SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended August 31, 1998 Commission File Number 0-16008
A.R.T. INTERNATIONAL INC.
----------------------------
(Formerly ARTAGRAPH REPRODUCTION TECHNOLOGY INCORPORATED)
ONTARIO, CANADA 98-0082514
5-7100 Warden Avenue, Markham, Ontario L3R 5M7
Registrant's telephone number: (905) 477-0252
Indicate by check mark whether the registrant (1) has filled all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 _X_
Indicate the number of shares outstanding of each of the issuer's classes of
common stock:
Common Shares Outstanding as at August 31, 1998: 1,066,519
1
<PAGE>
A.R.T. INTERNATIONAL INC.
(formerly ARTAGRAPH REPRODUCTION TECHNOLOGY INCORPORATED)
INDEX TO
QUARTERLY REPORT ON
FORM 10-Q
---------
FOR THE QUARTER ENDED
---------------------
AUGUST 31, 1998
---------------
<TABLE>
<CAPTION>
<S> <C>
PART I
Balance sheets as at August 31, 1998, and November 30, 1997 3-4
Statements of Contributed Surplus 5
at August 31, 1998
at August 31, 1997
Statements of Accumulated Deficit 6
at August 31, 1998
at August 31, 1997
Statements of Loss 7
for the three months ended August 31, 1998
for the three months ended August 31, 1997
for the nine months ended August 31, 1998
for the nine months ended August 31, 1997
Statements of Cash Flow 8
for the nine months ended August 31, 1998
for the nine months ended August 31, 1997
Notes to Financial Statements 9
PART II
SIGNATURES 10
</TABLE>
2
<PAGE>
A.R.T. INTERNATIONAL INC.
BALANCE SHEETS
(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
ASSETS
9 Months Ended 12 Months Ended
August 31, 1998 Nov. 30, 1997
--------------- -------------
(Unaudited) (Audited)
(Note 2)
<S> <C> <C>
CURRENT ASSETS
Cash $ 3,100 $ 89,395
Cash in Escrow - 95,975
Accounts Receivable (Note 3) 105,886 66,995
Inventory(Notes 2(a) and 4) 193,329 213,811
Prepaid expenses and deposits 32,611 126,205
----------- ------------
334,926 592,381
CAPITAL ASSETS
Equipment, furniture & fixtures 679,419 676,530
Molds 318,100 318,100
Leasehold improvements 288,958 288,958
Artwork - -
----------- ------------
1,286,477 1,283,588
Less: Accumulated depreciation 1,208,193 1,165,921
----------- ------------
78,284 117,667
----------- ------------
Patents 3,931,051 3,931,051
Art reproduction rights 441,875 441,875
----------- ------------
4,372,926 4,372,926
Less: Accumulated amortization 2,203,295 2,014,295
----------- ------------
2,169,631 2,358,631
----------- ------------
OTHER
Inventories (Notes 2(a) and 4) 33,125 42,644
----------- ------------
TOTAL ASSETS $2,615,966 $3,111,323
=========== ============
</TABLE>
The accompanying notes form an integral part of these consolidated financial
statements.
3
<PAGE>
A.R.T. INTERNATIONAL INC.
BALANCE SHEETS
(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
9 Months Ended 12 Months Ended
August 31, 1998 Nov. 30, 1997
--------------- -------------
(Unaudited) (Audited)
(Note 2)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 452,187 $ 464,156
Accounts payable - related party (Note 5) 157,794 159,796
Customers' deposits 14,750 -
Current portion of long-term debt 633,931 553,934
----------- ------------
1,258,662 1,177,886
LONG TERM DEBT
Notes payable (Note 6) 633,931 553,934
Less - current portion due within one year 633,931 553,934
----------- ------------
- -
----------- ------------
TOTAL LIABILITIES 1,258,662 1,177,886
----------- ------------
CAPITAL STOCK (Note 7)
Preference shares
Series 1 3,701,809 3,701,809
Series 2 2,785,628 2,785,628
Common shares 2,183,961 2,183,961
----------- ------------
8,671,398 8,671,398
CONTRIBUTED SURPLUS 11,775,000 11,775,000
DEFICIT (19,089,094) (18,512,961)
----------- ------------
1,357,304 1,933,437
----------- ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,615,966 $ 3,111,323
=========== ============
</TABLE>
The accompanying notes form an integral part of these consolidated financial
statements.
4
<PAGE>
A.R.T. INTERNATIONAL INC.
