| Offering Memorandum |
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OFFERING MEMORANDUM
The Issuer
Name: VISIONQUEST
ENTERPRISE GROUP (The “Issuer”) Currently listed or quoted? Yes – TSX Venture Exchange under the trading
symbol VQE The Offering $250,000
You
will be restricted from selling your securities for four months after
the date of issue. See Item 10. Purchaser’s
rights
You have two business days to cancel
your agreement to purchase these securities. If there is a misrepresentation in the Offering
Memorandum, you have the right to sue either for damages or to cancel
this agreement. See item 11. NO
SECURITIES REGULATORY AUTHORITY HAS ASSESSED THE MERITS OF THESE SECURITIES
OR REVIEWED THIS OFFERING MEMORANDUM.
ANY REPRESENTATION TO THE CONTRARY IS AN OFFENCE. THIS IS A RISKY
INVESTMENT. See item 8 ITEM
1. USE OF
PROCEEDS
1.4 Working
Capital Deficiency, Financing and Liquidity – As at June 30, 2004, the Issuer had a current
working capital deficiency of $41,330.
This deficiency is estimated to reach at least $60,000 as at
September 30, 2004. Revenue from product sales generated by the Issuer’s automotive subsidiary,
VQ-Speedi Automotive Inc. (which is the Issuer’s only current source
of revenue) is not, and is not expected to be in the near future, sufficient
to finance the Issuer’s operating expenses and other capital requirements.
Even after this private placement, the Issuer’s unallocated working
capital position will not be strong.
The Issuer will still require additional financing to fund both
administrative expenses and capital requirements for expansion and business
development/acquisition activities.
On
July 27, 2004, 1,064,000 Issuer Units priced at 10 cents per
Unit were issued and distributed pursuant to a $106,400 non-brokered
private placement accepted for filing by the TSX Venture Exchange July
12, 2004. Each Unit consisted of 1,064,000 common shares
with 1,064,000 non-transferable share purchase warrants exercisable
@ 15 cents per share up to July 29, 2005.
The common shares issued and any shares issued on exercise of
the warrants are subject to a hold period expiring November 29, 2004. A finder’s fee equivalent to $2,000 was paid
on $20,000 of the proceeds raised. There
were eleven arm’s length subscribers for $101,400 of this private placement
and one insider (Issuer director) subscriber for $5,000. This private placement enabled the Issuer to
maintain the working capital deficiency within reasonable limits pending
future financing. The
private placement described in this Offering Memorandum is the second
in a planned series of share equity financings, which now may extend
over the next 6-9 months into the 2005 RRSP season.
Proceeds of this second private placement will primarily provide
operations and administrative funding for/through to subsidiary Clear
Wind of Canada Corporation (the newest member of the VisionQuest family
of Companies), continuing the first phase developmental program for
the industry-redefining wind power generation technology being developed
by joint venture partner Clear Power Corporation. It is planned that the Issuer will endeavor
to raise up to an additional $1,150,000 in equity funding during the
coming 6-9 months and is continuing in the process of evaluating the
Flow-Through, VCC, private placement and prospectus alternatives that
are available for the equity funding of this early stage sustainable
resource investment opportunity. The
Issuer is also endeavoring to make arrangements with respect to a number
of potential sources of external financing but the Issuer cannot assure
that it will be successful in securing financing on a timely enough
basis to take advantage of enterprise development opportunities as these
opportunities are developed. This
private placement represents the second in what is expected to be a
series of private placement financings to fund enterprise development
initiatives, including the wind power technology project as well as
the retention of third party market making and/or investor relationship
management services. 1.5 Insufficient Proceeds - The proceeds of this Offering
will not be sufficient to accomplish all of the Issuers proposed objectives
for the next twelve months. This Offering is only the second in a series
of financings planned by the Issuer over that period. The Issuer intends to seek additional funding
from supplemental private placements and/or debt financing to complete
its business program through the current period.
There is no assurance that this additional and/or alternative
financing will be available. ITEM 2.
