preceding the date hereof, no claims have been made against ATI for breach of
warranty or contract requirement or negligence or for a price adjustment or
other concession in respect of any defect in or failure to perform or deliver
any products, services or work which had, in any such year, an aggregate cost
exceeding $25,000;
(iv) there are no repair contracts or maintenance obligations of ATI in
favor
of the customers or users of products of the Business, except obligations
incurred in the ordinary course of the Business and in accordance with ATI's
standard terms, a copy of which has been provided to the Corporation;
(v) ATI is not now subject to any agreement or commitment, and ATI has not,
within three years prior to the date hereof, entered into any agreement with
or made any commitment to any customer of the Business which would require
ATI
to repurchase any products sold to such customers or to adjust any price or
grant any refund, discount or other concession to such customer;
(vi) ATI is not required to provide any letters of credit, bonds or other
financial security arrangements in connection with any transactions with its
suppliers or customers; and
2.2 Other Representations - All statements contained in any
certificate or other instrument delivered by or on behalf of ATI pursuant to
this Agreement or in connection with the transactions contemplated by this
Agreement shall be deemed to be representations and warranties by ATI under
this Agreement.
2.3 Survival - The representations and warranties of ATI contained
in
this Agreement shall survive the Completion and the Share exchange and,
notwithstanding the Completion and the Share exchange, notwithstanding any
investigations or inquiries made by the Corporation prior to the Completion
and notwithstanding the waiver of any condition by the Corporation, the
representations, warranties, covenants and agreements of ATI shall (except
where otherwise specifically provided in this Agreement) survive the
Completion and shall continue in full force and effect for a period of two
(2)
years from the Completion Date for all matters except income tax liability or
other tax matters. With respect to income tax liability of ATI or other tax
matters, the representations, warranties, covenants and agreements of ATI
shall survive the Completion and continue in full force and effect for six
(6)
years from the later of the date of mailing of a notice of original
assessment
by the Minister of National Revenue and the date of mailing of a notification
from the Minister of National Revenue that no tax is payable by ATI for the
fiscal year of ATI ending on the Completion Date.
2.4 Reliance - ATI acknowledges and agrees that the Corporation has
entered into this Agreement relying on the warranties and representations and
other terms and conditions of this Agreement notwithstanding any independent
searches or investigations that may be undertaken by or on behalf of the
Corporation and that no information which is now known or should be known or
which may from the date of this Agreement become known to the Corporation or
its agents or professional advisers shall limit or extinguish the right to
indemnification under this Agreement.
3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
3.1 Representations and Warranties - In order to induce ATI to enter into
and to consummate the transactions contemplated by this Agreement, the
Corporation represents and warrants to ATI that:
(a) Organization and Good Standing - The Corporation is a company duly
organized, validly existing and in good standing under the laws of Nevada
with
respect to the filing of annual reports;
(b) Authority Relative to this Agreement - The Corporation has all
necessary
corporate power, authority and capacity to acquire the Shares and to perform
its obligations under this Agreement. The execution and delivery of this
Agreement has been duly authorized by all necessary corporate action on the
part of the Corporation and this Agreement constitutes a valid and binding
obligation of the Corporation. The Corporation is not a party to, bound by or
subject to any indenture, mortgage, lease, agreement, instrument, statute,
regulation, order, judgment, decree or law which would be violated,
contravened or breached by or under which any default would occur as a result
of the execution and delivery by the Corporation of this Agreement or the
performance by the Corporation of any of the terms of this Agreement;
and the Corporation covenants, represents and warrants to ATI that all of the
representations and warranties set forth in this paragraph 3.1 shall be true
and correct at the Completion Time as if made on that date;
3.2 Survival - The representations and warranties of the Corporation
contained in this Agreement shall survive the Completion and the exchange of
the Shares and notwithstanding the Completion and the exchange of the Shares,
the representations and warranties of the Corporation shall continue in full
force and effect for the benefit of ATI for a period of three (3) years from
the Completion Date;
3.3 Reliance - The Corporation acknowledges and agrees that ATI has entered
into this Agreement relying on the warranties and representations and other
terms and conditions of this Agreement notwithstanding any independent
searches or investigations that may be undertaken by or on behalf of ATI, and
that no information which is now known or which should be known or which may
after the date of this Agreement become known to ATI or its agents or
professional advisers shall limit or extinguish the right to indemnification
under this Agreement.
5. POOLING OF SHARES
4.1 Shares - Based and relying on the representations and warranties set
forth in paragraphs 2 and 3, the Corporation agrees to exchange the Shares of
ATI and ATI agrees to accept the exchange of Shares from the Corporation,
free
and clear of all liens, claims, charges, options and encumbrances whatsoever
and the Corporation agrees to exchange ATI Shares on the terms and conditions
set out in this Agreement.
5. COMPLETION
5.1 Completion Date - The transactions contemplated in this Agreement shall
be completed effective as of the Completion Date. The Completion Date is
October 1st, 1998 subject to shareholder and regulatory approval of ATI and
the Corporation. In the event that the Vancouver Stock Exchange does not
approve the merger in an ordinary fashion, ATI may request the Vancouver
Stock
Exchange to de-list ATI from the Exchange in order to complete the merger
transaction.
5.2 Completion Deliveries - On or before the Completion Date:
(a) ATI will deliver to the Corporation:
(i) resignations in writing, dated as of the Completion Date, of the
officers
and directors of ATI with the exception of ATI President, Mike Sintichakis,
which will be delivered when all or any outstanding matters have been
resolved
and the merger has been totally completed;
(ii) certified copies of directors and members resolutions of ATI approving
this Agreement;
(b) Corporation will deliver to ATI:
(i) certified copy of directors resolutions of the Corporation approving
this
Agreement and the completion of the transaction contemplated hereby;
5.3 Share Exchange and Pooling of Assets and Liabilities - Upon Completion
Date, the Corporation will;
(a) Exchange the Shares of ATI for Shares of the Corporation as
follows:
(i) One (1) Common share of the Corporation will be issued in exchange for
each Common share of ATI;
(ii) One (1) Common share option of the Corporation will be issued in
exchange for each Common share option of ATI under existing restrictions;
(iii) One (1) Escrow share of the Corporation will be issued in exchange for
each Escrow share of ATI under existing restrictions.
(b) Transfer all assets and liabilities of ATI to the
Corporation;
6. CONDITIONS PRECEDENT TO THE PERFORMANCE BY CORPORATION OF ITS
OBLIGATIONS UNDER THIS AGREEMENT
6.1 Corporation's Conditions - The obligations of the Corporation to
complete the exchange of the Shares shall be subject to the satisfaction of,
or compliance with, on or before the Completion Date, each of the following
conditions precedent:
(a) Truth and Accuracy of Representations of ATI at Completion - The
representations and warranties of ATI made in paragraph 2.1 shall be true and
correct in all material respects as at the Completion Date and with the same
effect as if made at and as of the Completion Date and ATI shall have
complied
in all material respects with its obligations and covenants under this
Agreement;
(b) Performance of Obligations - ATI shall have caused the Corporation to
have performed and complied with all the obligations to be performed and
complied with by ATI under this Agreement;
(c) Absence of Injunctions, etc. - No injunction or restraining order of
any
Court or administrative tribunal of competent jurisdiction shall be in effect
prohibiting the transactions contemplated by this Agreement and no action or
proceeding shall have been instituted or be pending before any Court or
administrative tribunal to restrain or prohibit the transactions between the
parties contemplated by this Agreement;
(d) Absence of Change of Conditions - No event shall have occurred or
condition or state of facts of any character shall have arisen or legislation
(whether by statute, rule, regulation, by-law or otherwise) shall have been
introduced which might reasonably be expected to have a materially adverse
effect upon the financial condition, results of operations or business
prospects of ATI.
