<PAGE>
As filed with the Securities and Exchange Commission on August 16, 1999
Reg. No. 0
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
AQUATIC CELLULOSE INTERNATIONAL CORP.
-------------------------------------
(Name of Small Business Issuer in its charter)
Nevada 82-0381904
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
3704 32nd Street, Suite 301 Vernon, B.C. VIT 5N6
- ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number: (800) 565-6544
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, $.001 par value per share
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PART I.
ITEM 1. Description of Business
(a) Business Development:
Aquatic Cellulose International Corp. (" the "Company") is a Nevada
Corporation originally organized as Aquatic Cellulose Ltd. ("ACL") and was
incorporated in March of 1997. In July of 1997, ACL was acquired by American
Foods Marketing (OTC Symbol ANFM). Subsequently, ANFM changed its name and
symbol to Aquatic Cellulose International Corp. (OTC BB: "AQCI"). Aquatic
Cellulose Ltd. remained a wholly owned subsidiary.
(b) Business of Issuer:
Located in Vernon, British Columbia, Canada, the AQCI is a forest industry
based company focusing on what was once considered a lost resource. That
resource is submerged timber. AQCI has in place the processes and equipment
necessary to access and recover this valuable resource. This submerged timber
is still of excellent quality and can be used for plywood, sawn lumber, and a
wide variety of wood fiber processes.
Currently, there is considerable pressure to reduce the consumption of land
based timber, however, the demand for wood and wood based products continues to
expand. AQCI has placed itself strategically to take advantage of this global
trend and at the same time enter into an industry with minimal competition.
This industry consists of two primary sources of underwater timber. The
first of these is a standing timber that has been inundated (flooded) as a
result of a dam construction (hydroelectric or otherwise). These standing
trees are submerged as the water level behind a dam rises, preserving them and
preventing degradation of the wood quality. The second source is salvage
timber. This source consists of those trees that have already been cut and have
sunk to the bottom of the waterway in route to a mill or load out area. It is
estimated that roughly 17% of the logs in route to the mill or load out area
that have been transported by water sink to the bottom of the waterway.
Inundated or salvage timber is viable for all types of finished product
production including paper. Furthermore, logs in deep, fresh water are not
subject to rot as bacteria requiring oxygen are not present, thus though there
may be some slight discoloration, the structural integrity of sunken wood is
sound. This is further supported by the fact that submerged hardwoods in the
Amazon are currently being used in the production of both plywood and sawn
lumber.
AQCI has investigated underwater forests and salvage timber in Canada, the
United States, and Brazil. In addition to confirming the quality and location
of the submerged forest, AQCI also completed a physical examination of standing
timber in reservoirs such as Ootsa lake in B.C. and salvage timber in water ways
such as Lake Superior. The wood examined was in excellent condition and
suitable for harvest and processing. AQCI has
2
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also done on-sight evaluations of the Tucurui and Balbina reservoirs in Brazil.
The Tucurui reservoir, located in northern interior of Brazil, was created in
1984. When the reservoir filled, it covered over 100,000 hectares of old growth
rain forest. Local plywood and lumber producers have harvested trees from these
reservoir using divers. The wood recovered was found to be excellent for
processing, however, this recovery process was found to be slow and inefficient
and represented a significant danger to the workers due to the inherent dangers
associated with manually cutting trees using scuba divers.
Presently there is not one operation existing that can consistently and
systematically harvest or collect trees under water on a large scale,
commercially viable basis. Furthermore, not one company has focused on the
international market place. Existing operations typically focus on specific
lakes with no stated plan to move outside of their home territory.
According to Roger Stanyer, CEO of Forest Renewal BC, the submerged timber
market is significant. Mr. Stanyer refers to the "lost gold mine" sort of
stories, where divers have reported piles of logs underwater 300' high, some of
the logs of a size that haven't been logged for years. Mr. Stanyer also points
out that underwater logs are, of course, a non-renewable resource. Still,
salvage and inundated trees represent an opportunity, if taken on an incremental
basis over 10 years, that could be "significant in volume, partially offsetting
the declining timber supply forecast for the next decade.
Declining timber supply is one of the biggest threats to the forest
industry. A recent article in the "Widman World Wood Review" stated that as
result of new reserves for parks plus the B. C. Forest Practices Code, the
annual harvest of logs in B.C. will decline to such a point that the result will
be a loss of fiber enough to close 12 large sawmills. Thus, the timber industry
needs a new cost effective source of timber. Aquatic Cellulose International
Corp. intend to be the provider of that source of timber.
The same situation is occurring internationally, especially in tropical
countries with previous hard woods. The governments of developing countries are
experiencing serious pressure to reduce the amount of rain forest that is
harvested each year. Some countries have even gone as far as boycotting the
purchase of certain timber to protest environmentally insensitive logging
practices. Bottom line, AQCI is offering an environmentally sound method of
retrieving this lost resource as well as offering a product that will be
accepted as an alternative to harvesting the shrinking rain forest.
The Company's timber harvesting system utilizes three technological
innovations. The first is "vision enhancement". This is low lux digitally
enhanced optics and lighting which provides real time continuous surveillance of
all underwater operations, even in turbid water conditions. This camera is
readily available through more than one vendor.
The second technology is the "Robotically Controlled Arms and Heads". The
Company has software that transforms individual arm and head joint position feed
back data into an accurate real time graphical image. The software is
copyrighted by Gary Ackles. Additionally, true three-axis robotic control of
the arm position and head functions are incorporated. There is a patent pending
for the use of this visually enhanced
3
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robotically controlled arm in the recovery of submerged timber. This pending
patent belongs to the Company's president, Mr. Gary Ackles and is anticipated to
be finalized by early 2000.
The third feature is "Sonar Imaging". The visual range provided by this
vision system is extended by three separate but complementary systems. The
first system is the bottom scan which gives the profile of the submerged terrain
plus the depth and distance between the head and the targets. The second
system, the polar sector scan, is an uninterrupted 360 degree sweep of the
harvesting area and provides the operator with a continuous overview of all
trees in the harvest area including a "nest tree" location data. The third
system is a state of the "real time" sonar which rotates with the harvester head
allowing the operator to target and capture individual trees.
All three technologies were incorporated in the development and
construction of a fully functional unit for log salvage operations called the
ATH-60. The Company is currently in the process of creating the second unit,
the ATHJ-120. This unit is specially designed for the deeper harvest of large
diameter submerged timber.
The short term objectives of AQCI are to finalize fabrication drawings
(engineering is complete and detailed design 90% complete) and subsequently
build the ATH-120 harvester, complete pre-operation "lake trials", and put the
machine to work.
The Company's long term objectives are to establish a reserve base of
inundated and salvage timber to ensure future stability and long term growth.
Also of key importance is the commitment to continued development of the
Company's technology and equipment to maintain our lead position in this
emerging industry.
The company has two main target markets. The first is reservoirs,
including hydroelectric projects, irrigation dams, etc. There are over 38,000
large dams in the world and a significant number of these contain lumber. Thus,
this is the main source of standing inundated timber. The Company has done
evaluations of the Tucurui and Balbina reservoirs in Brazil and is investigating
other regions such as Chile, Argentina, Venezuela, Panama and Australia.
Secondary markets in this arena would include hydroelectric utility companies,
forestry companies and governmental agencies (i.e. those involved in power
generation, foreign investment, economic development and the environment).
The second market is salvage timber, much of which sank to the bottom of
lakes and rivers years many years ago. Some state and provinces treat these
logs as un-owned logs and consider them as Natural Resources, collecting a token
stumpage fee upon harvest.
There is no requirement for government approval for the marketing or use of
the Company's principal products or services. The Company's products and
services are usually thought of as improving environmental conditions through
the removal of trees that are no longer adding to the ecosystem.
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There are no existing or probable governmental regulations on the Company's
business. Governmental agencies are generally in favor the Company's technology
and its by products.
The Company employs a total of four full time employees.
The principles of the company include Mr. Gary Ackles and Dr. Claus Wagner-
Bartak. Mr. Ackles has extensive experience in the aquatic environment and new
equipment development and corporate management. Dr. Claus Wagner-Bartak is the
creative mind behind the development of the internationally recognized
"Canadarm" used on NASA's Space Shuttle.
ITEM 2. Management Discussion and Analysis or Plan of Operation
(a) Full Year
The Company had revenue (from timber sales) of $3,070 for the year ended
May 31, 1999 as compared to no revenue for the prior year ended May 31, 1998.
Operating costs and expenses were $486,539 for the year ended May 31, 1999 as
compared to $499,116 for the year ended May 31, 1998, a decrease of $12,577 or
3%.
Net cash (used) in Operating Activities for the years ended May 31, 1999
and 1998 was ($318,962) and ($494,147) respectively. The change in cash from
operating activities was $175,185.
Net cash used in investing activities was ($79) and ($4,161) for the years
ended May 31, 1999 and 1998 respectively, reflecting a change of $4,082. This
decrease was a result of the Company reducing expenditures and capital assets.
Net cash from financing activities was $383,323 and $435,580 for the years
ended May 31, 1999 and 1998 respectively, reflecting a change of $52,257.
Net (loss) decreased from a loss of $491,800 for the year ended May 31,
1998 to a loss of $483,469 for the year ended May 31, 1999, a decrease of $8,331
or 2%.
ITEM 3. Description of Property
(a) Location of Principal Property
The Company's offices are located at 3704 32/nd/ Street, Suite 301, Vernon,
British Columbia, V1T5N6. The Company is committed through the year 2000 with
annual lease payments under operating leases for office premises and equipment
of $12,165 per year.
(b) Investment Policies
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The Company may invest the Company's funds and enter into one or more
business ventures or arrangements on the authority of the Board of Directors
without submitting such proposal to the shareholders for their approval.
ITEM 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of the date of this
Registration Statement regarding certain Ownership of the Company's outstanding
Common Stock by all officers and directors individually, all officers and
directors as a group, and all beneficial owners of more than five percent of the
common stock.
<TABLE>
<CAPTION>
Name and Address Shares Owned Beneficially(1) Percent of Class
- ---------------- ---------------------------- ----------------
<S> <C> <C>
Gary J. Ackles
3498 Salmon River Bench Rd 6,450,000 17.6%
Vernon, B.C. V1T 8Z7
Claus Wagner-Bartak
4092 Lee Highway 200,000 .5%
Arlington, VA 22207
Shane Kerpan
816 George Ann Street 115,000 .3%
Kamloops, B.C. V2C 1L5
Officer/Director as a Group 6,765,000 18.4%
</TABLE>
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of the registration
statement upon the exercise of options or warrants. Each beneficial owner's
percentage ownership is determined by assuming that options or warrants that are
held by such person (but not those held by any other person) and which are
exercisable within 60 days of the date of this registration statement have been
exercised. Unless otherwise indicated, the Company believes that all persons
named in the table have voting and investment power with respect to all shares
of common stock beneficially owned by them.
