<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
/X/ Filed by Registrant.
/ / Filed by Party other than the Registrant
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
KINETIC VENTURES LTD.
(Name of Registrant as Specified in Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (check the appropriate box):
/X/ No fee required.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total Fee Paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the Fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
----------------------------------------------------------------------
2) Form, Schedule or Registration Statement Number:
----------------------------------------------------------------------
3) Filing Party:
----------------------------------------------------------------------
4) Date Filed:
----------------------------------------------------------------------
<PAGE>
KINETIC VENTURES LTD.
1095 West Pender Street - Suite 850
Vancouver, British Columbia, Canada V6E 2M6
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JULY 2, 1998
Notice is hereby given that the Annual Meeting of Shareholders of Kinetic
Ventures Ltd. (the "Company") will be held at the offices of the Company at 1095
West Pender Street, Suite 850, Vancouver, British Columbia, Canada V6E 2M6, on
Thursday, July 2, 1998, at 10:00AM, local time, for the following purposes:
1. To elect three (3) directors of the Company to hold office until
the next Annual Meeting of Shareholders in 1999 and until their
respective successors are elected and qualified;
2. To consider and vote on a proposal to amend the Company's
Certificate of Incorporation to effect a one-for-six reverse stock
split (the "Reverse Stock Split");
3. To consider and vote on a proposal to amend the Company's
Certificate of Incorporation to change the name of the Company to
Kinetic Technologies Corp., or such other name as the Board of
Directors may approve; and
4. To transact such other business as may properly come before the
meeting, or any adjournments thereof.
Information with respect to the above is set forth in the Proxy Statement
which accompanies this Notice. Only holders of shares of the Company's Common
Stock of record at the close of business on May 27, 1998 (the "Record Date") are
entitled to notice of and to vote at the Meeting.
We hope that all of our shareholders who can conveniently do so will attend
the Meeting. Shareholders who do not expect to be able to attend the Meeting
are requested to mark, date and sign the enclosed proxy and return the same in
the enclosed addressed envelope which requires no postage and is intended for
your convenience.
SANDRA LEE, SECRETARY
Dated: May 29, 1998
<PAGE>
KINETIC VENTURES LTD.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited by the Board of Directors of Kinetic
Ventures Ltd., a Delaware corporation (the "Company"), from the holders of
shares of Common Stock, $.001 par value ("Common Stock") to be voted at the
Annual Meeting of Shareholders (the "Meeting") to be held at the offices of the
Company at 1095 West Pender Street, Suite 850, Vancouver, British Columbia,
Canada V6E 2M6, on Thursday, July 2, 1998, at 10:00AM, local time, and at any
adjournments thereof.
The only business which the Board of Directors intends to present or knows
that others will present at the Meeting is: (i) the election of three (3)
Directors of the Company to hold office until the next Annual Meeting of
Shareholders in 1999 and until their successors have been elected and qualified;
(ii) to consider and vote on a proposal to amend the Company's Certificate of
Incorporation to effect the Reverse Stock Split; and (iii) to consider and vote
on a proposal to amend the Company's Certificate of Incorporation to change the
name of the Company to Kinetic Technologies Corp., or such other name as the
Board of Directors may approve. Management does not know of any other business
to be brought before the Meeting but it is intended that as to any other
business, a vote may be cast pursuant to the proxy in accordance with the
judgment of the person or persons acting thereunder. If proxies in the enclosed
form are properly executed and returned, the Common Stock represented thereby
will be voted at the Meeting in accordance with the shareholder's direction.
Unless otherwise specified, proxies in the enclosed form will be voted for the
election of three (3) Directors named as nominees and in favor of each of the
other two proposals. Any shareholder giving a proxy has the power to revoke it
at any time before the proxy is voted by revoking it in writing, by executing a
later dated proxy or appearing at the Meeting and voting in person. Any writing
revoking a proxy should be addressed to Sandra Lee, Secretary of the Company, at
the address set forth below.
