Item 10. Additional information

Memorandum and Articles of association

The following presents a description of certain terms and provisions of our articles of incorporation and by-laws.

General

We were incorporated in the Province of Ontario, Canada on November 30, 1993 and operate under the Business Corporation Act (Ontario).

Our corporate objectives and purpose are unrestricted.

Directors

Our by-laws provide that a director who has a material interest in any transaction with us must disclose such interest and shall not vote on any resolution to approve the transaction.

Our by-laws provide our directors the following borrowing powers, subject to the Business Corporations Act (Ontario):

- borrow money upon Belzberg's credit;

- issue, reissue, sell or pledge bonds, debentures, notes or other evidences of indebtedness or guarantee of our company, whether secured or unsecured;

- give directly or indirectly financial assistance to any person by means of a loan, a guarantee or otherwise on behalf of us to secure performance of any present or future indebtedness, liability or obligation of any person; and

- 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 our 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 our company, reissue, sell or pledge bonds, debentures, notes or other evidences of indebtedness or guarantee

Annual and special meetings

The annual meeting and special meetings of shareholders are held at such time and place as the board of directors, the chairman of the board, the managing directors or the president shall determine. Notice of meetings is sent out to shareholders not less than 21 nor more than 51 days before the date of such meeting.

Investment Canada Act

There are no laws, governmental decrees or regulations in Canada that restrict the export or import of capital or which affect the remittance of dividends, interest or other payments to non-resident holders of our stock, other than withholding tax requirements.

There are no limitations under the laws of Canada or the Province of Ontario, or in our constating documents, with respect to the right of non-resident or foreign owners to hold or vote our common stock other than those imposed by the Investment Canada Act.

The Investment Canada Act is a Canadian federal statute which regulates the acquisition of control of existing Canadian businesses and the establishment of new Canadian businesses by an individual, a government or entity that is a "non-Canadian" as that term is defined in the Investment Canada Act.

We believe that we are not currently "non-Canadian" for purposes of the Investment Canada Act. Should we Company become "non-Canadian" in the future, acquisitions of control of Canadian businesses by us would become subject to review under the Act. Generally, the direct acquisition by a "non-Canadian" of an existing Canadian business with gross assets of $5,000,000 or more is reviewable under Act. Should the Company become "non-Canadian" in the future, we believe that we would likely qualify as a "WTO investor, as defined in the Investment Canada Act." Generally, a "WTO Investor" is an individual, other than a Canadian, who is a national of a country, which is a member of the World Trade Organization. In the case of a person, which is not an individual, a WTO investor is a person which, is ultimately controlled by individuals, other than Canadians, who are nationals of a WTO member. Currently there are 134 countries, which are members of the WTO, including virtually all countries of the Western world. Generally, in situations involving "WTO investors", indirect acquisitions are generally not reviewable under the Act; as of 2002, the threshold for review of acquisitions by "WTO investors" was acquired-business assets of $218 million. Conversely, in acquisitions of Canadian businesses engaged in the production of uranium, the provision of financial or transportation services or "cultural" businesses (relating to Canada's culture heritage or national identity), the benefit of the relatively high "WTO investor" thresholds do not apply.

In the future, Belzberg may acquire providers of financial services. Investments to establish new, unrelated businesses are not generally reviewable under the Act. Investments to establish a new business that is related to the non-Canadian's existing business in Canada is not notifiable under the Investment Canada Act unless such investment relates to Canada's cultural heritage or national identity.

Investments which are reviewable under the Investment Canada Act are reviewed by the Minister, designated as being responsible for the administration of the Investment Canada Act. Reviewable investments, generally, may not be implemented prior to the Minister's determining that the investment is likely to be of "net benefit to Canada" based on the criteria set out in the Investment Canada Act. Generally investments by non-Canadians consisting of the acquisition of control of Canadian businesses which acquisitions are otherwise non-reviewable or the establishment of new Canadian businesses require that a notice be given under the Investment Canada Act in the prescribed form and manner.