STATEMENTS OF CONTRIBUTED SURPLUS
(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
9 Months Ended 9 Months Ended
August 31, 1998 August 31, 1997
--------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Balance - beginning of period $11,775,000 $11,775,000
Add - additions to contributed surplus - -
----------- ------------
Balance - end of period $11,775,000 $11,775,000
=========== ============
</TABLE>
The accompanying notes form an integral part of these consolidated financial
statements.
5
<PAGE>
A.R.T. INTERNATIONAL INC.
STATEMENTS OF ACCUMULATED DEFICIT
(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
9 Months Ended 9 Months Ended
August 31, 1998 August 31, 1997
--------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Deficit - beginning of period $(18,512,963) $(17,344,701)
Add - net loss (576,131) (621,206)
------------ -------------
Deficit - end of period $(19,089,094) $(17,965,907)
============ =============
</TABLE>
The accompanying notes form an integral part of these consolidated financial
statements.
6
<PAGE>
A.R.T. INTERNATIONAL INC.
STATEMENTS OF INCOME (LOSS)
(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
3 Months Ended 3 Months Ended 9 Months Ended 9 Months Ended
August 31, 1998 August 31, 1997 August 31, 1998 August 31, 1997
--------------- --------------- --------------- ---------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
SALES $256,715 $306,295 $837,499 $644,772
COST OF GOODS
SOLD 216,238 248,619 632,965 626,474
---------- ------------ ------------ ------------
GROSS PROFIT 40,477 57,676 204,534 18,298
EXPENSES
Selling 22,032 11,032 61,018 58,992
General & Administrative 100,466 97,286 240,432 274,160
---------- ------------ ------------ ------------
TOTAL EXPENSES 122,498 108,318 301,450 333,152
Operating income/(loss) (82,021) (50,642) (96,916) (314,854)
OTHER EXPENSES
Amortization of patents 63,000 63,000 189,000 189,000
Depreciation 14,091 9,150 42,273 27,450
Note interest 11,053 11,053 33,160 33,160
Other 103,577 4,564 214,782 56,742
---------- ------------ ------------ ------------
TOTAL OTHER
EXPENSES 191,721 87,767 479,215 306,352
---------- ------------ ------------ ------------
NET INCOME (LOSS) $(273,742) $(138,409) $(576,131) $(621,206)
========== ============ ============ ============
NET LOSS PER
COMMON SHARE $(0.2567) $(0.1298) $(0.0022) $(0.0023)
========== ============ ============ ============
WEIGHTED AVE.NUMBER
OF COMMON SHARES 1,066,519 1,066,519 266,629,785 266,629,785
========== ============ ============ ============
</TABLE>
The accompanying notes form an integral part of these consolidated financial
statements
7
<PAGE>
A.R.T. INTERNATIONAL INC.
STATEMENTS OF CASH FLOW
(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
9 Months Ended 9 Months Ended
August 31, 1998 August 31, 1997
--------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash was provided by (applied to):
OPERATING ACTIVITIES
Net loss for period $(576,131) $(621,206)
Add: Items not requiring an outlay of cash
Amortization 189,000 189,000
Depreciation 42,273 42,273
----------- ------------
(344,858) (389,933)
----------- ------------
Accounts receivable (38,891) 126,289
Inventories - current & long-term 30,001 90,365
Prepaid expenses and deposits 93,594 18,282
Accounts payable and accrued liabilities (11,970) 54,239
Accounts payable - related party (2,002) -
Customer deposits 14,750 (11,200)
----------- ------------
Cash provided by (used by) operating activities (259,376) (111,958)
----------- ------------
INVESTMENT ACTIVITIES
Acquisition of capital assets and art
reproduction rights (2,889) -
----------- ------------
Cash provided by (used by) investment activities (2,889) -
----------- ------------
FINANCING ACTIVITIES
Notes payable 79,997 34,964
----------- ------------
Cash provided by (used by) financing activities 79,997 34,964
----------- ------------
INCREASE /(DECREASE) IN CASH (182,268) (76,994)
CASH, beginning of period 185,370 85,422
=========== ============
CASH, end of period $ 3,102 $ 8,428
=========== ============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Interest paid in period $ - $ -
=========== ============
Income taxes paid in period $ - $ -
=========== ============
</TABLE>
The accompanying notes form an integral part of these consolidated financial
statements
8
<PAGE>
A.R.T. INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998
(IN CANADIAN DOLLARS)
1. INCORPORATION AND OPERATIONS
The Company was incorporated in Canada on January 24, 1986, under The Ontario
Business Corporations Act. The Company's primary business is the production,
distribution and marketing of fine art reproductions. Effective July 14, 1998,
by articles of amendment, the Company changed its name to A.R.T. International
Inc. from Artagraph Reproduction Technology Inc.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The unaudited financial statements of the Company for the periods ended August
31, 1998, and August 31, 1997, have been prepared in accordance with Canadian
generally accepted accounting principles (GAAP) applied on a consistent basis.
