UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number _________________
CRYOPAK INDUSTRIES INC.
(Exact name of Registrant as specified in its charter)
CRYOPAK INDUSTRIES INC.
(Translation of Registrant's name into English)
BRITISH COLUMBIA, CANADA
(Jurisdiction of incorporation or organization)
1120-625 HOWE STREET, VANCOUVER, BRITISH COLUMBIA,
CANADA V6C 2T6 (Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each exchange on which registered
NONE
Securities registered or to be registered pursuant to Section 12(g) of the Act
Title of Class
COMMON STOCK, NO PAR VALUE
CLASS A PREFERRED STOCK, SERIES 1, NO PAR VALUE
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act
Title of Class
NONE
Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the annual
report: 17,255,740 common; 530 preferred as of March 31, 1999.
Indicate by check mark whether the registrant (1) has filed 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 registrants
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ ] No [ X ]
Indicate by check mark which financial statement item the registrant has elected
to follow. Item 17 [ X ] Item 18 [ ]
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST
FIVE YEARS) Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court Yes [ ] No [ ]
<PAGE>
PART I
Item 1. Description of Business
Cryopak Industries Inc.
Company History
Cryopak Industries Inc. ("Cryopak", the "Company") was incorporated in
the province of British Columbia, Canada, on February 13, 1981 as 226896 B.C.
Ltd. On March 30, 1981 the Company changed its name to Consort Energy Corp. The
Company changed its name again, to International Consort Industries Inc., on
April 30, 1990 and amended its name to Cryopak Industries Inc. on November 12,
1993. On January 3, 1996, Cryopak increased its authorized stock to a total of
two hundred million (200,000,000) shares, consisting of one hundred million
(100,000,000) shares of common stock with no par value and one hundred million
(100,000,000) shares of Class A Preferred Stock, no par value, of which one
thousand five hundred (1,500) were designated Class A Convertible Voting
Preference Shares, Series I. Cryopak has two subsidiaries. Cryopak (Canada)
Corporation, a British Columbia, Canada, corporation, was incorporated on June
6, 1986 as 310302 B.C. Ltd. and changed its name to Cryopak (Canada) Corporation
on September 22, 1987. Cryopak (International) Inc. is a Barbados corporation
incorporated on August 29, 1995, which is currently inactive. Additionally,
Cryopak (Canada) Corporation has a wholly-owned subsidiary, Cryopak Corporation,
a Nevada corporation formed on March 20, 1987 and has a fifty percent (50%)
interest in Cryopak (Alberta) Corporation, a dissolved Alberta, Canada
corporation.
On February 28, 1995, the Company signed an agreement in principle to
acquire one hundred percent interest in Rogell Enterprises Ltd. ("Rogell") of
Vancouver, British Columbia, Canada. Rogell is a private corporation formed in
1979 that was originally a picture product supplier and developed into a trade
showroom display center carrying design furniture, accessories, framed
decorative art, limited editions and original imagery. The proposed acquisition
was terminated on July 27, 1995.
This acquisition had required a Cdn$2,000,000 financing package and
Cryopak had entered into an agreement with Discovery Capital Corporation of
Vancouver to arrange this financing via a venture capital corporation, Cryopak
Industries (VCC) Inc., ("VCC"). An Investment Agreement was entered into between
the Company and VCC on March 13, 1995, which was approved by the provincial
government and the Vancouver Stock Exchange. The Investment Agreement allowed a
120 day period for fund raising and contemplated five initial closings of
Cdn$100,000 each. Initially, VCC invested $500,000 in common shares of the
Company at prices escalating with each $100,000 raised, starting at Cdn$0.40 per
share and going up to Cdn$0.50, Cdn$0.60, Cdn$0.70 and finally Cdn$0.80 per
share. Each share was accompanied by a non-transferable warrant exercisable at
$0.10 per share premium to the purchase prices and expiring one year from the
issuance date. VCC has 105 shareholders with all being Canadian except for one
being European. The Investment Agreement also provided that VCC would invest in
Cryopak's Class A Preferred Shares at an offering price of $1,000 per share.
Douglas Reid, a member of the Board of Directors of the Company, is the
President of VCC and abstained from voting when the board voted to accept this
Investment Agreement. Of the Cdn$2,000,000, $1,100,000 was received and the
financing was closed on February 25, 1997. After the proposed acquisition was
abandoned, the funds from this financing were designated for the construction of
manufacturing facilities for Cryopak products and to finance marketing programs.
Shareholders own VCC.
John McEwen, President and co-founder of Discovery Capital Corporation,
was appointed to the board of directors on August 17, 1995. The board consisted
of Harry Bygdnes, Robert Leigh Jeffs, and Douglas Reid.
In September 1995, the Company entered into a joint distribution
agreement with Unisource Worldwide, Inc. ("Unisource") to introduce Cryopak's
products regionally to each of ten Unisource divisions throughout the United
States and Canada. Unisource is a large marketer and distributor of paper and
imaging products and supply systems, disposable paper and plastic products,
janitorial supplies and packaging systems and is owned by Alco Standard
Corporation, a distribution company headquartered in Valley Forge, PA, with
revenues of US$8 billion in 1994. The focus of this agreement was the marketing
of the Company's ice substitute product targeting food processors, shippers of
perishables and wholesale and retail food distribution companies with Unisource
acting as Cryopak's marketing partner. Under the terms of the agreement,
Unisource was to sell, stock and distribute all Cryopak products used in food
processing and distribution within each Unisource marketing region as
distribution rights were allocated. Internal problems at Unisource and a lack of
positive response at the divisional level impeded the rate of growth within the
terms of the distribution agreement. As a result, promised purchases were not
completed and plans for national distribution
<PAGE>
with Unisource were abandoned by the fiscal year end of March 31, 1996. Instead,
the Company's management began working with Unisource regionally by offering
educational programs and training in areas that demonstrate a high interest in
marketing the Cryopak products. This helped the Company by opening doors to
recruitment of distributors more suited to specific industries requiring a
better refrigerant for shipping of perishables.
On July 14, 1995, the Company also signed an agreement with Cavanaugh
Communications Inc. ("Cavanaugh") of Bryn Mawr, Pennsylvania, to provide
advertising and marketing expertise to fulfill the obligations of the Unisource
agreement. The agency's focus was positioning Cryopak ice substitute as the
preferred refrigerant for packaging, shipping, storing and displaying a wide
variety of foods, beverages and other perishables, targeting food processors,
direct marketers and wholesale and retail food distribution companies. Cavanaugh
is the exclusive advertising and marketing company for Unisource. This contract
was terminated when the Unisource deal was abandoned.
Harley D. Sinclair joined the Company as its Secretary on November 23,
1995. At this time the officers were Harry Bygdnes, Robert Leigh Jeffs, Douglas
Reid, and John McEwen.
On January 1, 1996, the Company extended its Financial Management
Agreement with Strategic Investments Inc. ("Strategic") of Springfield, Ilinois,
to December 1996, rescindable by either party with 30 days' notice. Strategic
had been receiving US$5,000 per month under the terms of the Agreement but this
was amended to $500 per month plus certain out-of-pocket expenses, for the last
twelve months of the agreement. The agreement was not extended after its
termination in December 1996.
During the fiscal year ended March 31, 1996, the Company began working
directly with several pharmaceutical companies in the United States and Canada.
These companies provided Cryopak with existing packaging and protocols used in
present shipping situations by the Company's competitors so that Cryopak could
perform comparison testing. The graphic comparisons of these independent tests
were then submitted to the pharmaceutical companies.
Comparison testing similar to that done in the pharmaceutical industry
was also conducted in the seafood industry. Several large seafood distributors
tested the Company's product Cryomat(TM).
Also during the fiscal year ended March 31, 1996 the Company entered
into a Memorandum of Understanding with SCA Packaging of Sweden, the largest
packaging supplier in Europe, which began distributing the Cryomat(TM) product
into EEC countries in the fall of 1996. Similar agreements were negotiated in
Mexico and Indonesia. These agreements were never finalized.
<PAGE>
During the fiscal year ended March 31, 1997, the Company focused on
growth in the pharmaceuticals, seafood, meat and poultry and airline and hotel
catering industries. Cryopak devoted much of its energies during this time to
providing test data in each of these industries which compared Cryopak and its
products to existing refrigerants and conducted onground and inflight testing
with several airlines. The Company also sold small amounts of product to
companies in Brazil, Chile, Taiwan and Israel during this year and was
designated as the exclusive supplier of packaging systems to a unique marketing
and delivery concept established by Freshnex and Federal Express.
K. Barry Sparks joined the Board of Directors of the Company on April
25, 1996. The board had the following members: Harry Bygdnes, Robert Leigh
Jeffs, Douglas Reid, and John McEwen.
On April 1, 1997, the Company signed an agreement with Seafish Systems
of New Zealand ("Seafish") to purchase a minimum of twelve 40-foot containers
over a twelve month period, representing gross revenues of $500,000. Seafish
also agreed to provide exclusive marketing and distribution rights for Cryopak's
products in New Zealand and Australia and did a market study of projected sales
in Australia for the Company. It was also agreed that the two companies would
cooperate on marketing expansion in Southeast Asia. This Agreement is still
active.
James M. Fletcher was appointed to the Board of Directors on August 12,
1997. The board consisted of 6 members: Harry Bygdnes, Robert Leigh Jeffs,
Douglas Reid, John McEwen, K. Barry Sparks, and James Fletcher.
On August 13, 1997, the Company commenced a placement of 250,000 shares
at Cdn$0.50 per share for a total of Cdn$125,000 per share, plus warrants for up
to 250,000 additional shares at Cdn$0.60 per share exercisable for up to two
years. The proceeds from this offering, which was approved by the Vancouver
Stock Exchange, were used to
<PAGE>
reduce payables and for working capital. The offering was sold to two investors:
a Canadian individual and a Canadian corporation and was closed on August 25,
1997 with all shares sold.
The Company began testing its refrigerant systems on all Vancouver to
Los Angeles flights operated by Canadian Airlines on September 10, 1997. This
test was considered as a logistics trial period to determine the most effective
methods for handling the product. The test lasted 60 days. The product worked
but Canadian Airlines did not purchase any product.
The requisite 12% cumulative dividend on Class A Convertible Voting
Preferred Shares, Series I, was declared on September 24, 1997 for the year
ended March 31, 1997. The dividend was paid in common shares totaling 96,908
common shares at a deemed price of Cdn$0.495 per share ($47,969.84 total). Of
these shares, 88,980 were subject to a hold period in British Columbia which
expired March 31, 1998.
On February 2, 1998 K. Barry Sparks resigned from the Board of
Directors for personal reasons and due to other business demands. The board
consisted of 5 members: Harry Bygdnes, Robert Leigh Jeffs, Douglas Reid, John
McEwen, and James Fletcher.
The Company began a placement of 700,000 common shares at Cdn$0.50 each
for a total of Cdn$350,000 on February 24, 1998. This offering was approved by
the Vancouver Stock Exchange. The proceeds were used to repay debt. The private
placement was completed with one Canadian shareholder.
On March 27, 1998, the Company agreed to pay a bonus to David
Patriquin, the guarantor on the Company's US$167,285 equipment lease on a Model
L-18 Pouch Machine. Part of the bonus was paid in cash at 1% per month
(Cdn$2,392) over a maximum of 10 months, ceasing immediately if the guarantor
was released during the 10 month period. The remainder was paid in 119,608
non-transferable common stock warrants, all issued, exercisable for two years at
Cdn$0.40 in the first year and Cdn$0.46 in the second year. The Vancouver Stock
Exchange approved this transaction.
The manufacturing facility funded with the VCC financing completed
during the fiscal year ended March 31, 1997 was opened in Vancouver during the
fiscal year ended March 31, 1999. This facility manufactures product to be
delivered to the United States, Canada and the Pacific Rim. Sugar Foods produced
the product from April, 1987 until April, 1999 under a contractual arrangement.
With the opening of this second facility, the Company does not anticipate any
material acquisition of facilities or equipment in the foreseeable future.
The Company commenced a placement of 1,000,000 shares at Cdn$0.40 per
share for a total of Cdn$400,000 on April 23, 1998. The offering included
non-transferable warrants to purchase up to 1,000,000 additional shares for two
years at Cdn$0.40 per share for the first year and Cdn$0.46 during the second
year. The proceeds from this offering were used to reduce payables and for
unallocated working capital and the offering was closed on June 26, 1998 with
all shares sold. All shares were sold to Canadian and European individuals and
entities.
On June 9, 1998 the Company offered 120,000 shares of its common stock
with one two-year warrant per share to a Canadian individual. These shares were
purchased at Cdn$0.40 per share with warrants exercisable at Cdn$0.40 during the
first year and Cdn$0.46 during the second year.
On November 1, 1998, Cryopak declared the requisite 12% cumulative
dividend on its Class "A" Convertible Voting Preference Shares, Series I, held
by VCC on the record date of March 31, 1998. The Company elected to pay the
dividend in common shares and issued 159,199 common shares at a of Cdn$0.3995
per share for a total of Cdn$63,600. The shares were subject to a hold period in
British Columbia which expired after March 31, 1999.
Cryopak finalized a Cdn$3.6 million purchase order from Northwest
Airlines on December 1, 1998 for the refrigerant products of its subsidiary,
Cryopak (Canada) Corporation. This purchase order is for three years. Northwest
Airlines uses the Cryopak product in interior catering and inflight food and
beverage service. International launch of the product, starting with scheduled
flights between the United States and Asia, began on December 4, 1998.
An offering was commenced on February 3, 1999 of 1,280,000 common
shares at Cdn$0.75 per share for net proceeds of Cdn$924,900. The offering was
approved by the Vancouver Stock Exchange and was closed on March 19,
<PAGE>
1999 with all shares sold to European corporations. Finder's fees were paid to
two European corporations.
On February 8, 1999 Cryopak retained the services of European Investor
Services ("EIS") to coordinate investor relations with a growing group of
shareholders across Europe. EIS is an integrated investor relations company
headquartered in London and operating in all major financial centers of Europe
and specializing in the high tech, new media and biotechnology sectors. EIS
represents small and medium North American companies wishing to expand their
European shareholder bases and will provide corporate information to a
developing shareholder base and ensure a flow of information to industry and
financial analysts advising the European financial community as to the progress
and key developments of the Company. The contract is for six months at two
thousand pounds per month, subject to review after three months. Currently, the
contract has been extended to a month to month basis and all parties are
complying with its terms..
Nick Fuller was appointed Vice President of Public Relations of the
Company on February 11, 1999.
John Morgan was appointed President and CEO of Cryopak's subsidiary,
Cryopak Corporation, on March 19, 1999. He was also appointed a director of the
Company at this time. Mr. Morgan's signing incentive was a forgivable
interest-free loan which was used to acquire 125,000 common shares of the
Company at Cdn$0.776 per share, including 125,000 warrants exercisable after six
months' employment. The stock purchase was approved by the Vancouver Stock
Exchange. Also on March 19, 1999, Leigh Jeffs, a long-time member of the Board
of Directors, was appointed Chief Financial Officer of the Company.
On April 1, 1999 the Company retained the services of CCRI Corporation
("CCRI"), a Phoenix, Arizona, based corporation, to provide investor relations
and corporate finance services to the Company, especially in the United States.
CCRI will provide corporate information to a developing shareholder base, as
well as ensure a flow of information to industry and financial analysts advising
the American financial community as to the progress and key developments of the
Company. The initial agreement is for twelve months at US$6,000 per month, plus
$20,000 for preparation and mailing of a Corporate Profile.
Cryopak sold 72,000 shares of its common stock to CCRI at Cdn$0.75 per
share for total proceeds of Cdn$54,000 on April 8, 1999. Each share came with
one warrant exercisable for up to two years at Cdn$1.00 per share.
The proceeds from this offering were used for working capital.
On April 22, 1999 Ross G. Morrison was elected to the Company's Board
of Directors. The board is now comprised of 6 members: Harry Bygdnes,
Robert Leigh Jeffs, Douglas Reid, John McEwen, John Morgan, and Ross Morrison.
Products
Cryopak develops, manufactures and markets Cryomat(TM), a refrigerant
product that maintains a temperature range of 32-46 degrees Fahrenheit for
significantly longer than conventional cooling products such as ice, dry ice and
gel packs. The product keeps foods fresh and cold without freezing, unpleasant
odor or watery mess. Cryopak can be handled without risk of burning skin and
does not produce carbon dioxide. Cryomat(TM) was tested and independently
evaluated extensively for over twelve months by the North American airline and
food catering industry (eg. Northwest Airlines, Dobbs Catering, and LSG Sky
Chefs) and the results of these tests showed that it possesses superior
temperature control capabilities over all competing products, while meeting or
exceeding the HACCP requirements established by the FDA.
Cryomat(TM) consists of reusable sheets of liquid-filled laminate
pouches that provide refrigeration and insulation when frozen. The sheets can be
custom cut to various sizes or into individual cubes for use in a wide range of
applications and has been U.S.D.A approved for use with food products, including
fish, meat and poultry. The Company markets its Cryomat(TM) product to the
airline, pharmaceutical and seafood shipping industries and has begun to
investigate marketing the product to the sports/healthcare industry.
Additionally, Cryomat(TM) is sold commercially in Canada under the name Cooler
Mat.
All of the Company's sales are to third-party customers. Sales to the
United States for the years 1997, 1998, and 1999 are 73%, 67% and 88%
respectively. International sales are 24%, 29% and 7% for 1997, 1998 and 1999
with the majority to one customer, Seafish Systems. Sales within Canada are 3%,
4% and 5% for 1997, 1998 and 1999.
<PAGE>
Three customers accounted for approximately 70%, 76% and 70% of total
sales for the financial years 1997, 1998 and 1999. They are Dura*Kold Corp.,
Polyfoam Packers, and Seafish Systems for 1997 and 1998 and Dura*Kold Corp.,
Polyfoam Packers, and Wyeth-Ayerst Labs for 1999.
There is no new product or service being offered.
The Company conducts research and development activities of a minimal
nature at this time but the activities are not separately accounted for nor are
there allocated funds for these activities.
The "perishable" packaging industry is being faced with several
pressures, which have forced corporations within the industry to reevaluate
traditional methods of packing, transporting and storing temperature sensitive
goods. These pressures include the market and customer driven need for higher
quality, more timely and fresher products, a cost driven need to reduce the
amount of waste and spending on less effective products and regulation driven
requirements of new food safety and health standards and the United States' Food
and Drug Administration's ("FDA") regulations for the transport of
pharmaceuticals and general handling and catering of perishable meals for public
consumption.
In December 1997, the FDA introduced the HACCP ("Hazard Analysis
Critical Control Point") program, a food handling guideline system endorsed by
the FDA which was put into effect in December 1998. One portion of this program
requires that airline food be stored at temperatures below 41 degrees
Fahrenheit. Because the Company's testing in the airline industry have shown
that food stored using its products remain below this level, this new regulation
will have a positive impact on the Company's sales.
The "perishable" packaging industry must also follow U.S.D.A.
regulations in the United States and Agriculture Canada regulations in Canada.
Cryomat(TM) has been U.S.D.A. approved and Agriculture Canada accepted for use
with food products, including fish, meat and poultry.
The Company's Cryomat(TM) product has been registered with the U.S.
Patent and Trademark Office as a "Thermal Packaging Assembly" and received
patent number 4,931,333 on June 5, 1990. The product was also patented in Canada
on October 22, 1991 with patent number 1,291,073. The patent expires in Canada
on October 22, 2008 and in the United States on June 5, 2007. Both patents are
held by D. Lindley Henry. Lin Henry is a consultant for the company. A copy of
the Canadian patent is attached as an exhibit to this registration statement;
the United States patent is available from the U.S. Patent and Trademark Office.
Because these expiration dates are so far in the future, the Company feels that
the patent expirations will not make a significant impact upon the Company's
business.
The Company's subsidiary Cryopak Corporation has also trademarked the
words "Cryomat" and "Cryopak" with the United States Patent and Trademark
Office. The "Cryomat" trademark is registration number 1,420,052 dated December
9, 1986 and the "Cryopak" trademark is registration number 1,576,371 registered
January 9, 1990. These trademarks expire December 9, 2006 and January 9, 2000,
respectively. Additionally, Cryopak Corporation has trademarked "Super Cool
System" with the Canadian Trademark Office, registration number 441, 439 and
registration date March 31, 1995, as well as "Cooler Cube" with registration
number 441,438 and registration date March 31, 1995.
The Candaian subsidiary registered these trademarks.
<PAGE>
Cryopak (Canada) Corporation
Cryopak (Canada) Corporation, ("CCC") a British Columbia, Canada,
corporation, was incorporated on June 6, 1986 as 310302 B.C. Ltd. and changed
its name to Cryopak (Canada) Corporation on September 22, 1987. CCC has a wholly
owned subsidiary, Cryopak Corporation, a Nevada corporation formed on March 20,
1987. Additionally, CCC had a fifty percent (50%) interest in Cryopak (Alberta)
Corporation, an Alberta, Canada corporation formed in November 17, 1992, which
was dissolved in 1998. From inception until 1998, CCC has been handling all
sales activities up to the point when the Company started manufacturing in
Vancouver. From July 1998 onwards, CCC has been in charge of all sales to the
United States and worldwide while the Company is responsible for all sales
within Canada.
Cryopak (International) Inc.
Cryopak (International) Inc. is a Barbados corporation incorporated on
August 29, 1995. On March 19, 1996
<PAGE>
Cryopak (International) Inc., reached an agreement in principle with Erik
Petersson & Company, Inc. ("EPC") of Miami, Florida, to secure sales and
distribution contracts for the Company's products outside North America. Under
the terms of this agreement, EPC would be paid Cdn$2,500 per month until
contracts with customers were signed, plus five percent commission on total
gross sales generated by EPC and warrants issued to EPC's principal, Bertil I.
Petersson, based upon gross sales. These warrants were to be issued at a rate of
60,000 warrants for the first US$1,000,000 in gross sales and 30,000 warrants
for every additional US$500,000 in sales to a maximum of 600,000 warrants. All
warrants were exercisable for one year from the date of issuance. The agreement
stipulated a maximum of $10,000,000 gross sales, which must be generated within
five years. EPC has provided Cdn$680,000 in sales and the Company has not issued
any warrants. As part of this agreement, EPC's principal, Bertil I. Pertersson,
was appointed to the Company's board of directors. Bertil Petersson was never
officially appointed. Cryopak (International) Inc. has not had any activities to
date.
Item 2. Description of Property
Cryopak's principal executive offices are located at 1120-625 Howe
Street, Vancouver, British Columbia, Canada V6C2T6. Cryopak leases office space
for its corporate headquarters totaling 2,039 square feet at a rate of
Cdn$2,378.83 per month. The current lease expires on October 31, 2000. The
Company is reaching maximum office capacity and will likely be seeking
additional space prior to the expiry of the existing lease. The Company is
considering negotiating a purchase of our present manufacturer. This would
ensure adequate additional office space product testing facilities, and allow
complete monitoring and direct control of all manufacturing and production
functions.
Item 3. Legal Proceedings
Neither the Company nor any of its subsidiaries is a party to any legal
proceeding at this time.
Item 4. Control of Registrant
Cryopak is not directly or indirectly owned or controlled by any other
corporation or by any foreign government. The following table sets forth, as of
May 31, 1999, the beneficial ownership of the Company's Common Stock by each
person known by the Company to beneficially own more than 5% of the Company's
Common Stock outstanding as of such date and by the officers and directors of
the Company as a group. Except as otherwise indicated, all shares are owned
directly.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name and address of Amount and Nature Percent of
Title of Class beneficial owner Of Beneficial Ownership Class
<S> <C> <C> <C>
Common Shares Exceptional Technologies Funds 3 977,777 5.7%
2011 - 1177 W. Hastings St.
Common Shares Cryopak Industries (VCC) Inc. 1,043,722 6.0%
Common Shares Directors/Officers 1,461,241 8.5%
Harry Bygdnes
Robert Leigh Jeffs
Douglas Reid
John McEwen
John Morgan
Ross Morrison
</TABLE>
Item 5. Nature of Trading Market
The Company's common stock trades in Canada on the Vancouver Stock
Exchange. Non-Canadian investors are also able to trade the Company's stock on
this Exchange. As of March 31, 1999, the Company's stock was held by 388
American shareholders, which consisted of 34% of its total outstanding shares.
The high and low sales prices for the Company's common stock on the Vancouver
Stock Exchange over the past two fiscal years are as follows:
<PAGE>
<TABLE>
<CAPTION>
Fiscal Quarter High (Cdn$) Low(Cdn$)
<S> <C> <C>
April - June 1999 $1.15 $0.98
January - March 1999 $0.84 $0.74
October - December 1999 $0.89 $0.55
July - September 1998 $0.62 $0.39
April - June 1998 $0.46 $0.36
January - March 1998 $0.43 $0.36
October - December 1997 $0.42 $0.26
July - September 1997 $0.52 $0.41
April - June 1997 $0.60 $0.45
</TABLE>
Item 6. Exchange Controls and Other Limitations Affecting Security Holders
Except as discussed in Item 7 below, the Company is not aware of any
Canadian federal or provincial laws, decrees, or regulations that restrict the
export or import of capital, including foreign exchange controls, or that affect
the remittance of dividends, interest or other payments to nonCanadian holders
of Common Shares. The Company is not aware of any limitations on the right of
nonCanadian owners to hold or vote Common Shares imposed by Canadian federal or
provincial law or by the Company.
The Investment Canada Act (the "Act") governs acquisitions of Canadian
business by a nonCanadian person or entity. The Act provides, among other
things, for a review of an investment in the event of acquisition of control in
certain Canadian businesses in the following circumstances:
(1) if the investor is a non-Canadian and is not a
resident of a World Trade Organization ("WTO")
country, any direct acquisition having an asset value
exceeding $5,000,000 and any indirect acquisition
having an asset value exceeding $50,000,000;
(2) if the investor is a non-Canadian and is a resident
of a WTO member, any direct acquisition having an
asset value exceeding $168,000,000 unless the
business is involved in uranium production, financial
services, transportation services or a cultural
business.
An indirect acquisition of control by an investor who is a resident of
a WTO country is not reviewable unless the value of the assets of the business
located in Canada represents more than 50% of the asset value of the
transaction, or the business is involved in uranium production, financial
services, transportation services or a cultural business.
The Act provides that a non-Canadian investor can hold up to 1/3 of the
issued and outstanding capital of a Canadian corporation without being deemed a
"control person", and that a non-Canadian investor holding greater than 1/3 but
less than 1/2 of the issued and outstanding capital of a Canadian corporation is
deemed to be a control person subject to a rebuttable presumption to the
contrary (i.e. providing evidence of another control person or control group
holding greater number of shares).
The Act requires notification where a non-Canadian acquires control,
directly or indirectly, of a Canadian business with assets under the thresholds
for reviewable transaction. The notification process consists of filing a
notification within 30 days following the implementation of an investment.
Item 7. Taxation
The Income Tax Act (Canada) provides that interest and/or dividends
paid to persons who are not resident in Canada are subject to taxation in Canada
at a rate of 25% of the amount so paid. The tax is withheld by the payor at the
time of payment. The 25% withholding rate may be reduced where Canada and the
country of residence of the recipient have enacted a treaty with respect to
taxes on income and on capital. The Canada United States Income Tax Convention
of 1980 provides that the withholding rate on dividends and interest will be 15%
of any paid. There are no other taxes eligible for persons not resident in
Canada.
Item 8. Selected Financial Data
<PAGE>
<TABLE>
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
March 31, March 31, March 31, March 31, March 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Sales or Operating Revenues $1,295,159 $1,161,442 $1,140,242 $ 965,912 $1,053,456
Income (Loss) from Continuing
Operations ( 912,068) ( 638,553) ( 675,133)( 912,390) ( 799,428)
Income (Loss) from Continuing
Operations per common share ( 0.06) ( 0.05) ( 0.0)( 0.09) ( 0.09)
Total Assets 2,036,700 1,364,297 892,598 969,860 789,332
Long-Term Obligations and
Redeemable Preferred Stock
Long-Term Debt 350,000 0 0
Capital Leases 249,057 320,015 25,531 31,808
Redeemable Preferred Stock 0 0
Cash Dividends Declared per
Common Share N/A N/A N/A N/A N/A
</TABLE>
For further discussion of the Company's financial statements, including
factors such as accounting changes, business combinations or dispositions of
business operations, that materially affect the comparability of the information
reflected in the selected financial data, refer to the financial statements
attached hereto.
As of September 13, 1999, the exchange rate between the United
States and Canada was US$1.00 per Cdn$1.4703. Over the Company's past five
fiscal years, the exchange rate per US$1.00 has varied as follows:
<TABLE>
<CAPTION>
Rate at Average Low High
Fiscal Year Ended Year End Rate Rate Rate
<S> <C> <C> <C> <C>
March 31, 1999 $1.5092 $1.5033 $1.4173 $1.5765
March 31, 1998 $1.4166 $1.4023 $1.3669 $1.4639
March 31, 1997 $1.3843 $1.3609 $1.3306 $1.3843
March 31, 1996 $1.3632 $1.3629 $1.3282 $1.3987
March 31, 1995 $1.3990 $1.3824 $1.3408 $1.4235
</TABLE>
[NEED TO CALL FEDERAL RESERVE BANK AT 212-720-6130 FOR THE RATE OF EXCHANGE ON
MORNING OF FILING TO FILL IN BLANKS ABOVE]
Item 9. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the
financial statements and notes thereto included with this Form 20-F. Except for
the historical information contained herein, the discussion in this Registration
Statement contains certain forward-looking statements that involve risk and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this document
should be read as being applicable to all related forward-looking statements
wherever they appear in this document. The Company's actual results could differ
materially from those discussed here.
Liquidity
The Company has had the ability to raise adequate amounts of capital,
primarily through the issuance of equity (private placements and exercise of
stock options) to sustain its business operations and meet its debt obligations.
The Company believes that this type of financing will continue to provide cash
to meet its requirements until it attains profitable levels of operations.
Capital Resources
The Company has no long term commitments to make any further capital
expenditures other than as set out in its financial statements. However, as
sales increase generally, it will acquire additional manufacturing capacity.
<PAGE>
Results of Operations
The Company continues to explore for new opportunities to market its
product line. During the year ended March 31, 1999, the Company restructured its
management team to exploit these opportunities. At the same time, it streamlined
its manufacturing activities by acquiring its own equipment and exercising a
greater degree of control over this activity.
Item 9A. Quantitative and Qualitative Disclosures About Market Risk
Common Stock
The Company's common stock trades in Canada on the Vancouver Stock
Exchange. Non-Canadian investors are also able to trade the company's stock on
this exchange. The trading range of this stock over the last two years is set
out in tabular form under Item 5.
Market Risk
While the stock trades freely on the exchange, there is no assurance
that a buyer or buyers will be available to acquire any or all of the shares of
a seller or at a price that is favorable. The shares have a large trading volume
and the market is sensitive to large seller purchases.
Currency Risk
The stock trades on the Vancouver Stock Exchange in Canadian dollars.
An investor who trades in a currency other than Canadian dollars is subject to
the change in exchange rates between the non-Canadian currency and the Canadian
dollar. The average rates of exchange between the Canadian and US dollars is set
out under Item 8.
Dividends
The Company has not historically, nor does it anticipate paying
dividends on its common stock in the foreseeable future. The payment of such
dividends will be subject to the Company attaining a sustainable level of
profitability.
Preferred Stock
The Company has issued 530 Class A Preferred Shares, Series I. This
stock does not trade on a stock exchange. All dollar amounts are Canadian. No
other class of preferred shares has been created or issued.
Each Class A Preferred Share carries a 12%, cumulative dividend payable
at the company's fiscal year end, in either cash or common shares at the option
of the Company. Dividends in arrears at March 31, 1999 amounted to $64,039.
The Preferred Shares are convertible into common shares at the rate of
one common share for each $3 of paid up capital or the rate provided below:
$2.00at any time after December 31, 1998, provided that the Current
Trading Price shall never have exceeded $2.99 after December 31,
1996 or $2.49 after December 31, 1997.
at any time after December 1, 1999, provided that the Current Trading
Price shall never have exceeded $2.99 after December 31, 1996 or
$2.49 after December 1, 1997 or $1.99 after December 31, 1998, at a
common share price equal to that price which represents a 15%
discount to the then Current Trading Price, which common share price
in no event shall be less than $0.95;
But if not so converted prior to May 12, 2000, such Preferred Shares
shall be deemed to have been converted on May 12, 2000 at the applicable
conversion price described above. The Current Trading Price means
<PAGE>
the average trading price of the common shares on a recognized public stock
exchange for the preceding 20 business days.
Market Risk
The number of common shares to be received by an investor at conversion
may vary depending upon the trading price at the date of conversion, as set out
in the preceding paragraph.
The common shares which will be received upon conversion will range
between 333 and 1,053 common per preferred share (each of which was issued at
$1,000).
Item 10. Directors and Officers of Registrant
<TABLE>
Cryopak Industries Inc.
<CAPTION>
Arrangements Material
Name Title(s) Term of Office to Appointment
<S> <C> <C> <C>
Harry Bygdnes President, 1981 to Present None
Director 1981 to Present None
Robert Leigh Jeffs CFO, March 1999 to Present None
Director June 1990 to Present None
Harley D. Sinclair Secretary November 1995 to Present None
Ross G. Morrison Director April 1999 to Present None
John F. Morgan Director March 1999 to Present None
John A. McEwen Director August 1995 to Present None
</TABLE>
Cryopak (Canada) Corporation
<TABLE>
<CAPTION>
Arrangements Material
Name Title(s) Term of Office to Appointment
<S> <C> <C> <C>
Harry Bygdnes Secretary, 1987 - Present None
Director 1987 - Present None
Robert Leigh Jeffs President, March 1987 to March 1999 None
Director March 1987 to Present None
John F. Morgan President, March 1999 to Present None
CEO, and March 1999 to Present None
Director March 1999 to Present None
</TABLE>
Cryopak (International) Inc.
<TABLE>
<CAPTION>
Arrangements Material
Name Title(s) Term of Office to Appointment
<S> <C> <C> <C>
Harry Bygdnes Director August 1995 to Present None
Robert Leigh Jeffs Director August 1995 to Present None
</TABLE>
Item 11. Compensation of Directors and Officers
During the Company's last fiscal year ended March 31, 1999, the Company
paid an aggregate of Cdn$151,146 to its officers. The Company's directors do not
receive a salary, but are paid for out-of-pocket expenses incurred as directors
of the Company. Both the Company's officers and its directors have received
options for the Company's common stock at various exercise prices based upon the
average trading price for the ten trading days prior to the grant date.
Item 12. Options to Purchase Securities from Registrant or Subsidiaries
As of March 31, 1999, the following stock options of the Company were
outstanding:
<PAGE>
<TABLE>
<CAPTION>
Group Received Number of Shares Exercise Price Expiration Date
<S> <C> <C> <C>
Directors 170,000 $0.50 June 13, 1999
390,000 $0.52 August 17, 2000
343,000 $0.50 January 7, 2001
75,000 $0.52 June 19, 1999
200,000 $0.50 September 2, 1999
Officers 100,000 $0.40 June 26, 2000
136,300 $0.82 August 17, 2000
Employees 20,000 $0.52 June 16, 1999
100,000 $0.82 February 11, 2001
750,000* $0.76 March 19, 2004
</TABLE>
* These options will vest at a rate of 50,000 at the end of each calendar
quarter commencing March 31, 1999 and are subject to shareholder approval.
Item 13. Interest of Management in Certain Transactions
Over the past five fiscal years, the Company has given unsecured cash
advances to NCK Holdings, Inc. ("NCK"), which is owned by two of the directors
of Cryopak. These advances have included Cdn$56,972 during the fiscal year ended
March 31, 1995, Cdn$109,339 during the fiscal year ended March 31, 1996, Cdn$
90,668 during the fiscal year ended March 31, 1997, Cdn$70,572 during the fiscal
year ended March 31, 1998 and Cdn$48,868 during the fiscal year ended March 31,
1999. These amounts were not repaid during the fiscal year ended March 31, 1995;
however, commencing in the fiscal year ended March 31, 1996 NCK began repaying
the advances at a rate of Cdn$2,200 per month, which amount includes eight
percent annual interest.
The Company has also paid management fees and royalties to NCK. The
management fees were paid in exchange for management services and the royalties
were in exchange for the rights to the patent for the Cryomat product. Over the
past five fiscal years, these fees and royalties have been paid as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended Management Fees Royalties
<S> <C> <C>
March 31, 1995 Cdn$210,000 Cdn$17,722
March 31, 1996 Cdn$220,000 Cdn$20,159
March 31, 1997 Cdn$220,000 Cdn$22,934
March 31, 1998 Cdn$220,000 Cdn$26,289
March 31, 1999 Cdn$220,000 Cdn$26,261
</TABLE>
During the fiscal year ended March 31, 1996, the Company paid
commissions to Discovery Capital Corporation, the president and non-controlling
shareholder of which is a member of Cryopak's board of directors. These
commissions were paid in exchange for sales of the Company's stock as part of
the Cdn$2,000,000 venture capital Investment Agreement entered into between the
Company and Discovery Capital Corporation in March 1995 and totaled Cdn$56,560.
The Company paid an additional Cdn$15,540 in professional fees and Cdn$23,500 in
consulting fees to Discovery Capital Corporation during the fiscal year ended
March 31, 1997, also as a part of the terms of the Investment Agreement.
Other amounts paid to affiliated corporations during the past five
fiscal years include Cdn$10,000 in professional fees paid to a company owned by
a director during the fiscal years ended March 31, 1996 and March 31, 1998 and
professional fees of Cdn$22,200 paid in the fiscal year ended March 31, 1999.
The fees were paid to Reid & Company for advisory services.
The Company had accounts receivable of Cdn$12,446 owed to NCK Holdings
Inc. and Cdn$3,278 to Fulcrum Development Ltd., a company related by two
directors in common, during the fiscal year ended March 31, 1997. In the fiscal
year ended March 31, 1998 the accounts receivable were Cdn$7,658 to NCK Holdings
Inc. and Cdn$3,278 to Fulcrum Development Ltd., whose accounts receivable
balance was also at Cdn$3,278 during the fiscal year ended March 31, 1999.
PART II
Item 14. Description of Securities to be Registered
<PAGE>
Common Stock
Holders of the Common Stock are entitled to one vote for each share
held by them of record on the books of the Company in all matters to be voted on
by the stockholders. Holders of Common Stock are entitled to receive such
dividends as may be declared from time to time by the Board of Directors out of
funds legally available, and in the event of liquidation, dissolution or winding
up of the Company, to share ratably in all assets remaining after payment of
liabilities. Declaration of dividends on Common Stock is subject to the
discretion of the Board of Directors and will depend upon a number of factors,
including the future earnings, capital requirements and financial condition of
the Company. The Company has not declared dividends on its Common Stock in the
past and the management currently anticipates that retained earnings, if any, in
the future will be applied to the expansion and development of the Company
rather than the payment of dividends.
The holders of Common Stock have no preemptive or conversion rights and
are not subject to further calls or assessments by the Company. There are no
redemption or sinking fund provisions applicable to the Common Stock. The Common
Stock currently outstanding is, and the Common Stock offered by the Company
hereby will, when issued, be validly issued, fully paid and nonassessable.
Class A Preferred Stock, Series 1
Holders of the Class A Preferred Stock, Series I, shall be entitled to
receive notice of and attend all meetings of the shareholders of the Company and
shall have the right to vote at any such meetings on the basis of one vote for
each Series 1 Preferred Share held. The consideration for the issue of each
Class A Preferred Share, Series 1, shall be Cdn$1,000.
Each Class A Preferred Share, Series I, carry a 12% annual, cumulative
dividend, payable at the end of the Company's most recent fixed fiscal year end,
at the option of the Company, in either cash or Common Shares, the value of the
Common Shares being calculated on the basis of the Current Trading Price. No
dividends shall be declared or paid on any other class of shares unless and
until all unpaid dividends on the Series 1 Preferred Shares have been paid.
At any time after December 31, 1996, each Class A Preferred Share,
Series I, shall be convertible into Common Shares on the basis of a Common Share
price of Cdn$3.00 each, or at such lower price as may be provided below as
follows:
1. Cdn$2.50 at any time after December 31, 1997, provided that
the Current Trading Price shall never have exceeded Cdn$2.99
after December 31, 1996;
2. Cdn$2.00 at any time after December 31, 1998, provided that
the Current Trading Price shall never have exceeded Cdn$2.99
after December 31, 1996 or Cdn$2.49 after December 31, 1997;
3. At any time after December 31, 1999, provided that the Current
Trading Price shall never have exceeded Cdn$2.99 after
December 31, 1996 or Cdn$2.49 after December 31, 1997 or
Cdn$1.99 after December 31, 1998, at a Common Share Price
equal to that price which represents a 15% discount to the
then Current Trading Price, which Common Share price in no
event shall be less than $0.95.
Any shares not converted prior to May 12, 2000 shall be deemed to have been
converted on May 12, 2000 at the applicable conversion price described above. If
there is a subdivision or consolidation of the Class A Preferred Shares prior to
conversion of the Series I Preferred Shares into Common Shares, then the
applicable conversion formula shall be proportionally adjusted.
In the event of a dissolution, winding up or other return of capital of
the Company, registered holders of the Class A Preferred Shares, Series I, shall
be entitled to receive the amount paid up on such shares and all unpaid
dividends before any amount shall be paid or any property or asset of the
Company is distributed to the registered holders of any other classes of shares.
After payment to the registered holders of the Series I Preferred Shares of the
amount so payable to them as provided above, they shall not be entitled to share
in any future distribution for the property or assets of the Company.
<PAGE>
PART IV
Item 17. Financial Statements
INTERNATIONAL CONSORT INDUSTRIES INC
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 1993
AND AUDITORS' REPORT
Hay & Watson CHARTERED ACCOUNTANTS
AUDITORS'REPORT
To the Shareholders of International Consort Industries Inc.
We have audited the consolidated balance sheets of International Consort
Industries Inc. as at March 31, 1993 and 1992 and the consolidated statements of
loss and deficit, and of changes in cash flows for each of the years in the
three year period ended March 31, 1993. These consolidated financial statements
are the responsibility of the company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial CP
statement presentation.
In our opinion, these consolidated financial statements present fairly, the
financial position of the company as at March 31, 1993 and 1992 and the results
of its operations and the changes in its cash flow for each of the years in the
three year period ended March 31, 1993 in accordance with accounting principles
generally accepted in Canada. As required by the Company Act of British Columbia
we report that, in our opinion, these principles have been applied on a basis
consistent with that of the preceding year.
CHERTERED ACCOUNTANTS
Vancouver, B. C.
August 18, 1993
1822 West 2nd Avenue, Vancouver, B.C. V6J 1H9 (604)732-1466 Fax (604) 732-3133
<PAGE>
INTERNATIONAL CONSORT INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1992 AND 1991
(Stated in Canadian Dollars)
<TABLE>
ASSETS
<CAPTION>
1993 1992
<S> <C> <C>
Current
Cash $ 10,074 535,541
Accounts receivable 172,905 204,475
Inventory 40,636 9,913
Marketable securities (Note 3) 100 100
Prepaid expenses 3,609 33,609
227,324 783,638
Capital assets (Notes I and 4) 8,429 14,048
Advance to related company (Note 6) - 42,831
Intangibles, (Notes I and 5) 886,765 945,563
Mineral claims, option and
working interest 12,001 26,695
Deferred exploration costs 1 297,579
Minority interest 145 -
$1,134,665 $2,110,354
LIABILITIES
Current
Accounts payable and accrued
liabilities $ 363,472 184,075
Loans payable 8,688 12,545
372,160 196,620
Advance from related company
(Note 6) 11,331 -
Deferred income taxes 20,467 20,467
403,958 217,087
SHAREHOLDERS' EQUITY
Share capital (Note 7) 4,752,743 4,485,743
Authorized
10,000,000 common shares without par value
Issued and Outstanding
7,923,242 (1992 - 7,615,242) common shares
Deficit (4,022,036) (2,592,476)
730,707 1,893,267
$1,134,665 2,110,354
</TABLE>
APPROVED BY THE BOARD:
DIRECTOR
DIRECTOR
<PAGE>
INTERNATIONAL CONSORT INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
YEAR ENDED MARCH 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Sales $1,035,325 $1,152,222 $ 457,731
Cost of sales 839,900 611,114 274,191
Gross profit 195,425 541,108 183,540
Operating expenses, Schedule 1 774,868 577,266 411,513
Operating loss (579,443) (36,158) (227,973)
Other (income) expenses
Filing, listing and transfer agent fees 15,432 19,114 9,996
Corporate printing, financial and public relations 516,867 255,306 60,255
Royalties 27,248 37,205 17,838
Depreciation and amortization 66,661 70,520 54,303
Equity (income) loss - - 11,462)
Write off of abandoned mineral claims
and related exploration costs 312,272 140,840 -
Minority interest (146) - -
Gain on disposition of subsidiary - - (84,168)
Loss on write down and sale of marketable securities - - 780
Miscellaneous income (60,676) - -
Commission income (27,541) - -
850,117 522,985 47,542
Loss before income taxes (1,429,560) (559,143) (275,515)
Deferred income tax recovery - - 7,363
Net loss for the year
(1,429,560) (559,143) (268,152)
Deficit, beginning of year (2,592,476) (2,033,333) (1,765,181)
Deficit, end of year
(4,022,036) (2,592,476) (2,033,333)
Loss per share (Note 7) (0.19) (0.09) (0.06)
Weighted average common shares outstanding' 7,622,242 6,116.075 4,752,459
</TABLE>
<PAGE>
INTERNATIONAL CONSORT INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN CASH FLOWS
YEAR ENDED MARCH 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Operating activities
Net loss $(1,429,560) (559,143) (268,152)
Items not affecting cash flow
Equity income ( 145) - 11,462
Write off of abandoned mineral claims
and related exploration costs 312,272 140,840 -
Gain on disposal of subsidiary - - 84,168
Depreciation and amortization 66,661 70,520 54,303
Loss on write down and sale of
marketable securities - - 780
Deferred income tax recovery (7,363)
Write down of inventory - - -
Shares cancelled by settlement of lawsuit ( 57.600)
Shares issued for interest in subsidiary - - 426,439
Liabilities settled by issue of company shares (193,272) 404,112
Shares issued for patent - - 150,000
(1,108,372) (541,055) (855,749)
Changes in other operating items
Accounts receivable 31,570 (184,080) ( 12,297)
Inventory (30,723) ( 3,225) ( 6,688)
Prepaid expenses 30,000 ( 26,125) ( 4,375)
Accounts payable 179,397 (113,699) 165,702
Management fees payable - ( 74,249) 45,038
Loans payable ( 3,857) 1,422 (108,542)
Cash used for operating activities ( 901,985) (941,011) 934,587
Cash flow from financing activities
Advance to private company - - ( 105,762)
Issue of shares 324,600 1,553,092 99,580
Cash provided by financing activities 324,600 1,553,092 ( 6,182)
Cash flows investing activities
Acquisition of subsidiary - - ( 804,264)
Acquisition of capital assets ( 2,244) ( 7,853) -
Acquisition of patent license - - ( 150,000)
Advances (to) from related company 54,162 ( 67,612) 24,781
51,918 ( 75,465) ( 929,483)
(Decrease) increase in cash during the year
( 525,467) 536,616 ( 1,078)
Cash (bank indebtedness), beginning of year
535,541 ( 1,075) 3
Cash (bank indebtedness), end of year $ 10,074 535,541 ( 1,075)
</TABLE>
<PAGE>
INTERNATIONAL CONSORT INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1993 AND 1992
(Stated in Canadian Dollars)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with generally
accepted accounting principles in Canada and reflect the following policies:
Basis of Presentation
- ---------------------
The consolidated financial statements include the accounts of the company and
its wholly-owned subsidiary, Cryopak (Canada) Corporation its wholly-owned
subsidiary Cryopak Corporation, a Nevada corporation, and its subsidiary Cryopak
(Alberta) Corporation.
Inventories
- -----------
Inventories are valued at the lower of cost or net realizable value. Cost is
determined by an average cost method.
Marketable Securities
- ---------------------
Marketable securities are recorded at the lower of cost and market value.
Mineral Claims, Option and Deferred Costs
- -----------------------------------------
The company's mineral claims are in the exploration stage and, based on
information available to date, the company has not yet determined whether these
properties contain economically recoverable ore reserves. Costs associated
with these mineral claims, including exploration and development costs, are
deferred until such time as the properties are in commercial production,
abandoned or sold.
The recoverability of the amounts shown for mineral claims and related deferred
development costs is dependent upon the confirmation of economically recoverable
reserves, the ability of the company to obtain the financing to successfully
complete their development and upon future profitable production.
Depreciation
- ------------
The company records depreciation on its capital assets using the straight-line
method over five years.
Investments
- -----------
Investments in companies in which the company exercises significant influence
are accounted for using the equity method.
Patent License
- --------------
The patent license is recorded at cost and is amortized on a straight-line
basis over seventeen years.
Deferred Development and Research Costs
- ---------------------------------------
The deferred development and research costs are recorded at cost and are
amortized on a straight-line basis over twenty years.
Goodwill
- --------
The excess of cost of the purchase of a subsidiary company over the fair value
of assets acquired (consolidated goodwill) is amortized on a straight-line
basis over seventeen years.
<PAGE>
2. OPERATIONS
The ability of the company to continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities and commitments
in the normal course of business, is dependent on obtaining the financing
necessary to continue operations and, ultimately, profitable operations. The
company is engaged in discussions for these purposes but no arrangements are
in place and there can be no assurances that such arrangements will be made.
3. MARKETABLE SECURITIES
Investment in 2,500 shares (1992 - 2,500) of joint venture partner, received as
part of the proceeds in exchange for a 50 % interest in the West claim. Market
value at March 3 1, 1993 - $300 (1992 - $ 100).
4. CAPITAL ASSETS
<TABLE>
<CAPTION>
1993
Accumulated Net Book Net Book
Cost Depreciation Value Value
<S> <C> <C> <C> <C>
Furniture and fixtures $75,002 $66,573 $8,429 $14,048
</TABLE>
5. DEFERRED DEVELOPMENT RESEARCH COSTS, PATENT LICENSE AND GOODWILL
<TABLE>
<CAPTION>
1993 1993 1992
Accumulated Net Book Net Book
Cost Amortization Value Value
<S> <C> <C> <C> <C>
Deferred development
research costs $325,983 $ 44,822 $ 281,161 $ 297,459
Patent license 566,323 91,613 474,710 508,024
Goodwill 156,155 25,261 130,894 140,080
1,048,461 161,696 886,765 945,563
</TABLE>
6. ADVANCE TO/(FROM) RELATED COMPANY
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Advance to/(from) N.C.K. Holdings Ltd. $(11,331) $ 42,831
</TABLE>
The related company is owned by two directors. The advance is unsecured
non-interest bearing, and without terms of repayment.
