THE METALS RESEARCH GROUP CORP.
1390 Ottawa Street
West Vancouver, British Columbia
CANADA V7T 2H5
(604) 926-5352
$20,000,000 NINE-MONTH
ASSET BACKED DEBENTURE
The Debenture may be redeemed in whole without premium, at any time upon
payment of principal amount. The Debenture will be secured by specific asset(s)
of the Company. For additional information, see "Description of Debenture." The
Debenture will not be listed on any national securities exchange. The Metals
Research Group Corp. does not expect an over-the-counter market to develop
for the Debenture. Investors should carefully consider the factors set forth
under the caption "Certain Risk Factors," beginning on Page 1 hereof.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
OFFERING BY PRELIMINARY PROSPECTUS $20,000,000 OF DEBT SECURITIES
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any state.
Price Underwriting Discount Proceeds to Company (1)
to Public and Commissions Maximum Minimum
Debenture 100% 10% $18,000,000 $18,000,000
Total $20,000,000 10% $18,000,000 $18,000,000
(1) Before deduction of expenses payable by the Company, estimated at $15,310.
The Company is making this Offering on a Best Efforts Basis. The Offering is
subject to withdrawal, cancellation or modification without notice. The
Company reserves the right to reject an offer, in whole or in part, for the
purchase of the securities offered. There have been no arrangements made to
place any of the proceeds of the sale of this Offering into an escrow, trust,
or similar arrangement.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
______________________
THE METALS RESEARCH GROUP CORP.
(Exact name of registrant as specified in its charter)
UTAH
(State or other jurisdiction of incorporation or organization)
1041
(Primary Standard Industrial Classification Code Number)
Not a registered employer in the U.S.A.
(I.R.S. employer identification number)
1390 Ottawa Street
West Vancouver, British Columbia V7T 2H5
(604) 926-5352
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
______________________
Anthony Papalia, Director
The Metals Research Group Corp.
1390 Ottawa Street
West Vancouver, British Columbia V7T 2H5
(604) 926-5352
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
______________________
Approximate date of commencement of proposed sale of the securities to the
public: As soon as possible after the effective date of this registration
statement.
If the securities being registered on this form are to be offered on a delayed
or continuous basis pursuant to Rule 415 under the Securities Act, check the
following box: [x]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) 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: [ ]
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: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities to Be Amount to Be Offering Price Aggregate Registration
Registered Registered Per Unit Offering Price(1) Fee
Asset Backed
Debenture $20,000,000 90% $18,000,000 $5,310
(1) Estimated solely for purpose of computing the registration fee pursuant to
Rule 457 of The Securities Act of 1933, as amended.
DATE OF PROPOSED SALE
As soon as possible after the effective date of this registration statement.
DELAYING AMENDMENT
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 this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
CROSS REFERENCE SHEET
ITEM HEADING
1. Outside Front Cover of Prospectus . . . . . . . FRONT OF PROSPECTUS
2. Inside Front Page of Prospectus . . . . . . . . PAGE 2 OF PROSPECTUS
3. Summary Information/Risk Factors . . . . . . . . PROSPECTUS SUMMARY
4. Use of Proceeds . . . . . . . . . . . . . . . . USE OF PROCEEDS
5. Determination of Offering Price . . . . . . . . OFFERING PRICE DETERMINATION
6. Ratio of Earnings to Fixed Charges . . . . . . . DILUTION
7. Selling Security Holders . . . . . . . . . . . . SELLING SECURITY HOLDERS
8. Plan of Distribution . . . . . . . . . . . . . . PLAN OF DISTRIBUTION
9. Description of Securities to be Registered . . . DESCRIPTION OF SECURITIES
10. Interest of Named Experts and Counsel . . . . . EXPERTS AND COUNSEL
11. Information with Respect to the Registrant. . . THE COMPANY
11. (a) Description of Business . . . . . . . . . . Page 10
11. (b) Description of Property . . . . . . . . . . Page 10
11. (c) Legal Proceedings . . . . . . . . . . . . . Page 11
11. (d) Stockholder Matters . . . . . . . . . . . . Page 11
11. (e) Financial Statement Filing . . . . . . . . Page 11
11. (f) Selected Financial Data . . . . . . . . . . Page 12
11. (g) Supplementary Financial Information . . . . Page 14
11. (h) Managements Discussion and Analysis
of Financial Condition and
Results of Operations . . . . . . . . . . . Page 14
11. (i) Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . Page 14
11. (j) Disclosures about Market Risk . . . . . . . Page 15
11. (k) Directors and Executive Officers . . . . . Page 15
11. (l) Executive Compensation . . . . . . . . . . Page 15
11. (m) Security ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . Page 16
11. (n) Certain Relationships and Related
Transactions. . . . . . . . . . . . . . . . Page 17
12. Indemnification Disclosure. . . . . . . . . . . INDEMNIFICATION
13. Expenses of Issuance and Distribution . . . . . EXPENSES
14. Indemnification of Directors and Officers . . . DIRECTORS AND OFFICERS
15. Recent Sales of Unregistered Securities . . . . RECENT SALES
16. Exhibits; Financial Statement Schedules . . . . EXHIBITS
17. Undertakings . . . . . . . . . . . . . . . . . UNDERTAKINGS
$20,000,000 Nine-Month Debenture
Offered by the Company at a 10% Discount
The Debenture may be redeemed in whole without premium, at any time upon
payment of principal amount. The Debenture will be secured by specific asset(s)
of the Company.
There is no underwriter in connection with this Offering. This Offering will
only be made on behalf of the Company by certain of its officers and employees,
without compensation, or by their appointed agents for compensation, where
permitted by law, or if required by state law, through a broker-dealer. The
Debenture will not be listed on any national securities exchange. The Company
does not expect an over-the-counter market to develop for the Debenture.
(See "The Offering"). There is no assurance that the Debenture being offered
will be sold. There can be no assurance that the Debenture can be resold at
the offering price or that a trading market will develop, and therefore, it
might be difficult for an investor to sell such securities. (See "Certain
Risk Factors"). The discount price was arbitrarily determined by the Company
and does not bear any direct or indirect relationship to the Company's asset
value, book value, earnings or other generally accepted criteria of value, and
should not be considered an indication of the actual value of the Company.
THE SECURITIES OFFERED ARE HIGHLY SPECULATIVE, INVOLVE A HIGH
DEGREE OF RISK AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD
CAREFULLY CONSIDER THE FACTORS SET FORTH UNDER THE CAPTION "CERTAIN
RISK FACTORS" BEGINNING ON PAGE 6 HEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriting Discounts Proceeds to Company (1)
Price to Public and Commissions Maximum Minimum
Debenture 100% 10% $18,000,000 $18,000,000
Total $20,000,000 10% $18,000,000 $18,000,000
(1) Before deduction of expenses payable by the Company, estimated at $15,310.
Date of this Prospectus is September 21, 1998
TABLE OF CONTENTS
PAGE
Prospectus Summary
The Company 1
Certain Risk Factors 1
Ratio of Earnings to Fixed Charges 3
The Offering 3
Use of Proceeds 4
Determination of Offering Price 4
Selling Security Holders 5
Plan of Distribution 5
Description of Securities 5
Interest of Named Experts & Counsel 9
Registrant Information 10
Description of Business 10
Description of Property 11
Legal Proceedings 11
Stockholder Matters 11
Financial Statement Filing 13
Selected Financial Data 14
Supplementary Financial Information 14
Management Discussion & Analysis 14
Changes in and Disagreements with Accountants 15
Disclosures about Market Risk 15
Directors & Executive Officers 15
Security Ownership 15
Certain Relationships 16
Indemnification Disclosure 17
Expenses of Issuance and Distribution 18
Indemnification of Directors and Officers 18
Exhibits, Financial Statement Schedules, Legal Opinions
Undertakings 20
Exhibits
Item 3 PROSPECTUS SUMMARY
THE FOLLOWING INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION APPEARING ELSEWHERE.
The Company
The Metals Research Group Corp. (The "Company") is a corporation, duly
incorporated pursuant to the laws of the State of Utah, and is engaged in the
exploration and mining of precious minerals at its Lillooet project in
southwestern British Columbia. The Company has methodically overcome
significant obstacles to reach its current stage of development. The Lillooet
project involves 72 contiguous mining leases located on the Lillooet River
Valley, British Columbia, Canada, geologically outlined by definition
drilling more than 150 million tonnes of recoverable values of Gold, Silver,
Platinum and Magnetic Concentrates. The principal executive offices are located
at 1390 Ottawa Street, West Vancouver, British Columbia, Canada V7T 2H5 and may
be contacted by telephone at (604) 926-5352. The common stock of the Company
trades on the Nasdaq OTC under the trading symbol MLRA.
Certain Risk Factors
An investment in the securities offered hereby is speculative and involves a
high degree of risk. Due in part to the speculative nature of these securities,
and consistent with the Company's long-term plans, the Company has acquired a
Financial Guarantee Bond to secure the full repayment of the Debenture in the
event that the Company defaults on its obligation to pay on the maturity date.
The retro cessionaires to the Financial Guarantee Bond are represented to be
rated by Standard and Poor's as AAA. (See "Description of Securities").
Prospective purchasers should consider carefully, in addition to the other
information contained in this Prospectus, the following factors before
purchasing the Debenture offered hereby.
Seasonality; Weather Conditions
The Company operations are conducted in an area that may be characterized by a
prominent valley running south-southeast, flanked by rugged peaks of the Costal
Range Mountains. The climate is fairly moderate. Average annual temperature is
+10C. Rainfall averages 162.5 cm per year, 24 cm of which falls in December
(maximum) and 4.8 cm in July (minimum).
Absence of Public Market for Debenture
There is no existing trading market for the Debenture and the Company does not
expect one to develop. There is, therefore, no assurance that a holder desiring
to sell would be able to find a willing buyer or at what price that buyer would
be willing to purchase the Debenture.
Subordinated Obligations; Additional Leverage not Restricted
The Company's obligations under the Debenture are not subordinate nor junior in
right of payment to all other indebtedness of the Company. The Debenture is
collaterally secured by assets of the Company which have been specifically
hypothecated as security for the Debenture. These assets include, but may not
be limited to, a Financial Guarantee Bond (the "Bond") issued by Eastern
General Insurance Company Limited which declares on its face that the retro
cessionaires to the Bond are Munich Re (75%) and Swiss Re (25%), both of which
are rated by Standard and Poor's as AAA.
Call Feature of the Debenture
The Debenture is redeemable at maturity by the holder for full face value
principal. There is no interest payable. The Company has the option to call the
Debenture at any time, paying the full face vale principal at the date that
it is called. A holder of the Debenture has no such option.
Limited Operating History
The Company recognizes that it has a limited operating history which for the
most part has been unprofitable. Its business plan is based on certain
assumptions without the benefit of a length operating history.
Reliance on Management and Key Personnel
The Company's success depends in part on its ability to attract, motivate and
retain highly qualified management and personnel. Competition for such
personnel may be strong and there can be no assurance that the Company will be
able to attract and retain the personnel necessary for the development and
operation of its business. The Company is heavily dependent upon the continued
services of its present officers and directors. They have the major
responsibility for review of opportunities and implementing the Company's
growth plans. Consequently the loss of services of any or all of these persons
would have an adverse effect on the Company.
Need for Additional Capital
While the Company will be budgeting towards the achievement of its goals, there
can be no assurance that the Company will be able to achieve its goals without
additional capital. There can be no assurance that the Company will be able to
raise the additional capital it may be seeking. Even if additional capital is
obtained, there can be no assurance that the Company will be able to achieve
its goals with additional capital, or that any new capital, if available,
will be on terms favourable to the Company.
Management of Growth
The Company's planned rapid growth in the future may place a significant
strain on the Company's administrative, operational and financial resources and
increased demands on its systems and controls. The Company anticipates that
its growth will require it to recruit and hire a substantial number of new
managerial and administrative personnel. The inability to continue to upgrade
the operating and financial control systems, the inability to recruit and hire
necessary personnel, or the emergence of unexpected expansion difficulties
could adversely affect the Company's business, results of operations and
financial condition.
Ratio of Earnings to Fixed Charges
The Company is registering debt securities. For the past 4 years, inclusive
of the current year, the Company has had negative income. The annual deficiency
of earnings is as follows:
Year ended June 30
1998(1) 1997 1996 1995
Net Loss (Income) $250,000 $381,655 $522,390 $153,763
(1) Projected loss for the year ended June 30, 1998
Year ended June 30
1998(1) 1997 1996 1995
Ratio of earnings
to fixed charges The Company has had negative income in all of the above
mentioned years
(1) The Company is projecting a loss for the year ended June 30, 1998
The Offering
Securities *$20,000,000 principal amount Nine-Month Debenture.
*Offered directly by the Company.
Discount *10%
Redemption *Redeemable at maturity or at the option of the Company
for full face value principal.
Use of Proceeds *Add to working capital and general corporate purposes.
Item 4 USE OF PROCEEDS
The offering is not underwritten and no assurance can be given as to the amount
of proceeds that may be realized by the Company from this offering or when any
such proceeds may be received. The net proceeds from the sale of the Debenture
will be added to working capital and used for general Corporate purposes with
the first priority being the funding of capital expenditures necessary to
commence mining operations. The offering is not conditioned upon the sale of
any minimum amount of the Debenture.
Item 5 OFFERING PRICE DETERMINATION
There is no underwriter in connection with this Offering. This Offering will
only be made on behalf of the Company by certain of its officers and employees,
without compensation, or by their appointed agents for compensation, where
permitted by law, or if required by state law, through a broker-dealer. The
Debenture will not be listed on any national securities exchange. The Company
does not expect an over-the-counter market to develop for the Debenture. There
is no assurance that the Debenture being offered will be sold. There can be no
assurance that the Debenture can be resold at the offering price or that a
trading market will develop, and therefore, it might be difficult for an
investor to sell such securities. The discount price was arbitrarily determined
by the Company and does not bear any direct or indirect relationship to the
Company's asset value, book value, earnings or other generally accepted criteria
of value, and should not be considered an indication of the actual value of
the Company. In determining the Offering Price, the Company gave consideration
to the Financial Guarantee Bond guaranteeing the full repayment of the Company's
obligation at maturity date of the Debenture. The Company believes the
guarantee provided by the Financial Guarantee Bond is of substantial value to
an investor.
Securities *$20,000,000 principal amount 0% One-Year Debenture.
*Offered directly by the Company.
Redemption *Redeemable at maturity or at the option of the Company
for full face value principal.
Use of Proceeds *Add to working capital and general corporate purposes.
Item 6 DILUTION
The Company is registering debt securities. In the previous 3 fiscal years the
Company has reported net losses as follows:
Year ended June 30
1997 1996 1995
Net Loss (Income) $381,655 $522,390 $153,763
The nature of this Offering (debt financing) is such that there should be no
change in the net tangible book value per share before and after this Offering
is completed, the amount of net tangible book value per share attributable to
the proceeds of this Offering, and the amount of dilution.
Item 7 SELLING SECURITY HOLDERS
The Securities being registered for sale pursuant to this Offering are not to
be offered for the account of security holders.
Item 8 PLAN OF DISTRIBUTION
This offering of the Debenture is not underwritten. There can be no assurance
that a Debenture will be sold pursuant to the offering contemplated hereby. This
Offering will only be made, on a best efforts basis, on behalf of the Company by
certain of its officers and employees, without compensation, or by their
appointed agents for compensation, where permitted by law, or if required by
state law, through a broker-dealer. The Debenture will not be listed on any
national securities.
Item 9 DESCRIPTION OF DEBENTURE
The Company has authorized, in total, the Debenture offered hereby as
Series 1998-B, Certificate number 001 with a face value of $20,000,000 and shall
have a maturity date of June 14, 1999. The Company is offering the Debenture at
a 10% discount. The Company has negotiated for the provision of a Financial
Guarantee Bond issued by Eastern General Insurance Company Limited ("Eastern")
to indemnify the Holder of the Debenture against default of payment by the
Company. Eastern represents on the face of their Bond, and in supporting
documentation, that their Bond is 100% reinsured and that the reinsurance
includes Standard and Poor's AAA rated retro cessionaires, namely
Munich Re (75%) and Swiss Re (25%).
The Debenture may be issued in series from time to time upon the written order
of the Company in such aggregate principal amount as is authorized by the Board
of Directors of the Company. The Debenture does not provide for any sinking
fund. As of June 30, 1998, there were no outstanding Debenture(s) issued by
the Company.
General
The Debenture is not limited in principal amount by any Indenture, either in
the aggregate or as to any series. Although it has no present plans,
understandings or arrangements, the Company may in the future, in order to
meet capital requirements, issue further (un)secured debt, which by its terms
may be senior to the Debenture. Upon any insolvency or bankruptcy proceedings,
or any other receivership, liquidation, reorganization or similar proceedings,
the holders of any senior secured debt of the Company would be entitled to
receive payment in full before the holder of the Debenture is entitled to
receive any payment of principal on the Debenture by the Company. There is no
restriction against the issuance by the Company of additional indebtedness,
including unsecured debt, or secured debt.
The Debenture will be issued no later than as of the first of the month next
following the month in which payment for the Debenture is received by the
Company. The Debenture offered hereby will be due June 14, 1999 subject to
the right of the Company to redeem the Debenture at any time by payment of the
principal. Principal will be payable, and the Debenture will be transferable, at
the offices of the Company, 1390 Ottawa Street, West Vancouver, British Columbia
V7T 2H5 provided that any payment of principal may be made at the option of the
Company by check mailed to the address of the person entitled thereto as it
appears on the Debenture Register.