The Directors to be elected at the Meeting will be elected by a plurality
of the votes cast by the holders of Common Stock present in person or by proxy
and entitled to vote. The proposals to amend the Certificate of Incorporation
will require the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock. With regard to the election of Directors,
votes may be cast for or withheld from each nominee. Votes that are withheld
will have no effect on the outcome of the election because Directors will be
elected by a plurality of votes cast.
Abstentions may be specified on all proposals submitted to a stockholder
vote other than the election of Directors. Abstentions will be counted as
present for purposes of determining the existence of a quorum regarding the
proposal on which the abstention is noted. However,
<PAGE>
abstentions on any of the Company's proposals will have no effect on the outcome
of the vote on such proposal where the outcome requires the affirmative vote of
a majority of votes cast at the Meeting and will have the effect of a vote
against the proposals to amend the Company's Certificate of Incorporation.
Under the rules of the New York Stock Exchange, brokers who hold shares in
street name have the authority to vote on certain routine matters on which they
have not received instructions from beneficial owners. Brokers holding shares
of the Company's Common Stock in street name who do not receive instructions are
entitled to vote on the election of Directors. Under applicable Delaware law,
"broker non-votes" on any proposal (where a broker submits a proxy but does not
vote a customer's shares on such proposal) will be considered not entitled to
vote on that proposal and thus will not be counted in determining the outcome of
such vote. Likewise, where authority to vote for the election of Directors is
withheld by a stockholder, such shares will not be counted in determining the
outcome of such vote. Therefore, broker non-votes with respect to the election
of Directors and stockholders who mark their proxies to withhold authority to
vote their shares will have no effect on the outcome of such proposal, although
broker non-votes and proxies submitted where the vote for the election of
Directors is withheld are counted in determining the existence of a quorum.
Only holders of record of Common Stock as of the close of business on May
27, 1998 are entitled to vote at the Meeting or any adjournments thereof. On
such date, the Company had outstanding voting securities consisting of
39,933,733 shares of Common Stock, each of which shares is entitled to one (1)
vote on all proposals submitted to a vote of shareholders at the Meeting.
The Company's principal executive office address is Kinetic Ventures Ltd.,
1095 West Pender Street - Suite 850, Vancouver, British Columbia, Canada V6E
2M6, and its telephone number is (604) 689-1428. This Proxy Statement and the
enclosed Form of Proxy will be mailed to the Company's shareholders on or about
May 29, 1998.
1. ELECTION OF DIRECTORS
At the Meeting, it is proposed to elect three (3) Directors to hold office
until the next Annual Meeting of Shareholders in 1999 and until their respective
successors are elected and qualified. It is intended that, unless otherwise
indicated, the shares of Common Stock represented by proxies solicited by the
Board of Directors will be voted for the election as
-2-
<PAGE>
Directors of the three nominees hereinafter named. If, for any reason, any of
said nominees shall become unavailable for election, which is not now
anticipated, the proxies will be voted for the other nominees and may be voted
for a substitute nominee designated by the Board of Directors. Each nominee has
indicated that he is willing and able to serve as a Director if elected, and,
accordingly, the Board of Directors does not have in mind any substitute.
The nominees as Director and their age are as follows:
<TABLE>
<CAPTION>
Name Age
---- ---
<S> <C>
Brian Bayley 44
A. Murray Sinclair, Jr. 37
Jennine M. Ballard 47
</TABLE>
BRIAN BAYLEY has served as Director of the Company since February 1995 and
was appointed President in March 1997. He is also President and director of
Quest Management Corp., a private management company. Previously, Mr. Bayley
held the positions of director, President, Chief Executive Officer, Secretary
and Vice-President, Corporate Administration of Quest Oil & Gas, Inc. (formerly
Quest Capital Corporation). Quest Oil & Gas, Inc. was a publicly-traded oil and
gas company whose shares traded on The Toronto Stock Exchange. On April 22,
1997, substantially all the assets of Quest Oil & Gas Inc. were acquired by
EnerMark Income Fund. Prior to that, he worked with the Vancouver Stock
Exchange and a private management company. Mr. Bayley holds an MBA from Queen's
University, Kingston, Ontario. Mr. Bayley currently serves as Director of
Arlington Ventures Ltd., Belvedere Resources, Ltd., Brandale Food Services Inc.,
Ella Resources Inc., Gothic Energy Corporation, Greystar Resources Ltd., Leigh
Resource Corporation, Marchwell Capital Corp., Neary Resources Corporation,
Neutrino Resources Inc., New Candela Resources Ltd., Rhodelta Software, Inc.,
Roseland Resources Ltd. and Ventel, Inc.