INFORMATION ABOUT ISSUER
The Issuer is a publicly traded enterprise
management and development corporation. The core business activity of The Issuer is
the identification, screening, valuation, structuring and financing/service
facilitation of venture capital investment opportunities, with the ultimate
goal of engendering revenue generating investment, partnering and/or
operating positions in private early stage, commercializing, turn-around
and other select investee business ventures.
This is an ongoing process. More
complete information on the Issuer can be found on the Issuer’s main
Website www.vqe-group.com The
Issuer is currently directing its focus toward commercially exploiting
the licensed rights to revolutionary wind energy technology acquired
by subsidiary Clear Wind of Canada Corporation.
These initiatives are being advanced in conjunction with joint
venture partner Clear Power Corporation, a private Existing
Operations:
The
Issuer currently has only one cash-flowing subsidiary under its enterprise
umbrella and up to this point, virtually all of The Issuer’s revenue
emanates from this source. This company is VQ-Speedi Automotive Inc. (“VQ-Speedi”).
VQ-Speedi is a wholly owned subsidiary in the Issuer’s umbrella
marketing services/resources division under VisionWorks Marketing Corporation.
VQ-Speedi is a full service distributor of top quality automotive
fluid flush/exchange shop equipment.
VQ-Speedi is essentially self-supporting but revenue for this
division continues to under-perform expectations.
Management is working to increase revenue by bringing more products
on stream, as well as increase sales of existing products and even alter/expand
the channels of distribution. However,
to date none of management’s efforts have proved effective in halting
the slide in sales revenue. In
On October 6, 2003 the Issuer made a press release announcing that VQ-Speedi
had launched a marketing program through VQ-Speedi’s established North
American dealer distribution network, for a highly regarded and complete
line of professional automotive fluid flush/exchange equipment.
These new products supplement VQ-Speedi’s exclusive distribution
of the “Speedi-Bleed” brake flushing and bleeding system and mark the
first significant product expansion in recent years in VQ-Speedi’s quest
to source and distribute an expanding line of innovative, high quality,
leading edge tools and products to the automotive trade.
The addition of the new product line goes to defining VQ-Speedi’s
corporate persona as “automotive fluid flush/exchange specialists” and
includes coolant flushing, transmission flushing, brake flushing, power
steering flushing, as well as fuel system and emissions service equipment. To date, this expansion in product line has
not yielded positive results and no sales have been made of the new
products. Complete information
on VQ-Speedi and its growing line of automotive fluid replacement/flushing
products can be found on the company’s Website at www.vq-speedi.com. New
Initiatives (“Green Power
|
|
Description of Document |
Date of Document / SEDAR Filing |
|
|
|
|
Press Release – Validation of “Speed-Ball”
Wind Energy Technology Science |
September 14, 2004 |
|
BC Form 51-102F1 – Management Discussion
and Analysis |
August 27, 2004 / August 31, 2004 |
|
Interim Consolidated Financial
Statements and Notes – June 30, 2004 |
August 27, 2004 / August 31, 2004 |
|
Press Release – Private Placement
Share Issuance |
August 6, 2004 |
|
BC Form 51-102F1 – Management Discussion
and Analysis – March 31/ 2004 |
May 31, 2004 / June 4, 2004 |
|
Interim Consolidated Financial
Statements and Notes – March 31/ 2004 |
May 31, 2004 / June 4, 2004 |
|