7. SHARE CAPITAL
<TABLE>
<CAPTION>
Authorized
<S> <C>
10,000,000 common shares without par value
Issued and outstanding
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
Number Number Number
of of of
Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of year 7,615,242 $ 4,485,743 5,370,019 $ 2,932,651 4,737,353 $ 2,045,792
Consolidation of outstanding shares
on a 1 for 2 basis - - - - (2,368,677) -
Cancelled by settlement of lawsuit (192,000) (57,600) - - - -
Issued during the year
For cash 500,000 324,600 1,961,000 1,359,820 288,010 99,580
For interest in subsidiary - - - - 1,421,463 426,439
For patent - - - - 500,000 150,000
For settlement of debt - - 284,223 193,272 791,870 210,840
500,000 324,600 2,245,223 1,553,092 3,001,343 886,859
7,923,242 $ 4,752,743 7,615,242 $ 4,485,743 5,370,019 $ 2,932,651
</TABLE>
<PAGE>
On March 31, 1993, the following stock options were outstanding:
<TABLE>
<CAPTION>
Number of Exercise
Shares Price Expiry Date
<S> <C> <C> <C>
Directors 314,300 $0.80 May 27, 1997
Employees 192,500 0.80 May 27, 1997
Employees 100,000 0.85 February 23, 1995
</TABLE>
8. INCOME TAXES
The company has losses available for utilization against future years' taxable
incomes which, if unused, will expire as follows:
<TABLE>
<CAPTION>
<S> <C>
1994 $ 167,789
1995 359,062
1996 274,933
1997 276,415
1998 296,801
1999 1,089,726
</TABLE>
<PAGE>
INTERNATIONAL CONSORT INDUSTRIES INC.
CONSOLIDATED SCHEDULES OF OPERATING EXPENSES
YEAR ENDED MARCH 31, 1993, 1992 AND 1991
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Bad debts 68,986 - 5,471
Commissions 26,581 31,775 12,786
Management fees 168,000 120,000 120,000
Foreign exchange 14,214 16,812 6,012
Interest and bank charges 7,231 7,276 20,590
Media advertising, marketing and promotion 61,607 39,762 20,255
Office supplies and stationery 93,804 50,554 37,051
Professional fees 46,505 111,360 70,790
Rent 51,566 47,300 31,264
Salaries and benefits 98,188 68,435 46,456
Telephone 62,357 45,741 19,452
Travel 63,731 26,649 12,192
Vehicle 11,098 11,602 9,194
774,868 577,266 411,513
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED MARCH 31,1995
AND AUDITORS REPORT
CRYOPAK INDUSTRIES INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31,1995 AND 1994
Auditors Report
Balance Sheets
Consolidated Statements of Loss and Deficit
Consolidated Statements of Changes in Financial Position
Notes to Consolidated Financial Statements
Consolidated Schedules of Operating Expenses
Hay & Watson CHARTERED ACCOUNTANTS
AUDITORS' REPORT
To the Shareholders
of Cryopak Industries Inc.
We have audited the consolidated balance sheets of Cryopak Industries Inc. as at
March 31, 1995 and 1994 and the consolidated statements of loss and deficit and
of changes in financial position for each of the years in the three year period
ended March 31, 1995. These consolidated financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.
In our opinion, these consolidated financial statements present fairly the
financial position of the company as at March 31, 1995 and 1994 and the results
of its operations and the changes in its cash flows for each of the years in the
three year period ended March 31, 1995 in accordance with accounting principles
generally accepted in Canada. As required by the Company Act of British
Columbia, we report that, in our opinion, these principles have been applied on
a basis consistent with that of the preceding year.
CHARTERED ACCOUNTANTS
Vancouver, B.C.
August 17, 1995
1822 West 2nd Avenue, Vancouver, B.C. V6J IH9 -(604) 732-1466 Fax (604) 732-3133
<PAGE>
Hay & Watson CHARTERED ACCOUNTANTS
COMMENTS BY INDEPENDENT CHARTERED ACCOUNTANTS
FOR UNITED STATES READERS ON DIFFERENCES BETWEEN
REPORTING STANDARDS IN CANADA AND THE UNITED STATES
These consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada, which as explained in Note
12 to the consolidated financial statements, differ from accounting principles
generally accepted in the United States. In addition, United States reporting
standards for auditors require the addition of an explanatory paragraph
(following the opinion paragraph) when financial statements are affected by
significant uncertainties such as those described in Note 4 to these
consolidated financial statements under the caption "Operations". Our report to
the shareholders dated August 17, 1995 is expressed in accordance with Canadian
reporting standards which do not permit a reference to such uncertainties in the
auditors' report when the uncertainties are adequately disclosed in the
financial statements.
CHARTERED ACCOUNTANTS
Vancouver, B.C.
August 17, 1995
1822 West 2nd Avenue, Vancouver, B.C. V6J 1H9 (604) 732-1466 Fax (604) 732-3133
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS
MARCH31
(Stated in Canadian Dollars)
<TABLE>
ASSETS
<CAPTION>
1995 1994
<S> <C> <C>
Current
Cash $ 1,709 $ 1,842
Accounts receivable 83,204 152,482
Inventory 29,913 93,277
Marketable securities (Note 5) 100 100
Prepaid expenses 3,609 3,609
Due from employees - 5,240
118,535 256,550
Capital assets (Notes I and 6) 15,405 8,198
Advance to related company
(Note 8) 56,972 62,559
Intangibles (Notes I and 7) 598,420 827,963
$ 789,332 $1,155,270
LIABILITIES
Current
Bank indebtedness 6,373 -
Accounts payable and
accrued liabilities 346,635 257,143
Loans payable - 11,295
353,008 268,438
Deferred income taxes 20,467 20,467
373,475 288,905
SHAREHOLDERS EQUITY
Share capital (Note 9)
Authorized
100,000,000 common shares
without par value
Issued and outstanding
9,677,542 (1994-8,966,542)
common shares 5,972,928 5,623,668
(Deficit) (5,557,071) (4,757,303)
415,857 866,365
789,332 1,155,270
</TABLE>
APPROVED BY THE BOARD
DIRECTOR
DIRECTOR
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
YEAR ENDED MARCH 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1994 1993
1995 RESTATED RESTATED
<S> <C> <C> <C>
Sales $1,053,456 1,0176,266 1,035,325
Cost of sales
Materials 605,804 620,985 761,085
Packaging - - 2,817
605,804 620,985 763,902
Gross profit 447,652 455,281 271,423
Operating expenses,
Schedule 1 1,094,739 991,886 1,164,966
Operating (loss) ( 647,087) ( 536,605) (893,543)
Other (income) expenses
Filing, listing and
transfer agent
fees 21,157 27,599 15,432
Corporate printing,
financial and public
relations 142,617 158,686 266,059
Write off of abandoned
mineral claims and
related exploration
costs - 12,002 312,272
Minority interest - - 146
Recovery on shares
cancelled by settlement
of lawsuit - - (57,600)
Write off of loans
payable (11,295) - -
Other income ( 138) - -
152,341 198,287 536,017
(Loss) before income
taxes (799,428) (734,892) (1,429,560)
Income taxes 340 375 -
Net(loss)for
the year (799,768) (735,267) (1,429,560)
(Deficit),
beginning of year(4,757,303) (4,022,036) (2,592,476)
(Deficit),
end of year (5,557,071) (4,757,303) (4,022,036)
(Loss) per share $ (0.09) $ (0.09) $ (0.19)
Weighted average
common shares
outstanding 9,280,487 8,479,766 7,622,242
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
YEAR ENDED MARCH 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1994 1993
1995 RESTATED RESTATED
<S> <C> <C> <C>
Operating activities
Net (loss) $( 799,768) $( 735,267) $(1,429,560)
Items not affecung cash flow
Minority interest - - 145
Write off of abandoned mineral claims
and related exploration costs - 12,002 312,272
Depreciation and amortization 236,623 65,840 66,661
Gain on settlement of lawsuit - - ( 57,600)
Write off of loans payable ( 11,295) - -
( 574,440) (657,425) (1,108,372)
Changes in other operating items
Accounts receivable 69,278 20,568 31,570
Due from employees 5,240 ( 5,240) -
Inventory 63,364 ( 52,641) ( 30,723)
Prepaid expenses - - 30,000
Accounts payable 89,492 (106,329) 179,397
Cash (used for) operating activities ( 347,066) (801,067) ( 898,128)
Cash flow from financing activities
Issue of shares 315,260 870,925 324,600
Liabilities settled by issue of
company shares 34,000 - -
Loans payable - 2,607 3,857
Cash provided by financing activities 349,260 873,532 320,743
Cash flow from investing activities
Acquisition of capital assets ( 14,287) ( 6,807) ( 2,244)
Advances (to) from related company 5,587 ( 73,890) 54,162
Cash (used for) provided by investing
activities ( 8,700) ( 80,697) 51,918
(Decrease) in cash during the year ( 6,506) ( 8,232) (525,467)
Cash, beginning of year 1,842 10,074 535,541
Cash(bank indebtedness)end of year $( 4,664) $ 1,842 $ 10,074
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED SCHEDULES OF OPERATING EXPENSES
YEAR ENDED MARCH 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1994 1993
1995 RESTATED RESTATED
<S> <C> <C> <C>
Bad debts $ 28,731 165 18,369
Commissions 9,110 13,054 26,581
Depreciation and amortization 236,623 65,840 66,661
Foreign exchange 33,228 (19,244) 14,214
Freight and duty 31,741 48,968 75,937
Interest and bank charges 16,178 7,984 7,231
Management fees 210,000 192,000 168,000
Marketing 46,222 85,822 202,215
Office supplies and stationery 49,781 97,372 93,804
Professional fees 75,088 65,487 60,474
Rent 47,838 54,089 52,566
Royalties 26,584 25,959 27,248
Salaries and benefits 146,677 136,885 98,188
Storage 16,751 12,509 20,061
Telephone 46,662 62,121 62,357
Travel 64,460 134,005 159,962
Vehicle 9,065 8,870 11,098
$1,094,739 $991,886 $1,164,966
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31,1995 AND 1994
(Stated in Canadian Dollars)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with generally
accepted accounting principles in Canada and reflect the following policies:
Basis of Presentation
- ---------------------
The consolidated financial statements include the accounts of the company and
its wholly-owned subsidiary, Cryopak (Canada) Corporation its wholly-owned
subsidiary Cryopak Corporation, a Nevada corporation, and its proportionate
interest (50%) in a joint venture, Cryopak (Alberta) Corporation.
Inventories
- -----------
Inventories are valued at the lower of cost or net realizable value. Cost is
determined by an average cost method.
Marketable Securities
- ---------------------
Marketable securities are recorded at the lower of cost and market value.
Depreciation
- ------------
The company records depreciation on its capital assets using the straight-line
method over five years.
Patent License
- --------------
The patent license is recorded at cost and is amortized on a straight-line basis
over seventeen years.
Deferred Development Costs
- --------------------------
The deferred development costs are recorded at cost and are amortized on a
straight-line basis over ten years.
Foreign Currency
- ----------------
Foreign currency accounts are translated using the temporal method whereby
current assets and current liabilities are translated to Canadian dollars at
year end exchange rates, other assets and liabilities at exchange rates
prevailing at the dates of transactions, and revenue and expenses at the average
rate during the year. Gains and losses from foreign exchange currency
translation are included in the consolidated statement of loss and deficit.
Goodwill
- --------
The excess of cost of the purchase of a subsidiary company over the fair value
of assets acquired (consolidated goodwill) is amortized on a straight-line
basis over seventeen years.
<PAGE>
2. CHANGE IN ACCOUNTING POLICY
Effective April 1994 the company changed its method of accounting for its 50%
interest in Cryopak (Alberta) Corporation. Up to that date the company had
effective control and presented the financial statements on a consolidated
basis. The current arrangement is that of a joint venture and the financial
statements have been presented on a proportionate interest basis. The prior year
figures have been restated to reflect the retroactive application of this policy
for comparative purposes. The effect of this change on the net loss for the year
end March 31, 1994 is not significant. The sales, cost of sales and operating
expenses for 1994 have been reduced by $72,344, $64,461 and $7,296 respectively.
3. CHANGE IN ESTEVIATES
Effective April 1994 the company determined that as a result of a change in
marketing strategy deferred marketing costs included in deferred development
costs should no longer be deferred. Deferred marketing costs of $211,966 were
being amortized on a straight-line basis over 20 years. The net balance of
$172,223 has been expensed as depreciation in the current year.
Effective April 1994 the estimated useful life for product development costs has
been reduced from 20 years to 10 years.
The above accounting changes have been applied on a prospective basis and the
effect of this change is to increase depreciation expense and net loss for the
year by $170,741 and depreciation expense in each of the following five years by
$9,121.
4. OPERATIONS
The ability of the company to continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities and commitments in
the normal course of business, is dependent on obtaining the financing necessary
to continue operations and, ultimately, profitable operations. The company is
engaged in discussions for these purposes. (Note 11)
5. MARKETABLE SECURITIES
Investment in 2,500 shares (1994 - 2,500) of Roxwell Gold Mines Ltd. Market
value at March 31, 1995 - $350 (1994 $350).
6. CAPITAL ASSETS
<TABLE>
<CAPTION>
1995 1994
Accumulated Net Book Net Book
Cost Depreciation Value Value
<S> <C> <C> <C> <C>
Computer hardware and software $18,530 $ 6,269 $12,261 $ 3,936
Furniture and fixtures 77,565 74,421 3,144 4,262
$96,095 $80,690 $15,405 $ 8,198
</TABLE>
7. INTANGIBLES
<TABLE>
<CAPTION>
1995 1994
Accumulated Net Book Net Book
Cost Amortization Value Value
<S> <C> <C> <C> <C>
Deferred development costs $325,983 $248,167 $ 77,816 $264,861
Patent licence 566,323 158,241 408,082 441,394
Goodwill 156,155 43,633 112,522 121,708
$1,048,461 $450,041 $598,420 $827,963
</TABLE>
8. ADVANCE TO RELATED COMPANY
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Advance to N.C.K. Holdings Ltd. $ 56,972 $ 62,559
</TABLE>
The related company is owned by two directors. The advance is unsecured,
non-interest bearing and without terms of repayment. During the year the company
paid $210,000 (1994 - $192,000) as management fees to N.C.K. Holdings Ltd.
During the year the company also paid royalties of $17,722 (1994 - $17,306) to
N.C.K. Holdings Ltd.
9. SHARE CAPITAL
<TABLE>
<CAPTION>
Authorized
<S> <C>
100,000,000 common shares without par value
Issued and outstanding
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
Number Number Number
of of of
Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of year 8,966,542 $ 5,623,668 7,923,242 $ 4,752,743 7,615,242 $4,485,743
Cancelled by settlement of lawsuit - - - - (192,000) ( 57,600)
Issued during the year
For cash 661,000 315,260 1,043,300 870,925 500,000 324,600
For settlement of debt 50,000 34,000 - - - -
711,000 349,260 1,043,300 870,925 500,000 324,600
Balance, end of year 9,677,542 $5,972,928 8,966,542 $5,623,668 7,923,242 $4,752,743
</TABLE>
On March 31, 1995, the following stock options were outstanding:
<TABLE>
<CAPTION>
Number of Exercise Expiry
Shares Price Date
<S> <C> <C> <C>
Directors 104,700 0.45 May 6, 1996
82,000 0.45 May 30, 1996
50,000 0.55 Aug 23, 1996
155,000 0.26 Mar 3, 1997
75,000 0.45 May 27, 1997
Employees 20,000 0.45 May 27, 1997
145,000 0.45 January 28, 1996
150,000 0.30 Oct 6, 1996
</TABLE>
On March 31, 1995 the following non-transferable share purchase warrants were
outstanding:
<TABLE>
<CAPTION>
Number of Warrant
Shares to Number of Exercise Expiry
Purchase Warrants Price Date
<S> <C> <C> <C>
116,000 116,000 $0.26 Up to October 6, 1995
0.30 from October 7, 1995
to October 6, 1996
</TABLE>
<PAGE>
10. INCOME TAXES
The company has losses available for utilization against future years' taxable
incomes which, if unused, will expire as follows:
<TABLE>
<CAPTION>
<S> <C>
1995 $167,789
1996 359,062
1997 274,933
1998 276,415
1999 296,801
2000 1,089,726
2001 658,014
</TABLE>
11. SUBSEQUENT EVENTS
The company entered into an Investment Agreement, April 3, 1995 with Cryopak
Industries (VCC) Inc. for a private placement of up to $2,000,000 as follows:
(a) up to $500,000 for common shares on the sis of $ 0.40 per share for the
first $100,000 received, $ 0.50 per for the second $100,000 received, $ 0.60 per
share for the third $100,000 received, $ 0.70 per share for the fourth $ 100,000
received, $ 0.80 per share for the fifth $ 100,000.
(b) up to $1,500,000 for Class A Preferred shares on the basis of one such share
for each $1,000 so invested.
The common shares carry a warrant to purchase one additional common share at a
price equal to a $ 0. 10 premium to the price of the corresponding issued common
share. The warrants expire one calendar year from their date of issue.
The Class A Preference shares will have the following rights and restrictions:
(i) each share shall be entitled to one vote at all shareholders meetings;
(ii) each share will carry a 12% annual, cumulative dividend, payable, at the
option of the company in either cash or Common Shares, the value of the Common
Shares being calculated on the basis of the Current Trading Price as at the end
of the company's most recent fixed fiscal year end;
(iii) at any time after December 31, 1996, each share will be convertible into
Common Shares on the basis of a Common Share price of $3.00 each, or at such
lower price as may be provided below:
(aa) $2.50 at any time after December 31, 1997, provided that the Current
Trading Price shall never have exceeded $2.99 after December 3 1, 1996;
(bb) $2.00 at any time after December 31, 1998, provided that the Current
Trading Price shall never have exceeded $2.99 after December 3 1, 1996 or $2.49
after December 3 1, 1997;
(cc) at any time after December 31, 1999, provided that the Current Trading
Price shall never have exceeded $2.99 after December 31, 1996 or $2.49 after
December 31, 1997 or $1.99 after December 31, 1998, at a Common Share price
equal to that price which represents a 15% discount to the then Current Trading
Price subject, however, to applicable regulatory authority policy;
but if not so converted prior to May 12, 2000, such shares will be deemed to
have been converted on May 12, 2000 at the applicable conversion price described
above;
(iv) each share will have a par value of $ 1,000;
(v) if there is a subdivision or consolidation of the Class A Preferred Shares
prior to conversion into Common Shares then the applicable conversion formula
shall be proportionately adjusted;
(vi) no dividends shall be declared or paid on any other class of shares unless
and until all unpaid dividends on the Class A Preferred Shares have been paid;
(vii)each share shall rank in priority to any other class of shares in the event
of a dissolution, winding up or other return of capital.
As at August 17, 1995 the VCC had raised $143,000 and had advanced $88,000 to
the company.
12. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
a) Generally accepted accounting principles ("GAAP") used in the United
States of America differ in certain respects from GAAP used in Canada.
Differences which materially affect these consolidated financial statements
are: United States GAAP require deferred development costs be expensed as
incurred whereas Canadian GAAP allows these expenses to be deferred and
amortized. Had the consolidated financial statements been prepared in
accordance with United States GAAP as described above, the following changes
would have been made:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Total Assets - Canadian GAAP $789,332 1,155,761 1,134,665
Deferred development costs ( 77,816) (264,861) (276,884)
Total Assets - United States GAAP 711,516 890,900 857,781
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Shareholders' equity - Canadian GAAP $415,857 $866,365 $730,707
Deferred development costs (77,816) (264,861) (276,884)
Shareholders' equity -
United States GAAP 338,041 601,504 453,823
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Net Loss - Canadian GAAP $(799,768) $(734,517) $(1,429,560)
Amortization of deferred development 187,045 16,299 20,575
costs
Net Loss - United States GAAP (612,723) (718,218) (1,408,985)
</TABLE>
b) United States GAAP require non-cash investing and financing activities to be
excluded from the Consolidated Statements of Changes in Financial Position,
whereas Canadian GAAP require these activities to be included in the Statement.
Had the Consolidated Statement of Changes in Financial Position been prepared in
accordance with U.S. GAAP the following transactions would have been excluded:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Liabilities settled by issue of company shares $34,000 - 193,272
Shares issued for patent - - 150,000
</TABLE>
c) Loss per share
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
0.07 0.08 0.18
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED MARCH 31 1996
AND AUDITORS REPORT
CRYOPAK INDUSTRIES INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31,1996 AND 1995
Auditors Report
Balance Sheets
Consolidated Statements of Loss and Deficit
Consolidated Statements of Changes in Financial Position
Notes to Consolidated Financial Statements
Consolidated Schedules of Operating Expenses
Hay & Watson CHARTERED ACCOUNTANTS
AUDITORS REPORT
To the Shareholders
of Cryopak Industries Inc.
We have audited the consolidated balance sheets of Cryopak Industries Inc. as at
March 31, 1996 and 1995 and the consolidated statements of loss and deficit and
of changes in financial position for each of the years in the three year period
ended March 31, 1996. These consolidated financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the consulidated financial statements arc free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at March 31, 1996
and 1995 and the results of its operations and the changes in its cash flows for
each of the years in the three year period ended March 31, 1996 in accordance
with accounting principles generally accepted in Canada. As required by the
Company Act of British Columbia, we report that, in our opinion, these
principles have been applied on a basis consistent with that of the preceding
year.
CHARTERED ACCOUNTANTS
Vancouver, B.C.
July 5, 1996
1822 West 2nd Avenue, Vancouver, B.C. V6J IH9 -(604) 732-1466 Fax (604) 732-3133
Hay & Watson CHARTERED ACCOUNTANTS
<PAGE>
COMMENTS BY AUDITOR FOR U.S. READERS
ON CANADA - U.S. REPORTING DIFFERENCES
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the ophuon paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the company's ability to continue as a going concern, such as those described in
Note 2 to the financial statements. Our report to the shareholders dated July 5,
1996 is expressed in accordance with Canadian reporting standards which do not
permit a reference to such events and conditions in the Auditor's Report when
these are adequately disclosed in the financial statements.
CHARTERED ACCOUNTANTS
Vancouver, B.C.
July 5, 1996
1822 West 2nd Avenue, Vancouver, B.C. V6J 1IH9 (604)732-1466 Fax (604)732-3133
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS
March 31
(Stated in Canadian Dollars)
<TABLE>
ASSETS
<CAPTION>
1996 1995
<S> <C> <C>
Current
Cash $331,045 $ 1,709
Accounts receivable 134,338 83,204
Inventory 52,183 29,913
Investments
(Notes I and 3) 25,442 100
Prepaid expenses 9,476 3,609
Due from employees 10,218 -
________ ________
$264,702 $118,535
Capital assets
(Notes I and -4) 51,610 15,405
Advance to related company
(Note 5) 109,339 56,972
Intangibles (Notes I and 6) 544,209 598,420
________ ________
$969,860 $789,332
LIABILITIES
Current
Bank indebtedness $ - $ 6,373
Accounts payable and
accrued liabilitie 416,174 346,635
Current portion of
capital lease obligation 5,874 -
________ ________
$422,048 $353,008
Capital lease obligation
(Note 7) 31,808 -
Deferred income taxes 20,467 20,467
________ ________
$474,323 $373,475
SHAREHOLDERS EQUITY
Share capital (Note 8)
Issued and outstanding
11,229,065
(1995-9,677,542)common shares 6,699,998 5,972,928
265 class "A"
preferred shares,
Series 1 265,000 -
(Deficit) (6,469,461) (5,557,07)
495,537 415,857
$ 969,860 $ 789,332
</TABLE>
APPROVED BOARD:
DIRECTOR
DIRECTOR
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
YEAR ENDED MARCH 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1994
1996 1995 RESTATED
<S> <C> <C> <C>
Sales $ 965,912 1,053,456 1,076,266
Cost of sales 557,611 637,545 669,953
Gross profit 408,301 415,911 406,313
Operating expenses,
Schedule 1 1,158,036 1,062,998 942.918
Operating (loss) 749,735 647,087 536,605
Other (income) expenses
Filing, listing and
transfer agent fees 26,870 21,157 27,599
Corporate printing,
financial and public
relations 129,994 142,617 158,686
Write off of abandoned
mineral claims and
related exploration
costs - - 12,002
Loan payment as guarantor 6,518 - -
Write off of loans payable - ( 11,295) -
Other income ( 384) ( 138) -
162,998 152,341 198,287
(Loss) before income taxes (912,733) (799,428) (734,892)
Income taxes (recovery) ( 343) 340 375
Net (loss) for the year (912,390) (799,768) (735,267)
(Deficit),
beginning of year (5,557,071) (4,757,303) (4,022,036)
(Deficit), end of year $(6,469,461) $(5,557,071) $(4,757,303)
(Loss) per share $( 0.09) $( 0.09) $( 0.09)
Weighted average
common shares outstanding 10,637,948 9,280,487 8,479,766
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
YEAR ENDED MARCH 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1994
1996 1995 RESTATED
<S> <C> <C> <C>
Cash flow from operating activities
Operations
Net (loss) $(912,390) (799,768) (735,267)
Items not affecting cash flow
Write off of abandoned mineral claims
and related exploration costs - - 12,002
Depreciation and amortization 72,984 236,623 65,840
Write off of loans payable - (11,295) -
(839,406) (574,440) (657,425)
Changes in other operating items
Accounts receivable (51,134) (69,278) (20,568)
Due from employees (10,218) 5,240 ( 5,240)
Intangibles ( 3,113) - -
Inventory (22,270) 63,364 (52,641)
Investments (25,342) - -
Prepaid expenses ( 5,867) - -
Accounts payable 69,541 89,492 (106,329)
Cash (used for) operating activities (887,809) (347,066) (801,067)
Cash flow from financing activities
Issue of shares 992,070 315,260 870,925
Liabilities settled by issue of company shares - 34,000 -
Loans payable and capital lease obligation 37,682 - 2,607
Cash provided by financing activities 1,029,752 349,260 873,532
Cash flow from investing activities
Acquisition of capital assets ( 51,867) ( 14,287) ( 6,807)
Advances (to) from related company ( 52,367) 5,587 (73,890)
Cash (used for) investing activities (104,234) ( 8,700) (80,697)
Increase (decrease) in cash during the year 37,709 ( 6,506) ( 8,232)
(Bank indebtedness) cash, beginning of year (4,664) 1,842 10,074
Cash (bank indebtedness), end of year 33,045 ( 4,664) 1,842
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED SCHEDULES OF OPERATING EXPENSES
YEAR ENDED MARCH 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1995 1994
1996 RESTATED RESTATED
<S> <C> <C> <C>
Bad debts $ 32,668 28,731 165
Commissions 3,681 9,110 13,054
Depreciation and amortization 72,984 236,623 65,840
Foreign exchange 2,867 33,228 (19,244)
Interest and bank charges 11,435 16,178 7,984
Interest on capital lease obligation 1,156 - -
Management fees and commissions 220,000 210,000 192,000
Marketing 173,157 46,222 85,822
Office supplies and stationery 54,587 49,781 97,372
Professional fees 155,698 75,088 65,487
Rent 48,576 47,838 54,089
Royalties 30,239 26,584 25,959
Salaries and benefits 122,610 146,677 136,885
Storage 8,362 16,751 12,509
Telephone 41,899 46,662 62,121
Travel 167,284 64,460 134,005
Vehicle 10,833 9,065 8,870
$1,158,036 1,062,998 942,918
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31,1996 AND 1995
(Stated in Canadian Dollars)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with generally
accepted accounting principles in Canada and reflect the following policies:
Basis of Presentation
These consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, Cryopak (International) Inc., a Barbados
corporation, Cryopak (Canada) Corporation and its wholly-owned subsidiary
Cryopak Corporation, a Nevada corporation, and its proportionate interest (50%)
in a joint venture, Cryopak (Alberta) Corporation.
Inventories
- -----------
Inventories are valued at the lower of cost or net realizable value. Cost is
determined by the first-in first-out (FIFO) method of valuation.
Investments
- -----------
Investments are recorded at the lower of cost and market value.
Depreciation
- ------------
Capital assets are recorded at cost.
The Company records depreciation on its capital assets using the straight-line
method over five years, except for motor vehicles where the declining balance
method is used at the rate of 30% per annum.
Patent License
- --------------
The patent license is recorded at cost and is amortized on a straight-line
basis over seventeen years.
Deferred Development Costs
- --------------------------
The deferred development costs are recorded at cost and are amortized on a
straight-line basis over ten years.
Foreign Currency
- ----------------
Foreign currency accounts are translated using the temporal method whereby
current assets and current MWties are translated to Canadian dollars at year end
exchange rates, other assets and liabilities at exchange rates prevailing at the
dates of transactions, and revenue and expenses at the average rate during the
year. Gains and losses from foreign exchange currency translation are included
in the consolidated statement of loss and deficit.
Goodwill
- --------
The excess of cost of the purchase of a subsidiary company over the fair value
of assets acquired (disclosed in these consolidated financial statements as
goodwill) is amortized on a straight-line basis ever seventeen years.
2. OPERATIONS
These financial statements have been prepared on the assumption that the Company
is a going concern.
The ability of the Company to continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities and commitments in
the normal course of business, is dependent on obtaining the financing necessary
to continue operations and, ultimately, profitable operations (Note 12).
INVESTMENTS
- -----------
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Marketable securities-market value
at March 31, 1996 - $475 (1995 - $350) $ 100 $ 100
Artwork 25,342 -
$25,442 $ 100
</TABLE>
4. CAPITAL ASSETS
<TABLE>
<CAPTION>
1996 1995
Accumulated Net Book Net Book
Cost Depreciation Value Value
<S> <C> <C> <C> <C>
Computer $28,268 $14,131 $14,137 $12,261
Furniture and
fixtures 79,099 76,131 2,968 3,144
Motor vehicle
under
capital lease 40,594 6,089 34,505 -
$147,961 $96,351 $51,610 $15,405
</TABLE>
5. ADVANCE TO RELATED COMPANY
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Advance to N.C.K Holdings Inc. $109,339 $ 56,972
</TABLE>
The related company is owned by two directors. The advance is unsecured, bears
interest at 8% per anum commencing April 1, 1996, and is repayable in monthly
installments of S2,200, commencing April 30, 1996. During the year the Company
paid S220,000 (1995 - S2 10,000) as management fees to N.C.K Holdings Inc.
During the year, the Company also paid royalties of $20,159 (19,95 - $17,722) to
KUL Holdings Inc.
<PAGE>
6. INTANGIBLES
<TABLE>
<CAPTION>
1996 1995
Accumulated Net Book Net Book
Cost Amortization Value Value
<S> <C> <C> <C> <C>
Incorporation costs $ 3,111 $ - $ 3,111 -
Deferred development costs 114,017 51,023 62,994 77,816
Patent licence 566,323 191,555 374,768 408,082
Goodwill 156,155 52,819 103,336 112,522
$839,606 $295,397 $544,209 $598,420
</TABLE>
7. CAPITAL LEASE OBLIGATION
<TABLE>
<CAPTION>
<S> <C>
Capital lease payable, with interest of 10.25%,
due November 1, 1999. $ 37,682
Less: current portion 5,874
$ 31,808
</TABLE>
The future minimum lease payments required are $46,383 payable as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 9,240
1998 9,240
1999 9,240
2000 18,663
</TABLE>
Included in these amounts is imputed, interest of $8,701.
<PAGE>
8. SHARE CAPITAL
<TABLE>
<CAPTION>
Authorized
<S> <C>
100,000,000 common shares without par value
100,000,000 class "A preferred shares without par value
of which 1,500 are designated class "A"
convertible voting preferred shares, Series 1.
</TABLE>
The following changes occurred in capital stock:
<TABLE>
Common shares
Issued and outstanding
<CAPTION>
1996 1995 1994
Number Number Number
of of of
Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of year 9,677,542 $5,972,928 8,966,542 $5,623,668 7,923,242 $4,752,743
Issued during the year
For cash 1,551,523 727,070 661,000 315,260 1,043,300 870,925
For settlement of debt - - 50,000 34,000 - -
1,551,523 727,070 711,000 349,260 1,043,300 870,925
Balance, end of year 11,229,065 $6,699,998 9,677,542 $5,972,928 8,966,542 $5,623,668
</TABLE>
Class A preferred shares, Series I
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Balance, beginning of year - - -
Issued during the year 265 $265,000 - -
Balance, end of year 265 $265,000 - -
</TABLE>
<PAGE>
Each class "A" preferred share Series I carries a 12%~ cumulative dividend
payable at the company's fiscal year end, in either cash or common shares at the
option of the Company. Dividends in arrears at March 31, 1996 amounted to
S3,925.00.
The Series I preferred shares are convertible into common shares at the rate of
one common share for each S3.00 of paid up capital or the rate provided below:
(i) $2.50 at any time after December 31, 1997, provided that the Current Trading
Price shall never have exceeded $2.99 after December 31, 1996;
(ii) $2.00 at any time after December 31, 1998 provided that the Current Trading
Price shall never have exceeded $2.99 after December 31, 1996 or $2.49 after
December 31, 1997.
(iii) at any time after December 31, 1999 provided that the Current Trading
Price shall never have exceeded S2.99 after December 31, 1996 of $2.49 after
December 31, 1997 or $1.99 after December 31, 1998, at a common share price
equal to that price which represents a 15% discount to the then Current Trading
Price, which common share price in no event shall be less than $O.95;
but if not so converted prior to May 12, 2000, such Series I preferred shares
shall be deemed to have been converted on May 12, 2000 at the applicable
conversion price described above.
On March 31, 1996, the following stock options were outstanding:
<TABLE>
<CAPTION>
Number of Exercise Expiry
Shares Price Date
<S> <C> <C> <C>
Directors 104,700 $0.45 May 6, 1996
82,000 0.45 May 30, 1996
50,000 0.55 August 23, 1996
160,000 0.30 April 7,1997
98,000 0.25 June 20, 1997
150,000 0.44 November 7, 1997
75,000 0.45 May 27, 1997
255,000 0.55 August 22, 1997
100,000 0.40 January 12, 1999
Officers 35,000 0.44 November 7, 1997
Employees 20,000 0.45 May 27, 1997
30,000 0.25 June 20, 1997
50,000 0.40 January 12, 1999
150,000 0.30 October 6, 199,6
Contractor 50,000 0.40 January 12, 1999
</TABLE>
The Company has agreed to extend the expiry date to October 6, 1998, in
settlement of a financial obligation to a Company in which the optionee is a
principal. The Company has also agreed to issue another principal of this
Company an option to purchase 150,000 shares at $0.60 per share, expiring two
years from the date of issue. These transactions are subject to regulatory
approval.
On March 31, 1996 the following warrants, each to purchase one common share,
were outstanding:
<TABLE>
<CAPTION>
Class of Number of Purchase Expiry
Shares Warrants Price Date
<S> <C> <C> <C>
Common 5,000 $0.50 August 9, 1996
Common 38,000 0.60 August 9, 1996
Common 167,750 0.50 July 24, 1996
Common 28,000 0.60 September 29, 1996
Common 51,666 0.70 October 12, 1996
</TABLE>
9. INCOME TAXES
The Company has losses available for utilization against future years' taxable
incomes which, if unused, will expire as follows:
<TABLE>
<CAPTION>
<S> <C>
1995 167,789
1996 359,062
1997 274,933
1999 276,415
1999 296,801
2000 1,089,726
2001 658,014
2002 710,475
</TABLE>
10. LEASES
The minimum annual rental commitments for operating leases in effect at March
31, 1996 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 54,390
1998 32,262
1999 24,447
</TABLE>
<PAGE>
11. RELATED PARTY TRANSACTIONS
Related party transactions not otherwise disclosed in these consolidated
financial statements are:
(a) Professional fees include a commission of $56,560 to Discovery Capital
Corporation, the president and non-controlling shareholder of which is a
director of the Company. As of March 31, 1996, $56,560 was payable to Discovery
Capital Corporation. The amount was paid in full after the year end.
(b) Professional fees of $10,000 were paid to a company owned by a director of
the Company.
12. SUBSEQUENT EVENTS
The following events occurred subsequent to the year end:
(a) The following common shares were issued pursuant to the exercise by director
of share purchase options:
<TABLE>
<CAPTION>
Date of exercise Number of Exercise Total
Shares Price Proceeds
<S> <C> <C> <C>
May 30, 1996 82,000 $0.45 $36,900
May 27, 1996 102,836 0.55 56,560
</TABLE>
(b) The following class "A" convertible voting preferred shares Series I were
issued pursuant to an Investment Agreement with Cryopak Industries (VCC) Inc.
dated April 3, 1995, as amended, for a placement of up to S2,000,000.
<TABLE>
<CAPTION>
Date of issue Number of Total
Shares Proceeds
<S> <C> <C>
April 16, 1996 43 $43,000
June 13, 1996 50 50,000
</TABLE>
As of July 5, 1996, the VCC had advanced S858,000 to the Company. The
private placement was approved to close no later than June 27, 1996 by the
Vancouver Stock Exchange. An application for an extension has been filed by the
Company.
(c) The following share options were issued after the end of the year:
<TABLE>
<CAPTION>
Number of Exercise Expiry
Shares Price Date
<S> <C> <C> <C>
Director 100,000 0.42 April 26, 1998
</TABLE>
<PAGE>
13. CONTRACTUAL OBLIGATIONS
(a) Pursuant to an agreement dated December 20, 1989, with N.C.K Holdings Inc.,
as part of the consideration for a licence, the Company bas made a commitment to
issue up to 3,000,000 common shares of its capital (the "performance shares")
based upon certain performance criteria.
The issue of the shares is subject to regulatory approval which to date has not
been sought.
(b) Pursuant to an agreement with Erik Petersson & Company, Inc. (EPC) dated
February 8, 1996, as consideration for consulting work on international sales,
the Company has made the following commitment:
to pay EPC $2,500/month until the first sale and/or distribution contract has
been signed.
to pay EPC a 5% commission on Total Gross Sales generated by EPC, on behalf of
the Company.
to give EPC a bonus in the form of non-transferable common share purchase
warrants of the Company as follows:
(a) 60,000 warrants for a minimum of CDN S 1,000,000 in sales.
(b) a total of 60,000 warrants for each additional CDN $1,000,000 in sales to a
maximum of CDN $9,000,000, paid in increments of 30,000 warrants for each CDN
$500,000 in sales. The price of the warrants shall be set based on the average
price of the ten previous trading days prior to the signing of this agreement.
Each subsequent issuance of warrants after the first 60,000 shall be priced at
15% above the price of the previous warrants issued, and shall be exercisable
for a period of one (1) year after the date of issuance.
As of July 5, 1996, the Company had paid S.15,000 to EPC.
14. CONTINGENT LIABILITIES
Should sales of racks not meet expectations, the Company is liable for the cost
of the molds, the balance of which was approximately $30,000 at March 31, 1996.
15. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
a) Generally accepted accounting principles ("GAAP") used in the United States
of America differ in certain respects from GAAP used in Canada. A difference
which materially affects these consolidated financial statements is that United
States GAAP require deferred development costs be expensed as incurred whereas
Canadian GAAP aflows these expenses to be deferred and amortized. Had the
consolidated financial statements been prepared in accordance with United States
GAAP as described above, the following changes would have been made:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Total Assets - Canadian GAAP $969,860 $789,332 $1,155,761
Deferred development costs ( 62,994) (77,816) (264,861)
Total Assets -United States GAAP 906,866 711,516 890,900
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Shareholders equity-
Canadian GAAP $495,537 $415,857 $866,365
Deferred development costs (62,994) (77,816) (264,861)
Shareholders' equity-
United States GAAP 432,543 338,041 601,504
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Net Loss - Canadian GAAP $(912,390) $(799,768) $(734,517)
Amortization of deferred
development costs 14,822 187,045 16,299
Net Loss - United States GAAP (897,568) (612,723) (718,218)
</TABLE>
b) United States GAAP require non-cash investing and financing activities to be
excluded from the Consolidated Statements of Changes in Financial Position,
whereas Canadian GAAP require these activities to be included in the Statement
Had the Consolidated Statement of Changes in Financial Position been prepared in
accordance with U.S. GAAP the following transactions would have been excluded:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Liabilities settled by
issue of company shares $ - $34,000 $ -
</TABLE>
<PAGE>
c) Basic loss per share calculated in accordance with U.S. GAAP is:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
0.09 0.07 0.08
</TABLE>
<PAGE>
Hay & Watson CHARTERED ACCOUNTANTS
26 August 1997
Messrs. Harry Bydgnes and Leigh Jeffs
Cryopak Industries Inc.
1120 - 625 Howe Street
Vancouver, B.C. V6C 2T6
Dear Sirs:
During our examination of the consolidated financial statements of Cryopak
Industries Inc. for the year ended March 31, 1997, we reviewed the existing
system of accounting procedures and internal control and such review indicated
certain areas which we believe should be brought to your attention. We have also
recommended certain changes to achieve consistent application of accounting
policies adopted by the company.
1. INVENTORY
During our examination we found that there were no records of the inventory kept
at the various locations. In addition, no one had arranged for inventory counts
to be done at year-end although previously advised by us to do so. The lack of
proper records has caused the company to run out of inventory and to buy back
inventory from customers in order to fill other customers' orders. This causes
the company to lose its profit margin on the sale as well as showing the company
at a disadvantage. On an ongoing basis, sales staff and the receptionist should
call the storage companies to know if they can fill orders and therefore avoid
delays and poor customer relations.
The value of inventory at year-end is essential to the preparation of financial
statements, and deficiencies in that area may result in a qualified audit
report. A proper recording system for inventory is essential and must be
established immediately. All shipments in and out of the out of the outside
warehouses must be supported by a written confirmation including the date of the
shipment.
The company's inventory records should be compared with the quantities reported
by the storage companies periodically. A count at year-end must be performed and
reconciled to your record.
1822 West 2nd Avenue, Vancouver, B.C. V6J 1H9 e(604) 732-1466 Fax (604) 732-3133
The overall responsibility for the inventory should be assigned to a responsible
and knowledgable staff member. It should not be given to staff with no
accounting training or experience.
During the course of the audit, we have discussed the implementation of an
adequate temporary system on a computer spreadsheet with Laila. However the
company would benefit from the full integration of its invoicing and inventory
systems with its accounting system. We are available to further discuss and help
with the implementation of such a system.
2. EXPENSE ALLOCATION AND TAX PLANNING
Various expenses such as rent, telephone, promotion and advertising, salaries,
office expenses, insurance, and professional fees, are common to Cryopak
Industries Inc., Cryopak (Canada) Corporation and Cryopak (International) Ltd.
Currently, the majority of the expenses are allocated to Cyropak Industries Inc.
However, the operations of the group are recorded in Cyropak (Canada)
Corporation and will eventually result in taxable income. To ensure that full
advantage is taken of all expenses and that no losses carried forward are lost
due to expiry, management should start to review the allocation of expenses. In
addition, we recommend that the tax implications of U.S. and worldwide
operations be reviewed periodically.
3. PRICE LISTING
During our testing of sales invoices, except for the agreement with Unisource,
no official price list for the company's products was kept in the office. As a
result we were unable to trace whether the unit prices on the sales invoices
were accurate. A current price list should be kept in the office to ensure
standard and accurate pricing was given to customers. Special pricing and
discounts should be approved and initialed by an authorized person.
4. EXERCISE OF STOCK OPTIONS
During our review of share capital transactions, it was noted that when stock
options are exercised by members of management cash is not always received prior
to the issue of the shares. It is a contravention of the Company Act of British
Columbia to issue shares prior to receiving payment in full. In addition, stock
options exercised by employees were paid by way of loans advanced to the
employees. These loans were not secured by promissory notes or other such
documents.
5. MANAGEMENT FEES
Currently there are no contracts or invoices which indicate what management
remuneration is. We recommend that management remuneration be properly
documented.
<PAGE>
6. PETTY CASH
Currently, no control is in place over the petty cash. The company does not
record the detail expenditure included in each petty cash disbursement.
Therefor, even though the company keeps all its petty cash receipts, we are
unable to trace the receipts back to the petty cash expenses in the general
ledger.
7. EXPENSES PAID BY CREDIT CARD
During our tests of expenses, we found that both personal and business credit
cards were used to pay for business expenses and that personal expenses were
charged to the business credit cards as well as personal credit cards. In
addition, some of the credit card payments made by the company and applied to
the personal credit card were not properly supported by expense reports and
invoices.
We recommend that business expenses be paid with business credit card only so as
to be easily distinguished from the personal expenses. If some business expenses
have to be paid by personal credit card, then those expenses should be
documented on an expense report supported by proper receipts. We also recommend
that personal expenses be charged to personal credit cards only.
8. GST
In our sales test, we found some invoices to Canadian customers did not include
GST. Therefore, the GST collected and payable are understated, and the company
may be liable for the tax on those sales. GST is applied to all eligible goods
sold to Canadian companies even though invoices are billed in a foreign
currency.
9. SUPPORTING DOCUMENTATION
During the course of the audit, our analyses sometimes proved difficult due to
the lack of supporting documentation (e.g., invoices).
Management should ensure that supporting documentation be obtained and retained
for all company expenditures. The supporting documentation is required to
provide sufficient evidence for the audit and for future references. We
recommend that cheques only be issued when there is adequate supporting
documentation. If invoices are unavailable, then a memo providing details of the
expenditure, approved by management should be used as supporting documentation.
10. SUGAR FOOD CORPORATION INVOICES
It was noted that Sugar Food Corporation is no longer providing a detailed
listing of goods shipped out and billed to customers. They send a monthly
statement which only shows the total purchases and administration fee for the
month. As a result, we are unable to check if the unit cost billed is accurate
and what types of products are being sold.
We strongly recommend that the company require Sugar Food Corporation to report
in the same detailed manner as in the past.
We have noted improvements during the year in the recording of transactions and
performing accounting routines raised by us last year. The most significant
matter which we believe still needs to be addressed is the recording of and
control over inventory.
We would be pleased to discuss any of these comments and recommendations with
you in greater detail. We would like to thank you and your staff for your
assistance and cooperation extended during the audit. Please do not hesitate to
contact us if we may be of further assistance.
Yours very truly,
HAY & WATSON
Bruce S. Hay
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 1997
AND AUDITORS' REPORT
CRYOPAK INDUSTRIES INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31,1997 AND 1996
Auditors, Report
Balance Sheets
Consolidated Statements of Loss and Deficit
Consolidated Statements of Changes in Financial Position
Notes to Consolidated Financial Statements
Consolidated Schedules of Operating Expenses
Hay & Watson CHARTERED ACCOUNTANTS
AUDITORS' REPORT
To the Shareholders of
Cryopak Industries Inc.
We have audited the consolidated balance sheets of Cryopak Industries Inc. as at
March 31, 1997 and 1996 and the consolidated statements of loss and deficit and
of changes in financial position for each of the years in the three year period
ended March 31, 1997. These consolidated financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at March 31, 1997
and 1996 and the results of its operations and the changes in its cash flows for
each of the years in the three year period ended March 31, 1997 in accordance
with accounting principles generally accepted in Canada, As required by the
Company Act of British Columbia. we report that, in our opinion, these
principles have been applied on a basis consistent with that of the preceding
year.
CHARTERED ACCOUNTANTS
Vancouver, B.C.
June 27, 1997
1822 West 2nd Avenue, Vancouver, B.C. V6J IH9 (604) 732-1466 Fax (604) 732-3133
<PAGE>
Hay & Watson CHARTERED ACCOUNTANTS
COMMENTS BY AUDITORS FOR U.S. READERS
ON CANADA - U.S. REPORTING DIFFERENCES
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the company's ability to continue as a going concern, such as those described in
Note 2 to the financial statements. Our report to the shareholders dated June
27, 1997 is expressed in accordance with Canadian reporting standards which do
not permit a reference to such events and conditions in the Auditors' Report
when these are adequately disclosed in the financial statements.
CHARTERED ACCOUNTANTS
Vancouver, B.C.
June 27, 1997
1822 West 2nd Avenue, Vancouver, B.C. V6J IH9 (604) 732-1466 Fax (6041 732-3133
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31 (Stated in Canadian Dollars)
<TABLE>
<CAPTION>
ASSETS 1997 1996
<S> <C> <C>
Current
Cash $ - $ 33,045
Accounts receivable 146,863 134,338
Inventory 36,779 52,183
Investments (Notes I and 3) 25,442 25,442
Prepaid expenses 15,662 9,476
Due from employees 40,118 10,218
__________ ____________
264,864 264,702
Capital assets (Notes I and 4) 50,179 51,610
Advance to related company (Note 5) 90,668 109,339
Intangibles (Notes I and 6) 486,887 544,209
__________ ___________
$ 892,598 $ 969,860
LIABILITIES
Current
Bank indebtedness 834 -
Accounts payable and accrued liabilities 375,587 416,174
Current portion of capital lease obligation 6,345 5,874
__________ ___________
$ 382,766 $ 422,048
Capital lease obligation (Note 7) 25,531 31,808
Deferred income taxes 20,467 20,467
___________ ___________
$ 428,764 $ 474,323
SHAREHOLDERS' EQUITY
Share capital (Note 8)
Issued and outstanding
12,245,156 (1996 - 11,229,065)
common shares 7,078,428 6,699,998
530 (1996 - 265) class "A"
preferred shares, Series 1 530,000 265,000
(Deficit) (7,144,594) (6,469,461)
463,834 495,537
__________ _________
$ 892,598 $ 969,860
</TABLE>
APPROVED BY THE BOARD:
DIRECTOR
DIRECTOR
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
YEAR ENDED MARCH 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Sales $1,140,242 $ 965,912 $1,053,456
Cost of sales 675,706 557,611 637,545
Gross profit 464,536 408,301 415,911
Operating expenses, Schedule 1 992,673 1,158,036 1,062,998
Operating (loss) 528,137 749,735 647,087
Other (income) expenses
Filing, listing and transfer
agent fees 17,006 26,870 21,157
Corporate printing, financial
and public relations 138,150 129,994 142,617
Loan payment as guarantor - 6,518 -
Write off of loans payable - - (11,295)
Other income ( 8,160) ( 384) ( 138)
___________ _________ _________
$ 146,996 $162,998 $ 152,341
(Loss) before income taxes ( 675,133) (912,733) (799,428)
Income taxes (recovery) - ( 343) ( 340)
Net (loss) for the year ( 675,133) (912,390) (799,768)
(Deficit), beginning of year (6,469,461) (5,557,071) (4,757,303)
(Deficit), end of year (7,144,594) (6,469,461) (5,557,071)
(Loss) per share ( 0.06) ( 0.09) ( 0.09)
Weighted average common shares
outstanding 11,691,097 10,637,948 9,280,487
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
YEAR ENDED MARCH 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Cash flow from operating activities
Operations
Net (loss) $( 675,133) $( 912,390) $( 799,768)
Depreciation and amortization 79,564 72,984 236,623
Write off of loans payable 11,295
_____________ ____________ ____________
( 595,569) ( 839,406) ( 574,440)
Changes in other operating items
Advances to related companies ( 15,815) - -
Accounts receivable 3,290 ( 51,134) 69,278
Due from employees ( 29,900) ( 10,218) 5,240
Intangibles - ( 3,113) -
Inventory 15,404 ( 22,270) 63,364
Investments - ( 25,342) -
Prepaid expenses ( 6,186) ( 5,867) -
Accounts payable ( 40,587) 69,541 89,492
Cash used for operating activities (669,363,887) ( 887,809) (347,066)
Cash flow from financing activities
Issue of shares 586,870 992,070 315,260
Liabilities settled by issue of company
shares 56,560 - 34,000
Loans payable and capital lease obligation ( 5,806) 37,682 -
Cash provided by financing activities 637,624 1,029,752 349,260
Cash flow from investing activities
Acquisition of capital assets ( 20,811) ( 51,867) ( 14,287)
Advances (to) from related company 189,671 ( 52,367) 5,587
Cash used for investing activities ( 2,140) ( 104,234) ( 8,700)
Increase (decrease) in cash during the year ( 33,879) 37,709 ( 6,506)
Cash (bank indebtedness), beginning of the year33,045 ( 4,664) 1,842
Cash (bank indebtedness), end of year $( 834) $ 33,045 $(4,664)
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1"7 AND 19%
(Stated in Canadian Dollars)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with generally
accepted accounting principles in Canada and reflect the following policies:
Basis of Presentation
- ---------------------
These consolidated financial statements include the accounts of the Company an
and its wholly-owned subsidiaries, Cryopak (International) Inc., a Barbados
corporation, Cryopak F(Mada) Corporation and its wholly-owned subsidiary Cryopak
Corporation, a Nevada corporation, and its proportionate interest (50%) in a
joint venture, Cryopak (Alberta) Corporation.