MR. SINCLAIR was elected a director of the Company on March 21, 1997. He
is also President and a director of Quest Ventures Ltd., a private merchant
banking company. Previously he was Managing Director of Quest Oil & Gas Inc.
(formerly Quest Capital Corporation). Quest Oil & Gas Inc. was a
publicly-traded oil and gas company whose shares traded on The Toronto Stock
Exchange. Prior to that, he was President and director of Noramco Capital
Corp., a private investment company. Mr. Sinclair holds a B.Comm. from Queen's
University, Kingston, Ontario. Mr. Sinclair currently serves as Director of
Arlington Ventures
-3-
<PAGE>
Ltd., Belevedere Resources Ltd., Brandale Food Services Inc., Breakwater
Resources Ltd., Brimstone Gold Corp., Habanero Resources Inc., Magnifoam
Technology Inc., Marchwell Capital Corp., Neutrino Resources Inc., New Inca Gold
Ltd., Roseland Resources Ltd., RTO Enterprises Inc., Santa Cruz Minerals Inc.,
Sextant Enterprise Corp. and Ventel, Inc.
MS. BALLARD was elected a Director of the Company on March 21, 1997. She
has, since April 1994, been employed as a consultant to publicly traded
companies on Canadian securities regulatory matters. From April 1991 to April
1994, she was employed by Quest Capital Corporation (formerly known as Noramco
Mining Corporation) in a corporate administrative capacity.
There is no family relationship between any of the directors or executive
officers of the Company.
DIRECTOR AND OFFICER SECURITIES REPORTS
The Federal securities laws require the Company's Directors and executive
officers, and persons who own more than ten percent (10%) of a registered class
of the Company's equity securities to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
any equity securities of the Company. Copies of such reports are required to be
furnished to the Company. To the Company's knowledge, based solely on a review
of the copies of such reports and other information furnished to the Company,
all persons subject to these reporting requirements filed the required reports
on a timely basis with respect to the Company's year ended December 31, 1997.
-4-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid by the Company during
the fiscal year ended December 31, 1997 to the Chief Executive Officers of the
Company who served during any portion of that year. No other executive officer
total annual compensation in such year exceeded $100,000. All dollar amounts
are provided in U.S. dollars.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION
--------------------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARS (#)
- ------------------------------- -------- ------------ ----------- ------------------
<S> <C> <C> <C> <C>
Brian Bayley, President and 1997 -0- -0- -0-
Chief Executive Officer (1)
William J. Worthen, President 1997 $ 37,159 -0- -0-
And Chief Executive 1996 $140,000 -0- -0-
Officer (2) 1995 $140,000 -0- -0-
</TABLE>
- ------------------------------
(1) Mr. Bayley was elected President and Chief Executive Officer of the Company
on March 20, 1997.
(2) Mr. Worth resigned as President and Chief Executive Officer of the Company
on March 20, 1997.
No options were granted or exercised during the year ended December 31,
1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 12, 1997, the Company sold 30,000,000 shares of Common Stock to
clients of Benitz & Partners Limited for an aggregate purchase price of
$211,275. Benitz & Partners Limited is a United Kingdom based investment dealer
and holds the shares of record only as a portfolio manager as an agent for
accounts fully managed by it. The proceeds were used by the Company to pay
outstanding payables and for general corporate purposes. Benitz & Partners
Limited disclaims a beneficial interest in the shares.