6.2 The conditions set out in this paragraph 6 are for the exclusive
benefit of the Corporation and may be waived by the Corporation in writing in
whole or in part on or before the Completion Date. Notwithstanding any such
waiver, the completion of merger contemplated by this Agreement by the
Corporation shall not prejudice or affect in any way the rights of the
Corporation in respect of the warranties and representations of ATI set out
in
paragraph 2.1 of this Agreement, and the representations and warranties of
ATI
set out in paragraph 2.1 of this Agreement shall survive the completion of
the
merger.
7. CONDITIONS PRECEDENT TO THE PERFORMANCE OF ATI OF ITS OBLIGATIONS
UNDER
THIS AGREEMENT
7.1 The obligations of ATI to complete the exchange of Shares under
this Agreement shall be subject to the satisfaction of or compliance with, at
or before the Completion Time, of each of the following conditions precedent:
(a) Truth and Accuracy of Representations of the Corporation at Completion -
All of the representations and warranties of the Corporation set out in
paragraph 3.1 of this Agreement shall be true and correct in all material
respects as at the Completion Date and with the same effect as if made at and
as of the Completion Date;
(b) Performance of Agreements - The Corporation shall have complied with
and/or performed all its obligations, covenants and agreements contained in
this Agreement.
7.2 The conditions set out in this paragraph 7 are for the exclusive
benefit of ATI and may be waived by ATI in writing in whole or in part on or
before the Completion Date. Notwithstanding any such waiver, completion of
the
merger contemplated by this Agreement by ATI shall not prejudice or affect in
any way the rights of ATI in respect of the warranties and representations of
the Corporation set out in paragraph 3.1 of this Agreement, and the
representations and warranties of the Corporation set out in paragraph 3.1 of
this Agreement shall survive for a period of two (2) years from the date of
this Agreement.
8. CONDUCT OF BUSINESS PRIOR TO COMPLETION
8.1 Conduct - Except as otherwise contemplated or permitted by this
Agreement, during the period from the date of this Agreement to the
Completion
Date, the Corporation shall cause ATI to do the following:
(a) Conduct Business in Ordinary Course - Conduct ATI's business in the
ordinary and normal course of such business and not, without the prior
written
consent of the Corporation, enter into any transaction which would constitute
a breach of the representations, warranties or agreements contained in this
Agreement;
(b) Continue Insurance - Continue in force all existing policies of
insurance
presently maintained by ATI;
(c) Perform Obligations - Comply with all laws affecting the operation of
ATI's businesses and pay all required taxes;
(d) Prevent Certain Changes - Not, without the prior written consent of the
Corporation, take any of the actions, do any of the things or perform any of
the acts described in sub-paragraph 2.1(k) except as specifically permitted
under such sub-paragraph; and
(e) Compliance with Paragraph 9 - Comply with the provisions of paragraph 9
of this Agreement.
9. EXAMINATIONS AND WAIVERS
9.1 Access for Investigation - ATI shall permit the Corporation and
its agent, legal counsel, accountants and other representatives, between the
date of this Agreement and the Completion Date, to have access during normal
business hours to the premises and to all the key employees, books, accounts,
records and other data of ATI computer designs and codes, (including without
limitation, all corporate, accounting and tax records and any electronic or
computer accessed data) and to the properties and assets of ATI and ATI will
furnish, and require that ATI's principal bankers, appraisers and independent
auditors and other advisors furnish, to the Corporation such financial and
operating data and other information with respect to the business, properties
and assets of ATI as the Corporation shall from time to time reasonably
request to enable confirmation of the matters warranted in paragraph 2 of
this
Agreement. It is also the intention of the parties that the Corporation shall
be entitled to meet with ATI's major clients, customers and suppliers prior
to
Completion.
9.2 Disclosure of Information - Until the Completion Date and, in the event
of the termination of this Agreement without consummation of the transactions
contemplated by this Agreement, the Corporation shall use its best efforts to
keep confidential any information (unless otherwise required by law or such
information is readily available or becomes readily available, from public or
published information or sources) obtained from ATI. If this Agreement is so
terminated, promptly after such termination all documents, work papers and
other written material obtained from a party in connection with this
Agreement
and not previously made public (including all copies and photocopies
thereof),
shall be returned to the party which provided such material.
10. INDEMNITIES
10.1 Indemnification of the Corporation - Subject to the limitations
set out in this Agreement, ATI agrees with the Corporation to indemnify the
Corporation against all liabilities, claims, demands, actions, causes of
action, damages, losses, costs or expenses (including legal fees on a
solicitor and its own client basis) suffered or incurred by the Corporation,
directly or indirectly, by reason of or arising out of:
(a) any warranties or representations on the part of ATI set out in this
Agreement being materially untrue;
(b) a material breach of any agreement, term or covenant on the part of ATI
made or to be observed or performed pursuant to this Agreement;
which liabilities, claims, demands, actions, causes of action, damages,
losses, costs and expenses are collectively referred to as the "Corporation's
Losses";
10.2 Indemnification of ATI - Subject to the limitations set out in
this Agreement, the Corporation covenants and agrees with ATI to indemnify
ATI
against all liabilities, claims, demands, actions, causes of action, damages,
losses, costs or expenses (including legal fees on a solicitor and its own
client basis) suffered or incurred by ATI, directly or indirectly, by reason
of or arising out of:
(a) any warranties or representations on the part of the
Corporation set out in this Agreement being materially untrue;
(b) a material breach of any agreement, term or covenant on the
part of the Corporation made or to be observed or performed pursuant to this
Agreement;
which liabilities, claims, demands, actions, causes of action, damages,
losses, costs and expenses are collectively referred to as "ATI's Losses".
10.3 Claims under ATI's Indemnity - If any claim is made by any
Person against the Corporation in respect of which the Corporation may incur
or suffer damages, losses, costs or expenses that might reasonably be
considered to be subject to the indemnity obligation of ATI as provided in
paragraph 10.1, the Corporation shall notify ATI as soon as reasonably
practicable of the nature of such claim and ATI shall be entitled (but not
required) to assume the defense of any suit brought to enforce such claim.
