UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
AMENDMENT NO. 1
X REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ________
Commission file number: 0-50112
TRI-LATERAL VENTURE CORPORATION
(Exact name of Registrant as specified in its charter)
Ontario, Canada
(Jurisdiction of incorporation or organization)
750 West Pender St., #604, Vancouver, British Columbia V6C 2T7
(Address of principal executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Shares, without par value
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report. 3,372,054
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 12 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past ninety days. Yes ___ No xxx
Indicate by check mark which financial statement item the registrant has
elected to follow: Item 17 XXX Item 18 ___
Page 1 of 112
Index to Exhibits on Page 46
TRI-LATERAL VENTURE CORPORATION
FORM 20-F REGISTRATION STATEMENT
TABLE OF CONTENTS
PART I
Item 1. Identity of Directors, Senior Management and Advisors 3
Item 2. Offer Statistics and Expected Timetable 5
Item 3. Key Information 5
Item 4. Information on the Company 14
Item 5. Operating and Financial Review and Prospects 22
Item 6. Directors, Senior Management and Employees 24
Item 7. Major Shareholders and Related Party Transactions 29
Item 8. Financial Information 32
Item 9. The Offer and Listing 33
Item 10. Additional Information 35
Item 11. Quantitative and Qualitative Disclosures About Market Risk 43
Item 12. Description of Securities Other Than Equity Securities 43
PART II
Item 13. Default, Dividend Arrearages and Delinquencies 43
Item 14. Material Modifications to the Rights of
Security Holders and Use of Proceeds 43
Item 15. Reserved
Item 16. Reserved
PART III
Item 17. Financial Statements 43
Item 18. Financial Statements 43
Item 19. Exhibits 44
INTRODUCTION
Tri-Lateral Venture Corporation was organized under the laws of Ontario,
Canada. In this Registration Statement, the "Company", "we," "our" and "us"
refer to Tri-Lateral Venture Corporation (unless the context otherwise
requires). We have prepared this Registration Statement on the basis of
information that we have or that we have obtained from sources we believe to
be reliable. Summary discussions of documents referred to in this
Registration Statement may not be complete and we refer you to the actual
documents for more complete information. Our principal corporate offices are
located at 750 West Pender Street, #604, Vancouver, British Columbia V6C 2T7;
our telephone number is 604-689-0188.
BUSINESS OF TRI-LATERAL VENTURES CORPORATION
The Company is in the business of acquiring, exploring, and developing (when
appropriate) natural resource properties. The Company's primary property is
the Lennie Property, a gold-exploration project in Ontario, Canada. No known
bodies of commercial ore or economic deposits have been established on any of
the Company's natural resource properties.
FINANCIAL AND OTHER INFORMATION
In this Registration Statement, unless otherwise specified, all dollar amounts
are expressed in Canadian Dollars ("CDN$" or "$"). The Government of Canada
permits a floating exchange rate to determine the value of the Canadian Dollar
against the U.S. Dollar (US$).
FORWARD-LOOKING STATEMENTS
This Registration Statement includes forward-looking statements, principally
in ITEM #4, "Information on the Company" and ITEM #5 Item #5, "Operating and
Financial Review and Prospects". We have based these forward-looking
statements largely on our current expectations and projections about future
events and financial trends affecting our business. These forward-looking
statements are subject to risks, uncertainties and assumptions including,
among other things, the factors discussed in this Registration Statement under
ITEM #3, "Key Information, Risk Factors" and factors described in documents
that we may furnish from time to time to the Securities and Exchange
Commission.
The words "believe", "may", "will", "estimate", "continue", "anticipate",
"intend", "expect", and similar words are intended to identify forward-looking
statements. In light of these risks and uncertainties, the forward-looking
information, events and circumstances discussed in this Registration Statement
might not occur. Our actual results and performance could differ
substantially from those anticipated in our forward-looking statements. We
undertake no obligation to update publicly or revise any forward-looking
statements because of new information, future events or otherwise.
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
1.A.1. Directors
Table No. 1 lists as of 11/30/2002 the names of the Directors of the Company.
Table No. 1
Directors
______________________________________________________________________________
Date First Elected
Name Age or Appointed
- ------------------------------------------------------------------------------
Gregory C. Burnett (1)(2)(3) 40 June 2000
Alan G. Crawford (1)(2)(3) 47 June 2000
Kevin R. Hanson (1)(2)(3) 45 June 2000
Michael Weingarten (4) 47 June 2001
- ------------------------------------------------------------------------------
(1) Member of Audit Committee.
(2) Member of Executive Committee.
(3) Resident/Citizen of British Columbia, Canada.
(4) Resident/Citizen of Ontario, Canada
(5) All business addresses c/o Tri-Lateral Venture Corporation
750 Pender Street #604
Vancouver, BC Canada V6C 2T7
_ __________________________________________________________________________
1.A.2. Senior Management
Table No. 2 lists, as of 11/30/2002, the names of the Senior Management of the
Company. The Senior Management serves at the pleasure of the Board of
Directors.
Table No. 2
Senior Management
______________________________________________________________________________
Date of
First
Name Position Age Appointment
- ------------------------------------------------------------------------------
Gregory C. Burnett (1)(3) President/CEO 40 June 2000
Brent Petterson (2)(3) Corporate Secretary 41 June 2000
- ------------------------------------------------------------------------------
(1) He spends about 20% of his time on the affairs of the Company.
(2) He spends about 5% of his time on the affairs of the Company.
(3) All business addresses c/o Tri-Lateral Venture Corporation
750 Pender Street #604
Vancouver, BC Canada V6C 2T7
______________________________________________________________________________
Gregory C. Burnett's business functions, as President/CEO of the Company,
include leading the search for businesses opportunities, strategic planning,
business development, operations, financial administration, accounting,
liaison with auditors-accountants-lawyers-regulatory authorities-financial
community/shareholders; and preparation/payment/organization of the
expenses/taxes/ activities of the Company, and reporting to Board of
Directors.
Brent Petterson's business functions, as Corporate Secretary, include
assisting the President with financial and corporate administrative matters.
1.B. Advisors
The Company's attorneys are Clark Wilson,
800- 885 West Georgia Street
Vancouver, BC V6C 2T7
604-687-5700
1.C. Auditors
The Company's auditors for its financial statements for each of the preceding
two periods was Morgan & Company, Chartered Accountants, 700 West Georgia
Street, #1730, Vancouver, British Columbia, Canada V7Y 1A1. They are members
of the British Columbia Institute of Chartered Accountants.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.
--- No Disclosure Necessary ---
ITEM 3. KEY INFORMATION.
3.A.1. Selected Financial Data
3.A.2. Selected Financial Data
The selected financial data of the Company for Fiscal 2001 and Fiscal 2000
ended December 31st was derived from the financial statements of the Company
which have been audited by Morgan & Company, independent Chartered Accountants,
as indicated in their audit report which is included elsewhere in this
Registration Statement. The selected financial data of the Company for
Fiscal 1999, Fiscal 1998 and Fiscal 1997 ended December 31st was derived
from the financial statements of the Company that were audited by Amisano
Hanson; these financial statements are not included herein.
The selected financial data as at and for the nine-month periods ended
9/30/2002 and 9/30/2001 have been derived from the unaudited financial
statements of the Company, included herein and, in the opinion of management
include all adjustments (consisting solely of normally recurring adjustments)
necessary to present fairly the information set forth therein.
The selected financial data should be read in conjunction with the financial
statements and other financial information included elsewhere in the
Registration Statement.
The Company has not declared any dividends since incorporation and does not
anticipate that it will do so in the foreseeable future. The present policy
of the Company is to retain all available funds for use in its operations and
the expansion of its business.
Effective 5/15/1998, the Company consolidated its common shares on a 1-for-10
basis. All references to numbers of shares and/or per share figures refer to
post-consolidation data unless otherwise indicated.
Table No. 3 is derived from the financial statements of the Company, which
have been prepared in accordance with Canadian Generally Accepted Accounting
Principles (GAAP) and Canadian/USA Generally Accepted Auditing Standards
(GAAS). There are no material numerical differences between Canadian GAAP and
US GAAP; other differences, as applicable to the Company, are described in
footnotes to the financial statements.
Table No. 3
Selected Financial Data
(CDN$ in 000, except per share data)
______________________________________________________________________________
Unaudited
Nine Months Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended
9/30/02 9/30/01 12/31/01 12/31/00 12/31/99 12/31/98 12/31/97
- --------------------------------------------------------------------------------
CANADIAN GAAP and US GAAP
Sales Revenue $0 $0 $ 0 $ 0 $ 0 $ 0 $ 0
(Loss) From
Operations ($81) ($112) ($198) ($77) ($110) ($1065) ($441)
Net Income (Loss) ($81) ($112) ($198) ($77) ($110) ($1065) ($441)
(Loss) per Share ($0.02) ($0.03) ($0.06) ($0.02) ($0.05) ($0.96) ($0.39)
Dividends
Per Share $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Wtg. Avg.
Shares (000) 3372 3372 3372 3372 2238 1103 1103
Period-end
Shares O/S 3372 3372 3372 3372 3372 1104 1104
- -------------------------------------------------------------------------------
Working Capital ($957) ($869) ($869) ($171) ($93) ($437) ($164)
Long-Term Debt 0 0 0 0 0 0 0
Capital Stock 5783 5783 5783 5785 5785 5332 5332
Shareholders'
Equity (450) (369) (369) (171) (93) (437) 628
Total Assets 531 738 738 47 4 40 986
(1) Cumulative Net Loss since incorporation under US GAAP has been ($6,235,251).
_______________________________________________________________________________
3.A.3. Exchange Rates
In this Registration Statement, unless otherwise specified, all dollar amounts
are expressed in Canadian Dollars (CDN$). The Government of Canada permits a
floating exchange rate to determine the value of the Canadian Dollar against
the U.S. Dollar (US$).
Table No. 4 sets forth the exchange rates for the Canadian Dollar at the end
of Fiscal 2001/2000/1999/1998/1997 ended December 31st, the average rates for
the period, and the range of high and low rates for the period. The data for
the nine-month periods ended 9/30/2002 and 9/30/2001 is provided, as is the
data for each month during the most recent eleven months.
For purposes of this table, the rate of exchange means the noon buying rate
in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York. The table sets
forth the number of Canadian Dollars required under that formula to buy one
U.S. Dollar. The average rate means the average of the exchange rates on the
last day of each month during the period.
Table No. 4
U.S. Dollar/Canadian Dollar
______________________________________________________________________________
Average High Low Close
- ------------------------------------------------------------------------------
November 2002 1.59 1.55 1.57
October 2002 1.59 1.56 1.56
September 2002 1.59 1.55 1.59
August 2002 1.60 1.55 1.56
July 2002 1.59 1.51 1.57
June 2002 1.55 1.51 1.52
May 2002 1.57 1.53 1.53
April 2002 1.60 1.56 1.57
March 2002 1.60 1.58 1.60
February 2002 1.61 1.59 1.60
January 2002 1.61 1.59 1.59
- ------------------------------------------------------------------------------
Nine Months Ended 9/30/2002 1.57 1.61 1.51 1.59
Nine Months Ended 9/30/2001 1.54 1.58 1.49 1.58
- ------------------------------------------------------------------------------
Fiscal Year Ended 12/31/2001 1.55 1.60 1.49 1.59
Fiscal Year Ended 12/31/2000 1.50 1.56 1.44 1.50
Fiscal Year Ended 12/31/1999 1.49 1.53 1.44 1.44
Fiscal Year Ended 12/31/1998 1.49 1.57 1.41 1.54
Fiscal Year Ended 12/31/1997 1.39 1.44 1.34 1.43
______________________________________________________________________________
3.B. Capitalization and Indebtedness
Table No. 5 sets forth the capitalization and indebtedness of the Company as
of 9/30/2002. There have been no material changes since that date
Table No. 5
Capitalization and Indebtedness
September 30, 2002
______________________________________________________________________________
Shareholders' equity:
Common Shares, no par value;
Unlimited number authorized
3,372,054 shares issued and outstanding $5,783,259
Contributed Surplus 2,000
Retained Earnings (deficit) ($6,235,251)
Net Stockholders' Equity ($449,992)
TOTAL CAPITALIZATION ($449,992)
- ------------------------------------------------------------------------------
Stock Options Outstanding: nil
Warrants Outstanding: nil
Preference Shares Outstanding: nil
Capital Leases: nil
Guaranteed Debt: nil
Secured Debt: nil
______________________________________________________________________________
3.C. Reasons For The Offer And Use Of Proceeds
--- No Disclosure Necessary ---
3.D. Risk Factors
Risks Associated with Mining
Despite exploration work on its mineral claims, to date, no known bodies of
commercial ore or economic deposits have been established on any of the
Company's mineral properties. In addition, the Company is in its early stages
of exploration; the Company has only done a preliminary legal survey of the
boundaries of any of these properties, and therefore, in accordance with the
laws of the jurisdictions in which these properties are situated, their
existence/area could be in doubt.
Furthermore, mining exploration involves a high degree of risk, which even a
combination of experience, knowledge and careful evaluation may not be able to
avoid. The Company may not discover commercial quantities of minerals. The
mining properties may not be brought into a state of commercial production.
Finding mineral deposits is dependent on a number of factors, not the least
of which is the technical skill of exploration personnel involved. The
commercial viability of a mineral deposit once discovered is also dependent
on a number of factors, some of which are particular attributes of the deposit,
such as size, grade and proximity to infrastructure, as well as metal prices.
Most of these factors are beyond the control of the entity conducting such
mineral exploration.
Mining operations are subject to a wide range of government regulations such
as restrictions on production, price controls, tax increases, expropriation of
property, environmental protection, protection of agricultural territory or
changes in conditions under which minerals may be marketed.
Mining operations may also be affected by claims of native peoples. The
marketability of minerals is affected by numerous factors beyond the control
of the entity involved in their mining and processing. These factors include
market fluctuations, government regulations relating to prices, taxes
royalties, allowable production, import, exports and supply and demand. The
effect of these factors cannot be accurately determined.
The Company is an exploration stage company with no history of pre-tax profit.
There can be no assurance that the Company's operations will be profitable in
the future.
The mining industry is highly competitive and the Company will be required to
compete in the future directly with other corporations that may have greater
resources. Such corporations could outbid the Company for potential projects
or produce minerals at lower costs.
The Company may become subject to liability for cave-ins and other hazards of
mineral exploration against which it cannot insure or against which it may
elect not to insure because of high premium costs or other reasons. Payment
of such liabilities would reduce funds available for acquisition or
exploration of mineral prospects and would have a material adverse effect
on the Company's financial position.
