<PAGE> 1 utah/nevada
As filed with the Securities and Exchange Commission on
_________________________. Registration No. 333-3074.
=====================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
__________________________________
POST EFFECTIVE AMENDMENT NO. 1 TO THE
FORM S-1
REGISTRATION STATEMENT
Under The
Securities Act of 1933
__________________________________
WINDSTAR RESOURCES, INC.
Formerly, Turtleback Mountain Gold Co., Inc.
__________________________________
(Exact name of Registrant specified in charter)
Arizona 1330 86-0790266
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(State of (Primary Industrial (I.R.S. Employer
Incorporation) Classification Code) Identification #)
528 Fon du Lac Drive
East Peoria, Illinois 61611
Tel: (309) 699-1275
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(Address, including zip code of principal place of business and
telephone number, including area code of Registrant's principal
executive offices.)
Conrad C. Lysiak
Attorney and Counselor at Law
West 601 First Avenue
Suite 503
Spokane, Washington 99204
(509) 624-1475
- - ---------------------------------------------------------------------
(Name, address, including zip code and telephone number, including
area code of agents for service.)
Approximate date of commencement date or proposed sale to the public:
As soon as practicable after this Registration Statement becomes
effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box [x].
The Exhibit Index for this Registration Statement begins on
sequential page number __.
=====================================================================
<PAGE> 2
<TABLE>
_______________________________________________________________________
CALCULATION OF REGISTRATION FEE
_______________________________________________________________________
<CAPTION>
Title of each Proposed maximum
class of Amount to be aggregate offering Proposed maximum Amount of
securities to registered price per Share aggregate offering registration
be registered [3] [1][3] price [1][3] fee [1][3]
- - -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units consisting of:
Shares of
Common Stock 1,600,000 $ 0.0317 $ 50,725.00 $ 17.49
Class A Warrants
exercisable at $2.50
per Warrant 1,600,000 $ 0.00 $ 0.00 $ 0.00
Class B Warrants
exercisable at $5.00
per Warrant 1,600,000 $ 0.00 $ 0.00 $ 0.00
Shares issuable
upon the exercise
of the Class A
Redeemable
Warrants [2] 1,600,000 $ 2.50 $ 4,000,000 $1,379.31
Shares issuable
upon the exercise
of the Class B
Redeemable
Warrants [2] 1,600,000 $ 5.00 $ 8,000,000 $2,758.62
- - -----------------------------------------------------------------------
TOTAL REGISTRATION FEE $12,050,725 $4,155.42
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</TABLE>
[1] Estimated solely for the purpose of calculating the registration
fee.
[2] To be issued upon exercise of the Redeemable Warrants.
[3] Reflects the reverse stock split of 1 for 250 that occurred on
April 15, 1998.
The Registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically
states that the registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933 or until this registration statement shall be come effective on
such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 3
WINDSTAR RESOURCES, INC.
Formerly, Turtleback Mountain Gold Co., Inc.
Cross Reference Sheet
Cross reference sheet showing location in Prospectus of
information required by Items of Form S-1.
Item Number
and Caption Location in Prospectus
- - ---------------------------------------------------------------------
1. Forepart of the Registration Statement Outside
Front Cover Page of Prospectus . FACING PAGE; CROSS
REFERENCE SHEET; OUTSIDE
FRONT COVER PAGE
2. Inside Front and Outside
Back Cover Pages of Prospectus . INSIDE FRONT COVER PAGE;
OUTSIDE BACK COVER PAGE
3. Summary Information and Risk
Factors . . . . . . PROSPECTUS SUMMARY; RISK
FACTORS; THE COMPANY
4. Use of Proceeds . . . . PROSPECTUS SUMMARY; USE
OF PROCEEDS
5. Determination of Offering Price . OUTSIDE FRONT COVER
PAGE; PLAN OF OFFERING -
ESCROW OF FUNDS
6. Dilution . . . . . . DILUTION
7. Selling Securityholders . . . NOT APPLICABLE
8. Plan of Distribution. . . . INSIDE FRONT COVER PAGE;
PLAN OF OFFERING ESCROW
OF FUNDS
9. Description of Securities
to be Registered . . . . OUTSIDE FRONT COVER
PAGE; CAPITALIZATION -
DESCRIPTION OF
SECURITIES; PLAN OF
OFFERING - ESCROW
OF FUNDS
10. Interest of Named Experts
and Counsel . . . . . LEGAL MATTERS; EXPERTS
11a. Description of Business . . . PROSPECTUS SUMMARY;
PROPOSED BUSINESS
11b. Description of Property . . . NOT APPLICABLE
11c. Legal Proceedings . . . . PROPOSED BUSINESS
<PAGE> 4
Item Number
and Caption Location in Prospectus
- - ---------------------------------------------------------------------
11d. Market Price, Dividends
and Related Stockholder
Matters . . . . . . PRINCIPAL SHAREHOLDERS;
CAPITALIZATION
DESCRIPTION OF THE
SECURITIES
11e. Financial Statements . . . FINANCIAL STATEMENTS
11f. Selected Financial Data . . . SELECTED FINANCIAL DATA
11g. Supplementary Financial
Information . . . . . NOT APPLICABLE
11h. Management's Discussion
and Analysis of Financial
Condition and Results
of Operations . . . . . MANAGEMENT'S DISCUSSION
AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
11i. Disagreements with Accountants . NOT APPLICABLE
11j. Directors and Executive Officers . MANAGEMENT
11k. Executive Compensation . . . MANAGEMENT
11l. Security Ownership of
Certain Beneficial Owners
and Management . . . . . MANAGEMENT
11m. Certain Relationships
and Related Transactions . . . MANAGEMENT
12. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities. . . . . PROPOSED BUSINESS
<PAGE> 5
PROSPECTUS
WINDSTAR RESOURCES, INC.
Formerly, Turtleback Mountain Gold Co., Inc.
3,200,000 Shares of Common Stock
($0.0001 par value)
The shares of the Company's $0.0001 par value common stock (the
"Common Stock") being offered hereby may be purchased upon the
exercise of the Company's Class A Common Stock purchase warrants (the
"A Warrants") and/or upon the exercise of the Company's Class B
Common Stock purchase warrants (the "B Warrants"). Each A Warrant
entitles the holder to purchase one share of Common Stock at $2.50
per share at any time during the period commencing on August 16, 1996
and ending on August 15, 2001, unless extended by the Company. Each
B Warrant entitles the holder to purchase one share of Common Stock
at $5.00 per share at any time during the period commencing on August
16, 1996 and ending on August 15, 2001, unless extended by the
Company.
THESE ARE SPECULATIVE SECURITIES, INVOLVE A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION AND SHOULD BE PURCHASED ONLY BY
PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE "RISK
FACTORS" WHICH MAY BE FOUND AT PAGES 7 HEREOF; "DILUTION" AND "RISK
FACTORS."
The Common Stock of the Company is currently not traded
anywhere.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Price to Underwriting Proceeds
Public Commission [1] Company[2]
Per Share on Exercise
of A Warrants $ 2.50 $ -0- $ 2.50
Total on Exercise of
A Warrants [3] $4,000,000 $ -0- $4,000,000
Per Share on Exercise
of B Warrants $ 5.00 $ -0- $ 5.00
Total on Exercise of
B Warrants [3] $8,000,000 $ -0- $8,000,000
(See Notes on following page.)
WINDSTAR RESOURCES, INC.
Formerly, Turtleback Mountain Gold., Inc.
528 Fon du Lac Drive
East Peoria, Illinois 61611
(309) 699-1275
(800) 453-6544
The Date of this Prospectus is ___________________________________.
<PAGE> 6
[1] This offering is being conducted by the Company. No commission
will be paid in connection with the exercise of Warrants.
[2] Before deduction of the expenses of the offering, estimated to
be $7,500.
[3] This offering is made on a "best efforts" basis. There is no
minimum number of Shares which must be sold.
No dealer, salesman or other person has been authorized to give
any information or to make any representation other than those
contained in this Prospectus and, if given or make, such information
or representation must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to
made such offer in such jurisdiction, or in any jurisdiction in which
the person making such offer or solicitation is not qualified to do
so.
The Company is not currently subject to Section 13 of the
Securities Exchange Act of 1934 (the "Exchange Act"). Upon this Post
Effective Amendment being declared effect, the Company will be
subject to the reporting requirements set forth in Section 15(d) of
the Exchange Act and will furnish to its shareholders an Annual
Report containing financial statements examined by independent
certified public accountants and it may also provide unaudited
quarterly or other interim reports as it deems appropriate. The
Company intends to comply with the periodic reporting requirements of
Section 15(d) of the Exchange Act until such time as its is no longer
required to do so.
UNTIL _____________________, 1998, (90 DAYS AFTER THE DATE OF
THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
<PAGE> 7
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PROSPECTUS SUMMARY
- - ---------------------------------------------------------------------
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS.
The Company WINDSTAR RESOURCES, INC., formerly Turtleback Mountain
Gold Co., Inc. (the "Company") was formed on March 22,
1995, to engage in the business of exploration, and if
warranted, development and production, or the sale of
precious minerals. See "Proposed Business."
The Company is in the exploration stage and there is
no assurance that a commercially viable mineralized
body exists in any of the Company's properties.
In 1997, the Company completed a public offering of
1,600,000 Units, each Unit consisting of one share of
Common Stock, one Class A Warrant and one Class B
Warrant, in exchange for certain mining claims located
in Arizona. On December 31, 1997, the Company's
shareholders approved a change in the name of the
corporation to WindStar Resources, Inc. On April 15,
1998, the Company's shareholders approved, among other
things, a 1 for 250 share reverse stock split; and, a
change in the authorized capital from 3,000,000,000
shares of Common Stock, $0.00001 par value per share
to 50,000,000 shares of Common Stock, $0.0001 par
value, and from 400,000,000 shares of Preferred Stock
$0.00001 par value per share to 10,000,000 shares of
Preferred stock, $0.0001 par value per share.
The Company's offices are located at 528 Fon du Lac
Drive, East Peoria, Illinois 61611. The Company's
telephone number is (309) 699-1275.
The Offering Shares outstanding prior to offering 4,132,000
Securities offered upon
exercise of A Warrants 1,600,000
Securities offered upon
exercise of B Warrants 1,600,000
Shares to be outstanding after offering 7,332,000
Reflects a 1 for 250 share reverse stock split which
occurred on April 15, 1998.
Use of Proceeds
The proceeds from this offering will be used for
offering expenses, exploration, salaries,
administration expenses, leasehold payments, debt,
development and working capital.
<PAGE> 8
Risk Factors Investment in the Company should be considered highly
speculative, start-up and unproven. There are
non-arms length transactions with affiliates involving
conflicts of interest. Purchasers of the shares of
common stock upon the exercise of the warrants will
incur immediate and substantial dilution in the net
tangible book value of the shares. There is a lack of
public market for the Company's securities and the
price at which the Company's securities are being
offered to the public has been arbitrarily determined
by the Company. Substantial offering expenses will be
incurred by the Company in connection with this
offering and the Company does not anticipate paying
any dividends on its Common Stock. See "Risk
Factors."
Selected Financial Information
The Company is a start up company and has no operating
history. The Company formed on March 25, 1995 and has
no revenues and earnings from operations. There is no
assurance that the Company will ever have material
revenues or that its operations will be profitable.
The following financial data summarizes certain
information concerning the Company based upon the
financial statements and notes, thereto, contained in
this Prospectus. See "Financial Statements."
Balance Sheet as of March 31, 1998:
<TABLE>
<S> <C>
Assets
Current Assets . . . . . . . $ 777
Total Assets . . . . . . . $ 80,264
Liabilities and Stockholders' Equity
Current Liabilities . . . . . . $ 119,027
Stockholders' Equity (deficit) . . . . $ (66,363)
Total Liabilities
& Stockholders' Equity . . . . . . $ 80,264
Net Tangible Book Value Per Share . . . . $ -0-
</TABLE>
<PAGE> 9
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THE COMPANY
- - ---------------------------------------------------------------------
The Company was incorporated in the state of Arizona on March
22, 1995 for the purpose of acquiring, exploring and, if warranted,
developing mineral properties and producing minerals therefrom. The
Company does not own an operating mine and has no other revenue-
producing mining activities. The mineralization of main exploratory
interest is gold. No reserves have been delineated on the property
and to date the Company has not identified a commercially mineable
ore body. Since incorporation in 1955, the Company's operations have
been centered around its (i) organization; (ii) evaluation of the
mining industry; (iii) start-up financing of its operations; (iv)
acquiring mining claims and interests in southwestern Arizona; and,
(v) formulation and implementation of its business plan.
The Company acquired the mining rights to 136 unpatented claims
as a result of several transactions involving affiliated parties, who
previously staked and maintained the properties by paying an annual
maintenance fee of $100 per claim payable to the United States
Government by August 31 each year. Due to such relationships none of
these transactions can be deemed to have resulted from arms-length
negotiations. The terms of these transactions may not be as
favorable to the Company as they might have been had the Company
dealt with unaffiliated parties.
Upon organization, the Company sold an aggregate of 1,992,000
shares of its Common Stock to nineteen (19) persons and two (2)
corporations for an average price of $0.0223 per share or an
aggregate of $44,450 in cash and mining claims. Eight claims were
transferred to the Company on June 30, 1995 in exchange for 1,240,000
shares of Common Stock and were valued at the transferors' cost of
$13,000. The foregoing reflects a 1 for 250 shares reverse stock
split which occurred on April 15, 1998. See "Principal
Shareholders."
In 1997, the Company completed a public offering of 1,600,000
Units, each Unit consisting of one share of Common Stock, one Class A
Warrant and one Class B Warrant, in exchange for certain mining
claims located in Arizona. On November 16, 1996, the Company issued
1,600,000 Unites in exchange for 128 unpatented mining claims. Each
Unit consisted of one share of Common Stock; one warrant to purchase
one share of Common Stock at an exercise price of $2.50 per warrant
("Class A Warrants"), and one warrant to purchase one share of Common
Stock at an exercise price of $5.00 per warrant ("Class B Warrants").
The Warrants may be redeemed by the Company at any time upon thirty
(30) days written notice to the holders thereof at a redemption price
of $0.0025 per warrant. The Warrants are exercisable up to August
15, 2001 (five years from the effective date) unless called sooner.
The foregoing reflects a 1 for 250 share reverse stock split which
occurred on April 15, 1998. The foregoing number of Units was
arbitrarily determined by the Company and bore no relationship to the
value of the claims and no fairness opinion was obtained from an
independent part. See "Business Strategy."
<PAGE> 10
The four Red Raven Claims acquired under a January 7, 1994
agreement from Maxam Gold Corporation have a royalty fee clause
attached to them. The royalty fee is five percent (5%) of the net
income form operations on the Claims of $50,000 annually (which ever
is greater) starting July 1, 1997. As of the date of this report,
the Company is in default on the minimum annual payment. The Company
is in the process of trying to cure the default in order to hold the
mining rights to these four Claims. This transaction involves
entities which are affiliated and either principally owned or
controlled, directly or beneficially, by Dale L. Runyon and Robert M.
Brown, Chairman and a member on the Company's Board of Directors,
respectively. See "Business Strategy."
On April 15, 1998, the Company's shareholders approved, among
other things, a 1 for 250 share reverse stock split; and, a change in
the authorized capital from 3,000,000,000 shares of Common Stock,
$0.00001 par value per share to 50,000,000 shares of Common Stock,
$0.0001 par value, and from 400,000,000 shares of Preferred Stock
$0.00001 par value per share to 10,000,000 shares of Preferred stock,
$0.0001 par value per share. There are 4,132,000 shares of Common
Stock outstanding. No Preferred Stock has been issued.