-5-
<PAGE>
On November 13, 1995, the Company sold to Ballard 200,000 shares of
Preferred Stock which upon conversion represented 19.5% of the Company's capital
stock for US$2 million pursuant to the Ballard Agreement. Under the Ballard
Agreement, Ballard paid to the Company US$500,000 as nonrefundable consideration
for the Ballard Option to acquire all of the assets of the Company during the 24
month period following the closing of the sale of the Preferred Stock. On
February 28, 1997, the Company received notice from a wholly owned subsidiary of
Ballard of Ballard's exercise of the Ballard Option and on March 20, 1997, the
sale of substantially all the Company's assets to Ballard was completed. The
purchase price for the assets was $4,245,422, plus an adjustment for prepaid
rent of $2,233. Deducted from the purchase price were the $500,000
consideration paid for the option under the Option Agreement, $198,631 of
liabilities assumed, $3,671,471 principal and interest owing by the Company to
Ballard and liquid assets of $11,695, or a net purchase price deficiency of
$134,142. The Company's 200,000 shares of Series A Preferred Stock were
redeemed and retired. The deficiency of $134,142 in the payment of the purchase
price is represented by the Company's promissory note due on demand which was
assigned to a third party and paid subsequent to December 31, 1997. The Company
agreed to indemnify Ballard against certain losses in connection with the
transaction.
The Ballard Agreement also provided for a line of credit up to $500,000
commencing eight months after the closing of the sale of Preferred Stock to
finance operating expenses. The commencement date for this line of credit
anticipated an eight month period beginning in July 1995 when the Ballard
Agreement was signed. The Ballard Agreement was approved by shareholders in
November 1995, four months later. The Company began borrowings against this
credit facility in January 1996 and as of March 20, 1997 the Company has
borrowed $500,000 and an additional $3,040,000 in addition to the line of credit
for a total of $3,540,000.
Under the Ballard Agreement two nominees of Ballard served on the Company's
Board of Directors through March 20, 1997, and the Company's conduct of its
business was subject to certain restrictions, during the option term. Mr. Harold
Wolcott and Kenneth Sorenson joined the Board as Ballard's nominees and resigned
on March 20, 1997.
2. REVERSE STOCK SPLIT
The Certificate of Incorporation is proposed to be amended to effect a 1:6
reverse stock split of the issued and outstanding shares of the Company's Common
Stock. The Board of
-6-
<PAGE>
Directors has authorized the Reverse Stock Split, and stockholders are being
requested to approve an amendment to the Certificate of Incorporation.
Subject to approval of the amendment by the stockholders of the Company,
the Certificate of Amendment will be filed with the Secretary of State of the
State of Delaware (the "Effective Date"). The Board of Directors may abandon
the Reverse Stock Split without further action by the stockholders if it
determines that it is in the best interests of the Company not to effect the
Reverse Stock Split. On the Effective Date, the Reverse Stock Split will be
deemed effective, and each certificate representing shares of Common Stock
outstanding immediately prior to the Reverse Stock Split (the "Old Shares") will
be deemed automatically, without any action on the part of the stockholders, to
represent 1/6th of the number of shares of Common Stock outstanding after the
Reverse Stock Split (the "New Shares"), rounded up to the nearest whole number
to eliminate fractional New Shares.
The Company is presently authorized to issue up to 40,000,000 shares of
Common Stock, $.01 par value of which 39,933,733 shares are issued and
outstanding on the Record Date. The Reverse Stock Split will be effected on the
basis of one (1) share of New Shares for each six (6) shares of outstanding Old
Shares, and would authorize a reduction in the stated capital of the Company.
The authorized number of shares of Common Stock, however, will not change.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF THE PROPOSAL
Adoption of the Proposal requires the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock.