ITEM 5. Directors, Executive Officers, Promoters and Control Persons
The directors and executive officers of the Company, and significant
employees of the Company are as follows:
<TABLE>
<CAPTION>
Name AGE Position
- ---- --------
<S> <C> <C>
Gary J. Ackles 46 President & Director
Shane Kerpan 29 Secretary & Treasurer
Claus Wagner-Bartak 62 Director
</TABLE>
6
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The officers and Directors of the Company will devote only such time as
they deem appropriate in the business Affairs of the Company. It is, however,
expected that the President and Secretary will devote the majority of their time
to the business of the Company.
The directors of the company are elected to hold office until the next
annual meeting of shareholders and until their respective successors have been
elected and qualified.
Gary J. Ackles: Mr. Ackles was appointed to the Board of Directors on July 1,
- ---------------
1997, to fill a vacancy. Mr. Ackles was President and founder of Aquatic
Cellulose Ltd., and creator of the Aquatic Timber Harvester System. Mr. Ackles
has over 25 years expertise in the equipment-based industry with extensive
international and domestic experience. Mr. Ackles is an internationally
recognized creator of aquatic technologies, and has been involved with numerous
equipment based industries including oil and mineral exploration, logging, heavy
construction, and aquatic environmental management. Mr. Ackles has introduced
and sold equipment in Canada, USA, Middle East, Africa, and South America.
Shane Kerpan: Mr. Kerpan earned a degree in Business Administration from Simon
- ------------
Fraser University and has worked in a variety of staff management positions in
both the private and non-profit sectors. Mr. Kerpan also possesses experience
in project management and evaluation plus has provided AQCI with assistance in
project research, development of multi-media presentations and public relations.
Claus Wagner-Bartak--Dr. Claus Wagner-Bartak was appointed to the Board of
- -------------------
Directors in July, 1997, to fill a vacancy. Dr. Wagner-Bartak is an
internationally recognized scientist and business executive. Dr. Wagner-Bartak
was the founder of the Sparo Aro Space and Creator of the NASA Space Shuttle
"Canadarm".
ITEM 6. Executive compensation
The following table sets forth the total remuneration to be paid to the
executive officers of the Company.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
Name ------------------- ------ --------
and Bonus Restricted
Principal Position Year Salary Stock Other
<S> <C> <C> <C> <C>
Chief Executive Officer 1999 $84,000 none none
Chief Operating Officer none
Chief Accounting Officer none
Key Personnel: none
Total: 1999 $84,000 none none
Directors as a Group 1999 $84,000 none none
</TABLE>
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Directors receive no remuneration at this time. All Company Directors are
entitled to reimbursement of funds advanced to pay expenses in connection with
the Company's Business.
Currently the Company does not have a stock option plan in place.
ITEM 7. Certain Relationships and Related Transactions
On or about February 22, 1999, the Board of Directors authorized the
issuance of stock options to certain officers and directors of the Company based
under a stock option plan yet to be formalized. The options were granted on or
about April 13, 1999 at $0.03 per share as follows: 1) 3,250,000 shares of
common stock to Gary Ackles, 2) 115,000 shares of common stock to Shane Kerpan,
and 150,000 shares of common stock to Claus Wagner Bartak.
ITEM 8. Description of Securities
General
As of the date of this Registration Statement, the authorized capital stock
of the Company consists of 50,000,000 shares of Common Stock, $.001 par value,
of which 36,603,985 shares are outstanding. There are 257 shareholders that
are not in street name. The following description of the securities of the
Company and certain provisions of the Company's Articles of Incorporation and
By-laws, each as amended, is a summary and is qualified in its entirety by the
provisions of the Articles of Incorporation and By-laws as currently in effect.
Common Stock
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of shareholders, including the election of
directors. Accordingly, holders of a majority of shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election if they chose to do so. The Articles of Incorporation
does not provide for cumulative voting for the election of directors. Holders
of Common Stock will be entitled to receive ratably such dividends, if any, as
may be declared from time to time by the Board of Directors out of funds legally
available therefor, and will be entitled to receive, pro rata, all assets of
the Company available for distribution to such holders upon liquidation.
Holders Common Stock have no preemptive, subscription or redemption rights. All
outstanding shares of Common Stock are, and the shares offered hereby, upon
issuance, will be, fully paid and non assessable.
Preferred Stock
There are 10,000,000 shares of preferred stock, no par value authorized.
None are issued or outstanding at this time. The rights associated with the
preferred shares are still to be determined by the Board of directors of the
Company. There are no present plans by
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the company's Board of Directors to issue preferred shares or to address the
rights to be assigned to such shares.
Transfer Agent
The Company's transfer agent is Oxford Transfer & Registrar located at 317
Southwest Alder, Suite 1120, Portland, Oregon, 92704.
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PART II.
ITEM 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
Market Price
- ------------
The Company's Common Stock has been quoted on the OTC:BB since (July, 1997)
under the symbol "AQCI". The following table set forth, the high and low bid
prices for the Common stock for the quarters indicated.
<TABLE>
<CAPTION>
High Bid Low Bid
-------- -------
<S> <C> <C>
Third Quarter 1998 .16 .13
Fourth Quarter 1998 .23 .23
First Quarter 1999 .06 .06
Second Quarter 1999 .47 .31
</TABLE>
Dividends
- ---------
The Company anticipates that for the foreseeable future, earnings will be
retained for the development of is business. Accordingly, the Company does no
anticipate paying dividends on the Common Stock in the foreseeable future. The
payment of future dividends will be at the sole discretion of the Company's
Board of Directors and will depend upon among other of the Company and general
business condition.
ITEM 2. Legal Proceedings
The Company is not a party to any material pending legal proceedings and,
to the best of its knowledge, no such action by or against the Company has been
threatened.
ITEM 3. Recent Changes in and Disagreements with Accountants
During the Company's first fiscal year and up to the present time, the
principal independent accountant for the Company has neither resigned (or
declined to stand for reelection) nor been dismissed. The independent
accountant for the Company is KPMG LLP. This firm was engaged on or about
September 10, 1997.
ITEM 4. Recent Sales of Unregistered Securities
A total of 26,426,336 shares of common stock, par value $.001 (the
"Shares"), have been issued by the Company within one year prior to the filing
of this Form 10-SB for cash or services rendered to the Company, absent
registration under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to the exemptions provided by Rule 504 of Regulation D
(10,523,336 Shares), where specifically indicated, pursuant to the exemption
provided in Section 4(2) of the Securities Act for transactions by an issuer not
involving a public offering. The Shares issued are as follows.
10
<PAGE>
In March, 1998, the Company issued 50,000 Shares to Claus Wagner Bartak and
in June the Company issued 50,000 Shares to Gary Ackles valued at $.0013 per
Share as compensation for services rendered the Company in their positions as
Officers of the Company.
In August, 1998, the Company issued 1,000,000 Shares to Big Rock Marketing
Group and 720,000 Shares to Chelsey Technology Corp. valued at $.027 per share
as compensation for public relations services rendered to the Company.
In October, 1998, the Company issued 1,000,000 Shares to Big Rock Marketing
Group and 500,000 Shares to P. Daoust valued at $.027 per Shares as compensation
for public relations services rendered to the Company.
In November, 1998, the Company issued 1,028,000 Shares to various
consultants for services rendered to the Company valued at $.027 per share.
In December, 1998, the Company issued 3,250,000 to various consultants for
public relations services rendered valued at $.027 per share and 240,000 Shares
valued at $0.146 to Sean Ackles as compensation rendered in his position as an
Officer of the Company. Mr. Ackles related services were performed in the prior
year.
In January, 1999, the Company issued 1,350,000 Shares to various
consultants and vendors for services and product rendered. These Shares were
valued at $.027 per share.
In February, 1999, the Company issued 10,523,336 Shares to various
investors pursuant to Rule 504 Regulation D. These shares were sold at $.025
per share.
In April, 1999, the Company issued 3,515,000 Shares to various Officers of
the Company for services rendered in their positions. These Shares were valued
at $.03 per share. In addition the Company also issued 3,000,000 Shares valued
at $.10 per share to Consultants for public relations services rendered to the
Company.
In May, 1999, the Company issued 500,000 Shares valued at $.10 per share to
a Consultant for public relations services rendered to the Company.
ITEM 5. Indemnification of Directors and Officers
The corporation shall indemnify to the fullest extent not prohibited by law
any person who has or is a party or is threatened to be made a party to any
proceeding (as hereinafter defined) against all expenses (including attorney's
fees), judgements, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such proceeding.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in
11
<PAGE>
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore unenforceable.
12
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PART F/S:
FINANCIAL STATEMENTS
13
<PAGE>
[LETTERHEAD OF KPMG LLP]
AUDITORS' REPORT TO THE STOCKHOLDERS
We have audited the consolidated balance sheet of Aquatic Cellulose
International Corp. as at May 31, 1999 and the consolidated statements of loss
and deficit, cash flows and stockholders' equity for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. 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 May 31, 1999 and
the results of its operations and its cash flows for the year then ended in
accordance with generally accepted accounting principles in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1a), the
application of the going concern concept is dependent on the Company's ability
to generate future profitable operations and receive continued financial support
from its shareholders and other investors. Management is of the opinion that
sufficient working capital will be obtained from operations and external
financing to meet the Company's liabilities and commitments as they become
payable.