To date, the Investment Canada Act has had no practical effect on our operations and/or financial condition. Moreover the Investment Canada Act has not and will not create an impediment to an unsolicited take-over of us as our asset base is approximately Cdn$15,671,000 as at March 31, 2002. Accordingly any proposed take-over of us by a "non-Canadian" would likely be subject only to the simple "notification" requirements of the Investment Canada Act as in all likelihood that non-Canadian would be a "WTO investor" for purposes of the Investment Canada Act. Generally, a "WTO investor" is an individual, other than a Canadian, who is a national of a country which is a member of the World Trade Organization. In the case of a person which is not an individual, a WTO investor is a person which, generally, is ultimately controlled by individuals, other than Canadians, who are nationals of a WTO member. Currently there are 134 countries which are members of the WTO, including virtually all countries of the Western world. We would have to have an asset base of at least Cdn$184 million before the "reviewable" transaction provisions of the Investment Canada Act became relevant for consideration by a third party non-Canadian acquirer, which is not a WTO investor.

Taxation

The following is a general summary only and should not be considered as income tax advice or relied upon for tax planning purposes.

Certain Canadian Federal Income Tax Consequences

The following is a general summary of the principal Canadian federal income tax considerations generally applicable to a person who holds our common stock and who, at all relevant times, for the purposes of the Income Tax Act (Canada) (the "Act") is not and has never been resident or deemed to be resident in Canada, deals at arm's length and is not affiliated with us, holds his/her common stock as capital property, does not use or hold (and will not use or hold) and is not deemed to use or hold his/her Common Stock in, or in the course of, carrying on a business in Canada and does not carry on an insurance business in Canada and elsewhere (a "Non-Resident Holder").

The summary is based on the current provisions of the Act and the regulations thereunder and our understanding of the current published administrative positions, and assessing policies of the Canada Customs and Revenue Agency (the "CCRA"). This summary takes into account all specific proposals to amend the Act and the regulations publicly announced by the Minister of Finance (Canada) prior to the date hereof (the "Proposed Amendments") although no assurances can be given that such Proposed Amendments will be enacted in the form proposed or at all. This summary does not otherwise take into account or anticipate any other changes in law, whether by judicial, governmental or legislative action or decision or other changes in administrative positions or assessing policies of the CCRA nor does it take into account any provincial, territorial, local or foreign tax considerations. The provisions of provincial income tax legislation may vary from province to province in Canada and, in some cases, differ from federal tax legislation.

This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular holder. Accordingly, holders and prospective holders of our common stock should consult their own tax advisors with respect to their particular circumstances, including the application and effect of the income and other tax laws of any country, province, state or local tax authority.

Item 10. Additional information

Common stock. We presently are authorized to issue an unlimited number of shares of our common stock, no par value per share. As at May 31, 2002, we had 11,033,424 shares of our common stock issued and outstanding.

The holders of our common stock will elect all directors and are entitled to one vote for each share. All shares of our common stock will participate equally in dividends if declared by our board of directors, and in net assets in the event of the liquidation of Belzberg. All shares of our common stock presently outstanding are duly authorized, validly issued, fully paid and non-assessable by Belzberg. Our shares of common stock have no preference, conversion, exchange, preemptive or cumulative voting rights.

Options. Set forth below is a table summarizing the 4,363,300 outstanding options to purchase shares of our common stock issued under our Stock Option Plan as of May 31, 2002.

                                   Outstanding                                        Exercisable
-----------------------------------------------------------------------------------------------------------------
            Range of          Number         Weighted          Weighted        Number            Weighted
        Exercise Prices    Outstanding   Average Exercise   Average Exercise   Exercisable   Average Exercise
                                        Remaining Life (a       Price                              Price
-----------------------------------------------------------------------------------------------------------------

          $3.00 - $5.00      2,603,800         4.66              $4.67        2,429,400           $4.71
          $5.50 - $9.00      1,197,500         3.70               7.68          921,250            7.62
        $10.00 - $18.00        562,000         3.90              14.32          330,667           13.38
                       ------------------------------------------------------------------------------------------
                             4,363,300         4.30              $6.74        3,681,317           $6.22
                       ==========================================================================================

(a) Weighted average contractual remaining life in years.

