UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
(Mark One)
[ * ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission file number 0-12196
PREMIS Corporation
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1424202
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
13220 County Road 6, Plymouth, Minnesota 55441
(Address of principal executive office)
(612)550-1999
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 par value
(Title and class)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [ * ] No [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10KSB or any amendment to this
Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year. $5,945,378
The aggregate market value of the Common Stock held by non-affiliates of
the Registrant as of June 18, 1998 was $4,597,776, based on the closing
sale price for the Company's Common Stock on that date as reported on
the Nasdaq National Market. For purposes of determining this number, all
officers and directors of the Registrant are considered to be affiliates
of the Registrant, as well as individual shareholders holding more than
10% of the Registrant's outstanding Common Stock. This number is
provided only for the purpose of this report on Form 10-KSB and does
not represent an admission by either the Registrant or any such
person as to the status of such person.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant's
definitive Proxy Statement for the Registrant's Annual Meeting of
Stockholders to be held August 5, 1998 for the year ended
March 31, 1998, a definitive copy of which the Registrant
anticipates will be filed on or about July 9, 1998, are
incorporated by reference in Part III.
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [ * ]
PART 1
ITEM 1. Description of Business.
PREMIS Corporation (the "Company" or "PREMIS") develops, markets and
supports enterprise-wide retail automation systems to meet the
information needs of multi-store specialty and general merchandise
retailing chains. The Company's systems provide retailers with a
variety of integrated functions and benefits such as:
* point of sale data collection
* "real time" sales analysis reporting by store, product, customer or
salesperson
* enterprise inventory tracking
* improved customer loyalty
* merchandise management
* gross margin improvement
* increased inventory productivity
* improved loss prevention
* store to head office communications
* electronic data interface for online ordering from and customers
* on-line communication connections between stores and main corporate
office
The Company has developed leading-edge, industry-specific software
systems to collect business information, analyze the collected data and
provide timely and meaningful reports to individuals within an
organization. During this fiscal year, PREMIS has continued to improve
the functionality of its standard suite of software products - "PREMIS
OpenEnterprise" - and has begun to evolve from a provider of single
application specialty software into a vendor of enterprise-wide
information management systems for the retail industry.
PREMIS OpenEnterprise retail software combines an easy-to-use POS
transaction processing interface with sophisticated data analysis and
information reporting capabilities at the head office. The graphical
user interface significantly reduces the cost of training cashier
personnel and shortens the time required to process a sale. This
software is designed to accelerate information access and provide a
wide variety of management reports on a "real time" basis to
various levels of an organization. The sophisticated data
acquisition and processing features of the products positions the
Company's systems to satisfy the needs of the entire retail market.
INDUSTRY OVERVIEW
Over the past two decades, many businesses have significantly increased
their use of software products and computer systems to automate tasks
and improve the efficiency of their day-to-day operations and long-term
strategic planning. Historically, most businesses purchased software
tools specifically designed to address a particular task or function of
their operations. Most of these software tools were engineered by
different software companies and, consequently, each tool had difficulty
communicating data it gathered to the other systems. The need for fast
and reliable data transfer between various business functions created
a demand for software and hardware solutions which integrated the
independent business functions of an organization.
In response, firms like PREMIS have expanded the functionality of
their software products to integrate a wide variety of independent
tasks within a particular business. These software systems allow
data from one business function to be available to any other function,
thereby creating an enterprise-wide information management system.
Company-wide portability provides critical information to a wide
variety of personnel within an organization to more effectively and
efficiently manage day-to-day activities, as well as long-term strategic
objectives. However, a recent site survey conducted by PREMIS
Associates of over 200 specialty retailers at the Mall of America in
Minneapolis, MN found that only one of these 200 specialty retailers had
implemented a graphical point of service system such as PREMIS
OpenStore. This informal survey reinforces the Company's belief that
the market opportunity exists for its graphical, Windows-based point of
sale applications, which are ideally suited to replace these aging DOS
and UNIX based solutions.
MULTI-STORE SPECIALTY AND GENERAL MERCHANDISE RETAIL MARKET
This market is comprised of approximately 14,000 chain headquarters
controlling roughly 250,000 stores. This market includes apparel and
accessory stores, gift and novelty stores, sporting goods stores and
department stores. Although the number of specialty retail stores has
not shown consistent growth, there are always individual store chains
which are expanding and new chains which are emerging. PREMIS has found
that as retail chains expand, even those that historically developed
their own information management systems migrate toward outside vendors
because they lack technical expertise necessary to support rapidly
evolving and changing information management technologies. Although
retailers historically have computerized POS data, many have not
integrated their POS software with their "back office" store systems
or headquarters systems. This lack of integration of the back office
and headquarters systems has prevented effective interfacing between
POS and management data. Specialty and general merchandise retailers
are increasingly seeking the full integration of these individual store
and headquarters management functions to maximize the availability of
data on an enterprise-wide basis. Management believes that the
Company's products are marketable to any size multi-store specialty
retail chain.
STRATEGY
The Company's long-term objective is to achieve and maintain a
leadership position as a provider of enterprise-wide retail automation
systems. The Company's business strategy for attainment of its objective
is to:
* provide innovative leading edge systems
* expand marketing and sales efforts through a variety of distribution
channels to penetrate its selected markets to capitalize on first to
market product advantages
* pursue strategic relationships with other firms having complementary
products and service capabilities
PROVIDE LEADING EDGE SYSTEMS. The Company intends to leverage its
extensive technical expertise in software development and advanced
programming techniques with PREMIS' marketing, training and hardware
integration to offer both standardized and customized fully-integrated,
enterprise-wide solutions to its customers.
EXPAND MARKETING AND SALES EFFORTS. The Company intends to expand its
product offerings to include fully functional software systems for
retailers of all types of goods. The Company intends to utilize the
PREMIS sales and marketing organization to reach the expanded markets
with its enterprise-wide products and services. Marketing and sales
efforts will be augmented with strategic alliances and reseller
relationships, such as the current relationships of the Company with NCR
Corporation ("NCR"), and Microsoft Corporation ("Microsoft").
PURSUE STRATEGIC PARTNERSHIPS. The Company intends to explore and
evaluate opportunities for acquisition or partnering with complementary
products and services as opportunities present themselves.
COMPANY OFFERINGS
* MULTIPLE MARKET SOLUTIONS. The Company offers a complete end-to-end
management information solution to multi-store specialty retailers
in both hardgoods and softgoods markets.
* FULL RANGE OF PRODUCTS. The products and services provided by the
Company offer a complete integrated enterprise-wide management
solution, from POS to back room to head office, for the multi-store
specialty retailer.
* INTERNATIONAL APPLICATIONS. The graphical user interface and features
of the Company's products and Windows NT(tm) accommodate multiple
languages and currencies.
* HIGH-END SALES. The Company's expanded product line is targeted to
large customers whose needs support products priced at the high end
of the range.
PRODUCTS AND SERVICES
The Company's products, while targeted to selected vertical markets, are
broad in their functionality and flexibility and are scaleable from
small to large business organizations. The Company strives to provide an
enterprise-wide solution to the information needs of businesses in its
vertical markets. These solutions include registering data at the point
of transaction, assembling data at the point of processing, analyzing
and summarizing data using business specific rules, warehousing data
and converting data into meaningful information through flexible
inquiry and reporting. The concepts and technology, while currently
adapted to specific types of businesses, can be adapted to many
vertical markets.
The Company's systems consist of standardized and optional applications
software offered to its target market. These software products are
often combined with computer hardware purchased by the Company from
various suppliers providing equipment for Windows NT(tm) operating
systems. The Company's current principal product is PREMIS
OpenEnterprise. The Company also provides extensive project management,
consulting, education, end-user training and on-site support to help
manage the implementation process for new customers, as well as help
desk services for existing customers.
PREMIS OpenEnterprise
PREMIS OpenEnterprise and its related components provide a complete
enterprise-wide automation solution for all specialty and general
merchandise retail chains, including softgoods retailers, and eliminates
the need to purchase and integrate software components from a number of
different vendors. The PREMIS OpenEnterprise system features SQL/ODBC
(a formatted, standardized method for accessing information) relational
databases and a Windows graphical user interface ("GUI") running in a
true 32-bit Windows NT(tm) operating system environment. All PREMIS
OpenEnterprise products have been designed as client/server solutions
using the processing power of a main server and a PC workstation client.
PREMIS OpenEnterprise includes:
* PREMIS OpenOffice, which automates head office functions and
provides easy access to mission critical information for the entire
retail organization;
* PREMIS OpenStore, which automates the entire POS function consistent
with the "open system" concept; and
* PREMIS OpenNet, which provides real-time on-line communications as
well as periodic summary between headquarters and individual stores
by extending the head office LAN to the POS workstation in individual
stores.
Each of the system's component parts may operate independently or in
conjunction with other components.
PREMIS OpenOffice
PREMIS OpenOffice is an integrated, client/server retail management
system. It has been optimized by using an open architecture which
brings the power of Windows NT into the head office. PREMIS OpenOffice
was developed to be easy to use, flexible and powerful. Designed
completely from object oriented tools, this product offers a state of
the art design to take an organization well into the next millennium.
PREMIS OpenOffice operates on a Microsoft SQL Server. PREMIS OpenOffice
can be ported to any open relational database, such as Oracle(tm) or
Informix(tm), built for client/server architecture using an industry
standard SQL.
The primary components of PREMIS OpenOffice are modular in design to
provide maximum benefits with a minimum investment in computing
hardware. The user has the option of designing a solution with modules
they choose. Additional software may be added at any time with no
disruption to the existing system. The Base System is the core of the
PREMIS OpenOffice retail management system and is required for all other
applications and modules. The Base System is comprised of various
structures that enable users to create organizational, merchandise and
time hierarchies of data that are meaningful to the user.
The Base System structures are designed for ease of use and maximum
flexibility. The user may, at any time, change, add or delete levels
within structures and may move data within either structure with a
simple click of a mouse and "drag and drop" to the new or changed level.
All existing data is reassigned and all summary tables are re-summarized
automatically. For example, if some stores in one region are realigned
to another region, the click of a mouse can immediately move the data
to the new region structure, without additional programming or loss of
data. PREMIS OpenOffice is currently available for sale. In addition,
the Company is continuing to enhance its OpenOffice product with
scheduled version releases. For example, an upcoming OpenOffice release
will contain enhancements in support of and related to auto
replenishment. This version is scheduled for release by the end of
calendar year 1998. OpenOffice is currently operating at Tie Rack
(Canada) and has been ordered by Cotton Ginny Limited and L.A. Weight
Loss Centers Inc., the latter two having ordered the entire
OpenEnterprise solution.
The specific components available with PREMIS OpenOffice include:
Base System:
* Structure Management
* Maintenance
* System Management
Optional Applications:
* Audit Management
* Funds Management
* Merchandise Management
* Price Management
* Sales Analysis
* Client Management
PREMIS OpenStore
PREMIS OpenStore is an advanced POS software system which automates the
entire POS function consistent with the "open system" concept. PREMIS
OpenStore can operate on a wide variety of POS hardware and PC's
combined with cash drawers and can be easily integrated with other
PC-based office systems. Particular attention has been given to the
GUI, which can be combined with keyboard entry, touch screen, mouse or
the NCR Dynakey cash register terminal display. Data tables that are
maintained in PREMIS OpenStore have companion tables that are maintained
in PREMIS OpenOffice and vice versa, resulting in quick, seamless
transmission of data.
PREMIS OpenStore is able to:
* manage multiple sales transactions types
* monitor extensive Item/SKU level price management, including
special promotions
* support multiple currencies and languages
* support local, county, special, national and other taxation
* manage multiple tender types, such as cash, check, debit
cards, credit cards, etc.
* configure cash drawer compulsion by tender type and control
* enter data by manual keystroke, scanning or special search
screens
* monitor balancing and floating counts for cash paid in, paid
out and petty cash
* generate reports by department sales, associate sales, tender
totals, returns/exchanges, voids, store productivity, sales
discounts, store summary, layaway status and aging reports
* compile extensive store summary reporting, including sales and
gross profit generated, net sales by sales type and layaway sales
* create "customer profiling" for tracking customer demographics,
preferences and purchase history
* manage inventory at the store level
PREMIS OpenNet
PREMIS OpenNet provides a means of communication between a retailer's
headquarters and its individual stores through a variety of different
communication standards and protocols. While competitive software
modules typically offer either real-time on-line communications or
nightly polling of store systems by the host, PREMIS OpenNet provides
communications between stores, districts, regions or headquarters can
be as frequent or as selective as desired. Updates can go to the
central, regional or district hosts independently or simultaneously.
Transactions can be instantaneous or summarized and periodic, depending
on the communications network. Public networks such as the Internet can
be used as well as private networks or dialup polling. This flexibility
recognizes the need for faster headquarters information on product
marketing, sales force utilization, shopping patterns and other
marketing and product information and prepares the system to meet
all of the possible communications demands of the modern retailer.
Development initiatives for Internet commerce as part of OpenNet include
an application called Virtual Merchant. This application will be
designed during calendar 1998 and 1999 or as market demand dictates.
PREMIS OpenNet features:
* a file-based merchandise locator server
* standard E-mail messaging enhancements
* multiple service providers for electronic funds transfer
* PREMIS OpenNet network traffic and monitor extension
* industry standard Windows NT(tm) client interfaced to PREMIS
OpenNet
* Sybase Adaptive Server integration for access to enterprise data
* system-wide alert messaging and logging facilities
FULFILLMENT AND HELP DESK SERVICES
The Company provides extensive project management, education, end-user
training and on-site support to help manage the implementation process
for new customers. In general, customers view these services as
important discriminating factors in a purchase decision.
Fulfillment services are conducted from the Company's headquarters in
Minneapolis, Minnesota and from the Canadian Subsidiary offices located
in Toronto, Canada. The fulfillment services organization:
* assists sales representatives and programming staff with retail
industry expertise to better address customers' industry-specific
needs
* manages the business relationship between the Company and the
customer
* designs custom programming specifications
* develops installation plans to achieve customer schedules
* provides education and training for customer staff
* provides physical product installation and setup
* provides regular status reporting and transition to Help Desk for
support on an on-going basis
Fulfillment services will become an increasingly important source of
revenue as the Company's installed base of customers grows. Currently,
approximately 25% of the initial software purchase price charged to the
Company's customers is dedicated to installation and custom
modifications, if required. In addition, the Company charges an annual
fee equivalent to 15% of the initial software purchase price for
maintenance and software support services.
Customers who purchase maintenance agreements receive Help Desk
telephone support and product upgrades once the system has been
installed. The Help Desk provides critical and extensive software
support to its customers, dealers and field employees by telephone. The
Help Desk is highly automated, with computer assisted tracking of each
client call, high speed text search for similar problems, on-line
manuals, interactive diagnostics and expert systems for guidance through
special and third party supplier problems. Senior product specialists
take referral of difficult problems which cannot be easily resolved by
Help Desk personnel. The Company recently purchased a sophisticated
software system which will facilitate this two-tiered approach.
MARKETING AND SALES
The Company believes that a comprehensive understanding of the business
issues which are prevalent in a customer's particular market is a key
component to successful marketing. To this end, PREMIS has compiled an
industry-specific database, which is continually updated by the sales
staff and fulfillment services staff based on changing market
conditions. This database also contributes to educating personnel in
the marketing department and in research and development to ensure that
customer issues, features and requirements are addressed and
incorporated in future product releases. In addition, the Company seeks
to provide comprehensive uninterrupted service by utilizing a
designated team of PREMIS associates for each customer throughout the
customer's relationship with the Company. This team consists of
personnel from sales and marketing, systems integration, and support and
maintenance. The Company intends to serve the ongoing needs of smaller
multi-store retailers through distributor relationships.
The Company's sales techniques involve traditional methods, including
development of prospects through telemarketing, direct mail, seminars
and advertising; development and distribution of marketing literature,
such as brochures, product technical overviews, newsletters and direct
marketing letters; direct selling efforts through sales meetings with
prospective customers; and order fulfillment, including planning,
training, installation and long-term customer support. The Company's
marketing and sales activities continue to be based principally in the
United States and Canada.
The Company estimates that hardware components comprise approximately
50% to 60% of the cost of a management information system. The Company
often sells its software systems together with hardware components,
which are purchased by the Company from a variety of equipment vendors.
In certain markets, the Company also sells its software directly to
equipment vendors for resale by the vendors to their end-user customers.
The Company has developed strategic alliances with key hardware vendors
of open systems, including NCR which is the primary vendor in this
market. To date, PREMIS and NCR have cooperated in a strategic
alliance partner program which provides customers with turn-key
solutions including NCR hardware and maintenance services and PREMIS
software. However, since PREMIS is also an NCR remarketer, it can
provide hardware as well. The Company is working to expand its hardware
offerings and may enter into reseller relationships with other hardware
suppliers. In addition, PREMIS OpenEnterprise products may be marketed
with certain Microsoft products. This has resulted in marketing
seminars and advertisements presented jointly by the Company and
Microsoft.
CUSTOMERS
The following list is a sample of current retail customers that are
representative of the types of businesses served by the Company, each
of whom has purchased products or services from PREMIS during the last
fiscal year.
* U.S. Postal Service
* Cotton Ginny Ltd.
* Gymboree
* NEXCOM (U.S. Navy Exchange Commissaries)
* Lerner New York
COMPETITION
The Company competes directly with other information systems software
vendors and system integrators that market similar software. The
Company competes indirectly with certain hardware vendors that offer
their own proprietary management information system software.
Competition in the Company's markets is based principally upon
functionality, quality of service and support, type of hardware (i.e.,
the compatibility and availability of desired hardware and software
components and the ease of integration with the customer's existing
system) and price. The Company believes that its current and
anticipated levels of product functionality, service and support are
generally perceived as comparable or superior to those of its
competitors. Although the Company's products may be priced higher
than other products marketed for the same purpose, the Company believes
that the Company is able to justify its higher prices to customers
based on the premium value provided by its advanced technological
design, its integration capability, "complete solution" functionality,
comprehensive support and maintenance services, and in-depth knowledge
of its customers' industry requirements.
