part 3Trust Company and certain original shareholders dated for reference the 28 th day of February 1993. The
escrow agreement provides that the escrowed shares are to be released from escrow on the receipt of the
consent of the British Columbia Superintendent of Brokers (now the Executive Director of the British
Columbia Securities Commission) or The Vancouver Stock Exchange (now CDNX).
On October 31, 1997 John R. Hislop entered into an agreement with Hugo Wyss, pursuant to which
he acquired the 1,500,346 escrowed Luxmatic Shares. The transfer of the 1,500,346 escrowed Luxmatic
Shares was approved by The Vancouver Stock Exchange on November 7, 1997.
Conflicts of Interest of Luxmatic
There may develop potential conflicts of interest to which the directors and officers of Luxmatic may
be subject in connection with the operations of Luxmatic. For example, situations may arise where directors
and officers will be in direct conflict with Luxmatic. Conflicts, if any, will be subject to the procedures and
remedies under the laws of the Netherlands.
Dividend Record and Policy of Luxmatic
Since its incorporation, Luxmatic has not paid any dividends on the Luxmatic Shares and it is not
contemplated that Luxmatic will pay any dividends on the Luxmatic Shares in the immediate or foreseeable
future.
Promoters of Luxmatic
John R. Hislop may be considered to be the promoter of Luxmatic in that he took the initiative in
reorganizing the business of Luxmatic.
Interests of Management and Others in Material Transactions of Luxmatic
Except as described under the heading "Corporate Background and History of Luxmatic", there are
no material interests, direct or indirect, of directors, senior officers, any shareholder who beneficially owns,
directly or indirectly, more than 10% of the outstanding Luxmatic Shares or any known associate or affiliates
of such persons, in any transaction within the last three years or in any proposed transaction which has
materially affected or would materially affect Luxmatic.
Material Contracts of Luxmatic
The only material contracts entered into by Luxmatic during the past two years which can reasonably
be regarded as material, are the following:
1. Letter of Intent entered into on February 26, 2000 between Luxmatic and the Corporation with
respect to the Offer.ഊ23
2. The Lock-up Agreement. See "Proposed Transaction with Luxmatic".
3. The Luxmatic Fiscal Agency Agreement. See "Information Concerning Luxmatic - Corporate
Background and History of Luxmatic".
Copies of these agreements will be available for inspection in Vancouver at the offices of counsel
to Luxmatic, Clark, Wilson, HSBC Building, Suite 800, 855 West Georgia Street, Vancouver, British Columbia
V6C 3H1 and at the offices of Luxmatic, 1100 - 609 West Hasting Street, Vancouver, British Columbia V6B
4W4, at any time during normal business hours during the course of distribution of the Common Shares and
Warrants, and for a period of 30 days thereafter.
Legal Proceedings Concerning Luxmatic
There are no legal proceedings to which Luxmatic is a party nor to the knowledge of management
of Luxmatic have any such proceedings been threatened by any Person.
Auditors, Transfer Agent and Registrar of Luxmatic
The auditors of Luxmatic are Davidson & Company, Chartered Accountants, Stock Exchange
Tower, Suite 1270, 609 Granville Street, Vancouver, British Columbia V7Y 1G6.
CIBC Mellon Trust Company, at its principal offices at Suite 1600, 1066 West Hastings Street,
Vancouver, British Columbia V6E 3X1, is the transfer agent and registrar for the Luxmatic Shares.
PLAN OF DISTRIBUTION
On March 9, 2000, the Corporation completed a private placement pursuant to prospectus exemptions
under applicable securities legislation of an aggregate of 10,000,000 Special Warrants at a price of $0.75 per
Special Warrant as provided for in the Agency Agreement dated March 9, 2000 between the Corporation and
the Agent for aggregate gross proceeds of $7,500,000.
Each Special Warrant entitles the holder thereof to acquire upon exercise, and without payment of
any additional consideration, one Common Share and one Warrant at any time on or before the Time of
Expiry on the Expiry Date which is the earlier of: (i) the fifth Business Day following the later of the date that
(A) a receipt is issued for the Prospectus by the securities commission in the Qualifying Province (as
hereinafter defined) in which the holder of the Special Warrants is resident, and (B) the listing of the Common
Shares for trading on a recognized stock exchange acceptable to the Agent; and (ii) September 9, 2001. Any
Special Warrants not exercised by the holders prior to the Time of Expiry on the Expiry Date shall be deemed
to have been automatically exercised immediately prior to the Time of Expiry on the Expiry Date without any
further action on the part of the holder.
