Exhibit 99.1
DECEMBER 4, 2000 REOFFER PROSPECTUS
THE TRACKER CORPORATION
OF AMERICA
UP TO 3,500,000 SHARES OF COMMON STOCK
The selling stockholders pursuant to the 2000 Stock Wage and Fee Payment
Plan of The Tracker Corporation of America may offer up to 3,500,000 shares of
our common stock.
The security holders may sell their shares of common stock after delivery
of this prospectus to purchasers, from time to time, through broker-dealers or
underwriters at the prevailing market price as listed on the OTC Bulletin Board
under the symbol "TRKR." We will not receive any of the proceeds from the
secondary offering and sale of the common stock by the security holders.
See, RISK FACTORS on page 1.
Our principal offices are located at 1120 Finch Avenue West, Suite 303,
North York, Ontario, Canada M3J 3H7. For more information, contact Bruce Lewis
at 1-800-822-8757.
------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SELLING SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . 7
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . 8
INTEREST OF NAMED EXPERTS AND COUNSEL . . . . . . . . . . . . . . . 8
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . . 9
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES. . . . . . . . . . . . . . . . . . . . 10
<PAGE>
RISK FACTORS
The securities offered in this prospectus involve a high degree of risk.
In addition to the other information contained in this prospectus, you should
consider the following risk factors before making an investment. The
occurrence of any the following risks could materially adversely affect our
business, financial condition and results of operations. Additional risks and
uncertainties not presently known to us or that we currently view as immaterial
might also materially adversely affect our business, financial condition or
results of operations. In such a case, the value of your investment could
decline and you may lose all or part of your investment.
This prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those
anticipated in such forward-looking statements as a result of a variety of
factors, including those set forth in the following risk factors and elsewhere
in this prospectus.
THE CONVERSION OF THE BRIDGE FINANCING NOTES AND THE EXERCISE OF THE WARRANTS
MAY CREATE IMMEDIATE AND SUBSTANTIAL DILUTION TO THE EXISTING SHAREHOLDERS.
As of December 31, 1999, we had 53,988,579 shares of common stock
outstanding, with a book value of $-0.04 per share. By a previous registration
statement, we have reserved shares of common stock for future issuance pursuant
to the conversion of notes and the exercise of certain warrants. We cannot
assure that the issuance of the common stock reserved for future issuance will
not materially adversely affect the prevailing market price of the common stock.
Furthermore, issuance of the shares of common stock as described below could
result in significant dilution to our stockholders.
We issued $1,700,000 in principal amount of bridge financing notes. The
notes are convertible into shares of common stock by the holders at a conversion
price dependent on the market price as of the date of issue and the date of
redemption. The notes also carry an attached repricing warrant that entitled
the holder to additional shares of common stock if the price drops below certain
levels. The conversion of the notes and the exercise of the repricing warrants
will not result in the receipt of any additional funds, but will eliminate
approximately $1,700,000 in debt. We estimate the dilution to the book value of
our common stock, which may have an accretive affect, resulting from the
conversion of the notes and attached repricing warrants as follows:
<TABLE>
<CAPTION>
Low conversion price High conversion price
(.15/share) (.40/share)
---------------------- ----------------------
<S> <C> <C>
Book value before $ .-0.04 $ -0.04
Shares converted/exercised 15,000,000 8,500,000
Book value after $ -0.00 $ -0.00
</TABLE>
We also reserved additional shares of common stock for issuance pursuant to
the callable warrants, purchase warrants, and warrants issued to Sovereign
Capital Advisors, LLC as our placement agent, in the amount and up to the
following expirations from the original issue date, should we choose to call the
warrants:
<TABLE>
<CAPTION>
Warrant Amount Expiration Date
----------- ------------------------------------------ ---------------
<S> <C> <C>
Callable up to 12,575,000 shares ($1,700,000 worth) 1 year
Purchase 340,000 shares 5 years
Sovereign 85,000 shares 3 years
</TABLE>
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Any proceeds we may receive upon the exercise of these warrants will be
used for general corporate purposes and for working capital, which may include
payment of salaries, research and development, and marketing expenses. Assuming
the conversion of the notes and exercise of the repricing warrants result in
65,000,000 shares of common stock issued and outstanding, we estimate the
dilution to the book value of our common stock, which may have an accretive
affect, resulting from the exercise of the remaining warrants as follows:
<TABLE>
<CAPTION>
Low call price High call price
(.15/share) (.40/share)
---------------- -----------------
<S> <C> <C>
Book value before $ -0.00 $ -0.00
Additional shares, if exercised 11,750,000 4,650,000
Total receipts $ 1,400,000 $ 1,550,000
Book value after $ 0.01 $ 0.02
</TABLE>
Should we convert the notes and the warrants be exercised, the number of
shares of common stock will substantially increase. This could adversely affect
our stock price and other shareholders' ownership interests. Should the
exercise and/or call price be even lower than $0.15 per share, or if we issue
additional shares in the future, the book value of our common stock may
experience further dilution.