The Debenture will be issued only in fully registered form without coupons in
denomination of $20,000,000. No service charge will be made for any transfer or
exchange of Debenture, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Original Issue Discount
The following is a summary of material United States Federal income tax
consequences relevant, in the opinion of the Company, to the acquisition,
ownership and disposition of the Debenture, but does not purport to be a
complete analysis of all potential tax effects. This summary is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed
regulations thereunder (the "Regulations"), published rulings and court
decisions, all as in effect and existing on the date hereof and all of which are
subject to change at any time, which change may be retroactive. This summary is
not binding on the Internal Revenue Service or on the courts, and no ruling will
be requested from the Internal Revenue Service on any issues described below.
There can be no assurance that the Internal Revenue Service will not take a
different position concerning the matters discussed below and that such
positions of the Internal Revenue Service would not be sustained.
This summary applies only to U.S. Holders (as defined below) that are the
initial holders of the Debenture, who acquired the same for cash and who hold
the same as capital assets. It does not address the tax consequences to
taxpayers who are subject to special rules (such as financial institutions,
tax-exempt organizations, insurance companies, dealers in securities or
currencies and persons who hold Notes, Warrants, or Warrant Shares as a hedge or
as a position in a "straddle" for tax purposes). A "U.S. Holder" means a
beneficial owner of a Note, Warrant, or Warrant Shares that is for U.S. federal
income tax purposes (i) a citizen or resident of the United States; (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof; (iii) an estate
the income of which is subject to U.S. federal income taxation regardless of its
source; or (iv) a trust if (A) a court within the United States is able to
exercise primary supervision over the administration of the trust and (B) one or
more U.S. fiduciaries have the authority to control all substantial decisions of
the trust.
THE FOLLOWING DISCUSSION IS FOR GENERAL INFORMATION ONLY. EACH
INVESTOR IS STRONGLY URGED TO CONSULT WITH ITS OWN TAX ADVISORS TO
DETERMINE THE IMPACT OF SUCH HOLDER'S TAX SITUATION ON THE ANTICIPATED
TAX CONSEQUENCES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN OR OTHER TAX LAWS, OF THE ACQUISITION, OWNERSHIP AND
DISPOSITION OF THE DEBENTURE.
Taxation of the Debenture
The Debenture is issued with de minimis original issue discount ("OID") for
Federal income tax purposes. A debt instrument generally is issued with de
minimis OID if the amount by which its stated redemption price at maturity
exceeds its issue price is less than the product of .0025 multiplied by the
product of the stated redemption price at maturity and the number of complete
years to maturity from the issue date. The issue price (discount) of the
Debenture was arbitrarily determined by the Company at 10%, based on the
relative fair market value as projected by the Company. De minimis OID is
recognized as capital gain upon the redemption, sale or other taxable
disposition of the debt instrument.
A holder that purchases a Debenture at a purchase price less then the stated
redemption price will be considered to have purchased the Debenture at a
"market discount" equal to such difference. Market discount, however, will be
considered to be zero if it is less than 0.25% of the stated redemption price
at maturity of a Debenture multiplied by the number of complete years to
maturity remaining after the date of its purchase.
Any principal payment or gain realized by a holder on disposition or retirement
of a Debenture will be treated as ordinary income to the extent that there is
accrued market discount on the Discount. Unless a holder elects to accrue under
a constant-interest method, accrued market discount is the total market discount
multiplied by a fraction, the numerator of which is the number of days the
holder has held the obligation and the denominator of which is the number of
days from the date the holder acquired the obligation until its maturity. A
holder may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to purchase
or carry a Debenture purchased with market discount. Any such deferred interest
expense would not exceed the market discount that accrued during such taxable
year and is, in general, allowed as a deduction not later than the year in which
such market discount is includible in income. If the holder elects to include
market discount in income currently as it accrues on all market discount
instruments acquired by the Holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.
A holder of the Debenture, subject to certain limitations, may elect to treat
all "interest" on any Debenture as original issue discount and calculate the
amount includible in gross income under the method described above. For this
purpose, "interest" includes stated and unstated interest, original issue
discount, acquisition discount, market discount and de minimis market discount,
as adjusted by any acquisition premium. Such election, if made with respect to a
market discount obligation, will constitute an election to include market
discount in income currently on all market discount obligations acquired by
such holder on or after the first taxable year to which the election applies.
The election is to be made for the taxable year in which the holder acquired the
Debenture and may not be revoked without the consent of the Internal Revenue
Service.
Sale, Retirement or Other Taxable Disposition.
Gain or loss upon a sale or other disposition of a Debenture will be measured
by the difference between the amount of cash and the fair market value of
property received with respect to such sale and the holder's adjusted tax basis
in such Debenture. A holder's adjusted tax basis in a Debenture generally will
be equal to the purchase price of the Debenture. Such gain or loss generally
will be capital gain or loss, and will be long-term capital gain or loss if the
holder held the Debenture for more than one year.
Effect of Change of Control.
Upon a Change of Control, each holder will have the right to require the
Company to repurchase all or any part of such holder's Debenture for a price
equal to 101% of the principal amount thereof plus accrued and unpaid interest
and liquidated damages, if any, to the date of payment. Under the Regulations,
a provision such as the Change of Control redemption requirement will not
affect the yield or maturity date of the Debenture unless, based on all facts
and circumstances as of the date of issuance, it is more likely than not that a
Change of Control giving rise to the redemption will occur. The Company will not
treat the Change of Control redemption provision of the Debenturer as affecting
the calculation of the yield to maturity of any Debenture.
Information Reporting and Backup Withholding
The backup withholding and information reporting requirements may apply to
certain payments of principal and interest on a Debenture and to certain
payments or proceeds of the sale or retirement of a Debenture. The Company, its
agent, a broker, the Trustee or any paying agent, as the case may be, is
required to withhold tax from any payment that is subject to backup withholding
at a rate of 31% of such payment if the holder fails to furnish its taxpayer
identification number (social security number or employer identification
number), to certify that such holder is not subject to backup withholding rules.
Certain holders (including, among others, all corporations) are not subject to
the backup withholding and reporting requirements.
Under current Treasury regulations, backup withholding and information
reporting do not apply to payments made by the Company or any agent thereof (in
its capacity as such) to a holder of a Debenture who has provided the required
certification under penalties of perjury that it is not a U.S. holder or has
otherwise established an exemption (provided that neither the Company nor such
agent has actual knowledge that the holder is a U.S. holder or that the
conditions of any other exemption are not in fact satisfied).
Any amounts withheld under the backup withholding rules from a payment to a
holder may be claimed as a credit against such holder's United States federal
income tax liability.
Events of Default
The following will be events of default:
(a) failure to pay principal when due;
(b) failure to perform any other covenant of the Company, continued for
60 days after written notice; and
(c) certain events in bankruptcy, insolvency or reorganization.
The Trustee may withhold notice to the holders of the Debenture of any default
(except in the payment of principal) on the Debenture if it considers such
withholding to be in the interests of the holder.
If a default shall happen and be continuing, either the Trustee or the holder
of the Debenture may accelerate the maturity of the Debenture. The holders of
the outstanding Debenture may waive a default resulting in acceleration of the
Debenture, but only if all defaults have been remedied and all payments due
(other than by acceleration) have been made.
The holder of the Debenture has the unconditional right to receive the payment
of principal when due and to institute suit for the enforcement of such payment.
The Trustee
Subject to provisions relating to its duties in the case of default, the
Trustee is under no obligation to exercise any of its rights or powers under any
Indenture at the request, order or direction of any holder, unless such holder
has offered to the Trustee reasonable indemnity. Subject to such provisions for
indemnification, the holder of the outstanding Debenture will be entitled to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or of exercising any trust or power conferred upon the
Trustee.
The Company is required to furnish to the Trustee annually a statement as to
performance or fulfilment of covenants, agreements or conditions in any
Indenture and as to the absence of default.
Item 10 EXPERTS AND COUNSEL
Legal Opinion
The legality of the Debenture offered hereby and matters with respect to the
Company as disclosed herein have been passed on by___________________________,
Counsel of the Company. _____________________________holds no common stock or
options to purchase common stock of the Company and has no interest in the
financial affairs of the Company.
Auditor's Opinion
The consolidated financial statements of The Metals Research Group Corp. at
June 30, 1997, June 30, 1996 and June 30, 1995 and for each of the three years
in the period ended June 30, 1997, incorporated in this Prospectus by reference
to the consolidated financial statements filed pursuant to Rule 15C2-11 of the
Company for the year ended June 30, 1997, have been audited by Deloitte & Touche
independent auditors, in their report thereon and incorporated by reference
therein.
Item 11 THE COMPANY
11. (a) Description of Business
The Company was originally incorporated in Utah on July 22, 1971 under the name
Hawaii Furniture Lease. It was originally organized to conduct a furniture
leasing business that was unsuccessful. The Company became dormant in 1975 and
remained so until July, 1984. During the fiscal year ending June 30, 1985, the
Company was reactivated and its name was changed to Metals Research Corporation
of America. During the fiscal year ended June 30, 1998, the Company changed its
name to Metals Research Group Corp.
Metals Research Group Corp. has not been subject to a proceeding in bankruptcy
or receivership. At no time during the past five years has the Company been
materially reclassified or party to a merger or consolidation. The Company has
not acquired or disposed of any material amount of assets that is not in the
ordinary course of business during the previous five years. There have been no
material changes in the mode of conducting business for the Company in the
previous 5 years.
The Company's Plan of Operation anticipates the proceeds of the Offering will
be sufficient for the Company to commence full scale mining operations and
within six to 8 months, by receiving sufficient cash flow from sales to support
continued operations without the need for additional capital. The Company
believes it will be able to fully satisfy its obligations under the Debenture at
maturity date.
11. (b) Description of Property
The Company holds valid land leases for 72 contiguous mining leases located on
the Lillooet River Valley, British Columbia, Canada, geologically outlined by
definition drilling more than 150 million tonnes of recoverable values of Gold,
Silver, Platinum and Magnetic Concentrates.
11. (c) Legal Proceedings
The Company is the defendant in a claim for repayment of a $716,430 loan
described in Notes 6 and 9 of the audited financial statements for the year
ended June 30, 1997. This amount has been included in the liabilities of the
Company. The Company is not aware of any other material pending or threatened
legal proceedings to which the Company or any of its subsidiaries is or may be a
party or to which any of their property is or may be subject.
11. (d) Stockholder Matter
The Company is offering common equity in connection to this Registration.
11. (e) Financial Statement Filing
The Metals Research Group Corp. and its predecessors have been and are
currently subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). In accordance therewith, the
Company files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). Such reports, proxy statements,
and other information can be inspected and copied at the offices of the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of
the SEC at 75 Park Place, New York, New York 10007 and Northwestern Atrium
Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661, and copies
of such material can be obtained from the Public Reference Section at the
principal office of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
The Company will furnish holders of the Debenture offered hereby, upon request,
with its annual report to shareholders containing consolidated financial
statements audited by an independent public accounting firm.
The Company's Annual Report on 15c2-11 for the year ended June 30, 1997 which
has been filed by the Company with the SEC, is incorporated herein as Exhibit
24.1.
All documents filed by the Company with the SEC pursuant to Section 13(a),
13(c), 15 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering of the Debenture shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein 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 Prospectus.
The Company will provide without charge to each person to whom this Prospectus
is delivered, upon written or oral request of such person, a copy of any
document incorporated by reference in this Prospectus, other than exhibits to
any such document not specifically described above. Requests for such documents
should be directed to:
The Metals Research Group Corp.,
1390 Ottawa Street,
West Vancouver, British Columbia V7T 2H5,
(Telephone Number (604) 926-5352).
INDEX TO SUPPLEMENTARY FINANCIAL INFORMATION
Page
Consolidated Financial Statements
of the Company as of June 30, 1997 and 1996 F1 - F9
Auditors' Report dated November 5, 1997 F2
Consolidated Balance Sheets F3
Consolidated Statements of Loss and Deficit F4
Consolidated Statements of Changes in Financial Position F5
Notes to the Consolidated Financial Statements F6 - F9
Consolidated Financial Statements
of the Company as of June 30, 1995 F10 - F17
Auditors' Report dated May 10, 1996 F11
Consolidated Balance Sheets F12
Consolidated Statements of Loss and Deficit F13
Consolidated Statements of Changes in Financial Position F14
Notes to the Consolidated Financial Statements F15 - F17
Eastern General Insurance Company Limited F18 - F25
Interim Summary of the Affairs of the Company
for the Period Ended 31 December, 1997 F18
Balance Sheet as at December 31, 1997 F19 - F20
Consolidated Insurance Revenue Account
for the Period Ended 31 December, 1997 F21
Marine Insurance Revenue Account
for the Period Ended 31 December, 1997 F22
Fire Insurance Revenue Account
for the Period Ended 31 December, 1997 F23
Bonds, Engineering, Motor & Miscellaneous Insurance Revenue Account
for the Period Ended 31 December, 1997 F24
Profit and Loss Account
for the Period Ended 31 December, 1997 F25
11. (f) Selected Financial Data
The following selected financial data of the Company as of June 30, 1997 have
been derived from the financial statements of the Company which have been
reviewed by _________________________, independent auditor. The following data
should be read in conjunction with the Company's financial statements and notes
included elsewhere in this Prospectus.
Selected Balance Sheet Data
Cash and cash equivalents $ 1,765
Total Assets $1,647,457
Selected Operations Data
Total Revenues $ NIL
Net Income (Loss) ($ 381,655)
Capitalization
The following table sets forth the consolidated capitalization of the Company
as of June 30, 1997. No effect has been given in the table below to the receipt
of any proceeds from the offering described herein, since the amount of proceeds
and when the proceeds will be received is uncertain.
LONG-TERM DEBT:
Payable to Shareholders - non-interest bearing,
unsecured with no fixed maturity $ 522,458
SHAREHOLDERS' EQUITY
Share Capital $4,396,087
Contributed Surplus 340,000
Deficit (4,395,613)
Total Shareholders Equity 340,474
TOTAL CAPITALIZATION $ 862,932
See Notes 6, 7, 8, 9 and 10 to the June 30, 1997 Consolidated Financial
Statements for additional information as to the liabilities, long-term debt,
shareholders' equity, leases and commitments of the Company.
Results of Operations
The Company's operations to date have primarily been in connection with
acquiring the Land leases, commissioning geological surveys of the property,
setting up the organization, and financing.
Except for historical information, the matters discussed in this Prospectus are
forward looking statements which involve risks and uncertainties, including but
not limited to economic, competitive, and technological factors affecting the
Company's operations, markets, products, services, prices and other factors
which may cause actual results to differ materially from the results discussed
in the forward looking statements.
Liquidity and Capital Resources
The Company has financed its operations with equity capital to date. The
business the Company is engaged in can be potentially capital intensive. The
Company hopes the proceeds of the sale of the Debenture offered hereby will be
sufficient for the Company to then be able to finance its operations from the
cash flow from sales of the products of the Company.
11. (g) Supplementary Financial Information
The Company will provide without charge to each person to whom this Prospectus
is delivered, upon written or oral request of such person, a copy of any
document incorporated by reference in this Prospectus, other than exhibits to
any such document not specifically described above. Requests for such documents
should be directed to:
The Metals Research Group Corp.,
1390 Ottawa Street,
West Vancouver, British Columbia V7T 2H5,
(Telephone Number (604) 926-5352).
11. (h) Management's Discussion and Analysis of
Financial Condition and Results of Operations
The Company is engaged in the production and development of mineral sands
Lillooet project in southwestern British Columbia, Canada. The Lillooet project
involves 72 contiguous mining leases which are geologically outlined by
definition drilling more than 150 million tonnes of recoverable values of Gold,
Silver, Platinum and Magnetic Concentrates.
The Company has methodically overcome significant obstacles to reach its
current stage of development. Over USD $6.5 million has been expended since the
mid 1980's. Production start up is scheduled 3 months from obtaining senior
financing. Once financing has been obtained, the Lillooet project is expected
to evolve into a highly profitable, horizontally integrated operation.
11. (i) Changes in and Disagreements with Accountants
The Company has not experienced any disagreements with an Accountant(s) that
has resulted in the Company discontinuing the use of the services of the
accountant(s) nor has any accountant(s) discontinues offering their services to
the Company as a result of any disagreement.
11. (j) Disclosures about Market Risk
The Company has identified many markets risks which all investors and potential
investors should consider before making any investment in the Debenture. While
this may not be an exhaustive study of all market risks, the Company recognizes
that the vagaries of the market in general, the uncertainty of future values of
precious metals, the emergence of a globalized economy, political uncertainties,
economic instability, and the absence of a market for the Debenture may all
contribute, collectively or individually, to a high degree of risk and
subsequent loss of all investment in the Debenture.
11. (k) Directors and Executive Officers
Age Years As A Director
Robert Papalia 53 President and Chief Executive 14
Anthony Papalia 53 Director and Secretary 14
Albarosa Simonetti 50 Director and Treasurer 10
Giuseppe Bombara 63 Director 8
Edward Nixon 67 Director 3
Anthony Papalia Jr. 23 Director 1
Dario Marrucchi 58 Director 1
11. (l) Executive Compensation
No salaries were paid to any officer or director of the Company. Related party
transactions are referred to in Note 3 of the June 30, 1997 audited financial
statements.
11. (m) Security Ownership
During the year ended June 30, 1998, the following transactions occurred with
respect to share capital:
In August 1997, the Company exchanged 20,000,000 shares at a deemed value of
USD $0.10 per share for 2,000,000 shares of A & A International Industries Inc
(ANAFF) at a deemed value of USD $1.00 per share.
By Articles of Amendment filed in December, 1997, the Company changed its name
from Metals Research Corporation of America to The Metals Research Group Corp.
and consolidated its share capital on the basis of 20 old shares for each new
share. The authorized share capital was increased to 100,000,000 Common Shares
without par value.