PRINCIPAL EFFECTS OF REVERSE STOCK SPLIT
The principal effects of the Reverse Stock Split will be:
1. Based upon the 39,933,733 shares of Old Shares outstanding as of the
Record Date, the Reverse Stock Split will decrease the outstanding shares of
Common Stock, and thereafter approximately 6,655,622 shares of New Shares will
be outstanding. The Reverse Stock Split will not affect any stockholder's
proportionate equity interest in the Company, subject to the provisions for the
elimination of fractional shares.
2. The Company is authorized under its Certificate of Incorporation to
issue up to 40,000,000 shares of Common Stock. The Company is not proposing to
reduce the amount of its
-7-
<PAGE>
authorized Common Stock. The New Shares issued and outstanding will represent
approximately 16.6% of the Company's authorized Common Stock, whereas the Old
Shares currently issued and outstanding represent approximately 99.8% of the
authorized Common Stock. After giving effect to the Reverse Stock Split,
approximately 33,344,378 shares of Common Stock will be available for future
issuance by the Board of Directors without further action by the stockholders.
PURPOSES OF THE REVERSE STOCK SPLIT
The purpose of the Reverse Stock Split is to reduce the number of shares of
Common Stock of the Company currently outstanding and, inasmuch as the Reverse
Stock Split will not affect the number of shares of Common Stock the Company is
authorized to issue, enable the Company, should such shares be required for such
purpose, to issue such shares in order to raise additional capital or to be used
in conjunction with any favorable business acquisition opportunities management
of the Company desires to pursue. At present, management of the Company does
not have any specific plans to issue any shares of Common Stock in order to
raise additional capital or in connection with any business acquisitions. The
issuance of such shares for such purposes could be effected without obtaining
any further stockholder approval of such transactions.
There can be no assurance that the Company will ever complete the
acquisition of any further business activities or that the terms thereof may not
be dilutive to the interests of the Company's present stockholders. In
addition, in the event the Company should seek to raise additional capital, the
terms on which such capital is raised may be dilutive to the Company's present
stockholders.
Having available a number of shares of Common Stock for issuance will
eliminate possible later delays and expenses associated with obtaining a
stockholder vote on specific issuances.
IMPLEMENTATION OF REVERSE STOCK SPLIT
The Reverse Stock Split will be effected by filing the amendment to the
Certificate of Incorporation with the Delaware Secretary of State and will
become effective on the Effective Date. Without any further action on the part
of the Company or the stockholders, after the Effective Date, each certificate
representing Old Shares will be deemed to represent 1/6th of the number of New
Shares (exclusive of any fractional interest).
-8-
<PAGE>
As soon as practicable after the Effective Date, the Company will send a
letter of transmittal to each holder of record of Old Shares of Common Stock
outstanding on the Effective Date. The letter of transmittal will contain
instructions for the surrender of certificate(s) representing such Old Shares to
Montreal Trust Company, 151 Front Street, 8th Floor, Toronto, Ontario, Canada
M5J 2N1, the Company's exchange agent (the "Exchange Agent"). Upon proper
completion and execution of the letter of transmittal and return thereof to the
Exchange Agent, together with the certificate(s) representing Old Shares, a
stockholder will be entitled to receive a certificate representing the number of
New Shares of Common Stock into which such stockholder's Old Shares have been
reclassified and changed as a result of the Reverse Stock Split, rounded up to
the nearest whole number to eliminate any fractional share interest.
Stockholders should not submit any certificates until requested to do so.
No new certificate will be issued to a stockholder until such stockholder has
surrendered such stockholder's outstanding certificate(s) together with the
properly completed and executed letter of transmittal to the Exchange Agent.
3. PROPOSAL TO CHANGE THE NAME OF THE COMPANY
Subsequent to the sale of the assets of the Company to Ballard Medical
Products in March 1997, the Company changed its name from Neuro Navigational
Corporation to its present name. It is now proposed to change the Company's
name to Kinetic Technologies Corp., or such other name as the Board of Directors
may approve in order to better reflect the possible future activities in which
the Company is engaged at the time.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF THE PROPOSAL.