In the Company's view, its strongest competitors in the specialty
retail distribution market are those that have the ability to design,
develop and install enterprise-wide retail automation systems. In
general, these competitors are highly knowledgeable about the specialty
retailer's business and about the capabilities of their own products.
PREMIS believes that its primary direct competitors in the specialty
retail market are STS Systems, Inc., Datavantage, CRS Business
Computers, Inc., JDA Software, Inc., as well as other smaller vendors.
The Company also has several indirect competitors in hardware vendors
such as IBM, ICL Retail Systems (a division of Fujitsu America Inc.)
and NCR, that offer, along with their hardware, software systems that
compete with the Company's software products.
TECHNOLOGY AND PRODUCT DEVELOPMENT
The Company utilizes state-of-the-art technologies to gather
relevant information from a business transaction, transport that data
to a central database, manipulate and analyze the data and provide
concise and comprehensive reports to the appropriate people within an
organization to assist them with their day-to-day decisions and
long-term strategic planning. The Company's software products are
written in C and object-oriented C++ source code languages which
enable a programmer to develop a user-friendly GUI and to program
tasks more efficiently for increased speed.
The predominant trend in consumer software is toward a GUI, user-
friendly, menu driven interface. A GUI interface requires the use of
object-oriented programming languages and programming techniques. PREMIS
has been using the object-oriented programming language C++ since 1991.
The Company believes that many of its competitors currently do not have
GUI products or the ability to utilize this advanced programming
technique.
The Company's products utilize client/server architecture and relational
databases. The Company utilizes several relational database
technologies, such as Microsoft(tm) and Sybase(tm), for its software to
reduce the information processing time required to sort data and to
allow multiple users to simultaneously access the same information.
While relational database products have been available since the early
1980s, they were not considered practical for enterprise-wide
applications until the widespread implementation of enterprise servers
in the early 1990s. In a client/server environment, a relational
database can be addressed by the server, which then sends and receives
data over a local area network to simultaneous multiple users (i.e.,
clients). As server processor technology speeds have increased and the
cost of servers has decreased, the market for network systems and
products has expanded. A business comprising many separate locations,
such as a retail chain, presents a natural application of client/server
and relational database technologies. The Company's management believes
that client/server architecture will be the dominant networking
technology for the foreseeable future and that the Company is uniquely
positioned to capitalize on this trend.
The Company believes that it must continue to enhance its current
products and develop new software and technologies to quickly respond
to market opportunities. The Company is focusing its product
development efforts on enhancing the breadth and depth of its current
products while developing key new add-on features.
PROPRIETARY RIGHTS
PREMIS does not own any patents or any registered copyrights or
trademarks; PREMIS claims trademark protection of the names and marks
"PREMIS OpenEnterprise", "PREMIS OpenOffice", "PREMIS OpenNet", "PREMIS
OpenStore", but does not consider such marks to be material to its
operations.
PREMIS primarily relies on a combination of trade secret laws and
confidentiality agreements to protect its proprietary technology.
Although PREMIS no longer markets the IRIS product line to new
customers, IRIS could be marketed by PREMIS pursuant to the terms of a
software license and distribution agreement (the "IRIS License") dated
April 15, 1994, with Commercial Systems Corporation, pursuant to which
the Company is granted an exclusive worldwide right to license and
sublicense and to develop, copy, distribute, remarket and maintain
IRIS for a term ending March 31, 1999. All derivative upgrades,
enhancements, new releases, new versions and other improvements made
by PREMIS, and all copyrights, trademark rights, trade secret rights
and patent rights, as well as all marketing and all other materials
developed by PREMIS with respect to IRIS, are the sole and exclusive
property of PREMIS.
EMPLOYEES
At June 5, 1998, the Company employed 56 employees (48 full-time
employees and 8 contract employees). No employee of the Company is
represented by a labor union or is subject to a collective bargaining
agreement. All employees are covered by agreements containing
confidentiality provisions. The Company believes it maintains good
relations with its employees. In April 1998, the Company reduced the
number of staff at its Minneapolis office from 28 to 19 to reflect the
concentration of resources and activity in its Canadian location.
ITEM 2. Description of Property.
The Company is headquartered in Plymouth, Minnesota. The Company
occupies these premises pursuant to a lease, effective
September 1, 1996, with a limited liability partnership controlled by
two persons who are officers, directors and principal shareholders of
the Company. The lease provides approximately 22,000 square feet of
space at a minimum monthly base rent of $13,477. PREMIS has prepaid
$105,000 in rent, which reduces the minimum monthly base rent by $2,816
for the first 44 months of the lease (an aggregate credit of $105,000
plus 9% interest per annum). The lease has an initial ten year term,
ending August 31, 2006, with two successive two-year options for
renewal. As of May 1998 the limited liability partnership has placed
the building up for sale. Upon the sale of the building the
Company's lease will be terminated and the unamortized prepaid rent
will be paid to the Company from the building sales proceeds. The
Company intends to relocate its U.S. operations to another facility
of approximately 5,000 square feet in the same geographic area.
The Company's Canadian subsidiaries currently lease facilities in
Markham, Ontario (near Toronto) for use as its corporate offices. The
lease provides 19,893 square feet at a minimum monthly rent of
CDN$11,083 during calendar 1996 and 1997 pursuant to a ten-year term
expiring in December 2005, with one option for renewal for an additional
five-year term. The minimum monthly rent on this lease increases to
CDN$16,577 in 1998, to CDN$17,820 in 2001, and to CDN$19,893 in 2003.
The Company believes that this facility will be adequate to meet its
needs in Canada for the foreseeable future.
ITEM 3. Legal Proceedings.
The Company has commenced legal proceedings against Edward W. Anderson
and Robert E. Ferguson, the former owners of REF Retail Systems Corp.
("REF") which the Company acquired on October 1, 1996. Effective
July 15, 1997, Mr. Anderson ceased to be employed by the Company as
President and Chief Executive Officer of PREMIS Systems Canada
Incorporated (formerly, REF). Mr. Ferguson resigned as an officer,
director and employee of REF on October 1, 1996. The legal proceeding
against Mr. Anderson was filed in the United States District Court,
District of Minnesota, Fourth Division on September 16, 1997
(Case No. 97-2087 MJD/AJB). The legal proceeding against Mr. Ferguson
was filed in the Ontario Court of Justice, General Division on
September 22, 1997 (Case No. 97-CV-132581). In both proceedings, the
Company is seeking damages in an unspecified amount related to alleged
breaches of the agreement for the purchase of REF, and related matters.
Additionally, the Anderson claim seeks to annul and declare void an
employment agreement with Mr. Anderson dated October 1, 1996. Under
the employment agreement with Mr. Anderson the Company would be required
to pay Mr. Anderson an amount equal to his base salary that would have
been payable for the balance of the initial five year term which
commenced October 1, 1996. Mr. Anderson's annual base salary at the
time of termination was CND$150,000. Mr. Anderson was also granted
650,000 common stock options under the terms of the employment
agreement. Effective June 3, 1998 the suit against Anderson and
the corresponding counterclaim were settled. Under the settlement
arrangement with Mr. Anderson the grant of 650,000 common stock options
has been cancelled along with all other rights afforded to Mr. Anderson
under his employment agreement.
The settlement requires the Company to pay Anderson $50,000 within
thirty days after receipt by the Company of at least $2,000,000 from
NCR Corporation, the United States Postal Service, or other person, in
connection with the United States Postal Services' POS ONE software,
but the Company does not guarantee when or if this payment will be
received. Further, the Company releases Anderson of any past and
future obligations. The Ferguson suit has not been settled as of
June 28, 1998. The Ferguson suit is scheduled for mediation in
July 1998.
ITEM 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the
fourth quarter ended March 31, 1998.
PART II
ITEM 5. Market for Common Equity and Related Stockholder Matters.
MARKET INFORMATION
Since September 26, 1996, the Company's Common Stock has traded on the
Nasdaq National Market under the symbol PMIS. The following table sets
forth, for the fiscal quarters indicated, a summary of the high and low
closing prices of the Common Stock as reported by the Nasdaq National
Market. Information for the periods prior to September 26, 1996
represents high and low bid information as reported on the NASD's
Electronic Bulletin Board system. Such bid information reflects
inter-dealer prices, without retail mark-up, mark-down, or commissions
and does not necessarily reflect actual transactions.
Common Stock
Low High
Fiscal 1997
First Quarter $2.125 $4.50
Second Quarter 3.00 5.125
Third Quarter 4.938 6.875
Fourth Quarter 2.625 6.25
Fiscal 1998
First Quarter $1.625 $3.25
Second Quarter 1.813 2.875
Third Quarter 1.438 2.25
Fourth Quarter .813 1.75
As of June 17, 1998, the Company had 105 stockholders of record and
approximately 1,252 beneficial holders of its Common Stock.
The Company has never declared or paid any dividends on its Common
Stock. The Company currently intends to retain any earnings for use
in its business and therefore does not anticipate paying any dividends
in the foreseeable future.
Effective August 22, 1997, the NASDAQ Stock Market received approval
from the Securities and Exchange Commission to implement changes to its
initial and continued listing requirements. The new listing
requirements became effective on February 23, 1998. On
December 2, 1997, the Company received notice from the NASDAQ Stock
Market indicating possible non-compliance with these new requirements.
On February 26, 1998 the Company received formal notice that it was not
in compliance with these new requirements. Under the new continued
listing requirements the Company does not meet the net tangible assets
requisite of $4 million and the market value of public float requisite
of $5 million, as defined. The Company's net tangible assets were
approximately $2.8 million and $1.9 million at December 31, 1997 and
March 31, 1998, respectively. The Company's market value of public
float calculated by using the Company's reported closing price on
June 4, 1998 was approximately $4 million. The Company provided the
NASDAQ Stock Market a detailed plan of compliance on March 27, 1998
which was denied on May 5, 1998. The Company has formally appealed
the ruling and will be submitting further information for review by a
new NASDAQ Listing Panel on Thursday, July 2, 1998. However, there
can be no assurance that any such plan provided to the NASDAQ Stock
Market would be approved. In the event the Company does not meet the
new continued listing requirements and a plan for compliance is not
accepted, the Company will be delisted from the National Market System.
If the Company is delisted the Company will be considered for listing
on the NASDAQ Small Cap Market under its continued listing requirements.
As of March 31, 1998 the Company meets all continued listing
requirements for the NASDAQ Small Cap Market except for the net tangible
assets requisite of $2 million, as defined. If the Company fails to
meet the continued listing requirements for the NASDAQ Small Cap Market
it will be included on the NASD's Electronic Bulletin Board system.
ITEM 6. Management Discussion and Analysis.
Results of Operations
REVENUE. The Company's revenues are divided into two categories:
systems revenues and maintenance fees and other revenues. Systems
revenues are comprised principally of software license, hardware,
long-term system development contracts and U.S. Postal Service site
installation revenues. Maintenance and other services revenues are
comprised principally of system maintenance contracts. The Company
records revenues from software licenses, hardware and site installations
upon the completion of services and customer acceptance. Revenues under
long-term system development contracts are recognized over the period
the Company satisfies its obligation using the percentage-of-completion
method of accounting. Progress on the contracts is measured by the
percentage of cost incurred to date to the total estimated cost of each
contract. Revenues derived from system maintenance contracts are
deferred and recognized ratably over the contract period, which is
typically twelve months.
Total revenues decreased by 32 percent to $5,945,000 during fiscal 1998,
down from $8,750,000 in fiscal 1997. Total revenues were generated
primarily from long-term system development contracts, maintenance
contracts and U.S. Postal Service site installations. As anticipated,
these revenue sources continue to decline during the transition from
providing custom system development solutions to the OpenEnterprise
suite of products. The decrease was further impacted by lower revenues
generated from the U.S. Postal Service "Store of the Future" contract.
In May 1997, the Company completed its final installation under the
"Store of the Future" program while transitioning to POS ONE
installations. Under the POS ONE contract, the Company as a
subcontractor to NCR Corp. no longer provides the hardware for U.S.
Postal site installations. As a result the revenue generated per
site under POS ONE installations is approximately 70% less than
comparable "Store of the Future" sites. Additionally, under the
POS ONE program the Company is developing point-of-sale software as
a subcontractor to NCR Corp. POS ONE will be deployed in three phases.
Phase One is expected to generate revenues of approximately $2,200,000
upon roll-out which is expected to commence during the first half of
fiscal 1999. Phases Two and Three have not yet been awarded by the
USPS. As mentioned in Item 1 above, the changes to the framework of
OpenStore have resulted in a delay in its commercial release. The
delay of OpenStore significantly impacted the Company's ability to
generate revenues from its OpenEnterprise suite of products in fiscal
1998. The Company expects the first live pilot of OpenEnterprise to
be successfully implemented during the second quarter of fiscal 1999.
The Company derives a substantial amount of its revenues from a small
number of customers. Accordingly, the timing of product deliverables,
the amount of services performed for these customers, and the timing
of payments by these customers may cause the Company's systems revenues
to fluctuate. The Company expects continued volatility in systems
revenues throughout fiscal 1999 and beyond.
GROSS PROFIT. Gross profit decreased to $2,484,000 in fiscal 1998 down
from $4,134,000 in fiscal 1997. Gross profit as a percentage of revenue
decreased slightly to 42% in fiscal 1998 from 47% in fiscal 1997. The
decline in margin as a percentage of revenue is primarily attributable
to lower margin custom system development contracts and the continued
support of previously installed custom development software systems.
The Company expects gross profit to fluctuate based on the level and
composition of systems revenues.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased by 13 percent to $3,145,000 in fiscal
1998 up from $2,788,000 in fiscal 1997. As a percentage of revenue,
expenses were 53 and 32 for fiscal 1998 and 1997, respectively. The
increase in absolute dollars reflects the investment in selling,
general and administrative infrastructure during fiscal 1998.
RESEARCH AND DEVELOPMENT. Research and development expense for fiscal
1998 and 1997 was $1,780,000 and $736,000, respectively. The increased
research and development expenditures are related to the PREMIS
OpenEnterprise suite of products which include PREMIS OpenStore, PREMIS
OpenOffice and PREMIS OpenNet. At the time of the acquisition of REF,
the Company in conjunction with NCR Corporation decided to make
significant changes to the underlying framework architecture of
OpenStore. The changes were initiated as part of a sub-contractor
arrangement with NCR Corp. in support of the United States Postal
Service ("USPS") POS ONE project. Correspondingly, these changes
resulted in a delay of the commercial release of OpenStore. The changes
to the framework are expected to significantly enhance the marketability
of the commercial release of OpenStore. The Company currently
anticipates that the first pilot release will be completed and
commercial introduction will proceed during the second quarter of fiscal
1999. In addition, the Company is continuing to enhance its OpenOffice
and OpenNet products.
PURCHASED RESEARCH AND DEVELOPMENT. The one-time charge in fiscal 1997
of $6,510,000 relates to purchased research and development in progress,
expensed in accordance with purchase accounting rules, in connection
with the acquisition of REF Retail Systems Corp. on October 1, 1996.
INTEREST AND OTHER INCOME. The difference in interest and other income
between periods reflects interest earned on investments, as well as
interest earned on the 5 year 12% note receivable in the original amount
of $651,000 related to the licensing in fiscal 1997 of ADVANTAGE, the
Company's Food Brokerage Technology. Such note is due and payable in
monthly installments of $14,481. The interest income is off-set by
interest expense on various debt instruments, including the Company's
building capital lease obligation. Other income was generated from a
sub-leasing arrangement for a portion of the Company's current U.S.
office facility. The sub-leasing arrangement expired on June 30, 1997.
INCOME TAX EXPENSE. The Company recognized income tax expense of
$84,000 during fiscal 1998 compared to $319,000 in fiscal 1997. Income
tax expense related to fiscal 1998 resulted from the increase in the
valuation allowance for previously recorded deferred tax assets.
Income tax expense was partially off-set by tax refunds received in
fiscal 1998 related to fiscal 1997 tax filings. The Company had no
deferred tax asset balance at March 31, 1998 compared to $134,000 at
March 31, 1997. The one-time charge related to purchased research
and development in progress in fiscal 1997 does not result in a tax
benefit due to differences between financial and tax reporting
requirements.
Liquidity and Capital Resources
The Company's cash and cash equivalents decreased by approximately
$1,074,000 from March 31, 1997 to March 31, 1998. The decrease resulted
primarily from an operating loss of $2,426,000, purchase of capital
equipment, repayment of notes payable and reduction in the bank line of
credit. Cash used in operations was partially off-set by the reduction
in accounts receivable. As of March 31, 1998, the Company had working
capital of $929,000. The Company's Canadian subsidiary's line of credit
of $289,000 ($400,000 CAN) bearing interest at the Canadian prime rate
plus 1% was not renewed as of June 1, 1998. The line of credit was
uncommitted and payable upon demand. Borrowings were limited to 75%
of eligible accounts receivable, as defined. There was no outstanding
balance at March 31, 1998. The line of credit was collateralized
by substantially all the assets of the Canadian subsidiary (PREMIS
Systems Canada Incorporated).
Capital expenditures for property and equipment in fiscal 1998 were
$180,000. These expenditures primarily consisted of sales promotional
equipment, computers and related equipment.
On April 15, 1997, the Company authorized the open market repurchase of
its common stock at times and prices to be determined by management for
a period of 90 days. The Company repurchased 28,600 shares at a cost
of $61,000. As of June 28, 1998, the Company has no definitive plans
to acquire additional shares.
Effective July 15, 1997, Edward W. Anderson ceased to be employed by
the Company as President and Chief Executive Officer of PREMIS Systems
Canada Incorporated (formerly, REF Retail Systems Corp. Incorporated).
Under certain circumstances, the Company would have been required to
pay Mr. Anderson an amount equal to his base salary that would have
been payable for the balance of the initial 5 year term which commenced
October 1, 1996. Mr. Anderson's annual base salary at the time of
termination was CND$150,000. The Company's obligation to make such
payments, if any, arise under its Employment Agreement with
Mr. Anderson. Under a settlement agreement with Mr. Anderson
effective June 3, 1998 the Company is obligated to pay Mr. Anderson
$50,000 within thirty days after receipt by the Company of at least
$2,000,000 from NCR Corporation, the United States Postal Service, or
other person, in connection with the United States Postal Services'
POS ONE software but the Company does not guarantee when or if this
payment will be received. See Part 2, Item 1 herein for information
on legal proceedings against Mr. Anderson.
