SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10SB
Amendment 3
General Form for Registration of Securities Of Small
Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
PINNACLE RESOURCES, INC.
(Exact name of Small Business Issuer in its charter)
WYOMING 84-1414869
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
7345 E. Peakview Avenue, Englewood, Colorado 80111
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code:
(303) 771-8100
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.00001 par value
Preferred Stock, $.01 par value
<PAGE>2
ITEM 1. DESCRIPTION OF BUSINESS
A. Business Development. Pinnacle Resources, Inc. (the "Company") is a
development stage company, incorporated pursuant to the laws of the State of
Wyoming on January 6, 1995 under the name of Claremont House, Corp. On June
26, 1997, the Articles of Incorporation were amended to change the name of
the Company to Pinnacle Resources, Inc. and to authorize 2,000,000 Preferred
Shares with a par value of $.01 per Preferred Share. Additionally, the
Company effectuated a 1 for 3.3333 reverse stock split reducing the number of
outstanding Common Shares from 500,000 to 150,000.
The Company has had limited operations since its inception in 1995 due to its
lack of working capital. The Company was originally established with the
idea of providing "Assisted Living Facilities" to at risk (frail) senior
citizens. Management never commenced operations regarding this venture due
to a lack of funding. In June, 1997, the Company issued 4,000,000 (post
split) Common Shares for cash at $.025 per Common Share for an aggregate of
$100,000 to thirteen individuals who were then non-affiliates. The new
owners of Claremont House, Corp. did not acquire the Company in order to use
Claremont House, Corp. or its predecessors, as the object of a merger or
acquisition. Claremont House, Corp. was acquired, and its name changed to
Pinnacle Resources, Inc., in order to more clearly identify its new mandated
business purpose, which is to evaluate, structure, and complete a merger
with, or acquisition of, another unrelated privately-owned corporation. In
the course of its activities, the Company plans to arrange (or provide)
funding for companies that it evaluates and will try to structure merger or
acquisition opportunities so that conditions are advantageous to the Company.
Victory Minerals Corp., a holding company controlled by Glen Gamble,
purchased 2,000,000 of those Common Shares. Currently, the Company is
engaged in the business of providing financial services to emerging growth
companies in the United States, as well as development stage companies
located in selected developing countries, primarily in Africa and South
America.
Except for loans to two related entities, the Company has not had any other
material financial activities. See "Certain Transactions."
The Company is filing this Form 10-SB on a voluntary basis to provide full
disclosure to its shareholders and to meet one of the requirements of a
NASDAQ listing. Until the Company, if ever, meets all of the requirements
of a NASDAQ listing, the Company intends to seek quotation on the OTC
Bulletin Board, which is managed by the NASD. The Company does not know
when it will seek said quotation on the OTC Bulletin Board. The Company will
voluntarily file periodic reports in the event that its obligation to file
such reports is suspended under the Exchange Act.
Many states limit the resales of securities of shell companies. As a
result, such restrictions may be placed upon the Company's shareholders even
though the Company now has a stated business purpose. The Company has not
yet applied for secondary trading in any specified states and does not know
specifically of any such restrictions.
B. Business of Company. The Company will engage in the business of
financial services, making small commercial loans to, and equity investments
in, emerging growth companies which are unable to obtain financing from
traditional sources. The Company intends to be in the financial services
business and may also furnish financial consulting services and advice as an
incidental part of any other agreement or arrangement.
The Company will focus its financing and capital arrangement activities on
emerging growth companies which plan to raise capital in the public markets
within a reasonably short period of time, i.e., one to two years.
Although the Company will initially target small mining companies due to its
contacts in that industry, management has not identified any particular
industry within which the Company will focus its efforts. Rather,
management intends to identify any number of candidates which may be brought
to its attention through present associations or by word-of-mouth. However,
the Company will direct its activities in seeking and evaluating suitable
candidates for financing both in the United States and on companies operating
in selected stable, developing countries, principally in Africa and South
America.
In addition to domestic financing experience, management's historical
exposure has been in Southern Africa and South America. Even though the
Company intends to review and evaluate a variety of funding opportunities,
the bulk of the management's funding and financing experience has been
concentrated in the mineral and mining industry; therefore management's
experience would be limited in the financing of projects outside the mining
industry. In Africa and South America, management assisted in funding a
variety of mining opportunities. For example, a gold operating company in
Bolivia; a domestic brokerage firm for placing two active diamond properties
in South Africa; a gold claims leasing project in Zimbabwe; and a
leasing/title program for a vanadium ore property and a platinum ore property
both located in South Africa. Based on this exposure, management is of the
opinion that the need for outside sources of funding by mining companies in
these markets has potential. The Company is attracted to these areas
because they represent some of the most highly mineralized areas in the
world. Additionally, the Company's management has some prior expertise and
working knowledge in these markets. The Company expects to encounter normal
timing difficulties with third world governmental regulations and bureaucracy
<PAGE>3
that could slow down and encumber the Company's planned business activities.
In the third world countries it is not uncommon during the application and
approval process relating to surface and mineral titles; drilling and
exploration permits; mineral and mining leases; easements and rights-of-way;
water or power access and usage; environmental and restoration plans; etc.,
to be exceedingly slow compared to United States standards. Based on
management observation and past experience, these third world countries often
have only one person qualified to process any particular application; and
sometimes they have no one qualified to evaluate an application and the
department has to seek an outside consultant's report prior to processing an
application. In geographic areas where prospecting and mining activity is
abundant, regulatory departments can be understaffed, resulting in delays in
the application process.
Management has over 70 years of combined business experience involving a
variety of situations where financing and/or funding has been required in
order to effectuate a mining opportunity. Individually, management
personnel has directly funded, underwritten or brokered financing for a
number of mining prospects over the years, both in the domestic market as
well as South Africa and South America.
The Company's operating strategies will be to provide financing solutions to
privately-held corporations and other companies which, in all likelihood, do
not meet the overall credit standards typically required by commercial banks
in today's restrictive credit environment. Management believes that
commercial banks are reluctant to make loans to small and newly organized
companies and, in the instances in which such loans are made, they are
heavily collaterized by homes and other personal assets in virtually every
case. Commercial bankers typically do not lend to companies with limited
assets, or which have been in business for less than three or four years.
Most, if not all, of the companies which will be candidates for loans and/or
equity investments by the Company or for other sources of capital known to
management, will not have an operating history which will support bank loans.
These companies, primarily privately-held corporations to be targeted by the
Company, may have negative working capital positions, negative cash flow,
recurring losses or other negative characteristics relating to their past
performance which would result, in all probability, in a bank's refusal to
lend funds. The Company may consider as candidates for financing,
corporations and entities which are affiliated with the Company, or in which
the Company or executive officers, directors and/or controlling shareholders
have an equity interest.
While the Company may require, as a condition to making a loan to any
particular candidate, adequate collateral as security, the Company will rely
upon the expertise and experience of its management on a case-by-case basis
in making the determination regarding the issue of collateral. Management
will not employ any specific formula for collateral coverage and may make
unsecured signature loans under circumstances deemed acceptable by
management. Banks, on the other hand, traditionally require collateral
coverage of approximately 133% for accounts receivable, 300% for inventory
and 200% of liquidation value for real estate, equipment and other tangible
assets. The Company intends to charge interest rates on loans in a range
from 5% to 18% and to obtain equity participation in the form of warrants or
options to purchase shares of the common stock of the entity financed or
other forms of securities in order to provide additional yield enhancement.
Where the Company receives such warrants, options or other securities, the
Company may distribute such securities to its shareholders as a stock
dividend, subject to compliance with applicable state and federal securities
laws. In addition to or in lieu of the aforementioned types of securities,
the Company may seek to obtain an interest in revenues, a carried working
interest or other carried interest in an operating, producing mine or oil,
gas or mineral property owned by a mining or energy-related company financed
by the Company or its other capital sources. Depending upon the nature of
the legal interest or right obtained, the Company could become subject to
liability in addition to that of a shareholder or holder of a debt
instrument.
The Company recently has been asked by the management of Plateau Resources
(Pty) Ltd., a South African development-stage corporation, to arrange funding
in order to initiate a drilling and exploration program on their undeveloped
properties. In March 1998, the Company loaned Plateau $75,000 for this
purpose. See "Certain Transactions."
Plateau Resources (formerly Bougleigh 126 (Pty) Ltd} was organized in
February 1995 and its business activities to date have been confined to South
Africa. Mr, Gamble did not organize Plateau. Mr. Gamble joined the Board
of Directors in the second quarter of 1997. Plateau has been awarded
Prospecting Rights on lands that have platinum group metals (PGM's)
potential. To date, no drilling or exploration has been conducted on these
lands by Plateau.