The balance sheet at November 30, 1997, has been derived from the audited
financial statements at that date but does not include all the information and
footnotes required by GAAP for complete financial statements. In the opinion of
the Company's management, the accompanying financial statements contain the
material adjustments, necessary to present fairly the financial position of the
Company at August 31, 1998, and November 30, 1997, and the results of their
operations and cash flows for the periods ended August 31, 1998, and August 31,
1997, and, should be read in conjunction with the audited financial statements
for the year ended November 30, 1997. All such adjustments are of a normal
recurring nature. Interim period results are not necessarily indicative of the
results to be achieved for the full fiscal year.
(a) Inventories
Inventories, whether classified as current or long-term assets, are valued at
the lower of cost or market value. Cost is determined on a first in, first out
basis.
The Company's policy is to periodically evaluate the inventory levels of each
product in its inventory on an image-by-image basis, both in light of past sales
and estimated future sales of each product and similar products. In addition,
when the Company determines that a product line or market should be
discontinued, the inventory relating to that product line or market is written
down to net realizable value.
The purpose of these policies is to ensure that the Company's inventory
balances, net of reserves, exclude slow-moving and obsolete inventory and are
valued at the lower of cost or market value. The Company uses annual physical
inventory counts combined with an analysis of each product's preceding three
years (or for such shorter period that a particular product may have been in
existence) sales and a review of the Company's sales expectations for each
product to determine whether the level and value of the Company's inventory of a
particular product at a given time is excessive. This three year period has been
deemed to be an appropriate period for evaluating the historical sales of the
Company's products since such products are not perishable and tend to be
marketed over multi-year periods through intermittent and recurring sales
programs. In no event are amounts carried as a current asset if it is not
probable that they will be sold within one year, nor do amounts carried as
long-term inventory exceed their fair value as determined by the inventory
valuation policies of the Company as described above.
9
<PAGE>
PART II
Nothing to report unless specifically included herein by reference.
Item (3) Default Under Senior Securities:
(i) As reported in the Company's Annual Report on form 10-K for the year
ended November 30, 1997, and incorporated herein by reference.
(ii) Dividends. As reported in this Company's Quarterly Report on Form
10-Q for the quarter ended August 31, 1998, in the section on Liquidity
and Capital Resources under Management's Discussion and Analysis, and
incorporated herein by reference.
Item (6) Exhibts and Reports on Form 8K
EX-3 Articles of Amendment
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
A.R.T. INTERNATIONAL INC.
Dated: February 12, 1999
/s/ Simon Meredith
- -------------------------------------
By: Simon Meredith
President
10
ARTICLES OF AMENDMENT
STATUTS DE MODIFICATION
Form 3
Business
Corporations
Act
<TABLE>
<CAPTION>
<S> <C>
1. The name of the corporation is: Denomination sociale de la societe
ARTAGRAPH REPRODUCTION TECHNOLOGY INCORPORATED
2. The name of the corporation is changed to (If Nouvelle denomination sociale de la societe (If y a lteu):
applicable):
A.R.T. INTERNATIONAL INC.
3. Date of Incorporation/amalgamation: Date de la constitution ou de la lusion:
1986/01/24
- --------------------------------------------------------------------------------
(Year, Month, Day)
(annde, mois, jour)
4. The articles of the corporation are amended Les statuts de la societe sont modifies de la
as follows facon suivante.
</TABLE>
SEE ATTACHED SCHEDULE.