The following summarizes the issued share capital to Officers, Directors and
Significant shareholders as at the date of this filing:
Total Issued Shares 4,465,235
Shares Held Directly or Indirectly by Officers and Directors:
Robert Papalia 113,297 3%
Anthony Papalia 159,121 4%
Albarosa Simonetti 25,853 1%
Giuseppe Bombara 50,000 1%
Edward Nixon 0 0%
Anthony Papalia Jr. 1,355 0%
Dario Marrucchi 75,000 2%
Shares held by a Company controlled by 2 or more Directors
1,868,125 42%
Shareholders with greater than 10% holding:
A & A International Industries Inc. 1,000,000 22%
Cede & Company 614,219 14%
Outstanding Stock Options
There are 225,000 stock options outstanding at USD$1.00 per share. They expire
on August 8, 2000. The options are as follows:
Options granted to Directors:
Robert Papalia 45,000
Anthony Papalia 45,000
Anthony Papalia Jr. 45,000
Albarosa Simonetti 45,000
Edward Nixon 45,000
Options granted to Employees:
Dario Marruchi 45,000
Peter Baker 45,000
Giovanni Camporese 45,000
Robert Pacilio 45,000
Ezio Montagliani 45,000
11. (n) Certain Relationships and Related Transactions
The following amounts were due from and payable to related parties on
June 30, 1997:
Due from Related Parties $ 17,518
Payable to Shareholders - non-interest
bearing, unsecured with no fixed maturity $ 522,458
During the year ended June 30, 1997, the Company incurred $240,000 in
Management fees payable to Directors of the Company and rent of $22,000 was paid
to persons related to Directors of the Company.
Item 12 INDEMNIFICATION DISCLOSURE
There has not been any provision to indemnify the Directors of the registrant,
the Officers of the registrant, or any controlling persons of the registrant.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed 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.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and if given or
made, such information or representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the Debenture to which
it relates or an offer to, or solicitation of, any person in any jurisdiction in
which such offer or solicitation is unlawful. Neither the delivery of this
prospectus nor any sale made hereunder shall under any circumstances imply that
information contained herein is correct at any time subsequent to its date. The
Registrant will comply with its obligations under applicable securities laws to
file and deliver any necessary supplement to this Prospectus.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13 EXPENSES
The following are additional estimated expenses of the offering described in
the Prospectus:
Printing $1,000
Accounting fees 3,000
Legal fees 5,000
Securities and Exchange Commission filing fees 5,310
Miscellaneous 1,000
Total $15,310
Item 14 DIRECTORS AND OFFICERS
Utah Corporation Law, inter alia, empowers an Utah corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. Similar indemnity
is authorized for such person against expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement of
any such threatened, pending or completed action or suit if such person acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the corporation, and provided further that (unless a
court of competent jurisdiction otherwise provides) such person shall not have
been adjudged liable to the corporation. Any such indemnification may be made
only as authorized in each specific case upon a determination by the
shareholders or disinterested directors or by independent legal counsel in a
written opinion that indemnification is proper because the indemnitee has met
the applicable standard of conduct.
A corporation is further authorized to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him or her and incurred in any such
capacity, or arising out of his or her status as such, whether or not the
corporation would otherwise have the power to indemnify him or her. The Company
does not maintain policies insuring its and its subsidiaries' officers and
directors against certain liabilities for actions taken in such capacities,
including certain liabilities under the Securities Act of 1933.
The Bylaws of the Company provides for indemnification of the directors and
officers of the Company to the full extent permitted by law, as now in effect or
later amended. In addition, the Bylaws provide for indemnification against
expenses incurred by a director or officer to be paid by the Company in advance
of the final disposition of such action, suit or proceeding; provided, however,
that if required by the Utah Business Corporation Act, an advancement of
expenses will be made only upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount if it shall be ultimately determined
that he or she is not entitled to be indemnified by the Company. The Bylaws
further provide for a contractual cause of action on the part of directors and
officers of the Company with respect to indemnification claims which have not
been paid by the Company.
The Company's Restated Articles of Incorporation limits to the fullest extent
permitted by the Utah Corporation Law as the same exists or may have been
amended, the personal liability of the Company's directors to the Company or its
shareholders for monetary damages for a breach of their fiduciary duty as
directors. Utah Corporation Law currently provides that such provisions do not
eliminate the liability of a director (i) for a breach of the director's duty of
loyalty to the Company or its shareholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) misconduct with respect to the declaration of dividends and purchase
or redemption of shares in violation of the Utah Corporation Law; or (iv) for
any transaction from which the director derived an improper personal benefit.
Item 15 RECENT SALES
The Company has not completed a sale of any unregistered securities within the
past three years.
Item 16 EXHIBITS; FINANCIAL STATEMENT SCHEDULES
Exhibit
Number Description
3.1 Articles of Incorporation
3.2 Bylaws of the Company.
4.1 Specimen of Secured Corporate Debenture Series 1998-B
Certificate no. 001
5.1 Legal Opinion of ________________, dated September __ , 1998,
as to the validity of the securities being registered hereby.
10.1 Sworn Affidavit of Godfrey (Geoff) Waterhouse, agent for
Eastern General Insurance Company Limited.
10.2 Managing General Agency Agreement between Eastern General
Insurance Company Limited and Godfrey (Geoff) Waterhouse.
10.3 Letter from Riaz-ul-Hasan & Co. attorneys of Eastern General
Insurance Company Limited.
10.4 Reinsurance treaties confirmation letter dated 06-04-1998 from
Pakistan Insurance Corporation to Eastern General Insurance
Company Limited.
10.5 Pakistan Insurance Corporation letter dated 14th May 98
confirming their continuing relationship with Munich Re. and
Swiss Re.
10.6 Letter from the Director (Public Relations) for the Pakistan
Insurance Regulatory Authority (PIRA), Government of Pakistan,
dated 24-11-97, making representations regarding the excellent
performance as well as the reinsurers of Eastern General
Insurance Company Limited.
10.7 Letter from the Director (Legal Services) for the Pakistan
Insurance Regulatory Authority dated April 2, 1998 confirming
that the Eastern General Insurance Company Limited has
reinsurance treaties with Muncih Re and Swiss Re.
23.1 Review of Independent Auditors.
23.2 Consent of Legal Counsel (included in the opinion filed as
Exhibit 5.1).
24.1 Copy of Form 15c2-11 for the year ended June 30, 1997 and 1996
27.1 Supplementary Financial Information
Item 17 UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement;
(b) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(d) That, for the purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(e) To file an application for the purpose of determining the eligibility of
the trustee to act under subsection (a) of section 310 of the Trust Indenture
Act ("Act") in accordance with the rules and regulations prescribed by the
Commission under section 305(b)(2) of the Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of West Vancouver, Province
of British Columbia on this 21st day of September, 1998.
The Metals Research Group Corp.
By: /s/ Robert Papalia
Robert Papalia
President, Director, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
/s/ Robert Papalia 9/25/98
Robert Papalia President and Chief Executive Officer, Director
/s/ Anthony Papalia 9/25/98
Anthony Papalia Director and Secretary
/s/ Anthony Papalia Jr. 9/25/98
Anthony Papalia Jr. Director
/s/ Dario Marrucchi 9/25/98
Dario Marrucchi Director
F1
Consolidated Financial Statements of
METALS RESEARCH CORPORATION OF AMERICA
June 30, 1997 and 1996
F2
Deloitte & Touche
Suite 2100 Telephone: (604) 669 4466
1055 Dunsmuir Street Facsimile: (604) 685-0395
P.O. Box 49279
Four Bentall Centre
Vancouver, British Columbia
V7X 1P4
Auditors' Report
To the Shareholders of
Metals Research Corporation of America:
We have audited the consolidated balance sheets of Metals Research Corporation
of America as at June 30, 1997 and 1996 and the consolidated statements of loss
and deficit and changes in financial position for the years then ended (all
expressed in U.S. dollars). 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 auditing standards generally accepted
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at June 30, 1997 and
1996 and the results of its operations and the changes in its financial position
for the years then ended in accordance with accounting principles generally
accepted in Canada.
Charted Accountants
Vancouver, British Columbia
November 5, 1997
F3
METALS RESEARCH CORPORATION OF AMERICA
Consolidated Balance Sheets
June 30
(stated in U.S. dollars)
_______________________________________________________________________________
1997 1996
ASSETS
CURRENT
Cash $ 1,765 $ 2,636
Due from related parties (Note 3) 17,518 10,207
GST receivable 11,184 6,970
Deposits 2,176 2,398
INVESTMENT IN PAC RIM INFORMATION
SYSTEMS INC. (Note 4) 1,007,986 1,007,986
LILLOOET MINING PROJECT (Note 5) 600,001 600,001
PLANT AND EQUIPMENT 6,827 8,862
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 45,056 $ 32,167
Loans payable (Note 6) 739,469 739,469
PAYABLE TO SHAREHOLDERS - non-interest bearing
unsecured and with no fixed maturity 522,458 145,295
_________ _________
1,306,983 916,931
SHAREHOLDERS' EQUITY
Share capital (Note 8) 4,396,087 4,396,087
Contributed surplus 340,000 340,000
Deficit (4,395,613) (4,013,958)
__________ __________
340,474 722,129
__________ __________
$1,647,457 $1,639,060
APPROVED BY THE BOARD OF DIRECTORS
/s/ Robert Papalia Director
/s/ Anthony Papalia Director
F4
METALS RESEARCH CORPORATION OF AMERICA
Consolidated Statements of Loss and Deficit
Years ended June 30
(stated in U.S. dollars)
_______________________________________________________________________________
1997 1996
EXPENSES
Bank charges and interest $ 650 $ 382
Camp 39,578 57,686
Depreciation 2,911 1,415
General, administrative and rent (Note 3) 31,614 21,902
GST recovered ______ (7,302)
Loss on investment (Note 7) ______ 105,000
Management fees (Note 3) 240,000 240,000
Professional 40,348 38,727
Repairs and maintenance 22,748 33,118
Travel and promotion 3,806 31,462
_________ __________
NET LOSS FOR THE YEAR 381,655 522,390
DEFICIT, BEGINNING OF YEAR 4,013,958 3,491,568
_________ _________
DEFICIT, END OF YEAR $4,395,613 4,013,958
_________ _________
LOSS PER SHARE $ 0.005 $ 0.008
_________ _________
F5
METALS RESEARCH CORPORATION OF AMERICA
Consolidated Statements of Changes in Financial Position
Years ended June 30
(stated in U.S. dollars)
_______________________________________________________________________________
1997 1996
OPERATING ACTIVITIES
Net loss for the year $ (381,655) $ (522,390)
Add back item not affecting cash
Depreciation 2,911 1,415
_______ _______
(378,744) (520,975)
Change in non-cash operating working capital 1,586 32,666
_______ _______
(377,158) (488,309)
INVESTING ACTIVITY
Purchase of fixed assets (876) (10,277)
_______ ________
FINANCING ACTIVITIES
Issue of share capital on settlement of debt - 413,263
Issue of share capital for investment - 105,000
Shareholders advances 377,163 (23,347)
________ ________
377,163 494,916
DECREASE IN CASH (871) (3,670)
CASH, BEGINNING OF YEAR 2,636 6,306
_______ _______
CASH, END OF YEAR $ 1,765 $ 2,636
_______ _______
F6-9
METALS RESEARCH CORPORATION OF AMERICA
Notes to the Consolidated Financial Statements
June 30, 1997 and 1996
(stated in U.S. dollars)
______________________________________________________________________________
1. CONTINUING OPERATIONS
The Company is a Utah corporation, incorporated in 1971, and is in the
process of exploring and developing mineral properties.
These financial statements have been prepared on the assumption that the
Company will continue as a going concern. The Company has, however,
incurred losses during its current development stage, and its ability to
continue as a going concern is dependent on its ability to obtain
additional financing. If the going concern assumption is not appropriate
then the Company may be forced to realize its assets at amounts
significantly less than the current carrying value.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with accounting
principles generally accepted in Canada and reflect the following policies:
(a) Basis of presentation
The financial statements include the accounts of the Company and its
subsidiaries.
Platinate Minerals & Industries, Inc. (British Columbia, Canada)
(100% owned) Metals Research S.A. (Panama) (54% owned)
International Metals Research Management Ltd. (British Columbia,
Canada) (100% owned)
(b) Investments
The Company accounts for its investments using the equity method of
accounting.
(c) Plant and equipment
Plant and equipment is recorded at cost. Depreciation is provided on
a straight-line basis at the following rates:
Transportation equipment 3 years
Mining equipment 5 years
Office equipment 5 years
(d) Segment of business, foreign operations and major customer reporting
The only industry significant of the company is mining, all of its
assets are located in British Columbia, Canada, and the company has no
sales for the reporting periods. Therefore, the company has
determined that it is neither necessary nor appropriate for it to
report information as to these matters.
2. SIGNIFICANT ACCOUNTING POLICIES
(e) Functional currency and foreign currency translation
The Company has determined its functional currency to be the U.S. dollar.
Any gains or losses resulting from exchange rate changes are reported in
the statement of loss and deficit.
3.
DUE FROM RELATED PARTIES 1997 1996
555 Corporate Ventures - Advances $ 15,843 $ 10,207
Pacrim Information Systems Inc 1,675 -
17,518 10,207
Pac Rim Information Systems Inc. and 555 Corporate Ventures are controlled
by directors of the Company. Other related party transactions include
management fees of $240,000 (1996 - $240,000) paid to directors of the
Company, and rent of $22,000 (1996 - Nil) was paid to persons related to
the directors of the Company.
4. INVESTMENT IN PAC RIM INFORMATION SYSTEMS INC.
On June 30, 1996, the Company exchanged its common shares in 555 Corporate
Ventures for 5,235,556 shares of Pac Rim Information Systems Inc. ("Pac
Rim"), a related company controlled by the directors of the Company.
555 Corporate Ventures owns the rights to the Texada Island Project.
Pac Rim invests in mining and technology projects. The Company currently
owns 44% of Pac Rim. As the transactions occurred between non-arms length
parties and is determined not to be the culmination of the earnings process
the investment in Pac Rim has been recorded at the carrying value of 555
Corporate Ventures prior to the transaction. The investment is to be
accounted by the equity method, however as Pac Rim has not commenced
commercial production, no adjustment to carrying cost has been recorded.
The Company will review the carrying value of its investment on a regular
basis to determine and provide for any impairment in value.
5. LILLOOET MINING PROJECT
The project is comprised of placer mineral leases (and certain attendant
personal property) and equipment located in the New Westminster Mining
Division at the north end of Harrison Lake, approximately 100 miles from
Vancouver, British Columbia, Canada.
6. LOANS PAYABLE
The loans payable are unsecured. As at June 30, 1997 and 1996, $716,430 of
the loans payable are the subject of the lawsuit described in Note 9,
7. B.F.M. ACQUISITION
In September 1995, the Company acquired 100% of the stock of B.F.M.
Associates, a California corporation, for 1,600,000 shares of the Company.
The fair market value of B.F.M. at acquisition was not determinable
therefore the value of the acquisition was assumed to be equal to the
estimated market value of the Company's shares, at $105,000. Due to issues
relating to the value of assets acquired and subsequent legal actions
initiated by the Company, the investment in B.F.M. has been fully written
off.
8. SHARE CAPITAL
Authorized
100,000,000 common shares with a par value of $.0.10 per share.
As at June 30, 1990 issued and fully paid-up legal capital consisted of
60,359,376 common shares with a par value of $0.10 amounting to $6,035,938.
For accounting purposes, the company's issued and fully paid-up capital
reflects a reorganization that took place in 1987, at which time the
contributed surplus and deficit were eliminated against the share capital,
and consist of the following:
Shares Amounts
Balance, June 30, 1990 60,359,376 $1,878,929
Issued for settlement of debt to
shareholders and related parties 3,874,117 1,998,895
__________ __________
Balance, June 30, 1994 and 1995 64,233,493 3,877,824
Issued for purchase of BFM Associates 1,600,000 105,000
Issued for settlement of debt to
shareholders and related parties 2,756,186 413,263
__________ _________
Balance, June 30, 1996 and 1997 68,589,679 $4,396,087
9. CONTINGENCIES
The Company is the defendant in a claim for repayment of the $716,430 loan
described in Note 6. The lender is seeking judgement for the immediate
return of the amount of money advanced, which was originally payable out
of revenues of the Texada Island Project. The Company has since sold its
interest in the Texada Island Project in exchange for shares of Pac Rim
Information Systems Inc. as described in Note 4. In addition, the lender
claims that additional funds of $78,765 was advanced. The Company is
defending this claim and considers it is unlikely that the suit will be
successful. The Company has filed a counter-claim which, if successful,
would reduce the amount owing. The outcome of these actions are not yet
determinable. Any future gain or loss will be recorded in the period in
which it becomes known.
10. FINANCIAL INSTRUMENTS
The Company's financial instruments include cash, GST receivable and
accounts payable and accrued liabilities. The book value of these
financial instruments approximates fair value due to the short-term nature
of the instrument.
Amounts due from related parties and amounts payable to shareholders are
recorded at the original advanced amounts. Due to the non-arms length
nature of the transactions and the absence of an available market for such
financial instruments, their fair value is not determinable.
Loans payable are subject to litigation and therefore the fair value
thereof is not determinable.
F10
METALS RESEARCH CORPORATION OF AMERICA
FINANCIAL STATEMENTS
June 30, 1995
F11
Deloitte & Touche
Suite 2100 Telephone: (604) 669 4466
1055 Dunsmuir Street Facsimile: (604) 685-0395
P.O. Box 49279
Four Bentall Centre
Vancouver, British Columbia
V7X 1P4
Auditors' Report
To the Shareholders of
Metals Research Corporation of America:
We have audited the consolidated balance sheets of Metals Research Corporation
of America as at June30, 1995 and the consolidated statements of loss and
deficit and changes in financial position for the four years then ended (all
expressed in U.S. dollars). 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 audit.