/s/ KPMG LLP
Chartered Accountants
Kelowna, Canada
July 23, 1999
14
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Consolidated Balance Sheet
$ United States
May 31, 1999, with comparative figures for 1998
<TABLE>
<CAPTION>
=================================================================================
1999 1998
(Unaudited)
- ---------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets
Cash $ 100,906 $ 25,757
Accounts receivable 7,734 21,746
Share subscriptions receivable (note 7) 250,000 -
Deposit - 9,419
-------------------------------------------------------------------------------
358,640 56,922
Capital assets (note 3) 6,226 8,458
- ---------------------------------------------------------------------------------
$ 364,866 $ 65,380
=================================================================================
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 24,060 $ 63,771
Stockholders' equity
Capital stock (note 4) 1,561,034 739,665
Deficit accumulated during the development stage (1,254,793) (771,324)
Foreign currency translation adjustment 34,565 33,268
-------------------------------------------------------------------------------
340,806 1,609
- ---------------------------------------------------------------------------------
$ 364,866 $ 65,380
=================================================================================
</TABLE>
See accompanying notes to financial statements
On behalf of the Board:
Director
- ---------------------
Director
- ---------------------
15
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Consolidated Statement of Loss and Deficit
$ United States
Year ended May 31, 1999, with comparative figures for 1998
<TABLE>
<CAPTION>
====================================================================================================
From inception
(March 11, 1996) 1999 1998
to May 31, 1999 (Unaudited)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Timber sales $ 3,070 $ 3,070 $ -
Expenses
Advertising and promotion 20,395 7,868 9,405
Amortization 5,811 2,160 2,162
Engineering design 67,448 34,443 33,005
Financial and promotional consulting 188,046 188,046 -
Interest and bank charges 7,387 1,180 2,840
Office rent 18,713 6,342 8,278
Office 27,401 13,319 10,694
Professional fees 34,778 9,963 17,831
Research and development 301,306 42,660 97,443
Shop and fabrication 7,024 3,185 3,839
Telephone 36,348 12,019 13,442
Travel 124,376 23,013 74,172
Vehicle and equipment leases 22,246 7,209 7,199
Wages and benefits 404,063 135,132 218,806
---------------------------------------------------------------------------------------------------
1,265,342 486,539 499,116
Loss before other income (1,262,272) (483,469) (499,116)
Other income
Interest 184 - 21
Foreign exchange gain 7,295 - 7,295
---------------------------------------------------------------------------------------------------
7,479 - 7,316
- ----------------------------------------------------------------------------------------------------
Loss (1,254,793) (483,469) (491,800)
Deficit, accumulated during the development stage,
beginning of year - (771,324) (279,524)
- ----------------------------------------------------------------------------------------------------
Deficit, accumulated during the development stage,
end of year $(1,254,793) $(1,254,793) $ (771,324)
====================================================================================================
Weighted average number of shares 19,014,620 9,167,802
Loss per share $ (0.03) $ (0.05)
====================================================================================================
</TABLE>
See accompanying notes to financial statements
16
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Consolidated Statement of Cash Flows
$ United States
Year ended May 31, 1999, with comparative figures for 1998
<TABLE>
<CAPTION>
============================================================================================
From inception
(March 11, 1996) 1999 1998
to May 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Cash received from timber sales $ 3,070 $ 3,070 $ -
Cash received from other income 7,479 - 7,316
Cash paid to suppliers and employees (1,055,159) (322,032) (501,463)
------------------------------------------------------------------------------------------
(1,044,610) (318,962) (494,147)
Financing
Issuance of capital stock 1,439,410 633,323 667,682
Share issue costs (66,422) - (14,443)
Share subscriptions receivable (250,000) (250,000) -
Repayment of note payable - - (217,659)
------------------------------------------------------------------------------------------
1,122,988 383,323 435,580
Investing
Purchase of capital assets (12,470) (79) (4,161)
Foreign currency translation adjustment 34,998 1,448 30,806
- --------------------------------------------------------------------------------------------
Increase (decrease) in cash 100,906 75,149 (31,922)
Cash, beginning of year - 25,757 57,679
- --------------------------------------------------------------------------------------------
Cash, end of year $ 100,906 $ 100,906 $ 25,757
============================================================================================
</TABLE>
See accompanying notes to financial statements
17
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Consolidated Statement of Stockholders' Equity
$ United States
Year ended May 31, 1999, with comparative figures for 1998
<TABLE>
<CAPTION>
====================================================================================================
==================================================================================================
Number of Shares Amount
--------------------------------------------------------------------------------------------------
<S> <C> <C>
ACL
Issued upon inception March 11,1996 800 $ 5
Issued for cash net of share issue costs 4,732,000 138,400
-----------------------------------------------------------------------------------------------
ACL balance, May 31, 1997 4,732,800 138,405
Financing costs related to business combination - (66,422)
-----------------------------------------------------------------------------------------------
ACL balance July 12, 1997 exchanged into one ANFMI
share for each ACL share 4,732,800 $ 71,983
===============================================================================================
ACIC
ANFMI balance, May 31, 1997 145,649 $ 60,626
Issued for cash 4,974,351 469,611
-----------------------------------------------------------------------------------------------
ANFMI balance, July 12, 1997, prior to business
combination with ACL 5,120,000 530,237
Adjustment to record business combination
Reduction in the book value of ANFMI's share capital
to that of ACL (note 2) - (458,254)
-----------------------------------------------------------------------------------------------
5,120,000 71,983
Shares of ANFMI issued to acquire shares of ACL (above)
recorded at the carrying value of AMFMI net assets
(note 2) 4,732,800 469,611
-----------------------------------------------------------------------------------------------
ACIC balance, July 12, 1997, after business combination 9,852,800 541,594
Issued during the period from July 13, 1997 to May 31, 1998:
Conversion of note payable to common shares 300,000 217,313
Issued for cash 24,849 2,295
Adjustment to record foreign currency translation - (21,537)
-----------------------------------------------------------------------------------------------
ACIC balance, May 31, 1998 10,177,649 739,665
Issued for cash 14,113,336 383,323
Issued upon exercise of options 3,515,000 105,450
Issued for services 6,798,000 188,046
Subscribed shares 2,000,000 250,000
Notes receivable (note 5) - (105,450)
-----------------------------------------------------------------------------------------------
ACIC balance, May 31, 1999 36,603,985 $1,561,034
===============================================================================================
</TABLE>
Refer to note 1c) for basis of presentation and consolidation.
18
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Year ended May 31, 1999
================================================================================
Aquatic Cellulose International Corp. was incorporated under the laws of the
State of Nevada. The Company's principal activity is the development under
authority, of equipment for underwater harvesting and/or salvaging of submerged
timber and the procurement of contracts for the harvest and salvage of submerged
timber.
1. Significant accounting policies:
a) Going concern
These financial statements have been prepared on the going concern basis,
which assumes the realization of assets and liquidation of liabilities in
the normal course of business. The application of the going concern
concept is dependent on the Company's ability to generate future
profitable operations and receive continued financial support from its
shareholders and other investors. Management is of the opinion that
sufficient working capital will be obtained from operations and external
financing to meet the Company's liabilities and commitments as they
become payable.
b) Translation of Financial Statements
The Company's subsidiary, Aquatic Cellulose Ltd., operates in Canada and
its operations are conducted in Canadian currency.
Except as otherwise noted, these statements are presented in United
States currency for the convenience of readers accustomed to United
States currency. The method of translation applied is as follows:
i) Assets and liabilities are translated a the rate of exchange in
effect at the balance sheet date, being US $1.00 per Cdn $1.474
(1998 - $1.457).
ii) Revenues and expenses are translated at the exchange rate in effect
at the transaction date.
iii) The net adjustment arising from the translation is recorded as a
separate component of stockholders' equity called "foreign currency
translation adjustment".
c) Basis of presentation and consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Aquatic Cellulose Ltd.
19
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 2
$ United States
Year ended May 31, 1999
================================================================================
1. Significant accounting policies (continued):
c) Basis of presentation and consolidation (continued)
Effective July 12, 1997, the Company completed the acquisition of 100% of
the outstanding common shares of Aquatic Cellulose Ltd. ("ACL"). As ACL
shareholders obtained effective control of the Company through the
exchange of their shares of ACL for shares of the Company, the
acquisition of ACL has been accounted for in these consolidated financial
statements as a reverse acquisition. Consequently, the 1998 consolidated
statements of loss and deficit and cash flows reflect the results of
operations and changes in financial position of ACL, the legal
subsidiary, for the year ended May 31, 1998, combined with those of
American Natural Foods Marketing, Inc. ("ANFMI"), the legal parent, from
acquisition on July 12, 1997, in accordance with generally accepted
accounting principles for reverse acquisitions. In addition, the figures
for the period from inception to May 31, 1999 presented in the
consolidated statements of loss and deficit and cash flows are those of
ACL, the legal subsidiary, together with those of ANFMI from July 12,
1997. Effective November 10, 1997, the Company changed it's name from
ANFMI to Aquatic Cellulose International Corp. ("ACIC").
In these notes to the consolidated financial statements, the Company,
prior to the business combination with ACL, is referred to as "ANFMI",
and after completion of the business combination and name change, is
referred to as "ACIC".
d) Capital assets
Capital assets are stated at cost. Amortization is provided using the
following methods and annual rates which are intended to amortize the
cost of assets over their estimated useful life:
<TABLE>
<CAPTION>
===================================================================
Asset Method Rate
-------------------------------------------------------------------
<S> <C> <C>
Computer equipment Declining balance 30%
Furniture and equipment Declining balance 20%
Leasehold improvements Straight-line 20%
-------------------------------------------------------------------
</TABLE>
e) Management estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amount of revenues and expenses during the period. Actual results could
differ from those estimates.
f) Financial instruments
The fair values of the Company's cash, accounts and share subscriptions
receivable and accounts payable and accrued liabilities approximate their
carrying values due to the relatively short periods to maturity of the
instruments. It is not practicable to determine the fair value of notes
receivable due to the nature of the amount and the absence of a market
for such instruments. The maximum credit risk exposure for all financial
assets is the carrying amount of those assets.
20
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 3
$ United States
Year ended May 31, 1999
================================================================================
2. Business Combination:
Effective July 12, 1997, ANFMI and ACL executed their business combination
agreement. ANFMI issued 4,732,800 common shares to the shareholders of ACL
in consideration for all of the issued and outstanding common shares of ACL
on the basis of 1 common share of ANFMI for each common share of ACL. As the
former shareholders of ACL obtained effective control of the Company through
the share exchange, this transaction has been accounted for in these
financial statements as a reverse acquisition and the purchase method of
accounting has been applied. Under reverse acquisition accounting, ACL is
considered to have acquired ANFMI with the results of ANFMI's operations
included in the consolidated financial statements from the date of
acquisition. ACL is considered the continuing entity and consequently, the
comparative figures are those of ACL.
The acquisition has been recorded at the estimated fair value of the
consideration given which, under reverse acquisition accounting, is the net
asset value of ANFMI at the date of acquisition. The acquisition details are
as follows:
<TABLE>
<CAPTION>
Net assets acquired, at book values
<S> <C>
Cash $ 469,611
Receivable from related company 217,313
Note payable (217,313)
--------------------------------------------------------------------
$ 469,611
====================================================================
Consideration given for net assets acquired
--------------------------------------------------------------------
Common shares issued $ 469,611
====================================================================
</TABLE>
As the continuing entity is deemed to be ACL, share capital of ANFMI has
been reduced by $458,254 as a result of accounting for this combination as a
reverse acquisition.