The Company's offices are presently located at 528 Fon du Lac
Drive, Richmond, East Peoria, Illinois 61611. The Company's
telephone number is (309) 699-1275 and its fax telephone number is
(309) 699-1275.
- - ---------------------------------------------------------------------
RISK FACTORS
- - ---------------------------------------------------------------------
THE SECURITIES BEING OFFERED INVOLVE A HIGH DEGREE OF RISK AND,
THEREFORE, SHOULD BE CONSIDERED EXTREMELY SPECULATIVE. THEY SHOULD
NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD THE POSSIBILITY OF THE
LOSS OF THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD READ
THE ENTIRE PROSPECTUS AND CAREFULLY CONSIDER, AMONG THE OTHER FACTORS
AND FINANCIAL DATA DESCRIBED HEREIN, AND THE FOLLOWING RISK FACTORS:
1. Exploration Stage Mining Company with No History of
Operation. The Company is in its exploration stage, has no operating
history and is subject to all the risks inherent in a new business
enterprise. The Company does not own an operating mine and has no
other revenue-producing mining activities. The likelihood of success
of the Company must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered in
connection with a new business, and the competitive and regulatory
environment in which the Company will operate.
2. Securities are Subject to Penny Stock Rules. The Company's
shares are "penny stocks" consequently they are subject to Securities
and Exchange Commission regulations which impose sales practice
requirements upon brokers and dealers to make risk disclosures to
customers before effecting any transactions therein.
<PAGE> 11
3. No Commercially Mineable Ore Body. No commercially mineable
ore body has been delineated on the properties, nor have any reserves
been identified.
4. Risks Inherent in the Mining Industry. The Company is
subject to all of the risks inherent in the mining industry
including, without limitation, the following: competition from a
large number of companies, many of which are significantly larger
than the Company, in the acquisition, exploration, and development of
mining properties; in order to maintain possessory title to
Unpatented mining claims after discovery of valuable mineral
deposits, the claim holder must pay fees; exploration for minerals is
highly speculative and involves substantial risks, even when
conducted on properties known to contain significant quantities of
mineralization, and most exploration projects do not result in the
discovery of commercially mineable deposits of ore; operations are
subject to a variety of existing laws and regulations relating to
exploration and development, permitting procedures, safety
precautions, property reclamation, employee health and safety, air
quality standards, pollution and other environmental protection
controls; a large number of factors beyond the control of the
Company, including fluctuations in gold, silver, or other mineral
prices, inflation, and other economic conditions, will affect the
economic feasibility of mining of precious metals, particularly gold
and silver; mining activities are subject to substantial operating
hazards some of which are not insurable or may not be insured due to
economic considerations; the availability of water, which is
essential to milling operations; and, interruptions caused by adverse
weather conditions.
5. Need for Additional Capital. The ability of the Company to
ultimately conclude the exploration of its properties will depend
upon its ability to raise additional capital or to enter into
arrangements for such purposes with third parties. There can be no
assurance that additional financing will not be required sooner than
presently projected. There also can be no assurance that additional
capital or other types of financing will be available when needed or
that, if available, the terms of such financing will be commercially
acceptable to the Company.
6. Nature of the Industry. Exploration, development and mining
of mineral properties is highly speculative and involves unique and
greater risks than are generally associated with other businesses.
The Company's operations will be subject to all the operating hazards
and risks normally incident to the exploration, development and
mining of mineral properties, including risks enumerated above and
below.
7. Fluctuating price for gold. The Company's operations will
be greatly influenced by the price of gold. Gold prices fluctuate
widely and are affected by numerous factors beyond the Company's
control, including expectations for inflation, the strength of the
United States dollar, global and regional demand and political and
economic conditions and production costs in major gold producing
regions of the world.
<PAGE> 12
8. Unpatented Claims. The Company holds unpatented mining
claims, which are possessory only and are held by right of location.
Unpatented mining claims are subject to title hazards, and require
payment of fees.
9. Environmental Controls. Compliance with statutory
environmental quality requirements may necessitate significant
capital outlays, may materially affect the earning power of the
Company, or may cause material changes in the Company's intended
activities. No assurance can be given that environmental standards
imposed by either federal or state governments will not be changed or
become more stringent, thereby possibly materially adversely
affecting the proposed activities of the Company.
10. Governmental Regulation and Environmental Controls. The
Company's activities are subject to extensive federal, state, county
and local laws and regulations controlling not only the exploration
for and development of mineral properties, but also the possible
effect of such activities upon the environment. In its mining
operations, the Company will use certain equipment which will subject
the Company to federal and state safety and health regulations.
While the Company intends to act in compliance with all such
regulations, any adverse ruling under any regulations, any imposition
of a fine, or any imposition of more stringent regulations could
require the Company to make additional capital expenditures that
could impair its operations. The United State Congress is currently
considering changes to the General Mining Laws of 1872. The exact
nature and extent of any changes are unknown at this time, but it is
anticipated that there may be changes affecting the cost of acquiring
unpatented mining claims and the assessment work required to hold
them.
11. Preferred Shares Authorized. Although the Company does not
presently intend to issue preferred shares, the holders of preferred
shares, if and when issued, would more than likely have rights
superior to those of common shareholders. Any issuance of preferred
shares would dilute the interest of the common shareholders.
12. Reliance Upon Directors and Officers. The Company is
wholly dependent, at the present, upon the personal efforts and
abilities of its Officers who will exercise control over the day to
day affairs of the Company and upon its Directors, most of whom are
engaged in other activities, and will devote limited time to the
Company's activities, upon completion of this offering. The
President will devote 80% of his time to the operation of the day to
day affairs of the Company and the Secretary/Treasurer will devote
25% his time to the operation of the day to day affairs to the
Company. There can be no assurance as to the volume of business, if
any, which the Company may succeed in obtaining, nor that its
proposed operations will prove to be profitable.
<PAGE> 13
13. No Dividends. The Company has paid no dividends since its
inception and does not intend to pay any dividends in the foreseeable
future. Instead, the Company intends to retain all earnings, if any,
for use in its business operations.
14. Issuance of Additional Shares. 42,668,000 shares of Common
Stock or 85.34% of the 50,000,000 authorized shares of Common Stock
of the Company remain unissued even if all of the Redeemable Warrants
are exercised. The Board of Directors has the power to issue such
shares, subject to shareholder approval, in some instances. Although
the Company presently has no commitments, contracts or intentions to
issue any additional shares to other persons, the Company may in the
future attempt to issue shares to acquire equipment or services, or
for other corporate purposes. Any additional issuance by the Company
following the offering, from its authorized but unissued shares,
would have the effect of further diluting the interest of investors
in this offering.
15. Non-Arms's Length Transaction. The number of shares of
Common Stock issued to present shareholders of the Company for cash
and property was arbitrarily determined and may not be considered the
product of arm's length transactions.
16. Indemnification of Officers and Directors for Securities
Liabilities. The Articles of Incorporation of the Company provide
that the Company may indemnify any Director, Officer, agent and/or
employee as to those liabilities and on those terms and conditions as
are specified in the Arizona Business Corporation Act. Further, the
Company may purchase and maintain insurance on behalf of any such
persons whether or not the corporation would have the power to
indemnify such person against the liability insured against. The
foregoing could result in substantial expenditures by the Company and
prevent any recovery from such Officers, Directors, agents and
employees for losses incurred by the Company as a result of their
actions. Further, the Company has been advised that in the opinion
of the Securities and Exchange Commission, indemnification is against
public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable.
17. Competition. The Company has competitors and potential
competitors, many of whom may have considerably greater financial and
other resources than the Company.
18. Lack of Public Market for Securities. At present, no
market exists for the Company's securities and there is no assurance
that a regular trading market will ever develop or, if developed,
that it will be sustained. A purchaser of shares may, therefore, be
unable to resell the securities offered herein should he or she
desire to do so. Furthermore, it is unlikely that a lending
institution will accept the Company's securities as pledged
collateral for loans unless a regular trading market develops.
<PAGE> 14
19. Cumulative Voting, Preemptive Rights and Control. There
are no preemptive rights in connection with the Company's Common
Stock. The shareholders purchasing in this offering may be further
diluted in their percentage ownership of the Company in the event
additional shares are issued by the Company in the future.
Cumulative voting in the election of Directors is not provided for.
Accordingly, the holders of a majority of the shares of Common Stock,
present in person or by proxy, will be able to elect all of the
Company's Board of Directors.
20. No Marketmaker. There is no assurance the Company's
securities will be traded in the Bulletin Board operated by the
National Association of Securities Dealers, Inc. (the "NASD"). The
Company has no agreement with any member of the NASD to act as a
Marketmaker for the Company's securities. Olsen Payne, a
broker/dealer firm, has filed a Form 211, seeking the right to
initiate quotations of the Company's securities on the Bulletin Board
operated by the National Association of Securities Dealers, Inc.
Although management intends to contact several broker/dealers
concerning their possible participation as Marketmakers, there is no
assurance management will be successful in obtaining a Marketmaker.
If a Marketmaker is obtained, there can be no assurance that a
trading market will develop or continue following the listing of the
Company's securities on the Bulletin Board, or even if such a trading
market should develop that the securities may be resold at or near
their original cost. If the Company is unsuccessful in obtaining one
or more Marketmaker, the trading level and/or price of the Company's
securities will be materially adversely affected. The exercise
price of all Classes of Warrants, including those originally offered
as part of the Units, has been determined arbitrarily by the Company
and bears no relationship whatsoever to assets, earnings, book value,
or any other objective standard of worth.
21. Possibility of Defective Title. The Company's interests in
the properties are and will be in the form of unpatented mining
claims acquired from third parties. The validity of all unpatented
mining claims is dependent upon inherent uncertainties and
conditions. These uncertainties related to such non-recorded facts
as the sufficiency of the discovery of minerals, proper posting and
marking of boundaries, whether the minerals discovered were properly
locatable as a lode claim or a placer claim as appropriate, whether
sufficient annual assessment work has been performed since location
as required by law, and possible conflicts with other claims not
determinable from description of record. In the absence of a
discovery of valuable minerals, a mining claims is open to location
by others unless the owner is in actual possession of and diligently
working the claim.
22. Availability of Water Shortages of Supplies and Materials.
Water is essential in all phases of the exploration for and
development of mineral properties. It is used in such processes as
exploration, drilling, leaching, placer mining, dredging, testing,
and hydraulic mining. Water is known to be in short supply
throughout the area where the Company intends to concentrate its
<PAGE> 15
mining activities. Furthermore, any water that may be found will be
subject to acquisition pursuant to local, state and federal water
quality standards. The Company has not determined the availability
of water, and has not determined the cost of compliance with any
water quality restrictions. Both the lack of available water and the
cost of complying with water quality regulations may make an
otherwise viable project economically impossible to complete. The
mineral industry has experienced from time to time shortages of
certain supplies and materials necessary in the exploration for an
evaluation of mineral deposits. The prices at which such supplies
and materials are available have also greatly increased. There is a
possibility that planned operations may be subject to delays due to
such shortages and that further price escalations will increase the
costs of the Company.
FOR ALL OF THE AFORESAID REASONS AND OTHERS SET FORTH HEREIN,
THE ACQUISITION OF THE COMPANY'S COMMON STOCK THROUGH THE EXERCISE OF
THE CLASS A AND CLASS B WARRANTS HEREUNDER INVOLVES A HIGH DEGREE OF
RISK. ANY PERSON CONSIDERING EXERCISING THE WARRANTS SHOULD BE AWARE
OF THESE AND OTHER FACTORS SET FORTH IN THIS PROSPECTUS. THE
ACQUISITION OF THE COMPANY'S COMMON STOCK THROUGH THE EXERCISE OF THE
WARRANTS SHOULD ONLY BE DONE BY PERSONS WHO CAN AFFORD TO ABSORB A
TOTAL LOSS OF THEIR INVESTMENT IN THE COMPANY AND HAVE NO NEED FOR A
RETURN ON THEIR INVESTMENT.
- - ---------------------------------------------------------------------
USE OF PROCEEDS
- - ---------------------------------------------------------------------
Although there is no basis for determining how many Warrants
will be exercised, the following table shows how possible proceeds
would be applied over the next 12 months assuming 25%, 50%, 75% and
100% of each class of Warrants are exercised.
<TABLE>
<CAPTION>
Purpose 25% 50% 75% 100%
<S> <C> <C> <C> <C>
Offering Expenses $ 7,500 $ 7,500 $ 7,500 $ 7,500
Exploratory Phase [1] 510,000 850,000 1,250,000 2,500,000
Salaries - Officers [2] 168,000 315,000 475,000 675,000
General and Administrative
Expenses [3] 210,000 225,000 250,000 350,000
Leasehold Payments [4] 13,500 13,500 13,500 13,500
Repayment of Debt [5] 28,000 78,000 78,000 78,000
Development Phase [6] 1,500,000 3,750,000 5,500,000 7,000,000
Working Capital [7] 563,000 761,000 1,426,000 1,376,000
Total $3,000,000 $6,000,000 $9,000,000 $12,000,000
</TABLE>
[1] The allocation is intended to meet the expenses associated with
the exploratory phase of operations which includes contract
drilling, excavator trenching, sampling, assaying, metallurgical
testing, haulage, supplies, bonds, permits, insurance/GL-PL and
general field contingencies. This allocation is an estimate of
anticipated exploration costs for the Lost Horse Peak Claim. If
more than 25% of the Warrants are exercised, additional amounts
reflects the fact that management will explore more than one
claim.
<PAGE> 16
[2] This allocation is intended to provide a reserve for payment of
officers', geologist, field and office personnel salaries. If
all warrants are exercised this reserve will be adequate for all
officers' salaries, including salaries anticipated for
additional management, technical and staff personnel expected to
be added. If only 25%, 50% and 75% of the Warrants are
exercised such allocation is expected to be adequate for all
personnel required in the anticipated first year of operations.
Additional amounts for the exercise of more than 25% of the
Warrants reflects the fact that management will add additional
personnel and undertake the exploration of more than one claim
in the first year if more than 25% of the Warrants are
exercised.
[3] This allocation is intended to meet the general office, clerical
and administrative expenses of the Company's operations,
exclusive of salaries and consulting fees. Additional amounts
for the exercise of more that 25% of the Warrants reflects the
fact that management will add additional personnel as more
operations are undertaken in the first year if more than 25% of
the Warrants are exercised.
[4] This allocation is intended to meet the anticipated expenses for
the annual maintenance fee of $100 per claim payable to the
United States Government by August 31 for the first year.
[5] This allocation is intended to repay promissory note loans,
including interest, and deferred minimum annual royalty
obligations on the Red Raven Claims during the first year.
[6] This allocation is intended for the development of the Lost
Horse Peak Claim as determined by the Company's exploratory
phase operations proves the existence of mineable ore, which
would include machinery and equipment, site facilities work,
assays and mining supplies, mining contractor's labor and costs,
and consulting services. If further development of the Lost
Horse Peak Claim is not warranted, management will apply such
proceeds to the development of such other claims with proven
economical, mineable ore reserves as determined by exploratory
operations. Additional amounts for the exercise of more than
25% of the Warrants reflects the fact that management will
develop more than one claim is as a result of the Company's
expanded exploration activities proves the existence of
additional mineable ore.
