U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
RIMPAC RESOURCES LTD.
(Name of Small Business Issuer in its charter)
NEVADA 91-1921379
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11930 MENAUL BOULEVARD, N.E., SUITE 107, ALBUQUERQUE, NEW MEXICO 87112
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (505) 298-8235
Securities to be registered under Section 12(b) of the Act: NONE
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK, $0.001 PAR VALUE
(Title of class)
Exhibit index on page 27 Page 1 of 88 pages
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Rimpac Resources Ltd.. (the "Company"), was organized under the laws of
the State of Nevada on January 26, 1998, to acquire a mineral exploration permit
and to explore for precious metals in the State of Arizona. The Company
subsequently acquired a mineral exploration permit issued by the State of
Arizona and intended to explore for gold mineralization on the Goldstone
Prospect within the permit area. However, the Company was unable to secure
financing for the intended exploration and the world market price of gold was on
the decline. As a result, the Company has abandoned its operations and the
permit was not renewed, as more fully described below under "Prior Operations".
The Company may now be considered as a "shell" company, whose sole
purpose at this time is to locate and consummate a merger or acquisition with a
private entity. The Company's sole officer and director has elected to commence
implementation of the Company's principal business purpose, as more fully
described below under "Plan of Operations".
The Company is filing this registration statement on a voluntary basis
because the primary attraction of the Company as a merger partner or acquisition
vehicle will be its status as a public company. Any business combination or
transaction will likely result in a significant issuance of shares and
substantial dilution to present stockholders of the Company.
The proposed business activities classify the Company as a "blank
check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities or undertake any offering of the
Company securities, either debt or equity, until such time as the Company has
successfully implemented its business plan.
The Company's offices are located at 11930 Menaul Boulevard, N.E.,
Suite 107, Albuquerque, New Mexico 87112, and its telephone number is (505)
298-8235. Our registered office and records are located at One East First
Street, Reno, Nevada.
PRIOR OPERATIONS
On March 28, 1998, the Company entered into a related party Assignment
of Lease and Purchase Option agreement with its sole officer and director, Mr.
Leroy Halterman. See Exhibit 10.1. According to the agreement, Mr. Halterman
assigned to the Company all of his rights and interests in the Mineral
Exploration Permit Number 08-103044 issued by the State of Arizona in exchange
for 500,000 shares of the Company's common stock. The Company assumed all of the
terms and obligations of the permit, and the deemed value of the permit was
$1,250.
The Mineral Exploration Permit Number 08-103044 allowed the Company to
prospect and explore for minerals on approximately 160 acres of land located in
Cochise County, Arizona, and included all of the north half of the southwest
quarter and south half of the northwest quarter of Section 28, T20S, R23E SE.
Please see Exhibit 10.2. The Mineral Exploration Permit was valid for five
years, expiring on September 16, 2002. The State of Arizona required an annual
renewal payment for the last four years equal to $1.00 per acre, the first two
years of which were prepaid by Mr. Halterman, along with a $100.00 filing fee to
obtain the permit. The State of Arizona also required a $100.00 filing fee for
each renewal period. Mr. Halterman posted a $3,000 cash bond on the property,
which has been repaid to Mr. Halterman. In addition, the Company was required to
make annual exploration expenditures of $10.00 per acre during the first two
years and $20.00 per acre during the last three years.
The Mineral Exploration Permit was limited to minerals owned by the
State of Arizona and to which there was no reservation by a predecessor in title
to the State of Arizona. The permit only allowed the Company to remove minerals
from the land that were required for sampling, assay and metallurgical testing
purposes. The Company was
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required to fill any holes, ditches, or other excavations as may be required by
the Arizona State Land Commissioner, and so far as reasonably possible, restore
the surface to its former condition.
The Company intended to explore the Goldstone Prospect area which was
subject to the Mineral Exploration Permit and located in the north half of the
southwest quarter and south half of the northwest quarter of Section 28 T20S
R23E SE of Coshise County, Arizona. The Goldstone Prospect was exploratory
property and did not have any proven mineral reserves. Prior to the Company's
acquisition of the Mineral Exploration Permit, Mr. Halterman, CPG, RPG, prepared
a report dated December 15, 1997 for the purpose of evaluating the Goldstone
Prospect. See Exhibit 10.3.
