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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12(g) of the Securities Act of 1934
INTERUNION FINANCIAL CORPORATION
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Delaware 87-0520294
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(State of Other jurisdictions of Incorporation of Organization) (I.R.S. Employer
Identification No.)
249 Royal Palm Way, Suite 301 H, Palm Beach, FL 33480
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(Address of Principal Executive Offices) (Zip Code)
(561) 820-0084
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(Issuer's Telephone Number)
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Securities to be registered under Section 12(b) of the Act:
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Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
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</TABLE>
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Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001
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(Title of Class)
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(Title of Class)
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INTERUNION FINANCIAL CORPORATION
FORM 10-SB
TABLE OF CONTENTS
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PART I. PAGE
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Item 1. Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 3. Description of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 4. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Item 5. Directors, Executive Officers, Promoters
and Control Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 6. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Item 7. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 8. Description of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
PART II.
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 2. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 3. Changes in and Disagreements with Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 4. Recent Sales of Unregistered Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 5. Indemnification of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
PART F/S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
PART III.
Item 1. Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
(a) BUSINESS DEVELOPMENT
InterUnion Financial Corporation (the "Company" or "IFC") was
incorporated under the laws of the State of Delaware on July 15, 1994. At the
time of incorporation, the name of the Company was: AU 'N AG, INC.
On February 15, 1994, a Certificate of Merger was executed by and
between AU 'N AG, INC., a Utah corporation and AU 'N AG, INC., a Delaware
corporation (the Company) and was filed in the office of the Secretary of State
of Delaware on March 10, 1994. Under the Certificate of Merger AU 'N AG, INC.,
the Delaware corporation, was the surviving corporation.
Under the terms of the above-referenced merger each share of common
stock of AU 'N AG, INC. (Utah) was converted into one share of AU 'N AG, INC.
(Delaware). At the time of its incorporation, AU 'N AG, INC. (Delaware) had
total authorized capital stock in the amount of 50,000,000 shares at $.001 par
value. Each holder of AU 'N AG, INC. (Utah) upon surrender to AU 'N AG, INC.
(Delaware) of one or more certificates for such shares for cancellation
received one or more certificates for the number of shares of common stock of
AU 'N AG, INC. (Delaware) represented by the certificates of AU 'N AG, INC.
(Utah) so surrendered for cancellation by such holder.
As a result of the above-referenced merger, 23,297,800 shares of
common stock of AU 'N AG, INC. (Delaware) were issued to the shareholders of
the corporation formerly known as AU 'N AG, INC. (Utah). At the time of the
merger, AU 'N AG, INC. (Utah) had no assets and was an inactive corporation.
On April 11, 1994, a Certificate of Amendment of the Certificate of
Incorporation of AU 'N AG, INC. (Delaware) was executed, providing that the
name of the Company be changed to: INTERUNION FINANCIAL CORPORATION. This
change of name was filed by the office of the Secretary of State of Delaware n
April 19, 1994.
Subsequent to a filing of information submitted to the National
Association of Securities Dealers, Inc. (NASD) pursuant to Schedule H of the
NASD By-Laws and Rule 15c 2-11 under the Securities Act of 1934, on July 27,
1994 IFC was
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cleared for listing on the OTC Bulletin Board. The Company currently trades
under the symbol: IUFC.
Subsequent to approval by the required shareholders at a meeting held
October 14, 1994, the common stock was reverse split at a ratio of ten (10) to
one (1). Further, based upon shareholder approval at that meeting, a
Certificate of Amendment was filed with the Secretary of State, State of
Delaware, showing capitalization as follows:
(1) 100,000,000 shares of common voting stock at $.001 par value.
(2) 1,500,000 shares of Class A preferred stock at $.10 par
value.
(3) 50,000,000 shares of Class B preferred stock with par value
to be set by the Board of Directors.
(4) 50,000,000 shares of Class C preferred stock with par value
to be set by the Board of Directors.
On January 18, 1995 the Company acquired all of the stock of BEARHILL,
LIMITED, INC., a British Virgin Islands corporation, for the issuance of
444,000 shares of common stock. On January 18, 1995 the Company also acquired
all of the stock of GUARDIAN TIMING SERVICES, INC., a corporation organized
under the laws of Ontario, Canada, for the issuance of 112,112 shares of common
stock.
Upon application to the Florida Department of State, on February 2,
1995, the Company was qualified and authorized to transact business in the
State of Florida. The Company moved its principal office to 249 Royal Palm
Way, Suite 301-H, Palm Beach, Florida 33480.
On March 20, 1995, the Company acquired all of the stock of I & B,
INC., a Delaware corporation, CREDIFINANCE CAPITAL, INC., a corporation
organized under the laws of Ontario, Canada, CREDIFINANCE SECURITIES, LTD., a
corporation organized under the laws of Ontario, Canada, and Ninety-Five
percent (95%) of the stock of ROSEDALE REALTY CORPORATION, a corporation
organized under the laws of Ontario, Canada, for the issuance of 1,500,000
shares of common stock. The Company further acquired the remaining outstanding
stock of ROSEDALE REALTY CORPORATION for the issuance of 24,600 shares of
common stock. It should be noted that in 1996 the Company disposed, by way
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of an assignment in bankruptcy, of its shares in ROSEDALE REALTY CORPORATION
(See Note 13 of InterUnion Financial Corporation Notes to Consolidated
Financial Statements, March 31, 1996 and 1995, Part F/S).
At a special meeting of the shareholders held May 17, 1996, the Board
of Directors was authorized to reverse split all authorized shares in a ratio
of twenty (20) to one (1). At the time of this authorization, the total of all
issued and outstanding voting shares of stock was 13,851,156.
REEVE, MACKAY & ASSOCIATES LIMITED was formed May 15, 1995 as a
corporation organized under the laws of Ontario, Canada. All capital stock of
this corporation was originally issued to InterUnion Financial Corporation.
The corporation is a wholly-owned subsidiary of the Company.
(b) BUSINESS OF ISSUER
GENERAL
The Company was formed to act as a holding company to invest primarily
in the equity securities of securities firms, investment management companies,
banks, insurance companies, and other financial and brokerage companies located
in the United States and Canada. Following its investment, the Company intends
to function as an "information link" between these financial companies
resulting in their immediate access to new markets and investment
opportunities.
The Company will also engage in bridge financing, which involved
providing capital for a company to go public or make targeted acquisitions, and
the Company may also purchase restricted securities for resale, or publicly
traded securities.
Because of the information link the Company is able to provide, the
Company believes, but cannot assure investors, that it will be allowed to make
investments in certain banks, insurance companies and securities firms that,
without the information link would not be possible. The Company may invest
both in debt as well as equity investments.
The Company may invest in securities of privately held firms, as well
as securities listed in markets that are official, regulated, well recognized,
normally functioning, and open to public investment in Europe, and North
America. The Company may invest in those markets on a case-by-case basis, as
opportunities arise.
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There can be no assurance that the Company will generate adequate, or
any, returns from securities investments. The risks inherent to securities
investments are connected to the possible variations in the underlying prices
of the securities. Securities prices can vary depending on the general trends
in the economy, in the money markets, and in the securities markets, as well as
on the specific economic and financial performance of the issuers. Investments
in foreign securities present the added risk of foreign exchange fluctuations.
PRODUCTS AND/OR SERVICES OF ACTIVE SUBSIDIARIES
In addition to the operations of InterUnion Financial Corporation as
the parent, the Company owns five operating subsidiary corporations. A
description of the business operations of these subsidiary corporations is as
follows:
(1) CREDIFINANCE SECURITIES, LTD.
Credifinance Securities, Ltd. ("Credifinance") is an investment bank
with office in Toronto and Montreal, and is a member of the Investment Dealers
Association of Canada, the Toronto Stock Exchange, Montreal Exchange and the
International Securities Market Association. Credifinance has 30 employees
engaged in fixed income and equity trading for Canadian institutions and in
corporate finance. Credifinance's six person research team provides
perspective on equity markets, companies and industries in Canada.
Credifinance Securities was started in 1990, engaging in institutional
trading, investment banking and research. The consolidation in the
brokerage/investment banking industry in Canada created opportunities for small
companies to provide better service to institutions. This unit began by
specializing in the trading of less than investment grade bonds. In 1991-92,
it expanded into equity trading for its institutional clients. Unlike the
large brokerage firms, Credifinance Securities acts strictly as an agent, and
does not take positions against its clients.
To enhance its service for the institutional clients, Credifinance has
developed research capability focusing on:
- biotechnology
- communications and media
- software
- telecommunications
- metals, minerals and precious metals mining
- oil and gas
- industrial products
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Credifinance's corporate finance activities consist primarily of
underwritings for small and medium-size, technology-intensive companies.
Between 1993 and 1995, Credifinance has been the sole underwriter in five
transactions, ranging in value from C (Canadian) $1.5 to $5.4 million;
co-underwriter in two transactions of C$32.5 million and C$11 million;
participated in a C$135 million co-bought deal; and has been involved in two
special transactions of C$10 and C$15 million.
In the first quarter of 1996, Credifinance has financed, through
private placements of special warrants, the following companies:
- Getty Cooper (C$5.9 million) - copper mining in British
Columbia;
- Etruscan Enterprises (C$7.0 million) - gold mining in Niger,
West Africa;
- Novadx International (C$1.8 million) - biotechnology company
commercializing in vitro tests for arthritis, osteoporosis and
other chronic diseases;
- Nortran Pharmaceuticals (C$2.0 million) - pharmaceutical
company focusing on research and commercial development of
targeted small molecule drugs; and
- Imutec (C$2.8 million) - biotechnology company engaged in the
development of immunotherapeutic products.
In additional, Mariposa Steamship Company and Mancan Gold Limited have
engaged Credifinance as their fiscal agent to take them public in 1996.
(2) GUARDIAN TIMING SERVICES, INC.
Guardian Timing Services, Inc. ("Guardian") is an investment
management firm located in Toronto, Canada, currently having approximately C$90
million in assets under management. Guardian manages the Canadian Protected
Fund, the Protected American Fund and the First America Fund. It uses a
proprietary ITM market timing model owned by Bearhill Limited, Inc., another
subsidiary of the Company.
(3) CREDIFINANCE CAPITAL, INC.
Credifinance Capital, Inc. is an investment corporation located in
Toronto, Canada. The business activities of this subsidiary corporation are
limited to proprietary security investing using its own capital resources.
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(4) BEARHILL LIMITED, INC.