The Company experienced a significant loss from operations in fiscal
1998 which has resulted in a significant reduction in its working
capital. As a result of this loss and the reduction of available
funds, the Company has reduced and expects to continue to reduce its
expense structure through certain reductions in personnel, facilities
cost and research and development. Although the Company believes
that its current working capital and anticipated operating cash flows
will be sufficient to fund its operations through March 31, 1999, this
belief is contingent upon the Company receiving a payment of
approximately $2.2 million under its United States Postal Service
POS ONE software development sub-contract with NCR Corp. prior to
September 30, 1998. If such payment is not received when anticipated,
the Company's ability to fund its operations and generate cash flows
will be significantly and adversely affected. There is no assurance
that the POS ONE payment of $2.2 million will be received prior to
September 30, 1998. If future circumstances indicate that the Company
will not receive the POS ONE payment prior to September 30, 1998 it
will require the Company to seek additional equity or debt financing.
There is no assurance that equity or debt financing will be available
or, if available, on acceptable terms.
The Company's ability to raise additional capital and/or raise capital
on acceptable terms could be adversely affected in the event it no
longer meets the Nasdaq's requirements for continued listing on the
Nasdaq National Market. For continued listing on the Nasdaq National
Market, a company must satisfy a number of requirements, which in the
Company's instance includes: (1) Net tangible assets in excess of
$4.0 million and (2) market value of public float in excess of
$5 million. The Company's net tangible assets at March 31, 1998
were $1.9 million. The Company's market value of public float
calculated by using the Company's reported closing price on
June 4, 1998 was approximately $4 million. See Part 2, Item 5
herein for information regarding the Company's position regarding
compliance with Nasdaq Listing Requirements.
The independent auditors report included in this report on Form 10KSB
states that the Company's accumulated deficit and working capital as of
March 31, 1998 raise substantial doubt about the Company's ability to
continue as a going concern.
Year 2000 Compliance
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These
date code fields will need to accept four digit entries to distinguish
21st century dates. As a result, in less than two years, computer
systems and software used by many companies may need to be upgraded to
comply with such "Year 2000" requirements. The Company believes that
its OpenEnterprise suite of products and internal systems are Year 2000
compliant. The Company has previously installed custom software point
of sale solutions for retail customers which are not Year 2000
compliant. The Company has or continues to be in discussions with
customers regarding options to modify these previously installed systems
to comply with Year 2000 requirements. To date these customers have
decided to either purchase the source code or contract with the
Company directly to perform work related to Year 2000 issues. The
Company does not consider the Year 2000 obligation with respect to
these previously installed systems to be material to its business
operations.
Inflation and Seasonality
To date, the Company has not been significantly impacted by inflation.
The Company's sales and revenues are not seasonal, except that the
Company's target customer, specialty retailers, will not generally
install new critical software applications like OpenEnterprise between
Thanksgiving and New Years.
Forward Looking Statements
The forward looking statements included in Management's Discussion and
Analysis of Financial Condition and Results of Operations, except for
the historical information contained herein, contains forward-looking
statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and is subject to the safe harbor created by
that statute. Such statements are subject to certain risks and
uncertainties. In addition to the factors discussed below, other
factors that could cause actual results to differ materially from
those described in the forward-looking statements include:
volatility in the demand and price for retail software systems; the risk
of delay or deferral of delivery dates and payments for system orders;
the risk of order cancellations; the risk of delays in introducing new
software products, including the OpenEnterprise suite of products,
specifically OpenStore, and the market's acceptance of such products.
The reader is urged to consider the more comprehensive summary of
such risks found in the Company's Registration Statement on Form S-2
(SEC File No. 333-10917) which was declared effective September 26,
1996. Readers are cautioned not to place undue reliance on those
forward looking statements which speak as to matters only as of the
date hereof. The Company has no obligation to publicly release the
results of any revisions to these forward-looking statements which
may be made to reflect events or circumstances after the date hereof
or to reflect the occurrence of unanticipated events.
ITEM 7. Financial Statements.
The information required by Item 7 is included in the PREMIS
Corporation Audited Financial Statements for the year ended
March 31, 1998, which are included as Exhibit 99.1.
ITEM 8. Changes in or disagreements with Accountants on Accounting
and Financial Disclosure.
Not Applicable
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
Incorporated by reference to the Company's Proxy Statement for Annual
Meeting of Shareholders to be filed with the Securities and Exchange
Commission within 120 days after the close of the fiscal year ended
March 31, 1998.
ITEM 10. Executive Compensation.
Incorporated by reference to the Company's Proxy Statement for Annual
Meeting of Shareholders to be filed with the Securities and Exchange
Commission within 120 days after the close of the fiscal year ended
March 31, 1998.
ITEM 11. Security Ownership of Certain Beneficial Owners and
Management.
Incorporated by reference to the Company's Proxy Statement for Annual
Meeting of Shareholders to be filed with the Securities and Exchange
Commission within 120 days after the close of the fiscal year ended
March 31, 1998.
ITEM 12. Certain Relationships and Related Transactions.
Incorporated by reference to the Company's Proxy Statement for Annual
Meeting of Shareholders to be filed with the Securities and Exchange
Commission within 120 days after the close of the fiscal year ended
March 31, 1998.
ITEM 13. Exhibits and Reports on Form 8-K.
(a) Exhibits
The following exhibits are filed as part of this Annual Report on
Form 10-KSB for the fiscal year ended March 31, 1998:
2.1 REF Stock Purchase Agreement dated July 9, 1996 (2)
2.2 Amalgamation Agreement dated as of June 30, 1997
3.1 Articles of Incorporation, as amended through June 1996 (1)
3.2 Amendment of Articles of Incorporation, dated July 17, 1996 (2)
3.3 Bylaws (1)
4.1 Form of certificate representing the Common Stock (2)
10.1 Form of Employment Agreement with Edward A. Anderson (2)
10.2 Form of R. Ferguson Noncompete Agreement (2)
10.3 Form of E. Anderson Noncompete Agreement (2)
10.4 Form of E. Anderson Stock Option Agreement (2)
10.5 Software License and Distribution Agreement between PREMIS
Corporation and Information Access Incorporated (exhibits 3.1,
3.2 and 3.4, comprising customer names and locations, omitted)(3)
21.1 Subsidiaries of the Registrant
23.1 Consent of Price Waterhouse LLP, independent accountants
99.1 PREMIS Corporation Audited Financial Statements for March 31,
1998 and March 31, 1997.
(1) Incorporated by reference to exhibit filed as a part of Form S-18,
SEC File No. 2-85498-C.
(2) Incorporated by reference to exhibit filed as part of
registration statement on Form S-2, (SEC File No. 333-10917),
effective on September 26, 1996.
(3) The registrant hereby undertakes to furnish supplementally a copy
of any omitted schedule or other attachment to the Securities and
Exchange Commission upon request
(b) REPORTS ON FORM 8K - None
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PREMIS Corporation
/S/ F. T. Biermeier
F. T. Biermeier
(Principal Executive Officer)
Dated: June 29, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant, and in the capacities on the dates indicated.
Signature Date
- - --------- ----
/S/ F. T. Biermeier June 29, 1998
F. T. Biermeier
Chairman and Chief Executive Officer
/S/ Richard R. Peterson June 29, 1998
Richard R. Peterson
Chief Financial Officer
(Principal Financial and Accounting Officer)
/S/ Mary Ann Calhoun June 29, 1998
Mary Ann Calhoun
Vice President and Director
/S/ Gerald F. Schmidt June 29, 1998
Gerald F. Schmidt
Director
/S/ S. Albert D. Hanser June 29, 1998
S. Albert D. Hanser
Director
/S/ Terrence W. Glarner June 29, 1998
Terrence W. Glarner
Director
EXHIBIT 21.1
PREMIS Systems Canada Incorporated, a Nova Scotia, Canada Corporation.
Principal offices located in Toronto, Canada and amalgamated effective
June 30, 1997 (1).
REF Retail Systems Corp. Incorporated, a Nova Scotia, Canada
Corporation. Principal offices located in Toronto, Canada (1).
The Softworks Group, Inc., an Ontario, Canada Corporation. Principal
offices located in Toronto, Canada (2).
(1) By Order of Amalgamation dated July 15, 1997 PREMIS Systems Canada
Incorporated and REF Retail Systems Corp. Incorporated were
amalgamated effective June 30, 1997.
(2) The Registrant expects to wind down The Softworks Group, Inc. on
September 30, 1998.
EXHIBIT 23.1
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-03161) of PREMIS Corporation, of our
report dated [May 22, 1998] appearing in this Form 10-KSB.
PRICE WATERHOUSE LLP
Minneapolis, Minnesota
[May 22, 1998]
EXHIBIT 99.1
PREMIS Corporation
Consolidated Financial Statements
March 31, 1998 and 1997
Report of Independent Accountants
To the Stockholders and
Board of Directors of
PREMIS Corporation
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, of stockholders'
equity and of cash flows present fairly, in all material respects,
the financial position of PREMIS Corporation and its subsidiaries
at March 31, 1998 and 1997, and the results of their operations and
their cash flows for the years then ended, in conformity with
generally accepted accounting principles. These consolidated financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements
in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable
assurance about 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for the opinion expressed above.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company requires additional
financing and has accumulated a deficit. These matters raise
substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also
described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
PRICE WATERHOUSE LLP
Minneapolis, Minnesota
May 22, 1998
Premis Corporation
Consolidated Balance Sheet
March 31,
ASSETS 1998 1997
Current assets:
Cash and cash equivalents $1,359,773 $2,433,439
Trade accounts receivable, net of
allowance for doubtful
accounts of $148,183 and $240,581, respectively 610,244 2,136,680
Refundable income taxes 149,453 246,846
Inventory 12,591 396,295
Cost and estimated earning in excess of billings 90,097 164,537
Prepaids and other assets 200,450 367,466
Deferred taxes - 133,921
Current portion of note receivable 117,367 104,158
Total current assets 2,539,975 5,983,342
Property and equipment, net 1,316,201 1,395,445
Note receivable 405,322 522,689
Software distribution rights, net of
accumulated amortization
of $325,211 and $242,763, respectively 82,865 165,314
Total assets $4,344,363 $8,066,790
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $234,043 $587,349
Accrued liabilities 369,198 684,297
Accrued income taxes 4,550 -
Unearned income 858,412 787,065
Bank line of credit - 245,820
Current portion of notes payable - banks 32,403 29,194
Current portion of other notes payable 49,438 144,803
Current portion of capital lease obligation 62,731 55,684
Total current liabilities 1,610,775 2,534,212
Long-term liabilities:
Unearned income - 186,750
Notes payable - banks 53,311 84,256
Other notes payable 24,792 68,125
Capital lease obligation 792,649 855,386
Total long-term liabilities 870,752 1,194,517
Commitment and contingencies (Note 15)
Stockholders' equity:
Common stock, 10,000,000 shares authorized,
4,714,177 and 4,734,027 shares issued and
outstanding, $.01 par value 47,142 47,340
Additional paid-in capital 9,644,109 9,702,940
Accumulated deficit (7,832,909) (5,406,695)
Cumulative translation adjustment 4,494 (5,524)
Total stockholders' equity 1,862,836 4,338,061
Total liabilities and stockholders' equity $4,344,363 $8,066,790
See accompanying notes to the consolidated financial statements.
Premis Corporation
Consolidated Statement of Operations
Year Ended March 31,
1998 1997
Revenue:
System sales $4,215,767 $7,224,948
Maintenance fees and other revenue 1,729,611 1,525,530
Total revenue 5,945,378 8,750,478
Cost of sales:
Systems 2,853,046 4,400,622
Maintenance and other 608,706 216,029
Total cost of sales 3,461,752 4,616,651
Gross profit 2,483,626 4,133,827
Operating expenses:
Selling, general, and administrative expenses 3,145,476 2,787,943
Research and development expenses 1,779,802 736,040
Purchased research and development - 6,509,981
Total operating expenses 4,925,278 10,033,964
Loss from operations (2,441,652) (5,900,137)
Interest income, net 72,744 24,427
Other income 26,595 32,613
Loss before income taxes (2,342,313) (5,843,097)
Income tax expense 83,901 318,778
Net loss $(2,426,214) $(6,161,875)
Loss per share - basic and diluted $(.51) $(1.67)
Weighted average shares of common stock and
common stock equivalents 4,717,053 3,691,622
See accompanying notes to the consolidated financial statements.
Premis Corporation
Consolidated Statements of Cash Flows
Year Ended March 31,
1998 1997
Cash flows from operating activities:
Net loss $(2,426,214) $(6,161,875)
Adjustments to reconcile net loss to
net cash provided (used)
by operating activities:
Depreciation and amortization 342,166 206,028
Purchased research and development - 6,509,981
Proceeds from note receivable 104,158 24,153
Changes in assets and liabilities,
net of effect from acquisition:
Accounts receivable 1,526,436 (498,346)
Refundable income taxes 97,393 (130,190)
Cost and estimated earnings in
excess of billings 74,440 (61,275)
Inventory 383,704 (113,575)
Prepaids and other assets 177,034 (326,573)
Deferred taxes 133,921 (77,760)
Accounts payable (353,306) 79,508
Accrued liabilities (310,549) (82,342)
Unearned income (115,403) (199,918)
Net cash used by operating activities (366,220) (832,184)
Cash flows from investing activities:
Short-term investments - 300,000
Purchase of property and equipment (180,473) (224,573)
Cash paid in purchase of REF Retail
Systems - (6,572,935)
Cash acquired in purchase of REF Retail Systems - 173,911
Net cash used by investing activities (180,473) (6,323,597)
Cash flows from financing activities:
Proceeds from common stock offering - 8,729,675
(Repayments) borrowing under line of credit (245,820) 245,820
Repurchase of common stock (60,779) -
Proceeds from notes payable 47,500 -
Exercise of common stock options 1,750 137,320
Repayment of debt (213,934) (152,748)
Capital lease obligations (55,690) (38,930)
Net cash (used) provided by financing act. (526,973) 8,921,137
Net (decrease) increase in cash (1,073,666) 1,765,356
Cash and cash equivalents at beg of year 2,433,439 668,083
Cash and cash equivalents at end of year $1,359,773 $2,433,439
See accompanying notes to the consolidated financial statements.
Premis Corporation
Consolidated Statement of Stockholders' Equity
For the Years Ended March 31, 1998 and 1997
Retained
Additional Earnings Cumulative
Common Stock Paid-in (Accumulated Translation
Shares Amount Capital Deficit) Adjustments Total
Balance at
March 31, 1996 2,609,444 $26,094 $731,181 $755,180 $- $1,512,455
Stock issued
through the exercise
of stock
options 112,083 1,121 262,209 263,330
Sale of common stock,
net of offering
cost of $2,012,500 20,125 8,709,550 8,729,675
Currency translation
adjustment (5,524) (5,524)
Net Loss (6,161,875) (6,161,875)
Balance at
March 31,1997 4,734,027 47,340 9,702,940 (5,406,695)(5,524) 4,338,061
Stock issued
through the
exercise of stock
options 8,750 88 1,662 1,750
Repurchase of
common stock (28,600) (286) (60,493) (60,779)
Currency translation
adjustment 10,018 10,018
Net Loss (2,426,214) (2,426,214)
Balance at
March 31,1998 4,714,177 $47,142 $9,644,109 $(7,832,909)$4,494 $1,862,836
See accompanying notes to the consolidated financial statements.
Premis Corporation
Notes to Consolidated Financial Statements
March 31, 1998 and 1997
1. Organization
PREMIS Corporation (the "Company") develops, markets and supports a
line of enterprise-wide solutions to meet the information needs of
multi-store specialty and general merchandise retailing chains.
The Company's information management software systems are designed
to assist businesses with the day-to-day management of their operations
and long-term strategic planning.
The accompanying consolidated financial statements are prepared
assuming the Company will continue as a going concern. The Company
incurred an operating loss of $2,426,214 and a decrease in cash and cash
equivalents of $1,073,666 during the year ended March 31, 1998. As of
March 31, 1998, the Company had an accumulated deficit of $7,832,909
and working capital of $929,200. The Company's continued existence is
dependent upon management's ability to return to profitable operations
and resolve its liquidity problems. Management anticipates
profitability will return and that liquidity problems will be resolved
as a result of the actions described below.
Management has adopted the following plans for the upcoming year:
- - -Receive payment of approximately $2,200,000 under the Company's
United States Postal Service POS ONE software development sub-contract
by September 30, 1998.
- - -Continue to develop, market and support its line of enterprise-wide
solutions to the information needs of multi-store specialty and
general merchandise retailing chains.
- - -Continue to strengthen its strategic partnering relationships with
key hardware vendors of open systems.
- - -Reduce operating costs and ensure the effectiveness of future
expenditures.
If operations and cash flows can be improved through these efforts,
management believes that the Company can continue to operate.
2. Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.
Supplemental Cash Flow Information
Year Ended March 31,
1998 1997
Cash paid during the year for interest $142,425 $83,022
Cash paid during the year for income taxes - 944,610
Capital lease obligation - 950,000
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
Inventories
Inventories are stated at the lower of cost (first-in, first-out)
or market. Inventories consist primarily of computer equipment held for
resale.
Property and Equipment
Property and equipment are stated at cost and depreciated for financial
statement purposes on a straight-line basis over the estimated useful
life of the assets. Depreciation expense for the years ended
March 31, 1998 and 1997 was $259,717 and $122,041, respectively.
A summary of property and equipment is as follows:
Depreciation
Lives 1998 1997
Building capital lease 10 years $950,000 $950,000
Furniture and equipment 5 - 7 years 837,126 662,683
Leasehold improvements 7 years 76,994 70,964
Less accumulated depreciation
and amortization (547,919) (288,202)
$1,316,201 $1,395,445
Software Distribution Rights
The Company has acquired certain software marketing licenses and
distribution rights. The costs are capitalized and amortized
using the straight-line method over the term of the agreements
which range from three to five years.
Foreign Currency Translation and Transactions
Foreign assets and liabilities are translated using the fiscal
year-end rates of exchange. Results of operations are translated
using the average exchange rates throughout the period. Translation
gains or losses, net of applicable deferred taxes, are accumulated
as a separate component of stockholders' equity.
