U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Golden Phoenix Minerals, Inc.
(Name of Small Business Issuer in its charter)
Minnesota 41-1878178
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4935 San Diego Court
Sparks, Nevada 89436
(Address of principal executive office) (Zip Code)
Issuer's telephone number (702) 626-4935
Securities to be registered under Section 12(g) of the Act:
Common Shares
Preferred Shares
Shares Underlying the Options
Charles Clayton
527 Marquette
Minneapolis, Minnesota 55402
(612) 338-3738
(Agent for Service)
ITEM 1. DESCRIPTION OF BUSINESS
Golden Phoenix Minerals, Inc. was formed in Minnesota on June 2, 1997,
and has had limited operations.
The Company plans to produce economically valuable minerals from the
mining claims it currently controls, and from claims that it will acquire in the
future. The Company intends to concentrate its exploration efforts in the
Western US and Alaska.
The Company intends to minimize financial risk by utilizing the
director's experience in precious metals exploration and development to assess
the merits of current properties and expenditures. The Golden Phoenix Minerals,
Inc. professional staff and "Technical" directors are previous employees of
Santa Fe Pacific Gold Corporation with a combined 60 years of minerals
exploration, development and gold production experience.
Golden Phoenix Minerals, Inc. will provide joint venture opportunities
to other selected mining companies, to conduct exploration or development on
additional properties the Company owns. The Company will explore and develop
selected properties to a stage of positive economic feasibility prior to any
sale of assets or mine construction decisions. This will allow the Company to
acquire and maintain an interest in a portfolio of properties for mineral
exploration and development. This corporate strategy will minimize financial
risk while maximizing the potential of success and growth.
The Company believes that it can create the basis for a competitive
minerals exploration company through assembling a unique group of individuals
with experience in target generation and discovery, resource evaluation and mine
development.
There are at least four sources of land for exploration by the Company:
public lands, private fee lands, unpatented mining claims, and patented mining
claims. The primary sources for these lands are the United States government,
though the Bureau of Land Management and the U. S. Forest Service, state
governments, tribal governments, and individuals that currently hold title to or
lease government and private lands.
There are numerous levels of government regulation associated with the
activities of exploration and mining companies. The only two types of permitting
which the Company should have to be concerned with in the near future are
"Notice of Intent" and "Plan of Operation." Both of these types of procedures
will be necessary in the next twelve months, but they will not prevent the
Company from completing a majority of its preliminary exploration activities.
The Company has not yet filed for any of these permits.
The cost and effects of the permitting process can not be summarized at
this time. The cost will vary for each project when they are initiated.
The Company has four full time employees. It does not anticipate any
changes to this staffing in the next twelve months. The Company will use
independent contractors to fill any short term employment needs that may arise.
ITEM 2. PLAN OF OPERATION
Golden Phoenix Minerals, Inc. is a mineral exploration company
dedicated to the discovery and development of precious metal deposits in the
Western US and Alaska. The Company intends to minimize financial risk by
providing joint venture opportunities for larger mining companies to conduct
exploration on properties the Company owns. Selected properties will be explored
and developed to a stage of positive economic feasibility by the Company. This
will allow the Company to acquire and maintain an interest in a portfolio of
quality properties for mineral exploration and development. The Company's
corporate strategy will minimize financial risk, while maximizing the potential
of success and growth.
The Company currently holds the Garamendi property in Nevada and is in
the process of acquiring other properties in Nevada and Alaska, in which it will
have 100% ownership, and is actively acquiring additional properties. In
addition the Company is finalizing agreements with Rio Tinto (Kennecott) and
Cambior USA on two joint ventures.
The Company plans to finance its operations through the exercising of
common stock options controlled by key directors of the Company. The Company
will also offset some of its cost by joint venturing properties to other mining
groups to explore and develop while paying fees to Golden Phoenix Minerals, Inc.
for the right to explore the ground they control.
Changes in claim rental policies and the general exodus of major gold
corporations from the US has resulted in a lot of very prospective ground that
is open for location and acquisition. However, there has been a recent increase
in staking activities by the majors, which may be signaling a more competitive
field in the future.
The Company has positioned itself to handle any seasonal aspect of the
exploration business by location of its properties. Problems of access and
inclement weather will be minimized through strategic planning of fieldwork.
The only capital equipment the Company plans to purchase in the next
twelve months is field vehicles and computer equipment. The field vehicles will
be for staff professionals only, all contractors will provide their own
vehicles. The computer equipment will aid in the analysis of data and in the
preparation of reports for shareholders. The Company will be able to evaluate
and make decisions on the economic viability of a property more efficiently with
the appropriate computer equipment and software.
The Company plans to maintain its present staffing for at least the
next twelve months. The Company will employ independent contractors to fulfil
short term needs and obligations.
ITEM 3. DESCRIPTION OF PROPERTY
LOCATION, ACCESS AND TERRAIN
The Garamendi project area is located in Elko County, Nevada at the
northern end of the Adobe Range in northeastern Nevada. The area can be reached
in less than a hour from Elko via I-80 and on a gravel and dirt road that
extends northward from the Ryndon exit 10 miles east of Elko. In dry weather the
area can be reached by two wheel drive pickup truck or van, but a four wheel
drive vehicle is recommended.
The Garamendi project area is located in typical Basin and Range
Province of the western U. S. The claims are located on an east-west ridge
projecting off the main Adobe Range. Relief is moderate with the minimum
elevation approximately 6500 feet and the maximum elevation approximately 6900
feet.
Rainfall in the area is low with the main vegetation on the property
consisting of sagebrush and various grasses. There are small springs in the
vicinity of the claims with small discharge rates and account for the only
surface water except during spring run off. Larger shrubs and small trees are
clustered around these springs.
LAND POSITION
The Garamendi project area is located within a checkerboard of fee land
and U. S. Government (BLM) lands in Elko County, Nevada. It currently consists
of 12 unpatented mining claims situated in the southern half of Section 18, T 38
N. R 56 E Mount Diablo Base and Meridian. There are also fifty nine located but
unrecorded unpatented mining claims located in alternate sections within one
mile of the core area.