As consideration for the services rendered by the Agent to the Corporation pursuant to the Agency
Agreement, the Agent was paid a commission of $750,000 in cash, as well as a commission of 10% payable
by the issuance of the 1,000,000 Agent’s Special Warrants, which is equal to an aggregate of 20% of the
gross proceeds of the offering of the Special Warrants. The Prospectus qualifies for distribution the Common
Shares and Warrants issuable upon exercise of the Agent’s Special Warrants.
As additional compensation, the Corporation granted to the Agent and members of its selling group
the non-assignable Compensation Warrants, to acquire for no additional consideration at any time prior to the
Time of Expiry on the date which is the earlier of: (i) the fifth Business Day following the later of the date
that (A) a receipt is issued by the last of the securities commission in the Qualifying Provinces for the
Prospectus; and (B) the listing of the Common Shares for trading on CDNX or another stock exchange
acceptable to the Agent; and (ii) September 9, 2001, non-assignable compensation options (the "Compensation
Options") to purchase an aggregate of 1,000,000 units of the Corporation (the "Optioned Units"), each
Optioned Unit consisting of one Common Share and one Warrant, at a price of $0.75 per Optioned Unit. Inഊ24
the event the Compensation Warrants are not exercised prior to the Time of Expiry on the date described
above, they shall be deemed to be exercised immediately prior thereto. The Compensation Options are
exercisable at any time following exercise of the Compensation Warrants and prior to the Time of Expiry on
March 9, 2002. One-half of the Compensation Options are qualified for distribution pursuant to this
Prospectus.
Pursuant to the terms and conditions of the Agency Agreement, at Closing the Corporation also paid
the Agent the Fiscal Advisory Fee of $750,000 which was paid by the issuance of the 1,000,000 Fiscal Special
Warrants. Each Fiscal Special Warrant entitles the holder thereof to acquire, upon exercise and without
payment of additional consideration, one Common Share at any time on or before 5:00 p.m. (Toronto time)
on March 9, 2001. The Common Shares issuable upon exercise of the Fiscal Special Warrants are
also qualified for distribution under this Prospectus.
Pursuant to the terms and conditions to the Agency Agreement, the Corporation has also agreed
concurrent with the closing of the Offer to issue the Finder’s Special Warrants to the Agent. Each Finder’s
Special Warrant entitles the holder thereof to acquire, upon exercise and without payment of additional
consideration, one Common Share at any time on or before one year from the date of issuance of the Finder’s
Special Warrants. The Common Shares issuable upon exercise of the Finder’s Special Warrants are
also qualified for distribution pursuant to this Prospectus.
In the event that: (i) a receipt for this Prospectus is not issued by the securities commission in the
Qualifying Province where a holder is resident on or before the Time of Expiry on October 15, 2000 (or in
the case of holders resident outside the Qualifying Provinces, if a receipt has not been issued in the Province
of Ontario on or before the Time of Expiry on October 15, 2000); or (ii) the Common Shares have not been
listed on CDNX or another stock exchange acceptable to the Agent at or prior to the Time of Expiry on
August 17, 2000, then holders of Special Warrants will be entitled, upon exercise or deemed exercise of any
Special Warrants, to receive from the Corporation 1.1 Common Shares and 1.1 Warrants for each Special
Warrant held, without payment of any additional consideration.
No additional fee will be payable to the Agent in connection with the issue of the Common Shares
and Warrants upon conversion of the Special Warrants.
The Special Warrants were created and issued pursuant to the Special Warrant Indenture dated
March 9, 2000 between the Corporation and Montreal Trust. Since the date of issuance no Special Warrants
have been exercised. The terms of the Special Warrants were determined by negotiation between the
Corporation and the Agent.
No additional funds are to be received by the Corporation from the distribution of Common Shares
and Warrants upon exercise of Special Warrants, the Agent’s Special Warrants and the Fiscal Special
Warrants, or the distribution of the Compensation Options upon exercise of the Compensation Warrants.
The Warrants will be issued under and subject to the Warrant Indenture dated March 9, 2000
between the Corporation and Montreal Trust. Subject to adjustment as provided under the Warrant Indenture,
each Warrant will entitle the holder thereof to acquire one Common Share at a price of $0.75 per share,
exercisable on or before the Time of Expiry on March 9, 2002. The Warrant Indenture provides that on
subdivision or consolidation of the Common Shares, the number of Common Shares issuable upon exercise
of the Warrants and the exercise price thereof will be adjusted proportionately, and that in the event of any
reclassification or change of the Common Shares or consolidation, amalgamation or merger of the Corporation
or any transfer of its undertaking or assets as an entirety or substantially as an entirety, the holder shall be
entitled to receive the type and amount of shares and other securities or property which he or she would have
been entitled to receive as a result of such event if, on the effective date thereof, he or she had been the
registered owner of the number of Common Shares to which he or she was theretofore entitled upon
exercise. The Warrant Indenture also provides for an adjustment of the exercise price in certain instances
where there is a stock dividend or rights offering of Common Shares or other participating shares or other
specified distribution to the holders of Common Shares.ഊ25
The Agency Agreement provides that the Corporation will indemnify the Agent in certain
circumstances and that the Corporation will not, without the prior consent of the Agent, issue or sell any
Common Shares or any securities convertible into Common Shares (other than pursuant to the stock option
plan of the Corporation or upon the conversion of any outstanding securities or pursuant to any existing
obligations of the Corporation) prior to the Expiry Date.