[7] This allocation is intended to supply general working capital
for the Company to use in connection with its commercial
operations and to meet unexpected contingencies.
<PAGE> 17
The amounts set forth above are only estimates. The Company is
unable to predict precisely what amounts, if any, will be received
from the exercise of the Warrants and, consequently, cannot
accurately predict what amounts will be used for each purpose. The
actual expenditures may vary from the estimates set for in the table
above, depending upon a number of factors beyond the control of the
Company. It is anticipated that a sufficient reserve has been
allocated to "Working Capital" to provide adequate additional funds,
without affecting the allocations set forth in other categories. To
the extent amounts received are inadequate in any particular area of
expenditure, supplemental amounts may be drawn from operating
revenues, if any, or from the allocation for "Working Capital."
Conversely, in the event that actual expenditures in any particular
category are less than the amounts allocated, any amounts not
expended will be added to the reserve for "Working Capital."
At present, the company does not have adequate cash on hand or
other resources in order to fully implement its business plan. At
least $950,000 in proceeds from the exercise of Warrants is required
by the Company for completion of the initial exploratory stage of
operations on the Lost Horse Peak Claim. It is estimated that an
additional $1,500,000 is required by the Company is order to commence
further development of the Lost Horse Peak Claim, if warranted. See
"Risk Factors." Receipt of proceeds from the exercise of the
Warrants in excess of these amounts will permit the Company to
evaluate additional mining claims and implement future expansion
plans.
The net proceeds to the Company, as set forth above, are
expected to be used over the one year following the exercise of the
Warrants. Such proceeds are anticipated to be adequate to meet the
Company's cash needs during such one year period. Provided that a
minimum of $2,500,000 is raised from this offering, the Company does
not expect to raise additional funds either through the public or
private sale of its securities for at least six months following the
completion of this offering. Thereafter, depending upon the success
of its operations, prevailing market conditions affecting the future
prospects of the Company's business, and the availability of new or
expanded business opportunities, the Company may seek such funding
for its future expansion.
Pending the utilization of the net proceeds of this offering,
the available funds will be vested temporarily in government
securities, bank certificates of deposit and other bank money market
instruments.
- - ---------------------------------------------------------------------
DILUTION
- - ---------------------------------------------------------------------
As of May 5, 1998, the Company had 4,132,000 shares of Common
Stock outstanding with a net tangible book value of approximately
$-0- per share which were issued in return for $44,450.00 in cash and
claims.
<PAGE> 18
Assuming the exercise of all Class A Warrants (1,600,000) and
assuming no other changes to the Company's financial position, the
net tangible book value of the Company would be $3,925,726 or
approximately $0.685 per share. This represents an immediate
dilution of $1.815 per share to new investors and an immediate
increase in the net tangible book value of shares held by present
shareholders of $0.685 per share.
Assuming the exercise of all Class B Warrants (1,600,000) and
assuming no other changes to the Company's financial position, the
net tangible book value of the Company would be $11,925,726 or
approximately $1.627 per share. This represents an immediate
dilution of $3.373 per share to new investors and an immediate
increase in the net tangible book value of shares held by present
shareholders of $3.373 per share.
"Net tangible book value" is the amount that results from
subtracting the total liabilities, deferred costs, and intangible
assets of the Company from its total assets. "Dilution" is the
difference between the public offering price and the net tangible
book value of the shares immediately after the offering.
Additionally, dilution is calculated based on book value of the
Company's assets, which may not necessarily reflect the actual market
value of such assets.
The following table illustrates the per share dilution:
<TABLE>
<CAPTION>
Assuming Assuming
Exercise Exercise
of all of all
Class A Class B
Warrants [3] Warrants [3]
<S> <C> <C>
Exercise price
per Warrant [1] . . $ 2.50 $ 5.00
Net tangible book value
per share before
offering [2] . . . $ -0- $ -0-
Increase per share
attributable to
existing investors . $ 0.685 $ 1.627
Net tangible book
value per share
after offering . . $ 0.685 $ 1.627
Dilution of net
tangible book
value per share to
new investors . . $ 1.815 $ 3.373
</TABLE>
<PAGE> 19
[1] Exercise price before deduction of offering expenses.
[2] Determined by dividing the number of shares of Common Stock
outstanding into the net tangible book value of the Company.
[3] All calculations are on a per share basis.
- - ---------------------------------------------------------------------
CAPITALIZATION
- - ---------------------------------------------------------------------
The following table sets forth the capitalization of the Company
as of March 31, 1998, as adjusted to reflect the exercise of no
Warrants, all Class A Warrants and all Class B Warrants. This table
should be reviewed in conjunction with the financial statements of
the Company and the notes thereto included elsewhere in this
Prospectus. See "Financial Statements."
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------
As Adjusted for As Adjusted for
Exercise of all Exercise of all
Class A Warrants Class B Warrants
Actual Pro Forma Pro Forma
<S> <C> <C> <C>
Stockholder's Equity:
50,000,000 Common Stock
$0.0001 par value [1]
4,132,000 shares outstanding $ 4,132
5,732,000 shares outstanding
(A Warrants) $ 5,732
7,332,000 shares outstanding
(B Warrants) $ 7,332
Paid-In Capital $ 96,275 $ 4,083,456 $ 12,081,856
Retained Earnings (Deficit) $ (163,051) $ (163,051) $ (163,051)
TOTAL STOCKHOLDERS' EQUITY $ (66,363) $ 3,926,137 $ 11,926,137
</TABLE>
[1] Reflects the 1 for 250 share reverse stock split.
<PAGE> 20
- - ---------------------------------------------------------------------
SELECTED FINANCIAL DATA
- - ---------------------------------------------------------------------
The selected financial data presented below has been derived
from the financial statements of the Company, which financial
statements have been examined by Robert Moe & Associates, P. S.,
Certified Public Accountants, as indicated in their report included
elsewhere herein. The information below should be read in
conjunction with the Company's Financial Statements and the notes
thereto, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." For the reasons set forth in
the "Prospectus Summary - Risk Factors" the information shown below
may not be indicative of the Company's future results of operations.
March 31, 1998
<TABLE>
<CAPTION>
<S> <C>
Income . . . . . . . . $ -0-
Operating Expenses . . . . . . $ 31,539
Net Income (loss) . . . . . . $ (31,539)
Net Income per Share . . . . . $ NIL
Balance Sheet Data:
Working Capital (deficit) . . . . $ (118,250)
Total Assets . . . . . . . $ 80,264
Long-term Debt . . . . . . $ 27,600
Stockholders' equity . . . . . $ (66,363)
</TABLE>
- - ---------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- - ---------------------------------------------------------------------
The Company is considered to be in the development stage as
defined in the Statement of Financial Accounting Standards No. 7.
There have been no operations since incorporation.
Liquidity and Capital Resources.
The Company sold 1,992,000 shares of its Common Stock to
nineteen persons and two corporations for $44,450 in cash and
property. The cash has been used for organizational matters and
initial start-up.
Included in the foregoing were eight mining claims transferred
to the Company on June 30, 1995 by "Quitclaim Deed" in exchange for
1,240,000 shares of common stock. The mining claims are reflected in
the balance sheet at the transferor's costs of $13,000.
One hundred twenty-eight mining claims were transferred to the
Company on November 16, 1996 by "Quitclaim Deed" in exchange for
1,600,000 shares of common stock. The mining claims are reflected in
the balance sheet at the transferor's costs of $66,076.
<PAGE> 21
As part of the employment agreement dated November 11, 1997 the
Company sold Fred R. Schmid, pursuant to a Stock Purchase Agreement,
540,000 shares of Common Stock at a purchase price of $10,000, which
has been paid to the Company. The agreement also provides an option
for the purchase of 160,000 shares at a $2.50 per share and 160,000
shares at $5.00 per share for a period of ten years.
The Company must obtain additional capital in order to fully
develop its claims. The Company intends to raise additional capital
in the future through the exercise of the Class A and Class B
Warrants for shares of Common Stock, loans, or to enter into
arrangements for such purposes with third parties. There is no
assurance that the Company will be able to raise such additional
capital or that, if available, the terms of such financing will be
commercially acceptable to the Company. The Company has no operating
history.
The foregoing reflects the 1 for 250 share reverse stock split
that took place on April 15, 1998.
- - ---------------------------------------------------------------------
DIVIDEND POLICY
- - ---------------------------------------------------------------------
The Company has never paid a cash dividend on its Common Stock
and does not expect to pay a cash dividend in the foreseeable future,
but intends to devote all funds to the operations of its business.
See "Risk Factors - No Dividends Anticipated."
<PAGE> 22
- - ---------------------------------------------------------------------
BUSINESS
- - ---------------------------------------------------------------------
Background and Business Strategy.
Background.
WindStar Resources, Inc., formerly Turtleback Mountain Gold Co.,
Inc. (the "Company") has had no significant operating history and
must be considered an exploration stage company. The Company was
formed on March 22, 1995, to engage in the business of
identification, acquisition, exploration and, if warranted,
development of mineral properties and the production of minerals
therefrom. The Company does not own an operating mine and has no
other revenue-producing mining activities. Moreover, it is not
expected to commence mining activities, at least with respect to its
southwestern Arizona properties, until the following events have
occurred; initial operating capital has been secured; significant
exploration activities on the Company's mining claims have been
completed; a determination has been made that the properties contain
a commercially minable ore body; all required mining and
environmental permitting applications have been approved; a
comprehensive feasibility study or proposed mine plan has been
prepared; and adequate financing of a mine has been obtained. There
is no assurance that the Company will be successful in any of these
activities. The mineralization of main exploratory interest is gold.
No reserves have been delineated on the property, and to date the
Company has not identified a commercially mineable ore body.
Business Strategy.
Since incorporation in 1995, the Company's operations have been
centered around its (i) organization; (ii) evaluation of the mining
industry; (iii) start-up financing of its operations; (iv) acquiring
mining claims and interests in southwestern Arizona; (v) formulation
and implementation of its business plan.
Upon organization, the Company sold an aggregate of 1,992,000
shares of its Common Stock to nineteen (19) persons and two (2)
corporations for an average price of $0.0223 per share or an
aggregate of $44,450 in cash and mining claims. Eight claims were
transferred to the Company on June 30, 1995 in exchange for 1,240,000
shares of Common Stock and were valued at the transferors' cost of
$13,000. The foregoing reflects a 1 for 250 shares reverse stock
split which occurred on April 15, 1998. See "Principal
Shareholders."
In 1997, the Company completed a public offering of 1,600,000
Units, each Unit consisting of one share of Common Stock, one Class A
Warrant and one Class B Warrant, in exchange for certain mining
claims located in Arizona. On November 16, 1996, the Company issued
1,600,000 Unites in exchange for 128 unpatented mining claims. Each
Unit consisted of one share of Common Stock; one warrant to purchase
one share of Common Stock at an exercise price of $2.50 per warrant
("Class A Warrants"), and one warrant to purchase one share of Common
<PAGE> 23
Stock at an exercise price of $5.00 per warrant ("Class B Warrants").
The Warrants may be redeemed by the Company at any time upon thirty
(30) days written notice to the holders thereof at a redemption price
of $0.0025 per warrant. The Warrants are exercisable up to August
15, 2001 (five years from the effective date) unless called sooner.
The foregoing reflects a 1 for 250 share reverse stock split which
occurred on April 15, 1998. The foregoing number of Units was
arbitrarily determined by the Company and bore no relationship to the
value of the claims and no fairness opinion was obtained from an
independent part. See "Business Strategy."
The Company acquired the mining rights to 136 unpatented claims
as a result of several transactions involving affiliated parties, who
previously staked and maintained the properties by paying an annual
maintenance fee of $100 per claim payable to the United States
Government by August 31 each year. Due to such relationships none of
these transactions can be deemed to have resulted from arms-length
negotiations. The terms of these transactions may not be as
favorable to the Company as they might have been had the Company
dealt with unaffiliated parties.
The four Red Raven II Claims acquired under a January 7, 1994
agreement from Maxam Gold Corporation have a royalty fee clause
attached to them. The royalty fee is five percent (5%) of the net
income from operations on the Claims or $50,000.00 annually (which
ever is greater) starting July 1, 1997. As of the date of this
report, the Company is in default on the minimum annual payment. The
Company is in the process of trying to cure the default in order to
hold the mining rights to these four Claims. This transaction
involves entities which are affiliated and either principally owned
or controlled, directly or beneficially, by Dale L. Runyon and Robert
M. Brown, Chairman and member on the Company's Board of Directors,
respectively. They receive part of the annual royalty fee payment
made by the Company as a result of their approximately 27.89 and
34.49 percent interest, respectively, in the Red Raven Claims prior
to the time the Company acquired the mining rights to the Claims.
All of the claims will be reviewed annually by management for
continued valuation or impairment. Management will consider the
estimated undiscounted future cash flows and write off claims
abandoned or impaired. Management intends to adopt Financial Account
Standards No. 121 effective January 1, 1996.
On April 15, 1998, the Company's shareholders approved, among
other things, a 1 for 250 share reverse stock split; and, a change in
the authorized capital from 3,000,000,000 shares of Common Stock,
$0.00001 par value per share to 50,000,000 shares of Common Stock,
$0.0001 par value, and from 400,000,000 shares of Preferred Stock
$0.00001 par value per share to 10,000,000 shares of Preferred stock,
$0.0001 par value per share. There are 4,132,000 shares of Common
Stock outstanding. No Preferred Stock has been issued.
The Company's management believes that exploration is warranted
on eight claims currently held by the Company as indicated by recent
geology information. Management's belief is predicated upon a report
<PAGE> 24
dated October 1986 prepared by William T. Marston, P.E., deceased,
which indicates that there are economically recoverable quantities of
gold in the mineralized material. Reports written on May 7 and
September 4, 1996 by Hewlett Mineral Management indicated a mineral
resource on the Lost Horse Peak Claim of approximately 10.9 million
tons averaging a gold grade of 0.036 troy ounces per ton (see
Exploration and Development Section). However, there can be no
assurance the occurrence, grade, and quantity of gold or other
precious metal mineralization will satisfy the cost of recovery.
Currently, there are no known mineral deposits of commercial minable
significance on any of the Company's properties. Nevertheless,
according to preliminary geological information, eight of the claims
that have been examined demonstrate mineralization features related
to possible deposits of gold or other precious metals sufficient to
merit further exploration. If sufficient funds are available,
management plans to complete the exploration stage of operations on
these eight claims and others to substantiate the presence of
sufficient commercial gold bearing deposits and to prepare a
feasibility report based upon such information, if indicated. To
date, the Company has not established any marketing plans or
concluded any commercial mineral reserves which may be located on the
Company's claims.
The Company anticipates funding the cost of exploration by the
sale of common stock, loans, or possible joint venture projects with
third parties. The Company has not identified any purchasers of
common stock, lenders or joint venture partners as of the date of
this report and there is no assurance that the exercise of any
warrants, sales of common stock, loans or joint ventures will ever
occur. There has only been a very limited public market for the
Units and Common Stock of the Company.
Property Location, Description and Access.
The claims are located in La Paz, Maricopa and Yuma counties,
Arizona. Parker is the county seat for La Paz County, Phoenix is the
county seat for Maricopa County and Yuma is the county seat for Yuma
County. The claims are accessible from state, county roads or ranch
roads on BLM land and lie in flat desert areas with minimum
vegetation as is common in arid areas.
Title - Unpatented Claims.