<PAGE>
SCHEDULE
A. The Articles of the Corporation be amended by:
(a) consolidating the 266,629,785 issued and outstanding Common shares
without par value into 1,066,519 issued and outstanding Common shares on the
basis of one new consolidated share for two hundred and fifty former Common
shares. No fractional shares are to be issued in connection with the
consolidation. In the event that a common shareholder would otherwise be
entitled to receive a fractional share upon the consolidation of the number of
shares to be received by such shareholder shall be rounded up to the nearest
whole number of common shares;
(b) The number of the Directors of the Corporation shall be a minimum
of three and a maximum of ten, and the Board of Directors is authorized to
determine the number of Directors from time to time within those limits by
resolution;
(c) The Corporation is authorized to issue an unlimited number of Class
B Preference shares without nominal or par value, designated as Class B
Preference shares. The preferences, rights privilege, limitations and conditions
attaching to the Class B Preference shares shall be as follows:
1. DIVIDENDS
1.1. The holders of the Class B Preference shares, in priority to the
common shares and any other shares of the Corporation including the Class A
Preference shares or Class C Common shares or any other class of shares, shall
be entitled to receive and the Corporation shall pay thereon, as and when
declared by the board of directors of the Corporation out of the moneys of the
Corporation properly applicable to the payment of dividends, fixed preferential
non-cumulative cash dividends at the rate of $0.10 per share annum. The Board of
Directors of the Corporation shall be entitled from time to time to declare part
of the fixed preferential non-cumulative Class B Preference share cash dividend
for any fiscal year notwithstanding that such dividend for such fiscal year
shall not be declared in full. If within four (4) months after the expiration of
any fiscal year of the Corporation the board of directors in its discretion
shall not declare the said dividend or any part thereof on the Class B
Preference shares for such fiscal year then the rights of the holders of the
Class B Preferences shares to such dividend or to any undeclared part thereof
for such fiscal year shall be forever extinguished. The holder of the Class B
Preference shares shall not be entitled to any dividends other than or in excess
of the preferential non-cumulative cash dividends hereinbefore provided for.
<PAGE>
1.2 Cheques of the Corporation payable at par at any branch of the
Corporation's bankers for the time being in Canada shall be issued in respect of
the dividends on the preference shares (less any tax required to be withheld by
the Corporation) and payment thereof shall satisfy such dividends. Dividends
which are presented by a cheque which has not been presented to the
Corporation's bankers for payment or that otherwise remain unclaimed for a
period of six (6) years from the date on which they were declared to be payable
shall be forefeited to the Corporation.
1.3 No dividends shall at any time be declared or paid on or set apart
for payment on the common shares, the Class A Preference shares or on any shares
of any other class of the Corporation ranking junior to the Class B Preference
shares provided the full fixed preferential non-cumulative cash dividend has
been declared and paid or set apart for payment for the current fiscal year of
the Corporation on all the Class B Preference shares outstanding, however the
Corporation may call for redemption or purchase or otherwise acquire for value
all or less than all the then outstanding Class B Preference shares or purchase
or otherwise acquire for value any common shares, Class C Common or any shares
of any other class of the Corporation ranking junior to the Class B Preference
shares so long as any Class B Preference shares are outstanding.
2. DISSOLUTION
2.1 In the event of the dissolution, liquidation or winding-up of the
Corporation or other distribution of assets of the Corporation among
shareholders for the purpose of winding up its affairs, the holders of the
Class B Preference shares shall be entitled to receive from the assets
and property of the Corporation for each Class B Preference share held by them
respectively the sum of $1.00 together with all declared and unpaid preferential
non-cumulative cash dividends thereon or a sum equivalent to the result obtained
when the amount in the stated capital account for the Class B Preference shares
is divided by the number of issued and outstanding Class B Preference shares
together with all declared and unpaid preferential non-cumulative cash
dividends thereon (whichever is the greater), before any amount shall be paid
or any property or assets of the Corporation distributed to the holders of any
common shares, Class C Common Shares, Class A Preference shares or shares of
any other class ranking junior to the Class B Preference shares of the amount
so payable to them as provided in this Article 2.1, they shall not be entitled
to share in any further distribution of the property or assets of the
Corporation.
<PAGE>
3. PURCHASE BY THE CORPORATION
3.1 Subject to the provisions of subsection 32(2) of the Business
Corporations Act (Ontario), as now enacted or as the same may from time to time
be amended, re-enacted or replaced (and in the case of such amendment,
re-enactment or replacement, any preferences herein shall be read as
referring to such amended, re-enacted or replaced provisions), the Corporation
may at any time or from time to time purchase (if obtainable) all or any part
of the outstanding Class B Preference shares at the lowest price at which, in
the opinion of the directors, such shares are obtainable, but not exceeding the
amount to be paid on dissolution calculated in the manner set out in clause 2.1.