Management is currently reviewing various alternatives relating to further
business activities for the Company, but no specific business activities have
been identified and no agreements or agreements in principle have been entered
into whereby the Company will again be engaged in any business activities. In
addition, management has made no decision as to any specific industries or
geographical areas where any such future business activities may be undertaken.
Although management believes that its future business activities will be the
result of the acquisition of an existing business, there can be no assurance
with respect thereto and the Company may become engaged in such activities
through other means. Management may seek to raise additional capital to enable
it to become engaged in further business activities to finance
-9-
<PAGE>
an acquisition of an existing business or it may effectuate the acquisition
through a merger, consolidation or other issuance of shares of the Company's
Common Stock.
There can be no assurance that the Company will be successful in
effectuating the acquisition of any further business operations. In addition,
there can be no assurance that the terms of such acquisition may not be dilutive
to the Company's existing stockholders or that such terms will be advantageous
to the Company. There can be no assurance that the Company will be successful
in its attempts to enter into any further business activities.
Until such time as the Company is successful in entering into further
business activities, it should be expected that the Company will not realize any
material revenues.
Adoption of the Proposal requires the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock.
-10-
<PAGE>
COMMON STOCK OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of the Record Date, the Company had issued and outstanding 39,933,733
shares of its Common Stock. The following table sets forth, as of the Record
Date, certain information regarding beneficial ownership of the Common Stock by
(i) those persons beneficially holding more than five percent of the Company's
Common Stock, (ii) the Company's directors who beneficially own shares of the
Common Stock and (iii) all of the Company's directors and officers as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNED (2) COMMON STOCK
- -------------------------------------------------------------------------------
<S> <C> <C>
Brian Bayley (3) 1,261,571 3.1%
A. Murray Sinclair, Jr. (3) 1,261,571 3.1%
Benitz & Partners Limited (4)
94 Mount Street - First Floor 30,000,000 75.0%
London, England W1Y 5H5
</TABLE>
All officers and directors as a group 1,261,571 3.1%
(2 persons)
- --------------------
(1) Unless otherwise indicated, the address of such person is c/o the Company.
(2) For purposes of the above table, a person is considered to "beneficially
own" any shares with respect to which he or she exercises sole or shared
voting or investment power or of which he or she has the right to acquire
the beneficial ownership within 60 days following the Record Date.
(3) Consists of 1,261,571 shares of Common Stock owned by Quest Ventures, Ltd.
of which Mr. Sinclair is President and Mr. Bayley is a Director and of
which each holds 50% of the outstanding capital stock.
(4) Benitz & Partners Limited is an investment dealer regulated in England by
the Securities and Futures Authority and holds the shares as a portfolio
manager as an agent for accounts fully managed by it. Benetz & Partners
Limited disclaims a beneficial interest in such shares.
-11-
<PAGE>
ESCROWED SHARES
In compliance with the requirements of the Securities Act (Ontario) and the
securities laws of certain other Provinces of Canada, and pursuant to an
agreement (the "Escrow Agreement") dated as of March 11, 1994 between Montreal
Trust Company of Canada (the "Escrow Agent"), Quest Oil & Gas Inc. ("Quest"),
Inter-Tel Media, Inc. (formerly Medsana Medical Systems, Inc.) ("Connect") and
the Company, 2,523,142 shares of Common Stock (the "Escrowed Shares") owned
directly or indirectly by Quest and Connect were deposited with the Escrow
Agent. The Escrow Agent released 10% of the Escrowed Shares on December 24,
1994, 20% on December 24, 1995, 20% on December 24, 1996 and will release 20% on
December 24, 1997 and the remaining 30% on December 24, 1998. Under the Escrow
Agreement, the Escrowed Shares may not be sold, pledged as security or otherwise
disposed of without the prior consent of the applicable securities commissions
and other regulatory authorities. Quest and Connect have transferred beneficial
ownership of such shares to Quest Ventures Ltd.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors has not appointed either a Compensation
Committee or an Audit Committee. The Board of Directors does not have a
nominating committee.