The Common Shares and Warrants have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act") and may not be offered or sold within the
United States or to, or for, the account or benefit of, United States' residents, except in transactions exempt
from the registration requirements of the U.S. Securities Act.
Holders of Special Warrants who wish to exercise the Special Warrants held by them and acquire
Common Shares and Warrants thereunder should complete the exercise form on their Special Warrant
certificate and deliver the certificate and the executed exercise form to Montreal Trust in Calgary, Alberta
or Toronto, Ontario. Common Shares and Warrants issued to a holder of Special Warrants, Agent’s
Special Warrants, Fiscal Special Warrants or the Finder’s Special Warrants in any province in which
a receipt for this Prospectus has not been issued may be subject to resale restrictions contained
in applicable securities legislation.
DESCRIPTION OF SHARE CAPITAL
The Corporation is authorized to issue an unlimited number of Common Shares without nominal or
par value, of which, as at the date hereof, 6,000,000 Common Shares are issued and outstanding as fully paid
and non-assessable.
The holders of Common Shares are entitled to dividends if, as and when declared by the directors,
to one vote per share at meetings of the holders of Common Shares, and upon liquidation, to receive such
assets of the Corporation as are distributable to the holders of the Common Shares.
PRIOR SALES
Common Shares
During the 12 months prior to the date hereof, Common Shares have been issued by the Corporation
as follows:
Date of Issuance
Number of
Common Shares
Issued
Issue
Price Per
Common
Share
Aggregate
Issue Price
Nature of
Consideration
Received
February 2, 2000 (1) 5,999,999 $0.10 $600,000 Conversion of
Shareholder
Advances
Founder’s Warrants
On February 2, 2000 the Corporation granted 1,000,000 Founder’s Warrants to directors, officers and
employees of the Corporation. Each Founder’s Warrant entitles the holder thereof to acquire one Common
Share at a price of $0.75 per share until February 2, 2002. The Founder’s Warrants were subsequently
transferred and assigned to EcomPark effective February 2, 2000.ഊ26
CAPITALIZATION (1)
The following table sets forth the capitalization of the Corporation as at March 31, 2000 and June 30,
2000, both before and after giving effect to the exercise of the Special Warrants, the Agent’s Special
Warrants and the Fiscal Special Warrants, as well as the completion of the Offer:
Authorized
Outstanding as
at
March 31,
2000 (2)(3)(4)(5)
Outstanding as at
June 30, 2000
(2)(3)(4)(5)(6)
Outstanding
as at June 30,
2000 after
giving effect to
the Exercise of
the Special
Warrants,
Agent’s
Special
Warrants and
Fiscal Special
Warrants (2)(3)(4)(5)(6)
Outstanding
as at June 30,
2000 after
giving effect to
the Exercise of
the Special
Warrants,
Agent’s
Special
Warrants and
Fiscal Special
Warrants and
Completion of
the Offer (2)(3)(4)(5)(6)(7)(8)
(audited) (unaudited) (unaudited)
Common Shares (unlimited) $600,000 (9)
(6,000,000
Common Shares)
$600,000 (9)
(6,000,000
Common Shares)
$7,237,588 (9)
(18,000,000
Common
Shares)
$7,737,685 (9)
(45,300,637
Common
Shares)
Special Warrants $6,637,538 (9)
(10,000,000
Special Warrants)
$6,637,538 (9)
(10,000,000 Special
Warrants)
Nil Nil
Agent’s Special
Warrants
$893,333
(1,000,000 Special
Warrants)
$893,333
(1,000,000 Special
Warrants)
Nil Nil
Fiscal Special
Warrants
Nil (9)
(1,000,000 Fiscal
Special Warrants)
Nil (9)
(1,000,000 Fiscal
Special Warrants)
Nil Nil
Notes:
(1) The deficit of the Corporation as at March 31, 2000, the date of the Corporation's most recent audited financial
statements, was $912,298.
(2) Excludes the 3,000,000 Common Shares which are reserved for stock options. As at March 31, 2000, the
Corporation had no outstanding stock options.