The Company owns or holds unpatented mining claims. The
unpatented mining claims are possessory only and are held by right of
location. Management believes that all of its unpatented claims are
properly staked and recorded, and that it has the right to possession
of them, and the right to remove minerals therefrom. Unpatented
mining claims require the expenditure of $100 each per year to their
benefit. All of the required expenditures and assessment work on the
Company's property has been accomplished. The claims have been
properly recorded at the Bureau of Land Management, and with the
various county recorders, in compliance with federal and state filing
requirements.
<PAGE> 25
The claims are as follows:
<TABLE>
<CAPTION>
Title of BLM Claim Section
Claim County Location AMC Number Number
- - -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lost Horse Peak Maricopa Township 7 South 317628 11-1 11
Range 1 West 317629 11-2
317630 11-4
317631 12-1 12
Vekol Valley Maricopa Township 8 South 330955 27-1 27
Range 1 East 330956 27-2
330957 27-3
330958 27-4
Red Raven II Yuma Township 4 South 315314 3-1 3
Range 12 West 315315 3-2
315316 3-3
315317 3-4
Salome Lapaz Township 6 North 332066 14-1 14
Range 13 West 332071 15-2 15
332072 15-3
332073 15-4
Winchester Lapaz Township 6 North 332112 6-3 6
Range 12 West 332113 6-4
332114 7-1 7
332115 7-2
Low Mountain Lapaz Township 7 North 332043 28-1 28
Range 12 West 332044 28-2
332045 28-3
332046 28-4
Socorro Peak Lapaz Township 6 North 332098 30-1 30
Range 11 West 332099 30-2
332100 30-3
332101 30-4
Happy Camp Lapaz Township 7 North 332030 8-1 8
Range 11 West 332031 8-2
332032 8-3
332033 8-4
Sacaton Flats Maricopa Township 3 South 329259 5-3 5
Range 10 West 329260 7-2 7
329261 7-4
329262 8-1 8
Red Raven II Yuma Township 4 South 329263 4-1 4
Range 12 West 329969 4-2
329264 4-3
329265 4-4
329266 9-1 9
329971 9-2
329973 10-1 10
329974 10-2
Meltop Maricopa Township 2 South 331076 34-2 34
Range 3 West 331077 35-1 35
331078 35-2
331079 35-3
Tricia Maricopa Township 2 South 323305 31-3 31
Sheri-Ect Range 2 West 323308 31-4
Township 2 South 323332 26-2 26
Range 3 West 323331 26-4
Meltop Maricopa Township 2 South 331049 20-3 20
Range 3 West 331050 20-4
331065 29-1 29
331066 29-2
<PAGE> 26
Title of BLM Claim Section
Claim County Location AMC Number Number
- - -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rainbow Maricopa Township 3 South 331090 7-3 7
Range 1 West 331091 18-1 18
331092 18-3
331093 19-1 19
Mobile Maricopa Township 3 South 331080 19-4 19
Range 1 East 331081 20-3 20
331082 29-1 29
331083 30-2 30
Rainbow Valley Maricopa Township 3 South 331106 11-1 11
Range 2 West 331107 11-2
331108 11-3
331109 11-4
Bosque Maricopa Township 6 South 329591 1-3 1
Range 3 West 328317 11-2 11
328319 11-4
329600 12-1 12
329601 12-3
329602 13-1 13
328320 14-1 14
328321 14-2
Township 5 South 329605 29-3 29
Range 3 West 330030 29-4
329606 30-3 30
329607 30-4
Coyote Peak Lapaz Township 2 North 329373 3-1 3
Range 13 West 329374 3-2
330478 3-3
330479 3-4
330490 8-1 8
330491 8-2
330492 8-3
330493 8-4
330554 28-1 28
330555 28-2
330556 28-3
330557 28-4
Coyote Well Lapaz Township 2 North 329573 12-3 12
Range 14 West 329572 12-4
329574 13-1 13
329575 13-2
Little Horn Lapaz Township 1 North 330333 2-1 2
Range 13 West 330334 2-2
330335 2-3
330336 2-4
330367 11-1 11
330368 11-2
330369 11-3
330370 11-4
330373 13-1
330374 14-1
330375 14-2
Little Horn Lapaz Township 1 North 330376 14-3
Range 13 West
Red Raven Yuma Township 3 South 329944 2-1 2
Range 12 West 329934 2-2
329946 2-3
329947 2-4
329964 34-2 34
329965 34-3
329966 34-4
329967 35-1 35
<PAGE> 27
Title of BLM Claim Section
Claim County Location AMC Number Number
- - -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
continued
Charco Tank Lapaz Township 3 North 329485 17-3 17
Range 14 West 329486 17-4
329487 18-3 18
329488 18-4
Mike Lapaz Township 2 North 330295 6-1 6
Range 12 West 330296 6-2
330297 6-3
330298 6-4
Getz Well Maricopa Township 7 South 338174 34-1 34
Range 2 West 339175 34-2
338176 34-3
338201 34-4
Palomas Yuma Township 2 South 339721 1-1 1
Range 13 West 339722 1-2
337241 1-3
339723 1-4
337302 36-1 36
339796 36-2
339797 36-3
339798 36-4
</TABLE>
History.
There has been no significant operating history and the Company
must be considered an exploration stage company. The Company does not
own an operating mine and has no other revenue-producing mining
activities. To date there has been limited exploration work on a
small portion of the claims held by the Company.
Moreover, it is not expected to commence mining activities, at
least with respect to its southwest Arizona properties, until the
following events have occurred; initial operating capital has been
secured; significant exploration activities on the Company's mining
claims have been completed; a determination has been made that the
properties contain a commercially minable ore body; all required
mining and environmental permitting applications have been approved;
a comprehensive feasibility study or proposed mine plan has been
prepared; and adequate financing of a mine has been obtained. There
is no assurance that the Company will be successful in any of these
activities.
The number of shares issued was based on the amount of acreage
owned by a claimant. The Company issued approximately 89.688 Units
for each acre it acquired and arbitrarily assigned a value of $50.00
to each claim exchanged for Units.
<PAGE> 28
Geology.
The sites lie within the Basin and Range province of Southwest
Arizona. Each site is in the flat lying, gently sloping and
relatively uncut area between and along the adjacent mountains. The
sites are covered (or filled) by basin fill that is recent to
Pleistocene in age. The source areas for the basin fill are the
surrounding ranges of hills and mountains. The basin fill is
composed of unconsolidated gravel, sand, silt, clays, and possibly
some glacial till and debris. The silt and clays are water deposited
although there is evidence that some of the silty sand may be air-
borne and deposited. The gravel may or may not be water worn-usually
the top or upper layers of coarser material are angular indicating
that this material has not traveled far from its in-situ location.
Other Properties.
Management may enter into new mining ventures with joint
venturers, partners or other third parties. Such arrangements may be
multi-party ventures to which the Company will contribute stock, cash
and/or mineral interests. In such arrangements, the Company's
participation in revenues and profits, if any, will be reduced. At
this time, the Company has no agreement or understanding with any
third parties for the formation of a joint mining operation. As of
the date hereof, the Company has not entered into any mining ventures
with third parties and there is no assurance that the Company will
ever enter into such ventures.
In determining the suitability of any property as a prospective
acquisition, factors to be considered by the Company will include,
but not be limited to, the following: (a) whether the asking price is
competitive and permits possible appreciation in value; (b) condition
of title; (c) whether the geological features of the property
indicate the probable likelihood of gold mineralization of a
commercial grade that is of sufficient quantity to justify further
exploration and development; (d) time and expenses which will be
involved in the exploration and development of the property; (e) a
fairness opinion on the economic considerations of the transaction
from independent parties, if warranted; (f) procedure for exploration
and development (individually or joint venture); and, (g)
environmental impact and endangered species effects.
Management, together with such professional advisors which the
Company deems appropriate, will investigate prospective properties
through on-site examination, reviewing available geologic reports or
publications relating to the property, and a general field
reconnaissance to secure preliminary information regarding
characteristics of the property, including environmental
investigation. If, from such preliminary reviews, management deems
it advisable to further investigate the property, the Company may
determine the condition of title and ownership by using abstractors
or title companies, and may obtain a preliminary report feasibility
study by one or more geologists, mining engineers, or accountants.
If, after the foregoing preliminary investigation, management
<PAGE> 29
determines that the property does not meet the Company's acquisition
criteria, efforts to acquire the property would be abandoned, in
which case costs incurred in conducting the investigation would not
be recoverable. In the event the property is abandoned, the Company
intends to reallocate the unexpended proceeds for the acquisition
and/or exploration of other prospects.
Exploration and Development Activities.
Since the claims are without known commercially mineable proven
or probable reserves the Company proposes to investigate and explore
the possibility of commercial grade of minerals contained in the
claims through exploration work on the properties. In order to
determine if such minerals are present, the Company must raise the
necessary capital to undertake an initial exploration program.
Approximately $1.0 million is budgeted for initial trenching,
drilling, sampling, assaying, metallurgical testing, permitting,
engineering, geological and administrative supervision of the
program. Multiple claims will be investigated with primary focus
directed toward Lost Horse Peak, Vekol Valley and Red Raven claims,
since preliminary information has previously been reported on these
claims by independent sources. On September 4, 1996, Hewlett Mineral
Management issued a report on Lost Horse Peak based on two series of
back-hoe trenches and two periods of auger drill-hole sampling to
compute a mineralized resource of approximately 10.9 million
tons averaging a gold grade of 0.036 troy ounces per ton. This
information was based upon standard methods of ore computation on
500-foot square blocks through interpolation into a 500-foot square
grid. However, additional work must be completed to establish and
confirm that the mineralized values are consistent throughout the
tested area through in-fill drilling, trenching, sampling, assaying,
metallurgical testing and additional work before proven reserves can
be reported and a developmental plan implemented. There is no
assurance that reserves will be established or that the estimated
exploration costs will be sufficient to prove the existence of
commercial grade minerals. Costs may vary depending upon unknown
events which may impact the exploration and mining of claims
The Company expects to pay the costs of such exploration work
from funds to be realized through the exercise of the outstanding "A"
and "B" Warrants held by shareholders of the Company, which are
exercisable into shares of the Company's Common Stock at $2.50 and
$5.00 respectively. Management is also considering raising funds
through loans. On August 1, 1997, the Company established a line of
credit for $1,000,000 with Phoenix International Mining, Inc. (a
principal shareholder), however, at the time of this report this
source of funding has been delayed due to unforeseen circumstances
beyond Phoenix's control. The Company therefore is considering the
exercise of the outstanding Warrants as its best source of raising
capital for funding the initial phase of exploration work. There are
1,600,000 A Warrants and 1,600,000 B Warrants outstanding, which if
all Warrants were exercised could provide the Company with $12
million. Should the necessary capital for initial exploration work
not be realized through the exercise of the Warrants, the Company may
<PAGE> 30
be compelled to call the Warrants upon thirty (30) days written
notice of redemption. Warrantholders may exercise any Warrants
called for redemption during the 30-day notice period. Such right
will terminate on the redemption date if not exercised during such
30-day period and will render the Warrants valueless, except for the
right to receive the nominal redemption price. Management may also
seek to raise capital through a public offering of its securities or
joint venture participation from third parties. There is no
assurance, however, that the Company will be successful in its
efforts to raise capital or how long it may take to raise adequate
funds to complete the exploration of the claims. In the event
adequate capital is not available to complete the exploration of the
claims or if adequate capital is raised but commercial grade of
minerals are not established on any of the claims a
shareholder/warrantholder could lose his/her entire investment.
Mining, Environmental and Other Matters Pertaining to Properties.
Overview. The Company, like other mining companies doing
business in the United States, is subject to a variety of federal,
state and local statutes, rules and regulations designed to protect
the quality of the air and water in the vicinity of its mining
operations and the preservation of certain archeological sites.
These include "permitting"or pre-operating approval requirements
designed to ensure the environmental integrity of a proposed mining
facility, operating requirements designed to mitigate the effects of
discharges into the environment during mining operations, and
reclamation or post-operation requirements designed to remediate the
lands affected by a mining facility once commercial mining operations
have ceased. These laws also set forth limitations on the generation,
transportation, storage and disposal of solid and hazardous waste.
Federal legislation and implementing regulations adopted and
administered by the Environmental Protection Agency, the Forest
Service, the Bureau of Land Management, the Fish and Wildlife
Service, the Army Corps of Engineers and other agencies in
particular, legislation such as the federal Clean Water Act, the
Clean Air Act, the National Environmental Policy Act and the
Comprehensive Environmental Response, Compensation and Liability Act,
have a direct bearing on domestic mining operations. These federal
initiatives are often administered and enforced through state
agencies operating under parallel state statutes and regulations.
Although mines continue to be approved for development in the United
States, the cost and uncertainty associated with the permitting
process could have a material affect on mining the properties.
The Clean Water Act. The federal Clean Water Act is the
principal federal environmental protection law regulating mining
operations. The Act imposes limitations on waste water discharges
into waters of the United States, including discharges from point
sources such as mine facilities. In order to comply with the Clean
Water act, the Company will be required to obtain one or more permits
which will control the level of effluent discharges from future
proposed mining and processing operations.
<PAGE> 31
The Clean Air Act. The federal Clean Air Act limits the ambient
air discharge of certain materials deemed to be hazardous and
establishes a federal air quality permitting program for such
discharges. Hazardous materials are defined in enabling regulations
adopted under the Act to include metals and toxic solvents such as
cyanide which is used in heap leach recovery processes. The Act also
imposes limitations on the level of particulate matter generated from
mining operations, and the Company may be required to adopt dust
control techniques in all phases of mining in order to comply with
these limitations.
The National Environmental Policy Act. The National
Environmental Policy Act ("NEPA") requires all governmental agencies
to consider the impact on the human environment of major federal
actions as therein defined. Because the Company's mining properties
are located on federal lands, mining operations on those lands could
be conditioned on the preparation, review and approval of an
environmental impact statement outlining in detail the environmental
effects of such operations and the Company's efforts to ameliorate
such effects.
The Comprehensive Environmental Response, Compensation and
Liability Act. The federal Comprehensive Environmental, Response,
Compensation and Liability Act ("CERCLA") imposes clean-up and
reclamation responsibilities with respect to unlawful discharges into
the environment, and establishes significant criminal and civil
penalties against those persons who are primarily responsible for
such discharges.
Arizona Environmental Laws and Regulations. Arizona has adopted
counterparts to NEPA and CERCLA, being the Environmental Policy Act
and the Metal Mine Reclamation Act, both of which are administered by
the Department of Lands. The state has also adopted the Air Quality
Act and Water Quality Act, which parallel to a large extent the
provisions of the Clean Air Act and Clean Water Act; these statutes
are administered through various bureaus of the Department of
Environmental Quality.
Compliance with statutory environmental quality requirements
may: necessitate significant capital outlays; materially affect the
earning power of the Company; or may cause material changes in the
Company's intended activities. No assurance can be given that
environmental standards imposed by either federal, state or local
governments will not be changed or become more stringent, thereby
possibly materially adversely affecting the proposed activities of
the Company.
Competition and Markets.
The Company faces extensive competition in the acquisition of
properties suitable for the exploration and development of gold and
other precious metals. Many of the Company competitors have greater
financial resources and more extensive operating histories that the
Company. There is no assurance the Company will be able to begin
<PAGE> 32
exploration work which results in the discovery of commercially
producible quantities of gold or other previous metals. In addition,
there is no assurance that the Company's property interests can be
economically maintained.
