<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
Registration Statement on Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
BIG PONY GOLD, INC.
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(Name of Small Business Issuer as specified in its charter)
UTAH 87-0422966
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) I.D. No.)
N/A
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(SEC File No.)
710 Kearns Building
Salt Lake City, Utah 84101
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(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (801) 328-4452
Securities registered pursuant to Section 12(b) of
the Exchange Act:
None
Securities registered pursuant to Section 12(g) of
the Exchange Act:
$0.001 par value common voting stock
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Title of Class
DOCUMENTS INCORPORATED BY REFERENCE: See the Exhibit Index
herein.
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PART I
Item 1. Description of Business
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Business Development.
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Big Pony Gold, Inc. (the "Company") was incorporated under the laws of
the State of Utah on August 2, 1984, under the name "Big Pony Development."
The Company was organized for the primary purposes of (i) purchasing, owning
and selling assets of all types and kinds; (ii) acquiring or merging into
existing businesses; (iii) buying, selling, mortgaging, exchanging, leasing,
holding for investment or otherwise operating real and personal property of
all kinds and any interest therein; and (iv) any other lawful purpose.
The Company's initial Articles of Incorporation authorized it to issue a
total of 50,000,000 shares of common stock having a par value of one mill
($0.001) per share. A copy of the Company's original Articles of
Incorporation is attached hereto and is incorporated herein by this reference.
See the Exhibit Index, Part III.
At the Company's inception, the Board of Directors authorized the
issuance of a total of 1,000,000 "unregistered" and "restricted" shares of its
common stock to certain directors, executive officers and persons who may be
deemed to have been promoters or founders of the Company, for the
total consideration of $2,500.
Commencing in September, 1984, and pursuant to the requirements of
Section 3(b) of the Securities Act of 1933, as amended (the "Act"), Rule 504
of Regulation D of the Securities and Exchange Commission and Section 61-1-10
of the Utah Uniform Securities Act, the Company publicly offered and sold an
aggregate total of 2,500,000 shares of its common stock to public investors
at an offering price of $0.01 per share. This offering was completed on or
about May 14, 1985, with the Company receiving aggregate gross proceeds of
$25,000, before payment of offering costs. After payment of these costs, the
Company had net proceeds of approximately $21,694.
On or about November 14, 1988, pursuant to a Stock Purchase
Agreement entered into by the parties, Gold Standard, Inc., a Utah corporation
("Gold Standard"), acquired 3,700,000 "unregistered" and "restricted" shares
of the Company's common voting stock in consideration of the sum of $50,000.
In connection with the Stock Purchase Agreement and in consideration of its
completion, a total of 650,000 "unregistered" and "restricted" shares that had
been issued at the Company's inception were conveyed to the Company by a
former principal and were canceled. Following the completion of this
transaction, Gold Standard was the owner of 50% of the issued and outstanding
common stock of the Company. Gold Standard may be deemed to be the parent of
the Company. See the caption "Security Ownership of Certain Beneficial Owners
and Management," Part I, Item 4 of this Registration Statement. For a
complete breakdown of the issuances and cancellations of the Company's common
stock, see the financial statements accompanying this Registration Statement.
See Part F/S hereof.
In connection with the Stock Purchase Agreement, the Company's Articles
of Incorporation were amended on November 15, 1988, to change its name to "Big
Pony Gold, Inc." This name change was approved by a vote of stockholders
owning a majority of the issued and outstanding shares of the Company's common
stock. A total of 4,386,500 shares were voted in favor of the name change,
with none opposing and none abstaining. A copy of the Articles of Amendment
effecting this name change is attached hereto and is incorporated herein by
this reference. See the Exhibit Index, Part III.
Also in connection with the Stock Purchase Agreement, on November 15,
1988, the Company acquired 100% of the issued and outstanding common stock of
Tormin Sociedad Anonima, a corporation organized under the laws of the
Oriental Republic of Uruguay ("Tormin S.A."), in consideration of the issuance
of 850,000 shares of the Company's "unregistered" and "restricted" common
stock to certain persons who had provided services to Tormin S.A. Tormin S.A.
owns 100% of Dinelcor Sociedad Anonima ("Dinelcor S.A.") and Alfastar Sociedad
Anonima ("Alfastar S.A."), both of which are corporations organized under the
laws of Uruguay.
Between 1988 and 1992, the Company and Gold Standard each spent
approximately $1,000,000 on exploration activities in Uruguay. By 1992 the
Company and Gold Standard had acquired or owned the right to acquire
prospecting permits (the "Permits") issued or to be issued by the government
of Uruguay. From June, 1992, until April, 1996, the properties covered by the
Permits (the "Properties" or "Campo del Oro") were the subject of a joint
venture agreement among Compania Minera Santa Fe, a wholly owned subsidiary of
Santa Fe Pacific Mining Company ("Santa Fe"), the Company, and Gold Standard.
Netiher Compania Minera Santa Fe nor Santa Fe is otherwise affiliated with the
Company. Santa Fe spent approximately $4,965,000 on the exploration of the
Properties between June, 1992, and October, 1995, and withdrew from the joint
venture as of April 14, 1996. Santa Fe had incorporated Dinelcor S.A. and
Alfastar S.A. and, when it withdrew, it returned the Permits to the Company
and Gold Standard by assigning its interest in Dinelcor S.A. and Alfastar
S.A., and Gold Standard transferred its interest in the Permits
to the Company in an Agreement dated March 14, 1996. The Company intends to
continue exploring the Properties. See the caption "Business," Part I, Item 1
of this Registration Statement.
On March 1, 1996, the Company consolidated all of its issued and
outstanding shares on the basis of one new share for every three shares issued
and outstanding , with the Company's authorized capital and par value to
remain at 50,000,000 shares and one mill ($0.001), respectively. This
recapitalization was effected by a one for three reverse split of the issued
and outstanding shares of the Company.
Also in March, 1996, the Company issued 50,000 "unregistered" and
"restricted" post-consolidation shares of its common stock each (i) to Bret C.
Decker, its Secretary/General Manager and director, in consideration of
services rendered during the previous four years; and (ii) to Nilton D.
Franke, an employee of Gold Standard in Brazil, for his services in overseeing
the Company's exploration activities during the preceding 18 months.
On May 10, 1996, the Company issued to Sun Valley Gold, L.P., Sun Valley
Gold International, Ltd. and Odyssey Partners, L.P. (the "Sun Valley
Entities") a total of 500,000 units at a price of $1.00 per unit. Each unit
consists of one "unregistered" and "restricted" share of the Company's common
stock and one warrant to purchase an additional share of common stock at a
price of $1.25 per share at any time until May 10, 1999.
The Company is preparing to undertake a public offering of up to 600,000
shares of its common stock at a price of $1.38 Canadian ($1.00 U.S.) per share
(the "Offering"). All subsequent references to the price and proceeds of the
Offering are given in U.S. dollars. These shares will be offered through the
facilities of the Vancouver Stock Exchange (the "Exchange") within 90 days of
the date on which the shares of the Company are conditionally listed on the
Exchange. The Offering will be conducted in accordance with the rules and
policies of the Exchange. These securities will be registered with the
British Columbia Securities Commission. No shares to be offered pursuant to
the Offering will be offered or sold in the United States, and resales of
these securities into the United States will be subject to registration or an
applicable exemption under the Securities Act of 1933, as amended.
The Company has retained Georgia Pacific Securities Corporation of
Vancouver, British Columbia ("Georgia Pacific") as its agent to sell shares
under the Offering. Pursuant to an agreement executed by the parties on June
27, 1996 (the "Agency Offering Agreement"), the Company will pay to Georgia
Pacific a commission of $0.10 U.S. per share sold by Georgia Pacific. Under
the terms of the Offering, Georgia Pacific may over-allot shares of the
Company to cover over-subscriptions up to a number that is the lesser of 15%
of the number of shares offered under the Offering or the actual number of
shares sold by Georgia Pacific by way of over-subscription. The Company has
granted to Georgia Pacific an option to buy shares from the Company at the
offering price of $1.00 U.S. per share to cover the over-allotment (the
"Greenshoe Option"). In the alternative, Georgia Pacific may cover the
over-allotment by buying the Company's shares in the open market through the
Vancouver Stock Exchange during the exercise period of the Greenshoe Option.
The Company will pay Georgia Pacific a commission on $0.10 U.S. per share sold
pursuant to the Greenshoe Option. The Greenshoe Option is exercisable for a
period of 60 days from the commencement of the Offering. A copy of the Agency
Offering Agreement is attached hereto and is incorporated herein by this
reference. See the Exhibit Index, Part III.
Georgia Pacific has agreed to purchase any shares for which subscriptions
have not been received at the conclusion of the Offering. In consideration of
this Agency Offering Agreement, the Company has granted Georgia Pacific
non-transferable share purchase warrants entitling Georgia Pacific to purchase
up to 150,000 shares of the Company's common stock at any time during the two
year period after the date on which the Company's shares are listed, posted
and called for trading on the Exchange, at a price of $1.00 U.S. during the
first year and $1.152 U.S. during the second year of the exercise term (the
"Agent's Warrants").
No payments in cash, securities or other consideration will be made to
any promoter, finder or any other person or company other than Georgia Pacific
in connection with the Offering. However, the Company's directors and
executive officers may purchase shares of its common stock under the Offering,
for which they will pay the full price; these securities would become
"restricted securities" in the hands of any such purchasers.
The Company has granted Georgia Pacific a right of first refusal to
provide future equity financing to the Company for a period of 12 months from
the effective date of the Company's Offering prospectus. The Company has made
an application to conditionally list the shares being offered under the
Offering on the Exchange. Listing is subject to the Company fulfilling the
listing requirements of the Exchange, as to which there can be no assurance.
On September 23, 1996, the Company entered into an agreement with Georgia
Pacific whereby Georgia Pacific agreed to act as sponsor for the Company for a
period of one year from the commencement of the Offering, in accordance with
the rules and policies of the Exchange (the "Sponsorship Agreement"). As
sponsor, Georgia Pacific will oversee and provide advice on the affairs of the
Company in consideration of payment of the sum of $1,250 per month. Georgia
Pacific will, among other things, review the Company's quarterly financial
statements and news releases and will act as a consultant regarding funding
and disclosure issues. A copy of the Sponsorship Agreement is attached hereto
and is incorporated herein by this reference. See the Exhibit Index, Part
III. For a discussion of the use of the proceeds of the Offering, see the
caption "Management's Discussion and Analysis or Plan of Operation," Part I,
Item 2 of this Registration Statement.
Business.
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The following is a description of the Permits, the location, access and
physiography, the geological setting, the history and previous work and the
results of previous programs.
The Permits
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The Permits were granted by the Direccion Nacional de Mineria y Geologia
("DINAMIGE") under the Mining Code of Uruguay (the "Mining Code"). DINAMIGE
grants and administers three types of permits: prospecting permits,
exploration permits, and exploitation permits. Prospecting permits are
granted for 12 or 24 months and can cover a maximum of 200,000 hectares, but
individual blocks cannot exceed 100,000 hectares. The Mining Code permits two
extensions of a prospecting permit, each for a maximum of 12 months. With
each extension, the area covered by a permit must be reduced by 50%. The
permit holder decides which area the extension will cover. A prospecting
permit entitles the holder to conduct non-disruptive exploration activities
such as mapping, sampling, and geophysical testing. A prospecting permit does
not normally permit drilling, but a permit holder may conduct limited drilling
with the landowner's permission.
A holder of a prospecting permit may apply at any time for an exploration
permit covering up to 1,000 hectares. An exploration permit is granted for
two years and may be extended for two 12-month periods. The holder of an
exploration permit may conduct the work that is necessary to define an
economically exploitable mineral deposit.
A holder of an exploration permit may apply for an exploitation permit
covering up to 1,000 hectares of land. An exploitation permit is granted for
30 years and may be extended for two 15-year periods. The procedure for
obtaining an exploitation permit is provided in the Mining Code and is similar
to the North American procedure.
A permit holder must file a final report with DINAMIGE within six months
of a permit's expiring, or apply for an extension if an extension is still
available, or a nominal penalty may be assessed at the discretion of DINAMIGE
giving consideration to the circumstances. Upon its receipt and review of the
final report, DINAMIGE must publish a notice of release and free the property
for new applications. Until the notice is published, usually several months
after the filing of the final report, the permit holder has the exclusive
right to and responsibility for the property covered by the expired permit.
The Company intends to apply for a 12-month extension, if one is
available, of any permit that expires where its exploration activities have
indicated that further exploration is warranted, and will review its
exploration results to determine the number of hectares that will be covered
in accordance with the reduction requirements of DINAMIGE.
The Company intends to apply for new prospecting permits on properties
covered by expired permits that cannot be extended where its exploration
activities have indicated that further exploration is warranted. It will make
its applications at the same time as the notices are published by DINAMIGE.
The Company has ten active prospecting permits, has applied for one
prospecting permit and two exploration permits, and has eleven expired
permits. The Company is preparing final reports on the expired permits and
applications for new prospecting permits. Table 1 sets out the status of the
active and the applied-for Permits as of July 4, 1996.
TABLE 1
STATUS OF THE PERMITS
<TABLE>
<CAPTION>
Permit Name Reference No. Registered Hectares Issue Expiry
Holder Date Date
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<C> <S> <S> <S> <S> <S>
Paso de Lugo 1 288/89 Dinelcor S.A. 374 10/11/93 11/10/96
Paso de Lugo 3 1/90 Dinelcor S.A. 2,755 11/9/93 11/10/96
Paso de Lugo 5 84/92 Dinelcor S.A. 356 11/19/93 11/20/96
Guaycuru 81/92 Dinelcor S.A. 4,639 11/19/93 11/20/96
Guaycuru 1 3/90 Dinelcor S.A. 6,971 11/1/93 11/2/96
Mal Abrigo 79/88 Alfastar S.A. 1,019 2/10/94 2/11/97
Mal Abrigo 1 4/90 Alfastar S.A. 1,187 1/3/95 1/4/97
Colla 1 83/92 Alfastar S.A. 1,080 1/7/94 1/8/97
San Juan Hills 3 288/92 Alfastar S.A. 3,587 12/16/94 12/17/96
San Juan Hills 4 181/91 Alfastar S.A. 768 11/12/93 11/13/96
Isla Patrulla 120/96 Tormin S.A. 16,000 (1) (1)
Santiago(2) 297/96 Dinelcor S.A. 850 (1) (1)
Sonia(2) 299/96 Dinelcor S.A. 200 (1) (1)
(1) The registered holder has exclusive preference but the rights have
not yet been conferred by DINAMIGE. The number of hectares may be changed
during the conferring process.
(2) These are exploration permits. They were segregated from the expired
Paso de Lugo prospecting permit. See the heading "Primary Exploration
Targets" of the caption "Description of Business," Part I, Item 1 of this
Registration Statement.
(3) This permit may be extended for twelve months.
Location, Access and Physiography
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The active Permits in the Campo del Oro project are located in
south-central Uruguay. The Company has established a field office in
Trinidad, the capital of the department of Flores, approximately 186
kilometers north-west of Montevideo, the capital of Uruguay. Trinidad is a
medium-sized city with a population of approximately 18,000 people and the
services that are necessary for the conducting of an exploration program.
Trinidad is in the center of the Properties and is accessible from Montevideo
by Route 1 then Route 3, both excellent paved roads. The Properties are
accessible from Trinidad by good paved or gravel roads and have a system of
gated grass roads between individual farm boundaries.
The topography in the vicinity of Campo del Oro is flat with only minor
relief. The entire area is farmland, the majority of which is pastures with
some planted fields and a few eucalyptus plantations. The total outcrop in
the area is estimated at 5%-10%. Water is available from streams and rivers
for exploration and industrial use, and a high voltage power line bisects the
Paso de Lugo permits. Field work can be conducted year round.
Glossary of Geologic Terms in Order as Used in this Registration Statement
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Precambrian - Geologic time older than 600,000,000 years.
Ptoterozoic - Geologic time within 600,000,000 to 2,500,000,000 years of
age.
Phanerozoic - The geologic age dating of rocks in which evidence of past
life exists. Encompasses all rocks that are younger then Precambrian.
Fold Belt - A linear region that has been subjected to folding and other
deformation.
Metamorphism - The mineralogical and structural changes in solid rock
that have been caused by heat and pressure at depth over time.
Gneisses - Foliated rocks that exhibit bands or flows formed by
metamorphism.
Migmatites - A composite rock composed of igneous and/or metamorphic
materials.
Schist - a strongly foliated crystalline rock formed by dynamic
metamorphism that can be split into parallel flakes or slabs.
Greenschist facies - A term for schistose rocks containing an abundance
of green minerals; e.g., chlorite, epidote and actinolite.
Archean - Geologic age older than 2,500,000 years.
Ultramafic - an igneous rock composed chiefly of dark colored minerals
including iron and magnesium.
Granodiorite - A classification of igneous rock by its mineral
composition. All rocks intermediate in composition between granite and
diorite.
Norite - A course grained igneous rock formed at great depth with a
certain mineral assemblage.
Cretaceous - The geologic age dating period from approximately 68,000,000
years to 142,000,000 years.
Silcrete - A conglomerate of sand and gravel cemented into a hard mass by
silica.
Felsic - An igneous rock comprised chiefly of light colored minerals. It
is the opposite of mafic.
Volcanics - Those igneous rocks that have reached or nearly reached the
earth's surface before solidifying.
Phyllite - A general term used for rocks with a layered crystal structure
formed by regional metamorphism, intermediate between slate and schist.
Diabase - An igneous rock that is intermediate in composition between
acidic and basic rocks. Also used as diorite.
Gabbro - Dark colored basic intrusive rocks. Intrusive equivalent of
volcanic basalt.
Dike - A tabular igneous intrusion that cuts across the structures of
surrounding rock.
Inlier - An area or group of rocks surrounded by rocks of a younger age.
Metavolcanics - Volcanic rocks that show evidence of having been
subjected to metamorphism.
Metasediments - Sedimentary rocks showing evidence of metamorphism.
Synform - A folded structure, the core of which contains the younger
rocks and the stratographic sequence of which is unknown.
Pelitic-Psammic - Pelite is a sedimentary rock composed of fine particles
such as clay. Psammite refers to particles that are sand sized; e.g.,
sandstone. These terms are usually associated with metamorphism.
Geological Setting
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Approximately 50,000 square kilometers of Precambrian basement are
exposed in Uruguay, consisting of two main geotectonic units: the Rio de la
Plata Craton, composed of Early Proterozoic terranes; and the Southeastern
Fold Region, composed of Mid Proterozoic terranes. The remainder of the
country is covered by a thick sequence of Phanerozoic sediments and local
basaltic flows.
The Rio de la Plata Craton is exposed over approximately 28,000 square
kilometers in south-western and south-central Uruguay, and over approximately
3,000 square kilometers in northern Uruguay. Two greenstone belts have been
identified: the Colonia-Florida greenstone belt, and the Paso de Lugo
greenstone belt. All of the active Permits are located in the Rio de la Plata
Craton.
The Southeastern Fold Region in eastern Uruguay consists of two parallel
fold belts that strike north-east by south-west. The fold belts are known as
the Llavalleja and Rocha groups and are separated by gneisses, migmatites and
granites.
Greenstone Belts
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The greenstone belts, in general, display a vertical structure and a low
grade, low shear, greenschist facies metamorphism, which is typical of Archean
greenstone belts found throughout the world.
The Paso de Lugo permits cover a block of greenstone approximately 40
kilometers long that trends in an east-west direction with a width of
approximately 12 kilometers. The greenstone sequence is sub-vertical and
composed of ultramafic members and sedimentary and volcanic units with an
overall metamorphic grade of greenschist facies. The sequence is cut by
granodiorite and norite intrusions and partially covered by flat lying
Cretaceous sandstone and silcrete.
The Florida, Mal Abrigo, Guaycuru, San Juan Hills and Colla permits are
located in the Colonia-Florida greenstone belt, which is approximately 300
kilometers long and has a maximum width of 35 kilometers. The greenstone belt
trends in an east west direction and is sub-vertical. The greenstone belt is
composed of a variable sequence of mafic to felsic volcanics, slates,
phyllites and schists with minor banded iron-formations, black slates,
graphitic schists and limestones. The sequence is cut by granite-granodiorite
intrusions and by many diabase and gabbro dikes.
The Ojosmin permit is thought to be a greenstone belt inlier of the
Colonia-Florida belt.
Sarandi Permits
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The inactive Sarandi and Sarandi 1 permits are in the Llavalleja Group of
the Southeastern Fold Region. They cover a sequence of moderately
metamorphosed sediments which contain an 8-kilometer system of quartz veins.
History and Previous Work
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Uruguay has a limited known mining history. It has minimal known
reserves of manganese, copper, lead and zinc. Thirty mines in the extreme
northeastern part of the country are reported to have produced approximately
30 tons of gold between 1889 and 1939. Most of the mining activity in Uruguay
has focused on the extraction of industrial minerals such as dimension stone,
limestone, dolomite, marble and aggregates.
In the late 1970s, St. Joe Minerals conducted a base metals exploration
program in the Southeastern Fold Region known as the Llavalleja Group and
later conducted a gold exploration program in eastern and central Uruguay, now
known as the Colonia-Florida greenstone belt. Several gold occurrences were
found and one, the Mahoma deposit, was put into production by American
Resources Corporation.
St. Joe Minerals discontinued its exploration program in the mid-1980s.