(3) Excludes the 1,000,000 Common Shares that may be issued on exercise of the 1,000,000 Founder’s Warrants
outstanding. The Corporation has reserved up to 1,000,000 Common Shares for issuance upon the exercise of
the Founder’s Warrants at a price of $0.75 per share.
(4) The Corporation has reserved up to 1,000,000 Common Shares for issuance upon the exercise of the Fiscal
Special Warrants.
(5) The Corporation has reserved for issuance up to 11,000,000 Common Shares and 11,000,000 Warrants for
issuance upon exercise of the Special Warrants and the Agent’s Special Warrants. The Corporation has also
reserved up to 11,000,000 Common Shares, at a price of $0.75 per share, for issuance upon exercise of the
Warrants.
(6) The Corporation has reserved for issuance 1,000,000 Common Shares and 1,000,000 Warrants issuable upon
exercise of the Compensation Options issuable to the Agent and members of its selling group upon exercise of
the Compensation Warrants that are outstanding. The Corporation has also reserved up to 1,000,000 Commonഊ27
Shares at a price of $0.75 issuable upon exercise of the Warrants issuable upon exercise of the Compensation
Options.
(7) Includes the 26,407,304 Common Shares that may be issued in connection with the completion of the Offer. See
"Proposed Transaction with Luxmatic".
(8) Excludes the 893,333 Common Shares that may be issued to the Agent upon exercise of the Finder’s Special
Warrants which will be issued as payment of the Finder’s Fee in connection with the completion of the Offer.
See "Glossary", "Proposed Transaction with Luxmatic" and "Plan of Distribution".
(9) These dollar values represent net proceeds to the Corporation after the deduction of selling commissions,
professional fees and other related expenses incurred by the Corporation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATING
RESULTS AND FINANCIAL CONDITION
The following discussion and analysis should be read in conjunction with the financial
statements of the Corporation, as well as the notes thereto, included with this Prospectus.
Overview
The Corporation was a wholly-owned subsidiary of EcomPark that did not carry on any active
business from the date of its incorporation until effective March 31, 1999, when EcomPark transferred the
assets, intellectual property and two employees of the Storage Business of EcomPark to the Corporation.
During the period ended March 31, 2000, the Corporation focussed on establishing itself as a B2B e-commerce
company.
Year ended March 31, 2000
During the period ended March 31, 2000, the Corporation recorded sales of $335,637. Sales were
mainly comprised of end of the line product at 57%, hard to find product at 27% and new product at 16%.
During the period ended March 31, 2000 the Corporation’s primary focus was developing its e-commerce
Web site. Since the Web site was not launched until March 15, 2000, sales generated up to March 31, 2000
were derived from the more traditional channels. For the year ended March 31, 2000 sales revenue was
generated using traditional methods such as phone, fax and email. WiredMerchant.com’s relationships with
key product suppliers allowed it to source product and make it available to its customer base at a reasonable
mark up. Customers were offered end-of-line and hard-to-find products, as well as new products. Product
was drop shipped from the supplier to the customer and WiredMerchant.com did not take an inventory
position.
The Corporation realized a gross margin on its recorded sales of $40,000 or 12%. The gross margin
of 12% was in line with the expectations of Management.
During the period ended March 31, 2000, the Corporation incurred general and administrative
expenses of $952,311. General and administrative expenses were largely comprised of Web site development
costs of $523,000 and salaries, benefits and consulting fees of $247,000 for the Corporation’s eighteen (18)
employees.
During the period ended March 31, 2000, the Corporation recorded capital asset amortization of
$35,000 related to the acquisition of capital assets in the amount of $295,000.
Liquidity and Capital Resources
On February 2, 2000, EcomPark converted $600,000 of shareholder loan advances into 5,999,999
Common Shares.ഊ28
On March 9, 2000, the Corporation issued 10,000,000 Special Warrants for gross proceeds of
$7,500,000. See “Plan of Distribution”.
During the period ended March 31, 2000 the Corporation received $8,211,000 from financing
activities, expended $726,000 on operating activities, and invested $3,295,000 in marketable securities and
capital assets.
Pursuant to the Letter of Intent, the Corporation received an advance from Luxmatic in March 2000
for $750,000. See "Proposed Transaction with Luxmatic". The Corporation also received an advance of
$224,000 from EcomPark.
Management of the Corporation is of the opinion it has adequate working capital to meet its working
capital requirements for the next twelve (12) months.
MANAGEMENT OF THE CORPORATION
Donald R. Sanderson, Chief Executive Officer and Director
Donald R. Sanderson is a graduate from Ryerson University in Ontario with a Bachelor of Applied
Arts degree.