Research and Development Costs
Research and development expenditures are charged to operations
as incurred. Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased
or Otherwise Marketed," requires capitalization of certain software
development costs subsequent to the establishment of technological
feasibility of the products in development. Costs have not been
capitalized because post-technological feasibility costs are
immaterial to both total assets and pre-tax results of operation.
Revenue Recognition
System sales include software license, hardware and long-term system
installation contract revenue. The Company records revenues from
softwarelicenses and hardware upon installation and customer acceptance.
Customers are provided with a warranty period which provides customer
support for a 90-day period. No reserve has been provided, since
warranty costs have been insignificant. After the 90-day warranty
period, support is provided only if a maintenance contract is in place.
Revenues derived from system maintenance contracts are deferred
and recognized ratably over the contract period.
Revenues under long-term system installation contracts are recognized
over the period the Company satisfies its obligation using the
percentage-of-completion method. Progress on the contracts is
measured by the percentage of project hours incurred to date to the
total estimated number of project hours for each contract. Management
considers project hours to be the best available measure of progress
on these contracts. Changes in conditions and estimated earnings may
result in review of estimated costs and earnings during the course
of the contract and are reflected in the accounting period in
which the facts which require the revisions become known.
In the normal course of business, the Company may also be subject
to a risk of loss by incurring costs to complete a contract in
excess of the fixed bid price.
Net Loss Per Share
In 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings Per Share, (Statement 128). Statement 128 replaced
the calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of
options, warrants and convertible securities. Diluted earnings per
share is very similar to fully diluted earnings per share under the
previous rules. All earnings per share amounts for all periods have
been presented, and where necessary, restated to conform to the
Statement 128 requirements. Diluted earnings per share is not
presented as the effect ofoutstanding options, warrants and
preferred stock are antidilutive.
Income Taxes
The Company accounts for income taxes under the liability method of
accounting. Deferred tax assets and liabilities are determined
based on the difference between the financial statement and tax
basis of assets and liabilities, reduced by valuation allowances as
necessary.
Fair Value of Financial Instruments
The Company's financial instruments consist of cash and cash equivalents,
short-term trade receivables and payables for which current carrying amounts
approximate fair market value. Additionally, interest rates on outstanding
debt are at rates which approximate market rates for debt with similar terms
and average maturities.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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 amounts of
revenue and expenses during the reporting period. Actual results
could differ from those estimates.
Stock Options
The Company has adopted the disclosure only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," regarding disclosure of pro forma information for stock
compensation. As is allowed by Statement No. 123, the Company will
continue to measure compensation cost using the methods described
in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees."
Reclassifications
Certain amounts presented in the fiscal 1997 consolidated financial
statementshave been reclassified to conform with the fiscal 1998
presentation.
Recently Issued Accounting Standards
In June 1997, the FASB issued No. 130, "Reporting Comprehensive Income."
Statement No. 130 is effective for fiscal years beginning after December 15,
1997. This standard defines comprehensive income as the changes in equity of
an enterprise income are required to be reported in a new financial statement.
Management believes the adoption of Statement No. 130 will not have a material
effect on the Company's financial statements.
Also in June 1997, the FASB issued Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Statement No. 131 is
effective for years beginning after December 15, 1997. Statement No. 131
establishes standards for disclosures about operating segments, products and
services, geographic areas and major customers. Management has not completed
its review of Statement No. 131, but does not anticipate that the adoption will
have a significant effect on the Company's reported segments.
In October 1997, the American Institute of Certified Public Accountants issued
Statement of Position 97-2 ("SOP 97-2"), "Software Revenue Recognition." This
Statement establishes revenue recognition requirements for companies that sell
software for fiscal years beginning after December 15, 1997. Management is
currently evaluating the impact of SOP 97-2 and has not determined the result,
if any, on the Company's financial position, results of operations or cash
flows.
3. Acquisition of REF Retail Systems Corporation
In October 1996, the Company acquired REF Retail Systems Corporation ("REF"), a
Toronto based provider of Windows NT(r)-based specialty retailing management
software, for $6,572,000 cash, which includes expenses of $72,000, in exchange
for all outstanding common stock of REF. The acquisition has been accounted
for using the purchase method. Subsequent to the acquisition, the Company
expensed all purchased research and development in process of $6,510,000 based
upon an independent appraisal.
Operating results for the acquisition are included in the accompanying
consolidated statements of operations from October 1, 1996. Assuming the above
described company had been acquired on April 1, 1996, unaudited pro forma
consolidated revenues, net income (loss) and net income (loss) per share would
have been as follows:
Year Ended
March 31,
1997
Net revenues $10,166,000
Net income (loss) $(7,448,000)
Net income (loss) per share $(2.02)
The pro forma information provided above does not purport to be indicative of
the results of operations that would actually have resulted if the acquisition
were made as of those dates or of results which may occur in the future.
4. Completion of Common Stock Offering
On October 1, 1996, the Company successfully completed a secondary offering of
common stock. The Company sold 2,012,500 shares of common stock in the
offering for $8,729,675 net of issuance costs of $1,332,825.
5. Costs, Estimated Earnings and Billings on Uncompleted Contracts in
Progress
Costs, estimated earnings and billings on uncompleted contracts are
summarized as follows:
1998 1997
Costs incurred on uncompleted contracts $184,640 $543,731
Estimated earnings 133,705 507,292
318,345 1,051,023
Billings to date 228,248 886,486
Costs and estimated earnings in excess of
billings $90,097 $164,537
The amount is included in current assets as all contracts in progress
are expected to be completed within one year.
Billings in excess of costs and earnings of $388,288 and $29,745 are
included in unearned income at March 31, 1998 and 1997, respectively.
6. Lease Commitments
The Company is obligated under various capital and operating leases for
equipment and office facilities. These leases expire over the next ten years.
The present value of the future minimum capital lease payments for the office
facilities described in Note 15 and future payments due under noncancelable
operating leases, excluding executory costs such as management and maintenance
fees, are as follows:
Capital Operating
Fiscal Year Ending March 31, Leases Leases
1999 $161,724 $159,255
2000 161,724 150,043
2001 161,724 148,456
2002 161,724 149,988
2003 161,724 154,041
Thereafter 552,557 459,528
Total future minimum lease payments 1,361,177 $1,221,311
Less: Amount representing interest (505,797)
Present value of future minimum capital
lease payments $855,380
The cost of the facilities under capital lease was $950,000 and the
related accumulated deprecation was $150,423 and $55,419 as of
March 31, 1998 and 1997, respectively.
Total rent expense under operating leases was approximately
$235,000 and$188,000 for the years ended March 31, 1998
and 1997, respectively.
7. Line of Credit
At March 31, 1998, the Company has a $289,200 ($400,000 Canadian dollars)
line of credit, bearing interest at the Canadian prime rate plus 1%.
The Canadian prime rate was 6.5% at March 31, 1998. The line of
credit is uncommitted and payable upon demand. Borrowings are
limited to 75% of eligible accounts receivable, as defined. There
was no balance outstanding at March 31, 1998. The line of credit
is collateralized by substantially all the assets of PREMIS Systems
Canada Incorporated (formerly REF Retail Systems Corporation). The
Company has guaranteed the payment of the line of credit.
The line of creditwas terminated subsequent to March 31, 1998.
8. Stock Options
The PREMIS Corporation 1994 Employee Stock Option Plan (the "Plan") was adopted
to provide incentives to selected eligible officers and key employees of the
Company. As adopted, the Plan authorizes qualified options for up to 500,000
shares of common stock. In addition, the Board of Directors has reserved
600,000 shares of common stock for non-qualified stock options. Options
granted typically have five-year terms and vest annually over four years.
A summary of changes in outstanding options and common shares reserved under
the Plan are as follows:
Weighted-
Shares Average
Available Options Exercise
for Grant Outstanding Price
Balance at March 31, 1996 350,000 731,250 $0.72
Shares authorized 650,000
Granted (1,013,158) 1,013,158 5.19
Exercised (112,083) 1.22
Canceled 270,417 (270,417) 1.70
Balance at March 31, 1997 257,259 1,361,908 $3.82
Granted (277,000) 277,000 2.93
Exercised (8,750) 0.20
Canceled 166,500 (166,500) 5.69
Balance at March 31, 1998 146,759 1,463,658 $3.45
The following table summarizes information about the stock options outstanding
at March 31, 1998:
Options Outstanding Options Exercisable
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Price Outstanding Life Price Exercisable Price
$0.15 - $0.50 357,500 5.7 years $0.17 265,000 $0.17
$1.125 - $3.00 291,579 4.5 years 2.85 6,770 1.69
$5.00 - $6.25 814,579 7.5 years 5.11 691,145 5.03
1,463,658 6.5 years $3.45 962,915 $3.67
Effective April 2, 1998, all stock options for full-time employees priced at
more than $1.31 were canceled and reissued at the then current stock price of
$1.31. 346,000 total options were reissued. In addition, 650,000 options
priced at $5.00 were canceled (see Note 18).
Options outstanding under the Plan expire at various dates from 1999 to 2001.
The number of options exercisable as of March 31, 1998 and 1997 were 962,915
and 981,250, respectively. The weighted-average fair value of options granted
during 1998 and 1997 are $2.69 and $2.32, respectively.
Pro forma information regarding net loss and loss per share is required by
Statement No. 123, and has been determined as if the Company had accounted for
its employee stock options under the fair value method of that Statement. The
fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions for 1998 and 1997, respectively; risk-free interest rates of 6.2%;
volatility factors of the expected market price of the Company's Common Stock
of 150% and 40%; and a weighted-average expected life of the option of five
years.
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The pro forma effect
on the net loss for 1998 and 1997 does not take into consideration pro forma
compensation expense related to grants made prior to fiscal 1996. The
Company's pro forma information is as follows:
Year Ended March 31,
1998 1997
Pro forma net loss $(2,663,598) $(7,758,000)
Pro forma loss per share $(0.56) $(2.10)
Stock Warrants
Stock warrants for the right to purchase shares of the Company's common stock
have been issued in connection with a common stock offering and other
transactions. A summary of the Company's warrant activity is as follows:
Exercise
Number Price Expiration
Warrants issued in equity
financing 175,000 $6.00 September 26, 2001
Warrants issued to consultants 13,968 6.25 December 31, 2001
Outstanding at March 31, 1997 188,968
No activity during 1998
Outstanding at March 31, 1998 188,968
The warrant issued in the equity financing vest 100% on September 26, 1997.
The warrants issued to consultants vested immediately.
9. Notes Payable
The Company's notes payable - bank at March 31, 1998 and 1997 consist of the
following Small Business Development Loans ("SBDL") and installment note which
are secured by substantially all assets of the Company.
1998 1997
Note payable - bank (SBDL), monthly
principal payments of $936 through
December 2000, interest at 3% above the
Canadian prime rate (9.5% at March 31,1998) $29,898 $42,109
Note payable - bank (SBDL), monthly principal
payments of $1,170 through February 2001,
interest at 3% above the Canadian prime rate
(9.5% at March 31, 1998) 39,663 55,012
Note payable - bank (SBDL), monthly principal
payments of $327 through May 2001, interest at
3% above the Canadian prime rate
(9.5% at March 31, 1998) 12,015 16,329
Note payable - bank (installment note),
monthly payments of $4,143 through April 1998,
interest fixed at 8.5% 4,138
85,714 113,450
Less: Current portion 32,403 29,194
$53,311 $84,256
The Company has other notes payable as follows:
1998 1997
Note payable to an individual
(assumed with REF acquisition),
monthly principal payments of $1,506
through August 2000, interest at 7% $42,292 $61,755
Note payable for purchase of software
license, monthly payments of $8,342 through
April 1998 (see Note 11) 8,272 102,376
Inventory note payable, monthly
payments of $2,384 through February 1999,
interest at 9.7% 23,666 48,797
74,230 212,928
Less: Current portion 49,438 144,803
$24,792 $68,125
10. Income Taxes
Income tax expense is comprised of the following:
1998 1997
Current income tax provision (benefit):
Federal $(50,020) $406,000
State - (10,000)
Foreign - (371,301)
Total current taxes (50,020) 24,699
Deferred income taxes:
Federal (61,000) (59,000)
State (6,000) (9,000)
Foreign (1,167,270) (32,921)
Total deferred taxes (1,234,270) (100,921)
Valuation allowance 1,368,191 395,000
Income tax expense $83,901 $318,778
A reconciliation of the expected federal statutory rate for the years ended
March 31, 1998 and 1997 is as follows:
1998 1997
Expected tax provision (benefit) at statutory
rate $(106,000) $(1,987,000)
State income tax provision, net of federal tax
effect (10,000) 50,000
Non-deductible acquisition costs - 2,213,000
Foreign tax benefit (923,000) (134,000)
Foreign research and development credit (184,000) (187,000)
Valuation allowance 1,368,191 395,000
Other (61,290) (31,222)
$83,901 $318,778
Deferred tax assets (liabilities) are comprised of the following at March 31:
1998 1997
Allowance for doubtful accounts $39,000 $64,000
Net operating loss carryforwards 1,277,000 134,000
Business credit carryforwards, net 393,000 209,000
Deferred facility costs 43,000 88,000
Other 11,191 33,921
Gross deferred tax assets 1,763,191 528,921
Less valuation allowance (1,763,191) (395,000)
Net deferred tax asset $- $133,921
11. Purchase of Software License and Distribution Rights
During fiscal year 1995, PREMIS purchased a software license and distribution
rights for a period of five years for $403,910. In addition to the purchase
price, the Company must make contingent royalty payments based on a percentage
of the net cash receipts from related sales. The Company capitalized the
purchase price as software distribution rights and is amortizing the amount
over the term of the agreement. Amortization of $80,782 and $83,987 is
included in cost of sales for the years ended March 31, 1998 and 1997,
respectively.
12. Employee Benefits
The Company has a retirement savings plan which qualifies under the
Internal Revenue Code Section 401(k) which covers substantially all
U.S. employees of the Company. All employees with at least 90 days
of employment are eligible to participate in the Plan. The
Company's contributions to the Plan are based on 15% of employee
contributions which are subject to salary limitations. Company
contributions to the Plan were approximately $3,312 and $6,500
for the year ended March 31, 1998 and 1997, respectively.
There was no discretionary Company contribution in fiscal 1998.
The Company has a defined contribution employee retirement plan
covering substantially all Canadian employees of the Company.
All employees with at least one year of employment are eligible
to participate. The Company's contributions to the plan range
from 1% to 2% of the employee's compensation depending upon
length of service. The Company recognized expense of $5,357
and $10,147 for contributions to the plan for the year ended
March 31, 1998 and 1997, respectively.
13. Significant Customers
Sales to one customer represented 24% and 43% of total revenues
during 1998 and 1997, respectively. Additionally, this customer
represented 16% and 46% of trade accounts receivable at
March 31, 1998 and 1997, respectively. Another customer
accounted for 43% and 15% of total revenues during 1998 and
1997, respectively and 30% and 25% of year-end trade accounts
receivable at March 31, 1998 and 1997, respectively.
A third customer accounted for 10% of year-end trade accounts
receivable at March 31, 1998.
14. Software License and Distribution Agreement
On January 1, 1997, the Company and an unaffiliated corporation entered into a
software license and distribution agreement. The Company, in exchange for the
granting of exclusive worldwide rights to the Advantage System and providing
training and other contract work over a limited time period, received a note
receivable for $651,000. The note receivable is payable in 60 equal monthly
installments of $14,481 and bears interest at 12% At March 31, 1998, the
outstanding balance of the note receivable was $522,689 of which $117,367 is
included in current assets. Licensing revenue is being recognized ratably
over two years and all training and contract revenue is recognized as
services are performed. Unearned revenue at March 31, 1998 and 1997
was $186,750 and $480,750, respectively.
15. Related Party Transaction and Commitment
Effective September 1, 1996, the Company entered into a lease agreement which
was recorded as a capital lease. The Company's executive offices and
operations currently occupy this facility. The facility is owned by a limited
liability partnership controlled by two officers, directors and principal
stockholders of the Company. The lease has an initial ten-year term with
monthly base rent of $13,477 and two successive two-year options for renewal.
On June 30, 1996, the Company prepaid $105,000 in base rent, which reduces the
minimum monthly base rent by $2,816 for the first 44 months of the lease (an
aggregate credit of $105,000 plus 9% interest per annum). The prepaid rent
balance at March 31, 1998 was $63,879. The Company has guaranteed the
mortgage loan obligation of the limited liability partnership with respect
to this property in the principal amount of $950,000. This loan carries
interest at 2.75% over the rate on five-year treasury notes.
16. Contingencies
As of March 31, 1998 the Company had commenced legal proceedings against
the two former owners of their Canadian subsidiary. One of the claims
was settled subsequent to year-end resulting in a payment by the
Company of $50,000 in exchange for cancellation of the related
employment agreement and the cancellation of the individual's
650,000 stock options.
17. Segment Information and Foreign Operations
The Company conducts its business within one industry segment:
software and services for point of sale customers. Canadian operations
include the wholly owned subsidiary, Premis Systems Canada Incorporated.
Revenues, net income and identifiable assets by geographic area
are summarized as follows:
As or For the Years Ended
March 31
1998 1997
Revenues from unaffiliated customers:
Domestic operations $3,440,191 $6,315,849
Canadian operations 2,505,187 2,434,629
Consolidated $5,945,378 $8,750,478
Net income (loss):
Domestic operations $(312,645) $691,161
Canadian operations (2,113,569 (6,853,036)
Consolidated $(2,426,214) $(6,161,875)
As or For the Years Ended
March 31
1998 1997
Identified assets:
Domestic operations $3,561,894 $6,468,027
Canadian operations 782,469 1,598,763
Consolidated $4,344,363 $8,066,790
Transaction gains and losses recorded in income in 1998 and 1997
were immaterial. There were no intercompany revenues in fiscal
years 1998 and 1997.
18. Subsequent Event
On June 3, 1998 the Company's legal proceeding with a former employee and
owner of REF Retail Systems Corp. acquired on October 1, 1996 was settled.