The
defense of any such claim (whether assumed by ATI or not) shall be through
legal counsel and shall be conducted in a manner acceptable to the
Corporation
and ATI, acting reasonably, and no settlement may be made by ATI or the
Corporation without the prior written consent of the other. If ATI assumes
the
defense of any claim then the Corporation and the Corporation's counsel shall
cooperate with ATI and its counsel in the course of the defense, such
cooperation to include using reasonable best efforts to provide or make
available to ATI and its counsel documents and information and witnesses for
attendance at examinations for discovery and trials. The reasonable legal
fees
and disbursements and other costs of such defense shall, from and after such
assumption, be borne by ATI. If ATI assumes the defense of any claim and the
Corporation retains additional counsel to act on its behalf, ATI and his
counsel shall cooperate with the Corporation and its counsel, such
cooperation
to include using reasonable best efforts to provide or make available to the
Corporation and its counsel documents and information and witnesses for
attendance at examinations for discovery and trials. All fees and
disbursements of such additional counsel shall be paid by the Corporation. If
ATI and the Corporation are or become parties to the same action, and the
representation of all parties by the same counsel would be inappropriate due
to a conflict of interest, then the Corporation and ATI shall be represented
by separate counsel and, subject to the indemnity obligations of ATI as set
out in paragraph 10.1, the costs associated with the action shall be borne by
the parties incurring such costs.
10.4 Claims under the Corporation's Indemnity - If any claim is made
by any Person against ATI in respect of which ATI may incur or suffer
damages,
losses, costs or expenses that might reasonably be considered to be subject
to
the indemnity obligation of the Corporation as provided in paragraph 10.2,
ATI
shall notify the Corporation as soon as reasonably practicable of the nature
of such claim and the Corporation shall be entitled (but not required) to
assume the defense of any suit brought to enforce such claim. The defense of
any such claim (whether assumed by the Corporation or not) shall be through
legal counsel and shall be conducted in a manner acceptable to ATI and the
Corporation, acting reasonably, and no settlement may be made by the
Corporation or ATI without the prior written consent of the other. If the
Corporation assumes the defense of any claim, ATI and ATI's counsel shall
cooperate with the Corporation and his counsel in the course of the defense,
such cooperation to include using reasonable best efforts to provide or make
available to the Corporation and its counsel documents and information and
witnesses for attendance at examinations for discovery and trials. The
reasonable legal fees and disbursements and other costs of such defense shall
be borne by the Corporation. If the Corporation assumes the defense of any
claim and ATI retains additional counsel to act on its behalf, then the
Corporation and its counsel shall cooperate with ATI and its counsel, such
cooperation to include using reasonable best efforts to provide or make
available to ATI and its counsel documents and information and witnesses for
attendance at examinations for discovery and trials. All fees and
disbursements of such additional counsel shall be paid by ATI. If the
Corporation and ATI are or become parties to the same action, and the
representation of all parties by the same counsel would be inappropriate due
to a conflict of interest, then ATI and the Corporation shall be represented
by separate counsel and, subject to the indemnity obligations of the
Corporation as set out in paragraph 10.2, the costs associated with the
action
shall be borne by the parties incurring such costs.
11. GENERAL
11.1 Public Notices - The parties agree that all notices to third
parties and all other publicity concerning the transactions contemplated by
this Agreement shall be jointly planned and coordinated and no party shall
act
unilaterally in this regard without the prior approval of the others, such
approval not to be unreasonably withheld.
11.2 Expenses - All costs and expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement shall be
paid by the party incurring such expenses.
11.3 Time - Time shall be of the essence of this Agreement.
11.4 Notices - Any notice or other writing required or permitted to
be given under this Agreement or for the purposes of this Agreement shall be
sufficiently given if delivered or telecopied to the party to whom it is
given
or if mailed, by prepaid registered mail, addressed to such party at:
(a) If to Aztek, Inc. at:
Meadow Wood Crown Plaza
1575 Delucchi Lane, Suite # 40
Reno, Nevada 89502
with a copy to the Corporation's Solicitors at:
Michael J. Morrison Attorney and Counselor at Law
1025 Ridgeview Drive Suite 400,
Reno Nevada 89509
(b) If to Aztek Technologies Inc. at:
#5 -246 Lawrence Avenue
Kelowna, British Columbia, V1Y 6L3
with a copy to ATI's Solicitors at:
Stephen K. Winters Law Corporation
#505 - 700 West Pender Street
Vancouver, British Columbia, V6C 1G8
or at such other address as the party to whom such writing is to be given
shall have last notified to the party giving the same in the manner provided
in this paragraph. Any notice mailed as set out above shall be deemed to have
been given and received on the fifth (5th) business day next following the
date of its mailing unless at the time of mailing or within five (5) business
days after the date of such mailing there occurs a postal interruption which
could have the effect of delaying the mail in the ordinary course, in which
case any notice shall only be effectively given if actually delivered or sent
by telecopy. Any notice delivered or telecopied to the party to whom it is
addressed shall be deemed to have been given and received on the day it was
delivered, provided that if such day is not a business day then the notice
shall be deemed to have been given and received on the business day next
following such day.
11.5 Governing Law - This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada and the parties
submit and attorn to the jurisdiction of the Courts of the State of Nevada.
11.6 Severability - If any one or more of the provisions contained
in
this Agreement should be invalid, illegal or unenforceable in any respect in
any jurisdiction, the validity, legality and enforceability of such provision
or provisions shall not in any way be affected or impaired as a result of
such
event in any other jurisdiction and the validity, legality and enforceability
of the remaining provisions contained in this Agreement shall not in any way
be affected or impaired as a result of such event, unless in either case as a
result of such determination this Agreement would fail in its essential
purpose.
11.7 Entire Agreement - This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, oral or written, by and between any of the parties with
respect to the subject matter of this Agreement.
11.8 Further Assurances - The parties shall with reasonable
diligence
do all such things and provide all such reasonable assurances as may be
required to consummate the transactions contemplated by this Agreement, and
each party shall provide such further documents or instruments required by
the
other party as may be reasonably necessary or desirable to effect the purpose
of this Agreement and carry out its provisions whether before or after the
Completion Date.
11.9 Enurement - This Agreement and each of its terms and provisions
shall enure to the benefit of and be binding upon the parties and their
respective heirs, executors, administrators, personal representatives,
successors and assigns.
11.10 Counterparts - This Agreement may be executed in as many
counterparts as may be necessary or by facsimile and each such agreement or
facsimile so executed shall be deemed to be an original and such counterparts
together shall constitute one and the same instrument.
IN WITNESS TO THIS AGREEMENT the parties have duly executed this Agreement as
of the day and year first above written.
SIGNED, SEALED AND DELIVERED )
BY AZTEK TECHNOLOGIES INC. )
in the presence of: )
)
) /s/ Edson Ng
______________________________) -------------------------
Name of Witness ) EDSON NG
)
______________________________)
Address of Witness )
)
______________________________)
SIGNED, SEALED AND DELIVERED )
BY AZTEK, INC. )
in the presence of: )
)
) /s/ Mike Sintichakis
______________________________)
- ----------------------------------- Name of Witness
) MIKE E. SINTICHAKIS
)
______________________________)
Address of Witness )
)
______________________________)
EXHIBIT 99.2 Letter Of Intent For ATI To Acquire Harrison Muirhead Systems
Inc. And Q-Smart Investments Inc.