Annual Information Circular (December
31, 2003) |
May 21, 2004 / June 1, 2004 |
|
Press Release – Issuer subsidiary
Clear Wind of Canada Corporation Appoints Stephan Venczel
as Director of Operations. |
May 5, 2004 |
|
Press Release – Licensing and Financing
Agreements signed with Clear Power Corporation. |
April 5, 2004 |
|
BC Form 51-901F/Schedule A. – Audited
Annual Consolidated Financial Statements (December 31, 2003) |
March 26, 2004 / March 30, 2004 |
|
BC Form 51-901F/Schedule B &
C – Notes to Consolidated Financial Statements (December 31, 2003)
and Management Discussion |
March 26, 2004 / March 30, 2004 |
|
Press Release – Issuer Chooses
Beloud Management Consultants Ltd. as Market-Maker |
March 9, 2004 |
|
Press Release – Launch of 2004
Wind Energy Program |
February 20, 2004 |
|
Press Release – Share Issuance
/ Shares For Debt |
December 8, 2003 |
|
Material Change Report |
December 8, 2003 |
|
BC Form 51-901F/Schedule A. - Interim
Consolidated Financial Statements (September 30, 2003) |
Nov. 27, 2003 / Dec. 1, 2003 |
|
BC Form 51-901F/Schedule B &
C – Notes to Consolidated Financial Statements (September 30,
2003) and Management Discussion |
Nov. 27, 2003 / Dec. 1, 2003 |
|
Press Release – Issuer enters into
Green Power Alliance with Clear Power Corporation |
Oct. 28, 2003 |
|
Press Release – VQ-Speedi Automotive
Launches Distribution of New Products |
Oct. 6, 2003 |
|
BC Form 51-901F/Schedule A. – Audited
Annual Consolidated Financial Statements (December 31, 2002) |
May 12, 2003 / May 15, 2003 |
|
BC Form 51-901F/Schedule B &
C – Notes to Consolidated Financial Statements (December 31, 2002)
and Management Discussion |
May 12, 2003 / May 15, 2003 |
|
Annual Information Circular (December
31, 2002) |
May 12, 2003 / May 15, 2003 |
Other documents available on the
SEDAR website (for example, most press releases, take-over bid circulars,
prospectuses and rights offering circulars) are not incorporated by
reference into this Offering Memorandum unless they are specifically
referenced in the table above. Your
rights as described in item 11 of this Offering Memorandum apply only
in respect of information contained in this Offering Memorandum and
documents or information incorporated by reference.
2.4 Existing Information Not Incorporated by reference – None
2.5 Future Documents Not Incorporated by Reference. Documents filed after the date of
this Offering Memorandum are not deemed to be incorporated into this
Offering Memorandum. However,
if you subscribe for securities and an event occurs, or there is a change
in our business or affairs, that makes the certificate to this Offering
Memorandum no longer true, we will provide you with an update of this
Offering Memorandum, including a newly updated and signed certificate,
and will not accept your subscription until you have re-signed the agreement
to purchase the securities.
The following four persons were re-elected
to the Issuer’s Board of Directors:
Gary W. Ciccozzi, B.Comm., M.B.A., (President); Bruce A. Wilson (Secretary); James N. Gellatly;
and Thomas Cully.
At the Board of Directors meeting
held subsequent to the AGM, the Board re-appointed Bruce Wilson, James
Gellatly and Thomas Cully to the Audit Committee.
All four directors will serve on the Issuer’s Enterprise Development
Committee for the ensuing year. Gary
Ciccozzi was confirmed as the President and Chief Financial Officer
of The Issuer as well as the sole Director & President, of wholly-owned
Issuer subsidiaries, VisionWorks Marketing Corporation, World Enviro-Solutions
Technology Corp. and VQ Capital House Inc.
Bruce Wilson was confirmed as Secretary of The Issuer as well
as Secretary of the aforementioned Issuer subsidiaries.