21
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 4
$ United States
Year ended May 31, 1999
================================================================================
3. Capital assets:
<TABLE>
<CAPTION>
===========================================================================
1999 1998
---------------------------------------------------------------------------
Accumulated Net book Net book
Cost amortization value value
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Computer equipment $ 2,323 $1,356 $ 967 $1,397
Furniture and equipment 4,639 1,349 3,290 4,071
Leasehold improvements 4,927 2,958 1,969 2,990
---------------------------------------------------------------------------
$11,889 $5,663 $6,226 $8,458
===========================================================================
</TABLE>
4. Capital stock:
a) Authorized:
50,000,000 common shares with a par value of $0.001 per share
10,000,000 preferred shares with a par value of $0.001 per share,
issuable in series
b) Stock options
<TABLE>
<CAPTION>
===================================================================================
Price per Outstanding Outstanding
Expiry Date share May 31, 1998 Issued Exercised May 31, 1999
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
February 22, 2004 $0.03 - 3,515,000 3,515,000 -
===================================================================================
</TABLE>
The Company applies APB Opinion No. 25 in accounting for its Stock Option
Plan and, accordingly, no compensation cost has been recognized for its
stock options in the financial statements. Had the Company determined
compensation costs based on the fair value at the grant date for its
stock options under SFAS No. 123, the Company's net loss would have been
increased to the proforma amounts below:
<TABLE>
<S> <C>
Net Loss
As reported $295,423
Proforma $317,300
Loss per share
As reported $ 0.02
Proforma $ 0.02
</TABLE>
5. Notes receivable:
The Company loaned $105,450 to three Directors for the exercise of Company
stock options during the year (note 4b). These notes are unsecured, do not
bear interest and are due on July 24, 2001.
22
<PAGE>
AQUATIC CELLULOSE INTERNATIONAL CORP.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements, page 5
$ United States
Year ended May 31, 1999
================================================================================
6. Income taxes:
The Company has non-capital losses available to reduce future years' income
for Canadian tax purposes. Management has determined that utilizing these
losses is unlikely, and therefore the benefit of which has not been recorded
in the accounts of the Company. These losses expire as follows:
<TABLE>
<CAPTION>
========================================================================
$ Canada
------------------------------------------------------------------------
<S> <C>
2003 159,077
2005 570,428
2006 382,035
------------------------------------------------------------------------
$1,111,540
========================================================================
</TABLE>
7. Subsequent event:
Subsequent to May 31, 1999, the share subscriptions receivable were
collected.
8. Uncertainty due to the Year 2000 Issue:
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using Year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect an entity's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the entity,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
23
<PAGE>
PART III.
Item 1. Index to Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<C> <S>
2.1 Articles of Incorporation of the Company filed February 28, 1997.
2.2 Certificate Amending Articles of Incorporation filed November 19, 1997
2.3 Bylaws of the Company.
6.1 Lease for the Premises dated November 1, 1996.
27 Financial Data Schedule
</TABLE>
24
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Registrant: AQUATIC CELLULOSE INTERNATIONAL CORP.
Date: August 16, 1999
By: /s/ Gary Ackles
---------------
Gary Ackles - Chief Executive Officer
25
<PAGE>
EXHIBIT 2.1
[STAMP]
SECRETARY OF STATE OF THE
STATE OF NEVADA
FEB 28 1997
[ILLEGIBLE] SECRETARY OF STATE
/s/ [ILLEGIBLE]
C4093-97
- ------------------------------
ARTICLES OF INCORPORATION
OF
AMERICAN NATURAL FOODS MARKETING, INC.
THE UNDERSIGNED natural person, who is at least eighteen years of age, for
the purpose of forming a private corporation under and subject to the provisions
of NRS (S)78.010, et seq., hereby adopts the following articles of
incorporation.
ARTICLE I
NAME AND BUSINESS ACTIVITIES. The name of the corporation shall be
AMERICAN NATURAL FOODS MARKETING, INC. (hereafter referred to as the
"Corporation"). The purpose of the Corporation shall be to engage in any lawful
activity and any activities necessary, convenient, or desirable to accomplish
such purposes, not forbidden by law or by these articles of incorporation.
ARTICLE 2
RESIDENT AGENT. The initial resident agent of the Corporation shall be
Roxanne L. Paine, whose address is 230 Bullion Rd., Dayton, Nevada 89403. The
board of directors may establish, from time to time, other places of business
within and without the State of Nevada for the conduct of its business.
ARTICLE 3
SHARES OF STOCK. The total number of authorized shares of the Corporation
is 60,000,000 non-assessable shares, 50,000,000 shares of which shall be common
voting stock with a par value of $0.001 per share, and 10,000,000 shares of
which shall be preferred non-voting stock with a par value of $0.001 per share.
The consideration for the issuance of shares may be paid in whole or in part, in
money, labor, services, property, or other thing of value. When payment of the
consideration for the shares has been received by the Corporation, such shares
shall be deemed to be fully paid. The judgment of the board of directors as to
the value of the consideration for the shares shall be conclusive.
ARTICLE 4
DIRECTORS. The business and affairs of the Corporation shall be conducted
by a board of directors. The number of directors shall be set forth in the
bylaws of the Corporation and may be changed from time to time. Directors need
not be shareholders
Page 1 - Articles of Incorporation
<PAGE>
of the Corporation nor residents of Nevada, but must be at least 18 years old.
There shall be one (1) director. The following persons shall constitute the
initial board of directors until their successors are elected:
NAME ADDRESS
---- -------
Roxanne L. Paine 230 Bullion Rd.
Dayton, Nevada 89403
The directors may, at any time prior to the first meeting of the board of
directors, elect or appoint additional directors, not exceeding the number set
forth in the bylaws, to serve until their successors are elected and qualified.
Thereafter, vacancies on the board of directors, however arising, may be filled
at any time and from time to time by the remaining directors.
The successors of the first board of directors shall be elected at the
annual meeting of the shareholders to be held on the date and at the time
provided in the bylaws. The directors shall hold office for one year, or until
they are removed or their successors shall have been duly elected and qualified,
as provided in the bylaws.
The board of directors shall elect or appoint a president, a secretary, a
treasurer, a resident agent, and such other officers or agents for the
administration of the business of the Corporation as it shall from time to time
determine. Such persons need not be shareholders of the Corporation nor members
of the board of directors.
ARTICLE 6
DIRECTORS' CONTRACTS. No contract or other transaction between this
Corporation and one or more of its directors or any other person, partnership,
corporation, firm, association, or entity in which one or more of this
Corporation's directors are directors or officers or are financially interested,
shall be either void or voidable because of such relationship or interest, or
because such director or directors are present at the meeting of the board of
directors, or a committee thereof, which authorizes, approves, or ratifies such
contract or transaction, or because his or their votes are counted for such
purpose, and each such director of this Corporation is hereby released from
liability which might otherwise exist from such contract if: (a) the fact of
such relationship or interest is disclosed or known to the board of directors or
committee which authorizes, approves, or ratifies the contract or transaction;
(b) the contract or transaction is approved by sufficient vote or consent
without counting the votes or consents of such interested director; (c) the fact
of such relationship or interest is disclosed or known to the shareholders
entitled to vote and they authorize, approve, or ratify such contract or
transaction by vote or written consent; or (d) the contract or transaction is
fair or reasonable to the corporation. If the fact of such relationship or
interest is known, then the common or interested directors may be counted in
Page 2 - Articles of Incorporation
<PAGE>
determining the presence of a quorum at the meeting of the board of directors or
committee thereof which authorizes, approves, or ratifies such contract or
transaction.
ARTICLE 6
LIMITED LIABILITY OF OFFICERS AND DIRECTORS. No officer or director of the
Corporation shall be liable to the corporation or its shareholders for damages
for breach of a fiduciary duty as a director or officer other than: (a) acts or
omissions which involve intentional misconduct, fraud, or a knowing violation of
the law; or (b) the payment of dividends in violation of NRS (S)78-300.
The Corporation may purchase and maintain insurance or make other financial
arrangements 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, partnership, joint venture, trust, or other enterprise for any
liability asserted against him and liability and expenses incurred by him in his
capacity as a director, officer, employee, or agent, or arising of his status as
such, whether or not the Corporation has the authority to indemnify him against
such liability or expenses.
The Corporation shall indemnify all of its officers and directors, past,
present and future, against any and all expenses incurred by them, and each of
them, including, but not limited to, legal fees, judgments, and penalties which
may be incurred, rendered or levied in any legal action or administrative
proceeding brought against them for any act or omission alleged to have been
committed while acting within the scope of their duties as officers or directors
of the Corporation. The expenses of officers and directors incurred in defending
any legal action or administrative proceeding must be paid by the corporation as
they are incurred and in advance of the final disposition of the action or
proceeding upon receipt of an undertaking by or on behalf of the officer or
director to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he/she is not entitled to be indemnified by the
corporation. Such right of indemnification shall not be exclusive of any other
rights of indemnification which the officers and directors may have or hereafter
acquire. Without limitation of the foregoing, the board of directors may adopt
bylaws from time to time to provide the fullest indemnification permitted by the
laws of the State of Nevada.
Page 3 - Articles of Incorporation
<PAGE>
ARTICLE 11
AMENDMENT. These articles of incorporation may be amended by the
affirmative vote of a majority of the shares entitled to vote on each such
amendment.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
articles of incorporation on this 19 day of February, 1997.
-- --------
/s/ Roxanne L. Paine
------------------------------------
Roxanne L. Paine
STATE OF NEVADA )
) SS:
COUNTY OF [ILLEGIBLE] )
On this 19th day of February 1997, before me personally appeared Roxanne L.
Paine, who acknowledged to me that she executed the above articles of
incorporation.
/s/ Dorothy L. Kane
------------------------------------
NOTARY PUBLIC
OFFICIAL
DOROTHY L. KANE
Notary Public
[SEAL] STATE OF NEVADA
My Commission Expires
March 22, [ILLEGIBLE]
Page 5 - Articles of Incorporation
<PAGE>
[STAMP]
FEB 28 1997
[ILLEGIBLE] SECRETARY OF STATE
/s/ [ILLEGIBLE]
C4093-97
- ------------------------------
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
--------------------------------
In the matter of AMERICAN NATURAL FOODS MARKETING, INC., Roxanne L. Paine,
with an address of 230 Bullion Rd., Dayton, Nevada 89403, hereby accepts the
appointment as Resident Agent of the above-entitled corporation in accordance
with NRS 78.090.
Furthermore, the mailing address for the above-registered office is 230
Bullion Rd., Dayton, Nevada 89403.