We conducted our audit in accordance with auditing standards generally accepted
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at June 30, 1995 and
the results of its operations and the changes in its financial position for the
year then ended in accordance with accounting principles generally accepted in
Canada.
Charted Accountants
Vancouver, British Columbia
May 10, 1996
F12
METALS RESEARCH CORPORATION OF AMERICA
CONSOLIDATED BALANCE SHEET
as at June 30, 1995
(stated in U.S. dollars)
CURRENT ASSETS NOTES 1995 1994
Cash $ 6,306 $ 7,364
Due from related parties 3 - 602,877
GST receivable 4,207 -
Deposit 48,288 48,288
_________ ________
58,801 658,529
Texada Mining Project 4 1,007,986 -
Lillooet Mining Project 5 600,001 600,001
Plant and equipment 6 - 416,309
_________ _________
$1,666,788 $1,674,309
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 32,421 $ 55,351
Loans payable 7 739,469 739,469
_________ ________
771,890 794,820
Payable to shareholders - non interest bearing,
unsecured, and with no fixed maturity 168,642 -
_________ ________
940,532 794,820
SHAREHOLDERS' EQUITY
Share capital 8 $3,877,824 3,877,824
Contributed surplus 340,000 340,000
Deficit (3,491,568) (3,337,805)
__________ __________
726,256 80,019
__________ __________
$1,666,788 $1,674,839
__________ __________
F13
METALS RESEARCH CORPORATION OF AMERICA
CONSOLIDATED STATEMENT OF LOSS AND DEFICIT
period ended June 30, 1995
(stated in U.S. dollars)
Four years
Year ended ended
1995 1994
Rental income $ - $ 188,213
____________ ___________
Expenses
Bank charges and interest 789 76,405
Camp 93,377 268,526
Depreciation - 869,684
General, administrative and rent 1,399 121,658
Office and miscellaneous 12,629 43,892
Professional 29,638 102,607
Repairs and maintenance 7,542 26,776
Salaries and employee benefits - 51,015
Travel and promotion 8,352 1,676,382
___________ __________
153,726 1,676,382
Loss before undernoted 153,726 1,488,169
Loss on fixed asset deposit - 50,000
Foreign exchange (gain) loss 37 (117,968)
___________ _________
Net loss for the period 153,763 1,420,201
Deficit, beginning of period 3,337,805 1,917,604
_________ _________
DEFICIT, END OF PERIOD $3,491,568 $3,337,605
_________ _________
F14
METALS RESEARCH CORPORATION OF AMERICA
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
period ended June 30, 1995
(stated in U.S. dollars)
Four years
Year ended ended
1995 1994
OPERATING ACTIVITIES
Net loss for the period $ (153,763) (1,420,201)
Add back items not affecting cash
Depreciation - 869,684
___________ ___________
(153,763) (550,517)
Change in non-cash operating working capital (5,940) 190,934
___________ ___________
(159,703) (741,451)
INVESTING ACTIVITIES
Purchase of fixed assets - (25,945)
___________ ___________
FINANCING ACTIVITIES
Issue of share capital on settlement of debt - 1,998,896
Shareholder advances 168,642 (1,591,593)
Related party loans (net) - 60,563
Loans payable - 313,314
Obligation under capital lease - (34,249)
168,642 746,929
__________ _________
INCREASE (DECREASE) IN CASH (1,061) (20,467)
CASH, BEGINNING OF PERIOD 7,364 27,831
__________ _________
CASH, END OF PERIOD $ 6,303 $ 7,364
F15-17
METALS RESEARCH CORPORATION OF AMERICA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
period ended June 30, 1995
(stated in U.S. dollars)
1. CONTINUING OPERATIONS
The Company is a Utah corporation, incorporated in 1971, and is in the
process of exploring and developing mineral properties.
These financial statements have been prepared on the assumption that the
Company will continue as a going concern. The Company has, however,
incurred losses during its current development stage (prior to which it
was dormant), and its ability to continue as a going concern is dependent
on ability obtaining additional financing.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with accounting
principles generally accepted in Canada and reflect the following policies:
a) Basis of presentation
The financial statements include the accounts of the Company and its
subsidiaries.
Platinate Minerals & Industries, Inc. (British Columbia, Canada)
(100% owned)
Metals Research S.A. (Panama) (54% owned)
International Metals Research Management Ltd. (British Columbia,
Canada) (100% owned)
b) Plant and equipment
Plant and equipment are recorded at cost. Depreciation is provided
on a straight-line basis at the following rates:
Plant 10 years
Transportation equipment 3 years
Mining equipment 5 years
Roads 10 years
Office equipment 5 years
c) Segment of business, foreign operations and major customer reporting.
The only industry significant of the company is mining, all of its assets
are located in British Columbia, Canada, and the company has no sales for
the reporting periods. Therefore the company has determined that it is
neither necessary nor appropriate for it to report information as to these
matters.
2. SIGNIFICANT ACCOUNTING POLICIES
d) Functional currency and foreign currency translation
The Company has determined its functional currency to be the U.S. dollar.
Any gains or losses resulting from exchange rate changes are reported in
the statement of loss and deficit.
3. DUE FROM RELATED PARTIES
1995 1994
Tony Papalia - shareholder and director $ - $ 3,950
Rhyolite Resources - Advances - 461,724
Texada Mining Project - Advances - 137,203
___________ ___________
$ - $ 602,877
Rhyolite and the Texada Project are controlled by directors of the Company.
4. TEXADA MINING PROJECT
During the year, the Company exchanged advances of $591,677 and its plant
and equipment of $416,309 for a 59.4% interest in certain mineral claims on
Texada Island, British Columbia.
5. LILLOOET MINING PROJECT
The project is comprised of placer mineral leases (and certain attendant
personal property) and equipment located in the New Westminster Mining
Division at the north end of Harrison Lake, approximately 100 miles from
Vancouver, British Columbia, Canada.
6. PLANT AND EQUIPMENT
During the year, the Company transferred its plant and equipment of
$416,839 to the Texada Mining Project.
7. LOANS PAYABLE
The loans payable are unsecured. As at June 30, 1994 and 1995, $716,430 of
the loans payable are to be repaid, with bonus, from revenue earned from
the production of the Texada Island mine and mill. The remainder are
non-interest bearing, with no fixed terms of repayment.
8. SHARE CAPITAL
Authorized
100,000,000 common shares with a par value of $0.10 per share.
As at June 30, 1990 issued and fully paid-up legal capital consisted of
60,359,376 common shares with a par value of $0.10 amounting to $6,035,938.
For accounting purposes, the company's issued and fully paid-up capital
reflects a reorganization that took place in 1987, at which time the
contributed surplus and deficit were eliminated against the share capital,
and consist of the following:
Number of
common
shares Amount
Balance, June 30, 1990 60,359,376 $1,878,929
Issued for settlement of debt to
shareholders & related parties 3,874,117 1,998,905
__________ __________
Balance, June 30, 1994 and 1995 64,233,493 $3,877,824
9. CONTINGENCIES
The Company is the defendant in a claim to change the terms of repayment on
the $716,430 loan described in Note 7. The lendor is seeking judgement for
the immediate return of the amount of money advanced, whereas presently it
is only payable out of revenues of the Texada Island Project. In addition,
the lendor claims that additional funds of $78,765 were advanced. The
Company is defending this claim and it is unlikely that the suit will be
successful. The Company has filed a counter-claim which, if successful,
would reduce the amount owing. The outcome of these actions are not yet
determinable. Any future gain or loss will be recorded in the period in
which it becomes known.
10. SUBSEQUENT EVENTS
Subsequent to June 30, 1995, the Company entered into an agreement to
purchase 100% of the share capital of a company which owns certain mineral
claims in southern California. Consideration for this purchase is the
issue of common shares of the Company.
F18
EASTERN GENERAL INSURANCE COMPANY LIMITED
INTERIM SUMMARY OF THE AFFAIRS OF THE COMPANY
FOR THE PERIOD ENDED 31ST DEC 1997
US Dollars
Gross Direct Premium All Classes 57,189,510
Premium Retained 28,594,755
Net Claims Outstanding 310,881
Commission 11,437,902
Expenses of Management 11,437,902
Premium Reserve 11,437,902
Note: The retention of the Company has been divided into the subsidiary
companies of the group under spearate arrangements and agreement.
Commander H. Aftab
CHAIRMAN
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
F19
EASTERN GENERAL INSURANCE COMPANY LIMITED
BALANCE SHEET AS AT 31ST DEC 1997
(in US Dollars)
ASSETS
Real Estate 20,171,737
Cash Investments
(Bonds, Securities & Fixed) 23,348,000
Current Accounts at Banks 42,376,516
Accounts due from other persons or bodies carrying
on insurance business 3,003,430
Call Deposits 51,912,406
140,812,089
Commander H. Aftab Mrs. R. Husain Faisal Aftab
CHAIRMAN MANAGING DIRECTOR DIRECTOR
& VICE CHAIRMAN
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
F20
CAPITAL AND LIABILITIES
Authorised Capital
3,000,000 ordinary shares of US$10 each 30,000,000
Issued, subscribed & paid-up Capital
1,550,500 ordinary shares of US$10 each 15,500,000
Surplus over Liabilities 93,108,132
Fire Insurance Reserve 3,101,536
Marine Insurance Reserve 2,526,705
Engineering, Motor, Bonds etc 6,208,460
General FIG Reserve 1,140,932
Estimated Liability in respect of outstanding
claims whether due or intimated 310,881
Amounts due to other persons or bodies carrying
on insurance business 639,251
Special Reserve 922,616
Misc. Liabilities 20,416
Surplus Funds 10,000,000
Shareholders' Funds 7,333,160
___________
140,812,089
MUNIFF ZIAUDDIN & CO.
Chartered Accountants
Karachi: April 27, 1998
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
F21
EASTERN GENERAL INSURANCE COMPANY LIMITED
CONSOLIDATED INSURANCE REVENUE ACCOUNT
For the period ended 31st December 1997
(in US Dollars)
Estimated liability in Premium less reinsurances
respect of outstanding 50% net retention of
claims whether due or gross premium 28,594,756
intimated 310,881
Commission
40% of net premium 11,437,902
Expenses of Management 11,437,902
40% of net premium
Reserve for unexpected risks 11,437,902
being 40% of the premium
income of the year
Balance 6,029,832
34,624,587 34,624,587
Gross Premium 57,189,510
MUNIFF ZIAUDDIN & CO Commander H. Aftab Mrs. R. Husain Faisal Aftab
Chartered Accountants CHAIRMAN MANAGING DIRECTOR DIRECTOR
& VICE CHAIRMAN
Karachi: April 27, 1998
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
F22
EASTERN GENERAL INSURANCE COMPANY LIMITED
MARINE INSURANCE REVENUE ACCOUNT
For the period ended 31st December 1997
(In US Dollars)
Commission Premium less reinsurances
40% of net premium 2,526,705 50% net retention of gross
premium 6,316,763
Expenses of management
40% of net premium 2,526,705
Reserve for unexpired risks 2,526,705
being 40% of the premium
income of the year
Balance 1,263,352
_________ __________
7,580,115 7,580,115
Gross Premium 12,633,526
MUNIFF ZIAUDDIN & CO Commander H. Aftab Mrs. R. Husain Faisal Aftab
Chartered Accountants CHAIRMAN MANAGING DIRECTOR DIRECTOR
& VICE CHAIRMAN
Karachi: April 27, 1998
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
F23
EASTERN GENERAL INSURANCE COMPANY LIMITED
FIRE INSURANCE REVENUE ACCOUNT
For the period ended 31st December 1997
(In US Dollars)
Commission Premium less reinsurances
40% of net premium 3,101,536 50% net retention of
gross premium 7,753,842
Expenses of management
40% of net premium 3,101,536
Reserve for unexpired risks
being 40% of the premium
income of the year 3,101,536
Balance 1,550,766
__________ _________
9,304,608 9,304,608
Gross Premium 15,507,684
MUNIFF ZIAUDDIN & CO Commander H. Aftab Mrs. R. Husain Faisal Aftab
Chartered Accountants CHAIRMAN MANAGING DIRECTOR DIRECTOR
& VICE CHAIRMAN
Karachi: April 27, 1998
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
F24
EASTERN GENERAL INSURANCE COMPANY LIMITED
BONDS ENGINEERING,
MOTOR & MISCELLANEOUS INSURANCE REVENUE ACCOUNT
For the period ended 31st December 1997
(in US Dollars)
Estimated liability in Premium less reinsurances
respect of outstanding 50% net retention of
claims whether due or gross premium 15,521,150
intimated 310,881
Commission
40% of net premium 6,208,460
Expenses of Management 6,208,460
40% of net premium
Reserve for unexpected risks 6,208,460
being 40% of the premium
income of the year
Balance 3,415,111
18,936,261 18,936,261
Gross Premium 31,042,300
MUNIFF ZIAUDDIN & CO Commander H. Aftab Mrs. R. Husain Faisal Aftab
Chartered Accountants CHAIRMAN MANAGING DIRECTOR DIRECTOR
& VICE CHAIRMAN
Karachi: April 27, 1998
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
F25
EASTERN GENERAL INSURANCE COMPANY LIMITED
PROFIT & LOSS ACCOUNT
For the period ended December 1997
NO INTEREST NO TAX BASIS
PROFIT AND LOSS APPROPRIATION ACCOUNT FOR THE PERIOD ENDED 31ST DEC 1997
N/A. Please refer to P&L Account
MUNIFF ZIAUDDIN & Co Commander H. Aftab Mrs. R. Husain Faisal Aftab
Chartered Accounts CHAIRMAN MANAGING DIRECTOR DIRECTOR
& VICE CHAIRMAN
Karachi April 27, 1998
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
Exhibit 3.1
RESTATED
ARTICLES OF INCORPORATION
of
METALS RESEARCH CORPORATION OF AMERICA
Pursuant to the applicable provisions of the Utah Business Corporation Act,
the undersigned Corporation Act, the undersigned Corporation adopts the
following Restated Articles of Amendment by stating the following:
1. The name of the corporation is Metals Research Corporation of America.
2. On Jan. 17, 1991, the Board of Directors adopted a resolution
approving the Restated Articles of Incorporation in the manner prescribed by
Utah law.
3. The following Restated Articles restate the entire text of the
Articles of Incorporation of said corporation as amended to date:
ARTICLE 1.
NAME AND DURATION
The name of the corporation is Metals Research Corporation of America and
the period of its duration shall be perpetual.
ARTICLE II.
REGISTERED OFFICE AND AGENT
The address of the initial registered office of the corporation which may
be changed by the Board of Directors, is 915 Continental Bank Bldg., Salt
Lake City, Utah, and the name of its initial registered agent at said address
is Richard M. Day.
ARTICLE III.
PURPOSE
The purpose of the corporation is to own, conduct, operate, maintain and
carry on the general business of selling, displaying and leasing of home and
office furniture and furnishings, or of any other product or service, and to
engage in any activity necessary or convenient to promote the interests of the
corporation or to enhance the value of its property to the fullest extent
permitted by law, and in furtherance of this purpose, to exercise all powers now
or hereafter granted or permitted by law, including the powers enumerated in
Utah Business Corporation Act.
ARTICLE IV.
CAPITALIZATION
The total number of shares which the corporation shall have authority to
issue is 100,000,000 (One Hundred Million) shares of common stock having a
par value of $-0.10 (Ten Cents) each; said share are all of the same class,
shall not be issued in series, and shall have one vote each."
ARTICLE V.
VOTING AND SHAREHOLDERS RIGHTS
Each outstanding share of the common stock of the corporation shall be
entitled to one vote on any matter submitted to a vote at a duly scheduled
meeting of the shareholders, each shareholder being entitled to vote his shares
in person or by proxy executed in writing. At each election for directors each
number of shares owned by him for as many persons as there are directors to be
elected.
There shall be no cumulative voting.
The shareholders shall not have the preemptive right to acquire additional
shares of the corporation.
ARTICLE VI.
REGULATION OF INTERNAL AFFAIRS OF THE CORPORATION
Section 1. Shareholders Meetings. An annual meeting of the shareholders
of the corporation shall hereafter be held, commencing in 1987, at such specific
time and place in August of each year in Vancouver, British Columbia, Canada as
may be fixed by the Board of Directors, or in such other city as the Board of
Directors may be duly adopted Resolution determine to be convenient to the
shareholders. The purposes of said meeting shall be an annual report by
management to the shareholders, election of directors, and to conduct such other
and further business as may be necessary or appropriate.
Annual and special meetings of the shareholders shall be called, and Notice
thereof shall be given, in accordance with applicable provisions of the Utah
Business Corporation Act.
Shareholders in attendance at a meeting in person or by proxy duly executed
in writing, and entitled to vote, shall constitute a quorum, each such
shareholder being entitled to vote the number of share owned by him, of record
and as of the record date for the meeting, on any matter submitted to a vote of
shareholders The vote of a majority of a quorum shall constitute the act of the
shareholders.
Section 2. Officers and management. The affairs and business of the
corporation shall be conducted by a Board of Directors consisting of seven
directors, provided that the number of directors may, by majority vote of the
shareholders, be changed to any number from three to eleven. Directors need not
be residents of this state or of the United States and need not be shareholders
in the corporation.
Members of the initial Board of Directors are:
NAME ADDRESS
Richard S. Wall 966 Prospect Street
Honolulu, Hawaii
Carl A . Swalberg 949 Conner Street
Salt Lake City, Utah
J. Stephen Reid 7048 Niumalu Loop
Honolulu, Hawaii
Michael S. Hansen 2037 East 5290 South
Salt Lake City, Utah
Boyce Reid Brown Jr. 700 Bishop
Honolulu, Hawaii
Bruce Cassell 1240 Ala Moana
Honolulu, Hawaii
Richard M. Day 1433 Wilson Avenue
Salt Lake City, Utah,
which directors shall hold office until the first annual meeting of the
shareholders and until their successors have been duly elected and qualified.