In addition to the foregoing, as of May 31, 2002, Belzberg had issued compensation options to the underwriters of our Special Warrant Offering that was completed on June 14, 2002. Such compensation options entitle the holders to purchase 177,450 units consisting of one common share and one-quarter of one share purchase warrant of the Company at a price of $5.25 per unit expiring October 16, 2003. Each whole share purchase warrant entitles the holder to purchase an additional common share at a price of $5.50 per share expiring October 16, 2003.

Warrants. As at May 31, 2002, Belzberg had issued 1,750,000 share purchase warrants with various private placements of its common shares. Each share purchase warrant may be exercised at the below-referenced exercise price to purchase one (1) common share. Set forth below is a table summarizing all outstanding share purchase warrants of the Company's common stock.

Warrants

A total of 1,750,000 share purchase warrants ("Warrants") were issued and outstanding at May 31, 2002. Each outstanding Warrant entitles the holder thereof to purchase a Common Share as follows:

(a) 550,000 Warrants are exercisable at a price of $4.00 per share on the earlier of February 10, 2005 and the first anniversary of the date that a Qualified Public Offering has been completed by the Company.

(b) 500,000 Warrants are exercisable at a price of $5.00 per share on the earlier of February 14, 2005 and the first anniversary of the date that a Qualified Public Offering has been completed by the Company.

(c) 100,000 Warrants are exercisable at a price of $4.00 per share on the earlier of June 30, 2005 and the first anniversary of the date that a Qualified Public Offering has been completed by the Company.

(d) 600,000 Warrants are exercisable at a price of $10.00 per share on or before February 14, 2003.

A Qualified Public Offering is defined to mean a firm commitment underwritten public offering of Common Shares of the Company in which the aggregate purchase price paid by the public is at least $25,000,000 and in which the offering price of the Common Shares is at least $5.00 per share.

Special Warrants

In addition to the foregoing, pursuant to an underwriting agreement dated as of April 1, 2002 with Haywood Securities Inc. and Sprott Securities Inc. (collectively, the "Underwriters") Belzberg sold 2,730,000 Special Warrants to investors at a price of $5.25 per Special Warrant.

An aggregate of 2,730,000 common shares and 682,504 Share Purchase Warrants were issued upon exercise of the Special Warrants on June 21, 2002.

Subject to adjustment, each Share Purchase Warrant entitles the holder thereof to purchase one common share of the Company at any time on or before October 16, 2003 at a price of $5.50 per common share.

Dividends on Common Stock

Dividends paid or credited or deemed under the Act to be paid or credited on our common stock held by a Non-Resident Holder will be subject to Canadian non-resident withholding tax at a general rate of 25%. This rate may be reduced pursuant to the terms of an applicable tax treaty between Canada and the country of residence of the Non-Resident Holder. Dividends paid or credited or deemed under the Act to be paid or credited on our common stock held by a Non-Resident Holder who is resident in the United States for purposes of the Canada- United States Income Tax Convention will generally be subject to Canadian non-resident withholding tax at a rate of 15%.

Disposition of Common Stock

A Non-Resident Holder will not be subject to tax under the Act in respect of any capital gain realized on a disposition of shares of our common stock unless at the time of such a disposition such shares constitute taxable Canadian property of the Non-Resident Holder for purposes of the Act and such Non-Resident Holder is not entitled to relief under an applicable tax treaty between Canada and the country of residence of the Non-Resident Holder.

Shares of our common stock will generally not constitute taxable Canadian property of a Non-Resident Holder at a particular time provided that such shares are listed on a prescribed stock exchange (which currently includes the TSX) at that time unless at any time during the sixty month period immediately preceding the disposition of such shares of our common stock, the Non-Resident Holder, persons with whom the Non-Resident Holder did not deal at arm's length, or the Non-Resident Holder together will all such persons, owned 25% or more of the shares of any class or series of our capital stock. For this purpose, a Non-Resident Holder will be considered to own any share in respect of which such holder or a person not dealing at arm's length with such holder has an interest or option or other right to acquire. Under certain circumstances, shares of common stock may be deemed to be taxable Canadian property. In the event that shares of our common stock constitute taxable Canadian property to a particular Non-Resident Holder, capital gains realized on the disposition our common stock held by a Non-Resident Holder who is resident in the United States for purposes of the Canada-United States Income Tax Convention will generally not be subject to Canadian tax unless the value of the shares is derived principally from real property situated in Canada or the shares form part of the business property of a permanent establishment or fixed base which such holder has or had in Canada within the 12 month period preceding the disposition. Provided that at the time a Non- Resident Holder disposes of shares of our common stock, such shares are listed on a prescribed stock exchange, the notification and withholding provisions of Section 116 of the Act will not apply.