Its senior exploration geologist, Federico R. Brown, then joined the Company
and conducted more exploration in the area. A team of four senior geologists
and two prospectors prepared a geological and structural base map from aerial
photographs on a scale of 1:20,000 for each Permit. The outcrops were mapped
and stream sediments were panned and collected. This exploration confirmed
the potential of the Colonia-Florida and Paso de Lugo greenstone belts. A
structural analysis of Landsat imagery covering the Paso de Lugo and Ojosmin
permits carried out by a Canadian consultant familiar with greenstone-hosted
gold mineralization, and an airborne geophysical survey consisting of
magnetics and radiometrics on 200 meter line spacing led to the
identification in 1991 of thirteen targets where gold was visible on the
surface of the lands covered by the Paso de Lugo permits. The Company then
formed the Campo del Oro joint venture with Santa Fe.
The Company between 1987 and 1991, and Santa Fe between June, 1992, and
October, 1995 conducted the following programs on the Properties:
Paso de Lugo: field geology, stream sampling, soil sampling, geological photo
interpretation, airborne and ground and geophysical, ground geophysics and
diamond drilling.
Ojosmin: field geology and stream sampling; IP survey, and ground mag survey.
Florida: field geology, stream sampling, soil sampling, geological photo
interpretation, airborne EM, airborne radiometry, airborne VLF, IP survey,
ground mag survey, and diamond drilling.
Mal Abrigo: field geology, stream sampling, soil sampling, airborne EM,
airborne radiometry, and airborne VLF.
Guaycuru: field geology, stream sampling, soil sampling, geological photo
interpretation, airborne electromagnetic, airborne radiometry and airborne
very low frequency, induced potential survey, ground mag, and diamond
drilling.
Sarandi: field geology, stream sampling, soil and trench sampling.
Colla and San Juan Hills: preliminary field geology.
Results of Previous Programs
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Geochemistry
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The Company and Santa Fe panned 18-20 kilogram samples of stream
sediments down to approximately 50 grams and sent them for analysis. The
Company sent samples collected before the formation of the Campo del Oro joint
venture with Santa Fe to BP Laboratories in Brazil. Santa Fe sent the samples
it collected to Becquerel Laboratories Inc. (Canada) for instrumental neutron
activation analysis, which was chosen for its ability to detect gold values
down to 5 parts per billion and 33 other elements in the same sample. Soil
sample grids were established over areas of interest and formed the basis for
follow-up ground geophysics.
Geophysics
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Questor Surveys Limited (Canada) conducted an airborne geophysical survey
for the Company in January and February, 1990. Questor collected
radiometric and magnetic data of the Paso de Lugo and Ojosmin areas from a
fixed-wing aircraft.
Dighem Surveys & Processing Inc. (Canada) in October, 1992, conducted a
combined magnetic and electromagnetic survey of the Paso de Lugo, Guaycuru,
and Florida permits by helicopter over 5,400 line-km with a line spacing of
200 meters. The survey was used to locate bedrock conductors, delineate
conductive shear and fault zones, identify resistive silicified areas, and
provide information to assist in the mapping of geology and structures.
Diamond Drilling
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The diamond drill program was conducted by Sevicos Tecnicos Minerais
Ltda. of Rio de Janeiro, Brazil, with two new Maquesonda 320 hydrostatic
diamond drills with a capacity comparable to a Longyear-44. The program was
designed to test combinations of geophysical and geochemical anomalies and
determine the significance of the known signatures.
More than 8,100 meters of 2-3/8 inch diameter core were drilled during
1994 and 1995: 31 holes on the primary exploration targets located in Paso de
Lugo, specifically Lili-Cacilda, Ultramafics, and Santiago; and 6 scout holes
to test some initial geophysical anomalies in Guaycuru and Florida. The core
was logged and photographed then split and analyzed for gold and silver in
one-meter intervals, with some core analyzed for copper, lead, zinc, arsenic,
chromium and nickel. Gold and silver were determined by fire assay by
American Assay Laboratories ("AAL") in Estacion Gonzales, Uruguay. The other
elements were determined by atomic absorption by AAL in either Uruguay or
AAL's laboratory in Sparks, Nevada.
As a result of these exploration programs, Santa Fe concentrated its
exploration activities on three targets located in the area covered by the
Paso de Lugo permits. The targets are known as the "Lili-Cacilda",
"Ultramafics" and "Santiago" (the "Targets").
Primary Exploration Targets
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Lili-Cacilda
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The Lili-Cacilda exploration target is a zone of sheared granodiorites and
metasediments with gold-bearing quartz vein structures. The target is located
in the Paso de Lugo East area. The zone is approximately two kilometers wide
and has been traced over a distance of approximately eight kilometers and
strikes generally east-west.
A grid with a baseline of 6,000 meters and a line spacing of 100 meters
was constructed over the shear zone and a zone known as the Tamara extension.
While the grid line lengths varied, the average line length was approximately
2,000 meters. Soil samples were taken every 20 meters along the grid lines.
IP and ground magnetic surveys were completed over the grid and 11 holes
totaling 2,046.54 meters were drilled to test 11 geophysical and geochemical
anomalies.
Santa Fe drilled nine holes in the zone of sheared granodiorites and
metasediments which contain gold-bearing quartz veins. Many of the
geophysical and geochemical signatures were satisfactorily explained, but no
economic gold mineralization was detected. Santa Fe recommended that no
further work be conducted in the Lili-Cacilda area.
Santa Fe drilled two holes beneath and along the strike of the Tamara
outcrop. The two holes intersected hydrothermally altered rocks with probable
volcanic-hosted massive sulfide mineralization affinities. While the
mineralization is weak, the potential environment was established. Santa Fe
recommended that more detailed litho-geochemical studies, such as Pearce
Element Ratio Analysis, be undertaken along the Lugo East volcano-sedimentary
belt to assist in locating mineralization centers.
Ultramafics
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This target is a sequence of ultramafic rocks containing pyroxenite,
peridotite and olivine peridotite located in the Paso de Lugo West area. The
zone is approximately one kilometer long and 0.6 kilometers wide and strikes
generally north-west south-east.
A grid with a baseline of 4,800 meters and a line spacing of 100 meters
was constructed over the zone. The average length of the grid lines was
approximately 1,500 meters. Approximately 3,800 soil samples were taken and
assayed using the neutron activation method. IP and ground magnetic surveys
were completed over the grid that was not affected by the major power
transmission line traversing the eastern portion of the area, and seven
diamond drill holes totaling 1,612.25 meters were drilled to test three
geochemical anomalies.
Three holes tested a 1,200 meter by 600 meter-wide gold and chrome soil
geochemical anomaly. The results indicated that erratic gold values are
frequently within basic and intermediate greenstone units and to a lesser
extent within acid volcanics and minor quartz veins within these units. More
work is recommended to resolve the geology and construct a mineralization
model in this anomaly.
One hole tested a long, narrow geochemical anomaly associated with major
quartz-filled thrust zones. In outcrop, major enrichment of gold in hematite
was detected but the results returned very low order gold values throughout
the distinctive quartzite zone. No further work is recommended on this type
of anomaly within the Ultramafics.
Three holes tested a geochemically anomalous zone related to the
granite-greenstone contact along the southern margin of the grid. The first
hold intersected a 42 meter zone of mineralized basic volcanics with gold
values up to 2.5 grams/ton and 0.5 grams/ton over the entire intersection.
The other two holes, drilled 200 meters on either side of the first hole,
returned low order gold values.
Santiago
- --------
This target is located in a 3-4-kilometer-wide zone of intercalated
metavolcanics and clastic metasediments. The western end of the target area
is cut by a norite dike, but the zone extends to the west beyond the dike.
The area is structurally complex and may be part of a tight synform.
A grid with a baseline of 4,000 meters and a line spacing of 100 meters
was constructed over the exposed portion of metasediments to the east and west
of the norite dike. The average length of the grid lines was approximately
1,000 meters. Approximately 3,100 soil samples were taken and assayed using
the neutron activation method. The IP and ground magnetic surveys were
completed over the grid, and 11 diamond drill holes were drilled to test three
geochemical and geophysical anomalies.
The results of the drilling program indicate that disseminated gold
occurs within pelitic and psammitic units within highly folded
volcano-sedimentary rocks over a strike length in excess of 3,000 meters. Six
of the eleven holes had significant gold intercepts. The significant
intercepts are shown in the following Table 2:
</TABLE>
<TABLE>
<CAPTION>
TABLE 2
SIGNIFICANT INTERCEPTS
Hole From To Interval Gold Assay
(Parts per Billion)
- ---- ---- -- -------- -------------------
<S> <C> <C> <C> <C>
LA 94-12 61 meters 68 meters 7 meters @ 204
LA 94-14 102 meters 117 meters 15 meters @ 302
158 meters 182 meters 24 meters @ 490
LA 94-18 166 meters 181 meters 15 meters @ 970
166 meters 197 meters 31 meters @ 675
LA 94-20 31 meters 49 meters 18 meters @ 282
LA 94-26 57 meters 69 meters 12 meters @ 409
LA 94-32 81 meters 95 meters 14 meters @ 759
80 meters 129 meters 49 meters @ 484
Secondary Exploration Targets
- -----------------------------
The Company and Santa Fe have conducted preliminary exploration programs
on the secondary exploration targets Ojosmin, Guaycuru, Florida, Mal Abrigo,
Colla, San Juan Hills, and Sarandi.
Primary Exploration Target
- --------------------------
The Santiago target has been identified as the primary exploration
target. Six of the 11 holes drilled in 1995 had significant gold intercepts,
and the soil sampling program indicated an anomalous gold zone at least four
kilometers long. Geological interpretation of the drill hole information
indicates that the deposit is strata bound and that the deeper intersections
(approximately 150 meters) were in sulfides, and suggests some supergene
enrichment above the sulfides.
The Company intends to conduct a 3,600-meter reverse circulation drilling
program on Santiago to test for a potential gold deposit near the surface by
drilling 20 fences consisting of three holes per fence on 200 meter centers
along the baseline of 4,000 meters, each hole between 40 and 80 meters for an
average of 60 meters per hole, and sampling for assay every 1.5 meters. The
budget for this program is $180,000.
Secondary Exploration Targets
- -----------------------------
The Company intends to drill approximately 2,400 meters and sample for
assay every 1.5 meters. The Company's budget for this program is $120,000.
The Company's budget for continued mapping, geophysical surveying, and soil
sampling and assaying on all of the Permits is $350,000.
Risk Factors.
- -------------
The Company's present and proposed business operations will be highly
speculative and subject to the same types of risks inherent in any new or
unproven venture, and will include those types of risk factors outlined below.
No Known Bodies of Ore. The Company's mineral properties are not known
to contain any bodies of ore. If the Company's exploration programs are
successful, it will require additional funds to finance its development of an
economic ore body and place it into commercial production. The only sources
of funds that are available to the Company for its future financing needs are
proceeds from its sale of equity and its offering to another party or parties
of a right to earn an interest in the Permits in exchange for a commitment to
carry out an exploration or development program on the properties.
Speculative Business. By its very nature, the exploration for minerals
is a speculative venture necessarily involving substantial risk. The Company
cannot be certain that the programs undertaken by Santa Fe will result in
discoveries of commercial quantities of ore.
Marketability Factors. Resource exploration and development are
speculative businesses and involve a high degree of risk. The marketability
of natural resources that might be acquired or discovered by the Company can
be affected by numerous factors beyond the control of the Company. These
factors include market fluctuations, the proximity and capacity of natural
resource markets and processing equipment, government regulations including
regulations relating to prices, taxes, royalties, land tenure, land use,
importing and exporting of minerals, and environmental protection. The
Uruguayan government retains a 5% net smelter return, which increases to 8%
after five years. The projected increase may significantly affect corporate
profitability in low grade circumstances. The exact effect of these factors
cannot be accurately predicted, but the combination of these factors might
result in the Company not receiving an adequate return on invested capital.
Environmental Hazards. Hazards such as unusual or unexpected formations
and other conditions may affect the Company's operations. The Company may be
subject to liability for pollution, cave-ins or hazards against which it
cannot insure or against which it may elect not to insure. The payment of
such liabilities may have a material, adverse effect on the Company's
financial position.
Potential Title Uncertainties. The Company has obtained the usual
industry standard title reports regarding the Permits, but these cannot be
construed as a guarantee of title. The renewal of expired permits is subject
to governmental approval. The Properties might be subject to earlier,
unregistered agreements or transfers and their titles might be affected by
undetected defects.
No Surveys. The Company's Properties consisting of recorded mineral
claims have not been surveyed; therefore, the precise location of these
Properties may be in doubt.
No Economic Deposit Finding. The presence of anomalous gold
mineralization does not signify the presence of an economic deposit. No
economic intersections in drill holes or surface showings have been found to
date on the Properties. The target areas are still "exploration" targets with
attendant high risk.
Potential Limited Access. Although the terrain is hospitable and road
access is generally good, future access may be limited by the existence of
farmland over the entire area of the Targets and of eucalyptus plantations
over part of the Targets.
Political Concerns. The political environment in Uruguay appears to be
quite stable but a loss of tenure in the future is possible. In such an
event, the Company and its subsidiaries may lose the entire value of their
assets and operations in Uruguay.
Competition. No significant barriers exist to deter competitors from
entering the market.
Conflicts of Interest. Certain directors of the Company also serve as
directors of other companies involved in the development of natural resources.
Conflicts of interest may arise.
Voting Control. Due to its ownership of a majority of the shares of the
Company's outstanding common stock, Gold Standard has the ability to elect all
of the Company's directors, who in turn elect all executive officers, without
regard to the votes of other stockholders. See Part I, Item 4 of this
Registration Statement.
Future Sales of Common Stock. Gold Standard currently beneficially owns
3,316,668 shares of the common stock of the Company or approximately 64
percent of its outstanding voting securities. Subject to compliance with the
applicable provisions of Rule 144 of the Securities and Exchange Commission,
Gold Standard is currently eligible to sell up to one percent of the
outstanding securities of the Company in any three month period. Such sales
could have a substantial adverse effect on any public market that may then
exist in the Company's common stock. Sales of any of these shares by Gold
Standard could severely affect the ability of the Company to secure the
necessary debt or equity funding for the Company's proposed business
operations. For additional information concerning the present market for
shares of common stock of the Company, see the caption "Market Price of and
Dividends on the Company's Common Equity and Other Stockholder Matters," Part
II, Item 1 of this Registration Statement.
Dilution. Depending on the nature and extent of services rendered, the
Company may compensate present management for services rendered and to be
rendered. If this compensation takes the form of an issuance of the Company's
stock, this would have the effect of diluting the holdings of the Company's
other stockholders.
Limited and Volatile Market for Common Stock. The Company's common stock
is listed on the OTC Bulletin Board of the National Association of Securities
Dealers, Inc. (the "NASD") under the symbol "PONY"; however, there is
currently no "established trading market" for such common stock and there can
be no assurance that any such market will ever develop or be maintained. Any
market price for shares of common stock of the Company is likely to be very
volatile, and numerous factors beyond the control of the Company may have a
significant effect. In addition, the stock markets generally have experienced,
and continue to experience, extreme price and volume fluctuations which have
affected the market price of many small capital companies and which have often
been unrelated to the operating performance of these companies. These broad
market fluctuations, as well as general economic and political conditions, may
adversely affect the market price of the Company's common stock in any market
that may develop. For additional information regarding the market for the
Company's common stock, see the caption "Market Price of and Dividends on the
Company's Common Equity and Other Stockholder Matters," Part II, Item 1 of
this Registration Statement.
Risks of "Penny Stock." The Company's common stock may be deemed to be
"penny stock" as that term is defined in Reg. Section 240.3a51-1 of the
Securities and Exchange Commission. Penny stocks are stocks (i) with a price
of less than five dollars per share; (ii) that are not traded on a
"recognized" national exchange; (iii) whose prices are not quoted on the
NASDAQ automated quotation system (NASDAQ-listed stocks must still meet
requirement (i) above); or (iv) is an issuer with net tangible assets less
than $2,000,000 (if the issuer has been in continuous operation for at least
three years) or $5,000,000 (if in continuous operation for less than three
years), or with average annual revenues of less than $6,000,000 for the last
three years.
Section 15(g) of the Securities Exchange Act of 1934, as amended, and
Reg. Section 240.15g-2 of the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in
a penny stock for the investor's account. Potential investors in the Company's
common stock are urged to obtain and read such disclosure carefully before
purchasing any shares that are deemed to be "penny stock."
Moreover, Reg. Section 240.15g-9 of the Securities and Exchange
Commission requires broker-dealers in penny stocks to approve the account of
any investor for transactions in such stocks before selling any penny stock to
that investor. This procedure requires the broker-dealer to (i) obtain from
the investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably determine,
based on that information, that transactions in penny stocks are suitable for
the investor and that the investor has sufficient knowledge and experience as
to be reasonably capable of evaluating the risks of penny stock transactions;
(iii) provide the investor with a written statement setting forth the basis on
which the broker-dealer made the determination in (ii) above; and (iv) receive
a signed and dated copy of such statement from the investor, confirming that
it accurately reflects the investor's financial situation, investment
experience and investment objectives. Compliance with these requirements may
make it more difficult for investors in the Company's common stock to resell
their shares to third parties or to otherwise dispose of them.
Principal Products and Services.
- --------------------------------
The Company is engaged in the business of mineral exploration and
prospecting in the Oriental Republic of Uruguay. As of the date of this
Registration Statement, the Company has not discovered economic amounts of
such minerals on the Properties covered by its permits, and there can be no
guarantee that such deposits exist or will be located. For a complete
discussion of the Company's proposed principal products and services, see the
caption "Business," Part I, Item 1 of this Registration Statement.
Distribution Methods of the Products or Services.
- -------------------------------------------------
As of the date of this Registration Statement, the Company has not
located economically feasible deposits of minerals on the Properties that are
subject to the Permits, and there can be no guarantee that such deposits exist
or will be located. In the event that the Company is able to recover economic
amounts of minerals, it will construct mills, concentrators and necessary
extraction equipment on the Properties and the concentrated product will be
sold to refiners/smelters. The Properties have good access to railroads,
roads and water for distribution purposes.
Status of any Publicly Announced New Product or Service.
- --------------------------------------------------------
None; not applicable.
Competitive Business Conditions.
- --------------------------------
Worldwide, there are hundreds of companies engaged in the gold and
mineral exploration business. Because world gold prices are determined by the
laws of supply and demand, increased gold production by these companies will
lead to lower global gold prices, which may adversely affect the Company's
business. Accordingly, each of these companies may be deemed to be a
competitor of the Company. Other than the Company, only one company, REA Gold
of Vancouver, Canada("REA"), is engaged in the gold exploration and mining
business in Uruguay. REA is a joint venture partner with Gold Standard in
Uruguay.
Sources and Availability of Raw Materials and Names of Principal
Suppliers.
- -----------
The Company's Properties in Uruguay have very good access to fuel,
equipment, water and other materials that may be necessary for its exploration
activities and any mining activities that it may undertake in the future. The
Properties have very good access to railroads and roadways.
Dependence on One or a Few Major Customers.
- -------------------------------------------
In the event that the Company is able to locate and economically mine
gold in Uruguay, the concentrated product will be sold to refiners and/or
smelters. Because the demand for gold is global, the Company does not
anticipate that it will be limited to one or a few major customers.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements or Labor Contracts.
- ------------------------------
For a discussion of the Permits held by the Company through its
subsidiaries, see the heading "The Permits" under the caption "Description of
Business," Part I, Item 1 of this Registration Statement.
Need for any Governmental Approval of Principal Products or
Services.
- ---------
The Company's exploration and prospecting activities in Uruguay require
it to obtain permits granting the right to engage in such activities on the
Properties. For a complete discussion of the Permits, see the heading
"Permits" under the caption "Description of Business," Part I, Item 1 of this
Registration Statement.
In addition, the government of Uruguay requires the posting of a bond for
exploration activities on the Properties. The Company has already posted its
bond for these activities.
On the effectiveness of this Registration Statement, the Company will
become subject to Regulation 14A regarding proxy solicitations, which was
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended (the "1934 Act"). Section 14(a) of the
1934 Act requires all companies with securities registered pursuant to Section
12(g) thereof to comply with the rules and regulations of the Securities and
Exchange Commission regarding proxy solicitations outlined in Regulation 14A.
Matters submitted to stockholders of the Company at a special or annual
meeting thereof or pursuant to a written consent shall require the Company to
provide its stockholders with the information outlined in Schedules 14A or 14C
of Regulation 14; preliminary copies of this information must be submitted to
the Securities and Exchange Commission at least 10 days prior to the date that
definitive copies of this information are forwarded to stockholders.
Effect of Existing or Probable Governmental Regulations on
Business.
- ---------
Because the Company has already obtained the Permits and has posted its
bond for the exploration of the Properties, management does not anticipate
that governmental regulations will have a significant effect on its proposed
business operations in the foreseeable future.
Research and Development.
- -------------------------
Other than its mineral exploration activities, the Company has not
engaged in any research or development. See the caption "Description of
Business," Part I, Item 1 of this Registration Statement.
Cost and Effects of Compliance with Environmental Laws.
- -------------------------------------------------------
The Company's parent, Gold Standard, has placed a $900,000 bond to cover
surface restoration of the Properties. It is not expected that the Company's
activities on the Properties will cause pollution.
Number of Employees.
- --------------------
The Company presently has four full-time employees and two part-time
employees. Three of the full-time employees and one of the part-time
employees are located in Uruguay. The remaining part-time employee is located
in Salt Lake City, Utah.
Item 2. Management's Discussion and Analysis or Plan of
Operation.
- ----------
Plan of Operation.
- ------------------
The Company is preparing to undertake a public offering of up to
600,000 shares of its common stock at a price of $1.00 U.S. per share (the
"Offering"). For a complete discussion of the Offering, see the heading
"Business Development" of the caption "Description of Business," Part I, Item
1 of this Registration Statement.