IN WITNESS WHEREOF, I hereunto set my hand this 19 day of February 1997.
-- --------
By /s/ Roxanne L. Paine
-------------------------
Roxanne L. Paine,
Resident Agent
Page 6 - Articles of Incorporation
<PAGE>
EXHIBIT 2.2
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
AMERICAN NATURAL FOODS MARKETING, INC.
A Nevada Corporation
The undersigned being the President and the Secretary of AMERICAN NATURAL
FOODS MARKETING, INC., a Nevada corporation, hereby certify that by majority
vote of the Shareholders at the Annual Meeting of Shareholders held on November
17, 1997, it was agreed by unanimous vote that this CERTIFICATE AMENDING
ARTICLES OF INCORPORATION be filed.
The undersigned further certify that the original Articles of Incorporation
of AMERICAN NATURAL FOODS MARKETING, INC. were filed with the Secretary of State
of Nevada on the 23rd day of November, 1996, as amended on the 16/th/ day of
June, 1997 and filed with the Secretary of State of Nevada. The undersigned
further certify that ARTICLE ONE of the Articles of Incorporation as filed on
the 23/rd/ day of November, herein is amended to read as follows:
ARTICLE ONE
NAME AND BUSINESS ACTIVITIES. The name of the corporation shall be AQUATIC
CELLULOSE INTERNATIONAL CORP. (hereafter referred to as the "Corporation"). The
purpose of the Corporation shall be to engage in any lawful activity and any
activities necessary, convenient, or desirable to accomplish such purposes, not
forbidden by law or by these articles of incorporation.
The undersigned hereby certify that they have executed this Certificate
Amending the Article of Incorporation heretofore filed with the Secretary of
State of Nevada.
Dated this 19/th/ day of November 1997
---------------------------------
GARY ACKLES, President
[STAMP OF NOTARY PUBLIC]
/s/ Shane Kerpan
--------------------------------
SHANE KERPAN, Secretary
<PAGE>
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
AMERICAN NATURAL FOODS MARKETING, INC
The undersigned, being the President and Secretary of AMERICAN NATURAL
FOODS MARKETING, INC, a Nevada Corporation, hereby certify that by majority vote
of the Board of Directors at a meeting held on the 4 day of June, 1997, it was
agreed by unanimous vote that this CERTIFICATE AMENDING ARTICLES OF
INCORPORATION be filed.
The undersigned further certify that the original Articles of Incorporation
of AMERICAN NATURAL FOODS MARKETING, INC, were filed with the Secretary of State
of Nevada on the 23/rd/ day of November, 1998. The undersigned further certify
that ARTICLE THREE of the original Articles of Incorporation filed on the 23/rd/
day of November, 1998 herein is amended to read as follows:
ARTICLE THREE
-------------
SHARES OF STOCK. The total number of authorized shares of the Corporation
is 60,000,000 non-assessable shares, 50,000,000 shares of which shall be common
stock with a par value of $0.001 per share, and 10,000,000 shares of which shall
be preferred stock with a par value of $0.001 per share. The consideration for
the issuance of shares may be paid in whole or in part, in money, labor,
services, property, or other thing of value. When payment of the consideration
for the shares has been received by the Corporation, such shares shall be deemed
to be fully paid. The judgment of the board of directors as to the value of the
consideration for the shares shall be conclusive.
ISSUANCE OF PREFERRED STOCK IN SERIES. The Preferred Stock may be issued
from time to time in one or more series, the shares of each series to have such
voting powers, full or limited, and such designations, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions thereof as are stated and expressed herein or in the resolution
or resolutions providing for the issue of such series adopted by the board of
directors.
AUTHORITY OF THE BOARD OF DIRECTORS. Authority is hereby expressly granted
to the board of directors to the limitations prescribed by law, to authorize the
issue of one or more series of Preferred Stock, and with respect to each such
series to fix by resolution or resolutions providing for the issue of each
series the number of shares of such series, the voting powers, full or limited,
preferences and relative, participating, optional or other special rights and
the qualifications, limitations of restrictions thereof. The authority of the
board of directors with respect to each series of Preferred Stock shall include,
but not be limited to, the determination or fixing of the following:
<PAGE>
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
AMERICAN NATURAL FOODS MARKETING, INC
CONTINUED
(a) The number of shares of such series:
(b) The designation of such series;
(c) The dividends of such series the conditions and dates upon which
such dividends shall bear to the dividends payable on any other
class or classes of stock and whether such dividends shall be
cumulative or non-cumulative;
(d) Whether the shares of such series shall be subject to redemption,
the times, prices, rates, adjustments, and other terms and
conditions of such redemption;
(e) The terms and amounts of any sinking fund provided for the
purchase or redemption of the shares of such series;
(f) Whether or not the shares of such series shall be convertible into
or exchangeable for shares of any other class or classes or of any
other series of any class or classes of stock of the corporation
and, if provisions be made for conversion of exchange, the times,
prices, rates, adjustments and other terms and conditions of such
conversion or exchange;
(g) The extent, if any, to which the holders of the shares of such
series shall be entitled to vote with respect to the election of
directors or otherwise, including the right to elect a specified
number or class of directors, the number or percentage of votes
required for certain actions, and the extent to which a vote by
class or series shall be required for certain actions.
(h) The restrictions, if any, on the issue or reissue of any Preferred
Stock;
(i) The rights of the holders of the shares of such series upon the
dissolution of, or upon the distribution of the assets of, the
corporation; and
(j) The extent, if any, to which any committee of the board of
directors may fix the designations and any of the preferences or
rights of the shares of such series relating to dividends,
redemption, dissolution, and distribution of assets of the
corporation or the conversion into or exchange of such shares for
shares of any other class or classes of stock of the corporation or
any other series of the same, or fix the number of shares of any
such series or authorize the increase or decrease in the shares of
such series.
<PAGE>
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
AMERICAN NATURAL FOODS MARKETING, INC
CONTINUED
The undersigned hereby certify that they have on this 16th day of June,
------ ------
1997, executed this Certificate Amending the original Articles of Incorporation
heretofore filed with the Secretary of State of Nevada.
/s/ James M. McKenzie
- --------------------------------------
James M. McKenzie, President/Secretary
STATE OF Oregon )
------------------)
)SS:
COUNTY OF Washington )
-----------------)
On this 16th day of June, 1997, before me, the undersigned, a Notary Public,
------ -----
personally appeared James M. McKenzie, known to me to be the person(s), whose
------------------
name(s) are subscribed to the foregoing Certificate Amending Articles of
Incorporation and acknowledged to me that they executed the same.
/s/ [ILLEGIBLE]
- ---------------------------
Notary Public
-----------------------
(SEAL) [ILLEGIBLE]
-----------------------
<PAGE>
FILED
IN THE OFFICE OF THE CERTIFICATE AMENDING ARTICLES OF INCORPORATION
SECRETARY OF STATE OF THE
STATE OF NEVADA OF
NOV 26 1997 AMERICAN NATURAL FOODS MARKETING, INC.
No. C4093-97
------------ A Nevada Corporation
[NAME ILLEGIBLE]
[ILLEGIBLE] SECRETARY OF STATE
The undersigned, being the President and the Secretary of AMERICAN NATURAL
FOODS MARKETING, INC., a Nevada corporation, hereby certify that by majority
vote of the Shareholders at the Annual Meeting of Shareholders held on November
17, 1997, it was agreed by unanimous vote that this CERTIFICATE AMENDING
ARTICLES OF INCORPORATION be filed.
The undersigned further certify that the original Articles of Incorporation
of AMERICAN NATURAL FOODS MARKETING, INC. were filed with the Secretary of State
of Nevada on the 23/rd/ day of November, 1996, as amended on the 16/th/ day of
June, 1997 and filed with the Secretary of State of Nevada. The undersigned
further certify that ARTICLE ONE of the Articles of Incorporation as filed on
the 23/rd/ day of November, herein is amended to read as follows:
ARTICLE ONE
NAME AND BUSINESS ACTIVITIES. The name of the corporation shall be AQUATIC
CELLULOSE INTERNATIONAL CORP. (hereafter referred to as the "Corporation"). The
purpose of the Corporation shall [ILLEGIBLE] to engage in any lawful activity
and any activities necessary, convenient, or desirable to accomplish such
purposes, not forbidden by law or by these articles of incorporation.
The undersigned hereby certify that they have executed this Certificate
Amending the Article of Incorporation heretofore filed with the Secretary of
State of Nevada.
DATED this 19/th/ day of November 1997.
/s/ [ILLEGIBLE]
---------------------------
[ILLEGIBLE], President
[ILLEGIBLE]
Notary Public ---------------------------
[ILLEGIBLE] [ILLEGIBLE]
<PAGE>
EXHIBIT 2.3
BYLAWS
OF
AMERICAN NATURAL FOODS MARKETING, INC.
ARTICLE I
Offices
-------
The principal office of the corporation in the State of Oregon shall be
located at 9640 SW Sunshine Court, Suite G700, Beaverton, Oregon, 97005. The
corporation may have such other offices, either within or without the State of
Oregon, as the Board of Directors may designate or as the business of the
corporation may from time to time require.
The registered of office of the corporation required by the Oregon Business
Corporation Act to be maintained in the State of Oregon may be, but need not be,
identical with principal office in the State of Oregon, and the address of the
registered office may be changed from time to time by the Board of Directors.
ARTICLE II
Shareholders
- ------------
Section 1. Annual Meeting. The annual meeting of the shareholders shall
--------------
be held on First Monday in June at 9:30 AM, for the purpose of electing
directors and for the transactions of such other business as may come before
meeting. If the day fixed for the annual meeting shall be a legal holiday in the
State of Oregon, such meeting shall be held on the next succeeding business day.
Failure to hold the annual meeting at the designated time shall not work a
forfeiture or dissolution of the corporation.
Section 2. Failure to hold Annual Meeting. If the annual meeting is not
------------------------------
held at the designated time, the President or the Board of Directors may call
the annual meeting at a time fixed by them not more than sixty days after such
designated time by proper notice designating the meeting as the annual meeting.
If the annual meeting is not held at the designated time or during the
sixty-day period thereafter, the annual meeting may be called by the holders of
not less than one-tenth of all the shares entitled to vote at the meeting. In
such event, notice shall be given not more than fifteen days after the
expiration of such sixty-day period. Such notice shall fix the time of the
meeting at the earliest date permissible under the applicable notice
requirements.
