
                       COTTON VALLEY RESOURCES CORPORATION
                          8350 North Central Expressway
                                   Suite M2030
                               Dallas, Texas 75206


                         MANAGEMENT INFORMATION CIRCULAR

1.       SOLICITATION OF PROXIES

         This  Management  Information  Circular is furnished in connection with
         the  solicitation  of  proxies  by  the  management  of  COTTON  VALLEY
         RESOURCES  CORPORATION  (the  "Corporation")  for use at the Annual and
         Special Meeting of  Shareholders of the Corporation  (the "Meeting") to
         be held at the time and  place  and for the  purposes  set forth in the
         attached  Notice of Annual and Special Meeting of  Shareholders.  It is
         expected that the solicitation  will be by mail primarily,  but proxies
         may also be  solicited  personally  by  officers  or  directors  of the
         Corporation.  The  cost  of such  solicitation  will  be  borne  by the
         Corporation.

2.       APPOINTMENT, REVOCATION AND DEPOSIT OF PROXIES

         The  persons  named in the  enclosed  form of proxy  are  directors  or
officers of the Corporation.

         A  SHAREHOLDER  HAS THE RIGHT TO  APPOINT  A PERSON  (WHO NEED NOT BE A
         SHAREHOLDER) TO ATTEND AND ACT FOR HIM AND ON HIS BEHALF AT THE MEETING
         OTHER THAN THE PERSONS  DESIGNATED IN THE ENCLOSED FORM OF PROXY.  SUCH
         RIGHT  MAY BE  EXERCISED  BY  STRIKING  OUT THE  NAMES  OF THE  PERSONS
         DESIGNATED  IN THE ENCLOSED FORM OF PROXY AND BY INSERTING IN THE BLANK
         SPACE  PROVIDED FOR THAT  PURPOSE THE NAME OF THE DESIRED  PERSON OR BY
         COMPLETING ANOTHER PROPER FORM OF PROXY AND, IN EITHER CASE, DELIVERING
         THE COMPLETED AND EXECUTED PROXY TO THE CORPORATION  BEFORE THE TIME OF
         THE MEETING OR ANY ADJOURNMENT THEREOF.

         A shareholder  forwarding the enclosed proxy may indicate the manner in
         which the  appointee is to vote with  respect to any  specific  item by
         checking the appropriate  space.  If the  shareholder  giving the proxy
         wishes to confer a discretionary  authority with respect to any item of
         business  then the space  opposite  the item is to be left  blank.  The
         shares  represented  by the proxy  submitted by a  shareholder  will be
         voted in accordance with the directions, if any, given in the proxy.

         A shareholder who has given a proxy may revoke it at any time in so far
         as it has not been exercised.  A proxy may be revoked, as to any matter
         on which a vote  shall  not  already  have been  cast  pursuant  to the
         authority conferred by such proxy, by instrument in writing executed by
         the  shareholder  or by his attorney  authorized  in writing or, if the
         shareholder is

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         a body corporate,  by an officer or attorney  thereof duly  authorized,
         and deposited either at the registered office of the Corporation at any
         time up to and including the last business day preceding the day of the
         Meeting,  or any adjournment  thereof, at which the proxy is to be used
         or with the  Chairman of such  Meeting on the day of the Meeting or any
         adjournment  thereof,  and upon  either of such  deposits  the proxy is
         revoked.  A proxy may also be revoked in any other manner  permitted by
         law.

3.       MANNER OF VOTING AND EXERCISE OF DISCRETION BY PROXIES

         The persons  named in the  enclosed  form of proxy will vote the common
         shares in respect of which they are  appointed in  accordance  with the
         direction of the  shareholders  appointing them. In the absence of such
         direction,  such  common  shares  will be  voted  for the  election  of
         directors,  for the  appointment  of the  auditor,  for the  resolution
         approving   the  proposed   financing  of  between   US$7,500,000   and
         US$20,000,000  through the issuance of a minimum of 1,250,000 units and
         a maximum of 3,333,333 units, and for the special resolution  approving
         the continuance of the Corporation from Ontario to the Yukon Territory,
         all as described in this  Circular.  The enclosed form of proxy confers
         discretionary  authority upon the persons named therein with respect to
         amendments  or  variations  to  matters  identified  in the  Notice  of
         Meeting,  and with respect to other  matters  which may  properly  come
         before the Meeting.  At the time of the printing of the  Circular,  the
         management of the Corporation  knows of no such amendments,  variations
         or other  matters to come  before the  Meeting  other than the  matters
         referred   to  in  the  Notice  of  Annual  and   Special   Meeting  of
         Shareholders.