Inventories
- -----------
Inventories are valued at the lower of cost or net realizable value. Cost is
determined by the first-in first-out (FIFO) method of valuation.
Investments
- -----------
Investments are recorded at the lower of cost and market value.
Depreciation
- ------------
Capital assets are recorded at cost.
The Company records depreciation on its capital assets using the straight-line
method over five years, except for motor vehicles where the declining balance
method is used at the rate of 30% per anum.
Patent Licence
- --------------
The patent4icence is recorded at cost and is amortized on a straight-line basis
over seventeen years.
Deferred Development Costs
- --------------------------
The deferred development costs are recorded at cost and are amortized on a
straight-line basis over ten years.
Foreign Currency
- ----------------
Foreign currency accounts are translated using the temporal method whereby
current assets and current liabilities are translated to Canadian dollars at
year end exchange rates, other assets and liabilities at exchange rates
prevailing at the dates of transactions, and revenue and expenses at the average
rate during the year. Gains and losses from foreign currency translation are
included in the consolidated statement of loss and deficit.
Goodwill
- --------
The excess of cost of the purchase of a subsidiary company over the fair value
of assets acquired (disclosed in these consolidated financial statements as
goodwill) is amortized on a straight-line basis over seventeen years.
CRYOPAK INDUSTRIES INC.
<PAGE>
2. OPERATIONS
These financial statements have been prepared on the assumption that the Company
is a going concern.
The ability of the Company to continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities and commitments in
the normal course of business, is dependent on obtaining the financing necessary
to continue operations and, ultimately, profitable operations.
3. INVESTMENTS
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Marketable securities -
market value at March 31,
1997 - $325
1996 - $475 $ 100 $ 100
Artwork 25,342 25,342
________ ________
$25,442 $25,442
</TABLE>
4. CAPITAL ASSETS
<TABLE>
<CAPTION>
1997 1996
Accumulated Net Book Net Book
Cost Depreciation Value Value
<S> <C> <C> <C> <C>
Computer $ 45,617 $ 19,010 $ 26,607 $ 14,137
Furniture and fixtures 82,562 77,218 5,344 2,968
Motor vehicle under
capital lease 40,594 22,366 18,228 34,505
________ ________ ________ ________
$168,773 $118,594 $ 50,179 $ 51,610
</TABLE>
5. ADVANCE TO RELATED COMPANY
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Advance to N.C.K. Holdings Inc. $ 90,668 $109,339
</TABLE>
The related company is owned by two directors. The advance is unsecured, and is
repayable in monthly installments of $2,200 including interest of 8% per annum.
During the year the Company paid management fees of $220,000 (1996 - $220,000)
and royalties of $22,934 (1996 - $20,159) to N.C.K. Holdings Inc.
6. INTANGIBLES
<TABLE>
<CAPTION>
1997 1996
Accumulated Net Book Net Book
Cost Amortization Value Value
<S> <C> <C> <C> <C>
Incorporation costs $ 3,111 $ - $ 3,111 $ 3,111
Deferred development costs 114,017 65,845 48,172 62,994
Patent licence 566,323 224,869 341,454 374,768
Goodwill 156,155 62,005 94,150 103,336
________ ________ _________ ________
$839,606 $352,719 $486,887 $544,209
</TABLE>
7. CAPITAL LEASE OBLIGATION
<TABLE>
<CAPTION>
<S> <C> <C>
Capital lease payable,
with interest of 10.25%,
due November 1, 1999 $31,876 $37,682
Less: current portion 6,345 5,874
_______ _______
$25,531 $31,808
</TABLE>
The future minimum lease payments required are $37,143 payable as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 9,240
1999 9,240
2000 18,663
</TABLE>
Included in these amounts is imputed interest of $5,267.
<PAGE>
8. SHARE CAPITAL
<TABLE>
<CAPTION>
Authorized
<S> <C>
100,000,000 common shares without par value
100,000,000 Class "A" preferred shares without par value, of which 1,500 are
designated class "A" convertible voting preferred shares, Series I.
</TABLE>
The following changes occurred in share capital:
<TABLE>
Common shares
Issued and outstanding
<CAPTION>
1997 1996 1995
Number Number Number
of of of
Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning
year 11,229,065 $6,699,998 9,677,542 $5,972,928 8,966,542 $5,623,668
Issued during the year
For cash 913,255 321,870 1,551,523 727,070 661,000 315,260
For settlement
of debt 102,836 56,560 - - 50,000 34,000
_________ _______ _________ ________ _______ _______
1,016,091 378,430 1,551,523 727,070 711,000 349,260
Balance, end
of year 12,245,156 $7,078,42 11,229,065 $6,699,998 9,677,542 $5,972,928
</TABLE>
Class A preferred shares, Series I
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Balance, beginning of year 265 $265,000 - $ -
Issued during the year for cash 265 265,000 265 265,000
Balance, end of year 530 $530,000 265 $ 265,000
</TABLE>
<PAGE>
Each class "A" preferred share Series I carries a 12%, cumulative dividend
payable at the company's fiscal year end, in either cash or common shares at the
option of the Company. Dividends in arrears at March 31, 1997 amounted to
$48,048.
The Series I preferred shares are convertible into common shares at the rate of
one common share for each $3.00 of paid up capital or the rate provided below:
(1) $2.50 at any time after December 31, 1997, provided that the Current Trading
Price shall never have exceeded $2.99 after December 31, 1996;
(ii) $2.00 at any time after December 31, 1998, provided that the Current
Trading Price shall never have exceeded $2.99 after December 31, 1996 or $2.49
after December 31, 1997.
(iii) at any time after December 31, 1999, provided that the Current Trading
Price shall never have exceeded $2.99 after December 31, 1996 or $2.49 after
Decemb~r 31, 1997 or $1.99 after December 31, 1998, at a common share price
equal to that price which represents a 15% discount to the then Current Trading
Price, which common share price in no event shall be less than $0.95;
but if not so converted prior to May 12, 2000, such Series I preferred shares
shall be deemed to have been converted on May 12, 2000 at the applicable
conversion price described above. The Current Trading Price means the average
trading price of the common shares on a recognized public stock exchange for the
preceding 20 business days.
On March 31, 1997, the following stock options were outstanding:
<TABLE>
<CAPTION>
Number of Exercise Expiry
Shares Price Date
<S> <C> <C> <C>
Directors 38,000 $0.44 November 7,1997
490,000 0.50 June 13, 1999
75,000 0.45 May 27,1997
96,909 0.55 August 22, 1997
100,000 0.42 April 26,1998
Officers 35,000 0.44 November 7,1997
Employees 20,000 0.45 May 27, 1997
80,000 0.40 January 12,1999
</TABLE>
9. INCOME TAXES
The Company has losses available for utilization against future years' taxable
incomes which, if unused, will expire as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 274,933
1999 276,415
2000 296,801
2001 1,089,726
2002 658,014
2003 710,475
2004 599,008
</TABLE>
10. LEASES
The minimum annual rental commitments for operating leases in effect at March
31, 1997 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $17,570
1999 10,570
2000 10,570
2001 1,627
2002 1,627
</TABLE>
11. RELATED PARTY TRANSACTIONS
Related party transactions not otherwise disclosed in these consolidated
financial statements are:
(a) Professional and consulting fees include $15,540 and $23,500, respectively,
paid to Discovery Capital Corporation, the president and non-controlling
shareholder of which is a director of the Company. As of March 31, 1997, $14,142
was payable to Discovery Capital Corporation.
(b) As of March 31, 1997, accounts receivable include $12,446 receivable from
N.C.K. Holdings Inc., a company owned by two directors, and $3,278 receivable
from Fulcrum Developments. Ltd., a company related by two directors in common.
12. SUBSEQUENT EVENTS
The following events occurred subsequent to the year end:
(a) The following common shares were issued pursuant to the exercise by
directors of share purchase options:
<TABLE>
<CAPTION>
Date of exercise Number of Exercise Total
Shares Price Proceeds
<S> <C> <C> <C>
April 30, 1997 38,000 $0.44 $ 16,720
June 16, 1997 60,000 0.50 30,000
</TABLE>
<PAGE>
(b) The following share options were issued after the end of the year:
<TABLE>
<CAPTION>
Number of Exercise Expiry
Shares Price Date
<S> <C> <C> <C>
Employee 240,000 $0.50 April 10, 1999
Directors (1) 230,000 0.52 June 16, 1999
Employee (1) 20,000 0.52 June 16, 1999
</TABLE>
(1) subject to regulatory approval
13. CONTRACTUAL OBLIGATIONS
Pursuant to an agreement dated December 20, 1989 with N.C.K. Holdings Inc., as
part of the consideration for a licence, the Company has made a commitment to
issue up to 3,000,000 common shares of its capital (the "performance shares")
based upon certain performance criteria.
The issue of the shares is subject to regulatory approval which to date has not
been sought.
14. CONTINGENT LIABILITIES
(a) Should sales of racks not meet expectations, the Company is liable for the
cost of the moulds, the balance of which was approximately $30,000 at March 31,
1997.
(b) A company has filed a complaint against the Company in respect of the use of
a registered trademark. The outcome of the claim is not determinable.
<PAGE>
15. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Generally accepted accounting principles ("GAAP") used in the United States of
America differ in certain respects from GAAP used in Canada. A difference that
materially affects these consolidated financial statements is that United States
GAAP require deferred development costs be expensed as incurred whereas Canadian
GAAP allows these expenses to be deferred and amortized. Had the consolidated
financial statements been prepared in accordance with United States GAAP as
described above, the following changes would hive been made:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Total Assets - Canadian GAAP $892,598 $969,860 $789,332
Deferred development costs ( 48,172) ( 62,994) ( 77,816)
Total Assets - United States GAAP $844,426 $906,866 $711,516
</TABLE>
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Shareholders' equity -
Canadian GAAP $463,834 $495,537 $415,857
Deferred development costs ( 48,172) ( 62,994) ( 77,816)
Shareholders' equity -
United States GAAP $415,662 $432,543 $338,041
1997 1996 1995
Net Loss - Canadian GAAP $675,133) (912,390) (799,768)
Amortization of deferred
development costs 14,822 14,822 187,045
Net Loss - United States GAAP $(660,311) $(897,568)$(612,723)
</TABLE>
(b) United States GAAP require non-cash investing and financing activities to
be excluded from the Consolidated Statements of Changes in Financial Position,
whereas Canadian GAAP require these activities to be included in the Statement.
Had the Consolidated Statement of Changes - in Financial Position been prepared
in accordance with U.S.GAAP the following transactions would have been excluded:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Liabilities settled by issue of company shares $56,560 $ - $34,000
</TABLE>
(c) Basic loss per share calculated in accordance with U.S. GAAP is:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
0.06 0.09 0.07
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED SCHEDULES OF OPERATING EXPENSES
YEAR ENDED MARCH 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Bad debts 7,245 $ 32,668 $ 28,731
Commissions 884 3,681 9,110
Depreciation and amortization 79,564 72,984 236,623
Foreign exchange 1,355 2,867 33,228
Interest and bank charges 16,549 11,435 16,178
Interest on capital lease
obligation 3,434 1,156 -
Management fees and commissions 220,000 220,000 210,000
Marketing 87,337 173,157 46,222
Office supplies and stationery 58,197 54,587 49,781
Professional fees 74,399 155,698 75,088
Rent 52,459 48,576 47,838
Royalties 44,903 30,239 26,584
Salaries and benefits 117,960 122,610 146,677
Storage 9,899 8,362 16,751
Telephone 50,748 41,899 46,662
Travel 155,138 167,284 64,460
Vehicle 12,602 10,833 9,065
________ __________ __________
$992,673 $1,158,036 $1,062,998
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 1998
AND AUDITORS' REPORT
Hay & Watson CHARTERED ACCOUNTANTS
August 06, 1998
Messrs. Harry Bydgnes and Leigh Jeffs
Cryopak Industries Inc.
1125 - 625 Howe Street
Vancouver, B.C. V6C 2T6
Dear Sirs:
During our examination of the consolidated financial statements of Cryopak
Industries Inc. for the year ended March 31, 1998, we reviewed the existing
system of accounting procedures and internal control and such review indicated
certain areas which we believe should be brought to your attention. We have also
recommended certain changes to achieve consistent application of accounting
policies adopted by the company.
1. INVENTORY
During our examination we found that there were only limited records of the
inventory kept at the various locations. The lack of proper records has caused
the company to run out of inventory and to buy back inventory from customers in
order to fill other customers' orders. This causes the company to lose its
profit margin on the sale as well as showing the company at a disadvantage. On
an ongoing basis, sales staff and the receptionist have to call the storage
companies to know if they can fill orders, causing delays and poor customer
relations.
The value of inventory at year-end is essential to the preparation of financial
statements, and deficiencies in that area may result in a qualified audit
report. A proper recording system for inventory is essential and must be updated
periodically. All shipments in and out of the outside warehouses must be
supported by a written confirmation from the warehouses confirming the date of
shipment.
The company's inventory records should be compared with the quantities reported
by the storage companies periodically. A count at year-end must be performed and
reconciled to your record.
The overall responsibility for the inventory needs to be given to a responsible
and knowledgeable staff member. During the course of the audit, we have
discussed the implementation of an adequate temporary system on a computer
spreadsheet with Laila. However the company would benefit from the full
integration of its invoicing and inventory systems with its accounting system.
We are available to further discuss and help with the implementation of such a
system.
2. SAMPLES
During our testing, we also found there is no system to account for samples sent
to customers. Since the company is trying to develop new markets for the
product, the cost for samples may be significant. In order to prevent customers
from getting products without paying, to follow up on new customers and to
maintain better internal control, samples that are given away should be properly
recorded, and periodically reviewed by management. Large shipments of free
samples should be authorized and approved by management. Completed records will
also facilitate the reconciliation of inventory on hand between your records and
the records from the warehouses.
3. EXPENSE ALLOCATION AND TAX PLANNING
Various expenses such as rent, telephone, promotion and advertising, salaries,
office expenses, insurance, and professional fees, are common to Cryopak
Industry, Cryopak Canada, and Cryopak International. Currently, the bulk of
these expenses is carried by Cryopak Industries. However, the operations of the
group are recorded in Cryopak Canada and will eventually result in taxable
income. To ensure that full advantage is taken of all expenses and that no
losses carried forward are lost due to expiry, management should start to review
the allocation of expenses. In addition, we recommend that the tax implications
of U.S. and worldwide operations be reviewed periodically.
4. EXERCISE OF STOCK OPTIONS
During our review of share capital transactions, it was noted that when stock
options are exercised by members of management, cash is not always received
prior to the issue of the shares. It is a contravention of the B.C. Company Act
to issue shares prior to receiving payment in fall.
5. MANAGEMENT FEES
Currently there are no contracts or invoices which indicate what management
remuneration is.. We recommend that management remuneration be properly
documented.
6. PETTY CASH
Currently, no control is in place over the petty cash. The company does not
record the detail of expenditures included in each petty cash disbursement.
Therefore, even though the company keeps all its petty cash receipts, we are
unable to trace the receipts back to the petty cash expenses in the general
ledger.
7. CREDIT CARD EXPENSES
During our tests of expenses, we found that both personal and business credit
cards were used to pay for business expenses and that personal expenses were
charged to the business credit cards as well as personal credit cards. In
addition, some of the credit card payments made by the company and applied to
the personal credit cards were not properly supported by expense reports and
invoices. We recommend that business expenses be paid with business credit cards
only so as to be easily distinguished from the personal expenses. If some
business expenses have to be paid by personal credit card, then those expenses
should be documented on an expense report supported by proper receipts. We also
recommend that personal expenses be charged to personal credit cards only.
<PAGE>
8. SUPPORTING DOCUMENTATION
During the course of the audit, our analyses sometimes proved difficult due to
the lack of supporting documentation such as invoices.
Management should ensure that supporting documentation be obtained and retained
for all company expenditures. The supporting documentation is required to
provide sufficient audit evidence for the audit and for future reference.
We recommend that cheques only be issued when there is adequate supporting
documentation. If invoices are unavailable, then a memo providing details of the
expenditure, approved by management should be used as supporting documentation.
9. YEAR 2000
The Year 2000 date change could have a significant impact on any of the
Company's equipment that operates with some form of micro-processor system. Some
of the computer systems and other systems such as telephone systems may be
susceptible to the Year 2000 issue.
We are taking this opportunity to stress the importance of the Year 2000 issue
and the significant operational and financial risk it poses for the Company. We
encourage management to consider the Year 2000 issue as equipment, facilities
and computer software programs are acquired. This should also include taking in
consideration the impact on those systems that may be critical to the business
but may be managed by third parties such as service bureaus.
We have noted improvements during the year in the recording of transactions and
performing accounting routines. The most significant matter which we believe
still needs to be addressed is the recording of and controls over inventory.
We would be pleased to discuss any of these comments and recommendations with
you in greater detail. We would, at this time, like to thank you and your staff
for their assistance and cooperation extended during the audit. Please do not
hesitate to contact this office if we may be of further assistance.
Yours very truly,
Chartered Accountants
<PAGE>
CRYOPAK INDUSTRIES INC.
Consolidated Balance Sheets
March 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
ASSETS
Current
Cash $ 3,417 $ -
Accounts receivable 217,677 146,863
Inventory 36,757 36,779
Term deposit - Restricted (Note 3) 119,609 -
Prepaid expenses 12,196 15,662
Due from employees 32,117 40,118
__________ _________
421,773 239,422
Investments (Note 4) 25,442 25,442
Capital Assets (Note 5) 416,945 50,179
Advance to Related Company (Note 6) 70,572 90,668
Intangibles (Note 7) 429,565 486,887
__________ __________
$1,364,297 $ 892,598
LIABILITIES
Current
Bank indebtedness $ - $ 834
Accounts payable and
accrued liabilities 532,440 375,587
Note payable (Note 8) 350,000 -
Current portion of
capital lease obligation 80,174 6,345
__________ __________
962,614 382,766
Capital Lease Obligation (Note 9) 320,015 25,531
Deferred Income Taxes 20,467 20,467 20,467
__________ ___________
1,303,096 428,764
SHAREHOLDERS' EQUITY
Share Capital (Note 10)
Issued and outstanding
Common shares 7,362,318 7,078,428
Class A preferred shares, Series 1 530,000 530,000
Deficit (7,831,117) (7,144,594)
___________ ___________
61,201 463,834
$1,364,297 $ 892,598
</TABLE>
APPROVED BY THE BOARD:
Director
Director
<PAGE>
CRYOPAK INDUSTRIES INC
Consolidated Statements of loss and Deficit
Year Ended March 31
(Stated in Candian Dollars)
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Sales $1,161,442 $1,140,242 $ 965,912
Cost of Sales 763,018 675,706 557,611
Gross Profit 398,424 464,536 408,301
Operating Expenses
(Schedule 1) 938,375 992,673 1,158,036
Operating Loss ( 539,951) ( 528,137) ( 749,735)
Other (Income) Expenses
Filing, listing and
transfer agent fees 20,321 17,006 26,870
Corporate printing, financial
and public relations 85,181 138,150 129,994
Loan payment as guarantor - - -
Other income ( 6,900) ( 8,160) ( 384)
___________ ___________ ___________
98,602 146,996 162,998
Loss before income taxes ( 638,553) ( 675,133) ( 912,390)
Income taxes (recovery) - - ( 343)
Net loss for the year ( 638,553) ( 675,133) ( 912,390)
Dividends ( 47,970) - -
Deficit, beginning of the year (7,144,594) (6,469,461) (5,557,071)
Deficit, end of year $(7,831,117) $(7,144,594) $(6,469,461)
Loss per share $ 0.05 $ 0.06 $ 0.09
Weighted average common
shares outstanding 12,597,083 11,691,097 10,637,948
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
Consolidated Statements of Changes in Financial Position
Year Ended March 31
(Stated in Canadian Dollars)
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Cash Flow from Operating Activities
Operations
Net loss $( 638,553) $( 675,133) $( 912,390)
Depreciation and amortization 77,783 79,564 72,984
( 560,770) ( 595,569) ( 839,406)
Changes in other operating items
Advance to related companies 4,789 ( 15,815) -
Accounts receivable ( 75,603) 3,290 ( 51,134)
Due from employees 8,001 ( 29,900) ( 10,218)
Intangibles - - ( 3,113)
Inventory 22 15,404 ( 22,270)
Investments - - ( 25,342)
Prepaid expenses 3,466 ( 6,186) ( 5,867)
Accounts payable 156,853 ( 40,587) 69,541
Cash used for operating activities ( 463,242) ( 669,363) (887,809)
Cash Flow from Financing Activities
Issue of shares 291,890 586,870 992,070
Shares returned to treasury ( 8,000) - -
Liabilities settled by issue
of company shares - 56,560 -
Note payable and capital
lease obligation 718,313 ( 5,806) 37,682
Payment of dividend ( 47,970) - -
Cash provided by financing activities 954,233 637,624 1,029,752
Cash Flow from Investing Activities
Acquisition of capital assets ( 387,227) ( 20,811) ( 51,867)
Advances(to)from related company 20,096 18,671 ( 52,367)
Cash used for investing activities ( 367,131) ( 2,140) (104,234)
Increase (Decrease) in cash during year 123,860 ( 33,879) 37,709
Cash (Bank indebtedness),
beginning of year ( 834) 33,045 ( 4,664)
Cash (Bank indebtedness), end of year $ 123,026 $( 834) $ 33,045
Cash is comprised of
Cash (indebtedness) $ 3,417 $( 834) $ 33,045
Tenn deposit 119,609 - -
$ 123,026 $( 834) $ 33,045
</TABLE>
<PAGE>
CRYOPAK INDUSTRIES INC.
Notes to Consolidated Financial Statements
March 31, 1998 amd 1997
(Stated in Canadian Dollars)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in Canada and reflect the
following policies:
Basis of Presentation
- ---------------------
These consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, CRYOPAK ( International ) Inc., a Barbados
corporation, CRYOPAK ( Canada ) Corporation and its wholly-owned subsidiary
CRYOPAK Corporation, a Nevada corporation, and its proportionate interest (50%)
in a joint venture, CRYOPAK (Alberta) Corporation.
Inventories
- -----------
Inventories are valued at the lower of cost or net realizable value. Cost is
determined by the first-in first-out (FIFO) method of valuation.
Investments
- -----------
Current investments are recorded at the lower of cost and market value.
Long-term investments are recorded as cost unless there has been a loss in value
that is other than a temporary decline, in which case the investment is written
down to fair market value.
Depreciation
- ------------
Capital assets are recorded at cost.
The Company records depreciation on its capital assets using the straight-line
method over five years, except for motor vehicles where the declining balance
method is used at the rate of 30% per annum.
Patent Licence
- --------------
The patent licence is recorded at cost and is amortized on a straight-line basis
over seventeen years.
Deferred Development Costs
- --------------------------
The deferred development costs are recorded at cost and are amortized on a
straight-line basis over ten years.
Foreign Currency
- ----------------
Foreign currency accounts are translated using the temporal method whereby
current assets and current liabilities are translated to Canadian dollars at
year end exchange rates, other assets and liabilities at exchange rates
prevailing at the dates of transactions, and revenue and expenses at the average
rate during the year. Gains and losses from foreign currency translation are
included in the consolidated statements of loss and deficit.
Goodwill
- --------
The excess of cost of the purchase of a subsidiary company over the fair value
of assets acquired (disclosed in these consolidated financial statements as
goodwill) is amortized on a straight-line basis over seventeen years.
<PAGE>
Financial Instruments
- ---------------------
The fair values of the Company's cash, investments, accounts receivable, amounts
due from employees, advance to related company, accounts payable and accrued
liabilities, bank indebtedness, and capital lease obligation were estimated to
approximate their carrying value.
2. OPERATIONS
These financial statements have been prepared on the assumption that the Company
is a going concern.
The ability of the Company to continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities and commitments in
the normal course of business, is dependent on obtaining the financing necessary
to continue operations and, ultimately, profitable operations.
3. TERM DEPOSIT
The term deposit is held by the Canadian Western Bank as security on lease
financing for a machine acquired during the year (Note 9).
4. INVESTMENTS
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Marketable securities -
market value at March 31,
1998 - $200
1997 - $325 $ 100 $ 100
Artwork 25,342 25,342
________ _______
$25,442 $25,442
</TABLE>
5. CAPITAL ASSETS
<TABLE>
<CAPTION>
1998 1997
Cost Accumulated Net Book Net Book
Depreciation Value Value
<S> <C> <C> <C> <C>
Computer $ 48,396 $ 36,586 $ 11,810 $ 26,607
Furniture
and Fixtures 83,066 78,781 4,285 5,344
Motor Vehicle
under Capital
Lease 40,594 23,687 16,907 18,228
Machinery under
Capital Lease 383,943 - 383,943 -
________ ________ ________ ________
$555,999 $139,054 $416,945 $ 50,179
</TABLE>
6. ADVANCE TO RELATED COMPANY
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Advance to N.C.K. Holdings Inc. $70,572 $90,668
</TABLE>
The related company is owned by two directors. The advance is unsecured and
is repayable in monthly installments of $2,200 including interest of 8% per
annum. During the year the Company paid management fees of $220,000 (1997 -
$220,000) and royalties of $26,289 (1997 - $22,934) to N.C.K. Holdings Inc.
<PAGE>
7. INTANGIBLES
<TABLE>
<CAPTION>
1998 1997
Accumulated NetBook NetBook
Cost Depreciation Value Value
<S> <C> <C> <C> <C>
Incorporation Cost $ 3,111 $ - $ 3,111 $ 3,111
Deferred Development
Costs 114,017 80,667 33,350 48,172
Patent Licence 566,323 258,183 308,140 341,454
Goodwill 156,155 71,191 84,964 94,150
________ ________ ________ ________
$839,606 $410,041 $429,565 $486,887
</TABLE>
8. NOTE PAYABLE
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Note payable to a company related
by two directors in common, bearing
interest at the rate of 12% per annum
repayable April 30, 1998, and
secured by a general security agreement
on all the Company's assets. The loan
was converted to share capital
subsequent to the year end (Note 14(a)).
The interest accrued on the loan was
forgiven. $350,000 -
</TABLE>
<PAGE>
9. CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Capital lease obligation with interest
at 10.25%, maturing November 1,
1999 $ 25,231 $ 31,876
Capital lease obligation with interest
at 10.6%, maturing July 20, 2002
(Note 3) 374,958 -
________ ________
400,189 31,876
Less: current portion 80,174 6,345
________ ________
$320,015 $ 25,531
</TABLE>
The future minimum lease payments required are as follows:
<TABLE>
<CAPTION>
<S> <C>
1999 $117,064
2000 126,487
2001 107,824
2002 107,824
2003 35,941
</TABLE>
Included in these amounts is imputed interest of $94,951.
<PAGE>
10. SHARE CAPITAL
<TABLE>
<CAPTION>
Authorized
<S> <C>
100,000,000 common share's without par value
100,000,000 Class A preferred shares without par value, of which 1,500
are designated Class A convertible voting preferred shares,
Series I
</TABLE>
The following changes occurred in share capital:
<TABLE>
Common shares
Issued and outstanding
<CAPTION>
1998 1997
Number of Number of
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Balance, beginning of year 12,245,156 $7,078,428 11,229,065 $6,699,998
Issued during the year
For cash, pursuant to the
exercise of stock options 243,000 118,920 647,255 242,070
For cash, pursuant to the
exercise of warrants - - 116,000 34,800
For cash, pursuant to
private placement 250,000 125,000 150,000 45,000
For settlement of debt - - 102,836 56,560
For payment of dividend
on Class A preferred
shares, Series 1 96,908 47,970 - -
__________ _______ _________ _______
589,908 291,890 1,016,091 378,430
Acquired during the year (20,000) (8,000) - -
Balance, end of year 12,815,064 $7,362,318 12,245,156 $7,078,428
Balance, beginning of year 530 $ 530,000 265 $ 265,000
Issued during the year for cash - - 265 265,000
Balance, end of year 530 530,000 530 530,000
</TABLE>
<PAGE>
Each class A preferred share Series I carries a 12%, cumulative dividend payable
at the company's fiscal year end, in either cash or common shares at the option
of the Company. Dividends in arrears at March 31, 1998 amounted to $64,039.
The Series I preferred shares are covertible into common shares at the rate of
one common share for each $3 of paid up capital or the rate provided below:
(i) $2.50 at any time after December 31, 1997, provided that the Current Trading
Price shall never have exceeded $2.99 after December 31, 1996;
(ii) $2.00 at any time after December 31, 1998, provided that the Current
Trading Price shall never exceeded $2.99 after December 31, 1996 or $2.49
after December 31, 1997;
(iii) at any time after December 1, 1999, provided that the Current Trading
Price shall never have exceeded $2.99 after December 31, 1996 or $2.49
after December 1, 1997 or $1.99 after December 31, 1998, at a common share
price equal to that price which represents a 15% discount to the then
Current Trading Price, which common share price in no event shall be less
than $0.95;
But if not so coverted prior to May 12, 2000, such Series I preferred shares
shall be deemed to have been converted on May 12, 2000 at the applicable
conversion price described above. The Current Trading Price means the average
trading price of the common shares on a recognized public stock exchange for the
preceeding 20 business days.
On March 31, 1998, the following stock options were outstanding:
<TABLE>
<CAPTION>
No. Of Shares Exercise Price Expiry Date
<S> <C> <C> <C>
Directors 145,000 $0.50 June 13, 1999
152,500 0.52 June 16, 1999
145,000 0.50 June 13, 1999
77,500 0.52 June 16, 1999
100,000 0.50 September 2, 1999
150,000 0.50 September 2, 1999
Officers 240,000 0.50 April 10, 1999
Employees 20,000 0.52 June 16, 1999
</TABLE>
On March 31, 1998, 250,000 warrants were outstanding. The warrants entitle the
holder to purchase 250,000 common shares at an exercise price of $0.60 per share
and expire August 18, 1998.
<PAGE>
11. INCOME TAXES
The Company has losses available for utilization against future years' taxable
incomes which, if unused, will expire as follows:
<TABLE>
<CAPTION>
<S> <C>
1999 $ 276,415
2000 296,801
2001 1,089,726
2002 658,014
2003 710,475
2004 599,008
2005 649,840
</TABLE>
12. LEASES
The minimum annual rental commitments for operating leases in effect at March
31, 1998 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1999 $ 47,832
2000 47,832
2001 27,480
2002 1,627
</TABLE>
13. RELATED PARTY TRANSACTIONS
Related party transactions not otherwise disclosed in these consolidated
financial statements are:
(a) Professional fees include $10,000 paid to a company owned by a director of
the Company.
(b) As of March 31, 1998, accounts receivable include $7,658 receivable from
N.C.K. Holdings Inc., a company owned by two directors and $3,278
receivable from Fulcrum Developments Ltd., a company related by two
directors in common.
14. SUBSEQUENT EVENTS
The following share transactions took place subsequent to the year end:
(a) Issued 777,777 common shares for gross proceeds of $350,000 pursuant to the
conversion of debt (Note 8).
(b) Issued 1,000,000 units for gross proceeds of $400,000. Each unit consists
of one common share and one non-transferable share purchase warrant. Each
warrant entitles the holder to purchase one common share at $0.40 on or
before April 23, 1999, or at $0.46 on or before April 23, 2000.
(c) Issued 119,608 warrants to the person acting as guarantor on a capital
lease. Each warrant entitles the holder to purchase one common share at
$0.40 on or before March 20, 1999, or at $0.46 on or before March 20, 2000.
15. CONTRACTUAL OBLIGATIONS
(a) Pursuant to an agreement dated March 20, 1998, which is subject to
regulatory approval, the Company committed to pay a bonus to a third party
for a guarantee of a capital lease. The capital lease is $374,958 (Note 9).
The bonus is payable in monthly installments of $2,392 commencing April 20,
1998 up to a maximum of $23,920 and can be canceled if the Company can
obtain a release of the guarantee. In addition the Company must issue
119,608 share purchase warrants (Note 14(c)). The warrants will expire
within 30 days of the Company obtaining a release of the guarantee.
(b) Pursuant to an agreement dated December 20, 1989 with N.C.K. Holdings Inc.,
as part of the consideration for a licence, the Company has made a
commitment to issue up to 3,000,000 common shares of its capital (the
"performance shares") based upon certain performance criteria.
<PAGE>
16. CONTINGENT LIABILITIES
Should sales of racks not meet expectations, the Company is liable for the cost
of the molds, the balance of which was approximately $30,000 at March 31, 1998.
17. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(a) Generally accepted accounting principles ("GAAP") used in the United States
of America differ in certain respects from GAAP used in Canada. A
difference that materially affects these consolidated financial statements
is that United States GAAP require deferred development costs be expensed
as incurred whereas Canadian GAAP allows these expenses to be deferred and
amoritzed. Had the consolidated financial statements been prepared in
accordance with United States GAAP as described above, the following
changes would have been made:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Total assets-Canadian GAAP $1,364,297 $ 892,598 $ 969,860
Deferred Development costs 33,350 48,172 62,994
Total assets-United States GAAP 1,330,947 884,426 906,866
Shareholders' equity-Candaian GAAP 61,201 463,834 495,537
Deferred development costs 33,350 48,172 62,994
Shareholders' equity-United States GAAP 27,851 415,662 432,543
Net loss-Canadian GAAP 638,553 675,133 912,390
Amortization of deferred development costs 14,822 14,822 14,822
Net loss-United States GAAp 623,731 660,311 897,568
</TABLE>
<PAGE>
(b) United States GAAP require non-cash investing and financing activities to be
excluded from the consolidated statements of changes in financial position,
whereas Canadian GAAP require these activities to be included in the
statement. Had the consolidated statement of changes in financial
position been prepared in accordance with U.S. GAAP the following
transactions would have been excluded:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Liabilities settled by issue of company shares $ - $56,560 $ -
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Basic loss per share calculated in accordance
with U.S. GAAP is: $(0.05) $(0.06) $(0.09)
</TABLE>
<PAGE>
Hay & Watson Chartered Accountants
Auditors' Report
To the Shareholders
Cryopak Industries Inc.
We have audited the consolidated balance sheets of Cryopak Industries Inc. as at
March 31, 1998 and 1997 and the consolidated statements of loss and deficit and
of changes in financial position for each of the years in the three year period
ended March 31, 1998. These consolidated financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statements.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial positions of the company as at March 31, 1998
and 1997 and the results of its operations and the changes in its cash flows;
for each of the years in the three year period ended March 31, 1998 in
accordance with accounting principles generally accepted in Canada. As required
by the Company Act of British Columbia, we report that, in our opinion, these
principles have been applied on a consistent basis with that of the preceding
year.
Chartered Accountants
Vancouver, BC
June 25, 1998
<PAGE>
CRYOPAK INDUSTRIES INC.
Consolidated Financial Statements
Year Ended March 31, 1999
and Auditors' Report
AUDITORS' REPORT
To the Shareholders
Cryopak lndustries Inc.
We have audited the consolidated balance sheets of Cryopak industries Inc. as at
March 31, 1999 and 1998 and the consolidated statements of loss and deficit and
changes in financial position for each of the years in the three year period
ended March 31, 1999. These consolidated financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statements.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial positions of the company as at March 31, 1999
and 1998 and the results of its operations and the changes in its financial
position for each of the years in the three year period ended March 3 1, 1999 in
accordance with accounting principles generally accepted in Canada. As required
by the Company Act (British Columbia), we report that, in our opinion, these
principles have been applied on a consistent basis.
Chartered Accountants
Vancouver, BC
June 11, 1999
<PAGE>
COMMENTS BY AUDITORS FOR U.S. READERS ON
CANADA-U.S. REPORTING DIFFERENCES
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the company's ability to continue as a going concern, such as those described in
Note 2 to the financial statements. Our report to the shareholders dated June
11, 1999 is expressed in accordance with Canadian reporting standards which do
not permit a reference to such events and conditions in the Auditors' Report
when these are adequately disclosed in the financial statements.
Chartered Accountants
Vancouver, BC
June 11, 1999
<TABLE>
Consolidated Balance Sheets
March 31
(Stated in Candian Dollars)
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS
Current
Cash $ 640,299 $ 3,417
Accounts receivable 360,783 217,677
Inventory (Note 3) 20,609 36,757
Prepaid expenses 14,075 12,196
Due from employees 24,448 32,117
_________ _______
1,060,213 421,773
Term deposit - Restricted (Note 4) 125,649 119,609
Investments (Note 5) 75 25,442
Capital Assets (Note 6) 429,652 416,945
Advance to Related Company (Note 7) 48,869 70,572
Intangibles (Note 8) 372,243 429,565
__________ __________
$2,036,700 $1,364,297
__________ __________
LIABILITIES
current
Accounts payable and accrued liabilities $ 276,966 $ 532,440
Note payable (Note 9) - 350,000
current capital lease obligation 94,544 80,174
__________ __________
361,510 962,614
Capital Lease Obligation (Note 10) 249,057 320,015
Deferred Income Taxes 20,467 20,467
__________ __________
$ 631,034 $1,303,096
__________ __________
SHAREHOLDERS' EQUITY
Share Capital (Note 11)
Issued and outstanding
Common shares 9,682,451 7,362,318
Class A preferred shares, Series 1 530,000 530,000
Deficit (8,806,785) (7,831,117)
___________ __________
1,405,666 61,201
___________ __________
$2,036,700 $1,364,297
</TABLE>
<PAGE>
<TABLE>
Consolidated Statements of Loss and Deficit
Year Ended March 31
(Stated in Canadian Dollars)
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Sales $ 1,295,159 $ 1,161,442 $ 1,140,242
Cost of goods sold 746,285 763,018 675,706
Gross profit 549,874 398,424 464,536
Operating expenses (Schedule 1,331,413 938,375 992,673
Operating loss (782,539) (539,951) (528,137)
____________ ____________ ____________
Other (Income) Expenses
Filing, listing and
transfer agent fees 25,289 20,321 17,006
Corporate printing, financial
and public relations 117,043 85,181 138,150
Other income ( 12,803) ( 6,900) ( 8,160)
____________ ____________ ____________
129,529 98,602 146,996
____________ ____________ ____________
Loss before income taxes ( 912,068) ( 638,553) ( 675,133)
Net loss for the year ( 912,068) ( 638,553) ( 675,133)
Dividends ( 63,600) ( 47,970) -
Deficit beginning of the year (7,831,117) (7,144,594) (6,469,461)
Deficit, end of year $(8,806,785) $(7,831,117) $(7,144,594)
____________ ___________ ____________
Less per share $ 0.06 $ 0.05 $ 0.06
Weighted average common
shares outstanding 14,937,561 12,597,083 11,691,097
___________ ___________ ___________
</TABLE>
<PAGE>
<TABLE>
Consolidated Statements of Changes in Financial Position
Year Ended March 31
(Stated in Canadian Dollars)
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Operating Activities
Net loss for the year $( 912,068) $( 638,553) $( 675,133)
Adjustment for,
Depreciation and amortization 114,730 77,783 79,564
Loss from short term investment 25 - -
____________ ___________ ___________
( 797,313) ( 560,770) ( 595,569)
Changes in non-cash working capital
Proceeds from (repayment of)
advances - related companies - 4,789 ( 15,815)
(Increase)decrease in accounts
receivable ( 143,106) ( 75,603) 3,290
Decrease (increase,) in amount
due from employees 7,669 8,001 ( 29,900)
Decrease in inventory 16,149 22 15,404
(Increase)decrease in prepaid
expenses ( 1,879) 3,466 ( 6,186)
(Decrease)increase in accounts
payable ( 255,474) 156,853 ( 40,587)
Cash used in operating activities (1,173,954) ( 463,242) ( 669,363)
___________ ___________ ___________
Financing Activities
ISSUES of shares 2,392,733 291,890 586,870
Share issue costs ( 72,600) - -
Shares returned to treasury - ( 8,000) -
Liabilities settled by issue
of company shares - - 56,560
(Repayment of) proceeds from
note payable and capital
lease obligation ( 416,588) 718,313 ( 5,806)
Payment of dividend ( 63,600) ( 47,970) -
Cash provided by financing
activities 1,839,945 954,233 637,624
___________ ___________ ___________
Investing Activities
Acquisition of capital assets ( 44,773) ( 387,227) ( 20,811)
Advances from related company 21,704 20,096 18,671
Cash used in investing activities ( 23,069) ( 367,131) ( 2,140)
___________ ___________ ___________
Increase (Decrease)in Cash 642,922 123,860 ( 33,879)
Cash (Bank indebtedness),
Beginning of Year 123,026 ( 834) 33,045
Cash (Bank indebtedness),
End of Year $ 765,948 $ 123,026 $( 834)
__________ ___________ ____________
Cash is Comprised of
Cash (indebtedness) $ 640,229 $ 3,417 $( 834)
Term deposit 125,649 119,609 -
__________ __________ ____________
$ 765,948 $ 123,026 $( 834)
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Stated in Canadian Dollars)
1. DESCRIPTION OF BUSINESS
Cryopak Industries Inc. (the "Company"), incorporated under the laws of British
Columbia, is in the business of the manufacturing and sale of thermal packaging
solutions. The Company produces a patented, flexible, reusable refrigerant
product.
The Company has financed its cash deficiency from operating activities primarily
from share issuances. The ability of the Company to continue as a going concern,
which contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business, is dependent upon its ability
to continue to obtain the financing necessary to continue operations and,
ultimately, profitable operations.
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company prepares its accounts in accordance with accounting principles
generally accepted in Canada. A reconciliation of amounts presented in
accordance with United States accounting principles is detailed in Note 18.
The following is a summary of significant accounting policies used in the
preparation of these consolidated financial statements:
Basis of Consolidation
These consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, Cryopak (International) Inc. (inactive), a
Barbados corporation, Cryopak (Canada) Corporation and its wholly owned
subsidiary Cryopak Corporation, a Nevada corporation, and its proportionate
interest (50%) in a joint venture, Cryopak (Alberta) Corporation (inactive
/active).
Inventories
Inventories are valued at the lower of cost or net realizable value. Cost is
determined by the first-in first-out (FIFO) method of valuation.
Investments
Current investments are recorded at the lower of cost and market value.
Long-term investments are recorded at cost unless there has been a loss in value
that is other than a temporary decline, in which case the investment is written
down to fair market value.
Depreciation
Capital assets are recorded at cost and are depreciated on the following basis
at the rates indicated:
<TABLE>
<CAPTION>
<S> <C>
Computer Hardware 3 years straight-line
Computer Software 2 years straight-line
Furniture & Fixture, Office Equipment 5 years straight-line
Machinery 5 years straight-line
Motor Vehicle 30% declining balance
</TABLE>
<PAGE>
Patent License
The patent licence is recorded at cost and is amortized on a straight-line basis
over seventeen years.
Deferred Development Costs
The deferred development costs are recorded at cost and are amortized on a
straight-line basis over tern years.
Foreign Currency
Foreign currency accounts are translated using the temporal method whereby
current assets and current liabilities are translated to Canadian dollars at
year end exchange rates, other assets and liabilities at exchange rates
prevailing at the dates of transactions, and revenue and expenses at the average
rate during the year. Gains and losses from foreign currency translation are
included in the consolidated statements of loss and deficit.
Goodwill
The excess of cost of the purchase of a subsidiary company over the fair value
of assets acquired (disclosed in these consolidated financial statements as
goodwill) is amortized on a straight-line basis over seventeen years.
Financial Instruments
The fair values of the Company's cash, investments, accounts receivable, amounts
due from employees, advance to related company, accounts payable and accrued
liabilities, bank indebtedness, and capital lease obligation were estimated to
approximate their carrying value.
3. INVENTORIES
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Raw Materials $ 5,348 $ -
Finished goods 15,260 36,757
_________ _________
$ 20,608 $ 36,757
</TABLE>
4. TERM DEPOSIT
The term deposit is held by the Canadian Western Bank as security on lease
financing for a machine acquired in 1998 (Note 10).
5. INVESTMENTS
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Marketable securities -
$ 75 $ 100
Artwork - 25,342
__________ _________
$ 75 $ 25,442
</TABLE>
During the year the Company changed its intended use of the artwork and decided
to keep it as office furnishings. As a result the artwork has been reclassified
to capital assets.
6. CAPITAL ASSETS
<TABLE>
<CAPTION>
1999
Accumulated Net Book
Cost Depreciation Value
<S> <C> <C> <C>
Artwork $ 25,342 $ - $ 25,342
Computer Hardware 36,698 27,478 9,220
Computer Software 2,215 1,084 1,131
Furniture and Fixtures 59,696 56,907 2,789
Motor Vehicle under Capital Lease 40,594 28,759 11,835
Machinery under Capital Lease 399,279 39,928 359,351
Machinery 18,445 1,844 16,601
Office Equipment 4,113 730 3,383
________ ________ ________
$586,382 $156,730 $429,652
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1998
Accumulated NetBook
Cost Depreciation Value
<S> <C> <C> <C>
Computer Hardware $ 45,852 $ 34,168 $ 11,684
Computer Software 2,544 2,419 125
Furniture and Fixtures 80,967 78,252 2,715
Motor Vehicle and Capital Lease 40,594 23,686 16,908
Machinery under Capital Lease 383,943 - 383,943
Office Equipment 2,099 529 1,570
________ _________ ________
$555,999 $139,054 $416,945
</TABLE>
7. ADVANCE TO RELATED COMPANY
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Advance to N.C.K. Holdings Inc. $ 48,869 $ 70,572
</TABLE>
The related company is owned by two directors. The advance is unsecured and is
repayable in monthly installments of $2,200 including interest of 8% per annum.
During the year the Company paid management fees of $220,000 (1998 - $220,000)
and royalties of $26,261 (1998 $26,289) to N.C.K. Holdings Inc.
8. INTANGIBLES
<TABLE>
<CAPTION>
1999 1998
Accumulated NetBook NetBook
Cost Depreciation Value Value
<S> <C> <C> <C> <C>
Incorporation Cost $ 3,111 - $ 3,111 $ 3,111
Deferred Development Costs 114,017 95,489 18,528 33,350
Patent Licence 566,323 291,497 274,826 308,140
Goodwill 156,155 80,377 75,778 84,964
________ _________ ________ ________
$839,606 $467,363 $372,243 $429,565
</TABLE>
9. NOTE PAYABLE
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Note payable to a company
related by two directors in
common, bearing interest at
the rate of 12% per annum,
secured by a general security
agreement on all the Company's
assets, fully repaid during the
year. - $350,000
</TABLE>
<PAGE>
10. CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Capital lease obligation with
interest at 10,25%, maturing
November 1, 1999 $ 17,990 $ 25,231
Capital lease obligation with
interest at 10.6%, maturing
July 20, 2002 (Note 4) 302,689 374,958
Capital lease obligation with
interest at 17%, maturing
October 20, 2001 12,922 -
________ ________
333,601 400,189
Less: current portion 84,544 80,174
________ ________
$249,057 $320,015
</TABLE>
The future minimum lease payments required are as follows;
<TABLE>
<CAPTION>
<S> <C>
2000 $158,775
2001 121,449
2002 118,711
2003 38,293
2004 -
</TABLE>
Included in these amounts is imputed interest of $62,148.
11 SHARE CAPITAL
Authorized
100,000,000 common shares without par value
100,000,000 Class A preferred shares without par value, of which 1,500
are designated Class A convertible voting preferred shares,
Series I
The following changes occurred in share capital:
<TABLE>
Common shares
Issued and outstanding
<CAPTION>
1999 1998
Number of Number of
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Balance beginning of year 12,815,064 $7,362,318 12,245,156 $7,078,428
Issued during the year
For cash, pursuant to the
exercise of stock options 1,173,700 581,633 243,000 118,920
For cash, pursuant to
private placements 3,057,777 1,710,000 250,000 125,000
For finder's fee 50,000 37,500 - -
For payment or dividend
on Class A preferred
shares, Series 1 159,199 63,600 96,908 47,970
Share issue costs - ( 72,600) - -
___________ ___________ __________ __________
4,440,676 2,320,133 589,908 291,890
Acquired during the year - - (20,000) (8,000)
Balance. end of Year 17,255,740 $9,682,451 12,815,064 $7,362,318
</TABLE>
<TABLE>
Class A preferred shares,
Series 1
<CAPTION>
1999 1998
Number Number of
of Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Balance, begining and
end of year 530 $ 530,000 530 $ 530,000
</TABLE>
Each Class A preferred share Series I carries a 12%, cumulative dividend payable
at the company's fiscal year end, in either cash or common shares at the option
of the Company. Dividends in arrears at March 31, 1999 amounted to $64,039.
The Series I preferred shares are convertible into common shares at the rate of
one common share for each $3 of paid up capital or the rate provided below:
(i) $2.00 any time after December 31, 1998, provided that the Current Trading
Price shall never have exceeded $2.99 after December 31, 1996 or $2.49
after December 31, 1997.
(ii) at any time after December 1, 1999, provided that the Current Trading Price
shall never have exceeded $2.99 after December 31, 1996 or $2.49 after
December 1, 1997 or $1.99 after December 31, 1998, at a common share price
equal to that price which represents a 15% discount to the then Current
Trading Price, which common share price in no event shall be less than
$0.95;
But if not so converted prior to May 12, 2000, such Series I preferred shares
shall be deemed to have been converted on May 12, 2000 at the applicable
conversion price described above. The Current Trading Price means the average
trading price of the common shares on a recognized public stock exchange for the
preceding 20 business days.
On March 31, 1999, the following stock options were outstanding:
<TABLE>
<CAPTION>
No. of Shares Exercise Price Expiry Date
<S> <C> <C> <C>
Directors 170,000 $0.50 June 13, 1999
390,000 0.52 August 17, 2000
343,000 0.50 January 7, 2001
75,000 0.52 June 19,1999
100,000 0.50 September 2. 1999
150,000 0.50 September 2, 1999
Officer 100,000 0.40 June 26, 2000
136,300 0.82 August 17, 2000
Employee 20,000 0.52 June 16,1999
100,000 0.82 February 11, 2001
*750,000 0.76 March 19,2004
</TABLE>
*These options will vest at a rate of 50,000 at the end of each calendar quarter
commencing March 31, 1999 and are subject to shareholder approval.
<PAGE>
On March 31. [999. the following warrants were outstanding,
<TABLE>
<CAPTION>
No. of Warrants Exercise Price Expiry Date
<S> <C> <C>
250,000 $0.60 August 18,1999
250,000 0.46 April 29, 2000
125,000 0.776 September 20, 1999
225,000 0.46 May 13, 2000
135,000 0.46 May 29,2000
265,000 0.46 June 3, 2000
125,000 0.46 June 17,2000
119,608 0.46 March 20, 2000
</TABLE>
12. INCOME TAXES
The Company has estimated losses available for utilization against future years'
taxable incomes which, if unused, will expire as follows:
<TABLE>
<CAPTION>
<S> <C>
2000 $ 296,801
2001 1,089,726
2002 658,014
2003 710,475
2004 599,008
2005 649,840
2006 882,657
</TABLE>
13, LEASES
The minimum annual rental commitments for operating leases in effect at
March 31, 1999 are as follows:
<TABLE>
<CAPTION>
<S> <C>
2000 47,790
2001 27,456
2002 1,627
</TABLE>
14. RELATED PARTY TRANSACTIONS
Related party transactions not otherwise disclosed in these consolidated
financial statements are as follows:
(a) Professional fees include $22,200 paid to a company owned by a director of
the Company.