3.1 The
following table sets out information about each director, officer and
promoter of the Issuer and each person who directly or indirectly beneficially
owns or controls 10% or more of any class of voting securities of the
Issuer (a “principal holder”)
|
Name and municipality of principal residence |
Positions held (e.g. director, officer, promoter and/or principal
holder) and the date of obtaining that position |
Compensation paid by Issuer in the most recently completed
financial year |
Number, type and percentage of securities of the Issuer beneficially
owned or controlled directly or indirectly after completion
of $1,250,000 common share offering (2) |
|
Gary Ciccozzi |
Director since November, 1996; President and Chief Financial
Officer since January, 1997 |
$30,000 for the financial year ended 12/31/03 |
1,388,794 common shares being 10.05% 300,000 share purchase options exercisable @ $0.15 per share
to May 29, 2006 |
|
Bruce Wilson (1) |
Director and Secretary since June, 1993 |
$29,000 for the financial year ended 12/31/03 |
109,736 common shares being 0.79% 100,000 share purchase options exercisable @ $0.15 per share
to May 29, 2006 |
|
James Gellatly (1) |
Director since June, 1993 |
Nil (2003) |
157,298 common shares being 1.13% 50,000 share purchase options exercisable @ $0.15 per share
to May 29, 2006 |
|
Thomas Cully (1) |
Director since June, 2001 |
Nil (2003) |
48,333 common shares being 0.35% 50,000 share purchase options exercisable @ $0.15 per share
to June 29, 2006 |
(1) Denotes Audit Committee)
(2) percentages calculated do not include common shares issuable
on the exercise of share purchase options or unexercised warrants.
The following table discloses the
principal occupations of our directors and senior officers over the
past five years.
Name
|
Principal occupation and related experience |
|
Gary Ciccozzi (B. Comm., M.B.A.) President, Chief Financial Officer and Director |
History: Managing principal, Proview Capital Management
Associates Inc, 1984 to date; President and Director, Inter-Citic
Envirotec Inc. 1987 to 1996. The overall responsibility for managing, providing, coordinating
or arranging for the provision of management, supervisory, and
administrative services to the Issuer and its subsidiary and investee
enterprises, is vested with a team headed by the Issuer’s Managing
Director, Gary W. Ciccozzi. He
is a proven, experienced financial executive with broad expertise
in corporate finance and financial management.
Mr. Ciccozzi functions in the Issuer’s prime leadership
role, as the driving force creating/nurturing complementary external
and internal strategic interfaces and alliances toward building
a diversified management/holding company. In concert with the board of directors and
a team of managers and advisors, the President bears prime responsibility
for molding the corporate persona, effective managerial resource
development, as well as formulating and implementing an evolutionary
organizational blueprint. In his role as Chief Financial Officer (“CFO”), Mr. Ciccozzi’s
primary purpose is to build, within a definitive framework, the
financial integrity of the Issuer, through generation of healthy,
sustainable earnings and development/implementation of sound financial
management, practices and administration.
The CFO spearheads a continuous improvement effort in his
areas of responsibility, being hands-on in building investor and
other developmental relationships, maximizing funding and administrative
efficiency to enhance return on investment, creatively manage
the Issuer’s funding, financial management information and reporting
systems, budget and credit areas. Mr. Ciccozzi is also President and managing principal of
Proview Capital Management Associates Inc. (“Proview”), a private
corporate capital management-consulting firm that he founded in
1984. Prior to founding Proview, Mr. Ciccozzi directed
the investment and funding operations of a major Provincial financial
services organization with assets in excess of one billion dollars.
He has over thirty years of financial management experience,
a respected track record for providing innovative and workable
solutions to asset and liability management challenges and well-developed
networking, analytical and strategic planning skills. In addition to general management and administration,
his discretionary operational responsibilities have included diversified
investment portfolio management, asset/liability management, short
term funding & investment and financial and market advisory
services. |
|
Bruce Wilson Secretary and Director |
History: Owner B. Wilson Associates, business consultants,
1990 to date; President, International Silver Ridge Resources
Inc. Oct/97-April/99. Mr. Wilson has extensive project management and entrepreneurial
experience gained in diverse business situations generally in
the management consulting (small/medium size business development),
hotel & restaurant, employee training program, retail sales
(department store), industrial manufacturing and product market
development, recycling, mining and minerals exploration industries.
He has twenty-five years of managerial/administrative experience. He brings to the Issuer, complementary interpersonal
skills, keen entrepreneurial initiative as well as valuable managerial,
business planning, project management and administrative seasoning.