4.       VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

         The  authorized  capital of the  Corporation  consists of an  unlimited
         number of common shares (the "Common  Shares") and an unlimited  number
         of  preference  shares.  On November 4, 1996, an aggregate of 9,204,318
         Common  Shares and no  preference  shares were issued and  outstanding.
         Each Common Share  entitles  the holder  thereof to one (1) vote at all
         meetings of shareholders.

         All  shareholders  of  record  at  the  time  of  the  Meeting  or  any
         adjournment  thereof are entitled  either to attend and vote thereat in
         person the shares held by them,  or provided a completed  and  executed
         proxy shall have been delivered to the Corporation,  to attend and vote
         thereat by proxy the shares held by them.

         As at  November  4, 1996,  the only  persons or  companies  who, to the
         knowledge  of the  directors  and senior  officers of the  Corporation,
         beneficially  own,  directly  or  indirectly,  or  exercise  control or
         direction   over  more  than  ten  percent  (10%)  of  the  issued  and
         outstanding voting shares of the Corporation were as follows:

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                                                       - 3 -



 NAME                                    NUMBER OF                  TOTAL OF
                                        COMMON SHARES            COMMON SHARES

Royal Trust Corporation .................   1,000,000                  10.86%

Eugene A. Soltero .......................   946,000(1)(2)              10.28%

James E. Hogue ..........................   961,000(2)(3)              10.44%
  
         Notes:

         (1)      Includes  80,000 Common Shares held  directly,  610,000 Common
                  Shares owned by the Soltero  Family  Limited  Partnership  and
                  256,000 Common Shares held by Mr. Soltero's wife.
         (2)      Mr.  Soltero  and Mr.  Hogue also hold a Power of  Attorney to
                  vote  3,481,732  Common  Shares held by certain  parties  that
                  received  Common  Shares in exchange  for the  transfer to the
                  Corporation  of their  interests in respect of property in the
                  Movico  Field of Mobile  County,  Alabama  and in  respect  of
                  property in the Cheneyboro Field of Navarro County, Texas.
         (3)      Includes  80,000 Common Shares held  directly,  640,000 Common
                  Shares  owned by the  Hogue  Family  Limited  Partnership  and
                  241,000 Common Shares held by Mr. Hogue's wife.


                     PARTICULARS OF MATTERS TO BE ACTED UPON

5.       ELECTION OF DIRECTORS

         The persons  named in the enclosed form of proxy intend to vote for the
         election  of  the  nominees  whose  names  are  set  forth  below.  The
         shareholders  are  being  asked to elect  five  (5)  directors  at this
         Meeting.  The management does not contemplate  that any of the nominees
         will be unable to serve as a director  but if that should occur for any
         reason prior to the Meeting,  the persons named in the enclosed form of
         proxy  reserve  the  right  to  vote  for  another   nominee  in  their
         discretion.  Each director  elected will hold office until the close of
         business on the day of the first annual meeting of  shareholders of the
         Corporation following his election unless his office is earlier vacated
         in accordance with the Articles of the Corporation.

         The  following are the names of  management's  nominees for election as
         directors of the  Corporation  together with their  positions held with
         the Corporation, municipalities of residence, principal occupations for
         the past five  years,  and the number of shares  beneficially  owned or
         over which control or direction is exercised:


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                                                       - 4 -

<TABLE>

<S>                            <C>                              <C>                         <C>  
Name, Address                                                    Date Elected                Shares
and Position                    Principal Occupation             Director                    Held
Eugene A. Soltero               Petroleum Executive              December, 1995              946,000(2)(3)
Chairman of the Board and
Chief Executive Officer
Dallas, Texas
James E. Hogue                  Petroleum Executive              July, 1996                  961,000(3)(4)
President, Chief Operating
Officer, Director
Dallas, Texas
Richard J. Lachcik              Lawyer                           February, 1995              Nil
Director
Oakville, Ontario
Wayne T. Egan                   Lawyer                           June, 1996                  Nil
Director
Toronto, Ontario
Michael Kamis                   Petroleum Executive              November, 1996              Nil
Director
Calgary, Alberta
</TABLE>

         The shareholders are urged to elect Management's nominees as directors.