(b) As of March 31, 1999, accounts receivable include $28,316 (1999: $7,658)
receivable from N.C.K. Holdings Inc., a company owned by two directors, and
$3,278 (1998: $7,658) receivable from Fulcrum Developments Ltd., a company
related by two directors in common.
<PAGE>
15. SUBSEQUENT EVENTS
The following share transactions took place subsequent to the year end:
(a) Issued 72,000 units for gross proceeds of $54,000, Each unit consists
of one common share and one non-transferable share purchase warrant.
Each warrant entitles the holder to purchase one common share at $ 1.00
on or before May 4, 2001.
(b) Issued 125,000 units to a director of the Company for gross proceeds of
$97,000. The Company provided an interest-free loan, forgivable under
certain conditions, for the purchase of these units. Each unit consists
of one common share and one non-transferable share purchase warrant,
Each warrant entitles the holder to purchas one common share at $0.776
on or before September 20, 1999.
(c) Granted 290,000 stock options to directors and officers of the Company,
exercisable on or before April 21, 2001 at $0.86 per share.
(d) Issued 326,300 common shares for gross proceeds of $175,166 pursuant to
the exercise of stock options.
16. CONTRACTUAL OBLIGATIONS
Pursuant to an agreement dated December 20, 1989 with N.C.K. Holdings Inc., as
part of the consideration for a licence, the Company has made a commitment to
issue up to 3,000,000 common shares of its capital (the "performance shares")
based upon certain performance criteria.
17. CONTINGENT LIABILITIES
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year, Date-sensitive systems may recognize the
Year 2000 as 1900 or some other date, resulting in errors when information using
Year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations, It is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
entity, including those related to the efforts of customers, suppliers, or other
third parties will be fully resolved.
18. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(a) Generally accepted accounting principles ("GAAP") used in the United States
of America differ in certain respects from GAAP used in Canada. A difference
that materially affects these consolidated financial statements is that United
States GAAP require deferred development costs be expensed as incurred whereas
Canadian GAAP allows these expenses to be deferred and amortized. Had the
consolidated financial statements been prepared in accordance with United States
GAAP as described above, the following changes would have been made,
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Total assets - Canadian GAAP $2,016,700 $1,364,297 $ 892,508
Deferred development costs 18,528 33,350 49,172
Total assets - United States GAAP $2,018,172 $1,330,947 $ 844,426
Shareholders,' equity - Canadian GAAP $1,405,666 $ 61,201 $ 463,834
Deferred development costs 18,528 33,350 48,172
Shareholder,.' equity - United States GAAP $1,387,138 $ 27,851 $ 415,662
Net loss - Canadian GAAP $ 912,068 $ 638,553 $ 675,133
Amortization of deferred development costs 14,822 14,822 14,822
Net loss - United States GAAP $ 997,246 $ 623,731 $ 660,311
</TABLE>
<PAGE>
(b) United States GAAP require non-cash investing and financing activities to be
excluded from the consolidated statements of changes in financial position,
whereas Canadian GAAP require these activities to be included in the statement.
Had the consolidated statement of changes in financial position been prepared in
accordance with U.S. GAAP the following transactions would have been excluded:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Liabilities settled by issue of
company shares $ - $ - $ 56,560
Dividends paid by issue of company shares 63,600 47,970 -
Finder's fee raid by issue of company shares 37,500 - -
_________ _________ ________
$ 101,100 $ 47,970 $ 56,560
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Basic loss per share calculated in
accordance with U.S., GAAP is: $( 0.06) $( 0.05) $( 0.06)
</TABLE>
<TABLE>
Consolidated Schedules of Operating Expenses
Year Ended March 31
(Stated in Canadian Dollars)
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Bad debts $ 53,529 $ 29,125 $ 7,245
Commissions 4,144 520 884
Depreciation and amortization 72,958 77,783 79,564
Foreign exchange 20,640 10,876 1,355
Interest and bank charges 41,746 15,301 16,549
Interest on capital lease obligation 38,912 2,595 3,434
Management fees 220,000 220,000 220,000
Marketing 201,347 57,944 87,337
Office supplies and stationery 80,250 68,798 58,197
Professional fees 98,867 56,291 74,399
Rent 53,915 52,861 52,459
Royalties 53,328 51,258 44,903
Salaries and benefits 151,146 126,769 117,960
Storage 4,507 10,459 9,899
Telephone 37,790 41,994 50,748
Travel and entertainment 180,770 97,769 155,138
Vehicle 17,564 18,032 12,602
__________ _________ ________
$1,331,413 $938,375 $992,673
</TABLE>
<PAGE>
Item 18. Financial Statements
The Registrant has chosen to file Financial Statements under Item 17,
above.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this registration statement annual
report to be signed on its behalf by the undersigned, thereunto duly authorized.
CRYOPAK INDUSTRIES INC.
/s/ Harry Bygdnes
---------------------------------
Harry Bygdnes, President
This offering statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C>
Harry Bygdnes, Director September 13, 1999
Robert Leigh Jeffs, Director September 13, 1999
Douglas R. Reid, Director September 13, 1999
Ross G. Morrison, Director September 13, 1999
John F. Morgan, Director September 13, 1999
John A. McEwen, Director September 13, 1999
</TABLE>
VANCOUVER STOCK EXCHANGE
March 1, 1999
Godinho, Sinclair
Banisters & Solicitors
Suite 1020, Montreal Trust Centre
510 Burrard Street
Vancouver, BC
V6C3A8
Attention: Harley D. Sinclair
Dear Sirs\Mesdames:
Re: CRYOPAK INDUSTRIES INC. ("CII")
Private Placement-Non-Brokered - Submission #42994
This is to confirm that the Vancouver Stock Exchange has accepted for filing
documentation with respect to a Non-Brokered Private Placement announced
February 3, 1999.
Number of Shares: 1,280,000 shares
Purchase Price: $0.75 per share
Placees:Sparten Establishment 100,000
Societe Parisience de Gestion 100,000
Drewin Dolphin Securities 70,000
Dank von Ernst & Cie AG 500,000
Banque Leu S.A. 10,000
Veritas SG Investment Trust GIBH 500,000
Finder's Fees: 50,000 shares to Union Securities
(International) Ltd. and
$35,100 to European Investor
Services Ltd.
These securities have not yet been issued. The Company shall issue a news
release if the private placement does not close promptly.
This fax will be the only copy you receive. Should you have any questions,
please contact the undersigned.
Yours truly,
Colleen Chambers
Analyst
Corporate Finance Services
CC\n1
cc BC Securities Commission
Attention: Corporate Finance Cryopak Industries Inc.
VANCOUVER STOCK EXCHANGE
March 17, 1999
Godinho, Sinclair
Barristers & Solicitors
Suite 1020, Montreal Trust Centre
510 Burrard Street
Vancouver, BC
V6C3A8
Attention: Harley Sinclair
Dear Sirs\Mesdames:
Re: Cryopak Industries Inc.
Private Placement (Submission #42994)
Further to your letter dated March 15, 1999 this is to advise that the Vancouver
Stock Exchange has accepted the place, King Eagle Investments Ltd., for 100,000
shares in lieu of original placee, Societe Parisienne de Gestion, as requested.
This fax will be the only copy you receive. Should you have any questions,
please contact the undersigned.
Yours truly,
Colleen Chambers
Analyst
Corporate Finance Services
CC/nl
cc BC Securities Commission
Attention: Corporate Finance Cryopak Industries Inc.
<PAGE>
VANCOUVER STOCK EXCHANGE
November 29, 1993
Godinho, Sinclair
Beriisters & Solicitors
Stock Exchange Tower
P.O. Box 10323, Pacific Centre
1590 - 609 Granville St.
Vancouver, BC
V7Y 105
Attention: Mr. Harley Sinclair
Dear Sirs:
Re: CRYOPAK INDUSTRIES INC. ("CII")
Private Placement-Certified Filing
This is to confirm that the Vancouver Stock Exchange has accepted, subject to
the transaction closing no later than 45 days from October 20, 1993, for filing
documentation with respect to a private placement announced October 6, 1993:
Number of Shares: 97,000 shares
Purchase Price: $1.00 per share
Warrants: 48,500 non-transferable share purchase warrants
to purchase 48,500 shares
Warrant Exercise Price: $1.00 for a one year period
Placees: Canadian Ice Ltd. ( Brian M. LaRue, Robert C.
Houghton, Elizabeth Haack, Karen Bouthillette,
Paul Deterling, W.B. Parris and Drew Floyd)
The Company must give, the Exchange notice in writing of the number of shares
issued pursuant to the above so that we may update our records. These reports
should be addressed to the attention of Index Clerk, Corporate Finance &
Listings.
A statement from our Accounting Department representing the applicable
processing fees will be forthcoming under separate cover.
Yours truly,
Karen Chernoff
Analyst
Corporate Finance & Listings
KC/lp
cc: British Columbia Securities Commission
Attention: Corporate Finance Department
<PAGE>
VANCOUVER STOCK EXCHANGE
Stock Exchange Tower
P.O. Box 10333
609 Granville Street
Vancouver, British Columbia
V7Y 1H1
Telephone
(604) 689-3334
Direct Line: 643-6541
Fax: 682-6549
January 27, 1994
Godinho, Sinclair
Barristers & Solicitors
Stock Exchange Tower
P.O. Box 10323, Pacific Centre
- -1590 - 609 Granville St.
Vancouver, BC
V7Y 105
Attention: Harley D. Sinclair
Dear Sirs:
Re: CRYOPAK INDUSTRIES INC. ("CII")
Private Placement-Certified Filing - Sub #68717
This is to confirm that the Vancouver Stock Exchange has accepted, subject to
the transaction closing no later than 45 days from December 31, 1993, for filing
documentation with respect to a private placement announced December 9, 1993:
Number of Shares: 200,000 shares
Purchase Price: $1.00 per share
Warrants: 200,000 non-transferable share purchase warrants to
purchase 200,000 shares
Warrant Exercise Price: $1.00 for a one year period
$1.15 in the second year
Placee: Richard M. Dewinetz
Finder's Fee: $20,000 in cash to Ben Kolbuc.
The Company must give the Exchange notice in writing or a "Form 20" of the
number of shares issued pursuant to the above so that we may update of records.
These reports should be addressed to the attention of Index Analyst, Corporate
Finance & Listings.
A statement from our Accounting Department representing the applicable
processing fees will be forthcoming under separate cover.
Yours truly,
Christy Yip
Analyst
Corporate Finance & Listings
CY/dj
cc: British Columbia Securities Commission
Attention: Corporate Finance Department
file:CYL050
<PAGE>
VANCOUVER STOCK EXCHANGE
March 12, 1992
Godinho, Sinclair
Barristers & Solicitors
P.O. Box 10323, Pacific Centre
1590 - 609 Granville St.
Vancouver, BC
V7Y 1G5
Attention: Harley Sinclair
Dear Sirs:
RE: INTERNATIONAL CONSORT INDUSTRIES INC. ("IKI")
Private Placement-Certified Filing
This is to confirm that the Vancouver Stock Exchange has accepted, subject to
the transaction closing no later than 45 days from February 19, 1992, for filing
documentation with respect to a private placement of:
Number of Shares: 5OO,OOO shares
Purchase Price: $1.40 per share
Warrants: 500,000 non-transferable share purchase warrants to
purchase 500,000 shares
Warrant Exercise Price: $1.50 for a one year period
Placees: Montgomery Financial Corp. 100,000
Peter Brown 75,000
Nell Dragovan 250,000
John McPhail 75,000
Finder's Fee: $60,000 payable to 414823 B.C. Limited
The Company must give the Exchange notice in writing or a "Form 20" of the
number of shares issued pursuant to the above so that we may update of records.
These reports should be addressed to the attention of Index Analyst, Listings
Department.
A statement from our Accounting Department representing the applicable
processing fees will be forthcoming under separate cover.
Yours truly,
VANCOUVER STOCK EXCHANGE
Linda Dendy
Listings Analyst
LAD/1e
cc: B.C. Securities Commission
Attention: Deadra Robinson
<PAGE>
VANCOUVER STOCK EXCHANGE
January 15, 1992
Godinho, Sinclair
Barristers & Solicitors
1590 - 609 Granville Street
Vancouver, B.C.
V7Y 1G5
Attention: Harley Sinclair
Dear Sirs:
RE: INTERNATIONAL CONSORT INDUSTRIES INC. ("IKI")
- Private Placement
This is to confirm that the Vancouver Stock Exchange has accepted for filing
documentation with respect to a Private Placement of:
Number of Shares: 60,000 shares
Purchase Price: $0.05 per share
Warrants: 60,000 non-transferable share
purchase warrants to purchase 60,000 shares
Warrant Exercise Price: $0.55 for a one year period
Placees: V.I.P. Video Image Producers Inc.
(David Jeffrey)
The Company must give the Exchange notice in writing of the number of shares
issued pursuant to the above so that we may update our records. These reports
should be addressed to the attention of Index Analyst, Listings Department.
A statement from our Accounting Department representing the applicable
processing fees will be forthcoming under separate cover
Should you have any questions, please contact the undersigned.
Yours truly,
VANCOUVER STOCK EXCHANGE
Karen Thomson
Listings Analyst
KT/le
cc: B.C. Securities Commission
Attention: Deadra Robson
<PAGE>
VANCOUVER STOCK EXCHANGE
Stock Exchange Tower Telephone
P.O. Box 10333 (604) 689-3334
609 Granville Street
Vancouver, British Columbia
V7Y 1H1
January 29, 1992
Godinho, Sinclair
Stock Exchange Tower
1590 - 609 Granville Street
Vancouver, B.C.
V7Y 1G5
Attention: Harley -Sinclair
Dear Sirs:
RE: INTERNATIONAL CONSORT INDUSTRIES INC. ("IKI")
Private Placement-Certified Filing-
This is to confirm that the Vancouver Stock Exchange has accepted, subject to
the transaction closing no later than 45 days from January 21, 1992, for filing
documentation with respect to a private placement of:
Number of Shares: 500,000 shares
Purchase Price: $0.50 per share
Warrants: 500,000 non-transferable share purchase warrants
to purchase 500,000 shares
Warrant Exercise Price: $0.60 for a one year period
Placees: Lancer Industries Ltd.
(Verna Hunter) 100,000
Murray Pezim 250,000
Alan and Ruth Best 100,000
Classic Sports Tours Ltd.
(Miles Desharnais) 50,000
Agents' Fee: 50,000 shares being 10% of the gross proceeds
payable to 414823 B.C. Limited
(Gordon Cunningham, Principal)
The Company must give the Exchange notice in writing or a "Form 20" of the
number of shares issued pursuant to the above so that we may update of records.
These reports should be addressed to the attention of Index Analyst, Listings
Department.
Yours truly,
VANCOUVER STOCK EXCHANGE
Edwin Cho, C.G.A.
Listings Analyst
EC/le
cc: B.C. Securities Commission
Attention: Deadra Robson
<PAGE>
Vancouver Stock Exchange
December 13, 1994
Godinho, Sinclair
Barristers & Solicitors
10th Floor-Montreal Trust Centre
510 Burrard Street
Vancouver, BC
V6C 3A8
Attention: Mr. Harley Sinclair
Dear Sirs:
RE: CRYOPAK INDUSTRIES INC ("CII")
Private Placement-Certified Filing
This is to confirm that the Vancouver Stock Exchange has accepted, subject to
the transaction closing no later than 45 days from October 21, 1994, for filing
documentation with respect to a private placement announced October 6, 1994:
Number of Shares: 116,000 shares
Purchase Price: $0.26 per share
Warrants: 116,000 non-transferable share purchase warrants
to purchase 116,000 shares
Warrant Exercise Price: $0.26 for a one year period
$0.30 in the second year
Placees: Harry Bygdnes 58,000
Leigh Jeffs 58,000
Yours truly,
Linda A. Ward
Analyst
Corporate Finance & Listings
LAW/lp
cc: British Columbia Securities Commission
Attention: Corporate Finance Department
file:LWLISOO.CII
<PAGE>
June 6, 1995
Godinho, Sinclair
Business Lawyers
Ste.1020
Montreal Trust Centre
510 Burrard Street
Vancouver, B.C.
V6C 3A8
Attention: Mr. Harley D. Sinclair
Dear Sirs:
RE CRYOPAK INDUSTRIES INC. ("CII")
- Private Placement
This is to confirm that the Vancouver Stock Exchange has accept4 subject to the
transaction closing no later than September 11, 1995, for filing documentation
with respect to a private placement announced May 16, 1995-
1. Private Placement of up to $500,000
Common Shares:
Number of Shares: Up to 884,524 shares
Purchase Price: $0.40 per share on first $100,000 raised
$0.50 per share on second $100,000 raised
$0.60 per share on third $100,000 raised
$0.70 per share on fourth $100,000 raised
$0.80 per share on fifth $100,000 raised
Warrants: 884,524 non-transferable shares purchase warrants
to purchase 884,524 shares
Warrant Exercise Price: $0.10 premium to the purchase prices, for a one year
period.
Placee: Cryopak Industries (VCC) Inc.
2. Private Placement of up to $1,500,000
Convertible Preferred Shares:
Number of Shares: Up to 1,500 Class A Preferred shares
Purchase Price: The Class A Preferred Shares have a par value of $1,000
per share, carry one vote and will carry a 12% annual
cumulative dividend, After December 31, 1996, the
Preferred Shares are convertible into common shares of
the Company at the rate of $3,00 per common share. If
the common shares do not trade at or above $3.00 during
1997, the conversion price reduces to $2.50. If the
common shares do not trade at or above S2,50 during 1998
the conversion price reduces to $2.00. In the event that
the common shares do not trade at or above $1.99 during
1999, the conversion price reduces to the higher of a
15% discount from the market price at that time, and
$0.59.
If the Preferred Shares are not converted prior to May 12, 2000, such shares
automatically convert on May 12, 2000 at the applicable conversion price,
Placee: Cryopak Industries (VCC) Inc.
The Preferred Shares have not currently been created. It is proposed that these
shares will be, created at the Company's upcoming Extraordinary General Meeting
to be held on June 26, 1995.
Should you have any questions, please do not hesitate to contact the
undersigned.
Yours truly,
Rory Matheson, C.A.
Corporate Analyst
Corporate Finance & Listings
RM/Ice
cc: British Columbia Securities Commission
Attention: Corporate Finance Department
Cryopak Industries
file:RM050.01
<PAGE>
VANCOUVER STOCK EXCHANGE
August 20, 1997
Godinho, Sinclair
Barristers & Solicitors
Suite 1020, Montreal Trust Centre
5 10 Burrard Street
Vancouver, BC V6C 3AS
Attention: Harley D. Sinclair
Dear Sir\Madame:
Re: CRYOPAK INDUSTRIES INC.
Private Placement-Non-Brokered - Submission #32427
This is to confirm that the Vancouver Stock Exchange has accepted for filing,
documentation with respect to a Non-Brokered Private Placement announced August
13, 1997:
Number of Shares: 250,000 shares
Purchase Price: $O.50 per share
Warrants: 250,000 non-transferable share purchase warrants
to purchase 250,000 shares
Warrant Exercise Price: $0.60 for a one year period
$0.60 in the second year
Placees: James A.Fletcher 50,000
Exceptional Technologies
Fund 3 (VCC) Inc. 200,000
These securities have not yet been issued. The Company shall issue a news
release if the private placement does not close promptly.
Should you have any questions, please contact the undersigned.
Yours Truly,
Ivy Wong
Analyst
Corporate Finance Services
lw\nj
cc BC Securities Commission
Attention: Corporate Finance
Cryopak Industries Inc.
<PAGE>
VANCOUVER STOCK EXCHANGE
June 25, 1998
Godinho, Sinclair
Barristers & Solicitors
Suite 1020, Montreal Trust Centre
510 Burrard Street
Vancouver, BC
V6C 3AS
Attention: Harley Sinclair
Dear Sirs\Mesdames:
Re: CRYOPAK INDUSTRIES INC ("CII")
Submission # 39094 - Private Placement-Non-Brokered
This is to confirm that the Vancouver Stock Exchange has accepted for filing
documentation with respect to a Non-Brokered Private Placement announced April
23, 1998-,
Number of Shares: 1,000,000 shares
Purchase Price: $0.40 per share
Warrants: 1,OO0,000 non-transferable share purchase
Warrants to purchase 1,000,000 shares
Warrant Exercise Price: $0.40 for a one year period
$0.46 in the second year
Placees: Harry Bygdnes 225,000
Leigh Jeffs 135,000
Exceptional Technologies
Fund 2 (VCC) Inc. 265;000
Phyllis Anne Patriquin 125,000
Banque Cantrade
Ormond Durrus 250,000
These securities have not yet been issued, The Company shall issue a news
release if the private placement does not close promptly.
This fax will be the only copy you receive. If you require a signed original by
mail, please call 602-6918. Should you have any questions, please contact the
undersigned.
Yours truly,
Ivy Wong
Analyst
Corporate Finance Services
cc BC Securities Commission
Attention: Corporate Finance
Cryopak Industries Inc.
<PAGE>
VANCOUVER STOCK EXCHANGE
April 23, 1999
Godinho, Sinclair
Barristers & Solicitors
Suite 1020, Montreal Trust Centre
510 Burrard Street
Vancouver, BC
V6C 3A8
Attention: Harley D. Sinclair
Dear Sir\Mesdames:
RE: CRYOPAK INDUSTRIES INC- ("CII")
Private Placement-Non-Brokered - Submission No. 43928
This is to confirm that the Vancouver Stock Exchange has accepted for filing
documentation with respect to a Non-Brokered Private Placement announced April
8, 1999:
Number of Shares: 72,000 shares
Purchase Price: $0.75 per share
Warrants: 72,000 non-transferable share purchase warrants
to purchase 72,000 shares
Warrant Exercise Price: $1.00 for a two year period
Placee: C.C.R.1 Corporation (Malcolm McGuire)
These securities have not yet been issued. The Company must issue a news release
when the private placement closes. In addition, the Company must issue a news
release if the private placement does not close promptly.
This fax will be the only copy you receive. Should you have any question please
contact the undersigned.
Yours truly,
Colleen Chambers
Analyst
Corporate finance Services
cc: BC Securities Commission
Attention: Corporate Finance
Cryopak Industries Inc.
<PAGE>
VANCOUVER STOCK EXCHANGE
March 31, 1999
Godinho, Sinclair
Banisters & Solicitors
Suite 1020, Montreal Trust Centre
510 Burrard Street
Vancouver, BC
V6C 3A8
Attention: Harley A Sinclair
Dear Sirs\Mesdames:
Re: CRYOPAK INDUSTRIES INC. ("CII")
Private Placement-Non-Brokered - Submission #43575
This is to confirm that the Vancouver Stock Exchange has accepted for filing
documentation with respect to a Non-Brokered Private Placement announced March
19, 1999:
Number of Shares: 125,000
Purchase Price: $0.667 per share
Warrants: 125,000 non-transferable share purchase warrants
to purchase 125,000 shares
Warrant Exercise Price: $0.667 for a six month period
Placees: John F. Morgan
These securities have not yet been issued. The Company must issue a news release
when the private placement closes. In addition, the Company must issue a news
release if the private placement does not close promptly. Note that in certain
circumstances the Exchange may later extend the expiry date of the warrants, if
they are less than the maximum permitted term.
This fax will be the only copy you receive. Should you have any questions,
please contact the undersigned.
Yours truly,
Colleen Chambers
Analyst
Corporate Finance Services
CC\nl
cc: BC Securities Commission
Attention: Corporate Finance
Cryopak Industries Inc.
<PAGE>
VANCOUVER STOCK EXCHANGE
April 1, 1999
Godinho, Sinclair
Barristers & Solicitors
Suite 1020, Montreal Trust Centre
510 Burrard Street
Vancouver, BC
V6C 3A8
Attention: Harley D. Sinclair
Dear Sir\Mesdames:
Re: CRYOPAK INDUSTRIES INC ("CII")
Private Placement-Non-Brokered, Correction - Submission #43575
This is to confirm that further to the Vancouver Stock Exchange Notice dated
March 31, 1999, the Purchase Price and the Warrant Exercise Price both should
have read $0.776 per share and not $0.667.
This fax will be the only copy you receive. Should you have any questions please
contact the undersigned.
Yours truly,
Colleen Chambers
Analyst,
Corporate Finance Services
CC\n1
cc BC Securities Commission
Attention: Corporate Finance
Cryopak Industries Inc.
I CERTIFY THIS IS A COPY OF A
DOCUMENT FILED ON
JAN - 3 1996
JOHN S. POWELL
REGISTRAR OF COMPANIES
PROVINCE OF BRITISH COLUMBIA
he following directors' resolution was passed by the undermentioned
Company on the date stated:
Province of British Columbia
COMPANY ACT
Section 253(1)(b)
DIRECTORS' RESOLUTION
Certificate of
Incorporation No. 226896
CRYOPAK INDUSTRICES INC.
December 28, 1995
RESOLVED THAT pursuant to Part 23.01 of the Articles of the Company:
1. the number of Class "A" Preference shares without par value in the capital of
the Company to constitute the first series of such shares be and is hereby fixed
at 1,500 and that such first series of Class "A" Preference shares be desianated
as "Class "A" Convertible Voting Preference shares, Series I";
2. there be attached to the Class "A" Convertible Voting Preference shares,
Series I, the special rights and restrictions set out in Part 25 of the Articles
of the Company as adopted by paragraph 4 of this resolution;
3. paragraph 2 of the Memorandum be altered to read as follows:
"2. The authorized capital of the Company consists of 200,000,000 shares
divided into:
(a) 100,000,000 common shares without par value; and
(b) 100,000,000 Class "A" Preference shares without par value, of which 1,500
are designated Class "A" Convertible Voting Preference shares, Series 1;
The special rights and restrictions attached to the said shares are as set
out in the Articles of the Company."
4. the Articles of the Company be altered by adding the special rights and
restrictions set out in Schedule A hereto as Part 25.
The Memorandum as altered is attached hereto as Schedule "B"
CERTIFIED a true copy the 28th day of December, 1995.
LEIGH JEFFS, Director
SCHEDULE A
PART 25
CLASS "A" CONVERTIBLE VOTING PREFERENCE SHARES, SERIES I
SPECIAL RIGHTS AND RESTRICTIONS
25.01 The Class "A" Convertille Voting Preference shares, Series I
(collectively, the "Series I Preference Shares"), in addition to the rights,
restrictions, conditions and limitations attached to the Class "A" Preference
shares as a class, shall have the rights and shall be subject to the
restrictions, conditions and limitations as follows:
(a) Ea this Article 25.01, the following words and phrases shall have the
following meanings:
(i) "Common Shares" means the common shares without par value in the capital
of the Company; and
(ii) "Current Trading Price" means the average trading price of the Common
Shares on a recognized public stock exchange for the preceding 20 business days;
(b) The registered holders of the Series I Preference Shares shall be entitled
to receive notice of and to attend all meetings of the shareholders of the
Company and shall have the right to vote at any such meeting on the basis of one
vote for each Series I Preference Share held;
(c) Each Series I Preference Share shall carry a 12% annual, cumulative
dividend, payable at the end of the Company's most recent fixed fiscal year end,
at the option of the Company, in either cash or Common Shares, the value of the
Common Shares being calculated on the basis of the Current Trading Price; C;
(d) At any time after December 31, 1996, each Series I Preference Share shall be
convertible into Common Shares on the basis of a Common Share price of $3.00
each, or at such lower price as may be provided below:
(i) $2.50 at any time after December 31, 1997, provided that the Current Trading
Price shall never have exceeded $2.99 after December 3 1, 1996;
(ii) $2.00 at any time after December 31, 1998, provided that the Current
Trading Price shall never have exceeded $2.99 after December '31, 1996 or S2.49
after December 3 1, 1997;
(iii) at any time after December 31, 1999, provided that the Current Trading,
Price shall never have exceeded $2.99 after December 31, 1996 or $2.49 after
December 31, 1997 or $1.99 after December 31, 1998, at a Common Share price
equal to that price which represents a 15% discount to the then Current Trading
Price, which Common Share price in no event shall be less than $0.95 but if not
so converted prior to May 12, 2000, such Series I Preference Shares shall be
deemed to have been converted on May 12, 2000 at the applicable conversion price
described above;
(e) The consideration for the issue of each of the Series I Preference Shares
shall be $1,000;
(f) If there is a subdivision or consolidation of the Class "A" Preference
shares prior to conversion of the Series I Preference Shares into Common Shares
then the applicable conversion formula shall be proportionately adjusted;
(g) No dividends shall be declared or paid on any other class of shares unless
and until all unpaid dividends on the Series I Preference Shares have been
paid;
(h) In the event of a dissolution, winding up or other return of capital of the
Company, registered holders of Series I Preference Shares shall be entitled to
receive the amount paid up on such shares and all unpaid dividends before any
amount shall be paid or any property or asset of the Company is distributed to
the registered holders of any other classes of shares. After payment to the
registered holders of the Series I Preference Shares of the amount so payable to
them as provided above, they shall. not be entitled to share in any further
distribution of the property or assets of the Company.
SCHEDULE B
COMPANY ACT
FORM 1
ALTERED MEMORANDUM
(as altered by a Directors' Resolution passed December 28, 1995)
I wish to be formed into a company with limited liability under the British
Columbia Company Act in pursuance of this Memorandum.
1. The name of the Company is "CRYOPAK INDUSTRIES INC."
2. The authorized capital of the Company consists of 200,000,000 shares divided
into:
(a) 100,000,000 common shares without par value; and
(b) 100,000,000 Class "A" Preference shares without par value, of which 1,500
are designated Class "A" Convertible Voting, Preference shares, Series I;
The special rights and restrictions attached to the said shares are as set out
in the Articles of the Company.
PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
(R.S.B.C. 1979, Chapter 59)
ARTICLES
OF
CRYOPAK INDUSTRIES INC.
PART I
INTERPRETATION
1.01 In these Articles:
(a) "directors" means the directors of the Company for the time being;
(b) "Company Act" means the British Columbia Company Act from time to time in
force and all amendments thereto;
(c) "Registered Address" of a member means his address as recorded in the
register of members; and
(d) "Registered Address" of a director means his address as recorded in the
Company's register of directors to be kept pursuant to the Company Act.
1.02 Words importing the singular include the plural and vice versa; and words
importing a male person include a female person and a corporation.
1.03 The definitions in the Company Act on the date of incorporation or creation
by amalgamation of the Company shall, with the necessary changes, apply to these
Articles.
PART 2
SHARES
2.01 The allotment and issuance of shares shall be under the control of the
directors who may allot and issue or grant options to purchase shares at such
times and to such persons or class of persons and in such manner and upon such
terms as they think proper and, without limiting the generality of the
foregoing, the directors may grant options to purchase shares to directors,
officers or employees for such consideration and at such price or prices and
upon such terms as the directors may determine.
2.02 Shares without par value may be allotted and issued at such prices and for
such consideration as the directors may determine.
2.03 Shares may be allotted and issued as consideration for any property
acquired by or work done for or obligation undertaken for the Company.
2.04 The Company may at any time pay a commission or allow a discount to any
person in consideration of his subscribing or agreeing to subscribe, whether
absolutely or conditionally, or procuring or agreeing to procure subscriptions,
whether absolutely or conditionally, for any of its shares, but the commission
and discount in the aggregate shall not exceed 25% of the subscription price.
The commission or discount may be paid or satisfied in cash or in shares.
PART 3
SHARE CERTIFICATES
3.01 If a share certificate is defaced, lost or destroyed, it may be replaced on
payment of such fee, not exceeding $2.00 and on such terms as to evidence and
indemnity as the directors think fit.
PART 4
REGISTER OF MEMBERS
4.01 The directors may make such provisions as they may think fit respecting the
keeping of the register of members or any branch register and for the
appointment
5.04 The directors may decline to recognize any instrument of transfer unless
the instrument of transfer is accompanied by the certificate of the shares to
which it relates and such other evidence as the directors may reasonably require
to show the right of the transferor to make the transfer.
PART 6
PURCHASE OF SHARES
6.01 Subject to the special rights and restrictions attached to any class of
shares, the Company may, by a resolution of the directors, purchase any of its
shares at the price and upon the terms specified in such resolution.
PART 7
ALTERATION OF CAPITAL AND SHARES
7.01 Except as otherwise provided by conditions imposed at the time of creation
of any new shares or by these Articles, any addition to the authorized capital
resulting from the creation of new shares shall be subject to the provisions of
these Articles.
PART 8
BORROWING POWERS
8.01 The directors may from time to time at their discretion authorize the
Company to borrow any sum of money for the purposes of the Company and may raise
or secure the repayment of that sum in such manner and upon such terms and
conditions, in all respects, as they think fit, and in particular, and without
limiting the generality of the foregoing, by the issue of bonds or debentures or
any mortgage or charge, whether specific or floating, or other security on the
undertaking or the whole or any part of the property of the Company, both
present and future.
8.02 The directors may make any debentures, bonds or other debt obligations
issued by the Company assignable free from any equities between the Company and
the person to whom they may be issued, or any other person who lawfully acquires
the same.
8.03 The directors may authorize the issue of any debentures, bonds, or other
debt obligations of the Company at a discount, premium or otherwise, and with
special or other rights or privileges as to redemption, surrender, drawings,
allotment of or conversion into shares, attending at general meetings of the
Company and otherwise as the directors may determine at or before the time of
issue.
8.04 If any director or any other person becomes personally liable for the
payment of any sum primarily due from the Company, the directors may execute or
cause to be executed any mortgage, charge or security over or affecting the
whole or any part of the assets of the Company by way of indemnity to secure
such director or person from any loss in respect of such liability.
PART 9
GENERAL AND CLASS MEETINGS
9.01 The general meetings of the Company, shall be held at such time and place
as the directors appoint.
9.02 Every general meeting, other than an annual general meeting, shall be
called an extraordinary general meeting.
9.03 The directors may, whenever they think fit, convene an extraordinary
general meeting.
9.04 Notice of a general meeting shall specify the place, the day and the hour
of meeting, and, in case of special business, the general nature of that
business. The accidental omission to give notice of any meeting to, or the
non-receipt of any notice by, any of the members entitled to receive notice
shall not invalidate any proceedings at that meeting.
9.05 If any special business includes the presenting, considering, approving,
ratifying or authorizing the execution of any document, then the portion of any
notice relating to that document is sufficient if it states that a copy of the
document or proposed document is or will be available for inspection by members
at an office of the Company in the Province of British Columbia or at one or
more designated places in the Province during business hours on any specified or
unspecified working day or days prior to the date of the meeting and at the
meeting.
9.06 The provisions of these Articles relating to the call and conduct of
general meetings apply, with the necessary changes and so far as are applicable,
to class meetings and to series meetings, except that the quorum for a class
meeting or a series meeting of the Company shall be one member present in person
or by proxy or (being a corporation) represented in accordance with Section
33 of the Company Act, holding not less than one-third of the shares affected.
PART 10
PROCEEDINGS AT GENERAL MEETINGS
10.01 The following business at a general meeting shall be deemed to be special
business:
(a) All business at an extraordinary general meeting;
(b) All business that is transacted at an annual general meeting, with the
exception of the consideration of the financial statement and the report of the
directors and auditors, the election of directors, the appointment of the
auditors and such other business as, under these Articles ought to be
transacted at an annual general meeting, or any business which is brought under
consideration by the report of the directors issued with the notice convening
the meeting.
10.02 No business, other than the election of a chairman and the adjournment or
termination of the meeting, shall be conducted at any general meeting at any
time when a quorum is not present. If at any time during a general meeting there
ceases to be a quorum present, any business then in progress shall be suspended
until there is a quorum present or until the meeting is adjourned or terminated,
as the case may be. A quorum shall be one member present in person or by proxy
or (being a corporation) represented in accordance with Section 33 of the
Company Act, holding not less than one voting share of the Company.
10.03 If within a half -an hour from the time appointed for a general meeting a
quorum is not present, the meeting, if convened upon the requisition of members,
shall be terminated; but in any other case, it shall stand adjourned to the same
day in the next week, at the same time and place, and if, at the adjourned
meeting, a quorum is not present within half an hour from the time appointed for
the meeting, if the quorum for the meeting is one member holding or representing
one voting share, then the meeting shall be terminated, or, if the quorum is
greater than as aforesaid, the members present shall be a quorum.
10.04 Subject to Article 10.05, the Chairman of the Board, or in his absence,
the President of the Company, or in his absence one of the directors present
shall preside as chairman of every general meeting.
10.05 If at any general meeting there is no such officer or director present
within fifteen minutes after the time appointed for holding the meeting or if
the Chairman of the Board and the President and all the directors present are
unwilling to act as chairman, the members present shall choose a person (who
need not be a member) to be chairman.
10.06 The chairman of a general meeting may, with the consent of any meeting at
which a quorum is present, and shall, if so directed by the meeting, adjourn the
meeting from time to time and from place to place, but no business shall be
transacted at any adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place. When a meeting is adjourned
for ten days or more, notice of the adjourned meeting but not "advance notice"
shall be given as in the case of the original meeting. Except as aforesaid, it
is not necessary to give any notice of an adjournment or of the business to be
transacted at an adjourned general meeting.
10.07 No resolution proposed at a meeting need be seconded and the chairman of
any meeting is entitled to move or propose a resolution.
10.08 In case of an equality of votes, the chairman shall not, either on a show
of hands or on a poll, have a casting or second vote in addition to the vote or
votes to which he may be entitled as a member.
10.09 In the case of any dispute as to the admission or rejection of a vote, the
chairman shall determine the same and his determination made in good faith is
final and conclusive.
10.10 A member entitled to more than one vote need not, if he votes, use all his
votes or cast all the votes he uses in the same way.
10.11 Subject to the provisions of Article 10.12, if a poll is duly demanded, it
shall be taken in such manner and at such time, within seven days after the date
of the meeting, and such place as the chairman of the meeting directs. The
result of the poll shall be deemed to be the resolution of the meeting at which
the poll is demanded. A demand for a poll may be withdrawn.
10.12 A poll demanded on a question of adjournment shall be taken at the meeting
without adjoumment.
10.13 The demand for a poll shall not, unless the chairman so rules, prevent the
continuance of a meeting for the transaction of any business other than the
question on which a poll has been demanded.
PART 11
VOTES OF MEMBERS
11.01 Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every member present in person
has one vote, and on a poll every member, present in person or by proxy, has one
vote for each share he holds.
11.02 Any person who is not registered as a member but is entitled to vote at
any general meeting in respect of a share, may vote the share in the same manner
as if he were a member; but, unless the directors have previously admitted his
right to vote at that meeting in respect of the share, he shall satisfy the
directors of his right to vote the share before the time for holding the
meeting, or adjourned meeting, as the case may be, at which he proposes to vote.
11.03 Where there are joint members registered in respect of any share, any one
of the joint members may vote at any meeting, either personally or by proxy, in
respect of the share as if he were solely entitled to it. If more than one of
the joint members is present at any meeting, personally or by proxy, the joint
member present whose name stands first on the register in respect of the share
shall alone be entitled to vote in respect of that share. Several executors or
administrators of a deceased member in whose sole name any share stands shall,
for the purpose of this Article, be deemed joint members.
11.04 Subject to Section 183 of the Company Act, a corporation which is a member
may vote by its duly authorized representative who is entitled to speak and
vote, either in person or by proxy, and in all other respects exercise the
rights of a member and that representative shall be reckoned as a member for all
purposes in connection with any meeting of the Company.
11.05 A member for whom a committee has been duly appointed may vote, whether on
a show of hands or on a poll, by his committee and that committee may appoint a
proxyholder.
11.06 Unless the directors otherwise determine, the instrument appointing a
proxyholder and the power of attorney or other authority, if any, under which it
is signed or a notarially certified copy thereof shall be deposited at a place
specified for that purpose in the notice convening the meeting, not less than
forty-eight hours before the time for holding the meeting at which the
proxyhoider proposes to vote.
11.07 A vote given in accordance with the terms of an instrument of proxy is
valid notwithstanding the previous death or incapability of the member of
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given, provided no
intimation in writing of the death, incapability, revocation or transfer has
been received at the registered office of the Company or by the chairman of the
meeting or adjourned meeting before the vote is given.
11.08 Unless, in the circumstances, the Company Act requires any other form of
proxy, an instrument appointing a proxyholder, whether for a specified meeting
or otherwise, shall be in common form, or in any other form that the directors
shall
PART 12
DIRECTORS
12.01 The directors may exercise all such powers and do all such acts and things
as the Company may exercise and do, and which are not by these Articles or by
statute or otherwise lawfully directed or required to be exercised or done by
the Company in general meeting, but subject, nevertheless, to the provisions of
all laws affecting the Company and of these Articles and to any rules, not being
inconsistent with these Articles, which are made from time to time by the
Company in general meeting; but no rule made by the Company in general meeting
shall invalidate any prior act of the directors that would have been valid if
that rule had not been made.
12.02 The number of directors shall be not less than one (or, if the Company is
a reporting Company, not less than three) and not more than fifteen. The number
of directors may be determined from time to time by ordinary resolution.
12.03 A director is not required to have any share qualification.
PART 13
RETIREMENT AND ELECTION OF DIRECTORS
13.01 Upon the termination of the first annual general meeting of the Company
after its incorporation or formation by amalgamation, and upon the termination
of every succeeding annual general meeting, all the directors shall retire. At
every annual general meeting the members shall fill up the offices to be vacated
by electing a like number of directors and, whenever the number of retiring
directors is less than the maximum number for the time being required by or
determined pursuant to Article 12.02, they may also elect such further number
of directors if any, as the Company then determines, but the total number of
directors elected shall not exceed that maximum.
13.02 If, at any general meeting at which an election of directors ought to take
place, the places of the retiring directors are not filled up, such of the
retiring directors as may be requested by the newly elected directors shall, if
willing, continue in office until further new directors are elected either at an
extraordinary general meeting specially convened for that purpose or at the
annual general meeting in the next or some subsequent year, unless it is
determined to reduce the number of directors.
13.03 If the Company removes any director before the expiration of his period of
office and appoints another person in his stead, the person so appointed shall
hold office only during such time as the director in whose place he is appointed
would have held the office if he had not been removed.
13.04 The directors have the power at any time and from time to time to appoint
any person as a director to fill a casual vacancy in the directors. The
directors shall have the power at any time and from time to time to appoint one
or more additional directors; but the number of additional directors shall not
at any time exceed one-third of the number of directors elected or appointed at
the last annual general meeting of the Company. Any director so appointed holds
office only until the conclusion of the next following annual general meeting of
the Company, but is eligible for re-election at that meeting.
13.05 A director may, with the approval of the directors, appoint any person,
whether a member of the Company or not, and whether a director of the Company or
not, to serve as his alternate director and as such to attend and vote in his
stead at meetings of directors, and such alternate director shall, if present,
be included in the count for a quorum, and if he is a director, he shall be
entitled to two votes, one as a director and the other as an alternate director.
If the appointing director so directs, notice of meetings of directors shall be
sent to the alternate director and not to the appointing director. An alternate
director shall ipso facto vacate office as an alternate director if and when the
appointing director vacates office as a director or removes the appointee from
office as alternate director, and any appointment or removal under this Article
shall be made in writing under the hand of the director making the same.
PART 14
PROCEEDINGS OF DIRECTORS
14.01 The directors may meet at such places as they think fit, adjourn and
otherwise regulate their meetings and proceedings as they see fit. The directors
may from time to time fix the quorum necessary for the transaction of business
and unless so fixed the quorum shall be a majority of the directors then in
office. Any director who is interested in a proposed contract or transaction
with the Company shall be counted in the quorum. The Chairman of the Board, or
in his absence the President of the Company, shall be chairman of all meetings
of the directors; but if at any meeting the Chairman of the Board or the
President is not present within thirty minutes after the time appointed for
holding the meeting, the directors present may choose some one of their number
to be chairman at that meeting. Any two directors may at any time and the
Secretary, upon the request of any two directors, shall, convene a meeting of
the directors.
14.02 The directors, or any committee of directors, may take any action required
or permitted to be taken by them and may exercise any of the authorities, powers
and discretions, for the time being vested in or exercisable by them by
resolution either passed at a meeting at which a quorum is present or consented
to in writing under Section 149 of the Company Act.
14.03 A director may participate in a meeting of directors or of any committee
of the directors by means of conference telephones or other communications
facilities by means of which all directors participating in the meeting can hear
each other and provided that all such directors agree to such participation. A
director participating in a meeting in accordance with this Article shall be,
deemed to be present at the meeting and to have so agreed and shall be counted
in the quorum therefor and be entitled to speak and vote thereat.
14.04 For the first meeting of the directors to be held immediately following
the appointment or election of a director or directors at an annual or other
general meeting of shareholders, or for a meeting of the directors at which a
director is appointed to fill a vacancy in the directors, it is not necessary to
give notice of the meeting to the newly elected or appointed director or
directors for the meeting to be duly constituted, if a quorum of the directors
is present.
14.05 Any director of the Company who may be temporarily absent from the
Province of British Columbia may file, at the registered office of the Company,
a written waiver of notice, which may be by letter, telegram, telex or cable, of
any meeting of the directors and may, at any time, withdraw the waiver, and
until the waiver is withdrawn, no notice of meetings of directors shall be sent
to that director, and all meetings of the directors of the Company, notice of
which has not been given to that director, shall, provided a quorum of the
directors is present, be valid and effective.
14.06 Questions arising at any meeting of the directors shall be decided by a
majority of votes. In case of an equality of votes, the chairman has a second or
casting vote.
14.07 No resolution proposed at a meeting of directors need be seconded and the
chairman of any meeting is entitled to move or propose a resolution.
14.08 A resolution in writing, signed by each director shall be as valid and
effectual as if it had been passed at a meeting of directors duly called and
held. Such resolution may be in one or more counterparts each signed by one or
more directors which together shall be deemed to constitute one resolution in
writing.
14.09 Not less than forty-eight hours' notice of a meeting of the directors
shall be given in writing by delivery by hand or by telegraph or by mail (if it
is mailed by prepaid post at least three clear days in advance -exclusive of any
Saturday or holiday) but any director may in writing waive notice or accept
shorter notice. The directors may, by resolution, fix a regular time and place
for meetings, and in that case notice shall be given of such resolution or
resolutions and thereafter no further notice need be given of such meetings.
PART 15
DIRECTORS - MISCELLANEOUS PROVISIONS
15.01 The remuneration of the directors may from time to time be determined by
the directors.
15.02 The directors shall be reimbursed such reasonable travelling, hotel and
other expenses as they may incur in and about the business of the Company and if
any director shall be required to perform extra services or should otherwise be
specially occupied about the Company's business, he shall be entitled to receive
a remuneration to be fixed by the Board or, at the option of such director, by
the Company in general meeting, and such remuneration may be either in addition
to or in substitution for any other remuneration he may be entitled to receive,
and the same shall be charged as part of the ordinary working expenses.
15.03 Inasmuch as the directors of the Company are likely to be connected with
other companies, corporations or associations with which from time to time the
Company must or may have business dealings, no contract or other transaction
between the Company and any other company, corporation or association shall be
affected by the fact that directors of the Company are interested in or are
shareholders, directors or officers of such other company, corporation or
association.
PART 16
EXECUTIVE AND OTHER COMMITTEES
16.01 The directors may after the annual general meeting of the Company and from
time to time as vacancies occur, elect from among their members an Executive
Committee. The Executive Committee shall consist of not less than two members
but the number of members may be increased or decreased from time to time by
resolution of the directors. The Executive Committee shall advise and aid the
officers of the Company in all matters concerning its interests and the
management of its business and affairs and may (subject to any regulations or
restrictions which the directors may from time to time make or impose) exercise
any and all powers of the directors while the latter are not in session except
the power to do any act which must by law be performed by the directors
themselves provided, however, that a report of all acts and proceedings of the
Executive Committee done or had in the interval between meetings of the
directors shall be made to the next following meeting of the directors for the
information thereof. The Executive Committee shall meet at such times and at
such place or places as shall be determined by the Executive Committee and in
accordance with such rules as may be provided by resolution of the directors. A
majority of the members of the Executive Committee shall constitute a quorum for
the transaction of business, provided that in the event of there being no quorum
present at any meeting of the Executive Committee, any director or directors of
the Company who is or are requested by the chairman of such meeting to attend
such meeting shall have the right to attend and shall thereupon be a member or
members of the Executive Committee for such meeting.
16.02 The members of the Executive Committee shall be entitled to receive such
remuneration for acting as members of the Executive Committee as the directors
may from time to time determine.
16.03 The directors may delegate any, but not all, of their powers to committees
(other than the Executive Committee) consisting of such director or directors as
they think fit. Any committee so formed in the exercise of the powers so
delegated shall conform to any rules that may from time to time be imposed on it
by the directors, and shall report every act or thing done in exercise of those
powers to the earliest meeting of the directors to be held next after it has
been done.
16.04 A committee may elect a chairman of its meetings; if no chairman is
elected, or if at any meeting the chairman is not present within thirty minutes
after the time appointed for holding the meeting, the directors present who are
members of the committee may choose one of their number to be chairman of the
meeting.
16.05 The members of a committee may meet and adjourn as they think proper.
Questions arising at any meeting shall be determined by a majority of votes of
the members present and in case of an equality of votes the chairman shall have
a second or casting vote.
PART 17
OFFICERS
17.01 The directors shall elect from among their members a President and, if
they see fit, may elect a Chairman of the Board and may elect a Vice-Chairman,
either of whom may also be the President, all or any of whom shall hold office
until their successors are elected. Vacancies occurring from time to time in
these offices may be filled by the directors from among their members.
17.02 The directors may designate the Chairman of the Board or the Vice Chairman
if any, or the President to be the chief executive officer. Failing such
designation the Chairman of the Board or, if there is none, the Vice-Chairman
or, if there is none, the President, shall be the chief executive officer. The
chief executive officer shall, subject to the control of the directors, have and
exercise general supervision over the management and control of the business and
affairs of the Company, its officers and employees.
17.03 The directors, from time to time, shall appoint a Secretary and may
appoint one or more Vice-Presidents, one of whom may be the chief financial
officer, and such other officers as the directors may determine, so including
one or more assistants to any of the officers so appointed, and may determine
their duties and, in the discretion of the directors, in the absence of a
written agreement to the contrary, may remove or suspend them. One person may
hold more than one such office.
PART 18
EXECUTION OF INSTRUMENTS
18.01 The directors may provide a common seal for the Company and for its use
and they shall have power from time to time to destroy the same and substitute a
new seal in place of the seal destroyed,
18.02 The directors may provide an official seal for use in any other province,
state, territory or country.
18.03 The directors shall provide for the safe custody of the common seal of the
Company which shall not be affixed to any instrument except in the presence of:
(a) any two of the Chairman of the Board or the Vice-Chairman (if any) or the
President or a Vice-President or the Directors or the Secretary; or
(b) such other officers or persons as may be prescribed from time to time by
resolution of the directors; and such officers, directors, and persons shall
sign every instrument to which the seal of the Company is affixed in their
presence.