Mr. Wilson’s well-grounded attributes and experience with
small public companies can be expected to have a significant progressive
influence on the organizational dynamic and program/process implementation
of the Issuer. |
|
James Gellatly Director |
Sales Representative, Pfizer Canada Inc,, August/98 to date;
Western Manager, Dumex, 1992-1998; Sales agent, Global Medical
Products, 1994 to date. |
|
Thomas Cully Director |
Independent Business Consultant, January/00 to date; Principal,
Zenith Property Group and President, Zenith Realty Co., 1987-1999 |
3.3 Current information regarding the securities held by
directors, senior officers and principal holders can be obtained from
the SEDI website at www.sedi.ca, or if information cannot be
obtained from the SEDI website, refer to the securities regulatory authority(ies)
from which the information can be obtained, including any website(s).
The Issuer cannot guarantee the accuracy of this information.
|
Description of security |
Number authorized to be issued |
Number outstanding as at the Offering Memorandum date |
Number outstanding after minimum offering |
Number outstanding after maximum offering |
|
Common shares |
100,000,000 shares without par value |
12,574,056 fully paid and non-assessable |
N/A |
13,824,056 |
|
i) |
Common shares - (unrestricted float) |
11,510,056 shares |
|
ii) |
Common shares (restricted until
November 29, 2004) |
1,064,000 shares |
|
|
|
------------------------- |
|
|
Subtotal - outstanding common shares |
12,574,056 shares |
|
iii) |
Unexercised warrants (expire 07/29/05) |
1,064,000 shares |
|
iv) |
Unexercised share purchase options |
500,000 shares |
|
|
|
-------------------------- |
|
|
Fully diluted |
14,138,056 shares |
The Units
The Offering consists of 1,250,000
Units of the Issuer. Each Unit
consists of one (1) Common Share of the Issuer and one non-transferable
one-year share purchase Warrant. The
management of the Issuer determined the price per Unit of this Offering.
All Shares of the Issuer, including
those offered by this Offering Memorandum are common shares of the same
class with equal voting rights, and none of the common shares are subject
to any future call or assessment. There
are no special rights or restrictions of any nature attaching to any
of the Common Shares and they all rank pari passu each with the other
as to all benefits, which might accrue to the holders of the securities.
The authorized capital of the Issuer
consists of 100,000,000 Common Shares without par value (see “Share
and Loan Capital Structure”). All
Shares of the Issuer, both issued and unissued, rank equally as to dividends,
voting rights and participation in assets.
No Common Shares have been issued subject to call or assessment. There are no conversion rights and no provision
for redemption, purchase or cancellation, surrender or sinking funds.
Provisions as to the amendment or variation of such rights or
such provisions are contained in the British Columbia Business Corporations
Act.
Share Purchase Warrants
The
Warrants will be non-transferable and in registered form.
One (1) such warrant will entitle the holder thereof to purchase
one (1) common share in the capital of the Issuer at any time up to
the date which is one (1) year after the issue of the Units at a price
of $0.25 per share.
The
Warrants will contain, among other things, provision for appropriate
adjustment of the class, number and price of the shares issuable pursuant
to the exercise thereof upon the occurrence of certain events, including
any subdivision, consolidation or reclassification of the shares of
the issuer, the payment of stock dividends or amalgamation of the Issuer.
5.2 Subscription Procedure
This
offering is not subject to any aggregate minimum subscription level,
and therefore, any funds received and accepted from a Subscriber are
available to the Issuer and need not be refunded to the Subscriber.
The Subscriber will have the mandatory two days to cancel their
subscription agreements. Subscription
funds received by the Issuer will be held in trust for two days from
the date of receipt. Thereafter, the funds may be used by the Issuer
as described in this Offering Memorandum and will be characterized as
a non-interest bearing loan by the Subscriber to the Issuer until acceptance
or rejection of this subscription by the Directors of the Issuer.