         Notes:

         (1)      The audit committee will be composed of all the directors.
         (2)      Includes  80,000 Common Shares held  directly,  610,000 Common
                  Shares owned by the Soltero  Family  Limited  Partnership  and
                  256,000 Common Shares held by Mr. Soltero's wife.
         (3)      Mr.  Soltero  and Mr.  Hogue also hold a Power of  Attorney to
                  vote  3,481,732  Common  Shares held by certain  parties  that
                  received  Common  Shares in exchange  for the  transfer to the
                  Corporation  of their  interests in respect of property in the
                  Movico  Field of Mobile  County,  Alabama  and in  respect  of
                  property in the Cheneyboro Field of Navarro County, Texas.
         (4)      Includes  80,000 Common Shares held  directly,  640,000 Common
                  Shares  owned by the  Hogue  Family  Limited  Partnership  and
                  241,000 Common Shares held by Mr. Hogue's wife.


6.       STATEMENT OF EXECUTIVE COMPENSATION

         A.       Summary Compensation Table

                  The following table discloses  compensation paid or awarded to
                  the  Corporation's  Chief  Executive  Officer  and each of the
                  other  executive  officers  for the last two  financial  years
                  since its inception.


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<TABLE> 
<S>                <C>     <C>          <C>      <C>       <C>           <C>              <C>             <C>              

                                        Annual Compensation                                Long-Term Compensation
                                                                                           Awards                   Payouts


                                                                            Restricted
                                                            Securities      Shares
                                                  Other     Under           or                             All
      Name                                        Annual    Options/        Restricted                     Other
      and                                         Compen-   SARs            Share            LTIP          Compen-
   Principal        Year    Salary       Bonus    sation    Granted         Units           Payouts        sation
    Position                 (US$)       (US$)     (US$)     (#)           (US$)            (US$)            (US$)
      (a)            (b)      (c)         (d)       (e)      (f)           (g)              (h)              (i)

Eugene A.           1996       115,000     -         -       200,000         -               -                -
Soltero             1995        25,000     -         -                       -               -                -
Chairman of
the Board,
Chief
Executive
Officer
---------------- --------------------- ----------------------------- ----------------- --------------  --------------
James E.            1996       115,000     -         -       200,000         -               -                -
Hogue               1995        25,000     -         -                       -               -                -
President,
Chief
Operating
Officer
---------------- --------------------- ----------------------------- ----------------- --------------  --------------
Peter Lucas         1996       101,500     -         -       200,000         -               -                -
Senior Vice         1995             0     -         -             -         -               -                -
President,
Chief
Financial
Officer
---------------- --------------------- ----------------------------- ----------------- --------------  --------------
C. Ronald           1996        22,000     -         -       200,000         -               -                -
Burden              1995             0     -         -             -         -               -                -
Senior Vice
President of
Exploration
================ ========= =========== ========= =================== ================= ==============  ==============
</TABLE>

         B.       Long-Term Incentive Plan Awards (Period ended June 30, 1996)

                  The Corporation  currently has no long-term  incentive  plans,
                  other  than  stock  options  granted  from time to time by the
                  Board of Directors  under the provisions of the  Corporation's
                  stock option plan.