HISTORY AND PRODUCTION
Published information on the history of mining in the Garamendi project
area is sparse. There appears to be at least two generations of workings at the
mine sites older (1930s?) underground workings and newer (post 1970?) trenches
and pits. Unpublished U. S. Bureau of Mines production data reports production
of 48,850 pounds of lead, 59 ounces of silver, and 135 pounds of copper. About
500 tons of oxidized lead ore was removed from pits in the Garamendi mine area.
Total production from the district is unknown.
Texasgulf Western, Inc. explored the area around the Garamendi project
area for stratiform sediment-hosted massive sulfide deposits during the late
seventies and early eighties. Texasgulf drilled and outlined a small lead-zinc
resource in 1981 in and around the Garamendi mine. Prospecting done by D. J.
McDowell in the area in late 1996 and early 1997 focused on similarities in rock
types and gold mineralization like those observed at the Twin Creeks Mine and
other mineralized areas in northern Nevada. Because of his observations in the
area, the present land position was located.
REGIONAL GEOLOGIC SETTING
The rocks in the Adobe Range consist of a sequence of Ordovician
through Triassic classic sedimentary shales, siltstones, cherts, and limestones.
Bedding strikes northeast and is cut by numerous northeast and northwest
striking high angle faults. Northeast striking thrust faults cross the area
bringing older Paleozoic sediments into contact with younger Paleozoic and
Mesozoic clastic rocks.
The low angle thrusts are complicated by younger high angle faults. A
thrust plate composed of Silurian and Permian clastic rocks and one composed of
Triassic clastic rocks has been thrust over Mississippian autochthonous or
semiautochtonous rocks. All three were then folded to form the Adobe Mountain
syncline and Garamendi anticline. These structures were over thrust by plates
composed predominately of lower Paleozoic rocks such as Silurian siltstones and
the Ordovician Vinni Formation, which are usually assigned to the Roberts
allochthon. Younger, high angle faults cut these thrust faults and their
corresponding sedimentary packages.
PROPERTY GEOLOGY
The geologic picture in the Garamendi project area is a bit more
complicated than the regional geologic picture. The Ordovician Silurian
sediments strike northeast-southwest and are exposed in an oblique belt cutting
across the Adobe Range. Tertiary volcanic rocks to the north and east cover
these rocks. Exposures decrease and eventually disappear to the west under
alluvial cover. These sediments were subsequently folded and thrust to the
southeast over younger Mississippian shales and sandstones.
Mapping by Texasgulf of the Garamendi mineralized zone outcrops show
them as resistant, topographically obvious, northerly dipping siliceous gossan.
This gossan varies from well bedded to brecciated to massive sugary silica. The
silica varies in color from white to light gray to black and yellow with various
shades of orange and red. Interbedded within this gossan is remnant limestone,
possibly the original protolith.
Lithology beneath the gossan is black shale, with the overlying rocks
being a gray-green siltstone. The siltstone is in turn overlain by another black
shale that is very similar in appearance to the shale beneath the gossan zone.
The contact between this shale and the underlying siltstone varies from
transitional to very fine interbeds.
The sequence of shales and siltstones overlying the gossan zone were
still an unanswered question when Texasgulf discontinued work in the area. The
area to the north is a series of thrust faults with intensely folded sediments
between them.
Texasgulf mapped many occurrences as "chert/jasperoid" for lack of a
better name. These rocks vary from black to red and many show evidence of
secondary silicification and brecciation with subsequent resilicification. These
units have small remnants of disturbed recrystallized limestone adjacent to them
and may represent what is left of the original protolith.
Ignous rocks occur sporadically across the property and are mapped as
dykes, but Texasgulf never reported their composition.
MINERALIZATION
The host rocks in the Garamendi area consist of fine-grained quartzite
interbedded with calcareous siltstones, limey shales, and limestones. The beds
are relatively flat lying but are fractured by several east-west structures.
Mineralization occurs in a highly silicfied, partially brecciated calcareous
unit and in replacement zones parallel to the east-west structures. Primary
sulfide minerals occurring as pyrite, galena and sphalerite characterize the
lead-zinc mineralization. Gold mineralization, when assayed by Texasgulf,
generally occurred in the calcareous siltstones and silicified sediments above
the lead-zinc mineralization. Because of extensive recrystallization, few
original sedimentary structures are recognizable.
Shale and calcareous siltstone are common as breccia fragments and
matrix adjacent to mineralization and as concordant units where the rock has not
been so intensely altered. Limestone units are light gray when alteration is
slight with color changing to oranges and reds when it is silicified.
The sulfide minerals present include marcasite, pyrite, galena, and
sphalerite. The non-sulfide minerals are calcite, dolomite, quartz and minor
barite. Very little gold or silver has been reported within the mineralized
area. By Texasgulf's own admission, this may be the result of the samples not
regularly being assayed for gold or silver. However, Texasgulf does report
assays of up to 0.11 opt Au and 1.25 opt Ag from drill hole samples that were
assayed. Surface rock geochemistry also indicated anomalous local Au and Ag
values when assays were performed for precious metals.
The trace amounts of gold in the drill hole and rock chip samples
reported by Texasgulf occur in silicified breccias, jasperoids, jasperoid
breccias, and calcareous siltstones. These occurrences suggest that the
mineralization in the Garamendi area was a multi-episodic hydrothermal event.
The potential host rocks of silty or "dirty" limestones, calcareous siltstones
and limey shales were structurally prepared by the low and high angle normal and
reverse faulting in the area. The prominent outcrops of silicified and
brecciated jasperoid on the ridges and pediment areas to the west mark the
traces of these reverse faults and high angle structures. The hydrothermal
fluids traveled up these structures and mineralized the receptive host rocks as
they were encountered. Remnant pieces ("horses") of recrystallized limestone and
calcareous siltstone within the jasperoid zones show that these rocks were
favorable for alteration by the hydrothermal fluids.The occurrence of the
resilicified jasperoid breccias and silica stockworks within jasperoids and
jasperoid breccias suggest that there was more than one pulse of mineralization.