After payment of Georgia Pacific's commission, the Company will receive
net proceeds of $540,000 from the Offering which, when added to the Company's
working capital of $442,029 at August 31, 1996, will provide the Company with
total working capital of $982,029. The Company intends to use the proceeds,
in this order, as follows:
Principal Purpose Amount
----------------- ------
Payment of costs of Offering $ 32,609
One-year reserve to satisfy obligations under Sponsorship 10,870
Agreement
Drilling of Primary Exploration Target 180,000
Drilling of Secondary Exploration Targets 120,000
Continuing field work on all Properties, professional and 350,000
labor costs and property maintenance
Repayment of debt to Gold Standard (see the caption "Certain 207,754
Relationships and Related Transactions," Part I, Item 7
of this Registration Statement)
Working capital to fund ongoing operations 80,797
-------
Total $ 982,030
The Company will add to working capital any funds that it receives from
Georgia Pacific's exercise of the Agent's Warrants and the Greenshoe Option.
There can be no assurance that circumstances will not arise which will require
a reallocation of funds for sound business reasons.
Results of Operations.
- ----------------------
The Company had no revenues during the fiscal year ended October 31,
1995, or the period ended July 31, 1996. Expenses during these periods were
$60,929, and $153,821, respectively. The increase resulted primarily from
increases in leasehold exploration and carrying costs and accounting fees,
office overhead, travel and miscellaneous expenses.
Interest income during the fiscal year ended October 31, 1996, and the
period ended July 31, 1996, was $8 and $964, respectively. Net losses during
these periods were $61,018 and $152,857. See the Index to Financial
Statements, Part F/S of this Registration Statement.
Item 3. Description of Property.
- --------------------------------
The Company, through its subsidiaries, owns Permits to conduct mineral
exploration activities on certain Properties in the Oriental Republic of
Uruguay. For a complete discussion of the Permits and the Properties, see the
caption "Business Development," Part I, Item 1 of this Registration Statement.
The Company shares office facilities in Salt Lake City and Uruguay with
Gold Standard. The Salt Lake City facilities consist of a suite of four
offices totaling 1472 square feet; of this amount, the Company uses one
office, consisting of approximately 300 square feet. Expenses in this regard
have been apportioned between the Company and Gold Standard on the basis of
exploration activities conducted on their joint and separate properties and as
the directors of both companies agree. As of August 1, 1996, the Company pays
Gold Standard for 25% of the office expenses, which are estimated at $1,250
per month.
The Uruguay facilities consist of 600 square feet of office space and
2,000 square feet of warehouse space in the town of Trinidad, Uruguay. These
facilities are leased on a month-to-month basis at monthly rents of $400 and
$600, respectively.
Item 4 Security Ownership of Certain Beneficial Owners and
Management.
- -----------
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 November 11, 1996:
</TABLE>
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class
- ---------------- ------------------ --------
<S> <C> <C>
Gold Standard, Inc. 3,316,668 64.4%(1)
710 Kearns Building
Salt Lake City, Utah
84101
------- ----
3,316,668 64.4%
</TABLE>
(1) This figure does not take into account (i) the 600,000 shares
that will be offered pursuant to the Company's Offering; (ii)
the Greenshoe Option; (iii) the Agent's Warrants; or (iv) the
aggregate of 1,075,008 shares that are subject to options
granted to the Sun Valley Entities and the directors and
employees of the Company. See the captions "Business
Development," Part I, Item 1, and "Executive Compensation," Part
I, Item 6 of this Registration Statement.
Security Ownership of Management.
- ---------------------------------
The following table sets forth the shareholdings of the
Company's directors and executive officers as of November 11, 1996:
<TABLE>
<CAPTION>
Number of Percentage of
Name and Address Shares Beneficially Owned(1) of Class
- ---------------- ------------------------- --------
<S> <C> <C>
Scott L. Smith 92,167(2) 1.8%
710 Kearns Building
Salt Lake City, Utah
84101
Bret C. Decker 83,334 1.6%
710 Kearns Building
Salt Lake City, Utah
84101
David E. Aro 33,334 0.6%
710 Kearns Building
Salt Lake City, Utah
84101 ----- -----
All directors and executive 208,835 4.0%
officers as a group
as a group (3 persons)
</TABLE>
(1) This figure does not take into account (i) the 600,000 shares
that will be offered pursuant to the Company's Prospectus dated
September 30, 1996; (ii) the Greenshoe Option; (iii) the Agent's
Warrants; or (iv) the aggregate of 1,075,008 shares that are
subject to options granted to the Sun Valley Entities and the
directors and employees of the Company. See the captions
"Business Development," Part I, Item 1 and "Executive
Compensation," Part I, Item 6 of this Registration Statement.
(2) A total of 22,050 of these shares are held in the name of
Marjorie A. Smith, Mr. Smith's wife.
See the caption "Directors, Executive Officers, Promoters and Control
Persons," Part I, Item 5 of this Registration Statement, for information
concerning the offices or other capacities in which the foregoing persons
serve with the Company.
Changes in Control.
- -------------------
A total of 750,000 of the 3,316,668 shares of the Company owned by Gold
Standard are subject to an Escrow Agreement dated March 14, 1996. The Escrow
Agreement places significant restrictions on the transferability of the
escrowed shares and provides that such shares must be returned to the Company
for cancellation if a stockholder ceases to be a principal, dies or becomes
bankrupt or upon the tenth anniversary of the date of receipt of the Company's
Offering prospectus if the escrowed shares are not released in accordance with
the policies of the Executive Director of the British Columbia Securities
Commission or the Vancouver Exchange. In the event of such a cancellation,
the holdings of Gold Standard would be reduced to 49.8% of the total issued
and outstanding securities of the Company; this percentage would be further
reduced if the escrowed shares were canceled after the issuance of the shares
of the Company's common stock pursuant to the Offering. See the caption
"Recent Sales of Unregistered Securities," Part II, Item 4 of this
Registration Statement.
Absent a cancellation of 750,000 of the shares held by Gold Standard, the
sale of the 600,000 shares of common stock pursuant to the Offering will
reduce the holdings of Gold Standard to 57.7% of the issued and outstanding
securities of the Company, which will not be sufficient to effect a change in
control.
Item 5. Directors, Executive Officers, Promoters and Control
Persons.
- --------
Identification of Directors and Executive Officers.
- ---------------------------------------------------
The following table sets forth the names of all current
directors and executive officers of the Company. These persons
will serve until the next annual meeting of the stockholders (to
be held on the first Monday in the month of the commencement of the Company's
fiscal year) or until their successors are elected or appointed and qualified,
or their prior resignation or termination.
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
Scot L. Smith President/CEO 3/90 *
Treasurer/CFO 11/88 *
Chairman 11/88 *
David L. Clarke, Vice President 3/90 9/96
Q.C. Director 3/90 9/96
Bret Decker Secretary/ 3/96 *
General Manager 3/96 *
Director 11/88 *
David E. Aro Director 3/94 *
</TABLE>
* These persons presently serve in the capacities indicated.
Business Experience.
- --------------------
Scott L. Smith. Mr. Smith, age 70, holds a Bachelor of Science in
Geology from the University of Washington. He has been involved in the mining
business for the past 36 years. His experience includes all facets of the
mining industry: financing, exploration, mining, milling, refining and
marketing. He has directed exploration efforts in the United States, Canada,
Mexico and Panama and has managed mining operations in Nevada, Texas, Peru and
Uruguay. He pioneered the first registered mining tax partnership in the
United States in 1969. Mr. Smith has been the President and Chief Executive
Officer of Gold Standard, the Company's majority stockholder, since 1972.
Bret Decker. Mr. Decker, age 42, majored in business management at the
University of Utah. He has served as the president of Great Western Oil
Company, an East Texas oil and gas company that successfully drilled,
completed and put into production a number of oil wells under Mr. Decker's
direction. He was the secretary-treasurer of Tacoma Mining Company where he
was responsible for the first exploratory drilling operation in the Darien
Province of Panama. He served as an officer of Alaska Pacific until it was
sold in 1985. During the past five years, Mr. Decker has been an independent
consultant to the mining and oil and gas industries, overseeing relations with
investors and financial institutions, media communications and general
administrative duties. He is responsible for the Company's administration.
David E. Aro. Mr. Aro is 69 years of age. He holds an Engineer of Mines
degree from the Colorado School of Mines and is a Professional Engineer
registered in Idaho, Montana, Utah and Washington. He has been in
the mining engineering business since 1958. From 1981 to 1983 he was the
engineering manager for Cyprus Mines Engineering and Construction
Group, monitoring the design and construction of a 25,000-ton-per-day
molybdenum plant. During 1996 he is the Project Manager of the Fort Knox Gold
Mine for AMAX Gold, Inc., directing all construction and engineering efforts.
This $400,000,000 project out of Fairbanks, Alaska is projected to produce
350,000 ounces of gold per year commencing in 1997. Mr. Aro has been an
independent consulting mining engineer since 1983, providing services in
exploration, evaluation and feasibility studies on mineral properties,
including mine development and planning, equipment selection and conceptual
design of mining and milling facilities.
Significant Employees.
- ----------------------
The Company has no significant employees who are not directors or
executive officers.
Family Relationships.
- ---------------------
There are no family relationships between any directors or
executive officers of the Company, either by blood or by
marriage.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no director, person nominated to become a
director, executive officer, promoter or control person of the Company:
(1) was a general partner or executive officer of any
business against which any bankruptcy petition was filed, either
at the time of the bankruptcy or two years prior to that
time;
(2) was convicted in a criminal proceeding or named subject
to a pending criminal proceeding (excluding traffic violations
and other minor offenses);
(3) was subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any
type of business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in a
civil action), the Securities and Exchange Commission or the
Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.
Item 6. Executive Compensation.
- -------------------------------
The following table sets forth the aggregate compensation
paid by the Company for services rendered during the periods
indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (d) (e) (f) (g) (h) (i)
Securities All
Other Underlying Other
Name and Year or Annual RestrictedOptions/LTIP Compen-
Principal Period Salary Bonus Compen- Stock SAR's(#)Payouts sation
Position Ended ($) ($) sation($) Awards($) (1)
($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Scott L. Smith, 10/31/94 0 0 0 0 0 0 0
President/CEO, 10/31/95 0 0 0 0 0 0 0
Treasurer/CFO 9/30/96 0 0 0 0 0 0 0
Director
David L Clarke, 10/31/94 0 0 0 0 0 0 0
Former V.P., 10/31/95 0 0 0 0 0 0 0
Former Director 9/30/96 0 0 0 0 0 0 0
Bret C. Decker, 10/31/94 0 0 0 0 0 0 0
Secretary/GM, 10/31/95 0 0 0 0 0 0 0
Director 9/30/96 1600(2) 0 0 0 0 0 12,500(3)
David E. Aro, 10/31/94 0 0 0 0 0 0 0
Director 10/31/95 0 0 0 0 0 0 0
9/30/96 0 0 0 0 0 0 0
</TABLE>
(1) The Company has set aside options for its directors and employees
to acquire a total of 575,008 "unregistered" and "restricted"
shares of common stock at a price of $1.00 U.S. These options,
which do not have registration rights, are exercisable for a
period of two years from the date on which the Company's shares
are listed, posted and called for trading on the Exchange. As of
the date of this Registration Statement, none of these options has
been allocated among the Company's directors and employees.
(2) This figure represents the sum that the Company has paid Mr.
Decker pursuant to the parties' agreement that the Company will
pay Mr. Decker the sum of $100 for each day that he provides
services as general manager. See the heading "Compensation of
Directors" of this caption.
(3) In March, 1996, the Company issued 50,000 "unregistered" and
"restricted" shares of its common stock to Mr. Decker in
consideration of services rendered as general manager during
the preceding four years. See the caption "Recent Sales of
Unregistered Securities," Part II, Item 4 of this Registration
Statement.
Other than the cash compensation paid to Mr. Decker and the incentive
stock options referred to above, no cash compensation, deferred compensation
or long-term incentive plan awards were issued or granted to the Company's
management during the fiscal years ending October 31, 1996, 1995 or 1994.
Compensation of Directors.
- --------------------------
As of June 1, 1996, the Company pays Bret C. Decker, who is its Secretary
and General Manager and a director, $100 for each day that he provides his
services as its general manager. Other than the incentive stock options
referred to above, none of which have been allocated to any director, there
are no standard arrangements pursuant to which the Company's directors are
compensated for any services provided as director. No additional amounts are
payable to the Company's directors for committee participation or special
assignments.
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements.
- -------------------------------
There are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company,
with respect to any director or executive officer of the Company
which would in any way result in payments to any such person
because of his or her resignation, retirement or other
termination of employment with the Company or any subsidiary, any
change in control of the Company, or a change in the person's
responsibilities following a change in control of the Company.
Item 7. Certain Relationships and Related Transactions.
- -------------------------------------------------------
Transactions with Management and Others.
- ----------------------------------------
Except as stated below, there have been no material transactions, series
of similar transactions, currently proposed transactions, or series of
similar transactions, to which the Company or any of its
subsidiaries was or is to be a party, in which the amount
involved exceeded $60,000 and in which any director or executive
officer, or any security holder who is known to the Company
to own of record or beneficially more than five percent of the
Company's common stock, or any member of the immediate family of
any of the foregoing persons, had a material interest.
The Company's operating expenses and exploration activities on the
Properties have been funded through loans advanced by Gold Standard, the
Company's majority stockholder. A cumulative total of $968,062 was converted
to equity in the form of 4,000,000 "unregistered" and "restricted" shares of
the Company's common stock during the fiscal year ended October 31, 1993. A
total of $140,046 was advanced during the fiscal years ended October 31, 1994,
and 1995. The total due to Gold Standard as of May 31, 1996, is $207,723.
Gold Standard has obtained a standby bank letter of credit in the amount
$1,000,000 which it has pledged as security with the government of Uruguay as
required by law to guarantee the future reclamation of the mineral properties
that are subject to Gold Standard's exploration activities. The benefits of
this security have been extended by Gold Standard to the Company and its
subsidiary to guarantee their future reclamation commitments in Uruguay as
partial consideration of the Company's issuance of 750,000 shares to Gold
Standard.
The exploration costs incurred on the Permits were borne by the Company
and Gold Standard in proportion to their respective ownership interests when
Gold Standard had an interest in the Permits.
The Company shares office facilities and employees in Salt Lake City and
Uruguay with Gold Standard. Wages and office expenses have been apportioned
between the Company and Gold Standard on the basis of the exploration
activities conducted on their joint and separate properties and as the
directors of both companies agree. As of August 1, 1996, the Company pays
Gold Standard for 25% of the office expenses, which are estimated to be $1,250
per month. See the caption "Description of Property," Part I, Item 3 of this
Registration Statement.
In March, 1996, the Company issued 50,000 "unregistered" and
"restricted" post-consolidation shares of its common stock each (i) to Bret C.
Decker, its Secretary/General Manager and director, in consideration of
services rendered during the previous four years; and (ii) to Nilton D.
Franke, an employee of Gold Standard in Brazil, for his services in overseeing
the Company's exploration activities during the preceding 18 months.
Certain Business Relationships.
- -------------------------------
Except as stated under the caption "Transactions with Management and
Others," there have been no material transactions, series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be
a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to the
Company to own of record or beneficially more than five percent of the
Company's common stock, or any member of the immediate family of
any of the foregoing persons, had a material interest.
Indebtedness of Management.
- ---------------------------
Except as stated under the caption "Transactions with Management and
Others," there have been no material transactions, series of similar
transactions, currently proposed transactions, or series of
similar transactions, to which the Company or any of its
subsidiaries was or is to be a party, in which the amount
involved exceeded $60,000 and in which any director or executive
officer, or any security holder who is known to the Company to
own of record or beneficially more than five percent of the
Company's common stock, or any member of the immediate family of
any of the foregoing persons, had a material interest.
Parents of the Issuer.
- ----------------------
Gold Standard, the owner of 64% of the Company's issued and outstanding
common stock, may be deemed to be the parent of the Company.
Transactions with Promoters.
- ----------------------------
Except as stated under the caption "Transactions with Management and
Others," there have been no material transactions, series of similar
transactions, currently proposed transactions, or series of
similar transactions, to which the Company or any of its
subsidiaries was or is to be a party, in which the amount
involved exceeded $60,000 and in which any promoter or founder,
or any member of the immediate family of any of the foregoing
persons, had a material interest.
Item 8. Description of Securities.
- -----------------------------------
The Company has only one class of securities authorized,
issued or outstanding, that being capital stock of the Company
consisting of 50,000,000 shares of one mill ($0.001) par value
common capital stock. The holders of the Company's common stock
are entitled to one vote per share on each matter submitted to a
vote at a meeting of stockholders. The shares of common stock
carry cumulative voting rights in the election of directors.
Stockholders of the Company have no pre-emptive rights to
acquire additional shares of common stock or other securities.
The common stock 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. All shares of the common stock now
outstanding are fully paid and non-assessable.
Except as stated under the caption "Business Development" of this
Registration Statement, there are no outstanding options, warrants or calls to
purchase any of the authorized securities of the Company.
There is no provision in the Company's Articles of
Incorporation or Bylaws that would delay, defer, or prevent a
change in control of the Company.
PART II
Item 1. Market Price of and Dividends on the Company's Common
Equity and Other Stockholder Matters.
- -------------------------------------
Market Information.
- -------------------
The Company's common stock is listed on the OTC Bulletin
Board of the National Association of Securities Dealers, Inc. (the "NASD")
under the symbol "PONY"; however, the market for shares of the Company's
common stock is extremely limited. No assurance can be given that the present
limited market for the Company's common stock will continue or will be
maintained, and the sale of the Company's common stock pursuant to Rule 144 by
Gold Standard, purchasers under the Offering, or other holders of the
Company's securities may have a substantial adverse impact on any such public
market. See the heading "Business Development" of the caption "Description of
Business," Part I, Item 1, the heading "Future Sales of Common Stock" under
the caption "Risk Factors," Part I, Item 1, and the caption "Recent Sales of
Unregistered Securities," Part II, Item 4 of this Registration Statement.
The high and low bid prices for shares of common stock of the Company for
each quarter within the last two fiscal years, the quarterly periods ended
January 31, 1996, April 30, 1996, July 31, 1996, and the period from August
31, 1996, to October 11, 1996, are as follows:
<TABLE>
<CAPTION>
Bid
Quarter ending: High Low
- --------------- ---- ---
<S> <C> <C>
January 31, 1994 7/16 1/8
April 30, 1994 9/16 1/4
July 31, 1994 1/2 1/4
October 31, 1994 5/16 1/8
January 31, 1995 11/32 3/16
April 30, 1995 5/16 3/16
July 31, 1995 1/4 3/16
October 31, 1995 1/4 3/16
January 31, 1996 3/16 1/8
Period ending
March 4, 1996 .16 1/8
Period from March 5, 1996,
through April 30, 1996* 5/8 1/4
July 31, 1996 5/8 1/4
Period Ended
October 11, 1996 1/4 1/4
</TABLE>
* All prices from March 5, 1996, take into account the
consolidation of the Company's shares in the ratio of one share
for three. See the caption "Business Development," Part I, Item
1 of this Registration Statement.
These bid prices were obtained from the National Quotation
Bureau, Inc. ("NQB") and do not necessarily reflect actual
transactions, retail markups, mark downs or commissions.
No assurance can be given that any "established public
market" will develop in the common stock of the Company,
regardless of whether the Company is successful in completing any
acquisition, reorganization or merger deemed by management to be
beneficial for the Company, or if any such market does develop,
that it will continue or be sustained for any period of time.
Holders.
- --------
The number of record holders of the Company's common stock
as of the date of this Registration Statement is approximately 118.
Dividends.
- ----------
The Company has not declared any cash dividends with respect
to its common stock and does not intend to declare dividends in
the foreseeable future. The future dividend policy of the Company
depends upon the Company's profitability, financial requirements and other
relevant factors. Other than the foregoing, there are no material
restrictions limiting, or that are likely to limit, the Company's ability to
pay dividends on its common stock.
Item 2. Legal Proceedings.
- --------------------------
The Company is not a party to any pending legal proceeding.
To the knowledge of management, no federal, state or local
governmental agency is presently contemplating any proceeding
against the Company. No director, executive officer or affiliate
of the Company or owner of record or beneficially of more than
five percent of the Company's common stock is a party adverse to
the Company or has a material interest adverse to the Company in
any proceeding.
Item 3. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
- ------------------------------------
Neither the Company nor any subsidiary has changed its principal
independent accountant during the Company's two most recent fiscal years or as
of the date of this Registration Statement.
Item 4. Recent Sales of Unregistered Securities.
- ------------------------------------------------
The Company issued 750,000 "unregistered" and "restricted" shares of its
common stock to Gold Standard in consideration of the payment of $10,000 and
the conveyance by Gold Standard of certain mining properties in southern
Uruguay. These shares have been placed in escrow pursuant to an Escrow
Agreement dated March 14, 1996 between the Company, Pacific Corporate Services
Ltd. As escrow agent and Gold Standard, in accordance with the British
Columbia Securities Commission's Local Policy 3-07 and the Vancouver
Exchange's Listing Policy 18. The escrowed shares are subject to the
direction of the Executive Director of the British Columbia Securities
Commission or the Exchange if the Company's common stock is listed there.
The Escrow Agreement provides that the escrowed shares can not be traded
in, released from escrow or dealt with in any manner, nor may the Company, its
transfer agent or the holders of the escrowed shares transfer or record any
trading thereof without the consent of the Executive Director or the Exchange.