At the first annual meeting of shareholders and at each annual meeting
thereafter the shareholders shall elect directors to hold office until the next
succeeding annual meeting and until their successors are duly elected and
qualified. Vacancies in the Board of Directors may be filed by an affirmative
vote of the majority of the remaining directors, provided that a director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor. Any director elected by reasons of an increase in the number of
directors shall hold office until the next annual meeting.
The officers of the corporation shall be a President, a Secretary, a
Treasurer, and such number of Vice-Presidents as the Board of Directors may
determine. The officers shall be elected from the Board of Directors, and one
director may exercise and hold more than one office, except the offices of
President and Secretary shall not be held by the same person.
Section 3. Board of Directors - meetings, functions and powers. Meetings
of the Board of Directors shall be held at anytime and place designated by the
Board of Directors or by at least three directors. Notice of such meeting shall
be in the manner prescribed by the Board of Directors. A majority of the
directors holding office shall constitute a quorum for the transaction of
business, and the act of a majority of directors present at a meeting which a
quorum is present shall be the act of the Board of Directors.
The Board of Directors may define the duties of the various officers; until
such designation is made, the duties of the officers shall be those usually
incumbent upon holders of such offices.
The Board of Directors may make provision for reasonable compensation of
its members for their services as directors and establish the conditions upon
which such compensation shall be paid. Any director may also serve the
corporation in any other capacity and receive compensation for such other
services.
The Board of Directors shall have the power to adopt and amend by-laws for
governing the affairs of the corporation.
The Board of Directors may delegate certain duties in respect to the
affairs of the corporation to the various officers, to committees of the Board
of Directors, or to persons appointed or employed by the Board of Directors;
may require and fix the amount and conditions of bonds from the various
officers, agents, and employees, and may define and fix the terms and conditions
of employment of such other agents and employees.
The Board of Directors may sell, mortgage or otherwise deal with or dispose
of the property of the corporation, real or otherwise, upon such terms and
conditions and for such consideration as it deems appropriate, and the Board of
Directors shall have the power to fix and vary the amount to be reserved as
working capital and to otherwise govern the affairs, financing and management of
the corporation as the Board, in its discretion, deems proper.
Section 4. Books and records. The corporation shall keep adequate
books and records and minutes of its meetings at its registered office or at
such other suitable place as may be determined by the Board of Directors; such
books and records as are necessary shall be maintained at branches of the
corporation anywhere in the world.
The names and addresses of each of the shareholders of record of the common
stock of the corporation shall be conclusively presumed to be in accordance with
the stock ledger of the corporation. Such shareholders shall have all rights
usual to shareholders of a corporation, and as provided by applicable Utah law,
except as otherwise provided herein.
ARTICLE VII.
INCORPORATORS AND OFFICERS
The names of the incorporators of the corporation and the offices to be held by
them until their successors are duly qualified are:
NAME ADDRESS OFFICE
Richard S. Wall 966 Prospect Street President
Honolulu, Hawaii
Michael S. Hansen 2037 East 5920 South Vice-President
Salt Lake City, Utah
Boyce R. Brown, Jr. 700 Bishop Vice-President
Honolulu., Hawaii
Richard M. Day 1433 Wilson Avenue Vice-President
Salt Lake City, Utah
J. Stephen Reid 7048 Niumalu Loop Secretary
Honolulu, Hawaii
Carl A. Swalberg 949 Conner Street Treasurer
Salt Lake City, Utah
Date:January 17, 1991 _________________________
Robert Papalia, President
__________________________
Jack Loverock, Secretary
EXHIBIT 3.2
BYLAWS OF THE COMPANY
BYLAWS OF
METALS RESEARCH CORPORATION
OF AMERICA
TABLE OF CONTENTS
Section Page
1. OFFICES 1
1.1 Registered Office 1
1.2 Other Offices 1
2. MEETINGS OF SHAREHOLDERS 2
2.1 Place of meetings 2
2.2 Annual Meetings 2
2.3 Special Meetings 2
2.4 Notice of Meetings 2
2.5 Closing of Transfer Books 3
2.6 Record Date for Determination of Shareholder
Entitled to Receive Notice and Vote 3
2.7 No Record Date by Board 4
2.8 Registered Shareholders 4
2.9 List of Shareholders 4
2.10 Quorum 5
2.11 Voting 6
2.12 Proxies 6
2.12.1 Generally 6
2.12.2 Form of Proxy or Consent if Corporation
Has One Hundred or More Shareholders 7
2.13 Inspector of Election 8
Section Page
2.14 Shareholder Action by Consent Without a Meeting 9
3. DIRECTORS 10
3.1 Number of Directors 10
3.2 Election and Term of Office 10
3.3 Removal of Directors 10
3.4 Vacancies 11
3.5 Powers 11
3.6 Time and Place of Board Meetings 13
3.7 Notice of Board Meetings 13
3.8 Quorum of Directors 14
3.9 Action Without Board Meetings 14
3.10 Action Without Board Meetings 14
3.11 Committees of Directors 15
4. NOTICES 15
4.1 Notices to Directors or Shareholders 16
4.2 Waiver of Notice 16
5. OFFICERS 16
5.1 Officers 16
5.2 Election 16
5.3 Term 17
5.4 Subordinate Officers 17
5.5 Compensation 17
5.6 President 17
5.7 Vice President 18
5.8 Secretary 18
5.9 Treasurer 19
Section Page
6. GENERAL MATTERS 17
6.1 Signing of Checks, Drafts and Evidence
of Indebtedness 20
6.2 Corporate Seal 20
6.3 Stock Certificates 20
6.4 Replacement of Lost Certificates 21
6.5 Transfer of Shares 22
7. AMENDMENTS 23
7.1 Generally 23
7.2 By Directors 23
7.3 By Shareholders 23
BYLAWS
OF
METALS RESEARCH CORPORATION OF AMERICA
1. OFFICES
1.1 Registered Office. The Registered office for the
transaction of business of METALS RESEARCH CORPORATION OF
AMERICA, a Utah corporation (the "Corporation"), is hereby fixed
and located at the following address:
737 South Broadway
Salt Lake City, Utah
The Board of Directors is hereby granted full power and
authority to change the registered office from one location to
another. Any such change shall be noted on the Bylaws by the
Secretary, opposite this section, or this section may be amended
to state the new location.
1.2 Other Offices. The Corporation may also have
offices at such other places both within and without the State of
Utah as the Board of Directors may from time to time determine or
the business of the Corporation may require.
2. MEETINGS OF SHAREHOLDERS
2.1 Place of Meetings. All annual meetings or special
meetings of shareholders shall be held at any place within or
without the State of Utah as may be designated by the Board of
Directors. In the absence of such designation, the annual
meeting shall be held at the registered office of the
Corporation.
2.2 Annual Meetings. Annual meetings of shareholders
shall be held on such date and time to be designated by the Board
of Directors. At the annual meeting, directors shall be elected
and any another proper business may be transacted.
2.3 Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, may be called by the
Board of Directors or the holders of not less than one-tenth
(1/10) of all the outstanding shares entitled to vote at such
meeting.
2.4 Notice of Meetings. Written or printed notice of all
annual meetings or special meetings stating the place, day and
hours of the meeting shall be delivered not less than ten (10)
nor more than fifty (50) days before the date of the meeting,
either personally or by mail, by or at the direction off the
president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such
meeting.
If mailed, such notice shall be deemed to be delivered 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.
2.5 Closing of Transfer Books. For the purpose of
determining shareholders entitled to notice of any meeting or to
vote or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other purpose,
the Board of Directors may provide that the stock transfer books
shall be closed for a stated period but not exceed, in any case,
fifty (50) days. If the stock transfer books shall be closed for
the purposes of determining shareholders entitled to notice of
any meeting or to vote at a meeting of shareholders, such books
shall be closed for at least ten (10) days immediately preceding
such meeting.
2.6 Record Date for Determination of Shareholders Entitle to
Receive Notice and Vote. In lieu of closing the stock transfer
books, the Board of Directors may fix, in advance, a record date
which shall not be more than fifty (50) days and, in case of a
meeting of shareholders, not less than ten (10) days before the
date on which the particular action, requiring such determination
of shareholders, is to be taken.
2.7 No Record Date by Board. If the stock transfer books
are not closed and no record date is fixed for the purpose of
determinating shareholders entitled to notice of any meeting or
to vote, or entitled to receive payment of a dividend, the date
on which notice of the meetings is mailed or the date on which
the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for such
determination of shareholders. 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.
2.8 Registered Shareholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as
such owner, and hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be
bound to recognize any equitable or other claim to or interest in
such share or shares on the art of any person, whether or not it
shall have express or other notice thereof, except as otherwise
provided by the laws of Utah.
2.9 List of Shareholders. The officer or agent having charge
of the transfer books for shares shall make, at least ten (10)
days before each meeting f shareholders, a complete list of the
shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of
shares held by each, which list, for a period of ten (10) days
prior to such meeting, shall be kept on file at the registered
office of the Corporation and shall be subject to inspection by
any shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place
of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original
share ledger or transfer book, or a duplicate thereof, shall be
prima facie evidence as to who are the shareholders entitled to
examine such list or share ledger or transfer book or to vote at
annual meeting of the shareholders.
2.10 Quorum. The holders of the majority of shares entitled to
vote, represented in person or by proxy, shall constitute a
quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the
articles of incorporation. If however, such quorum shall not be
present in person or represented by proxy shall have power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting, at which a quorum shall
be present or represented any business may be transacted which
might have been transacted at the meeting as originally notified.
If a quorum is present, the affirmative vote of a majority of
the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders unless the
vote of a greater number or voting by classes is required by
statute of the articles of incorporation.
2.11 Voting. Each outstanding share shall be entitled to one
vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by
proxy execute in writing by the shareholder or by his duly
authorized attorney-in-fact. No proxy shall be valid after
eleven months from its date of execution, unless otherwise
provided in the proxy.
In all elections for directors every shareholder, entitled
to vote, shall have the right to vote, in person or by proxy, the
number of shares of stock owned by him, for as many persons as
there are directors to be elected.
2.12 Proxies.
2.12.1 Generally. Every person entitled to vote
shares or execute consents with respect thereto shall have the
right to do so either in person or by an agent or agents
authorized by a written proxy signed by such person or his duly
authorized attorney in fact and filed with the Secretary. A
proxy shall be deemed signed if the shareholder name is placed on
the proxy (whether by manual signature, typewriting, telegraphic
transmission, or otherwise) by the shareholder or the shareholder
attorney in fact. Any proxy duly executed and filed is not
revoked and continues in full force and effect in accordance with
the terms until:
(a) An instrument revoking it or a duly executed proxy bearing
a later date is filed with the Secretary of the Corporation
prior to the vote pursuant thereto:
(b) The person executing the proxy attends the meeting and votes
in person; or
(c) Written notice of the death or incapacity of the maker of
such proxy is received by the Corporation before the vote
pursuant thereto:
provided that no such proxy shall be valid after the expiration
of eleven (11) months from the date of its execution, unless
otherwise provided in the proxy.
2.12.2 Form of Proxy or Consent if Corporation Has One
Hundred or More Shareholders. If the Corporation has outstanding
shares held of record by one hundred (100) or more persons, but
is not subject to the reporting requirements of the Securities
Exchange Act of 1934, any proxy or form of written consent
distributed to ten (10) or more shareholders shall afford the
person voting an opportunity to specify a choice among approval,
disapproval, or abstention as to each matter of group of related
matters, other than election to office.
2.13 Inspector of Election. Before any meeting of
shareholders, the Board of Directors may appoint any person or
persons other than nominees for office to act as inspectors of
election at the meeting or its adjournment. If no inspectors of
election are so appointed, the chairman of the meeting may, and
on the request of any shareholder or a shareholder's proxy shall,
appoint inspectors of election at the meeting. The number of
inspectors shall be either one (1) or three (3). If inspectors
are appointed at a meeting on the request of one or more
shareholders or proxies, the holders of a majority of shares or
their proxies present at the meeting shall determine whether one
(1) or three (3) inspectors are to be appointed. If there are
three (3) inspectors of election, the decision, act or
certificate of all. If any person appointed as inspector fails
to appear or fails or refuses to act, the chairman of the meeting
may, and under the request of any shareholder or a shareholder's
proxy shall, appoint a person to fill that vacancy. These
inspectors shall:
(a) Determine the number of shares outstanding and the voting power
of each, the shares represented at the meeting, the existence of
a quorum, and the authenticity, validity, and effect of proxies:
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in
any way arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the results; and
(g) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
2.14 Shareholder Action by Consent Without a Meeting. Any action
required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by
all of the shareholders entitled to vote with respect to the
subject matter thereof.
3. DIRECTORS
3.1 Number of Directors. The authorized number of
directors shall be seven (7). The number of directors may be
increased or decreased by an amendment to these Bylaws duly
adopted by the Board of Directors, provided that the number of
directors shall never be less than three (3). A decrease in the
number of directors shall not effect the term of any incumbent
director. Directors need not be residents of the State of Utah
nor shareholders of the Corporation.
3.2 Election and Term of Office. The directors, other than
the first board of directors, shall be elected at the annual
meeting of the shareholders, and each director elected shall
serve until the next succeeding annual meeting and until his
successor shall have been elected and qualified. The first board
of directors shall hold office until the first annual meeting of
shareholders.
3.3 Removal of Directors. At a meeting expressly called
for that purpose, one or more directors or the entire Board of
Directors may be removed, with or without cause, by a vote of the
holders of a majority of the shares then entitled to vote at an
election of directors.
3.4 Vacancies. Vacancies occurring in the Board of
Directors may be filled by the affirmative vote of a majority of
the remaining directors though less than a quorum of the Board of
Directors. A director elected to fill a vacancy shall be elected
for the unexpired term of his predecessor in office. Any directorship to be
filled by reason of an increase in the number of directors shall be filled by
the Board of Directors and shall hold office until the next annual meeting.
Any directorship to be filled by reason of the removal of one or more directors
by the shareholders may be filled by election by the shareholders at
the meeting at which the directors or directors are removed.
3.5 Powers. Subject to limitations of the Articles of
Incorporation, of these Bylaws, and the Utah Business Corporation
Act as to action to be authorized or approved by the
Shareholders, all corporate powers shall be exercised by or under
the authority of and the business and affairs of the Corporation
shall be controlled by, the Board of Directors. Without
prejudice to such general powers, but subject to the same
limitations, the Board of Directors shall have the following
powers:
(a) To select and remove all other officers, agents and
employees of the Corporation, prescribe such powers and duties
for them as may not be inconsistent with law, with the Articles
of Incorporation or the Bylaws, fix their compensation, and
require from them security for faithful service.
(b) To conduct, manage and control the affairs and business
of the Corporation, and to make such rules and regulations
therefor not inconsistent with law, the Articles of Incorporation
or the Bylaws, as they may deem best.
(c) To change the registered office in Utah from one
location to another; to fix and locate from time to time one or
more branch or subordinate offices of the Corporation within or
without the State of Utah; to designate any place within or
without the State of Utah for the holding of any shareholders'
meeting or meetings; and to adopt, make and use a corporate seal,
prescribe the forms of certificates for share of stock, and alter
the form of such seal and of such certificates form time to time
as in their judgement they may deem best, provided that such seal
and such certificates shall at all times comply with the
provisions of law.
(d) To authorize the issuance of shares of stock of the
Corporation from time to time upon such terms and for such
considerations as may be lawful.
(e) To borrow money and incur indebtedness for the purposes
of the Corporation, and to cause to be executed and delivered
therefor, in the corporate name, promissory notes, bonds,
debentures, deeps of trust, mortgages, pledges, hypothecation, or
other evidences of debt and securities therefor.
(f) To carry out and effectuate the powers and purposes of
the Corporation.
3.6 Time and Place of Board Meetings. Meetings of the
Board of Directors, regular or special, may be held either within
or without the State of Utah as may be designated by the Board of
Directors. The first meeting of each newly elected Board of
Directors shall be held at such time and place as shall be fixed
by the vote of the shareholders at the annual meeting and no
notice of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided a
quorum shall be present, or it may be convene at such place and
time s shall be fixed by the consent in writing of all the
directors.
3.7 Notice of Board meetings. Regular meetings of the Boar
of Directors may be held without notice immediately following the
Annual Meeting of Shareholders and at such time and at such place
as shall from time to time be determined by the Board on ten
day's notice. Special meetings of the Board of Directors shall
be held on three days' notice to each director, either personally
or by mail or by telegraph. Attendance of a director at any
meeting shall constitute a waiver notice of such meeting, except
where a director attends for the express purpose of objecting to
the transaction of any business because the meeting is not
lawfully called or convened.
Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
3.8 Quorum of Directors. A majority of the directors shall
constitute a quorum for the transaction of business unless a
greater number is required by the Utah Business Corporation Act
or by the Articles of Incorporation. The act of a majority of
the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors, unless the act of a
greater number is required by the Utah Business Corporation Act
or by the Articles of Incorporation. If a quorum shall be
present at any meeting of directors, the directors present may
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
3.9 Action Without Board Meetings. Any action required or
permitted to be taken by the Board of Directors may be taken
without a meeting, if all members of the Board shall individually
or collectively consent in writing to such action. Such action
shall have the same force and effect as an action duly authorized
and approved at a meeting of directors. A consent in writing,
setting forth the action so taken, shall be signed by all of the
directors entitled to vote with respect tot he subject matter
thereof.
3.10 Committees of Directors. The Board of Directors, by a
resolution adopted by a majority of the number of directors fixed
by these Bylaws may designate a committee or committees
consisting of not less than two directors which committee or
committees, to the extent provided in such resolution, shall
exercise all of the authority of the Board of Directors in the
management of the corporation, except as otherwise required by
law. Vacancies in the membership of the committee shall be
filled by the Board of Directors at a regular or special meeting
of the Board of Directors. The committee or committees shall
keep regular minutes of its proceedings and report the same to
the board when required.