Bearhill Limited, Inc. ("Bearhill") is an investment management firm
located in Toronto, Canada. Bearhill now manages the Rexmore Fund which
invests primarily in U.S. equity mutual funds and offers management services in
the international market place.
Bearhill owns the rights to the ITM market timing trading model which
is used by Guardian in making investment decisions for the funds it manages.
The forecasting technique used by the ITM market timing model involves general
market indicators, interest rates and monetary analysis, market perception
indicators, and various statistical data to detect trends. An earlier version
of the market timing model predicted the stock market downturn in October,
1987, allowing Guardian clients to get out of the market 10 days prior to the
downturn. The model is continually updated and has been credited with
successfully avoiding many of the overall market declines in the early part of
the 1990s.
A major Canadian bank has acquired a three year option, renewable each
year, to purchase the ITM software development by Bearhill. In the event that
this option is exercised, InterUnion Financial Corporation will be a direct
beneficiary of the option price of C$15 million. There is, of course, no
assurance that such an option will be exercised.
(5) REEVE, MACKAY & ASSOCIATES LIMITED
Reeve, Mackay & Associates Limited ("Reeve, Mackay") commenced
business operations in July, 1995 as a Canadian auction house. Reeve, Mackay
held auctions in 1995 on a monthly basis, which has increased, due to its
successful sales, to two monthly with a continuing goal of holding four
auctions monthly. In the first nine months of operation, Reeve, Mackay
generated revenues of C$1.6 million.
As a result of its sales and a considerable amount of media attention
in the form of numerous unsolicited articles in the major Canadian press,
Reeve, Mackay has reached an agreement with two of the largest international
auction houses (Christie's and Phillips) whereby these companies have agreed to
recommend it as the Canadian auctioneers for the portion of the Canadian estates
that they will not sell in New York or London.
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COMPETITION
The search for potentially profitable investments is intensely
competitive. A list of actual and potential competitors would include the
multinational banks, regional banks, thrift institutions, investment banks,
brokerage firms, finance and leasing companies, merchant banks, venture
capitalists and other financial service companies. The Company may be at a
disadvantage when competing with firms with substantially greater financial and
management resources and capabilities than the Company.
The issue of competition also directly impacts the subsidiary
companies owned by InterUnion Financial Corporation. Credifinance Securities,
Ltd. concentrates on providing underwritings for small and medium-sized
technology-intensive companies. Credifinance must compete with underwriting
companies in Canada that are superior in asset strength and personnel staff.
Guardian Timing Services, Inc. and Bearhill Limited, Inc. both operate as
managers of funds. A decline in their investment performance could cause the
loss of these essential accounts. And if the ITM market timing model used by
both of these companies should not show an accurate forecast the companies
could lose the managed accounts to larger investment management firms.
Finally, the auction company of Reeve, Mackay & Associates Limited must
directly compete for accounts with larger internationally recognized companies
such as Christie's and Phillips. There is certainly no assurance that Reeve,
Mackay can continue to attract substantial accounts for auction.
GROWTH STRATEGY
The growth strategy consists of two complimentary components:
. Investing in the existing portfolio of financial services
companies; and acquiring, when the appropriate opportunities
arise, major positions in well-managed banks, thrifts,
brokerage houses, investment banks and other financial
services companies (e.g. leasing, insurance) positioned in
niche markets in key international money centers; and
. Expansion of bridge financing and investment banking
activities.
Entry into the U.S. market is the next step in the Company's long-term
strategy to take major positions in investment banks, brokerage houses,
insurance companies, and other financial services companies around the world.
The Company is positioning itself to take advantage of opportunities. There is
no pressure to make an acquisition at any time or at any cost.
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But any acquisition will represent the second phase in the Company's
growth strategy. The first phase involves building up the existing operations
to more completely utilize the existing resources and to capitalize on each
unit's competitive strengths. For example, the Montreal office of Credifinance
Securities has been expanded and is fully bilingual, staffed by French
Canadians to better serve Quebec institutions. The corporate finance
capabilities of Credifinance will continue to be expanded to fully utilize the
unit's research and corporate finance capabilities and trading networks.
Additional capital will enable InterUnion to participate in more bridge
financing opportunities that in turn, will provide more corporate finance work
for Credifinance; and will permit Credifinance to increase its block trading
activity.
Bearhill will launch a new fund in 1996 and Guardian will continue to
expand the assets under its management by actively engaging in marketing for
the first time in its history. A new fund may be established for U.S.
investors.
A retail brokerage operation may be established in Canada to take
advantage of the client lists provided by Reeve, Mackay and the investment
products created by Guardian. InterUnion Financial Corporation also may create
an investment banking presence in the United States by expanding Credifinance
into this market and/or by following up on negotiations with individuals who
are part of the Company's international network. Credifinance may expand into
the United States in order to provide better service for Canadian corporations
which increasingly are being listed on NASDAQ. On the other hand, if the
latter partnership is created, this new division will provide research on
markets and industries in the European Union and emerging markets in Europe and
Asia, and trading services for U.S. clients in European and emerging markets
equities and fixed income. This unit also will develop, over time, a corporate
finance capability that will match European investment opportunities with U.S.
investors.
A high priority has been assigned to acquiring hard assets, in the
form of a bank, savings and loan company or insurance company, in order to add
stability to revenues, provide access to new sources of capital and open new
distribution channels. Moreover, these types of financial institutions will
permit IFC to offer the companies, which it will advise and assist, a complete
range of loan options. In addition, IFC will continue to search for and invest
in financial services companies with talented partners and employees,
predictable cash flows, low break evens and low marginal costs that are
complementary with the Company's existing divisions. The Company will pay for
the current cash flow with stock equity and share the incremental increase in
cash flow with the owners/managers of the companies.
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GOVERNMENT REGULATION
The operating activities of InterUnion Financial Corporation are not
subject to governmental regulatory agencies. Likewise, the Canadian investment
management companies of Guardian Timing Services and Bearhill Limited are not
subject to direct government regulation in Canada.
Credifinance Securities, Ltd. is a member of the Investment Dealers
Association of Canada, the Toronto Stock Exchange, Montreal Exchange and the
International Securities Market Association. As such, it is subject to the
rules, regulations, and adminis
trative rulings of these entities. However,
these regulatory entities are not considered as having any adverse impact on
the ability of Credifinance to conduct its underwriting activities.
The auction firm of Reeve, Mackay is not subject to government
regulation under Canadian law.
It should be noted that InterUnion Financial Corporation considers
itself to be outside of the Investment Company Act of 1940, as amended (the
"Act"). Section 3 of the Act broadly defines the term "investment company."
It specifies that investment company means any issuer which is (a) primarily
engaged in investing, reinvesting, or trading in securities, or (b) is in the
business of issuing amount face- certificates of the installment type, or has
been engaged in such business and has any such certificates outstanding. It is
a matter of fact that IFC does not come within (a) or (b) above.
The third part of the investment company definition is a company that
is engaged or proposes to engage in the business of investing, reinvesting,
owning, holding or trading in securities, and owns or proposes to acquire
investment securities having a value exceeding 40 per centum of the value of
such issuer's total assets (exclusive of Government securities and cash items)
on an unconsolidated basis. Section 3(a)(3) of the Act defines "investment
securities" to include all securities except government securities, securities
issued by employees' securities companies, and securities issued by
majority-owned subsidiaries of the owner which are not investment companies.
It has been clearly ruled that a holding company whose primary business is
owning or holding securities issued by its non-investment company subsidiaries
would not be an investment company. IRC clearly does not own 40 percent of its
assets in investment securities.
EMPLOYEES
The employees of the Company and its subsidiaries are all full-time
employees. The total number of such employees is listed below:
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<TABLE>
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InterUnion Financial Corporation ............................................................... 3
Credifinance Securities, Ltd. .................................................................. 30
Bearhill Limited ............................................................................... 1
Guardian Timing Services ....................................................................... 2
Reeve, Mackay & Associates Limited ............................................................. 14
--
Total Employees ....................................................................... 50
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
During fiscal year 1996 (ending March 31), InterUnion reported
consolidated revenues of US$5.9 million. This represented a 45 percent
increase over the consolidated revenues for fiscal 1995 of US$40 million.
Revenues for fiscal 1996 were generated as follows: US$4.5 million
from commissions (US$530,000 increase over fiscal 1995 commission, trading and
investment income) and US$1.4 million from fees (US$1.3 million improvement
from fiscal 1995 fee revenues).
Net earnings for the year were $301,566 versus the previous year's
loss of $134,438. The increase reflects a gain on the disposition of Rosedale
Realty and is also the result of middle management streamlining to better
manage the Company's growth. The net earnings represent earnings per share of
US$0.60 on a weighted average of 501,535 common shares outstanding.
Cash flow from operations were a positive $110,232 in fiscal 1996, as
compared to a negative cash flow of $110,166 in 1995.
Shareholders' equity increased by 14 percent to US$4.1 million,
representing a book value per share of $5.98 on a total of 692,558 outstanding
and issued common shares as of March 31, 1996.
Reeve, Mackay & Associates, which started operations in July 1995, had
excellent results in November-December due to the quality of the consignments
which generated substantial sales volumes and strong margins. Revenues
generated in the first nine months of operation were C$1.6 million. The
reputation
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of its specialists combined with its association with Credifinance Securities
has secured important consignments from collectors and trust companies.
Christie's and Phillips have agreed to recommend Reeve, Mackay as the Canadian
auctioneers for the portion of the Canadian estates that they will not sell in
New York or London.
Credifinance Securities Limited saw its commission income rise and the
investment banking revenues for fiscal 1996 far exceeded the levels in 1995.
Credifinance benefited from the strength of its research department in sectors
which have been in demand by investors -- oil and gas, mining and
biotechnology. This resulted in a significant increase in underwritings during
the year to about C$45 million. The last quarter of 1996 was particularly
active as Credifinance raised C$25 million in Canada and Europe for its
clients.
Credifinance is steadily gaining market share as it continues to
improve its institutional research and trading capability. There were several
other positive changes in the last quarter for Credifinance. A new
fixed-income operation was started in the Montreal office. The institutional
equity desks were expanded. The decision to make the Montreal office a
"French" franchise has met with the approval of Credifinance's Quebec-based
institutional and corporate clients.
Guardian Timing Services, the investment management company, increased
assets under management to approximately C$90 million. The investment
management firm is well positioned to achieve and surpass the C$100 million ark
for assets under management -- the target set for the 18 months following its
acquisition by IFC in January 1995. The Company will commence marketing
Guardian's services more systematically during the 1997 fiscal year.