Plateau required operational capital which was provided by a third party
investor introduced to the Plateau opportunity independently by the efforts
of Mr. Gamble for a fee. Plateau is currently seeking drilling and
exploration funds in the amount of US$1.5 million in order to initiate a core
drilling program over the next eighteen months. If the funding is
completed, this exploration program will either prove or disprove the
commercial feasibility of the anticipated PGM reserves of platinum,
palladium, ruthenium as well as base metals of copper and nickel. The
<PAGE>4
Company made a $75,000 loan to Plateau to use as a deposit for the drilling
company. Management anticipates these funds will be returned out of funding
for Plateau's drilling and exploration program which the Company intends to
arrange from private third party sources and such financing may not be
accomplished. If the Company is successful in achieving funding for Plateau
Resources, then Company management expects to obtain an option for equity
participation in Plateau Resources and perhaps an option to merge Plateau
Resources in as a wholly owned subsidiary of the Company. The Company is of
the opinion that equity participation in Plateau could be advantageous to the
Company if Plateau successfully encounters a commercially feasible-mineable
PGM ore reserve. If any option is earned then the Company may, or may not,
exercise such option depending upon the outcome of Plateau's exploration
program. Any anticipated option to merge is undefined and is presently not
contemplated.
Other than this one opportunity, the Company is not currently evaluating any
development-stage companies with a view to making a loan or stock purchase or
arranging funding or any loan proposals and has no contingent loan agreements
which are subject to approval.
Subject to market conditions, the Company may attempt to raise additional
equity or debt capital to fund additional financing activities in the future.
As of the date of this filing, management has no specific plans in this
regard. Management acknowledges that the Company may have insufficient
capital with which to implement its business plans on the scale desired.
Accordingly, the Company may be capable of making only an extremely limited
number of loans to, and/or equity investments in, companies to which
traditional sources of capital are unavailable.
With the exception of loans to Asset Partners and Plateau Resources, the
Company has not performed any financial services for any emerging growth
clients or consummated or arranged any loans, equity investments or other
financing transactions. Further, no loans, stock purchases or other non-
traditional financing transactions are pending or under consideration. The
Company has no existing agreement or arrangement for the performance of
financial services.
Prior to any affiliation with the Company, Mr. Glen Gamble, now President of
the Company, and Victory Minerals Corp. (now a major shareholder of the
Company) had arranged start-up financing for a South African mining company
by the name of Plateau Resources (Pty) Ltd. This entity was awarded mineral
rights on certain undeveloped properties in May 1997 and is now
seekingfunding from the Company in order to continue its operations.
Therefore, Plateau Resources (Pty) Ltd. has become the Company's first
prospect. Neither the Company nor Mr. Gamble (before assuming his position
as President) had any pre-arrangement or prior commitment to Plateau
Resources.
Consequently, this opportunity with Plateau Resources came about because non-
related third-party financial commitments from within the Canadian mining
industry failed to materialize.
The Company has no pre-arranged financing with any other prospects. The
Company has not made any prior commitments, or any understandings, with any
third parties, or any of its affiliated entities, such as Victory Minerals or
Re-Group, Inc. for financing or participation. Additionally, the Company
does not have any plans, arrangements, commitments or understandings to pay
any finders' fees to any person or entity.
The Company does not have any plans, arrangements, commitments or
understandings to obtain an interest in an operating producing mine or oil,
gas or mineral property owned by a mining or energy-related company.
Operating Strategy.
Management of the Company will evaluate the future potential, credit
worthiness and, if required, collateral of prospective candidates for funding
by the Company or other sources, including corporate and individual lenders
and investors, known to management. The fact that a corporation or other
entity is affiliated with the Company or an equity interest in a prospective
borrower is owned by one or more of the executive officers, directors and/or
controlling shareholders of the Company, will not disqualify such entity from
consideration as a potential borrower or recipient of investment capital.
In order to minimize conflicts of interest, the Company has adopted a policy
that any contracts or other transactions with entities with whom management
is affiliated, or in which they have a financial interest, will be approved
by a majority of the disinterested members of the Board of Directors and will
be fair and reasonable, but that no such transactions by the Company shall be
affected or invalidated solely because of such relationship or interest of
directors or officers. For purposes herein, the term "disinterested
directors" are those directors who have no direct, pecuniary interest in a
proposed transaction. If the Company's Board of Directors is unavailable to
approve a financing transaction with an affiliated or related party, the
Company will require that the transaction be approved by a majority of the
Company's shareholders, at a special meeting of shareholders called for such
purpose.
<PAGE>5
Prior to funding any loans or equity investments, management of the Company
will conduct a comprehensive credit investigation of the potential financing
candidate. The investigation will generally include, but not necessarily be
limited to, the following: (I) a review of the prospective candidate's
financial statements and operating and prior credit history; (ii) an analysis
of the prospect's projected cash flow; (iii) a survey of the performance of
other companies engaged in the candidate's business; (iv) an analysis of the
value of the collateral, if any, proposed to secure a loan; and (v) the
source of repayment for the loan. In addition, management intends, as part
of its credit procedures, to conduct a complete due diligence review of the
prospective candidate's business at its offices, during which management
proposes to review the prospect's record keeping systems and procedures, the
historical and projected financial condition of the borrower/recipient of
investment capital and its industry and any collateral offered to secure a
loan. Management may, in its discretion, conduct a formal, independent
appraisal of any collateral offered to assure that the collateral can be
liquidated without a loss in the event of a downturn in the economy, which
appraisal may include an assessment of auction liquidation and/or fair market
value. Management intends to make the decision whether to arrange or fund a
loan or purchase common stock of a financing candidate only after completing
the number and type of credit procedures described above and as deemed
necessary or appropriate, in the discretion of management, in order to
determine the candidate's business potential and credit worthiness.
In instances deemed appropriate by management, the Company may require
security in the form of inventory, accounts receivable, manufacturing and
other operating equipment, other tangible assets and/or real estate used in
the financing candidate's business. With respect to asset-based loans which
the Company may fund, management will have no fixed policy as to the
percentage of collateral coverage required. However, in almost every such
case, management envisions that the percentage of collateral coverage
required by it will be in excess of 100% of the amount of the loan.
Additionally, management may require that any one or more of the officers,
directors and principal shareholders of the borrower personally guarantee the
indebtedness and, depending upon the prospective borrower's financial
strength and the nature and value of any collateral, require, in addition,
that the personal guarantees be collateralized separately.
Management of the Company will closely monitor the borrower's performance
after funding a loan or equity investment and, with respect to a secured
loan, intends to monitor the adequacy of the collateral at least on a monthly
basis. If the primary collateral is accounts receivable, management may
require direct verification and a monthly aging of the receivables. The
Company's management intends to conduct aspects of its monitoring process,
inducing, if necessary, a reappraisal of any collateral, periodically at the
borrower's place of business. Regardless of whether the financing provided
by the Company takes the form of a loan, stock purchase or a combination
thereof, management will maintain close contact with management of the
financing recipient to ensure that the financial condition and overall
performance of the borrower are acceptable and that any collateral remains
adequate. In the event of default in the payment of principal or interest
on a loan, management may notify the borrower's customers to make payments
directly to the Company via a lock box established for the borrower. In a
case where the Company arranges financing for, but does not itself fund, a
development-stage company, management will also endeavor to monitor the
borrower's performance if an equity interest in the form of common stock,
warrants, options or any other type of security is received as part of the
finder's or consulting fee.
Management has not adopted any policy regarding the maximum size of any loans
or stock purchases which it may make with respect to a single company.
Further, management has not determined any maximum percentage of its loan or
stock portfolio which may be committed to loans or investments in excess of a
specified amount. Management, in its sole discretion, will determine
guidelines for levels of concentration as to the diversity of companies which
it funds and types of assets required as collateral for loans, in order to
attempt to minimize credit losses. However, management intends to employ a
policy of maintaining a diversity of companies financed and types of
collateral accepted as security for loans in order to minimize undue
exposure.
Competition. The Company is, and will remain for the foreseeable future,
an insignificant participant among those firms which are also engaged in the
business of the Company. There are many established entities and financial
concerns which have significantly greater financial and personnel resources
and technical expertise than the Company. Management will rely upon their
own ability to generate potential lending candidates, either through their
own personal industries in which management has had prior experience. In
view of the Company's extremely limited resources, it should be expected that
the Company will continue to be at a significant competitive disadvantage
compared to the Company's competitors.
Federal and/or State Regulation. The Company is not subject to any federal
or state regulations regarding its services.
Business Development Company. As the Company obtains equity interests in
companies who desire to become public, the Company may become subject to the
provisions of the Investment Company Act of 1940 or the Investment Advisers
Act of 1940. It is possible that the Company may choose to elect to be
<PAGE>6
treated as a Business Development Company ("BDC") pursuant to Section 54 of
the Investment Company Act of 1940 (the "1940 Act"). On October 21, 1980,
the 1940 Act was amended by a series of amendments which added sections 59
through 65. These sections comprise the Small Business Investment Incentive
Act of 1980 (the "SMIIA"). For purposes of the SMIIA, a business
development company is defined as a domestic closed-end company which is
operated for the purpose of making certain types of investments and which
makes available significant managerial assistance to the companies in which
it invests. Generally, a company which elects to be treated as a business
development company, or intends within 90 days to so elect, is exempt from
certain provisions of sections 1 through 53 of the 1940 Act.