4. NOTICES
4.1 Notice to Directors or Shareholders. Whenever, under
the provisions of the Utah business Corporation Act, the Articles
of Incorporation or these Bylaws, notice is required to be given
to any director or shareholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by
mail, addressed to such director or shareholder, at his address
as it appears on the records of the corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at
the time when the same shall be deposited in the United States
mail. Notice to directors may also be given by telegram.
4.2 Waiver of Notice. Whenever any notice whatever is
required to be given under the provisions of the Utah Business
Corporation Act, the Articles of Incorporation or these Bylaws, a
waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
5. OFFICERS
5.1 Officers. The officers of the Corporation shall be a
President, a Secretary and a Treasurer and such numbers of Vice-Presidents as
the board may determine.
5.2 Election. The Board of Directors at its first meeting
after each annual meeting of shareholders shall choose a
President, one or more Vice-Presidents, a Secretary and a
Treasurer, none of whom need be a director.
5.3 Term. The officers of the Corporation shall hold
office until their successors are chosen and qualify. Any
officer elected or appointed by the Board of Directors may be
removed at any time by the affirmative vote of a majority of the
Board of Directors. Any vacancy occurring in any office of the
Corporation shall be filled by the Board of Directors.
5.4 Subordinate Officers. The Board of Directors may
appoint and may empower the President to appoint such other
officers as the business of the Corporation may require, each of
whom shall hold offices for such period, and have such authority
and perform such duties as are provided in these Bylaws or as the
Board of Directors may from time to time determine.
5.5 Compensation. The salaries of all officers of the
Corporation shall be determined by the Board of Directors.
5.6 President. The President shall be the chief
executive officer of the corporation and shall have, subject to
the control of the Board of Directors, general supervision,
direction and control of the business and affairs of the
Corporation. He shall preside at all meetings of the
shareholders and the Board of Directors. He shall be an officer
and a member of all standing committees, if any, and shall have
the general powers and duties of management usually vested in the
president of a corporation, and shall have such other powers and
duties as may be prescribed by the Board of Directors or these
Bylaws.
5.7 Vice-President. The Vice-President(s), shall have
such powers and perform such other duties as from time to time
may be prescribed for them respectively by the Board of
Directors, these Bylaws or the President.
5.8 Secretary. The Secretary shall:
(a) Record, or cause to be recorded, and keep, or cause to be kept,
at the registered office or such other place as the Board of
Directors may order, a book of the minutes of all actions and
meetings of directors, committees of directors, and shareholders,
with, in the case of meetings, the time and place of holding,
whether regular or special, and if special, how authorized; the
notice thereof given; the names of those present at directors'
and committee meetings; the number of shares present or
represented at shareholders' meetings; and the proceedings
thereof.
(b) Keep, or cause to be kept, at the registered office of the
Corporation or at the office of the Corporation transfer agent or
registrar, a share register, or a duplicate share register,
showing the names of the shareholders and their addresses; the
number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of
cancellation of every certificate surrendered for cancellation.
(c) Give, or cause to be given, notice of all of the meetings of the
shareholders and of the Board of Directors required by the Bylaws
or by law to be given, keep the seal of the Corporation in safe
custody,and have such other powers and perform such other duties
as may be prescribed by the Board of Directors or these Bylaws.
5.9 Treasurer. The Treasurer shall be the chief
financial officer of the Corporation and shall keep and maintain,
or cause to be kept and maintained, adequate and correct accounts
of the properties and business transactions of the Corporation,
including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings and
shares. The books of account shall be open to inspection by any
director at all reasonable times. The Treasurer shall deposit all
moneys and other valuables in the name and to the credit of the
Corporation with such depositories as may be designated by the
Board of Directors, shall disburse the funds of the Corporation
as may be ordered by the Board of Directors, shall render to the
President and directors, whenever they request it, an account of
all of his transaction as Treasurer and of the financial
condition of the Corporation, and shall have such other powers
and perform such other duties as may be prescribed by the Board
of Directors or these Bylaws.
6. GENERAL MATTERS
6.1 Signing of Checks, Drafts and Evidence of Indebted-ness. All checks,
drafts or other orders for payment of money, notes or other evidence of
indebtedness, issued in the name of or payable to the Corporation, shall be
signed or endorsed by such person or persons and in such manner as, from time to
time shall be determined by the Board of Directors.
6.2 Corporate Seal. The Corporation shall have a corporate
seal and an impression thereof shall be made in the minute book
of the Corporation. However, failure to affix the seal shall not
affect the validity of any instrument.
6.3 Stock Certificates. A certificate or certificates for
shares of the stock of the Corporation shall be issued to each
shareholder when such shares are fully paid. All certificates
shall be signed in the name of the Corporation by the President
or a Vice-President and the Secretary of the Corporation
certifying the number of shares and the class owned by the
shareholder. Any or all of the signatures on the certificate may
be facsimile if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the Corporation
or an employee of the Corporation. In case any officer who has
signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with
the same effect as if he were such officer at the date of its
issue. Each certificate representing shares shall state upon the
face thereof: (a) that the Corporation is organized under the
laws of the State of utah; (b) the name of the person to whom
issued; (c) the number and class of shares; and (d) the par value
of each share represented by such certificate.
No certificate shall be issued for any share until such share is
fully paid.
6.4 Replacement of Lost Certificates. The Board of
Directors shall issue a new certificate for shares in lieu of an
old certificate unless the latter is surrendered to the
Corporation and cancelled at the same time. A new certificate
may be issued without surrender of the old certificate providing
that the owner of the old certificate or the owner's legal
representative files an affidavit with the Treasurer (or such
other officer or agent of the Corporation as may be designated by
the Board of Directors) stating that the old certificate is lost,
destroyed or stolen and the circumstances surrounding such loss,
destruction or theft and containing such other representations
and agreements that may be reasonably required, together with a
sufficient indemnity bond or other indemnity or security
sufficient to protect the Corporation against any claim, expense
or liability on account of such lost, destroyed or stolen certificate.
Unless otherwise ordered by the Board of Directors, the
provisions of this Section may be implemented by or under the
direction of the Treasurer, without further action by the Board,
or the Board may delegate implementation hereof to the
Corporation's transfer agent pursuant to blanket lost instrument
bond arrangement or otherwise. The Treasurer shall have full
authority, subject to applicable law, to determine the form of
affidavit, agreements, and indemnity to be required hereunder as
a condition to replacement of any lost, destroyed or stolen
certificate. Upon the issuance of a new certificate, the rights
and liabilities of the Corporation, and of the holders of the old
and new certificates, shall be governed by the applicable
provisions of the Utah Commercial Code.
6.5 Transfer of Shares. Upon surrender to the Corporation
or the transfer agent of the Corporation of a certificate
representing shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, a
new certificate shall be issued to the person entitled thereto,
and the old certificate cancelled and the transaction recorded
upon the books of the Corporation.
7. AMENDMENTS
7.1 Generally. These Bylaws may be adopted or amended or
repealed, subject to repeal or change by action of the
shareholders, by the Board of Directors unless reserved to the
shareholders by the Articles of incorporation.
7.2 By Directors. No Bylaws shall be adopted by the
directors which shall require more than a majority of the voting
shares for a quorum at a meeting of shareholders, or more than a
majority of the votes cast to constitute action by the
shareholders, except where higher percentages are required by law
or by the Articles of Incorporation.
7.3 By Shareholders. The shareholders shall have the right
to change or repeal any Bylaws adopted by the directors.
CERTIFICATE OF SECRETARY OF
METALS RESEARCH CORPORATION OF AMERICA
I, the undersigned, do hereby certify that;
(1) I am the duly elected and acting Secretary of
Metals Research Corporation of America.
(2) The foregoing Bylaws, comprising 23 pages, are a
true and correct copy of the Bylaws of this corporation and are
in full force and effect as of the date hereof.
Executed at Los Angeles, California, January 8, 1991.
Jack Loverock, Secretary
EXHIBIT 4.1
SPECIMEN OF SECURED CORPORATE DEBENTURE
Denomination + CUSIP + Registration + Series + Certificate Number
<20,000,000.00 USD + + + 1998-B + 001>
SECURED CORPORATE DEBENTURE, SERIES 1998-B
CERTIFICATE # 001, $20,000,000.00 USD
THE METALS RESEARCH GROUP CORP.
A corporation duly organized and existing pursuant to the laws
of the State of Utah, USA, Registration number 054717,
with offices at 1390 Ottawa Avenue,
West Vancouver, British Columbia, Canada
ISSUES THIS DEBENTURE CERTIFICATE COLLATERALLY SECURED
AND GUARANTEED FOR PAYMENT BY SECURITIES DERIVED FROM
CORPORATE OR REINSURANCE COMPANIES RATED AA OR BETTER,
FOR THE PURPOSE OF PAYING FROM THE LIQUIDATED PROCEEDS
THE FULL NOMINAL VALUE OF THIS CERTIFICATE.
THIS CORPORATE DEBENTURE IS ISSUED AT ZERO INTEREST PER
ANNUM AND IS DUE FOR PAYMENT IN FULL ON DEMAND AT AN
OFFICE OR BANKING INSTITUTION AUTHORIZED BY THE COMPANY
ON OR AFTER 28 DAYS OF THE DUE DATE.
This is to certify that the BEARER of this Debenture Certificate with a
face value of $20,000,000.00 USD of the above named Company may
present this Certificate for redemption by the Paying Agent Bank
on the 14th day of June, 1999 or after, ON DEMAND.
SURETY GUARANTOR
EASTERN GENERAL INSURANCE COMPANY LIMITED
5302-E Memorial Drive, Suite 1407
Stone Mountain, Georgia 30083
RETROCESSIONAIRES
MUNICH RE:75%
SWISS RE:25%
____________________________ _________________________________
DIRECTOR DIRECTOR
THIS CORPORATE DEBENTURE IS ASSIGNABLE AND TRANSFERRABLE WITH WRITTEN CONSENT.
The Surety underwriting this Debenture is in effect for a period of not more
than 0ne (1) year expiring no later than midnight 14 June, 1999. If no notice
of default is delivered to Surety, it will lapse.
EXHIBIT 5.1
The attorney's letter was late arriving for this submission. The letter will be
filed by amendment immediately upon its receipt.
AFFIDAVIT
I, Godfrey (Geoff) Waterhouse, businessman, of 5302-E Memorial Drive,
Suite 1407 at Stone Mountain, Georgia, hereby make oath and say as follows;
1) That I am the President of The Finsure House, Inc.
2) That I am the attorney-of-fact for Eastern General Insurance Company
Limited of Karachi, Pakistan; and
3) That I am a director of Union Insurance Company of Pakistan Limited; and
4) That I verily believe the following information to be true:
Eastern General Insurance Company Limited has reinsurance with Munich Re.
and Swiss Re. currently in full force. In the event that Eastern General
Insurance Company would default on their Financial Guarantee Bond, the
reinsurance companies will pay in accordance to the surety limits of Five
Hundred Million US Dollars (US$500,000,000.00) per bond issued by Eastern
General Insurance Company Limited. The retrocessionaires are Munich Re.
seventy-five percent (75%) and Swiss Re. twenty-five percent (25%).
Munich Re. whose headquaters offices are located at Hong Kong are acting by
and through its authorized agent, Pakistan Insurance Corporation, whose
telephone number is (9221) 7212161 and facsimile number is (9221)7212161
and the reference policy number is AO/2772024/12/97,
Swiss Re. whose headquarters offices are located at Switzerland are acting
by and through its authorized agent, Pakistan Insurance Corporation, whose
telephone number is (9221) 7212161 and facsimile number is (9221) 7212161
and the reference policy number is TA/535/12/97
Sworn to and sunscribed before
me at the City of Stone Mountain
in the State of Georgia this 27th /s/ Godfrey (Geoff) Waterhouse
day of April, 1998. Godfrey (Geoff) Waterhouse
/s/John C. Parris
John C. Parris
Notary Public Commission Expires 2002
Verified and Agreed
/SEALED/
NOTARY PUBLIC SEAL /s/ Dabir Hussain
DEKALB COUNTY, GA Dabir Hussain
Assistant Manager
Treaty & CR.
/SEALED/
Pakistan Insurance
Corporation
MANAGING GENERAL AGENCY AGREEMENT
ADDENDUM "B"
THIS ADDENDUM, effective the 21st day of August, 1997 is hereby attached to and
made a part of the Managing General Agency Agreement made by and between the
undersigned parties dated the 21st day of August, 1997.
1. The Managing General Agent shall be authorized to write and bind all
classes of business transacted by the Company including, but not limited to,
the following lines of coverage:
Financial Guarantee Bonds:
Maximum Limit per Bond: $500,000,000.00 USD (Five Hundred Million US
Dollars)
Signed on behalf of the Company
/s/ Commander Husain Aftab
Commander Husain Aftab
Chairman, Eastern General Insurance Company Limited
/SEAL/
CORPORATE SEAL
EASTERN GENERAL INSURANCE
COMPANY LIMITED
Signed on behalf of the Managing General Agent
/s/Godfrey (Geoff) Waterhouse /seal/
Godfrey (Geoff) Waterhouse THE FINSURE HOUSE, INC.
President, The Finsure House, Inc. CORPORATE
SEAL
1998
Riaz-ul-Hasan & Co.
BAR-AT-LAW
2A/I, 14th South Street, DHA, Phase
2, Karachi, Pakistan
Attorneys at Law
Supreme Court of Pakistan
Also at High Courts.
Standing Council of the
Govt. of Pakistan.
Date: 24th Nov/97.
Ref: EGG/HO/769/97
Phone: 0300-232037
E-mail: [email protected]
To Whom It May Concern:
We have to certify that we are the lawful attorneys of Eastern General
Group of Companies and we are also the authorized barristers of the
group and as well as custodians of their finances with the authorities
to disburse the funds against claims under their insurance policies
without reference to the group but of course after full satisfaction as
to correctness and authentication.
We are also responsible & custodians to keep in safe custody the
reinsurance treaties of the group companies and are allowed to answer
any query in this regard, directly to the responsible authorities if
necessary.
/s/Riaz-ul-Hasan & Co
Riaz-ul-Hasan & Co.
BARRISTERS
Pakistan Insurance Corporation
BY COURIER SERVICE
TO COMPANY: EASTERN GENERAL INSURANCE COMPANY LIMITED. TELEFAX NO:
COUNTRY: 3RD FLOOR, NADIR HOUSE,
KARACHI.
ATTENTION: MS. REHANA HUSSAIN, MANAGING DIRECTOR DATE: 06-04-1998
OUR REF: CR & TREATY DEPARTMENT
URGENT
YOUR REF: CR-21(23)/98
DEAR SIR,
SUB: CONFIRMATION OF PLACEMENTS OF YOUR TREATIES
WITH REFERENCE TO YOUR SPECIFIC INQUIRIES IN RESPECT OF YOUR BOND
AND GUARANTEEES COVERS, I AM DIRECTED TO CONFIRM THAT OUT OF OUR
MASTER COVERS WE HAVE PROVIDED THE FOLLOWING PARTICIPATION TO
YOUR COMPANY:
BOND/GUARANTEES PER POLICY UPTO A LIMIT OF US DOLLARS 500 MILLION
EFFECTIVE FROM 15 DEC 1997, RENEWAL IN DEC EVERY YEAR AS PER
MUTUAL CONSENT.
THE SECURITIES:
MUNICH RE 75% OUR REF NO. AO/27772024/12/97
SWISS RE 25% OUR REF NO. TA/535/12/97
REGARDS
/SEAL/
MINISRTY OF FORIEGN AFFAIRS
/S/ HAMID ALI KHAN PAKISTAN
(HAMID ALI KHAN) authenticated verified
ASSTT. DEPARTMENTAL OFFICER 7/4/98
/s/"the signature is illegible"
/stamped/"the text of the stamp is illegible"
D-16 NOORANI VIEW, GOLD STREET, GARDEN EAST KARACHI, PAKISTAN
PHONE (92-21) 7212161 FAX: (92-21) 7212161
Pakistan Insurance Corporation
To COMPANY: Eastern General Insurance Company Limited TELEFAX NO:
COUNTRY: Pakistan (009221) 7210904
Attention: Mr. A.H. Aali, Director DATE: 14th May 98
OUR REF: TY/EGI/98/206
Confidential
YOUR REF: PIC/EG/98/98.21
Dear Mr. Aali,
/SEAL/
THE OFFICIAL SEAL
Sub: Representation NOTARY PUBLIC
UNDER NOTARY LAWS
Please refer to our discussion regarding Munich Re. & Swiss Re We have to
confirrn that PIC is the National Representative and Reinsurance Organization
of Pakistan and it has continuing relationship with Munci Re. & Swiss Re.
Therefore you should not have any doubts about it.
Yours FaithfulIy
/s/ M.I. Khan
M.I. Khan /SEAL/
Chief manager Re. Pakistan Insurance Corporation
/SEAL/ /SEAL/
THE OFFICIAL SEAL Notarized to Take /SEAL/
KARACHI PAKISTAN Effect to all ATTESTED
Continents out /s/S.S. Ali
of Pakistan Under S.S. ALI
International Advocate Notary Public
Law Karachi (Pakistan)
14 MAY 1998
D-16 NOORANI VIEW, GOLD STREET, GARDEN EAST KARACHI, PAKISTAN
PHONE (92-21) 7212161 FAX: (92-21) 7212161.