Guardian Timing's sister company, Bearhill, has entered into an option
agreement to sell its proprietary market timing model to a major financial
institution for proceeds to IFC of approximately C$15 million. The Company's
interest in the software is valued at US$774,450 and is included in the capital
assets.
The Company does not require an infusion of cash proceeds to maintain
its business operations on a profitable level. However, in order to meet its
growth plans, the Company issued a Confidential Private Offering Memorandum
dated July 8, 1996. This Offering Memorandum offers for sale 250,000 units of
the Company at a price of $8.00 per unit. Each unit consists of one share of
common voting stock and one warrant to purchase one share of common voting
stock at $9.00 per share, with an expiration date on the warrant of July 15,
1997. The total offering seeks to raise $2,000,000, with anticipated net
proceeds after commissions and offering costs of $1,775,000.
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The offering as noted above has not been registered under the
Securities Act of 1933, as amended, in reliance on an exemption from
registration under Regulation D (Rule 505) as promulgated by the Securities and
Exchange Commission, and under Regulation S as promulgated by the Securities
and Exchange Commission.
Assuming a sale of all units offered, the Company anticipates that the
net proceeds will be applied as follows:
<TABLE>
<CAPTION>
Approximate Percentage
Use Amount of Proceeds
- ------------- ------------- -----------
<S> <C> <C>
InterUnion Financial Corporation ................ US$1,075,000 61
. business development including
bridge financing
Credifinance Securities Limited ................. US$500,000 28
. increase statutory capital
. upgrade equipment and leaseholds
. expand research department
. develop U.S. institutional
equity business
Guardian Timing; Bearhill;
Reeve, Mackay ................................... US$200,000 11
. market the services of Guardian
and Bearhill systematically
. develop Reeve, Mackay into a
market leader
------------ ----
Total .................................. US$1,775,000 100%
============ ====
</TABLE>
The Company feels that the financial statements for the periods ending
March 31, 1995 and March 31, 1996 accurately reflect the operations of the
Company and its subsidiaries. In fact, the Company has taken every reasonable
step to insure that its financial statements do not represent a distorted
picture to anyone having a business reason to review such statements. As
evidence of this commitment, see Note 1 of the InterUnion Financial Corporation
Notes to Consolidated Financial Statements March 31, 1996 and 1995, Part F/S,
explaining that a change in accounting policy resulted in a decreased value of
goodwill and additional paid-in capital of $7,103,020.
There are no material events and uncertainties known to the management
of the Company that would cause the reported financial information to be other
than indicative of future operating results or of future financial condition.
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ITEM 3. DESCRIPTION OF PROPERTY
Neither the Company nor any of its subsidiaries owns real estate.
The Company and certain of its subsidiaries do have leasehold
interests in real estate as shown below.
<TABLE>
<CAPTION>
Lessee &
Location of Gross Area Annual Rent
Premises (S. Ft.) Term (Per S. Ft.)
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<S> <C> <C> <C>
Credifinance Securities, Ltd.
Suite 3303
130 Adelaide Street W 3,310 Feb. 92-Jan. 97 $16.00
Toronto, Ontario Feb. 97-Jan. 02 $22.00
Credifinance Securities, Ltd.
Suite 3304
130 Adelaide Street W 927 Feb. 93-Jan. 97 $12.00
Toronto, Ontario Jul. 97-Jan. 02 $15.00
Credifinance Securities, Ltd.
Suite 1580
1501 McGill College Ave.
Montreal, Quebec 1,386 Jun. 92-Jan. 98 $16.00
Reeve, MacKay &
Associates, Ltd.
Suite 400
163 Queen St. E
Toronto, Ontario 3,375 Jul. 96-Jun. 97 $ 5.00
Reeve, MacKay &
Associates, Ltd.
Suite 102
163 Queen St. E
Toronto, Ontario 2,053 Jul. 96-Jun. 97 $ 3.00
InterUnion Financial Corp.
Suite 301
249 Royal Palm Way
Palm Beach, Florida 1,000 Mar. 96-Feb. 97 US$365 per month
</TABLE>
15
<PAGE> 16
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following persons (including any group as defined in Regulation
S-B, Section 228.403) are known to InterUnion Financial Corporation, as the
issuer, to be the beneficial owner of more than five percent of any class of
the said issuer's voting securities.
<TABLE>
<CAPTION>
Title Name and Address Amount and Nature Percent
of Class of Beneficial Owner of Beneficial Owner of Class
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common RIF Capital Inc,(1) 354,121 51.13%
Price Waterhouse Centre
PO Box 634C
St. Michael, Barbados, WI
Common Capital Securities & Credit Corp. 52,144 7.53%
114 Belmont Street
Toronto, Ontario, Canada M5R 1P8
Common Finance Research Development 50,500 7.29%
(FRD) Trust
Icaza, Ruiz-Gonzalez & Alemen
Vanterpool Plaza, 2nd Floor
Wickhams Cay, PO Box 873
Road Town, Tortola, BVI
Common Financiera Hispano-Suiza, SA 50,050 7.23%
10 Rue Pierre-Fatio
Geneva, Switzerland CH1204
TOTAL 506,815 73.18%
========= =======
Preferred A RIF Capital Inc. 1,500,000 100.00%
Price Waterhouse Centre
PO Box 634C
St. Michael, Barbados, WI
</TABLE>
____________________
(1)RIF Capital Inc. is a wholly-owned subsidiary of Equibank Inc.
which is wholly-owned by Central Investment Trust. Georges Benarroch is the
sole protector of Central Investment Trust and is not a beneficiary of the
Trust nor its subsidiaries.
16
<PAGE> 17
(b) SECURITY OWNERSHIP OF MANAGEMENT
The following information lists, as to each class, equity securities
beneficially owned by all directors and nominees, and of the directors and
nominees of the issuer, as a group.
<TABLE>
<CAPTION>
Title Name and Address Amount and Nature Percent
of Class of Beneficial Owner of Beneficial Owner of Class
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Georges Benarroch 354,121 51.13%
Suite 3303 Trustee (voting
130 Adelaide Street power) of Central
Toronto, Ontario Investment Trust
Canada, M5H 3P5
Preferred A Georges Benarroch 1,500,000 100.00%
Suite 3303 Trustee (voting
130 Adelaide Street power) of Central
Toronto, Ontario Investment Trust
Canada, M5H 3P5
Common Directors and 354,121 51.13%
Executive Officers
as a group
(1 person)
Preferred A Directors and 1,500,000 100.00%
Executive Officers
as a group
(1 Person)
</TABLE>
NOTE TO (A) AND (B): As to the beneficial owner(s) of the securities listed
above in (a) and (b), no such owner has any right to acquire within sixty (60)
days or otherwise, the right to acquire shares from options, warrants, rights,
conversion privileges or similar obligations.
17
<PAGE> 18
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
(a) IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name, Municipality
of Residence Age Length of Service
- ----------------------------------------------------------------------------
<S> <C> <C>
Georges Benarroch 49 Appointed as President and
Toronto, Ontario Chairman of the Board,
Canada March 21, 1994
T. Jack Gary, III 55 Appointed as Secretary
West Palm Beach, Florida January 30, 1995
Ann Glover 46 Appointed to Board
Toronto, Ontario of Directors
Canada February 17, 1995
Jacques Meyer de Stadelhofen 48 Appointed to Board
Geneva, Switzerland of Directors
December 16, 1994
Karen Lynn Bolens 49 Appointed to Board
Geneva, Switzerland of Directors
December 16, 1994
</TABLE>
GEORGES BENARROCH is the President, Chief Executive Officer and Chief
Financial Officer of the Company. He is also the President, Chief Executive
Officer, and Chairman of the Board of Credifinance Securities, Ltd.,
Credifinance Capital, Inc. and Reeve, Mackay & Associates, Ltd. -- all
wholly-owned subsidiaries of the Company. He is also the president of
Equibank.
Since 1977, Mr. Benarroch has held the position of officer and
partner/director with various investment firms and private/public companies in
the United States, Canada and Europe. He has been a senior partner and/or
18
<PAGE> 19
seat holder of a member firm of the Toronto Stock Exchange since 1982. His
experience covers Euro-financings, venture capital, mining and high tech
financings and bridge financings. Between 1988 and 1990, he was one of the
largest foreign traders of Austrian and Eastern European securities. One of
his holding companies, which indirectly is the largest current shareholder of
InterUnion, owns or has owned substantial equity interest in financial
companies in North America, mining companies in California and
technology-oriented, venture capital firms.
T. JACK GARY, III is the Secretary of the Company. He is also Branch
Manager of the West Palm Beach, Florida, office of Raymond James & Associates,
a national brokerage firm, having held that position since 1995. He is the
President of Crown Financial Advisors, Inc., an investment advisory firm. From
April, 1988 to 1992 Mr. Gary was President and Chief Executive Officer of Crown
Capital Advisors, Inc., a company registered as an investment advisor with the
Securities and Exchange Commission and with the State of Florida under the
Florida Securities and Investor Protection Act. From 1992, until his
appointment with Raymond James, Mr. Gary served as Chief Executive Officer of
Crown Financial and Executive Vice President of Crown Capital Advisors, Inc.
ANN GLOVER serves as a Director of the Company. She is a Director,
Secretary/Treasurer, and Chief Operating Officer of Credifinance Securities,
Limited a subsidiary of the Company. Ms. Glover has been an employee of
Credifinance Securities, Limited since 1991, having held the position of a
Director, Secretary/ Treasurer, and Chief Compliance Officer.
JACQUES MEYER DE STADELHOFFEN serves as a Director of the Company.
Since 1981 through and including the present time, he has practiced as an
attorney, specializing in tax and financial matters for international
corporations and charitable organizations.
KAREN LYNN BOLENS serves as a Director of the Company. Since 1985
through and including the present time, she has practiced as an associate
attorney, specializing in corporate, estate and family law for international
clients.
19
<PAGE> 20
ITEM 6. EXECUTIVE COMPENSATION
(a) SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME &
PRINCIPAL FISCAL OTHER LONG TERM ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION COMPENSATION
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Georges
Benarroch,
President 1996 None None None None None
& CEO 1997 None None $50,000* None None
</TABLE>
*Georges Benarroch was paid $50,000 as compensation for services subsequent to
the end of the fiscal year ending March 31, 1996. No other officer was paid
compensation.
