Process Capital Corp. — M&A Activity 1997

Nov 12, 1997

FORM 27

Securities Act

MATERIAL CHANGE REPORT UNDER SECTION 118(2)

OF THE SECURITIES ACT

ITEM 1 Reporting Issuer

Process Capital Corp.

ITEM 2 Date of Material Change

November 12, 1997

ITEM 3 Publication of the Material Change

Sent out through Stockwatch and Market News Publishing on November 11, 1997

ITEM 3A Filing of Material Change with Stock Exchange

A copy of this Form 27 is being forwarded to The Alberta Stock Exchange

ITEM 4 Summary of Material Change

see #5 below

ITEM 5 Full description of Material Change

Process Capital Corp. ("POR" on The Alberta Stock Exchange) is pleased to announce that the previously announced Major Transaction, being the acquisition of Advanced Process Fuels Inc. ("APF") was approved by the shareholders at the Annual and Special Meeting held on November 7, 1997. APF designs, manufactures and installs turnkey waste oil micro-refineries, using a unique patent-pending process. APF micro-refineries convert used motor oil and other waste lubricants into diesel fuel. APF’s new micro-refinery in Kingston, Ontario is completing its production testing phase.

R. Brian Murray, Calvin D. Bruner, A. Timothy Peterson, Michael J. Preston and Jules Roy of Toronto and Peter J.H. Meyer of London, England, were elected directors at the Meeting. The officers are R, Brian Murray, President, Gregory R. Harris of Calgary, Corporate Secretary, Dolores Quance of Toronto, Assistant Secretary.

Process is pleased to announce that a third party engineering report indicates that the APF micro-refinery in Kingston, Ontario is completing its commissioning and start-up stages. Operations to date are consistent with the commissioning and start-up of a new process with new equipment and should meet design yields. The unit has not been operated at steady state conditions for a time period long enough to make an accurate verification of yield and throughput. However, preliminary test results of the output generated to date indicate that the yield and throughput will be as estimated. Management estimates that testing will be completed in about one month.

A revised financial forecast and cash flow analysis by McCafferty Research Securities Corp., which prepared the valuation of APF for the Major Transaction, indicates that additional working capital of up to $500,000 may be required. Accordingly, APF has recently completed a $600,000 private placement at $1.25 per APF share with warrants to purchase 480,000 APF shares at $1.40 each until May 7, 1999. Process has revised the Take Over and has acquired such additional APF shares and warrants by issuing 480,000 Process Shares and 480,000 Process “C” Warrants exercisable at $1.40 each until May 7, 1999.

On closing 15,740,000 Process Shares were issued to previous holders of APF Shares. The number of issued and outstanding Process shares is now 17,890,000. There are also 2,500,000 Process A Warrants exercisable into 2,500,000 Process Shares at $0.50 each to December 31, 1998, 2,650,000 Process B Warrants exercisable into 2,650,000 Process Shares at $1.00 each to November 7, 1998 and 480,000 Process C Warrants exercisable into 480,000 Process Shares at $1.40 each until May 7, 1999. Such Process Warrants are exercisable at an aggregate value of $4,572,000 into a further 5,630,000 Process Shares. None of the Process warrants will be posted for trade on the ASE. There are outstanding options to purchase 1,395,000 Process Shares exercisable at $1.42 each for up to three years. Outstanding options to purchase 170,000 Process Shares at $0.20 each issued prior to the initial public offering remain outstanding. Yorkton Securities Inc., the Agent on the initial public offering, has an option to purchase 50,000 Process Shares at $0.20 each.

Escrow restrictions have been imposed on 1,360,000 Process Shares issued on the Major Transaction owned by management. Following the conclusion of the test phase at the Kingston micro-refinery, Process will request a technical assessment by an independent consulting engineering company. If such report confirms that the plant has produced at the required yields to allow the facility to be operationally viable then such escrowed shares will be released as to 1/3 on each anniversary date of such report. A further news release will be issued at that time announcing the results of the report.

The Corporation will remain a junior capital pool company until it has submitted certain documents to the ASE. A further news release will be issued at that time.

ITEM 7 Senior Officers and Directors

President - R. Brian Murray, Toronto, Ontario

Director - Calvin D. Bruner, Toronto, Ontario

Director - A. Timothy Peterson, Toronto, Ontario

Director - Michael J. Preston, Westhill, Ontario

Director – Jules Roy, Toronto, Ontario

Director – Peter J.H. Meyer, London, England

Secretary - Gregory R. Harris, Calgary, Alberta

Assistant Secretary - Dolores Quance, Toronto, Ontairo

ITEM 8 Statement of Senior Officer

The foregoing accurately discloses the material change referred to herein.

DATED at the City of Calgary, Alberta this 12th day of November, 1997.

Process Capital Corp.

per: "Gregory R. Harris" (signed)

Gregory R. Harris, Secretary