Under the terms of the settlement agreement a previous grant of 650,000
common stock options at an exercise price of $5.00 was canceled along
with all other rights afforded under an employment agreement dated
October 1, 1996. Additionally, the Company is obligated to pay
$50,000 within thirty days after receipt by the Company of at least
$2,000,000 in connection with the United States Postal Service
POS ONE software project.
EXHIBIT 2.2
THIS AGREEMENT OF AMALGAMATION dated June 30, 1997
BETWEEN:
PREMIS SYSTEMS CANADA INCORPORATED,
a body corporate ("Premis")
OF THE FIRST PART
- and -
REF RETAIL SYSTEMS CORP. INCORPORATED,
a body corporate ("REF")
OF THE SECOND PART
WHEREAS Premis was incorporated under the laws of Nova Scotia on
September 25, 1996, and has an authorized capital consisting of
10,000,000 common shares without nominal or par value;
AND WHEREAS REF was continued under the laws of Nova Scotia on
November 21, 1996, and has an authorized capital consisting of:
(a) 5,000 Class A Preferred Shares without par value;
(b) 925,000 Class B Special Shares without par value;
(c) 5,000 Class C Special Shares without par value; and
(d) 5,000 common shares without par value.
AND WHEREAS the shareholders of Premis and REF deem it desirable and in
the best interests of each of them that they be amalgamated pursuant
to the provisions of Section 134 of the Companies Act of Nova Scotia;
NOW THEREFORE THIS INDENTURE WITNESSETH that in consideration of the
premises the parties hereto agree as follows:
1. Premis and REF shall be amalgamated and continue as one company
(the "Amalgamated Company") pursuant to Section 134 of the Companies
Act of Nova Scotia.
2. The attributes and characteristics of the Amalgamated Company shall
be as follows:
(a) The name of the Amalgamated Company shall be "Premis Systems
Canada Incorporated".
(b) The registered office of the Amalgamated Company shall be
situated at Suite 800, 1959 Upper Water Street, Halifax,
Nova Scotia, B3J 2X2.
(c) The authorized capital of the Amalgamated Company shall consist
of 10,000,000 Common Shares without nominal or par value.
(d) The liability of the members of the Amalgamated Company shall
be limited.
(e) The objects of the Amalgamated Company shall be those set out
in Schedule "A" attached hereto.
(f) The names, occupations and places of residence of the first
directors of the Amalgamated Company are as follows:
Name Occupation Place of Residence
---- ---------- ------------------
Fritz T. Biermeier Executive 3370 Sycamore Lane
Plymouth, MINN
53447
Such directors are to hold office until the first annual
meeting of the shareholders of the Amalgamated Company.
(g) Subsequent directors are to be elected at the first annual
general meeting of the shareholders of the Amalgamated Company
and are to hold office while qualified until their successors
are from time to time elected in the manner provided for in the
Articles of Association of the Amalgamated Company.
(h) The manner of converting the authorized and issued capital of
Premis and REF into that of the Amalgamated Company shall be as
follows:
(i) each registered holder of common shares without nominal or
par value in the capital stock of Premis shall be entitled
to one fully paid and non-assessable common share without
nominal or par value in the capital stock of the
Amalgamated Company for each common share in the capital
stock of Premis held by such registered shareholder on the
date of the Order of the Judge of the Supreme Court of
Nova Scotia, in Chambers, approving the amalgamation of
Premis and REF so there will be a total of 100 common
shares without nominal or par value of the Amalgamated
Company issued to the registered holders of common
shares in the capital stock of Premis.
(ii) the capital of REF shall be cancelled.
3. The Articles of Association of the Amalgamated Company shall be
those attached and marked Schedule "B" to this Agreement until
repealed, amended, altered or added to.
4. The Amalgamated Company shall possess all the property, rights,
privileges and franchises, and shall be subject to all the
liabilities, contracts and debts of Premis and REF.
5. All rights of creditors against the property, rights and assets
of Premis and REF respectively and all mortgages, liens or claims
upon their respective properties, rights and assets shall be
unimpaired by the proposed amalgamation and all debts, contracts,
liabilities and duties of Premis and REF respectively shall
thenceforth attach to the Amalgamated Company and may be
enforced against it to the same extent as if the said debts,
contracts, liabilities and duties had been incurred or contracted
by it.
6. No action or proceeding by or against Premis or REF shall abate or
be affected by the proposed amalgamation but for all purposes of
such action or proceeding by or against Premis or REF as the case
may be, they shall be deemed still to exist and the Amalgamated
Company may be substituted in such action or proceeding in the place
thereof.
7. Neither Premis or REF shall, subsequent to the date hereof, unless
this Agreement shall fail of confirmation by the shareholders of
either Premis or REF or not be approved by a Judge of the Trial
Division of the Supreme Court of Nova Scotia, in Chambers:
(a) issue any unissued shares of its capital stock, redeem or
reduce any shares of its capital stock now outstanding or
otherwise alter its existing capital structure; or
(b) declare or pay any dividends or make any other distribution
in respect of any shares of its outstanding capital stock.
8. Premis and REF may by resolution of their Boards of Directors assent
to such alterations or modifications of this Agreement which the
shareholders of the respective companies at meetings duly called to
consider the same approve or as a Justice of the Supreme Court of
Nova Scotia may require, and the expression "this Agreement" as
used herein shall be read and construed to mean and include this
Agreement as so altered or modified.
IN WITNESS WHEREOF the parties hereto have caused the same to be
executed in their names and on their behalf and their corporate seals
to be thereunto affixed by their proper officers duly authorized in that
behalf.
SIGNED, SEALED AND DELIVERED ) PREMIS SYSTEMS CANADA
in the presence of: ) INCORPORATED
)
)
) By:
___________________________ )
Witness )
) And:
)
) REF RETAIL SYSTEMS CORP.
) INCORPORATED
)
)
) By:
__________________________ )
Witness )
) And:
SCHEDULE "A"
MEMORANDUM OF ASSOCIATION
OF
PREMIS SYSTEMS CANADA INCORPORATED
1. The name of the Company is Premis Systems Canada Incorporated.
2. The restrictions, if any, on the objects and powers of the
Company are: none.
Notwithstanding any restrictions set forth above the Company shall
expressly have the following powers:
(a) To sell or dispose of its undertaking, or a substantial part
thereof;
(b) To distribute any of its property in specie among its members;
and
(c) To amalgamate with any company or other body of persons.
SCHEDULE "B"
ARTICLES OF ASSOCIATION
OF
PREMIS SYSTEMS CANADA INCORPORATED
__________________________________
INTERPRETATION
1. In these Articles, unless there is something in the subject or
context inconsistent therewith:
(1) "Act" means the Companies Act (Nova Scotia);
(2) "Articles" means these Articles of Association of the Company
and all amendments hereto;
(3) "Company" means the company named above;
(4) "director" means a director of the Company;
(5) "Memorandum" means the Memorandum of Association of the Company
and all amendments thereto;
(6) "month" means calendar month;
(7) "Office" means the registered office of the Company;
(8) "person" includes a body corporate;
(9) "proxyholder" includes an alternate proxyholder;
(10) "Register" means the register of members kept pursuant to the
Act, and where the context permits includes a branch register
of members;
(11) "Registrar" means the Registrar as defined in the Act;
(12) "Secretary" includes any person appointed to perform the duties
of the Secretary temporarily;
(13) "shareholder" means member as that term is used in the Act
in connection with a company limited by shares;
(14) "special resolution" has the meaning assigned by the Act;
(15) "in writing" and "written" includes printing, lithography
and other modes of representing or reproducing words in visible
form;
(16) words importing number or gender include all numbers and
genders unless the context otherwise requires;
2. The regulations in Table A in the First Schedule to the Act shall
not apply to the Company.
3. The directors may enter into and carry into effect or adopt and
carry into effect any agreement made by the promoters of the Company
on behalf of the Company and may agree to any modification in the
terms of any such agreement, either before or after its execution.
4. The directors may, out of the funds of the Company, pay all
expenses incurred for the incorporation and organization of the
Company.
5. The Company may commence business as soon after incorporation as
the directors think fit, notwithstanding that part only of the
shares has been allotted.
SHARES
6. The directors shall control the shares and, subject to the
provisions of these Articles, may allot or otherwise dispose of
them to such person, at such times, on such terms and conditions
and, if the shares have a par value, either at a premium or at par,
as they think fit.
7. The directors may pay on behalf of the Company a reasonable
commission to any person in consideration of subscribing or agreeing
to subscribe (whether absolutely or conditionally) for any shares in
the Company, or procuring or agreeing to procure subscriptions
(whether absolute or conditional) for any shares in the Company.
Subject to the Act, the commission may be paid or satisfied in
shares of the Company.
8. On the issue of shares the Company may arrange among the holders
thereof differences in the calls to be paid and in the times for
their payment.
9. If the whole or part of the allotment price of any shares is, by
the conditions of their allotment, payable in installments, every
such installment shall, when due, be payable to the Company by the
person who is at such time the registered holder of the shares.
10. Shares may be registered in the names of joint holders not
exceeding three in number.
11. Joint holders of a share shall be jointly and severally liable
for the payment of all installments and calls due in respect of
such share. On the death of one or more joint holders of shares
the survivor or survivors of them shall alone be recognized by the
Company as the registered holder or holders of the shares.
12. Save as herein otherwise provided, the Company may treat the
registered holder of any share as the absolute owner thereof and
accordingly shall not, except as ordered by a court of competent
jurisdiction or required by statute, be bound to recognize any
equitable or other claim to or interest in such share on the part
of any other person.
13. The Company is a private company, and:
(1) no transfer of any share or prescribed security of the
Company shall be effective unless or until approved by the
directors;
(2) the number of holders of issued and outstanding prescribed
securities or shares of the Company, exclusive of persons who
are in the employment of the Company or in the employment of
an affiliate of the Company and exclusive of persons who,
having been formerly in the employment of the Company or the
employment of an affiliate of the Company, were, while in that
employment, and have continued after termination of that
employment, to own at least one prescribed security or share of
the Company, shall not exceed 50 in number, two or more persons
or companies who are the joint registered owners of one or more
prescribed securities or shares being counted as one holder;
and
(3) the Company shall not invite the public to subscribe for any of
its securities.
In this Article, "private company" and "securities" have the meanings
ascribed to those terms in the Securities Act (Nova Scotia), and
"prescribed security" means any of the securities prescribed by the
Nova Scotia Securities Commission from time to time for the purpose
of the definition of "private company" in the Securities Act
(Nova Scotia).
CERTIFICATES
14. Certificates of title to shares shall comply with the Act and may
otherwise be in such form as the directors may from time to time
determine. Unless the directors otherwise determine, every
certificate of title to shares shall be signed manually by at least
one of the Chairman, President, Secretary, Treasurer, a
vice-president, an assistant secretary, any other officer of the
Company or any director of the Company or by or on behalf of a share
registrar transfer agent or branch transfer agent appointed by the
Company or by any other person whom the directors may designate.
When signatures of more than one person appear on a certificate all
but one may be printed or otherwise mechanically reproduced. All
such certificates when signed as provided in this Article shall be
valid and binding upon the Company. If a certificate contains
a printed or mechanically reproduced signature of a person, the
Company may issue the certificate, notwithstanding that the person
has ceased to be a director or an officer of the Company and the
certificate is as valid as if such person were a director or an
officer at the date of its issue. Any certificate representing
shares of a class publicly traded on any stock exchange shall be
valid and binding on the Company if it complies with the rules of
such exchange whether or not it otherwise complies with this
Article.
15. Except as the directors may determine, each shareholder's shares
may be evidenced by any number of certificates so long as the
aggregate of the shares stipulated in such certificates equals the
aggregate registered in the name of the shareholder.
16. Where shares are registered in the names of two or more persons,
the Company shall not be bound to issue more than one certificate
or set of certificates, and such certificate or set of certificates
shall be delivered to the person first named on the Register.
17. Any certificate that has become worn, damaged or defaced may, upon
its surrender to the directors, be cancelled and replaced by a new
certificate. Any certificate that has become lost or destroyed may
be replaced by a new certificate upon proof of such loss or
destruction to the satisfaction of the directors and the furnishing
to the Company of such undertakings of indemnity as the directors
deem adequate.
18. The sum of one dollar or such other sum as the directors from time
to time determine shall be paid to the Company for every certificate
other than the first certificate issued to any holder in respect of
any share or shares.
19. The directors may cause one or more branch Registers of shareholders
to be kept in any place or places, whether inside or outside of
Nova Scotia.
CALLS
20. The directors may make such calls upon the shareholders in respect
of all amounts unpaid on the shares held by them respectively and
not made payable at fixed times by the conditions on which such
shares were allotted, and each shareholder shall pay the amount of
every call so made to the person and at the times and places
appointed by the directors. A call may be made payable by
installments.
21. A call shall be deemed to have been made at the time when the
resolution of the directors authorizing such call was passed.
22. At least 14 days' notice of any call shall be given, and such
notice shall specify the time and place at which and the person
to whom such call shall be paid.
23. If the sum payable in respect of any call or installment is not
paid on or before the day appointed for the payment thereof, the
holder for the time being of the share in respect of which the
call has been made or the installment is due shall pay interest
on such call or installment at the rate of 9% per year or such
other rate of interest as the directors may determine from the
day appointed for the payment thereof up to the time of actual
payment.
24. At the trial or hearing of any action for the recovery of any
amount due for any call, it shall be sufficient to prove that the
name of the shareholder sued is entered on the Register as the
holder or one of the holders of the share or shares in respect of
which such debt accrued, that the resolution making the call is
duly recorded in the minute book and that such notice of such call
was duly given to the shareholder sued in pursuance of these
Articles. It shall not be necessary to prove the appointment of
the directors who made such call or any other matters whatsoever
and the proof of the matters stipulated shall be conclusive evidence
of the debt.
25. The directors may receive from any shareholder willing to advance
it all or any part of the amount due upon shares held by such
shareholder beyond the sums called for; and upon the amount so paid
or satisfied in advance or so much thereof as from time to time
exceeds the amount of the calls then made upon the shares in respect
of which such advance has been made, the Company may pay interest at
such rate or permit such participation in profits upon the amount so
paid or satisfied in advance as the shareholder paying such sum in
advance and the directors agree.
FORFEITURE OF SHARES
26. If any shareholder fails to pay any call or installment on or before
the day appointed for payment, the directors may at any time
thereafter while the call or installment remains unpaid serve a
notice on such shareholder requiring payment thereof together with
any interest that may have accrued and all expenses that may have
been incurred by the Company by reason of such non-payment.
27. The notice shall name a day (not being less than 14 days after the
date of the notice) and a place or places on and at which such call
or installment and such interest and expenses are to be paid. The
notice shall also state that, in the event of non-payment on or
before the day and at the place or one of the places so named, the
shares in respect of which the call was made or installment is
payable will be liable to be forfeited.
28. If the requirements of any such notice are not complied with, any
shares in respect of which such notice has been given may at any
time thereafter, before payment of all calls or installments,
interest and expenses due in respect thereof, be forfeited by a
resolution of the directors to that effect. Such forfeiture shall
include all dividends declared in respect of the forfeited shares
and not actually paid before the forfeiture.
29. When any share has been so forfeited, notice of the resolution
shall be given to the shareholder in whose name it stood immediately
prior to the forfeiture and an entry of the forfeiture shall be made
in the Register.
30. Any share so forfeited shall be deemed the property of the Company
and the directors may sell, re-allot or otherwise dispose of it in
such manner as they think fit.
31. The directors may at any time before any share so forfeited has
been sold, re-allotted or otherwise disposed of, annul the
forfeiture thereof upon such conditions as they think fit.
32. Any shareholder whose shares have been forfeited shall
nevertheless be liable to pay and shall forthwith pay to the Company
all calls, installments, interest and expenses owing upon or in
respect of such shares at the time of the forfeiture together with
interest thereon at the rate of 9% per year or such other rate of
interest as the directors may determine from the time of forfeiture
until payment. The directors may enforce such payment if they
think fit, but are under no obligation to do so.
33. A certificate signed by the Secretary stating that a share has
been duly forfeited on a specified date in pursuance of these
Articles and the time when it was forfeited shall be conclusive
evidence of the facts therein stated as against any person who would
have been entitled to the share but for such forfeiture.
LIEN ON SHARES
34. The Company shall have a first and paramount lien upon all shares
(other than fully paid-up shares) registered in the name of a
shareholder (whether solely or jointly with others) and upon the
proceeds from the sale thereof for debts, liabilities and other
engagements of the shareholder, solely or jointly with any other
person, to or with the Company, whether or not the period for the
payment, fulfilment or discharge thereof has actually arrived,
and such lien shall extend to all dividends declared in respect of
such shares. Unless otherwise agreed, the registration of a
transfer of shares shall operate as a waiver of any lien of the
Company on such shares.
35. For the purpose of enforcing such lien the directors may sell the
shares subject to it in such manner as they think fit, but no sale
shall be made until the period for the payment, fulfillment or
discharge of such debts, liabilities or other engagements has
arrived, and until notice in writing of the intention to sell has
been given to such shareholder or the shareholder's executors or
administrators and default has been made by them in such payment,
fulfillment or discharge for seven days after such notice.
36. The net proceeds of any such sale after the payment of all costs
shall be applied in or towards the satisfaction of such debts,
liabilities or engagements and the residue, if any, paid to such
shareholder.
VALIDITY OF SALES
37. Upon any sale after forfeiture or to enforce a lien in purported
exercise of the powers given by these Articles the directors may
cause the purchaser's name to be entered in the Register in respect
of the shares sold, and the purchaser shall not be bound to see to
the regularity of the proceedings or to the application of the
purchase money, and after the purchaser's name has been entered in
the Register in respect of such shares the validity of the sale
shall not be impeached by any person and the remedy of any person
aggrieved by the sale shall be in damages only and against the
Company exclusively.
TRANSFER OF SHARES
38. The instrument of transfer of any share in the Company shall be
signed by the transferor. The transferor shall be deemed to remain
the holder of such share until the name of the transferee is
entered in the Register in respect thereof and shall be entitled to
receive any dividend declared thereon before the registration of
the transfer.