BECAUSE THE CONVERSION AND/OR EXERCISE PRICE IS TIED TO THE MARKET PRICE, THE
NUMBER OF SHARES THAT MAY BE ISSUED WILL INCREASE AS OUR STOCK PRICE DECREASES.
A potentially unlimited number of shares can be issued under the conversion
terms of the notes and related warrants since the exercise price of the warrants
is tied to the market price of our common stock. As such, the number of shares
that can be issued will increase as the price decreases. These registered
shares should be sufficient to cover the conversion of the notes and exercise of
the warrants down to a low price of $.15 per share. Should the conversion
and/or exercise price drop below $.15 per share, we may need to register
additional shares to complete the transaction.
RESALE RESTRICTIONS
We are registering restricted securities that were issued under an employee
benefit plan. Consequently, certain limitations apply to the resale of these
securities. Any sale of the securities subject to this registration statement
by the selling shareholders may not exceed, during any three-month period,
greater than the greater of:
- 1% of our outstanding common stock; or
- the average weekly reported trading volume of the common stock during
the four calendar weeks preceding the sale
BECAUSE NO CLEARLY IDENTIFIED MARKET EXISTS FOR OUR PRODUCTS AND SERVICES, WE
MAY LACK THE FINANCIAL RESOURCES TO DEVELOP ANY MARKET ACCEPTANCE.
Our future success entirely depends on the successful development,
commercialization and market acceptance of our personal property marking and
monitoring system. Our initial marketing efforts, which focused primarily on
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consumer applications of our technology, were not successful. Identifying
markets that will respond favorably to our products and services will present
marketing and financial challenges to us. We are experimenting with new
business models that are speculative and untested to date. We cannot assure
that we will gain a significant level of commercial acceptance for our products
and services in any commercial market.
We have a large number of competitors across a variety of industries that
have substantially greater financial, technical, marketing, and management
resources. For example, we currently offer a pet registration service using our
technology. However, Pets.com and Petopia.com have recently launched web pages
as a lead in to the sale of pet related products. These marketing efforts may
hinder our success in the pet registration market. Similarly, we recently
launched a business asset management system in certain niche markets. One of
our competitors, Tangram Enterprise Solutions, has over twenty times greater
assets than us and ten times the work force. Should we compete directly with
them, their financial and personnel strength could prevent us from capturing
those markets. As a result, demand and market acceptance for our products and
services are subject to a high level of uncertainty.
OUR FUTURE SUCCESS DEPENDS ON THE EXPERIENCE AND RETENTION OF KEY PERSONNEL.
Our success is largely dependent on our ability to attract and retain key
management and operating personnel. We particularly depend on the efforts and
skills of Bruce I. Lewis, Jay S. Stulberg, Christopher Creed, and Tizio Panara.
We have entered into employment agreements with Mr. Lewis and Mr. Stulberg and
are planning to enter into agreements with Mr. Creed and Mr. Panara. The loss,
incapacity, or unavailability of any of these individuals could materially
adversely affect our business, financial condition or results of operation.
It may also be necessary for us to attract and retain additional
individuals to support our growth or to replace key personnel in the event of
their termination of employment. Because qualified individuals are in high
demand and are often subject to competing offers, we cannot assure that we can
attract and retain qualified personnel needed for our business.
BECAUSE OF OUR HISTORY OF OPERATING LOSSES AND EXPECTATION OF FUTURE LOSSES, OUR
INDEPENDENT AUDITORS EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR FUTURE VIABILITY AS A
GOING CONCERN IN THEIR MOST RECENT AUDIT REPORT.