The exploration and development of mineral properties, and the
marketing of minerals, are affected by a number of facts which are
beyond the Company's control. These factors include fluctuations in
the market price of gold and previous minerals, availability of
adequate transportation and equipment, marketing of competitive
minerals, prices of fuels and fluctuating supply and demand for
minerals.
Offices.
The Company's headquarters and executive offices are located at
528 Fon du Lac Drive, East Peoria, Illinois 61611 and the telephone
number is (309) 699-1275. The Company uses approximately 100 square
feet of space at the aforementioned address rent free.
Management Remuneration.
From March 22, 1995 through November 11, 1997, no compensation
has been paid or accrued to any Officer or Director to date. The
Company entered into a three (3) year employment agreement with Fred
R. Schmid as its President/CEO effective November 11, 1997 that
requires him to devote at least 80% of his time to the affairs of the
Company. Between November 11 through December 31, 1997, Mr. Schmid
was paid as a consultant to the Company. Under the agreement, Mr.
Schmid shall be compensated at a base salary of $95,000 for the first
year, a base salary of $115,000 for the second year and a base salary
of $140,000 for the third year, such salary to be payable in equal
monthly installments with an annual cost of living adjustment based
upon the percentage of increase in the consumer price index for New
York City-Northern New Jersey. As additional consideration for his
commitment to render future services to the Company, the Company
shall pay Schmid a cash bonus equal to 3% of the Company's Net Pre-
Tax Operating Profit, as determined by the Company's independent
certified public accountants. For each joint venture arranged by
Schmid on behalf of the Company, Schmid shall receive, subject to
applicable securities and other laws, an equity ownership of 3% of
the Company's equity ownership therein or in such other entity formed
by the Company for the purposes of entering into a joint venture.
Upon completion of raising the initial $1,000,000 equity (excluding
the equity raised through the exercise of the Company's outstanding A
and B Warrants) for the Company, the Company will pay the premium
necessary (but not to exceed $25,000) per year to (a) purchase a
$1,000,000 one-year term life insurance policy on Schmid's life
renewable each year thereafter; or (b) apply an amount equal to such
premium each year to purchase mutual fund shares or a tax-deferred
annuity in Schmid's name, whichever Schmid may elect. If the
agreement is terminated for any reason except cause or the death of
Schmid, he will be entitled to receive a lump sum payment equal to
the greater of (i) $5,000,000 or (ii) one percent (1%) of the
<PAGE> 33
Company's net worth as of the preceding year's end, plus the balance
of any salary and bonus owed to Schmid pursuant to the agreement.
The Company has no other employment agreements and it has no
retirement, pension or profit sharing plan. Along with the retention
of its Officers, the Company anticipates adding employees as needed
in the future.
Safe Harbor Statement
Some of the statements contained in this report relate to future
events and are considered to be "forward-looking statements" under
the Private Securities Litigation Reform Act of 1995. These
statements do not involve historical facts and pose special risks and
uncertainties. In evaluating these forward-looking statements, you
should be mindful of these potential risks and uncertainties,
including: the likelihood that the Company will continue to incur
losses from operations pending development of its mining properties,
and the uncertainly that it will be able to continue as a going
concern; the likelihood that the Company will need to obtain
significant additional financing in order to develop its properties;
the effect of extensive regulatory controls over mining operations;
the environmental and other risks associated with mining; the absence
of established proven and probable reserves on the Company's mining
properties; fluctuations in the price of gold; and other factors that
may affect future results. These risks and uncertainties, which may
not be complete, are described in greater detail below.
- - ---------------------------------------------------------------------
MANAGEMENT
- - ---------------------------------------------------------------------
The following table sets forth the name, age and position of
each Officer and Director of the Company:
Name Age Position
Dale L. Runyon 71 Chairman of the Board of Directors
Fred R. Schmid 63 President, Chief Executive Officer and
a member of the Board of Directors
Richard G. Steeves 59 Secretary/Treasurer, Chief Financial
Officer and a member of the Board of
Directors
Alan E. Hubbard 60 Member of the Board of Directors
Robert M. Brown 59 Member of the Board of Directors
Term of Office
The terms of office of the current directors continue until the
annual meeting of stockholders, which the Bylaws provide shall be
held on the third Friday of November of each year; officers are
elected at the annual meeting of the board of directors, which
immediately follows the annual meeting of stockholders.
<PAGE> 34
Dale L. Runyon - Chairman of the Board of Directors of the Company.
Mr. Runyon is a founder of the Company and since inception a
member of the Board of Directors. From inception and through
November 1997, Mr. Runyon was the Secretary/Treasurer, Chief
Financial Officer. Since 1978, Mr. Runyon has been a business
consultant in the mining industry. As a consultant, he assists
companies with economic analysis of potential mining properties and,
in general, supervises "turnkey projects" from start to finish.
Since 1986, Mr. Runyon has been the Chairman of the Board and Chief
Executive Officer of Phoenix International Mining, Inc., a Nevada
corporation. Since 1987, Mr. Runyon has been the Chairman of the
Board and Chief Executive Officer of Maxam Gold Corporation, an
Nevada corporation, involved in the business of mining. Mr. Runyon
received a B.A. from Knox College and is a retired Colonel in the
United States Army.
Fred R. Schmid - President and Chief Executive Officer and a Member
of the Board of Directors of the Company.
Since November 1997, Mr. Schmid has been President and Chief
Executive Officer and a member of the Board of Directors of the
Company. Mr. Schmid was Chairman of the Board of Directors of Hanover
Gold Company. Inc., a publicly traded NASDAQ company he founded, from
September 1990 to April 1996, and President and Chief Executive
Officer from September 1990 to March 1996, and a Director from
September 1990 to June 1997. Mr. Schmid was Chairman of the Board,
President and Chief executive Officer of Hanover Resources, Inc. and
Group S Limited, both privately-held gold resource companies he
founded in April 1990 and September 1991, respectively, both of which
were merged into Hanover Gold in September 1996. From 1972 to
December 1995, he was Chairman, President and Chief executive Officer
of The Hanover Group, Inc., a privately-held natural resource
investment company he founded, which was merged into Group S Limited
in December 1995. Mr. Schmid received a B.S. degree in Industrial
Engineering from New York University - College of Engineering.
Richard G. Steeves - Secretary/Treasurer, Chief Financial Officer and
a member of the Board of Directors
Mr. Steeves has been a member of the Board of Directors since
November 1996 and the Secretary/Treasurer, Chief Financial Officer
since November 1997. Since August 1994, Mr. Steeves has been the
President and a member of the Board of Directors of JOHSTE, Inc., an
Illinois corporation. JOHSTE, Inc. consults with companies on
business management. From July 1978 to August 1993, Mr. Steeves was
the controller and division manager of Southland Corporation.
Southland Corporation, a Texas corporation, is an operator of a
convenience store chain ("Seven-Eleven"). Since April 1993, Mr.
Steeves has been the President and a member of the Board of Directors
of Sandaz Corporation, a Nevada corporation. Sandaz Corporation is a
natural resources company. Since April 1993, Mr. Steeves has been
<PAGE> 35
the President and a member of the Board of Directors of RGS Services,
Inc., an Illinois corporation. RGS Services, Inc. consults with
companies on business management, transportation and taxes. Mr.
Steeves received a B.A. from Hampton Institute, Hampton, Virginia.
Alan E. Hubbard - Member of the Board of Directors of the Company.
Mr. Hubbard was elected to the Board of Directors on November
19, 1996. From May 1988 to the present, Mr. Hubbard has been the
President and Chief Executive of Al Hubbard Associates, Inc., a Texas
corporation. Since July 1995, Mr. Hubbard has been the President and
a member of the Board of Directors of Maxam Gold Corporation, a
Nevada corporation. Maxam Gold Corporation is a natural resource
company. Since May 1996, Mr. Hubbard has been the President and a
member of the Board of Directors of Phoenix International Mining,
Inc., a Nevada corporation. Phoenix International Mining, Inc. is a
natural resource company. Mr. Hubbard received a B.A. from Bradley
University.
Robert M. Brown - Member of the Board of Directors
Mr. Brown is a founder of the Company. Since the Company's
inception, he has been a member of the Board of Directors. From the
Company's inception until October 31, 1996, Mr. Brown served as
President of the Company. Since 1985, Mr. Brown has been a member of
the Board of Directors of H.W.W. Foundation, a Colorado corporation,
involved in the business of family investments. Mr. Brown received a
B.A. from DePauw University, Greencastle, Indiana.
Family Relationships
The only known relationship between any directors is Alan E.
Hubbard is first cousin to Dale L. Runyon.
Conflicts of Interest.
All Officers, Directors and consultants have other part-time
employment. See "Management - Officers and Directors of the
Company."
Indemnification.
The Company's Articles of Incorporation provide that the
Company's directors and officers will be indemnified to the fullest
extent permitted by the Arizona Corporation Code, however, such
indemnification shall not apply to acts of intentional misconduct; a
knowing violation of law; or, any transaction where an officer or
director personally received a benefit in money, property, or
services to which to the director was not legally entitled.
The Company has been advised that in the opinion of the
Securities and Exchange Commission indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and
is, therefore, unenforceable.
<PAGE> 36
- - ---------------------------------------------------------------------
CERTAIN TRANSACTIONS
- - ---------------------------------------------------------------------
Registrant has engaged in no transactions with management or
others in which the amount involved exceeds $60,000 other than the
following:
On March 31, 1995, the Company issued 1,992,000 post reverse
split shares of Common Stock to nineteen persons in exchange for
$44,450 in cash and property. The foregoing includes shares issued
to its officers and directors or affiliates thereof.
The following table reflects the name of each officer and
director and their affiliates, the amount of cash contributed by each
and in the case of the 8-160 acre claims contributed by the Lost
Horse Peak A Trust and the Phoenix International Mining, Inc., the
dollar value assigned to the claims. The dollar value assigned to
each claim was arbitrarily determined by the Company and claimant,
and bears no relationship to the value of the claim.
<TABLE>
<CAPTION> Amount of
Shares Consideration Date of
Name of Owner Acquired Cash/Other Sale
- - ----------------------------------------------------------------
<S> <C> <C> <C>
William Brown 12,000 $ 3,000.00 2/13/95
H. W. W. Foundation 4,000 $ 1,000.00 3/25/95
Lost Horse Peak,
A Trust 840,000 4-160 acre 02/21/95
mining claims
Phoenix International
Mining, Inc. 400,000 4 - 160 acre 02/21/95
mining claims
Uranco Trust #5 580,000 $ 1,450.00 01/06/95
</TABLE>
The foregoing reflects the 1 for 250 reverse stock split which
occurred on April 15, 1998.
Dale Runyon, a member of the Board of Directors, is the Trustee
of the Uranco Trust #5; and affiliate and a Director of Phoenix
International Mining, Inc.; and a Trustee of Lost Horse Peak A Trust.
Further, Robert M. Brown, a member of the Board of Directors, is a
member of the Board of Directors of H.W.W. Foundation, a foundation
which holds title to investments made by the Brown family.
The transactions with the Lost Horse Peak A Trust and Phoenix
International Mining, Inc. were arbitrarily decided by the Company
and the respective party and were not at arms-length and in the
opinion of the parties were more favorable to the Company and less
favorable to those entities than in an arm's length transaction with
unaffiliated third parties. The basis for the foregoing statement is
that Lost Horse Peak A Trust and Phoenix International Mining, Inc.
<PAGE> 37
would not have transferred the claims to the Company for 1,240,000
restricted shares of common stock in a start-up venture, but for the
affiliation of Dale L. Runyon with the Company.
The following table reflects the name of each officer and
director and their affiliates that were issued stock in exchange for
claims:
Name Number of Units
Estate of Teddi N. Brown 20,698
R. M. Brown & R. D. Brown 500
Robert M. Brown 21,198
Brown Family Investments 1,500
Charco Tank Mining LLC 40,000
Coyote Peak Mining LLC 160,000
DLR Trust #3 6,766
Getzwell Mining LLC 40,000
Alan E. Hubbard 80,000
Little Horn Mining LLC 120,000
Maxam Gold Corporation 304,000
Meltop Mining LLC 40,000
Mike Mining LLC 40,000
Rainbow Valley Mining LLC 160,000
Tank Mountain Gold Co., Inc. 80,000
Uranco Mining LLC 137,500
Uranco Trust #5 26,703
Uranco Trust #1 8,496
Dale L. Runyon 17,854
The foregoing reflects the 1 for 250 reverse stock split which
occurred on April 15, 1998.
On the 11th day of November, 1997, the Company and Fred Schmid,
the Company's President, entered into a Stock Purchase Agreement
wherein Schmid purchased 540,000 "restricted" shares which are
deliverable as follows: 135,000 shares on payment of the $10,000.
The $10,000 has been paid and the 135,000 shares have been paid;
135,000 shares on or before May 31, 1998; 135,000 shares on or before
December 1, 1998; and, 135,000 shares on or before May 31, 1999.
Further, the Company granted Schmid an option to purchase up to
160,000 shares of Common Stock at a purchase price of $2.50 per
share. The option period commences on the second anniversary of the
date of this Agreement and ending ten years after the second
anniversary date. Further, the Company granted Schmid an option to
purchase an additional 160,000 share of Common Stock at a purchase
price of $5.00 per share. The option period commences on the third
anniversary date of this Agreement and ends ten years after the third
anniversary date. The stock options will be prevented from dilution.
On April 15, 1998, the Company effected a 1 for 250 reverse
stock split which occurred on April 15, 1998.
<PAGE> 38
On December 31, 1997, the shareholders of the Company approved
amendments to the Company's Articles of Incorporation, changing the
Company's name from Turtleback Mountain Gold Co., Inc. to WindStar
Resources, Inc. On April 15, 1998, the shareholders of the Company
approved a change in the authorized capital from 3,000,000,000 shares
of Common Stock, $0.00001 par value per share, to 50,000,000 shares
of Common Stock, $0.0001 par value per share and from 400,000,000
shares of Preferred Stock, $0.0001 par value per share, to 10,000,000
shares of Preferred Stock $0.0001, par value per share.
To date, there have not been any transactions between the
Company and its Officers, Directors, principal shareholders or
affiliates other than as set forth above. If such transactions occur
in the future, they will be on terms no less favorable to the Company
than could be obtained from unaffiliated parties.
- - ---------------------------------------------------------------------
MANAGEMENT REMUNERATION
- - ---------------------------------------------------------------------
The following table sets forth the aggregate compensation paid
by the Company for services rendered during the period indicated:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION> Long Term Compensation Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (I)
Name Other Restricted LTIP All
and Annual Stock Pay- Other
Principal $ $ Compen Awards Options/ Outs Compen
Position Year Salary Bonus sation($) $ SAR's(#) ($) sation$
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31
Dale R. Runyon
Director 1997 $ -0- $0 $0 $0 0 $0 $0
1996 $ -0- $0 $0 $0 0 $0 $0
1995 $ -0- $0 $0 $0 0 $0 $0
Fred R. Schmid
President -
CEO 1997 $12,930 $0 $0 $0 540,000 $0 $0
1996 $ -0- $0 $0 $0 0 $0 $0
1995 $ -0- $0 $0 $0 0 $0 $0
Richard G. Steeves
Secretary/Treasurer
Director 1997 $ -0- $0 $0 $0 0 $0 $0
1996 $ -0- $0 $0 $0 0 $0 $0
1995 $ -0- $0 $0 $0 0 $0 $0
Alan Hubbard
Director 1997 $ -0- $0 $0 $0 0 $0 $0
1996 $ -0- $0 $0 $0 0 $0 $0
1995 $ -0- $0 $0 $0 0 $0 $0
<PAGE> 39
Robert M. Brown
Director 1997 $ -0- $0 $0 $0 0 $0 $0
1996 $ -0- $0 $0 $0 0 $0 $0
1995 $ -0- $0 $0 $0 0 $0 $0
</TABLE>
Employment Agreement.