The Company's ability to continue exploration of resource properties will be
dependent upon its ability to raise significant additional financing
hereafter. Should the Company not be able to obtain such financing, its
properties may be lost entirely.
Financing Risks
The Company, while engaged in the business of exploiting mineral properties,
believes it has sufficient funds to undertake its planned operations and
exploration projects during the next six months. If the Company's exploration
programs are successful, additional financing will be required to develop the
mineral properties identified and to place them into commercial production.
The exploitation of the Company's mineral properties is, therefore, dependent
upon the Company's ability to obtain financing through the joint venturing of
projects, debt financing, equity financing or other means. There is no
assurance that such sources of financing will be available on acceptable terms,
if at all. Failure to obtain such financing may result in delay or indefinite
postponement of work on the Company's mineral properties, as well as the
possible loss of such properties.
Development Risks
The development of mineral properties, assuming exploration efforts identify
commercially recoverable amounts of minerals, involves a high degree of risk.
Unusual or unexpected geological formations, formation pressures, fires, power
outages, labor disruptions, industrial accidents, flooding, explosions, cave-
ins, land slides, environmental hazards, and the inability to obtain suitable
or adequate machinery, equipment or labor are other risks involved in the
operation of mines and the conduct of exploration programs. Such risks could
result in damage to, or destruction of, mineral properties or producing
facilities, personal injury, environmental damage, delays in mining, monetary
losses and possible legal liability. The economics of developing precious
and base metal properties is affected by many factors including the cost of
operations, variations of the grade of ore mined, fluctuating mineral markets,
costs of processing equipment and such other factors as government regulations,
including regulations relating to royalties, allowable production, importing
and exporting of minerals and environmental protection. Depending on the price
of precious and base metals produced, the Company may determine that it will be
impractical to commence commercial production. If the Company's development
efforts are not successful with respect to any individual properties, the
expenditures associated with such properties are written off.
Management of Growth
The Company may not be able to manage the expansion of its business, and a
failure to do so may have a material adverse effect on the Company's operating
results.
Dependence Upon Key Management Employees
While engaged in the business of exploiting mineral properties, the nature of
the Company's business, its ability to continue its exploration of potential
development projects, and to develop a competitive edge in the marketplace,
depends, in large part, on its ability to attract and maintain qualified key
management personnel. Competition for such personnel is intense and the
Company may not be able to attract and retain such personnel. The Company's
growth will depend, on the efforts of its key management employees. Loss of
any of these people could have a material adverse effect on the Company. The
Company has no key-man life insurance or written contacts with Senior
Management.
Conflicts of Interest
Certain of the Directors and Senior Management of the Company are also
Directors and/or Senior Management and/or significant shareholders of other
companies, including those also involved in natural resources. As the Company
is engaged in the business of exploiting mineral properties, such associations
may give rise to conflicts of interest from time to time. The Directors of the
Company are required by law to act honestly and in good faith with a view to
the best interests of the Company and to disclose any interest that they may
have in any project or opportunity of the Company. If a conflict of interest
arises at a meeting of the Board of Directors, any Director in a conflict must
disclose his interest and abstain from voting on such matter. In determining
whether or not the Company will participate in any project or opportunity, the
Directors will primarily consider the degree of risk to which the Company may
be exposed and its financial position at the time.
Risks Relating to an Investment in the Securities of the Company
Dilution Through Employee/Director/Consultant Options. Because the success
of the Company is highly dependent upon its respective employees, the Company
may in the future grant to some or all of its key employees, Directors and
consultants options to purchase common shares as non-cash incentives. Those
options may be granted at exercise prices below those for the common shares
prevailing in the public trading market at the time or may be granted at
exercise prices equal to market prices at times when the public market is
depressed. To the extent that significant numbers of such options may be
granted and exercised, the interests of the other stockholders of the Company
may be diluted.
Dividends. The Company intends to invest all available funds to finance the
growth of the Company's business and therefore investors cannot expect to
receive a dividend on the common shares of the Company in the foreseeable
future. Even were the Company to determine a dividend could be declared, the
Company could be precluded from paying dividends by restrictive provisions of
loans, leases or other financing documents or by legal prohibitions under
applicable corporate law.
Stock Market Price and Volume Volatility. The market for the common shares of
the Company may be highly volatile for reasons both related to the performance
of the Company or events pertaining to the industry (i.e., mineral price
fluctuation/high production costs/accidents) as well as factors unrelated to
the Company or its industry. The Company's common shares can be expected to
be subject to volatility in both price and volume arising from market
expectations, announcements and press releases regarding the Company's
business, and changes in estimates and evaluations by securities analysts or
other events or factors. In recent years the securities markets in the United
States and Canada have experienced a high level of price and volume volatility,
and the market price of securities of many companies, particularly small-
capitalization companies such as the Company, have experienced wide
fluctuations that have not necessarily been related to the operations,
performances, underlying asset values, or prospects of such companies. For
these reasons, the Company's common shares can also be expected to be subject
to volatility resulting from purely market forces over which the Company will
have no control. Further, despite the existence of a market for trading the
Company's common shares in Canada, stockholders of the Company may be unable
to sell significant quantities of common shares in the public trading markets
without a significant reduction in the price of the common shares.
Control by Principal Stockholders, Officers and Directors Could Adversely
Affect the Company's Stockholders. The Company's Senior Management, Directors
and greater-than-five-percent stockholders (and their affiliates), acting
together, have the ability to control substantially all matters submitted to
the Company's stockholders for approval (including the election and removal of
directors and any merger, consolidation or sale of all or substantially all of
the Company's assets) and to control the Company's management and affairs.
Accordingly, this concentration of ownership may have the effect of delaying,
deferring or preventing a change in control of the Company, impeding a merger,
consolidation, takeover or other business combination involving the Company
or discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of the Company, which in turn could materially
adversely affect the market price of the Company's stock.
History of Losses. The Company has had a history of losses and there is no
assurance that it can reach profitability in the future. The Company will
require significant additional funding to meet its business objectives.
Capital will need to be available to help maintain and to expand work on the
Company's principal exploration property. The Company may not be able to
obtain additional financing on reasonable terms, or at all. If equity
financing is required, as expected, then such financings could result in
significant dilution to existing shareholders. If the Company is unable to
obtain sufficient financing, the Company might have to dramatically slow
exploration efforts and/or lose control of its projects. The Company has
historically obtained the preponderance of its financing through the issuance
of equity, there is no limit to the number of authorized common shares, and
the Company has no current plans to obtain financing through means other than
equity financing.
Company is Incorporated in Canada. The articles/by-laws and the laws of the
Province of Ontario are different that those typical in the United States.
However, the typical rights of investors in Canadian companies differ only
modestly from those in the United States; refer to the relevant sections which
are discussed in Section 9.A.5 and Section 10.B of this Registration
Statement.
Broker-Dealers May Be Discouraged From Effecting Transactions In Our Common
Shares Because They Are Considered Penny Stocks And Are Subject To The Penny
Stock Rules. Rules 15g-1 through 15g-9 promulgated under the Securities
Exchange Act of 1934, as amended, impose sales practice and disclosure
requirements on NASD broker-dealers who make a market in "a penny stock".
A penny stock generally includes any non-NASDAQ equity security that has a
market price of less than US$5.00 per share. Our shares are quoted on the
Canadian Unlisted Board, and the price of our common shares ranged from
CDN$1.00 (low) to CDN$1.50 (high) during the period from 1/1/2001 to
11/30/2002. The closing price of our shares on 11/30/2002 was CDN$1.00. The
additional sales practice and disclosure requirements imposed upon broker-
dealers may discourage broker-dealers from effecting transactions in our
shares, which could severely limit the market liquidity of the shares and
impede the sale of our shares in the secondary market.
Under the penny stock regulations, a broker-dealer selling penny stock to
anyone other than an established customer or "accredited investor" (generally,
an individual with net worth in excess of US$1,000,000 or an annual income
exceeding US$200,000, or US$300,000 together with his or her spouse) must make
a special suitability determination for the purchaser and must receive the
purchaser's written consent to the transaction prior to sale, unless the
broker-dealer or the transaction is otherwise exempt.
In addition, the penny stock regulations require the broker-dealer to deliver,
prior to any transaction involving a penny stock, a disclosure schedule
prepared by the US Securities and Exchange Commission relating to the penny
stock market, unless the broker-dealer or the transaction is otherwise exempt.
A broker-dealer is also required to disclose commissions payable to the
broker-dealer and the registered representative and current quotations for the
securities. Finally, a broker-dealer is required to send monthly statements
disclosing recent price information with respect to the penny stock held in a
customer's account and information with respect to the limited market in penny
stocks.
U.S. Investors May Not Be Able to Enforce Their Civil Liabilities Against Us
or Our Directors, Controlling Persons and Officers. It may be difficult to
bring and enforce suits against the Company. The Company is a corporation
incorporated in the province of Ontario under the Ontario Business
Corporations Act. A majority of the Company's directors must be residents of
Canada, and all or a substantial portion of their assets are located outside
of the United States, predominately in Canada. As a result, it may be
difficult for U.S. holders of our common shares to effect service of process
on these persons within the United States or to realize in the United States
upon judgments rendered against them. In addition, a shareholder should not
assume that the courts of Canada (i) would enforce judgments of U.S. courts
obtained in actions against us or such persons predicated upon the civil
liability provisions of the U.S. federal securities laws or other laws of the
United States, or (ii) would enforce, in original actions, liabilities against
us or such persons predicated upon the U.S. federal securities laws or other
laws of the United States.
However, U.S. laws would generally be enforced by a Canadian court provided
that those laws are not contrary to Canadian public policy, are not foreign
penal laws or laws that deal with taxation or the taking of property by a
foreign government and provided that they are in compliance with applicable
Canadian legislation regarding the limitation of actions. Also, a judgment
obtained in a U.S. court would generally be recognized by a Canadian court
except, for example:
a) where the U.S. court where the judgment was rendered had no jurisdiction
according to applicable Canadian law;
b) the judgment was subject to ordinary remedy (appeal, judicial review and
any other judicial proceeding which renders the judgment not final,
conclusive or enforceable under the laws of the applicable state) or not
final, conclusive or enforceable under the laws of the applicable state;
c) the judgment was obtained by fraud or in any manner contrary to natural
justice or rendered in contravention of fundamental principles of
procedure;
d) a dispute between the same parties, based on the same subject matter has
given rise to a judgment rendered in a Canadian court or has been decided
in a third country and the judgment meets the necessary conditions for
recognition in a Canadian court;
e) the outcome of the judgment of the U.S. court was inconsistent with
Canadian public policy;
f) the judgment enforces obligations arising from foreign penal laws or laws
that deal with taxation or the taking of property by a foreign
government; or
g) there has not been compliance with applicable Canadian law dealing with
the limitation of actions.
ITEM 4. INFORMATION ON THE COMPANY
4.A. History and Development of the Company
Introduction
Tri-Lateral Venture Corporation hereinafter also is referred to as the
"Company". The Company actively explored its natural resource properties
until Fiscal 1998 when it wrote-down its interests in its remaining
properties, in response to low precious metal prices and a difficult
investment market in which to raise funds to finance continued exploration.
However, the Company retained ownership of its crown-granted mineral claims in
good standing on one property, known as the Lennie Property. Given a recent
resurgence in the price of gold, market conditions for raising capital for
precious metals exploration, and the recent activity in the Red Lake gold camp
in Ontario, where the Company's claims are located, the Company is seeking to
explore this property.
From December 2000 until July 2001, the Company attempted to acquire Contact
Solutions Group Inc. ended July 2001. That effort ended unsuccessfully; and
the Company has had to file suit in the Superior Court of Ontario to recover
the $500,000 loaned to Contact Solutions Group Inc.
The Company's executive office is located at:
750 West Pender Street, #604
Vancouver, British Columbia, Canada V6C 2T7
Telephone: (604) 689-0188
Facsimile: (604) 689-9773.
e-mail: khanson@amisanohanson.com
The Company's registered office is located at:
c/o: Clark Wilson,
800 - 885 West Georgia St., Vancouver, BC, Canada V6C 2T7
Telephone: (604) 687-5700; and
Facsimile: (604) 687-6314.
The contact person is:
Gregory C. Burnett, President/CEO/Director.
The Company's fiscal year ends December 31st.
The Company's common shares trade on the Canadian Unlisted Board in Toronto
under the symbol "TRIV".
The Company has an unlimited number of common shares without par value
authorized and an unlimited non-voting convertible redeemable non-cumulative
6% preference shares authorized. At 12/31/2001, the end of the Company's most
recent fiscal year, there were 3,372,054 common shares issued and outstanding.
At 11/30/2002, there were 3,372,054 common shares issued/outstanding.
In this Registration Statement, unless otherwise specified, all dollar amounts
are expressed in Canadian Dollars (CDN$).
Incorporation and Name Changes
The Company was incorporated in Ontario, Canada under the Ontario Business
Corporations Act on 4/24/1967 under the name "Jolly Jumper Products of America
Limited". The name was changed on 9/25/1987 to "Sun Valley Hot Springs Ranch
Inc". The name was changed on 3/26/1991 to "Tri-Valley Free Trade Inc". The
name was changed on 6/19/1995 to "Tri-Valley Investments Corporation". The
name was changed on 10/2/1998 to "Tri-Lateral Venture Corporation".
Stock Consolidation
Effective 5/15/1998, the Company consolidated its common shares on a 1-for-10
basis. All references to numbers of shares and/or per share figures refer to
post-consolidation data unless otherwise indicated.
Financings
The Company has financed its operations through funds raised in loans,
public/private placements of common shares, shares issued for property, shares
issued in debt settlements, and shares issued upon exercise of stock options
and share purchase warrants.
______________________________________________________________________________
Fiscal Number of Capital
Year Nature of Share Issuance Shares Raised
- ------------------------------------------------------------------------------
1997 Shares for debts 578,388 shares $1,199,076
1998 None
1999 Shares for debts 2,268,498 shares $453,699
2000 None
2001 Unsecured Loans $700,000
2002-to-Date None
______________________________________________________________________________
Capital Expenditures
Fiscal 1997: $359,992 for property acquisition/exploration
Fiscal 1998: $ 58,149 for property acquisition/exploration
Fiscal 1999: None
Fiscal 2000: None
Fiscal 2001: None
Fiscal 2002-to-Date: None
4.B. BUSINESS OVERVIEW
Description and Growth
The Lennie Property was acquired in August 1995 as part of a larger group of
properties in the Red Lake District on Ontario, Canada. During Fiscal 1995
through 1998, the Company conducted exploration on this property, expending
$660,077 in total.