Section 3. Special Meeting. Special meetings of the shareholders, for any
---------------
purpose or purposes, unless otherwise prescribed by statute, may be called by
the President or by the Board of Directors, and shall be called by the President
at the request of the holders of not less than one-tenth of all the outstanding
shares of the corporation entitled to vote at the meeting.
page 1- Bylaws
<PAGE>
Section 4. Place of Meeting. The Board of Directors may designate any
----------------
place, either within or without the State of Oregon, as the place of meeting for
any annual meeting or for any special meeting called by the Board of Directors.
A waiver of notice signed by all shareholders entitled to vote to a meeting may
designate any place, either within or without the State of Oregon, as the place
for holding of such meeting. If no designation is made, or if a special meeting
is otherwise called, the place of meeting shall be at the principal office of
the corporation in the State of Oregon.
Section 5. Notice of Meeting. Written notice stating the place, day
-----------------
and hour of the meeting and, in case of special meeting the purpose or purposes
for which the meeting is called, shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail,
by 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's address as
it appears on the stock transfer books of the corporation, with first class
postage paid.
Section 6. Closing of Transfer Books or Fixing of Record Date. For
--------------------------------------------------
the purpose of determining shareholders entitled to notice of or vote at any
meeting of shareholders or any adjournment of it, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
corporation may provide that the stock transfer books shall be closed for a
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be for
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting 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 of such meeting.
Section 7. Voting Lists. The officer or agent having charge of the stock
------------
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, or any adjournment of it, arranged in
alphabetical order, with the address of the shareholders and the number of
shares held by each, which list, for a period of ten days prior to such meeting,
shall to 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 stock transfer book shall be prima facie
evidence as to who are the
page 2- Bylaws
<PAGE>
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
Section 8. Quorum. Unless otherwise provided in the corporation's Article
------
of Incorporation, a majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice until a quorum is
present or represented. At such adjourned meeting during which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified. The shareholders present at
duly adjournment notwithstanding the withdrawal of enough shareholders to leave
less than a quorum.
Section 9. Proxies. At all meetings of shareholders, a shareholder may
-------
vote in person or by proxy executed in writing by the shareholders or by the
shareholder's duly authorized attorney in fact. Such proxy shall be filed with
the Secretary of the Corporation before or at time of the meeting. No proxy
shall be valid after eleven months from the date of its execution unless
otherwise provided in the proxy.
Section 10. Voting of Shares. Unless otherwise provided in the
----------------
corporation's Article of Incorporation, each outstanding share entitled to vote
shall be entitled to one vote upon each matter submitted to a vote at a meeting
of shareholders.
The vote of the holders of a majority of the shares present and entitled to
vote at any duly organized meeting shall decide any question unless the vote of
a greater number shall be required by law or the Articles of Incorporation.
No cumulative voting for directors shall be permitted.
Section 11. Voting of Shares by Certain Holders. Shares standing in the
-----------------------------------
name of another corporation may be voted by such officer, agent or proxy as the
Bylaws of such corporation may prescribe, or, in the absence of such provision,
as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian of conservator may be
voted by such person, either in person or by proxy, without a transfer of such
shares into such person's name. Shares standing in the name of a trustee or
custodian may be voting by such person, either in person or by proxy, but no
trustee or custodian shall be entitled to vote shares held by such person
without a transfer of such shares into such person's name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without their transfer into the receiver's name if authority to so vote
is contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledge, and
page 3- Bylaws
<PAGE>
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 12. Informal Action by Shareholders. Any action required to be
-------------------------------
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action to taken, shall be signed by all shareholders
entitled to vote with respect to the subject matter of the action.
ARTICLE III
Board of Directors
- ------------------
Section 1. General Powers. The business and affairs of the corporation
--------------
shall be managed by its Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of directors of
---------------------------------
the corporation shall be minimum of 1 and maximum of 7 as determined from time
to time by the Board of Directors. Each director shall hold office until the
next annual meeting of shareholders and until the director's successor shall
have been duly elected and qualified. Directors need not be residents of the
State of Washington or shareholders of the corporation.
Section 3. Regular Meeting. A regular meeting of the Board of Directors
---------------
shall be held without other notice than this bylaw, immediately after, and at
the same place as, the annual meeting of shareholders. The Board of Directors
may provide by resolution the time and place, either within or without the State
of Oregon, for the holding of additional regular meeting without other notice
than such resolution.
Section 4. Special Meeting. Special meetings of the Board of Directors
---------------
may be called by or at the request of the President or any director. The person
or persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State or Oregon, as the place for
holding any special meeting of the Board of Directors called by him, her or
them.
Section 5. Telephone Conference Meeting. Any regular or special meeting
----------------------------
of the board may be by means of conference telephone or similar communications
equipment by means of which all person participating in the meeting can hear
each other. Participation in such a meeting shall constitute presence in person
at the meeting.
Section 6. Notice of Meeting. Notice of any special meeting shall be
-----------------
given at least 5 days prior to such meeting written notice delivered personally
or mailed to each director at the director's business address, or by telegram.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail so addressed, with first class postage paid. If notice is
given by telegram, such notice shall be deemed to be delivered when the telegram
is delivered to the telegraph company. Any director may waiver notice of
page 4- Bylaws
<PAGE>
meeting. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business 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.
Section 7. Quorum. A majority of the number of directors fixed by
------
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors. If less than a majority is
present at a meeting, the director or directors present may adjourn the meeting
from time to time without further notice. The directors present at a duly
adjournment, notwithstanding the withdrawal of enough directors to leave less
than a quorum.
Section 8. Manner of Acting. The act of the majority of the directors
----------------
presents at a meeting at which a quorum is present shall be the act of the Board
of Directors except as provided in Section 7 of this Article III and in Article
XI and Article XII.
Section 9. Removal. All or any number of the directors may be removed,
-------
with or without cause, by a vote of the majority of the shares then entitled to
vote at an election of directors, or at a special meeting of the shareholders
called for that purpose.
Section 10. Vacancies. Any vacancy 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, or by a sole remaining
director. A director elected to fill a vacancy shall be elected for the expired
term of the director's predecessor in office. Any directorship to be filled by
election at an annual meeting or at a special meeting of shareholders called for
that purpose unless otherwise provided in the Articles of Incorporation.
Section 11. Compensation. By resolution of the Board of Directors, each
------------
director may be paid the director's expense, if any, of attendance at each
meeting of the Board of Directors, and may be paid a stated salary as director
or fixed sum for attendance at each meeting of the Board of Directors or both.
No such payment shall preclude any director from serving the corporation in any
other capacity and receiving compensation for such service.
Section 12. Presumption of Assent. A director of the corporation who is
---------------------
present at a meeting of the Board of Directors at which action on any
corporation matter is taken shall be presumed to have assented to the action
taken unless the director's dissent shall be entered in the minutes of the
meeting or unless the director shall file his or her written dissent to the
action with the person acting as the Secretary of the meeting before the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of the action.
Section 13. Action Without a Meeting. Any action that may be taken at a
------------------------
meeting of the directors may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all directors.
page 5- Bylaws
<PAGE>
ARTICLE IV
Officers
- --------
Section 1. Number. The officers of the corporation shall be a President,
------
a President and/or General Manager, one or more Vice Presidents (the number to
be determined by the Board of Directors), a Secretary and a Treasurer, each of
whom shall be elected by the Board of Directors. Such other officers and
assistant officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors. Any two or more officers may be held by the
same person.
Section 2. Election and Term of Office. The officers of the corporation
---------------------------
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as may be
convenient. Each officer shall hold office until his or her successor shall have
been duly elected and shall have qualified or until the officer's death or until
he or she shall resign or shall have been removed in the manner provided in this
Article IV.
Section 3. Removal. Any officer or agent may be removed by the Board of
-------
Directors whenever, in its judgment, the best interests of the corporation would
be served by such removal, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of an
officer or agent shall not itself create contract rights.
Section 4. Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or otherwise may be filled by the Board
of Directors for the unexpired portion of the term.
Section 5. President. The President shall be the principal executive
---------
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all the business and affairs
of the Corporation. The President shall, when present, preside at all meetings
of the shareholders and of the Board of Directors. The President may sign, with
the Secretary, Assistant Secretary or any other proper officer of the
corporation so authorized by the Board of Directors, certificates for share of
the corporation. The President may also sign deeds, mortgages, bonds, contracts,
and/or other instruments which the Board of Directors has authorized to be
executed, except in cases where the signing and execution of any of the same
shall be expressly delegated by the Board of Directors or by these Bylaws to
some other officer or agent of the corporation, or shall be required by law to
be otherwise signed or executed. The President shall, in general, perform all
duties incident to the office of the President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. Vice President. In the absence of the President, or in the
--------------
event of the President's death, inability or refusal to act, the Vice President
(or in the event there is more than one vice president, the vice presidents in
the order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the
page 6- Bylaws
<PAGE>
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President. Any Vice President may sign, with the
Secretary or an Assistant Secretary, certificates for shares of the
corporation; and shall perform such other duties as from time to time may be
assigned to him or her by the, the President and/or General Manager or the Board
of Directors.
Section 7. Secretary. The Secretary shall: (a) keep the minutes of the
---------
proceedings of the shareholders and of the Board of Directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the mailing address of each shareholder which shall be furnished to
the Secretary by such shareholder which shall be furnished to Secretary by such
shareholder; (e) sign, with the President or a Vice President, certificates for
shares of the corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the Board of Directors.
Section 8. Treasurer. The Treasurer shall: (a) have charge and custody
---------
of and be responsible for all funds and securities of the corporation; (b)
receive and give receipts for moneys due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the corporation in
such banks, trust companies or other depositories as shall be selected in
accordance with the provision of Article VI of these Bylaws; and (c) in general
perform all of the duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him or her by the President or by
the Board of Directors. If required by the Board of Directors, the Treasurer
shall give a bond for the faithful discharge of his or her duties in such sum
and with such surety or sureties as the Board of Directors shall determine.
Section 9. Assistant Secretaries and Assistant Treasurers. The
----------------------------------------------
Assistant Secretaries, when authorized by the Board of Directors or the Bylaws,
may sign, with the President or a Vice President, certificates for shares of the
corporation the issuance of which shall have been authorized by resolution of
the Board of Directors. The assistant Treasurers shall, respectively, if
required by the Board of Directors, give bonds for the faithful discharge of
their duties in such sums and with such sureties as the Board of Directors shall
determine. The Assistant Secretaries and Assistant Treasurers shall, in
general, perform such duties as shall be assigned to them by the Secretary or
the Treasurer, respectively, or by the President or the Board of Directors.
