Settlements

Edward Morgan Clunn [Sec. 144]

BCSECCOM #:
Document Type:
Sec. 144
Published Date:
1994-11-18
Effective Date:
1994-11-09
Details:


Clunn (Re)
IN THE MATTER OF The Securities Act, S.B.C. 1985, c. 83
AND IN THE MATTER OF Edward Morgan Clunn
Order Under Section 144
D.E. Holley
November 9, 1994

ORDER:-- WHEREAS an Agreed Statement of Facts and Undertaking was executed by Edward Morgan Clunn and the Superintendent of Brokers, a copy of which is attached hereto as Schedule "A";

NOW THEREFORE the Superintendent, considering that it would be in the public interest to do so, orders by CONSENT:

1.that pursuant to section 144(1)(c) of the Securities Act, S.B.C. 1985, c. 83 the exemptions contained in sections 30 to 32, 55, 58, 80 and 81 of the Act do not apply to Clunn for a period ending November 7, 2014; and
2.that pursuant to section 144(1)(d) of the Act, Clunn is prohibited from becoming or acting as a director or officer of any reporting issuer for a period ending November 7, 2014.
D.E. HOLLEY, Superintendent of Brokers

*  *  *  *  *

Agreed Statement of Facts and Undertaking

The following agreement has been reached between Edward Morgan Clunn and the Superintendent of Brokers:

1.As the basis for the undertakings and orders referred to in paragraphs two and three of this agreement, Clunn acknowledges the following:
(a)IMT Mobile Medical Technologies Inc. ("IMT") (formerly MMT Mobile Medical Technologies Inc.) was incorporated in British Columbia under the Company Act, R.S.B.C. 1979, c. 59 on August 28, 1987 and became a reporting issuer on December 5, 1989;
(b)Clunn was a director, officer and the president of IMT until his resignation in February of 1991 and at all times material to this agreement was the person primarily responsible for the operation and management of IMT;
(c)a Cease Trade Order, under section 146 of the Securities Act, S.B.C. 1985, c. 83, was issued against IMT on December 4, 1990.  IMT was delisted from the Vancouver Stock Exchange on March 1, 1991;
False Prospectus

(d)IMT submitted a prospectus dated November 30, 1989 for which a receipt was issued by the Superintendent on December 5, 1989 (the ("Prospectus");
(e)the Prospectus contained a certificate signed by Clunn and other directors of IMT which stated the following:
"The foregoing constitutes full, true an plain disclosure of all material facts relating to the securities offered by this Prospectus as required by the Securities Act and its regulations."
(f)on March 29, 1990 Clunn entered into an agreement (the "Agreement") with a third party whereby Clunn was loaned funds for the purpose of purchasing 200,000 shares of IMT (the "IPO Shares") pursuant to the offering described in Prospectus (the "IPO");
(g)pursuant to the Agreement the third party was assigned $85,000 that was owed to Clunn and his father by IMT.  The existence of this indebtedness was a material fact and was not disclosed in the Prospectus;
(h)on April 27, 1989 Clunn swore an affidavit (the "Affidavit") which stated the following:
"No material changes have taken place in the Company from the date of the Company's prospectus dated November 30, 1989 and an effective date of December 5, 1989 other than the completion of the sale of 1,000,000 shares of the Company...."
(i)on April 30, 1990, the date of the IPO, Clunn caused IMT to pay $85,000 from the IPO funds to the third party;
(j)IMT's intention to pay the third party $85,000 from the proceeds of the IPO was a material fact and was not disclosed in the Prospectus;
(k)Clunn represents that, prior to swearing the Affidavit, he obtained advice from IMT's corporate counsel not to include the particulars of the Agreement or the existence of the debt in the Prospectus;
False Insider Reports

(l)Clunn did not disclose on his insider reports that he was the beneficial owner of the IPO Shares;
(m)Clunn did not disclose on his insider reports the subsequent sale of the IPO Shares;
Misuse of Funds

(n)the Prospectus represented that the proceeds of the offering were to be spent in the following manner:
Cost of issue$10,000
Agent's fees50,000
Fixed monthly expenses for
six months prior to receipt
of prospectus14,580
Fixed monthly expenses for
eleven months following receipt
of prospectus179,300
Construction of demo unit100,000
Reserve for unallocated
working capital117,120
Working capital deficiency79,000
---------
$ 550,000
---------
(o)the proceeds from the IPO were received by IMT on April 30, 1990.  Pursuant to Clunn's directions the proceeds were disbursed by May 24, 1990 in the following manner:
Agent's fees$50,715
Legal fees40,000
To third party
(re: Agreement)85,000
To Clunn128,403
Paid to employees
or contractors of IMT77,690
Computer equipment49,179
Consulting8,757
Promotion18,282
Accounting12,208
Demo unit28,688
Miscellaneous51,078
---------
$ 550,000
---------
(p)Clunn represents that by October 9, 1990 he repaid $73,914 to IMT in the following manner:
(i)unreimbursed travel and promotion
expenses relating to the period
subsequent to June 1, 1990 $37,906
(ii)cash repayments17,900
(iii)unpaid management fees15,200
     (iv) other unreimbursed travel
              expenses2,908
---------
$  73,914
---------
The Share Issuances
(q)on May 8, 1990 Clunn caused 100,000 shares to be issued from IMT's treasury to Pathfinder Technology Services for the purchase of equipment, although ultimately IMT received no consideration for these shares;
(r)on May 31, 1990 Clunn caused 100,000 shares to be issued from IMT's treasury to Fujilyte Corporation. IMT ultimately received no consideration for these shares although Clunn represents that the written agreement for the acquisition by the company of certain rights from Fujilyte has been misplaced or lost; and
(s)on July 16, 1990 Clunn caused 100,000 shares to be issued from IMT's treasury to himself.  IMT ultimately received no consideration for these shares although Clunn represents that at the time of the issuance of the shares he believed that IMT was indebted to him for wages and past services.
2.Clunn consents to orders of the Superintendent that:
(a)under section 144(1)(c) of the Act the exemptions described in the sections 30 to 32, 55, 58, 80 and 81 do not apply to him for twenty years; and
(b)under section 144(1)(d) of the Act he be prohibited from becoming or acting as a director or officer of any reporting issuer for twenty years.
3.Clunn undertakes to pay the Minister of Finance and Corporate Relations the sum of $10,000.
4.Clunn waives any right he may have, under the Act or otherwise, to a hearing, hearing and review, judicial review or appeal related to, in connection with or incidental to this agreement and the Orders.
DATED at Vancouver, British Columbia, on November 4, 1994.

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"H. Roderick Anderson"____________________)
Witness Signature             )
)
)______________________
H. Roderick Anderson______________________)"Edward Morgan Clunn"
Witness Name (please print)    )
)
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________________________________________)
Witness Address                )
D.E. HOLLEY, Superintendent of Brokers