(B) ALL COMPENSATION COVERED
The Company's Board of Directors has approved payment of $1,750 for
the services of each of its directors for the fiscal year ending March 31,
1997. No payments to Directors have been made as of the date of this
registration statement.
As of the date of this registration statement, the Company has no
options, warrants, SARs, long-term incentive plans, pension or profit-sharing
plans, insurance plans, medical reimbursement plans, or other compensation
plans in any form, direct or indirect, in effect regarding any employees of the
Company.
The Company feels that it does not have to include executive
compensation for an executive officer of any subsidiary because under Rule 3b-7
under the Exchange Act (17 CFR 240.3b-7) no executive officer(s) of any
subsidiary perform(s) policy making functions for the registrant.
As of the date of this registration statement, the Company has no
agreement or understanding, express or implied, with any officer or director,
or any other person regarding employment with the Company or compensation for
services.
20
<PAGE> 21
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
ITEM 8. DESCRIPTION OF SECURITIES
(A) COMMON STOCK
The Company is authorized to issue 100,000,000 (One Hundred Million)
shares of common voting stock, each share having one vote, at $.001 par value.
There are no fixed rights to dividends on the common stock. Dividends
may be paid as authorized by the Board of Directors in cash, in property, or in
shares of capital stock.
Section 102 of the General Corporation Law of Delaware provides that
no stockholder shall have any preemptive right to subscribe to an additional
issue of stock or to any security convertible into stock unless, and except to
the extent that, such right is expressly granted to him in the certificate of
incorporation. The Certificate of Incorporation of InterUnion Financial
Corporation contains no provision for preemptive rights.
(B) PREFERRED STOCK
(1) CLASS A PREFERRED STOCK
The Company is authorized to issue 1,500,000 (One Million Five Hundred
Thousand) shares of Class A preferred stock at $.10 par value.
The Class A preferred stock is voting stock, each share having 100
votes.
In any given fiscal year in which the directors shall declare a
dividend, the holder(s) of Class A preferred stock shall be entitled to a fixed
yearly dividend in the percentage amount, which such amount shall be fixed and
declared by the directors at the time of issuance of the Class A preferred
stock. When such a dividend is declared, the holder(s) of the Class A
preferred stock shall receive payment before any dividend shall be paid or set
apart on the common stock. The dividends in respect to the Class A preferred
stock shall be non-cumulative and shall be non-participating. These shares
carry no terms of repayment and have no terms of conversion.
21
<PAGE> 22
In the event of dissolution of the Company, the holder(s) of Class A
preferred stock shall be entitled to be paid in full the par value of the
shares before any amount is to be paid to the holders of common stock or the
holders of Class B and C preferred stock.
(2) CLASS B PREFERRED STOCK
The Company is authorized to issue 50,000,000 (Fifty Million) shares
of Class B preferred stock. The par value of this stock and the yearly
dividend in a percentage amount to which the holder(s) of this stock shall be
entitled, shall be determined by the directors at the time of first issuance of
any such shares. In any given year in which the directors shall declare a
dividend, the holder(s) of the Class B preferred stock shall receive payment
before any dividend shall be set apart or paid on the common stock.
The Class B preferred stock is non-voting, non-cumulative and
non-participating. These shares carry no terms of repayment and have no terms
of conversion.
In the event of dissolution of the Company, the holder(s) of the Class
B preferred stock shall be entitled to be paid in full the par value of the
shares before any amount is to be paid to the holders of common stock or the
holders of Class C preferred stock.
(3) CLASS C PREFERRED STOCK
The Company is authorized to issue 50,000,000 (Fifty Million) shares
of Class C preferred stock. The par value of this stock and the yearly
dividend in a percentage amount to which the holder(s) of this stock shall be
entitled, shall be determined by the directors at the time of first issuance of
any such shares. In any given year in which the directors shall declare a
dividend, the holder(s) of the Class C preferred stock shall receive payment
before any dividend shall be set apart or paid on the common stock.
The Class C preferred stock is non-voting, non-cumulative and
non-participating. These shares carry no terms of repayment.
The Class C preferred stock is convertible to common voting stock,
provided, however, that the exchange ratio on such a conversion shall be
subject to the price and terms as decided by the directors, and provided
further, that the right of conversion shall be decided by the directors in
their sole discretion. In the event, upon a conversion, it shall appear that a
fraction of a common share
22
<PAGE> 23
shall be issued, the Company shall pay cash for the pro rata market value of
any such fraction, market value being based upon the last sale price for a
share of common stock on the business day next prior to the date such fair
market value is to be determined.
In the event of dissolution of the Company, the holder(s) of the Class
C preferred stock shall be entitled to be paid in full the par value of the
shares before any amount is paid to the holders of common stock.
23
<PAGE> 24
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE
REGISTRANT'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
(a) MARKET INFORMATION
The issuer's common equity is traded on the OTC Bulletin Board under
the symbol: IUFC.
The high and low sale prices for each quarter within the last two
fiscal years and the first quarter of fiscal year 1977 are listed below. Only
two quarters are shown for fiscal year 1995 because the stock was not cleared
by the NASD for trading until July 27, 1994.
================================================================================
<TABLE>
<CAPTION>
Open High Low Close
------ ------ ----- -----
<S> <C> <C> <C> <C>
FY 95 Qtr 3 $52.50 $100.00 $52.50 $80.00
FY 95 Qtr 4 $80.00 $102.50 $77.50 $80.00
FY 96 Qtr 1 $80.00 $ 85.00 $32.50 $40.00
FY 96 Qtr 2 $40.00 $ 50.00 $15.00 $30.00
FY 96 Qtr 3 $30.00 $ 32.50 $10.63 $21.25
FY 96 Qtr 4 $21.25 $ 21.25 $ 5.00 $13.75
FY 97 Qtr 1 $13.75 $ 13.75 $ 5.00
</TABLE>
================================================================================
(b) HOLDERS
The approximate number of holders of record of each class of common
equity is as follows:
24
<PAGE> 25
================================================================================
<TABLE>
<CAPTION>
CLASS OF STOCK NUMBER OF HOLDERS
<S> <C>
Common 383
Class A Preferred 1
Class B Preferred 0
Class C Preferred 0
</TABLE>
================================================================================
(c) DIVIDENDS
The company has never declared or paid dividends on its common stock
or its preferred stock. The Board of Directors does not anticipate paying any
dividends in the foreseeable future. It intends to retain its distributable
earnings, if any, for the expansion and development of its business.
ITEM 2. LEGAL PROCEEDINGS
The issuer is not a party to any pending legal proceeding, nor is its
property the subject of a pending legal proceeding.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
(a) SALES PURSUANT TO REGULATION D
The following sales were made by the Company within the past three (3)
years in reliance upon an exemption from the registration requirements of the
Securities Act of 1933, as amended, as contained within Regulation D
promulgated by the Securities and Exchange Commission:
25
<PAGE> 26
===============================================================================
<TABLE>
<CAPTION>
Title of Class Number Shares Price per Share Consideration Date of Sale
- -------------- ------------- ------------------ ------------- --------------
<S> <C> <C> <C> <C>
Common 16,980,000 .00145 cents/share $ 24,621 April 1, 1994
Common 1,750,000 2 cents/share $ 35,000 April 22, 1994
Common 1,000,000 2 cents/share $ 20,000 May 16, 1994
Common 1,250,000 2 cents/share $ 25,000 July 26, 1994
Common 1,000,000 1 cent/share $ 10,000 July 26, 1994
Common 3,702,200 1 cent/share $ 37,022 Aug. 4, 1994
Common 5,000,000 1 cent/share $ 50,000 Aug. 17, 1994
Common 1,000,000 5 cents/share $ 50,000 Oct. 5, 1994
Common 1,500,000 20 cents/share $300,000 Mar. 23, 1994
Common 1,250,000 10 cents/share $125,000 June 5, 1995
Common 3,200,000 10 cents/share $320,000 Mar. 12, 1996
</TABLE>
===============================================================================
NOTES TO SALES PURSUANT TO REGULATION D
(1) All sales of securities are shown based upon the shares at the
date of sale and do not reflect subsequent reverse stock splits
as approved by the shareholders.
(2) All sales were made directly by the Company as issuer. No
commissions or underwriting discounts were paid in connection
with the sales.
(3) The class of persons to whom the Company sold the
above-referenced securities were individuals or entities whom
the Company had reason to believe were either accredited
investors within the meaning of Regulation Section 230.501 or
were investors having such knowledge and experience in
financial and business matters that the purchaser could
properly evaluate the risks and merits of the investment.
(4) All sales as shown above were made to non-U.S. persons.
26
<PAGE> 27
(5) The company specifically relied upon compliance with Rule 504
of Regulation D (Regulation Section 230.504). The Company
qualified for Rule 504 because all offers and sales were made
by the issuer, the Company was not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the
Company was not an investment company, and the Company was not
a development stage company. Further, the Company was in
compliance with the conditions as set forth in Regulation
Section 230.504(b).
(B) SALES PURSUANT TO REGULATION S
The following sales were made by the Company within the past three (3)
years in reliance upon an exemption from the registration requirements of the
Securities Act of 1933, as amended, as contained within Regulation S
promulgated by the Securities and Exchange Commission:
================================================================================
<TABLE>
<CAPTION>
Title of Class Number Shares Price per Share Consideration Date of Sale
- -------------- ------------- --------------- ------------- ------------
<S> <C> <C> <C> <C>
Common 2,000,000 .10 cents/share $200,000 Oct. 16, 1995
Title of Class Number Shares Price per Share Consideration Date of Sale
- -------------- ------------- --------------- ------------- ------------
<S> <C> <C> <C> <C>
Class A
Preferred 1,500,000 .10 cents/share $150,000 Dec. 21, 1994
</TABLE>
================================================================================
NOTES TO SALES PURSUANT TO REGULATION S
(1) All sales of securities are shown based upon the shares at the
date of sale and do not reflect subsequent reverse stock splits
as approved by the shareholders.
27
<PAGE> 28
(2) All sales were made directly by the Company as issuer. No
commissions or underwriting discounts were paid in connection
with the sales.
(3) The class of persons to whom the Company sold the
above-referenced securities were individuals or entities whom
the Company had reason to believe were either accredited
investors within the meaning of Regulation Section 230.501 or
were investors having such knowledge and experience in
financial and business matters that the purchaser could
properly evaluate the risks and merits of the investment.