The trace amounts of precious metals associated with the base metal deposit is
also indicative of a multi-episodic hydrothermal event with the precious
metal-bearing fluids overprinting the base metal occurrence. The presence of
these characteristics, favorable host rocks, structural preparation,
multi-episodic hyperthermal event(s), and the presence of precious metal values,
suggest that the Garamendi area has the potential of a large tonnage "Northern
Nevada" or "Carlin" type gold deposit.
DATA REVIEW
The data, which was available for this report was extracted from two
Texasgulf in-house progress reports. The reports were from 1980 and 1985. The
reports consisted of summary data for the work which had been completed that
year.
Texasgulf completed a total of 23 core holes between 1979 and 1984.
Based on the information in the reports only those intervals which had visible
sulfides, which was less than 50% of the intervals, were analyzed for lead and
zinc. Precious metals assays were reported for select intervals, primarily
silver. There was some assaying for gold, but it represents less than 10% of the
reported intervals. The known gold assays are represented in Table 3. There were
significant gold surface assays reported for the project, but were not in the
area of the lead zinc mineralization.
Table 1
NAME FROM TO AU(OPT)FA AG(OPT)AA
GAR-79-1-1 146.5 147.0 less than 0.002 0.59
GAR-79-1-2 155.6 156.0 0.002 2.06
GAR-79-1-18 281.0 285.0 0.005 1.03
GAR-79-1-19 287.5 290.0 0.004 5.83
GAR-79-1-20 290.0 293.0 less than 0.002 0.69
GAR-79-1-21 293.0 295.0 0.110 1.03
GAR-79-1-22 307.0 310.0 0.010 1.37
DH-80-3 263.0 267.0 0.007 -0.10
DH-80-3 267.0 275.6 trace 2.40
DH-80-3 281.0 289.5 0.005 7.40
DH-80-3 298.5 304.0 0.004 1.80
DH-81-2 20.0 28.0 0.020 0.20
DH-82-1 163.5 175.0 0.015 0.40
DH-82-2 5.0 50.0 trace 0.10
DH-82-2 145.0 190.0 trace -0.10
DH-82-3 55.0 85.0 0.008 -0.10
DH-82-5 5.0 20.0 0.022 -0.10
DH-82-4 5.0 20.0 trace 4.20
DH-82-4 70.0 80.0 trace 0.40
DH-82-4 135.0 155.0 trace -0.10
DH-82-4 245.0 250.0 trace -0.10
EXPLORATION PROGRAM
The exploration program proposed during the first year would involve
obtaining and evaluating the currently open ground adjacent to the core area of
interest. This would involve staking additional BLM ground and leasing adjacent
fee ground. All data that is available will need to be researched to determine
its applicability to the current project.
The geologic mapping completed by Texasgulf overall is very good.
Several points that are in need of revisiting are the areas to the west and
northwest currently mapped as alluvium. In the course of preparing the claim
block Company personnel came across several outcrops of jasperoid that did not
appear on the Texasgulf mapping and would also extend the fault traces in those
areas. The distinction between jaseroid and chert needs further definition.
Depositional or primary chert is present in the area and is not distinguished
from the hydrothermal jasperoids. The interpretation of the mineralization by
Texasgulf within the Garamendi area being an exhalative occurrence explains
their reluctance of deeming it not of real importance. Looking at it from a
hydrothermal angle, distinguishing between jasperoids and cherts has important
implications from a genetic point of view. A similar problem in distinguishing
cherts from jasperoids occurred at the Twin Creeks mine with many initial chert
calls being changed to jasperoid upon closer examination. Revisiting the
structural aspects of the Texasgulf interpretation may shed new light in the
role that structure played with respect to the movement of hydrothermal fluids
in the system.
The geochemical surveys performed by Texasgulf were designed for a base
metal exploration program involving lead-zinc mineralization. The soil samples
were only analyzed for lead, zinc and locally for mercury. Rock chip samples
show the same general suite but were also occasionally assayed for copper,
silver and gold. Since the rock chip and soil sample pulps are no longer
available a lot of this work will need to be redone. The rock chip sampling can
be done in conjunction with the field checking and remapping of the project
area. The soil sampling should involve a grid with soil samples being taken at
least every 100 feet along lines no more than 200 feet apart over the areas of
interest. Continuity between samples and grid(s) suggest that the claim block be
solidified and the adjacent fee ground be acquired. The samples (rock and soil)
should be assayed for gold and silver, with trace element geochemistry involving
a suite of elements that would at least include copper, lead, zinc, molybdenum,
arsenic, antimony, mercury, bismuth and cadmium.
Texasgulf conducted several geophysical surveys over the Garamendi
area. The EM techniques worked very well in locating the structures in the area.
The IP and CSAMT surveys were successful in locating both massive and
disseminated sulfide mineralization. Hopefully the geophysical data will become
available in the near future so that it can be reinterpreted from a hydrothermal
aspect to determine if additional geophysical work needs to be done.
The core and rejects from the Texasgulf core and reverse-circulation
drilling is not available for reassay of "favorable" calcareous and siliceous
horizons. The future drill program will be designed to test new targets related
to gold mineralization developed from the geological, geochemical and
geophysical data.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the information as to the ownership of
each person who owns of record, or is known by the Company to own beneficially,
more than five per cent of the Company's common and preferred stock, and the
officers and directors of the Company.
Common Stock
Name Shares Percent
---- ------ -------
Michael R. Fitzsimonds 1,750,000 14%
4935 San Diego Court
Sparks, NV
Donald J. McDowell 2,000,000 16%
1555 Ridgeview
Reno, NV
Dennis J. McDowell 500,000 4%
28119 180th Avenue S.E.