On November 17, 1997, the Company and Fred Schmid, the Company's
President entered into a three year employment agreement wherein the
Company agreed to pay Mr. Schmid a based salary of $95,000 the first
year; $115,000 the second year; and, $140,000 the third year. The
foregoing base salary is also entitled to a cost of living increase
using the Consumer Price Index for New York City - Northern New
Jersey. In addition to the foregoing, the Company shall pay Schmid a
cash bonus of 3% of the Company's Net Pre-Tax Operating Profit. In
addition to the foregoing, the Company will pay Schmid 3% of the
Company's equity ownership in any joint venture arranged by Schmid.
As of December 31, 1997, the Company paid Schmid the sum of
$12,930.54.
Compensation of Directors.
The Company's Board of Directors unanimously resolved that
directors receive no compensation for their services; however, they
are reimbursed for travel expenses incurred in serving on the Board
of Directors.
No additional amounts are payable to the Company's directors for
committee participation or special assignments.
Termination of Employment and Change of Control Arrangements.
There are no compensatory plans or arrangements, including
payments to be received from the Company, with respect to any person
named in the Summary Compensation Table set out above
which would in any way result in payments to any such person because
of his or her resignation, retirement or other termination of such
person's employment with the Company or its subsidiaries, or any
change in control of the Company, or a change in the person's
responsibilities following a change in control of the Company, other
than as set forth in Mr. Schmid's employment agreement.
- - ---------------------------------------------------------------------
PRINCIPAL SHAREHOLDERS
- - ---------------------------------------------------------------------
Security Ownership of Certain Beneficial Owners
The following table sets forth the shareholdings of those
persons who own more than five percent of the Company's Common Stock
as of May 5, 1998:
<PAGE> 40
Name and address 05/05/98
of owner Shares Percent
Maxam Gold Corporation[1] 304,000 7.35%
528 Fon du Lac Drive
East Peoria, IL 61611
Dale L. Runyon[2][3] 2,648,948 64.10%
528 Fon du Lac Drive
East Peoria, Illinois
Fred R. Schmid [4] 540,000 13.06%
P.O. Box B
Roslyn, NY 11576
TOTAL 3,492,948 84.45%
[1] Dale Runyon and Alan Hubbard are officers and/or directors of
Maxam Gold Corporation.
[2] Includes shares owned by Charco Tank Mining, LLC; Coyote Peak
Mining, LLC; DLR Trust #3; Getzwell Mining, LLC; Little Horn
Mining, LLC; Maxam Gold Corporation; Meltop Mining, LLC; Phoenix
International Mining, Inc.; Rainbow Valley Mining, LLC.; Lost
Horse Peak Trust; Uranco Trust #1; Uranco Trust #5; Tank
Mountain Gold Co., Inc.; and, Uranco Mining, LLC., which Mr.
Runyon is affiliated with.
[3] Does not include 1,221,321 Class A Warrants and 1,221,321 Class
B Warrants to purchase up to 2,442,642 shares of Common Stock.
[4] Does not include up to 320,000 shares of common stock for
purchase under a Stock Option Agreement.
Security Ownership of Management
The following table sets forth the shareholdings of the
Company's directors and executive officer as of December 31, 1997:
<TABLE>
<CAPTION>
Shares Beneficially Owned
Name & address Number Percent
<S> <C> <C>
Dale L. Runyon[2][4] 2,648,948 64.10%
528 Fon du Lac Drive
East Peoria, IL 61611
Fred R. Schmid 540,000 13.06%
P.O. Box B
Roslyn, NY 11576
Richard G. Steeves 4,000 0.09%
1911 E. Meadowlake Drive
Mahomet, Illinois 61853
Alan E. Hubbard[5] 80,000 1.93%
9471 East Yucca Street
Scottsdale, Arizona 61611
<PAGE> 41
Robert M. Brown[1][3] 48,000 1.16%
528 Fon du Lac Drive
East Peoria, IL 61611
ALL OFFICERS AND
DIRECTORS (as a group
five persons) 3,320,948 80.37%
</TABLE>
[1] Includes shares owned by the Estate of Teddi N. Brown; R. D.
Brown; Brown Family Investments and the HWW Foundation.
[2] Includes shares owned by Charco Tank Mining, LLC; Coyote Peak
Mining, LLC; DLR Trust #3; Getzwell Mining, LLC; Little Horn
Mining, LLC; Maxam Gold Corporation; Meltop Mining, LLC; Phoenix
International Mining, Inc.; Rainbow Valley Mining, LLC.; Lost
Horse Peak Trust; Uranco Trust #1; Uranco Trust #5; Tank
Mountain Gold Co., Inc.; and, Uranco Mining, LLC., which Mr.
Runyon is affiliated with.
[3] Does not include 43,895 Class A Warrants and 43,895 Class B
Warrants to purchase up to 87,830.
[4] Does not include 1,221,321 Class A Warrants and 1,221,321 Class
B Warrants to purchase up to 2,442,642 shares of Common Stock.
[5] Does not include 80,000 Class A Warrants and 80,000 Class B
Warrants to purchase up to 160,000 shares of Common Stock.
[6] Does not include 320,000 shares of common stock for purchase
under a Stock Option Agreement.
The foregoing reflects a 1 for 250 shares of common stock
reverse stock split.
Changes in Control
To the knowledge of management, there are no present
arrangements or pledges of securities of the Company which may result
in a change in control of the Company.
<PAGE> 42
- - ---------------------------------------------------------------------
DESCRIPTION OF THE SECURITIES
- - ---------------------------------------------------------------------
The Company is presently authorized to issue 50,000,000 shares
of its $0.0001 par value Common Stock and 10,000,000 shares of its
$0.0001 par value Preferred Stock. Presently 4,132,000 shares of the
Company's Common Stock are issued and outstanding. In the event all
of the Class A Warrants are exercised, there will be 5,732,000 shares
of Common Stock outstanding and in the event all of the Class B
Warrants are exercised, in additional to the Class A Warrants, there
will be 7,332,000 shares of Common Stock outstanding. The holders of
the Company's Common Stock are entitled to one vote per share on each
matter submitted to a vote at any meeting of shareholders. Shares of
Common Stock do not carry cumulative voting rights and, therefore, a
majority of the outstanding Common Stock will be able to elect the
entire Board of Directors and, if they do so, minority shareholders
would not be able to elect any members to the Board of Directors.
See "Capitalization" and "Risk Factors - Cumulative Voting,
Preemptive Rights and Control."
Shareholders of the Company have no preemptive rights to acquire
additional shares of Common Stock or other securities. The Common
Stock is not subject to redemption and carries no subscription or
conversion rights. In the event of liquidation of the Company, the
shares of Common Stock are entitled to share equally in corporate
assets after satisfaction of all liabilities. The shares of Common
Stock, when issued, will be fully paid and non-assessable.
Rights of Common Stock Shareholders.
Shareholders of the Company have no preemptive rights to acquire
additional shares of Common Stock or other securities. The Common
Stock is not subject to redemption and carries no subscription or
conversion rights. In the event of liquidation of the Company, the
shares of Common Stock are entitled to share equally in corporate
assets after satisfaction of all liabilities. The shares of Common
Stock, when issued, will be fully paid and non-assessable. There are
no outstanding options, warrants or rights to purchase shares of the
Company's Common Stock, other than as disclosed in this Prospectus.
Preferred Stock.
10,000,000 shares of preferred stock, $0.0001 par value (the
"Preferred Shares") are authorized for issuance. No Preferred Shares
are issued and outstanding and there are no plans to issue any
Preferred Shares at the present time. The relative rights,
preferences, designations, rates, conditions, privileges,
limitations, dividend rates, conversion rights, preemptive rights,
voting rights, rights and terms of redemption, liquidation
preferences and sinking terms thereof shall be determined by the
Board of Directors, without any further vote or action by
<PAGE> 43
shareholders. The Board of Directors, without shareholder approval
may issue Preferred Shares with dividend rights, liquidation
preferences or other rights that are superior to the rights of
holders of Common Stock.
Description of Redeemable Warrants.
The Redeemable Class A and Class B Warrants, have been issued
under warrant certificates (the "Warrant Certificates") between the
Company and American Securities Transfer, Inc., Warrant Agent (the
"Warrant Agent"). The following summary of certain provisions of the
Warrant Certificates does not purport to be complete and is qualified
in its entirety by reference to the Warrant Certificates.
Each Redeemable Class A or Class B Warrant entitles the owner to
purchase one share of Common Stock. The Redeemable Class A Warrants
are exercisable at any time from the effective date of this offering
until August 15, 2001, at an exercise price of $2.50 per share. The
Redeemable Class B Warrants are exercisable at any time from the
effective date of this offering until August 15, 2001, at an exercise
price of $5.00. Collectively referred to as the "Exercise Price." At
the time a Redeemable Warrant is exercised, the exercise price
therefore shall be paid in full. Prior to expiration, the Redeemable
Warrants may be exchanged, transferred or exercised by the Registered
Warrantholder by presenting the Redeemable Warrants to the Warrant
Agent. The Redeemable Class A and Class B Warrants are redeemable by
the Company upon thirty (30) days written notice at the discretion of
the Board of Directors, at a redemption price of $0.0025 per Warrant.
The Redeemable Class A and Class B Warrants are redeemable at any
time from the effective date of this offering until August 15, 2001.
Upon redemption of the Redeemable Warrants, if the holder does not
exercise the Redeemable Warrants, the Redeemable Warrant loose all
value. See "Risk Factors - Redeemable Warrants."
Fractional shares will not be issued upon exercise of Redeemable
Warrants and the Company will not make any cash or other adjustments
in respect of a fraction of a share of Common Stock to which any
holder might otherwise be entitled upon exercise of Redeemable
Warrants. No adjustments as to previously declared or paid cash
dividends, if any, will be made upon any exercise of Redeemable
Warrants. The Redeemable Warrants do not confer on the holders
thereof, any voting or other rights of a stockholder of the Company.
The Company will have authorized and reserved for sale the stock
purchasable upon exercise of the Redeemable Warrant. When delivered,
such shares of stock shall be fully paid and non-assessable.
The Warrant Agent will not, at the present time or in the
future, receive a fee for soliciting the exercise of the Warrants.
The Company may pay a solicitation fee to any NASD registered
representative, who, after one year from the effective date of the
registration statement, causes the exercise thereof prior to the
expiration thereof.
<PAGE> 44
The Exercise Price and the number of shares issuable upon
exercise of the Redeemable Warrants are subject to adjustment by the
Board of Directors upon the occurrence of certain events, including
the issuance of any Common Stock as a dividend or any stock split or
reverse split as a dividend. Adjustments in the number of shares
issuable or in the Exercise Price of both shall also be made in the
event of any merger or other reorganization.
The Warrant Certificates will also provide that the Company and
the Warrant Agent may without the consent of the holder of the
Redeemable Warrants, make changes in the Warrant Certificates which
do not adversely affect, alter or change the rights, privileges or
immunities of the Registered Warrantholders of the Redeemable
Warrants.
Shares Eligible for Future Sale.
In the event that no Warrants are exercised the Company will
have outstanding 4,132,000 shares of Common Stock. If all Class A
and Class B Warrants are exercised, there will 7,332,000 shares of
Common Stock outstanding. The shares to be issued upon the exercise
of the Class A and Class B Warrants are expected to be freely
tradeable without restriction or further registration under the
Securities Act of 1933, as amended (the "Act"), except for shares
purchased by an existing "affiliates" of the Company, which will be
subject to the limitations of Rule 144 promulgated under the Act
except the one year holding period.
In general, under Rule 144, a person (or persons whose shares
are aggregated) who has satisfied a one (1) year holding period may
sell in ordinary market transactions through a broker or with a
market maker, within any three (3) month period a number of shares
which does not exceed the greater of one percent (1%) of the number
of outstanding shares of Common Stock or the average of the weekly
trading volume of the Common Stock during the four calendar weeks
prior to such sale. Sales under Rule 144 require the filing of Form
144 with the Securities and Exchange Commission. If the shares of
Common Stock have been held for more than two (2) years by a person
who is not an affiliate, there is no limitation on the manner of sale
or the volume of shares that may be sold and no Form 144 is required.
Sales under Rule 144 may have a depressive effect on the market price
of the Company's Common Stock.
Transfer Agent and Warrant Agent.
The Transfer Agent and Warrant Agent for the Company's Common
Stock, Class A Redeemable Warrants and Class B Redeemable Warrants
is:
American Securities Transfer, Inc.
938 Quail Street
Suite 101
Lakewood, Colorado 80215-5513
(303) 234-5300
<PAGE> 45
- - ---------------------------------------------------------------------
PLAN OF DISTRIBUTION
- - ---------------------------------------------------------------------
The shares of the Company's Common Stock which may be purchased
upon the exercise of the outstanding Warrants are being offered by
the Company on a "best efforts" basis. No commissions will be paid
to any persons in connection with the exercise of the Warrants. Any
solicitation of the holders of the Warrants to exercise their
Warrants will be made only by the Company and will be accomplished or
preceded by the delivery of this Prospectus.
The A Warrants are exercisable at $2.50 per share from August
16, 1996 until August 15, 2001, and the B Warrants are exercisable at
$5.00 per share from August 16, 1996 until August 15, 2001.
Persons who wish to exercise their Warrants must deliver an
executed Warrant with the form of Election to Purchase, duly
executed, accompanied with payment in check or money order payable to
WindStar Resources, Inc. for the number of shares subscribed ($2.50
per share for the A Warrants and $5.00 per share for the B Warrants)
to American Securities Transfer, Inc., 938 Quail Street, Suite 101,
Lakewood, Colorado 80213-5513 and the telephone number is (303) 234-
5300 (the "Warrant Agent"). All payments must be received by the
Warrant Agent prior to the termination of the exercise period, and
Warrants not exercised prior to the termination of the exercise
period will expire. See "Description of Securities - Warrants."
SECTION 15(g) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company's securities are covered by Section 15(g) of the
Securities Exchange Act of 1934 that imposes additional sales
practice requirements on broker/dealers who sell such securities to
persons other than established customers and accredited investors
(generally institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 jointly with their spouses). For
transactions covered by the Rule, the broker/dealer must make a
special suitability determination for the purchase and have received
the purchaser's written agreement to the transaction prior to the
sale. Consequently, the Rule may affect the ability of
broker/dealers to sell the Company's securities and also may affect
the ability of purchasers in this offering to sell their shares in
the secondary market. See "Risk Factors - Offering Subject to Penny
Stock Rules."
Section 15(g) also imposes additional sales practice
requirements on broker/dealers who sell penny securities. These
rules require a one page summary of certain essential items. The
items include the risk of investing in penny stocks in both public
offerings and secondary marketing; terms important to in
understanding of the function of the penny stock market, such as
"bid" and "offer" quotes, a dealers "spread" and broker/dealer
compensation; the broker/dealer compensation, the broker/dealers
<PAGE> 46
duties to its customers, including the disclosures required by any
other penny stock disclosure rules; the customers rights and remedies
in causes of fraud in penny stock transactions; and, the NASD's toll
free telephone number and the central number of the North American
Administrators Association, for information on the disciplinary
history of broker/dealers and their associated persons.