Pakistan Insurance Regulatory Authority
B-6 Green Garden, Naserwanji Road, Garden East Karachi, Pakistan
Phone: (92-21) 7217446, Fax: (92-21) 7217446 E-mail:[email protected]
Ref: PIRA/EGG/US/98-1
Date: April 2, 1998
Confidential
TO WHOM IT MAY CONCERN
Confirmation of the retrocession program of
The Eastern General Insurance Company
We are pleased to confirm, after examination of the confidential reinsurance
treaty documents at the office of Mr. Riazul Hasan Barrister and after putting
up an under-taking of non disclosure of the material information regarding terms
and conditions, the limits and retrocessionaires of the company are as follows:
- - The limit per sinngle Bond/Guarantee is US$ 500 million.
- - The retrocessionaires are Munich Re 75%
Swiss Re 25%
/s/ S. Ahktar Zaidi
S. Ahktar Zaidi
Director (legal services)
PIRA
INSURANCE REGULATORY AUTHORITY
(GOVT. OF PAKISTAN)
ISLAMABAD
Office of the Director(Public Relations)
24-11-97,
DO/97, PRIVATE AND CONFIDENTIAL
To Whom It May Concern:
This is to certify that M/s. Eastern General Insurance Company Ltd., is a well
established company with surplus funds of over US$100 million and also it has
reserves and assets well over US$200 million as at 30th November 1997 and the
performance of the company is excellent.
It enjoys the backing of world class reinsurers like UK, German and Swiss
underwrtiers and also backed by the Pakistan Insurance Corporation who have
retrocession treaties backed by the companies like Munich Re, Swiss Re, Colon Re
and London Lloyds' Underwriters. The company has the highest insurance limits
in all classes of General Insurance business i.e. Fire & Allied Perils, Marine
Cargo, Marine Hull All Risk, Aviation All Risk, Engineering All Risk, Bonds all
types, Motor, all sub classes of General Accident business i.e. Personal
Accident, Burglary & Theft, Bankers's Blanket Cover, Health Insurance etc.
The company has informed for increase of its paid-up capital from US$15.5
million to US$30 million during Dec 1997.
The company is the leading company of the Eastern General Insurance Group of
Companies which owns the following companies:
Shalimar General Insurance Company Ltd. (Pakistan)
Dubai National General Insurance Company Ltd. (UAE)
National Insurance & Reinsurance Company of (UAE) Ltd. (Caymn Islands).
The Eastern General Group of Companies owned by Husain family, who have also got
a large interest in the non-insurance field as well i.e. Textile, Imports &
Exports, Construction, Real Estate, Stocks and Aviation having assets as at 30th
June 1997 of US$3500 million.
/s/F.S.R. Kureshi
(F.S.R. Kureshi)
Director (Public Relations)
Chairman,
Eastern General Group,
68/D/2, PECHS,
Karachi.
EXHIBIT 23.1
The accountant's letter was late arriving for this submission. The letter will
be filed by amendment immediately upon its receipt.
EXHIBIT 23.2
The lawyer's consent letter was late arriving for this submission. The letter
will be filed by amendment immediately upon its receipt.
EXHIBIT 24.1
FORM 15C2-11
JUNE 30, 1997
THE METALS RESEARCH GROUP CORP.
Listed on the National Association of Securities Dealers, Inc.
Electronic Bulletin Board.
Symbol: "MLRA"
INFORMATION STATEMENT
Pursuant to Rule 15C2- 11 under the Securities Exchange Act of 1934
1390 Ottawa Avenue
West Vancouver
British Columbia, Canada, VAT 2H5
Tel: (504) 926-6175 Fax: (604) 926-5371
Dated: August 16, 1998
Introduction:
Management provides the following information in compliance with the provisions
of Rule 15C2-11 promulgated under the Securities Exchange Act of 1934, as
amended in order to provide the recipient with current information about the
business operations and financial condition of The Metals Research Group Corp.
(the "Company"). All financial information contained herein is expressly
qualified by the financial statements of the Company attached hereto.
Interested parties are encouraged to contact management of the Company at the
address listed on the cover page hereof in order to request additional
information or to ask questions about the information contained herein.
This document does not constitute an offer to sell any securities, or the
solicitation of an offer to buy any securities, to any person in any state or
in any jurisdiction. This document has been prepared to provide general
information about the Company to the brokerage, financial and investment
community, including the general public, for distribution on and after the date
set forth on the cover page hereof. As of the date hereof, this Information
Statement does not contain any untrue statements or omission of any material
fact necessary to make the statements made not misleading in light of the
circumstances under which they were made.
This Information Statement may contain summaries of certain documents believed
by the Company to be accurate. However, reference is made to such documents for
complete information concerning the rights and obligations of the parties
thereto. Copies of any such documents are available at the office of the
Company listed on the cover page hereof. All such summaries, if any, are
qualified in their entirety by this reference.
______________
FILING PURSUANT TO RULE 15C2-11
SECTION (a) (5)
1. The exact name of the Issuer and its predecessor (if any);
MLRA was incorporated in Utah on July 22nd, 1971 under the name Hawaii
Furniture Lease. It was initially organized to conduct a furniture leasing
business that was unsuccessful. The Company became dormant in 1975 and
remained so until July, 1984. During the fiscal year ending June 30, 1985,
the Company was reactivated and its name was changed to Metals Research
Corporation of America, and on December 15th, 1997 changed to The Metals
Research Group Corp.
2. The address of its principle executive offices;
1390 Ottawa Avenue, West Vancouver, British Columbia, Canada,
V7T 2H5 Telephone (604) 926-6175 or fax: (604) 926-5371.
3. The state of incorporation, if it is a corporation:
The Metals Research Group Corp. was organized under the State of Utah on
July 22nd, 1971.
4. The exact title and class of the security:
The Company's Articles of Incorporation authorizes it to issue a total of
100,000,000 shares, all of which are designated as "Common Stock."
5. The par or stated value of the security:
Was $0.10 (ten Cents) before consolidation.
6. The number of shares or total amount of securities outstanding as of the
end of the Issuer's most recent fiscal year:
MLRA has authorized capital of 100,000,000 common shares, of which
4,429,773 are issued and outstanding The Company's shares are not
registered under the Securities Act of 1934, the shares trade in the
United States on the NASD Electronic Bulletin Board, and their Cusip
Number is 591320 20 5.
7. The name and address of the transfer agent:
American Registrar & Transfer Co., 10 Exchange Place, Suite 705,
P.O. Box 1798,
Salt Lake City, Utah 84110.
8. The nature of the issuer's business:
MLRA is engaged in the production development of its 54% owned mineral
sands Lillooet project in southwestern British Columbia. The Company has
methodically overcome significant obstacles to reach its current stage of
development.
The project the Company is involved in at this moment is in the extraction
and metallurgical recovery of precious metals, magnetite concentrates and
rare earth from the mineral bearing black alluvial sands. Products
include, gold silver, platinum and others in that metals group plus
zirconium. Over UD$6.5 million has been expended since the mid 1980's.
Capital costs to bring on stream a 40,000 tonnes per day open cut surface
operation and construction of a plant treatment complex on site is
estimated at UD$50 million. Production start up is scheduled 9 months from
obtaining senior financing. Expressions of interest suggest the monies
would be obtained from major financial institutions with minimum equity
dilution. Phase two calls for the installation of similar size capacity
units and the implementation of gravel operation for the sale of aggregates
to the industrial sector. Consequently, the Lillooet project could evolve
into a highly profitable, horizontally integrated operation.
9. The nature of the products or services offered:
The company is in the business of mining gold and precious metals and
offering them for sale.
A. The Company announced on August 26th, 1997 that it acquired 2,000,000
shares of A & A International Industries Inc. ("ANAFF" NASDAQ) for
investment purposes.
B. The Company announced on October 10, 1997 that it will issue a
dividend to its registered shareholders. The dividend will be for one (1)
share of AIC International Resources Corporation ("AIC") for every five
hundred (500) shares of Metals.
AIC is a public company trading on the Vancouver Stock Exchange under
Symbol "AIX" and on the NASD Electronic Bulletin Board under Symbol
"AICUF:.
The dividend is to be effected on the week of October 27, 1997 for
shareholders on record of Friday, October 24, 1997.
C. By Articles of Amendment filed December 15th, 1997 the Company changed
its name from "Metals Research Corporation of America" to "The Metals
Research Group Corp.";
D. By Articles of Amendment filed December 15th, 1997, the Company
consolidated its share capital of up to 20 (twenty) old shares for one
new share, so that the authorized share capital is altered from
100,000,000 Common shares without par value, of which 88,589,679 share
are issued, to 5,000,000 Common shares, of which up to 4,429,484 shares
will be issued. The authorized share capital was increased from 5,000,000
to 100,000,000 Common shares, after the consolidation of the share capital,
and the effective date was January 14th, 1998.
E. The Company has up to 44% vested interest in Pacrim Information
Systems,Inc. ("Pacrim") a corporation incorporated under the laws of the
State of California and trades on the NASD Bulletin Board under Symbol
"PAKR", (Web:http://www.buypakr.com).
10. The nature and extent of the issuer's facilities:
A. The Company maintains an office in West Vancouver, British Columbia,
Canada for general corporate purposes with operational facilities at the
mining projects. Port Douglas is the location of the Lillooet project and
the site of the Company's research and processing center. This facility is
approximately 7500 sq. ft. and contains the laboratory and processing
equipment necessary for the analysis and the treatment and recovery of
precious metals from ore samples. There are also lodging facilities with
the necessary infrastructure including a 250 kW hydroelectric plant to
accommodate up to 75 people.
B. The Lillooet property encompasses an area of about 3,600 hectares
(8900 acres) and varies in width from 0.8 to 2.5 kilometers in a northwest
southwest direction. The Lillooet River, which the property straddles, is
about 30,.5 meters in width and covers its entire length. Approximately 14
of the 140 placer mining leases have been examined in detail by trenching,
drilling and metallurgical testing with encouraging results. This area
represents 19% of the Company's ground.
The Lillooet property extends form the Lillooet River delta at the north
end of Harrison Lake north westerly to the southern tip of Lillooet Lake.
The initial area where operations are to commence is centered on PL#9790
which is located at the northern tip of Little Harrison Lake of the Port
Douglas base camp. Access to this location can be reached via a four-wheel
drive vehicle through an all weather-paved road from Vancouver, heading
north to Mount Curie and then south on a gravel road for a total distance
of 262 kilometers. The Property is traversed by a secondary road system
over its entire length.
11. The name of the Chief Executive Officers and the Members of the Board of
Directors:
Robert Papalia - President/Chief Executive Officer
Antony Papalia - Director/Secretary
Albarosa Simonetti - Director/Treasurer
Giuseppe Bombara - Director
Edward Nixon - Director
Anthony Papalia, Jr. Director
Dario Marrucchi, Director
12. The Issuer's most recent balance sheet and profit and loss and retained
earnings statements:
Please request Schedule "C" Consolidated Financial Statements as at June
30, 1997 and 1996 for Metals Research Corporation of America now The Metals
Research Group Corp.
13. Similar financial information for such part of the two preceding fiscal
years as the issuer of its predecessor has been in existence:
Please request Schedule "B" Audited Statements as June 30, 1995 for Metals
Research Corporation of America, now The Metals Research Group Corp.
Please request Schedule "A" Audited Financial Statements of June 30, 1994
for Metals Research Corporation of America, now the Metals Research Group
Corp.
F1
Consolidated Financial Statements of
METALS RESEARCH CORPORATION OF AMERICA
June 30, 1997 and 1996
F2
Deloitte & Touche
Suite 2100 Telephone: (604) 669 4466
1055 Dunsmuir Street Facsimile: (604) 685-0395
P.O. Box 49279
Four Bentall Centre
Vancouver, British Columbia
V7X 1P4
Auditors' Report
To the Shareholders of
Metals Research Corporation of America:
We have audited the consolidated balance sheets of Metals Research Corporation
of America as at June 30, 1997 and 1996 and the consolidated statements of loss
and deficit and changes in financial position for the years then ended (all
expressed in U.S. dollars). 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 auditing standards generally accepted
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at June 30, 1997 and
1996 and the results of its operations and the changes in its financial position
for the years then ended in accordance with accounting principles generally
accepted in Canada.
Charted Accountants
Vancouver, British Columbia
November 5, 1997
F3
METALS RESEARCH CORPORATION OF AMERICA
Consolidated Balance Sheets
June 30
(stated in U.S. dollars)
_______________________________________________________________________________
1997 1996
ASSETS
CURRENT
Cash $ 1,765 $ 2,636
Due from related parties (Note 3) 17,518 10,207
GST receivable 11,184 6,970
Deposits 2,176 2,398
INVESTMENT IN PAC RIM INFORMATION
SYSTEMS INC. (Note 4) 1,007,986 1,007,986
LILLOOET MINING PROJECT (Note 5) 600,001 600,001
PLANT AND EQUIPMENT 6,827 8,862
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 45,056 $ 32,167
Loans payable (Note 6) 739,469 739,469
PAYABLE TO SHAREHOLDERS - non-interest bearing
unsecured and with no fixed maturity 522,458 145,295
_________ _________
1,306,983 916,931
SHAREHOLDERS' EQUITY
Share capital (Note 8) 4,396,087 4,396,087
Contributed surplus 340,000 340,000
Deficit (4,395,613) (4,013,958)
__________ __________
340,474 722,129
__________ __________
$1,647,457 $1,639,060
APPROVED BY THE BOARD OF DIRECTORS
/s/ Robert Papalia Director
/s/ Anthony Papalia Director
F4
METALS RESEARCH CORPORATION OF AMERICA
Consolidated Statements of Loss and Deficit
Years ended June 30
(stated in U.S. dollars)
_______________________________________________________________________________
1997 1996
EXPENSES
Bank charges and interest $ 650 $ 382
Camp 39,578 57,686
Depreciation 2,911 1,415
General, administrative and rent (Note 3) 31,614 21,902
GST recovered ______ (7,302)
Loss on investment (Note 7) ______ 105,000
Management fees (Note 3) 240,000 240,000
Professional 40,348 38,727
Repairs and maintenance 22,748 33,118
Travel and promotion 3,806 31,462
_________ __________
NET LOSS FOR THE YEAR 381,655 522,390
DEFICIT, BEGINNING OF YEAR 4,013,958 3,491,568
_________ _________
DEFICIT, END OF YEAR $4,395,613 4,013,958
_________ _________
LOSS PER SHARE $ 0.005 $ 0.008
_________ _________
F5
METALS RESEARCH CORPORATION OF AMERICA
Consolidated Statements of Changes in Financial Position
Years ended June 30
(stated in U.S. dollars)
_______________________________________________________________________________
1997 1996
OPERATING ACTIVITIES
Net loss for the year $ (381,655) $ (522,390)
Add back item not affecting cash
Depreciation 2,911 1,415
_______ _______
(378,744) (520,975)
Change in non-cash operating working capital 1,586 32,666
_______ _______
(377,158) (488,309)
INVESTING ACTIVITY
Purchase of fixed assets (876) (10,277)
_______ ________
FINANCING ACTIVITIES
Issue of share capital on settlement of debt - 413,263
Issue of share capital for investment - 105,000
Shareholders advances 377,163 (23,347)
________ ________
377,163 494,916
DECREASE IN CASH (871) (3,670)
CASH, BEGINNING OF YEAR 2,636 6,306
_______ _______
CASH, END OF YEAR $ 1,765 $ 2,636
_______ _______
F6-9
METALS RESEARCH CORPORATION OF AMERICA
Notes to the Consolidated Financial Statements
June 30, 1997 and 1996
(stated in U.S. dollars)
______________________________________________________________________________
1. CONTINUING OPERATIONS
The Company is a Utah corporation, incorporated in 1971, and is in the
process of exploring and developing mineral properties.
These financial statements have been prepared on the assumption that the
Company will continue as a going concern. The Company has, however,
incurred losses during its current development stage, and its ability to
continue as a going concern is dependent on its ability to obtain
additional financing. If the going concern assumption is not appropriate
then the Company may be forced to realize its assets at amounts
significantly less than the current carrying value.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with accounting
principles generally accepted in Canada and reflect the following policies:
(a) Basis of presentation
The financial statements include the accounts of the Company and its
subsidiaries.
Platinate Minerals & Industries, Inc. (British Columbia, Canada)
(100% owned) Metals Research S.A. (Panama) (54% owned)
International Metals Research Management Ltd. (British Columbia,
Canada) (100% owned)
(b) Investments
The Company accounts for its investments using the equity method of
accounting.
(c) Plant and equipment
Plant and equipment is recorded at cost. Depreciation is provided on
a straight-line basis at the following rates:
Transportation equipment 3 years
Mining equipment 5 years
Office equipment 5 years
(d) Segment of business, foreign operations and major customer reporting
The only industry significant of the company is mining, all of its
assets are located in British Columbia, Canada, and the company has no
sales for the reporting periods. Therefore, the company has
determined that it is neither necessary nor appropriate for it to
report information as to these matters.
2. SIGNIFICANT ACCOUNTING POLICIES
(e) Functional currency and foreign currency translation
The Company has determined its functional currency to be the U.S. dollar.
Any gains or losses resulting from exchange rate changes are reported in
the statement of loss and deficit.
3.
DUE FROM RELATED PARTIES 1997 1996
555 Corporate Ventures - Advances $ 15,843 $ 10,207
Pacrim Information Systems Inc 1,675 -
17,518 10,207
Pac Rim Information Systems Inc. and 555 Corporate Ventures are controlled
by directors of the Company. Other related party transactions include
management fees of $240,000 (1996 - $240,000) paid to directors of the
Company, and rent of $22,000 (1996 - Nil) was paid to persons related to
the directors of the Company.
4. INVESTMENT IN PAC RIM INFORMATION SYSTEMS INC.
On June 30, 1996, the Company exchanged its common shares in 555 Corporate
Ventures for 5,235,556 shares of Pac Rim Information Systems Inc. ("Pac
Rim"), a related company controlled by the directors of the Company.