This Offering Memorandum has been
prepared for distribution to and review by prospective, qualified investors
in Units of the Issuer, which Units will be issued to any such investor
only upon compliance with the provisions set forth in certain exemptions
from prospectus and registration requirements contained in the B.C.
Securities Act and its the Rules thereto. These statutory exemptions
relieve the Issuer from provisions requiring the Issuer to file a prospectus,
and therefore the Subscriber does not receive the benefits associated
with purchasing securities issued pursuant to a prospectus, including
without limiting the generality of the foregoing, the review of the
material by a securities commission or similar regulatory authority.
Persons may subscribe for the securities
offered hereunder by completing and forwarding the following documentation
to the Issuer at the address shown on the cover page of this Offering
Memorandum:
|
(i) |
a Subscription Agreement in the
form accompanying this Offering Memorandum, duly executed by the
Subscriber; |
|
(ii) |
a Securities Act Form 45-103F3
– Risk Acknowledgement in the form accompanying this Offering
Memorandum; and, |
|
(iii) |
If a resident of Alberta, Saskatchewan
or Manitoba acquiring more than $10,000 of Units, complete and
sign a Declaration to the effect that you are an eligible investor;
and |
|
(iii) |
a certified cheque, bank draft
or other negotiable instrument acceptable to the Issuer for the
subscription amount payable to the Issuer. |
Closing
The Closing of the sale of the securities
offered hereunder will take place at such times as are chosen by the
Issuer. The Issuer reserves the
right to close the offering at any time as subscriptions are received.
Termination of Offering
The Issuer may reject subscriptions
for the securities offered hereunder if the offering is otherwise fully
subscribed, acceptance would be unlawful or, in the discretion of the
Issuer acting reasonably, acceptance is not in the best interests of
the Issuer.
Additional Offering
In the event the entire Offering
is fully subscribed for, the Issuer reserves the right to increase the
size of the Offering on the same terms and conditions.
Any additional capital raised will be used for general working
capital.
6.2 Subject to the stipulation in 6.1 above, income tax
consequences are not a material aspect of the securities being offered. It is not anticipated that there are any material
income tax consequences to the subscriber resulting from this Offering.
6.3 Not all securities are eligible for investment in a
registered retirement savings plan (“RRSP”).
You should consult your own professional advisers to obtain advice
on the RRSP eligibility of these securities.
GENERAL FACTORS
(i) The Issuer's
securities are listed and trade on the TSX Venture Exchange under the
trading symbol VQE. The market
value of the Issuer's securities can be expected to fluctuate with changes
in the actual and/or perceived value of the underlying enterprise interests
and that value may be more or less than the amount invested by any investor. The value of the Issuer's holdings may fluctuate
with a broad range of economic conditions which are beyond the control
of the Issuer such as general interest rate levels, stock market trends,
corporate earnings and dividends, changes in the growth or credit status
of investments, changes in tax treatment of income, capital gains or
dividends from domestic or foreign corporations and other factors related
to the industries in which the Issuer invests or operates.
(ii) The enterprises
in which the Issuer invests, lends money to or otherwise supports development
may be highly speculative. Although
management will follow certain sound due diligence criteria with respect
to investment, lending, and/or acquisitions to be made by the Issuer,
the value of the assets of the Issuer may be materially affected by
the failure of one or more of the enterprises in which the Issuer is
involved.
(iii) The Issuer
does not have a history of earnings or profit.
There is no assurance that in the future the Issuer will develop
revenues, operate profitably or provide a return on investment. Therefore, investors should not invest on the
expectation of receiving dividends or any guaranteed return on their
investment of any nature.
(iv) No dividends
have been paid on the Issuer's common shares since inception and there
is no assurance that such dividends will be earned or paid in the future.
For the foreseeable future, the Issuer expects to re-invest in
Issuer's operations, all cash flow that might otherwise be available
for distribution to shareholders in the form of cash dividends.
While the payment of stock dividends is an alternative, there
is no assurance that these will be paid in the foreseeable future.