The Lennie Property was a special focus of activity with exploration
expenditures of $6,337 incurred during 1995, $512,732 during 1996, $114,828
during 1997, and $26,180 during 1999. During the 1996 season, 17,413 feet of
diamond drilling was completed. The first phase contained 9887 feet and
sixteen; the second phase contained 3962 feet and five holes. Based on
interim results, additional drilling completed combined portions of the
original Phase III and Phase IV drill programs. A total of 26 holes of
varying depths were drilled encompassing the central portion of the property
along the stratigraphic geological boundaries. Two major zones were outlined
between two folds in the rock units. One zone was located at a vertical depth
of 400 feet and the second zone was in the mid-west of the property with a
strike length of 700 feet and to a vertical depth of 1000 feet. In order to
continue to explore the full potential of the property a total of 30,000 feet
of diamond drilling was estimated. Due to severe winter weather conditions
and a very last spring season during 1997, the drilling was delayed.
Faced with low prices for precious metals and a financial market not conducive
toward small, exploration stage natural resource companies, the Company ceased
all exploration work and wrote down it natural resource property interests to
$1. The Company retained its interests in the Lennie Property, believing that
the property had the possibility of being developed into a commercial project.
With the price of gold again trading above US$300 per ounce and hitting US$324
(on 7/18/2002) for the first time since late 1997, the Company is working to
resume exploration of its Lennie Property. The Company is considering many
alternatives regarding the exploitation of this property, including optioning
the property to a larger, third-party exploration company. Discussions have
been held with several parties, but as of 10/15/2002, all discussions are
preliminary.
Plan Of Operations
Source of Funds for Fiscal 2002/2003
The Company's primary source of funds since incorporation has been through
the issuance of common shares and loans. The Company has had no revenue from
operations and does not anticipate revenues in the foreseeable future.
The Company had a negative working capital balance of ($869,130) at 12/31/2001
and ($957,492) at 9/30/2002. The Company had $20,248 in cash at 9/30/2002.
The Company has had discussions with third parties about additional equity
offerings and/or loans; but the talks as of 11/30/2002 were preliminary.
Use of Funds for Fiscal 2002/2003
During Fiscal 2002 and Fiscal 2003, respectively, the Company estimates that
it might expend $100,000 and $100,000 on general/administrative expenses.
During Fiscal 2002 and Fiscal 2003, respectively, the Company estimates that
it might expend $25,000 and $100,000 on property acquisition/exploration
expenses. These estimates are contingent upon many factors, including the
method the Company chooses to exploit its Lennie Property.
Anticipated Changes to Facilities/Employees
The Company has no plans to acquire any new facilities. The Company has no
plans to add any additional personnel. Management anticipates that any
property exploration efforts will be carried out by outside contractors.
United States vs. Foreign Sales/Assets
The Company generated no sales revenue in the last five years.
At 12/31/2001 and 12/31/2000, all assets were located in Canada.
Seasonality
Dependency upon Patents/Licenses/Contracts/Processes
Sources/Availability of Raw Materials
Material Effects of Government Regulations
- --- No Disclosures Necessary ---
4.C. Organization Structure
The Company was incorporated in Ontario, Canada under the Ontario Business
Corporations Act on 4/24/1967 under the name "Jolly Jumper Products of America
Limited". The name was changed on 9/25/1987 to "Sun Valley Hot Springs Ranch
Inc". The name was changed on 3/26/1991 to "Tri-Valley Free Trade Inc". The
name was changed on 6/19/1995 to "Tri-Valley Investments Corporation". The
name was changed on 10/2/1998 to "Tri-Lateral Venture Corporation". The
Company has no subsidiaries.
4.D. Property, Plant and Equipment
The Company's executive offices are located in shared, rented premises of
approximately 300 sq. ft. at 750 West Pender Street, #604, Vancouver, British
Columbia, Canada V6C 2T7. The Company began occupying these facilities in
July 2000. Monthly rent is $500.
Lennie Property
The Company's primary mineral property is the Lennie Property, a gold-
exploration project located in the Red Lake District in northwestern Ontario,
Canada.
Acquisition Details
Pursuant to an option agreement dated 8/31/1995, the Company acquired a 100%
interest in ten mineral claims located in Balmer Township, Ontario, subject to
a 2% net smelter return upon commencement of commercial production. The
Company was obligated to incur exploration expenses of $250,000 on the
property on or before 2/28/1997 (done).
Property Description
The property consists of ten patented claims that are for mineral rights only.
The Red Lake area is glaciated Precambrian shield with comparatively thin till
reworked by a pro-glacial lake. This caused sandy gravelly veneer that is
anticipated to overlie a sandy till. The latter is largely limited to
topographic depressions. Relief in the Red Lake area is a maximum 80 meters
with relief observed on the property estimated at 15-20 meters.
Location and Access
The Balmertown - Red Lake area is a well-established mining center 165 miles
by air northwest of the city of Winnipeg, Manitoba. Red Lake has daily air
service from Winnipeg and Thunder Bay, Ontario, via Sioux Lookout. Balmertown
has a year-round paved road connecting it with the town of Red Lake, ten
kilometers to the west on Highway 125. From Red Lake, paved Highway 105
extends southward 115 miles to the village of Vermilion Bay on Highway 17, the
Trans Canada Highway.
The property is two miles to the east-northeast of Balmertown. Access to the
property is through the Gold Corp. mining site by a gravel bush road to a
gravel forestry road that crosses the property. The latter gravel forestry
road crossing the property arcs to the northwest then south six kilometers to
Balmertown.
Figure No. 1
Lennie Property
Location Map
Regional and Property Geology
The Lennie Property is underlain by the lower Mafic Sequence (komatites to
tholaitas with minor sediments) of the Red Lake portion of the Uchi Lake
Greenstone Belt. This lithological package hosts the Campbell Red Lake, Gold
Corp Red Lake, McMarmac, Cochenour, and H.G. Young Mines, all being or having
been successful mining ventures.
Outcrop exposure is poor, being largely mantled by swamp and overburden.
Mostly diamond drilling and some surface geology mapping are the basis for
determining the geology. Amphibolite grade metamorphism has affected the
following rock types: mafic to intermediate flows to tuffs, iron formation
chemical sediments, diorite and quartz feldspar porphyry dykes. The flows are
massive with fine to medium grained crystalline texture. Tuffs are well-
banded fine-grained volcanic sediments.
Alteration is regional carbonization overprinted by local metamorphism to
garnet, biotite, sericite with superimposed areas of silicification. Garnets
may comprise up to 5% of the rock commonly associated with green cliloritic
and gray sericite alteration.
Two felsic tuff units are recognized. A northern unit identified from drill
hole locations in the western part of the claim group, possibly extending
across the property. The second, larger felsic tuff unit extends along the
southern contact of the central iron formation, intersected in drill holes
near the east and western boundaries of the property. These latter tuffs are
intensely altered rocks are unexposed lying beneath low swampy ground. This
type of alteration has been identified as a very positive factor for gold
mineralization.
The two bands of iron formation are readily identified by magnetometer surveys
and scattered outcrops. The well-banded material is predominately cherty
oxide phase iron formation with sulphide facies in argillaceous portions.
Bedding contains irregular millimeter to meter scale folds with closures to
the east. New and larger exposures observed indicate folding is not
isoclinal, rather an irregular deformation varying significantly over a matter
of meters.
Thin zones of diorite and quartz feldspar porphyry intersected by diamond
drilling are interpreted as dykes. The gray-to-brown diorite is fine to
medium grained and generally un-mineralized. Quartz feldspar porphyries
contain white to blue rounded phenocryst in a white-to-gray aphanitic
groundmass. The boundaries are sharp well-defined contacts.
Previous Work Done by Former Owners
Three separate investigations have been undertaken over 42 years. This has
lead to possible discrepancies in correlating data from one survey to the
next. In each case, a grid was established without tying into the previous
work. Only the 1975 drill collars were left and can be precisely located.
Permanent location markers were not erected for either the 1946 or 1967
drilling. The grids established in 1946 and 1975 were largely eradicated by
logging sometime after 1975. The 1987 grid is poorly recognized as the north
half of the claims have been extensively reforested.
Lennie Red Lake Gold Mines, 1946. Following staking of the property, the
claim block perimeter was surveyed to bring the ground to patent. Geological
mapping and a magnetometer survey were completed over a grid with 200-foot
line spacings oriented 360 degrees. Data presented on 1" to 200' scale maps.
Corrections for drift in the magnetometer survey was by looping to a common
base line station. From the data, a west-northwest shear or fault was
identified as crossing the property. These surveys do not appear to have
covered claim 22687.
Diamond drilling of six holes were completed for a total of 4,381 feet. The
core size was E core with split samples taken for assay. No structural
information was collected from the drill core, only general lithological
descriptions. This work was sufficient to bring the claims to patent.
Option by Dome Exploration, 1975. Dome Exploration Ltd. optioned the property
from Lennie Red Lake Gold Mines for the period 1975 - 1976. A new grid was
established lines at 200-foot intervals oriented 010 degrees. The drill log
records state the holes were drilled grid north at 015 degrees while the
geology map with the grid-plotted states baseline at 100 degrees with
crosslines at 010 degrees. A matching of the 1946, 1975 and 1987 magnetic
data supports the 010 degree orientation of the 1976 grid.
A magnetic survey was completed over the entire grid with data and contours
plotted at 1" to 200' scale. Magnetic data was corrected using repeat
stations and NOT using a base station magnetometer.
An EM survey carried out over the entire grid identifying three highly
conductive zones trending west-northwest across the property. The southern
zone, or more properly group of zones, lies within the southern iron
formation. The middle conductor is a single well-defined conductor in the
center of the property with defined east and west terminations. It definitely
does not continue on the adjoining property to the east. The northern
conductor in the far northwest of the property. The good correlation between
magnetic signature and conductivity has led to interpreting all conductors as
suiphide facies iron formation.
The geological mapping was also undertaken with attention paid to stratigraphy
but not to structural elements. A geochemical survey was completed. Reports
of the results cite surface contamination by dust from the nearby Campbell and
Gold Corp mines. Four localized anomalous zones were referred to but not
located. They were stated as correlating approximately to Lennie drill holes
#1 and #6 and some unspecified Dome drill holes.
Thirteen diamond drill holes totaling 7639 feet of AX core were completed on
the Lennie property with additional holes on the adjoining Dunlop Option.
Drilling was as three fences crossing the property more or less perpendicular
to the stratigraphy. Assays of split core yielded two interesting sections.
No evidence of the earlier 1946 work was observed making correlations the
early work inexact. The drill hole casing were left such that their exact
locations can not be determined.
International RSV Resources Corp., 1987. A successor company to Lennie fled
Lake Gold Mines, International RSV Resources Corp. carried out further
fieldwork in 1987. A grid with lines oriented 360 degrees at 200' spacing was
cut. The grid did not extend to the western boundary of the property.
Another magnetometer survey was undertaken with a contoured map presented
without numerical data. A base station magnetometer was not used to correct
the data. Similar features to those identified in the earlier magnetic
surveys were reconfirmed.
The remainder of work was diamond drilling collecting 13,082 feet of BQ core
from sixteen drill locations. Sludge samples were not taken. The drill core
was split and sent for assay. The drilling focused on fence drilling to
intersect structures paralleling the interpreted fold axis or shear zone.
Some of the proposed drill targets could not be drilled due to time and access
limitations (swamps not yet frozen). Following the logging of the core, it
was initially stored then dumped and is unavailable for re-examination.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion for the Nine Months Ended 9/30/2002, Nine Months
Ended 9/30/2001, and the fiscal periods ended 12/31/2001, 12/31/2000, and
12/31/1999 should be read in conjunction with the financial statements of the
Company and the notes thereto.
Overview
With the price of precious metals rising since November 2001, management has
accelerated its activities regarding the Lennie Property. Management believes
that it will be able to structure an arrangement whereby it will be possible
to re-activate exploration on this property. Management is exploring numerous
alternatives, including optioning the property to a larger, more well-financed
exploration company, whereby that firm would provide the funds and expertise
for exploration in exchange for a percentage ownership of the property. As of
10/31/2002, all discussions are preliminary.
With the exception of the renewed interest in natural resource property
exploration during Fiscal 2002, the Company has been relatively inactive
during the last year.
During May 2000, control of the Company changed to the current Directors and
management, with their purchase of 1,801,422 common shares. This control
group desired to expand the Company's focus from natural resource property
exploration to include involvement in "high technology" ventures. The attempt
to acquire Contact Solutions Group Inc. resulted from the change of control
effected May 2000, whereby the current management and directors gained
substantial ownership of the Company.
From December 2000 until July 2001, the Company attempted to acquire Contact
Solutions Group Inc. During Fiscal 2001, the Company expended $66,224 on
acquisition costs related to Contract Solutions Group Inc. That acquisition
effort ended unsuccessfully; and the Company has had to file suit in the
Superior Court of Ontario to recover the $500,000 loaned to Contact Solutions
Group Inc.
During Fiscal 2001/2000/1999, the Company spent virtually no funds on capital
expenditures, other than discussed above.
During the Nine Months Ended 9/30/2002, the Company has expended $22,324 on
legal costs related to attempts to recover is $500,000 investment in Contract
Solutions Group Inc.
Results of Operations
Nine-Months Ended 9/30/2002
Administrative expenses totaled $132,282 for the Nine Months Ended 9/30/2002,
a 14% decrease from the $153,730 for the same period last year. Increased
corporate activity during the third quarter this year, lower bank
charges/interest, and lower legal expenses were the primary causes for the
higher costs. Bank charges/interest were $37,683 versus $58,894.
Other Items were $51,420 primarily resulting from a $51,072 gain on settlement
of debt, which was related to negotiated settlement of old accounts payable.
Net Income (Loss) was ($80,862) and ($112,477) for the Nine Months Ended
9/30/2002 and Nine Months Ended 9/30/2001, respectively.
Net Loss per Share was ($0.02) and ($0.03) for the Nine Months Ended 9/30/2002
and Nine Months Ended 9/30/2001, respectively.