18.04 To enable the seal of the Company to be affixed to any bonds, debentures,
share certificates, share warrants or other securities of the Company, whether
in definitive or interim form on which facsimiles of the respective signatures
of Chairman of the Board, Vice-Chairman, or the President, or Vice-President,
and the Secretary are mechanically reproduced there may be delivered to the firm
or company employed to engrave, lithograph or print such definitive or interim
bonds, debentures, share certificates, share warrants or other securities one or
more unmounted dies reproducing the Company's seal and the President or a
Vice-President and the Secretary may by a writing authorize such firm or company
to cause the Company's seal to be affixed to such definitive or interim bonds,
debentures, share certificates, share warrants or other securities by the use of
such dies. Bonds, debentures, share certificates, share warrants or other
securities to which the Company's seal has been so affixed shall for all
purposes be deemed to be under and to bear the Company's seal as if it had
actually been affixed thereto and be valid and binding on the Company and this
notwithstanding that any person whose signature is so engraved, lithographed or
printed as that of the Chairman of the Board, Vice-Chairman, President,
Vice-President or Secretary may have ceased to hold such office at the date of
the issue thereof.
PART 19
DIVIDENDS
19.01 The directors may declare dividends and fix the date of record therefor
and the date for payment thereof.
19.02 Subject to the terms of shares with special rights or restrictions, all
dividends shall be declared according to the number of shares held.
19.03 Dividends may be declared to be payable out of the profits of the Company.
No dividend shall bear interest against the Company.
19.04 A resolution declaring a dividend may direct payment of the dividend
wholly or partly by the distribution of specific assets or of paid-up shares,
bonds, debentures or other debt obligations of the Company, or in any one or
more of those ways and where any difficulty arises in regard to the distribution
the directors may settle the same as they think expedient, and in particular may
fix the value for distribution of specific assets, and may determine that cash
payments shall be made to a member upon the basis of the value so fixed in place
of fractional shares, bonds, debentures or other debt obligations in order to
adjust the rights of all parties, and may vest any of those specific assets in
trustees upon such trusts for the persons entitled as may seem expedient to the
directors.
19.05 Any dividend or other moneys payable in cash in respect of a share may be
paid by cheque sent through the post to the member in a prepaid letter, envelope
or wrapper addressed to the member at his registered address, or in the case of
joint members, to the registered address of the joint member who is first named
on the register, or to such person and to such address as the member or joint
members, as the case may be, in writing direct. Any one of two or more joint
members may give effectual receipts for any dividend or other moneys payable or
assets distributable in respect of a share held by them.
19.06 Where the dividend to which a member is entitled includes a fraction of
one cent such shall be disregarded in making payment thereof and such payment
shall be deemed to be payment in full.
19.07 No notice of the declaration of a dividend need be given to any member.
19.08 The directors may, before declaring a dividend, set aside out of the
profits of the Company such sums as they think proper as a reserve or reserves
which shall, at the discretion of the directors, be applicable for meeting
contingencies, or for equalizing dividends, or for any other purpose to which
the profits of the Company may be property applied, and pending that application
may, at the like discretion, either be employed in the business of the Company
or be invested in such investments, other than shares of the Company, as the
directors may from time to time think fit.
PART 20
ACCOUNTS
20.01 The directors shall cause records and books of accounts to be kept as
necessary to record properly the financial affairs and condition of the Company
and to comply with the provisions of statutes applicable to the Company.
20.02 Unless the directors determine otherwise, or unless otherwise determined
by an ordinary resolution, no member of the Company shall be entitled to inspect
the accounting records of the Company.
PART 21
INDEMNIFICATION
21.01 The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
proceeding, whether or not brought by the Company or by a corporation or other
legal entity or enterprise as hereinafter mentioned and whether civil, criminal
or administrative, by reason of the fact that he is or was a director, officer,
employee, or agent of the Company or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation, a
partnership, joint venture, trust or other enterprise, against all costs,
charges and expenses, including legal fees and any amount paid to settle the
action or proceeding or satisfy a judgment, if he acted honestly and in good
faith with a view to the best interests of the corporation or other legal entity
or enterprise as aforesaid of which he is or was a director, officer, employee
or agent, as the case may be, and exercised the care, diligence and skill of a
reasonably prudent person, and with respect to any criminal or administrative,
action or proceeding, he had reasonable grounds for believing that his conduct
was lawful but the Company shall not be bound to indemnify any such person,
other than a director, officer or an employee of the Company ( who shall be
deemed to have notice of this Article and to have contracted with the Company
in terms hereof solely by virtue of his acceptance of such office or
employment), if in acting as agent for the Company or as a director, officer,
employee or agent of another corporation or other legal entity or enterprise
as aforesaid, he does so by written request of the Company containing an express
reference to this Article and no indemnification of a director or former
director or officer or former officer of the Company, of a corporation in which
the Company is or was a shareholder, shall be made except to the extent approved
by the Court pursuant to the Company Act or any other statute. The
determination of any action, suit or proceeding by judgment, order, settlement,
conviction or otherwise shall not, of itself, create a presumption that the
person did not act honestly and in good faith and in the best interests of the
Company and did not exercise the care, diligence and skill of a reasonably
prudent person and, with respect to any criminal action or proceeding,
did not have reasonable grounds to believe that his conduct was lawful.
21.02 The Company shall indemnify any person other than a director in respect of
any loss, damage, costs or expenses whatsoever incurred by him while acting as
an employee or agent for the Company unless such loss, damage, costs or expenses
shall arise out of failure to comply with instructions,or willful act or default
or fraud by such person in any of which events the Company shall only indemnify
such person if the directors, in their absolute discretion, so decide or the
Company by ordinary resolution shall so direct.
21.03 The indemnification provided by this Part shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
any other Part, or any valid and lawful agreement, vote of members or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall enure to the benefit of the heirs, executors and administrators
of such person. The indemnification provided by this Part shall not be exclusive
of any powers, rights, agreements or undertakings which may be legally
permissible or authorized by or under any applicable law. Notwithstanding any
other provisions set forth in this Part, the indemnification authorized by this
Part shall be applicable only to the extent that any such indemnification shall
not duplicate indemnity or reimbursement which that person has received or shall
receive otherwise than under this Part.
21.04 The directors are authorized from time to time to cause the Company to
give indemnities to any director, officer, employee, agent or other person who
has undertaken or is about to undertake any liability on behalf of the Company
or any corporation controlled by it.
21.05 No director or officer or employee for the time being of the Company shall
be liable for the acts, receipts, neglects or defaults of any other director or
officer or employee, or for joining in any receipt or act for conformity, or for
any loss, damage or expense happening to the Company through the insufficiency
or deficiency of title to any property acquired by order of the Board for the
Company, or for the insufficiency or deficiency of any security in or upon which
any of the moneys of or belonging to the Company shall be invested or for any
loss or damages arising from the bankruptcy, insolvency, or tortious act of any
person, firm or corporation with whom or which any moneys, securities or effects
shall be lodged or deposited or for any loss occasioned by any error of judgment
or oversight on his part or for any other loss, damage or misfortune whatever
which may happen in the execution of the duties of his respective office or
trust or in relation thereto unless the same shall happen by or through his own
willful act or default, negligence, breach of trust or breach of duty.
21.06 Directors may rely upon the accuracy of any statement of fact represented
by an officer of the Company to be correct or upon statements in a written
report of the auditor of the Company and shall not be responsible or held liable
for any loss or damage resulting from the paying of any dividends or otherwise
acting in good faith upon any such statement.
21.07 The directors may cause the Company to purchase and maintain insurance for
the benefit of any person who is or was a director, officer, employee or agent
of the Company or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, a partnership, joint venture,
trust or other enterprise against any liability incurred by him as a director,
officer, employee or agent.
PART 22
NOTICES
22.01 Except as otherwise provided in these Articles, a notice may be given to
any member or director, either personally or by sending it by post to him in a
prepaid letter, envelope or wrapper addressed to the member or director at his
Registered Address.
22.02 A notice may be given by the Company to joint members in respect of a
share registered in their names by giving the notice to the joint member first
named in the register of members in respect of that share.
22.03 A notice may be given by the Company to the persons entitled to a share in
consequence of the death or bankruptcy of a member by sending it through the
post in a prepaid letter, envelope or wrapper addressed to them by name, or by
the title of representatives of the deceased, or trustee of the bankrupt, or by
any like description, at the address, if any, supplied for the purpose by the
persons claiming to be so entitled, or, until that address has been so supplied,
by giving the notice in any manner in which the same might have been given if
the death or bankruptcy has not occurred.
22.04 Any notice or document sent by post to, or left at, the Registered Address
of, any member, shall, notwithstanding that member is then deceased, and whether
or not the Company has notice of his death, be deemed to have been duly served
in respect of any registered shares, whether held solely or jointly with other
persons by that deceased member, until some other person is registered in his
stead as the member or joint member in respect of those shares, and that service
shall for all purposes be deemed a sufficient service of such notice or document
on his personal representatives and all persons, if any, jointly interested with
him in those shares.
22.05 Any notice sent by post shall be deemed to have been served on the day,
Saturdays and holidays excepted, following that on which the letter, envelope or
wrapper containing the same is posted, and in proving service it is sufficient
to prove that the letter, envelope or wrapper containing the notice was properly
addressed and put in a Canadian Government post office, postage prepaid.
22.06 authorized to:
Notice of every general meeting shall be given in any manner hereinbefore
(a) every member holding a share or shares carrying the right to vote at such
meetings on the record date or, if no record date was established by the
directors, on the date of the mailing of such notice;
(b) every person upon whom the ownership of a share devolves by reason of his
being a legal personal representative or a trustee in bankruptcy of a member
where the member but for his death or bankruptcy would be entitled to receive
notice of the meeting.
No other person is entitled to receive notice of general meetings.
PART 23
SPECIAL RIGHTS AND RESTRICTIONS
23.01 The Class "A" Preference shares of the Company shall have the rights and
shall be subject to the restrictions, conditions and limitations as follows:
(a) The directors may issue Class "A" Preference shares in one or more series,
but only one series may be issued and outstanding at any one time;
(b) The directors may alter by resolution the Memorandum of the Company to fix
the number of shares in, and to determine the designation of the shares of, each
series of Class "A" Preference shares;
(c) The directors may after by resolution the Memorandum of the Company or these
Articles or both to create, define and attach special rights and restrictions to
the shares of each series of Class "A" Preference shares, subject to the special
rights and restriction"6~hed to the Class "A" Preference shares by this Part;
(d) A directors' resolution pursuant to paragraphs (b) or (c) may only be passed
prior to the issue of shares of the series to which the resolution relates, and
after the issue of shares of that series the number of shares in, the
designation of and the special rights and restrictions attached to that series
may be added to, altered, varied or abrogated only pursuant to Sections 248, 249
254 or 255 of the Company Act, as the case may be;
(e) Except as expressly provided in the special rights or restrictions which the
directors may create, define or attach to any series of Class "A" Preference
shares, shares of a series of Class "A" Preference shares shall not confer on
the holders thereof any right to notice of or to be present or to vote, either
in person or by proxy, at any general meeting other than a separate meeting of
the holders of the Class "A" Preference shares, or of the holders of shares of
a series of the Class "A" Preference shares, as the case may be;
(f) Except as expressly provided in the special rights or restrictions which the
directors may create, define or attach to any series of Class "A" Preference
shares, the directors may declare dividends with respect to the common shares
only or with respect to any series of Class "N' Preference shares only or with
respect to any combination of two or more such classes or series of classes
only.
23.02 Except as hereinafter provided, in the event of the liquidation,
dissolution or winding-up of the Company or any distribution of its assets for
the purpose of winding-up its affairs, after the payment of dividends declared
but unpaid the holders of the Class "A" Preference shares shall be entitled pari
passu to be paid such amount as the special rights and restrictions attaching to
such shares shall provide, and in the absence of any express provision with
respect thereto the amount of capital paid up in respect thereof per share for
each Class "A" Preference share held by them, out of the assets of the Company
in preference to and with priority over any payment or distribution of any
capital asset or monies among the holders of any common shares of the Company,
and after payment to the holders of the Class "A" Preference shares of the
amount so payable to them they shall not be entitled to share in any other
distribution of the property or assets of the Company. The foregoing provisions
of this Article 23.02 shall apply to all Class "A" Preference shares except as
expressly provided in the special rights and restrictions which the directors
may create, define or attach to any series of Class "A" Preference Shares.
PART 24
PROHIBITIONS
24.01 No shares may be transferred except with the prior approval of the
directors, who may in their absolute discretion refuse to register the transfer
of any share, such approval to be evidenced by a resolution of the directors.
24.02 There shall not be any invitation to the public to subscribe for any
shares or debt obligations of the Company.
24.03 The provisions of this Part shall only apply if the Company is not a
reporting company.
ARTICLES OF INCORPORATION
of
402, INC.
KNOW ALL MEN BY THESE PRESSNT, that I the undersigned, do hereby associate
myself into a corporation under and pursuant to the provisions and by virtue of
the laws of the State of in the Corporation Act of 1925, and all Acts amendatory
thereof and supplemental thereto, and for that purpose do hereby make
subscribe, acknowledges certify and set forth as follows:
FIRST: That the name of the corporation shall be: 402, INC.
SECOND: The principal office or place of business of the corporation
shall be located at 402 North Division Street, Carson City, Nevada, at the
offices of ALLISON, MacKENZIE, HARTMAN, SOUMBENIOTIS a RUSSELL, LTD., but the
corporation may maintain offices, a4encies and places of business in any other
state in the United States and in foreign countries without restriction as to
place; and the corporation may keep such books, papers and records of the
corporation as are not required by law to be kept within the State of Nevada,
and as the directors may find convenient, in such offices, agencies and places
of business,
THIRD: The nature of the business to be transacted and the objects and
purposes to be promoted and carried on by the corporation shall be as follows:
(a) To engage in any lawful activities not prohibited by law anywhere
in the world.
(b) To perform services of every kind and nature authorized by law for
any person, firm association or corporation. To enter into, make, perform and
carry out contracts of every kind and character with any person, firm,
association or corporation.
(c) To engage in and conduct every type of building and/or construction
and/or contracting work in the State of Nevada and in every state and territory
of the United States, and/or in any foreign country, including but not limited
to the construction of all types of buildings, highways, mining developments,
irrigation works, naval and military installations, docks, piers, airports,
ranching and farming projects, and also to engage in every type and manner of
activity incidental thereto and in connection with or independently of the
above, to own, lease and rent and/or in any manner deal with and trade in every
type and manner of motor vehicles, machinery, equipment, merchandise and
supplies, and to manage, operate and conduct every type and manner of business
in which such may be employed; to enter into every kind and manner of contract
and agreement concerning such work; to give and post bond for the faithful
performance thereof; and without limitation, except as may be imposed by law, to
do every act and thing necessary and/or required in the carrying on, operating
and conducting of a general contracting business; to engage in the
transportation of passengers and commodities both intrastate and interstate and
within the State of Nevada, and in any other state and territory in the United
States and/or in any foreign country; to build, rent, lease, buy, sell, own,
operate and manage machine shop, foundries, garages, service stations,
depots, that restaurants, taxi cabs, stages, bus lines, freight lines,
passenger and transportation lines, railroads and steamships, and airlines.
(d) To manufactured purchase, sell and deal in export and import
personal property of all kinds other than and in addition to goods, wares and
merchandise hereinbefore set forth and described, and to pledge, hypothecate, or
to otherwise encumber the same in any manner whatsoever, or to borrow thereon,
in such ways and to such extent as may be prescribed or required by the laws of
any state of the United States or any other country.
(e) To mortgage# pledgeo hypothecate and trade in all manner of goods,
wares, merchandise, commodities and products, including machinery and mechanical
appliances of every description.
(f) To buy, sell, mortgage, own, hold, lease, develop and deal in and
with real estate, and with any and all franchises, appurtenances, easements
privileges and rights thereto pertaining, and any interest therein, and to
develop and/or to improve the same in any manner deemed advantageous to the
corporation; and to build, purchase, or lease, dispose of sell and mortgage
buildings, houses and premises, plants, factories, mills and structures of every
description, used in connection with, or incident to, or which may be
advantageous to the business of the corporation.
(g) To acquire by purchase, lease or otherwise, the good will, business,
property, assets, franchises and rights, in whole or in part of any person,
firm, association or corporation; and to assume all or any of the liabilities
thereof and to pay for the same in cash# with the stock of this corporation or
its debentures, or bonds, or otherwise, and to hold, maintain, operate and
conduct, an well as in any manner to dispose of, the whole or any part of the
property so acquired, but always in accordance with, and subject to, the laws of
the State of Nevada.
(h) To borrow money and contract debts when necess4ry for the
transaction of the business of the corporation for the exercise of its
corporate rights or privileges or franchises, or for any other purpose of its
incorporation; also to issue bonds or promissory notes, bills of exchange,
debentures and other obligations and also evidences of indebtedness, payable at
specified time or times, or payable upon the happening of a specified event or
events, and when necessary to secure the same or any part thereof, or any part
or parts of the same by mortgage, pledge or otherwise, for money borrowed or
goods purchased or for payment of property bought or acquired or for any other
lawful obligation; also to issue, sell and dispose of certificates of investment
or participation certificates, upon such terms and under such conditions as are
or may be prescribed by the laws of the State of Nevada, or by the by-laws of
the corporation.
(i) To loan the funds of the corporation upon notes, bonds', mortgages,
deeds of trust, debentures or other securities, or property, real, personal or
mixed, or otherwise.
(j) To receive; collect and dispose of principal and interest,
dividends, income, increments and profits upon or from all or any notes, stocks
or bonds, deeds of trust, debentures securities, obligations and other property
held owned or possessed by the corporation or any other person, firm or
corporation as escrow agent or trustee or for the use and benefit of the
corporation and ' to exercise in respect of all such stocks, bonds, mortgages,
deeds of trust, notes debentures, obligations, securities and all other
property and any and all bonds, any and all rights of individual ownership
thereof.
(k) To guarantee the payment of dividends or interest on shares of stock
of this corporation or upon the contracts& stocks, bonds, or other securities or
agreements of this corporation, or of any other parson or corporation, and also
to become surety, guarantor or indemnitor in connection with any of the
foregoing purposes for the payment of money or for the performance of other
obligations.
(1) To purchase, acquire and to hold, use, operate, introduce, sell,
assign or otherwise dispose of, hire or let or licenser any patents, patent
rights, licenses, trademarks, trade names, privileges, formulas, secret
process and any and all inventions, improvements and processes used in
connection with or secured under letters patent and grants of the United States
of America or any other country or government, and which may appear likely to be
advantageous or useful to the corporation, and to use, exercise, develop, and
grant licenses in respect of and to turn to account, manufacture, build and
construct under such patents# licenses, processes and the like, inventions and
improvements with the view of working and developing the same and effectuating
the foregoing objects or any thereof.
(m) To act as agent, attorney in fact, trustee, or in any other
representative capacity for other persons, firms or corporations.
(n) To guarantee, purcha3e, hold# sell, transfer, assign, mortgage,
pledge or otherwise dispose of the shares of the capital stack or of any bonds,
securities or evidences of indebtedness created by any other corporation or
corporations of the State of Nevada, or of any other state or government and
while owner of such stocks to exercise all the rights, powers and privileges of
ownership, including the right to vote thereon.
(o) To purchase, hold or sell, transfer and reissue shares of its own
capital stock, but always in accordance with, and as permitted by the laws of
the State of Nevada, and the by-laws of the corporation.
(p) To enter into, make and perform contracts of every kind with any
person, firm, association or corporation, public, private or municipal or any
body politic, and with any state or with the government of the United States or
any dependency thereof as well as any foregoing government and in general to
carry on and conduct and engage in any business in connection with the
foregoing, either as manufacturers dealer, principal, agent or otherwise
permitted to corporations organized under the laws of the State of Nevada.
(q) To establish, maintain, operate, conduct and carry on in the State
of Nevada and in any or all of the general states, territories, possessions
and dependencies of the United States the District of Columbia, And in any
foreign country, its business or any part or parts thereof and as many other
businesses, stores, plants, factories, mills, warehouses, offices and agencies
as may be necessary or deemed expedient for the corporation and its business as
well as for the extension, expansion and exploitation of the affairs, operation
and benefit of the corporation.
(r) And generally to do all and everything necessary, suitable,
convenient or proper for the accomplishment of any of the purposes or the
attainment of any of the objects or the furtherance of any of the powers
hereinbefore set forth either alone or in association with other corporations,
firms, or individuals and to do every other act or thing incidental or
pertaining to or growing out of the aforesaid purposes or powers, and/or
any of them, provided the same be not inconsistent with the laws of the State
of Nevada; and also to exercise any and all of the powers conferred upon
corporations by the laws of the State of Nevada which now exist or which may be
hereafter conferred upon or granted to corporations by the laws of the said
State of Nevada.
FOURTH; The amount of the total authorized capital stock of the
corporation is 2500 shares of common stock of no par value.
FIFTH: The members of the governing board shall be known as directors
and the number thereof shall be not less than three (3),, nor more than nine
(9), the exact number to be fixed by the by-laws of the corporation; provided,
that when all of the shares of the corporation are owned beneficially and of
record by either one or two stockholders, the number of directors may be less
than three (3) but not less than the number of stockholders.
The name and post office address of the first Board, consisting of one
(1) director, is as follows:
NAME POST OFFICE ADDRESS
MIKE PAVLAKIS P.O. Box 646
Carson City, KV 89702
SIXTH: The capital stock shall not be subject to any further assessment
to pay the debts of the corporation.
SEVENTH; The name and post office address of the sole incorporator
signing these Articles of Incorporation are as follows;
BONNIE KORDONOW P.O. Box 3362
Dayton, NV 89403
EIGHTH: This corporation is to have perpetual existence.
NINTH: In furtherance, and not in limitation of the power conferred by
statute the Board of Directors is expressly authorized: I Subject to the by-law
so if any, adopted by the stockholders,to make alter or amend the by-laws of the
corporation to fix the I amount to be reserved as working capital over and above
the capital stock paid in; to authorize and cause to be executed mortgages and
liens upon the real and personal Property of this corporation; From time to time
to determine whether, and to what extent, and to what times and places,and under
what conditions an regulations, the accounts and books of this corporation.Other
than the original or duplicate stock ledger), 0r any of them, shall be open to
inspection of stockholders, and no stockholder shall have any right of
inspection of any account, book or document of this corporation except as
conferred by statute, unless authorized by a resolution of the stockholders or
directors;
By resolution on, or resolutions, passed by a majority of the whole bond, to
designate one or more committee each committee to consist of two or more of the
directors of the corporation! which, to the extent provided in said resolution
or resolution or in the by-laws of the corporation shall have, and may exercise
the powers of the Board of directors in the management of the business affairs
of the corporation, and may have power to authorize the seal of the corporation
to be affixed to all papers which may require it. Such committee, or committees,
shall have such name, or names, as may be stated in the by-laws of the
corporation, or as may be determined by resolution adopted by the Board of
Directors;
Pursuant to the affirmative vote of the stockholders, of at least i majority of
the stock issued and outstanding# having voting power given at a stockholders'
meeting duly that purpose, or when authorized by the written called for consent,
the holders of at least a majority of the voting stock issued and outstanding,
the Board of Directors shall havd1power and authority at any meeting, to sell
lease or exchange all of the property and assets of this corporation, including
its good will and its corporate franchise upon such terms and conditions
and its Board of Directors expedient and for the best interests of the
corporation's this corporation may, in its by-laws confer powers upon its
directors in addition to the foregoing, and in addition to the powers and
authorities expressly conferred upon them by statute.
TENTH: Both stockholders and directors shall have power, if the by-laws
so provide, to hold their meetings, and to have one or more of offices within or
without the State of Nevada and to keep the books of this corporation (subject
to the requirements of the Nevada Revised Statutes) outside of the State of
Nevada at such places as may from time to time be designated by the Board of
Directors.
ELEVENTH This corporation reserves the right to amend# alter, change or
repeal any provision contained in these Articles of Incorporation in the manner
now or hereafter prescribed by statute or by these Articles of
Incorporation, and all rights conferred upon stockholders herein are
granted subject to this reservation.
THE UNDERSIGNED, being the sole incorporator herein before named for the
purpose of forming a corporation to do business both within and without the
State of Nevada and in pursuance of the Corporation Laws of the State of Nevada
being Chapter 177 of the Laws of 1925, and the acts amendatory thereof and
supplemental thereto, does make and file this certificate, hereby declaring
and certifying that the facts herein stated are true.
IN WITNESS WHEREOF, I accordingly have hereunto set my
hand and seal this 20th day of March, 1987.
STATE OF NEVADA
CARSON CITY
On this 20th day of March, 1987, personally appeared before met a notary
public, BONNIE KORDONOWY, who acknowledged to me that she executed the
foregoing document.
Notary Public
CERTIFICATE OF AMENDMENT OF ARTICLES
Of INCORPORATION Of
402, INC.
COMES NOW, the Incorporator of 402, INC., a Nevada corporation, and
pursuant to NRS 578.380, does herewith certify that she is the original and sole
incorporator of the corporation, that the Articles of Incorporation of the
corporation were filed with the Nevada Secretary of State on March 20, 1987, and
with the clerk of Carson City, Nevada on March 24 1987, that no stock has been
subscribed for or purchased, and no part of the capital of the corporation has
been paid; and that on March 24, 1987, at the first meeting of the incorporator
of this corporation, she approved the filing of this certificate for the purpose
of changing the composition of the first board of directors named In Article
FIFTH, of the corporation as follows:
"FIFTH: The members of the governing board shall be known as directors and the
number thereof shall be not less than three (3), nor more than nine (9), the
exact number to be fixed by the by-laws of the corporation provide that when all
of the shares of the corporation are owned beneficially and of record by either
one or two stockholder the number of directors may be less than three but
not less than the number of stockholders.
The names and posi office addresses of the first Board, consisting of two (2)
directors are as follows;
NAME POST OFFICE ADDRESS
LEIGH JEFFS 505 Burrard Street, Suite 2030
Vancouver, B.C. V7X1M6
Canada
HARRY BYDGNES 505 Burrard Street, Suite 2030
Vancouver, B.C. V7X1M6
Canada
That other than stated herein, all of the other Articles of
Incorporation shall remain unchanged and be as filed heretofore.
DATED this 31st day of March, 1987.
Bonnie Kordonowy,
Sole Incorporator
STATE OF NEVADA
Carson City
On this 31st day of 1987, personally appeared before me, a Notary Public,
BONNIE KORDONOWY, known to me to be the Sole Incorporator of 402, INC., who
acknowledged to me that she executed the foregoing Amendment as the Sole
Incorporator of said corporation.
NOTARY PUBLIC
CERTIFICATE OF AMENDMENT OF ARTICLES
OF INCORPORATION OF
402, INC.
COMES NOW, the President and Secretary of 402, INC. a Nevada corporation,
and do hereby certify that following a vote on the 31st day of March, 1987, all
stockholders and directors of the said corporation have approved the filing of
this certificate for the purpose of changing the name of 402, INC. One hundred
percent (100%) of the stock entitled to vote did vote, and upon a canvas thereof
the stockholders authorized the following amendment to Article FIRST of the
Articles of Incorporation of 402, INC., changing the name of the corporation
as follows:
"FIRST: The name of the corporation shall be:
CRYOPAX CORPORATION"
That other than stated hereine al'I of the other Articles of
Incorporation shall remain unchanged and be as filed heretofore.
DATED this 23rd day of April 1987.
LEIGH JEFF
President
Attest:
HARRY BYDGNES, Secretary
CANADA
PROVINCE OF BRITISH COLUMBIA
On this 23rd day of April, 1987, personally appeared before me, a Notary
Public, LEIGH JEFFS and HARRY BYDGNES known to me to be the President and
Secretary, respectively, of 402, INC., who acknowledged to me that they executed
the foregoing Amendment on behalf of said corporation.
NOTARY PUBLIC
FILED AND REGISTERED
FEB 13 1981
M. A. Jorre de St. Jorre
REGISTRAR OF COMPANIES
COMPANIES ACT
MEMORANDUM
Certfied true copies
Feb 13 1981
I wish to be formed into a company with limited liability under the
Companies Act in pursuance of this Memorandum.
1. The name of the Company is 226896 B.C.LTD.
2. The authorized capital of the Company consists of 1,000 shares without par
value.
3. I agree to take the number and kind and class of share in the Company set
opposite my name.
Full Name, Resident Address & Number, Kind & Class of
Occupation of Subscriber Shares taken by Subscriber
James Mercer Munsie One (1) Common share without par
#102 - 2130 York Street value.
Vancouver, B.C.
Barrister & Solicitor
TOTAL SHARES TAKEN ONE (1) Common
Dated this 30th day of January, 1981.
<PAGE>
<TABLE>
ARTICLES OF
B.C. Ltd.
TABLE OF CONTENTS
<CAPTION>
PART ARTICLE SUBJECT
<S> <C> <C>
1. INTERPRETATION
1.1. Headings
1.2. Definition
1.3. Construction of Words
1.4. Definitions same as Company Act
Interpretation Act Rules of Construction
Apply
2. SHARES
2.1. Member entitled to Certificate
2.2. Replacement of Lost or Defaced
Certificate
2.3. Execution of Certificates
2.4. Recognition of Trusts
3. ISSUE OF SHARES
3.1. Directors Authorized
3.2. Conditions of Allotment
3.3. Waiver of offer on Allotment
3.4. Commissions and Brokerage
3.5. Conditions of Issue
4. SHARE REGISTERS
4.1. Registers of Members, Transfers and
Allotments
4.2. Branch Registers of Members
4.3. No Closing of Register of Members
5. TRANSFER AND
TRANSMISSION
OF SHARES
5.1. Transfer of Shares
5.2. Execution of Instrument of Transfer
5.3. Enquiry as to Title not Required
5.4. Submission of Instruments of Transfer
5.5 Transfer Fee
5.6 Personal Representative Recognized
on Death
5.7 Death or Bankruptcy
5.8 Persons in Representative Capacity
6. ALTERATION OF CAPITAL
6.1. Increase of Authorized Capitzl
6.2. Other Capital Alte-ra-tions
6.3. Creation, Variation and Abrogation
of Special Rights and Restrictions
6.4. Consent of Class Required
6.5. Special Rights of Conversion
6.6. Class Meetings of Muarcbeyrs
7. PURCHASE AND REDEMPTION OF SHARES
7.1. Conpany Authorized to Purchase or
Redeem its Shares
7.2. & 7.3. Redenption of Shares
8. BORROWING POWERS
8.1. Powers of Directors
8.2. Special Rights Attached to and
Negotiability of Debt Obligations
8.3. Register of Debentureholders
8.4. Execution of Debt Obligations
8.5. Register of Indebtedness
9. GENERAL MEETINGS
9.1. Annual General Meetings
9.2. Waiver of Annual General Meetings
9.3. Classificatim of General Meetings
9.4. Calling of Meetings
9.5. Advance Notice for Electiarl of
Directors
9.6. Notice for General Meeting
9.7. Waiver or Reduction of Notice
9.8. Notice of Special Business at
General Meeting
10. PROCEEDINGS AT GENERAL MEETINGS
10.1. Special Business
10.2. Requirenent of Quorum
10.3. Quorum
10.4. Lack of Quortm
10.5. Chairman
10.6. Alternate Chairman
10.7. Adjournments
10.8. Resolutions Need Not be Seconded
10.9. Decisions by Show of Hands or Poll
10.10. Casting Vote
10.11. Manner of Taking Poll
10.12. Retention of Ballots Cast on a Poll
10.13. Casting of Votes
10.14. Ordinary Resolution Sufficient
11. VOTES OF MEMBERS
11.1. Number of Votes Per Share or Member
11.2. Votes of Persons in Representative
Capacity
11.3. Representative of a Corporate Manber
11.4. Votes by Joint Holders
11.5. Votes by Comnittee for a Member
11.6. Appointzaent of Proxyholders
11.7. Execution of Forin of Proxy
11.8. Deposit of Proxy
11.9. Form of Proxy
11.10. Validity of Proxy Vote
11.11. Revocation of Proxy
12. DIRECTORS
12.1. Number of Directors
12.2. Remuneration and Expenses of Directors
12.3. Qualificaticn of Directors
13. ELECTION AND REMOVAL OF DIRECTORS
13.1. Election at Annual General Meetings
13.2. Eligibility of Retiring Director
13.3. Continuance of Directors
13.4. Election of Less than Required
13.5. Filling a Casual Vacancy
13.6. Additional Directors
13.7. Alternate Directors
13.8. Termination of Directorship
13.9. Removal of Directors
14. POWER AND DUTIES OF DIRECTORS
14.1. Management of Affairs and Business
14.2. Appointment of Attorney
15. DISCLOSURE OF INTEREST OF DIRECTORS
15.1. Disclosure of Conflicting Interest
15.2. Voting and Quorum re Proposed Contract
15.3. Director my Hold Office or Place of
Profit with Company
15.4. Director Acting in Professional Capacity
15.5. Director Receiving Remuneration from Other
Interests
16. PROCEEDINGS OF DIRECTORS
16.1. Chairman and Alternate
16.2. Meetings - Procedure
16.3. Meetings by Conference Telephone
16.4. Notice of Keeting
16.5. Waiver of Notice of Meetings
16.6. Quorum
16.7. Continuing Dixectors may Act During
Vacancy
16.8. Validity of Azts of Directors
16.9. Resolution in Writing Effective
17. EXECUTIVE AND OTHER C0MMITTEES
17.1. Appointment of Executive Committee
17.2. Appointnent of Cdmdttees
17.3. Procedure at Meetings
18. OFFICERS
18.1. President and Secretary Regaired.
18.2. Persons Holding More than One Office
and Renuneration
18.3. Disclosure of Conflicting Interest
19. INDEMNITY AND PROTECTION OF DIRECTORS,
OFFICERS AND EMPLOYEES
19.1. Indemnificaticn of Directors
19.2. Indemnification of Officers,
Employees, Agents
19.3. Indemnification not Invalidated by
Non-conpliance
19.4. Company may Purchase Insura nce
20. DIVIDENDS AND RESERVES
20.1. Declaration of Dividends
20.2. Declared Dividend Date
20.3. Proportionate to Number of Skiares
Held
20.4. Reserves
20.5. Receipts from Joint Holders
20.6. No interest on Dividends
20.7. Payment of Dividends
20.8. Capitalization of Undistributed
Surplus
21. DOCUMENTS, RECORDS AND REPORTS
21.1. Documents to be Kept
21.2. Accounts to be Kept
21.3. Inspecticn of Accounts
21.4. & 21.5. Financial Statements and Reports
22. NOTICES
22.1. Method of Giving Notice
22.2. Notice to Joint Holder
22.3. Notice to Personal Representative
22.4. Persons to Receive Notice
23. RECORD DATES
23.1. Record Date
23-2. No Closure of Register of Members
24. SEAT
24.1. Affixation of Seal to Documents
24.2. Mechanical Reproducticn of
Signatures
24.3. Official Seal for Other
Jurisdictions
25. PROHIBITIONS
25.1. Number of Menters
25.2. No Securities to be Offered to the
Public
25.3. Restrictions on Transfers of Shares
26. RESIRICTIONS ON SHARE TRANSFERS
26.1. Offer to other Members
26.2. Directors may Decline to Register
Transfers
</TABLE>
<PAGE>
PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
ARTICLES
OF
226896 B.C. LTD.
PART 1
INTERPRETATION
1.1 The headings contained in these Articles Are for convenience of reference
only and shall not in any way affect the construction of tbose Articles.
1.2 In these Articles, unless there is scuething in the subject or context
inconsistent therewith:
"Board" al'4 "the Directors" or "the directors" man the Directors or sole
Director of the Ccnpany for the tinie being.
"Company Act" means the Company Act of the Province of British Columbia from
time to time in force and includes all amendments thereto and regulations made
pursuant to that Act.
"Seal" means the common seal of the Company.
"Month" means calendar month.
"Registered owner" or "registered holder" when used with respect to a share in
the authorized capital of the Company means the person registered in the
register of members in respect of such share.
Expressions referring to writing shall be construed as including
references to printing, lithography, typewriting, photography and other modes of
representing or reproducing words in a visible form.
Words importing the singular include the plural and vice versa; and words
importing male persons include female persons and words importing persons shall
include corporations.
1.3 The meaning of any words or phrases defined in the Company Act shall, if not
inconsistent with the subject or context, bear the same meaning in these
Articles.
1.4 The Rules of Construction contained in the Interpretation Act shall apply,
mutatis mutandis, to the interpretation of these Articles.
PART 2
SHARES AND SHARE CERTIFICATES
2.1 Every member is entitled, without charge, to one certificate representing
the share or shares of each class held by him; provided that, in respect of a
share or shares held jointly by several persons, the Company shall not be bound
to issue more than one certificate, and delivery of a certificate for a share to
one of several joint registered holders or to his duly authorized agent shall be
sufficient delivery to all; and provided further that the Company shall not be
bound to issue certificates representing redeemable shares, if such shares are
to be redeemed within one month of the date on which they were allotted. Any
share certificate nay be sent through the mail by registered prepaid mail to the
member entitled thereto, and neither the Company nor any transfer agent shall be
liable for any loss occasioned to the member owing to any such share certificate
so sent being lost in the mail or stolen.
2.2 If a share certificate
(i) is worn out or defaced, the Directors shall, upon production to them, of the
said certificate and upon such other term, if any, as they may think fit, order
the said certificate to be cancelled and shall issue a new certificate in lieu
thereof;
(ii) is lost, stolen or destroyed, then, upon proof thereof to the satisfaction
of the Directors and upon such indemnity, if any, as the Directors deem adequate
being given, a new share certificate in lieu thereof shall be issued to the
person entitled to such lost, stolen or destroyed certificate; or
(iii) represents more than one share and the registered owner thereof surrenders
it to the Company with a written request that the Company issue in his name own
or more certificates each representing a specified number of shares and in the
aggregate representing the same number of shares as the certificate so
surrendered, the Company shall cancel the certificate so surrendered and
issue in lieu thereof certificates in accordance with such request.
Such sum, not exceeding that permitted by the Company Act, as the Directors may
from time to time fix, shall be paid to the Company for each certificate to be
issued under this Article.
2.3 Every share certificate shall be signed manually by at least one officer or
Director of the Company or by or on behalf of a registrar, branch registrar,
transfer agent or branch transfer agent of the Company and any additional
signatures may be printed or otherwise mechanically reproduced and, in such
event, a certificate so signed is as valid as if signed manually,
notwithstanding that any person whose signature is so printed or mechanically
reproduced shall have ceased to hold the office that he is stated on such
certificate to hold at the date of the issue of a share certificate.
2.4 Except as required by law, statute or these Articles, no person shall be
recognized by the Company as holding any share upon any trust, and the Company
shall not be bound by or compelled in any way to recognize (even when having
notice thereof) any equitable, contingent, future or partial interest in any
share or in any fractional part of a share of (except only as by law,
statute or these Articles provided or as ordered by a Court of competent
Jurisdiction) any other rights in respect of any share except an absolute right
to the entirety thereof in its registered holder.
PART 3
ISSUE OF SHARES
3.1 Subject to Article 3.2 and to any direction to the Contrary ontained in a
resolution passed at a general meeting authorizing any increased or
alteration of capital, the shares shall be under the control of the Directors
who may, subject to the rights of the holders of the shares of the Company for
the time being issued, issue, allot, sell or otherwise dispose of, and/or
grant options on or otherwise deal in, shares authorized but not outstanding
at such times, to such persons (including Directors), in such manner, upon such
terms and conditions, and at such price or for such consideration, as they, in
their absolute discretion, may determine.
3.2 If the Company is, or becomes a company which is not a reporting company,
the Directors shall, before allotting any shares, first offer those shares pro
rata to the members,- but if there are classes of shares, the directors shall
first offer the shares to be allotted pro rata to, the shareholders holding
shares of the class proposed to be allotted, and if any shares, remain, the
directors shall then offer the remaining shares pro rata to the other members.
The offer shall be made by notice specifying the number of shares offered, the
price of same, limit the time for acceptance and contain a statement that the
offer may be accepted by notice to the Company received at an address which
shall clearly be specified therein. After the expiration of the time for
acceptance or on receipt by the Company, at the address set out as aforesaid,
written confirmation from the person to whom the offer is made that he declines
to accept the offer, and if there are no other members holding shares who
should first receive an offer, the directors may for three months thereafter
offer the shares to such persons and in such manner as they think most
beneficial to the Company; but the offer to those persons shall not be at a
price less than or on term more favorable than the offer to the members.
3.3 A member who, in writing, waives his right to receive an offer referred to
in the immediately preceding Article 3.2 hereof shall not revoke same, and such
member shall be contractually bound to any allottee subscribing or agreeing to
subscribe for shares which the member has waived his right to receive an offer
therefor as aforesaid and any such allottee shall be deemed to have notice of
this Article and to have agreed to subscribe for shards relying on this Article
by virtue of his subscription of any such shares as aforesaid.
3.4 Subject to the provisions of the Company Act, the Company, or the Directors
on behalf of the Company, may pay a commission or allow a discount to any person
in consideration of his subscribing or agreeing to subscribe, whether absolutely
or conditionally, for any shares in the Company, or procuring or agreeing to
procure subscriptions, whether absolutely or conditionally, for any such shares,
provided that,if the Company is not a specially limited Company, the rate of the
commission and discount shall not in the aggregate exceed Twenty-Five (25%) per
centum of the amount of the subscription price of such shares.
3.5 No share may be issued until it is fully paid and the Company shall have
received the full consideration therefor in cash, property or past services
actually performed for the Company. The value of property or services for the
purpose of this Article shall be the value determined by the Directors by
resolution to be, in all circumstances of the transaction, the fair market value
thereof.
PART 4
SHAM REGISTERS
4.1 The Company shall keep or cause to be kept a register of members, a register
of transfers and a register of allotments within British Columbia, all as
required by the Company Act, and may combine one or more of such registers. If
the Company's capital shall consist of more than one class of shares, a separate
register of members,register of transfers and register of allotments may be kept
in respect of each class of shares. The Directors on behalf of the Company may
appoint a trust company to keep the register of members, register of transfers
and register of allotments or, if there is more than one class of shares, the
Directors may appoint a trust company, which need not be the same trust company,
to keep the register of members, the register of transfers and the register of
allotments for each class of share. The Directors on behalf of the Company may
also appoint one or more trust companies,including the trust company which keeps
the said registers of its shares or of a class thereof, as transfer agent for
its shares or such class thereof, as the case may be, and the same or another
trust company or companies as registrar for its shares or such class thereof as
the case may be. The Directors may terminate the appointment of any such trust
company at any time and my appoint another trust company in its place.
4.2 Unless prohibited by the Company Act, the Company may keep or caused to be
kept one or more branch registers of members at such place or places as the
Directors may from time to time determine.
4.3 The Company shall not at any time close its register of members.
PART 5
TRANSFER AND TRANSMISSION OF SHARES
5.1 Subject to the provisions of the Memorandum and of these Articles that may
be applicable, any member may transfer any of his shares by instrument in
writing executed by or on behalf of such member and delivered to the Company or
its transfer agent. The instrument of transfer of any share of the Company shall
be an the form, if any, on the back of the Company's share certificates or in
such form as the Directors may from time to time approve. Except to the extent
that the Company Act may otherwise provide, the transferor shall be deemed to
remain the holder of the shares until the name of the transferee is entered in
the register of members or a branch register of members in respect thereof.
5.2 The signature of the registered owner of any shares, or of his duly
authorized attorney, upon an authorized instrument of transfer shall constitute
officer,a complete and sufficient authority to the Company, its directors,of and
agents to register, in the name of the transferee as named in the of transfer,
the number of shares specified therein or if no number is specified, all the
shares of the registered owner represented by share certificates deposited with
the instrument of transfer. If no transferee is named in the instrument of
transfer, the instrument of transfer shall constitute complete and sufficient
authority to the Company, its directors, officers and agents to register, in the
name of the person in whose behalf any certificate for the shares to be
transferred is deposited with the Company for the purpose of having the transfer
registered, the number of shares specified in the instrument of transfer or, if
no number is specified, all the shares represented by all share certificates
deposited with the instrument of transfer.
5.3 Neither the Company or any Director,officer or agent there of shall be bound
to inquire into the title of the person named in the form of transfer as
transferee, or, if no person is named therein as transferee of the person on
whose behalf the certificate is deposited with the Company for the purpose of
having the transfer registered or be liable to any claim by such registered
owner or by any intermediate owner or holder of the certificate or of any of the
shares represented thereby or any interest therein for registering the transfer,
and the transfer, when registered, shall confer upon the person in whose name
the shares have been registered a valid title to such shares.
5.4 Every instrument of transfer shall be executed by the transferor and left at
the registered office of the Company or at the office of its transfer agent or
registrar for registration, together with the share certificate for the shares
to be transferred and such other evidence, if any, as the Directors or the
transfer agent or registrar way require to prove the title of the transferor or
his right to transfer the shares and the right of the transferee to have the
transfer registered. All instruments of transfer where the transfer is
registered shall be retained by the Company or its transfer agent or registrar
and any instrument of transfer, where the transfer is not registered, shall be
returned to the person depositing the same, together with the share certificate
which accompanied the same when tendered for registration.
5.5 There shall be paid to the Company in respect. of the registration of any
transfer such sun, if any, as the Directors may from time to time determine.
5.6 In the case of the death of a member, the survivor or survivors where
the deceased was a Joint registered holder and the legal personal representative
of the deceased where he was the sole holder, shall be the only persons
recognized by the Company as having any title to his interest in the shares
Before recognizing any legal personal representative, the Directors may require
him to obtain a grant of probate or letters of administration in British
Columbia.
5.7 Upon the death or bankruptcy of a member, his personal representative or
trustee in bankruptcy, although not a member, shall have the same rights,
privileges and obligations that attach to the shares formerly held by the
deceased or bankrupt member if the documents required by the Company Act shall
have been deposited at the Company's registered office.
5.8 Any Person becoming entitled to a share in consequence of the death or
bankruptcy of a member shall, upon such documents and evidence being produced to
the Company as the Company Act requires or who becomes entitled to a share as a
result of an order of a Court of competent jurisdiction or a statute has the
right either to be registered as a member in his representative capacity in
respect of such share, or, if he is a personal representative, instead of being
registered himself, to make such transfer of the share as the deceased or
bankrupt person could have made; but the Directors shall, as regards a transfer
by a personal representative or trustee in bankruptcy, have the same right, if
any, to decline or suspend registration of a transferee as they would have in
the case of a transfer of a share by the deceased or bankrupt person before the
death or bankruptcy.
PART 6
ALTERATION OF CAPITAL
6.1 The Company way by ordinary resolution filed with the Registrar amend its
Memorandum to increase the authorized capital of the Company by:
(i) creating shares with par value or shares without par value, or both;
(ii) increasing the number of shares with par value or shares without par value,
or both; or
(iii) increasing the par value of a class of shares with par value, if no shares
of that class are issued.
6.2 The Company may by special resolution alter its Memorandum to subdivide,
consolidate, change from shares with par value to shares without par value, or
from shares without par value to shares with par value, or change the
designation of all or any of its shares, but only to such extent, in such
manner and with such consents of members holding a class of shares which is the
subject of or affected by such alteration, as the Company Act provides.
6.3 The Company may alter its Memorandum or these Articles:
(i) by special resolution, to create, define and attach special restrictions to
any sharer and
(ii) by special resolution and by otherwise complying with any applicable
provision of its Memorandum or these Articles, to vary or abrogate any special
rights and restrictions attached to any shares and in each case by filing a
certified copy of such resolution with the Registrar, but no right or special
right attached to any issued shares shall be prejudiced or interfered with
unless all members holding shares of each class whose right or special right is
so prejudiced or interfered with consent thereto in writing, or unless a
resolution consenting thereto is passed at a separate class meeting of the
holders of the shares of each such class by a majority of three-fourths, or such
greater majority as may be specified by the special rights attached to the class
of shares, of the issued shares of such class.
6.4 Notwithstanding the foregoing provisions of this Part, no such alteration
shall be valid as to any part of the issued shares of any class unless the
holders of the rest of the issued shares of such class either all consent
thereto in writing or consent thereto by a resolution passed by the votes of
members holding three-fourths of the rest of such shares.
6.5 If the Company is or becomes a reporting company, no resolution to create,
vary or abrogate any special right of conversion attaching to any class of
shares shall be submitted to any meeting of members unless any consent
thereto required to be obtained under the Company Act shall have been first
obtained.
6.6 Unless these Articles otherwise provide, the provision of these Articles
relating to general meetings shall apply, with the necessary changes and so far
as they are applicable, to a class meeting of members holding a particular class
of shares, but the quorum at a class meeting shall comply with any applicable
provisions of the Company Act.
PART 7
PURCHASE AND REDEMPTION OF SHARES
7.1 Subject to the special rights and restrictions attached to any class of
shares, the Company may, by a resolution of the Directors and in compliance with
the Company Act, purchase any of its shares at the price and upon the terms
specified in such resolution or redeem any class of its shares in accordance
with the special rights and restrictions attaching thereto. No such purchase or
redemption shall be made if the Company is insolvent at the time of the proposed
purchase or redemption or if the proposed purchase or redemption would render
the Company insolvent. Unless the shares are to be purchased through a stock
exchange or the Company is purchasing the shares from dissenting members
pursuant to the requirements of the Company Act,the Company shall make its offer
to purchase pro rata to every member who holds shares of the class or kind, as
the case may be, to be purchased.
7.2 If the Company proposes at its option to redeem some, but not all of the
shares of any class, the Directors may, subject to the special rights and
restrictions attached to such class of shares, decide the manner in which the
shares to be redeemed shall be selected.
7.3 Subject to the provisions of the Company Act, any shares purchased or
redeemed by the Company may be sold or issued by it, but while such shares are
held by the Company, it shall not exercise any vote in respect of these shares
and no dividend shall be paid thereon.
PART 8
BOOMING POWERS
8.1 The Directors may from time to time on behalf of the Company:
(i) borrow money in such manner and amount, on such security, from such sources
and upon such terms and conditions as they think fit;
(ii) issue bonds, debentures, and other debt obligations either outright or as
security for any liability or obligation of the Company or any other person; and
(iii) mortgage, charge, whether by way of specific or floating charge, or give
other security on the undertaking, or on the whole or any part of the property
and assets of the Company (both present and future)
8.2 Any bonds, debentures or other debt obligations of the Company may be issued
at a discount, premium or otherwise, and with any special privileges as to
redemption, surrender, drawing, allotment of, or conversion into or exchange for
shares or other securities, attending and voting at general meetings of the
Company, appointment of Directors or otherwise and may by their terms be
assignable free from any equities between the Company and the person to whom
they were issued or any subsequent holder thereof, all as the Directors may
determine.
8.3 The Company shall keep or cause to be kept within the Province of British
Columbia in accordance with the Company Act a register of its debentures and a
register of debenture holders, which registers may be combined, and subject to
the provisions of the Company Act, may keep or cause to be kept one or more
branch registers of its debenture holders at such place or places as the
Directors may from time to time determine and the Directors may by resolution,
regulation or otherwise make such provisions as they think fit respecting the
keeping of such branch registers.
8.4 Every bond, debenture or other debt obligation of the Company shall be
signed manually by at least one Director or officer of the Company or by or on
behalf of a trustee, registrar, branch registrar, transfer agent or branch
transfer agent for the bond, debenture or other debt obligation appointed by the
Company or under any instrument under which the bond, debenture or other debt
obligation is issued and any additional signatures may be printed or otherwise
mechanically reproduced thereon and, in such event, a bond, debenture or
other debt obligation so signed is as valid as ifsigned manually notwithstanding
that any person whose signature is so printed or mechanically reproduced shall
have ceased to hold the office that he is stated on such bond, debenture or
other debt obligation to hold at the date of the issue thereof.