4. VOTING RIGHTS
4.1 The holders of the Class B Preference shares shall not be entitled as
such (except as hereinafter specifically provided and except as otherwise
provided by the Business Corporations Act (Ontario)) to receive notice of or
to attend any meeting of the shareholders of the Corporation and shall not be
entitled to vote at any such meeting; the holders of the Class B Preference
shares shall, however, be entitled to notice of meetings of shareholders
called for the purpose of authorizing the dissolution of the Corporation
under section 237 of the Business Corporations Act (Ontario), or a sale, lease
or exchange of all or substantially all of the property of the Corporation
other than in the ordinary course of business under subsection 184(3) of the
Business Corporations Act (Ontario).
4.2 No class of shares may be created ranking as to capital or dividends
in priority to or on a parity with the Class B Preference shares without the
approval of the holders of the Class B Preference shares given as hereinafter
specified in clause 4.4 hereof, in addition to any vote or authorization
required by the Business Corporations Act (Ontario).
4.3 The provisions hereof attaching to the Class B Preference shares or
any part of such sections may be deleted, varied, modified, amended or
amplified by articles of amendment but only with the approval of the holders
of the Class B Preference shares given as hereinafter specified in section 4.4
hereof, in addition to any vote or authorization required by the Business
Corporations Act (Ontario).
4.4 The approval of the holders of the Class B Preference shares hereby
required as to any and all matters referred to herein (in addition to or
as distinct from any vote or authorization required by the Business Corporations
Act (Ontario) may be given by an instrument or instruments in writing by the
holders of not less than two-thirds of the issued and outstanding Class B
Preference shares or by resolution
<PAGE>
passed at a special meeting of the holders of the Class B Preference shares duly
called for that purpose as provided, mutatis mustandis, in subsection 4.5
hereof of the conditions attaching to the Class B Preference shares.
4.5 The confirmation required by subsection 170(4) of the Business
Corporations Act (Ontario) as now enacted or as the same may from time to time
be amended, re-enacted or replaced (and in the case of such amendment,
re-enactment or replacement, any references herein shall be read as referring
to the amended re-enacted or replaced provisions thereof), of a resolution
authorizing an amendment to the articles as referred to in subsection 170(1)
of the Business Corporations Act (Ontario) may be given by at least two-thirds
of the votes cast at a meeting of the holders of the Class B Preference
shares duly called for that purpose and help upon at least ten days' notice
at which the holders of at least a majority of the then outstanding Class
B Preference shares are present or represented by proxy. If at any such meeting
the holders of a majority of the then outstanding Class B Preference shares are
not present or represented by proxy within half an hour after the time
appointed for the meeting, then the meeting shall be adjourned to such date
being not less than fourteen days later and to such time and place as may be
appointed by the chairman of the meeting and at least ten days' notice shall be
given of such adjourned meeting but it shall not be necessary in such notice to
specify the purpose for which the meeting was originally called. At such
adjourned meeting the holders of Class B Preference shares present or
represented by proxy may transact the business for which the meeting
was originally called. At such adjourned meeting the holders of Class B
Preference shares present or presented by proxy may transact the business
for which the meeting was originally called and confirmation of the holders
of Class B Preference shares referred to above may be given by at least two
thirds of the votes cast at such adjourned meeting. The formalities to be
observed with respect to the giving of notice of any such meeting and the
conduct threat shall be those from time to time prescribed the Business
Corporations Act (Ontario) and the bye-laws of the Corporation with respect to
meetings of shareholders. On every poll taken at every such meeting every holder
of Class B Preference shares shall be entitled to one vote in respect of each
Class B Preference share held.
5. PRIORITY
5.1 The Class B Preference shares shall rank senior to the Class A
Preference shares, the Class C Common shares and the common shares.