A purchase of shares of our common stock by the Company itself (other than a purchase of shares of our common stock in the open market in the manner in which shares would normally be purchased by any member of the public in the open market) will give rise to a deemed dividend under the Act equal to the amount, if any, by which the amount paid by us on the purchase exceeds the paid-up capital of such shares determined in accordance with the Act. The paid-up capital may be less than the Non-Resident Holder's adjusted cost base of such shares. Any such dividend deemed to have been received by a Non-Resident Holder will be subject to non-resident withholding tax as described above. The amount of such deemed dividend will reduce the proceeds of disposition of the shares of our common stock to the Non-Resident Holder for purposes of computing the Non-Resident Holder's capital gain or loss under the Act.

Certain United States Federal Income Tax Consequences

The following is a general discussion of certain possible United States federal income tax consequences, under current law, generally applicable to a U.S. Holder (as defined below) of our common stock.

As used herein, a "U.S. Holder" means a holder of our common stock who is a citizen or individual resident of the United States, a company or partnership created or organized in or under the laws of the United States or of any political subdivision thereof or a trust whose income is taxable in the United States irrespective of source. This summary does not address the tax consequences to, and U.S. Holder does not include persons subject to specific provisions of federal income tax law, such as tax-exempt organizations, qualified retirement plans, individual retirement accounts and other tax-deferred accounts, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, nonresident alien individuals, persons or entities that have a "functional currency" other than the U.S. dollar, shareholders who hold our common stock as part of a straddle, hedging or a conversion transaction, and shareholders who acquired their stock through the exercise of employee stock options or otherwise as compensation for services. This summary is limited to U.S. Holders who own our common stock as capital assets. This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire our common stock.

This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire our common stock. This discussion does not address all potentially relevant federal income tax matters and it does not address consequences peculiar to persons subject to special provisions of federal income tax law, such as those described below as excluded from the definition of a U.S. Holder. In additions, this discussion does not cover any state, local or foreign tax consequences.

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, published Internal Revenue Service ("IRS") rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time. This discussion does not consider the potential effects, both adverse and beneficial, of any recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. This discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of our common stock and no opinion or representation with respect to the United States federal income tax consequences to any such holder or prospective holder is made. Accordingly, holders and prospective holders of our common stock should consult their own tax advisors about the federal, state, local, and foreign tax consequences of purchasing, owning and disposing of our common stock.

Distributions on the Company's Common Stock

U.S. Holders receiving dividend distributions (including constructive dividends) with respect to our common stock are required to include in gross income for United States federal income tax purposes the gross amount of such distributions equal to the U.S. dollar value of such dividends on the date of receipt (based on the exchange rate on such date) to the extent that we have current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder's United States federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder's United States federal taxable income by those who itemize deductions. (See more detailed discussion at "Foreign Tax Credit" below.) To the extent that distributions exceed our current or accumulated earnings and profits, they will be treated first as a return of capital up to the U.S. Holder's adjusted basis in our commons and thereafter as gain from the sale or exchange of our common stock. Preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a company. In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Generally any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss. However, an individual whose realized gain does not exceed $200 will not recognize that gain, to the extent that there are no expenses associated with the transaction that meet the requirement for deductibility as a trade or business expense (other than travel expenses in connection with a business trip) or as an expense for the production of income.