To take advantage of these special regulatory provisions, a BDC must comply
with sections 59 through 65 of the 1940 Act, which require, among other
things, that:
a. a majority of the BDC's directors must not be "interested persons" as
defined in section 2(a)(19) of the 1940 Act;
b. A BDC is restricted in the kind of investments it can make, i.e., at
least seventy percent of the BDC's assets (excluding assets necessary to
maintain the business, such as office furniture) must consist of securities
of small, developing business or financially troubled businesses and such
liquid assets as cash or cash items, Government securities or short-term,
high quality debt securities;
c. A BDC must annually furnish to its shareholders a statement, in such
form and manner as the Securities and Exchange Commission may prescribe,
about the risks involved in investing in a BDC due to the nature of its
portfolio, and;
d. A BDC must have a class of equity securities registered under the
1934 Act or have filed a registration statement under that section and must
comply with the periodic reporting requirements under the 1934 Act, including
annual reports, quarterly reports and reports of certain material changes,
rather than with those in section 30 of the 1940 Act.
Employees. The Company presently has two employees, none of whom are paid
any salary.
Seasonal Nature of Business Activities. The Company's business activities
are not seasonal.
Item 2. Management's Discussion and Analysis or Plan of Operation
Trends and Uncertainties. The financial statements have been prepared
assuming that the Company will continue as a going concern. The Company is
in the development stage and has no operations as of March 31, 1998. The
deficiency in working capital as of March 31, 1998 raises substantial doubt
about its ability to continue as a going concern. In the course of its
development activities the Company has sustained continuing losses and
expects such losses to continue for the foreseeable future. The Company's
management plans on advancing funds on an as needed basis and in the longer
term to generate revenues from the operations of which there is no assurance.
The Company's ability to continue as a going concern is dependent on these
additional management advances, and, ultimately, upon achieving profitable
operations, of which there is no assurance.
The Company has expended charges for professional fees. These are not
expected to be of a recurring nature.
Until revenues commence, the Company shall raise funds through equity
financing which may or not be successful. The Company has tried to limit
its general and administrative expenses. The Company has little or no
control as to the demand for its services and, as a result, inflation and
changing prices could have a material effect on the future profitability of
the Company.
The Company will focus its financing and capital arrangement activities on
emerging growth companies which plan to raise capital in the public markets
within a reasonable short period of time, i.e., one to two years. Although
the Company will initially target small mining companies due to its contacts
in that industry, management has not identified any particular industry
within which the Company will focus its efforts. Rather, management intends
to identify any number of candidates which may be brought to its attention
through present associations or by word-of-mouth. Initially the Company
intends to arrange sources of funding and finance for its prospective clients
through established sources for such funds by acting as a finder or broker to
the lender and as an arranger or financial consultant to the borrowing party.
In the emerging markets of South Africa and South America, opportunities
exist where small mining companies seek funding from outside sources for
capitalization because it is not available locally.
Management has over 70 years of combined business experience involving a
variety of situations where financing and/or funding has been required in
order to effectuate a mining opportunity. Individually, management
personnel has directly funded, underwritten or brokered financing for a
number of mining prospects over the years, both in the domestic market as
well as South Africa and South America.
PAGE>7
Management believes that the Company will be able to successfully seek out
potential candidates who are interested in obtaining loans from the Company
in the immediate future. This belief is based upon the perceived difficulty
of many development and growth stage companies who require additional
financing, but are unable to obtain the same from established sources, such
as banking institutions and venture capitalists. As interest rates begin to
rise, management anticipates that those types of entities earmarked by the
Company as possible clients will continue to seek out the Company as a
lending source, as management views a potential borrower's borrowing base in
a different light than banks. For loans made by regulated commercial
lenders, there is normally a structured review and evaluation of a
prospective borrower's loan application by the lender, including an in-depth
review of such application by a loan committee. The loan committee will
then approve or reject each application as it is submitted. The evaluation
and approval of loans depends on subjective factors and judgments, as well as
objective criteria, such as loan to value ratios and independent appraisals,
when appropriate or available. The Company's loan committee consists of
substantially fewer persons than a commercial lender and uses a less formal
procedure than more traditional lenders. It is possible that any such
subjective factors and judgments may prove to be incorrect with a resulting
loss of part or all of the Company's investment in any particular loan.
However, as part of the consideration provided to the Company for issuance of
its loans, the Company receives its interest and attempts to also obtain
additional consideration in the form of equity or options or warrants in the
borrower. In the event the borrower's business plan proves successful, the
Company may receive substantial returns as a result of this equity
enhancement.
Most venture capitalists take an aggressive equity position far in excess of
that of the Company and in many instances, takes an active role in the
management of their clients. Management believes that this makes venture
capitalists unattractive to those types of entities with whom the Company
does business.
The Company's ability to become a significant lender is impaired primarily by
its own lack of capital with which to make loans. While management would
welcome the opportunity to make more loans for larger amounts, management
finds itself in the same predicament as that of its prospective clients.
That is, the lack of capital with which to fully implement the Company's
business plan. Management hopes that as the Company begins to make
successful loans, its track record will allow the Company to attract
either private investors seeking to invest in the business of the Company on
a private basis, or that the Company will be able to attract an investment
banker willing to underwrite a secondary offering of the Company's securities
to generate additional capital. There are no assurances that the Company
will be able to attract either of the aforesaid entities to increase the
Company's working capital. If the Company is unable to obtain additional
working capital, it is unlikely that the Company will generate any
substantial growth in the near future.
Many existing computer programs use only two digits to identify a year in the
date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the
Year 2000. As a result, many companies will be required to undertake major
projects to address the Year 2000 issue. Because the Company has nominal
assets, including no personal property such as computers, it is not
anticipated that the Company will incur any negative impact as a result of
this potential problem. However, it is possible that this issue may have an
impact on the Company after the Company successfully consummates a merger or
acquisition.
Capital Resources and Source of Liquidity. The Company currently has no
material commitments for capital expenditures. As of July 1997, the Company
pays $300 rent per month for its current office space. An increase in
lease payments could have negative effect on the cash flow and liquidity of
the Company.
On June 26, 1997, the Company sold 4,000,000 at $.025 per Common Share for
an aggregate of $100,000. At June 30, 1997, the Company had working capital
of $100,000 consisting of $100,000 in current assets and $0 in current
liabilities.
The Company received a loan of $100,000 in March, 1998. For the nine month
period ended March 31, 1998, the Company advanced two related parties an
aggregate of $115,000 resulting in net cash flows used in financing
activities of $115,000. At March 31, 1998, the Company had working capital
of $37,882 consisting of $144,506 in current assets and $106,624 in
liabilities. The Company has no long-term liabilities.
Results of Operations. The Company expects to earn consulting fees,
commissions, brokerage points and equity participation for having acted as an
arranger and go-between from having effectuated a financing package on behalf
of a client and a funding source. To date, the Company has not yet commenced
operations or received any revenues. The Company had a net loss for the
nine months ended March 31, 1998 of $62,118. The Company had an increase of
$2,505 in interest receivable for the nine months ended March 31, 1998, an
increase in accounts payable of $6,460 and an increase in accrued interest
payable of $164. As a result, the Company had net cash flows from operations
of $(57,999) for the nine months ended March 31, 1998.
<PAGE>8
For the nine months ended March 31, 1997, the Company had a net loss of
$1,500 and issued stock for services valued at $1,500. This resulted in net
cash flows from operations of $0.00 for the nine months ended March 31, 1997.
The Company spent $1,500 and $0 in administrative costs for the three months
ended December 31, 1996 and 1997 respectively. No other costs were incurred
in the three months ended December 31, 1996. The Company incurred legal and
accounting costs of $250, paid officer remuneration of $4,800, professional
fees of $18,400 and rent of 1,600 in the three months ended December 31,
1997.
Plan of Operation. The Company is not delinquent on any of its obligations
even though the Company has not yet begun to generate revenue. The Company
will identify and subsequently qualify prospective clients. Current
operations require minimal cash infusions. The Company may borrow funds or
obtain equity financing from affiliated persons or entities to continue
operations, if necessary. The Company intends to market its services
utilizing cash made available from the recent private sale of its Common
Shares. The Company is of the opinion that revenues from its services along
with proceeds of the private sale of its securities will be sufficient to pay
its expenses until receipt of revenues at a level to sustain operations.
ITEM 3. DESCRIPTION OF PROPERTY. In May 1997, the Company moved its
offices to 7345 E. Peakview Avenue, Englewood, Colorado 80111, a building
rented and occupied by a shareholder in the Company. As of July 1997, the
Company pays $300 rent per month for its current office space. The Company's
offices consist of approximately 500 square feet of executive office space
and secretarial area. Management believes that this space will meet the
Company's needs for the foreseeable future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following tabulates holdings of shares of the Company by each person or
entity who, subject to the above, as of October 20, 1997, holds of record or
is known by Management to own beneficially more than 5.0% of the Common
Shares and, in addition, by all directors and officers of the Company
individually and as a group. Each named beneficial owner has sole voting
and investment power with respect to the shares set forth opposite his name.