We have generated only modest revenue and have sustained significant
operating losses each year since our inception. In fact, we have not generated
any significant revenue since September 1997. We have accumulated a deficit of
$18,383,736 as of December 31, 1999. Our ability to generate revenue from
operations and achieve profitability is largely dependent upon a successful
transition from a development stage company to a fully operating company. In
order to achieve that, we will require significant additional financing to
penetrate new markets for our products and services. If we are unable to
attract such financing or achieve profitable operations, we may be forced to
cease or significantly limit our operations. As a result of the foregoing
conditions, our independent public accountants expressed doubt about our future
viability as a going concern in their audit report dated July 8, 1999.
OUR STOCK MAY EXPERIENCE SEVERE VOLATILITY BECAUSE OF THE LIMITED TRADING MARKET
AVAILABLE.
Our common stock is traded in the over-the-counter market and is quoted on
the OTC Bulletin Board. The market for the common stock must be characterized
as extremely limited due to the low trading volume and the small number of
brokerage firms acting as market makers. Because stocks traded on the OTC
Bulletin Board generally have limited brokerage and news coverage, the market
price of our common stock may not reflect our true value. As a result, you may
find it difficult to dispose of our common stock or to obtain accurate
quotations as to our value. Over the past eighteen months our stock has traded
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at a price as low as $.05 per share and as high as $.41 per share. We cannot
assure that the over-the-counter market for our securities will continue, that a
more active market will develop, or that the prices in any such market will be
maintained at their current levels or otherwise. Furthermore, technological
innovations, new product developments, general trends in our industry and
quarterly variations in our results of operations may cause the market price of
the common stock to fluctuate significantly.
PENNY STOCK RULES
Our common stock is subject to the penny stock rules promulgated under the
Exchange Act of 1934. The penny stock rules regulate broker-dealer practices in
connection with transactions in equity securities with a price of less than
$5.00. This does not include securities registered on certain national
securities exchanges or quoted on the NASDAQ system as long as exchange or
system provides current price and value information with respect to transactions
in such securities. The penny stock rules require a broker-dealer to deliver a
standardized risk disclosure document prepared by the SEC that provides
information about penny stocks and the nature and level of risks in the penny
stock market. This must occur prior to a transaction involving a penny stock
not otherwise exempt from the rules. The broker-dealer must provide the
customer with current bid and offer quotation for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid/offer quotations and the broker-dealer and
salesperson compensation information must be given to the customer orally or in
writing prior to effectuating the transaction. It also must be given to the
customer in writing before or with the customer's confirmation. In addition,
the penny stock rules require that he broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for our common stock. As such, you may find it
more difficult to sell our common stock in the over-the-counter market.
OUR CURRENT OWNERSHIP STRUCTURE AND THE PROVISIONS OF OUR ARTICLES OF
INCORPORATION AND BYLAWS MAY HINDER ANY MATERIAL CHANGE IN CONTROL.
Our directors, officers, principal stockholders and their affiliates will
continue to beneficially own approximately 13% of the common stock immediately
following this registration. This assumes the full exercise of currently
exercisable options and warrants and the conversion of outstanding convertible
debentures. As a result of such ownership, our directors, officers, principal
stockholders and their affiliates will effectively have the ability to maintain,
control and direct our business and affairs. Such concentration of ownership
may have the effect of delaying, deferring or preventing a change in control.
In addition, our articles of incorporation and bylaws contain provisions that
have the effect of retaining the control of current management and may
discourage any acquisition bids. Such provisions could limit the price that
investors might be willing to pay in the future for shares of the common stock.
It may also impede the ability of stockholders to replace management should
factors warrant such a change.
OUR FUTURE SUCCESS DEPENDS ON THE ACCEPTANCE OF OUR TECHNOLOGY IN THE
MARKETPLACE AND OUR FINANCIAL ABILITY TO KEEP UP WITH TECHNOLOGICAL CHANGES IN
OUR INDUSTRY.
We cannot assure that our competitors and potential competitors will not
succeed in developing or marketing technologies and products that will be more
accepted in the marketplace or render our technology obsolete or noncompetitive.
Most of our competitors and potential competitors have substantially greater
capital resources, research and development staffs and facilities than us.