- - ---------------------------------------------------------------------
LITIGATION
- - ---------------------------------------------------------------------
The Officers and Directors of the Company certify that to the
best of their knowledge, neither the Company nor any of its Officers
and Directors are parties to any legal proceeding or litigation.
Further, the Officers and Directors know of no threatened or
contemplated legal proceedings or litigation. None of the Officers
and Directors have been convicted of a felony or none have been
convicted of any criminal offense, felony and misdemeanor relating to
securities or performance in corporate office. To the best of the
knowledge of the Officers and Directors, no investigations of
felonies, misfeasance in office or securities investigations are
either pending or threatened at the present time.
- - ---------------------------------------------------------------------
LEGAL MATTERS
- - ---------------------------------------------------------------------
Legal matters in connection with the Common Stock of the Company
to be issued in connection with the offering will be passed upon for
the Company by Conrad C. Lysiak, Attorney and Counselor at Law, West
601 First Avenue, Suite 503, Spokane, Washington 99204.
- - ---------------------------------------------------------------------
EXPERTS
- - ---------------------------------------------------------------------
The financial statements of the Company appearing in this
Prospectus and the Registration Statement have been examined by the
accounting firm of Robert Moe & Associates, P.S., Certified Public
Accountants, West 201 North River Drive, Suite 305, Spokane,
Washington 99201, as indicated in its report contained herein. Such
financial statements are included in this Prospectus in reliance upon
the said report, given upon such firm's authority as an expert in
auditing and accounting.
<PAGE> 46
- - ---------------------------------------------------------------------
ADDITIONAL INFORMATION
- - ---------------------------------------------------------------------
The Company has filed with the Securities and Exchange
Commission, 450 Fifth Street, N.W. Washington D.C. 20549, a
registration statement under the Act, as amended with respect to the
Units offered hereby. This Prospectus does not contain all of the
information set forth in the registration statement, exhibits and
schedules thereto. For further information with respect to the
Company and the Units, reference is made to the registration
statement, exhibits and schedules, copies of which may be obtained
from the Commission's principals officers in Washington, D.C., upon
payment of the fees prescribed by the Commission.
<PAGE> 48
WINDSTAR RESOURCES, INC.
FINANCIAL INFORMATION
PAGE
INDEX NUMBER
Accountants' Report F-1
Balance Sheet as of March 31, 1998 and December 31, 1997 F-2
Statement of Loss and accumulated deficit
for the period from inception (March 22, 1995)
through March 31, 1998 F-3
Statement of Changes in Stockholders' Equity
for the period from inception (March 22, 1995)
through March 31, 1998 F-4
Statement of Cash Flows for the period from
inception (March 22, 1995) through
March 31, 1998 F-5
Notes to Financial Statements F6-F8
<PAGE> 49
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
WindStar Resources, Inc.
We have audited the accompanying balance sheet of WindStar Resources,
Inc. (A Development Stage Company) as of December 31, 1997 and 1996,
and the related statements of operations, changes in stockholders'
equity and cash flows for the period from inception (3/22/95) through
December 31, 1997. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of WindStar
Resources, Inc. (A Development Stage Company) at December 31, 1997
and 1996, and the results of its operations, changes in stockholders'
equity and its cash flows for the period from inception (3/22/95)
through December 31, 1997, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming
that the company will continue as a going concern. As discussed in
the footnotes, the company is in the development stage and there have
been no operations since incorporation, which raises substantial
doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in the footnotes.
The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
We have not audited the balance sheet as of March 31, 1998, or the
related statements of loss and accumulated deficit and cash flows for
the three months ended March 31, 1998 and March 31 1997, and
accordingly, do no express an opinion or any other form of assurance
on them.
Robert Moe & Associates, PS
Certified Public Accountants
Spokane, Washington
February 27, 1998
<PAGE> 50
WINDSTAR RESOURCES, INC.
(A Development Stage Company)
BALANCE SHEET
March 31, 1998 and December 31, 1997
ASSETS
<TABLE>
<CAPTION>
3/31/98
Unaudited 1997
<S> <C> <C>
CURRENT ASSETS
Cash $ 777 $ 387
Accounts receivable - -
---------- ----------
Total Current Assets 777 387
OTHER ASSETS
Organization Costs (net of $274
amortization) 411 411
Mining Claims 79,076 79,076
---------- ----------
$ 80,264 $ 79,874
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 16,394 $ 8,355
Accrued interests 3,453 5,943
Accrued royalty fee 50,000 50,000
Notes payable 49,180 22,800
---------- ----------
Total Current Liabilities 119,027 87,098
---------- ----------
LONG TERM DEBT
Note Payable 27,600 27,600
---------- ----------
STOCK HOLDERS' EQUITY
Common stock - $.00001 par value
3,000,000,000 shares authorized
1,033,000,000 shares issued 10,330 10,330
Preferred stock - $0.00001 par value
400,000,000 shares authorized, 0
shares issued - -
Additional paid in capital 86,358 86,358
---------- ----------
96,688 96,688
Deficit accumulated during the
development stage (163,051) (131,512)
---------- ----------
Total Stockholders' Equity
(deficit) (66,363) (34,824)
---------- ----------
$ 80,264 $ 79,874
========== ==========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE> 51
WINDSTAR RESOURCES, INC.
(A Development Stage Company)
STATEMENT OF LOSS AND ACCUMULATED DEFICIT
for the period from inception (March 22, 1995)
through March 31, 1998
<TABLE>
<CAPTION>
Cumulative
During
Development
Stage from
Inception
Inception (3/22/95)
Three months ended (3/22/95) through
3/31/98 3/13/97 through 3/31/98
(Unaudited) (Unaudited) 12/31/97 (Unaudited)
<S> <C> <C> <C> <C>
INCOME $ - $ - $ 383 $ 383
OPERATING EXPENSES 31,539 7,495 131,895 163,434
--------- -------- ---------- ----------
NET INCOME (LOSS) $ (31,539) $ (7,495) $ (131,512) $ (163,051)
========= ======== ========== ==========
NET INCOME PER SHARE NIL NIL NIL NIL
========= ======== ========== ==========
</TABLE>
The company is in the development stage and has not commenced
operations.
See accompanying notes to financial statements
F-3
<PAGE> 52
WINDSTAR RESOURCES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
March 22, 1995 (Inception through March 31, 1998
<TABLE>
<CAPTION>
Additional Retained
Common Stock Paid-in Earnings
Shares Amount Capital (Deficit)
<S> <C> <C> <C> <C>
BALANCE
Inception March 22, 1995 - $ - $ - $ -
ADD:
Sale of 188,000,000 shares
of common stock for
$44,450 188,000,000 1,880 42,570
Sale of 310,000,000 shares
of common stock for
mining claims at a value
of $13,000 310,000,000 3,100 9,900
Net loss for the period (10,094)
------------- -------- -------- ---------
BALANCE, December 31, 1995 498,000,000 4,980 52,470 (10,094)
ADD:
Sale of 400,000,000 shares
of common stock for
mining claims at a
value of $66,076 400,000,000 4,000 62,076
Deferred registration costs
charged to paid-in capital (36,838)
Net loss for 1996 (4,434)
------------- -------- -------- ---------
Balance,
December 31, 1996 898,000,000 8,980 77,708 (14,528)
ADD:
Sale of 135,000,000 shares
of common stock for
$10,450 135,000,000 1,350 8,650
Net loss for 1997 (116,984)
------------- -------- -------- ---------
BALANCE,
December 31, 1997 133,000,000 10,330 86,358 (131,512)
Net loss for the three
months ended March 31,
1998 (unaudited) (31,539)
------------- -------- -------- ---------
BALANCE, March 31,
1998 (Unaudited) 1,033,000,000 $ 10,300 $ 86,358 $(163,051)
============= ======== ======== =========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 53 WINDSTAR RESOURCES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
for the period from inception (March 22, 1995)
through March 31, 1998
<TABLE>
<CAPTION>
Cumulative
During
Development
Stage from
Inception
Inception (3/22/95)
Three months ended (3/22/95) through
3/31/98 3/13/97 through 3/31/98
(Unaudited) (Unaudited) 12/31/97 (Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS PROVIDED (USED) IN OPERATIONS
Net loss for the period $ (31,539) $ (7,495) $ (131,512) $ (163,051)
Noncash expense included:
Amortization of
organization costs - - 274 274
(Increase) decrease
in accounts receivable - - - -
Increase in current
liabilities 31,929 4,300 87,098 119,027
--------- -------- ---------- ----------
390 (3,195) (44,140) (43,750)
--------- -------- ---------- ----------
CASH FLOWS PROVIDED (USED IN
INVESTING ACTIVITIES - - - -
--------- -------- ---------- ----------
CASH FLOWS PROVIDED (USED IN
FINANCING ACTIVITIES
Proceeds from sale of stock - - 54,450 54,450
Payment of deferred registration
and organization costs - - (37,523) (37,523)
Increase in long term debt - - 27,600 27,600
--------- -------- ---------- ----------
- - 44,527 44,527
--------- -------- ---------- ----------
NET INCREASE (DECREASE)
IN CASH 390 (3,195) 387 777
CASH BEGINNING OF PERIOD 387 3,536 - -
--------- -------- ---------- ----------
CASH END OF PERIOD $ 777 $ 341 $ 387 $ 777
========= ======== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ - $ - $ - $ -
Income taxes $ - $ - $ - $ -
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES
Mining claims were transferred to the Company during 1995, in
exchange for 310,000,000 shares of common stock and is reflected in
the balance sheet at the transferor cost of $13,000. The mining
claims were appraised in October 1986 for an amount that exceeds the
value reflected in the balance sheet by Marston & Marston, Inc.
(engineers to the mining industry). Mining claims were transferred
to the Company during 1996 in exchange for 400,000,000 shares of
common stock and is reflected in the balance sheet at the transferor
cost of $66,076.
See accompanying notes to financial statements
F-5
<PAGE> 54
WINDSTAR RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization: WindStar Resources, Inc. was incorporated on
March 22, 1995, under the laws of the State of Arizona under the
name of Turtleback Mountain Gold Co. Inc. On December 31, 1997,
the board of directors authorized amending the Articles of
Incorporation to change the name of the Company from Turtleback
Mountain Gold Co., Inc. to WindStar Resources, Inc. The Company
has adopted a year ending on December 31.
The Company was organized to use the limited funding it obtained
from its original shareholders for organizational matters and
preparation of an offering. The Company exchanged stock for
mining claims.
Because of the speculative nature of the Company, there are
significant risks which are summarized as follows:
Newly formed company with no operating history and minimal
assets.
Limited funds available for acquisition or development.
The Company is considered to be in the development stage as
defined in Statement of Financial Accounting Standards No. 7.
There have been no operations since incorporation.
Summary of Significant Accounting Principles: Organization
costs will be amortized over sixty (60) months beginning January
1, 1996.
Mining claims transferred to the Company were recorded at the
transferor cost basis.
Mining claims are reviewed annually by management for continued
valuation or impairment. Management will consider the estimated
undiscounted future cash flows and write off claims abandoned or
impaired. Management elected to adopt Financial Accounting
Standards No. 121 effective January 1, 1996. The adoption did
not impact the financial statements at December 31, 1995.
2. STOCKHOLDERS' EQUITY
Incorporation shares: Upon incorporation, the Company had a
total of 498,000,000 shares subscribed.
<PAGE> 55
WINDSTAR RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
2. STOCKHOLDERS' EQUITY . . .continued
Public stock offering: On November 16, 1996, the Company issued
four hundred million (400,000,000) units in exchange for one
hundred twenty eight (128) mining claims located in La Paz,
Maricopa, and Yuma counties, Arizona. Each Unit consists of one
share of Common Stock; one warrant to purchase one share of
Common Stock at an exercised price of $0.01 per warrant ("Class
A Warrants"); and, one warrant to purchase one share of Common
Stock at an exercise price of $0.02 per warrant ("Class B
Warrants"). The Warrants may be redeemed by the Company at any
time upon thirty (30) days written notice to the holders thereof
at redemption price of $0.00001 per warrant. The Warrants are
immediately detachable and separately tradable. The Warrants
are exercisable up to five (5) years from the effective date of
the offering unless called sooner.
3. EMPLOYMENT AGREEMENT
On November 11, 1997 the Company entered into an employment
agreement with Mr. Fred R. Schmid to be employed as President
and Chief Executive Officer. The agreement shall expire on
November 10, 2000.
4. MINING CLAIMS
Eight mining claims were transferred to the company on June 30,
1995 by "Quitclaim Deed" in exchange for 310,000,000 shares of
common stock. The mining claims are reflected in the balance
sheet at the transferor cost of $13,000.
One hundred twenty-eight mining claims were transferred to the
Company on November 16, 1996 by "Quitclaim Deed" in exchange for
400,000,000 units (see note 2 above). The mining claims are
reflected in the balance sheet at the transferor cost of
$66,076.
The Four (4) Red Raven II claims purchased from Maxam Gold
Corporation has a Royalty Fee clause attached to them. The
royalty fee is Five (5) percent of the net income from
operations on the claims or $50,000.00 annually (which ever is
greater) starting July 14, 1996. As of the date of this report,
the Company is in default on the $50,000 annual payment which
was due July 14, 1997 and has been accrued. In addition, the
accrued interest on such indebtedness is due from the end of
such period until such $50,000 royalty fee is paid which now
totals $2,490 based on the average prime interest rate for the
period.
<PAGE> 56
WINDSTAR RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
5. GOING CONCERN MATTERS
The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course
of business. The company is in the development stage and there
have been no operations since incorporation
The company hired a person to be the President and Chief
Executive Officer and to assume the normal duties of that
position. The President will be responsible for all reporting,
budgeting, planning and operations of the Company following the
Board of Directors' guidance and approval of the Plan of
Operations and annual budget.
The Company plans on developing a program to evaluate the
mineral content of certain claims to determine the economic
value of the claims. This will be done by a controlled plan of
drilling and trenching for samples along with laboratory testing
and assaying the samples for content.
The Company must obtain additional capital in order to fully
develop its claims. The Company intends to raise additional
capital in the future through loans or the sale of common stock.
On August 1, 1997, the Company established a line of credit for
one million ($1,000,000) dollars with Phoenix International
Mining, Inc. (a principle stockholder), with interest to be at
one percent (1%) per month of the outstanding balance. As of
the date of this report the $1,000,000 line of credit
established by the Company with Phoenix International Mining,
Inc. has been suspended due to lack of funds available at the
present time. The company must seek alternative capital funding
sources if it is to undertake the exploration of its claims.
There is no guarantee that the Company will be successful in its
efforts to raise the necessary capital and, if not, it may not
be able to continue as a going concern.
6. SALE OF STOCK & GRANT OF OPTIONS
The company sold 135,000,000 shares of common stock to its
President and Chief Executive Officer for $10,000 cash and
granted purchase options during November, 1997. Certain shares
of the common stock are held in escrow until May 31, 1999. If
the Purchaser has permanently terminated his association with
the Corporation prior to May 31, 1999 any shares of Stock of
the Corporation still to be delivered to the Purchaser on the
next or forthcoming due dates shall be returned to the
Corporation for cancellation and any unused portion of the
purchase price shall be remitted to the Purchaser at the rate of
$.000074 for each share returned to the Corporation.