8.5 The Company shall keep or cause to be kept a register of indebtedness to
every Director or officer of the Company or an associate of any of then in
accordance with the provisions of the Company Act.
PART 9
GENERAL MEETINGS
9.1 Subject to any extensions of time permitted pursuant to the Company Act, the
first annual general meeting of the Company shall be held within fifteen
months from the date of incorporation and thereafter an annual general meeting
shall be held once in every calendar year at such time (not being more than
thirteen months after the holding of the last preceding annual general meeting)
and place as may be determined by the Directors.
9.2 If the Company is, or became a company which is not a reporting company and
all the members entitled to attend and vote at an annual general meeting consent
in writing to all the business which is required, or desired to be transacted
at the meeting, the meeting need not be held.
9.3 All general meetings other than annual general meetings are herein referred
to as and may be called extraordinary general meetings.
9.4 The Directors may, whenever they think fit, convene an extraordinary general
meeting. An extraordinary general meeting, if requisitioned in accordance with
the Company Act, shall be convened by the Directors or, if not convened by
the Directors, may be convened by the Requisitionists as provided in the Company
Act.
9.5 If the Company is or becomes a reporting company, advance notice of any
general meeting at which Directors are to be elected shall be published in the
manner required by the Company Act.
9.6 A notice convening a general meeting specifying the place the day, and the
hour of the meeting, and in case of special business the general nature of that
business shall be given as provided in the Company Act are in the manner
hereinafter in these Ariticles mentioned, or in such other manner(if any) as may
be prescribed by ordinary resolution, whether previous notice thereof has been
given or not, to such persons as are entitled by law or under these Articles to
receive such notice from the Company. Accidental omission to give notice of a
meeting to, or the non-receipt of notice of a meeting by any member shall not
invalidate the proceedings at that meeting.
9.7 All the members of the Company entitled to attend and vote at a general
meeting my, by unanimous consent in writing given before, during or after the
meeting, or if they are present at the meeting by a unanimous, vote, waive or
reduce the period of notice of such meeting and an entry in the minute book of
such waiver or reduction shall be sufficient evidence of the due convening of
the meeting.
9.8 Except as otherwise provided by the Company Act, where any special business
at a general meeting includes considering, approving, ratifying, adopting or
authorizing any document or the execution therof or the giving of effect thereto
the notice convening the meeting shall, with respect to such, document, be
sufficient if it states that a copy of the document or proposed document is or
will be available for inspection by members at the registered office or records
office of the Company or at some other place in British Columbia designated in
the notice during usual business hours up to the date of such general meeting.
PART 10
PROCEEDINGS AT GENERAL MEETINGS
10.1 All business shall be deemed special business which is transacted at:
(i) an extraordinary general meeting other than the conduct of and voting at,
such meeting; and
(ii) an annual general meeting, with the exception of the conduct of, and voting
at such meeting, the consideration of the financial statement and of the
respective reports of the Directors and Auditor, fixing or changing the number
of directors, approval of a motion to elect two or more directors by a single
resolution, the election of Directors, the appointment of the Auditor, the
fixing of the remuneration of the Auditor and such other business as by these
Articles or the Company Act may be transacted at a general meeting without prior
notice thereof being given to the members or any business which is brought under
consideration by the report of the Directors.
10.2 No business, other than election of the chairman or the adjournment of the
meeting, shall be transacted at any general meeing unless a quorum of members,
entitled to attend and vote, is present at the commencement of the meeting, but
the quorum need not be present throughout the meeting.
10.3 Save as herein otherwise provided, a quorum shall be two persons present
and being, or representing by proxy, members holding not less than one-twentieth
of the shares which may be voted at the meeting. If there is only one member,
the quorum is one person present and being, or representing by proxy, such
member. The Directors, the Secretary, or, in his absence, an Assistant Secretary
and the solicitor of the Company shall be entitled to attend any general meeting
but no such persons shall be counted in the quorum or be entitled to vote at any
general meeting unless he shall be a member or proxyholder entitled to vote
thereat.
10.4 If within half an hour from the time appointed for a general meeting a
quorum is not present, the meeting, if convened upon the requisition of members
shall be dissolved. In any other case, it shall stand adjourned to the same day
in the next week, at the same time and place, and if at the adjourned meeting a
quorum is not present within half an hour from the time appointed for the
meeting, the person or persons present and being, or representing by proxy, a
member or members entitled to attend and vote at the meeting shall be a quorum.
10.5 The Chairman of the Board, if any, or in his absence the President of the
Company or in his absence a Vice-President of the Company, if any, shall be
entitled to preside as chairman at every general meeting of the Company.
10.6 If at any general meeting neither the Chairman of the Board nor President
nor a Vice-President is present within fifteen minutes after the time appointed
for holding the meeting or is unwilling to act as chairman, the Directors
present shall choose some one of their member to be chairman or if all the
Directors present decline to take the chair or shall fail to so choose or if no
Director be present, the members present shall choose one of their number to
be chairman.
10.7 The chairman may and shall, if so directed by the meeting, adjourn the
meeting from time to time and from place to place, but no business shall be
transacted at any adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place. When a meeting is adjourned
for Thirty (30) days or more, notice, but not "advance notice", of the adjourned
meeting shall be given as in the case of an original meeting. Save as aforesaid,
it shall not be necessary to give any notice of an adjourned meeting or of
the business to be transacted at an adjourned meeting.
10.8 No motion proposed at a general meeting need be seconded and the chairman
may propose or second a motion.
10.9 Subject to the provisions of the Company Act, at any general meeting a
resolution put to the vote of the meeting shall be decided on a show a of hands,
unless (before or on the declaration of the result of the show of hands (if )a
poll is directed by the chairman or demanded by at least one entitled to vote
who is present in person or by proxy. The chairman shall declare to the meeting
the decision on every question in accordance with the result of the show of
hands or the poll and such decision shall be entered in the book of proceedings
of the Company. A declaration by the chairman that resolution has been carried,
or carried unanimously, or by a particular majority, or lost or not carried by a
particular majority and an entry to that effect in the book of the proceedings
of the Company shall be conclusive evidence of the fact, without proof of the
number or proportion of the votes recorded in favour of, or against that
resolution.
10.10 In the case of an equality of votes, whether on a show of ban&; or on a
poll, the chairman of the meeting at which the show of hands takes place or at
which the poll is demanded shall not be entitled to a second or casting vote.
10.11 No poll may be demanded on the election of a chairman. A, poll demanded on
a question of adjournment shall be taken forthwith. A poll demanded on any other
question shall be taken as soon as in the opinion of the chairman is reasonably
convenient, but in no event later than seven days after the meeting and at such
time and place and in such manner as the chairman of the meeting directs. The
result of the poll shall be deemed to be the resolution of and passed at the
meeting at which the poll was demanded. Any business other than that upon which
the poll has been demanded may be proceeded with pending the taking of the poll.
A demand for a poll may be withdrawn. In any dispute as to the admission or
rejection of a vote, the decision of the chairman made in good faith shall be
final and conclusive.
10.12 Every ballot cast upon a poll and every proxy appointing a proxyholder who
casts a ballot upon a poll shall be retained by the Secretary for such period
and be subject to such inspection as the Company Act my provide.
10.13 On a poll a person entitled to cast more than one vote need not, if he
votes, use all his votes or cast all the votes he uses in the same way.
10.14 Unless the Company Act, the Memorandum= or these Articles otherwise
provide, any action to be taken by a resolution of the members may be taken by
an ordinary resolution.
PART 11
VOTES OF MEMBERS
11.1 Subject to any special voting rights or restrictions attached to any class
of shares and the restrictions on joint registered holders of shares, on a show
of hands every number who is present in person and entitled to vote thereat
shall have one vote for each share of which he is the registered holder and may
exercise such vote either in person Cr bY Proxyholder.
11.2 Any person who is not registered as a member but is entitled to vote at any
general meeting in respect of a share may vote the share in the same manner as
if he were a maber; but, unless the Directors have previously admitted his right
to vote at that meeting in respect of the share, he shall satisfy the directors
of his right to vote the share before the time for holding the meeting, or
adjourned meeting, as the case way be, at which he proposes to vote.
11.3 Any corporation not being a subsidiary which is a member of the Company
may by resolution of its directors or other governing body authorize such person
as it thinks fit to act as its representative at any general meeting or class
meeting. The person so authorized shall be entitled to exercise in respect of
and at such meting the same powers on behalf of the corporation which he
represents as that corporation could exercise if it were an individual member of
the Carpany personally present, including, without limitation, the right, unless
restricted by such resolution, to appoint a proxyholder to represent such
corporation and shall be counted for the purpose of forming a quorum if present
at the meeting. Evidence of the appointment of any such representative may be
sent to the Company any by written instrument, telegram, telex or any method of
transmitting legibly recorded messages. Notwithstanding the foregoing, a
corporation being a member may appoint a proxyholder.
11.4 In the case of joint registered holders of a share the vote of the senior
who exercises a vote, whether in person or by proxyholder, shall be accepted to
the exclusion of the votes of the other joint registered holders; and for this
purpose seniority shall be determined by the order in which the nams stand in
the register of members. Several legal personal representatives of a deceased
mmber whose shares are registered in his sole name shall for the purpose of this
Article be deemed joint registered holders.
11.5 A member of unsound mind entitled to attend and vote in respect of whom an
order has been made by any court having jurisdiction, may vote, whether on a
shcw of hands or on a poll, by his committee, curator bonis, or other person in
the nature of a committee or curator bonis appointed by that court, and any
such committee, curator bonis, or other person may appoint a proxyholder
11.6 A member holding more than one share in respect of wbich he is entitled to
vote shall be entitled to appoint one or mre (but not more than five)
proxyholders to attend, act and vote for him on the same occasion. If such. a
nvmter should appoint more than one proxyholder for the same occasion, he shall
specify the number of shares each proxyholder shall be entitled to vote. A
member may also appoint one or more alternate proxyholders to act in the place
and stead of an absent proxyholder.
11.7 A form of proxy shall be in writing under the hand of the appointor or of
his attorney duly authorized in writing, or if the appointor is a corporation,
either under the sale of the corporation or under the band of a duly authorized
officer or attorney. A proxyholder need not be a member of the Company if :
(i) the Company is at the time a reporting ccopany; or
(ii) the member appointing the proxyholder is a corporation; or
(iii) the Company shall have at the time only one member; or
(iv) the persons present in person or by proxy and entitled to vote at the
meeting by resolution permit the proxyholder to attend and vote; for the purpose
of such resolution the proxyholder shall be counted in the quorum, but shall not
be entitled to vote and in all other cases a proxyholder nust be a member.
11.8 A form of proxy and the power of attorney or other authority, if any, under
which it is signed or a notarially certified copy thereof shall be deposited at
the registered office of the Ccnpany or at such other place as is specified for
that purpose in the notice convening the meeting, not. than 48 hours (excluding
Saturdays, Sundays and holidays) before the time for holding the meeting in
respect of which the person named in the instrument is appointed. In addition
to any other method of depositing proxies provided for in these Articles, the
Directors may from time to time by resolution make regulations relating to the
depositing of proxies at any place or places and fixing the time or times for
depositing the proxies not exceeding 48 hours (excluding Saturdays, Sundays
and holidays) preceding the meeting or adjourned meeting specified in the
notice calling a meeting of members and providing for particulars of such
proxies to be sent to the Company or any agent of t1he Company in writing or by
letter, telegram, telex or any method of transmittinq legibly recorded messages
so as to arrive before the comencement of the meeting or adjourned meeting at
the office of the Company or of any agent of the Company appointed for the
purpose of receiving such particulars and providing that proxies so deposited
may be acted upon as though the proxies themselves were deposited as required by
this Part arid votes given in accordance with such regulations shall be valid
and shall be counted.
11.9 Unless the Company Act or any other statute or law which is applicable to
the Company or to any class of its shares requires any other form of proxy, a
proxy, whether for a specified meeting or otherwise, shall be in the form
following, but way also be in any other fonn that the Directors or the chairman
of the meting shall approve:
(Name of Cmpany)
The undersigned, being a member of the above-named Ccnpany,
hereby appoints I
or failing him
as proxyholder for the undersigned to attend, act and vcrte for and on
behalf of the undersigned at the general meeting of the Clonpany to be
held on the day of and at any adjournment
thereof.
Signed this day of 19
(Signature of Member)
11.10 A vote given in accordance with the terms of a proxy is valid
notwithstanding the previous death or incapacity of the member giving the proxy
or the revocation of the proxy or of the authority under which the form of proxy
was executed or the transfer of the share in respect of which the proxy is
given, provided that no notification in writing of such death, incapacity,
revocation or transfer shall have been received at the registered office of the
Conpany or by the chairman of the meeting or adjourned meeting for which the
proxy was given before the vote is taken.
11.11 Every proxy may be revoked by an instrument in writing:
(i) executed by the member giving the same or by his attorney authorized in
writing or, where the member is a corporation, by a duly authorized officer or
attorney of the corporation; and
(ii) delivered either at the registered office of the Company at any time up to
and including the last business day preceding the day of the meeting, or any
adjournment thereof at which the proxy is to be used, or to the chairman of the
meeting on the day of the meting or any adjournment thereof before any vote in
respect of which the proxy is to be used shall have been taken or in any other
manner provided by law.
PART 12
DIRECTORS
12.1 The subscribers to the Memorandum of the Conpany are the first Directors.
The Directors to succeed the first Directors may be appointed in writing by a
majority of the subscribers to the Memoranduu or at a meeting of the
subscribers, or if not so appointed,. they shall be elected by the members
entitled to vote on the election of Directors and the number of Directors shall
be the same as the number of Directors so appointed or elected. The number of
Directors, excluding additional Directors may be fixed or cbanged frcm time to
time by ordinary resolution, whether previous notice thereof has been given or
not, but notwithstanding anything contained in these Articles, the number of
Directors shall never be less than one, or if the Conpany is or becomes a
reporting company, less than that number as may be specified in the Ccopany Act.
12.2 The remuneration of the Directors as such my from time to time be
determined by the Directors or, if the Directors shall so decide, by the
members such remuneration way be in addition to any salary or other remuneration
paid to any officer or enployee -of the Company as such who is also a Director.
The Director shall be repaid such reasonable travelling, botel and other
expenses as they incur in and about the business of the Company and if any
Director shall perform any professional or other services for the Company that
in the opinion of the Directors are outside the ordinary duties of a Director or
shall otherwise be specially occupied in or about the Company's business, he
may be paid a remuneration to be fixed by the Board, or at the option of such
Director, by the Company in general meeting, and such remuneration may be either
in addition to, or in substitution for any other emuneration that he may be
entitled to receive. The Directors on behalf of the Company, unless otherwise
determined by ordinary resolution, may pay a gratuity or pension or allcwance
on retirement to any Director who has held any salaried office or place of
profit with the Company or to his spouse or dependents and may make
contributions to any fund and pay premiums for the purchase of provision of any
such gratuity, pension or allowance.
12.3 A Director shall not be required to hold a share in the capital of the
Coupany as qualification for his office, but shall be qualified as required by
the Company Act, to become or act as a Director
PART 13
ELECTION AND REMOVAL OF DIRECTORS
13.1 At each annual general meeting of the Conpany, all the Directors shall
retire and the members entitled to vote thereat shall elect a Board of
Directors consisting of the number of Directors for the time being fixed
pursuant to these Articles. If the Company is or becomes a company that is
not a reporting company and the business to be transacted at any annual general
meeting is consented to in writing by all the members who are entitled to
attend and vote thereat, such annual general meeting shall be deemed for the
purpose of this Part to have been held on such written consent effective.
13.2 A retiring Director shall be eligible for re-election.
13.3 Where the Company falls to hold an annual general meetirig in accordance
with the Company Act, the Directors then in office shall be deemed to have been
elected or appointed as Directors on the last day on which the annual general
meeting could have been held pursuant to these Articles and they my hold office
until other Directors are appointed or elected or until the day on which the
next annual general meeting is held.
13.4 If at any general meeting at which there should be an election of
Directors, the places of any of the retiring Directors are not filled by such
election, such of the retiring Directors who are not re-elected as may be
requested by the newly elected Directors shall, if willing to do so, continue in
office to complete the number of Directors for the time being fixed pursuant to
these Articles until further new Directors are elected at a general meeting
convened for the purpose. If any such election or continuance of Directors does
not result in the election or continuance of the number of Directors for the
time being fixed pursuant to these Articles, such number shall be fixed at the
number of Directors actually elected or continued in office.
13.5 Any casual vacancy occurring in the Board of Directors may be filled by the
remaining Directors or Director.
13.6 Between successive annual general meetings, the Di-rectors sball have power
to appoint one or more additional Directors, but not more than one-third of the
number of Directors fixed pursuant to these Articles and in effect at the last
general meeting at which Directors were elected. Any Director so appointed shall
hold office only until the next following annual general meeting of the Company,
but shall be eligible for election at such meeting and so long as he is an
additional Director, the number of Directors shall be increased accordingly.
13.7 Any Director may by instrument in writing delivered to the Caqpany appoint
any person to be his alternate to act in his place at meetings of the Directors
at which he is not present unless the Directors shall have reasonably
disapproved the appointment of such person as an alternate Director and shall
have given notice to that effect to the Director appointing the Alternate
Director within a reasonable tine after delivery of such instrument to the
Company. Every such alternate shall be entitled to notice of meetings of the
Directors and to attend and vote as a Director at a meeting at which the person
appointing him is not personally present, and if he is a Director, to have a
separate vote on behalf of the Director he is representing in addition to his
own vote. A Director way at any time by instrument, telegram, telex or any
method of transmitting legibly recorded messages delivered to the Company
revoke the appointment of an alternate appointed by him.
13.8 The office of Director shall be vacated if the Director:
(i) resigns his office by notice in writing delivered to the registered office
of the Conpany; or
(ii) is convicted of an indictable offence and the other Directors shall have
resolved to remove him; or
(iii) ceases to be qualified to act as a Director pursuant to the Company Act.
13.9 The Company may by special resolution remove any Director before the
expiration of his period of office, and may by ordinary resolution appoint
another person in his stead.
PART 14
POWERS AND DUTIES OF DIRECTORS
14.1 The Directors shall muiage or supervise the management of the affairs and
business of the Company and shall have the authority to exercise all such powers
of the Cmpany as are not, by the Conpany Act or by the Memorandum or these
Articles, required to be exercised by the Conpany in general meeting.
14.2 The Directors may from time to time by power of attorney or other
instrument under the seal, appoint any perscn to be the attorney of the Company
for such purposes, and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles
and excepting the powers of the Directors relating to the constituticn of the
Board and of any of its committees and the appointment or removal of
officers and the power to declare dividends) and for such period, with such
remuneration and subject to such conditions as the Directors way think fit,
and any such appointment may be made in favour of any of the Directors, officers
or members of the Company or in favour of any corporation, or of any of the
shareholders, directors, officers, nominees or managers of any corporation, firm
or joint venture and any such power of attorney may contain such provisions for
the protection or convenience of persons dealing with such attorney as the
Directors think fit. Any such attorney may be authorized by the Directors to
sub-delegate all or any of the powers, authorities and discretions for the time
being vested in him.
PART 15
DISCLOSURE OF INTEREST OF DIRECTORS
15.1 A Director who is, in any way, directly or indirectly interested in an
existing or proposed contract or transaction with the Company or who holds any
office or possesses any property whereby, directly or indirectly, a duty or
interest might be created to conflict with his duty or interest as a Director
shall declare the nature and extent of his interest in such contract or
transaction or of the conflict or potential conflict with his duty and interest
as a Director, as the case my be, in accordance with the provisions of the
Company Act.
15.2 Subject to the provisions of the Company Act, a Director shall be counted
in the quoran present at the meting and nay vote in respect of any such contract
or transaction with the Ccapany in which he is interested). Not so as to limit
the generality of the foregoing and subject to the provisions of the Company
Act, a Director shall be specifically entitled to vote in respect of:
(i) any such contract or transaction relating to a loan to the Company, which a
Director or a specified corporation or a specified firm in which he has an
interest has guaranteed or joined in guaranteeing the repayment of the loan or
any part of the loan;
(ii) any contract or transaction made or to be wade with, or for the benefit of
a holding corporation or a subsidiary corporation of which a Director is a
director;
(iii) any contract by a Director to subscribe for or underwrite shares or
debentures to be issued by the Company or a subsidiary of the Company or any
contract, arrangement or transaction in which a Director is, directly or
indirectly, interested if all the other Directors are also, directly or
indirectly interested in the contract, arrangement or transaction;
(iv) determining the remuneration of the Directors;
(v) purchasing and maintaining insurance to cover against liability incurred by
then as Directors; or
(vi) the indemnification of any Director by the Company.
These specific entitlements may fran time to time be suspended or mended to any
extent approved by the Ocnpany in general meeting and permitted by the Company
Act, either generally or in respect of any particular contract or transaction or
for any particular period.
15.3 A Director may bold any office or place of profit with the Company (other
than the office of auditor of the ConTpany) in conjunction with his office of
Director for such period and on such terms (as to rermneration or otherwise) as
the Directors may determine and no Director or intended Director shall be
disqualified by his office from contracting with the Company either with regard
to his tenure of any such other office or place of profit or as vendor,
purchaser or otherwise, and subject to coupliance with the provisons; of the
Company Act, no contract or transaction entered into by or on behalf of the
Company in which a Director is in any way interested sha-U be liable to be
voided by reason thereof.
15.4 Subject to compliance with the provisons of the Company Act, a Director or
any corporation or firm in which he has an interest way act in a professional
capacity for the Company (except as auditor of the Company) and he or such
corporation or firm shall be entitled to renuneration for professional services
as if he were not a Director.
15.5 A Director may be or become a director or other officer or employee of, or
otherwise interested in any corporation or firm in which the Company may be
interested as a shareholder or otherwise, and subject to compliance with the
provisions of the Company Act, such Director shall not be accountable to the
Company for any remuneration or other benefit received by him as director,
officer or employee of, or from his interest in such other corporatim or firm.
PART 16
PROCEEDINGS OF DIRECTORS
16.1 The Chairman of the Board, if any, or in his absence, the President shall
preside as chairman at every meeting of the Directors, or if there is no
Chairman of the Board or neither the Chairman of the Board nor the President is
present within fifteen minutes of the time appointed for holding the meeting or
is urwi I ling to act as chairman, or if the Chairman of the Board, if any, and
the President have advised the Secretary that they will not be present at the
meeting, the Directors present shall choose one of their number to be chairman
of the meeting.
16.2 The Directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings, as they think fit. Questions arising at any
meeting shall be decided by a majority of votes. In case of an equality of
votes, the Chairman shall ncrt have a second or casting vote. Meetings of the
Board held at regular intervals may be held at such place, at such time and upon
such notice (if any) as the Board may by resolution fran time to time determine.
16.3 A Director may participate in a meeting of the Board or of any committee of
the Directors by means of conference telephones or other communications
facilities by means of which all Directors participating in the meeting can hear
each other and provided that all such Directors agree to such participation. A
Director participating in a meeting in accordance with this Article shall be
deemed to be present at the meeting and to have so agreed and shall be counted
in the quorum therefor and be entitled to speak and vote thereat.
16.4 A Director way, and the Secretary or an Assistant Secretary upon request of
a Director shall call a meeting of the Board at any time Reasonable notice of
such meeting specifying the place, day and hour of such neeting shall be given
by mail, postage prepaid, addressed to each of the Directors and alternate
Directors at his address as it appears on the books of the Clompany or by
leaving it at his usual business or residential address or by telephcne,
telegram, telex, or any method of transmitting legibly recorded messages. It
shall not be necessary to give rotice of a meeting of Directors, to any Director
or alternate Director:
(i) who is at the time not in the Province of British Colianhia; or
(ii) if such meeting is to be held immediately following a genetal meeting at
which such Director shall have been elected or is the meeting of Directors at
which such Director is appointed.
16.5 Any Director of the Conpany may file with the Secretaxy a document executed
by him waiving notice of any past, present or future meeting or meetings of the
Directors being, or required to have been sent to him and may at any time
withdraw such waiver with respect to meetings held thereafter. After filing such
waiver with respect to future meetings and until such waiver is withdrawn,
no notice need be given to such Director and unless the Director otherwise
requires in writing to the Secretary, to his alternate Director of any
meetings of Directors and all meetings of the Director so held shall be deemed
not to be improperly called or constituted by reason of notice not having been
given to such Director or alternate Director.
16.6 The quorum necessary for the transaction of the Directors may be fixed by
the Directors and if not so fixed shall two Directors, or if the numbers of
Directors is fixed at one, shall be one Director.
16.7 The continuing Directors way act notwithstanding any vacancry in their body
but if and so long as their number is reduced below the number fixed
pursuant to these Articles as the necessary quorum of Directors, the continuing
Directors may act for the purpose of increasing the number of Directors to
that number, or of summoning a general meeting of the Conpany but for no other
purpose.
16.8 Subject to the provisions of the Company Act, all acts done by any meeting
of the Directors or of a committee of Directors, or by any person acting as a
Director shall, notwithstanding that it be afterwards discovered that there was
scm defect in the qualification, electicn or appointment of any such Directors
or of the members of such conmittee or person acting as aforesaid, or that they
or any of them were disqualified, be as valid as if every such person had been
duly elected or appointed and was qualified to be a Director.
16.9 A resolution consented to in writing, whether by document, telegram, telex
or any method of transmitting legibly recorded messages or other means by all of
the Directors shall be as valid and effectual as if it had been passed at a
meeting of the Directors duly called and held. Such resolution may be in two or
more counterparts which together shall be deemed to constitute one resolution
in writing. Such resolution shall be filed with the minutes of the proceedings
of the Directors and shall be effective on the date stated thereon or on the
lastest date stated on any counterpart.
PART 17
EXECUTIVE AND OTHER COMMITTEES
17.1 The Directors may by resolution appoint an Executive Committee to consist
of such member or members of their body as they think fit, which Comnittee shall
have and may exercise during the intervals between the metings of the Board,
all the powers vested in the Board except the power to fill vacancies in
the Board, the power to change the membership of, or fill vacancies in said
Committee or any other conmittee of the Board and such other powers, if any, as
may be specified in the resolution. Ihe said Committee shall keep regular
minutes of its transactions and shall cause them to be recorded in books kept
for that purpose, and shall report the same to the Board of Directors at such
times as the Board of Directors may from time to time require. The Board shall
have the powex at any time to revoke or override the authority given to or acts
done by the Executive Committee except as to acts done before such revocation
or overriding and to terminate the appointment or change the membership of such
Committee and to fill vacancies in it. The Executive Committee may make rules
for the conduct of its business and may appoint such assistants as it may deem
necessary. A majority of the members of said Committee shall constitute a
quorum thereof.
17.2 The Directors may by resolution appoint one or more committees consisting
of such member or members of their body as they think fit and may delegate to
any such committee between meetings of the Board such powers of the Board
(except the power to fill vacancies in the Board and the power to change the
membership of or fill vacancies in any committee of the Board and the power to
appoint or reomve officers appointed by the Board) subject to such conditions as
may be prescribed in such resolution, and all committees so appointed shall keep
regular minutes of their transactions and shall cause them to be recorded in
books kept for that purpose and shall report the same to the Board of Directors
at such times as the Board of Directors may from time to time require. The
Directors shall also have power at any time to revoke or override any
authority given to or acts to be done by any such committees except as to
acts done before such revocation or overriding and to terminate the appointment
or change the nembership of a conmittee and to fill vacancies in it. Committees
may make rules for the conduct of their business and may appoint such assistants
as they may deem necessary. A majority of the members of a committee shall
constitute a quorum thereof.
17.3 The Executive Ccnmttee and any other coamttee rmy met and adjourn as it
thinks prcper. Questions arising at any meeting shall be determined by a
majority of votes of the meTbers of the coninittee present, and in case of an
equality of votes, the chairman shall not have a second or casting vote. A
resolution approved in writing by all the members of the Executive Committee or
any other committee shall be as valid and effective as if it had been passed at
a meting of such Committee duly called and constituted. Such resolution my be in
two or more counterparts which together shall be deemed to constitute one
resolution in writing. Such resolution shall be filed with the minutes of the
proceedings of the committee and shall be effective on the date stated thereon
or on the latest date stated in any counterparty.
PART 18
OFFICERS
18.1 The Directors shall, from time to time, appoint a President and a Secretary
and such other officers, if any, as the Directors shall determine and the
Directors may, at any time, terminate any such appointmnt. No officer shall be
appointed unless he is qualified in accordance with the provisions of the
Company Act.
18.2 One person may hold more than one of such offices except that the offices
of President and Secretary must be held by different persons unless the Company
has only one member. Any person appointed as the Chairman of the Board, the
President or the Managing Director shall be a Director. The other officers need
not be Directors.The remuneration of the officers of the Company as such and the
terms and conditions of their tenure of office or employment shall from time to
time be determined by the Directors; such remuneration may be by way of salary,
fees, wages, comission or participation in profits or any other means or all of
these modes and an officer may in addition to such remuneration be entitled to
receive after he ceases to hold such office or leaves the employment of the
Company a pension or gratuity. The Directors may decide what functions and
duties each officer shall perform and may entrust to and confer upon him any of
the powers exercisable by them upon such term and conditions and with such
restrictions as they think fit and may from time to time revoke, withdraw,
alter or vary all or any of such function, duties and powers. The Secretary
shall, inter alia, perform the functions of the Secretary specified in the
Company Act.
18.3 Every officer of the Company who holds any office or possesses any
property whereby, whether directly or indirectly, duties or interest might be
created in conflict with his duties or interests as an officer of the Company
shall, in writing, disclose to the President the fact and the nature, character
and extent of the conflict.
PART 19
INDEMNITY AND PROTECTICN OF
DIRECTORS, OFFICERS AND EMPLOYEES
19.1 Subject to the provisions of the Company Act, the Director shall cause the
Company to indemnify a Director or former Director of the Company and the
Directors may cause the Company to indemnify a director or former director of a
corporation of which the Company is or was a shareholder and the heirs and
personal representatives of any such person against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
actually and reasonably incurred by him or them, including an armunt paid to
settle an action or satisfy a judgment in a civil, criminal or administrative
action or proceeding to which he is or they are made a party by reason of his
being or having been a Director of the Company or a director of such corporation
including any action brought by the Company or any such corporation. Each
Director of the Company on being elected or appointed shall be deemed to have
contracted with the Company on the terms of the foregoing indemnity.
19.2 Subject to the provisions of the Conpany Act, the Directors may cause the
Company to indennify any officer, employee or agent of the Company or of a
corporation of which the Company is or was a shareholder (notwithstanding that
he is also a Director) and his heirs and personal representatives against all
costs, charges and expenses whatsoever incurred by him or them and resulting
frorn his acting as an officer, employee or agent of the Company or such
corporation. In addition, the Company shall indemnify the Secretary or an
Assistant Secretary of the Company (if he shall not be a full time enplcyee of
the Company and notwithstanding that he is also a Director) and his respective
heirs and legal representatives against all costs, charges and expenses
whatsoever incurred by him or them and arising cut of the functions assigned to
the Secretary by the Conpany Act or these Articles and each such Secretary and
Assistant Secretary shall on being appointed be deemed to have contracted with
the Company on the terms of the foregoing indemnity.
19.3 The failure of a Director or officer of the Company to comply with the
provisions of the Company Act or of the Memorandum or these Articles shall not
invalidate any indemnity to which he is entitled under this Part.
19.4 The Directors may cause the Company to purchase and maintain insurance for
the benefit of any person who is or was serving as a Director, officer, employee
or agent of the Conpany or as a director, officer, employee or agent of any
corporation of which the Company is or was a shareholder and his heirs or
personal representative against any liability incurred by him as such Director,
Officer, employee or agent.
PART 20
DIVIDENDS AND RESERVE
20.1 The Directors may from time to time declare and authorize payment of such
dividends, if any, as they may deem advisable and need not give notice of such
declaration to any member. No dividend shall be paid otherwise than out of funds
and/or assets properly available for the payment of dividends and a declaration
by the Directors as to the amount of such funds or assets available for
dividends shall be conclusive. The Company may pay any such dividend wholly or
in part by the distribution of specific assets and in particular by paid up
shares, bonds, debentures or other securities of the Company or any other
corporation or in any one or more such ways as may be authorized by the Company
or the Directors and where any difficulty arises with regard to such a
distribution, the Directors may settle the same as they think expedient, and in
particular may fix the value for distribution of such specific assets or any
part thereof, and may determine that cash payments in substitution for a" or any
part of the specific assets to which any members are entitled shall be made to
any momibers; on the basis of the value so fixed in order to adjust the rights
of all parties and may vest any such specific assets in trustees for the persons
entitled to the dividend as may seen expedient to the Directors.
20.2 Any dividend declared on shares of any class by the Directors indy be made
payable on such date as is fixed by the Directors.
20.3 Subject to the rights of mwbeers,(if any) holding shares with special
rights as to dividends, all dividends on shares of any class shall be declared
and paid according to the number of such shares held.
20.4 The Directors may before declaring any dividend, set aside cut of the funds
properly available for the paymient of dividends such sums as they think proper
as a reserve or reserves, which sball, at the discretion of the Directors, be
applicable for meeting contingencies, or for equalizing dividends, or for any
other purpose to which such funds of the Company may be properly applied, and
pending such application, may at the like discretion, either be employed in
the business of the Company or be invested in such investments as the Dirctors;
may from time to time think fit.The Directors may also, without placing the same
in reserve, carry forward such funds which they think prudent not to divide.
20.5 If several persons are registered as joint holders of any share, any one of
then may give an effective receipt for any dividend, bonnses or other moneys
payable in respect of the share.
20.6 No dividend shall bear interest against the Company. Where the dividend to
which a member is entitled includes a fraction of a cent, such fraction shal1
be disregarded in making payment thereof and such payment shall be deared to be
payment in full.
20.7 Any dividend, bonuses or other moneys payable in cash in respect of shares
may be paid by cheque or warrant sent through the post directed to the
registered address of the holder, or in the case of joint holders to the
registered address of that one of the joint holders who is first named on the
register, or to such person and to such address as the holder or joint holders
may direct in writing. Every such cheque or warrant shall be mode payable to the
order of the person to whom it is sent. The mailing of such cheque e or warrant
shall, to the extent of the sum represented thereby (plus the amount of any tax
required by law to be deducted) discharge all liability for the dividend, unless
such cheque or warrant shall not be paid on presentation or the amount of tax so
deducted shall not be paid to the appropriatc taxinq authority.
20.8 Notwithstanding anything contained in these Articles, the Directors may
from time to time capitalize any undistributed surplus on hand of the Company
and may from time to time issue as fully paid and non-assessable any unissued
shares or any bonds, debentures or debt obligations of the Company as a dividend
representing such undistributed surplus on hand or any part thereof.
PART 21
DOCUMENTS, RECORDS AND REPORTS
21.1 The Company shall keep at its records office or at such other place as the
Company Act may permit, the documents, copies, registers, minutes, and records
which the Company is required by the Company Act to keep at its records office
or such other place, as the case nay be.
21.2 The Company shall cause to be kept proper books of account and accounting
records in respect of all financial and other transactions of the Comparry in
order properly to record the financial affairs and condition of the Conpany and
to comply with the Company Act.
21.3 Unless the Directors determine otherwise, or unless otherwise determined by
an ordinary resolution, no member of the Carpany shall be entitled to inspect
the accounting records of the Company.
21.4 The Directors shall from time to time at the expense of the Clompany cause
to be prepared and laid before the Company in general meeting such financial
statements and reports as are required by the Company Act.
21.5 Every member shall be entitled to be furnished once gratis on demand with a
copy of the latest annual financial statement of the Company, and if so
required by the Conpany Act, a copy of each such annual financial statement and
interim financial statement shall be mailed to each member.
PART 22
NOTICES
22.1 A notice, statement or report may be given or delivered by the Company to
any member either by delivery to him personally or by sending it by mail to him,
to his address as recorded in the register of members. Where a notice, statement
or report is sent by mail, service or delivery of the notice, statement or
report shall be deemed to be effected by properly addressing, prepaying and
mailing the notice, statement or report and to have been given on the day,
Saturdays, Sundays and holidays excepted, following the date of mailing. A
certificate signed by the Secretary or other officer of the Company or of any
other corporation acting in that behalf for the Company that the letter,
envelope or wrapper containing the notice, statement or report was so addressed,
prepaid and mailed shall be conclusive evidence thereof.
22.2 A notice, statement or report may be given or delivered by the Company to
the joint holders of a share by giving the notice to the joint holder first
named in the register of maTbers in respect of the share.
22.3 A notice, statement or report may be given or delivered by the Company to
the persons entitled to a share in consequence of the death, bankruptcy or
incapacity of a member by sending it through the Mil prepaid addressed to them
by name or by the title of representatives of the deceased or incapacitated
person or trustee of the bankrupt, or by any like description, at the address
(if any) supplied to the Company for the purpose by the persons claiming to be
so entitled,or (until such address has been so supplied) by giving the notice in
a manner in which the same might have been given if the death, bankruptcy or
incapacity had not occurred.
22.4 Notice of every general meeting or meeting of mexrbers holding a class of
shares shall be given in a manner hereinbefore authorized to every member
holding at the time of the issue of the notice or the date fixed for determining
the nxnbers entitled to such notice, whichever is the earlier, shares which
confer the right to notice of and to.attend and vote at any such meeting. No
other perscn except the auditor of the Company and the Directors of the Conpany
shall be entitled to receive notices of any such meting.
PART 23
RECORD DATES
23.1 The Directors may fix in advance a date, which shall not be more than the
maximum number of days permitted by the Clompany Act preceding the date of any
meting of members or any class thereof or of the payment of any dividend or of
the proposed taking of any other proper action requiring the determination of
members as the record date for the determination of the members entitled to
notice of, or to attend and vote at any such meeting and any adjournment
thereof, or entitled to receive payment of any such dividend or for any other
proper purpose and, in such case, notwithstanding anything elsewhere contained
in these Articles, only members of record on the date so fixed shall be deemed
to be members for the purposes aforesaid.
23.2 Where no record date is so fixed for the determination of members as
provided in the preceding Article, the date on which the notice is mailed or on
which the resolution declaring the dividend is adopted, as the case may be,shall
be the record date for such determination.
PART 24
SEAL
24.1 The Directors way provide a seal for the Ccmpany, and if they do so, shall
provide for the safe custody of the seal which shall not be affixed to any
instrument except in the presence of the following persons, namely:
(i) any two Directors; or
(ii) one of the Chairman of the Board, the President, the Managing Director, a
Director or a Vice-President, together with one of the Secretary, the Treasurer,
the Secretary-Treasurer, or an Assistant Secretary or an Assistant Treasurer, or
an Assistant Secretary-Treasurer; or
(iii) if the Company shall have only one member, the President or the Secretary;
or
(iv) such person or persons as the Directors may from time time by resolution
appoint
and the said Directors, Officers, person or persons in whose presenm the seal is
so affixed to an instrument shall sign such instrument. For the purpose of
certifying under seal true copies of any document or resolution, tbe seal may be
affixed in the presence of any cne of the foregoing persons.
24.2 To enable the seal of the Company to be affixed to any bonds, debentures,
share certificates, or other securities of the Company, whether in definitive or
interim form, on which facsimiles of any of the signatures of the Directors or
officers of the Company are in accordance with the Company Act and/or these
Articles, printed or otherwise mechanically reproduced, they may be delivered
to the firm or company employed to engrave, lithograph or print such definitive
or interim bonds, debentures, share certificates or other securities one or more
unmounted dies reproducing the Company's seal and the Chairman of the Board, the
President,the Managing Director or Vice-President and the Secretary, Treasurer,
Secretary-Treasurer, an Assistant Secretary, an Assistant Treasurer or
an Assistant Secretary-Treasurer may by a document authorize such firm or
company to cause the Company's seal to be affixed to such definitive or interim
bonds, debentures, share certificates or other securities by the use of such
dies. Bonds, debentures, share certificates or other securities to which the
Company's seal has been so affixed shall for all purposes be deemed to be under
and to bear the Company's seal lawfully affixed thereto.
24.3 The Company may have for use in any other province, state, territory or
country an official seal which shall have on its face the name of the
province, state, territory or country where it is to be used and all of the
powers conferred by the Company Act with respect thereto may be xercised by
the Directors or by a duly authorized agent of the Company.
PART 25
PROHIBITIONS
25.1 The number of members shall be limited to fifteen.
25.2 No shares or debt obligations issued by the Company shall be offered for
sale to the public.
25.3 No shares shall be transferred without the previous consent of the
Directors expressed by a resolution of the Board and the Directors shall not be
required to give any reason for refusing to consent to any such proposed
transfer.
PART 26
RESTRICTION ON SHARE TRANSFERS
26.1 No shares in the capital of the Company shall be transferred by any menber,
or the personal representative of any deceased menber or trustee in bankruptcy
of any bankrupt member, or the liquidator of a member which is a corporation,
except under the following conditions:
(a) A person (herein called the "proposing transferor") desiring to transfer any
share or shares in the Ccnpany shall give notice in writing (herein called the
"transfer notice") to the Ccapany that he desires to transfer the same. The
transfer notice shall specify the price, which shall be expressed in lawful
n-oney of Canada, and the terms of payment upon which the proposing transferor
is prepared to transfer the share or shares and shall constitute the Ccnpany his
agent for the sale thereof to any member or members of the Ccnpany at the price
and upon the terms of payment so specified. The transfer notice shall also state
whether or not the prcposing transferor has had an offer to purchase the shares
or any of them from, or proposes to sell the shares or any of them to any
particular perscn or persons who are not mmbers, and if so, the names and
addresses of such persons shall be specified in the transfer notice. The trans
fer notice shall constitute an offer by the proposing transferor to the other
members of the Conpany holding shares of the class or classes included in the
transfer notice and shall not be revocable except with the sanction of the
directors. If the transfer notice pertains to shares of more than cne class,
then the consideration and terms of payment for each class of shares shall be
stated separately in the transfer notice.
(b) The directors shall forthwith upon receipt thereof transmit the transfer
notice to each of the members, other than the proposing transferor, holding
shares of the class or classes set forth in the transfer notice and request the
member to Whcrn the transfer notice is sent to state in writing within 14 days
whether he is willing to accept any, and if so, the maximan number of shares be
is willing to accept at the price and. upon the terms specified in the transfer
notice. A menber shall only be entitled to purchase shares of the class or
classes held by him.
(c) UPon the expiration of the 14 day notice period referred to in Article 26.1
(b), if the directors shall have received from the members entitled to receive
the transfer notice sufficient acceptances to take up the full number of shares
offered by the transfer notice, and if the transfer notice includes shares of
more than one class, sufficient acceptances from the members of each class to
take up the full nunber of shares of each class offered by the transfer notice,
the directors shall thereupon apportion shares so offered among the members so
accepting and so far as maybe, pro rata, according to the number of shares
held by each of them respectively, and in the case of more than one class of
shares, then Pro rata in respect of each class. If the directors, shall not
have received sufficient acceptaxices as aforesaid, they may, but only with the
consent of the proposing transferor, who shall not be obliged to sell to
numbers in the aggregate less than the total number of shares of one or more
classes of shares offered by the transfer notice, apportion the shares so
offered among the members so accepting so far as may be according to the number
of shares held by each respectively, but only up to the amount accepted by such
members respectively. Upon any such apportionment beinq made, the proposing
transferor shall be bound upon payment of the price transfer the shares to the
respective members to whom the directors have apportioned same. If, in any case,
the proposing transferor having become so bound fails in transferring any share,
the Company may receive the purchase money for that share and shall receipt
cause the name of the Purchasing member to be entered in the rcgis-ter as the
holder of the shares and cancel the certificate of the share held by the
proposing transferor, whether the same shall be produced to the Company or not,
and shall hold such purchase when in trust for the prcposuig transferor. The
receipt of the Company for the purchase money shall be a good discharge to the
purchasing member and after his name has been entered in the register, the
validity of the Proceedings shall not be questioned by any person.
(d) In the event that some or all of the shares offered shall not be sold under
the preceding Articles within the 14 day period referred to in Article 26.1 (b),
the proposing transferor shall be at liberty for a Period of 90 days after the
expiraticn of that period to transfer such of the shares so offered as are not
sold to any person, provided that he shall not sell them at a price less than
that specified in the transfer notice or cn term more favourable to a Purchaser
than those specified in the transfer notice.
The provisions as to transfer contained in this Article shall not apply:
(i) if before the proposed transfer of shares is made, the transferor shall
cbtain consents to the proposed transfer from members of the Company, who at
the time of the transfer are the registered holders of two-thirds or more of the
issued shares of the class to be transferred of the Company or if the shares
ccaprised more than cne class, then from the registered holders of two-thirds
or more of the shares of each class to be transferred and such consent shall be
taken to be a waiver of the application to the preceding articles as regards
such transfer; or
(ii) to a transfer of shares desired to be made merely for the purpose of
effectuating the appointment of a new trustee for the owner thereof, provided
that it is proved to the satisfaction of the Board that such is the case.
26.2 Notwithstanding anything contained in these articles, the directors may in
their absolute discretion decline to register any transfer of shares and shall
not be required to disclose their reasons therefor.
Full Name(s), Address(es) and Occupation(s) of Subscriber(s)
James Mercer Munsie
Barrister & Solicitor
#102 - 2130 York Street
Vancouver, B. C.
V6K 1C3
DATED at Vancouver, British Columbia, this 30th day of January 1981.
ORIGINAL WAS
FILED AND REGISTERED
JUL - 6 1983
M. A. Jorre de St. Jorre
REGISTRAR OF COMPANIES
CERTIFIED TRUE COPY
July 6, 1983
B. Beckwith
Assistant Deputy Registrar of Companies
For The Province Of British Columbia.
FORM 21
(Section 371)
PROVINCE OF BRITISH COLUMBIA
Certificate of
Incorporation No. 226,896
COMPANY ACT
SPECIAL RESOLUTION
The following special resolution was passed by the undermentioned
Company on the date stated:
Name of Company: CONSORT ENERGY CORP.
Date resolution passed: June 22, 1983
Resolution:
"RESOLVED, as a special resolution, that the Articles of the
Company be altered by rescinding the existing Articles and
by substituting in their place and stead the Articles annexed
hereto."
Certified a true copy the 4th day of July, 1983.
(Signature)
(Relationship to Company) Solicitor
PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
ARTICLES OF
CONSORT ENERGY CORP.
(AS AMENDED BY SPECIAL RESOLUTION PASSED ON JUNE 22, 1983.)
PART 1
INTERPRETATION
1.01 In these Articles, unless the context otherwise
requires:
(a) "directors" means the directors of the Company for the time being;
(b) "Company Act" means the Company Act of the Province of British Columbia
from time to time in force and all amendments thereto;
(c) "register" means the register of members to be kept pursuant to the Company
Act;
(d) "registered address" of a member means his address as recorded in the
register;
(e) "registered address" of a director means his address as recorded in the
Company's register of directors to be kept pursuant to the Company Act.
1.02 Words importing the singular include the plural and vice versa; and words
importing a male person include a female person and a corporation.
1.03 The definitions in the Company Act on the date these Articles become
effective shall, with the necessary changes and so far as are applicable, apply
to these Articles.
PART 2
SHARES
2.01 The issue of shares shall be under the control of the directors who may
allot or otherwise dispose of the same or grant options to purchase the same at
such times and to such persons or class of persons and in such manner and upon
such terms as they think proper and in particular, but without limiting the
generality of the foregoing, the directors may grant options to purchase and
allot shares to directors, officers or employees for such consideration and at
such price or prices and upon such terms as the directors may determine.
2.02 Any shares without par value may be issued and allotted at such prices and
for such consideration as the directors may determine.
2.03 Shares may be issued and allotted as the consid eration or part
consideration for any property acquired. by or work done for or obligation
undertaken for the Company.
2.04 The Company may at any time pay a commission or allow a discount to any
person in consideration of his subscribing or agreeing to subscribe, whether
absolutely or conditionally, or procuring or agreeing to procure sub scriptions,
whether absolutely or conditionally, for any of its shares, provided the
commission and discount in the aggregate shall not exceed twenty-five per cent
(25%) of the subscription price. The commission or discount may be paid or
satisfied in cash or in shares.
PART 3
SHARE CERTIFICATES
3.01 If a share certificate is defaced, lost or destroyed, it may be replaced
on payment of such fee (if any), not exceeding one dollar ($1.00) and on such
terms (if any) as to evidence and indemnity as the directors think fit.
PART 4
REGISTER OF MEMBERS
4.01 The directors may, subject to the provisions of the Company Act, make such
provisions as they may think fit respecting the keeping of the register of
members or any branch register and for the appointment of registrars and
transfer agents for the purpose of issuing, countersigning,
4.02 The Company may cause to be kept outside British Columbia one or more
branch registers of members.
4.03 Except as required by law, no person shall be recognized by the Company as
holding any share upon any trust, and the Company shall not be bound by or be
compelled in any way to recognize, even when having notice thereof, any
equitable, contingent, future or partial interest in any share or any interest
in any fractional part of a share or, except as by these Articles or by law
otherwise provided, any other rights in respect of any share except in absolute
right to the entirety thereof in the registered holder.
PART 5
TRANSFER OF SHARES
5.01 The instrument of transfer of any. shares of the Company shall be
respectively in such usual or common form as the directors shall approve and
shall comply with the Company Act.
5.02 The transferor shall be deemed to remain the holder of the shares until the
name of the transferee is entered in the register of members in respect thereof.
5.03 The signature of the registered owner of any shares or of his duly
authorized attorney upon the form of transfer endorsed upon the certificate for
the said shares or upon a form of transfer accompanying the said certificate
shall constitute a complete and sufficient authority to the Company, its
directors, officers and agents to register in the name of the person, firm or
company named in the form of transfer as transferee or if no person, firm or
company is named-therein as transferee then in the name of the person, firm or
company in whose behalf the certificate is deposited with the Company for the
purpose of having the transfer registered of all of the shares comprised in the
said certificate or so many thereof as the form of transfer shall state are to
be transferred. Neither the Company nor any director, officer or agent thereof
shall be bound to inquire into the title of the person, firm or company named in
the form of transfer as transferee, or if no person, firm or company is named
therein as transferee, of the person, firm or company in whose behalf the
certificate is presented for the purpose of having the transfer registered or be
liable to any claim by such registered owner or by any intermediate owner of the
certificate or of the shares represented there by for registering the transfer,
and the transfer, when registered, shall confer upon the person, firm or company
in whose name the shares have been registered a valid title to such shares.
5.04 The directors may decline to recognize any instrument of transfer unless
the instrument of transfer is accompanied by the certificate of the shares to
which it relates and such other evidence as the directors may reason ably
require to show the right of the transferor to make the transfer.
PART 6
PURCHASE OF SHARES
6.01 Subject to the special rights and restrictions attached to any class of
shares, the Company may, by a resolution of the directors and in compliance with
the Company Act, purchase any of its shares at the price and upon the terms
specified in such resolution.
PART 7
ALTERATION OF CAPITAL AND SHARES
7.01 Except as otherwise provided by conditions imposed .at the time of creation
of any new shares or by these Articles, any addition to the authorized capital
resulting from the creation of new shares shall be subject to the provisions of
these Articles.
PART 8
BORROWING POWERS
8.01 The directors may from time to time at their discretion authorize the
Company to borrow any sum of money for the purposes of the company and may raise
or secure the repayment of that sum in such manner and upon such terms and
conditions, in all respects, as they think fit, and in particular, and without
limiting the generality of the foregoing, by the issue of bonds or debentures or
any mortgage or charge, whether specific or floating, or other security on the
undertaking or the whole or any part of the property of the Company, both
present and future.