Mr. Sanderson commenced his career in the broadcasting industry where he was both a broadcaster
and a sales and marketing representative. During 20 years in the broadcasting industry, Mr. Sanderson
created a network of computer-automated radio stations that were provided with their programming by
satellite, a system that is still in use across North America. In addition, he was instrumental in creating a
virtual inventory system for the Television Shopping Network where he hired and trained selling hosts and
performed on the air.
In 1993, Mr. Sanderson co-founded Online Direct Inc. ("Online"), Canada’s first Internet marketing
organization. Mr. Sanderson assembled a team of developers at Online that helped develop a number of
technology components and software programs still in use across the Internet, including:
1. a telephone technology that allows Internet users with a single telephone line to view Web
pages while also making a normal telephone call with a single "click" from a Web site;
2. an online polling machine that is today's international standard within the Polling and Survey
Industry;
3. a suite of e-commerce software that is now in use around the world; and
4. the first secure coupon distribution system on the Internet.
In 1998, Online merged with two others, and eventually was sold. Mr. Sanderson returned to a private
consulting practice in 1998, where he assisted large corporations in the development of their eBusiness
systems. Mr. Sanderson also consulted for a number of venture funds throughout the United States, and from
May 1999 to October 1999 was the Manager of eBusiness for Compaq Canada Inc., taking them for the first
time to a “direct sales” model.
Timothy T. Sjoholm, President
After graduating from Ryerson University in Toronto, Ontario, Mr. Sjoholm joined DeHaviland
Aircraft of Canada as a Mechanical Engineer working in the engineering test laboratory. In 1967 he joined
Cesco Electronics Inc., a private company, where he progressed through a series of promotions in sales to
become Corporate Product Manager.ഊ29
In 1975 he was recruited to join Avnet International Ltd., where he assumed increasingly responsible
positions in both product and sales management. In 1989 he started a pilot telemarketing program to sell
across the Canadian market, which was ultimately implemented into the United States.
In 1992 Mr. Sjoholm was recruited to join Arrow Electronics Inc. as General Manager, where he
developed and managed the Canadian sales team and also negotiated several Canadian franchises.
In 1993 he joined Tecmar Technologies Inc., a public company listed on the TSE, as the General
Manager of the Computer Storage division, which ultimately became Storage One Inc. (the predecessor to
EcomPark) in 1997.
Mr. Sjoholm was the President and a Director of Storage One Inc. (the predecessor to EcomPark)
where he was responsible for the development and growth of the storage products business, from April 1997
to May 7, 1999.
From May 1999 to February 1999 Mr. Sjoholm was responsible for overseeing the development of
the business plan of the Corporation and the development of the WiredMerchant.com Web site.
On February 1, 2000 Mr. Sjoholm was appointed the President of the Corporation.
Christopher J. Hobbs, Chief Financial Officer and Director
After graduating from York University in 1990 with a Bachelor of Business Administration degree,
Mr. Hobbs joined KPMG LLP. In 1992 Mr. Hobbs received his designation as a Chartered Accountant.
Mr. Hobbs’ clientele at KPMG spanned a broad range of industries and sizes, including both private and
public companies. The services provided by Mr. Hobbs while at KPMG LLP included accounting and
business systems, financing, assistance with acquisitions and divestitures, and taxation.
On June 18, 1999 Mr. Hobbs left KPMG LLP to become the Chief Financial Officer of EcomPark.
On February 1, 2000 Mr. Hobbs was appointed the Chief Financial Officer of the Corporation. As Chief
Financial Officer, his responsibilities include financial reporting, as well as operational and administration
duties.
Mr. Hobbs is also currently the President, Chief Executive Officer and a Director of Pentland Firth
Ventures Ltd., a public company listed on the TSE. He is also currently a Director of SamsCD.com Inc.
John A. McMahon, Director
Mr. McMahon has been the Chairman of EcomPark since September 23, 1998. Mr. McMahon was
the founder, President and Chief Executive Officer of Cellular Express, a cellular equipment distributor and
reseller based in Atlanta, Georgia from 1989 to 1995. Mr. McMahon was a senior consultant to the Agent
from 1996 to December 31, 1999.
In 1998, Mr. McMahon was appointed to the Board of Directors of Diversinet Corp., a public
company listed on the TSE that is a developer of products based on public-key infrastructures and
technologies required for corporate networks, intranets and the Internet. He is also currently a Director of
Pentland Firth Ventures Ltd., a public company listed on the TSE.
Mr. McMahon is also currently a Director of Zconnexx Corporation, a public company listed on
CDNX, as well as SamsCD.com Inc.