Based on this report, management believed the Goldstone Prospect
represented a large epithermal gold system that shared many common
characteristics with other systems that host disseminated gold deposits in the
western United States. The report also indicated that there was a mineralized
trend on the Goldstone Prospect which paralleled the northwest trending range
front faults trend, extending at least two miles along strike. All known
significant mineralization occured within one-half mile of the range front.
Management believed the most significant mineralization appeared to occur within
one-quarter mile of this structure. Management believed that this gave a strong
indication that the source of the gold mineralization probably lies west at an
unknown depth in the valley just off the range front. The epithermal nature of
the mineralization also indicated that it would not lie at a great depth.
Management adopted the recommendations as set forth in Mr. Halterman's
report. The recommendations consisted of two phases. The first phase, with an
estimated cost of $20,500, was limited to defining the drilling targets for the
phase two exploration program. The phase two exploration program involved the
offsetting of the unoffset mineralized drill holes on the edges of the edges of
the mineral body, offsetting other known mineralization, and offsetting the
mineralization found by prior exploration by other companies along the
range-front fault and testing geochemical targets. The approximate cost of the
phase two exploration program was $80,000.
During implementation and further investigation of the planned
operations, the Company decided not to renew the permit issued by the State of
Arizona. The Company did no pay the annual renew fee of $1,600, which was due on
September 16, 1999. The Company's decision, in large part, was based on its
inability to secure funding to finance the adopted exploration program and the
decline of the world market price of gold. As a result, the Company allowed the
mineral exploration permit to terminate. The Company is no longer allowed to
explore for gold mineralization within the permit area. To the extent necessary,
the Company has restored the property to its prior condition and has no further
financial or restoration obligations with respect to the Company's prior
operations.
PLAN OF OPERATIONS
The Company now intends to seek to acquire assets or shares of an
entity actively engaged in a business in exchange for its securities. Management
has not identified a particular acquisition target and has not entered into any
negotiations regarding such an acquisition.
Depending upon the nature of the relevant business opportunity and the
applicable state statutes governing the manner in which the transaction is
structured, the Company's sole director expects that he will provide the
Company's shareholders with complete disclosure documentation concerning a
potential business opportunity and the structure of the proposed business
combination prior to consummation. Such disclosure is expected to be in the form
of a proxy or information statement. While such disclosure may include audited
financial statements of such target entity, there is no assurance that such
audited financial statements will be available. The sole director intends to
obtain certain assurances of value of the target entity assets prior to
consummating such a transaction.
While such disclosure may include audited financial statements of such
a target entity, there is no assurance that such audited financial statements
will be available. The sole director intends to obtain certain assurances of
value of the target entity assets prior to consummating such a transaction, with
further assurance that audited statements would be provided within sixty days
after closing. Closing documents will include representations that the value of
the assets
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conveyed to or otherwise transferred will not materially differ from the
representations included in such closing documents, or the transaction will be
voidable.
Due to the Company's intent to remain a shell corporation until a
merger or acquisition candidate is identified, its is anticipated that its cash
requirements shall remain minimal. The Company believes that it has sufficient
working capital to fund its operations through June 2000. To raise additional
working capital, if required, management believes that the Company may conduct
an offering of common stock or obtain short or long-term financing.
The Company has no employees, other than its sole officer and director,
Mr. Leroy Halterman, who is serving without compensation. It is anticipated that
the Company will have employees in the future. As President, Secretary and
Treasurer of the Company, Mr. Halterman is responsible for conducting the
day-to-day operations of the Company. See Part I Item 5. Directors, Executive
Officers, Promoters and Control Persons.
Mr. Halterman may become involved with other companies with a business
purpose similar to that of this Company. As a result, potential conflicts of
interests may arise in the future. If such a conflict does arise and Mr.
Halterman is presented with business opportunities under circumstances where
there may be a doubt as to whether the opportunity should belong to the Company,
he will disclose the opportunity to the Company.
GENERAL BUSINESS PLAN
The Company will be seeking, investigating and, if such investigation
warrants, acquiring an interest in business opportunities presented to it by
persons or firms who or which desire to seek the perceived advantages of a
registered corporation. The Company will not restrict its search to any specific
business, industry, or geographical location and the Company may participate in
a business venture of virtually any kind or nature. This discussion of the
proposed business is purposefully general and is not meant to be restrictive of
the Company's virtually unlimited discretion to search for and enter into
potential business opportunities. Management anticipates that it may be able to
participate in only one potential business venture because the Company has
nominal assets and limited financial resources. See Part F/S Financial
Statements. This lack of diversification should be considered a substantial risk
to shareholders of the Company because it will not permit the Company to offset
potential losses from one venture against gains from another.