Section 10. Salaries. The salaries of the officers shall fixed from
--------
time by the Board of Directors. No officer shall be prevented from receiving
such salary by reason of the fact that the officer is also a director of the
corporation.
page 7- Bylaws
<PAGE>
SECRETARY OF STATE
[GREAT SEAL OF THE STATE OF NEVADA]
CERTIFICATE OF EXISTENCE
WITH STATUS IN GOOD STANDING
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that I am, by the laws of said State, the custodian of the
records relating to filings by corporations, limited-liability companies,
limited partnerships, and limited-liability partnerships pursuant to Title 7 of
the Nevada Revised Statutes which are either presently in a status of good
standing or were in good standing for a time period subsequent of 1976 and am
the proper officer to execute this certificate.
I further certify that the records of the Nevada Secretary of State, at the date
of this certificate, evidence, AMERICAN NATURAL FOODS MARKETING, INC. as a
corporation duly organized under the laws of Nevada and existing under and by
virtue of the laws of the State of Nevada since December 28, 1997 and is in good
standing in this state.
IN WITNESS WHEREOF, I have hereunto set my hand
and affixed the Great Seal of State, at my office, in
Carson City, Nevada, on March 7, 1997.
/s/ Dean Heller
[GREAT SEAL OF
THE STATE OF NEVADA] Secretary of State
By /s/ [ILLEGIBLE]
Certification Clerk
<PAGE>
SECRETARY OF STATE
[GREAT SEAL OF THE STATE OF NEVADA]
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that AMERICAN NATURAL FOODS MARKETING, INC. did on February 20,
1997 file in this office the original Articles of Incorporation; that said
Articles are now on file and of record in the office of the Secretary of State
of Nevada, and further, that said Articles contain all the provisions required
by the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand
and affixed the Great Seal of State, at my office, in
Carson City, Nevada, on March 3, 1997.
/s/ Dean Heller
Secretary of State
[GREAT SEAL OF
THE STATE OF NEVADA]
By /s/ [ILLEGIBLE]
Certification Clerk
<PAGE>
EXHIBIT 6.1
MACK STOCK Page 1
Printers & Stationers Ltd. FORM 140-1 (c)1990 (Insert page number)
LEASE -- COMMERCIAL
THIS INDENTURE made the ________ day of ________ 19__
IN PURSUANCE OF THE "LAND TRANSFER FORM ACT"
BETWEEN Gerald & Dauphne Batula
2584 Lakeshore Rd.
Vernon, B.C.
V1T
hereinafter called the Lessor of the FIRST PART,
AND
Aquatic Cellulose Ltd.
[ILLEGIBLE]
Box 1952
Vernon, BC
V1T-8Z7
hereinafter called the Lessee of the SECOND PART,
Ph. (604) 379-2212
WITNESSETH that in consideration of the Rents, Covenants, Conditions and
Agreements hereinafter respectively reserved and contained, the said Lessor doth
demise and lease unto the said Lessee, ALL AND SINGULAR those certain lands,
premises and buildings situate in the
3704 32nd Street of Vernon in the
Province of British Columbia and known and described as
Lot4, Block A, Section 3, Plan 270, ODYD
hereinafter called the Premises,
FROM the 1st day of November 1996
FOR THE TERM OF 1 year thence ensuing,
YIELDING therefor during the said term the RENT of
+GST
Nine Thousand Five Hundred & Seventy Six Dollars ($9576.00+GST)
payable at the office of
Century 21 Alliance Realty Ltd.
3704 32nd Street, Vernon, BC
monthly in advance without deduction on the 1st day of each and every month
in 12 consecutive monthly installments of
+GST
Seven Hundred Ninety eight Dollars ($798.00 + GST)
<PAGE>
MACK STOCK Page ____
Printers & Stationers Ltd. FORM 140-2 (Insert page number)
LEASE -- COMMERCIAL
THAT THE SAID LESSEE COVENANTS WITH THE SAID LESSOR:
TO pay rent and to pay water rates and to pay for all gas and electric light and
power used on the premises; and to pay also (as rent) on or before the FIRST day
of JULY in each year that portion of all taxes (including local improvement
taxes) levied by any federal, provincial, municipal or school authority in
respect of the entire premises of which the demised premises form part as shall
be attributable to the assessment for any purpose of all things erected or
placed in, upon or under or affixed to the demised premises prior to or during
the term hereof or any renewal or to any building, fixture or structure
therein, thereon or thereunder, including all fixtures, machinery and similar
things of a commercial or industrial undertaking, business or going concern
operation which may be lawfully removed by the Lessee.
AND to repair, reasonable wear and tear and damage by fire, lightning, tempest
and earthquake excepted; AND to give to the Lessor or his agent immediate notice
of any defect in water, gas or other pipes or fixture, heating apparatus,
elevator, hoist, machinery or telephone, electric or other wires or fixtures;
AND that the Lessor may enter and view state of repair and that the Lessee will
repair according to notice, reasonable wear and tear and damage by fire,
lightning, tempest and earthquake excepted;
AND that the Lessee will leave the premises in good repair, reasonable wear and
tear and damage by fire, lightning, tempest and earthquake excepted;
AND will keep and leave whole and in good order all water, gas and electric
fixtures, glass, pipes, faucets, locks, fastenings, hinges, window shades, sash
cords, heating an cooling apparatus under the control of and used by the Lessee
and will keep and leave all brass, copper or other metals and all windows, in on
or attached to the premises, cleaned and polished;
AND will not assign without leave; AND will not sublet without leave;
AND will not use the premises nor allow the premises to be used for any other
purpose than that for which the premises are hereby leased, namely;
AND will not carry on nor do, nor allow to be carried on or done on the premises
any sales by auction, nor any work, business, occupation, act or thing whatever
which may be or become a nuisance or annoyance to the Lessor, the [ILLEGIBLE] or
any other occupant of the said building or which may increase the hazard of fire
or liability of any kind or which may increase the premium rate of insurance
against loss by fire or liability upon the said building or the premises or
invalidate any policy on insurance of any kind upon or in respect the same or
which may cause or result excessive use or waste of water or increase the amount
of water rates payable in respect of the said building or the premises.
AND will not drive nails or screws into nor drill into nor cut, mark nor in any
way deface any part of the premises;
AND will not make any alterations in the structure, plan or partitioning of the
premises nor install any plumbing, piping, wiring, or heating apparatus without
the written permission of the Lessor or his agents first had and obtained and at
the end or sooner determination of the said term will restore the premises to
their present condition if called upon to do so by the Lessor but otherwise all
repairs, alterations, installations and additions made by the Lessee upon the
premises, except gas and electric fixtures and movable business fixtures, shall
be the property of the Lessor and shall be considered in all respect as part of
the premises; AND will indemnify and save harmless the Lessor from and against
all and all manner of claims for liens for wages or materials, or for damage to
persons or property caused during the making of or in connection with any
repairs, alterations, installations and additions which the Lessee shall make or
cause to be made on the premises; AND will allow the Lessor to post and will
keep posted on the premises any notice that the Lessor may desire to post under
the provisions of the Repairers Lien Act;
AND will erect, place, use or keep in or upon the premises only such shades,
window blinds, awnings, projections, signs, advertisements, lettering, devices,
notices, painting or decoration as are first approved in writing by the Lessor,
and upon the expiration or determination of this lease will remove the same if
required to do so by the Lessor;
AND will indemnify and save harmless the Lessor from and against any and all
manner of actions or causes of action, damages, loss, costs or expenses which he
may sustain, incur or be put to by reason of any advertising signs now existing
or which may hereafter be erected by the Lessee upon, over, projecting from or
above the said building or the premises, and will pay the premiums charged upon
any bond of indemnity or liability insurance policy in respect of such signs
issued upon the demand of Civic, Municipal or other
<PAGE>
MACK STOCK Page ______
Printers & Stationers Ltd. FORM 140-3 (Insert page number)
LEASE -- COMMERCIAL
authorities, provided always that the Lessor shall from time to time and at all
times hereafter be at liberty to examine the said signs, and that the Lessee
will repair or strengthen the same upon notice from the Lessor, and if the
Lessee shall fail to comply with such notice, the Lessor shall be at liberty to
repair or strengthen the said signs, and the costs, charges and expense of so
doing shall be forthwith paid by the Lessee and the Lessor, but the giving of
such notice and the undertaking of such repairs or strengthening by the Lessor
shall not be deemed an acknowledgment or admission of any liability or
responsibility on the part of the Lessor;
AND will not cover nor obstruct the glass doors, partitions, transoms, windows,
lights and skylights which reflect or admit light into any passageway or other
place in the said building;
AND will not bring into or upon the premises any safe, motor, machinery or other
heavy articles without the consent of the Lessor in writing first had and
obtained, and will immediately make good any damage done to any part of the
building or premises by bringing in or taking away the same;
AND will provide receptacles for refuse and rubbish of all kinds, and will
attend to the removal of the same from the premises at regular intervals, and
will not keep nor leave any boxes, packing material or rubbish of any kind in or
near the premises or any passages connected with same. AND will keep clean and
free from any rubbish, ice or snow, all walks, passages, yards and alleys
adjacent to the premises;
AND will observe, obey and conform to and cause his employees to observe, obey
and conform to all rules and regulations from time to time made by the Lessor
with regard to the management, use or occupation of the said building and the
premises;
AND will comply promptly at his own expense with all laws, ordinances,
regulations, requirements and recommendations of any and all Dominion,
Provincial, Civic, Municipal and other authorities, or Association of Fire
Insurance Underwriters or Agents and all notices in pursuance of same whether
served upon the Lessor or the Lessee, and will indemnify and save harmless the
Lessor from and against all and all manner of actions or causes of action,
damages, loss, costs or expenses, which he may sustain, incur or be put to by
reason of any neglect of same or noncompliance therewith or by reason of any
defect, deficiency, disrepair, depreciation, damage or change in or to the
premises, or any injury or damage to any person or to any goods and chattels
contained in, upon or about the premises, however caused;
AND will allow notices "For Sale" or "To Let" to be put and remain on the
premises in a conspicuous position for at least sixty days prior to the
expiration of this lease and will allow prospective purchasers or tenants to
enter and inspect the premises on week days during the said sixty days;
AND at the expiration or sooner determination of these lease will peaceably
surrender and give up possession of the premises without notice from the Lessor,
any right to notice to quit or vacate being hereby expressly waved by the
Lessee, any law, usage or custom to the contrary notwithstanding.