39. The instrument of transfer of any share shall be in writing in the
following form or to the following effect:
For value received,_______________________ hereby sell, assign, and
transfer unto__________________________________ shares in the capital
of the Company represented by the within certificate, and do hereby
irrevocably constitute and appoint_____________________________ attorney
to transfer such shares on the books of the Company with full power of
substitution in the premises.
Dated the _______ day of ______________________, 19____.
Witness:
40. The directors may, without assigning any reason therefor, decline
to register any transfer of shares
(1) not fully paid-up or upon which the Company has a lien, or
(2) the transfer of which is restricted by any agreement to which
the Company is a party.
41. Every instrument of transfer shall be left for registration at the
Office of the Company, or at any office of its transfer agent where
a Register is maintained, together with the certificate of the
shares to be transferred and such other evidence as the Company may
require to prove title to or the right to transfer the shares.
42. The directors may require that a fee determined by them be paid
before or after registration of any transfer.
43. Every instrument of transfer shall, after its registration, remain
in the custody of the Company. Any instrument of transfer that
the directors decline to register shall, except in case of fraud,
be returned to the person who deposited it.
TRANSMISSION OF SHARES
44. The executors or administrators of a deceased shareholder (not
being one of several joint holders) shall be the only persons
recognized by the Company as having any title to the shares
registered in the name of such shareholder. When a share is
registered in the names of two or more joint holders, the survivor
or survivors or the executors or administrators of the deceased
survivor, shall be the only persons recognized by the Company as
having any title to, or interest in, such share.
45. Notwithstanding anything in these Articles, if the Company has
only one shareholder (not being one of several joint holders) and
that shareholder dies, the executors or administrators of the
deceased shareholder shall be entitled to register themselves in the
Register as the holders of the shares registered in the name of the
deceased shareholder whereupon they shall have all the rights given
by these Articles and by law to shareholders.
46. Any person entitled to shares upon the death or bankruptcy of any
shareholder or in any way other than by allotment or transfer may,
upon producing such evidence of entitlement as the directors
require, may be registered as a shareholder in respect of such
shares, or may, without being registered, transfer such shares
subject to the provisions of these Articles respecting the transfer
of shares. The directors shall have the same right to refuse
registration as if the transferee were named in an ordinary transfer
presented for registration.
SURRENDER OF SHARES
47. The directors may accept the surrender of any share by way of
compromise of any question as to the holder being properly
registered in respect thereof. Any share so surrendered may be
disposed of in the same manner as a forfeited share.
SHARE WARRANT
48. The Company, with respect to any fully paid-up shares, may issue
warrants ("Share Warrants") stating that the bearer is entitled to
the shares therein specified, and may provide, by coupons or
otherwise, for the payment of future dividends on the shares
included in the Share Warrants.
49. The directors may determine and vary the conditions upon which
Share Warrants will be issued and, without limiting the generality
of the foregoing, may determine the conditions upon which
(1) a new Share Warrant or coupon will be issued in the place of
one worn out, defaced, lost or destroyed, or
(2) the bearer of a Share Warrant will be entitled to attend and
vote at general meetings, or
(3) a Share Warrant may be surrendered and the name of the bearer
entered in the Register in respect of the shares therein
specified. Subject to such conditions and to these Articles
the bearer of a Share Warrant shall be a shareholder to the full
extent. The bearer of a Share Warrant shall be subject to the
conditions for the time being in force, whether made before or
after the issue of the Share Warrant.
INCREASE AND REDUCTION OF CAPITAL
50. Subject to the Act, the Company may by resolution of its
shareholders increase its share capital by the creation of new
shares of such amount as it thinks expedient.
51. Subject to the Act, the new shares may be issued upon such terms
and conditions and with such rights, privileges, limitations,
restrictions and conditions attached thereto as the Company by
resolution of its shareholders determines or, if no direction is
given, as the directors determine.
52. The Company by resolution of its shareholders may, before the
issue of any new shares, determine that such shares or any of them
shall be offered in the first instance to all the then shareholders
or to the holders of any class or series of shares in proportion to
the amount of the capital held by them, or make any other provisions
as to the issue and allotment of such shares. In default of any
such determination or to the extent that it does not apply, the
directors shall control the new shares.
53. Except as otherwise provided by the conditions of issue, or by these
Articles, any capital raised by the creation of new shares shall be
considered part of the original capital and shall be subject to the
provisions herein contained with reference to payment of calls and
installments, transfer and transmission, forfeiture, lien and
otherwise.
54. The Company may, by special resolution where required, reduce its
share capital in any way and with and subject to any incident
authorized and consent required by law.
ALTERATION OF CAPITAL
55. Subject to the Act, the Company may by resolution of its
shareholders:
(1) consolidate and divide all or any of its share capital into
shares of larger amount than its existing shares;
(2) convert all or any of its paid-up shares into stock and
reconvert that stock into paid-up shares of any denomination;
(3) exchange shares of one denomination for another; or
(4) cancel shares which, at the date of the passing of the
resolution in that behalf, have not been taken or agreed to be
taken by any person, and diminish the amount of its share
capital by the amount of the share so cancelled.
56. Subject to the Act, the Company may by special resolution:
(1) subdivide its shares, or any of them, into shares of smaller
amount than is fixed by the Memorandum, so, however, that in
the subdivision the proportion between the amount paid and the
amount, if any, unpaid on each reduced share shall be the same
as it was in the case of the share from which the reduced share
is derived and the special resolution whereby any share is
subdivided may determine that as between the holders of the
shares resulting from such subdivision, one or more of such
shares shall have some preference or special advantage as
regards dividend, capital, voting or otherwise, over, or
as compared with, the others or other;
(2) convert any part of its issued or unissued share capital into
preference shares redeemable or purchasable by the Company;
(3) provide for the issue of shares without any nominal or par
value provided that, upon any such issue, a declaration
executed by the Secretary must be filed with the Registrar
stating the number of shares issued and the amount received
therefor;
(4) convert all or any of its previously authorized, unissued or
issued, fully paid-up shares, other than preferred shares, with
nominal or par value into the same number of shares without any
nominal or par value, and reduce, maintain or increase
accordingly its liability on any of its shares so converted;
provided that the power to reduce its liability on any of its
shares so converted may, where it results in a reduction of
capital, only be exercised subject to confirmation by the court
as provided by the Act; or
(5) convert all or any of its previously authorized, unissued or
issued,fully paid-up shares without nominal or par value into
the same or a different number of shares with nominal or par
value, and for such purpose the shares issued without nominal
or par value and replaced by shares with a nominal or par value
shall be considered as fully paid, but their aggregate par value
shall not exceed the value of the net assets of the Company as
represented by the shares without par value issued before the
conversion.
57. Subject to the Act and any provisions attached to such shares, the
Company may redeem, purchase or acquire any of its shares and the
directors may determine the manner and the terms for redeeming,
purchasing or acquiring such shares and may provide a sinking fund
on such terms as they think fit for the redemption, purchase or
acquisition of shares of any class or series.
INTEREST ON SHARE CAPITAL
58. The Company may pay interest at a rate not exceeding 6% per year
on share capital issued and paid-up for the purpose of raising funds
to defray the expenses of the construction of any works or buildings
or the provision of any plant which cannot be operated profitably
for a lengthy period of time. Such interest may be paid for such
period and may be charged to capital as part of the cost of
construction of the work or building or of the provision of the
plant. The payment of the interest shall not operate to reduce
the amount paid-up on the shares in respect of which it is paid.
The accounts of the Company shall show full particulars of the
payment during the period to which the accounts relate.
CLASSES AND SERIES OF SHARES
59. Subject to the Act and the Memorandum, and without prejudice to
any special rights previously conferred on the holders of existing
shares, any share may be issued with such preferred, deferred or
other special rights, or with such restrictions, whether in regard
to dividends, voting, return of share capital or otherwise, as the
Company may from time to time determine by special resolution.
MEETINGS AND VOTING BY CLASS OR SERIES
60. Where the holders of shares of a class or series have, under the
Act, the Memorandum, the terms or conditions attaching to such
shares or otherwise, the right to vote separately as a class in
respect of any matter then, except as provided in the Act, the
Memorandum, these Articles or such terms or conditions, all the
provisions in these Articles concerning general meetings
(including, without limitation, provisions respecting notice,
quorum and procedure) shall, mutatis mutandis, apply to every
meeting of holders of such class or series of shares convened for
the purpose of such vote.
61. Unless the rights, privileges, terms or conditions attached to a
class or series of shares provide otherwise, such class or series
of shares shall not have the right to vote separately as a class
or series upon an amendment to the Memorandum or Articles to:
(1) increase or decrease any maximum number of authorized shares
of such class or series, or increase any maximum number of
authorized shares of a class or series having rights or
privileges equal or superior to the shares of such class or
series;
(2) effect an exchange, reclassification or cancellation of all or
part of the shares of such class or series; or
(3) create a new class or series of shares equal or superior to the
shares of such class or series.
BORROWING POWERS
62. The directors on behalf of the Company may:
(1) raise or borrow money for the purposes of the Company or any
of them;
(2) secure, subject to the sanction of a special resolution where
required by the Act, the repayment of funds so raised or
borrowed in such manner and upon such terms and conditions in
all respects as they think fit, and in particular by the
execution and delivery of mortgages of the Company's real or
personal property, or by the issue of bonds, debentures or
other securities of the Company secured by mortgage or other
charge upon all or any part of the property of the Company,
both present and future, including its uncalled capital for
the time being;
(3) sign or endorse bills, notes, acceptances, cheques, contracts,
and other evidence of or securities for funds borrowed or to be
borrowed for the purposes aforesaid;
(4) pledge debentures as security for loans;
(5) guarantee obligations of any person.
63. Bonds, debentures and other securities may be made assignable, free
from any equities between the Company and the person to whom such
securities were issued.
64. Any bonds, debentures and other securities may be issued at a
discount, premium or otherwise and with special privileges as to
redemption, surrender, drawings, allotment of shares, attending and
voting at general meetings of the Company, appointment of directors
and other matters.
GENERAL MEETINGS
65. Ordinary general meetings of the Company shall be held at least
once in every calendar year at such time and place as may be
determined by the directors and not later than 15 months after the
preceding ordinary general meeting. All other meetings of the
Company shall be called special general meetings. Ordinary or
special general meetings may be held either within or without the
Province of Nova Scotia.
66. The President, a vice-president or the directors may at any time
convene a special general meeting, and the directors, upon the
requisition of shareholders in accordance with the Act shall
forthwith proceed to convene such meeting or meetings to be held at
such time and place or times and places as the directors determine.
67. The requisition shall state the objects of the meeting requested, be
signed by the requisitionists and deposited at the Office of the
Company. It may consist of several documents in like form each
signed by one or more of the requisitionists.
68. At least seven clear days' notice, or such longer period of notice
as may be required by the Act, of every general meeting, specifying
the place, day and hour of the meeting and, when special business is
to be considered, the general nature of such business, shall be
given to the shareholders entitled to be present at such meeting by
notice given as permitted by these Articles. With the consent in
writing of all the shareholders entitled to vote at such meeting,
a meeting may be convened by a shorter notice and in any manner
they think fit, or notice of the time, place and purpose of the
meeting may be waived by all of the shareholders.
69. When it is proposed to pass a special resolution, the two meetings
may be convened by the same notice, and it shall be no objection to
such notice that it only convenes the second meeting contingently
upon the resolution being passed by the requisite majority at the
first meeting.
70. The accidental omission to give notice to a shareholder, or
non-receipt of notice by a shareholder, shall not invalidate any
resolution passed at any general meeting.
RECORD DATES
71. (1) The directors may fix in advance a date as the record date
for the determination of shareholders
(a) entitled to receive payment of a dividend or entitled to
receive any distribution;
(b) entitled to receive notice of a meeting; or
(c) for any other purpose.
(2) If no record date is fixed, the record date for the
determination of shareholders
(a) entitled to receive notice of a meeting shall be the day
immediately preceding the day on which the notice is
given, or, if no notice is given, the day on which the
meeting is held; and
(b) for any other purpose shall be the day on which the
directors pass the resolution relating to the particular
purpose.
PROCEEDINGS AT GENERAL MEETINGS
72. The business of an ordinary general meeting shall be to receive and
consider the financial statements of the Company and the report of
the directors and the report, if any, of the auditors, to elect
directors in the place of those retiring and to transact any other
business which under these Articles ought to be transacted at an
ordinary general meeting.
73. No business shall be transacted at any general meeting unless the
requisite quorum is present at the commencement of the business.
A corporate shareholder of the Company that has a duly authorized
agent or representative present at any such meeting shall for the
purpose of this Article be deemed to be personally present at such
meeting.
74. One person, being a shareholder, proxyholder or representative of
a corporate shareholder, present and entitled to vote shall
constitute a quorum for a general meeting, and may hold a meeting.
75. The Chairman shall be entitled to take the chair at every general
meeting or, if there be no Chairman, or if the Chairman is not
present within fifteen 15 minutes after the time appointed for
holding the meeting, the President or, failing the President,
a vice-president shall be entitled to take the chair. If the
Chairman, the President or a vice-president is not present
within 15 minutes after the time appointed for holding the meeting
or if all such persons present decline to take the chair, the
shareholders present entitled to vote at the meeting shall choose
another director as chairman and if no director is present or if
all the directors present decline to take the chair, then such
shareholders shall choose one of their number to be chairman.
76. If within half an hour from the time appointed for a general
meeting a quorum is not present, the meeting, if it was convened
pursuant to a requisition of shareholders, shall be dissolved; if
it was convened in any other way, it shall stand adjourned to the
same day, in the next week, at the same time and place. If at
the adjourned meeting a quorum is not present within half an hour
from the time appointed for the meeting, the shareholders present
shall be a quorum and may hold the meeting.
77. Subject to the Act, at any general meeting a resolution put to the
meeting shall be decided by a show of hands unless, either before
or on the declaration of the result of the show of hands, a poll is
demanded by the chairman, a shareholder or a proxyholder; and unless
a poll is so demanded, a declaration by the chairman that the
resolution has been carried, carried by a particular majority, lost
or not carried by a particular majority and an entry to that effect
in the Company's book of proceedings shall be conclusive evidence
of the fact without proof of the number or proportion of the votes
recorded in favour or against such resolution.
78. When a poll is demanded, it shall be taken in such manner and at
such time and place as the chairman directs, and either at once or
after an interval or adjournment or otherwise. The result of the
poll shall be the resolution of the meeting at which the poll was
demanded. The demand of a poll may be withdrawn. When any dispute
occurs over the admission or rejection of a vote, it shall be
resolved by the chairman and such determination made in good
faith shall be final and conclusive.
79. The chairman shall not have a casting vote in addition to any
vote or votes that the Chairman has as a shareholder.
80. The chairman of a general meeting may with the consent of the
meeting adjourn the meeting from time to time and from place to
place, but no business shall be transacted at any adjourned
meeting other than the business left unfinished at the meeting
that was adjourned.
81. Any poll demanded on the election of a chairman or on a question
of adjournment shall be taken forthwith without adjournment.
82. The demand of a poll shall not prevent the continuance of a
meeting for the transaction of any business other than the
question on which a poll has been demanded.
VOTES OF SHAREHOLDERS
83. Subject to the Act and to any provisions attached to any class or
series of shares concerning voting rights
(1) on a show of hands every shareholder present in person, every
duly authorized representative of a corporate shareholder, and,
if not prevented from voting by the Act, every proxyholder,
shall have one vote; and
(2) on a poll every shareholder present in person, every duly
authorized representative of a corporate shareholder, and
every proxyholder, shall have one vote for every share held;
whether or not such representative or proxyholder is a
shareholder.
84. Any person entitled to transfer shares upon the death or bankruptcy
of any shareholder or in any way other than by allotment or transfer
may vote at any general meeting in respect thereof in the same
manner as if such person were the registered holder of such shares
so long as the directors are satisfied at least 48 hours before the
time of holding the meeting of such person's right to transfer such
shares.
85. Where there are joint registered holders of any share, any of such
holders may vote such share at any meeting, either personally or by
proxy, as if solely entitled to it. If more than one joint holder
is present at any meeting, personally or by proxy, the one whose
name stands first on the Register in respect of such share shall
alone be entitled to vote it. Several executors or administrators
of a deceased shareholder in whose name any share stands shall for
the purpose of this Article be deemed joint holders thereof.
86. Votes may be cast either personally or by proxy or, in the case of
a corporate shareholder by a representative duly authorized under
the Act.
87. A proxy shall be in writing and executed in the manner provided in
the Act. A proxy or other authority of a corporate shareholder does
not require its seal. Holders of Share Warrants shall not be
entitled to vote by proxy in respect of the shares included in such
warrants unless otherwise expressed in such warrants.
88. A shareholder of unsound mind in respect of whom an order has been
made by any court of competent jurisdiction may vote by guardian or
other person in the nature of a guardian appointed by that court,
and any such guardian or other person may vote by proxy.
89. A proxy and the power of attorney or other authority, if any,
under which it is signed or a notarially certified copy of that
power or authority shall be deposited at the Office of the Company
or at such other place as the directors may direct. The directors
may, by resolution, fix a time not exceeding 48 hours excluding
Saturdays and holidays preceding any meeting or adjourned meeting
before which time proxies to be used at that meeting must be
deposited with the Company at its Office or with an agent of the
Company. Notice of the requirement for depositing proxies shall
be given in the notice calling the meeting. The chairman of the
meeting shall determine all questions as to validity of proxies and
other instruments of authority.
90. A vote given in accordance with the terms of a proxy shall be valid
notwithstanding the previous death of the principal, the revocation
of the proxy, or the transfer of the share in respect of which the
vote is given, provided no intimation in writing of the death,
revocation or transfer is received at the Office of the Company
before the meeting or by the chairman of the meeting before the
vote is given.
91. Every form of proxy shall comply with the Act and its regulations
and subject thereto may be in the following form:
I, _________________________ of _________________________ being a
shareholder of _______________________ hereby appoint
________________________ of ______________________ (or failing
him/her ___________________________ of ________________________) as
proxyholder to attend and to vote for me and on my behalf at the
ordinary/special general meeting of the Company, to be held on the
____ day of __________ and at any adjournment thereof, or at any
meeting of the Company which may be held prior to [insert specified
date or event].
[If the proxy is solicited by or behalf of the management of the
Company, insert a statement to that effect.]