[ATI's Letterhead]
Letter of Intent
August 20, 1997
Blaine Harrison, President
Harrison Muirhead Systems Inc.
101, 15023 - 123 Avenue
Edmonton, Alberta
T5V 1J7
Dear Blaine,
This Letter of Intent formalizes the sale of assets and business operations
of
Harrison Muirhead Systems Inc. and Q-Smart Investments Inc. to Aztek
Technologies Inc. The close date for the acquisisiiotn is Feb. 28, 1998 and
subject to the following conditions:
Completion of Aztek Technologies Inc. financing.
Aztek completing due diligence review on Harrison Muirhead Systems
Inc.
Harrison Muirhead completing due diligence review on Aztek products.
Finalizing terms and conditions for future purchase agreement.
Approval by the Vancouver Stock Exchange.
By signing below, the parties agree to the terms and conditions set forth in
this agreement.
Aztek Technologies Inc. Harrison Muirhead Systems Inc. and
Q-Smart Investments Inc.
/s/ Mike Sintichakis /s/ Blaine Harrison
- -------------------- -----------------------
Mike Sintichakis, President Blaine Harrison, President
Aug. 26/1997 Aug. 25\1997
EXHIBIT 99.3 Letter of Intent for ATI to acquire Concord Consultants.
[ATI's Letterhead]
Letter of Intent
September 3, 1997
Gerry Schaup, President
Concord Consultants Limited 228 - 11121 Horseshoe Way
Richmond, British Columbia
V7A 4Y1
Dear Gerry,
This Letter of Intent formalizes the sale of assets and business operations
of
Concord Consultants Limited to Aztek Technologies Inc. The close date for
the
acquisition is November 1, 1997 and subject to the following conditions:
Completion of Aztek equity financing
Aztek completing due diligence review on Concord Consultants Limited
Concord Consultants Limited completing due diligence review on
Aztek and Aztek products.
Finalizing terms and conditions for purchase agreement.
Approval by the Vancouver Stock Exchange and B.C. Securities
Commission.
By signing below, the parties agree to the terms and conditions set forth in
this agreement.
Aztek Technologies Inc. Concord Consultants Limited
/s/ Mike Sintichakis /s/ Gerry Schaap, President
- ------------------------- ----------------------------
Mike Sintichakis, President Gerry Schaap, President
Sept. 5/97 Sept. 3/97
EXHIBIT 99.4 Minutes Of Shareholders Of Aztek Inc. To Approve Merger
MINUTES OF THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
OF
AZTEK, INC.
(the "Company")
The Annual and Special Meeting of the Shareholders of AZTEK, INC., a
Nevada corporation, was held at the Company's offices, on the 30th day of
June, 1998, at the hour of 10:00 o'clock a.m., for the purposes of:
(a) electing Directors for the ensuing year;
(b) approving a merger and share exchange with Aztek Technologies Inc.;
(c) approving directors, officers and employees options;
(d) authorizing Mike Sintichakis to arrange financing of a maximum $10
million for the purpose of acquiring and developing two properties, one
located in the U.S. and one located in Canada for sales and support of the
Company's customers. The Directors do not anticipate that the maximum
development costs of the properties will not exceed $6.0 million. The balance
of $4.0 million will be used as follows: $1.5 million for new acquisitions;
$1.0 million for completion of products under development; and $1.5 million
to
be used for financing expenses, marketing and working capital.
Mike Sintichakis, President and Chairman of the Company, called the
meeting to order, and Nick Sintichakis, Secretary, recorded the minutes.
On motion duly made and unanimously carried, the reading, correcting and
approval of the minutes of the last meeting was waived.
Upon motion duly made, Mike Sintichakis, Nick Sintichakis, Edson Ng and
Eileen Keogh were elected as Directors of the Company to serve for the
ensuing
year.
On motion duly made and unanimously carried, it was resolved that the
Company enter into an agreement with Aztek Technologies Inc., on terms and
conditions acceptable to the Board of Directors of the Company in their
discretion, whereby each one outstanding share of common stock of Aztek
Technologies Inc. would be exchanged for one common share par value $0.001 of
the Company resulting in all shareholders of Aztek Technologies Inc. becoming
shareholders of the Company. Aztek Technologies Inc. is a British Columbia
public company listed on the Vancouver Stock Exchange and the Electronic
Bulletin Board of NASD. The transaction is subject to regulatory acceptance
and the approval of the shareholders of Aztek Technologies Inc. The
transaction is also subject to the approval of all regulatory bodies having
jurisdiction over the Company.
On motion duly made and unanimously carried, it was resolved the Board
of
Directors of the Company be and are hereby authorized to grant directors,
officers and employees stock options at prices and on terms and conditions
acceptable to the Board of Directors in their sole discretion and to amend
such options as from time to time may be required. The granting, alteration
and pricing of such options shall be in accordance with, and subject to the
approval of, the prevailing policies of all regulatory bodies and stock
exchanges having jurisdiction over the Company and no further resolution or
approval by the shareholders of the Company shall be required for the
granting
of the options or the exercise of such options granted.
On motion duly made and unanimously carried, it was resolved that Mike
Sintichakis, President of the Company, be and is hereby authorized on behalf
of the Company to enter into agreements to arrange equity or debt
financings.
Be it further resolved that the maximum number of shares to be issued to any
new investor or group of investors shall not exceed 5% of all outstanding
shares of the Company.
On motion duly made and unanimously carried, it was resolved that Mike
Sintichakis be and is hereby authorized on behalf of the Company to enter
into
agreements for the acquisition and/or development of any property on terms
and
conditions deemed appropriate and in the best interests of the Company. Be
it
further resolved that Mike Sintichakis be authorized and empowered on behalf
of the Company to do all such acts and deeds and execute and deliver all such
documents and instruments as he in his discretion may deem necessary or
desirable in order to effect the purchase and development of any property.
There being no further business to come before the meeting at this time,
the meeting was, upon motion duly made, adjourned at 10:30 a.m.
Dated this 30th day of June, 1998.
/s/ Mike Sintichakis
---------------------------
Mike Sintichakis, President
/s/ Nick Sintichakis
---------------------------
Nick Sintichakis, Secretary
EXHIBIT 99.5 Opinion Letter of Steve Winters in Reference to Dissenters'
Rights.
[LETTERHEAD OF STEPHEN K WINTERS LAW CORPORATION]
August 5, 1998
Board of Directors
Aztek Technologies Inc.
#5 - 246 Lawrence Ave.
Kelowna, B.C. V1Y 6L3
Re: Joint Policy Statement - Prospectus on Form S-4 and Dissenters' Rights
We are rendering this opinion to you at your request and in our capacity as
Canadian Counsel to Aztek Technologies Inc. ("ATI") in connection with the
Joint Proxy Statement - Prospectus pursuant to which ATI is issuing the proxy
statement to its shareholders for approval of the proposed merger between ATI
and Aztek, Inc. wherein ATI will cease to exist and Aztek, Inc. will be the
surviving corporation. If the merger is approved, Aztek, Inc. will issue one
share of its common stock in exchange for each share of ATI common stock (the
"Merger"). We are rendering this opinion to provide you with a description
of
the dissent provisions of the British Columbia Company Act (the "Act") which
apply to the Merger.