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         C.       Option/SAR Grants (Period ended June 30, 1996)

<TABLE>
<S>                  <C>                  <C>                 <C>                <C>                   <C>   

                                             % of Total                              Market Value
                         Securities           Options/                              of Securities
                            Under               SARs                                  Underlying
                          Options/           Granted to            Exercise            Options/
                            SARs              Employees               or             SARs on the
                           Granted          in Financial          Base Price        Date of Grant          Expiration
        Name                 (#)                Year             ($/Security)        ($/Security)             Date
        (a)                  (b)                 (c)                 (d)                 (e)                   (f)
-------------------- ------------------- -------------------  ------------------ --------------------  -------------------
Eugene A.                        200,000        25.0%                2.50                2.25             July 1, 2001
Soltero
-------------------- ------------------- -------------------  ------------------ --------------------  -------------------
James E.                         200,000        25.0%                2.50                2.25             July 1, 2001
Hogue
-------------------- ------------------- -------------------  ------------------ --------------------  -------------------
Peter Lucas                      200,000        25.0%                2.50                2.25             July 1, 2001
-------------------- ------------------- -------------------  ------------------ --------------------  -------------------
C. Ronald                        200,000        25.0%                2.50                2.25             July 1, 2001
Burden
==================== =================== ===================  ================== ====================  ===================
</TABLE>

     D.   Aggregated  Option/SAR  Exercises  (Period  ended  June 30,  1996) and
          Financial Year-End Option/SAR Values

<TABLE>
<S>                      <C>                   <C>                       <C>                      <C> 

                                                                                                         Value of
                                                                                                       Unexercised
                                                                               Unexercised             in-the-Money
                                                                              Options/SARs             Options/SARs
                                Securities              Aggregate               at FY-End               at FY-End
                               Acquired on                Value                    (#)                     ($)
                                 Exercise               Realized              Exercisable/             Exercisable/
          Name                     (#)                     ($)                Unexercisable           Unexercisable
           (a)                     (b)                     (c)                     (d)                     (e)
Eugene A. Soltero                   0                       0                            200,000            0
------------------------- ---------------------- ----------------------- -----------------------  ----------------------
James E. Hogue                      0                       0                            200,000            0
------------------------- ---------------------- ----------------------- -----------------------  ----------------------
Peter Lucas                         0                       0                            200,000            0
C. Ronald Burden                    0                       0                            200,000            0
========================= ====================== ======================= =======================  ======================
</TABLE>

       E.         Compensation of Directors

                  Directors  who are not  employees of the  Corporation  receive
                  $500 per meeting of the board and $500 per  committee  meeting
                  not held on the same date as a board  meeting.  Directors  are
                  permitted to accept shares in lieu of cash. Employee directors
                  receive no extra compensation for service on the board.

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                  No directors were  compensated by the  Corporation  during the
                  last  financial  year for services as  consultants or experts,
                  other  than  $26,035.92  paid in legal  fees to Weir & Foulds,
                  Toronto;  Mr.  Richard  J.  Lachcik  and Mr.  Wayne  T.  Egan,
                  directors of the Corporation, are partners in such firm.

         F.       Indebtedness of Directors and Senior Officers

                  None of the directors or senior officers of the Corporation or
                  their  respective  associates or affiliates is indebted to the
                  Corporation.


7.       PUBLIC FINANCING

         The Corporation has entered into an agreement with National  Securities
         Corp.  (the  "Underwriter")  of  Seattle,  Washington  to  complete  an
         offering on a firm commitment basis of a minimum of 1,250,000 units and
         a maximum of 3,333,333 units. Under the terms of the agreement with the
         Underwriter, the Corporation proposes to raise between US$7,500,000 and
         US$20,000,000  through the issuance of a minimum of 1,250,000 units and
         a maximum of 3,333,333  units (the "Units"),  each Unit consisting of 1
         series A convertible  preferred  share (the  "Preferred  Shares") and 1
         redeemable  Common  Share  purchase  warrant  (the   "Warrants").   The
         Preferred Shares and Warrants may not be traded  separately until April
         6, 1997, unless separated earlier upon three days' prior written notice
         to the  Corporation  from  the  Underwriter.  Each  Preferred  Share is
         convertible into two Common Shares of the Corporation.  Each Warrant is
         exercisable  after the date on which the Preferred  Shares and Warrants
         become  tradeable  separately,  until  December 31, 1998, at a price of
         US$3.00 per share  (subject to  adjustment) to acquire one Common Share
         of the  Corporation.  After April 6, 1997 the  Corporation may call for
         the  redemption  of the Warrants at any time on 30 days' prior  written
         notice to warrant holders at a redemption  price of US$0.01 per Warrant
         provided  that the closing  price or the closing bid  quotation  of the
         Common Shares is at least US$4.50 per share for ten consecutive trading
         days.