AND IT IS HEREBY AGREED
THAT the whole contract and agreement between the parties hereto is set forth
herein, that the Lessee has leased the promises after examining the same, that
to representation, warranties or conditions have been made other than those
expressed or complied herein, and that no agreement collateral hereto shall be
binding upon the Lessor unless it be made in writing and signed by the Lessor;
THAT no waiver of nor neglect to enforce the right to forfeiture of this lease
or the right of re-entry upon breach of any covenant, condition or agreement
herein contained shall be deemed a waiver of such rights upon subsequent breach
of the same or any other covenant, condition or agreement herein contained;
THAT if the Lessor shall be unable to deliver possession of the premises at the
time of the commencement of the said term, neither the Lessor not his agents
shall be liable for any damage or loss caused thereby, nor shall this lease be
void or voidable, nor the date of the expiration of same be changed by reason
thereof, but in such event the Lessee shall only be liable for rent at the rate
hereby reserved from such time as the Lessor shall be able to deliver possession
of the premises;
THAT the Lessor shall not be responsible for any defect in or change of
conditions affecting the premises, nor for any damage to the premises or to any
person or to merchandise, goods, chattels, machinery or equipment contained
therein howsoever caused;
<PAGE>
MACK STOCK Page____
Printers & Stationers Ltd. FORM 140-4 (Insert page number)
LEASE -- COMMERCIAL
THAT the Lessor shall not be responsible for or in regard to the sufficiency or
insufficiency of any safe or vault used by the Lessee to withstand fire,
burglars, thieves, and that the use of such safe or vault is accepted by the
Lessee at his own risk and without any recourse whatever against the Lessor for
or on account of any loss or damage which may occur in any manner of or to any
money, securities, valuables, books, papers or other property which may be
placed therin by the Lessee;
THAT the Lessor shall not by responsible for any loss, damage, or expense caused
by any overflow or leakage of water from any part of the said building, or any
adjoining buildings, occasioned by the use, misuse or abuse of water or by the
breaking or bursting of any pipes or plumbing fixtures, or in any other manner
or by seepage from adjoining lands or premises or by any accident or
misadventure to or arising from the use and operation of machinery, elevator,
heating apparatus, electric wiring and appliances, gas or other pipes and
appliances or any fixtures or by reason of any structural defects in the
building or premises of by any other matter or thing whatsoever;
THAT in the event of the said building or the premises being condemned in whole
or in part because of the unsafe condition thereof, this lease shall cease and
determine upon the date of such condemnation, and the Lessor shall not be
responsible for any loss, damages or expense which the Lessee may suffer or
incur by reason of the same;
THAT any yard, passage, alley or area connected with the said building is for
the use of all the occupants of the said building and that the Lessee will not
obstruct nor hinder the use of same by other occupants of the said building and
their employees, agents and customers and that the Lessee will keep clean and
sanitary the portion of same situated in the rear of or adjacent to the
premises;
THAT the sole and exclusive right to use or to lease to others for their use the
roof or exterior side and rear walls of the said building is reserved to and
retained by the Lessor.
THAT the Lessor shall have the right at any time during the said term to repair,
remodel, alter, improve, or add to the premises or the whole or any part of the
building of which the premises form a part or to change the location of the
entrance or entrances to the said building and the premises without compensation
or responsibility to the Lessee and for such purposes, if necessary, to enter
into, pass through, work upon and attach scaffolds or other temporary structures
to the premises, putting the Lessee to no unnecessary inconvenience;
THAT any rights or privileges which may accrue or enure to or for the benefit
the Lessor by virtue of any law governing the relations of Landlord and Tenant
not specifically mentioned herein and not inconsistent with the terms and
conditions hereof and all rights of enforcements of same shall be deemed to
hereby reserved to and claimed by the Lessor;
THAT if the Lessor shall suffer of incur any damage, loss or expense or be
obliged to make any payment for which the Lessee is liable hereunder by reason
of any failure of the Lessee to observe and comply with any of the covenants of
the Lessee here in contained then the Lessor shall have the right to add the
cost or amount of any such damages, loss, expenses, or payment to the rent
hereby reserved, and any such amount shall there upon immediately be due and
payable as rent and recoverable in the manner provided by law for the recovery
of rent in arrear.
THAT in case the premises or any part thereof shall at any time during the said
term be burned down or damaged by fire so as to render the same unfit for the
purpose of the Lessee, the rent hereby reserved or a proportionate part thereof
according to the nature and extent of the damage sustained, shall be suspended
and abated until the premises shall have been rebuilt or made fit for the
purpose of the Lessee, or at the option of the Lessor the said term shall in
such case forthwith come to an end, and the Lessee shall cease to be held liable
for payment of rent except such rent as shall have already accrued due, and
shall be entitled to be repaid any rent paid in advance for the balance of the
period so paid for in advance;
THAT whensoever the Lessor shall be entitled to levy distress against the goods
and chattels of the Lessee he may use such force as he may deem necessary for
that purpose and for gaining admittance to the premises without being liable to
any action in respect thereof, or for any loss or damage occasioned thereby and
the Lessee hereby expressly releases the Lessor from all actions, proceedings,
claims or demands whatsoever for or on account of or in respect of any such
forcible entry or any loss or damage sustained by the Lessee in connection
therewith.
<PAGE>
MACK STOCK Page____
Printers & Stationers Ltd. FORM 140-5 (Insert page number)
LEASE -- COMMERCIAL
THAT in case the Lessee shall become insolvent or bankrupt or make an assignment
for the benefit of creditors, or being an incorporated company if proceedings be
begun to wind up the said company, or in case of the non-payment of rent at the
times herein provided, or in case the premises or any part thereof become vacant
and unoccupied for a period of thirty days or be used by any other person or
persons, or for any other purpose than as hereinbefore provided, without the
written consent of the Lessor, this lease shall, at the option of the Lessor,
cease and be void, and the term hereby created expire and be at an end, anything
hereinbefore to the contrary notwithstanding, and the then current month's rent
and three months' additional rent shall thereupon immediately become due and
payable, and the Lessor may re-enter and take possession of the premises as
though the Lessee or his servants or other occupant or occupants of the premises
were holding over after the expiration of the said term and the term shall be
forfeited and void;
THAT if the Lessee shall hold over and the Lessor shall accept rent after the
expiration of the said term, the new tenancy thereby created shall be a tenancy
from month to month and not a tenancy from year to year and shall be subject to
the covenants and conditions herein contained so far as the same are applicable
to a tenancy from month to month;
THAT any additional covenants, conditions or agreements set forth in writing and
attached hereto whether at the commencement of the said term or at any
subsequent time and signed or initialled by the parties hereto shall be read and
construed together with and as part of this lease, provided always that when the
same shall be at variance with any printed clause in this lease, such additional
covenants, conditions and agreement shall be deemed to supersede such printed
clause;
Taxes - Lessee to pay its proportionate share of all real property taxes and all
assessments to those improvements thereon deemed to be fixtures, machinery and
similar things of a commercial or industrial undertaking which may be removed by
the Lessee.
Insurance - After the bill for insurance for each year is received, the Lessee
agrees to pay the Lessor within thirty (30) days of written demand from the
Lessor, its proportionate share of said insurance.
Utility Charges - the Lessee shall pay for all charges for lights, power,
gas, water, and garbage supplied, delivered, consumed, provided to, or made
available upon the Premises and in the event that any said utility proportionate
share of said utility charges.
General Maintenance - The Lessee covenants to pay to the Lessor within thirty
(30) days often written demand from the Lessor, supplemented by such additional
information as the Lessee requires, its proportionate share of general operating
costs for the buildings. The terms operating cost as used in this paragraph
shall include but not be limited to, complete maintenance and landscaping
services for the building such as are in keeping with maintaining the standard
of a first-class office and a commercial building, including the cost of
providing the electricity not otherwise changeable to tenants, the cost of snow
removal, parking and management, said management costs not to exceed ten (10%)
of all operating costs. After every [ILLEGIBLE] is [ILLEGIBLE].
Glass - To restore forthwith at the Lessee's expense and with glass of the same
colour and quality, any broken or damaged glass on the Premises.
Janitorial Services - That the Lessee will provide and pay for its own janitor
service and window cleaning.
Not withstanding anything to the contrary contained in this lease, this lease
shall be a fully carefree lease to the Lessor.
Lessee will pay for and is responsible for outside walls to outside, interior
partition to centre of wall.
<PAGE>
MACK STOCK Page____
Printers & Stationers Ltd. FORM 140-6 (Insert page number)
LEASE -- COMMERCIAL
THAT all grants, covenants, conditions, provisoes, agreements, rights, powers,
privileges, and liabilities contained herein shall be read and construed as
granted to, made and reserved by, imposed upon and undertaken by the parties
hereto and their respective heirs, executors, administrators, successors and
assigns, and that wherever the singular or the masculine pronoun is used the
same shall be construed as meaning the plural or feminine or the body politic or
corporate where the circumstances so require and that the Lessor may perform any
act hereunder in person or by and through an agent:
PROVISO FOR RE-ENTRY BY THE LESSOR on non-payment of rent, or non-performance of
covenants. The Lessor in pursuance of this proviso shall have the right to break
into the premises to obtain possessions thereof and the Lessee hereby waives all
claims for damage to or loss of any of the Lessee's property caused by the
Lessor in re-entering and taking possession of the promises: and no action taken
by the Lessor in pursuance of this proviso whether under what are generally
known as summary proceedings of otherwise shall be deemed to absolve relieve or
discharge the Lessee form liability hereunder and this proviso shall extend and
apply to all covenants whether positive or negative.
THE LESSOR COVENANTS WITH THE LESSEE for quiet enjoyment.
IN WITNESS WHEREOF the parties hereto have hereunto set their hands and seals,
the day and year first above written.
SIGNED, SEALED AND DELIVERED )
BY THE LESSEE IN THE PRESENCE OF )
)
Signature of Witness /s/ [ILLEGIBLE] ) /s/ [ILLEGIBLE]
-------------- )
Street Address 3409 27th Ave. )
-------------------- )
City Vernon, BC )
------------------------------ )
Occupation Receptionist )
------------------------ )
SIGNED, SEALED AND DELIVERED )
BY THE LESSEE IN THE PRESENCE OF )
)
Signature of Witness /s/ [ILLEGIBLE] ) /s/ [ILLEGIBLE]
-------------- )
Street Address 3409 27th Ave. ) /s/ [ILLEGIBLE]
-------------------- )
City Vernon, BC )
------------------------------ )
Occupation Receptionist )
------------------------ )
<TABLE> <S> <C>
<PAGE>
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<S> <C>
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<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> MAY-31-1999
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<PP&E> 6,226
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0
0
<COMMON> 1,561,034
<OTHER-SE> (1,220,498)
<TOTAL-LIABILITY-AND-EQUITY> 364,866
<SALES> 3,070
<TOTAL-REVENUES> 3,070
<CGS> 0
<TOTAL-COSTS> 483,469
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