Any holder of common shares of Aztek ("Aztek Shares") is entitled to be paid
the faIr market value of such shares in accordance with the section 207 of
the
British Columbia Company Act (the "Act") if the shareholder dissents to the
special resolution authorizing the Amalgamation, and if the Amalgamation
becomes effective. A holder of Aztek Shares is not entitled to object with
respect to his shares if he votes any of such shares in favour of the special
resolution authorizing the Merger.
The dissenting shareholder is required to send a written objection to the
special resolution to be received within two days prior to the meeting. A
vote against a special resolution or an abstention does not constitute a
written objection. Within fourteen days after the special resolution is
adopted by the shareholders, the dissenting shareholder is required to send
to
the corporation a written notice containing his name and address, the number
of shares in respect of which he dissents and demand payment of the fair
value
of such shares, and the appropriate share certificate or certificates. The
dissenting shareholder is bound to sell these shares to the corporation and
the corporation is bound to purchase them. The price to be paid is the fair
value as of the day before the resolution was passed including any
appreciation or depreciation in anticipation of the vote, and all dissenting
shareholders shall be paid the same price. Either party may apply to the
court to fix the fair value of the shares. There is no obligation on the
corporation to apply to the court. If the application is made by either
party, the dissenting shareholder will be entitled to be paid the amount
fixed
by the court which may be greater or less than the value of the shares which
the shareholder would otherwise consent to by the corporation. A dissenting
shareholder loses his rights of dissent if he votes in favour of the
resolution (unless he is doing so as a proxyholder) or otherwise acts
inconsistent with his dissent (a request to withdraw a notice of dissent is
not acting inconsistent with a dissent).
Yours truly,
STEPHEN K WINTERS
LAW CORPORATION
/s/ Stephen K. Winters
- -----------------------
Per: Stephen K. Winters
EXHIBIT 99.6 Dissenters' Rights Statute
The following exhibit is the selected statute, Section 207 of the British
Columbia Company Act, relating to dissenters' rights.
Division 2 - Dissent Proceedings
Dissent procedure
207 (1) If,
(a) being entitled to give notice of dissent to a resolution as
provided in section 37, 103, 126, 222, 244, 249 or 289, a member of a company
(in this Act called a "dissenting member") gives notice of dissent,
(b) the resolution referred to in paragraph (a) is passed, and
(c) the company or its liquidator proposes to act on the authority
of
the resolution referred to in paragraph (a),
the company or the liquidator must first give to the dissenting member notice
of the intention to act and advise the dissenting member of the rights of
dissenting members under this section.
(2) On receiving a notice of intention to act in accordance with
subsection (1), a dissenting member is entitled to require the company to
purchase all of the dissenting member's shares in respect of which the notice
of dissent was given.
(3) The dissenting member must exercise the right given by subsection
(2)
by delivering to the registered office of the company, within 14 days after
the company, or the liquidator, gives the notice of intention to act.
(a) a notice that the dissenting member requires the company to
purchase all of the dissenting member's shares referred to in subsection (2),
and
(b) the share certificates representing all of those shares, and on
delivery of that notice and those share certificates, the dissenting member
is
bound to sell those shares to the company and the company is bound to
purchase
them.
(4) A dissenting member who has complied with subsection (3), the
company, or, if there has been an amalgamation, the amalgamated company, may
apply to the court, and the court may
(a) require the dissenting member to sell, and the company or the
amalgamated company to purchase, the shares in respect of which the notice of
dissent has been given,
(b) set the price and terms of the purchase and sale, or order that
the price and terms be established by arbitration, in either case having due
regard for the rights of creditors,
(c) joint in the application any other dissenting member who has
complied with subsection (3), and
(d) make consequential orders and give directions it considers
appropriate.
(5) The price that must be paid to a dissenting member for the shares
referred to in subsection (2) is their fair value as of the day before the
date on which the resolution referred to in subsection (1) was passed,
including any appreciation or depreciation in anticipation of the vote on the
resolution, and every dissenting member who has complied with subsection (3)
must be paid the same price.
(6)The amalgamation or winding up of the company, or any change in its
capital. Assets or liabilities resulting from the company acting on the
authority of the resolution referred to in subsection (1), does not affect
the
right of the dissenting member and the company under this section or the
price
to be paid for the shares.
(7) Every dissenting member who has complied with subsection (3)
(a) may not vote, or exercise or assert any rights of a member, in
respect of the shares for which notice of dissent has been given, other than
under this section,
(b) may not withdraw the requirement to purchase the shares, unless
the company consents, and
(c) until the dissenting member is paid in full, may exercise and
assert all the rights of a creditor company.
(8) If the court determines that a person is not a dissenting member, or
is not otherwise entitled to the right provided by subsection (2), the court,
without prejudice to any acts or proceedings that the company, its members,
or
any class of members may have taken during the intervening period, may make
the order it considers appropriate to remove the limitations imposed on the
person by subsection (7).
(9) The relief provided by this section is not available if, subsequent
to giving notice of dissent, the dissenting member acts inconsistently with
the dissent, but a request to withdraw the requirement to purchase the
dissenting member's shares is not an act in consistent with the dissent.
(10) A notice of dissent ceases to be effective if the dissenting member
consents to or votes in favour of the resolution of the company to which the
dissent relates unless the consent or vote is given solely as a proxy holder
for a person whose proxy required an affirmative vote.
EXHIBIT 99.7
AZTEK TECHNOLOGIES INC.
Consolidated Financial Statements
For the years ended June 30, 1998 and 1997
Contents
Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Financial Statements
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations and Deficit . . . . . . 4
Consolidated Statements of Changes in Financial Position . . 5
Summary of Significant Accounting Policies. . . . . . . . 6 - 7
Notes to Consolidated Financial Statements. . . . . . . 8 - 11
<AUDIT-REPORT>
[Letterhead of BDO Dunwoody Chartered Accountants]
Auditor's Report
To the Shareholders of
Aztek Technologies Inc.
We have audited the consolidated balance sheets of Aztek Technologies Inc. as
at June 30, 1998 and 1997 and the consolidated statements of operations and
deficit and changes in financial position for the years then ended. These
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 financial statements present fairly, in all material
respects, the financial position of the Company as at June 30, 1998 and 1997
and the results of its operations and the changes in its financial position
for the years then ended in accordance with generally accepted accounting
principles. As required by the British Columbia Companies Act we report that,
in our opinion, these principles have been applied on a consistent basis.
"BDO Dunwoody "
Chartered Accountants
Penticton, British Columbia
July 10, 1998
Canada - United States Reporting Differences
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 conditions and events that cast substantial doubt
on the company's ability to continue as a going concern, such as those
described in Note 1 to the financial statements. Our report to the
shareholders dated July 10, 1998 is expressed in accordance with Canadian
reporting standards which do not permit a reference to such events and
conditions in the auditor's report when these are adequately disclosed in the
financial statements.