The escrowed shares must be returned to the Company and canceled if a
stockholder ceases to be a principal, dies or becomes bankrupt or upon the
tenth anniversary of the date of receipt of the Company's Offering prospectus
if they are not released in accordance with the policies of the Executive
Director or the Exchange.
Also in March, 1996, the Company issued 50,000 "unregistered" and
"restricted" shares of its common stock each (i) to Bret C. Decker, its
Secretary/General Manager and director, in consideration of services rendered
during the previous four years; and (ii) to Nilton D. Franke, an employee of
Gold Standard in Brazil, for his services in overseeing the Company's
exploration activities during the preceding 18 months. See the caption
"Certain Relationships and Related Transactions," Part I, Item 7 of this
Registration Statement.
On May 10, 1996, the Company issued to Sun Valley Gold, L.P., Sun Valley
Gold International, Ltd. and Odyssey Partners, L.P. a total of 500,000 units
at a price of $1.00 per unit. Each unit consists of one "unregistered" and
"restricted" share of the Company's common stock and one warrant to purchase
an additional share of common stock at a price of $1.25 per share at any time
until May 10, 1999.
Management believes that each of the foregoing entities is an
"accredited investor" as that term is defined under applicable federal and
state securities laws, rules and regulations. Further, Mr. Decker is a
director and the Secretary/General Manager of the Company and had access to
all material information regarding the Company prior to the offer or sale of
these securities. The offers and sales of these securities are believed to
have been exempt from the registration requirements of Section 5 of the
Securities Act of 1933 pursuant to Section 4(2) thereof, and from similar
states' securities laws, rules and regulations requiring the offer and sale of
securities by available state exemptions from such registration. The stock
certificates for these shares are stamped with restrictive legends and the
stock transfer records of the Company's transfer agent contain stop transfer
instructions.
Item 5. Indemnification of Directors and Officers.
- --------------------------------------------------
Section 16-10a-902(1) of the Utah Revised Business
Corporation Act authorizes a Utah corporation to indemnify any
director against liability incurred in any proceeding if he
or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct
was unlawful.
Section 16-10a-902(4) prohibits a Utah corporation from
indemnifying a director in a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation or in a proceeding in which the director was adjudged
liable on the basis that he or she improperly received a personal
benefit. Otherwise, Section 16-10a-902(5) allows indemnification for
reasonable expenses incurred in connection with a proceeding by or in
the right of a corporation.
Unless limited by the Articles of Incorporation, Section
16-10a-905 authorizes a director to apply for indemnification to the
court conducting the proceeding or another court of competent
jurisdiction. Section 16-10a-907(1) extends this right to officers of
a corporation as well.
Unless limited by the Articles of Incorporation,
Section 16-10a-903 requires that a corporation indemnify a director
who was successful, on the merits or otherwise, in defending any
proceeding to which he or she was a party against reasonable expenses
incurred in connection therewith. Section 16-10a-907(1) extends
this protection to officers of a corporation as well.
Pursuant to Section 16-10a-904(1), the corporation may
advance a director's expenses incurred in defending any proceeding
upon receipt of an undertaking and a written affirmation of his or her
good faith belief that he or she has met the standard of conduct
specified in Section 16-10a-902. Unless limited by the Articles
of Incorporation, Section 16- 10a-907(2) extends this protection to
officers, employees, fiduciaries and agents of a corporation as well.
Regardless of whether a director, officer, employee,
fiduciary or agent has the right to indemnity under the Utah Revised
Business Corporation Act, Section 16-10a-908 allows the corporation to
purchase and maintain insurance on his or her behalf against
liability resulting from his or her corporate role.
PART F/S
Index to Financial Statements
Report of Certified Public Accountants
Financial Statements
- --------------------
(i) Consolidated Financial Statements for the
Years ended October 31, 1995 and 1994
-------------------------------------
Report of Independent Certified Public
Accountants
Consolidated Balance Sheets
Consolidated Statements of Operations for the
years ended October 31, 1995 and 1994 and the
period from August 2, 1984 (inception) to
October 31, 1995
Consolidated Statement of Accumulated Deficit
for the period from August 2, 1984 (inception)
to October 31, 1995
Consolidated Statements of Cash Flows for the
years ended October 31, 1995 and 1994, and the
period from August 2, 1984 (inception) to
October 31, 1995
Notes to Consolidated Financial Statements
(ii) Consolidated Financial Statements for the
Seven Months ended May 31, 1996
-------------------------------
Report of Independent Certified Public
Accountants
Consolidated Balance Sheet
Consolidated Statements of Operations for the
seven months ended May 31, 1996 and the period
from August 2, 1984 (inception) to May 31, 1996
Consolidated Statement of Stockholders' Equity
for the period from August 2, 1984 (inception)
to May 31, 1996
Consolidated Statements of Cash Flows for the
seven months ended May 31, 1996 and the period
from August 2, 1984 (inception) to May 31, 1996
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
on Supplementary Information
Schedule I - Consolidated Statements of Operations
for the seven months ended May 31, 1996 and for the
five fiscal years ended October 31, 1995
Schedule II - Consolidated Statements of Cash Flows
for the seven months ended May 31, 1996 and for the
five fiscal years ended October 31, 1995
(iii) Unaudited Financial Statements for the
Nine Month Period ended July 31, 1996
-------------------------------------
Balance Sheet
Statement of Operations
PART III
Item 1. Index to Exhibits.
- --------------------------
The following exhibits are filed as a part of this Registration
Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description*
- ------ ------------
<S> <C>
3.1 Initial Articles of Incorporation filed
August 2, 1984
3.2 Articles of Amendment filed November 15, 1988,
reflecting a name change to "Big Pony
Gold, Inc."
3.6 Bylaws
10.1 Agency Offering Agreement
10.2 Sponsorship Agreement
21 Subsidiaries of the Registrant
27 Financial Data Schedule
</TABLE>
* Summaries of all exhibits contained within this
Registration Statement are modified in their
entirety by reference to these Exhibits.
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the Registrant has caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized.
BIG PONY GOLD, INC.
Date: 11/20/96 By /s/ Scott L. Smith
------------ -------------------
Scott L. Smith
Director and
President/Chief Executive Officer
Date: 11/7/96 By /s/ Bret C. Decker
------------ -------------------
Bret C. Decker
Director and
Secretary/General Manager
Date: 20 Nov. 96 By /s/ David E. Aro
------------ -----------------
David E. Aro
Director
FOOTE, PASSEY, GRIFFIN and COMPANY
[Letterhead]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Big Pony Gold, Inc.
We have audited the accompanying consolidated balance sheets
of Big Pony Gold, Inc. and its subsidiary (both development
stage companies) as of October 31, 1995 and 1994, and the
related consolidated statements of operations, accumulated
deficit and cash flows for the years then ended. 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 audits.
We conducted our audits 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above,
present fairly, in all material respects, the consolidated
financial position of Big Pony Gold, Inc. and its subsidiary
(both development stage companies) as of October 31, 1995 and
1994, and the consolidated results of their operations and
their consolidated cash flows for the year then ended, in
conformity with generally accepted accounting principles.
/s/Foote, Passey, Griffin and Company
Salt Lake City, Utah
November 21, 1995
<TABLE>
<CAPTION>
Big Pony Gold, Inc. and Subsidiary
(Development stage companies)
CONSOLIDATED BALANCE SHEETS
October 31,
ASSETS
1995 1994
<S> <C> <C>
CURRENT ASSETS
Cash $ 944 $ 3,153
Prepaid expense 267 -
Total current assets 1,211 3,153
OTHER ASSETS
Deferred offering costs 50,259 23,242
Organization costs 50 50
50,309 23,292
$ 51,520 $ 26,445
LIABILITIES AND ACCUMULATED DEFICIT
CURRENT LIABILITIES
Accounts payable $ - $ 11,925
Income tax payable 100 100
Total current liabilities 100 12,025
LONG-TERM LIABILITIES
Loan payable - related party 140,046 42,028
ACCUMULATED DEFICIT
Common stock $.001 par value;
Authorized - 50,000,000 shares
Issued and Outstanding
11,400,000 shares 11,400 11,400
Additional paid-in-capital 1,087,736 1,087,736
Deficit accumulated during
the development stage (1,187,762) (1,126,744)
(88,626) (27,608)
$ 51,520 $ 26,445
</TABLE>
The accompanying notes are an integral part of these
statements.
<TABLE>
<CAPTION>
Big Pony Gold, Inc. and Subsidiary
(Development stage companies)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended October 31, 1995 and 1994
and the period from August 2, 1984 (inception)
to October 31, 1995
Period from
August 2, 1984
(inception)
through
October 31,
1995 1994 1995
<S> <C> <C> <C>
Revenues $ - $ - $
Operating expenses
Exploration expense 47,103 35,872 784,755
General and administrative 13,823 23,800 414,601
60,926 59,672 1,199,356
Loss from operations (60,926) (59,672) (1,199,356)
Other income
Interest 8 6 12,230
Other - - 785
8 6 13,015
Net loss before
income taxes (60,918) (59,666) (1,186,341)
Income tax expense (100) (100) (1,421)
NET LOSS $(61,018) $(59,766)$(1,187,762)
Loss per share $ (.01) $ (.01)
Weighted average
shares outstanding 11,400,000 11,400,000
</TABLE>
The accompanying notes are an integral part of these
statements.
<TABLE>
<CAPTION>
Big Pony Gold, Inc. and Subsidiary
(Development stage companies)
CONSOLIDATED STATEMENT OF ACCUMULATED DEFICIT
For the period from August 2, 1984 (inception)
to October 31, 1995
Deficit
Accumulated
Additional During the
Common Paid-In Development
Stock Capital Stage
<S> <C> <C> <C>
August 2, 1984:
Sale of common stock to
officers and directors $ 1,000 $ 1,500 $ -
December 31, 1984:
Net loss for period - - (109)
Balances at
December 31, 1984 1,000 1,500 (109)
May 14, 1985:
Sale of common stock
public offering (net) 2,500 19,194 -
December 31, 1985:
Net income for period - - 220
Balances at
December 31, 1985 3,500 20,694 111
December 31, 1986:
Net income for period - - 894
Balances at
December 31, 1986 3,500 20,694 1,005
December 31, 1987:
Net income for period - - 224
Balances at
December 31, 1987 3,500 20,694 1,229
November 8, 1988:
Contribution of capital
to the Company by an
insider - 24,092 -
November 14, 1988:
Sale of common stock to
Gold Standard, Inc. 3,700 46,300 -
November 15, 1988:
Acquisition of Tormin S.A.
through the issuance of
common stock 850 - -
Acquisition and cancellation
of common stock previously
issued (650) 650 -
December 31, 1988:
Net loss for period - - (2,620)
Balances at
December 31, 1988 7,400 91,736 (1,391)
December 31, 1989:
Net loss for period - - (332,455)
Balances at
December 31, 1989 7,400 91,736 (333,846)
December 31, 1990:
Net loss for period - - (408,825)
Balances at
December 31, 1990 7,400 91,736 (742,671)
October 31, 1991:
Net loss for period - - (217,096)
Balances at
October 31, 1991 7,400 91,736 (959,767)
October 31, 1992:
Net loss for period - - (90,674)
Balances at
October 31, 1992 7,400 91,736 (1,050,441)
May 7, 1993:
Issuance of stock in
conversion of debt to
equity 4,000 996,000 -
October 31, 1993:
Net loss for period - - (16,537)
Balances at
October 31, 1993 11,400 1,087,736 (1,066,978)
October 31, 1994:
Net loss for period - - (59,766)
Balances at
October 31, 1994 11,400 1,087,736 (1,126,744)
October 31, 1995:
Net loss for period - - (61,018)
Balances at
October 31, 1995 $11,400 $1,087,736 $ $(1,187,762)
</TABLE>
The accompanying notes are an integral part of this
statement.
<TABLE>
<CAPTION>
Big Pony Gold, Inc. and Subsidiary
(Development stage companies)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended October 31, 1995 and 1994,
and the period from August 2, 1984 (inception)
to October 31, 1995
Period from
August 2, 1984
(inception)
through
October 31,
1995 1994 1995
<S> <C> <C> <C>
Increase (decrease) in cash
Cash flows from operating
activities:
Net Loss $(61,018) $(59,766) $(1,187,762)
Adjustments to reconcile
net loss to net cash used by
operating activities:
Amortization - - 850
Decrease (increase) in:
Accounts receivable - 31,938 -
Prepaid expense (267) - (267)
Organization costs - - (50)
Deferred offering costs (27,017) (23,242) (50,259)
Increase (decrease) in:
Income tax payable - - 100
Accounts payable (11,925) 11,925 -
Net cash used by
operating activities (100,227) (39,145) (1,237,388)
Cash flows from financing
activities:
Proceeds from loan payable 98,018 42,028 1,140,046
Proceeds from capital
contributions - - 24,092
Proceeds from issuance of
common stock - - 77,500
Less cash applied to
offering cost - - (3,306)
Net cash provided by
financing activities 98,018 42,028 1,238,332
Net increase (decrease) in
cash (2,209) 2,883 944
Cash at beginning of period 3,153 270 -
Cash at end of period $ 944 $ 3,153 $ 944
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest $ - $ -
Taxes $ 100 $ 100
</TABLE>
The accompanying notes are an integral part of these
statements.
Big Pony Gold, Inc. and Subsidiary
(Development stage companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995 and 1994
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's accounting policies reflect industry practices
and conform to generally accepted accounting principles. The
following policies are considered to be significant:
1. Organization
Big Pony Gold, Inc. was incorporated pursuant to the laws of
the state of Utah on August 2, 1984 under the name of Big
Pony Development. During 1988, Gold Standard, Inc., a Utah
corporation (the parent company), acquired 50% of the
outstanding common stock of Big Pony Development and the
Company changed its name to Big Pony Gold, Inc. (the
Company). During the same period, Big Pony Gold, Inc.
acquired 100% of the common stock of Tormin S.A. (a
corporation organized under the laws of the Oriental Republic
of Uruguay). The parent company (Gold Standard, Inc.)
acquired an additional 4,000,000 shares of common stock on
May 7, 1993 in a conversion of debt to equity. This increased
the parent company's ownership interest to 67.5%. The Company
has not paid dividends in the past. Payment of dividends in
the future will depend on the Company's profitability,
financial requirements and other relevant factors.
2. Principles of Consolidation
The accompanying financial statements include the accounts of
Big Pony Gold, Inc. and its wholly owned subsidiary, Tormin
S.A., a corporation organized under the laws of the Oriental
Republic of Uruguay. The acquisition was effectuated to
provide Big Pony Gold, Inc. with an authorized corporate
entity through which business could be transacted in Uruguay.
The acquisition was accounted for under the purchase method
of accounting. As used herein, references to "the Company"
refer to Big Pony Gold, Inc. and its consolidated, wholly
owned subsidiary, Tormin S.A. All significant intercompany
accounts and transactions have been eliminated in
consolidation.
3. Development Stage Companies
The Company is involved in prospecting and exploration
activities, seeking commercially exploitable mineral
properties. The Company has not yet commenced development or
production activities on any of its mineral leaseholdings. No
significant revenues have, as yet, been generated from mining
activity, its planned principal operation. Therefore, the
Company has been treated as a development stage company for
financial reporting purposes, in accordance with Financial
Accounting Standards Board Statement No. 7.
4. Exploration and Development Expenses
Prospecting and exploration costs incurred in the search for
new mining properties are charged to expense as incurred,
unless associated with identified reserves. Exploration and
development costs associated with identified reserves will be
capitalized until the related geologic areas are either put
into production, sold or abandoned. Capitalized costs
associated with properties put into production will be
deferred and amortized using the units-of-production method
based upon proven reserves.
5. Deferred Offering Costs
Legal and accounting fees incurred in connection with a
proposed public offering are being deferred until the
offering has been completed. The total deferred costs will be
offset with cash proceeds received and the net amount will be
recorded to stock-holders' equity. In the event the proposed
offering is terminated, deferred costs will be charged to
operations.
6. Organization Costs
Costs related to the incorporation of the Company have been
capitalized. These costs will be amortized over sixty months
commencing when the Company ceases to be considered a
development stage company.
7. Loss Per Share
The computation of loss per share of common stock is based on
the weighted-average number of shares outstanding during the
period. There are no common stock equivalents.
NOTE B - RELATED PARTY TRANSACTIONS
The Company's operating expenses and exploration activities
on mineral leaseholdings in the Republic of Uruguay have been
funded through non-interest bearing loans received from its
parent company, Gold Standard, Inc. As of October 31, 1995,
loans received from the parent company totaled $140,046
($42,028 in 1994). Through October 31, 1993, the cumulative
loans received from the parent company totaled $968,062. This
debt was converted to equity in 1993 when 4,000,000 shares of
the Company's previously unissued common stock were issued to
the parent in exchange for consideration totaling $1,000,000
($968,062 in debt conversion plus a receivable from the
parent of $31,938).
The Company holds exploration rights to certain mineral
properties in Uruguay jointly with its parent company, Gold
Standard, Inc. Exploration costs incurred on these jointly
held properties are borne by the joint owners in proportion
to their ownership interest.
The Company shares office facilities and employees in Salt
Lake City and Uruguay with the parent company. Wages and
office expenses are apportioned between the parent and
subsidiary, based on the exploration activity on their joint
and separate properties and as the Boards of Directors of the
parent and subsidiary entities agree.
NOTE C - INCOME TAXES
The Company has a significant net operating loss carry forward
which could give rise to a deferred tax asset. Because the
Company has no assurance that the tax benefit from the net
operating loss will ever be realized, a valuation allowance
has been provided equal to the deferred tax asset. There are
no other temporary differences which arise from recognizing
income and expense in different periods for financial and tax
reporting purposes. The Company's gross deferred tax asset
attributable to the net operating loss carry forward and the
associated valuation allowance are summarized as follows at
October 31,:
1995 1994
Total deferred tax assets
(based on net operating
loss carry forward) $ 462,735 $ 447,978
Less valuation allowance (462,735) (447,978)
Net deferred tax asset $ - $ -
The Company's unused net operating loss carry forwards and
expiration dates are detailed as follows:
Federal Net Operating Loss State Net Operating Loss
Expiration Date Amount Expiration Date Amount
December 31, 2003 $ 1,391 December 31, 1994 $ 332,053
December 31, 2004 332,153 December 31, 1995 408,640
December 31, 2005 408,740 December 31, 1996 216,911
October 31, 2006 217,011 October 31, 1997 90,489
October 31, 2007 90,589 October 31, 1998 15,927
October 31, 2008 16,537 October 31, 2009 59,666
October 31, 2009 59,766 October 31, 2010 60,818
October 31, 2010 60,918
$1,187,105 $1,184,504
NOTE D - JOINT VENTURE AGREEMENT
During June of 1992 the Company entered into a joint venture
agreement with Santa Fe Pacific Mining, Inc., a division of
Santa Fe Pacific Corporation. The purpose of the joint
venture is to facilitate exploration and potential future
development of all of the Company's mineral holdings in
southern Uruguay. Under the terms of this operating
agreement, Santa Fe can earn up to a 60% interest in
producible discoveries on the subject properties by funding
100% of the exploration expenses up to either a specified
minimum investment or until a decision to develop a discovery
is reached. Thereafter, the Company must participate by
funding its proportionate share of future development costs
or see its 40% participating interest eroded. In no event,
however, will the Company's participating interest fall below
25%. In October of 1995 the Company was informed of Santa Fe
Pacific Corporation's intention to withdraw as manager of the
joint venture and the agreement effective November 16, 1995,
subject to the assignment of certain interests.
NOTE E - CONTINGENCIES
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles,
which contemplate continuation of Big Pony Gold, Inc. as a
going concern. However, the Company has not yet generated any
revenue from operations and has experienced recurring
operating losses since 1988. The Company's past operations
have been funded by Gold Standard, Inc. (its parent Company)
through unsecured, long term loans. In 1993 debt was
exchanged for additional common stock in the Company (Note
B).
Since the Company is not self-sustaining, its future as a
going concern is dependent on its ability to continue to
obtain operating capital from its parent Company or through
other equity or debt sources. The Company's funding needs
were reduced significantly in 1992 when the Company and its
parent entered into a joint venture agreement with Santa Fe
Pacific Mining, Inc., a division of Santa Fe Pacific
Corporation. Under the agreement, Santa Fe assumed the
responsibility to fund 100% of the continued exploration
activities on the Company's Uruguayan leaseholdings until
specified spending limits or events occurred. As of November
16, 1995 the joint venture will be terminated (Note D).
The parent's ability to continue funding the Company's
operations is dependent upon the parent's working capital
resources and fiscal strength. Erosion of the parent's
working capital could impact its ability to continue to fund
the Company's activities at current levels.
NOTE F - SEGMENTAL INFORMATION
The Company's only activity and, therefore, dominant industry
segment is gold exploration, development and mining. The
entire active operations of the Company for the years ended
October 31, 1995 and 1994 were located within the Republic of
Uruguay. No revenue was generated from operations in Uruguay
during the years ended October 31, 1995 and 1994. Less than
10% of the Company's identifiable assets are located in
Uruguay.
<PAGE>
BIG PONY GOLD, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1996
FOOTE, PASSEY, GRIFFIN and COMPANY
[LETTERHEAD]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Big Pony Gold, Inc.
We have audited the accompanying consolidated balance sheet of
Big Pony Gold, Inc. and its subsidiary (both development stage
companies) as of May 31, 1996 and the related consolidated
statements of operations, stockholders' equity and cash flows for
the seven months then ended. 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
audit provides a reasonable basis for our opinion.