         The share provisions attaching to the Preferred Shares are as follows:

          (a)  the Preferred Shares may be issued for such  consideration as the
               directors from time to time may determine;

         (b)      the holders of Preferred Shares are entitled to receive notice
                  of,  and to 2  votes  for  each  Preferred  Share  held at all
                  meetings of the shareholders of the  Corporation,  and to vote
                  as a class at any meeting at which,  pursuant to the corporate
                  laws of the  jurisdiction to which the Corporation is subject,
                  the  holders of  Preferred  Shares are  entitled  to vote as a
                  class;

         (c)      the  holders  of  Preferred  Shares  are  entitled  to receive
                  dividends  at the rate of 8% per annum,  payable in cash or in
                  Common Shares.  The dividends  will be paid  annually,  within
                  sixty (60) days  after the close of each  fiscal  year  ending
                  June 30. If the

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                                                       - 8 -


                  dividend  is paid in Common  Shares,  the price of such shares
                  shall be the  average  closing  price  for the  Common  Shares
                  publicly  traded  during the twenty (20) trading days ended on
                  the last day of the fiscal year;

         (d)      the  holders of  Preferred  Shares  shall  have  first  equity
                  preference  as a class,  limited  in  amount  to  US$6.00  per
                  Preferred  Share  in the  assets  of the  Corporation  legally
                  available  for  distribution  in the  event of a  liquidation,
                  dissolution or winding up of the Corporation; and

         (e)      each  Preferred  Share may be  converted  by the holder at any
                  time into Common Shares of the Corporation,  on the basis of 2
                  Common  Shares for each  Preferred  Share held by the  holder.
                  Each  Preferred  Share shall  automatically  convert  into two
                  Common  Shares  of  the  Corporation   immediately   upon  the
                  occurrence of the first of the following events:

                    (i)  the  closing   price  for  the  Common  Shares  of  the
                         Corporation  in any  public  market  meets  or  exceeds
                         US$4.00 per share for twenty (20)  consecutive  trading
                         days;

                    (ii) the  Corporation's  auditors release audited  financial
                         statements   according  to  U.S.   Generally   Accepted
                         Accounting    Principles   ("GAAP")   that   show   the
                         Corporation  has a net income for the  previous  twelve
                         (12) month (or shorter) period exceeding US$2,000,000;

                    (iii)the  Corporation's  auditors  release annual  financial
                         statements  according  to Canadian  GAAP that shows the
                         Corporation  has a net income for the  previous  twelve
                         (12) months (or shorter) period  exceeding  $2,600,000;
                         or

                    (iv) December 31, 2002.

          PROXIES  RECEIVED  IN  FAVOUR  OF  MANAGEMENT  WILL BE  VOTED  FOR THE
          RESOLUTION   APPROVING  THE  PROPOSED  PUBLIC   FINANCING,   UNLESS  A
          SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS SHARES ARE TO BE VOTED
          AGAINST SUCH RESOLUTION.  An affirmative of at least a majority of the
          votes cast at the Meeting  will be  required  to approve the  proposed
          resolution. A copy of the proposed resolution for the public financing
          is annexed to this Information Circular as Schedule "A".


8.       SPECIAL RESOLUTION - CONTINUATION INTO THE YUKON TERRITORY

         The Corporation is seeking shareholder  approval for the continuance of
         the Corporation into the Yukon Territory.  The Corporation is proposing
         to continue  into the Yukon  Territory  because under Yukon law it will
         not be subject to  Canadian  residency  requirements  for a majority of
         directors and to pursue potential  opportunities to amalgamate or merge
         with

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                                                       - 9 -


         companies in the same industry. As a company with all of its assets and
         properties  in the United  States,  it is  difficult  to  maintain  the
         required Canadian resident directors.  The freedom to access directors,
         whether Canadian residents or not, is attractive to the Corporation. If
         the  shareholders of the Corporation  approve the continuance  into the
         Yukon Territory, the Corporation will file Articles of Continuance with
         the Registrar under the Business  Corporations Act (Yukon) (the "YBCA")
         and, upon approval of the Articles of  Continuance  and issuance by the
         Registrar  under  the  YBCA  of  a  Certificate  of  Continuance,   the
         Corporation will thereafter be continued as a Yukon corporation.