"BDO Dunwoody "
Chartered Accountants
Penticton, British Columbia
July 10, 1998
</AUDIT-REPORT>
<TABLE>
<CAPTION>
Aztek Technologies Inc.
Consolidated Balance Sheets
June 30 1998 1997
<S> <C> <C>
Assets
Current
Cash $ 2,957 20,232
Accounts receivable 67,693 56,642
Prepaid expenses 1,904 1,536
--------------------------
72,554 78,410
Capital Assets (Note 2) 105,860 151,292
Goodwill (Note 3) - 417
===========================
$ 178,414 $ 230,119
Liabilities and Shareholders' Deficiency
Current
Accounts payable and
accrued liabilities - trade $ 222,326 $ 122,971
Accounts payable and accrued
liabilities - officers and directors 64,840 5,693
Deferred revenue 103,991 138,781
Current portion of amounts
due to related parties - 166,241
Current portion of royalties payable 100,000 70,000
Current portion of obligation under
capital lease 33,095 43,553
---------------------------
524,252 547,239
Due to related parties (Note 4) 132,707 3,689
Royalties payable (Note 5) - 30,000
Obligation under capital lease (Note 6) 800 33,632
---------------------------
657,759 614,560
Shareholders' deficiency
Share capital (Note 7)
Authorized
100,000,000 common shares
without par value
Issued
2,051,109 common shares
(1997 - 1,904,244) 4,179,522 3,909,000
Deficit (4,658,867) (4,293,441)
------------------------------
(479,345) (384,441)
------------------------------
$ 178,414 $ 230,119
==============================
</TABLE>
Approved on behalf of the Board:
"Mike Sintichakis" Director
" Director
<TABLE>
<CAPTION>
Aztek Technologies Inc.
Consolidated Statements of Operations and
Deficit
For the years ended June 30 1998 1997
<S> <C> <C>
Sales $ 340,081 $ 465,566
-------------------------
Selling and administration expenses
Advertising and promotion 4,382 27,770
Amortization 40,310 81,160
Contractors fees 57,420 151,552
Equipment leases 12,213 11,609
Filing and transfer fees 7,356 41,641
Interest on long-term debt 28,307 34,493
Investor relations 32,309 6,000
Management fees 199,589 91,122
Office and administration 23,606 42,823
Professional fees 48,004 60,835
Rent and property taxes 53,055 52,277
Selling and marketing 1,041 61,914
Telephone 23,704 34,061
Travel 5,227 8,159
Utilities 23,049 20,975
Wages, salaries and benefits 145,935 298,082
------------------------
705,507 1,024,473
Loss from operations (365,426) (558,907)
Deferred income taxes (recovery) - (1,000)
----------------------
Net loss for the year (365,426) (557,907)
Deficit, beginning of year (4,293,441) (3,735,534)
-------------------------
Deficit, end of year $ (4,658,867) $(4,293,441)
============================
Loss per share, basic $ (0.18) $ (0.38)
============================
</TABLE>
<TABLE>
<CAPTION>
Aztek Technologies Inc.
Consolidated Statements of Changes in Financial Position
For the years ended June 30 1998 1997
<S> <C> <C>
Cash provided by (used in)
Operating activities
Net loss for the year $ (365,426) $(557,907)
Items not involving cash
Amortization 40,310 81,160
Deferred income taxes (recovery) - (1,000)
--------------------------
(325,116) (477,747)
Decrease in deferred revenue - non-current - (19,272)
Changes in non-cash working capital balances
Accounts receivable (11,051) (2,130)
Prepaid expenses (368) (96)
Accounts payable 99,355 (8,733)
Due to officer 59,147 5,332
Deferred revenue (34,790) 16,129
-------------------------
(212,823) (491,853)
Financing activities
Advances from related parties 222,098 -
Repayments to related parties (259,321) (184,539)
Capital lease repayments (43,290) (34,290)
Increase in capital lease obligation - 20,682
Issuance of share capital 270,522 754,870
-------------------------
190,009 556,723
-------------------------
Investing activities
Acquisition of capital assets (866) (57,271)
Proceeds on disposal of capital assets 6,405 -
-------------------------
5,539 (57,271)
Increase (decrease) in cash (17,275) 7,599
Cash, beginning of year 20,232 12,633
-------------------------
Cash, end of year $ 2,957 $ 20,232
========================
</TABLE>
Aztek Technologies Inc.
Summary of Significant Accounting Policies
June 30, 1998 and 1997
- ------------------------------------------------------------------------------
Basis of Consolidation
These consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, S.T.A. North America Technologies Inc. and
Responseware Corp.
Use of Estimates
The consolidated financial statements of the corporation have been prepared
by
management in accordance with generally accepted accounting principals in
Canada. The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. The
financial statements have, in management's opinion, been properly prepared
using careful judgment within reasonable limits of materiality and within the
framework of the accounting policies summarized below.
Capital Assets
Capital assets are recorded at cost. Amortization based on their estimated
useful lives is as follows:
Computer hardware - 30% diminishing balance basis
Computer software - 30% diminishing balance basis
Furniture and equipment - 20% diminishing balance basis
Software license - 33% straight-line basis
Leasehold improvements are recorded at cost and are amortized using the
straight-line method over a period of five years.
Assets under Capital Lease
Assets under capital lease are recorded at cost. Amortization based on the
estimated useful life of the asset is as follows:
Computer hardware - 20% straight-line basis
Goodwill
Goodwill is recorded at cost. Amortization is provided as follows:
Goodwill - 50% straight-line basis
Financial Instruments
The Company's financial instruments consist of cash, accounts receivable,
accounts payable and accrued liabilities, amounts due to related parties,
royalties payable, and obligation under capital leases. Unless otherwise
noted, it is management's opinion that the Company is not exposed to
significant interest, currency or credit risks arising from these financial
instruments. The fair value of these financial instruments approximate their
carrying values, unless otherwise noted.
Revenue Recognition
The Company licenses software under noncancellable license agreements and
provides maintenance services, consisting of product support services and
periodic updates. License fee revenues are generally recognized when a
noncancellable license agreement has been signed, the software product has
been shipped, there are no uncertainties surrounding product acceptance,
there
are no significant vendor obligations, the fees are fixed and determinable,
and collection is considered probable. Revenues from maintenance agreements
are recognized ratably over the maintenance period, which in most instances
is
one year. Revenues for training or consulting services are recognized as
services are performed.
Deferred Revenue
Deferred revenue is comprised of deferrals for license fees, maintenance and
other services.
Deferred Income Taxes
Deferred income taxes arise from the difference between amortization for
accounting purposes and capital cost allowance for income tax purposes.
Per Share Data
Share amounts for all periods presented reflect restatement for the
five-for-one stock split in December 1996. Basic loss per share is computed
using the weighted average number of common shares outstanding during the
respective years. Diluted loss per share has not been calculated due to the
anti-dilutive effect.
Aztek Technologies Inc.