Mr. McMahon has been a Member of the Board of Trustees of the Art Gallery of Ontario since
1996. In 1996, Mr. McMahon co-founded and was elected the General Manager of The Merry-Go-Round
Children’s Foundation.ഊ30
Douglas M. Stuve, Director
Mr. Stuve holds a Bachelor of Arts degree (with distinction) from the University of Alberta and an
LL.B from Queen’s University, Kingston, Ontario.
Mr. Stuve is a partner with the law firm Burstall Ward of Calgary, Alberta, and has been since
April 1, 1998. From July 1, 1993 to April 1, 1998 he was an associate lawyer with Burstall Ward. Mr.
Stuve’s principal area of practice is corporate finance and securities law.
Mr. Stuve is currently a Director of Patfind Inc., a capital pool company listed on CDNX that has
announced its proposed qualifying transaction, Green River Holdings Inc., a public oil and gas company listed
on CDNX, as well as Multi-Glass International Inc., an insulation distribution company listed on CDNX. He
was a Director of Northline Energy Services Inc., a public oil and gas service company listed on CDNX, from
October 1999 until January 2000 when the company was acquired by Trican Well Service Ltd.
Mr. Stuve was the Corporate Secretary of EcomPark from May 1999 to March 3, 2000.
DIRECTORS AND SENIOR OFFICERS
The names, municipalities of residence, positions with the Corporation and the principal occupations
of the directors and senior officers of the Corporation are set out below.
Name, Municipality of
Residence and Positions
with the Corporation Occupation for Previous Five Years
Common
Shares
Beneficially
Owned (2)(3)
Donald R. Sanderson
Thornhill, Ontario
Chief Executive Officer
and Director
Chief Executive Officer of the Corporation since February 1, 2000.
Independent consultant to EcomPark from November 1999 to
February 2000; prior thereto the Manager of eBusiness for
Compaq Canada Inc. from May 1999 to October 1994. The
Executive Vice-President of Online Direct Inc. from January 1993
to May 1999.
Nil
Timothy T. Sjoholm
Mississauga, Ontario
President
President of the Corporation since February 1, 2000; prior thereto
an employee of the Corporation since May 7, 1999. President of
EcomPark from April 1997 to May 7, 1999. The General Manager
of the storage products division of Tecmar Technologies
Incorporated from November 1993 to April 1997.
Nil
Christopher J. Hobbs (1)
Mississauga, Ontario
Chief Financial Officer
and Director
Chief Financial Officer of the Corporation since February 1, 2000.
Chief Financial Officer of EcomPark since June 18, 1999; prior
thereto a chartered accountant with KPMG LLP, Chartered
Accountants, since 1990.
Nil
John A. McMahon (1)
Toronto, Ontario
Director
Chairman of EcomPark since September 23, 1998. Consultant to
Yorkton from 1996 to December 31, 1999. President and Chief
Executive Officer of Cellular Express from 1989 to 1995, a cellular
equipment distributor and reseller based in Atlanta, Georgia.
Currently a director of Diversinet Corp., a public company listed
on the TSE, as well as Zconnexx Corporation, a public company
listed on CDNX, and SamsCD.com Inc., a private company.
Nilഊ31
Name, Municipality of
Residence and Positions
with the Corporation Occupation for Previous Five Years
Common
Shares
Beneficially
Owned (2)(3)
Douglas M. Stuve (1)
Calgary, Alberta
Director
Partner with Burstall Ward, Barristers & Solicitors, since April 1,
1998; prior thereto an associate lawyer with Burstall Ward since
July 1, 1993. Currently a Director of Patfind Inc., a capital pool
company listed on CDNX that has announced its proposed
qualifying transaction, Green River Holdings Inc., a public oil and
gas company listed on CDNX, as well as of Multi-Glass
International Inc., an insulation distribution company listed on
CDNX.
Nil
Notes:
(1) Member of the Audit Committee of the Corporation.
(2) Excludes Common Shares issuable pursuant to the exercise of stock options granted to the directors and officers.
See "Executive Compensation" and "Compensation of Directors".
(3) Does not include the 6,000,000 Common Shares or 1,000,000 Founder’s Warrants owned by EcomPark.
PRINCIPAL SHAREHOLDERS
To the knowledge of the directors and senior officers of the Corporation, the only Person as at the
date hereof that beneficially owns, directly or indirectly, or exercises control or direction over, more than 10%
of the Common Shares is as follows:
Name and Municipality
of Residence
Number of
Common
Shares
% of Common Shares
before the Exercise of the
Special Warrants,
Agent’s Special Warrants
and Fiscal Special
Warrants
% of Common Shares
after the Exercise of the
Special Warrants,
Agent’s Special Warrants
and Fiscal Special
Warrants
EcomPark Inc.
Toronto, Ontario
6,000,000 100% (1) 33.3% (1)
Note:
(1) Prior to the exercise of the Compensation Warrants, Founder’s Warrants or any Warrants.