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Products based on new technologies such as radio frequency or new industry
standards may render our existing products obsolete and unmarketable. Over the
past two years we have invested minimal capital to maintain and update our
technology. Any delay in developing, testing and releasing enhanced or new
products could materially adversely affect our business, operating results and
financial condition.
OUR LACK OF SIGNED AGREEMENTS WITH SUPPLIERS MAY PREVENT US FROM EFFECTIVELY
DISTRIBUTING OUR PRODUCTS AND SERVICES TO THE MARKET.
The ability to market, sell and operate our products and services depends
on the procurement of necessary goods and services. Although we have
preliminary understandings with suppliers, these may be difficult to enforce.
We cannot assure that we will achieve and maintain product quality and
reliability in the quantities required for commercial operations or within a
period that will permit us to introduce our products in a timely fashion. We
also cannot assure that we will be able to assemble and manufacture our products
at an acceptable cost.
OUR FUTURE RELATIONSHIP WITH SYMBOL TECHNOLOGIES IS DEPENDENT ON OUR SALE OF A
MINIMUM NUMBER OF THEIR SCANNERS, WHICH WE PRESENTLY CANNOT FULFILL.
We procure scanning equipment from Symbol Technologies, particularly the
PDF 1000 laser scanner. This is the first laser scanner to read two-dimensional
bar code. On May 18, 1999 we entered into an agreement with Symbol whereby we
were granted the exclusive right to use the PDF 1000 laser scanners in the
United States, Canada, and Europe for personal property identification and
recovery purposes. This contract is subject to a minimum annual purchase
requirement of 5000 laser scanner units having a purchasing effect of at least
$10,000,000. We will likely not meet this requirement and Symbol will be
permitted to terminate the contract should it so choose. Should Symbol
terminate the agreement, our business may be harmed in two ways:
(1) we may no longer be capable of securing future orders due to a
lack of supply; and
(2) we may not be able to honor existing service agreements with
current customers using the Symbol scanners
Consequently, the termination of the Symbol Contract would directly affect our
general viability as a going concern.
BECAUSE OUR PRODUCTS AND SERVICES ARE SUBJECT TO LENGTHY SALES CYCLES, WE MAY
LACK THE FINANCIAL RESOURCES TO MAINTAIN OPERATIONS.
We typically experience long sales cycles that generally vary from three to
six months. Because the implementation of our products and services involves
significant capital expenditures by the customer, our sales are subject to
lengthy approval processes and delays. We often devote significant time and
resources to a prospective customer, including costs associated with multiple
site visits, product demonstrations, and feasibility studies without any
assurance that the prospective customer will decide to purchase our products.
OUR FUTURE SUCCESS IS DEPENDANT ON PATENTS AND PROPRIETARY TECHNOLOGY. WE
CURRENTLY DO NOT HAVE ANY PATIENTS, REGISTERED TRADEMARKS OR SERVICE MARKS.
Our success partly depends on our ability to obtain patent protection for
our proposed products and processes, to preserve our trade secrets and to
operate without infringing the proprietary rights of third parties. We rely on
a combination of trade secret, nondisclosure and other contractual agreements,
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and technical measures to protect the confidential information, know-how and
proprietary rights relating to our personal property identification and recovery
system. In addition, we have an exclusive license with Global Tracker to use
the technology associated with an international patent application filed
pursuant to the Patent Cooperation Treaty for our personal property
identification and recovery system. We cannot assure, however, that this will
mature into an issued patent or that any patent, trademark or service mark
obtained or licensed by us will be held valid and enforceable if asserted by us
against another party. In addition, these protections may not preclude third
parties from asserting infringement claims against us. The successful assertion
of such claims could materially adversely affect our business, operating results
and financial condition.
We do not have any registered trademarks or service marks. Furthermore, we
do not have any active trademark or service mark applications pending before the
U.S. Patent and Trademark Office or with any other regulatory authorities.
Even if our pending patent is ultimately issued, other parties may hold or
receive patents that contain claims covering our technology. Should this occur,
it may delay or prevent the sale of our products and services. It may also
require licenses resulting in the payment of fees or royalties by us in order to
continue operations. We cannot assure that needed or potentially useful
licenses will be available to us in the future on acceptable terms. An adverse
determination in any litigation with respect to proprietary infringement could
subject us to significant liabilities to third parties. In such a case, we may
be required to seek licenses from, or pay royalties to, third parties. We could
also be prevented from manufacturing, selling or using our proposed products.