(4) All sales as shown above were made to non-U.S. persons.
(5) The company specifically relied upon compliance with Regulation
S as promulgated by the Securities and Exchanges Commission.
The Company was in compliance with Category 3 of Rule 903 of
Regulation S which provides an issuer safe harbor. Under this
Category the Company complied with the two general conditions
of Rule 903(a) and (b) and to transactional and offering
restrictions by the execution of an investor Subscription
Agreement, and the placing of the appropriate restrictive
legend on the stock certificate(s).
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 14 of the By-laws of the Company provides for Indemnification
to directors and officers. This section is as follows:
"Section 14. The corporation shall indemnify and reimburse
each present and future director and officer of the corporation for and
against all or part of the liabilities and expenses imposed upon or
reasonably incurred by him in connection with any claim, action, suit
or proceeding in which he may be involved or with which he may be
threatened by reason of his being or having been a director or officer
of the corporation or of any other corporation of which he shall at the
request of this corporation then be serving or theretofore have served
as a director or officer, whether or not he continues to be a director
or officer, at the time such liabilities or expenses are imposed upon
or incurred by him, including but without being limited to attorney's
fees, court costs, judgments and reasonable compromise settlements;
provided, however, that such indemnification and reimbursement shall
not
28
<PAGE> 29
cover: (a) liabilities or expenses imposed or incurred in connection
with any matter as to which such director or officer shall be finally
adjudged in such action, suit or proceeding to be liable by reason of
his having been derelict in the performance of his duty as such
director of officer, or (b) liabilities or expenses (including amounts
paid in compromise settlements) imposed or incurred in connection with
any matter which shall be settled by compromise (including settlement
by consent decree or judgment) unless the board of directors of the
corporation by resolution adopted by it (i) approves such settlement
and (ii) finds that such settlement is in the best interest of the
corporation and that such director of officer has not been derelict in
the performance of his duty as such director or officer with respect to
such matter. These indemnity provisions shall be separable, and if any
portion thereof shall be finally adjudged to be invalid, or shall for
any other reason be inapplicable or ineffective, such invalidity,
inapplicability or ineffectiveness shall not affect any other portion
or any other application of such portion or any other portion which can
be given effect without the invalid, inapplicable or ineffective
portion. The rights of indemnification and reimbursement hereby
provided shall not be exclusive of other rights to which any director
of officer may be entitled as a matter of law or by votes of
stockholders or otherwise. As used in this paragraph, the terms
"director" and "officer" shall include their respective heirs,
executors and administrators."
This provision of the By-laws specifically does not provide any
measure of indemnification under circumstances whereby the director or officer
is adjudged to be derelict in the performance of his duty as an officer or
director. There would be no indemnification of an officer or director for
liabilities arising under the federal securities laws.
PART F/S
FINANCIAL STATEMENTS
The following audited consolidated financial statements for InterUnion
Financial Corporation, covering fiscal years ending March 31, 1995 and March
31, 1996 are submitted in compliance with the requirements of Item 310 of
Regulation S-B.
29
<PAGE> 30
PART III
ITEM 1. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Table
Number Exhibit Page No.
- -------------- ---------------------------------------------------- --------
<S> <C> <C>
(2) Certificate of Merger, dated February 15, 1994 E-1
(3)(i) Certificate of Incorporation of AU 'N AG, INC.
Dated February 15, 1994 E-3
(3)(i) Certificate of Amendment of Certificate of
Incorporation of AU 'N AG, INC.
Dated April 11, 1994 E-4
(3)(i) Certificate of Amendment of Certificate of
Incorporation of InterUnion Financial Corporation
Dated October 17, 1994 E-5
(3)(ii) Bylaws of InterUnion Financial Corporation E-7
(21) Subsidiaries of InterUnion E-17
</TABLE>
30
<PAGE> 31
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
INTERUNION FINANCIAL CORPORATION
(Registrant)
Date: July 15, 1996 By: /s/ Georges Benarroch
------------------------ -----------------------------------
Georges Benarroch
President, Chief Executive Officer
Chairman, Board of Directors
In accordance with the requirements of the Securities Exchange Act
of 1934, this Registration Statement has been signed below by the following
persons in their capacities on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Georges Benarroch President, Chief Executive July 15, 1996
- -------------------------------- Officer, Chairman, Board of -------------
Georges Benarroch Directors
/s/ Georges Benarroch Chief Financial Officer July 15, 1996
- -------------------------------- -------------
Georges Benarroch
/s/ Jacques Meyer de Stadelhofen Director July 15, 1996
- -------------------------------- -------------
Jacques Meyer de Stadelhofen
/s/ Ann Glover Director July 15, 1996
- -------------------------------- -------------
Ann Glover
</TABLE>
31
<PAGE> 1
EXHIBIT 2
STATE OF DELAWARE
CERTIFICATE OF MERGER SECRETARY OF STATE
DIVISION OF CORPORATIONS
of FILED 10:51 AM 03/10/1994
944037960 - 2377973
AU 'N AG, INC.
(A Delaware Corporation)
into
AU 'N AG, INC.
(A Delaware Corporation)
The undersigned officers, president and secretary of AU 'N AG, INC., a Utah
corporation, and AU 'N AG, INC., a Delaware Corporation hereby certify that the
Plan and Agreement of Merger between the parties to the merger has been
approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of Section 252 of
the General Corporation Law of Delaware by the shareholders of AU 'N AG, INC.,
a Utah corporation, at a special shareholders' meeting which was duly called
and was held on the 7th day of February 1994, after due notice had been given
to the shareholders, and was approved by the sole shareholder of AU 'N AG,
INC., a Delaware corporation, by consent action. The surviving corporation
shall be AU 'N AG, Inc., a Delaware corporation. The executed copy of the Plan
is on file at the principal place of business of the surviving corporation 357
South 200 East, Suite 300, Salt Lake City, Utah 34111. A copy of the Plan will
be furnished by the surviving corporation, on request and without cost, to any
stockholder of any constituent corporation. The authorized capital stock of AU
'N AG, INC., a Utah Corporation, is 50,000,000 shares of common stock, $.001
par value.
The number of shares outstanding of each class of each corporation which
were entitled to vote on the Plan and the number of shares of each class of
each corporation consenting and not consenting to the Plan, is as follows:
<TABLE>
<CAPTION>
Number of
Shares Number of Shares
Class Outstanding Consenting Not Consenting
----------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
AU 'N AG, INC. Common stock 23,297,800 17,005,000 0
(a Utah Corporation) ($.001 par)
AU 'N AG, INC.
(a Delaware Corporation) Common stock 10 10 0
($.001 par)
</TABLE>
The certificate of incorporation of the AU 'N AG, Inc., a Delaware
corporation, the surviving corporation, shall be the certificate of
incorporation of the surviving corporation.
All of the presently outstanding shares of AU 'N AG, INC., a Delaware
corporation are owned and held by AU 'N AG, INC., a Utah corporation.
IN WITNESS WHEREOF, AU 'N AG, INC., a Utah corporation, and AU 'N AG, INC.,
a Delaware corporation, have caused this Certificate of Merger to be executed
in their respective corporate names by their respective presidents and their
respective secretaries this 15th day of February 1994.
E-1
<PAGE> 2
Attest: AU 'N AG, INC.
A Utah Cororation
/s/ Max Morrill, Secretary /s/ R.G. Listul, President
- ----------------------------------- ---------------------------------
Max Morrill, Secretary R.G. Listul, President
AU 'N AG, INC.
Attest: A Delaware Corporation
/s/ Ronald N. Vance, Secretary /s/ Ronald N. Vance, President
- ---------------------------------- ---------------------------------
Ronald N. Vance, Secretary Ronald N. Vance, President
E-2
<PAGE> 1
EXHIBIT (3)(i)
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 02/15/94
944020578 - 2377973
CERTIFICATE OF INCORPORATION
OF
AU 'N AG, INC.
FIRST: The name of this corporation is AU 'N AG, INC.
SECOND: Its registered office in the state of Delaware is to be located at
Three Christina Centre, 201 N. Walnut Street, Wilmington, DE 19801, New Castle
County. The registered agent in charge thereof is The Company Corporation,
address "same as above."
THIRD: The nature of the business and, the objects and purposes proposed to be
transacted, promoted and carried on, are to do any or all the things herein
mentioned as fully and to the same extent as natural persons might or could do,
and in any part of the world, viz: The purpose of the corporation is to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
FOURTH: The amount of the total authorized capital stock of this corporation
is divided into 50,000,000 shares of stock at $.001 par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Vanessa Foster, Three Christina Centre, 201 N. Walnut Street, Wilmington DE
19801.
SIXTH: The Directors shall have power to make and to alter or amend the
By-Laws; to fix the amount to be reserved as working capital, and to authorize
and cause to be executed mortgages and liens without limit as to the amount,
upon the property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts and books
of this corporation, or any of them shall be open to the inspection of the
stockholders; and no stockholder shall have any right of inspecting any
account, or book or document of this Corporation, except as conferred by the
law or the By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings and keep
the books, documents, and papers of the Corporation outside of the State of
Delaware, at such places as may be from time to time designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
It is the intention that the objects, purposes and powers specified in the
Third paragraph hereof shall, except where otherwise specified in said
paragraph, be nowise limited or restricted by reference to or inference from
the terms of any other clause or paragraph in this certificate of
incorporation, that the objects, purposes and powers specified in the Third
paragraph and in each of the clauses or paragraphs of this charter shall be
regarded as independent objects, purposes and powers.
SEVENTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws of
the State of Delaware, do make, file and record this Certificate and do certify
that the facts herein are true; and I have accordingly hereunto set my hand.
DATED: February 15, 1994 /s/ Vanessa Foster
------------------
Vanessa Foster
E-3
<PAGE> 1
EXHIBIT (3)(ii)
BYLAWS
OF
INTERUNION FINANCIAL CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
Section 1. The principal office in the State of Delaware shall be at the
address of the registered agent for the corporation in the State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware and within or without the United
States of America as the board of directors may from time to time determine as
the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held at such place as may be fixed from time to time by the board of
directors, either within or without the State of Delaware. Meetings of
stockholders for any other purpose may be held at such time and place, within
or without the State of Delaware, as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held at times
designated by the board of directors, and at such meetings the stockholders
shall elect by a plurality vote a board of directors, and transact such other
business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting shall be given to each
stockholder entitled to vote thereat at least ten days and not more than sixty
days before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every election of
directors, a complete list of the stockholders entitled to vote at said
election, arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, during ordinary business hours, for a
period of at least ten days prior to the election, either at a place within the
city, town, or village where the election is to be held and which place shall
be specified in the notice of the meeting, or if not specified, at the place
where said meeting is to be held, and the list shall be produced and
E-7
<PAGE> 2
kept at the time and place of election during the whole time thereof, and
subject to the inspection of any stockholder who may be present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of the board of directors, or
at the request in writing of stockholders owning a majority in amount of the
entire capital stock of the corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed
meeting.