555 Corporate Ventures owns the rights to the Texada Island Project.
Pac Rim invests in mining and technology projects. The Company currently
owns 44% of Pac Rim. As the transactions occurred between non-arms length
parties and is determined not to be the culmination of the earnings process
the investment in Pac Rim has been recorded at the carrying value of 555
Corporate Ventures prior to the transaction. The investment is to be
accounted by the equity method, however as Pac Rim has not commenced
commercial production, no adjustment to carrying cost has been recorded.
The Company will review the carrying value of its investment on a regular
basis to determine and provide for any impairment in value.
5. LILLOOET MINING PROJECT
The project is comprised of placer mineral leases (and certain attendant
personal property) and equipment located in the New Westminster Mining
Division at the north end of Harrison Lake, approximately 100 miles from
Vancouver, British Columbia, Canada.
6. LOANS PAYABLE
The loans payable are unsecured. As at June 30, 1997 and 1996, $716,430 of
the loans payable are the subject of the lawsuit described in Note 9,
7. B.F.M. ACQUISITION
In September 1995, the Company acquired 100% of the stock of B.F.M.
Associates, a California corporation, for 1,600,000 shares of the Company.
The fair market value of B.F.M. at acquisition was not determinable
therefore the value of the acquisition was assumed to be equal to the
estimated market value of the Company's shares, at $105,000. Due to issues
relating to the value of assets acquired and subsequent legal actions
initiated by the Company, the investment in B.F.M. has been fully written
off.
8. SHARE CAPITAL
Authorized
100,000,000 common shares with a par value of $.0.10 per share.
As at June 30, 1990 issued and fully paid-up legal capital consisted of
60,359,376 common shares with a par value of $0.10 amounting to $6,035,938.
For accounting purposes, the company's issued and fully paid-up capital
reflects a reorganization that took place in 1987, at which time the
contributed surplus and deficit were eliminated against the share capital,
and consist of the following:
Shares Amounts
Balance, June 30, 1990 60,359,376 $1,878,929
Issued for settlement of debt to
shareholders and related parties 3,874,117 1,998,895
__________ __________
Balance, June 30, 1994 and 1995 64,233,493 3,877,824
Issued for purchase of BFM Associates 1,600,000 105,000
Issued for settlement of debt to
shareholders and related parties 2,756,186 413,263
__________ _________
Balance, June 30, 1996 and 1997 68,589,679 $4,396,087
9. CONTINGENCIES
The Company is the defendant in a claim for repayment of the $716,430 loan
described in Note 6. The lender is seeking judgement for the immediate
return of the amount of money advanced, which was originally payable out
of revenues of the Texada Island Project. The Company has since sold its
interest in the Texada Island Project in exchange for shares of Pac Rim
Information Systems Inc. as described in Note 4. In addition, the lender
claims that additional funds of $78,765 was advanced. The Company is
defending this claim and considers it is unlikely that the suit will be
successful. The Company has filed a counter-claim which, if successful,
would reduce the amount owing. The outcome of these actions are not yet
determinable. Any future gain or loss will be recorded in the period in
which it becomes known.
10. FINANCIAL INSTRUMENTS
The Company's financial instruments include cash, GST receivable and
accounts payable and accrued liabilities. The book value of these
financial instruments approximates fair value due to the short-term nature
of the instrument.
Amounts due from related parties and amounts payable to shareholders are
recorded at the original advanced amounts. Due to the non-arms length
nature of the transactions and the absence of an available market for such
financial instruments, their fair value is not determinable.
Loans payable are subject to litigation and therefore the fair value
thereof is not determinable.
F10
METALS RESEARCH CORPORATION OF AMERICA
FINANCIAL STATEMENTS
June 30, 1995
F11
Deloitte & Touche
Suite 2100 Telephone: (604) 669 4466
1055 Dunsmuir Street Facsimile: (604) 685-0395
P.O. Box 49279
Four Bentall Centre
Vancouver, British Columbia
V7X 1P4
Auditors' Report
To the Shareholders of
Metals Research Corporation of America:
We have audited the consolidated balance sheets of Metals Research Corporation
of America as at June30, 1995 and the consolidated statements of loss and
deficit and changes in financial position for the four years then ended (all
expressed in U.S. dollars). 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 audit.
We conducted our audit in accordance with auditing standards generally accepted
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at June 30, 1995 and
the results of its operations and the changes in its financial position for the
year then ended in accordance with accounting principles generally accepted in
Canada.
Charted Accountants
Vancouver, British Columbia
May 10, 1996
F12
METALS RESEARCH CORPORATION OF AMERICA
CONSOLIDATED BALANCE SHEET
as at June 30, 1995
(stated in U.S. dollars)
CURRENT ASSETS NOTES 1995 1994
Cash $ 6,306 $ 7,364
Due from related parties 3 - 602,877
GST receivable 4,207 -
Deposit 48,288 48,288
_________ ________
58,801 658,529
Texada Mining Project 4 1,007,986 -
Lillooet Mining Project 5 600,001 600,001
Plant and equipment 6 - 416,309
_________ _________
$1,666,788 $1,674,309
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 32,421 $ 55,351
Loans payable 7 739,469 739,469
_________ ________
771,890 794,820
Payable to shareholders - non interest bearing,
unsecured, and with no fixed maturity 168,642 -
_________ ________
940,532 794,820
SHAREHOLDERS' EQUITY
Share capital 8 $3,877,824 3,877,824
Contributed surplus 340,000 340,000
Deficit (3,491,568) (3,337,805)
__________ __________
726,256 80,019
__________ __________
$1,666,788 $1,674,839
__________ __________
F13
METALS RESEARCH CORPORATION OF AMERICA
CONSOLIDATED STATEMENT OF LOSS AND DEFICIT
period ended June 30, 1995
(stated in U.S. dollars)
Four years
Year ended ended
1995 1994
Rental income $ - $ 188,213
____________ ___________
Expenses
Bank charges and interest 789 76,405
Camp 93,377 268,526
Depreciation - 869,684
General, administrative and rent 1,399 121,658
Office and miscellaneous 12,629 43,892
Professional 29,638 102,607
Repairs and maintenance 7,542 26,776
Salaries and employee benefits - 51,015
Travel and promotion 8,352 1,676,382
___________ __________
153,726 1,676,382
Loss before undernoted 153,726 1,488,169
Loss on fixed asset deposit - 50,000
Foreign exchange (gain) loss 37 (117,968)
___________ _________
Net loss for the period 153,763 1,420,201
Deficit, beginning of period 3,337,805 1,917,604
_________ _________
DEFICIT, END OF PERIOD $3,491,568 $3,337,605
_________ _________
F14
METALS RESEARCH CORPORATION OF AMERICA
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
period ended June 30, 1995
(stated in U.S. dollars)
Four years
Year ended ended
1995 1994
OPERATING ACTIVITIES
Net loss for the period $ (153,763) (1,420,201)
Add back items not affecting cash
Depreciation - 869,684
___________ ___________
(153,763) (550,517)
Change in non-cash operating working capital (5,940) 190,934
___________ ___________
(159,703) (741,451)
INVESTING ACTIVITIES
Purchase of fixed assets - (25,945)
___________ ___________
FINANCING ACTIVITIES
Issue of share capital on settlement of debt - 1,998,896
Shareholder advances 168,642 (1,591,593)
Related party loans (net) - 60,563
Loans payable - 313,314
Obligation under capital lease - (34,249)
168,642 746,929
__________ _________
INCREASE (DECREASE) IN CASH (1,061) (20,467)
CASH, BEGINNING OF PERIOD 7,364 27,831
__________ _________
CASH, END OF PERIOD $ 6,303 $ 7,364
F15-17
METALS RESEARCH CORPORATION OF AMERICA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
period ended June 30, 1995
(stated in U.S. dollars)
1. CONTINUING OPERATIONS
The Company is a Utah corporation, incorporated in 1971, and is in the
process of exploring and developing mineral properties.
These financial statements have been prepared on the assumption that the
Company will continue as a going concern. The Company has, however,
incurred losses during its current development stage (prior to which it
was dormant), and its ability to continue as a going concern is dependent
on ability obtaining additional financing.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with accounting
principles generally accepted in Canada and reflect the following policies:
a) Basis of presentation
The financial statements include the accounts of the Company and its
subsidiaries.
Platinate Minerals & Industries, Inc. (British Columbia, Canada)
(100% owned)
Metals Research S.A. (Panama) (54% owned)
International Metals Research Management Ltd. (British Columbia,
Canada) (100% owned)
b) Plant and equipment
Plant and equipment are recorded at cost. Depreciation is provided
on a straight-line basis at the following rates:
Plant 10 years
Transportation equipment 3 years
Mining equipment 5 years
Roads 10 years
Office equipment 5 years
c) Segment of business, foreign operations and major customer reporting.
The only industry significant of the company is mining, all of its assets
are located in British Columbia, Canada, and the company has no sales for
the reporting periods. Therefore the company has determined that it is
neither necessary nor appropriate for it to report information as to these
matters.
2. SIGNIFICANT ACCOUNTING POLICIES
d) Functional currency and foreign currency translation
The Company has determined its functional currency to be the U.S. dollar.
Any gains or losses resulting from exchange rate changes are reported in
the statement of loss and deficit.
3. DUE FROM RELATED PARTIES
1995 1994
Tony Papalia - shareholder and director $ - $ 3,950
Rhyolite Resources - Advances - 461,724
Texada Mining Project - Advances - 137,203
___________ ___________
$ - $ 602,877
Rhyolite and the Texada Project are controlled by directors of the Company.
4. TEXADA MINING PROJECT
During the year, the Company exchanged advances of $591,677 and its plant
and equipment of $416,309 for a 59.4% interest in certain mineral claims on
Texada Island, British Columbia.
5. LILLOOET MINING PROJECT
The project is comprised of placer mineral leases (and certain attendant
personal property) and equipment located in the New Westminster Mining
Division at the north end of Harrison Lake, approximately 100 miles from
Vancouver, British Columbia, Canada.
6. PLANT AND EQUIPMENT
During the year, the Company transferred its plant and equipment of
$416,839 to the Texada Mining Project.
7. LOANS PAYABLE
The loans payable are unsecured. As at June 30, 1994 and 1995, $716,430 of
the loans payable are to be repaid, with bonus, from revenue earned from
the production of the Texada Island mine and mill. The remainder are
non-interest bearing, with no fixed terms of repayment.
8. SHARE CAPITAL
Authorized
100,000,000 common shares with a par value of $0.10 per share.
As at June 30, 1990 issued and fully paid-up legal capital consisted of
60,359,376 common shares with a par value of $0.10 amounting to $6,035,938.
For accounting purposes, the company's issued and fully paid-up capital
reflects a reorganization that took place in 1987, at which time the
contributed surplus and deficit were eliminated against the share capital,
and consist of the following:
Number of
common
shares Amount
Balance, June 30, 1990 60,359,376 $1,878,929
Issued for settlement of debt to
shareholders & related parties 3,874,117 1,998,905
__________ __________
Balance, June 30, 1994 and 1995 64,233,493 $3,877,824
9. CONTINGENCIES
The Company is the defendant in a claim to change the terms of repayment on
the $716,430 loan described in Note 7. The lendor is seeking judgement for
the immediate return of the amount of money advanced, whereas presently it
is only payable out of revenues of the Texada Island Project. In addition,
the lendor claims that additional funds of $78,765 were advanced. The
Company is defending this claim and it is unlikely that the suit will be
successful. The Company has filed a counter-claim which, if successful,
would reduce the amount owing. The outcome of these actions are not yet
determinable. Any future gain or loss will be recorded in the period in
which it becomes known.
10. SUBSEQUENT EVENTS
Subsequent to June 30, 1995, the Company entered into an agreement to
purchase 100% of the share capital of a company which owns certain mineral
claims in southern California. Consideration for this purchase is the
issue of common shares of the Company.
F18
EASTERN GENERAL INSURANCE COMPANY LIMITED
INTERIM SUMMARY OF THE AFFAIRS OF THE COMPANY
FOR THE PERIOD ENDED 31ST DEC 1997
US Dollars
Gross Direct Premium All Classes 57,189,510
Premium Retained 28,594,755
Net Claims Outstanding 310,881
Commission 11,437,902
Expenses of Management 11,437,902
Premium Reserve 11,437,902
Note: The retention of the Company has been divided into the subsidiary
companies of the group under spearate arrangements and agreement.
Commander H. Aftab
CHAIRMAN
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
F19
EASTERN GENERAL INSURANCE COMPANY LIMITED
BALANCE SHEET AS AT 31ST DEC 1997
(in US Dollars)
ASSETS
Real Estate 20,171,737
Cash Investments
(Bonds, Securities & Fixed) 23,348,000
Current Accounts at Banks 42,376,516
Accounts due from other persons or bodies carrying
on insurance business 3,003,430
Call Deposits 51,912,406
140,812,089
Commander H. Aftab Mrs. R. Husain Faisal Aftab
CHAIRMAN MANAGING DIRECTOR DIRECTOR
& VICE CHAIRMAN
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
F20
CAPITAL AND LIABILITIES
Authorised Capital
3,000,000 ordinary shares of US$10 each 30,000,000
Issued, subscribed & paid-up Capital
1,550,500 ordinary shares of US$10 each 15,500,000
Surplus over Liabilities 93,108,132
Fire Insurance Reserve 3,101,536
Marine Insurance Reserve 2,526,705
Engineering, Motor, Bonds etc 6,208,460
General FIG Reserve 1,140,932
Estimated Liability in respect of outstanding
claims whether due or intimated 310,881
Amounts due to other persons or bodies carrying
on insurance business 639,251
Special Reserve 922,616
Misc. Liabilities 20,416
Surplus Funds 10,000,000
Shareholders' Funds 7,333,160
___________
140,812,089
MUNIFF ZIAUDDIN & CO.
Chartered Accountants
Karachi: April 27, 1998
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
F21
EASTERN GENERAL INSURANCE COMPANY LIMITED
CONSOLIDATED INSURANCE REVENUE ACCOUNT
For the period ended 31st December 1997
(in US Dollars)
Estimated liability in Premium less reinsurances
respect of outstanding 50% net retention of
claims whether due or gross premium 28,594,756
intimated 310,881
Commission
40% of net premium 11,437,902
Expenses of Management 11,437,902
40% of net premium
Reserve for unexpected risks 11,437,902
being 40% of the premium
income of the year
Balance 6,029,832
34,624,587 34,624,587
Gross Premium 57,189,510
MUNIFF ZIAUDDIN & CO Commander H. Aftab Mrs. R. Husain Faisal Aftab
Chartered Accountants CHAIRMAN MANAGING DIRECTOR DIRECTOR
& VICE CHAIRMAN
Karachi: April 27, 1998
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EASTERN GENERAL INSURANCE COMPANY LIMITED
MARINE INSURANCE REVENUE ACCOUNT
For the period ended 31st December 1997
(In US Dollars)
Commission Premium less reinsurances
40% of net premium 2,526,705 50% net retention of gross
premium 6,316,763
Expenses of management
40% of net premium 2,526,705
Reserve for unexpired risks 2,526,705
being 40% of the premium
income of the year
Balance 1,263,352
_________ __________
7,580,115 7,580,115
Gross Premium 12,633,526
MUNIFF ZIAUDDIN & CO Commander H. Aftab Mrs. R. Husain Faisal Aftab
Chartered Accountants CHAIRMAN MANAGING DIRECTOR DIRECTOR
& VICE CHAIRMAN
Karachi: April 27, 1998
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
</TABLE>
F23
EASTERN GENERAL INSURANCE COMPANY LIMITED
FIRE INSURANCE REVENUE ACCOUNT
For the period ended 31st December 1997
(In US Dollars)
Commission Premium less reinsurances
40% of net premium 3,101,536 50% net retention of
gross premium 7,753,842
Expenses of management
40% of net premium 3,101,536
Reserve for unexpired risks
being 40% of the premium
income of the year 3,101,536
Balance 1,550,766
__________ _________
9,304,608 9,304,608
Gross Premium 15,507,684
MUNIFF ZIAUDDIN & CO Commander H. Aftab Mrs. R. Husain Faisal Aftab
Chartered Accountants CHAIRMAN MANAGING DIRECTOR DIRECTOR
& VICE CHAIRMAN
Karachi: April 27, 1998
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
F24
EASTERN GENERAL INSURANCE COMPANY LIMITED
BONDS ENGINEERING,
MOTOR & MISCELLANEOUS INSURANCE REVENUE ACCOUNT
For the period ended 31st December 1997
(in US Dollars)
Estimated liability in Premium less reinsurances
respect of outstanding 50% net retention of
claims whether due or gross premium 15,521,150
intimated 310,881
Commission
40% of net premium 6,208,460
Expenses of Management 6,208,460
40% of net premium
Reserve for unexpected risks 6,208,460
being 40% of the premium
income of the year
Balance 3,415,111
18,936,261 18,936,261
Gross Premium 31,042,300
MUNIFF ZIAUDDIN & CO Commander H. Aftab Mrs. R. Husain Faisal Aftab
Chartered Accountants CHAIRMAN MANAGING DIRECTOR DIRECTOR
& VICE CHAIRMAN
Karachi: April 27, 1998
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
F25
EASTERN GENERAL INSURANCE COMPANY LIMITED
PROFIT & LOSS ACCOUNT
For the period ended December 1997
NO INTEREST NO TAX BASIS
PROFIT AND LOSS APPROPRIATION ACCOUNT FOR THE PERIOD ENDED 31ST DEC 1997
N/A. Please refer to P&L Account
MUNIFF ZIAUDDIN & Co Commander H. Aftab Mrs. R. Husain Faisal Aftab
Chartered Accounts CHAIRMAN MANAGING DIRECTOR DIRECTOR
& VICE CHAIRMAN
Karachi April 27, 1998
CORPORATE SEAL
/S/ Commander H. Aftab
CHAIRMAN