Dated this ______ day of __________________.
_______________
Shareholder
92. Subject to the Act, no shareholder shall be entitled to be present
or to vote on any question, either personally or by proxy, at any
general meeting or be reckoned in a quorum while any call is due
and payable to the Company in respect of any of the shares of such
shareholder.
93. Any resolution passed by the directors, notice of which has been
given to the shareholders in the manner in which notices are
hereinafter directed to be given and which is, within one month
after it has been passed, ratified and confirmed in writing by
shareholders entitled on a poll to three-fifths of the votes, shall
be as valid and effectual as a resolution of a general meeting.
This Article shall not apply to a resolution for winding up the
Company or to a resolution dealing with any matter that by statute
or these Articles ought to be dealt with by a special resolution or
other method prescribed by statute.
94. A resolution, including a special resolution, in writing and signed
by every shareholder who would be entitled to vote on the resolution
at a meeting is as valid as if it were passed by such shareholders
at a meeting and satisfies all of the requirements of the Act
respecting meetings of shareholders.
DIRECTORS
95. Unless otherwise determined by resolution of shareholders, the
number of directors shall not be less than one or more than seven.
96. Notwithstanding anything herein contained the subscribers to the
Memorandum shall be the first directors of the Company.
97. The directors may be paid out of the funds of the Company as
remuneration for their service such sums, if any, as the Company
may by resolution of its shareholders determine, and such
remuneration shall be divided among them in such proportions and
manner as the directors determine. The directors may also be paid
their reasonable travelling, hotel and other expenses incurred in
attending meetings of directors and otherwise in the execution of
their duties as directors.
98. The continuing directors may act notwithstanding any vacancy in
their body, but if their number falls below the minimum permitted,
the directors shall not, except in emergencies or for the purpose
of filling vacancies, act so long as their number is below the
minimum.
99. A director may, in conjunction with the office of director, and
on such terms as to remuneration and otherwise as the directors
arrange or determine, hold any other office or place of profit
under the Company or under any company in which the Company is
a shareholder or is otherwise interested.
100. The office of a director shall ipso facto be vacated if the
director:
(1) becomes bankrupt or makes an assignment for the benefit of
creditors;
(2) is, or is found by a court of competent jurisdiction to be,
of unsound mind;
(3) by notice in writing to the Company, resigns the office of
director; or
(4) is removed in the manner provided by these Articles.
101. No director shall be disqualified by holding the office of director
from contracting with the Company, either as vendor, purchaser, or
otherwise, nor shall any such contract, or any contract or
arrangement entered into or proposed to be entered into by or on
behalf of the Company in which any director is in any way
interested, either directly or indirectly, be avoided, nor shall
any director so contracting or being so interested be liable to
account to the Company for any profit realized by any such contract
or arrangement by reason only of such director holding that office
or of the fiduciary relations thereby established, provided the
director makes a declaration or gives a general notice in
accordance with the Act. No director shall, as a director, vote
in respect of any contract or arrangement in which the director is
so interested, and if the director does so vote, such vote shall
not be counted. This prohibition may at any time or times be
suspended or relaxed to any extent by a resolution of the
shareholders and shall not apply to any contract by or on behalf
of the Company to give to the directors or any of them any
security for advances or by way of indemnity.
ELECTION OF DIRECTORS
102. At the dissolution of every ordinary general meeting at which
their successors are elected, all the directors shall retire from
office and be succeeded by the directors elected at such meeting.
Retiring directors shall be eligible for re-election.
103. If at any ordinary general meeting at which an election of
directors ought to take place no such election takes place, or if
no ordinary general meeting is held in any year or period of years,
the retiring directors shall continue in office until their
successors are elected.
104. The Company may by resolution of its shareholders elect any number
of directors permitted by these Articles and may determine or alter
their qualification.
105. The Company may, by special resolution or in any other manner
permitted by statute, remove any director before the expiration of
such director's period of office and may, if desired, appoint a
replacement to hold office during such time only as the director so
removed would have held office.
106. The directors may appoint any other person as a director so long
as the total number of directors does not at any time exceed the
maximum number permitted. No such appointment, except to fill a
casual vacancy, shall be effective unless two-thirds of the
directors concur in it. Any casual vacancy occurring among the
directors may be filled by the directors, but any person so
chosen shall retain office only so long as the vacating director
would have retained it if the vacating director had continued as
director.
MANAGING DIRECTORS
107. The directors may appoint one or more of their body to be managing
directors of the Company, either for a fixed term or otherwise ,
and may remove or dismiss them from office and appoint
replacements.
108. Subject to the provisions of any contract between a managing
director and the Company, a managing director shall be subject to
the same provisions as to resignation and removal as the other
directors of the Company. A managing director who for any reason
ceases to hold the office of director shall ipso facto immediately
cease to be a managing director.
109. The remuneration of a managing director shall from time to time be
fixed by the directors and may be by way of any or all of salary,
commission and participation in profits.
110. The directors may from time to time entrust to and confer upon a
managing director such of the powers exercisable under these
Articles by the directors as they think fit, and may confer such
powers for such time, and to be exercised for such objects and
purposes and upon such terms and conditions, and with such
restrictions as they think expedient; and they may confer such
powers either collaterally with, or to the exclusion of, and in
substitution for, all or any of the powers of the directors in
that behalf; and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
CHAIRMAN OF THE BOARD
111. The directors may elect one of their number to be Chairman and
may determine the period during which the Chairman is to hold
office. The Chairman shall perform such duties and receive such
special remuneration as the directors may provide.
PRESIDENT AND VICE-PRESIDENTS
112. The directors shall elect the President of the Company, who need
not be a director, and may determine the period for which the
President is to hold office. The President shall have general
supervision of the business of the Company and shall perform such
duties as may be assigned from time to time by the directors.
113. The directors may also elect vice-presidents, who need not be
directors, and may determine the periods for which they are to hold
office. A vice-president shall, at the request of the President or
the directors and subject to the directions of the directors,
perform the duties of the President during the absence, illness
or incapacity of the President, and shall also perform such duties
as may be assigned by the President or the directors.
SECRETARY AND TREASURER
114. The directors shall appoint a Secretary of the Company to keep
minutes of shareholders' and directors' meetings and perform such
other duties as may be assigned by the directors. The directors
may also appoint a temporary substitute for the Secretary who
shall, for the purposes of these Articles, be deemed to be the
Secretary.
115. The directors may appoint a treasurer of the Company to carry out
such duties as the directors may assign.
OFFICERS
116. The directors may elect or appoint such other officers of the
Company, having such powers and duties, as they think fit.
117. If the directors so decide the same person may hold more than
one of the offices provided for in these Articles.
PROCEEDINGS OF DIRECTORS
118. The directors may meet together for the dispatch of business,
adjourn and otherwise regulate their meetings and proceedings, as
they think fit, and may determine the quorum necessary for the
transaction of business. Until otherwise determined, one
director shall constitute a quorum and may hold a meeting.
119. If all directors of the Company entitled to attend a meeting
either generally or specifically consent, a director may
participate in a meeting of directors or of a committee of
directors by means of such telephone or other communications
facilities as permit all persons participating in the meeting
to hear each other, and a director participating in such a
meeting by such means is deemed to be present at that meeting
for purposes of these Articles.
120. Meetings of directors may be held either within or without the
Province of Nova Scotia and the directors may from time to time
make arrangements relating to the time and place of holding
directors' meetings, the notices to be given for such meetings and
what meetings may be held without notice. Unless otherwise
provided by such arrangements:
(1) a meeting of directors may be held at the close of every
ordinary general meeting of the Company without notice;
(2) notice of every other directors' meeting may be given as
permitted by these Articles to each director at least 48
hours before the time fixed for the meeting; and
(3) a meeting of directors may be held without formal notice if
all the directors are present or if those absent have
signified their assent to such meeting or their consent to
the business transacted at such meeting.
121. The President or any director may at any time, and the Secretary,
upon the request of the President or any director, shall summon a
meeting of the directors to be held at the Office of the Company.
The President, the Chairman or a majority of the directors may at
any time, and the Secretary, upon the request of the President,
the Chairman or a majority of the directors, shall summon a meeting
to be held elsewhere.
122. (1) Questions arising at any meeting of directors shall be decided
by a majority of votes. The chairman of the meeting may vote
as a director but shall not have a second or casting vote.
(2) At any meeting of directors the chairman shall receive and
count the vote of any director not present in person at such
meeting on any question or matter arising at such meeting
whenever such absent director has indicated by telegram,
letter or other writing lodged with the chairman of such
meeting the manner in which the absent director desires to
vote on such question or matter and such question or matter
has been specifically mentioned in the notice calling the
meeting as a question or matter to be discussed or decided
thereat. In respect of any such question or matter so
mentioned in such notice any director may give to any other
director a proxy authorizing such other director to vote for
such first named director at such meeting, and the chairman
of such meeting, after such proxy has been so lodged, shall
receive and count any vote given in pursuance thereof
notwithstanding the absence of the director giving such
proxy.
123. If no Chairman is elected, or if at any meeting of directors the
Chairman is not present within five minutes after the time
appointed for holding the meeting, or declines to take the chair,
the President, if a director, shall preside. If the President is
not a director, is not present at such time or declines to take
the chair, a vice-president who is also a director shall preside.
If no person described above is present at such time and willing
to take the chair, the directors present shall choose some one of
their number to be chairman of the meeting.
124. A meeting of the directors at which a quorum is present shall be
competent to exercise all or any of the authorities, powers and
discretions for the time being vested in or exercisable by the
directors generally.
125. The directors may delegate any of their powers to committees
consisting of such number of directors as they think fit. Any
committee so formed shall in the exercise of the powers so
delegated conform to any regulations that may be imposed on them
by the directors.
126. The meetings and proceedings of any committee of directors shall
be governed by the provisions contained in these Articles for
regulating the meetings and proceedings of the directors insofar
as they are applicable and are not superseded by any regulations
made by the directors.
127. All acts done at any meeting of the directors or of a committee
of directors or by any person acting as a director shall,
notwithstanding that it is afterwards discovered that there was
some defect in the appointment of the director or person so
acting, or that they or any of them were disqualified, be as
valid if every such person had been duly appointed and was
qualified to be a director.
128. A resolution in writing and signed by every director who would
be entitled to vote on the resolution at a meeting is as valid as
if it were passed by such directors at a meeting.
129. If any one or more of the directors is called upon to perform
extra services or to make any special exertions in going or
residing abroad or otherwise for any of the purposes of the
Company or the business thereof, the Company may remunerate
the director or directors so doing, either by a fixed sum or
by a percentage of profits or otherwise. Such remuneration
shall be determined by the directors and may be either in
addition to or in substitution for remuneration otherwise
authorized by these Articles.
REGISTERS
130. The directors shall cause to be kept at the Company's Office in
accordance with the provisions of the Act a Register of the
shareholders of the Company, a register of the holders of bonds,
debentures and other securities of the Company and a register of
its directors. Branch registers of the shareholders and of the
holders of bonds, debentures and other securities may be kept
elsewhere, either within or without the Province of Nova Scotia,
in accordance with the Act.
MINUTES
131. The directors shall cause minutes to be entered in books
designated for the purpose:
(1) of all appointments of officers;
(2) of the names of directors present at each meeting of directors
and of any committees of directors;
(3) of all orders made by the directors and committees of
directors; and
(4) of all resolutions and proceedings of meetings of shareholders
and of directors.
Any such minutes of any meeting of directors or of any committee of
directors or of shareholders, if purporting to be signed by the chairman
of such meeting or by the chairman of the next succeeding meeting, shall
be receivable as prima facie evidence of the matters stated in such
minutes.
POWERS OF DIRECTORS
132. The management of the business of the Company is vested in the
directors who, in addition to the powers and authorities by
these Articles or otherwise expressly conferred upon them, may
exercise all such powers and do all such acts and things as may
be exercised or done by the Company and are not hereby or by
statute expressly directed or required to be exercised or done
by the shareholders, but subject nevertheless to the provisions
of any statute, the Memorandum or these Articles. No modification
of the Memorandum or these Articles shall invalidate any prior
act of the directors that would have been valid if such
modification had not been made.
133. Without restricting the generality of the terms of any of these
Articles and without prejudice to the powers conferred thereby,
the directors may:
(1) take such steps as they think fit to carry out any agreement
or contract made by or on behalf of the Company;
(2) pay costs, charges and expenses preliminary and incidental
to the promotion, formation, establishment, and registration
of the Company;
(3) purchase or otherwise acquire for the Company any property,
rights or privileges that the Company is authorized to
acquire, at such price and generally on such terms and
conditions as they think fit;
(4) pay for any property, rights or privileges acquired by, or
services rendered to the Company either wholly or partially
in cash or in shares (fully paid-up or otherwise), bonds,
debentures or other securities of the Company;
(5) subject to the Act, secure the fulfilment of any contracts
or engagements entered into by the Company by mortgaging or
charging all or any of the property of the Company and its
unpaid capital for the time being, or in such other manner
as they think fit;
(6) appoint, remove or suspend at their discretion such experts,
managers, secretaries, treasurers, officers, clerks, agents
and servants for permanent, temporary or special services, as
they from time to time think fit, and determine their powers
and duties and fix their salaries or emoluments and require
security in such instances and to such amounts as they think
fit;
(7) accept a surrender of shares from any shareholder insofar as
the law permits and on such terms and conditions as may be
agreed;
(8) appoint any person or persons to accept and hold in trust for
the Company any property belonging to the Company, or in which
it is interested, execute and do all such deeds and things as
may be required in relation to such trust, and provide for
the remuneration of such trustee or trustees;
(9) institute, conduct, defend, compound or abandon any legal
proceedings by and against the Company, its directors or its
officers or otherwise concerning the affairs of the Company,
and also compound and allow time for payment or satisfaction
of any debts due and of any claims or demands by or against
the Company;
(10) refer any claims or demands by or against the Company to
arbitration and observe and perform the awards;
(11) make and give receipts, releases and other discharges for
amounts payable to the Company and for claims and demands
of the Company;
(12) determine who may exercise the borrowing powers of the Company
and sign on the Company's behalf bonds, debentures or other
securities, bills, notes, receipts, acceptances, assignments,
transfers, hypothecations, pledges, endorsements, cheques,
drafts, releases, contracts, agreements and all other
instruments and documents;
(13) provide for the management of the affairs of the Company
abroad in such manner as they think fit, and in particular
appoint any person to be the attorney or agent of the Company
with such powers (including power to sub-delegate) and upon
such terms as may be thought fit;
(14) invest and deal with any funds of the Company in such
securities and in such manner as they think fit; and vary
or realize such investments;
(15) subject to the Act, execute in the name and on behalf of the
Company in favour of any director or other person who may
incur or be about to incur any personal liability for the
benefit of the Company such mortgages of the Company's
property, present and future, as they think fit;
(16) give any officer or employee of the Company a commission on
the profits of any particular business or transaction or a
share in the general profits of the Company;
(17) set aside out of the profits of the Company before declaring
any dividend such amounts as they think proper as a reserve
fund to meet contingencies or provide for dividends,
depreciation, repairing, improving and maintaining any of
the property of the Company and such other purposes as the
directors may in their absolute discretion think in the
interests of the Company; and invest such amounts in such
investments as they think fit, and deal with and vary such
investments, and dispose of all or any part of them for the
benefit of the Company, and divide the reserve fund into such
special funds as they think fit, with full power to employ
the assets constituting the reserve fund in the business of
the Company without being bound to keep them separate from the
other assets;
(18) make, vary and repeal rules respecting the business of the
Company, its officers and employees, the shareholders of the
Company or any section or class of them;
(19) enter into all such negotiations and contracts, rescind and
vary all such contracts, and execute and do all such acts,
deeds and things in the name and on behalf of the Company as
they consider expedient for or in relation to any of the
matters aforesaid or otherwise for the purposes of the
Company;
(20) provide for the management of the affairs of the Company in
such manner as they think fit.
SOLICITORS
134. The Company may employ or retain solicitors any of whom may, at
the request or on the instruction of the directors, the Chairman,
the President or a managing director, attend meetings of the
directors or shareholders, whether or not the solicitor is a
shareholder or a director of the Company. A solicitor who is
also a director may nevertheless charge for services rendered
to the Company as a solicitor.
THE SEAL
135. The directors shall arrange for the safe custody of the common
seal of the Company (the "Seal"). The Seal may be affixed to
any instrument in the presence of and contemporaneously with the
attesting signature of (i) any director or officer acting within
such person's authority or (ii) any person under the authority
of a resolution of the directors or a committee thereof. For the
purpose of certifying documents or proceedings the Seal may be
affixed by any director or the President, a vice-president, the
Secretary, an assistant secretary or any other officer of the
Company without the authorization of a resolution of the directors.
136. The Company may have facsimiles of the Seal which may be used
interchangeably with the Seal.
137. The Company may have for use at any place outside the Province of
Nova Scotia, as to all matters to which the corporate existence and
capacity of the Company extends, an official seal that is a
facsimile of the Seal of the Company with the addition on its face
of the name of the place where it is to be used; and the Company
may by writing under its Seal authorize any person to affix such
official seal at such place to any document to which the Company is
a party.
DIVIDENDS
138. The directors may from time to time declare such dividend as they
deem proper upon shares of the Company according to the rights and
restrictions attached to any class or series of shares, and may
determine the date upon which such dividend will be payable and
that it will be payable to the persons registered as the holders
of the shares on which it is declared at the close of business
upon a record date. No transfer of such shares registered after
the record date shall pass any right to the dividend so declared.
139. No dividends shall be payable except out of the profits, retained
earnings or contributed surplus of the Company and no interest
shall be payable on any dividend except insofar as the rights
attached to any class or series of shares provide otherwise.
140. The declaration of the directors as to the amount of the profits,
retained earnings or contributed surplus of the Company shall be
conclusive.
141. The directors may from time to time pay to the shareholders such
interim dividends as in their judgment the position of the Company
justifies.
142. Subject to the Memorandum, these Articles and the rights and
restrictions attached to any class or series of shares, dividends
may be declared and paid to the shareholders in proportion to the
amount of capital paid-up on the shares (not including any capital
paid-up bearing interest) held by them respectively.