Section 6. Written notice of a special meeting of stockholders, stating
the time, place and object thereof, shall be given to each stockholder entitled
to vote thereat, at least ten days before the date fixed for the meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or
of the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after six months from its date, and, except where the transfer books of the
corporation have been closed or a date has been fixed as a record date for the
determination of its stockholders entitled to vote, no share of stock shall be
voted on at any election for directors which has been transferred on the books
of the corporation within twenty days next preceding such election of
directors.
Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action by
any provisions of the statutes or of the certificates of incorporation, the
meeting and vote of stockholders may be dispensed with, if all the stockholders
who would have been entitled to vote upon the action if such meeting were held,
shall consent in writing to such corporate action being taken.
E-8
<PAGE> 3
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be not less than three and not more than seven, unless approved by all of
the directors. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this article, and each
director elected shall hold office until his successor is elected and
qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, and the directors so chosen shall hold office
until the next annual election and until their successors are duly elected and
shall qualify, unless sooner displaced.
Section 3. The business of the corporation shall be managed by its board
of directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held immediately following the final adjournment of the annual meeting
of the stockholders. No notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and such place as shall from time to time be determined by
the board.
Section 7. Special meetings of the board may be called by the president on
forty-eight hours notice to each director, either personally or by mail or by
telegram setting forth the time and place thereat; special meetings shall be
called by the president or secretary in like manner and on like notice on the
written request of two directors.
Section 8. At all meetings of the board a majority of the directors then
in office shall constitute a quorum for the transaction of business and the act
of a majority of the directors, except as may be otherwise specifically
provided by statute or by the certificate of incorporation. If a quorum shall
not be present at any meeting of the board of directors the directors present
thereat may adjourn the meeting from time to time, without notice other than an
announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
of these by-laws, any action required or permitted to be taken at any meeting
of the board of directors or of any committee thereof may be taken without a
meeting, if prior to such action a written consent thereto is signed by all
members of the board or of such committee as the case may be, and such written
consent is filed with the minutes of proceedings of the board or committee.
E-9
<PAGE> 4
Section 10. Unless otherwise restricted by the certificate of
incorporation of these by-laws, members of the board of directors or any
committee designed by the board may participate in a meeting of such board or
committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other and participation in a meeting in this manner shall constitute
presence in person at such meeting.
COMMITTEES OF DIRECTORS
Section 11. The directors may appoint an executive committee from their
number. The executive committee may make its own rules of procedure and shall
meet where and as provided by such rules, or by a resolution of the directors.
A majority shall constitute a quorum, and in every case the affirmative vote of
a majority of all the members of the committee shall be required for the
adoption of any resolution.
Section 12. During the intervals between the meetings of the directors,
the executive committee may exercise all the powers of the directors in the
management and direction of the business of the corporation, in such manner as
such committee shall deem best for the interest of the corporation, and in all
cases in which specific directions shall not have been given by the directors.
Section 13. The Board of directors may, by resolution passed by a majority
of the whole board, designate one or more other committees, each committee to
consist of two or more of the directors of the corporation, which, to the
extent provided in the resolution, shall have and may exercise the powers of
the board of directors in the management of the business and affairs of the
corporation and may 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 determined from time to time by resolution adopted by the
board of directors.
COMPENSATION OF DIRECTORS
Section 14. Directors shall not receive any stated salary for their
services as directors, but by resolution of the board, a fixed fee and expenses
of attendance may be allowed for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any capacity as an officer or otherwise and receiving
compensation therefor.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be in writing and
delivered personally or mailed to the directors or stockholders at their
addresses appearing in the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
E-10
<PAGE> 5
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice-president, a secretary and
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Two or more
offices may be held by the same person.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders may choose a president, one or more vice-presidents, a
secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers of the corporation, if any, shall
be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall have power to call meetings of the directors and
stockholders in accordance with these by-laws, appoint and remove, subject to
the approval of the directors, servants, agents and employees of the
corporation and fix their compensation, make and sign contracts and agreements
in the name and on behalf of the corporation; he shall see that the books,
reports, statements and certificates required by the statute under which the
corporation is organized or any other laws applicable thereto are properly
kept, made and filed according to law; and he shall generally do and perform
all acts incident to the office of president, or which are authorized or
required by law.
THE VICE-PRESIDENTS
Section 7. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in
the absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
E-11
<PAGE> 6
THE SECRETARY AND ASSISTANT SECRETARIES
Section 8. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings
of the meetings of the corporation and the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 9. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform such other duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 10. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all
monies and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the board of
directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meting, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 12. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and
with such surety or sureties as shall be satisfactory to the board of directors
for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control belonging to
the corporation.
Section 13. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
INDEMNIFICATION
Section 14. The corporation shall indemnify and reimburse each present and
future director and officer of the corporation for and against all or part of
the liabilities and expenses
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<PAGE> 7
imposed upon or incurred by him, including but without being limited to
attorney's fees, court costs, judgments and reasonable compromise settlements;
provided, however, that such indemnification and reimbursement shall not cover:
(a) liabilities or expenses imposed or incurred in connection with any matter
as to which such director or officer shall be finally adjudged in such action,
suit or proceeding to be liably by reason of his having been derelict in the
performance of his duty as such director or officer, or (b) liabilities or
expenses (including amounts paid in compromise settlements) imposed or incurred
in connection with any matter which shall be settled by compromise (including
settlement by consent decree or judgment) unless the board of directors of the
corporation by resolution adopted by it (i) approves such settlement and (ii)
finds that such settlement is in the best interest of the corporation and that
such director or officer has not been derelict in the performance of his duty
as such director or officer with respect to such matter. These indemnity
provisions shall be separable, and if any portion thereof shall be finally
adjudged to be invalid, or shall for any other reason be inapplicable or
ineffective, such invalidity, inapplicability or ineffectiveness shall not
affect any other portion or any other application of such portion or any other
portion which can be given effect without the invalid, inapplicable or
ineffective portion. The rights of indemnification and reimbursement hereby
provided shall not be exclusive of other rights to which any director or
officer may be entitled as a matter of law or by votes of stockholders or
otherwise. As used in this paragraph, the terms "director" and "officer" shall
include their respective heirs, executors and administrators.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
president or a vice-president or a vice-president and the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by him in the corporation.
Section 2. Where a certificate is signed (1) by a transfer agent or an
assistant transfer agent (other than the corporation or a transfer clerk who is
an employee of the corporation) or (2) by a registrar (other than the
corporation or its employee), all other signatures may be a facsimile. In case
any officer or officers, transfer agent, or registrar, whether because of
death, resignation, or otherwise, before such certificate or certificates have
been delivered by the corporation, such certificate or certificates may
nevertheless be adopted by the corporation and be issued and delivered as
though the person or persons who signed such certificate or certificates or
whose facsimile signature or signatures have been used thereon had not ceased
to be such officer, transfer agent or registrar.
TRANSFER AGENT AND REGISTRAR
Section 3. The corporation may have such transfer agents and registrars as
the board of directors may designate and appoint.
E-13
<PAGE> 8
LOST CERTIFICATES
Section 4. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of the fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the board of directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate
alleged to have been lost or destroyed.
TRANSFERS OF STOCK
Section 5. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
Section 6. The board of directors may close the stock transfer books of
the corporation for a period not exceeding forty-five days preceding the date
of any meeting of stockholders or the date for payment of any dividend or the
date for the allotment of rights or the date when any change or conversion or
exchange of capital stock shall go into effect, or for a period of not
exceeding forty-five days in connection with obtaining the consent of
stockholders for any purpose. In lieu of closing the stock transfer books as
aforesaid, the board of directors may fix in advance a date, not exceeding
forty-five days preceding the date of any meeting of stockholders, or the date
for payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent, as a record date
for the determination of the stockholders entitled to notice of, and to vote
at, any such meeting, and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or exchange of
capital stock, or to give such consent and in such case such stockholders and
only such stockholders as shall be stockholders of record on the date so fixed
shall be entitled to such notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, or to give such consent, as
the case may be notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid.
REGISTERED STOCKHOLDERS
Section 7. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner
E-14
<PAGE> 9
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
ARTICLES VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
RESIGNATIONS
Section 3. Any director, member of any committee or other officer may
resign at any time. Such resignation shall be made in writing, and shall take
effect at the time specified therein, and if no time be specified therein at
the time of its receipt by the president or secretary, the acceptance of a
resignation shall not be necessary to make it effective.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officers or such other person or persons as the board
of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be as determined by
the Board of Directors.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered or repealed at any regular meeting
of the stockholders or of the board of directors or at any special meeting of
the stockholders or of the
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<PAGE> 10
board of directors if notice of such alteration or repeal be contained in the
notice of such special meeting.
CERTIFICATE OF SECRETARY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby certify that the undersigned is the
secretary of AU 'n AG, INC. a corporation duly organized and existing under and
by virtue of the laws of the State of Delaware; that the above and foregoing
Bylaws of said corporation were duly and regularly adopted as such by the Board
of Directors of said corporation by unanimous consent on the 15th day of
February 1994; and that the above and foregoing Bylaws are now in full force
and effect.
Dated this 15th day of February 1994.
/s/ Ronald N. Vance
--------------------------------
Ronald N. Vance, Secretary
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<PAGE> 11
EXHIBIT (21)
SUBSIDIARIES
OF
INTERUNION FINANCIAL CORPORATION
<TABLE>
<CAPTION>
Name of Subsidiary Jurisdiction of Incorporation
- ----------------------------- -------------------------------------------
<S> <C>
Guardian Timing Services, Inc. Ontario, Canada
Bearhill Limited, Inc. British Virgin Islands
I & B, Inc. State of Delaware
Credifinance Securities, Ltd. Ontario, Canada
Credifinance Capital, Inc. Ontario, Canada
Reeve, Mackay & Associates, Ltd. Ontario, Canada
</TABLE>
NOTE: All subsidiaries do business under their official names.