Kent, WA
All officers and directors as a group 4,250,000 34%
Preferred Stock
Andrea Albanesse 66,667 13%
1036 Jefferson Avenue
West Vancouver, B.C. Canada
Stephan Maurer 25,000 5%
28 W050 Garyes Mill Road
Winfield, IL
Paul Dickson 25,000 5%
202-1049 Chilco Street
Vancouver, B.C. Canada
Dave Venchus 25,000 5%
255 Eagle Ridge
West Chicago, IL
Jason Kolpec 25,000 5%
858 Spiros Drive
DeKalb, IL
Fiona Lattanzi 66,667 13%
2879 Norman Avenue
Coquitlam, B.C. Canada
Peter Shepherd 33,333 6%
7426 Bridge Street
Richmond, B.C. Canada
Terry Shepherd 33,333 6%
7426 Bridge Street
Richmond, B.C. Canada
Donald J. McDowell 100,000 20%
1555 Ridgeview
Reno, NV
Michael R. Fitzsimonds 100,000 20%
4935 San Diego Court
Sparks, NV
All officers and directors as a group 200,000 40%
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The executive officers and directors of the company, with a brief
description are as follows:
Name Age Position
- ---- --- --------
Michael R. Fitzsimonds 41 President, Director
Daniel T. Taylor 41 Vice President, Director
Donald J. McDowell 37 Executive Vice President, Director
Dennis J. McDowell 37 Secretary, Director
David A. Caldwell 36 Director
Michael R. Fitzsimonds, Mr. Fitzsimonds is the President, and a
Director of the Company. He is a Geological Engineer. He has been associated
with Santa Fe Gold Corporation for the past 10 years. He was responsible for
resource evaluation and due diligence on corporate acquisition projects
worldwide. He has experience in the minerals industry with project development
ranging from grass roots exploration to advanced project development and
expertise in resource evaluation.
Daniel T. Taylor, Mr. Taylor is Vice President and a Director. Mr.
Taylor is a Geologist. He has been associated with Santa Fe Gold Corporation for
the past 10 years in managing exploration and development projects in the
Western United States. He has experience in the minerals industry with project
development ranging from grass roots exploration to advanced project
development.
Donald J. McDowell, Mr. McDowell is Executive Vice President and a
Director. Mr. McDowell is a professional land surveyor and geologic explorations
with more than 19 years of surveying, mineral exploration and development
experience. He was associated with Santa Fe Gold Corporation for more than 10
years and most recently was a geologic consultant expediting project generation
for the Kennecot/RTZ exploration team.
Dennis J. McDowell, Mr. McDowell is Secretary and a Director. Mr.
McDowell is Vice President, Regional Director of Stores for Fred Meyer, Inc. and
has worked for that company for the past 12 years.
David A. Caldwell, Mr. Caldwell is a Director. Mr. Caldwell is a
geologist and geophysicist. He has more than 10 years experience in the minerals
exploration industry, with experience in sulfur, base metal and gold exploration
and development. He had roles in project management and development for Santa Fe
Gold Corporation and Gold Fields Mining Company in Nevada, New Mexico and Texas.
He was a project geologist with Santa Fe Pacific Gold Corporation and is
currently an Officer and Director with Nevada Pacific Gold (US), Inc.
ITEM 6. EXECUTIVE COMPENSATION
There is no employee that was paid as much as $60,000 per year as
salary. There is no contract for the payment of a salary to any employee. There
are no employment agreements. The Company has agreed to pay Michael R.
Fitzsimonds, Donald J. McDowell and Daniel T. Taylor the sum of $60,000 per year
each.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
ITEM 8. LEGAL PROCEEDINGS
None
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The company's common stock has not traded at this time.
There are 38 holders of the common and preferred stock of the Company.
There have never been any dividends, cash or otherwise, paid on the common
shares of the Company.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
There was a Form D for a Rule 504 offering filed in June, 1997. The
offering was for $50,000 and was sold to 38 persons. There was a 504 offering
for 40,000 shares dated July 10, 1997 for $20,000. There was a 504 offering for
330,000 shares dated July 10, 1997 for $693,000.
Common Shares
Name Date Shares Cost
---- ---- ------ ----
Andrea Albanese 6/97 500,000 $2,500
Elizabeth Ranft 6/97 500,000 $2,500
Karen Dawson 6/97 333,334 $1,666
Michelle White 6/97 70,000 $350
Stephan Maurer 6/97 500,000 $2,500
Paul Dickson 6/97 500,000 $2,500
Dave Venchus 6/97 500,000 $2,500
Jason Kolpec 6/97 500,000 $2,500
Fiona Lattanzi 6/97 500,000 $2,500
Stuart Hunter 6/97 250,000 $1,250
Chris Cooper 6/97 583,332 $2,916
Peter Shepherd 6/97 505,000 $2,525
Terry Shepherd 6/97 505,000 $2,525
Bruce Goodwin 6/97 25,000 $125
Steve Clark 6/97 25,000 $125
Chris Walters 6/97 33,334 $166
Lorelei Lauten 6/97 50,000 $250
Florence Walters 6/97 20,000 $100
Joe Walters 6/97 20,000 $100
Jon Walters 6/97 20,000 $100
Jean Walters 6/97 30,000 $150
Marlene Shepherd 6/97 10,000 $50
Mike Case 6/97 10,000 $50
Donald J. McDowell 6/97 2,000,000 $5,000
Michael R. Fitzsimonds 6/97 1,750,000 $5,000
Leona D. Fitzsimonds 6/97 200,000 $1,000
Nicole D. Fitzsimonds 6/97 200,000 $1,000
Marjorie L. Fitzsimonds 6/97 50,000 $250
Myrtle P. Burnett 6/97 50,000 $250
Dennis J. McDowell 6/97 500,000 $1,250
Donna Birdwell 6/97 50,000 $250
Danette Dunn 6/97 200,000 $1,000
Capital Formation Trust 6/97 150,000 $750
Capital Strategies Group 6/97 150,000 $750
Duet, Ltd. 6/97 245,000 $1,225
Millport Overseas, Ltd. 6/97 210,000 $1,050
Wrigley Investments Holdings, Ltd. 6/97 225,000 $1,125
Loewen Ondaatje McCutcheon, Ltd. 7/97 40,000 $20,000
Banque De Gestion Privee 7/97 52,000 $109,200
Cook et Cie SA 7/97 75,000 $157,500
Banque d'Orsay 7/97 30,000 $63,000
Banque Scalbert Dupont 7/97 50,000 $105,000
Banque Rivaud 7/97 60,000 $126,000
Credit Industriel et Commercial 7/97 25,000 $52,500
Neuflize Schlumberger Mallet 7/97 25,000 $52,500
E.B.P.F. 7/97 13,000 $27,300
Preferred Shares
Andrea Albanese 6/97 66,667
Stephan Maurer 6/97 25,000
Paul Dickson 6/97 25,000
Dave Venchus 6/97 25,000
Jason Kolpec 6/97 25,000
Fiona Lattanzi 6/97 66,667
Peter Shepherd 6/97 33,333
Terry Shepherd 6/97 33,333
Donald J. McDowell 6/97 100,000
Michael R. Fitzsimonds 6/97 100,000
There was no underwriter on the sales of any of the securities, and no
commissions were paid. except there was a commission of $.10 paid on the sale of
330,000 shares to Banque De Gestion Privee, Cook et Cie SA, Banque d'Orsay,
Banque Scalbert Dupont, Banque Rivard, Credit Industriel et Commercial
Cicotitres, Newflize Schlimberger Mattet and E.B.P.F. All sales were for cash.