In our opinion, the May 31, 1996 financial statements referred to
above present fairly, in all material respects, the financial
position of Big Pony Gold, Inc. and its subsidiary (both
development stage companies) as of May 31, 1996, and the
consolidated results of their operations and their consolidated
cash flows for the seven months then ended in conformity with
generally accepted accounting principles.
Salt Lake City, Utah
August 21, 1996
<TABLE>
<CAPTION>
Big Pony Gold, Inc.
(A development stage company)
CONSOLIDATED BALANCE SHEET
May 31, 1996
ASSETS
<S> <C>
CURRENT ASSETS
Cash $504,806
Total current assets 504,806
PROPERTY - VEHICLE 7,539
OTHER ASSETS
Deferred offering costs 60,855
Organization costs 50
60,905
$573,250
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 32,295
Total current liabilities 32,295
LONG-TERM LIABILITIES
Loans payable - related party 207,723
STOCKHOLDERS' EQUITY
Common stock $.001 par value;
Authorized - 50,000,000 shares
Issued and Outstanding
5,150,073 shares 5,150
Additional paid-in-capital 1,628,986
Deficit accumulated during the
development stage (1,300,904)
333,232
$ 573,250
</TABLE>
The accompanying notes are an integral part of this statement.
<TABLE>
<CAPTION>
Big Pony Gold, Inc.
(A development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the seven months ended May 31, 1996
and the period from August 2, 1984 (inception)
to May 31, 1996
Period from
August 2, 1984
Seven months (inception)
ended through
May 31, May 31,
1996 1996
<S> <C> <C>
Revenues $ - $ -
Operating expenses
Exploration 63,185 847,940
General and administrative 49,852 464,453
113,037 1,312,393
Loss from operations (113,037) (1,312,393)
Other income
Interest 4 12,234
Other - 785
4 13,019
Net loss before
income taxes (113,033) (1,299,374)
Income tax expense 109 1,530
NET LOSS $(113,142) $(1,300,904)
Loss per share $ (.03)
Weighted average
shares outstanding 4,127,429
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
<CAPTION>
Big Pony Gold, Inc.
(A development stage company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the period from August 2, 1984 (inception)
to May 31, 1996
Deficit
Accumulated
Additional During the
Common Paid-In Development
Stock Capital Stage
<S> <C> <C> <C>
August 2, 1984:
Sale of common stock to
officers and directors $ 1,000 $ 1,500 $ -
December 31, 1984:
Net loss for period - - (109)
Balances at
December 31, 1984 1,000 1,500 (109)
May 14, 1985:
Sale of common stock
public offering (net) 2,500 19,194 -
December 31, 1985:
Net income for period - - 220
Balances at
December 31, 1985 3,500 20,694 111
December 31, 1986:
Net income for period - - 894
Balances at
December 31, 1986 3,500 20,694 1,005
December 31, 1987:
Net income for period - - 224
Balances at
December 31, 1987 3,500 20,694 1,229
November 8, 1988:
Contribution of capital
to the Company by an
insider - 24,092 -
November 14, 1988:
Sale of common stock to
Gold Standard, Inc. 3,700 46,300 -
November 15, 1988:
Acquisition of Tormin S.A.
through the issuance of
common stock 850 - -
Acquisition and cancellation
of common stock previously
issued (650) 650 -
December 31, 1988:
Net loss for period - - (2,620)
Balances at
December 31, 1988 7,400 91,736 (1,391)
December 31, 1989:
Net loss for period - - (332,455)
Balances at
December 31, 1989 7,400 91,736 (333,846)
December 31, 1990:
Net loss for period - - (408,825)
Balances at
December 31, 1990 7,400 91,736 (742,671)
October 31, 1991:
Net loss for period - - (217,096)
Balances at
October 31, 1991 7,400 91,736 (959,767)
October 31, 1992:
Net loss for period - - (90,674)
Balances at
October 31, 1992 7,400 91,736 (1,050,441)
May 7, 1993:
Issuance of stock in
conversion of debt to
equity 4,000 996,000 -
October 31, 1993:
Net loss for period - - (16,537)
Balances at
October 31, 1993 11,400 1,087,736 (1,066,978)
October 31, 1994:
Net loss for period - - (59,766)
Balances at
October 31, 1994 11,400 1,087,736 (1,126,744)
October 31, 1995:
Net loss for period - - (61,018)
Balances at
October 31, 1995 $11,400 $1,087,736 $ $(1,187,762)
March 1, 1996:
Reverse stock split 3:1 (7,600) 7,600
March 14, 1996:
Issuance of stock for
conversion of debt to
equity and other
consideration 750 9,250
March 14, 1996
Issuance of stock for
services 100 24,900
May 10, 1996
Sale of common stock 500 499,500
Net loss for seven month
period - - (113,142)
Balances at
May 31, 1996 $5,150 $1,628,986 $1,300,904)
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
<CAPTION>
Big Pony Gold, Inc.
(A development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the seven months ended May 31, 1996
and the period from August 2, 1984 (inception)
to May 31, 1996
Period from
August 2, 1984
Seven months (inception)
ended through
May 31, May 31,
1996 1996
<S> <C> <C>
Increase (decrease) in cash
Cash flows from operating
activities:
Net Loss $ (113,142) $(1,300,904)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Amortization - 850
Issuance of stock for
services 25,000 25,000
Decrease (increase) in:
Prepaid expense 267 -
Deferred offering costs (10,596) (60,855)
Organization costs - (50)
Increase (decrease) in:
Income tax payable (100) -
Accounts payable 32,295 32,295
Net cash used by
operating activities (66,276) (1,303,664)
Cash flows used by investing activities:
Purchase of vehicle (7,539) (7,539)
Cash flows from financing activities:
Proceeds from loans payable 77,677 1,217,723
Proceeds from capital
contributions - 24,092
Proceeds from issuance of common
stock 500,000 577,500
Cash applied to offering costs - (3,306)
Net cash provided by
financing activities 577,677 1,816,009
Net increase in cash 503,862 504,806
Cash at beginning of period 944 -
Cash at end of period $ 504,806 $ 504,806
</TABLE>
Supplemental disclosures of cash flow information
Cash paid during the seven month period ending May 31, 1996 for:
Interest $ -
Taxes $ 133
Non-cash transactions
During the seven month period ended May 31, 1996, the Company's
parent, Gold Standard, Inc. transferred certain mineral rights
and other assets to the Company and canceled 410,000 in debt owed
to it by the Company in exchange for 750,000 shares of the
Company's common stock.
On March 14, 1996, the Company issued 100,000 shares of its,
common stock to two employees in exchange for services performed
by them valued at $25,000.
From inception through October 31, 1995, 4,000,000 shares of
common stock were issued in exchange for cancellation of debt of
$968,062 and conversion of a receivable of $31,938. Shares valued
at $850 were also issued for services.
The accompanying notes are an integral part of these statements.
Big Pony Gold, Inc.
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1996
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's accounting policies reflect industry practices and
conform to generally accepted accounting principles. The
following policies are considered to be significant:
1. Organization
Big Pony Gold, Inc. was incorporated pursuant to the laws of the
state of Utah on August 2, 1984 under the name of Big Pony
Development. During 1988, Gold Standard, Inc., a Utah corporation
(the parent company), acquired 50% of the outstanding common
stock of Big Pony Development and the Company changed its name to
Big Pony Gold, Inc. During the same period, Big Pony Gold, Inc.
acquired 100% of the common stock of Tormin S.A. (a corporation
organized under the laws of the Oriental Republic of Uruguay).
The parent company (Gold Standard, Inc.) acquired an additional
4,000,000 shares of common stock on May 7, 1993 in a conversion
of debt to equity. On March 1, 1996 the Company initiated a 3:1
reverse stock split. The parent company acquired 750,000 shares
of common stock on March 14, 1996 in a conversion of debt to
equity and transfer of other assets (Note G). In May of 1996 an
additional 500,000 shares were sold to outside investors. As of
May 31, 1996 the parent company was the majority shareholder with
ownership of 64.4% of the stock issued and outstanding. The
Company has not paid dividends in the past. Payment of dividends
in the future will depend on the Company's profitability,
financial requirements and other relevant factors.
2. Development Stage Company
The Company is involved in prospecting and exploration
activities, seeking commercially exploitable mineral properties.
The Company has not yet commenced development or production
activities on any of its mineral lease holdings. No significant
revenues have, as yet, been generated from mining activity, its
planned principal operation. Therefore, the Company has been
treated as a development stage company for financial reporting
purposes, in accordance with Statement of Financial Accounting
Standards No. 7., Accounting and Reporting by Development Stage
Enterprises.
3. Principles of Consolidation
The accompanying financial statements include the accounts of Big
Pony Gold, Inc. and its wholly owned subsidiary, Tormin S.A., a
corporation organized under the laws of the Oriental Republic of
Uruguay. The acquisition was effectuated to provide Big Pony
Gold, Inc. with an authorized corporate entity through which
business could be transacted in Uruguay. The acquisition was
accounted for under the purchase method of accounting. As used
herein, references to the Company" refer to Big Pony Gold, Inc.
and its consolidated, wholly owned subsidiary, Tormin S.A. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
4. Exploration and Development Expenses
Prospecting and exploration costs incurred in the search for new
mining properties are charged to expense as incurred, unless
associated with identified reserves. Exploration and development
costs associated with identified reserves will be capitalized
until the related geologic areas are either put into production, sold or
abandoned. Capitalized costs associated with properties put into production
will be deferred and amortized using the units-of-production method based upon
proven reserves.
5. Depreciation and amortization
Depreciation and amortization are provided for in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives. Vehicles are depreciated over 5 years using the
straight-line method.
6. Deferred Offering Costs
Legal and accounting fees incurred in connection with a proposed
public offering are being deferred until the offering has been
completed. The total deferred costs will be offset against cash proceeds
received and the net amount will be recorded as stockholders' equity. In the
event the proposed offering is terminated, deferred costs will be charged to
operations.
7. Organization Costs
Costs related to the incorporation of the Company have been capitalized. These
costs will be amortized over sixty months commencing when the Company ceases
to be considered a development stage company.
8. Loss Per Share
Loss per share of common stock is computed based on the weighted-average
number of common shares outstanding during the seven month period ending May
31, 1996. The Company had common stock equivalents outstanding at May 31, 1996
in the form of stock warrants (Note D). These warrants were excluded in the
calculation of loss per share at May 31, 1996 because their inclusion would be
anti-dilutive.
9. Use of estimates
In preparing the Company's financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
10. Pair market value disclosure
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments" (SFAS 107), requires disclosure of the fair
value of certain items, including receivables, payables, debt and investments.
The Company believes that the amounts disclosed within the combined balance
sheet do not differ significantly from fair value as defined in SFAS 107.
NOTE B - CONTINGENCIES
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
Big Pony Gold, Inc. as a going concern. However, the Company has not yet
generated any revenue from operations and has experienced recurring operating
losses since 1988. The Company's past operations have been funded by Gold
Standard, Inc. (its parent Company) and a subsidiary of the parent, Gold
Standard South through unsecured, long-term loans. A total debt of $978,062
was exchanged for additional common stock in the Company during 1993 and 1996.
(See Note C).
Since the Company is not self-sustaining, its future as a going concern is
dependent on its ability to generate net revenues from operations, or continue
to obtain operating capital from its parent Company or through other equity
or debt sources. In May of 1996 the Company obtained $500,000 in equity
financing as described in Note D.
The parent's ability to continue funding the Company's operations is dependent
upon the parent's working capital resources and fiscal strength. Erosion of
the parent's working capital could impact its ability to continue to fund the
Company's activities at current levels.
NOTE C - RELATED PARTY TRANSACTIONS
The Company's operating expenses and exploration activities on mineral lease
holdings in the Republic of Uruguay have been funded through loans received
from its parent company, Gold Standard, Inc., and a subsidiary of the parent
Gold Standard South. For the seven month period ending May 31, 1996, loans
received from the parent company and Gold Standard South totaled $25,867 and
$51,810 respectively. Through October 31, 1993, the cumulative loans received
from the parent company totaled $968,062. This debt was converted to equity
in 1993 when 4,000,000 shares of the Company's previously unissued common
stock were issued to the parent in exchange for consideration totaling
51,000,000 ($968,062 in debt conversion plus a receivable from the parent of
$31,938). As of May 31, 1996, non-interest bearing loans from Gold Standard
and its subsidiary totalled $207,723.
On March 14, 1996 the Company issued stock to related parties as described in
Note D.
To guarantee their future reclamation commitments in Uruguay, the parent
company has obtained a standby bank letter of credit in the amount of
$1,000,000. The benefits of this letter of credit have been extended by the
parent to Big Pony Gold, Inc. and its subsidiary, Tormin, S.A. (Note G).
The Company shares office facilities and employees in Salt Lake City and
Uruguay with the parent company. Wages and office expenses are apportioned
between the parent and subsidiary, based on the exploration activity on their
joint and separate properties as determined by agreement of the Boards of
Directors of the entities.
NOTE D - TRANSACTIONS IN CAPITAL STOCK
On March 1, 1996, the Company declared a 3:1 reverse stock split. Par value of
the stock did not change. On March 14, 1996, 750,000 shares of common stock
were issued to the parent in exchange for cancellation of $10,000 in debt, and
transfer of certain mineral rights and assets pursuant to the cancellation of
the Campo del Oro Venture (Note G). On March 14, 1996, 100,000 shares of
common stock were issued to two employees in exchange for services performed
by them. On May 10, 1996, the Company sold 500,000 shares of its common stock
for $1 per share. Each share included a warrant to purchase an additional
share for $1.25, exercisable for 3 years from the date of purchase.
As of May 31, 1996, the Company's outstanding stock purchase warrants are as
follows:
No of shares
Issue Expiration Exercise subject to
Date Date Price Warrant
May 10, 1996 May 10, 1999 1.25 500,000
If all outstanding stock purchase warrants were exercised, the total proceeds
would be $625,000.
NOTE E - CONCENTRATIONS OF CREDIT RISK
The Company maintains its cash balances with two financial institutions
located in Salt Lake City, Utah and a brokerage firm in Vancouver, Canada.
Uninsured balances are approximately $404,806 at May 31, 1996.
NOTE F - INCOME TAXES
Effective November 1, 1992, the Company adopted statement of Financial
Accounting Standard No. 109, Accounting for Income Taxes. The Company has a
significant net operating loss carry forward which could give rise to a
deferred tax asset. Because the Company has no assurance that the tax benefit
from the net operating loss will ever be realized, a valuation allowance has
been provided equal to the deferred tax asset. There are no other temporary
differences which arise from recognizing income and expense in different
periods for financial and tax reporting purposes. The Company's gross deferred
tax asset attributable to the net operating loss carry forward and the
associated valuation allowance are summarized as follows at May 31, 1996:
Total deferred tax assets
(based on net operating
loss carry forward) $ 470,000
Less valuation allowance (470,000)
Net deferred tax asset $ -
The Company's unused net operating loss carry forwards and expiration dates
are detailed as follows:
Federal Net Operating Loss State Net Operating Loss
Expiration Date Amount Expiration Date Amount
December 31, 2003 $ 1,391 - $ -
December 31, 2004 333,320 - -
December 31, 2005 408,740 - -
October 31, 2006 217,011 December 31, 1996 216,911
October 31, 2007 90,589 October 31, 1997 90,489
October 31, 2008 16,027 October 31, 1998 15,927
October 31, 2009 59,766 October 31, 1999 59,666
October 31, 2010 60,918 October 31, 2010 60,818
October 31, 2011 113,142 October 31, 2011 _ 113,042
$ 1,300,904 $ 556,853
NOTE G - JOINT VENTURE AGREEMENTS
During June of 1992 the Company and Gold Standard, Inc. entered into a joint
venture agreement (Campo del Oro Venture) with Santa Fe Pacific Mining, Inc.,
a division of Santa Fe Pacific Corporation. The purpose of the joint venture
was to facilitate exploration and potential future development of all of the
Company's mineral holdings in southern Uruguay. Under the terms of this
operating agreement, Santa Fe could earn up to a 60% interest in producible
discoveries on the subject properties by funding 100% of the exploration
expenses up to either a specified minimum investment or until a decision to
develop a discovery was reached.
During November 1994 the Campo del Oro Venture formed a joint venture with
Ashton Global Exploration Propriety Limited of Melbourne, Australia. The
purpose of the joint venture was to explore, develop and mine for diamonds in
Uruguay.
As of April 14, 1996, Santa Fe Pacific Mining, Inc. withdrew from the above
agreements. All mineral rights and assets of the joint venture were
transferred to the Company and Gold Standard, Inc. Under an agreement dated
March 14, 1996, Gold Standard, Inc. transferred its share of the mineral
rights and assets to the Company and canceled $10,000 of the debt due it from
the Company in exchange for 750,000 shares of the Company's common stock
(Note D).
NOTE H - SEGMENTAL INFORMATION
The Company's only activity and, therefore, dominant industry segment, is gold
exploration, development and mining. The entire active operations of the
Company for the seven months ended May 31, 1996 were located within the
Republic of Uruguay. No revenue was generated from operations in Uruguay
during the seven months ended May 31, 1996. Less than 10% of the Company's
identifiable assets are located in Uruguay.
NOTE I - COMPARISON OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
IN THE UNITED STATES TO ACCOUNTING PRINCIPLES IN CANADA
The Company's financial statements were prepared on the basis of generally
accepted accounting principles as promulgated in the United States of America.
Canada has its own accounting principles as promulgated by the Accounting
Standards Committee of the Canadian Institute of Chartered Accountants.
Differences between Canadian and United States accounting principles used in
the preparation of these financial statements are considered to be immaterial
and to have no significant effect on the Company's financial position or
results of operations.
Report of Independent Certified Public Accountants on Supplementary
Information
Board of Directors
Big Pony Gold, Inc.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole of Big Pony Gold, Inc. and its
subsidiary (both development stage companies) for the seven months ended May
31, 1996, which are presented in the preceding section of this report. The
supplementary information presented hereinafter is presented for purposes of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the audit procedures
applied in the audit of the basic financial statements and, in our opinion is
fairly stated, in all material respects, in relation to the basic financial
statements taken as a whole.
The financial statements of Big Pony Gold, Inc., as of and for the years ended
October 31, 1995 and 1994 were also audited by us. Our report dated November
21, 1995 stated that the supplementary information is fairly presented in all
material respects in relation to the basic financial statements taken as a
whole.
The financial statements of Big Pony Gold, Inc. as of and for the years ended
October 31, 1993, 1992, for the ten month period ending October 31, 1991 and
for the year ending December 31, 1990 were audited by other auditors whose
report dated January 21, 1994 stated that the supplementary information for
those periods is fairly presented in all material respects in relation to the
basic financial statements taken as a whole.
Salt Lake City, Utah
August 21, 1996
<TABLE>
<CAPTION>
Big Pony Gold, Inc.
(A development stage company)
SCHEDULE I - CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SEVEN MONTHS ENDED MAY 31, 1996
AND FOR THE FIVE FISCAL YEARS ENDED OCTOBER 31, 1995
Seven months
ended Year ended Year ended Year ended
May 31, October 31, October 31, October 31,
1996 1995 1994 1993
<S> <C> <C> <C> <C>
Revenues $ - $ - $ - $ -
Operating Expenses
Exploration expense 63,185 47,103 35,872 1,945
General and
administrative 49,852 13,823 23,800 14,498
113,037 60,926 59,672 16,443
Loss from
operations (113,037) (60,926) (59,672) (16,443)
Other income -
Interest 4 8 6 6
Net loss before
Income taxes (113,033) (60,918) (59,666) (16,437)
Income tax expense 109 100 100 100
NET LOSS $(113,142) $(61,018) $(59,766) $(16,537)
Loss per share (a) $ (.03) $ (.02) $ (.02) $ (.0l)
Weighted average
shares outstanding (a) 4,127,429 3,800,000 3,800,000 3,113,242
(a) As of March 1, 1996, the Company declared a 3:1 reverse stock split. The
weighted average shares outstanding and loss per share for all periods
presented above have been restated to reflect the stock split.
Big Pony Gold, Inc.
(A development stage company)
SCHEDULE I - CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SEVEN MONTHS ENDED MAY 31, 1996
AND FOR THE FIVE FISCAL YEARS ENDED OCTOBER 31, 1995
Ten months
Year ended ended
October 31, October 31,
1992 1991
<C> <C>
Revenues $ - $ -
Operating Expenses
Exploration expense 61,444 153,368
General and
administrative 29,137 63,719
90,581 217,087
Loss from
operations (90,581) (217,087)
Other income -
Interest 7 91
Net loss before
Income taxes (90,574) (216,996)
Income tax expense 100 100
NET LOSS $(90,674) $(217,096)
Loss per share (a) $ (.04) $ (.09)
Weighted average
shares outstanding (a) 2,466,666 2,466,666
(a) As of March 1, 1996, the Company declared a 3:1 reverse stock split. The
weighted average shares outstanding and loss per share for all periods
presented above have been restated to reflect the stock split.
</TABLE>
<TABLE>
<CAPTION>
Big Pony Gold, Inc.