         If the  continuance is approved,  the Articles of  Continuance  will be
         adopted  to replace  the  existing  Articles  of the  Corporation  (the
         equivalent  of a  Certificate  of  Incorporation  and  Bylaws) and will
         constitute  the governing  instruments  of the continued  company under
         Yukon law. The existing Articles of the Corporation will be adopted and
         continued into the Yukon Territory,  except to the extent that they may
         conflict with Yukon law.

         It is  contemplated  that if a continuance is approved,  it will become
         effective on the day of the Meeting or any adjournment thereof.

          PROXIES  RECEIVED  IN  FAVOUR  OF  MANAGEMENT  WILL BE  VOTED  FOR THE
          APPROVAL OF THE PROPOSED SPECIAL RESOLUTION TO CONTINUE INTO THE YUKON
          TERRITORY,  UNLESS A  SHAREHOLDER  HAS SPECIFIED IN THE PROXY THAT HIS
          SHARES ARE TO BE VOTED AGAINST SUCH SPECIAL  RESOLUTION.  The proposed
          continuation  requires  approval  by a  special  resolution  which  is
          defined as a  resolution  of the  shareholders  confirmed  by at least
          two-thirds  (2/3) of the votes  cast at a special  meeting  called for
          such purpose.  An affirmative vote of at least two-thirds (2/3) of the
          votes cast at the Meeting will  accordingly be required to approve the
          proposed special resolution. A copy of the proposed special resolution
          approving the continuation into the Yukon Territory is annexed to this
          Information Circular as Schedule "B".

         The  directors  of  the  Corporation  may,  notwithstanding   requisite
         shareholder  approval,  abandon the application for continuance without
         further approval of the  shareholders,  all as provided under the OBCA.
         In making such determination,  the directors in their discretion,  will
         determine  whether it is in the best  interests of the  Corporation  to
         proceed with the continuance, after considering all relevant factors at
         the particular time, whether or not foreseen at this date.

         Pursuant to the OBCA, a holder of Common  Shares is entitled to dissent
         and be paid the fair  value of such  Common  Shares if the  shareholder
         objects to the special  resolution  attached  hereto as Schedule "B". A
         management  summary  of the  shareholders  dissent  rights is set forth
         below under Section 9 - "Dissent Rights".



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                                                      - 10 -


9.       DISSENT RIGHTS

         Pursuant to the OBCA, a holder of Common Shares of the  Corporation who
         objects  to  the  special  resolution  in  respect  of  continuing  the
         Corporation  into the Yukon  Territory  (the "Special  Resolution")  is
         entitled,  to  dissent  and be paid the fair value of his or her Common
         Shares.  A  shareholder  may  dissent  only with  respect to all of the
         shares  of the  class  held by the  shareholder  on  behalf  of any one
         beneficial owner and registered in the shareholder's name. Accordingly,
         in respect of the Special Resolution,  a shareholder is not entitled to
         dissent with respect to any shares of one class  beneficially  owned by
         one owner if the shareholder  votes any of such shares in favour of the
         particular matter.

         In order to dissent,  a shareholder  must send to the Corporation at or
         before the Meeting a written  objection (an "Objection  Notice") to the
         Special  Resolution.  A  vote  against  the  Special  Resolution  or an
         abstention  does  not  constitute  such a  written  objection,  but the
         shareholder need not vote his shares against the Special  Resolution in
         order to object. Within ten (10) days after the approval of the Special
         Resolution, the Corporation must send to each shareholder who has filed
         an Objection  Notice a notice  stating that the Special  Resolution has
         been adopted (the "Corporation  Notice").  A Corporation  Notice is not
         required  to be sent  to any  shareholder  who  voted  for the  Special
         Resolution or who has withdrawn his Objection Notice.