The Company may seek a business opportunity with entities that have
recently commenced operations, or that wish to utilize the public marketplace in
order to raise additional capital in order to expand into new products or
markets, to develop new product or service, or for other corporate purposes. The
Company may acquire assets and establish wholly owned subsidiaries in various
businesses or acquire existing businesses and subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some industries
and shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes) for all shareholders and other factors.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash or other
assets. However, management believes that the Company will be able to offer
owners of acquisition candidates the opportunity to acquire a controlling
ownership interest in a publicly registered company without incurring the cost
and time required to conduct an initial public offering. The owners of the
business opportunities will, however, incur significant legal and accounting
costs in connection with acquisition of a business opportunity, including the
costs of preparing Form 8-K's, 10-KSB's, agreements and related reports and
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documents. The Securities Exchange Act of 1934 specifically requires that any
merger or acquisition candidate comply with all applicable reporting
requirements, which include providing audited financial statements to be
included within the numerous filings relevant to complying with the Securities
Exchange Act of 1934. Nevertheless, the officers and directors of the Company
have not conducted market research and are not aware of statistical data which
would support the perceived benefits of a merger or acquisition transaction for
the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the sole officer and director of the Company, Mr.
Leroy Halterman. Mr. Halterman is not a professional business analyst. See Part
I Item 5. Directors, Executive Officers, Promoters and Control Persons.
Management intends to concentrate on identifying preliminary prospective
business opportunities which may be brought to its attention through present
associations of Mr. Halterman, or by our shareholders. In analyzing prospective
business opportunities, management will consider such matters as the available
technical, financial and managerial resources; working capital and other
financial requirements; history of operations, if any; prospects for the future;
nature of present and expected competition; the quality and experience of
management services which may be available and the depth of that management; the
potential for further research, development, or exploration; specific risk
factors not now foreseeable but which then may be anticipated to impact the
proposed activities of the Company; the potential for growth or expansion; the
potential for profit; the perceived public recognition of acceptance of
products, services, or trades; name identification; and other relevant factors.
The sole officer and director of the Company expects to meet personally with
management and key personnel of the business opportunity as part of the "due
diligence" investigation. To the extent possible, the Company intends to utilize
written reports and personal investigations to evaluate the above factors.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, will rely upon his own efforts and,
to a much lesser extent, the efforts of our shareholders, in accomplishing the
business purposes of the Company. It is not anticipated that any outside
consultants or advisors, except for our legal counsel and accountants, will be
utilized by the Company to effectuate its business purposes. However, if the
Company does retain such an outside consultant or advisor, any cash fee earned
by such party will be paid by the prospective merger/acquisition candidate. We
have no contracts or agreements with any outside consultants and none are
contemplated.
We will not restrict our search for any specific kind of firms, but may
acquire a venture that is in its preliminary or development stage or is already
operating. It is impossible to predict at this time the status of any business
in which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer. Furthermore, the Company
does not intend to seek capital to finance the operation of any acquired
business opportunity until such time as the Company has successfully consummated
a merger or acquisition.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan. Because the Company has minimal capital
with which to pay these anticipated expenses, present management of the Company
may pre-pay these charges with their personal funds, as interest free loans to
the Company. If additional funding is necessary, management and/or shareholders
will continue to provide capital or arrange for additional outside funding.
However, the only opportunity which management has to have these loans repaid
will be from a prospective merger or acquisition candidate, or an additional
issuance of shares of the Company's common stock. If a merger candidate cannot
be found in a reasonable period of time, management may be required reconsider
its business strategy, which could result in the dissolution of the Company.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and shareholders of the
Company will no longer be in control of the Company. In addition, the Company's
director may, as part of the terms of the acquisition transaction, resign and be
replaced by new directors without a vote
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of the Company's shareholders or may sell his stock in the Company. Any and all
such sales will only be made in compliance with the securities laws of the
United States and any applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which there can be
no assurance, it will be undertaken by the surviving entity after the Company
has successfully consummated a merger or acquisition and the Company is no
longer considered a "shell" company. Until a merger or acquisition is
consummated, the Company will not attempt to register any additional securities.
The issuance of substantial additional securities and their potential sale into
any trading market which may develop in the Company's securities may have a
depressive effect on the value of the Company's securities in the future, if
such a market develops, of which there is no assurance.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order to
obtain tax-free treatment under the Code, it may be necessary for the owners of
the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company may retain 20% or less of
the issued and outstanding shares of the surviving entity, which would result in
significant dilution in the equity of such shareholders.