(A development stage company)
SCHEDULE II - CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SEVEN MONTHS ENDED MAY 31, 1996 AND
FOR THE FIVE FISCAL YEARS ENDED OCTOBER 31, 1995
Seven months
ended Year ended Year ended Year ended
May 31, October 31, October 31, October 31,
1996 1995 1994 1993
<S> <C> <C> <C> <C>
Cash flows from operating
activities -
Net Loss $ (113,142) $ (61,018) $ (59,766) $ (16,537)
Adjustments to
reconcile net loss
to net cash used by
operating activities:
Amortization - - - 510
Issuance of stock for
services 25,000 - - -
Decrease (increase) in:
Accounts receivable - - 31,938 -
Prepaid expenses 267 (267) - -
Deferred offering
costs (10,596) (27,017) (23,242) -
Increase (decrease) in:
Income tax payable (100) - - -
Accounts payable 32,295 (11,925) 11,925 (259)
Net cash used by
operating
activities (66,276) (100,227) (39,145) (16,286)
Cash flows used by investing
activities
Purchase of equipment (7,539) - - -
Cash flows from financing
activities
Proceeds from loans
payable 77,677 98,018 42,028 16,308
Proceeds from issuance of
common stock 500,000 - - -
577,677 98,018 42,028 16,308
Net increase (decrease)
in cash 503,862 (2,209) 2,883 22
Cash at beginning of
period 944 3,153 270 248
Cash at end of period $ 504,806 $ 944 $ 3,153 $ 270
Big Pony Gold, Inc.
(A development stage company)
SCHEDULE II - CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SEVEN MONTHS ENDED MAY 31, 1996 AND
FOR THE FIVE FISCAL YEARS ENDED OCTOBER 31, 1995
Ten months
Year ended ended
October 31, October 31,
1992 1991
<S> <C> <C>
Cash flows from operating
activities -
Net Loss $ (90,674) $ (217,096)
Adjustments to
reconcile net loss
to net cash used by
operating activities:
Amortization 85 85
Issuance of stock for
services - -
Decrease (increase) in:
Accounts receivable - -
Prepaid expenses - -
Deferred offering
costs - -
Increase (decrease) in:
Income tax payable - -
Accounts payable (142) (4,592)
Net cash used by
operating
activities (90,731) (221,603)
Cash flows used by investing
activities
Purchase of equipment - -
Cash flows from financing
activities
Proceeds from loans
payable 90,810 212,911
Proceeds from issuance of
common stock - -
90,810 212,911
Net increase (decrease)
in cash 79 (8,692)
Cash at beginning of
period 169 8,861
Cash at end of period $ 248 $ 169
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BIG PONY GOLD
UNAUDITED FINANCIAL STATEMENTS
JULY 1996
BIG PONY GOLD
BALANCE SHEET
July 31,1996
(Unaudited)
ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $429,375
Accrued interest 593
Prepaid expenses 50
TOTAL CURRENT ASSETS 430,018
PROPERTY AND EQUIPMENT
Equipment and vehicles 44,843
44,843
OTHER ASSETS
Deferred offering costs 60,856
Deposits 6,736
67,592
TOTAL ASSETS $ 542,452
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable $248,934
TOTAL CURRENT LIABILITIES 248,934
STOCKHOLDERS' EQUITY
Common stock 5,150
Additional paid-in capital 1,628,986
Retained deficit (1,340,618)
TOTAL STOCKHOLDERS' EQUITY 293,518
TOTAL LIABILITIES AND EQUITY $ 542,452
BIG PONY GOLD
STATEMENT OF OPERATIONS
Nine month period ended July 31, 1996
(Unaudited)
INCOME FROM OPERATIONS $ -
EXPENSES
Depreciation 2,360
Leasehold exploration
and carrying costs 91,076
General and administrative:
Legal 6,764
Other 53,621
NET LOSS FROM OPERATIONS (153,821)
OTHER INCOME
Interest income 964
NET LOSS $(152,857)
</TABLE>
ARTICLES OF INCORPORATION
OF
BIG PONY DEVELOPMENT
We, the undersigned, natural persons over the age of
eighteen (18) years or more, acting as incorporators of the
corporation under the Utah Business Corporation Act, adopt
the following Articles of Incorporation for such corporation.
ARTICLE I
CORPORATE NAME
The name of the Corporation is BIG PONY DEVELOPMENT.
ARTICLE II
DURATION
The duration of the Corporation shall be perpetual.
ARTICLE III
GENERAL PURPOSES
This Corporation is organized for the following
purposes:
A. To purchase, own and sell assets of all types and
kinds.
B. To acquire or merge into existing businesses.
C. To buy, sell, mortgage, exchange, lease, hold for
investment or otherwise operate real and personal
property of all kinds and any interest therein.
D. For any other purposes allowed by law.
E. The provisions of this Article shall be construed as
purposes and powers and each as an independent
purpose and power. The enumeration of specific
purposes and powers shall not be held to limit or
restrict in any manner the purposes and powers of the
Corporation, and the purposes and powers therein
specified shall not be limited or restricted by
reference to, or inference from, the terms of any
provision of this or any other article hereof.
ARTICLE IV
AUTHORIZED SHARES
The aggregate number of shares the Corporation shall
have authority to issue is FIFTY MILLION (50,000,000) shares
with a par value of ONE TENTH OF ONE CENT ($0.001) per share.
All stock of this Corporation shall be of the same class
which shall be designated common stock.
ARTICLE V
COMMENCEMENT OF BUSINESS
The Corporation will not commence business until at
least ONE THOUSAND DOLLARS ($1,000) in cash or property has
been received by it as consideration for the issuance of its
shares.
ARTICLE VI
REGISTERED OFFICE AND AGENT
The post office address of the Corporation's initial
registered office is 4940 South Eastlake Drive, Murray, Utah
and the name of its initial registered agent at such address
is Randy L. Goodsell.
ARTICLE VII
PRE-EMPTIVE RIGHTS
The shareholders shall have no pre-emptive rights to
acquire any securities of this Corporation.
ARTICLE VIII
DIRECTORS
The number of directors constituting the initial Board
of Directors of the Corporation is three (3) and the names
and addresses of the persons who are to serve as directors
until their successors are elected and shall qualify are:
Randy L. Goodsell 4940 South Eastlake Drive
Murray, UT 84107
Lucille B. Leavitt 6242 South 1280 East
Salt Lake City, Utah 84121
Earl E. Goodsell 744 Big Mountain
Murray, Utah 84107
ARTICLE IX
INCORPORATORS
The names and addresses of the incorporators are:
Randy L. Goodsell 4940 South Eastlake Drive
Murray, UT 84107
Lucille B. Leavitt 6242 South 1280 East
Salt Lake City, Utah 84121
Earl E. Goodsell 744 Big Mountain
Murray, Utah 84107
ARTICLE X
NON-ASSESSABILITY
Shares of the Corporation shall not be subject to
assessment for payment of the debts of the Corporation.
ARTICLE XI
EXEMPTION FROM CORPORATE DEBTS
The private property of the shareholders shall not be
subject to the payment of any corporate debts to any extent
whatsoever.
ARTICLE XII
COMMON DIRECTORS - TRANSACTIONS BETWEEN CORPORATIONS
No contract or other transaction between this
corporation and any one or more of its directors or any other
corporation, firm, association, or entity in which one or more of
its directors or officers are financially interested, shall
be either void or voidable because of such relationship or
interest, or because such director or directors are present
at the meeting of the Board of Directors, or a committee
thereof, which authorizes, approves, or ratifies such
contract or transaction, or because his or their votes are
counted for such purpose if: (a) the fact of such
relationship or interest is disclosed or known to the Board
of Directors or committee which authorizes, approves, or
ratifies the contract or transaction by vote or consent
sufficient for the purpose without counting the votes or
consents of such interested directors; or (b) the fact of
such relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize, approve, or
ratify such contract or transaction by vote or written
consent, or (c) the contract or transaction is fair and
reasonable to the corporation.
Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the
Board of Directors or committee thereof which authorizes,
approves or ratifies such contract or transaction.
DATED this 2nd day of August, 1984.
/s/Randy Goodsell
Incorporator
/s/Lucille H. Leavitt
Incorporator
/s/Earl E. Goodsell
Incorporator
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE)
On the 2nd day of August, 1984, personally appeared
before me Randy L. Goodsell, who being by me first duly
sworn, declared that he is the person who signed the
foregoing document as an incorporator and that the statements
therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
this 2nd day of August, 1984.
/s/ Scott H. Slot
NOTARY PUBLIC
Residing at Salt Lake City,
Utah
My Commission expires:
2/17/88
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE)
On the 1st day of August, 1984, personally
appeared before me Lucille B. Leavitt, who being by me first
duly sworn, severally declared that she is the person who
signed the foregoing document as an incorporator and that the
statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
this 1st day of August, 1984.
/s/Tanya M. Sargent
NOTARY PUBLIC
My Commission expires:
1/13/86
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE)
On the 2nd day of August, 1984, personally appeared
before me Earl E. Goodsell who being by me first duly sworn,
severally declared that he is the person who signed the
foregoing document as an incorporator and that the statements
therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
this 2ND day of August, 1984.
/s/Scott H. Slot
NOTARY PUBLIC
Residing at Salt Lake City,
Utah
My Commission expires:
2/17/88
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
BIG PONY DEVELOPMENT
Pursuant to the provisions of Section 16-10-57 of the
Utah Business Corporation Act, the undersigned corporation
hereby adopts the following Articles of Amendment to its
Articles of Incorporation.
FIRST: The name of the corporation is Big Pony
Development, Inc.
SECOND: The following amendments to the Articles of
Incorporation of Big Pony Development, Inc. were duly adopted
by the shareholders of the corporation at a meeting held
November 14, 1988, in the manner prescribed by the Utah
Business Corporation Act, to-wit:
ARTICLE I - NAME
The name of this corporation is BIG PONY GOLD, INC.
THIRD: The number of shares of the corporation
outstanding at the time of the adoption of such amendments
was 7,400,000, and the number entitled to vote thereon was
6,550,000.
FOURTH: The designation and number of outstanding shares
of each class entitled to vote thereon as a class were as
follows, to-wit:
CLASS NUMBER OF SHARES
Common 6,550,000
FIFTH: The number of shares voted for such amendments
was 4,386,500, with None opposing and None abstaining.
SIXTH: These amendments to not provide for any exchange,
reclassification or cancellation of issued shares.
SEVENTH: These amendments do not effect a change in the
stated capital of the corporation.
IN WITNESS WHEREOF, the undersigned President and
Secretary, having been hereunto duly authorized have executed
the foregoing Articles of Amendment for the corporation under
the penalties of perjury this 15th day of November, 1988.
BIG PONY DEVELOPMENT
/s/Richard A. Boulay
President
Attest:/s/Bret C. Decker
Secretary
BYLAWS
FOR
BIG PONY DEVELOPMENT
ARTICLE I
OFFICES - BOOKS AND RECORDS
Section 1.1 Offices. The initial office of the
Corporation and its principal place of business is 4940 South
Eastlake Drive, Murray, Utah 84107.
Section 1.2 Registered Agent. The initial registered
agent of the Corporation is Randy L. Goodsell.
Section 1.3 Books and Records. The Corporation shall keep
at its registered office the following books and records and any
shareholder of record, upon written demand stating the purpose
thereof, shall have the right to examine, in person, or by agent
or attorney, at any reasonable time or times, for any proper
purpose, the same and to make extracts therefrom:
(a) Its books and records of account.
(b) Its minutes of meetings of the Board of Directors and
any committees thereof.
(c) Its minutes of meetings of the shareholders.
(d) Its record of shareholders which shall give their
names and addresses and the number and class of the shares held
by each.
(e) Copies of its Articles of Incorporation and Bylaws as
originally executed and adopted together with all subsequent
amendments thereto.
Section 1.4 Financial Statements. Upon the written
request of any shareholder of the Corporation, the Corporation
shall mail to such shareholder its most recent annual or
quarterly financial statements showing in reasonable detail its
assets and liabilities and the results of its operation unless
the Bylaws shareholder has already received the same. Neither
the Corporation nor any director, officer, employee or agent of
the Corporation shall be liable to the shareholder or anyone to
whom the shareholder discloses the financial statement or any
information contained therein for any error or omission therein
whether caused without fault, by negligence or by gross
negligence, unless (1) the error or omission is material, (2) the
director, officer, employee or agent in question knew of the
error or omission and intended for the shareholder or other
person to rely thereon to his detriment, (3) the shareholder or
other persons did reasonably rely thereon, and, in addition, (4)
he is otherwise liable under applicable law.
ARTICLE II
BYLAWS
Section 2.1 Amendments. These Bylaws may be altered,
amended or repealed and new Bylaws adopted by the Board of
Directors. Any such action shall be subject to repeal or change
by action of the shareholders, but the alteration, amendment,
repeal, change or new Bylaw (and the repeal of the old Bylaw)
shall be valid and effective and no director, officer,
shareholder, employee or agent of the Corporation shall incur any
liability by reason of any action taken or omitted in reliance of
the same. The power of the shareholders to repeal or change any
alteration, amendment, repeal or new Bylaw shall not extend to
any original Bylaw of the Corporation so long as it is not
altered, amended or repealed, but only to action by the Board
thereafter. There shall be no time limit on its exercise.
Section 2.2 Bylaw Provisions Additional and Supplemental to
Provisions of Law. All restrictions, limitations, requirements
and other provisions of these Bylaws shall be construed, insofar
as possible, as supplemental and additional to all provisions of
law applicable to the subject matter thereof and shall be full
complied with in addition to the said provisions of law unless
such compliance shall be illegal.
Section 2.3 Bylaw Provisions Contrary to or Inconsistent
with Provisions of Law. Any article, section, subsection,
subdivision, sentence, clause or phrase of these Bylaws which,
upon being construed in the manner provided in Section 2.2
hereof, shall be contrary to or inconsistent with any applicable
provision of law, shall not apply so long as said provisions of
law shall remain in effect, but such result shall not affect the
validity or applicability of any other portions of these Bylaws,
it being hereby declared that these Bylaws would have been
adopted and each article, section, subsection, subdivision,
sentence, clause or phrase thereof, irrespective of the fact that
any or more articles, sections, subsections, subdivisions,
sentences, clauses or phrases is or are illegal.
ARTICLE III
MEETING OF SHAREHOLDERS
Section 3.1 Place of Meetings. All meetings of the
shareholders, annual or special, however called, shall be held at
the registered office of the Corporation unless the Board of
Directors designates another place. The Board of Directors may
designate any place for any meeting, either within or without the
State of Utah.
Section 3.2 Annual Meeting. An annual meeting of the
shareholders shall be held on the first Monday in the month of
the commencement of the fiscal year (unless that day is a legal
holiday, and then on the next succeeding day, that is not a legal
holiday) at 10:00 a.m., the local time of the place of the
meeting in effect on the day of the meeting.
Section 3.3 Special Meetings. Special meetings of the
shareholders may be called by the Chairman of the Board, the
President, the Board of Directors or the holders of not less than
one-tenth of all the shares entitled to vote to the meeting.
Section 3.4 Notice of Shareholders' Meetings. Written or
printed notice stating the place, day and hour of the meeting
and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than
ten (10) nor more than fifty (50) days before the date of the
meeting, either personally or by mail, by or at the direction of
the President, the Secretary or the officer or persons calling
such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States Mail addressed to
the shareholder at his address as it appears on the stock
transfer books of the Corporation with postage thereon prepaid.
Section 3.5 Waiver of Notice. Any shareholder may waive
notice of any meeting of shareholders (however called or noticed,
whether or not called or noticed and whether before, during or
after the meeting) by signing a written waiver of notice or a
consent to the holding of such meeting, or in approval of the
minutes thereof. Attendance at a meeting, in person or by proxy,
shall constitute waiver of all defects of call or notice
regardless of whether waiver, consent or approval is signed or
any objections are made. All such waivers, consents, or approvals
shall be made a part of the minutes of the meeting.
Section 3.6 Fixing record Date for Meeting. The stock
transfer books of the Corporation shall not be closed for the
purpose of determining shareholders entitled to notice of or to
vote at a meeting of the shareholders but, in lieu thereof, the
date on which notice is given in accordance with Section 3.4
above shall be the record date for those purposes. Such date
shall not be more than fifty (50) nor less than ten (10)
days before the date of the meeting. When a determination of
shareholders entitled to vote at any meeting of shareholders has
been made under this section, such determination shall apply in
any adjournment thereof.
Section 3.7 Voting List. The officer or agent having charge
of the stock transfer books for shares of the Corporation shall
make, at least ten (10) days before each meeting of shareholders,
a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical
order, with the address of and the number of shares held by each,
which list, for a period of ten (10) days prior to the meeting,
shall be kept on file at the registered office of the Corporation
and shall be subject to inspection by any shareholder at any time
during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole
time of the meeting. The original stock transfer books shall be
prima facie evidence as to who are the shareholders entitled to
examine such list or transfer books or to vote at any meeting of
shareholders.
Failure to comply with the requirements of this section
shall not effect the validity of any action taken at such
meeting.
Section 3.8 Quorum of Shareholders, Vote. A majority of
the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders. If a
quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on the
subject shall be the act of the shareholders, unless the vote of
a greater number or voting by classes is required by the Utah
Business Corporations act or the Articles of Incorporation.
Shares shall not be counted to make up a quorum for a meeting if
voting of them at the meeting has been enjoined or for any reason
they cannot be lawfully voted at the meeting. The shareholders
present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment
notwithstanding the withdrawal of enough shareholders to leave
less than quorum.
Section 3.9 Voting of Shares. Each outstanding share
regardless of class shall be entitled to one vote on each matter
submitted to vote at a meeting of shareholders, except to the
extent that the voting rights of the shares of any class or
classes are limited or denied by the Articles of Incorporation.
Neither treasury shares nor shares held by another
Corporation if a majority of the shares entitled to vote for the
election of directors of such other Corporation is held by the
Corporation, shall be voted at any meeting or counted in
determining the total number of outstanding shares at any given
time.
Section 3.10 Proxies. A shareholder may vote either in
person or by proxy executed in writing by the shareholder or by
his duly authorized attorney-in-fact. No proxy shall be valid
after eleven (11) months from the date of its execution, unless
otherwise provided in the proxy, specifically providing a longer
length of time for which the proxy is to continue in force, which
in no case shall exceed seven (7) years from the date of
execution. Any shareholder giving a written consent, or his
proxy, or his transferee or personal representative, or their
respective proxies, may revoke the same prior to the time that
Written consents of the number of shares required to authorize
the proposed action have been filed with the Secretary of the
corporation, but may not do so thereafter.
Section 3.11 Elections of Directors. At each election for
directors every shareholder entitled to dote at such election
shall have the right to vote, in person or by proxy, the number
of shares owned by him for an many persons as there are directors
to be elected and for whose election he has a right to vote. The
candidates receiving the highest number of votes up to the number
of directors to be elected shall be declared elected. Elections
for directors need not be by ballot except upon demand made by a
shareholder at the election and before the voting begins.
Section 3.12 Adjournments. Any shareholders' meeting,
Whether or not a quorum is present, may be adjourned from time to
time by the vote of a majority of the shares, the holders of
which are either present in person or represented by proxy
thereat, but, except as provided in Section 3.8 hereof, in the
absence of a quorum no other business may be transacted at such
meeting. When a meeting is adjourned for thirty (30) days or
more, notice of the adjourned meeting shall be given as in the
case of an original special meeting. Save as aforesaid, it shall
not be necessary to give any notice of the time and place of the
adjourned meeting or of the business to be transacted thereat
other than by announcement at the meeting at which such
adjournment is taken.
ARTICLE IV
DIRECTORS
Section 4.1 Exercise of Corporate Power. The business and
affairs of the Corporation shall be managed by the Board of
Directors.
Section 4.2 Qualifications. Directors need not be
residents of Utah or shareholders of the Corporation. They need
have no other qualifications.
Section 4.3 Compensation. The Board of Directors shall have
authority to fix the compensation of directors. Such compensation
so fixed shall be reported to the shareholders. Any compensation
so fixed shall be for services as a Director only, and a Director
who serves the Corporation in any other capacity may receive a
separate compensation therefor.
Section 4.4 Number. The number of Directors of the
Corporation is a minimum of three (3) and a maximum of nine (9)
as determined by the Board of Directors.
Section 4.5 Term. The term of each Director shall begin
immediately on his election and shall continue until the date set
under these Bylaws for the next annual meeting of the
shareholders. Each Director shall hold office for the term for
which he is elected and until his successor shall have been
elected and qualified.
Section 4.6 Elections. At each annual meeting the
shareholders shall elect Directors, provided that if for any
reason said annual meeting or an adjournment thereof is not held
or the Directors are not elected thereat, then the Directors may
be elected at any special meeting of the shareholders called and
held for that purpose.
Section 4.7 Vacancies. A vacancy or vacancies in the Board
of Directors shall exist in case of the death, resignation or
removal of any Directors, or if the authorized number of
Directors is increased, or if the shareholders fail, at any
annual or special meeting at which any Director is elected, to
elect the full authorized number of Directors to be voted for at
that meeting. Also, the Board of Directors may declare vacant the
office of a Director if he is found to be of unsound mind by an
order of a court of competent jurisdiction or Convicted of a
felony or misdemeanor involving moral turpitude or if, within
sixty (60) days after notice of his elections, he does not accept
the office either in writing or by attending a meeting of the
Board of Directors. Any vacancy occurring may be filled by the
affirmative vote of a majority of the remaining Directors (or a
sole remaining Director) although less than a quorum. A Director
elected to fill a vacancy shall be elected for the unexpired term
of his predecessor in office, or if there was no predecessor,
until the date set under these Bylaws for the next annual meeting
and until his successor is elected. Any vacancy created by reason
of the removal of one or more Directors by the shareholders may
be filled by election of the shareholders at the meeting to which
the Director or Directors are removed.
Section 4.8 Removal. At a meeting expressly called for that
purpose, one or more Directors may be removed by a vote of a
majority of the shares entitled to vote at an election of
Directors.
Section 4.9 Regular Meetings. A regular meeting of the
Board of Directors shall be held without further notice than this
Bylaw immediately after, and at the same place as, the annual
meeting of shareholders. The Board of Directors may provide, by
resolution, the time and place, either within or without the
State of Utah, for the holding of additional regular meetings
without other notice than such resolution.