Shareholdings at Date of
This Prospectus
Percentage of
Number & Class(1) Outstanding
Name and Address of Shares Common Shares
Glen R. Gamble<F1><F2>
12892 Sierra Circle
Parker, CO 80134 2,200,000 53.01%
Terryl K. Jensen
9600 E. Arapahoe Road
#260
Englewood, CO 80112 50,000 1.2%
Robert A. Hildebrand
7345 E. Peakview
Englewood, CO 80111 50,000 1.2%
Beverly Jo Gamble<F1><F2>
12892 Sierra Circle
Parker, CO 80134 200,000 4.82%
Mel Keller
R.R. 1 Box
Blairsburg, IA 840,000 20.24%
Victory Minerals Corp.<F1><F3>
7345 E. Peakview
Englewood, Co 80111 2,000,000 48.19%
Re-Group, Inc.<F4>
9600 E. Arapahoe Road
#260
Englewood, CO 80112 266,000 6.41%
All Directors & Officers
as a group (3 persons) 3,606,000 86.89%
[FN]
<F1>Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared voting
power (including the power to vote or direct the voting) and/or sole or
shared investment power (including the power to dispose or direct the
disposition) with respect to a security whether through a contract,
arrangement, understanding, relationship or otherwise. Unless otherwise
indicated, each person indicated above has sole power to vote, or dispose or
direct the disposition of all shares beneficially owned, subject to
applicable community property laws.
<PAGE>9
<F2>Beverly Jo Gamble is married to Glen R. Gamble, an officer and director
of the Company. As a result, Glen R. Gamble would be deemed to be a
beneficial owner of the Common Shares owned of record by Beverly Jo Gamble.
Nevertheless, Glen R. Gamble disclaims any beneficial ownership of the Common
Shares owned of record by his wife.
<F3>Victory Minerals Corp. is a corporation controlled by Glen R. Gamble, an
officer and director of the Company. As a result, Glen R. Gamble would be
deemed to be a beneficial owner of the 2,000,000 Common Shares owned of
record by Victory Minerals Corp.
<F4>Daniel J. Boone and S. Diane Boone are principals of Re-Group, Inc.
The balance of the Company's outstanding Common Shares are held by 17
persons, not including those persons who hold their shares in street name.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
Board of Directors. The following persons listed below have been retained to
provide services as director until the qualification and election of his
successor. All holders of Common Stock will have the right to vote for
Directors of the Company. The Board of Directors has primary responsibility
for adopting and reviewing implementation of the business plan of the
Company, supervising the development business plan, review of the officers'
performance of specific business functions. The Board is responsible for
monitoring management, and from time to time, to revise the strategic and
operational plans of the Company. A director shall be elected by the
shareholders to serve until the next annual meeting of shareholders, or until
his or her death, or resignation and his or her successor is elected.
Presently, Directors receive no compensation or fees for their services
rendered in such capacity.
The Executive Officers and Directors are:
Name Position Term(s) of Office
Glen R. Gamble, age 53 President, Director From June 26, 1997
Chief Executive Officer to present
Robert A. Hildebrand,
age 71 Vice President, Director From Inception
Secretary/Treasurer to present
Chief Financial Officer
President From Inception
to June 26, 1997
Terry K. Jensen, age 58 Director From June 26, 1997
to present
Prior to the change in control and name change, Anthony Griffin was a
Director of the Company and served as Secretary of the Company until June 26,
1997. Marshall Griffin was a Director of the Company from inception to June
26, 1997.
Resumes:
Glen R. Gamble. Mr. Gamble has served as an officer and director of
variety of companies engaged in the fields of mining, oil and gas, cattle,
real estate and resource financing. Currently, Mr. Gamble is the Manager of
Viatica Fund, LLC; a Director of Natural Buttes Gas Corp.; Manager of Desert
Flower Mining, LLC; and President and Chairman of Victory Minerals Corp. and
the Company. Offshore, Mr. Gamble also serves as a Director on the Board of
Directors of Plateau Resources (Pty) Ltd., a South African corporation since
May, 1997. Mr. Gamble assisted the management in setting up an offshore
parent holding company in the Cayman Islands. Additionally, Mr. Gamble
recently facilitated Plateau Resources (Pty) Ltd. in obtaining mineral rights
on South African properties. He helped to fund, via private sources,
Plateau's start-up and operating capital to date. Similarly, Mr. Gamble
served on the Board of Vanmag Exploration and Development (Pty) Ltd., also a
South African corporation. He also assisted this company in obtaining mineral
rights on a major vanadium deposit, and facilitated in setting up its parent
offshore company in the Cayman Islands. Mr. Gamble resigned from the Vanmag
Board of Directors when the Cayman parent company sold the South African
entity. Currently he is a Director with Zebediela Platinum (Pty) Ltd.,
another South African corporation which is awaiting approval of its
applications on farms having platinum potential.
In mid-1979, Mr. Gamble effected a sale and financing package on a ranch in
Russell, Kansas on which were several producing oil and gas wells. This
opportunity led to the creation of a new entity, Petro-Package Brokerage Co.,
which Mr. Gamble owns. For the next few years Mr. Gamble specialized in
packaging, financing and selling producing oil and gas properties.
Additionally, he managed several oil properties for investors and drilled
over 20 wells in Central Kansas. He moved the Petro-Package operation to
Denver in 1985 and created a new Wyoming company called Victory Minerals
Corp. which is the flagship company for Mr. Gamble's mineral interest both in
the United States and in Africa.
<PAGE>10
Mr. Gamble graduated from Lakewood High School in 1962, performed three
years of military service in the U.S. Army from which he was Honorably
Discharged in May 1966. Mr. Gamble attended the University of Colorado and
graduated with a Bachelor of Science degree in Accounting and Finance in
1970.
Robert A. Hildebrand. Since 1991, Mr. Hildebrand has been Vice President of
Environmental Assurance corporation, a company offering financial solutions
to owners of contaminated real estate. Mr. Hildebrand served as the
President and a director of Resource Finance Group, Ltd., a public Colorado
corporation engaged in the business of acquiring revenue interest in
producing mines in selected developing countries in exchange for mining and
processing equipment and training provided by Resource Finance Group, Ltd.,
from August 1991 until that company merged, in April 1993, with Onyx Systems,
Ltd. From June 1987 through October 1991, Mr. Hildebrand served as a
director and an officer, holding various positions including President, of
General Mining Company ("General Mining"), a small, inactive public mining
company. General Mining was active, from 1987 through early 1991, in
exploring for surface sulfur deposits in Bolivia, which did not result in
viable operations. In November 1996 Mr. Hildebrand served as a consultant to
Mr. Glen Gamble and Victory Minerals S.A. (Pty) Ltd. to assist Plateau
Resources (Pty) Ltd. and Vanmag Exploration (Pty) Ltd. with its applications
to be awarded mineral rights and surface rights on certain farms having
platinum/palladium and vanadium potential, respectively. On January 10,
1994, Mr. Hildebrand filed a voluntary petition pursuant to Chapter 7 of the
United States Bankruptcy Code, case #94-10209SBB. On May 19, 1994, he was
released from all dischargable debt. He has accepted a directorship with
Zebediela Platinum (Pty) Ltd., another South African corporation which has
pending applications in on farms with platinum potential.
Mr. Hildebrand attended the U.S. Naval Academy from 1947 through 1949 and
received his Geological Engineering Degree from the Colorado School of Mines
in 1954. He has been a registered Colorado Professional Engineer since
1958.
Terryl K. Jensen. Mr. Jensen has been with Horton Cavey Company since 1969
and is currently President of Horton Cavey Realty Company and has twenty-
eight years of experience in real estate as a broker, manager and owner. He
has held his real estate broker license since 1972. His experience includes
the sale of land and investment real estate, syndication of investment
property, development of commercial and residential projects and management
of the Company.
Mr. Jensen has participated in the development and marketing of twelve
residential projects of over 800 lots; the development of a small office
park, two apartment buildings and one office building. He was executive vice
president of a company that developed 5,200 acres in Kentucky into a large
equestrian community. In addition, he has participated in the forming,
marketing and management of over thirty investment partnership projects,
which included apartments, land, land development, mobile home parks and
residential subdivisions.
Mr. Jensen served as a Director of Paragon Mortgage Corporation, a mortgage
company from June 1994 to September 1994.
Mr. Jensen received a Bachelor of Science degree with a major in Business
from Dakota State University in 1964; and he is a licensed real estate broker
in the State of Colorado. Mr. Jensen is a member of the Denver Board of
Realtors Commercial Division, Colorado Association of Real Estate Boards,
National Association of Real Estate Boards, Home Builders Association of
Metropolitan Denver, Colorado Association of Home Builders and the National
Association of Home Builders.
Conflicts of Interest. The Corporation will be subject to various conflicts
of interest between the Corporation and its Affiliates. Since the executive
officers and directors will control the daily operations of the Corporation
and its Affiliates, there may be occasions when the interests of the
Corporation's Affiliates may be inconsistent with the interests of the
Corporation.
Allocation of Management Time. The Corporation will rely on its officers
to manage the Corporation's business operations. Currently the officers are
devoting a minimal amount of their time for the operation of the
Corporation. The Corporation may obtain additional officers, as necessary.