As part of the Company's "due diligence" investigation, the Company's
sole officer and director will meet with management and key personnel, may visit
and inspect material facilities, obtain independent analysis of verification of
certain information provided, check references of management and key personnel,
and may take other reasonable investigative measures to the extent of the
Company's limited financial resources and management expertise. The manner in
which the Company participates in an opportunity will depend on the nature of
the opportunity, the respective needs and desires of the Company and other
parties, the management of the opportunity and the relative negotiation strength
of the Company and such other management.
With respect to any merger or acquisition, negotiations with target
company management are expected to focus on the percentage of the Company which
the target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties, will specify
certain events of default, will detail the terms of closing and the conditions
that must be satisfied by each of the parties prior to and after such closing,
will outline the manner of bearing costs, including costs associated with the
Company's attorneys and accountants, will set forth remedies on default and will
include miscellaneous other terms.
The Company will not acquire or merge with any entity that cannot
provide independent audited financial statements within a reasonable time after
closing of the proposed transaction. The Company will be subject to the
reporting requirements of the Securities Exchange Act of 1934. Included in these
requirements is the affirmative duty of the Company to file independent audited
financial statements as part of its Form 8-K to be filed with the Securities and
Exchange Commission upon consummation of a merger or acquisition, as well as the
Company's audited financial statements included in its annual report on Form
10-KSB. If such audited financial statements are not available at
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closing, or within time parameters necessary to insure the Company's compliance
with the requirements of the Securities Exchange Act of 1934, or if the audited
financial statements provided do not conform to the representations made by the
candidate to be acquired in the closing documents, the closing documents will
provide that the proposed transaction will be voidable at the discretion of the
present management of the Company. If such transaction is voided, the agreement
will also contain a provision providing for the acquisition entity to reimburse
the Company for all costs associated with the proposed transaction.
YEAR 2000 DISCLOSURE
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 minimal assets,
it is not anticipated that we will incur any negative impact as a result of this
potential problem. However, it is possible that this issue may have an impact on
us after we successfully consummate a merger or acquisition. Management intends
to address this potential problem with any prospective merger or acquisition
candidate. There can be no assurances that new management of the Company will be
able to avoid a problem in this regard after a merger or acquisition is
consummated.
COMPETITION
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's combined extremely limited financial resources
and limited management expertise, the Company will continue to be at a
significant competitive disadvantage compared to the Company's competitors.
RISK FACTORS
In addition to those described above, the Company's proposed business
is subject to numerous risk factors, including the following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. We have had no
recent operating history nor any revenues or earnings from operations since its
inception. The Company has no significant assets or financial resources. The
Company will, in all likelihood, incur operating expenses without corresponding
revenues, at least until the consummation of a business combination. This may
result in the Company incurring a net operating loss that will increase
continuously until the Company can consummate a business combination with a
profitable business opportunity. There is no assurance that the Company can
identify such a business opportunity and consummate such a business combination.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified business
opportunity. While management intends to seek business combination(s) with
entities having established operating histories, there can be no assurance we
will be successful in locating candidates meeting such criteria. In the event we
complete a business combination, the success of our operations may be dependent
upon management of the successor firm or venture partner firm and numerous other
factors beyond our control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND
COMBINATIONS. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with, joint ventures with and
acquisitions of small private and public entities. A large number of established
and well-financed entities, including venture capital firms, are active in
mergers and acquisitions of companies that may be desirable target candidates
for the Company. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the
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Company and, consequently, we will be at a competitive disadvantage in
identifying possible business opportunities and successfully completing a
business combination. Moreover, we will also compete in seeking merger or
acquisition candidates with numerous other small public companies.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION. The Company
has no arrangement, agreement or understanding with respect to engaging in a
merger with, joint venture with or acquisition of, a private or public entity.
There can be no assurance that the Company will be successful in identifying and
evaluating suitable business opportunities or in concluding a business
combination. Management has not identified any particular industry or specific
business within an industry for evaluation by the Company. There is no assurance
we will be able to negotiate a business combination on terms favorable to the
Company.