As at the date hereof, the directors and senior officers of the Corporation currently own, directly or
indirectly, or exercise control or direction over, no Common Shares. Following the exercise or deemed
exercise of the Special Warrants, Agent’s Special Warrants and Fiscal Special Warrants, as well as prior to
the exercise of any of the Founder’s Warrants, Warrants or the Compensation Options, the directors and
senior officers will own no Common Shares.
EXECUTIVE COMPENSATION
During the financial year ended March 31, 2000, the Corporation had three Executive Officers who
were paid aggregate cash consideration of $150,000. For this purpose "Executive Officers" means the Chief
Executive Officer, the Chief Financial Officer and the President.ഊ32
The table below shows the total compensation of the Corporation's Executive Officers during the
financial year ended March 31, 2000.
Summary Compensation Table
Annual Compensation Long Term Compensation
Name and
Principal
Position
(a)
Year
(b)
Salary (1)
($)
(c)
Bonus
($)
(d)
Other
Annual
Compensation (2)
($)
(e)
Common
Shares
Under
Options
Granted
(#)
(f)
Restricted
Shares or
Restricted
Share
Units ($)
(g)
LTIP
Payouts
($)
(h)
All Other
Compensation (2)
($)
(i)
Donald R.
Sanderson
Chief
Executive
Officer (1)
2000 50,000 Nil Nil Nil N/A N/A N/A
Christopher
J. Hobbs
Chief
Financial
Officer (3)
2000 N/A N/A N/A Nil N/A N/A N/A
Timothy T.
Sjoholm
President (3)
2000 100,000 Nil Nil Nil N/A N/A N/A
Notes:
(1) In this Prospectus, "Executive Officer" means an individual who at any time during the year was the Chairman
of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, a Vice-President of the
Corporation, or an officer of the Corporation or any other person who performed a policy-making function in
respect of the Corporation who each had individual aggregate salaries and bonuses during the last fiscal year in
excess of $100,000.
(2) The value of perquisites and other personal benefits do not exceed the lesser of $50,000 and 10% of the total of
the annual salary and bonus for the Executive Officers.
(3) On February 1, 2000 Donald R. Sanderson was appointed the Chief Executive Officer of the Corporation,
Timothy T. Sjoholm was appointed the President of the Corporation, and Christopher J. Hobbs was appointed
the Chief Financial Officer of the Corporation.
Stock Option Plan
All options held by the Executive Officers have been granted pursuant to the Corporation’s incentive
stock option plan (the "Stock Option Plan"). The Stock Option Plan provides that the Board of Directors of
the Corporation may from time to time, in its discretion, grant to directors, officers, employees and consultants
of the Corporation, or any subsidiary of the Corporation, the option to purchase Common Shares provided that
the number of Common Shares reserved for issuance under the Stock Option Plan shall not exceed the
number of Common Shares established by the Directors and approved by the shareholders of the Corporation
(which is currently 3,000,000), and the number of shares reserved for issuance to any one person shall not
exceed 5% of the issued and outstanding Common Shares. The Board of Directors is to determine the price
per Common Share and the number of Common Shares which may be allotted to each director, officer,
employee and consultant and all other terms and conditions of the option. The price per Common Share set
by the directors shall not be less than the last price at which a full board lot of Common Shares was, on the
last business day prior to the date on which such option is granted, traded on the principal market on which
the Common Shares are then traded, less the applicable discount permitted (if any) by such applicable
exchange or market. Options may be exercisable for up to five years from the date of grant, but the Board
of Directors has the discretion to grant options which are exercisable for a shorter period. Options under the
Stock Option Plan are non-assignable. If prior to the exercise of an option, the holder ceases to be a director,ഊ33
officer, employee or consultant, the option of the holder shall be limited to the number of shares purchasable
by him/her immediately prior to the time of his/her cessation of office or employment and he/she shall have
no right to purchase any other shares. Options must be exercised within 90 days of termination of
employment or cessation of position with the Corporation, provided that if the cessation of office, directorship,
consulting arrangement or employment was by reason of death, the option must be exercised within 12 months
after such death, subject to the expiry date of such option.
The following table sets forth outstanding stock options granted by the Corporation under the Stock
Option Plan as at March 31, 2000.
Number in Group
Number of Shares
Under Option Expiry Date
Exercise Price
per Share
Directors Nil N/A N/A
Officers Nil N/A N/A
Employees Nil N/A N/A
Total Nil
Subsequent to March 31, 2000, the Corporation granted 2,000,000 stock options exercisable at a price
of $0.75 per share until July 1, 2005.