Fiscal 2001 Ended 12/31/2001 vs Fiscal 2000
Administrative expenses totaled $240,000 for Fiscal 2001 Ended 12/31/2001,
nearly three times the $85,007 for Fiscal 2000 add double the $104,811 for
Fiscal 1999. The Fiscal 2001 increase primarily was related to the attempt to
acquire Contact Solutions Group Inc. Many of the expenses were non-recurring,
including the $58,333 in bad debt expense. Legal fees were $41,549, a 52%
increase from Fiscal 2000 and ten times that for Fiscal 1999; the high levels
relate to costs to acquire Contract Solutions Group Inc. Bank charges and
interest were $71,600, versus only $315 in Fiscal 2000 and $244 in Fiscal
1999; these expenses relate primarily to the $500,000 borrowed from
directors/management/ shareholders to fund the loans to Contact Solutions
Group Inc.
The Company had significant "other items" in Fiscal 2001, including $26,725 in
business investigation costs versus $nil in Fiscal 2000; these costs related
to costs to acquire Contract Solutions Group Inc. Also, the Company "earned"
interest income of $68,415 in Fiscal 2001 versus $285, this income related to
interest income on the $500,000 advance to Contract Solutions Group Inc. and
interest earned on bank deposits.
Net Income (Loss) was ($198,310) and ($77,410) for Fiscal 2001 Ended
12/31/2001 and Fiscal 2000, respectively. Net Loss per Share was ($0.06) and
($0.02) for the Fiscal 2001 Ended 12/31/2001 and Fiscal 2000, respectively.
Liquidity and Capital Resources
The Company has been inactive in the capital markets since issuing 2,268,498
common shares in Fiscal 1999 to settle $453,699 in debts. During Fiscal 2001,
the Company cancelled 10,000 preferred shares, related to shares returned to
the treasury by a former Director.
Nine Months Ended 9/30/2002
The Company had negative working capital of ($957,492) on 9/30/2002. Much
of the current liabilities represent funds owing to Directors and Senior
Management, where demand for payment is not anticipated in the near future.
At 9/30/2002, the Company had $20,248 in cash and cash equivalents, sufficient
to temporarily fund operations. Cash Used by Nine Months Ended 9/30/2002
Operating Activities totaled ($208,934) including the ($80,862) Net Loss.
Significant adjustments included ($77,000) in net changes in non-cash working
capital items. Cash Used in Nine Months Ended 9/30/2002 Investing Activities
was ($7,500) resulting from a decrease in deposit. Cash Raised in Nine Months
Ended 9/30/2002 Financing Activities was $nil.
Fiscal 2001 Ended 12/31/2001 vs. Fiscal 2000
The Company had working capital of ($869,130) on 12/31/2001.
The Company had working capital of ($170,820) on 12/31/2000.
The Company had working capital of ($ 93,410) on 12/31/1999.
Cash Used by Fiscal 2001 Ended 12/31/2001 Operating Activities totaled
($61,564) including the ($198,310) Net Loss. Significant adjustments included
the $141,746 in net changes in non-cash working capital items. Cash Used in
Fiscal 2001 Investing Activities was $500,000, representing the funds loaned
to Contact Solutions Group Inc. Cash Provided by Fiscal 2001 Financing
Activities was $767,080, representing increased loans payable to
directors/management/shareholders. Cash Used by Fiscal 2000 Ended 12/31/2000
Operating Activities totaled ($50,521), including the ($77,410) Net Loss.
Significant adjustments included $34,191 in net changes in non-cash working
capital items. Cash Used in Fiscal 2000 Investing Activities was $nil. Cash
Provided by Fiscal 2000 Financing Activities was $78,424, representing
increased loans payable to directors/ management/shareholders.
Critical Accounting Policies
The consolidated financial statements are prepared in conformity with
accounting principles generally accepted in the Canada. There are no material
differences between US GAAP and Canadian GAAP, as applied to the Company's
financial statements. Management is required to make judgments, estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. On a regular basis, we
evaluate our estimates and assumptions. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES
6.A. Directors and Senior Management
Table No. 6
Directors and Senior Management
November 30, 2002
______________________________________________________________________________
Date of
First
Election or
Name Position Age Appointment
- ------------------------------------------------------------------------------
Gregory C. Burnett (1)(2)(3) President/CEO/Director 40 June 2000
Alan G. Crawford (1)(2) Director 47 June 2000
Kevin R. Hanson (1)(2) Director 45 June 2000
Brent Petterson (4) Secretary 41 June 2000
Michael S. Weingarten Director 47 June 2001
- ------------------------------------------------------------------------------
(1) Member of Audit Committee.
(2) Member of Executive Committee.
(3) He spends about 20% of his time on the affairs of the Company.
(4) He spends about 5% of his time on the affairs of the Company.
(5) All business addresses c/o Tri-Lateral Venture Corporation
750 Pender Street #604
Vancouver, BC Canada V6C 2T7
______________________________________________________________________________
Gregory C. Burnett, President/CEO and a Director of the Company, brings 16
years experience in corporate management. Since 1989, he has been President
of Carob Management Ltd., a private management consulting company,
specializing in providing due diligence services, developing business plans,
and structuring/ managing various venture capital projects, primarily in the
public market area. Mr. Burnett serves on the board of directors and is a
consultant to the following public companies: Garibaldi Granite Corp., Orka
Gold Corp., Camflo International Inc., and Prefco Enterprises Inc., all listed
on the TSX Venture Exchange; and Ocean Ventures Inc. which is listed on the
NASD OTCBB. Mr. Burnett obtained a Master of Business Administration degree
(1986) and a Bachelor of Applied Sciences Degree in Civil Engineering (1984)
from the University of British Columbia. He lives in British Columbia,
Canada.
Alan G. Crawford, Director of the Company, is the founder and President of the
Telchven Finance Group of Companies, doing business in Vancouver, Canada, and
Edinburgh, Scotland since 1991. Mr. Crawford's public company experience
includes the formation, financing and management of companies on the Toronto
Stock Exchange, TSX Venture Exchange, NASDAQ, German markets, and the London
Stock Exchange. Related experience includes corporate finance strategy,
mergers and acquisitions, investor relations and business planning. Mr.
Crawford was previously a Corporate Finance Partner and Registered
Representative in Canaccord Capital Corp. and Nesbitt Burns, where he was
involved in the structure, syndication and financing of public and private
companies. Mr. Crawford has a Master of Business Administration (MBA),
Honors, 1993 from the University of Edinburgh where he majored in technology
finance and marketing, as well as a Chartered Financial Planning (CFP), Honors
Accreditation (1987). He lives in British Columbia, Canada.
Kevin R. Hanson, Director of the Company, has been a chartered accountant
since 1983, a certified public accountant (CPA) since 2001, and is currently a
partner with Amisano Hanson, Chartered Accountants, since 1991. From 1987 to
1991, Mr. Hanson provided services as a controller of seven reporting public
companies while working for Clark Consulting Services Inc. From 1994 until
1998, Mr. Hanson served as a member of the Technical Subcommittee to the
British Columbia Securities Commission and the Vancouver Stock Exchange. Mr.
Hanson is President/Director of Brockton Capital Corp., "capital pool" public
company that trades on the TSX Venture Exchange. Mr. Hanson is also a
director of: Zena Capital Corp., a capital pool company listed on the TSX
Venture Exchange. He lives in British Columbia, Canada.
Brent Petterson, Corporate Secretary of the Company, obtained his Certified
General Accountant designation in 1989 and has 15 years of public practice
accounting experience as well as three years of property management
experience. Mr. Petterson is the President of Hiatt Management Ltd., a real
estate investment company since 1996; and President of Acony Belle Management
Ltd., a financial consulting company since 2001.
Michael S. Weingarten is a Director of the Company. In 1999, as the President
and controlling shareholder of Business Supplies Are Us Inc. ("BSRU"), he
successfully completed the reverse take-over of a capital pool company,
Balmoral Capital Corp., and listed the company on the Canadian Venture
Exchange (formerly the Vancouver Stock Exchange). The public company is now
named Commercial Consolidators Corp. His achievements to date which attribute
to his success include being a founding majority shareholder of BSRU; founder
and President of Complete Telemanagement Services Inc., the major hybrid
channel for AT&T Canada with regard to local Centrex resale, bundled with long
distance services; Director of Operations for Preferred Telemanagement, a
reseller of Centrex local lines and owner and President of Isoceles Telephone
Corp. Mr. Weingarten also is a director of Brockton Capital Corporation, a
"capital pool" public company that trades on the TSX Venture Exchange in
Canada. Mr. Weingarten is also a director of Zena Capital Corp., a "capital
pool" company listed on the TSX Venture Exchange. He lives in Ontario,
Canada.
The Directors have served in their respective capacities since their election
and/or appointment and will serve until the next Annual General Meeting or
until a successor is duly elected, unless the office is vacated in accordance
with the Articles/By-Laws of the Company.
The Senior Management serve at the pleasure of the Board of Directors.
Despite the Company's Senior Management spending material portions of their
time on businesses other than the Company, the Company believes that they
devote sufficient time to the Company to properly carry out their duties.
No Director and/or Senior Management has been the subject of any order,
judgment, or decree of any governmental agency or administrator or of any
court or competent jurisdiction, revoking or suspending for cause any license,
permit or other authority of such person or of any corporation of which he is
a Director and/or Senior Management, to engage in the securities business or
in the sale of a particular security or temporarily or permanently restraining
or enjoining any such person or any corporation of which he is an officer or
director from engaging in or continuing any conduct/practice/employment in
connection with the purchase or sale of securities, or convicting such person
of any felony or misdemeanor involving a security or any aspect of the
securities business or of theft or of any felony
There are no family relationships between any two or more Directors or Senior
Management.
There are no arrangements or understandings with major shareholders, customers,
suppliers or others, pursuant to which any person referred to above was selected
as a Director or member of senior management.
6.B. Compensation
Cash Compensation. Total compensation accrued and/or paid (directly and/or
indirectly) to all Directors/Senior Management during Fiscal 2001 ended
12/31/2001 was CDN$30,000, indirectly paid to Gregory Burnett, President/CEO.
Director Compensation. The Company has no formal plan for compensating its
Directors for their service in their capacity as Directors. Directors are
entitled to reimbursement for reasonable travel and other out-of-pocket
expenses incurred in connection with attendance at meetings of the Board of
Directors. The Board of Directors may award special remuneration to any
Director undertaking any special services on behalf of the Company other than
services ordinarily required of a Director. Other than indicated below no
Director received any compensation for his services as a Director, including
committee participation and/or special assignments.
Stock Options. The Company may grant stock options to Directors, Senior
Management and employees; refer to ITEM #6.E., "Share Ownership". There are
no stock options outstanding.
Change of Control Remuneration. The Company has no plans or arrangements in
respect of remuneration received or that may be received by Executive Officers
of the Company in Fiscal 2002 to compensate such officers in the event of
termination of employment (as a result of resignation, retirement, change of
control) or a change of responsibilities following a change of control, where
the value of such compensation exceeds US$60,000 per Senior Management.
Other Compensation. No Senior Management/Director received "other
compensation" in excess of the lesser of US$25,000 or 10% of such officer's
cash compensation, and all Senior Management/Directors as a group did not
receive other compensation which exceeded US$25,000 times the number of
persons in the group or 10% of the compensation.
Bonus/Profit Sharing/Non-Cash Compensation. Except for the stock option
program discussed in ITEM #6.E., the Company has no material bonus or profit
sharing plans pursuant to which cash or non-cash compensation is or may be
paid to the Company's Directors or Senior Management.
Pension/Retirement Benefits. No funds were set aside or accrued by the Company
during Fiscal 2001 to provide pension, retirement or similar benefits for
Directors or Senior Management.
6.C. Board Practices
6.C.1. Terms of Office. Refer to ITEM 6.A.1.
6.C.2. Directors' Service Contracts. --- No Disclosure Necessary ---
6.C.3. Board of Director Committees.
The Company has an Audit Committee, which recommends to the Board of Directors
the engagement of the independent auditors of the Company and reviews with
the independent auditors the scope and results of the Company's audits, the
Company's internal accounting controls, and the professional services furnished
by the independent auditors to the Company. The current members of the Audit
Committee are: Gregory Burnett, Alan Crawford, and Kevin Hanson. The Audit
Committee met once during Fiscal 2001 and once during Fiscal 2002-to-date.
6.D. Employees
As of 11/30/2002, the Company had two employees, representing the Senior
Management. As of 12/31/2001, 12/31/2000 and 12/31/1999, there were two, two
and two employees (including the Senior Management), respectively. None of
the Company's employees are covered by collective bargaining agreements.
6.E. Share Ownership
Table No. 7 lists, as of 11/30/2002, Directors and Senior Management who
beneficially own the Company's voting securities, consisting solely of common
share, and the amount of the Company's voting securities owned by the Directors
and Senior Management as a group. Table No. 7 also includes data on Terry
Amisano and Ruby Holdings Ltd., the only other persons/companies where the
Company is aware that a shareholder has 5% or greater beneficial interest in
the Company's securities.
Table No. 7
Shareholdings of Directors and Senior Management
Shareholdings of 5% Shareholders
______________________________________________________________________________
Title Amount and Nature Percent
of of Beneficial of
Class Name of Beneficial Owner Ownership Class #
- ------------------------------------------------------------------------------
Common Alan Crawford 600,474 17.8%
Common Gregory Burnett 352,474 10.4%
Common Kevin R. Hanson 330,474 9.8%
Common Ruby Holdings Ltd. (1) 600,474 17.8%
Common Terry M. Amisano 274,799 8.1%
Total Directors/Management/5% Holders 2,158,695 63.9%
- ------------------------------------------------------------------------------
(1) Ruby Holdings is an investment corporation incorporated pursuant to the
laws of Turks & Caicos with a registered office located at Design House
Leeward High P.O. Box 150, Providenciales, Turks & Caicos Islands,
British West Indies.
# Based on 3,372,054 shares outstanding as of 11/30/2002.
______________________________________________________________________________
Stock Options. The terms of incentive options grantable by the Company are
done in accordance with the rules and policies of the Canadian Unlisted Board
and the Ontario Securities Commission, including the number of common shares
under option, the exercise price and expiry date of such options, and any
amendments thereto. The Company has no formal written stock option plan.
Such "terms and conditions", including the pricing of the options, expiry and
the eligibility of personnel for such stock options; and are described below.
The principal purposes of the Company's stock option program are to (a)
promote a proprietary interest in the Company among the officers, directors
and employees of the Company and its affiliates, (b) retain and attract the
qualified officers, directors and employees the Company requires, (c) provide
a long-term incentive element in overall compensation, and (d) promote the
long-term profitability of the Company.