(v) The Issuer remains under constant working capital pressures. The amount of funding through this
offering is fully allocated and does not allow for any working capital
reserves. While there may be
some contribution to operating overhead from the existing operations
of subsidiary VQ-Speedi Automotive Inc., there is no immediate cash
flow expected from the renewable energy joint venture.
In the event that revenues cannot support existing and upcoming
expenses or other capital requirements, when the proceeds of this offering
have been expended, the Issuer will require and is planning for additional
funding. There is no assurance that this funding will
be available when required by the Issuer and/or on suitable terms.
(vi) While the proceeds of this Offering have been specifically allocated,
investors will in large part entrust their funds to the Directors, management,
and other professional advisors in whose judgment investors must depend
with only limited information about their specific evaluation of the
“sound business reasons” on which any reallocation of funds would be
based. The Issuer's financing
and enterprise acquisition/development policies and practices may be
changed at the discretion of the Board of Directors.
Persons who are not willing to rely on the Issuer’s management
or Directors should not subscribe for Units.
(vii) If any of
the Issuer's investments prove to be without commercial merit, then
the Issuer may not proceed with or may limit further development funding
and may write off all or a portion of its investment in the under-performing
investment.
(viii) Executive
management of the Issuer's business is primarily provided by the Issuer's
President, Secretary, and Board of Directors.
At this stage of its corporate development, the Issuer has necessarily
limited the establishment of extensive administrative and operating
infrastructure. Instead, the
Issuer may rely, for necessary skills, on external adviser/consultants
with extensive senior level management experience in such fields as
finance, manufacturing, marketing, law, and investment.
The future success of the Issuer is very dependent upon the ongoing
availability and commitment of its Directors, officers and advisor consultants,
not all of whom are or will be bound by formal contractual employment
agreements. The absence of these formal contractual relationships
may be considered to represent an area of risk.
(ix) The Issuer's
enterprise portfolio may contain equity or debt obligations of enterprises,
some of which may be in early growth stages, may lack experienced management,
or operate in technical areas subject to obsolescence and well financed
competition.
(x) The Issuer
will be competing for enterprise development opportunities with other
investing entities, some of which may have greater financial resources
than the Issuer. In some of the
arena's in which the Issuer intends to operate, there is considerable
competition and there are several well capitalized investment capital
sources seeking to identify and invest in high potential emerging companies.
Such competition may reduce the availability
of suitable enterprise development opportunities or increase costs and/or
price of acquisition or involvement.
(xi) The Issuer
may only have limited influence over the operations of the enterprises
into which it invests, lends or otherwise finances or has a development
interest.
(xii) Most of the financing
provided by the Issuer is expected to be to privately held and/or non-reporting
corporations. Accordingly, any
securities, or collateral security obtained may be subject to resale
restrictions and/or escrow agreements and/or be of a nature, which may
restrict the Issuer's ability to liquidate its holdings to its best
advantage.
(xiii) The Issuer
may not be able or willing to provide ongoing funding to some of the
companies in which it seeks or maintains an investment or development
interest. Since a portion of the Issuer’s revenues may
be derived from funding placement fees, revenues may be less than anticipated
from this source.
SPECIFIC RISK FACTORS RELATED TO
WIND ENERGY PROJECT
(xiv) Performance of Technology – As the technology is still at the proof
of concept stage, there is a risk that it will not operate as effectively
as anticipated. However, the
new technology is based on certain simple physical principles, which
have worked well in other applications for 50+ years.
Those principles are not being applied with existing wind power
systems already in the marketplace. The experienced inventor of the
new wind power technology has developed and patented other successful
innovative technologies and will work with the Issuer’s joint venture
and the Issuer’s joint venture partner in undertaking an extensive program
to prove and commercialize the new concept.
(xv) Patent protection requires advancement - Proprietary
technology status is considered important by the Issuer but control
over the patenting process is not within the control or influence of
the Issuer. The Issuer has assurance that the wind power
technology process will be undertaken in a tightly controlled and methodical
manner. Patent application data
is now under preparation for
(xvi) Resistance to market entry - There is a risk that the company will
not be successful in gaining entry into the alternative energy market.