E-17
<PAGE> 12
INTERUNION FINANCIAL CORPORATION
FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
F-1
<PAGE> 13
INTERUNION FINANCIAL CORPORATION
MARCH 31, 1996 AND 1995
CONTENTS
<TABLE>
PAGE
<S> <C>
Auditors' Report F-3
Financial Statements:
Consolidated Balance Sheet F-4
Consolidated Statement of Operations and Retained Earnings F-6
Consolidated Statement of Changes in Financial Position F-7
Notes to Consolidated Financial Statements F-8
</TABLE>
F-2
<PAGE> 14
[MINTZ & PARTNERS LETTERHEAD]
AUDITORS' REPORT
To The Shareholders,
InterUnion Financial Corporation
We have audited the consolidated balance sheet of InterUnion Financial
Corporation as at March 31, 1996 and 1995 and the consolidated statements of
operations and retained earnings and changes in financial position for the
years then ended. These 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 generally accepted auditing
standards. Those standards require that we plan and perform our audits to
obtain reasonable assurance whether the financial statements are free of
material misstatement. Audits include examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Audits
also include assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial 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 operations and changes in financial position for
the years then ended in accordance with generally accepted accounting
principles.
/S/ MINTZ & PARTNERS
Toronto, Ontario.
May 10, 1996.
CHARTERED ACCOUNTANTS
F-3
<PAGE> 15
INTERUNION FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
AS AT MARCH 31 1996 1995
===================================================================================================================
A S S E T S
<S> <C> <C>
CURRENT ASSETS
Cash $ 722,795 $ 490,681
Due from brokers and dealers 1,168,190 172,944
Client deposits 2,093,966 21,147,890
Marketable securities 2,625,585 15,682,071
Accounts receivable 208,727 55,262
Income tax receivable 1,597 15,866
Prepaid expenses and sundry assets 75,906 31,615
----------- ------------
6,896,766 37,596,329
----------- ------------
OTHER ASSETS
Start-up costs 438,803 --
Long-term investments 913,834 900,361
Capital assets (Note 3) 948,892 933,380
Reorganization costs 184,944 234,574
Goodwill 1,086,461 1,143,982
Assets of discontinued operations (Note 13) -- 240,693
----------- ------------
3,572,934 3,452,990
----------- ------------
$10,469,700 $ 41,049,319
=========== ============
APPROVED ON BEHALF OF THE BOARD:
____________________________ Director ______________________________ Director
===================================================================================================================
</TABLE>
See Accompanying Notes F-4
<PAGE> 16
INTERUNION FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
AS AT MARCH 31 1996 1995
===================================================================================================================
L I A B I L I T I E S
<S> <C> <C>
CURRENT LIABILITIES
Due to brokers and dealers $ 2,499,665 $30,168,593
Due to clients 3,035,310 6,368,681
Accounts payable and accrued liabilities 675,623 283,459
----------- -----------
6,210,598 36,820,733
LOANS PAYABLE (Note 4) 119,462 100,873
LIABILITIES OF DISCONTINUED OPERATIONS (Note 13) -- 499,377
----------- -----------
6,330,060 37,420,983
----------- -----------
S H A R E H O L D E R S' E Q U I T Y
CAPITAL STOCK AND ADDITIONAL PAID-IN CAPITAL (Note 7) 3,972,512 3,762,774
RETAINED EARNINGS (DEFICIT) 167,128 (134,438)
----------- -----------
4,139,640 3,628,336
----------- -----------
$10,469,700 $41,049,319
=========== ===========
===================================================================================================================
</TABLE>
See Accompanying Notes F-5
<PAGE> 17
INTERUNION FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31 1996 1995
===================================================================================================================
<S> <C> <C>
REVENUES
Commissions, trading and investment income $4,500,899 $3,971,160
Fee revenue 1,356,297 56,907
---------- ----------
5,857,196 4,028,067
---------- ----------
EXPENSES
Selling, marketing and research 4,207,289 2,868,886
Salaries and benefits 759,361 291,687
General and administration 702,938 796,673
Other 13,132 --
Gain on foreign exchange (20,902) (247)
Interest, bank charges and interest income, net (37,337) 5,830
Amortization 218,084 24,272
---------- ----------
5,842,565 3,987,101
---------- ----------
INCOME FROM CONTINUING OPERATIONS 14,631 40,966
LOSS FROM DISCONTINUED OPERATIONS (94,252) (184,845)
GAIN ON DISPOSITION OF SUBSIDIARY (Note 13) 409,418 --
---------- ----------
INCOME (LOSS) - Before income taxes 329,797 (143,879)
PROVISION FOR (RECOVERY OF) INCOME TAXES 28,231 (9,441)
---------- ----------
NET INCOME (LOSS) 301,566 (134,438)
DEFICIT - Beginning of year (134,438) --
---------- ----------
RETAINED EARNINGS (DEFICIT) - End of year $ 167,128 $ (134,438)
========== ==========
EARNINGS (LOSS) PER SHARE (Note 14)
From continuing operations $ 0.03 $ 0.26
========== ==========
After discontinued operations and gain on disposition of subsidiaries $ 0.60 $ (0.85)
========== ==========
===================================================================================================================
</TABLE>
See Accompanying Notes F-6
<PAGE> 18
INTERUNION FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31 1996 1995
===================================================================================================================
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 301,566 $ (134,438)
Items not affecting cash
Amortization 218,084 24,272
Gain on disposition of subsidiary (409,418) --
------------- -----------
110,232 (110,166)
(Decrease) increase in due to brokers and dealers, net (28,664,174) 29,995,649
Decrease (increase) in client deposits 15,720,553 (14,779,20)
Increase (decrease) in marketable securities 13,056,486 (15,682,07)
Increase in accounts receivable and sundry assets (183,487) (102,741)
Increase in accounts payable and accrued liabilities 392,164 283,460
------------- -----------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 431,774 (395,078)
------------- -----------
FINANCING ACTIVITIES
Proceeds on issuance of capital stock and additional paid-in capital 555,000 3,762,774
Increase in loans payable 18,589 100,872
------------- ------------
CASH PROVIDED BY FINANCING ACTIVITIES 573,589 3,863,646
------------- ------------
INVESTING ACTIVITIES
Start-up costs (438,803) --
Long-term investments (13,472) (900,361)
Purchase of capital assets (132,533) (957,653)
Reorganization costs (61,632) (234,574)
Goodwill -- (1,143,982)
Investment in subsidiaries (Note 5) -- (507,457)
Discontinued operations (126,809) 258,684
------------- ------------
CASH USED IN INVESTING ACTIVITIES (773,249) (3,485,343)
------------- ------------
INCREASE (DECREASE) IN CASH 232,114 (16,775)
CASH - Beginning of Year 490,681 --
CASH ACQUIRED ON ACQUISITION OF SUBSIDIARIES -- 507,456
------------- ------------
CASH - End of Year 722,795 $ 490,681
============= ============
===================================================================================================================
</TABLE>
See Accompanying Notes F-7
<PAGE> 19
INTERUNION FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(EXPRESSED IN U.S. DOLLARS)
===============================================================================
1. CHANGE IN ACCOUNTING POLICY
During the year, the company changed its method of valuing certain
subsidiaries from fair value of consideration, which was based on the
market price of shares given up to the carrying value of the underlying
assets to reflect that the effective control of these subsidiaries did not
change on acquisition.
The change has been applied retroactively, and has resulted in a
restatement of 1995 balances. The effect of this is a decrease in goodwill
and additional paid-in capital, of $7,103,020.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with generally
accepted accounting principles and reflect the following policies:
a) Principles of consolidation
The attached consolidated financial statements of InterUnion
Financial Corporation, a Delaware Corporation, ("the Company")
contain the financial position, results of operations and changes
in financial position of the Company and its subsidiaries, Bearhill
Limited, Credifinance Capital Inc., Credifinance Securities
Limited, Guardian Timing Services Inc., I & B Inc. and Reeve,
MacKay & Associates Limited. All transactions and balances between
the company and its subsidiaries have been eliminated.
b) Marketable securities
Marketable securities are stated at market value.
c) Security transactions
Security transactions are recorded in the accounts on trade date.
Commission income and related expenses for transactions executed
but not yet settled are accrued as of the financial statement date.
d) Capital assets
Capital assets are stated at cost less accumulated amortization.
It is the company's policy to provide amortization over the
estimated useful lives of the capital assets at the following
rates:
<TABLE>
<S> <C>
Automobile 30% on diminishing balance
Computer equipment 30% on diminishing balance
Furniture, fixtures and equipment 20% on diminishing balance
Computer software over 10 years
Leasehold improvements over the lease term
Research materials 20% on diminishing balance
</TABLE>
===============================================================================
/Continued... F-8
<PAGE> 20
INTERUNION FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(EXPRESSED IN U.S. DOLLARS)
===============================================================================
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
e) Start-up Costs
Costs incurred in start-up of the company's wholly-owned auction
subsidiary will be amortized on a straight- line basis over 5 years
commencing in the 1997 fiscal year.
f) Reorganization Costs
Costs incurred in reorganizing the structure of the company are
amortized on a straight-line basis over 5 years commencing in the
1996 fiscal year.
g) Goodwill
Goodwill represents the deficit of Au 'N Ag Inc. at acquisition
date and is amortized on a straight-line basis over 20 years
commencing in the 1996 fiscal year.
h) Long-Term Investments
Long-term investments in non-marketable securities where control or
significant influence is not exercised are recorded at cost. The
long-term investment in shares of the company held by a subsidiary
is included with long-term investments until sold. The sale of
these shares will be accounted for as a capital transaction.
Stock exchange seats are recorded at cost and included in long-term
investments. Declines in market value are only recorded when there
is an indication of permanent decline in value.
i) Valuation of Subsidiaries Acquired
Subsidiaries acquired from non-related parties are valued at
acquisition based on the fair market value of the underlying assets
acquired.
===============================================================================
/Continued... F-9
<PAGE> 21
INTERUNION FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(EXPRESSED IN U.S. DOLLARS)
===============================================================================
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
j) Additional Paid-in Capital
Additional paid-in capital represents the proceeds on issuance of
common shares in excess of par value of shares issued, net of costs
to issue such shares.
k) Translation of Foreign Currencies
Foreign currency amounts have been translated to U.S. funds as
follows:
i) Monetary assets and liabilities, at the rate of exchange
prevailing on the balance sheet date.
ii) Revenues and expenses, at average rate of exchange for the
month of the transaction.