(d) The Corporation is authorized to issue an unlimited number of Class
C Common shares with out nominal or par value, designated as Class C Common
shares. The Preference's rights, privileges, limitations and conditions
attaching to the Class C Common shares shall be as follows:
<PAGE>
1. DIVIDENDS
1.1 The holders of the Class C Common shares, in priority to the common
shares shall be entitled to receive and the Corporation shall pay thereon as
and when declared by the Board of Directors of the Corporation, out of the
monies of the Corporation properly applicable to the payment of dividends,
fixed preferential non-cumulative cash dividends at the rate of $0.01 per share
per annum. No dividends shall at any time be declared or paid or set aside
for payment for or on the Class C Common shares unless all dividends up to and
including the dividends payable on the last preceding dividend payment date
on the Class B Preference shares then issued and outstanding shall have been
declared and paid or provided for at the date of such declaration or payment
or setting apart for payment. Subject to the payment of the Class B Preference
shares divided, the Board of Directors of the Corporation shall be entitled
from time to time to declare part of the fixed preferential, non-cumulative
Class C Common share cash dividend for any fiscal year notwithstanding that
such dividend for such fiscal year shall not be declared in full. If within four
months after the expiration of any fiscal year of the Corporation, the Board of
Directors in its discretion, shall not declare the said dividend or any part
thereof on the Class C Common shares for such fiscal year than the rights of
the holders of the Class C Common shares to such dividend or any undeclared
part thereof of such fiscal year shall be forever extinguished. The holders
of the Class C Common shares shall not be entitled to any dividends other than
or in excess of the non-cumulative cash dividends herein before provided for.
1.2 Cheques of the Corporation payable at par at any branch of the
Corporation's bankers for the time being in Canada shall be issued in respect
of the dividends the preference shares (less any tax required to be withheld
by the Corporation) and payment thereof shall satisfy such dividends. Dividends
which are represented by a cheque which has not been presented to the
Corporation's bankers for payment or that otherwise remain unclaimed for a
period of six (6) years from the date on which they were declared to be
payable shall be forefeited to the Corporation.
2. DISSOLUTION
2.1 In the event of the dissolution, liquidation or winding-up of the
Corporation or other distribution of assets of the Corporation among
shareholders for the purpose of winding up its affairs, the holders of the
Class C Common shares shall be entitled to receive from the assets and property
of the Corporation for each Class C Common share held by them respectively the
sum of $0.10 together with all declared and unpaid preferential non-cumulative
cash dividends thereon or a sum equivalent to the result obtained when the
amount in the stated capital account for the Class C Common share is divided by
the number of issued and outstanding
<PAGE>
Class C Common shares together with all declared and unpaid preferential
non-cumulative cash dividends thereon (whichever is the greater), before any
amount shall be paid or any property or assets of the Corporation distributed to
the holders of any common shares or shares of any other class ranking junior to
the Class C Common shares. After payment to the holders of the Class C Common
shares of the amount so payable to them as provided in this Article 2.1, they
shall not be entitled to share in any further distribution of the property or
assets of the Corporation.
3. VOTING RIGHTS
3.1 The holders of the Class C Common shares shall be entitled to
receive notice and to attend all meetings of the shareholders of the Corporation
and shall have one hundred votes for each Class C Common share held at all
meetings of the shareholders of the Corporation except for meetings at which
only holders of another specified Class or Series of shares of the Corporation
are entitled to vote separately as a Class or Series.
3.2 The Class C Common shares shall rank junior to the common shares
and Class A Preference shares and to the Class B Preference shares.
B. Any Officer or Director of the Corporation is hereby authorized and
directed on behalf of the Corporation to execute and deliver to the Director
under the Business Corporations Act. Articles of Amendment in duplicate and such
Officer of Director is authorized to execute and deliver all such other
documents and do such other acts and things as may be necessary or desirable to
give effect to the foregoing; provided, however, that the Directors of the
Corporation are hereby authorized to revoke the foregoing Special Resolution in
whole or in part without further approval of the Shareholders of the Corporation
at any time prior to the endorsement by the Director under the Business
Corporation Act of the Certificate of Amendment of Articles.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
5. The amendment has been duly authorized as La modification a ene doment autonsee donformement
required by sections 168 & 170 (as applicable) aux articles 168 at 170 (selon le cas) de la
of the Business Corporations Act. lot sur las societes par actions.
6. The resolution authorizing the amendment Les actionnaires ou les administrateurs (selon le cas)
was approved by the shareholders/directors (as de la societe ont approuve la resolution autorisant
applicable) of the corporation on la modification le
1998/07/14
- --------------------------------------------------------------------------------
(Year, Month, Day)
(annee, mois, jour)
These articles are signed in duplicate. Les presents status sont signes en double exemplaire.
ARTAGRAPH REPRODUCTION
TECHNOLOGY INCORPORATED
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(Name of Corporation)
(Denomination sociale de la societe)
Secretary/
By:/Par: Simon Meredith Treasurer
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(Signature) (Description of Office)
(Signature) (Function)
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