WE WILL REQUIRE SIGNIFICANT FUTURE CAPITAL IN ORDER TO CONTINUE OPERATIONS. WE
CANNOT ASSURE THAT FUTURE CAPITAL WILL BE AVAILABLE.
We will require additional funds in the amount of $1,000,000 over the next
six months to successfully market and operate our business. We estimate
needing an additional $700,000 over the following twelve months. Our inability
to obtain financing or to raise additional capital when needed on favorable
terms could prevent or delay the marketing, sale and operation of our products
and services. Insufficient funds may require us to delay, scale back or
eliminate some or all of our programs designed to facilitate the commercial
introduction of our products and services or prevent such commercial
introduction altogether.
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USE OF PROCEEDS
We will not receive any part of the proceeds from the sale of the shares of
common stock offered by or for the account of the selling security holders.
SELLING SECURITY HOLDERS
We are registering up to 3,500,000 shares of our common stock issued, or to
be issued, pursuant to the 2000 Stock Wage and Fee Payment Plan. The following
table describes the number of securities issued under this Plan and the total
number of securities to be sold after the offering.
As of March 14, 2000, there were approximately 352 record holders of common
stock. Percentage of ownership is based upon 56,109,109 issued and outstanding
shares of common stock beneficially owned on March 14, 2000, including currently
exercisable warrants to purchase 1,250,000 shares of common stock, currently
exercisable options to purchase 40,000 shares of common stock, currently
exercisable options to purchase 2,498,578 shares of common stock, and currently
exercisable options to purchase 200,000 shares reserved under an option issued
to Toda Corporation Limited for financial consulting services.
<TABLE>
<CAPTION>
Shares Issued Total Shares Owned Percentage
Name and Position Under Plan As of March 14, 2000 (if >1%)
-------------------------- ------------- --------------------- -----------
<S> <C> <C> <C>
BRUCE I. LEWIS 565,313 3,944,289(1) 6.56
Chief Executive Officer
JAY S. STULBERG 1,146,024 1,494,289(2) 2.49
Chief Financial Officer
CHRISTOPHER CREED 544,578 344,578 N/A
VP - Operations
TIZIO PANARA 314,615 314,615 N/A
VP - Business Deelopment
ARNOLD ZWEIG 150,000 150,000 N/A
Attorney - Outside Counsel
ROBERT D. ARKIN 225,000 289,574 N/A
Attorney - Outside Counsel
JONATHAN FLEISHER 14,000 14,000 N/A
Attorney - Outside Counsel
ETIAN SCHIBI 100,000 0 N/A
Consultant
ROSEANNE BAKER THORNLEY 100,000 0 N/A
Consultant
TOM MCCULLOUGH 100,000 0 N/A
Consultant
<FN>
________
(1) Number of shares includes the currently exercisable option to
purchase 1,244,289 shares of common stock. Furthermore, Mr. Lewis
has pledged 600,000 shares of common stock and the option
to purchase an additional 1,244,289 shares of common stock as
security to the bridge financing notes.
(2) Number of shares includes the currently exercisable option to
purchase 1,244,289 shares of common stock. Furthermore, Mr.
Stulberg has pledged 250,000 shares of common stock and the option
to purchase an additional 1,244,289 shares of common stock as
security to the bridge financing notes.
</TABLE>
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PLAN OF DISTRIBUTION
We will not receive any of the proceeds from the sale of the common stock
by the selling security holders. We anticipate the selling security holders
will offer the shares of common stock for sale either directly or through
broker-dealers or underwriters. The broker-dealers or underwriters may act
solely as agents or may acquire the shares of common stock as principals. They
may receive compensation in the form of usual and customary or specifically
negotiated underwriting discounts, concessions or commissions from the selling
security holders or the secondary purchasers of the shares of common stock
registered in this prospectus for whom they may act as agent.
The net proceeds to the selling security holders from the sale of common
stock will be the purchase price of the common stock sold less the aggregate
agents' commissions and underwriters' discounts, if any. The selling security
holders and any dealers or agents that participate in the distribution of the
common stock may be deemed to be an underwriter within the meaning of the
Securities Act of 1933.