The Canadian Unlisted Board and Ontario Securities Commission policies in
respect of incentive stock options provides that shareholder approval is not
required if the aggregate number of common shares that may be reserved for
issuance pursuant to incentive stock options does not exceed 10% of the issued
common shares of the Company, 5% to any one individual and 2% to any consultant
at the time of granting.
Shareholder approval of the grant of incentive stock options is required
pursuant to the rules of the Canadian Unlisted Board and Ontario Securities
Commission where the grant will result in the Company having options
outstanding which, in aggregate, are exercisable to acquire over 10% (to a
maximum of 20%) of the outstanding common shares of the Company.
In addition, disinterested shareholders (all shareholders excluding insiders
and associates of insiders) approval is required pursuant to the rules of the
Canadian Unlisted Board and Ontario Securities Commission where:
(a) grant of incentive stock options could result at any time in:
(i) the Company having options outstanding to insiders which, in
aggregate, are exercisable to acquire over 10% of the outstanding
common shares of the Company; or
(ii) the issuance to insiders, within a one year period, of common
shares which, in aggregate, exceed 10% of the outstanding common
shares of the Company; or
(iii) the issuance to any one insider and such insider's associates,
within a one year period, of common shares which, in aggregate,
exceed 5% of the outstanding common shares of the Company; or
(iv) the issuance to any consultant of common shares which, in
aggregate, exceed 2% of the outstanding common shares of the
Company; or
(b) the Company is proposing to decrease the exercise price of stock options
held by any insiders.
The program authorizes the Board, or a committee thereof, to grant stock options
from time to time to officers, directors and employees of the Company and its
affiliates.
Under the program, stock options are non-assignable and may be granted for a
term not exceeding ten years. The exercise price of a stock option may not be
lower than the closing price of the common shares on the Canadian Unlisted
Board on the business day immediately preceding the date the option is granted.
If an optionee ceases to be an officer, director or employee of the Company
other than by reason of the death of such optionee, any outstanding stock option
held by such optionee will expire one month after the date of termination of
service, or such later date as the Board may determine. In the event of the
death of an optionee, any outstanding stock option held by the optionee will be
exercisable by such optionee's representatives for a period of twelve months
after such death.
No stock option granted under the stock option program is transferable by the
optionee other than by will or the laws of descent and distribution, and each
stock option is exercisable during the lifetime of the optionee only by such
optionee.
The Board, in certain events, as to exercise price and number of common
shares, to prevent dilution or enlargement, may adjust outstanding stock
options.
The Company has the right to create a multi-year vesting schedule.
As of 11/30/2002, there were no stock options outstanding.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7.A. Major Shareholders.
7.A.1.a. Holdings By Major Shareholders.
Refer to ITEM #6.E and Table No. 7.
7.A.1.b. Significant Changes in Major Shareholders' Holdings.
The participation in private placements of equity by the Company, the exercise
of stock options/share purchase warrants, and sales by the individuals has
lead over the last several years to some significant changes in the holdings
of major shareholders; table reflects direct/indirect holdings of common
shares, refer to Table No. 7 for additional information.
______________________________________________________________________________
Shares Shares Shares
Owned Owned Owned
12/31/2001 12/31/2000 12/31/1999
- ------------------------------------------------------------------------------
Alan Crawford 600,474 600,474 0
Gregory Burnett 600,474 600,474 0
Kevin Hanson 600,474 600,474 0
Ruby Holdings Ltd. 600,474 600,474 0
Terry Amisano 563,369 582,399 0
7.A.1.c. Different Voting Rights. The Company's major shareholders do not
have different voting rights.
7.A.2. Canadian Share Ownership. On 6/26/2002, the Company's shareholders'
list showed 3,372,054 common shares outstanding, with 2,657 registered
shareholders. 72 of these shareholders were U.S. residents, holding 17,914
shares (representing about 1% of the issued/outstanding shares) and 2,569
registered shareholders resident in Canada, holding 2,754,410 common shares.
The Company has researched the indirect holding by depository institutions and
other financial institutions; based on this research and other research into
the indirect holdings of other institutions, the Company believes that it has
approximately 3,000 beneficial owners of its common shares.
7.A.3. Control of Company. The Company is a publicly-owned Canadian
corporation, the shares of which are owned by U.S. residents, Canadian
residents and other foreign residents. The Company is not controlled by any
foreign government or other person(s) except as described in ITEM #4.A.,
"History and Growth of the Company", and ITEM #6.E., "Share Ownership".
7.A.4. Change of Control of Company Arrangements.
--- No Disclosure Necessary ---
7.B. Related Party Transactions
Shared Office
The Company's executive offices are located in facilities shared with Amisano
Hanson, Chartered Accountants. Terry Amisano and Kevin Hanson are principles
of Amisano Hanson, Chartered Accountants. The Company paid $6,000 and $3,000
in rent/ administrative services to Amisano Hanson during Fiscal 2001 and
Fiscal 2000, respectively.
Accounting Fees
The Company paid accounting fees of $7,681 and $5,704 to Amisano Hanson during
Fiscal 2001 and Fiscal 2000, respectively.
Indirect Payments to Gregory Burnett, President/CEO
Mr. Burnett is paid his $2,500 monthly compensation for his services as
President/CEO through payments to Carob Management Ltd., a company controlled
by Mr. Burnett. During Fiscal 2001 and Fiscal 2000, respectively, Carob
Management Ltd. was paid $30,000 and $15,000.
Shareholder Loans
On 7/27/2001, Gregory Burnett (President/CEO/Director of the Company) and
Michael Weingarten (subsequently a Director of the Company) lent $500,000 to
the Company to facilitate the Company's lending the funds to Contact Solutions
Group Inc. The promissory note is due on demand and charges interest of 10%
per year. During Fiscal 2001, $35,417 was paid in interest.
Amounts Owing to Senior Management/Directors
At 12/31/2001, 12/31/2000, and 12/31/1999, $116,191, $48,270, and $16,600 was
owed to officers/directors for accounting fees, consulting fees, interest
expense and rent. These amounts are unsecured, non-interest bearing, and have
no fixed terms of repayment.
At 12/31/2001, $250,000 was owed to Michael Weingarten, a Director of the
Company, in respect of a loan payable; this loan bears interest at 10% per
year, is unsecured, and is payable upon demand.
Other than as disclosed above, there have been no transactions since
12/31/1998, or proposed transactions, which have materially affected or will
materially affect the Company in which any director, executive officer, or
beneficial holder of more than 10% of the outstanding common shares, or any of
their respective relatives, spouses, associates or affiliates has had or will
have any direct or material indirect interest. Management believes the
transactions referenced above were on terms at least as favorable to the
Company as the Company could have obtained from unaffiliated parties.
7.C. Interests of Experts and Counsel
--- No Disclosure Necessary ---
ITEM 8. FINANCIAL INFORMATION
8.A. Consolidated Statements and Other Financial Information
The Company's financial statements are stated in Canadian Dollars (CDN$) and
are prepared in accordance with Canadian Generally Accepted Accounting
Principles (GAAP), the application of which, in the case of the Company,
conforms in all material respects for the periods presented with United States
GAAP, except as discussed in footnotes to the financial statements.
The financial statements as required under ITEM #17 are attached hereto and
found immediately following the text of this Registration Statement. The audit
report of Morgan & Company, independent Chartered Accountants, is included
herein immediately preceding the financial statements.
Audited Financial Statements:
Fiscal 2001 Ended December 31st
Fiscal 2000 Ended December 31st
Unaudited Financial Statements
Nine Months Ended 9/30/2002 and 9/30/2001
8.A.7. Legal/Arbitration Proceedings
The Company brought an action on 9/1/2001 in the Superior Court of Ontario in
Toronto against Contact Solutions Group Inc. ("CSG") and the principal of CSG
(Parry Rosenberg), for recovery of $500,000 previously loaned to CSG. CSG and
the principal of CSG, in turn has brought a counterclaim against the Company
claiming $3,000,000 damages for breach of a share purchase agreement between
the Company and CSG and a further $500,000 in punitive damages. The Company
believes the counterclaim is without merit and intends to vigorously defend
it.
The Directors and the management of the Company do not know of any other
material, active or pending, legal proceedings against them; nor is the
Company involved as a plaintiff in any material proceeding or pending
litigation.
The Directors and the management of the Company know of no other active or
pending proceedings against anyone that might materially adversely affect an
interest of the Company.
8.B. Significant Changes
No significant change has occurred since the date of the annual financial
statements, and/or since the date of the most recent interim financial
statements.
ITEM 9. THE OFFER AND LISTING
9.A.4. Common Share Trading Information
The Company's common shares began trading for over ten years on the Canadian
Dealing Network in Toronto, Ontario, Canada. The Canadian Dealing Network was
absorbed by the Canadian Venture Exchange (which was subsequently absorbed by
the TSX Venture Exchange). The Canadian Unlisted Board, where the Company's
common shares currently trade, evolved out of these mergers as an "exchange"
for those companies not seeking to be listed or not qualifying for listing on
the Canadian Venture Exchange. The current stock symbol is "TRIV". The CUSIP
number is #89557A-30-5.
Neither the Canadian Unlisted Board nor the Ontario Securities Commission
maintain public records regarding the trading activities of securities traded
on the Canadian Unlisted Board; the only archived official records are
maintained for market regulation purposes only. Upon review of informal
records maintained by stockbrokerage firms, the Company estimates that the
high and low prices during Fiscal 2001 and Fiscal 2002-to-date were $1.00 and
$1.50; a rough estimate of volume was 800,000 shares. The closing price was
$1.00 on November 30, 2002.
Canadian Unlisted Board
The Canadian Unlisted Board Inc. ("CUB") offers an internet, web-based system
for dealers to report completed trades in unlisted and unquoted equity
securities in Ontario as required pursuant to Part VI of Regulation 1015 to
the Ontario Securities Act.
The CUB system replaced the prior TSE/CATS reporting mechanism on 10/10/2000.
Further information about CUB and Over-The-Counter (OTC) trading may be obtained
if you e-mail the CUB at cubadmin@cub.ca or call the CUB at 866-282-9327.
The system is secured by user identification codes and passwords.
9.5. Common Share Description
Registrar/Common Shares Outstanding/Shareholders
The Company's common shares are issued in registered form and the following
information is taken from the records of CIBC Mellon Trust Company (located in
Vancouver, British Columbia, Canada), the registrar and transfer agent for the
common shares.
Common Share Description
All of the authorized common shares of the Company are of the same class and,
once issued, rank equally as to dividends, voting powers, and participation in
assets. Holders of common shares are entitled to one vote for each share held
of record on all matters to be acted upon by the shareholders. Holders of
common shares are entitled to receive such dividends as may be declared from
time to time by the Board of Directors, in its discretion, out of funds
legally available therefore.
Upon liquidation, dissolution or winding up of the Company, holders of common
shares are entitled to receive pro rata the assets of Company, if any,
remaining after payments of all debts and liabilities. No shares have been
issued subject to call or assessment. There are no pre-emptive or conversion
rights and no provisions for redemption or purchase for cancellation,
surrender, or sinking or purchase funds.
Provisions as to the modification, amendment or variation of such shareholder
rights or provisions are contained in the Business Corporations Act (Ontario).
Unless the Business Corporations Act or the Company's Articles or Memorandum
otherwise provide, any action to be taken by a resolution of the members may
be taken by an ordinary resolution or by a vote of a majority or more of the
shares represented at the shareholders' meeting.
There are no restrictions on the repurchase or redemption of common shares of
the Company while there is any arrearage in the payment of dividends or sinking
fund installments.
Share Purchase Warrants
As of 11/30/2002, no share purchase warrants were outstanding.
9.A.6. Differing Rights
9.A.7.a. Subscription Warrants/Right
9.A.7.b. Convertible Securities/Warrants
--- No Disclosure Necessary ---
9.C. Stock Exchanges Identified
The common shares trade on the Canadian Unlisted Board.
Refer to ITEM #9.A.4.
ITEM 10. ADDITIONAL INFORMATION
10.A. Share Capital
10.A.1. Authorized/Issued Capital. As of 9/30/2002, 12/31/2001, and
12/31/2000, the authorized capital of the Company was an unlimited number of
common shares without par value and an unlimited number of non-voting
convertible redeemable non-cumulative 6% preference shares without par value.
At these dates, there were 3,372,054, 3,372,054, and 3,372,054 common shares
issued and outstanding, respectively.
Over 10% of capital has been "paid for" with assets other than cash within the
past five years, considering that the Company has issued 2,846,886 common
shares for $1,652,775 of debt (Fiscal 1997 and Fiscal 1999).
10.A.2. Shares Not Representing Capital.
10.A.3. Shares Held By Company.
- --- No Disclosure Necessary ---
10.A.4. Stock Options/Share Purchase Warrants
10.A.5. Stock Options/Share Purchase Warrants
- --- None Outstanding ---
- --- Refer to ITEM #6.E. and Table No. 7. ---
10.A.6. History of Share Capital
Fiscal 1999: Shares for Debt, 2,268,498 shares, $453,699
Fiscal 2000: None
Fiscal 2001: None
Fiscal 2002 to Date: None
10.A.7. Resolutions/Authorizations/Approvals
- --- No Disclosure Necessary ---
10.B. Memorandum and Articles of Association
Objects and Purposes
The Articles of Incorporation place no restrictions upon the type of business
that the Company may engage in.
10.B.2. Directors
Disclosure of Interest of Directors/Officers,
Section 4.18 the By-Laws
A director or officer who is party to, or who is a director or officer of or
has a material interest in any person who is a party to, a material contract
or proposed material contract with the Company shall disclose the nature and
extent of his interest at the time and in the manner provided by the Business
Corporation Act (Alberta) ("Act"). Any such contract or proposed contract
shall be referred to the Board of Directors or shareholders for approval even
if such contract is one that in the ordinary course of the Company's business
would not require approval by the Board or shareholders, and a director
interested in a contract so referred to the Board shall not vote on any
resolution to approve the same unless the material contract or transaction is:
a) an arrangement by way of security for money lent to or obligations
undertaken by him for the benefit of the Company or an affiliate;
b) One relating primarily to his remuneration as a director, officer,
employee, or agent of the Company or an affiliate;
c) one for indemnity or insurance as specified under the Act; or
d) one with an affiliate.
Not withstanding the foregoing provision on voting by such a director, he may
be present at and counted to determine the presence of a quorum at the relevant
meeting of directors as provided in the Act. For the purposed of this section
4.18, "affiliate" means an affiliated body corporate within the meaning of
subsection 1(4) of the Act.