Section 4.10 Special Meetings. Special meetings of the
Board of Directors may be called by or at the request of the
President or any two Directors. The person or persons authorized
to call special meetings of the Board of Directors may fix any
place, either within or without the State of Utah as the place
for holding any special meeting of the Board of Directors called
by them.
Section 4.11 Notice of Special Meeting. Notice of any
special meeting shall be given at least three (3) days previously
thereto by written notice delivered personally or mailed to each
Director at his business address, or by telegram. If mailed, such
notice shall be deemed to be delivered to the Post Office. Any
Director may waive notice of any meeting. The attendance of a
Director at a meeting shall constitute a waiver of notice of such
meeting, except where a Director attends a meeting for the
express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular
or special meeting of the Board of Directors need be specified in
the notice or waiver of notice of such meeting.
Section 4.12 Quorum. A majority of the number of Directors
fixed by these Bylaws shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors,
but if less than such majority is present at a meeting, a
majority of the Directors present may adjourn the meeting from
time to time without further notice.
Section 4.13 Manner of Acting. The act of the majority of
the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 4.14 Presumption of Assent. A Director of the
Corporation who is present at a meeting of the Board of Directors
at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as
the secretary of the meeting before the adjournment thereof or
shall forward such dissent by certified or registered mail to the
secretary of the Corporation immediately after the adjournment of
the meeting. Such right of dissent shall not apply to a Director
who voted in favor of such action.
Section 4.15 Committees. The Board of Directors by
resolution adopted by the majority of the number of Directors
fixed by the Bylaws may designate a committee or committees
consisting of not less than two (2) directors which committee or
committees, to the extent provided in such resolution, shall have
and may exercise all the authority therein provided; but the
designation of such committee or committees and the delegation
thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed
upon it or him by law.
ARTICLE V
OFFICERS
Section 5.1 Election and Qualifications. The officers of
this Corporation shall consist of a president, one or more vice
presidents, a secretary and a treasurer, each of whom shall be
elected by the Board of Directors at the meeting of the Board of
Directors next following the annual meeting of the shareholders
(or at any meeting if an office is vacant) and such other
officers, including a Chairman of the Board of Directors, and
assistant officers and agents, as the Board of Directors shall
deem necessary, who shall be elected and shall hold their offices
for such terms as the Board of Directors may prescribe. Any two
or more offices may be held by the same person except those of
president and secretary. Any vice president, assistant treasurer
or assistant secretary, respectively, may exercise any of the
powers of the president, the treasurer, or the secretary,
respectively, as directed by the Board of Directors and shall
perform such other duties as are imposed upon him by the Bylaws
or the Board of Directors.
Section 5.2 Term of Office and Compensation. The term of
office and salary of each of said officers and the manner and
time of the payment of such salaries shall be fixed and
determined by the Board of Directors and may be altered by said
Board from time to time at its pleasure.
Section 5.3 Removal and Vacancies. Any officer of the
Corporation may be removed by the Board of Directors at any
meeting whenever in its judgment the best interests of the
Corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of an officer or agent shall
not of itself create contract rights. If any vacancy occurs in
any office of the Corporation, the Board of Directors may elect a
successor to fill such vacancy for the remainder of the unexpired
term and until his successor is fully chosen and qualified.
ARTICLE VI
CHAIRMAN OF THE BOARD
Section 6.1 Powers and Duties. The Chairman of the Board of
Directors, if there be one, shall have the power to preside at
all meetings of the Board of Directors and shall have such other
powers and shall be subject to such other duties as the Board of
Directors may from time to time prescribe.
ARTICLE VII
PRESIDENT
Section 7.1 Powers and Duties. The powers and duties of the
president are:
(a) To act as the chief executive officer of the
Corporation and, subject to the control of the Board of
Directors, to have general supervision, direction and control of
the business and affairs of the Corporation.
(b) To preside at all meetings of the shareholders and,
in the absence of the Chairman of the Board, or if there be none,
at all meetings of the Board of Directors.
(c) To call meetings of the shareholders and also of
the Board of Directors to be held at such times and, subject to
the limitations prescribed by law or by these Bylaws, at such
places as he shall deem proper.
(d) To affix the signature of the Corporation to all
deeds, conveyances, mortgages, leases, obligations, bonds,
certificates and other papers and instruments in writing which
have been authorized by the Board of Directors or which, in the
judgment of the President, should be executed on behalf of the
Corporation and do not require such authorization, to sign
certificates for shares of stock of the Corporation and, subject
to the direction of the Board of Directors, to have general
charge of the property of the Corporation and to supervise and
control all officers, agents and employees of the corporation.
Section 7.2 President pro tem. If neither the Chairman of
the Board, the president, nor the vice president is present at
any meeting of the Board of Directors, a president pro tem may be
chosen to preside and act at such meeting. If neither the
president nor the vice president is present at any meeting of the
shareholders, a president pro tem may be chosen to preside at
such meeting.
ARTICLE VIII
VICE PRESIDENT
Section 8.1 Powers and Duties. In case of the absence,
disability or death of the president, the vice president, or one
of the vice presidents, shall exercise all his powers and perform
all his duties. If there is more than one vice president, the
order in which the vice presidents shall succeed to the powers
and duties of the president shall be as fixed by the Board of
Directors. The vice president or vice presidents shall have such
other powers and perform such other duties as may be granted or
prescribed by the Board of Directors.
ARTICLE IX
SECRETARY
Section 9.1 Powers and Duties. The powers and duties of the
secretary are:
(a) To keep a book of minutes at the principal office
of the Corporation or such other place as the Board of Directors
may order, or all meetings of its Directors and shareholders with
the time and place of holding, whether regular or special, and,
if special, how authorized, the notice thereof given, the names
of those present at Directors' meetings, the number of shares
present or represented at shareholders' meetings and the
proceedings thereof.
(b) To keep the seal of the Corporation and to affix
the same to all instruments which may require it.
(c) To keep or cause to be kept at the principal office
of the Corporation, or at the office of the transfer agent or
agents, a share register, or duplicate share registers, showing
the names of the shareholders and their addresses, the number and
classes of shares held by each, the number and date of
certificates issued for shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
(d) To keep or cause to be kept at the registered
office of the Corporation the books and records required by
Section 1.3(b),(c), (d) and (e) above.
(e) To keep a supply of certificates for shares of the
Corporation, to fill in all certificates issued, and to make a
proper record of each such issuance; provided, that so long as
the Corporation shall have one or more duly appointed and acting
transfer agents of the shares, or any class or series of shares
of the Corporation, such duties with respect to such shares shall
be performed by such transfer agent or transfer agents.
(f) To transfer upon the share books of the Corporation
any and all shares of the Corporation; provided, that so long as
the Corporation shall have one or more duly appointed and acting
transfer agents of the shares, or any class or series of shares,
of the Corporation, such duties with respect to such shares shall
be performed by such transfer agent or transfer agents, and the
method of transfer of each certificate shall be subject to the
reasonable regulations of the transfer agent to which the
certificate is presented for transfer, and also if the
Corporation then has one or more duly appointed and acting
registrars, to the reasonable regulations of the registrar to
which the new certificate is presented for registration; and
provided, further, that no certificate for shares of stock shall
be issued or delivered or, if issued or delivered, shall have any
validity whatsoever until and unless it has been signed or
authenticated in the manner provided in Section 11.4 hereof.
(g) To make service and publication of all notices that
may be necessary or proper, and without command or direction from
anyone. In case of the absence, disability, refusal or neglect of
the secretary to make service or publication of any notices, then
such notices may be served and/or published by the president or a
vice president, or by any person thereunto authorized by either
of them or by the Board of Directors or by the holders of a
majority of the outstanding shares of the Corporation.
(h) To prepare the voting lists required by Section 3.7
above.
(i) Generally to do and perform all such duties as
pertain to his office and as may be required by the Board of
Directors.
ARTICLE X
TREASURER
Section 10.1 Powers and Duties. The powers and duties of
the treasurer are:
(a) To supervise and control the keeping and
maintaining of adequate end correct accounts of the Corporation's
properties and business transactions, including accounts of its
assets, liabilities, receipts, disbursements, gains, losses,
capital, surplus and shares. Any surplus, including earned
surplus, paid-in surplus and surplus arising from a reduction of
stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all
reasonable times be open to inspection by any Director and by any
shareholder as provided in Section 1.3 above.
(b) To keep or cause to be kept at a registered office
of the Corporation the books and records required by Section
1.3(a) above.
(c) To have the custody of all funds, securities,
evidences of indebtedness and other valuable documents of the
Corporation and, at his discretion, to cause any or all thereof
to be deposited for the account of the Corporation with such
depository as may be designated from time to time by the Board of
Directors.
(d) To receive or cause to be received, and to give or
cause to be given, receipts and acquittances for monies paid in
for the account of the Corporation.
(e) To disburse, or cause to be disbursed, all funds of
the Corporation as may be directed by the Board of Directors,
taking proper vouchers for such disbursements.
(f) To render to the president and to the Board of
Directors, whenever they may require, accounts of all
transactions as treasurer and of the financial condition of the
Corporation.
(g) Generally to do and perform all such duties as
pertain to his office and as may be required by the Board of
Directors.
ARTICLE XI
SUNDRY PROVISIONS
Section 11.1 Instruments in Writing. All checks, drafts,
demands for money and notes of the Corporation, and all written
contracts of the Corporation, shall be signed by such officer or
officers, agent or agents, as the Board of Directors may from
time to time by resolution designate. No officer, agent or
employee of the Corporation shall have power to bind the
Corporation by contract or otherwise unless authorized to do so
by these Bylaws or by the Board of Directors.
Section 11.2 Fiscal Year. The fiscal year of this
Corporation shall be from August 1 to July 31.
Section 11.3 Shares Held by the Corporation. Shares in
other corporations standing in the name of this Corporation may
be voted or represented and all rights incident thereto may be
exercised on behalf of this Corporation by any officer of this
Corporation authorized so to do by resolution of the Board of
Directors.
Section 11.4 Certificates of Stock. There shall be issued
to each holder of fully paid shares of the capital stock of the
Corporation a certificate or certificates for such shares. Every
such certificate shall be either (a)signed by the president or a
vice president and the secretary or an assistant secretary of the
Corporation and countersigned by a transfer agent of the
Corporation (if the Corporation shall then have a transfer agent)
and registered by the registrar of the shares of capital stock of
the Corporation (if the Corporation shall then have a registrar);
or (b) authenticated by facsimiles of the signature of the
president and secretary of the Corporation or by facsimile of the
signature of the president and the written signature of the
secretary or an assistant secretary and countersigned by a
transfer agent of the Corporation and registered by a registrar
of the shares of the capital stock of the Corporation.
Section 11.5 Lost Certificates. Where the owner of any
certificate for shares of the capital stock of the Corporation
claims that the certificate has been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place of
the original certificate if the owner (a) so requests, before the
Corporation, has notice that the original certificate has been
acquired by a bona fide purchaser, and (b) files with the
Corporation an indemnity bond in such form and in such amount as
shall be approved by the president or a vice president of the
Corporation, and (c) satisfies any other reasonable requirements
imposed by the Corporation. The Board of Directors may adopt such
other provisions and restrictions with reference to lost
certificates, not inconsistent with applicable law, as it shall
in its discretion deem appropriate.
ADOPTED this ____ day of ______, 1984.
/s/Randy Goodsell
President
ATTEST:
/s/Earl E. Goodsell
Secretary
AGENCY OFFERING AGREEMENT
THIS AGREEMENT is dated for reference June 27, 1996.
BETWEEN: Big Pony Gold, Inc., of 710 Kearns Building, Salt Lake
City, Utah 84101, (the "Issuer");
AND: Georgia Pacific Securities Corporation, of 16th Floor,
Two Bentall Centre, 555 Burrard Street, Vancouver, B.C.
V7X 1S6, (the "Agent").
WHEREAS:
A. The Issuer wishes to raise money for the purposes set
out in its Prospectus, which is to be filed by the Issuer with
the Superintendent of Brokers ("Superintendent") and the
Vancouver Stock Exchange (the "Exchange"), by offering for sale
certain of its securities.
B. The Issuer wishes to appoint the Agent to distribute
those securities and the Agent is willing to accept the
appointment on the terms and conditions of this Agreement.
THE PARTIES to this Agreement therefore agree that:
1. DEFINITIONS
In this Agreement:
(a) "Effective Date" means the date on which the final
receipt for the Prospectus is issued by
the Superintendent;
(b) "Offering" means the offering of the Shares under
the Prospectus;
(c) "Offering Day" means the day on which the Offering
is made;
(d) "Prospectus" means the preliminary prospectus and
the prospectus filed or intended to be filed by the
Issuer with the Regulatory Authorities in connection
with the Offering and any amendments to the
preliminary prospectus and prospectus that may be
filed with the Regulatory Authorities;
(e) "Regulatory Authorities" means the British Columbia
Securities Commission, the Exchange and the
Superintendent;
(f) "Securities" means the Shares, the Agent's Warrants
and any shares in the capital of the Issuer issued
on the exercise of the Agent's Warrants, and any
shares in the capital of the Issuer issued pursuant
to the Greenshoe Option; and
(g) "Shares" means the 600,000 common shares in the
capital of the Issuer to be distributed under the
Prospectus;
(h) "Executive Director" means the Executive Director of
the Securities Commission.
2. APPOINTMENT OF AGENT
2.1 The Issuer appoints the Agent as its exclusive agent and
the Agent accepts the appointment and will act as the exclusive
agent of the Issuer to offer the Shares for sale under the
Prospectus.
2.2 The price of the Shares is the Canadian equivalent of
US$ 1.00 per Share, which is approximately $1.38 as of the date
of this agreement (the "Offering Price").
2.3 The Issuer will reserve or set aside sufficient shares
in its treasury to issue the Shares and all shares that may be
issued on the exercise of the Agent's Warrants and pursuant to
the Greenshoe Option.
3. LISTING APPLICATION AND CONDUCT OF THE OFFERING
3.1 Before the Effective Date, the Issuer will apply to the
Exchange for a conditional listing of its common shares.
3.2 Following the Effective Date and after consulting with
the Exchange, the Issuer and the Agent will set the Offering Day.
3.3 The Offering Day will be on or before the earlier of the
day that is:
(a) 90 days after the Effective Date, and
(b) 12 months after the date of the issue by the
Executive Director of the receipt for the
preliminary prospectus filed in connection with the
Offering.
3.4 The Offering will be made through the facilities of and
in accordance with the rules and policies of the Exchange.
3.5 After the Offering has been completed, the Issuer and
the Agent will file any documents required by the Exchange in
order to remove the conditional listing and to list, post and
call the common shares of the Issuer for trading on the Exchange.
3.6 The Agent will advise the Issuer and its counsel in
writing when the distribution under the Prospectus is complete.
4. GREENSHOE OPTION
4.1 The Agent may solicit and accept subscriptions for
additional shares in the Offering up to a maximum of 15% of the
Offering (the "Greenshoe Option").
4.2 The number of additional shares subject to the Greenshoe
Option is the lesser of 15% of the Offering or the actual number
of additional shares for which subscriptions have been received.
4.3 The Agent will advise the Issuer and the Exchange of the
number of shares subject to the Greenshoe Option within five
business days after the Offering Day and before the shares of the
issuer are listed, posted and called for trading on the Exchange.
4.4 On receipt of notice in writing from the Agent within 60
calendar days of the Offering Day, the Issuer will issue and
deliver to the Agent forthwith, at the Offering Price, the number
of shares subject to the Greenshoe Option.
4.5 Nothing in this Agreement prevents the Agent from
purchasing additional shares on the Exchange in order to fill
subscriptions for additional shares.
5. OPINIONS AND CERTIFICATES
5.1 On the Effective Date, the Issuer will deliver the
following documents to the Agent and its counsel in a form
acceptable to them:
(a) an opinion of the auditor of the Issuer, dated as of
the date of the Prospectus and addressed to the
Agent and its counsel, relating to the accuracy of
the financial statements forming part of the
Prospectus and the accuracy of the financial,
numerical and certain other information disclosed in
the Prospectus;
(b) an opinion of counsel for the Issuer, dated as of
the Effective Date and addressed to the Agent and
its counsel, relating to any legal matter in
connection with the creation, issuance and sale of
the Securities for which the Agent may reasonably
request an opinion (the "Legal Opinion");
(c) a certificate of the Issuer, dated as of the
Effective Date and signed by the president of the
Issuer or by another officer approved by the Agent,
certifying certain facts relating to the Issuer and
its affairs (the "Officer's Certificate"); and
(d) any other certificates, comfort letters or opinions
in connection with any matter related to the
Prospectus that are reasonably requested by the
Agent or its counsel.
5.2 On the day before the Offering Day the Issuer will
provide the Agent and its counsel with evidence of the necessary
approval of the Regulatory Authorities for the Offering (the
"Legal Opinion") and the Officer's Certificate updated to 4:00
p.m. on the day before the Offering Day.
6. AGENT'S COMMISSION
The Issuer will pay the Agent a commission of $0.138 per share
sold (including previously unissued shares sold pursuant to the
Greenshoe Option) whether purchased by the Agent for its own
account or for its clients or purchased by other members of the
Exchange for their own accounts or for their clients.
7. GUARANTEED AGENCY AND AGENT'S WARRANTS
7.1 The Agent will purchase any of the Shares that are
unsubscribed for on the Offering Day (the "Guarantee"), including
any Shares in respect of which a subscription has been received
but is not binding on the subscriber by reason of the receipt by
the Agent, in accordance with the Securities Act (British
Columbia), of written notice evidencing the intention of the
subscriber not to be bound by the subscription.
7.2 In consideration for the Guarantee, the Issuer will
issue warrants (the "Agent's Warrants") to the Agent or to
members of their selling group as directed by the Agent entitling
it to purchase up to 150,000 previously unissued common shares of
the Issuer.
7.3 The Agent's Warrants are non-transferable.
7.4 The right to purchase shares under the Agent's Warrants
may be exercised at any time up to the close of business two
years from the day the shares of the Issuer are listed, posted
and called for trading on the Exchange, at the Offering price
during the first year and at $1.59 during the second year of the
term of the Agent's Warrants.
7.5 The terms governing the Agent's Warrants include, among
other things, provisions for the appropriate adjustment in the
class, number and price of the shares to be issued under the
Agent's Warrants upon the occurrence of certain events, including
any subdivision, consolidation or reclassification of the shares,
the payment of stock dividends or the amalgamation of the Issuer.
7.6 The issue of the Agent's Warrants does not restrict or
prevent the Issuer from obtaining any other financing, nor from
issuing additional securities or rights during the term of the
Agent's Warrants.
8. CLOSING
8.1 In this section:
(a) "Certificates" means the certificates representing
the Shares in the names and denominations
reasonably requested by the Agent and the
certificates representing the Agent's Warrants;
(b) "Proceeds" means the gross proceeds of the
Offering, less
(i) the Agent's commission,
(ii) the expenses of the Agent in connection with
the Offering that have not been repaid by the
Issuer, and
(iii) any amount that has been attached by
garnishing order or other form of attachment.
8.2 The Issuer will, within 10 business days of the
Offering Day, deliver the Certificates, through its registrar and
transfer agent, to the Agent against payment of the Proceeds.
8.3 If the Issuer has satisfied all of its obligations
under this Agreement, the Agent will, within 10 business days of
the Offering Day, pay the Proceeds to the Issuer through its
registrar and transfer agent, against delivery of the
Certificates.
9. MATERIAL CHANGES
If, after the Prospectus is first filed with the Regulatory
Authorities but before the conclusion of the distribution of all
the Securities under the Prospectus, a material change (as
defined in the Securities Act (British Columbia )) occurs in the
affairs of the Issuer, the Issuer will:
(a) notify the Agent immediately, in writing, with full
particulars of the change;
(b) file with the Regulatory Authorities as soon as
practicable, and in any event no later than 10 days
after the change occurs, an amendment to the
Prospectus disclosing the material change; and
(c) provide as many copies of that amendment to the
Agent as the Agent may reasonably request.
10. TERMINATION
10.1 The Agent may terminate its obligations under this
Agreement by giving a written notice to the Issuer at any time
before the day the shares of the Issuer are listed, posted and
called for trading on the Exchange if:
(a) an event, accident, governmental law or regulation
or other occurrence of any nature occurs that, in
the opinion of the Agent, seriously affects or will
seriously affect the financial markets or the
business of the Issuer or any subsidiary of the
Issuer or the ability of the Agent to perform its
obligations under this Agreement;
(b) the Securities cannot, in the opinion of the Agent,
be profitably marketed due to the state of the
financial markets; or
(c) an enquiry or investigation (whether formal or
informal) in relation to the Issuer, or the
Issuer's directors or officers, is commenced or
threatened by an officer or official of any
competent authority.
10.2 The Agent may terminate its obligations under this
Agreement at any time if:
(a) any order to cease trading (including communicating
with persons in order to obtain expressions of
interest) in the securities of the Issuer is made
by a competent regulatory authority and that order
is still in effect;
(b) the Issuer is in breach of any term of this
Agreement;
(c) the Agent determines that any of the
representations or warranties made by the Issuer in
this Agreement is false or has become false.
10.3 This Agreement terminates if a final receipt for the
Prospectus is not issued by the Executive Director within 120
days of the reference date of this Agreement.
10.4 The Agent is relieved of all obligations under this
Agreement if the Issuer or its filing solicitor does not receive,
within five days before the Effective Date, written confirmation
from the Agent or its solicitors that this Agreement remains in
effect and that the Agent accepts the proposed Effective Date.