The Company's Board of Directors held one (1) meeting during the year ended
December 31, 1997.
RELATIONSHIP WITH PUBLIC ACCOUNTANTS
The firm of Raimondo, Pettit & Glassman has been selected to serve as the
independent auditors for the Company for the fiscal year ending December 31,
1998. A representative of Raimondo, Pettit & Glassman is not expected to be
present at the annual meeting of stockholders of the Company with the
opportunity to make a statement or to be available to respond to appropriate
questions.
The Company's former independent accountants, Coopers & Lybrand L.L.P.
("Coopers") resigned from that capacity on November 8, 1996.
The report by Coopers on the financial statements of the Company dated
March 1, 1996, including consolidated balance sheets as of December 31, 1995 and
1994, and the related consolidated statements of operations, cash flows and
statement of stockholders' equity (deficit)
-12-
<PAGE>
for the years then ended did not contain an adverse opinion or a disclaimer of
opinion, and was not qualified or modified as to uncertainty, audit scope or
accounting principles except that the report contained a going concern
qualification.
The former independent accountants resigned from their position on November
8, 1996. The resignation was not presented to or considered by the Board of
Directors or any audit or similar committee of the Board and, therefore, the
decision was not recommended or approved by the Board or any such committee.
During the period covered by the financial statements through the date of
resignation of the former accountants, there were no disagreements with the
former accountants on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
A letter from the former independent accountants for the Company is
attached as an Exhibit to the Company's Form 10-QSB for the quarter ended
September 30, 1996.
SUBMISSION OF SHAREHOLDERS' PROPOSALS FOR 1999 ANNUAL MEETING
Any proposals which shareholders intend to present for a vote of
shareholders at the Company's 1999 Annual Meeting and which such shareholders
desire to have included in the Company's proxy statement and form of proxy
relating to that meeting must be sent to the Company's executive office and
received by the Company not later than January 29, 1999.
-13-
<PAGE>
GENERAL
The cost of soliciting proxies will be borne by the Company. In addition
to solicitation by use of the mails, certain officers and regular employees may
solicit proxies personally and by telephone and the Company will request banks,
brokerage houses and nominees and fiduciaries to forward soliciting material to
their principals and will reimburse them for their reasonable out-of-pocket
expenses.
The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997, including financial statements, is being mailed to
shareholders herewith.
By Order of the Board of Directors
SANDRA LEE, SECRETARY
Dated: May 29, 1998
-14-
<PAGE>
APPENDIX: FORM OF PROXY
KINETIC VENTURES LTD.
1095 West Pender Street - Suite 850
Vancouver, British Columbia, Canada V6E 2M6
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mr. Brian E. Bayley, Ms. Emily Hembroff and
Sandra Lee, and each of them, as proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and vote, as designated
below, all the shares of common stock of Kinetic Ventures Ltd. held of record by
the undersigned on May 27, 1998 at the annual meeting of shareholders to be held
on July 2, 1998 or any adjournment thereof.
1. Election of Directors
/ / For all nominees listed below (except as marked to contrary
below)
/ / Withhold Authority to vote for all nominees listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Brian E. Bayley A. Murray Sinclair, Jr.
Jennine M. Ballard
2. The proposal to amend the Company's Certificate of Incorporation to
effectuate the Reverse Stock Split.
/ / In Favor / / Against / / Abstain
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3. The proposal to amend to Company's Certificate of Incorporation to
change the name of the Company.
/ / In Favor / / Against / / Abstain
4. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR EACH OF THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, AS EXECUTOR, ADMINISTRATOR, TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY
PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
Dated: , 1998
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Signature
Title (if required)
--------------------------------------------
Signature (if held jointly)
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