Remuneration and Expenses of Directors, Section 4.19 the By-Laws
Subject to the articles or any unanimous shareholder agreement, the directors
shall be paid such remuneration for their services as the Board may from time
to time determine. The directors shall also be entitled to be reimbursed for
traveling and other expenses properly incurred by them in attending meetings
of the Board or any committee thereof. Nothing herein contained shall preclude
any director from serving the Company in any other capacity and receiving
remuneration therefore.
Borrowing Power, Section 3 of the By-Laws
Without limiting the borrowing powers of the Company as set forth in the Act,
but subject to the articles and any unanimous shareholders agreement, the Board
may from time to time on behalf of the Company, without authorization of the
shareholders:
a) borrow money upon the credit of the Company;
b) issue, reissue, sell or pledge bonds, debentures, notes or other similar
obligations or guarantee of such an obligation of a body corporate, whether
secured or unsecured;
c) to the extent permitted by the Act, give directly or indirectly financial
assistance to any person by means of a loan, a guarantee on behalf of the
Company to secure performance of any present or future indebtedness,
Liability or obligation of any person, or otherwise; and
d) charge, mortgage, hypothecate, pledge, or otherwise create a security
interest in all or any currently owned or subsequently acquired real or
personal, movable or immovable, property of the Company, including book
debts, rights, powers, franchises and undertakings, to secure any such
bonds, debentures, notes or other evidences of indebtedness or guarantee or
any other present or future indebtedness, liability or obligation of the
Company.
Nothing in this section limits or restricts the borrowing of money by the
Company on bills of exchange or promissory notes made, drawn, accepted or
endorsed by or on behalf of the Company.
Director Retirement
Neither the Company's memorandum/ articles/by-laws nor Ontario law requires
retirement or non-retirement of directors under an age limit requirement.
Director Stock Ownership
Neither the Company's memorandum/ articles/by-laws nor Ontario law requires
share ownership by directors.
10.B.3. Rights, Preferences, Restrictions of Common Shares
Dividends, Section 10.1 of the By-Laws
Subject to the Act and the articles, the Board may from time to time declare
dividends payable to the shareholders according their respective rights and
interests in the Company. Dividends may be paid in money or property by
issuing fully-paid shares of the Company or options or rights to acquire
fully-paid shares of the Company.
Voting Rights, Section 9.11 and 9.15 of the By-Laws
Subject to the provisions of the Act, at any meeting of the shareholders in
respect of which the Company has prepared a shareholders' list, every person
who is named in such list shall be entitled to vote the share shown. At any
meeting of the shareholders, every question shall, unless otherwise required
by the articles or by-laws or by law (refer to "special resolution" below) be
determined by the majority of the votes cast on the question. In case of an
equality of votes either upon a show of hands or upon a poll, the chairman of
the meeting shall not be entitled to a second or casting vote.
Neither the Company's memorandum/articles/by-laws nor Ontario law permit:
staggered terms for Directors; cumulative voting; shareholder approval of
corporate matter by written consent; the adoption of various "poison pill"
measures precluding shareholders from realizing a potential premium over the
market value of their shares.
Rights to Share in Profits
Rights in event of liquidation
Redemption Provisions
Sinking Fund Provisions
Liability to Further Capital Calls
Discriminatory Rights Against Significant Shareholders
The Company's articles/by-laws do not address these issues. Accordingly, the
shareholders' rights regarding these issues are governed by Ontario law and
any exchange upon which the common shares trade.
10.B.4. Modification of Rights of Shareholders
Provisions as to the modification, amendment or variation of such shareholder
rights or provisions are contained in the "Company Act" of Ontario, Canada.
Unless the "Company Act" or the Company's Articles or Memorandum otherwise
provide, any action to be taken by a resolution of the members may be taken by
an ordinary resolution or by a vote of a majority or more of the shares
represented at the shareholders' meeting.
Special Resolution
The Company's Articles and the Business Corporations Act (Ontario) contain
provisions that require a "special resolution" for effecting certain corporate
actions. Such a "special resolution" requires a two-thirds vote of shareholders
rather than a simple majority for passage. The principal corporate actions that
require a "special resolution" include:
a. Approval of contracts or transactions that give rise to certain conflicts
of interest by Directors or Officers in certain circumstances;
b. Disposing of all/substantially all of Company's undertaking or assets;
c. Changing the Company name;
d. Amalgamation of the Company with another corporation (other than wholly
-owned subsidiaries); and
e. Altering any restrictions on the Company's business; and
f. Certain reorganizations of the Company.
10.B.5. Annual Meetings, Special Meetings, Section 9 of the By-Laws
Annual meeting of shareholders shall be held at such time in each year and,
subject to section 9.3, at such place as the Board, the chairman of the Board,
the managing director, or the president may from time to time determine, for
the purpose of considering the financial statements and reports required by
the Act to be placed before the annual meeting, electing directors, appointing
auditors (unless the Company dispenses with such appointment in accordance
with the Act) and for the transaction of such other business as may properly
be brought before the meeting.
The board, the chairman of the board, the managing director or the president
shall have power to call a special meeting of shareholders at any time.
Subject to the articles and any unanimous shareholder agreement, meetings of
shareholders shall be held at the registered office of the Company or elsewhere
in the municipality in which the registered office is situate or, if the board
shall so determine, at some other place in or outside Ontario.
For every meeting of shareholders, the Company shall prepare a list of
shareholders entitled to receive notice of the meeting, arranged in alphabetical
order and showing the number of shares held by each shareholder entitled to vote
at the meeting in accordance with the Act. The only persons entitled to be
present at a meeting of the shareholders shall be those entitled to vote
thereat, the directors and auditors of the Company and others, who, although not
entitled to vote, are entitled or required under any provision of the Act or the
articles or by-laws to be present at the meeting. Any other person may be
admitted only on the invitation of the chairman of the meeting or with the
consent of the meeting.
Shareholder meetings are called in accordance with the rules of the Business
Corporation Act (Ontario) by approval of the Board of Directors determining
the time, date, and place of such meetings, which must be held in Canada and
not less than 54 days from the date of public notice of such meeting. The
quorum for a shareholders' meeting or continuance thereof is two shareholders
present in person or by proxy representing not less than 5% of the common
shares eligible to vote at such meeting.
10.B.6. Limitations on Rights to Own Shares
The Company is unaware of any limitations on the rights to own securities,
including those of non-resident or foreign shareholders.
10.B.7. Change of Control of Company
There are no provisions of the Company's articles of association, charter or
bylaws that would have an effect of delaying, deferring or preventing a change
in control of the Company and that would operate only with respect to a
merger, acquisition or corporate restructuring involving the Company.
10.B.8. Disclosure of Share Ownership
Although not expressly enumerated in the Articles/By-Laws, pursuant to Canadian
regulations, shareholder ownership must be disclosed by any shareholder who owns
more than 10% of the Company's common shares.
10.C. Material Contracts --- No Disclosure Necessary ---
10.D. Exchange Controls
Except as discussed in ITEM #10.E., the Company is not aware of any Canadian
federal or provincial laws, decrees, or regulations that restrict the export
or import of capital, including foreign exchange controls, or that affect the
remittance of dividends, interest or other payments to non-Canadian holders of
the common shares. There are no limitations on the right of non-Canadian owners
to hold or vote the common shares imposed by Canadian federal or provincial law
or by the charter or other constituent documents of the Company.
The Investment Canada Act (the "IC Act") governs acquisitions of Canadian
business by a non-Canadian person or entity. The IC Act requires a non-
Canadian (as defined in the IC Act) making an investment to acquire control of
a Canadian business, the gross assets of which exceed certain defined threshold
levels, to file an application for review with the Investment Review Division of
Industry Canada. The IC Act provides, among other things, for a review of an
investment in the event of acquisition of "control" in certain Canadian
businesses in the following circumstances:
1. If the investor is a non-Canadian and is a national of a country
belonging to the North American Free Trade Agreement ("NAFTA") and/or the
World Trade Organization ("WTO") ("NAFTA or WTO National"), any direct
acquisition having an asset value exceeding US$179,000,000 is reviewable.
This amount is subject to an annual adjustment on the basis of a
prescribed formula in the IC Act to reflect inflation and real growth
within Canada. This threshold level does not apply in certain sections of
Canadian industry, such as uranium, financial services (except insurance),
transportation services and cultural services (i.e. the publication,
distribution or sale of books, magazines, periodicals (other than printing
or typesetting businesses), music in print or machine readable form,
radio, television, cable and satellite services; the publication,
distribution, sale or exhibition of film or video recordings on audio or
video music recordings), to which lower thresholds as prescribed in the IC
Act are applicable.
2. If the investor is a non-Canadian and is not a NAFTA or WTO National, any
direct acquisition having an asset value exceeding US$5,000,000 and any
indirect acquisition having an asset value exceeding US$50,000,000 is
reviewable.
3. If the investor is a non-Canadian and is NAFTA or WTO National, an indirect
acquisition of control is reviewable if the value of the assets of the business
located in Canada represents more than 50% of the asset value of the transaction
or the business is involved in uranium, financial services, transportation
services or cultural services.
Finally, certain transactions prescribed in the IC Act are exempted from review
altogether.
In the context of the Company, in essence, three methods of acquiring control
of a Canadian business are regulated by the IC Act: (i) the acquisition of all
or substantially all of the assets used in carrying on business in Canada;
(ii) the acquisition, directly or indirectly, of voting shares of a Canadian
corporation carrying on business in Canada; or (iii) the acquisition of voting
shares of an entity which controls, directly or indirectly, another entity
carrying on business in Canada.
An acquisition of a majority of the voting shares of a Canadian entity,
including a corporation, is deemed to be an acquisition of control under the
IC Act. However, under the IC Act, there is a rebuttable presumption that
control is acquired if one-third of the voting shares of a Canadian corporation
or an equivalent undivided interest in the voting shares of such corporation are
held by a non-Canadian person or entity. An acquisition of less than one-third
of the voting shares of a Canadian corporation is deemed not to be an acquisi-
tion of control. An acquisition of less than a majority, but one-third or more,
of the voting shares of a Canadian corporation is presumed to be an acquisition
of control unless it can be established that, on the acquisition, the Canadian
corporation is not, in fact, controlled by the acquirer through the ownership of
voting shares. For partnerships, trusts, joint ventures or other unincorporated
Canadian entities, an acquisition of less than a majority of the voting
interests is deemed not to be an acquisition of control.
In addition, if a Canadian corporation is controlled by a non-Canadian, the
acquisition of control of any other Canadian corporation by such corporation
may be subject to the prior approval of the Investment Review Division, unless
it can be established that the Canadian corporation is not in fact controlled
by the acquirer through the ownership of voting shares.
Where an investment is reviewable under the IC Act, the investment may not be
implemented unless it is likely to be of net benefit to Canada. If an
applicant is unable to satisfy the Minister responsible for Industry Canada
that the investment is likely to be of net benefit to Canada, the applicant
may not proceed with the investment. Alternatively, an acquirer may be
required to divest control of the Canadian business that is the subject of the
investment.
In addition to the foregoing, the IC Act provides for formal notification
under the IC Act of all other acquisitions of control by Canadian businesses
by non-Canadian investors. The notification process consists of filing a
notification within 30 days following the implementation of an investment,
which notification is for information, as opposed to review, purposes.
10.E. Taxation
Canadian Federal Income Tax Considerations
The following summary discusses only the Canadian federal income tax
considerations generally applicable to a holder (a "Holder") of one or more
common shares of the Company who, for the purposes of the Income Tax Act
(Canada) (the "Tax Act") is a non-resident of Canada who holds common shares
as capital property. The summary deals with the provisions of the Tax Act in
force on 12/31/1999. It does not discuss all the tax consequences that may be
relevant to particular holders in light of their circumstances or to holders
subject to special rules. Holders and prospective holders should consult
their own tax advisers with respect to their particular circumstances.
Dividends
A Holder will be subject to Canadian withholding tax ("Part XIII Tax") equal
to 25%, or such lower rate as may be available under an applicable tax treaty,
of the gross amount of any dividend paid or deemed to be paid on common
shares. Under the Canada-U.S. Income Tax Convention (1980) as amended by the
Protocols signed on 6/14/1983, 3/28/1984, 3/17/1995, and 7/29/1997 (the
"Treaty"), the rate of Part XIII Tax applicable to a dividend on common shares
paid to a Holder who is a resident of the United States and who is the
beneficial owner of the dividend, is 5%. If the Holder is a company that owns
at least 10% of the voting stock of the Company paying the dividend, and, in
all other cases, the tax rate is 15% of the gross amount of the dividend. The
Company will be required to withhold the applicable amount of Part XIII Tax
from each dividend so paid and remit the withheld amount directly to the
Receiver General for Canada for the account of the Holder.
Disposition of Common Shares
A Holder who disposes of a common share, including by deemed disposition on
death, will not normally be subject to Canadian tax on any capital gain (or
capital loss) thereby realized unless the common share constituted "taxable
Canadian property" as defined by the Tax Act. Generally, a common share of a
public corporation will not constitute taxable Canadian property of a Holder
if the share is listed on a prescribed stock exchange unless the Holder or
persons with whom the Holder did not deal at arm's length alone or together
held or held options to acquire, at any time within the five years preceding
the disposition, 25% or more of the shares of any class of the capital stock
of the Company. The Canadian Venture Exchange is a prescribed stock exchange
under the Tax Act. A Holder who is a resident of the United States and
realizes a capital gain on a disposition of a common share that was taxable
Canadian property will nevertheless, by virtue of the Treaty, generally be
exempt from Canadian tax thereon unless (a) more than 50% of the value of the
common shares is derived from, or from an interest in, Canadian real estate,
including Canadian mineral resource properties, (b) the common share formed
part of the business property of a permanent establishment that the Holder has
or had in Canada within the 12 month period preceding the disposition, or (c)
the Holder is an individual who (i) was a resident of Canada at any time
during the 10 years immediately preceding the disposition, and for a total of
120 months during any period of 20 consecutive years, preceding the disposition,
and (ii) owned the common share when he ceased to be resident in Canada.
A Holder who is subject to Canadian tax in respect of a capital gain realized
on a disposition of a common share must include three quarters of the capital
gain (taxable capital gain) in computing the Holder's taxable income earned in
Canada. The Holder may, subject to certain limitations, deduct three-quarters
of any capital loss (allowable capital loss) arising on a disposition of
taxable Canadian property from taxable capital gains realized in the year of
disposition in respect to taxable Canadian property and, to the extent not so
deductible, from such taxable capital gains realized in any of the three
preceding years or any subsequent year.