11. WARRANTIES AND REPRESENTATIONS
11.1 The Issuer warrants and represents to the Agent that:
(a) the Issuer and its subsidiaries, if any, are
valid and subsisting corporations duly
incorporated and in good standing under the laws
of the jurisdictions in which they are
incorporated, continued or amalgamated;
(b) the Issuer and its subsidiaries, if any, are duly
registered and licensed to carry on business in
the jurisdictions in which they carry on business
or own property;
(c) the authorized and issued capital of the Issuer
is as disclosed in the Prospectus and the issued
shares are fully paid and non-assessable;
(d) the Issuer is the beneficial owner of the
properties, business and assets or the interests
in the properties, business or assets referred to
in the Prospectus; all agreements by which the
Issuer holds an interest in a property, business
or asset are in good standing according to their
terms, and the properties are in good standing
under the applicable laws of the jurisdictions in
which they are situated;
(e) the Prospectus contains full, true and plain
disclosure of all "material facts", within the
meaning of the Securities Act (British Columbia),
in relation to the Issuer, its subsidiaries (if
any), its business and its securities, and
contains no misrepresentations;
(f) the financial statements of the Issuer that form
part of the Prospectus accurately reflect the
financial position of the Issuer at the date of
the financial statements and there have been no
adverse material changes in the financial
position of the Issuer since that date, except as
fully and plainly disclosed in the Prospectus;
(g) the Issuer has complied and will comply fully
with the requirements of all applicable corporate
and securities laws, including, without
limitation, the Securities Act (British Columbia)
and its regulations and the Company Act (British
Columbia) in relation to the issue and trading of
its securities and in all matters relating to the
offering;
(h) the issue and sale of the Securities by the
Issuer does not and will not conflict with, and
does not and will not result in a breach of, any
of the terms of its incorporating documents or
any agreement or instrument to which the Issuer
is a party;
(i) except as disclosed in the Prospectus, the Issuer
is not a party to any actions, suits or
proceedings that could materially affect its
business or financial condition, and no such
actions, suits or proceedings are contemplated or
have been threatened;
(j) this Agreement has been authorized by all
necessary corporate action on the part of the
Issuer; and
(k) the warranties and representations in this
subsection are true and will remain so as of the
conclusion of the distribution under the
Prospectus.
11.2 Each of the Agent warrants and represents to the
Issuer that:
(a) it is a valid and subsisting corporation under
the law of the jurisdiction in which it was
incorporated, continued or amalgamated;
(b) it is a member in good standing of the Exchange;
and
(c) it has complied with and will fully comply with
the requirements of all applicable securities
laws, including, without limitation, the
Securities Act (British Columbia), its
regulations and the by-laws and rules of the
Exchange, in relation to trading in the
Securities and all matters relating to the
Offering.
12. EXPENSES OF AGENT
12.1 The Issuer will pay all of the expenses of the
Offering and all the expenses reasonably incurred by the Agent in
connection with the Offering including, without limitation, the
fees and expenses of the solicitors for the Agent.
12.2 The Issuer will pay the expenses referred to in the
previous subsection even if the Prospectus and this Agreement are
not accepted by the Regulatory Authorities or the transactions
contemplated by this Agreement are not completed or this
Agreement is terminated, unless the failure of acceptance or
completion or the termination is the result of a breach of this
Agreement by the Agent.
12.3 The Agent may, from time to time, render accounts for
its expenses to the Issuer for payment on or before the dates set
out in the accounts.
12.4 The Issuer authorizes the Agent to deduct its
reasonable expenses in connection with the Offering from the
proceeds of the Offering, including expenses for which an account
has not yet been rendered to the Issuer.
13. FILING OF PROSPECTUS
13.1 The Issuer will cause the Prospectus to be filed with
the Regulatory Authorities, will deliver all necessary copies of
the Prospectus to the Regulatory Authorities and will use its
best efforts to have the Prospectus accepted by the Regulatory
Authorities.
13.2 The Issuer will provide the Agent with as many copies
of the Prospectus as the Agent reasonably request.
14. GARNISHING ORDERS
14.1 If at any time, up to and including the final date of
payment for the Securities, the Agent receive a garnishing order
or other form of attachment purporting to attach or garnish a
part or all of the sale price or exercise price of any of the
Securities, the Agent will be free to pay the amount purportedly
attached or garnished into court.
14.2 Any payment by the Agent into court contemplated in
this Agreement are deemed to have been received by the Issuer as
payment by the Agent against the sale price or exercise price of
the Securities to the extent of the amount paid, and the Issuer
is bound to issue and deliver the Securities proportionately to
the amount paid by the Agent.
14.3 The Agent is not bound to ascertain the validity of
any garnishing order or attachment, or whether in fact it
attaches any monies held by the Agent, and the Agent is free to
act with impunity in replying to any garnishing order or
attachment.
14.4 The Issuer will release, indemnify and save harmless
the Agent in respect of all damages, costs, expenses or liability
arising from any acts of the Agent under this section.
15. REPORTS ON SOURCE AND APPLICATION OF FUNDS
The Issuer will deliver to the Agent, at its request, within 30
days of the end of each month following the completion of the
offering, a copy of any financial report required to be filed
with the Regulatory Authorities relating to the expenditure of
the proceeds of the Offering.
16. INDEMNITY
16.1 The Issuer indemnifies the Agent and saves it
harmless against all losses, claims, damages or liabilities:
(a) existing (or alleged to exist) by reason of
untrue statements contained in the Prospectus
or by reason of the omission to state in the
Prospectus any fact necessary to make the
statements not misleading (except for information
and statements referring solely to the Agent);
(b) arising directly or indirectly out of any order
made by any regulatory authority based upon an
allegation that any such untrue statement or
omission exists (except for information and
statements referring solely to the Agent)
including, without limitation, an order that
trading in or distribution of the Securities is
to cease;
(c) resulting from the failure by the Issuer to file
an amendment to the Prospectus as required by
this Agreement;
(d) if the Issuer fails to issue and deliver the
certificates for the Securities in the form and
denominations satisfactory to the Agent at the
time and place required by the Agent with
the result that any completion of a sale of the
Securities does not take place; or
(e) if, following the completion of a sale of any of
the Securities, a determination is made by any
competent authority setting aside the sale unless
that determination arises out of an act or
omission by the Agent.
16.2 If any action or claim is brought against the Agent
in respect of which indemnity may be sought from the Issuer
pursuant to this Agreement, the Agent will promptly notify the
Issuer in writing.
16.3 The Issuer will assume the defense of the action or
claim, including the employment of counsel and the payment of all
expenses.
16.4 The Agent has the right to employ separate counsel,
and the Issuer will pay the fees and expenses of such counsel.
16.5 The indemnity provided for in this section is not
limited or otherwise affected by any other indemnity obtained by
the Agent from any other person in respect of any matters
specified in this Agreement and continues in full force and
effect until all possible liability of the Agent arising out of
the transactions contemplated by this Agreement has been
extinguished by the operation of law.
17. RIGHT OF FIRST REFUSAL
17.1 The Issuer will notify the Agent of the terms of any
further equity financing that it requires or proposes to obtain
during the 12 months following the Effective Date and the Agent
has the right of first refusal to provide any such financing.
17.2 The right of first refusal must be exercised by the
Agent within 15 days following the receipt of the notice by the
Agent notifying the Issuer that it will provide such financing on
the terms set out in the notice.
17.3 If the Agent fails to give notice within the 15 days
that it will provide such financing upon the terms set out in the
notice, the Issuer then is free to make other arrangements to
obtain financing from another source on the same terms or on
terms no less favourable to the Issuer, subject to obtaining the
acceptance of the Regulatory Authorities.
17.4 The rights of first refusal do not terminate if, on
receipt of any notice from the Issuer under this section, the
Agent fail to exercise the right.
17.5 The right of first refusal granted under this section
terminates if the Offering is not made by the Agent within the
period provided in this Agreement.
18. ASSIGNMENT AND SELLING GROUP PARTICIPATION
18.1 The Agent will not assign this Agreement or any of
its rights under the Agreement nor, with respect to the
Securities, enter into any agreement in the nature of an option
or sub-option unless and until, for each intended transaction,
the Agent has obtained the consent of the Issuer and notice has
been given to and accepted by the Regulatory Authorities.
18.2 The Agent may offer selling group participation in
the normal course of the brokerage business to selling groups of
other licensed dealers, brokers and investments dealers, who may
or who may not be offered part of the commissions or warrants to
be received by the Agent pursuant to this Agreement.
19. NOTICE
19.1 Any notice under this Agreement must be given in
writing and must be delivered, sent by telex, telegram or
telecopier or mailed by prepaid post and addressed to the party
to which notice is to be given at the address indicated above, or
at another address designated by such party in writing.
19.2 If notice is sent by telex, telegram or telecopier or
is delivered it is deemed to have been given at the time of
transmission or delivery.
19.3 If notice is mailed, it is deemed to have been
received 48 hours following the date of mailing of the notice.
19.4 If normal mail service is interrupted due to strike,
labour unrest or other cause at or before the time a notice is
mailed the notice must be sent by telex, telegram or telecopier
or must be delivered.
20. TIME
Time is of the essence of this Agreement and is calculated in
accordance with the provisions of the Interpretation Act (British
Columbia).
21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations, warranties, covenants and indemnities of the
parties contained in this Agreement survive the closing of the
purchase and sale of the Securities.
22. LANGUAGE
Wherever a singular or masculine expression is used in this
Agreement, that expression is deemed to include the plural,
feminine or the body corporate where required by the context.
23. ENUREMENT
This Agreement enures to the benefit of and is binding on the
parties to this Agreement and their successors and permitted
assigns.
24. HEADINGS
The headings in this Agreement are for convenience of reference
only and do not affect the interpretation of this Agreement.
25. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each
of which is deemed to be an original and all of which constitute
one agreement, effective as of the reference date given above.
The common seal of Big Pony Gold, Inc. was )
affixed in the presence of: )
) c/s
Authorized signatory )
)
Authorized signatory )
The common seal of Georgia Pacific Securities )
Corporation was affixed in the presence of: )
)
) c/s
Authorized signatory )
SPONSORSHIP AGREEMENT
THIS AGREEMENT made as of the 23 day of September, 1996.
BETWEEN:
BIG PONY GOLD, INC., a corporation duly incorporated
under the laws of the State of Utah, having an
office at Suite 1190, 710 Kearns Building, Salt Lake
City, Utah, 84101
(the "Company")
OF THE FIRST PART
AND:
GEORGIA PACIFIC SECURITIES CORPORATION, of Suite
1600, 2 Bentall Centre, 555 Burrard Street,
Vancouver, B.C., V7X 1S6
(the "Sponsor")
OF THE SECOND PART
WHEREAS:
A. The Company proposes to proceed with the filing of a
reactivation application with the Regulatory Authorities;
B. The rules and policies of the Exchange require that the
Company retain the services of a Member firm of the Exchange to
act as sponsor for the Company's Application and for a period of
one year subsequent to the Listing Date; and
C. The Sponsor is willing to act as the Company's sponsor
subject to the terms and conditions hereof.
THEREFORE, in consideration of the premises and of the mutual
covenants and undertakings contained in this Agreement, the
parties hereby agree as follows:
1. In this Agreement:
(a) "Application" means the Company's listing application to
the Exchange with respect to a proposed initial public
offering ("IPO"); or the Company's application to the
Exchange for acceptance of a reverse takeover ("RTO"); or
the Company's application to the Exchange with respect to
a change of business ("COB"); or any other transaction
which will require a sponsor under Exchange rules and
policies, as the case may be;
(b) "Commission" means the British Columbia Securities
Commission;
(c) "Exchange" means the Vancouver Stock Exchange;
(d) "Listing Date" means, in the case of an IPO, the date
that the shares of the Company are listed, posted and
called for trading on the Exchange, or in the case of an
RTO, COB or other form of application, the date the
shares of the Company are recalled for trading after
acceptance of the Application by the Regulatory
Authorities;
(e) "Policy" means the Sponsorship Policy of the Exchange in
effect as of the date of this agreement;
(f) "Regulatory Authorities" means the Commission and the
Exchange; and
(g) "Shares" means the common shares of the Company.
2. The Company hereby retains the Sponsor as sponsor for its
Application to the Regulatory Authorities and for a period of one
year subsequent to the Listing Date. The Sponsor hereby accepts
such appointment subject to the satisfactory completion of the
Sponsor's due diligence investigations into the affairs of the
Company.
3. On the date of this Agreement the Company shall deliver
the sum of $12,500 (the receipt of which is acknowledged) to the
Sponsor as a non-refundable retainer to cover the cost of its due
diligence review into the affairs of the Company.
4. Immediately upon execution of this Agreement the Sponsor
and its solicitors shall initiate and carry out their due
diligence review into the affairs of the Company in an
expeditious manner, and the Company shall provide its full
cooperation with such review. In connection therewith the Company
shall instruct its directors, officers, solicitors, auditors and
consultants to comply with all reasonable requests from the
Sponsor and its solicitors for information or copies of documents
pertaining to the Company.
5. In addition, the Company shall designate in writing a
director or officer who shall be responsible for communications
with the Sponsor, and providing such information as the Sponsor
may reasonably request in the course of discharging its duties as
Sponsor. In the event the designated director or officer should
cease to be involved with the Company, then the Company shall
provide the sponsor with written notice of an alternate director
or officer within 10 days of such change.
6. Once the Sponsor has completed its due diligence review
to the extent that if it is satisfied that the Company is a
suitable candidate for listing on the Exchange, the Sponsor shall
advise the Company that it is prepared to sign the Company's
Application and such other documentation as may be required by
the Exchange including the Company's Pre-Listing Application and
Fact Sheet, if required.
7. The Sponsor shall also continue to periodically review
the affairs of the Company for a period of one year from the
Listing Date in order to discharge its "oversight
responsibilities" as required by the Policy.
8. In consideration of the services performed by the Sponsor
under this Agreement, the Company agrees to pay to the Sponsor a
fee of $15,000 plus GST (the "Oversight Fee"). The Company shall
pay the Oversight Fee to the Sponsor on or before the date the
Application is accepted by the Regulatory Authorities. In the
event that the Sponsor will be participating in a financing for
the Company, the Company hereby authorizes the Sponsor to reserve
sufficient funds from the proceeds of such financing as payment
of the Oversight Fee.
9. The obligations of the Sponsor contained in this
Agreement may be terminated by the Sponsor at any time in the
event that:
(a) there should develop, occur or come into effect any
catastrophe of national or international consequence
or any accident, governmental law or regulation or
other occurrence of any nature whatsoever which, in
the opinion of the Sponsor, seriously affects or will
seriously affect the financial markets or the
business of the Company or any subsidiary; or
(b) any order to cease trading (including communicating
with persons in order to obtain expressions of
interest) in any securities of the Company is made by
a competent regulatory authority and has not been
rescinded, revoked or withdrawn; or
(c) there is any breach or non-performance by the Company
of any of the terms of this Agreement, that has not
been rectified or remedied; or
(d) an enquiry or investigation (whether formal or
informal) in relation to the Company, or the
Company's directors or officer, is commenced or
threatened by an officer or official of any competent
authority; or
(e) as a result of the Sponsor's due diligence
investigations the Sponsor finds the Company to be
unsuitable for continued listing on the Exchange.
10. Where, during the term of this Agreement, a material
change (as that term is defined in the British Columbia
Securities Act) occurs in the affairs of the Company, the Company
shall:
(a) notify the Sponsor immediately, in writing, with full
particulars of the change; and
(b) file with the appropriate Regulatory Authorities as
soon as practicable, and in any event no later than
10 days after the change occurs, written notice
disclosing the material change and provide a copy of
such to the Sponsor.
11. The Company warrants and represents to and covenants
with the Sponsor as follows:
(a) that the Company is a valid and subsisting
corporation duly incorporated and in good standing
under the laws of Utah;
(b) that the Company's authorized and issued capital are
as set forth in the most recent financial statement
and that the issued shares are fully paid and non-
assessable;
(c) that the Company is the beneficial owner of the
assets and properties described in the most recent
financial statements and that any and all agreements
pursuant to which the Company holds any interest in
such assets and properties are in good standing under
the applicable statutes and regulations of the
jurisdictions in which they are situate;
(d) that the Company shall make full disclosure to the
public of all material changes in the affairs of the
Company;
(e) that the latest audited financial statements of the
Company accurately reflect the financial position of
the Company as at those dates, and no material
changes in the financial position of the Company have
taken place since the date of the last unaudited
financial statements of the Company filed with the
Regulatory Authorities (if any), save in the ordinary
course of the Company's business;
(f) that the Company has complied and will comply fully
with the requirements of the Securities Act, its
regulations in relation to its activities since
incorporation;
(g) that this Agreement has been duly authorized by all
necessary corporate action on the part of the Company
and constitutes a valid obligation of the Company
legally binding upon it and enforceable in accordance
with its terms;
(h) the Company will deliver to the Sponsor copies of all
News Releases or other documents which it has
released to the public, concurrently with disclosure
of such Releases to the public;
(i) the Company will deliver to the Sponsor in a timely
manner, all quarterly and other financial statements;
(j) the Company will deliver to the Sponsor a monthly
source and application of funds statement at the end
of each month during the term of this agreement;
(k) the Company will deliver to the Sponsor a monthly
sponsorship status letter in the form attached hereto
at the end of each month during the term of this
agreement;
(1) the Company will deliver to the Sponsor copies of any
material contracts which it has entered into
concurrent with disclosure of the material terms of
the contract to the public;
(m) the Company will provide to the Sponsor current Forms
4B and Resumes for all current directors of the
Company and shall also, if requested by the Sponsor,
provide independent verification as to the
credentials of any additional directors who may be
proposed for election to the Board of Directors of
the Company;
(n) the Company will provide to the Sponsor any and all
correspondence with the Vancouver Stock Exchange.
12. The representations, warranties, covenants and
indemnities of the Company herein shall survive the Listing Date.
13. Any notice under this Agreement shall be given in
writing and either sent by facsimile, telegram, delivered or
mailed by prepaid post to the party to receive such notice at the
address indicated above, or at such other address as either party
may hereafter designate by notice in writing. If such notice is
sent by facsimile, telegram or is delivered, it shall be deemed
to have been given at the time of delivery; if such notice is
sent by mail, it shall be deemed to have been received forty-
eight (48) hours following the date of mailing thereof. In the
event of a mail strike or disruption at or prior to the time a
notice is deemed to have been received, such notice shall be
delivered, or sent by facsimile or telegram.
14. In consideration of the Sponsor entering into this
Agreement, the Company further agrees with the Sponsor that:
(a) it shall pay all expenses in connection with the
preparation of this Agreement and in connection with
the Sponsor's due diligence investigations including
all reasonable fees and charges of counsel of the
Sponsor and all other reasonable expenses incurred by
the Sponsor in connection with the Company's listing
application whether or not the listing application is
accepted by the Exchange, provided that such fees and
charges shall not be included if such failure of
acceptance or failure of completion is as a result of
the breach of this Agreement by the Sponsor;
(b) it will protect and indemnify the Sponsor and save it
harmless against and from all losses, claims, damages
or liabilities:
i) existing (or alleged to exist) by reason of an
untrue statement contained in the Company's
listing application and supporting documentation
or by reason of the omission to state therein
any fact necessary to make the statements
therein not misleading (except for information
and statements referring solely to the Sponsor);
and
ii) caused by or arising directly or indirectly out
of any order made by any regulatory authority,
based upon an allegation that any such untrue
statement or omission exists (except information
and statements referring solely to the Sponsor)
that trading in or distribution to the public of
the Securities is to cease.
(c) If any action or claim shall be brought against the
Sponsor in respect of which indemnity may be sought
from the Company pursuant to the provisions of this
Agreement, the Sponsor shall promptly notify the
Company in writing, and the Company shall assume the
defence thereof, including the employment of counsel
and the payment of all expenses and, in addition, the
Sponsor shall also have the right to en ploy separate
counsel in any such action and participate in the
defence thereof, and the fees and expenses of such
counsel shall also be at the expense of the Company.
The indemnity hereby provided for shall remain in
full force and effect and shall not be limited to or
affected by any other indemnity in respect of any
matters specified in this Agreement obtained by the
sponsor from any other person.
15. Time shall be of the essence of this Agreement, and in
the event that the Company's Application has not been accepted
for filing by the Regulatory Authorities within one hundred and
eighty (180) days from the date of this Agreement, this Agreement
shall thereafter, unless extended or continued by the Sponsor, be
null and void and of no further force and effect save and except
that the Company shall remain bound to pay the Sponsor reasonable
costs including costs of their counsel.
16. Where ever the singular or masculine is used throughout
this Agreement the same shall be read as the plural, feminine or
body corporate as the context may require.
17. This agreement shall enure to the benefit of and be
binding upon the parties, their respective successors and
permitted assigns.
IN WITNESS WHEREOF the parties hereto have hereunto
executed this Agreement as of the day and year first above
written.
BIG PONY GOLD, INC.
Per:/s/Bret Decker
authorized Signatory
The Corporate Seal of GEORGIA
PACIFIC SECURITIES CORPORATION was )
hereunto affixed in the presence ) C/S
of: )
Per:/s/
Authorized Signatory, President
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Tormin Sociedad Anonima
Dinelcor Sociedad Anonima*
Alfastar Sociedad Anonima*
* Each of these entities is a wholly-owned subsidiary of Tormin
Sociedad Anonima, which is a wholly-owned subsidiary of the Registrant.
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<CIK> 0001017353
<NAME> BIG PONY GOLD, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
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<PERIOD-END> JUL-31-1996
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0
0
<COMMON> 5,150
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<TOTAL-LIABILITY-AND-EQUITY> 542,452
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