Notes to Consolidated Financial Statements
June 30, 1998 and 1997
1. Operations
The Company has continued to incur operating losses and continues to have a
working capital deficiency as at June 30, 1998. The future ability of the
Company to realize its assets at the recorded amounts and discharge its
liabilities in the normal course of business will depend upon its ability to
obtain further financing and to attain profitable operations. It is not
possible at this time to predict with assurance the outcome of these matters.
Management intends to raise equity that would allow the Company to proceed
with its business plan.
The company's primary business is that of developing and selling computer
software and computer systems and providing support services for the
company's
computer software.
2. Capital Assets
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------------
Accumulated Accumulated
Cost Amortization Cost Amortization
<S> <C> <C> <C> <C>
Computer hardware $ 93,884 $ 78,845 $ 93,017 $ 72,771
Computer software 102,601 62,557 105,081 45,357
Leasehold improvements 19,972 17,242 23,898 14,028
Furniture and equipment 42,916 32,631 42,916 30,060
Software license 16,000 16,000 16,000 14,666
Equipment under capital lease
- Computer hardware 159,958 122,196 159,958 112,696
-----------------------------------------------
$ 435,331 $ 329,471 $ 440,870 $ 289,578
-----------------------------------------------
Net book value $ 105,860 $
151,292
===============================================
</TABLE>
3. Goodwill
<TABLE>
<CAPTION>
1998 1997
---------------------------------------------------------
Accumulated Accumulated
Cost Amortization Cost Amortization
<S> <C> <C> <C> <C>
Goodwill $ 191,660 $ 191,660 $ 191,660 $ 191,243
=========================================================
Net book value $ - $ 417
=========================================================
</TABLE>
4. Due to Related Parties
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Loans payable, without interest, and specific
repayment terms. Principal is not repayable
prior to July 1, 1999. It was not practical
to determine the fair value of this debt. $ 132,707 $ 3,689
Note payable, repayable $1,507 monthly
including interest at 9% per annum and
collateralized by a general security
agreement. During the year a shares for debt
settlement agreement was entered into and
submitted to regulatory authorities for their
approval. - 166,241
-------------------------------
132,707 169,930
Less current portion - 166,241
-------------------------------
$ 132,707 $ 3,689
===============================
</TABLE>
5. Royalties Payable
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Royalties payable, royalties incurred in
a prior year's operations are repayable
$10,000 monthly, without interest, commencing
December 9, 1997. $ 100,000 $ 100,000
Less current portion 100,000 70,000
------------------------------
$ - $ 30,000
==============================
</TABLE>
As at June 30, 1998 the Company is in default on repayment and is negotiating
a revised payment schedule. It is anticipated that this will not have an
adverse effect on the Company's financial position or results of future
operations.
6. Obligation Under Capital Lease
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Total minimum lease payments $ 36,433 $ 89,694
Less imputed interest 2,538 12,509
------------------------------
Lease obligation 33,895 77,185
Less current portion 33,095 43,553
------------------------------
$ 800 $ 33,632
==============================
</TABLE>
Minimum lease payments on the capital lease obligations are 1999 - $35,620,
2000 - $813.
During the year interest expense of $10,252 (1997 - $18,240) was incurred on
the obligation under capital lease.
7. Share Capital
<TABLE>
Authorized
100,000,000 common shares without par value
<CAPTION>
1998 1997
Number of Number of
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Issued and fully paid
Balance, beginning of year 1,904,244 $ 3,909,000 1,001,932 $3,055,330
Issued for cash
Private placement - - 400,000 620,000
Exercise of warrants 47,400 104,280 28,600 65,560
For escrow shares - - 354,000 3,540
Issued for acquisition - - 30,000 30,000
Issued for debt settlement 120,465 166,242 89,712 134,570
Cancelled due to expiry
of escrow agreement (21,000) - - -
-------------------------------------------------
Balance, end of year 2,051,109 $ 4,179,522 1,904,244 $3,909,000
================================================
</TABLE>
a) Escrow Shares - The issued share capital includes 354,000 escrow shares
(1997 - 375,000). These shares will be released from escrow at the rate of 1
share for each $0.31 of cash flow from operations, as defined in the
agreement. Any shares not released prior to September 17, 2001 will be
cancelled and returned to treasury.
During the year ended June 30, 1998 21,000 shares, subject to a separate
escrow agreement that expired October 27, 1997, were canceled and returned to
treasury.
b) Share Purchase Options
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Number of share purchase options, beginning of year 185,000 -
Number granted during the year 40,000 185,000
- -----------------------
Number of share purchase options, end of year 225,000 185,000
</TABLE>
Options outstanding at June 30, 1998 are exercisable:
185,000 at $1.82 per share, expiring March 20, 1999
40,000 at $0.85 per share, expiring September 22, 1998
8. Related Party Transactions
<TABLE>
June 30, 1998 and 1997
<CAPTION>
1998 1997
<S> <C> <C>
a. Accounts payable and amounts due to related parties
include the following:
Due to officers and directors $ 69,647 $ 6,552
Due to a director's family members 127,900 169,071
b. Selling and administration expenses
include the following:
Interest paid to the spouse of a director 1,099 12,313
Rent paid to a company controlled by the spouse
of a director 13,500 13,500
</TABLE>
These transactions are in the normal course of operations and are measured at
the exchange value which is the amount of consideration established and
agreed
to by the related parties.
9. Income Taxes
The company has losses available for income tax purposes totaling
approximately $1,577,000. This amount can be used to reduce taxable income of
future years and has not been recognized in the financial statements. The
right to claim these losses expire as follows: 1999 - $89,000; 2000 -
$76,000;
2001 - $376,000; 2002 - $131,000; 2003 - $101,000; 2004 - $479,000; 2005 -
$325,000.
10. Lease Commitments
The company has lease commitments for its premises and certain equipment
which
require minimum annual lease payments payable as follows:
Year Amount
1999 $ 45,442
2000 27,504
2001 10,158
------------------------
$ 83,104
========================
99.8 Opinion Letter of Independent Accountants in Reference to Canadian
Tax Consequences
[Letterhead of BDO Dunwoody]
August 19, 1998
Aztek Technologies Inc.
#5 - 246 Lawrence Avenue
Kelowna, B.C.
V1Y 6L3
Attention: Mike Sintachakis
Dear Sirs:
RE: MERGER WITH U.S. COMPANY
This letter is further to your request that our firm offer an opinion as to
the Canadian tax implications to the shareholders of Aztek Technologies Inc.
("Canco") of a merger with Aztek Inc. ("Usco").
FACTS AND ASSUMPTIONS
Our opinion is based on our understanding of the following facts and
assumptions. Please review them to ensure that they are correct and, if not,
advise our office immediately so that our opinion can be revised accordingly.
1) Canco is a widely held, Canadian corporation with only one class of issued
shares. These shares are publicly traded on the Vancouver Stock Exchange.
2) Usco is a privately owned Nevada corporation.
3) Pursuant to U.S. corporate law:
a) Canco is to be merged into Usco. Usco will receive the assets of Canco,
and each shareholder of Canco will receive shares of Usco on a one-for-one
basis.
b) Canco will not be continued into Nevada prior to this merger, and at no
time in this process will Canco be a U.S. resident corporation.
c) Immediately upon the completion of the merger, Canco will cease to exist,
while Usco will be the surviving corporation.