The utility companies, governments and industrial consumers may
prefer to utilize conventional wind power technology or other alternative
renewable energy sources. However, the Issuer believes this new technology
will set new standards for the industry, and will prove to be a superior
performer over conventional wind systems and other alternative renewable
energy sources.
(xvii) Pricing sensitivity - There is a possibility that the elasticity
of wind energy pricing and the wind power equipment will fluctuate and/or
fall with competing renewable technologies, government regulations or
through other mechanisms inherent in the energy production and consumption
industry. Through the joint venture,
the Issuer will sustain ongoing R&D to maintain its superiority
in the industry. Other measures
to preserve competitiveness will be to build a diversified clientele/user
base, strong industry and customer alliances, synergistic joint venture
relationships and solid long-term power purchase agreements.
The new Clear Power Corporation technology has advantages of
scale for the large system and large efficiency gains for the small
systems and the Issuer’s wind power joint venture will exploit these
advantages to counter price sensitivity risk.
(xviii) Loss of key management - Attrition of key management could impede
the Issuer’s wind energy subsidiary from attaining its mission and projections.
The Issuer’s Canadian alternative power generation joint venture
subsidiary will be operated by Clear Power Corporation and as such the
Issuer will have only limited influence over the management and key
personnel contracting, retention and incentive programs that will be
designed and administered by the Issuer’s joint venture partner, Clear
Power Corporation.
(xix) Reverse engineering or copycatting
of Technology - Manufacturers could attempt to reverse engineer or copycat the new wind
power technology and equipment, which would create confusion in the
industry and draw potential business away from the Issuer’s wind power
joint venture. This risk factor
is somewhat mitigated by the uniqueness of the new technology. Copying would be very obvious and subject to
immediate response. The proprietary technology manufacturing process
may be protected by PCT patent application and trade secrets protection/insurance
as well as measures to divide the manufacturing/assembly process and/or
keep the parts of the manufacture/assembly in-house to secure the integrity
of certain proprietary elements. Further,
contracting manufacturing with bona fide manufacturers for select components
will curtail copycats.
ITEM 10. RESALE RESTRICTIONS
Unless permitted under securities
legislation, you cannot trade the securities before the date that is
4 months and a day after the distribution date.
ITEM 11. PURCHASER’S RIGHTS
Two Day Cancellation Right – You can
cancel your agreement to purchase these securities. To do so, you must send a notice to the Issuer
by midnight on the 2nd business day after you sign the agreement
to buy the securities.
Statutory Rights of Action in the
Event of a Misrepresentation – If there is a misrepresentation
in this Offering Memorandum, you have a statutory right to sue:
a)
the Issuer to cancel your agreement to buy these securities,
or
b)
For damages against the Issuer, every person who was
a director of the Issuer at the date of the Offering Memorandum and
every person who signed the Offering Memorandum.
This statutory right to sue is available
to you whether or not you relied on the misrepresentation. However, there are various defences available
to the persons or companies that you have a right to sue. In particular they have a defense if you knew
of the misrepresentation when you purchased the securities.
If you intend to rely on the rights
described in (a) or (b) above, you must do so within strict time limitations.
You must commence your action to cancel the agreement within
180 days after the transaction. You must commence your action for damages within
the earlier of 180 days after learning of the misrepresentation or three
years after the transaction.
ITEM 12. DATE AND CERTIFICATE
The foregoing contains no untrue statement of a material fact
and does not omit to state a material fact that is required to be stated
or that is necessary to prevent a statement that is made from being
false or misleading in the circumstance in which it was made.
Dated at Vancouver, British Columbia the 15th day of September,
2004
VISIONQUEST ENTERPRISE GROUP INC.
Gary W. Ciccozzi
Bruce A. Wilson
Thomas Cully
Director
James Gellatly