Dividends paid on our common stock will not generally be eligible for the dividends received deduction provided to companies receiving dividends from certain United States Companies. A U.S. Holder which is a company may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from us (unless the company qualifies as a "foreign personal holding company" or a "passive foreign investment company," as defined below) if such U.S. Holder owns shares representing at least 10% of our voting power and value. The availability of this deduction is subject to several complex limitations, which are beyond the scope of this discussion.

Under current temporary Treasury Regulations, dividends paid on our common stock, if any, generally will not be subject to information reporting and generally will not be subject to U.S. backup withholding tax. However, dividends paid, and the proceeds of a sale of our common stock, in the U.S. through a U.S. or U.S. related paying agent (including, a broker) will be subject to U.S. information reporting requirements and may also be subject to the 31% U.S. backup withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holder's U.S. federal income tax liability, provided the required information is furnished to the IRS. It should be noted, however, that under proposed Treasury Regulations which are not yet effective and which are only to be applied prospectively, any dividends paid on our common stock will be subject to information reporting and potential 31% U.S. backup withholding tax. Whether and when such proposed regulations will become effective cannot be determined at this time.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of our common stock may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income subject to tax. This election is made on a year-by-year basis and applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder's United States income tax liability that the U.S. Holder's foreign source income bears to his or its worldwide taxable income. In the determination of the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. In addition, this limitation is calculated separately with respect to specific classes of income such as "passive income," "high withholding tax interest," "financial services income," "shipping income," and certain other classifications of income. Dividends distributed by us will generally constitute "passive income" or, in the case of certain U.S. Holders, "financial services income" for these purposes. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific, and holders and prospective holders of our common stock should consult their own tax advisors regarding their individual circumstances.

Disposition of Company's Common Stock

A U.S. Holder will recognize gain or loss upon the sale of our common stock equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholder's tax basis in our common stock. This gain or loss will be capital gain or loss if our common stock is a capital asset in the hands of the U.S. Holder, which will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder. Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year. Deductions for net capital losses are subject to significant limitations. For U.S. Holders which are individuals, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders that are companies (other than companies subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

Other Considerations

In the following circumstances, the above sections of this discussion may not describe the United States federal income tax consequences resulting from the holding and disposition of our common stock.

Foreign Personal Holding Company

If at any time during a taxable year more than 50% of the total combined voting power or the total value of our outstanding shares is owned, directly or indirectly, by five or fewer individuals who are citizens or residents of the United States and 60% or more of our gross income for such year was derived from certain passive sources (e.g., from dividends received from its subsidiaries), we may be treated as a "foreign personal holding company." In that event, U.S. Holders that hold our common stock would be required to include in gross income for such year their allocable portions of such passive income to the extent we do not actually distribute such income.

Foreign Investment Company

If 50% or more of the combined voting power or total value of our outstanding shares are held, directly or indirectly, by citizens or residents of the United States, United States domestic partnerships or companies, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31)), and we are found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, it is possible that we may be treated as a "foreign investment company" as defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging our common stock to be treated as ordinary income rather than capital gain.

Passive Foreign Investment Company

As a foreign company with U.S. Holders, we could potentially be treated as a passive foreign investment company ("PFIC"), as defined in Section 1296 of the Code, depending upon the percentage of our income which is passive, or the percentage of our assets which is producing passive income. U.S. Holders owning common stock of a PFIC are subject to an additional tax and to an interest charge based on the value of deferral of tax for the period during which the common stock of the PFIC are owned, in addition to treatment of gain realized on the disposition of common stock of the PFIC as ordinary income rather than capital gain. However, if the U.S. Holder makes a timely election to treat a PFIC as a qualified electing fund ("QEF") with respect to such shareholder's interest therein, the above-described rules generally will not apply. Instead, the electing U.S. Holder would include annually in his gross income his pro rata share of the PFIC's ordinary earnings and net capital gain regardless of whether such income or gain was actually distributed. A U.S. Holder of a QEF can, however, elect to defer the payment of United States federal income tax on such income inclusions. In addition, taxpayers owning (actually or constructively) marketable stock in a PFIC will be permitted to elect to mark that stock to market annually, rather than be subject to the excess-distribution regime of
Section 1291. Amounts included in or deducted from income under this regime (and actual gains and losses realized upon disposition, subject to certain limitations) will be treated as ordinary. The provision will apply to taxable years of U.S. persons beginning after 1997, and taxable years of foreign corporations ending with or within such taxable years of U.S. persons. Special rules apply to U.S. Holders who own their interests in a PFIC through intermediate entities or persons. We believe that we are not a PFIC for its fiscal years ended December 31, 1996 and 1997. We may have been a PFIC in earlier fiscal years and may be a PFIC in our current and subsequent fiscal years. If in our current or in a subsequent year we conclude that we are a PFIC, we intend to make information available to enable a U.S. Holder to make a QEF election in that year. There can be no assurance that our determination concerning the PFIC status will not be challenged by the IRS, or that we will be able to satisfy record keeping requirements which will be imposed on QEF's.