8.02 The directors may make any debentures, bonds or other debt obligations
issued by the Company, by their terms, assignable free from any equities between
the Company and the person to whom they may be issued, or any other person who
lawfully acquires the same by assignment, purchase, or otherwise howsoever.
8.03 The directors may authorize the issue of any debentures, bonds, or other
debt obligations of the Company at a discount, premium or otherwise, and with
special or other rights or privileges as to redemption, surrender, drawings,
allotment of or conversion into shares, attending at general meetings of the
Company and otherwise as the directors may determine at or before the time of
issue.
8.04 If the directors or any of them or any other persons shall become
personally liable for the payment of any sum primarily due from the Company,
the directors may execute or cause to be executed any mortgage, charge or
security over or affecting the whole or any part of the assets of the Company by
way of indemnity to secure the directors or persons so becoming liable as
aforesaid from any loss in respect of such liability.
PART 9
GENERAL AND CLASS MEETINGS
9.01 The general meetings of the Company shall be held at such time and place,
in accordance with the Company Act, as the directors appoint.
9.02 Every general meeting, other than an annual general meeting, shall be
called an extraordinary general meeting.
9.03 The directors may, whenever they think fit, convene an extraordinary
general meeting.
9.04 Notice of a general meeting shall specify the place, the day and the hour
of meeting, and, in case of special business, the general nature of that
business. The accidental omission to give notice of any meeting to, or the
non-receipt of any notice by, any of the members entitled to receive notice
shall not invalidate any proceedings at that meeting.
9.05 If any special business includes the presenting, considering, approving,
ratifying or authorizing the execution of any document, then the portion of any
notice relating to that document is sufficient if it states that a copy of the
document or proposed document is or will be available for inspection by members
at an office of the Company in the Province of British Columbia or at one or
more designated places in the Province during business hours on any specified or
unspecified working day or days prior to the date of the meeting and at the
meeting.
9.06 The provisions of these Articles relating to the call and conduct of
general meetings apply, with the necessary changes and so far as are applicable,
to class meetings and to series meetings, except that the quorum for a class
meeting or a series meeting of the Company shall be one member present in person
or by proxy or (being a corporation) represented in accordance with Section 33
of the Company Act, holding not less than one-third of the shares affected.
PART 10
PROCEEDINGS AT GENERAL MEETINGS
10.01 The following business at a general meeting shall be deemed to be special
business:
(a) All business at an extraordinary general meeting;
(b) All business that is transacted at an annual general meeting, with the
exception of the consideration of the financial statement and the report of
the directors and auditors, the election of directors, the appointment of
the auditors and such other business as, under these Articles, ought to be
transacted at an annual general meeting, or any business which is brought
under consideration by the report of the directors issued with the notice
convening the meeting.
10.02 No business, other than the election of a chairman and the adjournment or
termination of the meeting, shall be conducted at any general meeting at any
time when a quorum is not present. If at any time during a general meeting there
ceases to be a quorum present, any business then in progress shall be suspended
until there is a quorum present or until the meeting is adjourned or terminated,
as the case may be. Save as herein otherwise provided, a quorum shall be one
member present in person or by proxy-or (being a corporation) represented in
accordance with Section 33 of the Company Act, holding not less than one voting
share of the Company.
10.03 If within a half an hour from the time appointed for a general meeting a
quorum is not present, the meeting, if convened upon the requisition of members,
shall be terminated; but in any other case, it shall stand adjourned to the
same day in the next week, at the 'Same time and place, and if, at the adjourned
meeting, a quorum is not present within half an hour from the time appointed for
the meeting, if the quorum for the meeting is one member holding or representing
one voting share, then the meeting shall be terminated, or, if the quorum is
greater than as aforesaid, the members present shall be a quorum.
10.04 Subject to Article 10.05, the Chairman of the Board, or in his absence,
the President of the Company, or in his absence one of the directors present
shall preside as chairman of every general meeting.
10.05 If at any general meeting there is no such officer or director present
within fifteen minutes after the time appointed for holding the meeting or if
the Chairman of the Board and the President and all the directors present are
unwilling to act as chairman, the members present shall choose some one of their
number to be chairman.
10.06 The chairman of a general meeting may, with the consent of any meeting at
which a quorum is present, and shall, if so directed by the meeting, adjourn
the meeting from time to time and from place to place, but no business shall be
transacted at any adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place. When a meeting is adjourned
for ten days or more, notice of the adjourned meeting but not "advance notice"
shall be given as in the case of the original meeting. Except as aforesaid, it
is not necessary to give any notice of an adjournment or of the business to be
transacted at an adjourned general meeting.
10.07 No resolution proposed at a meeting may be put to the vote of the meeting
unless seconded and the chairman of any meeting is entitled to move or propose a
resolution.
10.08 In case of an equality of votes, the chairman shall not, either on a show
of hands or on a poll, have a casting or second vote in addition to the vote or
votes to which he may be entitled as a member.
10.09 In the case of any dispute as the admission or rejection of a vote, the
chairman shall determine the same and his determination made in good faith is
final and conclusive.
10.10 A member entitled to more than one vote need not, if he votes, use all his
votes or cast all the votes he uses in the same way.
10.11 subject to the provisions of Article 10.12, if a poll is duly demanded, it
shall be taken in such manner and at such time, within seven days after the date
of the meeting, and such place as the chairman of the meeting directs. The
result of the poll shall be deemed to be the resolution of the meeting at which
the poll is demanded. A demand for a poll may be withdrawn.
10.12 A poll demanded on a question of adjournment shall be taken at the meeting
without adjournment.
10.13 The demand for a poll shall not, unless the chair man so rules, prevent
the continuance of a meeting for the transaction of any business other than the
question on which a poll has been demanded.
PART 11
VOTES OF MEMBERS
11.01 Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every member present in person
has one vote, and on a poll every member, present in person or by proxy, has one
vote for each share he holds.
11.02 Any person who is not registered as a member but is entitled to vote at
any general meeting in respect of a share, may vote the share in the same manner
as if he were a member; but, unless the directors have previously admitted his
right to vote at that meeting in respect of the share, he shall satisfy the
directors of his right to vote the share before the time for holding the
meeting, or adjourned meeting, as the case may be, at which he proposes to vote.
11.03 Where there are joint members registered in respect of any share, any one
of the joint members may vote at any meeting, either personally or by proxy, in
respect of the share as if he were solely entitled to it. If more than one of
the joint members is present at any meeting, personally or by proxy, the joint
member present whose name stands first on the register in respect of the share
shall alone be entitled to vote in respect of that share. Several executors or
administrators of a deceased member in whose sole name any share stands shall,
for the purpose of this Article, be deemed joint members.
11.04 Subject to Section 183 of the Company Act, a corporation which is a member
may vote by its duly authorized representative who is entitled to speak and
vote, either in person or by proxy, and in all other respects exercise the
rights of a member and that representative shall be reckoned as a member for all
purposes in connection with any meeting of the Company.
11.05 A member for whom a committee has been duly appointed may vote, whether on
a show of hands or on a poll, by his committee and that committee may appoint a
proxyholder.
11.06 Unless the directors otherwise determine, the instrument appointing a
proxyholder and the power of attorney or other authority, if any, under which it
is signed or a notarially certified copy thereof shall be deposited at a place
specified for that purpose in the notice convening the meeting, not less than
forty-eight hours before the time for holding the meeting at which the
proxyholder proposes to vote.
11.07 A vote given in accordance with the terms of an instrument of proxy is
valid notwithstanding the previous death or incapability of the member of
revocation of the proxy or of the authority under which the proxy was executed,
or the transfer of the share in respect of which the proxy is given, provided no
intimation in writing of the death, incapability, revocation or transfer has
been received at the registered office of the Company or by the chairman of the
meeting or adjourned meeting before the vote is given.
11.08 Unless, in the circumstances, the Company Act requires any other form of
proxy, an instrument appointing a proxyholder, whether for a specified
meeting or otherwise, shall be in common form, or in any other form that the
directors shall approve.
PART 12
DIRECTORS
12.01 The directors may exercise all such powers and do all such acts and things
as the Company may exercise and do, and which are not by these Articles or by
statute or other wise lawfully directed or required to be exercised or done by
the Company in general meeting, but subject, nevertheless, to the provisions of
all laws affecting the Company and of these Articles and to any rules, not being
inconsistent with these Articles, which are made from time to time by the
Company in general meeting; but no rule made by the Company in general meeting
shall invalidate any prior act of the directors that would have been valid if
that rule had not been made.
12.02 The number of directors shall be not less than three nor more than fifteen
and shall be from time to time determined by ordinary resolution.
12.03 A director is not required to have any share qualification.
PART 13
RETIREMENT AND ELECTION OF DIRECTORS
13.01 At the first annual general meeting of the Company and at every succeeding
annual general meeting, all the directors shall retire from office but are
eligible for re-election. At every annual general meeting the members shall
fill up the vacated of offices by electing a like number of directors and,
whenever the number of retiring directors is less than the maximum number
for the time being required by or determined pursuant to Article 12.02, they
may also elect such further number of directors if any, as the Company then
determines, but the total number of directors elected shall not exceed that
maximum.
13.02 If, at any general meeting at which an election of directors ought to take
place, the places of the retiring directors are not filled up, such of
the retiring directors as may be requested by the newly-elected directors shall,
if willing, continue in office until further new directors are elected either at
an extraordinary general meeting specially convened for that purpose or at the
annual general meeting in the next or some subsequent year, unless it is
determined to reduce the number of directors.
13.03 If the Company removes any director before the expiration of his period of
office and appoints another person in his stead, the person so appointed shall
hold office only during such time as the director in whose place he is appointed
would have held the office if he had not been removed..
13.04 The directors have power at any time and from time to time to appoint any
person as a director to fill a casual vacancy in the directors. The directors
shall have power at any time and from time to time to appoint one or more
additional directors; but the number of additional directors shall not at any
time exceed one-third of the number of directors elected or appointed at the
last annual general meeting of the Company. Any director so appointed holds
office only until the conclusion of the next following annual general meeting
of the Company, but is eligible for re-election at that meeting.
13.05 A director may, with the approval of the directors, appoint any person,
whether a member of the Company or not, and whether a director of the Company or
not, to serve as his alternate director and as such to attend and vote in his
stead at meetings of directors, and such alternate director shall, if present,
be included in the count for a quorum, and if he be a director, he shall be
entitled to two votes, one as a director and the other as an alternate director.
If the appointing director so directs, notice of meetings of directors shall be
sent to the alternate director and not to the appointing director. An alternate
director shall ipso facto vacate office as an alternate director if and when the
appointing director vacates office as a director or removes the appointee from
office as alternate director, and any appointment or removal under this clause
shall be made in writing under the hand of the director making the same.
PART 14
PROCEEDINGS OF DIRECTORS
14.01 The directors may meet together at such places as they think fit for the
dispatch of business, adjourn and otherwise regulate their meetings and
proceedings as they see fit. The directors may from time to time fix the quorum
necessary for the transaction of business and unless so fixed the quorum shall
be a majority of the directors then in office. The Chairman of the Board, or in
his absence the President of the Company, shall be chairman of all meetings of
the directors; but if at any meeting the Chairman of the Board or the President
is not present within thirty minutes after the time appointed for holding the
meeting, the directors present may choose some one of their number to be
chairman at that meeting. Any two directors may at any time and the Secretary,
upon the request of any two directors, shall, convene a meeting of the
directors.
14.02 The directors, or any committee of directors, may take any action required
or permitted to be taken by them and may exercise all or any of the authorities,
powers and discretions for the time being vested in or exercisable by them by
resolution either passed at a meeting at which a quorum is present or consented
to in writing under Section 149 of the Company Act.
14.03 A director may participate in a meeting of directors or of any committee
of the directors by means of conference telephones or other communications
facilities by means of which all directors participating in the meeting can hear
each other and provided that all such directors agree to such participation. A
director participating in a meeting in acc6rdance with this Article shall be
deemed to be present at the meeting and to have so agreed and shall be counted
in the quorum therefor and be entitled to speak and vote thereat.
14.04 For the first meeting of the directors to be held immediately following
the appointment or election of a director or directors at an annual or other
general meeting of shareholders, or for a meeting of the directors at which a
director is appointed to fill a vacancy in the directors, it is not necessary to
give notice of the meeting to the newly-elected or appointed director or
directors for the meeting to be duly constituted, provided that a quorum of the
directors is present.
14.05 Any director of the Company who may be absent temporarily from the
Province of British Columbia may file, at the registered office of the Company,
a waiver of notice, which may be by letter, telegram, telex or cable, of any
meeting of the directors and may, at any time, withdraw the waiver, and until
the waiver is withdrawn, no notice of meetings of directors shall be sent to
that director, and any and all meetings of the directors of the Company, notice
of which has not been given to that director, shall, provided a quorum of the
directors is present, be valid and effective.
14.06 Questions arising at any meeting of the directors shall be decided by a
majority of votes. In case of an equality of votes, the chairman has a second or
casting vote.
14.07 No resolution proposed at a meeting of directors need be seconded and the
chairman of any meeting is entitled to move or propose a resolution.
14.08 A resolution in writing, signed by each director shall be as valid and
effectual as if it had been passed at a meeting of directors duly called and
held. Such resolution may be in one or more counterparts each signed by one or
more directors which together shall be deemed to constitute one resolution in
writing.
14.09 Not less than forty-eight hours' notice of a meeting of the directors
shall be given in writing by delivery by hand or by telegraph (provided always
that notice shall also be sufficiently given if it is mailed by prepaid post at
least three clear days in advance (exclusive of the day on which the notice is
mailed and exclusive of any Sunday or holiday)) but any director may in writing
waive notice or accept shorter notice. The directors may, by resolution, fix a
regular time and place for meetings, and in that case notice shall be given of
such resolution or resolutions and thereafter no further notice need be given of
such meetings.
PART 15
DIRECTORS - MISCELLANEOUS PROVISIONS
15.01 The remuneration of the directors may from time to time be determined by
the directors.
15.02 The directors shall be repaid such reasonable travelling, hotel and other
expenses as they may incur in and about the business of the Company and if any
director shall be required to perform extra services or should other wise be
specially occupied about the Company's business, he shall be entitled to receive
a remuneration to be fixed by the Board or, at the option of such director,
by the Company in general meeting, and such remuneration may be either
in addition to or in substitution for any other remuneration he may be
entitled to receive, and the same shall be charged as part of the ordinary
working expenses.
15.03 Inasmuch as the directors of the Company are likely to be connected with
other companies, corporations or associations with which from time to time the
Company must or may have business dealings, no contract or other trans action
between this Company and any other company, corporation or association shall be
affected by the fact that directors of the Company are interested in or are
share holders, directors or officers of such other company, corporation or
association.
PART 16
EXECUTIVE AND OTHER COMMITTEES
16.01 The directors may after the annual general meeting of the Company and from
time to time as vacancies occur, elect from among their members an Executive
Committee. The Executive Committee shall consist of not less than two members
but the number of members may be increased or decreased from time to time by
resolution of the directors. The Executive Committee shall advise and aid the
officers of the Company in all matters concerning its interests and the
management of its business and affairs and may (subject to any regulations or
restrictions which the directors may from time to time make or impose) exercise
any and all powers of the directors while the latter are not in session except
power to do any act which must by law be performed by the directors themselves
provided, however, that a report of all acts and proceedings of the Executive
Committee done or had in the- interval between meetings of the directors shall
be made to the next following meeting of the directors for the information
thereof. The Executive Committee shall meet at such times and at such place or
places as shall be determined by the Executive Committee and in accordance with
such rules as may be provided by resolution of the directors. A majority of the
members of the Executive Committee shall constitute a quorum for the transaction
of business, provided that in the event of there being no quorum present at any
meeting of the Executive Committee, any director or directors of the Company who
is or are requested by the chairman of such meeting to attend such meeting shall
have the right to attend and shall thereupon be a member or members of the
Executive Committee for such meeting.
16.02 The members of the Executive Committee shall be entitled to receive such
remuneration for acting as members of the Executive Committee as the directors
may from time to time determine.
16.03 The directors may delegate any, but not all, of their powers to committees
(other than the Executive Committee) consisting of such director or directors
as they think fit. Any committee so formed in the exercise of the powers so
delegated shall conform to any rules that may from time to time be imposed on it
by the directors, and shall report every act or thing done in exercise of those
powers to the earliest meeting of the directors to be held next after it has
been done.
16.04 A committee may elect a chairman of its meetings; if no chairman is
elected, or if at any meeting the chairman is not present within thirty minutes
after the time appointed for holding the meeting, the directors present who are
members of the committee may choose one of their number to be chairman of the
meeting.
16.05 The members of a committee may meet and adjourn as they think proper.
Questions arising at any meeting shall be determined by a majority of votes of
the members present and in case of an equality of votes the chairman shall have
a second or casting vote.
PART 17
OFFICERS
17.01 The directors shall elect from among their members a President and, if
they see fit, may elect a Chairman of the Board and may elect a Vice-Chairman,
either of whom may also be the President, all or any of whom shall hold office
until their successors are elected. Vacancies occurring from time to time in
these offices may be filled by the directors from among their members.
17.02 The directors may designate the Chairman of the Board or the Vice-Chairman
if any, or the President to be the chief executive officer. Failing such
designation the Chairman of the Board or, if there be none, the Vice-Chairman
or, if there be none, the President, shall be the chief executive officer. The
chief executive officer shall, subject to the control of the directors, have
and exercise general supervision over the management and control of the business
and affairs of the Company, its officers and employees.
17.03 The directors from time to time, shall appoint a Secretary and may appoint
one or more vice-Presidents, one of whom may be the chief financial officer,
and such other officers as the directors may determine, including one or more
assistants to any of the officers so appointed, and may determine their duties
and, in the discretion of the directors, in the absence of a written agreement
to the contrary, may remove or suspend them. One person may hold more than one
office.
PART 18
EXECUTION OF INSTRUMENTS
18.01 The directors may provide a common seal for the Company and for its use
and they shall have power from time to time to destroy the same and substitute a
new seal in place of the seal destroyed.
18.02 Subject to the provisions of the Company Act, the directors may provide
for use in any other province, state, territory or country an official seal.
18.03 The directors shall provide for the safe custody of the' common seal of
the Company which shall not be affixed to any instrument except in the presence
of:
(a) any two of the Chairman of the Board or the Vice-Chairman (if any) or the
President or a Vice-President or the Directors or the Secretary; or
(b) such other officers or persons as may be prescribed from time to time by
resolution of the directors; and such officers, directors, and persons
shall sign every instrument to which the seal of the Company is affixed in
their presence.
18.04 To enable the seal of the Company to be affixed to any bonds, debentures,
share certificates, share warrants or other securities of the Company, whether
in definitive or interim form on which facsimiles of the respective
signatures of Chairman of the Board, Vice-Chairman, or the President, or a Vice-
President, and the Secretary are mechanically reproduced there may be delivered
to the firm or company employed to engrave, lithograph or print such definitive
or interim bonds, debentures, share certificates, share warrants or other
securities one or more unmounted dies reproducing the Company's seal and the
President or a Vice-President and the Secretary may by a writing authorize
such firm or company to cause the Company's seal to be affixed to such
definitive or interim bonds, debentures, share certificates, share warrants or
other securities by the use of such dies. Bonds, debentures, share certificates,
share warrants or other securities to which the Company's seal has been so
affixed shall for all purposes be deemed to be under and to bear the Company's
seal as if it had actually been affixed thereto and be valid and binding on the
Company and this notwithstanding that any person whose signature is so engraved,
lithographed or printed as that of the Chairman of the Board, Vice-Chairman,
President, Vice-President or Secretary may have ceased to hold such office at
the date of the issue thereof.
PART 19
DIVIDENDS
19.01 The directors may declare dividends and fix the date of record therefor
and the date for payment thereof.
19.02 Subject to the terms of shares with special rights or restrictions, all
dividends shall be declared according to the number of shares held.
19.03 Dividends may be declared to be payable out of the profits of the Company.
No dividend shall bear interest against the Company.
19.04 A resolution declaring a dividend may direct payment of the dividend
wholly or partly by the distribution of specific assets or of paid up shares,
bonds, debentures or other debt obligations of the Company, or in any one or
more of those ways, and, where any difficulty arises in regard to the
distribution, the directors may settle the same as they think expedient, and in
particular may fix the value for distribution of specific assets, and may
determine that cash payments shall be made to a member upon the basis of the
value so fixed in place of fractional shares, bonds, debentures or other debt
obligations in order to adjust the rights of all parties, and may vest any of
those specific assets in trustees upon such trusts for the persons entitled as
may seem expedient to the directors.
19.05 Any dividend or other moneys payable in cash in respect of a share may be
paid by cheque sent through the post to the member in a prepaid letter, envelope
or wrapper addressed to the member at his registered address, or in the case of
joint members, to the registered address of the joint member who is first named
on the register, or to such person and to such address as the member or joint
members, as the case may be, in writing direct. Any one of two or more joint
members may give effectual receipts for any dividend or other moneys payable or
assets distributable in respect of a share held by them.
19.06 Where the dividend to which a member is entitled includes a fraction of
one cent such fraction shall be disregarded in making payment thereof and such
payment shall be deemed to be payment in full.
19.07 No notice of the declaration of a dividend need be given to any member.
19.08 The directors may, before declaring a dividend, set aside out of the
profits of the Company such sums as they think proper as a reserve or reserves
which shall, at the discretion of the directors, be applicable for meeting
contingencies, or for equalizing dividends, or for any other purpose to which
the profits of the Company may be properly applied, and pending that application
may, at the like discretion, either be employed in the business of the Company
or be invested in such investments, other than shares of the Company, as the
directors may from time to time think fit.
PART 20
ACCOUNTS
20.01 The directors shall cause records and books of accounts to be kept as
necessary to record properly the financial affairs and condition of the Company
and to comply with the provisions of statutes applicable to the Company.
20.02 Unless the directors determine otherwise, or unless otherwise determined
by an ordinary resolution, no member of the Company shall be entitled to inspect
the accounting records of the Company.
PART 21
INDEMNIFICATION
21.01 The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
proceeding, whether or not brought by the Company or by a corporation or other
legal entity or enterprise as hereinafter mentioned and whether civil, criminal
or administrative, by reason of the fact that he is or was a director, officer,
employee, or agent of Company as a director, officer, employee or agent of
another the Company or is or was serving at the request of the corporation, a
partnership,joint venture, trust or other enterprise, against all costs, charges
and expenses, including legal fees and any amount paid to settle the action or
proceeding or satisfy a judgment, if he acted honestly and in good faith with a
view to the best interests of the corporation or other legal entity or
enterprise as aforesaid of which he is or was a director, officer, employee or
agent, as the case may be, and exercised the care, diligence and skill of a
reasonably prudent person, and with respect to any criminal or administrative,
action or proceeding, he had reasonable grounds for believing that his conduct
was lawful; provided that the Company shall not be bound to indemnify any such
person, other than a director, officer or an employee of the Company (who
shall be deemed to have notice of this article and to have contracted with the
Company in terms hereof solely by virtue of his acceptance of such office or
employment), if in acting as agent for the Company or as a director, officer,
employee or agent of another corporation or other legal entity or enterprise as
aforesaid, he does so by written request of the Company containing an express
reference to this article; and provided further that no indemnification of
a director or former director or officer or former officer of the Company, or
director or former director or officer or former officer of a corporation in
which the Company is or was a shareholder, shall be made except to the extent
approved by the Court pursuant to the Company Act or any other statute. The
determination of any action, suit or proceeding by judgment, order, settlement,
conviction or otherwise shall not, of itself, create a presumption that the
person did not act honestly and in good faith and in the best interests of the
Company and did not exercise the care, diligence and skill of a reasonably
prudent person and, with respect to any criminal action or proceeding, did
not have reasonable grounds to believe that his conduct was lawful.
21.02 The Company shall indemnify any person other than a director in respect of
any loss, damage, costs or expenses whatsoever incurred by him while acting as
an employee or agent for the Company unless such loss, damage, costs or expenses
shall arise out of failure to comply with instructions,willful act or default or
fraud by such person in any of which - events the Company shall only indemnify
such person if the directors, in their absolute discretion, so decide or the
Company by ordinary resolution shall so direct.
21.03 The indemnification provided by this Part shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
any other Part, or any valid and lawful agreement, vote of members or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall enure to the benefit of the heirs, executors and administrators
of such person. The indemnification provided by this article shall not be
exclusive of any powers, rights, agreements or undertakings which may be legally
permissible or authorized by or under any applicable law. Notwithstanding
any other provisions set forth in this Part, the indemnification authorized by
this Part shall be applicable only to the extent that any such indemnification
shall not duplicate indemnity or reimbursement which that person has received
or shall receive otherwise than under this Part.
21.04 The directors are authorized from time to time to cause the Company to
give indemnities to any director, officer, employee, agent or other person who
has undertaken or is about to undertake any liability on behalf of the Company
or any corporation controlled by it.
21.05 Subject to the Company Act, no director or officer or employee for the
time being of the Company shall, be liable for the acts, receipts, neglects or
defaults of any other director or officer or employee, or for joining in any
receipt or act for conformity, or- for any loss, damage or expense happening to
the Company through the insufficency or deficiency of title to any property
acquired by order of the Board for the Company, or for the insufficiency or
deficiency of any security in or upon which any of the moneys of or belonging to
the Company shall be invested or for any loss or damages arising from the
bankruptcy, in solvency, or tortious act of any person, firm or corporation
with whom or which any moneys, securities or effects shall be lodged or
deposited or for any loss occasioned by any error of judgment or oversight on
his part or for any other loss, damage or misfortune whatever which may happen
in the execution of the duties of his respective office or trust or in relation
thereto unless the same shall happen by or through his own willful act or
default, negligence, breach of trust or breach of duty.
21.06 Directors may rely upon the accuracy of any statement of fact represented
by an officer of the Company to be correct or upon statements in a written
report of the auditor of the Company and shall not be responsible or held
liable for any loss or damage resulting from the paying of any dividends or
otherwise acting in good faith upon any such statement.
21.07 The directors may cause the Company to purchase and maintain insurance for
the benefit of any person who is or was a director, officer, employee or agent
of the Company or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, a partnership, joint venture,
trust or other enterprise against any liability incurred by him as a director,
officer, employee or agent.
PART 22
NOTICES
22.01 Except as otherwise provided in these Articles, a notice may be given to
any member or director, either personally or by sending it by post to him in a
prepaid letter, envelope or wrapper addressed to the member or director at his
registered address.
22.02 A notice may be given by the Company to joint members in respect of a
share registered in their names by giving the notice to the joint member first
named in the register of members in respect of that share.
22.03 A notice may be given by the Company to the persons entitled to a share in
consequence of the death or bankruptcy of a member by sending it through the
post in a prepaid letter, envelope or wrapper addressed to them by name, or by
the title of representatives of the deceased, or trustee of the bankrupt, or by
any like description, at the address, if any, supplied for the purpose by the
persons claiming to be so entitled, or, until that address has been so supplied,
by giving the notice in any manner in which the same might have been given if
the death or bankruptcy had not occurred.
22.04 Any notice or document sent by post to, or left at, the registered address
of any member, shall, notwithstanding that member is then deceased, and whether
or not the Company has notice of his death, be deemed to have been duly served
in respect of any registered shares, whether held solely or jointly with other
persons by that deceased member, until some other person is registered in his
stead as the member or joint member in respect of those shares, and that service
shall for all purposes of these Articles be deemed a sufficient service of such
notice or document on his personal representatives and all persons, if any,
jointly interested with him in those shares.
22.05 Any notice sent by post shall be deemed to have been served on the day
following that on which the letter, envelope or wrapper containing the same is
posted, and in proving service it is sufficient to prove that the letter,
envelope or wrapper containing the notice was properly addressed and put in a
Canadian Government post office, postage prepaid.
22.06 Notice of every general meeting shall be given in any manner hereinbefore
authorized to:
(a) every member holding a share or shares carrying the right to vote at such
meetings on the record date or, if no record date was established by the
directors, on the date of the mailing of such notice;
(b) every person upon whom the ownership of a share devolves by reason of his
being a legal personal representative or a trustee in bankruptcy of a
member where the member but for his death or bankruptcy would be entitled
to receive notice of the meeting.
No other person is entitled to receive notice of geno meetings.
DATED at Vancouver, British Columbia this
day of 19
Signature of the Subscriber to the Memorandum:
CRYOPAK INDUSTRIES INC.
CONSULTING AGREEMENT
This Consulting Agreement is made and entered into this 1st day of April
1999, by and between C.C.R.I. CORPORATION, a Colorado Corporation ("Consultant')
and CRYOPAK INDUSTRIES INC. (the "Company").
It is agreed as follows:
I. Consultant Services - Consultant hereby agrees to perform and provide a
full range of development services for the Company. Consultant will perform the
Services with the assistance and full participation of Mr. Malcolm McGuire and
his associates. The services will include, but not be limited to, the following:
1. Investor Relations Program:
(a) Preparation of a Corporate Profile, suitable for use with
brokers and investors (research, write, design, print and distribute).
All content is subject to the Company's approval.
(b) Design and implement a Plan for both the short and long term
promotion of investor interest in the Company,
(c) Interface with the investment community on behalf of the
Company, and publicly promote investor interest in the Company in this
setting.
(d) Assist the Company in preparing press releases, upon request,
and introduce the Company to appropriate financial writers and media
persons.
(e) Prepare and distribute FAX pieces designed specifically to
promote interest in the Company (utilizing C.C.R.J.'s broker and
investor FAX NETWORK).
(f) Enlist additional quality market makers for the Company's
stock.
(g) Introduce Company personnel to key persons in the investment
community and to C.C.R.I.s network of brokers, financial planners,
money managers, analysts, and investors. This will include promotional
meetings in select cities,
(h) Include information about the Company in a mailing that will
target 10,000 selected appropriate institutions, brokers, investment
firms and individual investors.
(i) Develop a list of key brokers that can be cultivated on
behalf of the Company and its stock, and seek to enhance the interest
of these brokers in the Company.
<PAGE>
(j) Assist, when requested, in the preparation of presentations
to broker and investor groups.
(k) Provide quality Internet exposure via C.C.R.I.'s Web Site.
(l) Work with Company's officers to develop an ongoing in-house
program for investor relations.
2. Financial Activities.
(a) Assist in identifying financial sources, both domestic and
International.
(b) Introduce Investment Banking Relationships as required and
appropriate.
(c) Work in tandem with the Company to ensure necessary growth
capital as well as the achievemerA of net capital sufficient to
accomplish a NASDAQ listing.
(d) Generally; oversee and facilitate all financing activities.
II. Compensations - Subject to the provision of this Agreement, the Company
shall pay Consultant the following as full compensation for the Services for the
term hereof.
1. Initial Retbiner. The Company shall pay Consultant an initial
retainer of $20,000, payable as c~ the date hereof, as compensation for
Consultant's initial due diligence and - researcl expenses, preparation of
Corporate Profile, mailing of said profile and complete monitoring of
mailing responses, ($10,000 to be paid at the signing of the Contract, and
$10,000 at time profile is approved).
2. Monthly Retainer, The Consultant shall receive a monthly retainer
in the amount of $6,000, but half of the initial 12 month term's retainer
(ie. $36,000) shall be paid up front.
3. Expenses, The Company will reimburse Consultant's reasonable
administrative expenses in performing the Services, payable in arrears on
the Vt day of each month upon Consultant's delivery to the Company of an
itemized statement of such expenses for the previous month, payable up to a
maximum of $2,000 per month, unless otherwise negotiated between Company
and Consultant.
4. Project Expenses. The company shall pay Consultant project expenses
for costs of promotional events and materials, such expenses to be approved
in advance by the Company, and to be payable upon submission by Consultant
to the Company of itemized statements accounting for such expenses, or at
the discretion of the Company, upon the Company's receipt of written
estimates of such expenses. In certain circumstances, the Company will
prepay the consultant's airfare or hotel costs directly as agreed to in
advance by the parties.
<PAGE>
5. Additional Compensation. Consultant shall additionally receive a
Fee equal to 6% of the net proceeds of any financing which are a result of
the Consultant activities, subject to securities regulatory approval.
lll. Related Matters.
1. Corporate Profile. Consultant agrees to produce a full-color
four-page promotional brochure, (cost covered in initial retainer).
2. Mailing. Within forty-five (45) days of the date of this Agreement,
the Consultant shall cause to be mailed certain pre-printed materials
(corporate profile) which shall include an attached card returnable to the
Consultant, encouraging the recipient to request appropriate materials,
created by the Consultant. Cost covered in initial retainer.
3. Prior Approval of Published Materials. Consultant shall provide the
Company for Us review and comment copies of any tangible communications,
whether written or recorded on audio, video or film media, which Consultant
may give to any person in providing the Services. Consultant shall provide
such copies to the Company a minimum of two (2) business days prior to
Consultant's first Proposed use of such materials, or more than five (5)
business days prior if necessary, to provide the Company the opportunity to
make any revisions it deems appropriate and necessary to such materials.
Consultant shall not use material in performing the Services which contain
any statement which is false or misleading; provided that consultant shall
not be responsible for the accuracy or completeness of information
furnished to it in writing by the Company.
4. Nondisclosure of Confidential or Insider Information.
(a) In the course of performance of Consultant's duties,
Consultant may receive information which is considered material inside
information within the meaning and intent of the Canadian provincial
or United States federal securities laws, rules and regulations.
Consultant will not disclose this information to others, except as
expressly authorized by the Company and will not use this information
directly or indirectly for the benefit of Consultant or as a basis for
advice to any other party concerning any decision to buy, sell, or
otherwise deal in the Company's securities or those of any of its
affiliated companies.
(b) The provisions of this Section 4 shall survive the
termination or expiration of this Agreement.
<PAGE>
5. Scope of Engagement Consultant shall retain the legal status of an
independent contractor. In no event shall Consultant be or be deemed to be
an employee or agent of the Company, or to qualify for benefits afforded
such persons as Company employees. Consultant has no power or authority to
act for, represent, or bind the Company.
6. Term. This Agreement shall commence on the date first written
above, and shall terminate on the one-year anniversary of such date, unless
earlier terminated by either party pursuant to the terms hereof. The
Agreement will automatically renew for a second year if not terminated in
writing.
7. Termination. Either party may terminate this Agreement at any time
upon thirty (30) business days' notice. In the event that this Agreement is
terminated by either party prior to the end of the one-year term the
Consultant shall be entitled. to reimbursement of expenses through the date
of termination.
8. Assignment. This Agreement shall be binding upon the parties'
respective successors and permitted assigns. Neither party may assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the other party.
9. Notices. All notices and other official communicaflons under this
Agreement shall be in writing and deemed sufficiently given if delivered
personally or mailed by first class mail, postage prepaid, to (if to the
Company): CRYOPAK INDUSTRIES, INC., Suite 1120 - 625 Howe Street,
Vancouver, British Columbia Canada V6C-2T6 Attention: Harry Bygdnes,
C.E.O.; and (if to Consultant): C.C.R.I. Corporation, 3104 E. Camelback Rd.
#539, Phoenix, AZ 85016, Attention: Malcolm McGuire, or to such other
address as Consultant or the Company may from time to time designate in
writing. Notices shall be effective upon delivery if delivered personally,
and on the third business day after mailing if mailed.
10. Severability. In the event any one or more of the provisions of
this Agreement is determined to be invalid, illegal or unenforceable, the
remaining provisions of the Agreement shall remain in full force and
effect, unless the removal of the provisions of the Agreement so nullified
would render meaningless either party's performance here-under.
11. Headings. The headings used in this Agreement are for the
convenience of the parties only and shall not in any way limit or affect
the meaning or interpretation of any of the terms.
12. Entire Agreement This Agreement constitutes the entire agreement
between the parties with respect to the subject matter embraced hereunder
and except as expressly~, incorporated herein, supersedes all prior
agreements, promises, proposals, representations, understandings and
negotiations, whether written or oral ' between the parties. No
modifications, amendment, supplements, to or waivers of this Agreement, any
of the terms or conditions hereof shall be binding upon the parties or of
any effect unless made in writing and duly signed by both parties.
13. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Arizona, without regard to the
principles of Laws. Consultant agrees to act in the Company's best
interests and to comply with all applicable laws, including securities
laws. In addition, Consultant acknowledges being familiar with Policy 8 of
the Vancouver Stock Exchange.
14. Currency. All currency herein shall be a reference to United
States
Accepted by:
C.C.R.I. Corporation CRYOPAK INDUSTRIES, INC.
By:/s/ Malcom McGuire By:/s/ Harry Bygdnes
- --------------------- --------------------
Malcom McGuire, President Harry Bygdnes, C.E.O.
Date: April 1, 1999 Date: April 1, 1999
EUROPEAN INVESTOR SERVICES LTD
INTERNATIONAL INVESTOR COMMUNICATIONS 1& RELATIONS
CLIENT AGREEMENT
This Public Relations Services Agreement is made on the 5th day of February
1999 between the following parties under the Terms and Conditions set out
hereunder:
1. PARTIES
The parties to this Agreement are:
EUROPEAN INVESTOR SERVICES LTD. (hereinafter known as EIS ), a company
incorporated in the United Kingdom and whose registered office is situated at
17/18 Dover Street, London W1X 4DQ, England
and
CRYOPAK INDUSTRIES INC (hereinafter known as the 'Company'), Whose head office
is situated at Suite 1120-625 Howe Street, Vancouver BC, Canada V6C2T6.
2. WHEREAS
The Company has requested EIS to provide European Investor Relations, and
Financial Media Relations for Cryopak Industries Inc. (the'Company').
3. SERVICES
The following general services will be provided by EIS during the term of this
agreement:
Identifying and maintaining a database of the Target Audience and fostering
an interest in the company by direct liaison, including organizing one to one
meetings, with institutional investment professionals and key private investors.
The opportunity exists to produce a report identifying current shareholders of
company in your sectoral peer group, utilizing our online CDA database at a
reduced cost.
Identifying current major shareholders,analyzing their current attitudes to
your company, and reporting to you on this.
Ensuring on-going contact with the Target Audience and existing investors,
updating them with regular information by telephone, fax and mail, to include
timely distribution of quarterly financials, annual reports, news/press
releases, brokers reports and other relevant corporate information. EIS shall
obtain the company's approval of all written material prior to any distribution
of same.
Providing information to, and raising the company's profile with the
financial media, broadsheets and news agencies and coordinating coverage.
Ensure participation in regional / sectoral survey features. Ensure distribution
of press releases and relevant information to news agencies i.e. Press
Association News, Dow Jones, Reuters, Bloomberg where appropriate, Assess
possibilities for stories in the broadcast media i.e. business radio and
television.
Encourage industry and financial analysts to follow the company and
encourage the production of broker's reports.
Advising on corporate matters including presentation of your corporate
strategy, possibilities for share buy-backs, acquisitions, joint ventures, etc.
Advising on the opportunities and methods of financing available to the company,
and the possibilities and benefits of listing on other exchanges.
Providing representative office in London including use of boardroom, and
general administrative support where necessary.
4. REMUNERATION
EIS will be remunerated as follows:
(i) A Fee of 2,000 (Two thousand pounds) per month or part thereof payable
monthly in advance, commencing on the first day of this agreement, and to cover
day to day time and administrative costs incurred in the performance of the
services, Extraordinary items such as organizing roadshows, providing
promotional literature, arranging mailshots and entertaining clients on
the company's behalf, to be priced separately with the company's prior agreement
or treated as out-of-pocket expenses, subject to the provisions of Clause 4 (ii)
hereunder.
(ii) All travel/subsistence or other out-of-pocket expenses or costs incurred in
the performance of the services with the prior consent of the company being
required for all expense items over 200 (two hundred pounds).
(iii) All other investigatory costs and expenses, undertaken with the prior
consent of the company, including the use of outside consultants and carried out
in good faith in the performance of this Agreement.
(iv) All bought in items are charged to the client at cost plus a 15%
handling charge.
5. CONFIDENTIALITY
Both parties will treat all information provided to the other with the utmost
confidentiality, except as may be required to be disclosed in the reasonable
performance of this Agreement.
6. TERM
This Agreement will take effect on the 5th day of February, 1999 and remain in
force for six months from the date of signing whereupon it may be extended upon
the agreement of both parties. However, the remuneration of 2000 (two thousand
pounds) per month is subject to review after three months upon the written
agreement of both parties.
6.1 TERMINATION
Nonwithstanding any other provision of this Agreement, the Agreement may be
terminated at any time by either Party upon 30 days written notice to the other
Party.
7.GENERAL
Separability
The enforceability or unenforceability of any particular provision of this
Agreement shall not affect the other provisions herein and this Agreement shall
be construed as if such invalid or unenforceable provisions were omitted.
8. LAW
The terms of this Agreement shall be construed and governed in accordance with
the laws of the United Kingdom. EIS agrees to act in the company's best interest
and to comply with applicable laws including securities laws in addition, EIS
acknowledges being familiar with policy 8 of the VSE.
Signed this 5th day of February 1999 by the parties to this Agreement as,
CRYOPAK INDUSTRIES INC (The Company)
- ---------------- Director
EUROPEAN INVESTOR SERVICES (EIS)
- --------------- Director
CRYOPAK INDUSTRIES INC.
1120 - 625 Howe Street
Vancouver, B.C.
V6C 2T6
March 20, 1998
DAVID PATRIQUIN
2306 Folkstone Way
West Vancouver, B.C.
V7S 3C7
Dear Mr. Patriquin:
Re: Guarantee of Lease of Model L-18 Pouch Machine (U.S.$167,285)
We confirm that, in consideration of your above mentioned guarantee, we have
agreed, subject to VSE approval, to pay a bonus to you. The bonus will be
comprised of cash and non-transferable share purchase warrants. The cash
component will be $2,392 per month, payable on the 20th day of each month (or
the first business day thereafter, if the 20th falls on a weekend or holiday).
Once we obtain the necessary VSE approval, any late payments will become
immediate due. This cash bonus will be payable over a maximum of 10 months,
subject to cancellation in the event that we are able to obtain a release of
your guarantee. The remainder of your bonus will be comprised of 119,608
nontransferable share purchase warrants, exercisable for 119,608 common shares
in our capital for a period of two years from the date hereof, at a price of
$0.40 per share in the first year and $0.46 per share in the second year. Upon
VSE approval being obtained, we will issue the full number of warrants, In the
event that we obtain a release of your guarantee, the warrants will expire 30
days later, but the minimum exercise term will nevertheless be one year. The
warrant certificate will be in the form attached hereto as Schedule "A", and
contain the terms, conditions and understandings set out therein.
You acknowledge and understand that no prospectus has been filed by us with the
British Columbia Securities Commission in connection with the proposed issuance
of the warrants, the issuance is exempted from the prospectus requirement of the
Securities Act (British Columbia) (the "Act") or any regulations (the
"Regulations") promulgated pursuant to the Act and that:
(1) you are restricted from using most of the civil remedies available under the
Act and the Regulations;
(2) you may not receive information that would otherwise be required to be
provided to you under the Act and the Regulations; and
(3) we are relieved from certain obligations that would otherwise apply under
the Act and the Regulations.
We both agree to do all further acts and execute all further documents as are
reasonably necessary in order to effectively carry out the intent of this
agreement.
Please confirm by your signature below that the foregoing accurately reflects
the terms of our bonus arrangement.
Yours truly,
CRYOPAK INDUSTRIES INC.
Per:/s/ Harry Bygdnes
- ---------------------
Harry Bygdnes, President
Agreed and Confirmed
/s/ David Patriquin
- -------------------
David Patriquin
<PAGE>
SCHEDULE "A"
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE AND ANY SHARES ACQUIRED
UPON THE EXERCISE THEREOF ARE SUBJECT TO A HOLD PERIOD AND MAY NOT BE TRADED IN
BRITISH COLUMBIA UNTIL THE EXPIRY OF THE HOLD PERIOD EXCEPT AS PERMITTED BY THE
SECURITIES ACT (BRITISH COLUMBIA) AND REGULATIONS MADE UNDER THE ACT. THE HOLD
PERIOD EXPIRES AT MIDNIGHT ON MARCH 20,1999, HOWEVER, PURSUANT TO THE POLICIES
OF THE VANCOUVER STOCK EXCHANGE THE WARRANTS, IF EXERCISABLE FOR A PERIOD OF
MORE THAN ONE YEAR, REMAIN NOW TRANSFERABLE FOR THE BALANCE OF THE EXERCISE
PERIOD.
119,608 Share Purchase Warrants Void After March 20, 2000
SHARE PURCHASE WARRANT CERTIFICATE
CRYOPAK INDUSTRIES INC.
(incorporated under the laws of British Columbia)
THIS IS TO CERTIFY THAT, for value received, David Patriquin (the "Warrant
Holder") of 2306 Folkstone Way, West Vancouver, B.C., V7S 3C7, shall have the
right to purchase from CRYOPAK INDUSTRIES INC. (the "Company"), upon and subject
to the terms and conditions hereinafter referred to, at any time up to 4:00 p.m.
(Vancouver time) on March 20, 2000 (the "Expiry Time") one fully paid and
non-assessable common share of the Company for each warrant represented hereby
at the price of Cdn.$0.40 per share if exercised on or before March 20, 1999 and
Cdn.$0.46 per share if exercised after such date and on or before March 20,
2000. After the Expiry Time this warrant certificate and all rights conferred
hereby shall be void and of no value. In the event that the Company obtains a
release of the Warrant Holder's guarantee of the Company's Model L-18 Pouch
Machine, the Expiry Time shall be the earlier of March 20, 2000 and the date
which is 30 days after the date of obtaining the aforesaid release, but not
earlier than March 20, 1999.
The right to purchase common shares of the Company may only be exercised by the
Warrant Holder within the time hereinbefore set out by:
(a) duly completing and executing the subscription form attached hereto, in
the manner therein indicated;
(b) surrendering this warrant certificate to the Company's Registrar and
Transfer Agent, CIBC Mellon Trust Company, at its principal office in Vancouver,
British Columbia; and
<PAGE>
(c) paying the appropriate purchase price for the common shares of the
Company subscribed for, either in cash or by certified cheque.
Upon surrender and payment, the Company will issue to the Warrant Holder the
number of common shares subscribed for. Within three business days of surrender
and payment the Company will mail to the Warrant Holder a certificate evidencing
the common shares subscribed for. If the Warrant Holder subscribes for a lesser
number of common shares than the number of shares permitted by this warrant
certificate, the Company shall forthwith cause to be delivered to the Warrant
Holder a further warrant certificate in respect of the common shares referred to
in this warrant certificate but not subscribed for.
In the event of any subdivision of the common shares of the Company as such
shares are constituted on the date hereof, at any time while this warrant
certificate is outstanding, into a greater number of common shares, the Company
will thereafter deliver -at the time or times of purchase of the shares
hereunder, in addition to the number of shares in respect of which the right to
purchase is then being exercised, such additional number of shares as result
from such subdivision without any additional payment or other consideration
therefore.
In the event of any consolidation of the common shares of the Company as such
common shares are constituted on the date hereof, at any time while this warrant
certificate is outstanding, into a lesser number of common shares, the number of
shares represented by this warrant certificate shall thereafter be deemed to be
consolidated in like manner and any subscription by the Warrant Holder for
shares hereunder shall be deemed to be a subscription for shares of the Company
as consolidated.
In the event of any reclassification of the common shares of the Company, or
amalgamation with or into any other company, at any time while this warrant
certificate is outstanding, the Company shall thereafter deliver at the time of
purchase of shares hereunder the number of shares of the appropriate class
resulting from the reclassification, or the number of shares of the resulting
company, as the Warrant Holder would have been entitled to receive in respect of
the number of shares so purchased had the right to purchase been exercised
before such reclassification or amalgamation.
If at any time while this warrant certificate is outstanding the Company shall
pay any stock dividend upon the common shares of the Company in respect of which
the right to purchase is herein given, the Company shall thereafter deliver at
the time of purchase of shares hereunder, in addition to the number of shares in
respect of which the right to purchase is then being exercised, the additional
number of shares of the appropriate class as would have been outstanding on the
record date for the payment of the stock dividend.
<PAGE>
The holding of this warrant certificate or the warrants represented hereby shall
not constitute the Warrant Holder a member of the Company.
Time shall be of the essence hereof.
This warrant certificate shall not be valid for any purpose whatsoever until it
has been countersigned by or on behalf of the Company's Registrar and Transfer
Agent.
IN WITNESS WHEREOF THE COMPANY has caused this warrant certificate to be issued
by its duly authorized signatory.
CRYOPAK INDUSTRIES INC. CIBC MELLON TRUST COMPANY
By: /s/ Harry Bygdnes By: /s/
- --------------------- -------------------------
Authorized Signatory Authorized Signatory
DATE: April 20, 1999
<PAGE>
SUBSCRIPTION FORM
CIBC MELLON TRUST COMPANY
Concourse Level
1177 West Hastings Street
Vancouver, B.C.
V6E 2K3
Dear Sirs/Mesdames:
The undersigned hereby exercises the right to purchase and hereby subscribes for
_______________ common shares in the capital of CRYOPAK INDUSTRIES INC. referred
to in the warrant certificate surrendered herewith according to the conditions
thereof and herewith makes payment by cash or certified cheque of the purchase
price in full for the said shares.
Please issue a certificate for the shares being purchased as follows in the name
of the undersigned:
NAME:_______________________________
(please print)
ADDRESS:____________________________
____________________________________
____________________________________
Please deliver a warrant certificate in respect of the common shares referred to
in the warrant certificate surrendered herewith but not presently subscribed
for, to the undersigned.
DATED this ____ day of ____________, 19__.
_______________________________
(signature)
<PAGE>
CANADIAN WESTERN BANK
MASTER LEASE AGREEMENT DATED: MARCH 11, 1998
--------------
BETWEEN:
CANADIAN WESTERN BANK, a body corporate having an office at #401,
15127 100th Avenue Surrey, D.C. V3R ON9
("Lessor")
AND:
CRYOPAK INDUSTRIES, INC. a body corporate under the laws of BRITISH
COLUMBIA having an office at 1120-625 HOWE STREET, VANCOUVER B.C.
("First Lessee")
1. Lease, Lessor leases to Lessee. and Lessee leases from Lessor, all property
("Equipmenr) described In an present and future schedules to this Lease
("Schedules"). The term of lease for each Item of Equipment fferm") commences on
the dale specified In the relevant Schedule and continues to the specified
expiry date, The rent for each Item of Equipment Is the amount designated In the
Schedule Including any Interim or prepaid rent and 99 applicable sal6s, use,
value added, goods and services or similar taxes rRent"). Lessee will pay Rent
as provided In each Schedule free of offset or counterclaim. No prepayment may
be made without Lessor's written consent.
2. Use. Equipment will be kept by Lessee at the location specified In the
Schedule. Lessee will not give up possession of (except for repair) nor
transfer, nor sublet the Equipment nor assign or encumber this Lease nor remove
the Equipment from the Province without Lessor's prior written consent. Lessee
will not permit the Equipment to be used by anyone other than Lessee or Its
employees. Lessee shall comply with all manufacturer's and dealer's manuals or
Instructions, all Insurers' requirements and all laws In any way relating to the
possession, use or maintenance of the Equipment. Lessee will keep the Equipment
free of any environmental contamination or other hazardous or toxic substances
and cause the Equipment to be transported, used and maintained so as not to
cause, either directly or Indirectly, any environmental contamination or other
hazardous or toxic condition. Lessor may during business hours enter the
premises where the Equipment Is located to Inspect the Equipment or observe Its
use. Lessee will give Lessor Immediate notice of any seizure, attachment lien or
other judicial process affecting any Equipment and, on request, advise Lessor of
the exact location of the Equipment. Lessee will use the Equipment for business
purposes only. Lessee will keep the Equipment free of Hens and encumbrances and
pay all fees, assessments, Ones and taxes arising In respect of ownership,
lease, rental, sale, possession, use or operation of Equipment.