As such, and until all of their positions become "full time," there will be
conflicts of interest in allocating management time, services and functions
between the Corporation and its Affiliates. These individuals may engage
for their own account, or for the account of others in other business
ventures for which the Corporation shall not be entitled to any interest.
The Corporation may, at some time in the future, compete with others for the
management services of the current and future officers of the Corporation.
As a result, these individuals may be placed in a position where their
decision to favor other operations in which they are associated over those of
the Corporation will result in a conflict of interest. It should also be
noted that it may be expedient for them to favor one operation over another
since their participation in such operations will vary. In allocating their
time, they will recognize their fiduciary obligations to the Corporation, the
prevailing industry standards and the financial situation of the Corporation.
<PAGE>11
Conflicts of Interest Policy. The Corporation has adopted a policy that
any transactions with directors, officers or entities of which they are also
officers or directors or in which they have a financial interest, will only
be on terms consistent with industry standards and approved by a majority of
the disinterested directors of the Corporation's Board of Directors. No
such transactions by the Corporation shall be either void or voidable solely
because of such relationship or interest of directors or officers or solely
because such directors are present at the meeting of the Board of Directors
of the Corporation or a committee thereof which approves such transactions,
or solely because their votes are counted for such purpose if: (i) the fact
of such common directorship or financial interest is disclosed or known by
the Board of Directors or committee and noted in the minutes, and the Board
or committee authorizes, approves or ratifies the contract or transaction in
good faith by a vote for that purpose without counting the vote or votes of
such interested directors; or (ii) the fact of such common directorship or
financial interest is disclosed to or known by the shareholders entitled to
vote and they approve or ratify the contract or transaction in good faith by
a majority vote or written consent of shareholders holding a majority of the
Common Shares entitled to vote (the votes of the common or interested
directors or officers shall be counted in any such vote of shareholders), or
(iii) the contract or transaction is fair and reasonable to the Corporation
based on the material similarity of terms to recent consulting agreements not
involving interested parties, or in all other agreements by competitive bids,
at the time it is authorized or approved. In addition, interested directors
may be counted in determining the presence of a quorum at a meeting of the
Board of Directors of the Corporation or a committee thereof which approves
such transactions.
Non-Qualified and Incentive Stock Option Plans. The Corporation does not
currently have any stock option plans, however, the Corporation does intend
to pursue the adoption of a non-qualified stock option plan in the fourth
quarter of 1997.
ITEM 6. EXECUTIVE COMPENSATION
Commencing July 1, 1997, the officers of the Company receive $800 per month
(aggregate) for services. As operations increase, the Company intends to
enter into employment agreements with its officers. Upon funding, either
through revenues from operations, a private placement or initial public
offering, should the amount justify the salary demands, the key management of
the Company would be compensated according to their duties. No specific
details have been determined.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company maintains a mailing address at Victory Mineral Corporation's
place of business located at 7345 E. Peakview, Greenwood Village, CO
80111.
Glen Gamble, president of the Company, is also an officer and director of
Victory Minerals Corporation, a majority shareholder of the Company's common
stock.
Mr. Gamble is also a director on the Board of Directors of Plateau Resources
(Pty) Ltd., a South African corporation. He has acted as a consultant and
facilitator to assist Plateau Resources International Ltd., a Cayman Island
Corporation which serves as a parent holding company for the South African
entity. Plateau Resources (Pty) Ltd. has asked Mr. Gamble to obtain funding,
either from outside sources or from the Company itself in order to commence
drilling and exploration activities on its undeveloped properties in South
Africa.
In March 1998, monies ($75,000) were advanced to Plateau Resources (Pty) Ltd.
These funds are accruing interest at a rate of 10% per annum. The funds are
due to be repaid on March 22, 1999.
In October 1997, monies ($40,000) were advanced to Asset Partners LLC. whose
managing partner is a minority shareholder of the Company (holding 3,000
Common Shares or .07% of the Company's outstanding Common Shares). These
funds are accruing interest at a rate of 13% per annum. The funds were
originally due to be repaid on April 22, 1998. The note has been extended
until October 22, 1998.
ITEM 8. DESCRIPTION OF SECURITIES
Common Stock. The aggregate number of shares of common stock which the
Company has the authority to issue is Five Hundred million (500,000,000)
shares at par value of one-thousandth of a cent ($.00001) per share.
Holders of Common Shares of the Company are entitled to cast one vote for
each share held at all shareholders meetings for all purposes, including the
election of directors, and to share equally on a per share basis in such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. Upon liquidation or dissolution, each outstanding Common
Share will be entitled to share equally in the assets of the Company legally
available for distribution to shareholders after the payment of all debts and
other liabilities. Common Shares are not redeemable, have no conversion
<PAGE>12
rights and carry no preemptive or other rights to subscribe to or purchase
additional Common Shares in the event of a subsequent offering. All
outstanding Common Shares are, and the shares offered hereby will be when
issued, fully paid and non-assessable.
Cumulative Voting. The Common Shares do not have cumulative voting rights.
Dividends. There are no limitations or restrictions upon the rights of the
Board of Directors to declare dividends out of any funds legally available
therefor. The Company has not paid cash dividends to date and it is not
anticipated that any cash dividends will be paid in the foreseeable future.
The Board of Directors initially may follow a policy of retaining earnings,
if any, to finance the future growth of the Company. Accordingly, future
cash dividends, if any, will depend upon, among other considerations, the
Company's need for working capital and its financial conditions at the time.
Preferred Stock. The Preferred Stock authorized by this Certificate of
Incorporation may be issued from time to time in series. Preferred Shares
of each series when issued shall be designated to distinguish them from the
shares of all other series. The Board of Directors is hereby expressly
vested with authority to divide the class of Preferred Shares into series and
to fix and determine the relative rights and preferences of the shares of any
such series so established to the full extent permitted by these Articles and
the laws of the State of Wyoming in respect of the following:
(i) The number of shares to constitute such series, and the distinctive
designations thereof;
(ii) The rate and preference of dividends, if any, the time of payment of
dividends, whether dividends are cumulative, and the date from which any
dividend shall accrue;
(iii) Whether shares may be redeemed and, if so, the redemption price and
the terms and conditions of redemption;
(iv) The amount payable upon shares in event of involuntary liquidation;
(v) The amount payable upon shares in event of voluntary liquidation;
(vi) Sinking fund or other provisions, if any, for the redemption or
purchase of shares;
(vii) The terms and conditions on which shares may be converted, if the
shares of any series are issued with the privilege of conversion;
(viii) Voting rights, if any; and
(ix) Any other relative rights and preferences of shares of such series,
including, without limitation, any restriction of an increase in the number
of shares of any series theretofore authorized and any limitation or
restriction of rights or powers to which shares of any future series shall be
subject.
The authority of the Board of Directors to divide the class of preferred
shares into series and to fix and determine the relative rights and
preferences of the preferred stock with no required approval from the
shareholders could have an anti-takeover effect.
The Company has no specific plans, arrangements, commitments, or prior
understandings to issue any of its preferred stock.
<PAGE>13
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's common stock has not commenced trading on the over-the-counter
market. There has never been a market for the securities of the Company.
The Company has never paid any cash dividends nor does it intend, at this
time, to make any cash distributions to the its shareholders as dividends in
the near future.
As of March 31, 1998, the number of holders of Company's common stock is 24.
Broker-Dealer Sales of Company Securities. The Company intends to apply for
quotation of its common stock on the OTC Bulletin Board. Upon successful
application for the trading of its securities on the over-the-counter market
and until the Company successfully obtains a listing on the NASDAQ quotation
system, if ever, the Company's securities may be covered by Rule 15g-2 under
the Securities Exchange Act of 1934 that imposes additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally institutions with
assets in excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 jointly with his
spouse). For transactions covered by the rule, the broker-dealer must make
a special suitability determination of the purchaser and have received the
purchaser's written agreement to the transaction prior to the sale. In order
to approve a person's account for transactions in designated securities, the
broker or dealer must (i) obtain information concerning the person's
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on the information required by paragraph (i) that
transactions in designated securities are suitable for the person and that
the person has sufficient knowledge and experience in financial matters that
the person reasonably may be expected to be capable of evaluating the rights
of transactions in designated securities; and (iii) deliver to the person a
written statement setting forth the basis on which the broker or dealer made
the determination required by paragraph (ii) in this section, stating in a
highlighted format that it is unlawful for the broker or dealer to effect a
transaction in a designated security subject to the provisions of paragraph
(ii) of this section unless the broker or dealer has received, prior to the
transaction, a written agreement to the transaction from the person; and
stating in a highlighted format immediately preceding the customer signature
line that the broker or dealer is required to provide the person with the
written statement and the person should not sign and return the written
statement to the broker or dealer if it does not accurately reflect the
person's financial situation, investment experience and investment objectives
and obtain from the person a manually signed and dated copy of the written
statement. A designated security means any equity security other than a
security (i) registered, or approved for registration upon notice of
issuance on a national securities exchange that makes transaction reports
available pursuant to 17 CFR 11Aa3-1 (ii) authorized or approved for
authorization upon notice of issuance, for quotation in the NASDAQ system;
(iii) that has a price of five dollars or more or . . . (iv) whose issuer has
net tangible assets in excess of $2,000,000 demonstrated by financial
statements dated less than fifteen months previously that the broker or
dealer has reviewed and has a reasonable basis to believe are true and
complete in relation to the date of the transaction with the person.