United States Taxation
For federal income tax purposes, an individual who is a citizen or resident of
the United States or a domestic corporation ("U.S. Taxpayer") will recognize a
gain or loss on the sale of the Company's common shares equal to the difference
between the proceeds from such sale and the adjusted tax basis of the common
shares. The gain or loss will be a capital gain or capital loss if the
Company's common shares is a capital asset in the hands of the U.S. Taxpayer.
For federal income tax purposes, a U.S. Taxpayer will be required to include
in gross income dividends received on the Company's common shares. A U.S.
Taxpayer who pays Canadian tax on a dividend on common shares will be entitled,
subject to certain limitations, to a credit (or alternatively, a deduction)
against federal income tax liability. A domestic corporation that owns at least
10% of the voting shares should consult its tax advisor as to applicability of
the deemed paid foreign tax credit with respect to dividends paid on the
Company's common shares.
Under a number of circumstances, United States Investor acquiring shares of the
Company may be required to file an information return with the Internal Revenue
Service Center where they are required to file their tax returns with a
duplicate copy to the Internal Revenue Service Center, Philadelphia, PA 19255.
In particular, any United States Investor who becomes the owner, directly or
indirectly, of 10% or more of the shares of the Company will be required to
file such a return. Other filing requirements may apply, and United States
Investors should consult their own tax advisors concerning these requirements.
Holders and prospective holders should therefore consult their own tax advisers
with respect to their particular circumstances.
10.F. Dividends and Paying Agents
The Company has not declared any dividends on its common shares for the last
five years and does not anticipate that it will do so in the foreseeable
future. The present policy of the Company is to retain future earnings for
use in its operations and the expansion of its business.
Notwithstanding the aforementioned: the Company is unaware of any dividend
restrictions; has no specific procedure for the setting of the date of
dividend entitlement; but might expect to set a record date for stock
ownership to determine entitlement; has no specific procedures for non-
resident holders to claim dividends, but might expect to mail their dividends
in the same manner as resident holders. The Company has not nominated any
financial institutions to be the potential paying agents for dividends in the
United States.
10.G. Statement by Experts
The Company's auditors for its financial statements for each of the preceding
two years was Morgan & Company, Chartered Accountants, 700 West Georgia Street,
#1730, Vancouver, British Columbia, Canada V7Y 1A1. They are members of the
British Columbia Institute of Chartered Accountants. Their audit report for
Fiscal 2001/2000 is included with the related financial statements in this
Registration Statement with their consent. The auditors for Fiscal 1999 were
Amisano Hanson, Chartered Accountants.
10.H. Document on Display --- No Disclosure Necessary ---
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--- No Disclosure Necessary ---
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
12.A. Debt Securities --- No Disclosure Necessary ---
12.B. Warrants and Rights --- No Disclosure Necessary ---
12.C. Other Securities --- No Disclosure Necessary ---
12.D. American Depository Shares -- No Disclosure Necessary ---
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
--- No Disclosure Necessary ---
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS AND USE OF PROCEEDS --- No Disclosure Necessary ---
ITEM 15. CONTROLS AND PROCEDURES
Within the 90-day period prior to the filing of this report ("Date of
Evaluation"), an evaluation was carried out under the supervision and with the
participation of the Company's management, including the Chief Executive
Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of
our disclosure controls and procedures. Based on that evaluation, the CEO and
CFO have concluded that the Company's disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company
in reports that it files or submits under the Securities Exchange Act of 1934
is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms.
The Company's disclosure controls and procedures operate such that important
information flows to appropriate collection and disclosure points in a timely
manner and are effective to ensure that such information is accumulated and
communicated to the Company's management, and made known to the Company's
Chief Executive Officer and Chief Financial Officer, including the period when
this Annual Report on Form 20-F was prepared, as appropriate to allow timely
decision regarding the required disclosure.
There have been no significant changes in the Company's internal controls or
the occurrence of events or other factors that could significantly affect
these controls, subsequent to the Date of Evaluation. Nor have there been any
corrective actions with regard to significant deficiencies or material
weaknesses.
ITEM 15. RESERVED
ITEM 16. RESERVED
PART III
ITEM 17. FINANCIAL STATEMENTS
The Company's financial statements are stated in Canadian Dollars (CDN$) and
are prepared in accordance with Canadian Generally Accepted Accounting
Principles (GAAP), the application of which, in the case of the Company,
conforms in all material respects for the periods presented with United States
GAAP, except as discussed in footnotes to the financial statements.
The financial statements as required under ITEM #17 are attached hereto and
found immediately following the text of this Registration Statement. The
audit report of Morgan & Company, independent Chartered Accountants, is
included herein immediately preceding the audited financial statements.
Audited Financial Statements
Auditor's Report, dated 4/30/2002
Balance Sheets at 12/31/2001 and 12/31/2000
Statements of Cash Flows for the years ended 12/31/2001 and 12/31/2000
Notes to Financial Statements
Unaudited Financial Statements
Balance Sheets at 9/30/2002 and 12/31/2001
Statements of Loss and Deficit for the Nine Months 9/30/2002 and 9/30/2001
Statements of Cash Flows for the Nine Months 9/30/2002 and 9/30/2001
Notes to Financial Statements
ITEM 18. FINANCIAL STATEMENTS
The Company has elected to provide financial statements pursuant to ITEM #17.
ITEM 19. EXHIBITS
Page
1. Articles of Incorporation/Bylaws as currently in effect: 50
1.1. Certificate of Incorporation, dated 4/24/1967
1.2. Certificate of Name Change, dated 9/25/1987
1.2. Certificate of Name Change, dated 3/26/1991
1.2. Certificate of Name Change, dated 6/19/1995
1.2. Certificate of Name Change, dated 10/01/1998
1.3. Articles/By-Laws, dated 6/29/2001
2. Instruments defining the rights of holders of equity or
debt securities being registered.
--- Refer to Exhibit No. 1 ---
3. Voting Trust Agreements: No Disclosure Necessary
4. Material Contracts: No Disclosure Necessary
5. Foreign Patents: No Disclosure Necessary
6. Earnings Per Share Calculation: No Disclosure Necessary
7. Ratio of Earnings To Fixed Charges: No Disclosure Necessary
8. List of Subsidiaries: No Disclosure Necessary
9. Statement Regarding Date of Financial Statements:
No Disclosure Necessary
10. Additional Exhibits:
a. Information Circular for Takeover Bid, dated 5/26/2000 78
b. Form 42, Report of Takeover Bid, dated 5/29/2000 84
c. Notice/Information Circular for AGM held 8/6/2002 86
g. Consent of Auditor, Morgan & Company, dated 4/30/2002 111
Exhibit
Morgan & Company
Chartered Accountants
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the initial Registration
Statement of Tri-Lateral Ventures Corporation on Form 20-F of our Auditors'
Report, dated April 30, 2002, in connection with our audits of the financial
statements of that Company as at December 31, 2002 and 2001, and for each of
the years in the two year period ended December 31, 2002, which report is
included in the Form 20-F.
Vancouver, BC "Morgan & Company"
December 11, 2002 Chartered Accountants
SIGNATURE PAGE
Pursuant to the requirements of Section 12g of the Securities
Exchange Act of 1934, the Registrant certifies that it meets all of
the requirements for filing on Form 20-F and has duly caused this
amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
Tri-Lateral Venture Corporation - SEC File #0-50112
Registrant
Dated: December 23, 2002 By: /s/ Gregory Burnett
Gregory Burnett, President/Director
TRI-LATERAL VENTURE CORPORATION
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
December 31, 2001 and 2000
(Stated in Canadian Dollars)
AUDITORS' REPORT
To the Shareholders,
Tri-Lateral Venture Corporation
(A Development Stage Company)
We have audited the balance sheets of Tri-Lateral Venture Corporation (a
development stage company) as at December 31, 2001 and 2000 and the statements
of operations, shareholders' deficiency, and cash flows for the years ended
December 31, 2001 and 2000. 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 audits.
We conducted our audits in accordance with Canadian and United States of America
generally accepted auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 2001 and
2000 and the results of its operations and its cash flows for the years ended
December 31, 2001 and 2000 in accordance with Canadian generally accepted
accounting principles.
The financial statements as at December 31, 1999 and for the year then ended
were audited by other auditors who expressed an opinion without reservation
on those financial statements in their report dated April 24, 2000.
Vancouver, Canada "Morgan & Company"
April 30, 2002 Chartered Accountants
COMMENTS BY AUDITOR FOR US READERS ON CANADA-US REPORTING CONFLICT
In the United States, reporting standards for auditors require the addition
of an explanatory paragraph (following the opinion paragraph) when there is
substantial doubt about a company's ability to continue as a going concern.
The accompanying financial statements have been prepared on the basis of
accounting principles applicable to a going concern which assumes the
realization of assets and discharge of liabilities in the normal course of
business. As discussed in Note 1 to the accompanying financial statements,
the Company has a working capital deficiency and has incurred substantial
losses from operations which raises substantial doubt about the Company's
ability to continue as a going concern. The accompanying financial state-
ments do not include any adjustments that might result from the outcome of
this uncertainty.
Our report to the shareholders dated April 30, 2002 is expressed in accordance
with Canadian reporting standards which do not permit a reference to such
uncertainty in the Auditors' Report when the uncertainty is adequately
disclosed in the financial statements.
Vancouver, Canada "Morgan & Company"
April 30, 2002 Chartered Accountants
TRI-LATERAL VENTURE CORPORATION
(A Development Stage Company)
BALANCE SHEETS
December 31, 2001 and 2000
(Stated in Canadian Dollars)
2001 2000
$ $
ASSETS
Current
Cash 236,682 31,166
Accounts receivable 1,003 5,995
Prepaid expense - 10,000
--------- ---------
237,685 47,161
Promissory note receivable - Notes 3 and 9 500,000 -
--------- ----------
737,685 47,161
========= ==========
LIABILITIES
Current
Accounts payable and accrued liabilities
- Notes 6 and 10 261,311 139,557
Loans payable - Notes 4 and 6 845,504 78,424
--------- ---------
1,106,815 217,981
--------- ---------
SHAREHOLDERS' DEFICIENCY
Share capital - Note 5 5,783,259 5,785,259
Contributed surplus 2,000 -
Deficit (6,154,389) (5,956,079)
----------- -----------
(369,130) (170,820)
----------- -----------
737,685 47,161
========== ===========
Nature and Continuance of Operations - Note 1
Contingency - Note 9
ON BEHALF OF THE BOARD:
"Greg Burnett" "Kevin Hanson"
Director Director
TRI-LATERAL VENTURE CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
for the years ended December 31, 2001, 2000 and 1999
(Stated in Canadian Dollars)
2001 2000 1999
$ $ $
- ------------------------------------------------------------------------------
Administrative Expenses
Accounting fees - Note 6 9,846 7,454 7,091
Bad debts 58,333 - -
Bank charges and interest - Note 6 71,600 315 244
Consulting fees - Note 6 30,000 25,000 -
Filing fees 1,417 1,437 -
Legal fees 41,549 27,386 4,742
Management fees - - 12,000
Rent, office and administration - Note 6 6,174 3,653 65,348
Transfer agent 20,385 17,005 15,386
Travel and promotion 696 2,757 -
- --------------------------------------------------------------------------------
Loss before other items (240,000) (85,007) (104,811)
Other items
Business investigation costs (26,725) - (5,559)
Interest earned 63,415 295 278
Gain on settlement of accounts payable 5,000 7,302 -
Loss on write-off of resource properties - - (1)
- --------------------------------------------------------------------------------
Net loss (198,310) (77,410) (110,091)
================================================================================
Deficit accumulated to December 31, 1998 - - -
- --------------------------------------------------------------------------------
Weighted average number
of shares outstanding (3,372,054) (3,372,054) (2,321,708)
================================================================================
Basic and diluted loss per share (0.06) (0.02) (0.05)
================================================================================
TRI-LATERAL VENTURE CORPORATION
(A Development Stage Company)
STATEMENTS OF SHAREHOLDERS' DEFICIENCY
for the years ended December 31, 1999 to 2001
(Stated in Canadian Dollars)
Deficit
Accumu-
lated
During
the
Common Stock Preferred Stock Contri Devel-
Issued Issued buted opment
Shares Amount Shares Amount Surplus Stage Total
$ $ $ $ $
- -------------------------------------------------------------------------------
Cumulative
totals to
12 31 98 1,103,556 5,329,560 10,000 2,000 - (5,768,578) (437,018)
Issuance
of shares
pursuant
to debt
settlement
agreements 2,268,498 453,699 - - - 453,699
Net loss
for the
year ended
12 31 99 - - - - (110,091) (110,091)
- ------------------------------------------------------------------------------
Balance,
12 31 99 3,372,054 5,783,259 10,000 2,000 - (5,878,669) (93,410)
Net loss
for the
year ended
12 31 00 - - - - (77,410) (77,410)
- -------------------------------------------------------------------------------
Balance,
12 31 00 3,372,054 5,783,259 10,000 2,000 - (5,956,079) (170,820)
Cancellation
of preferred
shares - - (10,000) (2,000) 2,000 - -
Net loss for
the year ended
12 31 01 - - - - - (198,310) (198,310)
- -------------------------------------------------------------------------------
Balance,
12 3101 3,372,054 5,783,259 - - 2,000 (6,154,389) (369,130)
===============================================================================
TRI-LATERAL VENTURE CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
for the years ended December 31, 2001, 2000 and 1999
(Stated in Canadian Dollars)
2001 2000 1999
$ $ $
- ----------------------------------------------------------------------------
Operating Activities
Net loss for the year (198,310) (77,410) (110,091)
Add item not affecting cash:
Gain on settlement of accounts payable (5,000) (7,302) -
Loss on write-off of resource properties - - 1
Changes in non-cash working capital
items related to operations:
Accounts receivable 4,992 (5,364) 7,646
Prepaid expense 10,000 (10,000) -
Accounts payable and accrued
Liabilities 126,754 66,155 63,735
Due to related parties - (16,600) 10,000
- ------------------------------------------------------------------------------
Cash used in operating activities (61,564) (50,521) (28,709)
- ------------------------------------------------------------------------------
Investing Activity
Increase in promissory note receivable (500,000) - -
- ------------------------------------------------------------------------------
Financing Activity
Increase in loans payable 767,080 78,424 -
- -----------------------------------------------------------------------------
Increase (decrease) in cash 205,516 27,903 (28,709)
Cash, beginning 31,166 3,263 31,972
- ------------------------------------------------------------------------------
Cash, end 236,682 31,166 3,263
==============================================================================
Non-cash Transactions - Note 7
TRI-LATERAL VENTURE CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2001 and 2000
(Stated in Canadian Dollars)
Note 1 Nature and Continuance of Operations
The Company is in the development stage and is currently investigating new
business opportunities. During the year ended December 31, 2001, the Company
advanced $500,000 to a company in respect to a proposed acquisition of that
company. The proposed acquisition did not complete and the Company has brought
an action to recover the monies loaned (refer to Note 9).