The registrant believes that all transactions were transactions not
involving any public offering within the meaning of Section 4(2) of the
Securities Act of 1933, since (a) each of the transactions involved the offering
of such securities to a substantially limited number of persons; (b) each person
took the securities as an investment for his own account and not with a view to
distribution; (c) each person had access to information equivalent to that which
would be included in a registration statement on the applicable form under the
Act; (d) each person had knowledge and experience in business and financial
matters to understand the merits and risk of the investment; therefore no
registration statement need be in effect prior to such issuances.
ITEM 11. DESCRIPTION OF SECURITIES
The company has authorized 200,000,000 shares of stock, no par value,
150,000,000 shares have been designated as common shares, and the remaining
50,000,000 shares are preferred shares. Each holder of common stock has one vote
per share on all matters voted upon by the shareholders. Such voting rights are
noncumulative so that shareholders holding more than 50% of the outstanding
shares of common stock are able to elect all members of the Board of Directors.
There are no preemptive rights or other rights of subscription.
Each share of common stock is entitled to participate equally in
dividends as and when declared by the Board of Directors of the company out of
funds legally available, and is entitled to participate equally in the
distribution of assets in the event of liquidation. All shares, when issued and
fully paid, are nonassessable and are not subject to redemption or conversion
and have no conversion rights.
The preferred shares are convertible into 10 common shares at a price
of $.10 per share for a period of 10 years. The preferred shares have no voting
power, unless converted into common shares. There are no other preferences.
Risk Factor - Penny Stock Regulation. Broker-dealer practices in
connection with transactions in "penny stocks" are regulated by certain penny
stock rules adopted by the Securities and Exchange Commission. Penny stock
generally are equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on the
Nasdaq system, provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer must also provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules generally require that prior to a
transaction in a penny stock the broker-dealer make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. If the Company's securities become subject to the penny stock
rules, investors in this offering may find it more difficult to sell their
securities.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Minnesota Statutes, Section 302A.521, contain an extensive
indemnification provision which requires mandatory indemnification by a
corporation of any officer, director and affiliated person who was or is a
party, or who is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a member, director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a member, director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, and against judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted, or failed to act, in good
faith and in a manner he 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 conduct was unlawful. In some
instances a court must approve such indemnification.
ITEM 13. FINANCIAL STATEMENTS
Please see the attached Financial Statements.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Please see the attached Financial Statements
(b) Exhibits:
2.1 Articles of Incorporation and bylaws
6.1 Quitclaim Deed
10 Opinion of counsel
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: 7/25/97 Golden Phoenix Minerals, Inc.
____/s/___________________________
Michael R. Fitzsimonds, President
____/s/________________________
Donald J. McDowell, Executive Vice President
____/s/________________________
Daniel T. Taylor, Vice President
____/s/________________________
Dennis J. McDowell, Secretary
____/s/________________________
David A. Caldwell, Director
GOLDEN PHOENIX MINERALS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FROM JUNE 2, 1997 (DATE OF INCEPTION) TO JUNE 30, 1997
GARY A. LaPALME, C.P.A.
CERTIFIED PUBLIC ACCOUNTANTS
Minneapolis, Minnesota
GOLDEN PHOENIX MINERALS, INC.
(A Development Stage Company)
CONTENTS
FROM JUNE 2, 1997 (DATE OF INCEPTION) TO JUNE 30, 1997
Page
----
Independent Auditor's Report 2
Financial Statements
Balance Sheets 3
Statements of Earnings and Retained Earnings 4
Statements of Cash Flows 5
Statement of Stockholders' Equity 6
Notes to Financial Statements 7
[LETTERHEAD FOR GARY A. LAPALME, C.P.A.]
To the Stockholders and Board of Directors
GOLDEN PHOENIX MINERALS, INC.
(A Development Stage Company)
Minneapolis, Minnesota
I have audited the accompanying balance sheet of GOLDEN PHOENIX MINERALS, INC.,
(A Development Stage Company) as of JUNE 30, 1997 and the related statements of
earnings and retained deficit, and cash flows for the period from JUNE 2, 1997
(date of inception) to JUNE 30, 1997. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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 the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of GOLDEN PHOENIX MINERALS, INC., (A
Development Stage Company) as of JUNE 30, 1997 and the results of its operations
and its cash flows from JUNE 2, 1997 (date of inception) to JUNE 30, 1997 in
conformity with generally accepted accounting principles.