Option Grants During The Most Recently Completed Financial Year
Name
(a)
Securities
Under Options
Granted
(#)
(b)
% of Total
Options Granted
in Financial year
(c)
Exercise
Price
($/Security)
(d)
Market Value
of Securities
Underlying
Options on the
Date of Grant
($/Security) (1)
(e)
Expiration Date
(f)
Donald R.
Sanderson
Nil Nil N/A N/A N/A
Timothy T.
Sjoholm
Nil Nil N/A N/A N/A
Christopher
J. Hobbs
Nil Nil N/A N/A N/A
Note:
(1) Market Value of Securities is based on the previous price paid by an arm’s length party for the Special Warrants.
The following table shows the aggregate number of options exercised, the value realized upon
exercise of the options, the number of unexercised options held at year end and the year end value of the
unexercised options for options held by Executive Officers of the Corporation.ഊ34
Aggregated Option Exercises During The Most Recently
Completed Financial Year and Year End Option Values
Name
(a)
Securities
Acquired on
Exercise
(#)
(b)
Aggregate
Value
Realized
($)
(c)
Unexercised Options
at Financial
Year-End
(#)
(d)
Value of Unexercised in the
Money Options at Financial
Year-End
($)
(e)
Exercisable/Unexercisable Exercisable/Unexercisable
Donald R.
Sanderson
Nil Nil Nil Nil Nil Nil
Christopher J.
Hobbs
Nil Nil Nil Nil Nil Nil
Timothy T.
Sjoholm
Nil Nil Nil Nil Nil Nil
Long Term Incentive Plans
Other than the Stock Option Plan, details of which are provided above, the Corporation does not have
any plans which provide compensation intended to serve as incentive of Executive Officers for performance
to occur over a period longer than one year.
Employment and Consulting Agreements
The Corporation is not a party to any employment or consulting agreements with its senior officers.
COMPENSATION OF DIRECTORS
Directors' Fees
During the financial year ended March 31, 2000 no compensation was paid by the Corporation to
Directors for acting as directors. The Corporation has granted options to purchase Common Shares to the
directors. See "Executive Compensation Stock Option Plan".
Directors' Options
During the financial year ended March 31, 2000, no stock options were granted to directors. See
"Executive Compensation - Stock Option Plan".
During the financial year ended March 31, 2000, there were no stock options exercised by Directors
of the Corporation.
Other Compensation
The Corporation did not pay any other compensation to its Directors during the financial year ended
March 31, 2000.ഊ35
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
There has been no indebtedness outstanding by directors or senior officers of the Corporation to the
Corporation or from the Corporation to directors or senior officers of the Corporation, at any time since the
beginning of the last completed financial year of the Corporation.
The Corporation was indebted in the amount of $800,000 to EcomPark until February 2, 2000 when
$600,000 of such debt was converted into 5,999,999 Common Shares and the balance was repaid.
ESCROWED SECURITIES
The following table sets out as of the date hereof the number of Common Shares which are held in
escrow:
Designation of Class
Number of Securities
in Escrow as of the
date hereof
Number of
Securities in Escrow
After Completion
of the Offer
Percentage of
Class After
Exercise of the
Special Warrants and
After Completion of
the Offer
Common Shares Nil 3 3%
Upon completion of the Offer, it is expected CDNX will require John R. Hislop and Cubix
Investments Inc. to enter into a Form 5D value escrow agreement with Montreal Trust and the Corporation
(the "Luxmatic Escrow Agreement"), pursuant to which these shareholders will deposit 3 Common Shares
into escrow with Montreal Trust. The Luxmatic Escrow Agreement will provide that 25% of the number of
Common Shares held thereunder shall be released on the date of the bulletin of CDNX advising of the
completion and final acceptance of the Offer, as well as on each of the six month, twelve month and eighteen
month anniversaries of the date of such bulletin.
Upon completion of the Offer, it is expected CDNX will require EcomPark to enter into a Form 5D
value escrow agreement with Montreal Trust and the Corporation (the "EcomPark Escrow Agreement"),
pursuant to which EcomPark will deposit 6,000,000 Common Shares into escrow with Montreal Trust. The
EcomPark Escrow Agreement will provide that 25% of the number of Common Shares held thereunder shall
be released on the date of the bulletin of CDNX advising of the completion and final acceptance of the Offer,
as well as on and each of the six month, twelve month and eighteen month anniversaries of the date of such
bulletin.
CONFLICTS OF INTEREST
There may develop potential conflicts of interest to which the directors and officers of the
Corporation may be subject in connection with the operations of the Corporation. For example, situations may
arise where directors and officers will be in direct conflict with the Corporation. Conflicts, if any, will be
subject to the procedures and remedies under the Business Corporations Act (Ontario).ഊ36
DIVIDEND RECORD AND POLICY