         Within twenty (20) days after receipt of the Corporation  Notice or, if
         no Corporation Notice is received by the dissenting  shareholder within
         twenty  (20)  days  after  the  shareholder  learns  that  the  Special
         Resolution has been adopted, the dissenting  shareholder is required to
         send a written notice to the Corporation  containing the  shareholder's
         name and address, the number and class of shares held by him in respect
         of which he dissents and a demand for payment of the fair value of such
         shares (the "Demand for Payment").  Within thirty (30) days thereafter,
         the   dissenting   shareholder   must  send  the   share   certificates
         representing  such shares to the Corporation.  Such share  certificates
         will be endorsed by the Corporation  with a notice that the holder is a
         dissenting   shareholder   and  will  be  returned  to  the  dissenting
         shareholder.  A dissenting  shareholder who fails to forward his Demand
         for Payment and share  certificates  within the time required loses any
         right to make a claim for payment of the fair value of his shares.

         On sending  the Demand for  Payment to the  Corporation,  a  dissenting
         shareholder ceases to have any right as a shareholder in respect of the
         shares in respect of which the shareholder dissents except the right to
         be paid the fair value of his shares unless the dissenting  shareholder
         withdraws the Demand for Payment before the Corporation  sends an Offer
         to Purchase as described below.

         Not later  than seven (7) days after the later of the date on which the
         action approved by the Special  Resolution is effective or the date the
         Corporation  receives the Demand for Payment, the Corporation will send
         to  each  dissenting   shareholder  a  written  offer  (the  "Offer  to
         Purchase")  to pay  for  the  shares  in an  amount  considered  by the
         directors of the Corporation to be the fair value thereof,  accompanied
         by a statement  showing how the fair value was determined.  Every Offer
         to Purchase shall be on the same terms.

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         Dissenting  shareholders  who accept the Offer to Purchase will be paid
         within  ten (10) days  after the  Corporation  receives  notice of such
         acceptance.  The Offer to Purchase lapses if the  Corporation  does not
         receive an  acceptance  within thirty (30) days after the date on which
         the Offer to Purchase was made.

         If the  Corporation  fails  to  make  the  Offer  to  Purchase,  or the
         dissenting  shareholder  fails to  accept  the Offer to  Purchase,  the
         Corporation  may,  within fifty (50) days after the action  approved by
         the Special  Resolution is effective or within such further period as a
         court may allow,  apply to a court to fix a fair value for the  shares.
         If the Corporation  fails to make such an  application,  the dissenting
         shareholder  has the  right to  apply  for the  same  purpose  within a
         further period of twenty (20) days or within such further period as the
         court may allow.  All the dissenting  shareholders who have sent to the
         Corporation  the Demand for Payment and have not  accepted the Offer to
         Purchase,  if such an offer was made,  will be joined as parties to the
         application  and will be bound by the decision of the court.  The court
         may determine whether any person is a dissenting shareholder who should
         be  joined  as a party,  and the  court  will fix a fair  value for the
         shares of all dissenting shareholders.

         A shareholder  who complies with each of the steps  required to dissent
         effectively  is entitled,  for the  particular  Special  Resolution  in
         respect of which the shareholder  dissents and which Special Resolution
         becomes effective,  to be paid by the Corporation the fair value of the
         shares in respect of which that shareholder  dissents  determined as of
         the  close  of  business  on the  day  before  the  particular  Special
         Resolution is adopted.

         Notwithstanding  the foregoing summary, it is strongly suggested that a
         shareholder  obtain  legal  advice if he or she wishes to invoke his or
         her right of dissent. Failure to comply strictly with the procedure set
         out in the OBCA would result in prejudice to that right of dissent.


10.      APPOINTMENT OF AUDITORS

         The  shareholders  of the Corporation are being asked at the meeting to
         confirm the appointment of Coopers & Lybrand, Chartered Accountants, as
         auditors  for the year  ending  June  30,  1997  and to  authorize  the
         directors to fix the remuneration paid to the auditors.  Subject to the
         foregoing,  unless such authority is withheld, the persons named in the
         enclosed Proxy intend to vote for the  appointment of Coopers & Lybrand
         as auditors  for the  Corporation  to hold office until the next annual
         meeting of  shareholders  and to  authorize  the  directors  to fix the
         remuneration of the auditors.


11.      FINANCIAL STATEMENTS

         Attached  hereto  are  the  Consolidated  Financial  Statements  of the
         Corporation for the year ended June 30, 1996.