4) The Canadian and U.S. corporate counsel for the companies agree that the
above merger is effected in the following manner for purposes of Canadian
corporate law:
a) The shareholders of Canco exchange their shares thereof for shares of Usco
on a one-for-one basis. Canco will then be a wholly-owned subsidiary of Usco.
b) Canco is wound up into Usco, which takes possession of Canco's assets and
liabilities.
5)
At no time in the last five years has
a) a non-resident shareholder,
b) a person related to a non-resident shareholder, or
c) a non-resident shareholder and a person related thereto
owned more than 25% of the issued shares of any class of Canco.
6) Usco has (and will have, after the above transaction) only one issued class
of shares.
QUESTION
What are the Canadian tax ramifications to the shareholders of Canco?
OPINION
Deemed Disposition
In our opinion the Canadian shareholders of Canco have, for Canadian tax
purposes, disposed of their shares of Canco on the date of the merger for
proceeds equal to the fair market value of the shares of Usco received in
exchange therefor. Any gain or loss will be reportable for Canadian tax
purposes. Whether the gain is on account of capital (75% of which is included
in taxable income) or income (100% of which is included in taxable income)
depends on the particular shareholder's circumstances.
The actual gain or loss to each shareholder is a function of:
1. the fair market value of Usco's shares as at the date of amalgamation, and
2. the adjusted cost base of the particular shareholder's shares of Canco.
Generally, there are no Canadian tax ramifications to the non-resident
shareholders of Canco. However, this may not be true for a non-resident
shareholder that was a Canadian resident at some time in the past or a
non-resident shareholder that carries on business in Canada. Any such persons
should seek professional advice in this regard.
Foreign Affiliate
Usco will be a "foreign affiliate" for Canadian tax purposes of a
Canadian-resident shareholder if:
1. the particular shareholder owns 1% or more of the issued shares of Usco,
and
2. the particular shareholder and all persons "related" (as defined for
Canadian tax purposes) thereto own (directly, or through other corporations)
10% or more of the issued shares of Usco.
Usco will be a "controlled foreign affiliate" for Canadian tax purposes of a
Canadian-resident shareholder if at that time it is a "foreign affiliate" of
the taxpayer that is controlled by:
1. the shareholder,
2. the particular shareholder and not more than four other persons resident in
Canada,
3. not more than 4 persons resident in Canada, other than the shareholder,
4. a person or persons with whom the shareholder does not deal at arm's
length, or
5. the shareholder and a person or persons with whom the shareholder does not
deal at arm's length.
If Usco pays dividends to a corporation resident in Canada, the Canadian
taxation of those dividends may be impacted if Usco is a "foreign affiliate"
of said corporation. Any Canadian corporation of which Usco is a "foreign
affiliate" should seek professional advice.
If Usco is a "controlled foreign affiliate" of a person resident in Canada,
certain types of income earned by Usco (broadly defined as passive investment
income and income from certain services) is taxed in Canada on a current
basis. Again, any such person should seek professional advice.
Canadian Information Reporting
If Usco is a "foreign affiliate" of a person or partnership resident in
Canada, the person or partnership is required to file an annual information
return with Revenue Canada in respect of Usco pursuant to S.233.4 of the
Income Tax Act (Canada). This return is due within 15 months after the end of
the taxation year or fiscal period for which the person or partnership is
required to report.
If Usco is a "controlled foreign affiliate" of a Canadian shareholder, that
shareholder may be required to file additional information returns under
S.233.2 of the Income Tax Act (Canada) in respect of loans or transfers to the
corporation by certain foreign Trusts or in respect of loans and transfers to
those Trusts by the corporation. The same reporting requirement will apply to
loans and transfers to Usco made by the Canadian shareholder if Usco is a
"controlled foreign affiliate" of a foreign Trust that the Canadian
shareholder is in any way connected with. This return if required is due by
the normal Canadian tax filing deadline for the filer.
Withholding Tax
Any dividends paid by Usco to a Canadian-resident shareholder will be subject
to U.S. withholding tax at the following rates:
(a) 5% of the gross amount of the dividends if the beneficial owner is a
company which owns at least 10% of the voting stock of Usco;
(b) 15% of the gross amount of the dividends in all other cases.
Foreign Property
The shares of Usco will be considered "foreign property" for pension funds and
certain other tax-exempt entities (i.e. registered retirement savings plans).
These funds and entities are limited in the amount of "foreign property" that
they can own without incurring a special tax under Part XI of the Income Tax
Act (Canada).
Any such fund, plan or entity that currently owns shares of Canco should seek
professional advice regarding the pending change to its investment.
CAVEAT
The opinions expressed above are our views as Chartered Accountants
experienced in Canadian income tax matters. They are restricted to the
specific facts as set out above and are based on our interpretation of the
Income Tax Act (Canada) and the Income Tax Regulations as they presently
exist. None of the opinions are or should be construed to be legal opinions.
We have not been asked to express an opinion in respect of the tax
ramifications to Canco or Usco of this merger, nor have we been asked to
express an opinion as to the non-Canadian tax implications to any party.
We trust that we have addressed the issues to your satisfaction. If you have
any questions in this regard, please contact Murray Swales @ (250) 492-6020.
Sincerely,
BDO DUNWOODY
/s/ BDO Dunwoody
- -----------------
BDO/mmb
EXHIBIT 99.9 Proxy
REVOCABLE PROXY
AZTEK TECHNOLOGIES INC.
ANNUAL AND EXTRAORDINGARY MEETING, OCTOBER 1, 1998
PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned stockholder of the Company Technologies Inc. ("ATI") hereby
appoints Mike Sintichakis, the lawful attorney and proxy of the undersigned,
with several powers of substitution, to vote all shares of Common Stock of
ATI which the undersigned is entitled to vote at the Annual and Extraordinary
Meeting of Stockholders to be held on October 1, 1998, and at any
adjournments thereof:
1. Approval of the merger Agreement and the Plan of Merger providing for a
merger pursuant to which ATI will be merged into the Company Inc. (the
"Company") and each outstanding share of ATI Common Stock will be converted
into one share of the Company Common Stock.
2. IN THEIR DISCRETION ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
Shares represented by all properly executed proxies will be voted in
accordance with instructions appearing on the proxy. IN THE ABSENCE OF
SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED FOR APPROVAL OF THE MERGER
AGREEMENT AND PLAN OF REORGANIZATION AND THE PLAN OF MERGER AND IN THE
DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTERS.
[X] Please mark votes as in this example.
FOR AGAINST ABSTAIN
[_] [_] [_]
Please date and sign as name appears on the stock certificate, including
designation as executor, etc., if applicable. A corporation must sign in its
name by the president or other authorized officers. All co-owners must sign.
A majority of the proxies or substitutes present at the meeting may exercise
all powers granted hereby.
MARK HERE FOR ADDRESS
CHANGE AND NOTE AT LEFT [_]
Signature Date
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Signature Date
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