Controlled Foreign Company

If more than 50% of the voting power of all classes of stock or the total value of the stock of our company is owned, directly or indirectly, by citizens or residents of the United States, United States domestic partnerships and companies or estates or trusts other than foreign estates or trusts, each of whom own 10% or more of the total combined voting power of all of our classes of stock ("United States shareholder"), we could be treated as a "controlled foreign company" under Subpart F of the Code. This classification would effect many complex results one of which is the inclusion of certain income of a CFC which is subject to current U.S. tax. The United States generally taxes the U.S. 10-percent shareholders of a CFC currently on their pro rata shares of the subpart F income of the CFC. In effect, the Code treats those U.S. shareholders as having received a current distribution out of the CFC's subpart F income. Such shareholders also are subject to current U.S. tax on their pro rata shares of the CFC's earnings invested in U.S. property. The foreign tax credit may reduce the U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange of stock by a holder of common stock of our company who is or was a United States shareholder at any time during the five year period ending with the sale or exchange is treated as ordinary dividend income to the extent of earnings and profits of our company attributable to the stock sold or exchanged. Note that the overlap between the PFIC and CFC rules generally will be eliminated for 10-percent U.S. shareholders of a CFC. Where a foreign corporation is both a PFIC and a CFC, the provision generally will treat the foreign corporation as a non-PFIC with respect to 10-percent U.S. shareholders of the CFC. The change generally will be effective for taxable years of U.S. persons beginning after 1997, and for taxable years of foreign corporations ending with or within such taxable years of U.S. persons. Special rules are provided for stock held by PFIC shareholders subject to the rules applicable to non-qualified funds. Because of the complexity of Subpart F, and because it is not clear that Subpart F would apply to our holders of common stock, a more detailed review of these rules is outside of the scope of this discussion.

Dividend Restrictions

We have not declared or paid, and have no present intention to declare or to pay in the foreseeable future, any cash dividends with respect to our common stock. We currently intend to retain any earnings for reinvestment in our business. However, if dividends are declared by our board of directors, all shares of common stock will participate equally in the dividends and in net assets in the event of our liquidation.

Transfer agent and registrar. Computer Share Investor Services, 100 University Avenue, 11th Flr., Toronto, Ontario M5J 2YI acts as transfer agent and registrar for the our common stock.

Enforceability of Civil Liabilities Against Foreign Persons

We are formed under the laws of the Province of Ontario, Canada. Many of our assets are located outside the United States. In addition, a majority of the members of our board of directors and our officers and the experts named in this registration statement are residents of countries other than the United States. Consequently, it may be impossible for you to effect service of process within the United States upon us or these persons or to enforce against us or these persons any judgments in Civil and commercial matters, including judgments under United States federal securities laws. In addition, a Canadian court may not permit you to bring an original action in Canada or to enforce in Canada a judgment of a U.S. court based upon civil liability provisions of U.S. federal securities laws. No treaty exists between the United States and Canada for the reciprocal enforcement of foreign court judgments. However, a judgment of a U.S. court predicated solely upon civil liability under the United States federal securities law would probably be enforceable in Canada if the U.S. court in which the judgment was obtained had a basis for jurisdiction in the matter that was recognized by a Canadian court for such purposes but there is still uncertainty whether an action could be brought in Canada in the first instance on the basis of liability predicated solely upon such laws.