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                                                      - 12 -


12.      GENERAL

         Except as otherwise indicated, information contained herein is given as
         of  November  5,  1996.  Management  knows of no other  matters to come
         before the Meeting of Shareholders. However, if any other matters which
         are not now  known  to  Management  should  come  properly  before  the
         Meeting, the proxy will be voted on such matters in accordance with the
         best knowledge of the person voting it.


13.      DIRECTORS APPROVAL

         The contents and the sending of this Management Information Circular to
         shareholders  of the  Corporation  have been  approved  by the Board of
         Directors of the Corporation.

         DATED at Dallas, Texas this 5th day of November, 1996.


                                            BY ORDER OF THE BOARD





                                            EUGENE A. SOLTERO
                                            Chief Executive Officer

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                                                      - 13 -


                                  SCHEDULE "A"


                         RESOLUTION RE PUBLIC FINANCING


                  WHEREAS the  Corporation  has entered into an  agreement  with
National  Securities  Corp. of Seattle,  Washington to complete an offering on a
firm commitment basis of a minimum of 1,250,000 units and a maximum of 3,333,333
units (the  "Units"),  each Unit  comprised of 1 series A convertible  preferred
share (the ("Preferred  Shares") and 1 redeemable  Common Share purchase warrant
(the "Warrants");

                  AND  WHEREAS  the  Preferred  Shares and  Warrants  may not be
traded separately until April 6, 1997, unless separated earlier upon three days'
prior written notice to the Corporation from National Securities Corp.

                  AND  WHEREAS  each  Preferred  Share is  convertible  into two
Common Shares of the Corporation and each Warrant is exercisable  after the date
on which the Preferred  Shares and Warrants become  tradeable  separately  until
December 31, 1998, at a price of U.S.$3.00 per share  (subject to adjustment) to
acquire  1 Common  Share,  provided  that at any time  after  April 6,  1997 the
Corporation  may call  for the  redemption  of the  Warrants  on 30 days'  prior
written  notice to  Warrant  holders  at a  redemption  price of  U.S.$0.01  per
Warrant,  provided  that the closing  price on the closing bid  quotation of the
Common Shares is at least U.S.$4.50 per share for 10 consecutive trading days.

                  NOW THEREFORE BE IT RESOLVED THAT:

1. The  Corporation  be and it is hereby  authorized  to enter into an agreement
with  National  Securities  Corp.,  providing  for the  offering of a minimum of
1,250,000  Units  and a  maximum  of  3,333,333  Units  in  the  capital  of the
Corporation on a firm commitment basis; and

2. Any director or officer of the  Corporation  be and is hereby  authorized  on
behalf of the  Corporation to execute all documents and do all this necessary or
advisable in connection with the foregoing.


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                                                      - 14 -

                                  SCHEDULE "B"


                        SPECIAL RESOLUTION RE CONTINUANCE


WHEREAS the Corporation  considers it advisable to continue the Corporation into
the Yukon Territory;

                  NOW THEREFORE BE IT RESOLVED AS A SPECIAL RESOLUTION
THAT:

1. The Corporation is hereby  authorized to discontinue  under the provisions of
the Business Corporations Act (Ontario);

2. The continuance of the Corporation from the jurisdiction of Ontario under the
Business  Corporations  Act (Ontario) to the Yukon  Territory under the Business
Corporations Act (Yukon) be and the same is hereby authorized and approved; and

3. Any director or officer of the Corporation be and they are hereby  authorized
on behalf of the Corporation to apply for a certificate of  discontinuance  with
the  Ministry of Consumer  and  Commercial  Relations  in order to continue  the
Corporation  out of Ontario and into the Yukon  Territory,  to file  Articles of
Continuance  with the  Registrar of the Yukon  substantially  in the form of the
present Articles of the Corporation  except to the extent they may conflict with
Yukon law, and to execute all documents and do all things necessary or advisable
in connection  with the  foregoing;  provided  however that the directors of the
Corporation  are  hereby  authorized  to revoke or amend the  foregoing  special
resolution in whole or in part without further  approval of the  shareholders of
the  Corporation at any time prior to the  endorsement by the Director under the
Business Corporations Act (Ontario) approving the application for continuance.


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