/s/ GARY A. LaPALME
GARY A. LaPALME, C.P.A.
Certified Public Accountants
July 7, 1997
except for Note E to the financial statements
the date of which is July 24, 1997
Minneapolis, Minnesota
GOLDEN PHOENIX MINERALS, INC.
(A Development Stage Company)
BALANCE SHEETS
JUNE 30, 1997
ASSETS
June 30,
1997
--------
Cash $ 50,000
Mineral rights -
Incorporation costs 1,155
--------
TOTAL ASSETS $ 51,155
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable $ 7,155
--------
Total Liabilities 7,155
--------
Commitments and Contingencies -
--------
Stockholders' Equity
Common stock, no par value,
150,000,000 authorized, 12,000,000 issued
and outstanding at June 30, 1997
(including 2,000,000 of 144 restricted
shares for organizational services) 52,000
Preferred stock, no par value,
50,000,000 shares authorized and
500,000 shares issued and
outstanding at June 30, 1997 2,000
Additional paid-in capital (10,000)
Retained deficit -
--------
Total Stockholders' Equity 44,000
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 51,155
========
See Notes to Financial Statements
GOLDEN PHOENIX MINERALS, INC.
(A Development Stage Company)
STATEMENTS OF EARNINGS AND RETAINED EARNINGS
FROM JUNE 2, 1997 (DATE OF INCEPTION) TO JUNE 30, 1997
From
June 2,
1997 (Date of
Inception) to
June 30,
1997
----------
Sales $ --
----------
Cost of Sales --
----------
Gross Profit --
----------
Operating Expenses --
----------
Net Income Before Income Taxes --
----------
Income Taxes --
----------
Net Income --
----------
Retained Earnings $ --
==========
Net Earnings Per Share $ --
==========
Weighted Average Shares Outstanding 12,000,000
==========
See Notes to Financial Statements
GOLDEN PHOENIX MINERALS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FROM JUNE 2, 1997 (DATE OF INCEPTION) TO JUNE 30, 1997
From
June 2,
1997 (Date of
Inception) to
June 30,
1997
--------
Cash Flows From Operating Activities
Net income $ --
Increase in organization costs (1,155)
Increase in accounts payable 7,155
--------
Net Cash From Operating Activities 6,000
--------
Cash Flows From Financing Activities
Issuance of common stock, less
issue costs of $6,000 44,000
--------
Net Cash From Financing Activities 50,000
--------
Cash Flows From Investing Activities --
--------
Net Cash From Investing Activities --
--------
Net Increase in Cash 50,000
--------
Cash at Beginning of Period --
--------
Cash at End of Period $ 50,000
========
See Notes to Financial Statements
<TABLE>
<CAPTION>
GOLDEN PHOENIX MINERALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
FROM JUNE 2, 1997 (DATE OF INCEPTION) TO JUNE 30, 1997
Additional
Common Preferred Par Paid Over Paid In Retained
Shares Shares Value Par Capital Earnings Total
------ --------- ----- ------- --------- --------- ----------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, June 2,
1997 (Date of
inception) -- -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Net Earnings, From
June 2, 1997
(Date of
inception) To
June 30,1997 -- -- -- -- -- -- -- -- --
Issuance of Stock
Reg D rule 504
stock offering
June 23, 1997,
for cash, less
issue costs of
$6,000 10,000,000 -- -- -- 50,000 (6,000) -- 44,000
Issuance of Stock
Section 144
restricted
shares, June 23,
1997, for
services 2,000,000 -- -- -- 2,000 (2,000) -- --
Issuance of Stock
Section 144
restricted
shares, June 23,
1997, for
services -- 500,000 -- -- 2,000 (2,000) -- --
---------- ---------- ---------- --------- ---------- --------- ----------
Balances, June 30,
1997 12,000,000 500,000 -- $ -- -- $ 54,000 $ (10,000) $ -- $ 44,000
========== ========== ========== ========== ========== ========= ==========
See Notes to Financial Statements
</TABLE>
GOLDEN PHOENIX MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FROM JUNE 2, 1997 (DATE OF INCEPTION) TO JUNE 30, 1997
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The Company was incorporated on June 2, 1997 in the
State of Minnesota. The Company's primary concentrations are as a mineral
exploration and development company.
The Company plans to finance its operations through the exercising of common
stock options.
The Company plans to minimize financial risk by providing joint venture
opportunities with larger mining companies to conduct exploration on properties
the Company owns.
Development Stage Enterprise - The Company is in the development stage of its
existence. The Company has had no operations since inception and has devoted its
efforts primarily to raising capital, reviewing joint venture opportunities, and
administrative functions.
NOTE B COMMON STOCK
The authorized number of common shares is 150,000,000 of which 12,000,000 shares
are issued and outstanding (10,000,000 for Reg D rule 504 stock subscription and
2,000,000 of section 144 restricted shares for organizational services). The
Company intends to issue options to purchase common stock of the corporation in
the future in recognition of services rendered to the Company. The Company is to
reserve 4,000,000 shares of common stock for these options.
NOTE C PREFERRED STOCK
The authorized number of preferred shares is 50,000,000 of which 500,000 of
section 144 restricted shares were issued and outstanding as of June 30, 1997.
Preferred stock is convertible to ten common shares for every one preferred
share, at a conversion rate of $.10 per common share for a period of ten years
from June 12, 1997.
NOTE D MINERAL RIGHTS
The Company has obtained mineral rights to a property located in Nevada. The
mineral rights were deeded to the Company, but no value has been assigned to
these rights.