143. The directors may deduct from the dividends payable to any
shareholder amounts due and payable by the shareholder to the
Company on account of calls, instalments or otherwise, and may
apply the same in or towards satisfaction of such amounts so
due and payable.
144. The directors may retain any dividends on which the Company has
a lien, and may apply the same in or towards satisfaction of the
debts, liabilities or engagements in respect of which the lien
exists.
145. The directors may retain the dividends payable upon shares to
which a person is entitled or entitled to transfer upon the death
or bankruptcy of a shareholder or in any way other than by
allotment or transfer, until such person has become registered as
the holder of such shares or has duly transferred such shares.
146. When the directors declare a dividend on a class or series of
shares and also make a call on such shares payable on or before the
date on which the dividend is payable, the directors may retain all
or part of the dividend and set off the amount retained against the
call.
147. The directors may declare that a dividend be paid by the
distribution of cash, paid-up shares (at par or at a premium),
debentures, bonds or other securities of the Company or of any
other company or any other specific assets held or to be acquired
by the Company or in any one or more of such ways.
148. The directors may settle any difficulty that may arise in regard
to the distribution of a dividend as they think expedient, and in
particular without restricting the generality of the foregoing may
issue fractional certificates, may fix the value for distribution
of any specific assets, may determine that cash payments will be
made to any shareholders upon the footing of the value so fixed or
that fractions may be disregarded in order to adjust the rights of
all parties, and may vest cash or specific assets in trustees upon
such trusts for the persons entitled to the dividend as may seem
expedient to the directors.
149. Any person registered as a joint holder of any share may give
effectual receipts for all dividends and payments on account of
dividends in respect of such share.
150. Unless otherwise determined by the Directors, any dividend may be
paid by a cheque or warrant delivered to or sent through the post
to the registered address of the member entitled, or, when there
are joint holders, to the registered address of that one whose
name stands first on the register for the shares jointly held.
Every cheque or warrant so delivered or sent shall be made payable
to the order of the person to whom it is delivered or sent. The
mailing or other transmission to a shareholder at the shareholder's
registered address (or, in the case of joint shareholders at the
address of the holder whose name stands first on the register)
of a cheque payable to the order of the person to whom it is
addressed for the amount of any dividend payable in cash after
the deduction of any tax which the Company has properly withheld,
shall discharge the Company's liability for the dividend unless
the cheque is not paid on due presentation. If any cheque for a
dividend payable in cash is not received, the Company shall issue
to the shareholder a replacement cheque for the same amount on
such terms as to indemnity and evidence of non-receipt as the
directors may impose. No shareholder may recover by action or
other legal process against the Company any dividend represented
by a cheque that has not been duly presented to a banker of the
Company for payment or that otherwise remains unclaimed for 6
years from the date on which it was payable.
ACCOUNTS
151. The directors shall cause proper books of account to be kept of the
amounts received and expended by the Company, the matters in
respect of which such receipts and expenditures take place, all
sales and purchases of goods by the Company, and the assets,
credits and liabilities of the Company.
152. The books of account shall be kept at the head office of the
Company or at such other place or places as the directors may
direct.
153. The directors shall from time to time determine whether and to what
extent and at what times and places and under what conditions the
accounts and books of the Company or any of them shall be open to
inspection of the shareholders, and no shareholder shall have any
right to inspect any account or book or document of the Company
except as conferred by statute or authorized by the directors or
a resolution of the shareholders.
154. At the ordinary general meeting in every year the directors shall
lay before the Company such financial statements and reports in
connection therewith as may be required by the Act or other
applicable statute or regulation thereunder and shall distribute
copies thereof at such times and to such persons as may be required
by statute or regulation.
AUDITORS AND AUDIT
155. The Company shall at each ordinary general meeting appoint an
auditor or auditors to hold office until the next ordinary general
meeting. If at any general meeting at which the appointment of an
auditor or auditors is to take place and no such appointment takes
place, or if no ordinary general meeting is held in any year or
period of years, the directors shall appoint an auditor or auditors
to hold office until the next ordinary general meeting.
156. The first auditors of the Company may be appointed by the directors
at any time before the first ordinary general meeting and the
auditors so appointed shall hold office until such meeting unless
previously removed by a resolution of the shareholders, in which
event the shareholders may appoint auditors.
157. The directors may fill any casual vacancy in the office of the
auditor but while any such vacancy continues the surviving or
continuing auditor or auditors, if any, may act.
158. The Company may appoint as auditor any person, including a
shareholder, not disqualified by statute.
159. An auditor may be removed or replaced in the circumstances and in
the manner specified in the Act.
160. The remuneration of the auditors shall be fixed by the
shareholders, or by the directors pursuant to authorization given
by the shareholders, except that the remuneration of an auditor
appointed to fill a casual vacancy may be fixed by the directors.
161. The auditors shall conduct such audit as may be required by the
Act and their report, if any, shall be dealt with by the Company
as required by the Act.
NOTICES
162. A notice (including any communication or document) shall be
sufficiently given, delivered or served by the Company upon a
shareholder, director, officer or auditor by personal delivery at
such person's registered address (or, in the case of a director,
officer or auditor, last known address) or by prepaid mail,
telegraph, telex, facsimile machine or other electronic means of
communication addressed to such person at such address.
163. Shareholders having no registered address shall not be entitled
to receive notice.
164. The holder of a Share Warrant shall not, unless otherwise expressed
therein, be entitled in respect thereof to notice of any general
meeting of the Company.
165. All notices with respect to registered shares to which persons are
jointly entitled may be sufficiently given to all joint holders
thereof by notice given to whichever of such persons is named first
in the Register for such shares.
166. Any notice sent by mail shall be deemed to be given, delivered or
served on the earlier of actual receipt and the third business day
following that upon which it is mailed, and in proving such service
it shall be sufficient to prove that the notice was properly
addressed and mailed with the postage prepaid thereon. Any notice
given by electronic means of communication shall be deemed to be
given when entered into the appropriate transmitting device for
transmission. A certificate in writing signed on behalf of the
Company that the notice was so addressed and mailed or transmitted
shall be conclusive evidence thereof.
167. Every person who by operation of law, transfer or other means
whatsoever becomes entitled to any share shall be bound by every
notice in respect of such share that prior to such person's name
and address being entered on the Register was duly served in the
manner hereinbefore provided upon the person from whom such person
derived title to such share.
168. Any notice delivered, sent or transmitted to the registered address
of any shareholder pursuant to these Articles, shall,
notwithstanding that such shareholder is then deceased and that the
Company has notice thereof, be deemed to have been served in
respect of any registered shares, whether held by such deceased
shareholder solely or jointly with other persons, until some other
person is registered as the holder or joint holder thereof, and
such service shall for all purposes of these Articles be deemed a
sufficient service of such notice on the heirs, executors or
administrators of the deceased shareholder and all joint holders
of such shares.
169. Any notice may bear the name or signature, manual or reproduced,
of the person giving the notice.
170. When a given number of days' notice or notice extending over any
other period is required to be given, the day of service and the
day upon which such notice expires shall not, unless it is
otherwise provided, be counted in such number of days or other
period.
INDEMNITY
171. Every director or officer, former director or officer, or person
who acts or acted at the Company's request, as a director or
officer of the Company, a body corporate, partnership or other
association of which the Company is or was a shareholder, partner,
member or creditor, and the heirs and legal representatives of such
person, in the absence of any dishonesty on the part of such
person, shall be indemnified by the Company against, and it shall
be the duty of the directors out of the funds of the Company to
pay, all costs, losses and expenses, including an amount paid to
settle an action or claim or satisfy a judgment, that such
director, officer or person may incur or become liable to pay in
respect of any claim made against such person or civil, criminal or
administrative action or proceeding to which such person is made a
party by reason of being or having been a director or officer of
the Company or such body corporate, partnership or other
association, whether the Company is a claimant or party to such
action or proceeding or otherwise; and the amount for which such
indemnity is proved shall immediately attach as a lien on the
property of the Company and have priority as against the
shareholders over all other claims.
172. No director or officer, former director or officer, or person who
acts or acted at the Company's request, as a director or officer
of the Company, a body corporate, partnership or other association
of which the Company is or was a shareholder, partner, member or
creditor, in the absence of any dishonesty on such person's part,
shall be liable for the acts, receipts, neglects or defaults of
any other director, officer or such person, or for joining in any
receipt or other act for conformity, or for any loss, damage or
expense happening to the Company through the insufficiency or
deficiency of title to any property acquired for or on behalf of
the Company, or through the insufficiency or deficiency of any
security in or upon which any of the funds of the Company are
invested, or for any loss or damage arising from the bankruptcy,
insolvency or tortious acts of any person with whom any funds,
securities or effects are deposited, or for any loss occasioned
by error of judgment or oversight on the part of such person, or
for any other loss, damage or misfortune whatsoever which happens
in the execution of the duties of such person or in relation
thereto.
REMINDERS
173. The directors shall comply with the following provisions of the
Act or the Corporations Registration Act (Nova Scotia) where
indicated:
(1) Keep a current register of shareholders (Section 42).
(2) Keep a current register of directors, officers and managers,
send to the Registrar a copy thereof and notice of all changes
therein (Section 98).
(3) Keep a current register of holders of bonds, debentures and
other securities (Section 111 and Third Schedule).
(4) Send notice to the Registrar of any redemption or purchase
of preference shares (Section 50).
(5) Send notice to the Registrar of any consolidation, division,
conversion or reconversion of the share capital or stock of
the Company (Section 53).
(6) Send notice to the Registrar of any increase of capital
(Section 55).
(7) Call a general meeting every year within the proper time
(Section 83). Meetings must be held not later than 15 months
after the preceding general meeting.
(8) Send to the Registrar copies of all special resolutions
(Section 88).
(9) When shares are issued for a consideration other than cash,
file a copy of the contract with the Registrar on or before
the date on which the shares are issued (Section 109).
(10) Send to the Registrar notice of the address of the Company's
Office and of all changes in such address (Section 79).
(11) Keep proper minutes of all shareholders' meetings and
directors' meetings in the Company's minute book kept at the
Company's Office (Sections 89 and 90).
(12) Obtain a certificate under the Corporations Registration Act
(Nova Scotia) as soon as business is commenced.
(13) Send notice of recognized agent to the Registrar under the
Corporations Registration Act (Nova Scotia).
TABLE OF CONTENTS TO ARTICLES OF ASSOCIATION
Article Description Page
- - ------- ----------- ----
1. Interpretation 1
2. Table A not to apply 1
3. Pre-Incorporation Agreement 1
SHARES
4. Payment of expenses of Incorporation, etc. 2
5. May commence business at once 2
6. Shares under control of directors 2
7. Commission on subscription 2
8. Amount and timing of calls, etc. 2
9. Installments payable by registered holder 2
10. Joint registration of shares 2
11. Liability of joint holders - survivor only recognized 2
12. Registered holder treated as absolute owner 2
13. Private company 2
CERTIFICATES
14. Share certificates 3
15. Entitlement to share certificate 3
16. Certificate issued to joint holders 3
17. Worn out, defaced or lost certificates 3
18. Fee for certificate 3
19. Branch registers 3
CALLS
20. Directors may make calls 4
21. When calls deemed made 4
22. Notice of call - timing and contents 4
23. Interest on unpaid call 4
24. Resolution making call conclusive evidence 4
25. Shareholders advances on unpaid shares 4
FORFEITURE OF SHARES
26. Notice before forfeiture 4
27. Contents of notice 4
28. Forfeiture when notice not complied with 4
29. Notice of forfeiture resolution, register entry 5
30. Forfeited share becomes property of Company 5
31. Annulment of forfeiture, etc. 5
32. Liability of shareholders to pay call after forfeiture 5
33. Certificate of forfeiture conclusive evidence 5
LIEN ON SHARES
34. Lien on shares for debts of shareholder 5
35. Sale of shares not paid up to enforce lien 5
36. Application of proceeds of shares by Company 5
VALIDITY OF SALES
37. Validity of sale on forfeiture or to enforce lien 6
TRANSFER OF SHARES
38. How transfer effected 6
39. Form of transfer instrument 6
40. Directors may decline to register transfer 6
41. Delivery of transfer for registration 6
42. Fee on transfer 6
43. Transfer instrument to remain with Company 6
TRANSMISSION OF SHARES
44. Executors of deceased recognized as holder 7
45. Right of executor of sole shareholder 7
46. Transmission of shares on death, bankruptcy 7
SURRENDER OF SHARES
47. Surrender of shares in compromise 7
SHARE WARRANTS
48. Issue of Share Warrants 7
49. Conditions under which Share Warrants issued 7
INCREASE AND REDUCTION OF CAPITAL
50. Increase of capital 8
51. Terms of issue of new shares 8
52. New shares may be offered to existing shareholders 8
53. New capital within control of directors 8
54. Reduction of capital 8
ALTERATION OF CAPITAL
55. Altering capital by ordinary resolution 8
56. Altering capital by special resolution 8
57. Redemption and purchase of shares 9
INTEREST ON SHARE CAPITAL
58. When share capital may bear interest 9
CLASSES AND SERIES OF SHARES
59. Shares with preferred, deferred or special rights 9
MEETINGS AND VOTING BY CLASS OR SERIES
60. Procedure, etc. for class vote 10
61. Restrictions on separate class and series votes 10
BORROWING POWERS
62. Directors' authority to borrow, give security, guarantee 10
63. Securities assignable free from equities 10
64. Securities at discount, premium, with preference 10
GENERAL MEETINGS
65. Ordinary general meetings 11
66. Special general meetings - how called 11
67. Contents of requisition 11
68. Notice of meeting - Waiver of notice 11
69. Notice of two meetings for special resolution 11
70. Accidental omission of notice 11
RECORD DATES
71. Setting record dates - when no record date set 11
PROCEEDINGS AT GENERAL MEETINGS
72. Business of ordinary general meeting 12
73. Quorum prerequisite to holding meeting 12
74. Requirements for quorum 12
75. Chairman of meeting 12
76. If quorum not present - dissolution or adjournment 12
77. Resolution by show of hands - demand of poll 12
78. Conduct of poll 12
79. Casting vote 12
80. Adjournment of meeting 12
81. Poll on question of adjournment, election of chairman 13
82. Effect of demand of poll on continuance of meeting 13
VOTES OF SHAREHOLDERS
83. Voting generally 13
84. Votes on transmission by death, bankruptcy, etc. 13
85. Votes of joint registered shareholders 13
86. Voting in person, by proxy, by corporate representative 13
87. Proxy requirements generally 13
88. Votes of shareholders of unsound mind 13
89. Depositing proxies before meeting 13
90. Votes by proxy after authority revoked 14
91. Form of proxy 14
92. Votes when call due on shares 14
93. Resolution of directors ratified by shareholders 14
94. Resolution in writing without meeting 14
DIRECTORS
95. Number of directors 14
96. First directors 14
97. Remuneration of directors 15
98. Directors may act notwithstanding 15
99. Directors may also be officers 15
100. Vacation of office on bankruptcy, etc. 15
101. Directors' conflicts of interest 15
ELECTION OF DIRECTORS
102. Election of directors at general meeting 15
103. Retiring directors remain in office until succeeded 15
104. Number of directors elected, qualification 16
105. Removal of director 16
106. When directors may be appointed by other directors 16
MANAGING DIRECTOR
107. Authority to appoint managing director 16
108. Resignation and removal of managing director 16
109. Remuneration of managing director 16
110. Powers and duties of managing director 16
CHAIRMAN OF THE BOARD
111. Chairman of the Board 16
PRESIDENT AND VICE-PRESIDENTS
112. President 16
113. Vice-Presidents 16
SECRETARY AND TREASURER
114. Secretary 17
115. Treasurer 17
OFFICERS
116. Other officers 17
117. Same person may hold more than one office 17
PROCEEDINGS OF DIRECTORS
118. Meetings of directors - quorum requirement 17
119. Participation at meeting by telephone 17
120. Place of meetings - When notice required 17
121. Summoning of meetings 17
122. Questions decided by majority - casting vote - proxies 18
123. Chairman of directors' meeting 18
124. Authority of meeting when quorum present 18
125. Committees of directors 18
126. Proceedings of committees of directors 18
127. Effect on meeting of defectively appointed director 18
128. Resolution of directors in writing without meeting 18
129. Remuneration of directors for extra services 18
REGISTERS
130. Registers and branch registers 19
MINUTES
131. Minutes and Minute books - minutes prima facie evidence 19
POWERS OF DIRECTORS
132. General powers of directors 19
133. Specifically enumerated powers of directors 19
SOLICITORS
134. Solicitors 21
THE SEAL
135. Use of common seal 21
136. Facsimiles of common seal 21
137. Facsimile seal for use outside Nova Scotia 21
DIVIDENDS
138. Declaration of dividends 22
139. Dividends payable from profits, etc. 22
140. Declaration of amount of profits, etc., conclusive 22
141. Interim dividends 22
142. Dividends differentiated by paid-up capital 22
143. Right to set off debts against dividends 22
144. Where lien on dividends 22
145. Dividends on shares of deceased, etc. 22
146. Setting off calls and dividends 22
147. Cash dividend, dividend in kind, stock dividend, etc. 22
148. Power of directors to settle issues re dividends 22
149. Dividends on jointly registered shares 23
150. Satisfaction of dividend 23
ACCOUNTS
151. Directors' duty to keep accounts 23
152. Where books to be kept 23
153. Inspection of books by shareholders 23
154. Reports on accounts to general meeting 23
AUDITORS AND AUDIT
155. Appointment of auditors at ordinary general meeting 23
156. First auditors 23
157. Directors may fill casual vacancy 24
158. Persons qualified for appointment as auditors 24
159. Removal of auditor 24
160. Remuneration 24
161. Duties of auditors 24
NOTICES
162. How notice given 24
163. Notice to shareholder without registered address 24
164. Holders of share warrants not entitled to notice 24
165. Notice to joint holders 24
166. When notice deemed given - proof of notice 24
167. Transferees bound by prior notice 24
168. Notice valid through shareholder deceased 24
169. How notice to be signed 25
170. How time to be counted 25
INDEMNITY
171. Indemnity of directors, officers, etc. 25
172. Individual liability of directors, officers, etc. 25
REMINDERS
173. Reminders of directors of obligations under Act 25
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