Consequently, the rule may affect the ability of broker-dealers to sell the
Company's securities and also may affect the ability of purchasers in this
Offering to sell their shares in the secondary market.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings nor is the Company aware
of any disputes which may result in legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
During the Company's two most recent fiscal years or any later interim
period, there have been no changes in or disagreements with the Company's
principal independent accountant or a significant subsidiary's independent
accountant.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In January 1995, the Company issued 150,000 (post split) Common Shares for
cash advances made on behalf of the Company and for services rendered to the
following:
Name # of Common Shares Cash/Services valued at
Terry Whiteside 30,000 $300.00
Anthony Griffin 3,000 30.00
Marshall Griffin 3,000 30.00
Lane Whiteside 3,000 30.00
<PAGE>14
Duane C. Peterson 22,500 225.00<F3>
Mutual Ventures Int., Inc.<F1> 22,500 225.00<F3>
Alex Herman 22,500 225.00
Gayle Griffin 6,000 60.00
James Wood 15,000 150.00
Equitos Corporation <F2> 15,000 150.00<F3>
Phillip Georgensen 7,500 75.00<F3>
These above sales were made pursuant to an exemption from registration to
sophisticated investors pursuant to Section 4(2) of the Securities Act of
1933. The investors were afforded access to the same type of corporate
information which would be found in Part I of a registration filed under the
Securities Act.
[FN]
<F1>Jose Severino is the principal of Mutual Ventures International, Inc.
<F2>Jose Lara is the principal of Equitos Corporation
<F3>These entities provided professional consulting services to the Company
regarding its proposed operations.
In June, 1997, the Company issued 4,000,000 (post split) Common Shares for
cash at $.025 per Common Share for an aggregate of $100,000 to the following:
Name # of Common Shares Cash payment of
Glen R. Gamble 200,000 $ 5,000
Beverly Jo Gamble 200,000 5,000
Trent A. Gamble 100,000 2,500
Melissa N. Gamble 100,000 2,500
Mel Keller 840,000 21,000
Gary Keller 80,000 2,000
Esther Keller 10,000 250
Randall Tegtmeyer 4,000 100
Falstaff Holdings Ltd.<F1> 100,000 2,500
Victory Minerals
Corporation 2,000,000 50,000
R.A. Hildebrand 50,000 1,250
Terryl K. Jensen 50,000 1,250
Re-Group, Inc.<F2> 266,000 6,650
[FN]
<F1>David K. Fraser is the principal of Falstaff Holdings, Ltd.
<F2>Dan and Diane Boone are the principals of Re-Group, Inc.
These above sales were made pursuant to an exemption from registration to
sophisticated investors pursuant to Section 4(2) of the Securities Act of
1933. The investors were afforded access to the same type of corporate
information which would be found in Part I of a registration filed under the
Securities Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws provide that it will indemnify its officers and
directors for liabilities arising from actions performed on behalf of the
Company to the extent allowed by Section 17-16-851 (as amended by Ch. 190, L.
1997) of the Wyoming Statutes Ann., as amended. Section 17-16-851 et al. of
the Wyoming Statutes Ann., as amended, contains provisions entitling
directors, officers and employees of the Company to indemnification for their
expenses (including reasonable costs, disbursements and counsel fees) and
liabilities (including amounts paid or received in satisfaction of
settlements, judgments, fines and penalties), as the result of an action or
proceeding in which they may be involved by reason of being or having been a
director, officer or employee of a corporation provided said officers,
directors or employees acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE
CORPORATION FOR
LIABILITIES ARISING UNDER THE EXCHANGE ACT OF 1934, IS HELD TO BE
AGAINST
PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS
THEREFORE
UNENFORCEABLE.
PART F/S
The following financial statements required by Item 310 of
Regulation S-B
are furnished below:
Independent Auditor's Report
Balance Sheet as of June 30, 1997
Statement of Operations
Statement of Cash Flows
Statement of Changes in Stockholder's Equity
Notes to Financial Statements
<PAGE>15
Unaudited Balance Sheet as of March 31, 1998
Unaudited Statement of Operations for three months
ended March 31, 1998
Unaudited Statement of Operations for nine months
ended March 31, 1998
Unaudited Statement of Stockholders' Equity
Unaudited Statement of Cash Flows
Notes to Unaudited Financial Statements
<PAGE>16>
Independent Auditors' Report
We have audited the accompanying balance sheet of Pinnacle Resources, Inc.
(fka Claremont House, Corp. (a Developmental Stage Company), as of June 30,
1997 and the related statements of income, shareholders' equity, and cash
flows for the fiscal years ended June 30, 1997 and 1996 and period January 6,
1995 (Inception) through June 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and 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 financial position of Pinnacle Resources, Inc. at
June 30, 1997 and the results of its operations and its cash flows for the
fiscal years ended June 30, 1997 and 1996 and the period January 6, 1995
(Inception) through June 30, 1997 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5, the
Company is in the development stage and has no operations as of June 30,
1997. The deficiency in working capital as of June 30, 1997 raises
substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are described in Note 5. The
financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
July 23, 1997
<PAGE>17
Pinnacle Resources, Inc.
(Fka Claremont House, Corp.)
A Development Stage Company
Balance Sheet
<TABLE>
<CAPTION>
NOTES June 30, 1997
<S> <C> <C>
ASSETS
Cash $100,000
========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES - Accounts Payable 0
SHAREHOLDER' EQUITY *1,2
Preferred Stock, $.01 Par Value
Authorized 2,000,000 Shares; Issued
And Outstanding -0- Shares -
Common Stock, $.00001 Par Value
Authorized 500,000,000 Shares; Issued
And Outstanding 4,150,000 Shares 42
Additional Paid in Capital On Common Stock 101,458
Deficit Accumulated During the Development Stage (1,500)
TOTAL SHAREHOLDERS' EQUITY 100,000
--------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $100,000
========
* Restated See Note 2
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
<PAGE>18
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
JANUARY 6, 1995
(INCEPTION)
June June Through June
NOTES 30, 1997 30, 1996 30, 1997
<S> <C> <C> <C>
Revenue $0 $0 $0
Expenses:
Office 0 0 1,500
--- --- -----
Total 0 0 1,500
--- --- -----
Net (Loss) $0 $0 ($1,500)
Net (Loss) 1 $0.00 $0.00 ($0.00)
Common Shares Outstanding* 2 4,150,000 150,000 4,150,000
========= ======= =========
* Restated See Note 2
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
<PAGE>19
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
Statement of Cash Flows
<TABLE>
<CAPTION>
JANUARY 6, 1995
(INCEPTION)
June June Through June
NOTES 30, 1997 30, 1996 30, 1997
<S> <C> <C> <C> <C>
Net (Loss) Accumulated
During the Development
Stage $0 $0 $(1,500)
Issuance of Common Stock For
Services 2 0 0 1,500
--- --- -----
Cash Flows From Operations 0 0 0
--- --- -----
Cash Flows From Investing
Activities:
Cash Flows from Investing 0 0 0
--- --- -----
Cash Flows From Financing
Activities:
Issuance of Common Stock 2 100,000 0 100,000
------- --- -------
Cash Flows From Financing 100,000 0 100,000
------- --- -------
Net Increase in Cash 100,000 0 100,000
Cash At Beginning of Period 0 0 0
--- --- -----
Cash At End of Period $100,000 $0 $100,000
======== === ========
Non-Cash Activities:
Stock Issued For Cash Advances
& Services $0 $0 $1,500
=== === ======
</TABLE>
The Accompanying Notes Are An Integral Part of These Financial Statements.
<PAGE>20
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
Statement of Shareholders' Equity
<TABLE>
<CAPTION>
Deficit
Capital Paid Accumulated
Number Of In Excess During The
Common Common of Development
NOTES Shares Stock Par Value Stage Total
<S> <C> <C> <C> <C> <C> <C>
Balance At
January 6, 1995 1,2 0 $0 $ 0 $0 $ 0
Issuance of Common Stock:
January 1995 for Cash
Advances Made On Behalf
of the Company & Services
at $.01 Per Share * 150,000 2 1,498 1,500
Net (Loss) (1,500) (1,500)
------- --- ------- ------ -------
Balance At June 30,
1995, 1996 150,000 $2 $1,498 ($1,500) $0
Issuance Of Common Stock:
June 26, 1997 for Cash
At $.025 Per Share 4,000,000 40 99,960 0 100,000
Net (Loss) 0 0
--------- --- ------ ------ -------
Balance At June 30,
1995, 1996 4,150,000 $42 $101,458 ($1,500) $100,000
========= === ======== ======
========
</TABLE>
* Restated See Note 2
The Accompanying Notes Are An Integral Part of These Financial Statements.