3. Installation, Maintenance and Repairs. Lessee is responsible for delivery,
Installation, de-installation, re-delivery, maintenance and repair of
the.Equipment by parties acceptable to Lessor. Lessee will keep the Equipment In
good repair, condition and mechanical working order. Lessee will not make any
alterations to the Equipment which diminish Its value. All additions and
Improvements will be Lessor's property. Lessee will, unless Lessor otherwise
directs, return the Equipment at Its expense to the location Lessor specifies at
the expiration or termination of the Term In good condition, ordinary wear and
tear resulting from proper use excepted.
4. Loss. Lessee assumes the entire risk of loss with respect to any damage.
destructioti, loss or theft of Equipment, whether or not through Lessee's
default or neglec(and Lessee's obligations under this Lease will not be affected
by any such damage, destruction, loss or theft. In the event of any damage,
destruction, loss or theft of Equipment. Lessee will Immediately pay Lessor as a
genuine pre-estimate of liquidated damages, the "Present Value" (as defined In
paragraph 10.3(a)).
S. Insurance. Lessee will Insure throughout the Term the Equipment against loss,
theft, destruction or damage from any cause whatsoever. together with
comprehensive general liability Insurance, In form, for amounts and with
Insurers acceptable to Lessor. Each Insurance policy will name Lessor and Lessee
as Insured, name Lessor as loss payee and contain a clause providing that the
policy will not be cancelled or altered without at least 15 days prior written
notice to Lessor. Lessee will deliver to Lessor all Insurance policies with
premiums prepaid, or provide evidence satisfactory to Lessor that such Insurance
Is In place, an or before the date of delivery of Equipment. Lessee will deliver
to Lessor, prior to expiration of any policy, proof of renewal satisfactory to
Lessor. Lessee will Immediately advise Lessor of all accidents Involving
Equipment and all claims made of actions commenced In respect of Equipment, and
forward all correspondence and legal process In respect thereof to the Insurer
with copies to Lessor. 11 loss or damage occurs and Lessee Is not In violation
of the terms of any such policy and no Event of Default has occurred Lessor will
pay Lessee any Insurance proceeds received by Lessor In excess of the amount
owing under paragraph 4.
6. Lessor's Performance. If Lessee falls to perform any obligation, Lessor may,
but Is not obligated to, perform such obligation and any amount expended by
Lessor will be paid by Lessee to Lessor on demand.
<PAGE>
7. Miscellaneous. If more than one Lessee is named In this Lease, their
liability Is joint and several. Lessee will execute all documents and do all
things Lessor reasonably requires to give effect to this Lease. If a provision
of this Lease Is wholly or partially Invalid, at Lessor's option this Lease will
be Interpreted as If the Invalid provision was excluded. Time Is of the essence
of this Lease. This Lease and Its Schedules are governed by the laws of the
Province where the Equipment Is located and Lessee attoms to the non-exclusive
Jurisdiction or the Courts of such Province. The terms and conditions contained
In the attached Schedule, and any subsequent Schedules, are hereby Incorporated
by reference In this Agreement. This Lease and the Schedules constitute the
entire agreement between Lessor and Lessee and may only be amended by written
agreement. Lessee acknowledges receipt of a copy of this Lease and waives all
right to receive copies of any financing statement, financing change statement,
verification statement or other filing with respect to this Lease. any Schedule
or any amendment or supplement thereto.
8. Successors and Assigns. This Lease enures to the benefit of and Is binding
upon the parties and their successors and permitted assigns. This Lease and the
Equipment may be transferred and assigned by Lessor without Lessee's consent and
Lessee accepts such transfer and assignment and waives notice thereof. Lessor,
If not CANADIAN WESTERN BANK, transfers and assigns Its right, title and
Interest In and to this Lease and the Equipment to CANADIAN WESTERN BANK and
directs Lessee to make all payments and give all notices to CANADIAN WESTERN
BANK, #401, 151127-100th Ave., Surrey, B.C. V3R ON9 Notwithstanding any transfer
and assignment by Lessor, such Lessor and not the assignee. unless agreed
between such Lessor and tho assignee, will continue to be bound to perform
Lessor's obligations.
9. LESSEE CONSENTS TO AND AUTHORIZES LESSOR AND ANY POTENTIAL ASSIGNEE
OBTAINING INFORMATION ABOUT LESSEE FROM ANY CREDIT REPORTING AGENCY OR ANY OTHER
PERSON.
20. The Lessee hereby waives its rights under SA8 of The Limitation of Civil
Rights Act, RSS 1978, c. L-6 and all similar rights under similar or replacement
legislation.
CANADIAN WESTERN BANK (Lessor)
CRYOPAK INDUSTRIES, INC.
- ------------------------
(Print Name of First Lessee)
Per:/s/
- ---------------------------
(Authorized Signatory)
Per: /s/
- ---------------------------
(Authorized Signatory)
LEIGH JEFFS DIRECTOR
- ---------------------
Print Name and Title
<PAGE>
CANADIAN WESTERN BANK
SCHEDULE NO. 1
TO MASTER LEASE AGREEMENT DATED MARCH 11, 1998 (Lessor leases to Lessee the
Equipment described below, on The terms and conditions of this Schedule and the
Master Lease Agreement.)
QUANTITY MANUFACTURER/ MODEUSERIAL EQUIPMENT
DESCRIPTION NO. COST
- -------- ----------- --- ----
1 WINPAK LANE MODEL L-18 POUCH MACHINE S/N#182222 $358,825.61
EQUIPMENT LOCATION: British Columbia
----------------
TERM AND RENT PROVISIONS
LEASE TERM: COMMENCEMENT DATE: March 20, 1998
EXPIRY DATE: July 20, 2002
RENT PERIOD: Monthly
RENT PROVISIONS: A. EQUAL PAYMENTS: PERIOD BASE RENT: $ 8,397.48
PST: $ 587.82
GST: 587.82
TOTAL RENTAL PAYMENTS: $445,066.44
(plus applicable taxes)
PLUS, EXCLUSIVE OF TAXES, ONE-TIME ADMINISTRATION FEE: $_________________
B. VARIABLE (As set out In (he schedule below):
NO. OF PAYMENTS PERIOD BASE NO.OF PAYMENTS PERIOD BASE
RENT RENT
Plus applicable Provincial Sales Tax and Goods and Services Tax and one-time
Administration fee of $_________
PREPAID RENT: NUMBER: One AMOUNT: $9,573.12
PAYMENTS
Lessee will pay all Rent to Lessor In advance on the _____ day of each Period of
the Term at Lessor's address In the Master Lease Agreement or as Lessor
otherwise designates In writing. All payments shall be by cheque or bank draft
or by payments drawn from a specified account of Lessee pursuant to a
Pre-authorized Payment Debit delivered by Lessee to Lessor. If, between
execution date and Commencement Date, thereference rate used by Lessor to
calculate Rent based on the Equipment's purchase price changes, Rent will be
adjusted correspondingly. as specified by Lessor to Lessee during the Term's
first Period.
ADJUSTMENT OF PAYMENTS (LEASE BASED ON A FLOATING INTEREST RATE
Each rental payment shall be adjusted to reflect any Increases or decreases in
the Prime Rate. For the purpose of this adjustment the Lessor's starting rate of
return on this lease Investment is n/a % per annurn above the Lessor's Prime
Rate of n/a%. as at the late of this Schedule. Whenever rental payments are to
be adjusted as herein provided. such adjustments shall be made as of the last
Panking day of each month In each calendar quarter of the term of this Schedule,
so as to reflect the Prime Rate as of that day. The idjustment on each rental
payment due during the next succeeding month shall be calculated and payable at
such adjusted rate. The total of all such adjustments, together with applicable
provincial sales tax, If any, and goods and services tax, shall be paid each
calendar quarter and upon issue of a notice or billing by the Lessor. Such
payment shall be made by the Lessee or the Lessor, depending on whether there is
a net Increase or decrease In the rental payments for the preceding calendar
quarter, and the final rental payment shall reflect any such remaining
adjustments. The Lessor may, however, In lieu of a payment to the Lessee in
respect of such adjustment payment, issue a credit quote for the amount of such
adjustment, to be applied first to any arrears of rental and then against the
next rental payment(s) becoming due under this Schedule. The Lessee hereby
acknowledges It may obtain from The Lessor upon request confirmation of its
Prime Rate during he term of payment hereunder and waives further notice of such
Prime Rate.
INTERIM RENT
From and Including the date on which Lessee signs the Delivery and Acceptance
Certificate to the Date (he first full Instalment of Rent becomes due, (unless
otherwise agreed by Lessor) Lessee shall pay an Interim Rent calculated by
dividing the Period Base Rent by an mount equal to 30 multiplied by the number
of days In a Period and multiplying the result by the number of days from and
Including (lie ate of the Delivery and Acceptance Certificate to, but not
Including the first day of the first Period.
<PAGE>
PREPAID RENT
Lessee will pay Lessor on the Commencement Date any Prepaid Rent specified
above, such Prepaid Rent being deemed to be received by Lessor as a condition
precedent to the obligations of Lessee and not as a deposit or security to
compensate Lessor for damages. All Prepaid Rent remains Lessor's property and Is
not refundable to Lessee. Prepaid Rent will be applied against Rent payments In
inverse order of maturity if the Lease remains In force and In good standing;
otherwise Prepaid Rent may be applied by Lessor against any amounts owing under
the Master Lease Agreement.
OPTION TO PURCHASE
PURCHASE PRICE: $ 35,882.56 PURCHASE DATE:MARCH 20, 2002
Lessor grants Lessee options to purchase Lessor's title to the Equipment at The
Purchase Price and on the Purchase Date specified above or at a Purchase Price
of the Equipment's fair market value (as determined by Lessor) on a Purchase
Date of the last day of the Term. An option may be exercised by Lessee giving
notice to Lessor of Its Intention to exercise the option at least 30 days before
the Purchase Date. It Is a condition precedent to Lessor's obligations that, at
the time of such notice and on the Purchase Date there be no Event of Default or
any event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default. The giving of such notice shall constitute a
binding agreement for the sale and purchase of the Equipment on the terms and
conditions provided herein. The Equipment will be sold on an "as Is where Is"
basis free of warranties or representations, express or implied, as to
durability, marketability, suitability, quality or condition of the Equipment.
The Purchase Price will be paid to Lessor on the Purchase Date and Lessee shall
bear the cost of any federal or provincial taxes, license or registration fees
or other assessments or charges Imposed on or connected with the sale of the
Equipment. It Lessee exercises neither option, (file shall remain with Lessor
and Lessee shall return the Equipment as provided by the Lease.
Lessee and Lessor have executed this Schedule on the respective dates set out
below and this Schedule shall be deemed to have been executed on the later of
such dates.
CANADIAN WESTERN BANK (Lessor)
CRY0PAK INDUSTRIES, INC.
- ------------------------
(Print Name of First Lessee)
Per: /s/
- --------------------------
(Authorized Signatory)
Per: /s/
- --------------------------
(Authorized Signatory)
LEIGH JEFF DIRECTOR
- -----------------------
PRINT NAME AND TITLE
<PAGE>
AMENDMENT OF LEASE
THIS LEASE AMENDMENT AGREEMENT dated as of this 27th day of February, 1998.
BETWEEN:
THE STANDARD LIFE ASSURANCE COMPANY
# 1025 - 625 Howe Street
Vancouver, British Columbia
V6C 2T6
(the "Landlord")
AND:
CRYOPAK INDUSTRIES INC.
#1120 - 625 Howe Street
Vancouver, British Columbia
V6C 2T6
(the "Tenant")
WITNESSES that in consideration of the sums of $1.00 now paid by each of
the Landlord and Tenant to the other and other good and valuable consideration,
the receipt and sufficiency of which each of the Landlord and Tenant hereby
acknowledges, the Landlord and Tenant agree that:
1. DEFINITIONS. In this Agreement:
(a) "Building" means the building(s) located on the lands described in Schedule
(b) "Effective Date" means November 1, 1997.
(c) "Lease" means that certain lease of the Premises granted by the Landlord or
its predecessor-in-title to the Tenant or its predecessor-in-title dated as
of July 2, 1992; Amendment of Lease dated February 24,1993; and Renewal of
Lease dated October 24, 1997.
<PAGE>
(d) "Premises" mean those certain premises which are the subject of the demise
under the Lease and which are situated in the Building.
(e) other words which are initially capitalized herein will have the meanings
given to them in the Lease.
2. AMENDMENT. From and after the Effective Date, the Lease will be amended as
set out in Schedule "B" which will form part of this Agreement.
3. CONTINUING EFFECT. The Lease, as herein amended, will continue in full force
and effect.
4 GOVENANTOR. if any person, firm ef corporation guaranteed or covenanted the
Tenant's obligations under the Lease, the Tenant will cause such person, firm or
corporation to execute and deliver to the Landlord the confirmation attached as
Schedule "C" concurrently with the Tenant's execution and delivery of this
Agreement to the Landlord
5. ENURING EFFECT. This Agreement will enure to the benefit of and be binding
upon the Landlord and Tenant and their respective heirs, executors,
administrators, successors, and permitted assigns.
<PAGE>
IN WITNESS WHEREOF the Landlord and Tenant have executed this Agreement as
of the day and year first above written.
The Standard Life Assurance Company
per: /s/
- --------------------
Authorized Signatory
If the Tenant is a corporation:
The corporate seal of Cryopak Industries )
Inc. was hereunto affixed in the presence of: )
)
per: /s/ )
- ---------------------------- )
Authorized Signatory )
)
per: /s/ )
- ---------------------------- )
Authorized Signatory )
<PAGE>
SCHEDULE A
Description of Land:
ALL AND SINGULAR those certain premises situate, lying and being in the City of
Vancouver, in the Province of British Columbia, and more particularly described
as follows:
Lot D
Block 41
District Lot 541
Plan 15917
<PAGE>
SCHEDULE B
Amendments of Lease:
1. Delete the following Clauses of the Amendment of Lease dated February 24,
1993 and replace with:
1. Schedule "B" - Clause 1
(i) Part 1, 7(r) "Premises" mean the office space located on the eleventh
(11th) floor of the Building consisting of 2,039 rentable square feet more
or less, and outlined in red on the floorplan attached as Schedule "C".
(ii) Part 1, 7(t) "Share" means 1.5532% being the Tenant's portion of
Operating Costs and Taxes and being the proportion that the rentable area
of the Premises bears to the rentable area of the Building.
HAY & WATSON
CHARTERED PUBLIC ACCOUNTANT
September 10, 1999
CONSENT OF INDEPENDENT AUDITOR
As the independent auditor for Cryopak Industries, Incorporated, I hereby
consent to the incorporation by reference in this Form 20F Statement and any
amendments thereto of my report, relating to the financial statements and
financial statement schedules of Cyropak Industries, Incorporated for the years
ended Narch 31, 1999, 1998 and 1997 included on Form 20F and amendments. Reports
are dated June 11, 1999 for the year ended March 31, 1998.
I further consent to the incorporation of my review report and financial
statements by reference in the Form 20F and amendments thereto. These statements
cover the period for March 31, 1999 and 1998 (report date of June 11, 1999).
/s/ Hay & Watson
----------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> MAR-31-1999 MAR-31-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998
<CASH> 640,299 3,417
<SECURITIES> 75 25,442
<RECEIVABLES> 360,783 217,677
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 429,652 416,945
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 2,036,700 1,364,297
<CURRENT-LIABILITIES> 276,966 532,440
<BONDS> 0 0
0 0
530,000 530,000
<COMMON> 9,682,451 7,362,318
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 2,036,700 1,364,297
<SALES> 1,295,159 1,161,442
<TOTAL-REVENUES> 0 0
<CGS> 746,285 763,018
<TOTAL-COSTS> (782,539) (539,951)
<OTHER-EXPENSES> 129,529 98,602
<LOSS-PROVISION> (912,068) (638,553)
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (912,068) (638,553)
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
SMART& BIGGAR
BARRISTERS & SOLICITORS
P.O. BOX 2999, STATION 0
55 METCALFE STREET, SUITE 900
OTTAWA, CANADA KIP 5Y6
TELEPHONE: (613) 232-2486
TELEX: 053-3731
FACSIMILE: (613) 232-8440
OUR FILE No. 74018-1 November13, 1991
LETTERS PATENT
--------------
COUNTRY: CANADA
NUMBER: 1,291,073
DATE: OCTOBER 22, 1991
TERM: SEVENTEEN YEARS EXPIRES
OCTOBER 22, 2008
PATENTEE: D. LINDLEY HENRY
INVENTION: THERMAL PACKAGING ASSEMBLY
TAXES DUE: OCTOBER 22, 1993 AND YEARLY
THEREAFTER
WORKING: NOT NECESSARY
<PAGE>
Consumer and
Corporate Affairs Canada
Patent Office
- --------------------------------------------------------------------------------
Canadian Patent
N0.1291073
To all to whom these presents shall come:
Whereas a petition has been presented to the Commissioner of Patents praying for
the grant of a patent for a new and useful invention, the title and description
of which are contained in the specification of which a copy is hereunto attached
and made an essential part hereof, and the requirements of the Patent Act having
been complied with.
Now therefore the present patent grants to the appli-cant whose title thereto
appears from the records of the Patent Office and as indicated in the said copy
of the specification attached hereto, and to the legal representatives of said
applicant for a period of seventeen years from the date of these presents the
exclusive right, privilege and liberty of making, constructing, using and
vending to the others in Canada the invention, subject to adjudication in
respect thereof before any court of competent jurisdiction.
Provided that the grant hereby made is subject to the conditions contained in
1he Act aforesaid.
All patents are subject to annual maintenance fees subsequent to the modified
Patent Act.
In testimony whereof, these letters patent bear the signature of the
Commissioner and the seal of the Patent Office hereunto affixed at Hull, Canada.
This Patent was issued on:
[SEAL]
Date OCT 22 1991
-----------
/s/
-----------------------------------
Commissioner of Patents
/s/ D. Headrick
-----------------------------------
Attesting Officer
<PAGE>
Consommation Consumer and
et Corporations Canada Corporate Affairs Canada
Bureau des brevets Patent Office
Ottawa, Canada (11) (c) 1,291,073
K1A OC9
(21) 544,403
(22) 1987/08/13
(45) 1991/10/22
(52) 217-6
5
(51) INTL.CL. B65D-81/18
(19) (CA) CANADIAN PATENT (12)
(54) Thermal Packaging Assembly
(72) Henry, D. Lindley U.S.A.
(73) Same as inventor
(57) 11 Claims
<PAGE>
THERMAL PACKAGING ASSEMBLY
BACKGROUND OF THE INVENTION
The, present invention relates to thermal packaging assemblies for any
items which are to be packed ina thermally controlled environment for extended
periods of time, such. as foodstuffs, beverages, plants, other biological.
materials, medicines or other chemicals, temperature sensitive electronic
equipment, tissue specimens, and so on.
The use of refrigerants to keep items or products cool over extended
periods of time is widespread, both for transportation of heat sensitive or heat
damageable products and for long term storage of such products. Refrigerators
and refrigerated transport systems can be used on the large scale for storage
and transportation, but less massive and expensive coolant systems are required
for smaller scale purposes, for example short haul delivery systems, airline
transportation, and home and recreational cooling of foods, beverages and the
like.
The packing of temperature sensitive products such as foodstuffs,
pharmaceuticals, plants, biological materials and the like in ice or dry ice to
maintain their temperature over a prolonged period of time is well known and has
been used extensively for many years. For example, the general public widely
uses insulated containers or cool boxes packed with ice to maintain foodstuffs
and beverages cool when camping, travelling or on picnics and the like.
Commercially, ice is used in packing foodstuffs, flowers, plants and the like
for transportation and storage until sold or until placed in a refrigerator
in, a store, for example.
<PAGE>
In the medical field, ice is used to reduce trauma, swelling and pain from
injuries of all kinds, and is also used in transportation and storage of
blood, tissue organs, pharmaceuticals and the like. Ice or dry ice is also
used in transport and use of heat sensitive equipment or instruments, and
ice baths and controlled chemical reactions.
The use of ice or dry ice as a coolant material serves a preservative in
many cases and inhibits the growth of many harmful micro-organisms. Another
coolant in common use, particularly in cool boxes used for recreational
purposes, is the so-called "blue ice", which is a block or bag of coolant
material which is frozen solid before being placed in a container such as a cool
box to maintain foodstuffs or drinks in the container cool for extended periods
of time.
The major drawback to the use of ice as a coolant material is that it melts. The
space taken up by the ice when melted will be less than when it is frozen, so
that it will no longer be an effective packing material. The melted ice is
easily contaminated by microorganisms and, since it will be in intimate contact
with the products it is protecting, these are also liable to become
contaminated. They may also be damaged by getting wet. If the products to be
protected cannot tolerate wetness, they must be protected from melted ice in
some way, for example by the use of raised shelves in cool boxes for placing
foodstuffs above the level of the ice or by some sort of waterproof packaging
before they are packed in the ice.
<PAGE>
The melted ice will also allow the products to move or slosh around in the
container, risking damage by impact with the walls of the container. The
container itself must also be waterproof.
Dry ice has similar problems, in that it is converted into CO 2 with time
and thus the gas must be dissipated and the product will no longer be packed
against movement in its container. Both water and dry ice can be used only once,
adding to the expense of thermal storage.
In contrast, blue ice can be used repeatedly by refreezing the contents of
the bag or block, but is brick hard when frozen into a solid block and is unable
to conform to the shape of products to be kept cool in this state. Thus it does
not maintain good contact with unevenly shaped products over a large portion of
their surface area. It will become soft and pliable as the material melts within
the bag.
Neither ice nor "blue ice" is shock absorbent when activated or frozen and
they are therefore not ideal packaging materials, particularly of relatively
fragile items or articles of complex and non-uniform shapes.
SUMMARY OF THE INVENTION
According to the present invention there is provided a thermal packaging
assembly, comprising
an outer container;
a plurality of separate reusable capsules in said each container each
capsule comprising a continuous outer skin of flexible plastics material and a
thermal controlling agent completely filling the capsule, the agent being a
liquid in a predetermined temperature range, and freezable into a solid phase
prior to use in the packaging assembly;
<PAGE>
said outer container comprising means for packing the capsules around one
or more items to be packed, the container having an opening for receiving the
capsules and items to be packed;
the capsules each being of identical shape and dimensions and each having
opposed sloping, curved outer surfaces for resisting close packing against
adjacent capsules in the packaging assembly and for forming air gaps between
each capsule and.the next adjacent capsules;
the capsules comprising means for cushioning an item or items around which
they are packed, means for absorbing shocks by moving freely relative to one
another and means for maintaining a predetermined temperature range for an
extended period of time.
The invention further provides a thermal packaging material for wrapping
around an item or items, comprising:
a continuous sheet containing a plurality of rows of adjacent reusable
capsules, each containing a thermal controlling agent which completely fills the
capsules, each row being separate from the next adjacent row by a first set of
spaced seal lines and the capsules in each row being separate from one another
by a second set of spaced seal lines perpendicular to the first set;
each capsule having a generally rectangular outer periphery and opposing
curved outer surfaces on the upper and lower face of the sheet;
the thermal controlling agent being a liquid in a predetermined temperature
range and frozen into a solid phase having malleable characteristics prior to
use in the packaging assembly; and
<PAGE>
the sheet being selectively bendable when the agent is solidified along
both sets of perpendicular seal lines to completely wrap around an item to be
packed and an outer enclosure releasably enclosing said sheet.
The invention additionally provides a thermal packaging assembly,
comprising:
a plurality of pillow-shaped hollow capsules of flexible plastics material
each containing a reusable thermal controlling 10 agent elected from the group
consisting of an aqueous solution of 3% by weight polyethylene glycol having a
molecular weight in the range from 7,000 to 9,000 which completely fills the
capsule leaving no air gaps, and a eutectic solution having a liquid phase and
at least two solid phases, the agent being a liquid within a predetermined
temperature range;
enclosing means for packing the capsules around at least one item to be
packed so that the item is enclosed by and in direct contact with the capsules
the capsule being within said enclosing means;
the opposed sloping outer surfaces of the capsules comprising means for
resisting close packing and for leaving air gaps between adjacent capsules and
between the innermost capsules and the item to be packed.
According to another aspect of the invention there is provided a method of
packing one or more items to maintain a predetermined temperature range for an
extended period of time and to cushion the item or items against shocks,
comprising the steps of:
<PAGE>
taking a plurality of reusable capsules each containing a thermal
controlling agent which completely fills the capsules and which is a liquid
within a predetermined temperature range and has a solid phase and freezing the
capsules until the liquid in the capsules solidifies; and
packing the capsules in a container around at least one item to be packed
so gaps between the opposed, curved outer surfaces of each capsule and the next
adjacent capsules and the capsules are free to move relative to one another to
absorb shocks, the capsules maintaining the packed item in a predetermined
temperature range for an extended period of time and cushioning the item against
shocks during and beyond the extended period of time; and
subsequently reusing the capsules by refreezing them prior to packing them
around other items to be packed.
Useful thermal controlling agents include:
(a) an aqueous solution of 3% by weight of polyethyleneglycol
having a molecular weight in the range of 7,000 to 9,000; 20
(b) 40% propylene glycol, 50% isopropanol and 10% deionized
water; and
(c) an aqueous solution of 30% by weight of polyethylene glycol
having a molecular weight in the range of 7,000 to 9,000.
According to the present invention a thermal packaging assembly is provided
which comprises a plurality of capsules of non-rigid material each containing a
thermal controlling agent for maintaining a predetermined temperature range for
an extended period of time, and a means for containing or packing the capsules
around one or more items to be maintained in the predetermined temperature range
for a certain time period. The individual capsules are of relatively small
dimensions as compared to the item or total volume of items to be packaged, and
since they are packed relatively loosely around the item they will be shock
absorbing to a certain extent to cushion the packed item against damage, while
at the same time protecting against change in temperature for extended periods
of time.
<PAGE>
The capsules may be packed in a suitable insulating outer container, and
they may be separate or connected together in the form of a sheet of bubbles
with an interconnecting web. They may be of any suitable shape, the shape
preferably being chosen so that the capsules resist compaction and will be free
to move relative to one another when packed around one or more items so as to
provide a relatively good cushioning effect. They may, for example, be of a
shape similar to the known poly foam pellets use for packaging, or of arcuate,
ovoid, tubular or other shapes which will resist close packing, i.e. tend to
pack together loosely with gaps between adjacent capsules. In a preferred
embodiment they are pillow shaped.
The packaging assembly of this invention is therefore an improvement both
over known coolants such as ice, dry ice or blue ice, and over known packaging
materials which have no thermal controlling properties.
The thermal controlling agent contained in the capsules is preferably a
refrigerant although it may be designed to hold items at any chosen temperature,
i.e. even at temperatures above the ambient or surrounding temperature. In a
preferred embodiment of the invention the agent is a eutectic solution which has
the capacity to absorb or release heat with little or no change in temperature
while in the process of changing from one physical state to another, e.g. solid
to liquid or vice versa.
<PAGE>
The capsules must first be charged or frozen to the phase change temperature or
lower. They will then maintain items around which they are packed in a
temperature controlled environment for a time interval dependent on the number
of capsules used, the insulating properties of any container in which they are
packed, and the surrounding ambient temperature.
Water is one example of such an agent where it will phange from, a liquid
to a solid state at the precise temperature of 320 F (the phase change
temperature). In the preferred embodiment of the invention the agent comprise a
mixture of two or more substances which are miscible as liquids but which have a
lower freezing point when combined than either of the two substances separately.
The point at 15 whicb both substances solidify is known as the eutectic point.
In one example of the invention the eutectic solution is a solution of a
eutectic salt or compound which is formulated to provide good energy storage
capability at a given operating temperature. Such compounds may be formulated
for storage capabilities at a wide variety of different temperature ranges, and
may be used for hotor cold storage according to the eutectic point of the chosen
eutectic compound or compounds in the capsules.
The individual capsules or sheet of capsules may be used alone or in
combination with dry ice, for example. This avoids the problems of using dry ice
alone while allowing its effective cooling period to be prolonged. The capsules
may be designed for any specific operating temperatures by suitable choice of
the eutectic compound or compounds.
<PAGE>
In one particular embodiment the capsules.are designed to exhibit a similar
cooling temperature range to ice. In this example the~ thermal storage material
in each capsule is a. solu.tion of ammonium sulfate, calcium chloride, or other
inorganic salt, with the temperature at the eutectic point of the material, i.e.
the point at which the solution changes phase, being dependent on the particular
salt used in the material. The capsules may also be designed to hold products
higher temperatures with suitable choice of the thermal storage material.
BRIEF DESCRIPTION OF THE DRAWINGS
The present invention will be better understood from the taken in
conjunction with the accompanying drawings in which, like reference numerals
refer to like parts and in which:
Figure 1 shows a side elevation view of a thermal packing assembly
according to a first embodiment of the present invention, partly cut away to
show a suitable item to be packed and thermally protected embedded in the
packing material.
Figure 2 is a top plan view of a particular configuration of one of the
capsules of the packing assembly;
Figure 3 is a-side elevation view of the capsule of Figure 3.
Figure 4 is an enlarged sectional view taken on the lines 4-4 of Figure 3;
Figures 5 to 9 are perspective views of various other 30 possible shapes
for the capsules; and
<PAGE>
Figure 10 shows -an alternative embodiment of the thermal.packing assembly
according to the present invention.
DESCRIPTION OF THE PREFERRED EMBODIMENTS
Figure 1 shows a first embodiment of a thermal packing assembly according
to the present invention, in which a plurality of capsules 10 containing a
thermal controlling agent or refrigerant are packed in a container 14 around an
item 16 to be thermally protected.
The item 16 may be anything of a perishable or temperatured damageable
nature, for example, or anything which is to be kept at a controlled temperature
for any reason, and more than one item may be packaged in the capsule's. The
item or items 16 may, for example, be foodstuffs, beverages, plants, biological
materials, tissue sampies, chemicals, medicines, or live creatures sucb as bait
for fishing. The container may be of any suitable shape and dimensions according
to the item or items to be packed, and is preferably insulated.
As shown, the individual capsules are each of dimensions much smaller than
those of the item or total volume of items to be packed, so that the capsules
packed around the item will have some cushioning effect to protect the item
against shocks and can also contact most of the outer surface of the item even
if it is of a non-uniform or irregular outer shape. The capsules may be shaped
so that they resist compaction when packed, i.e. so that they will tend to leave
gaps 18 between adjacent capsules. This will enhance the cushioning effect since
capsules will be able to move relative to one another to resist or absorb
shocks.
<PAGE>
The capsule dimensions are preferably of the order of one square inch or
less but may be larger (e.g. 3 square inches) for larger scale packing and
further may have dimensions of up to 3"x3"x1/4", for example. The smaller scale
capsules will be filled with 0.5 ml to 2 ml of refrigerant liquid, with larger
scale capsules containing up to 20 ml of refrigerant.
Figures 2 to 9 show some of the many possible capsule shapes. Figures 2 to
4 show a first possible configuration in which each capsule 20 is tubular with
its opposite ends sealed. Such capsules may be manufactured from lengths of
tubing filled with a suitable refrigerant 12 (See Figure 4), which are sealed at
suitable spaced intervals, and then cut to form individual capsules. In one
specific example of this type of capsule the capsules were made of 1 inch
segments of polyethylene tubing having an outside diameter of 1/4" and a wall
thickness of 1/16", filled with approximately 0.5 ml of refrigerant solution.
However these specific dimensions may be changed according to the particular
applications for which the capsules are to be used,
Figures 5 to 9 show some of the many possible alternative configurations
for the capsules. In Figure 5, the capsule 30 is of generally square or
rectangular outline and of pillow-like form.
In Figure 6 the capsule 40 is of curved of S-like shape, similar to the
shape of foam pellets commonly used for packaging. Figure 7 shows another
alternative capsule shape 50 which is of a tubular form with enlarged end
portions. Figure 8 shows a capsule shape 60 of curved, C-shaped form, and in
Figure 9 the capsule 70 is of a star or flower-like form. In each case the
capsules may be formed, for example, by moulding the individual capsules from a
suitable material and then filling with the refrigerant 12.
<PAGE>
The capsules may be manufactured in any suitable manner, including blow
mouldingo, vacuum moulding, machine 5 forming or extruding tubing which is
suitably sealed and cut, forming tubing from a continuous film and suitably
sealing, filling with refrigerant, and cutting into individual capsules, and die
moulding of individual capsulesand filling with refrigerant.
The individual capsules are formed with an outer skin of a suitable
non-rigid or flexible material which is chosen according to the operating
temperature of the assembly in which the capsules are to be used and the
refrigerant which the capsules are to contain. The capsules are preferably of 15
a suitable plastics material such as low temperature melting polyethylene, PVC,
Teflon (Registered Trademark), polypropylene, polycarbonates, nylon and the
like.
Each capsule is filled with a refrigerant 12 which is chosen according to
the desired operating temperature. Although the assembly will normally be used
to maintain a temperature controlled environment below ambient temperatures,
i.e. as a cooling assembly, it may also be designed for use at temperatures
higher than ambient, i.e. for heating or maintaining items at a raised
temperature, with suitable use of the agent 12 within the capsules. The
refrigerant 12 is preferably a material which will change from one physical
state to another, i.e. liquid to solid or vice versa, at a predetermined
temperature, called the phase-change temperature. The capsules must first be 30
charged, or cooled to a temperature at or below the predetermined temperature.
They must normally be charged at a temp~qrature 20 C below the holding
temperature for periods of between 16 and 20 hours depending on the total volume
of capsules to be charged and their phase change temperature. The capsules will
then stay in a certain temperature range for an extended period.of time to hold
the temperature of an item or items around which they are packed f or time
dependent on the insulating properties of any outer container, the number and
weight of the capsules used, and the surrounding ambient temperature.
<PAGE>
According to the choice of refrigerant material the thermal packing
assembly can hold products at various preselected temperatures from -13 C (9 F)
to 25 C (77 F) for periods ranging from a few hours up to nearly 500 hours,
according to the number of capsules used and the properties of the
surrounding insulated container. With suitable choice of the controlling agent
it may even be possible to provide temperature control at any desired
temperature in a range from -60 C to 66C. The capsules are most efficient when
used with a well insulated container. The thermal controlling agent or
refrigerant has the capacity to absorb or release heat with little or no change
in temperature while in the process of changing from one physical state to
another, i.e. liquid to solid or solid to liquid. it is this property which
makes ice such a good refrigerant. Where the refrigerant 12 is water, the
capsules will first be frozen at 32 F. The ice must then absorb 144 BTU's of
heat energy before it becomes liquid again.
Although water is a possible refrigerant for the capsules, in one preferred
embodiment the refrigerant is a eutectic solution, or a mixture of two or more
substances which has a lower freezing point, known as the eutectic point than
either of the two substances taken individually. The solution on cooling will
transform from a single liquid phase to two or more solid phases at the eutectic
point. This is known as a eutectic reaction and may be used to maintain a chosen
temperature range in a manner similar to, or even more efficient than ice. The
solution may, for example, comprise a mixture or solution of an inorganic salt
in water. The salt may, for example, be chosen from the fol1owing class:
Sodium,calcium,ammonium,or potasslum chloride; ammonium,magnesium, or sodium
sulfate; potassium or sodium nitrate, among others.
The refrigerant or cooling agent is formulated to maintain specific
temperature ranges under controlled conditions, and a range of different
capsules containing different agents may be provided for various different
applications.
Some specific examples of eutectic and other refrigerants are given below,
although other refrigerants or temperature controlling agents can clearly be
designed for operation at various temperatures. The refrigerants used are
non-toxic and non-corrosive materials, and preferably have high boiling points
and low expansion coefficients in both the solid and liquid phase. The
refrige.rants are preferably of high density with a heat of fusion (heat
required for change of state at phase change temperature) of over 100 BTU's per
pound.
<PAGE>
Example 1
- ---------
The capsules are filled with an 11% by weight aqueous solution of ammonium
sulfate. The capsules are charged by storing for 10 to 16 hours (depending on
their total mass) at a temperature of -4 F for example, in any suitable
refrigerator or cooling assembly. The eutectic or freezing point of the solution
is -3.18 C. The ammonium sulfate may be replaced with calcium chloride, for
example, or other suitable inorganic salts. The capsules will maintain a
constant temperature over a similar period to an equivalent volume of ice. With
a surrounding ambient temperature of 21 C a weigbt of 5 lbs of the capsules
contained in a volume of 432 cu. inches within a container having 3 inch thick
urethane walls can hold or maintain refrigerator temperatures in the range from
2 to 8 C for up to 103 hours, which is equivalent to a similar volume of ice or
blue ice while not having the disadvantages of such cooling agents, i.e.
melting, non-cushioning, and so on.
Example 2
- ---------
In this example the refrigerant is the following mixture:
200 gm polyethylene glycol (PEG) 20% wt. over volume 28.392 gm sodium
phosphate diabasic 0.15 molar with pH adjusted to 7.2(Na2HP04.7H2O)
19.8 gm ammonium sulfate 0.15 molar in distilled water.
The eutectic point of this mixture is -2 0 C. The holding temperature may be
increased or decreased by decreasing or increasing, respectively, the amount of
ammonium sulfate or PEG.
<PAGE>
Capsules containing this refrigerant contained under the same conditions as
the capsules in Example 1 can maintain refrigerator like temperatures for
equivalent periods of time and have the additional advantage that the added PEG
will prevent the mixture from completely solidyfying even when frozen. Thus the
capsules will still be malleable, or semi-hard, when charged and will therefore
have improved cushioning characteristics.
Example 3
- ---------
The frigerant in this example comprises N-Tetradecane (CH3(CH2)12CH3). This
has a phase change temperature of 4.4 C and under similar conditions to the
capsules in example 1 capsules containing this refrigerant can hold their
temperature for about 76 hours and thus have thermal insulating properties for
equivalent periods of time.
Example 4
- ---------
In this example the capsules contain ethylene glycol 400, which has a phase
change temperature of -12.7 C. This material will still be malleable when frozen
and thus the capsules will have improved cushioning characteristics. The
capsules must be charged at lower temperatures than the previous examples, for
example at -20 C for up to 16 hours depending on the total mass to be charged.
Under equivalent conditions to the previous examples capsules containing this
refrigerant will stay frozen for up to 49 hours, and can maintain a lower
temperature environment than the previous examples which maintain refrigerator
like temperatures.
<PAGE>
Example 5
- ---------
In this example the capsules contain N-Hexadecane, which has a phase change
temperature of 25 C. This may be used, for example, to maintain temperatures
higher than the surrounding ambient temperature over extended periods of time.
The above five examples are compared in the following table over different
ambient temperatures, with the capsules in each case being pre-charged to at or
below the phase change temperature for a predetermined period of time and being
contained as described above in connection with Example 1. The table shows the
theoretical holding time in hours which may be achieved by the different
controlling agents in each example.
<TABLE>
TABLE Average Ambient
Temperature*(O q
<CAPTION>
CAPSULE -18 -6 4 21 32 38 43
OPERATING
TEMP (0 C) HOLDING TIME IN HOURS
<S> <C> <C> <C> <C> <C> <C> <C>
- -13 (Ex.4) 393 311 125 62 46 41 37
- -3 (Ex.1) 165 621 340 103 70 61 53
0 (Ex.2) 120 319 478 101 66 56 49
4 (Ex.3) 64 129 - 86 51 43 37
25 (Ex.5) 38 53 78 412 - - -
</TABLE>
The average holding time for any thermal packing assembly can be estimated
in advance given the surrounding ambient temperature and the mass of capsules to
be used, together with the thermal conductivity of any surrounding insulating
container. The holding time will be equal to the beat available divided by the
beat loss, which will be dependent on the total volume and the thermal
conductivity properties of the container. Thus anyone with a specific packaging
and thermal control problem will be able to estimate in. advance the probable
amount of capsules needed for a pariticular length of time, and the most
desirable thermal cohtrolling agent to use in the capsules. Capsules containing
different thermal controlling agents may be mixed together in certain cases to
prolong the cooling periods, for example.
<PAGE>
Thus the packing assembly described above has the advantage of both
cushioning iiems packed against shocks or 15 damage while maintaining them in a
predetermined temperature range over extended periods of time. The amount of
capsules needed and the type of refrigerant to be used can be calculated in
advance according to the items to be packaged, the expected ambient temperature,
and the length of time they are to be maintained in the predetermined
temperature range, which will typically be refrigerator temperature or lower.
Even when the capsules reach ambient temperatures, they will still have some
insulating properties to continue to insulate the packed items to a certain
extent, and will still be a good packaging material since there will be little
or no change in the volume they displace when the material in the capsules
changes phase.
The capsules may be used alone or mixed with anothr refrigerant. For
example, in cases where dry ice (C02) would 30 otherwise be specified as a
coolant, a mixture of dry ice with the capsules may be packed around the item or
items to be refrigerated. This would act both to prolong the cold generated' by'
the dry ice and keep it away from direct contact with the item or items. Some of
the capsules themselves may also be filled with dry ice as the thermal
controlling agent.
<PAGE>
The material of the capsules is chosen such that the capsules will not
stick or adhere to each other or adjacent surfaces which is a problem with ice
and similar coolant materials. The capsules have a non-wetting and non-wettable
surface so that condensation will be minimal and growth of micro-organisms on
the surface will normally not be supported.
As described above the shape of the capsules can be chosen so that they
resist compaction. Typically the percentage of compaction should be less than
one fifth of the total volume in which the capsules are contained. The capsules
can be re-used any number of times simply by re-charging them once they have
reached ambient temperature. The outer skin is flexible but fairly resistant to
tearing. The capsules will therefore be relatively inexpensive, particularly
when compared to ice and other single use coolant materials, and have a
relatively long life.
If the capsules should by some chance be ruptured, the agent inside is
chosen to be non-toxic, non-corrosive, and washable with water. The material of
the capsules themselves is also non-reactive, non-toxic, non-corrosive, and non
digestible.
<PAGE>
The capsules may be used as described above in a thermal packing assembly
to transport or store any delicate and/or temperature sensitive items, such as
perishable foodstuffs, plants, pharmaceuticals and so on. They may be used to
store and/or transport frozen foods, biologicals and other frozen materials for
20 to 60 hours at temperatures of -20 C to -4 C with suitable choice of
refrigerant in the capsules. They may be used in place of ice or blue ice for
recreational purposes to keep foods and drinks cool on picnics while camping or
on other outings, for example. Another possible use is to keep bait cool when
fishing.
The capsules of this invention may also be used, for example, in ice baths
for temperature control of laboratory chemical reactions, for protecting
temperature sensitive film, or for treating swelling or other injuries in the
form of ice packs. Another possible use is in ice dispenser or storage systems
where packs of ice for use in drinks and the like are stored prior to sale or
use. it can therefore be seen that the capsules of this invention are an
extremely versatile, economical and efficient thermal controlling and packing
material, which can be designed for packing any number of different types of
items and for operating temperatures over a wide range, both below and above
ambient.
The capsules need not be contained in a rigid outer container, but may be
enclosed around an item or items to be packed by any suitable means, for example
as a flexible wrapping.
<PAGE>
Figure 8 shows an alternative example of a thermal packing assembly
according to the invention. In this example a plurality of capsules 80
containing a suitable refrigerant 82,whicb may be any suitable material as
described above in connection with the previous embodiments, are interconnected
in the form of a sheet 84 of bubble pack, type material. The sheet 84 may be
manufactured in a similar manner to standard bubble pack material, with each
bubble or capsule 80 being filled with the refrigerant 82 in its liquid state.
The capsules in the sheet may be of any suitable shape. The sheet will be
pre-charged in the same manner as the individual. capsules as described above,
and then wrapped around an item or items to be packed. The wrapped sheet may be
6nclosed in an outer container if 'desired, for added insulation, or it may be
secured around the item to comprise the bntire packing assembly.
Although some preferred embod iments of the present invention have been
described above by way of example, it will be understood by those skilled in the
field that modifications may be made which are within the scope of the present
invention, which is defined by the appended claims.
<PAGE>
THE EMBODIMENTS OF THE INVENTION IN WHICH AN
EXCLUSIVE PROPERTY OR PRIVILEGE IS
CLAIMED ARE DEFINED AS FOLLOWS:
1. A thermal packaging assembly, comprising an outer container;
a plurality of separate reusable capsules in said each container each
capsule comprising a continuous outer skin of flexible plastics material and a
thermal controlling agent completely filling the capsule, the agent being a
liquid in a predetermined temperature range, and freezable into a solid phase
prior to use in the packaging assembly;
said outer container comprising means for packing the capsules around one
or more items to be packed, the container having an opening for receiving the
capsules and items to be packed;
the capsules each being of identical shape and dimensions and each having
opposed sloping, curved outer surfaces for resisting close packing against
adjacent capsules in the packaging assembly and for forming air gaps between
each capsule and the next adjacent capsules;
the capsules comprising means for cushioning an item or items around which
they are packed, means for absorbing shocks by moving freely relative to one
another and means for maintaining a predetermined temperature range for an
extended period of time.
2. The assembly as claimed in claim 1, in which the capsules are pillow-shaped.
3. The assembly as claimed in claim 1, wherein the agent comprises an aqueous
solution of 3% by weight polyethylene glycol having a molecular weight in the
range from 7,000 to 9,000.
<PAGE>
4. The assembly as claimed in claim 1, in which the agent comprises a solution
of 40% propylene glycol, 50% isopropanol, and 10% deionized water.
5. A method of packing one or more items to maintain a predetermined temperature
range for an extended period of time and to cushion the item or items against
shocks, comprising the steps of:
taking a plurality of reusable capsules each containing a thermal
controlling agent which completely fills the capsules and which is a liquid
within a predetermined temperature range and has a solid phase and freezing the
capsules until the liquid in the capsules solidifies; and
packing the capsules in a container around at least one item to be packed
so gaps between the opposed, curved outer surfaces of each capsule and the next
adjacent capsules and the capsules are free to move relative to one another to
absorb shocks, the capsules maintaining the packed item in a predetermined
temperature range for an extended period of time and cushioning the item against
shocks during and beyond the extended period of time; and
subsequently reusing the capsules by refreezing them prior to packing them
around other items to be packed.
<PAGE>
6. A thermal packaging material for wrapping around an item or items,
comprising:
a continuous sheet containing a plurality of rows of adjacent reusable
capsules, each containing a thermal controlling agent which completely fills the
capsules, each row being separate from the next adjacent row by a first set of
spaced seal lines and the capsules in each row being separate from one'another
by a second set of spaced seal lines perpendicular to the first set;
each capsule having a generally rectangular outer periphery and opposing
curved outer surfaces on the upper and lower face of the sheet;
the thermal controlling agent being a liquid in a predetermined temperature
range and frozen into a solid phase having malleable characteristics prior to
use in the packaging assembly; and
the sheet being selectively bendable when the agent is solidified along
both sets of perpendicular seal lines to completely wrap around an item to be
packed and an outer enclosure releasably enclosing said sheet.
7. The packaging material as claimed in claim 6, wherein the sheet of capsules
is formed from two opposed films sealed together along spaced parallel lines in
two perpendicular directions to form separate capsules each having a rectangular
outer periphery, each capsule being filled with a liquid forcing the outer
opposed surfaces of that capsule outwardly to form a generally pillow-shaped
capsule.
<PAGE>
8. A packaging material as claimed in claim 6, wherein the thermal controlling
agent is a eutectic solution having a liquid phase and at least two solid
phases.
9. The packaging material as claimed in claim 6, wherein, the thermal
controlling agent is an aqueous solution of 30% by weight polyethylene glycol
having a molecular weight in the ranges from 7,000 to 9000.
10. A thermal packaging assembly, comprising:
a plurality of pillow-shaped hollow capsules of flexible plastics material
each containing a reusable thermal controlling agent elected from the group
consisting of an aqueous solution of 3% by weight polyethylene glycol having a
molecular weight in the range from 7,000 to 9,000 which completely fills the
capsule leaving no air gaps, and a eutectic solution having a liquid phase and
at least two solid phases, the agent being a liquid within a predetermined
temperature range;
enclosing means for packing the capsules around at least one item to be
packed so that the item is enclosed by and in direct contact with the capsules
the capsule being within said enclosing means;
the opposed sloping outer surfaces of the capsules comprising means for
resisting close packing and for leaving air gaps between adjacent capsules and
between the innermost capsules and the item to be packed.
11. The assembly as claimed in claim 10, wherein the capsule dimensions are in
the range one square inch to three square inches, and the capsule thickness is
of the order of 1/4 inch.
SMART & BIGGAR
OTTAWA, CANADA
PATENT AGENTS
CERTIFICATE NUMBER: 226896
OF
CHANGE OF NAME
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
I Hereby Certify that
INTERNATIONAL CONSORT INDUSTRIES INC..
has this day changed its name to
CRYOPAK INDUSTRIES INC.
Issued under my hand at Victoria, British Columbia on November 12, 1993
JOHN S. POWELL
Registrar of Companies
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA 226896
Province of British Columbia
Ministry of Finance and Corporate Relations
REGISTRAR OF COMPANIES
COMPANY ACT
CERTIFICATE
I HEREBY CERTIFY THAT
CONSORT ENERGY CORP.
HAS THIS DAY CHANGED ITS NAME TO THE NAME
INTERNATIONAL CONSORT INDUSTRIES INC.
GIVEN, UNDER MY HAND AND SEAL OF OFFICE AT VICTORIA, BRITISH COLUMBIA
THIS 30TH DAY OF APRIL, 1990
DAVID W. BOYD
REGISTRAR OF COMPANIES
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA 226896
Province of British Columbia
Ministry of Consumer and Corporate Affairs
REGISTRAR OF COMPANIES
COMPANY ACT
Certificate
I HEREBY CERTIFY THAT 226896 B.C. LTD. HAS THIS DAY CHANGED ITS NAME, TO
THE
NAME CONSORT ENERGY CORP.
GIVEN UNDER MY HAND AND SEAL OF OFFICE AT VICTORIA, BRITISH COLUMBIA,
THIS 30TH DAY OF MARCH, 1981
L. G. HUCK
DEPUTY REGISTRAR OF COMPANIES
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA 310302
Province of British Columbia
Ministry of Finance and Corporate Relations
REGISTRAR OF COMPANIES
COMPANY ACT
Certificate
I HEREBY CERTIFY THAT
310302 B.C. LTD.
HAS THIS DAY CHANGED ITS NAME TO THE NAME
CRYOPAK (CANADA) CORPORATION
GIVEN UNDER MY HAND AND SEAL OF OFFICE AT VICTORIA, BRITISH COLUMBIA,
THIS 22ND DAY OF SEPTEMBER, 1987
ROBERTA J. LOWDON
DEPUTY REGISTRAR OF COMPANIES
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA 310302
Province of British Columbia
Ministry of Consumer and Corporate Affairs
REGISTRAR OF COMPANIES
COMPANY ACT
Certificate of Incorporation
I HEREBY CERTIFY THAT
310302 B.C. LTD.
HAS THIS DAY BEEN INCORPORATED UNDER THE COMPANY ACT
GIVEN UNDER MY HAND AND SEAL OF OFFICE AT VICTORIA, BRITISH COLUMBIA,
THIS 6TH DAY 0F JUNE, 1986
M. A. JORRE DE ST. JORRE
REGISTRAR OF COMPANIES
<PAGE>