NOTE E SUBSEQUENT EVENT
On July 22, 1997 the Company completed two separate 504 issues of common stock
for a total of $680,000 net proceeds to the Company after commissions of
$33,000. The issues were as follows:
Number of Price Per Net
Shares Share Commission Proceeds
------- ---------- ---------- ---------
40,000 $ .50 $ -- $ 20,000
330,000 2.10 33,000 660,000
------- ---------- ---------- ---------
370,000 $ 33,000 $ 680,000
======= ========== =========
ARTICLES OF INCORPORATION
OF
GOLDEN PHOENIX MINERALS, INC.
The undersigned incorporator, being a natural person, 18 years of age
or older, in order to form a corporate entity under Minnesota Statutes, Chapter
302A, hereby adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation is Golden Phoenix Minerals, Inc.
ARTICLE II
The registered office of the corporation is located at 527 Marquette,
Minneapolis, Minnesota 55402, and the registered agent at that address is
Charles Clayton.
ARTICLE III
The name and address of the incorporator is Charles Clayton, 527
Marquette, Minneapolis, Minnesota 55402.
ARTICLE IV
The corporation is authorized to issue an aggregate total of
200,000,000 shares.
ARTICLE V
In addition to the powers granted to the Board of Directors by
Minnesota Statutes, Chapter 302A, the Board of Directors of this corporation
shall have the power and authority to fix by resolution any designation, class,
series, voting power, preference, right, qualification, limitation, restriction,
dividend, time and place of redemption, and conversion right with respect to any
stock of the corporation.
ARTICLE VI
Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting by written action signed by a
majority of the Board of Directors then in office, except as to those matters
which require shareholder approval, in which case the written action shall be
signed by all members of the Board of Directors then in office.
ARTICLE VII
No holder of stock of this corporation shall be entitled to any
cumulative voting rights.
ARTICLE VIII
No holder of stock of this corporation shall have any preferential,
pre-emptive, or other rights of subscription to any shares of any class or
series of stock of this corporation allotted or sold or to be allotted or sold
and now or hereafter authorized, or to any obligations or securities convertible
into any class or series of stock of this corporation, nor any right of
subscription to any part thereof.
IN WITNESS WHEREOF, the Incorporator has executed these Articles of
Incorporation, this 30th day of May, 1997.
/s/ Charles Clayton
Charles Clayton
STATE OF MINNESOTA
DEPARTMENT OF STATE
FILED
JUN 02 1997
/S/ JOAN ANDERSON GROWE
SECRETARY OF STATE
BY-LAWS
OF
GOLDEN PHOENIX MINERALS, INC.
ARTICLE I
MEETINGS OF SHAREHOLDERS
1.1 Regular Meetings. Regular meetings of shareholders may be called by the
Chief Executive Officer, the Secretary, the Board of Directors, or by
shareholder demanded in accordance with Minnesota Statutes Section
302A.431, subdivision 2. No meeting shall be designated a regular
meeting unless specifically described as such in the notice of meeting
or unless all the shareholders are present in person or by proxy, and
none of them objects to this designation.
1.2 Special Meetings. Special meetings of the shareholders may be called
for any purpose or purposes at any time by the Chief Executive Officer,
Chief Financial Officer, two or more directors, or by shareholder
demand in accordance with Minnesota Statutes, Section 203A.433,
subdivision 2.
1.3 Time and Place of Shareholder Meeting. Except as otherwise provided by
statute, any meeting of shareholders shall be held on the date and at
the time and place fixed by the Chief Executive Officer or the Board of
Directors of the corporation.
1.4 Notice of Shareholder Meeting. Except as otherwise provided by statute,
written notice of the date, time, and place of any meeting of
shareholders shall be given to every holder of voting shares at such
address as appears on the stock book of the corporation at least five
days prior to the meeting if by mail, or two days prior to the meeting
if by telex, telegram, or in person.
1.5 Voting. Except where a greater percentage is required by statute, the
shareholders shall take action by the affirmative vote of the holders
of a majority of the votes of the shares present.
ARTICLE II
DIRECTORS
2.1 Number, Term of Office. The number of directors of the corporation
shall be as determined from time to time by the shareholders. Directors
need not be shareholders. Each director shall hold office for an
indefinite term, not to exceed five years, that expires at the regular
meeting of shareholders next held after the director's election and
until a successor is elected and has qualified, or until the earlier
death, resignation, removal, or disqualification of the director.
2.2 Removal. The Board of Directors or the shareholders may remove any
director of the corporation at any time, for cause or without cause.
New directors may be elected at a meeting at which directors are
removed.
2.3 Board Meetings, Notice. The Chief Executive Officer (if a director),
the Chairman of the Board of Directors (if one is elected) of Directors
comprising at least one third of the number of directors then in office
may call a Board meeting by giving five days notice if by mail, or two
days notice if by telephone, telex, telegram, or in person, to all
directors of the day or date and time of the meeting. Meetings of the
Board of Directors may be held at the day or date, time, and place, as
shall be determined by the Board. If the day or date, time, and place
have been announced at a previous meeting of the Board, or if a meeting
schedule is adopted by the Board, no notice is required. In absence of
a designation by the Board of Directors, Board meetings shall be held
at the principal executive offices of the corporation.
2.4 (a) Advance Written Consent or Opposition. Any member of the Board or a
committee thereof, as the case may be, may give advance written consent
or opposition to a proposal to be acted on at a Board or committee
meeting. If a director or committee member is not present at the
meeting, advance written consent or opposition to a proposal does not
constitute presence for the purpose of determining whether a quorum
exists, but such advance written consent or opposition shall be a vote
in favor of or against the proposal or resolution acted upon at the
meeting is substantially the same or has substantially the same effect
as the proposal or resolution to which the member of the Board or
committee has consented or objected.
(b) Action Without Meeting. Any action, other than an action requiring
shareholder approval, may be taken by written action signed by the
number of directors that would be required to take the same action at a
meeting of the Board at which all directors were present. An action
requiring shareholder approval required or permitted to be taken at a
board meeting may be taken by written action signed by all the
directors. Any such written action is effective when signed by the
required number of directors, unless a different effective time is
provided in the written action. When written action is taken by less
than all directors, all directors shall be notified immediately of its
text and effective date. Failure to provide the notice does not
invalidate the written action. A director who does not sign or consent
to the written action has no liability for the action or actions taken.