<PAGE>21
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED JUNE 30, 1997 AND 1996
NOTE 1 - Organization and Summary of Significant Accounting Policies
Organization:
On January 6, 1995 Pinnacle Resources, Inc. (fka Claremont House, Corp.),
(the Company) was incorporated under the laws of Wyoming to engage in all
aspects of the financial services industry or any other lawful business.
Development Stage:
The company entered the development stage to provide financial services to
emerging growth companies in the United States, as well as development stage
companies located in selected developing countries, primarily in Africa and
South America. The Company has had limited operations since its inception.
For the purpose of the Statement of Cash Flows, the Company considers demand
deposits and highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents.
Cash paid for interest in fiscal year ended June 30, 1997 and 1996 was $-0-.
Cash paid for income taxes in fiscal year ended June 30, 1997 and 1996 was $-
0-.
Net (Loss) per Common Share:
Net (Loss) per common share is computed by dividing the net loss for the
period by the number of shares outstanding at June 30, 1997 and June 30,
1996.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that effect the reported amounts. Actual results could differ from those
estimates.
NOTE 2 - Capital Stock and Capital in Excess of Par Value
The Company initially authorized 500,000,000 shares of $.0001 par value
common stock. in January 1995, the company issued 500,000 shares of common
stock for services and cash advances paid on behalf of the Company valued at
$1,500 or $.03 per share. On June 26, 1997, the Board of Directors
authorized a 1 for 3.33 reverse split. On June 25, 1997, the Company
amended its Articles of Incorporation and authorized 2,000,000 of $.01 par
value preferred stock.
On June 26, 1997, the Company issued 4,000,000 after split shares of common
stock for cash of $100,000 or $.025 per share. This issuance resulted in a
change of control in the Company.
NOTE 3 - Related Party Events
The Company maintains a mailing address at an officer's place of business.
This address is located at 7345 E. Peakview, Greenwood Village, CO 80111.
At this time the Company has no need for an office. As of June 30, 1997,
management has incurred a minimal amount of time and expense on behalf of the
Company.
The president of the Company is also an officer and director of a major
shareholder of the Company's common stock.
NOTE 4 - Income Taxes
At June 30, 1997, the Company had net operating loss carryforwards available
for financial statement and Federal income tax purposes of approximately
$1,500 which, if not used, will expire in the year 2008.
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other
things, an asset and liability approach to calculating deferred income taxes.
As of June 30, 1997, the Company has a deferred tax asset of $300 primarily
for its net operating loss carryforward which has been fully reserved through
a valuation allowance. The change in the valuation allowance for June 30,
1997 is $-0-.
NOTE 5 - Basis of Presentation
In the course of its development activities the Company has sustained
continuing losses and expects such losses to continue for the foreseeable
future. The Company's management plans on advancing funds on an as needed
<PAGE>22
basis and in the longer term revenues from the operations of a merger
candidate, if found. The Company's ability to continue as a going concern
is dependent on these additional management advances, and, ultimately, upon
achieving profitable operations from the success of its business plan or
equity infusion of funds.
NOTE 6 - Subsequent Events
The Company will be filing a Form 10 with the Securities and Exchange
Commission to become a 34 Act reporting company.
<PAGE>23
Pinnacle Resources, Inc.
(Fka Claremont House, Corp.)
A Development Stage Company
Balance Sheet
<TABLE>
<CAPTION>
Unaudited Audited
March 31 June 30,
1998 1997
<S> <C> <C>
ASSETS
Cash $ 27,001 $100,000
Interest Receivable - Relate Party 2,505 0
Note Receivable - Related Party 115,000 0
------- --------
Total Current Assets 144,508 $100,000
TOTAL ASSETS $144,508 $100,000
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Current Portion of Note Payable $100,000 0
Accounts Payable $6,460 0
Accrued Interest 164 0
-------- --------
Total Current Liabilities 106,624 0
Long-Term Portion of Note Payable 0 0
TOTAL LIABILITIES 106,624 0
SHAREHOLDER' EQUITY
Preferred Stock, $.01 Par Value
Authorized 2,000,000 Shares; Issued
And Outstanding -0- Shares 0 0
Common Stock, $.00001 Par Value
Authorized 500,000,000 Shares; Issued
And Outstanding 4,150,000 Shares 42 42
Capital Paid in Excess of
Par Value of Common Stock 101,458 101,458
Retained Earnings (Deficit) Accumulated
During the Development Stage (63,618)
(1,500)
------- --------
TOTAL SHAREHOLDERS' EQUITY 37,882 100,000
------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 144,508 $100,000
======== ========
</TABLE>
The Accompanying Notes Are An Integral Part Of These Unaudited Financial
Statements.
<PAGE>24
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Unaudited Unaudited JANUARY 6,
1995
9 month 9 month (INCEPTION)
Period ended period ended Through March
March 31, 1998 March 31, 1997 31, 1998
<S> <C> <C> <C>
Revenue $0 $0 $0
Expenses:
Administrative 750 1,500 2,250
Bank Charges 20 0 20
Legal and Accounting 15,389 0 15,389
Officer Remuneration 7,200 0 7,200
Professional Fees 38,400 0 38,400
Rent 2,700 0 2,700
------ ----- -----
Total 64,459 0 64,459
------ ----- -----
(Loss) Before Other Income $(64,459) $(1,500) $(65,959)
Other Income - Interest 2,505 0 2,505
Interest (Expense) (164) 0 (164)
-------- ------- --------
Net (Loss) $(62,118) $(1,500) $(62,118)
Basis (Loss) per Common Shares ($0.01) ($0.01) ($0.02)
Weighted Average Common Shares
Outstanding 4,150,000 150,000 4,150,000
========= ======= =========
</TABLE>
The Accompanying Notes Are An Integral Part Of These Unaudited Financial
Statements.
<PAGE>25
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Unaudited Unaudited
3 month 3 month
Period ended period ended
March 31, 1998 March 31, 1997
<S> <C> <C>
Revenue $0 $0
Expenses:
Administrative 750 0
Bank Charges 20 0
Legal and Accounting 1,361 0
Officer Remuneration 2,400 0
Professional Fees 0 0
Rent 900 0
------ -----
Total 5,431 0
------ -----
(Loss) Before Other Income $(5,431) $0
Other Income(Expense)
Interest Income 1,505 0
Interest (Expense) (164) 0
-------- -------
Total 1,341 0
Net (Loss) $(4,090) $0
======== =======
Basis (Loss) per Common Shares ($0.01) $0.00
======== =======
Weighted Average Common Shares
Outstanding 4,150,000 150,000
========= =======
</TABLE>
The Accompanying Notes Are An Integral Part Of These Unaudited Financial
Statements.
<PAGE>26
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
Statement of Cash Flows
<TABLE>
<CAPTION>
Unaudited Unaudited JANUARY 6, 1995
9 month 9 month (INCEPTION)
Period ended period ended Through March
March 31, 1998 March 31, 1997 31, 1998
<S> <C> <C> <C>
Net (Loss) $(62,118) $(1,500) $(63,618)
Adjustments to Reconcile Net
Loss to Net Cash Used in
Operating Activities 0 0 0
Issuance of Common Stock For
Services 0 1,500 1,500
Changes in Operating Assets
and Liabilities
Increase in Interest Receivable (2,500) 0 (2,505)
Increase in Accounts Payable 6,460 0 6,460
Increase in Accrued Interest
Payable 164 0 164
------ ----- -------
Net Cash Flows From Operations (57,999) 0 (57,999)
------- ----- -------
Cash Flows From Investing
Activities:
Advances made to Related Entity (115,000) 0 (115,000)
Net Cash Flows from Investing (115,000) 0 (115,000)
-------- ----- -------
Cash Flows From Financing
Activities:
Issuance of Common Stock 100,000 0 100,000
Monies received from Loans 100,000 0 100,000
------- ----- -------
Cash Flows From Financing 200,000 0 200,000
------- ----- -------
Net Increase in Cash (72,999) 0 (72,999)
Cash At Beginning of Period 100,000 0 100,000
Cash At End of Period Period 27,001 0 27,001
Non-Cash Activities:
Stock Issued For Services $ 0 $0 $1,500
====== === ======
</TABLE>
The Accompanying Notes Are An Integral Part of These Unaudited Financial
Statements.
<PAGE>27
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
Statement of Shareholders' Equity
<TABLE>
<CAPTION>
Deficit
Capital Paid Accumulated
Number Of In Excess During The
Common Common of Development
NOTES Shares Stock Par Value Stage Total
<S> <C> <C> <C> <C> <C> <C>
Balance At
January 6, 1995 1,2 0 $0 $ 0 $0 $ 0
Issuance of Common Stock:
January 1995 for Cash
Advances Made On Behalf
of the Company & Services
at $.01 Per Share * 150,000 2 1,498 1,500
Net (Loss) (1,500) (1,500)
------- --- ------- ------ -------
Balance At June 30,
1995, 1996 150,000 $2 $1,498 ($1,500) $0
Issuance Of Common Stock:
June 26, 1997 for Cash
At $.025 Per Share 4,000,000 40 99,960 0 100,000
Net (Loss) 0 0
--------- --- ------ ------ -------
Balance At June 30,
1995, 1996 4,150,000 $42 $101,458 ($1,500) $100,000
========= === ======== ======
========
Net Loss (62,118)
Balance at March 31,
1998 4,150,000 $42 $101,458 ($63,618) $100,000
========= === ======== =======
========
</TABLE>
The Accompanying Notes Are An Integral Part of These Unaudited Financial
Statements.