Gains and losses on translation of foreign currencies,
which are not significant, are included in the statement of
operations.
l) Capital Leases
Leases which transfer substantially all of the benefits and risks
incident of ownership of the property to the company, are treated
as "capital leases" and are recorded as the acquisition of an asset
and the incurrence of an obligation.
<TABLE>
<CAPTION>
3. CAPITAL ASSETS Accumulated Net Carrying Amount
Cost Amortization 1996 1996
---- ------------ ---- ----
<S> <C> <C> <C> <C>
Automobile $ 21,781 $ 8,192 $ 13,589 $ 3,123
Computer equipment 104,024 47,944 56,080 44,573
Furniture, fixtures and equipment 118,299 32,393 85,906 30,253
Leasehold improvements 1,273 1,273 -- --
Research materials 20,964 2,097 18,867 --
Computer software (Note 12) 864,554 90,104 774,450 855,432
---------- -------- -------- --------
$1,130,895 $182,003 $948,892 $933,381
========== ======== ======== ========
</TABLE>
Automobile and furniture, fixtures and equipment includes amounts under
capital leases with a cost of approximately $21,000. The $19,000
obligation under these capital leases is included in accounts payable.
===============================================================================
/Continued... F-10
<PAGE> 22
INTERUNION FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(EXPRESSED IN U.S. DOLLARS)
===============================================================================
4. LOANS PAYABLE
The amounts are due to shareholders or parties that are directly or
indirectly related to shareholders. The loans are non-interest bearing and
have no specific repayment terms.
5. ACQUISITION OF SUBSIDIARIES
During 1995, the company acquired the subsidiaries described in Note 2(a).
The consideration for these acquisitions was a combination of common shares
of the company and 27,828 common share purchase warrants (Note 8).
The acquisition of the subsidiaries is summarized as follows:
<TABLE>
<S> <C>
Cash $ 507,456
Computer software (Note 12) 855,432
Other non-cash liabilities assumed in excess of assets acquired (40,542)
----------
$1,322,346
==========
</TABLE>
6. CHANGE OF NAME
Effective, April 17, 1994, subsequent to the controlling interest being
acquired by the company's shareholders on April 11, 1994, the name of the
company was changed to InterUnion Financial Corporation from Au 'N Ag, Inc.
Because effective control was acquired by the shareholders of the company
in an arm's length transaction, the deficit of $1,143,643 in Au 'N Ag at
April 11, 1994 has been included in 1995 goodwill in the attached
consolidated balance sheet.
===============================================================================
/Continued... F-11
<PAGE> 23
INTERUNION FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(EXPRESSED IN U.S. DOLLARS)
===============================================================================
7. CAPITAL STOCK AND ADDITIONAL PAID-IN CAPITAL
<TABLE>
<S> <C>
AUTHORIZED
1,500,000 Non-cumulative, non-participating, ($.10
par value) Class A preference shares entitled
to 100 votes for every one share issued
50,000,000 Non-cumulative, non-participating non-voting
Class "B" preference shares with a par value to
be determined at date of first issue
50,000,000 Non-cumulative, non-participating, non-voting,
convertible into common shares at a conversion
rate to be determined at the date of first
conversion, Class "C" preference shares with a
par value to be determined at date of first issue
100,000,000 Common shares ($.001 par value)
</TABLE>
<TABLE>
<CAPTION>
ISSUED
Additional
Number Capital Paid-In
of Shares Stock Capital Total
--------- ------- ----------- -----
<S> <C> <C> <C> <C>
Class A preference shares 1,500,000 $ 150,000 $ -- $ 150,000
========= ---------- ------------ ------------
Common shares (adjusted for
reverse stock splits)
Balance, April 15, 1994 122,739 $ 24,546 $ 1,122,059 $ 1,146,605
Shares issued during 1995,
net of costs 246,319 49,264 2,416,905 2,466,169
--------- ---------- ------------ ------------
Balance, March 31, 1995 369,058 73,810 3,538,964 3,612,774
Shares issued during 1996,
net of costs, and other
adjustments 323,500 64,700 145,038 209,738
Balance, March 31, 1996 692,558 138,510 3,684,002 3,822,512
========= ----------- ------------ ------------
$ 288,510 $ 3,684,002 $ 3,972,512
=========== ============ ============
</TABLE>
===============================================================================
/Continued... F-12
<PAGE> 24
INTERUNION FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(EXPRESSED IN U.S. DOLLARS)
===============================================================================
7. CAPITAL STOCK AND ADDITIONAL PAID-IN CAPITAL - Continued
During 1995, a reverse stock split of 10 (ten) to 1 (one) was approved.
Subsequent to the 1996 year-end, a reverse stock split of 20 (twenty) to 1
(one) was approved, as explained in Note 14.
8. OPTIONS AND WARRANTS
Subsequent to year-end, options for 40,250 shares (adjusted for the 20 to 1
reverse stock split described in Note 7) at $40.00 and warrants for 102,828
shares (adjusted for the 20 to 1 reverse stock split described in Note 7)
at $40.00 outstanding as at March 31, 1995 and 1996 were cancelled.
9. INCOME TAX MATTERS
The company's subsidiaries have available losses, the benefits of which
have not been recorded, of approximately $650,000 to be applied against
future taxable income. These losses expire as follows:
<TABLE>
<S> <C>
1999 $ 160,000
2000 240,000
2001 60,000
2002 190,000
-----------
$ 650,000
===========
</TABLE>
10. CONTRACTS AND COMMITMENTS
a) Agreement with Canada Trust Securities Inc.
A subsidiary of the company has entered into an agreement with
Canada Trust Securities Inc. ("CT") whereby CT will perform certain
securities trading and clearing activities and record-keeping as
agent for and on behalf of the company in various securities
markets. The agreement requires CT to hold securities and/or cash
of the clients of the company in segregation or safekeeping as the
case may be, as and when required by regulatory requirements. In
summary, the services provided by CT are merely administrative in
nature and all obligations to pay for securities purchased and to
deliver securities sold for the company's clients rests with the
company and not CT.
===============================================================================
/Continued... F-13
<PAGE> 25
INTERUNION FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(EXPRESSED IN U.S. DOLLARS)
===============================================================================
10. CONTRACTS AND COMMITMENTS - Continued
b) Lease Commitments
The total annual rent obligations under the operating leases for
equipment is approximately $13,000
Minimum annual rentals, exclusive of additional operating costs,
under the leases for the company's premises in each of the next
five years are approximately:
<TABLE>
<S> <C>
1996 $ 100,000
1997 115,000
1998 135,000
1999 120,000
2000 120,000
</TABLE>
11. WARRANTS HELD
The company, holds warrants for common shares in public companies
received as fees in connection with underwritings and other
services provided. No value has been recorded in respect of these
warrants.
12. SALES COMMITMENT
The company entered into an option agreement with a major
international financial institution whereby software owned by its
subsidiary, Bearhill Inc. may be sold for proceeds to the company
of approximately $15,000,000 Cdn. (March 31, 1996 - $11,000,000
U.S.). The company's interest in this software through its
interest in Bearhill Inc. is valued at approximately $770,000 and
is included in capital assets (Note 3).
===============================================================================
/Continued... F-14
<PAGE> 26
INTERUNION FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(EXPRESSED IN U.S. DOLLARS)
===============================================================================
13. DISCONTINUED OPERATIONS
During 1996 the company disposed, by way of an assignment in
bankruptcy of its real estate sales subsidiary, Rosedale Realty
Corporation ("Rosedale").
Accordingly, the assets and liabilities of Rosedale as at March 31,
1995 and the results of operations for the year ended March 31,
1995 and until the effective date of disposition (September 26,
1995) are accounted for as discontinued operations in the attached
consolidated financial statements.
As a result of the disposition of Rosedale, the company has a gain
to the extent that the deficit of Rosedale exceeds the company's
net investment at disposition date. There is no tax charge
required in respect of this gain.
At March 31, 1995, Rosedale's summarized financial position is as
follows:
<TABLE>
<S> <C>
Current assets $ 168,000
Capital assets 72,000
----------
$ 240,000
==========
Current liabilities $ 240,000
Long-term debt 260,000
----------
500,000
----------
Share capital 360,000
Deficit (620,000)
----------
$ (260,000)
-----------
$ 240,000
==========
</TABLE>
Revenues of Rosedale up to September 26, 1995 were approximately
$400,000 ($1,300,000 for the year ended March 31, 1995).
14. EARNINGS (LOSS) PER SHARE
Earnings (loss) per share have been calculated on the weighted
average number of common shares outstanding, adjusted for the
reverse stock splits described in Note 7, which amounted to 501,335
shares (1995 - 157,531 shares).
Fully diluted earnings per share for 1995 have not been computed as
the effect would have been anti- dilutive. All options and
warrants that were outstanding at the end of 1995 have been
cancelled as described in Note 8.
===============================================================================
/Continued... F-15
<PAGE> 27
INTERUNION FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(EXPRESSED IN U.S. DOLLARS)
===============================================================================
15. INCOME TAXES
The company's approximate income tax charges (recovery) and
approximate effective rates are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C> <C> <C>
% %
- -
Statutory income tax
rate (recovery) $ 149,000 45 $ (64,000) (45)
Non-taxable gains (176,000) (53) (5,000) (3)
Other non-deductible items 13,000 4 -- ---
Losses not tax affected 42,000 12 60,000 42
----------- ---- -------- ---
Net taxes (recovery) and effective rate $ 28,000 8 $ (9,000) (6)
=========== ==== ========= ===
</TABLE>
16. 1995 FINANCIAL STATEMENTS
1995 financial statements have been restated and reclassified to
reflect the change in accounting policy described in Note 1.
===============================================================================
F-16
<PAGE> 1
Exhibit (21)
SUBSIDIARIES
OF
INTERUNION FINANCIAL CORPORATION
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
------------------ -----------------------------
<S> <C>
Guardian Timing Services, Inc. Ontario, Canada
Bearhill Limited, Inc. British Virgin Islands
I & B, Inc. State of Delaware
Credifinance Securities, Ltd. Ontario, Canada
Credifinance Capital, Inc. Ontario, Canada
Reeve, Mackay & Associates, Ltd. Ontario, Canada
</TABLE>
NOTE: ALL SUBSIDIARIES DO BUSINESS UNDER THEIR OFFICIAL NAMES.