ARTICLE III
OFFICERS
3.1 Election; Term of Office; Removal. The Board of Directors shall elect a
Chief Executive Officer and Chief Financial Officer, and may elect such
other officers as it may deem necessary for the operation and
management of the corporation, each of whom shall have the duties and
responsibilities incident to the offices which they hold or as
determined by the Board. Officers need not be directors or
shareholders. Without limiting the foregoing, the Board may elect a
Chairman of the Board, President, one or more Vice Presidents, a
Treasurer, a Secretary and such assistant officers as it may designate
with titles to describe their duties, functions or special
responsibilities. Officers shall hold office at the will of the Board
for an indefinite term until their successors are elected and
qualified. Any officer elected or appointed by the Board of Directors
may be removed by the Board at any time with or without cause.
ARTICLE IV
AMENDMENTS
4.1 Subject to the power of shareholders to adopt, amend, or repeal these
Bylaws as provided in Minnesota Statutes, Section 302A.181, Subdivision
3, any Bylaw may be amended or repealed by the Board of Directors at
any meeting, provided that, after adoption of the initial Bylaws, the
Board shall not adopt, amend, or repeal a Bylaw fixing a quorum for
meetings of shareholders, prescribing procedures for removing directors
or filling vacancies in the Board, or fixing the number of directors or
their classifications, qualifications, or terms of office. The Board
may adopt or amend a Bylaw to increase the number of directors.
ARTICLE V
INDEMNIFICATION
5.1 The corporation shall indemnify persons for such expenses and
liabilities in such manner, under such circumstances, and to the extent
required by Minnesota Statutes, Section 302A.521.
QUITCLAIM DEED
THIS INDENTURE, made and entered into this 9th day of June, 1997, by
and between DONALD J. McDOWELL, a unmarried man of Washoe County, Nevada
("Grantor"), and GOLDEN PHOENIX MINERALS, INC., a Minnesota Corporation, its
address being, 4935 San Diego Court, Sparks, Nevada 89436 ("Grantee").
W I T N E S S E T H:
That the said Grantor, for good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, does by these presents, REMISE,
RELEASE AND FOREVER QUITCLAIM all of Grantor's right, title and interest unto
the Grantee and to his assigns, in those certain unpatented mining claims staked
in the Coal Canyon Mine Mining District, Elko county, Nevada, described in
Exhibit "A", attached hereto and made a part herein by reference.
TOGETHER WITH all and singular, the tenements, hereditaments and
appurtenances hereunto belonging or anywise appertaining, and the reversion and
reversions, remainder and remainders, rents, issues and profits thereof.
TO HAVE AND TO HOLD the said premises, together with the appurtenances,
unto the said Grantee, and to its assigns forever.
IN WITNESS WHEREOF, the Grantor has caused this conveyance to be
executed the day and year first above written.
GRANTOR:
/s/ Donald J. McDowell
Donald J. McDowell
STATE OF NEVADA )
) ss.
COUNTY OF WASHOE )
On this 9th day of June, 1997, personally appeared before me, a Notary
Public, DONALD J. McDowell, known to me or proved to me on the basis of
satisfactory evidence, to be the person whose name is subscribed to this
Quitclaim Deed, and acknowledged to me that he executed the name.
WITNESS my hand and official seal.
/s/ Darci Dawn Bertram
NOTARY PUBLIC
SEAL: DARCI DAWN BERTRAM
NOTARY PUBLIC - STATE OF NEVADA
APPOINTMENT RECORDED IN WASHOE COUNTY
NO: 95-3591-2 EXPIRES JULY 29, 2000
Exhibit A
Quitclaim Deed between Donald J. McDowell & Gold Phoenix Minerals, Inc.
The following unpatented mining claims located in Section 18, Township
38 North, Range 56 East, MDM, Coal Canyon Mine Mining District, Elko County,
Nevada and recorded in the Official Records of the County Recorder of Elko
County, Nevada:
Claim Name Date of Location Recordation
Information
McTwin #23 May 22, 1997 Book 993, Page 587
McTwin #24 May 22, 1997 Book 993, Page 588
McTwin #25 May 22, 1997 Book 993, Page 589
McTwin #26 May 22, 1997 Book 993, Page 590
McTwin #27 May 22, 1997 Book 993, Page 591
McTwin #28 May 22, 1997 Book 993, Page 592
McTwin #41 May 22, 1997 Book 993, Page 593
McTwin #42 May 22, 1997 Book 993, Page 594
McTwin #43 May 22, 1997 Book 993, Page 595
McTwin #44 May 22, 1997 Book 993, Page 596
McTwin #45 May 22, 1997 Book 993, Page 597
McTwin #46 May 22, 1997 Book 993, Page 598
Exhibit 10
July 25, 1997
Golden Phoenix Minerals, Inc.
4935 San Diego Court
Sparks, NV 89436
Gentlemen:
I have acted as counsel for the company in connection with the
preparation of the Registration Statement, and, based on this, I am of the
opinion that:
1. The company is a corporation, duly organized, validly existing, and
in good standing under the laws of the State of Minnesota, with corporate
authority to conduct the business in which it is now engaged, and as described
in the Registration Statement.
2. There is not pending, or to the knowledge of counsel, threatened,
any action, suit, or proceeding before or by any court or governmental agency or
body to which the company is a party, or to which any property of the company is
subject, and which, in the opinion of counsel, could result in a material
adverse change in the business, business prospects, financial position or
results of operations, present or prospective, of the company or of its
properties or assets.
3. There is no liquidation preference for any shareholder, common or
preferred, all have the same standing in regard to liquidation.
Cordially,
/s/ CHARLES CLAYTON