<PAGE>28
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
Notes To Unaudited Financial Statements
For the nine Month Period Ended March 31, 1998
Note 1 - Unaudited Financial Information
The unaudited financial information included for the three month and nine
month period ended March 31, 1998 and 1997 and were taken from the books
and records without audit. However, such information reflects all
adjustments (consisting only of normal recurring adjustments, which are of
the opinion of management necessary to reflect properly the results of
interim periods presented) The results of operations for the three month
and nine month periods ended March 31, 1998 are not necessarily indicative
of the results expected for the year ended June 30,1998.
Note Receivable - Related Entity
In October 1997, monies were advanced to a related entity in the amount of
$40,000. These funds are accruing interest at a rate of 13% per annum.
The funds were originally due to be repaid on April 22, 1998. This note has
been extended until October 22, 1998.
In March 1998, monies were advanced to a related entity in the amount of
$75,000. These funds are accruing interest at a rate of 10% per annum. The
funds are due to be repaid on March 22, 1999.
Related Party Events;
When the Company organized in January 1995, stock was issued for services
valued at $1,500. This amount was treated as administrative fees.
Commencing July 1, 1997, the shareholders of the Company are providing office
space to the Company for $300 per month. The officers are providing
services valued at $800 per month.
In July 1997, the Company paid $20,000 to a related party. These monies
were treated as professional fees.
In December 1997, the Company paid a related entity that provides office
space and services $25,000. Of this, $4,800 was treated as officer
renumeration for the six months from July 1, 1997 through December 31, 1997
and $1,800 was treated as rent for the same period. The remaining $18,400
was treated as other professional fees.
<PAGE>29
PART III
ITEM 1. INDEX TO EXHIBITS
(2) Charter and By-Laws
(3) Instruments defining the rights of security holders
(5) Voting Trust Agreement - Not Applicable
(6) Material Contracts
(7) Material Foreign Patents - Not Applicable
(12) Additional Exhibits - Not Applicable
ITEM 2. DESCRIPTION OF EXHIBITS
(2.1) Articles of Incorporation incorporated by referenced to Form 10SB
filed August 7, 1997, File No. 0-22965
(2.2) Amendment to Articles of Incorporation incorporated by referenced to
Form 10SB filed August 7, 1997, File No. 0-22965
(2.3) Bylaws incorporated by referenced to Form 10SB filed August 7, 1997,
File No. 0-22965
(2.4) Amendment to Bylaws dated July 1, 1997 incorporated by reference to
Form 10SB filed October, 1997.
(3.1) Specimen Common Stock Certificate incorporated by referenced to Form
10SB filed August 7, 1997, File No. 0-22965
(6.1) Loan Agreement between the Company and Asset Partners, LLC dated
October 22, 1997
(6.2) Loan Agreement between the Company and Plateau Resources (PTY) Ltd.
dated March 22, 1998
(6.3) Loan Agreement between the Company and Mel Keller dated March 18, 1998
<PAGE>30
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.
PINNACLE RESOURCES, INC.
Date: 5/26/98
-------------------
/s/ Glen "Trig" Gamble
------------------------------------
Glen "Trig" Gamble, President
PINNACLE RESOURCES, INC. OFFICERS AND DIRECTORS
7345 E. PEAKVIEW AVE. GLEN "TRIG" GAMBLE, PREX.
ENGLEWOOD, COLORADO 80111 R.A. HILDEBRAND, DIRECTOR
(303) 771-8100 TELE TERRY K. JENSEN, DIRECTOR
(303) 771-1993 FAX
REVISED LOAN AGREEMENT
On this 22nd day of October 1997, Pinnacle Resources, Inc., a Wyoming Corp.,
whose principal place of business is 7345 Peakview Ave., Englewood CO 80111
(Pinnacle) hereby agrees to make a loan in accordance to the following terms
and conditions:
Loan made to: Asset Partners LLC, a Colorado Limited
Liability Company
Address: 9678 E. Arapahoe Road #152, Englewood, CO 80111
Signatory of Borrower: Anthony Griffin as Managing Member
Loan Amount: $40,000
Loan Date: October 22, 1997
Loan Duration Date: One Year or (365) days to close of business
October 22, 1998
Cost of Loan: On or before due date Borrower may pay off the
loan in the principal amount of $40,000,
together with origination fees and itnerest at
the rate of $100 per week. There will be no
penalty for prepayment and parts of a week shall
be charged at $14.29 per day.
Collateral for Loan: 75,000 shares of US Assurance Group (USAG)
Corporate stock
Use of Proceeds: Borrower has company expenses and administrative
needs which need to be met
The undersigned, being an officer of the Borrower, with requisite authority
to exectue this Loan Agreement, hereby accepts the terms and conditions as
the loan provisions set forth herein and agrees to repay the principal,
together with the appropriate costs, on or before the due date, which is
October 22, 1998
Borrower /s/ Anthony Griffin
--------------------------------------------
Assets Partners, LLC
Anthony Griffin, Managing Member
Loan Approved by /s/ Glen R. Gamble
--------------------------------------------
Pinnacle Resources, Inc.
Glen R. Gamble, President
PINNACLE RESOURCES, INC. OFFICERS AND DIRECTORS
7345 E. PEAKVIEW AVE. GLEN "TRIG" GAMBLE, PRES.
ENGLEWOOD, COLORADO 80111 R.A. HILDEBRAND, DIRECTOR
(303) 771-8100 TELE TERRY K. JENSEN, DIRECTOR
(303) 771-1993 FAX
PLATEAU RESOURCES LOAN AGREEMENT
On this 22nd day of March 1998, Pinnacle Resources, Inc., a Wyoming Corp.,
whose principal place of business is 7345 Peakview Ave., Englewood CO 80111
(Pinnacle) hereby agrees to make a loan in accordance to the following terms
and conditions:
Loan made to: PLATEAU RESOURCES (PTY) LTTD, a South African
Corporation
Address: P.O. Box 485, Hartbeespoort, South Africa 0216
Signatory of Borrower: John W.J. Davenport, as Managing Director
Loan Amount: $75,000
Loan Date: March 22, 1998
Loan Duration Date: One Year or (365) days to close of business
March 22, 1999
Cost of Loan: On or before due date Borrower may pay off the
loan in the principal amount of $75,000,
together with origination fees and interest at
the rate of $144 per week. There will be no
penalty for prepayment and parts of a week shall
be charged at $20.60 per day.
Collateral for Loan: Drilling Application Deposit on File with the
Mineral & Energy Departnment, Environmental
Division Pretoria, R.S.A.
Use of Proceeds: Borrower must show financial capability in order
to secure approval for permits to commence
exploration drilling
The undersigned, being an officer of the Borrower, with requisite authority
to exectue this Loan Agreement, hereby accepts the terms and conditions as
the loan provisions set forth herein and agrees to repay the principal,
together with the appropriate costs, on or before the due date, which is
March 22, 1999
Borrower /s/ John M.J. Davenport
--------------------------------------------
Plateau Resources (PTY) LTD
John W.J. Davenport, Managing Director
Loan Approved by /s/ Glen R. Gamble
--------------------------------------------
Pinnacle Resources, Inc.
Glen R. Gamble, President
LOAN AGREEMENT
$100,000
On this 18th day of March 1998, Pinnacle Resources, Inc., a Wyoming Corp.,
whose principal place of business is 7345 Peakview Ave., Englewood CO 80111
(Pinnacle) hereby accepts from:
LENDER: MEL KELLER
R.R. 1 Box 128
BLAIRSBURG, IOWA 50034
The Sum of One Hundred Thousand Dollars ($100,000.00);
For the duration of one year (1) from the date hereof;
To be repaid in full together with interest at the rate of Five Perent (5%)
per Annum.
The funds are to be used to advance the permitting process on platinum ore
properties of Plateau Resources (Pty) Ltd located in the Republic of South
Africa.
This loan shall be unsecured by Pinnacle Resources, Inc. but shall instead be
secured by an undivided five percent (5%) interest in the Drenthe, Witrivier,
Dortsland Platinum concession as arranged by Pinnacle Resources on behalf of
the lender and due in writing from Plateau Resources (PTY) Ltd sixty (60)
days from receipt of such funds.
Approved
By /s/ Mel Keller
----------------------------
Mel Keller, Individual Lender
Approved and Accepted:
By /s/ Glen R. Gamble
----------------------------
Pinnacle Resources, Inc.
Glen R. Gamble, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 27,001
<SECURITIES> 0
<RECEIVABLES> 117,505
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 144,506
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 42
0
0
<OTHER-SE> 37,840
<TOTAL-LIABILITY-AND-EQUITY> 144,506
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 64,459
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (62,118)
<INCOME-TAX> 0
<INCOME-CONTINUING> (62,118)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (62,118)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