<PAGE> 57
WINDSTAR RESOURCES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
6. SALE OF STOCK & GRANT OF OPTIONS . . . continued
The Company granted to the Purchaser options ("Stock Options")
to purchase (I) up to 40,000,000 shares of the Stock during the
ten year period commencing on the second anniversary of the date
of this Agreement for the exercise price of one cent ($0.01) per
share, and (ii) up to 40,000,000 additional shares of Stock
during the ten year period commencing on the third anniversary
of the date of this Agreement for the exercise price of two
($0.02) per share. This agreement was dated November 11, 1997.
7. NOTES PAYABLE
The long term debt is an unsecured note with Phoenix
International Mining, Inc. dated August 1, 1997 with interest
due at 1% per month and the principal is payable at the
discretion of WindStar Resources, Inc. with the full amount due
not later than five years from date of the note. Under terms of
the note, the Company may barrow from time to time in varying
amounts up to the sum of one million dollars within the two
years from date of the note (see note 5 above). The balance due
at December 31, 1997 was $27,600.00.
All other notes are unsecured demand notes with an interest rate
of 12% per annum.
Maturities of the notes payable are as follows:
1998 $22,800
1999 0
2000 0
2001 0
2002 $27,600
<PAGE> 58
UNTIL __________, 1998, (NINETY DAYS AFTER THE EFFECTIVE DATE OF THIS
PROSPECTUS) ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS.
TABLE OF CONTENTS
Prospectus Summary . .
The Company . . . WINDSTAR RESOURCES, INC.
Risk Factors . . .
Use of Proceeds . .
Dilution . . . .
Capitalization . . .
Selected Financial Data . 3,200,000 Shares of Common
Management's Discussion and Analysis Stock to be Issued Upon the
of Financial Condition and Exercise of 1,600,000 Class
Results of Operations . A Warrants and 1,600,000 Class
Dividend Policy . . B Warrants
Proposed Business . . __________________________
Management . . . PROSPECTUS
Certain Transactions . __________________________
Management Remuneration .
Principal Shareholders . DATED: ___________________
Description of the Securities
Plan of Offering. . .
Litigation . . . WINDSTAR RESOURCES, INC.
Legal Matters . . . 528 Fon du Lac Drive
Experts . . . . East Peoria, Illinois 61611
Additional Information . (309) 699-1275
Financial Statements . F-1 (800) 453-6544
No dealer, salesman or any other person has been authorized to give
any information or to make any representations other than those
contained in this Prospectus in connection with the offer contained
in this Prospectus and, if given or made, such information must not
be relied upon as having been authorized by the Company. Neither the
deliver nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs
of the Company since the date hereof. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy an
security other than the shares of Common Stock offered by this
Prospectus, nor does it constitute an offer to sell or a solicitation
of an offer to buy the shares of Common Stock by anyone in any
jurisdiction in which such offer or solicitation is not authorized or
in which the person making such offer or solicitation is not
qualified to do so, to any person to whom it is unlawful to make such
offer or solicitation.
<PAGE> 59
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses in connection with
the
issuance and distribution of the shares being registered. All the
amounts shown are estimates, except the registration fee.
<TABLE>
<S> <C>
Registration Fee - SEC . . . . . . $ 0.00
Printing and Engraving . . . . . . 500.00
Legal Fees and Disbursements . . . . . 5,000.00
Accounting Fees . . . . . . . 1,500.00
Transfer Agent Fees . . . . . . . 500.00
Blue Sky Fees and Expenses . . . . . 0.00
TOTAL . . . . . . . . $ 7,500.00
</TABLE>
<PAGE> 60
ITEM 14. Indemnification of Directors and Officers.
The only statutes, charter provisions, bylaws or other
arrangements under which any controlling person, Director or Officer
of the Registrant is insured or indemnified in any manner against
liability which he may incur in his capacity as such are set forth
below.
The Arizona Revised Statutes provides for indemnification where
a person who was or is a party or is threatened to be made a party to
any threatened, pending or contemplated action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than
action by or in right of a corporation), by reason of fact he is or
was a Director, Officer, employee or agent of a corporation or
serving another corporation at the request of the corporation,
against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement, actually and reasonably incurred by him
if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interest of the corporation and,
with respect to criminal action or proceeding, had no reasonable
cause to believe his conduct unlawful. Lack of good faith is not
presumed from settlement or nolo contendere plea. Indemnification of
expenses (including attorneys' fees) allowed in derivative actions
except in the case of misconduct in performance of duty to
corporation unless the Court decides indemnification is proper. To
the extent any such person succeeds on the merits or otherwise, he
shall be indemnified against expenses (including attorneys' fees).
Determination that the person to be indemnified met applicable
standards of conduct, if not made by the Court, is made by the Board
of Directors by majority vote of quorum consisting of the Directors
not party to such action, suit or proceeding or, if a quorum is not
obtainable or a disinterested quorum so directs, by independent legal
counsel or by the stockholders. Expenses may be paid in advance upon
receipt of undertakings to repay unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation.
The Corporation may purchase indemnity insurance. In so far as
indemnification for liability arising from the Securities Act of 1933
may be permitted to Directors, Officers or persons controlling the
Company, it has been informed that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
<PAGE> 61
ITEM 15. Recent Sales of Unregistered Securities.
The following table set forth information as to recent sales of
the Registrant's Common Stock since the formation of the Registrant,
all of which shares were not registered under the Securities Act of
1933, as amended:
<TABLE>
<CAPTION>
Amount of
Shares Consideration Date of
Name of Owner Acquired [1] Cash/Other Sale
- - ---------------------------------------------------------------------
<S> <C> <C> <C>
William Brown 12,000 $ 3,000.00 2/13/95
4010 North Brandywine
Apt. 404
Peoria, IL 61614
J. W. Bruckman 20,000 $ 5,000.00 2/13/95
204 N. Main St. 4,000 $ 1,000.00 3/22/95
Washington, IL 4,000 $ 1,000.00 3/29/95
Robert S. Easton,
Jr., M.D. 16,000 $ 4,000.00 3/15/95
217 West Olive Street
Canton, IL 61520
Eugene R. Galat 4,000 $ 1,000.000 3/17/95
404 North Hannibal
P. O. Box 162
Tremont, IL 61568-0162
H. W. W. Foundation 4,000 $ 1,000.00 3/25/95
1918 North Missouri
Peoria, IL 61603
George E. Harris 20,000 $ 5,000.000 3/12/95
5413 North Moody Avenue
Chicago, IL 60630-1050
Lost Horse Peak,
A Trust 840,000 4-160 acre 02/21/95
528 Fon du Lac Drive mining claims
East Peoria, IL 61611
Phoenix International
Mining, Inc. 400,000 4 - 160 acre 02/21/95
528 Fon du Lac Drive mining claims
East Peoria, IL 61611
<PAGE> 62
<CAPTION>
Amount of
Shares Consideration Date of
Name of Owner Acquired [1] Cash/Other Sale
- - ---------------------------------------------------------------------
<S> <C> <C> <C>
Robert D. Roemer,
Sr. 20,000 $ 5,000.00 02/07/95
Rural Route Box 78
Oak Ridge Subdivision
Metamora, IL 61548
Harriet D. Rucker 4,000 $ 1,000.00 03/13/95
1003 W. Centennial Drive
Peoria, IL 61614
Lester E. Siegrist 4,000 $ 1,000.00 03/18/95
1201 Hampton Road
Washington, IL 61571
Jehangir R. Sethna,
M.D. 20,000 $ 5,000.00 02/09/95
907 Midwest Club 12,000 $ 3,000.00 02/24/95
Oak Brook, IL 60521
Jehangir Rustom 4,000 $ 1,000.00 02/24/95
Sethna, M.D., Trustee
907 Midwest Club
Oak Brook, IL 60521
Jim R. Sethna 4,000 $ 1,000.00 02/24/95
907 Midwest Club
Oak Brook, IL 60521
Richard G. Steeves 4,000 $ 1,000.00 03/08/95
1911 E. Meadowlake Drive
Mahomet, IL 61853
Leszak Tomeczak 8,000 $ 2,000.00 03/13/95
2334 North Kedzie Blvd.
Chicago, IL 60647
Uranco Trust #5 580,000 $ 1,450.00 01/06/95
528 Fon du Lac Drive
East Peoria, IL 61611
Lezely W. White 4,000 $ 1,000.00 03/19/95
P. O. Box 462
Evanston, IL 60204-0462
<PAGE> 63
<CAPTION>
Amount of
Shares Consideration Date of
Name of Owner Acquired [1] Cash/Other Sale
- - ---------------------------------------------------------------------
<S> <C> <C> <C>
Robert D.
Wildermuth 4,000 $ 1,000.00 03/22/95
16783 Springfield Road
Pekin, IL 61554
Fred R. Schmid 540,000 $ 10,000.00 11/17/97
P. O. Box B
Roslyn, NY 11576
</TABLE>
[1] Reflects the 1 for 250 share reverse stock split which occurred
on April 15, 1998.
* With respect to these shares of Common Stock issued by the
Company, the Company believes that these transactions did not
involve any public offering, in as much as all these shares were
issued to the Company's founders, officers, directors and
others, who purchased the shares for investment purposes only
and not with a view to further public distribution. Further, no
advertising of any nature was made in connection with the sale
of said shares, all Company information was made available to
said purchasers, and said purchasers were required to execute a
subscription agreement restating the aforementioned, among other
things. Accordingly, the Company believes that the transactions
were exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
<PAGE> 64
ITEM 16. Exhibits.
(a) Exhibits
The following documents are incorporated herein be reference
from the Registrant's Form S-1 Registration Statement filed with the
Securities and Exchange Commission (the "Commission"), Commission
file #333-3074 on April 1, 1996 and declared effective by the
Commission August 16, 1996:
Number Document
3.1 Articles of Incorporation.
3.2 Amended Articles of Incorporation.
3.3 Bylaws of the Company.
4.1 Specimen certificate for Common Stock.
4.2 Specimen certificate for Class A Redeemable Warrants.
4.3 Specimen certificate for Class B Redeemable Warrants.
The following documents are incorporated herein be reference
from the Registrant's Form 10-K Annual Report for the period ended
December 31, 1997:
99.1 Stock Purchase Agreement.
99.2 Employment Agreement with Fred Schmid.
The following documents are filed herewith:
3.3 Amended Articles of Incorporation dated December 31, 1997.
3.4 Amended Articles of Incorporation dated April 15, 1998.
27 Financial Data Schedule.
All other schedules and exhibits are omitted, as the required
information is not applicable or is not present in amount sufficient
to require submission of the schedule or because the information
required is included in the financial statements and notes thereto.
<PAGE> 65
ITEM 17. Undertakings.
A. The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are
being made, a post effective amendment to this registration
statement:
a. To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
b. To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
c. To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
2. That, for the purpose of determining any liability
under the Securities Act of 1933, as amended, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
B. Insofar as indemnification for liabilities arising under
the securities Act of 1933 may be permitted to Directors, Officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a Director, Officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by a Director, Officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the
Act and shall be governed by the final adjudication of such issue.
<PAGE> 66 SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing of this Post-Effective
Form S-1 Registration Statement and has duly caused this Post-
Effective Form S-1 Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of East
Peoria, State of Illinois, on the 15th day of June, 1998.
WINDSTAR RESOURCES, INC.
(formerly, Turtleback Mountain Gold Co., Inc.)
BY: /s/ Fred R. Schmid
Fred R. Schmid,
President
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints Fred R. Schmid as his true and
lawful attorney-in-fact and agent, with full power of substitution,
for him and in his name, place and stead, in any and all capacities,
to sign any and all amendment (including post-effective amendments)
to this registration statement, and to file the same, therewith, with
the Securities and Exchange Commission, and to make any and all state
securities law or blue sky filings, granting unto said
attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite or necessary to be
done in about the premises, as fully to all intents and purposes as
he might or could do in person, hereby ratifying the confirming all
that said attorney-in-fact and agent, or any substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the S-1 Registration Statement has been
signed by the following persons in the capacities and on the dates
indicated:
Signature Title Date
/s/ Dale L. Runyon Chairman of the Board of June 15, 1998
Dale L. Runyon Directors
President Chief Executive
Officer and member of
/s/ Fred R. Schmid the Board of Directors June 15, 1998
Fred R. Schmid
Secretary/Treasurer, Chief
/s/ Richard G. Steeves Financial Officer and a June 15, 1998
Richard G. Steeves member of the Board of
Directors
Member of the Board
/s/ Alan E. Hubbard of Directors June 15, 1998
Alan E. Hubbard
/s/ Robert M. Brown Member of the Board June 15, 1998
Robert M. Brown of Directors
<PAGE> 67
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
TURTLEBACK MOUNTAIN GOLD CO., INC.
An Arizona Corporation
Turtleback Mountain Gold Co., Inc., a Corporation formed
under the Arizona Corporate Code of the State of Arizona.
The undersigned, the President and the Secretary of
Turtleback Mountain Gold Co., Inc., certify that at a
shareholders meeting held on December 31, 1997, and which was
called for the purpose of amending the Articles of Incorporation
of Turtleback Mountain Gold Co., Inc., an appropriate majority of
the holders of shares of each class entitled to vote authorized
the following amendment of Article I of the Articles of
Incorporation:
Article I: The name of the Corporation is:
WindStar Resources, Inc.
Dated this 31st day of December, 1997.
TURTLEBACK MOUNTAIN GOLD CO., INC.
BY: /s/ Fred R. Schmid
Fred R. Schmid, President
BY: /s/ Richard G. Steeves
Richard G. Steeves, Secretary
<PAGE> 68
CERTIFICATION OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
WINDSTAR RESOURCES, INC.
An Arizona Corporation
WindStar Resources, Inc., a Corporation formed under the
Arizona Corporate Code of the State of Arizona.
The undersigned, the President and the Secretary of WindStar
Resources, Inc. certify that at a shareholders meeting on April
15, 1998, and which was called for the purpose of amending the
Articles of Incorporation of WindStar Resources, Inc., an
appropriate majority of the holders of shares of each class
entitled to vote authorized the following amendment of Article V,
Authorized Capital, of the Articles of Incorporation:
The number of shares which the Corporation shall
have authority to issues is 50,000,000 shares of common
stock having a par value of $0.0001 per share and
10,000,000 shares of preferred stock, having a par
value of $0.0001 per share. There shall be no other
classes or shares of stock in the Corporation. The
Corporation shall have the right to purchase, take,
receive or otherwise acquire, hold, own, pledge,
transfer and dispose of its own shares, to the extent
of both its restricted and unreserved capital surplus.
Dated this April 15, 1998.
WINDSTAR RESOURCES, INC.
BY: /s/ Fred R. Schmid
Fred R. Schmid, President
BY: /s/ Richard G. Steeves
Richard G. Steeves, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Statement
of Financial Condition at December 31, 1997 (Audited) and March 31, 1998
(Unaudited) and the Statement of Income for the year ended December 31, 1997
(Audited) and the three months ended March 31, 1998 (Unaudited) and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> MAR-31-1998 DEC-31-1997
<CASH> 777 387
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 777 387
<PP&E> 79,761 79,761
<DEPRECIATION> 274 274
<TOTAL-ASSETS> 80,264 79,874
<CURRENT-LIABILITIES> 119,027 87,098
<BONDS> 0 0
0 0
0 0
<COMMON> 10,330 10,330
<OTHER-SE> (76,693) (45,154)
<TOTAL-LIABILITY-AND-EQUITY> 80,264 79,874
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 31,539 116,984
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (31,539) (116,984)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (31,539) (116,984)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (31,539) (116,984)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