The Company currently has title to 10 patented mineral claims located in the
Red Lake Mining Division of Ontario. These mineral claims were written-off in
previous years.
These financial statements have been prepared on a going concern basis. At
December 31, 2001 the Company has a working capital deficiency of $869,130 and
has accumulated losses of $6,154,389 since inception. Its ability to continue
as a going concern is dependent upon the ability of the Company to obtain the
necessary financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due.
The Company was incorporated pursuant to the Ontario Business Corporations Act
on April 24, 1967 as Jolly Jumper Products of America Limited. The Company
changed its name on September 25, 1987 to Sun Valley Hot Springs Ranch Inc.,
on March 26, 1991 to Tri-Lateral Free Trade Inc., on June 19, 1995 to Tri-
Lateral Investments Corporation and on October 2, 1998 to Tri-Lateral Venture
Corporation.
Note 2 Significant Accounting Policies
The financial statements of the Company have been prepared in accordance with
Canadian generally accepted accounting principles and are stated in Canadian
dollars. Except as disclosed in Note 11, these financial statements conform
in all material respects with GAAP in the United States of America. Because a
precise determination of many assets and liabilities is dependent upon future
events, the preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful judgment.
Actual results may vary from these estimates.
The financial statements have, in management's opinion, been properly
prepared within reasonable limits of materiality and within the framework
of the significant accounting policies summarized below:
(a) Basic and Diluted Loss Per Share
Basic earnings per share ("EPS") is calculated by dividing loss applicable
to common shareholders by the weighted-average number of common shares
outstanding for the year. Diluted EPS reflects the potential dilution
that could occur if potentially dilutive securities were exercised or
converted to common stock. As at December 31, 2001 and 2000, there were
potentially dilutive securities outstanding. Therefore, there was no
difference in the calculation of basic and diluted EPS in 2001 and 2000.
(b) Fair Market Value of Financial Instruments
The carrying value of cash, accounts receivable, accounts payable and
accrued liabilities and loans payable approximate fair value because of
the short term maturity of those instruments. Unless otherwise noted,
it is management's opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial
instruments.
(c) Income Taxes
The Company has adopted the liability method of accounting for income
taxes, following new standards adopted by the Canadian Institute of
Chartered Accountants ("CICA"). The adoption of the new standards
resulted in no adjustments to opening retained earnings. Under the
new standards, future income tax assets and liabilities are determined
based on the differences between the tax basis of assets and liabilities
and those reported in the financial statements. The future tax assets or
liabilities are calculated using the tax rates for the periods in which
the differences are expected to be settled. Future tax assets are
recognized to the extent that they are considered more likely than not
to be realized.
Note 3 Promissory Note Receivable
Promissory note receivable represents a loan to Contact Solutions Group
Inc. ("CSG"), secured by a general security agreement over the assets of
CSG and a personal guarantee of a director of CSG, bears interest at 10%
per annum and is due on demand. During the year ended December 31, 2001,
a formal demand for payment was made against CSG. Refer to Note 9.
Note 4 Loans Payable - Note 6
Loans payable consists of the following:
2001 2000
$ $
------ ------
Non-interest bearing, no specific terms of
repayment and unsecured 345,504 -
Promissory notes payable bearing interest at
10% per annum, unsecured and payable on demand 500,000 -
------- -------
845,504 -
======= =======
Note 5 Share Capital
Authorized
Unlimited common shares
Unlimited non-voting convertible redeemable non-cumulative 6% preference shares
Note 6 Related Party Transactions - Note 4
During the year ended December 31 the Company incurred the following expenses
with directors and a company with a common director:
December 31,
-------------------------------
2001 2000 1999
$ $ $
---- ---- ----
Accounting 7,681 5,704 -
Consulting fees 30,000 15,000 -
Interest expense 35,417 - -
Rent 6,000 3,000 -
------ ----- -----
79,098 23,704 -
====== ====== =====
The expenses were measured by the exchange amount, which is the amount
agreed upon by the transacting parties and are on terms and conditions
similar to non-related entities.
As at December 31, 2001, accounts payable and accrued liabilities includes
$116,191 (2000 $48,270) owing to directors of the Company.
As at December 31, 2001, loans payable includes a promissory note payable
to a director of the Company in the amount $250,000 (2000 $Nil).
Note 7 Non-cash Transactions
Investing and financing activities that do not have a direct impact on current
cash flows are excluded from the statement of cash flows as follows:
- - During the year ended December 31, 2001 the Company cancelled 10,000
preferred shares at $0.20 per share ($2,000). This amount has been
reclassified to contributed surplus.
- - During the year ended December 31, 1998, the Company issued 2,268,498
common shares at $0.20 per share to settle debts totalling $453,699.
Note 8 Corporation Income Tax Loss Carryforwards
At December 31, 2001 the Company has accumulated non-capital losses totaling
$1,218,586 which are available to offset future years' taxable income. These
losses expire as follows:
December 31, 2002 $ 48,040
December 31, 2003 209,894
December 31, 2004 353,593
December 31, 2005 214,852
December 31, 2006 104,533
December 31, 2007 84,712
December 31, 2008 202,962
-----------
$ 1,218,586
===========
At December 31, 2001 the Company has accumulated Canadian Exploration Expenses
of $749,711 and Canadian Development Expenses of $134,908. These expenses
carryforward indefinitely and are available to offset certain taxable income
of future years at various rates per year.
The potential tax benefit of these losses and expenses, if any, has not been
recorded in the financial statements.
Note 9 Contingency
The Company has brought an action in the Superior Court of Ontario against
Contact Solutions Group Inc. ("CSG") and the principal of CSG, for recovery
of $500,000 previously loaned to CSG. CSG and the principal of CSG, in turn
has brought a counterclaim against the Company claiming $3,000,000 damages for
breach of a share purchase agreement between the Company and CSG and a further
$500,000 in punitive damages. The Company believes the counterclaim is without
merit and intends to vigorously defend it.
Note 10 Subsequent Event
Subsequent to December 31, 2001, the Company settled accounts payable totaling
$67,000 for payments totalling US$10,000 (CDN$16,000) resulting in a gain on
settlement of accounts payable of $51,000.
Note 11 Differences between Canadian and United States Accounting Principles
The financial statements have been prepared in accordance with accounting
principles generally accepted in Canada which differ in certain respects with
those principles and practices that the Company would have followed had its
financial statements been prepared in accordance with accounting principles
and practices generally accepted in the United States.
The Company's accounting principles generally accepted in Canada differ from
accounting principles generally accepted in the United States as follows:
Accounting for Income Taxes
Under the asset and liability method of Statement of Financial Accounting
Standards No. 109 ("SFAS-109"), deferred tax assets and liabilities are
recognized for estimated future tax consequences attributable to differences
between the financial statements carrying amount of existing assets and
liabilities and their respective tax bases, measured using the provisions
of enacted tax laws. A deferred tax asset with respect to loss carry-forwards
and timing differences would not be recognized and the application of US GAAP
does not result in a material difference from Canadian GAAP.
New Accounting Standards
In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
141, "Business Combinations" and SFAS No. 142 "Goodwill and Other Intangible
Assets". SFAS No. 141 requires the use of the purchase method of accounting
and eliminates the pooling of interests method of accounting for business
combinations except for qualifying business combinations that were initiated
prior to July 1, 2001. It also further clarifies the criteria to recognize
intangible assets separately from goodwill. The requirements of SFAS No. 141
are effective for business combinations initiated after June 30, 2001.
Under SFAS No. 142, goodwill and indefinite-lived intangible assets are no
longer amortized but are reviewed at least annually for impairment. Separable
intangible assets that are not deemed to have an indefinite life will continue
to be amortized over their useful lives (but with no maximum life). The
amortization provisions of SFAS No. 142 apply to goodwill and intangible
assets acquired after June 30, 2001.
The adoption of SFAS No. 141 and SFAS No. 142 will not have a material effect on
the Company's financial statements.A quantitative reconciliation of the balance
sheet and the statement of operations has not been provided because there are no
quantitative differences to disclose between Canadian GAAP and US GAAP.
TRI-LATERAL VENTURES CORPORATION
INTERIM FINANCIAL STATEMENTS
September 30, 2002
(Unaudited)
(Unaudited) (Audited)
September 30, December 31,
2002 2001
- -------------------------------------------------------------------------------
$ $
ASSETS
Current
Cash
20,248 236,682
Accounts receivable 3,724 1,003
--------------------------
23,972 237,685
Promissory note receivable 500,000 500,000
Deposit 7,500 -
--------------------------
531,472 737,685
==========================
LIABILITIES
Current
Accounts payable and accrued liabilities - Note 3 256,040 261,311
Loans payable - Note 3 725,424 845,504
--------------------------
981,464 1,106,815
--------------------------
SHAREHOLDERS' DEFICIENCY
Share capital - Note 2 5,783,259 5,783,259
Contributed surplus 2,000 2,000
Deficit (6,235,251) (6,154,389)
--------------------------
(449,992) (369,130)
---------------------------
$531,472 $737,685
==========================
SEE ACCOMPANYING NOTES
TRI-LATERAL VENTURES CORPORATION
INTERIM STATEMENTS OF LOSS AND DEFICIT
for the three and nine months ended September 30, 2002
(Unaudited)
Three Months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
$ $ $ $
- -------------------------------------------------------------------------------
Administrative Expenses
Accounting - Note 3 2,100 - 9,735 7,771
Bank charges and interest - Note 3 12,344 58,508 37,683 58,894
Consulting fees - Note 3 7,500 7,500 22,500 22,500
Filing fees 9,979 150 11,237 1,392
Legal 2,661 8,203 23,635 40,005
Rent and office - Note 3 2,936 1,508 5,937 4,675
Resource property costs 3,494 - 5,156 -
Transfer agent 4,925 9,147 10,450 18,493
Travel - - 5,950 -
- -------------------------------------------------------------------------------
Loss before other items (45,939) (85,016) (132,282) (153,730)
Other items
Business investigation costs - - - (26,725)
Interest earned 86 60,327 348 62,781
Gain on settlement of debt - 5,197 51,072 5,197
- --------------------------------------------------------------------------------
Net loss for the period (45,853) (19,492) (80,862) (112,477)
- --------------------------------------------------------------------------------
Deficit, beginning of the period (6,154,389) (5,956,079)
- --------------------------------------------------------------------------------
Deficit, end of the period (6,235,251) (6,068,556)
- --------------------------------------------------------------------------------
Basic and diluted loss per share (0.01) (0.01) (0.02) (0.03)
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES
TRI-LATERAL VENTURES CORPORATION
INTERIM STATEMENTS OF CASH FLOWS
for the three and nine months ended September 30, 2002
(Unaudited)
Three Months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
$ $ $ $
- -------------------------------------------------------------------------------
Operating Activities
Net loss for the period (45,853) (19,492) (80,862) (112,477)
Add item not affecting cash:
Gain on settlement of debt - (5,197) (51,072) (5,197)
- --------------------------------------------------------------------------------
(45,853) (24,689) (131,934) (117,674)
Changes in non-cash working capital
items related to operations:
Accounts receivable (46) (1,807) (2,721) 1,731
Prepaid expenses - - - 10,000
Accounts payable 11,878 10,766 45,801 59,573
Loans payable (80) 442,333 (120,080) 827,413
- -------------------------------------------------------------------------------
(34,101) 426,603 (208,934) 781,043
- -------------------------------------------------------------------------------
Investing Activities
Increase in promissory
note receivable - (558,333) - (558,333)
Increase in deposit (7,500) - (7,500) -
- --------------------------------------------------------------------------------
(7,500) (558,333) (7,500) (558,333)
Increase (decrease) in cash during
the period (41,601) (131,730) (216,434) 222,710
Cash, beginning of period 61,849 385,606 236,682 31,166
- --------------------------------------------------------------------------------
Cash, end of period 20,248 253,876 20,248 253,876
================================================================================
Supplementary disclosure of cash flow
information:
Cash paid for:
Interest - - - -
===============================================================================
Income taxes - - - -
===============================================================================
SEE ACCOMPANYING NOTES
TRI-LATERAL VENTURES CORPORATION
NOTES TO THE INTERIM FINANCIAL STATEMENTS
September 30, 2002
(Unaudited)
Note 1 Interim Reporting
While the information presented in the accompanying nine months financial
statements is unaudited, it included all adjustments, which are, in the opinion
of management, necessary to present fairly the financial position, results of
operations and its cash flows for the interim periods presented. These interim
financial statements follow the same accounting policies and methods in their
application as the Company's annual financial statements. It is suggested that
these interim financial statements be read in conjunction with the company's
audited annual December 31, 2001 financial statements.
Note 2 Share Capital
Authorized
Unlimited common shares
Unlimited non-voting convertible redeemable non-cumulative 6% preference shares
Issued Common Shares Number $
Balance, December 31, 2001 and September 30, 2002 3,372,054 5,783,259
--------- ---------
Note 3 Related Party Transactions
During the nine months ended September 30, 2002 the Company incurred the
following expenses with directors and a company with a common director:
September 30,
2002 2001
$ $
----- -----
Accounting 6,400 5,606
Consulting fees 22,500 22,500
Interest expense 18,750 29,167
Rent 4,500 4,500
------ ------
52,150 61,773
====== ======
The expenses were measured by the exchange amount, which is the amount agreed
upon by the transacting parties and are on terms and conditions similar to non-
related entities.
As at September 30, 2002, accounts payable and accrued liabilities includes
$168,250 (December 31, 2001: $116,191) owing to directors of the Company.
As at September 30, 2002, loans payable includes a promissory note payable to a
director of the Company in the amount $250,000 (December 31, 2001: $250,000).
Note 4 Canadian and United States of America Accounting Principles
The financial statements have been prepared in accordance with accounting
principles generally accepted in Canada which do not differ with those
principles and practices that the Company would have followed had its
financial statements been prepared in accordance with accounting principles
generally accepted in the United States of America.
<FN>
55