The shares of common stock being offered by the selling security holders
will be sold in one or more transactions on the OTC Bulletin Board or on any
other market on which our common stock may be trading. The sale price to the
public may be the market price prevailing at the time of sale, or a different
price negotiated by the selling security holders. The selling security holders
shall have the sole and absolute discretion not to accept any purchase offer or
make any sale of shares of common stock if they deem the purchase price to be
unsatisfactory.
Certain limitations apply to the resale of these securities. Any sale of
the securities subject to this registration statement by the selling
shareholders may not exceed, during any three-month period, greater than the
greater of:
- 1% of our outstanding common stock; or
- the average weekly reported trading volume of the common stock
during the four calendar weeks preceding the sale
The selling security holders participating in the sale or distribution of
the shares of common stock will be subject to applicable provisions of the
Securities Exchange Act of 1934 and the rules and regulations passed by the SEC.
This may limit the timing of purchases and sales of any of the shares of the
common stock by the selling security holders. It may also affect the
marketability of the shares of common stock.
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INTERESTS OF NAMED EXPERTS AND COUNSEL
Robert D. Arkin, a partner in Arkin Merolla LLP, acted as our outside
securities counsel from April 1998 through October 1999. Over this time period,
he has received both cash and stock for his legal services, including $55,000
worth of our common stock at the time the stock was issued. He presently holds
approximately 289,574 shares of our common stock.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We filed the following documents with the SEC which are hereby incorporated
herein by reference:
(1) Our annual report on Form 10-K for the year ended March 31, 1999;
and
(2) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since March 31, 1999.
In addition, all documents subsequently filed by us pursuant to sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed incorporated by reference in this registration statement and to be a
part hereof from the date of filing such documents.
We will provide to each person, including any beneficial owner, to whom a
prospectus is delivered, a copy of any or all of the information that has been
incorporated by reference in the prospectus but not delivered with the
prospectus. We will provide this information upon written or oral request at no
cost to the requester. Any such request should be made in writing to 1120 Finch
Avenue West, Suite 303, North York, Ontario, Canada M3J 3H7 or by telephone to
Bruce I. Lewis at 1-800-822-8757.
We are required to file reports with the SEC. These reports include: (1)
an annual report on Form 10-K containing financial information examined and
reported upon by our certified public accountants; (2) quarterly reports on Form
10-Q containing unaudited financial statements for each of the first three
quarters of the fiscal year; and (3) additional information on Form 8-K
concerning our business and operations deemed appropriate by our board of
directors.
You may read and copy any materials we file with the SEC by visiting the
public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549
or by calling the SEC at 1-800-SEC-0330. Since we are an electronic filer, you
may also receive information about us through the SEC's internet website that
contains reports, proxy and information statements, and other information at
http://www.sec.gov.
------------------
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DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
We shall indemnify to the fullest extent permitted by the laws of Delaware
any person made or threatened to be made, a party to any legal action or
proceeding by reason of the fact the individual is or was our director, officer
or employee, or served as an agent for any other enterprise at our request. The
board of directors shall have the power to indemnify any person, other than a
director or officer, made a party to any legal action, suit or proceeding by
reason of the fact the individual was our employee.
Pursuant to our bylaws, we may indemnify and/or purchase indemnity
insurance for our directors, officers or other employees. We may also pay
and/or advance expenses to our directors, officers and other employees who are
eligible for or entitled to such payments or advances. The extent of any such
indemnification, payment or advance shall be expressly authorized by the board
of directors. Our right to indemnify such persons shall include, but not be
limited to, our authority to enter into written agreements for indemnification.
Subject to the laws of Delaware, our directors shall not be liable to the
company or our shareholders for monetary damages for an act or omission in the
director's capacity of a director, as long as the director acted in good faith.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act of 1933 and is therefore unenforceable. In the
event that a claim for indemnification against such is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final adjudication of
such issue. This excludes any payment of expenses incurred or paid by a
director, officer or controlling person in the successful defense of any action,
suit or proceeding.
Indemnification of officers or persons controlling us for liabilities arising
under the Securities Act of 1933 is held to be against public policy by the SEC,
and is therefore unenforceable.
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