NO STANDARDS FOR BUSINESS COMBINATION. The Company has not established
a specific length of operating history or a specified level of earnings, assets,
net worth or other criteria which it will require a target business opportunity
to have achieved. Accordingly, the Company may enter into a business combination
with a business opportunity having no significant operating history, losses,
limited or no potential for earnings, limited assets, negative net worth or
other characteristics that are indicative of development stage companies.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While seeking
a business combination, management will only be devoting part-time efforts to
the business of the Company. The sole officer and director of the Company, Mr.
Halterman, does not have a written employment agreement with the Company and is
not expected to have one in the foreseeable future. The Company has not obtained
key man life insurance on Mr. Halterman. Notwithstanding the limited experience
and time commitment of management, loss of the services of Mr. Halterman would
adversely affect development of the Company's business and its likelihood of
continuing operations. See Part I Item 5. Directors, Executive Officers,
Promoters and Control Persons.
CONFLICTS OF INTEREST - GENERAL. The sole officer and director of the
Company may participate in business ventures which could be deemed to compete
directly with the Company. Additional conflicts of interest and non-arms length
transactions may also arise in the event that the Company's sole officer and
director is involved in the management of any firm with which the Company
transacts business. Management has adopted a policy that the Company will not
seek a merger with, or acquire, any entity in which management serves as
officers, directors or partners, or in which they or their family members own or
hold any ownership interest.
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Sections 13
and 15(d) of the Securities Exchange Act of 1934 require reporting companies to
provide certain information about significant acquisitions, including certified
financial statements for the company acquired, covering one, two, or three
years, depending on the relative size of the acquisition. The time and
additional costs that may be incurred by some target entities to prepare such
statements may significantly delay or essentially preclude consummation of an
otherwise desirable acquisition by the Company. Acquisition prospects that do
not have or are unable to obtain the required audited statements may be
inappropriate for acquisition so long as the reporting requirements of the
Securities Exchange Act of 1934 are applicable.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has
neither conducted, nor have others made available to it, results of market
research indicating that market demand exists for the transactions contemplated
by the Company. Moreover, we do not have, and do not plan to establish, a
marketing organization. Even in the event demand is identified for a merger or
acquisition contemplated by the Company, there is no assurance we will be
successful in completing any such business combination.
LACK OF DIVERSIFICATION. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a business
combination with a business opportunity. Consequently, the Company's activities
may be limited to those engaged in by business opportunities which the Company
merges with or acquires. The Company's inability to diversify its activities
into a number of areas may subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks associated with
our operations.
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GOVERNMENT REGULATION. Although the Company will be subject to
regulation under the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, management believes that the Company will not
be subject to regulation under the Investment Company Act of 1940, as amended,
insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business combinations
which result in the Company holding passive investments interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, a violation of such Act could
subject the Company to material adverse consequences.
In addition, under Section 202(a)(11) of the Investment Advisors Act of
1940, as amended, an "investment advisor" means any person who, for
compensation, engages in the business of advising others, either directly or
indirectly or through publications or writings, as to the value of securities or
as to the advisability of investing in, purchasing or selling securities, or
who, for compensation and as part of a regular business, issues or promulgates
analyses or reports concerning securities. The Company shall only seek to locate
a suitable merger of acquisition candidate, and does not intend to engage in the
business of advising others in investment matters for a fee or otherwise.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination
involving the issuance of the Company's common stock will, in all likelihood,
result in shareholders of a private company obtaining a controlling interest in
the Company. Any such business combination may require management of the Company
to sell or transfer all or a portion of the Company's common stock held by him
or resign as a member of the Board of Directors of the Company. The resulting
change in control of the Company could result in removal of the Company sole
officer and director, Mr. Halterman, and a corresponding reduction in or
elimination of his participation in the future affairs of the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING A BUSINESS
COMBINATION. Our primary plan of operation is based upon a business combination
with a private concern which, in all likelihood, would result in the Company
issuing securities to shareholders of any such private company. The issuance of
previously authorized and unissued common stock of the Company would result in
reduction in percentage of shares owned by present and prospective shareholders
of the Company and may result in a change in control or management of the
Company.
DISADVANTAGES OF BLANK CHECK OFFERING. The Company may enter into a
business combination with an entity that desires to establish a public trading
market for its shares. A business opportunity may attempt to avoid what it deems
to be adverse consequences of undertaking its own public offering by seeking a
business combination with us. Such consequences may include, but are not limited
to, time delays of the registration process, significant expenses to be incurred
in such an offering, loss of voting control to public shareholders and the
inability or unwillingness to comply with various federal and state laws enacted
for the protection of investors.
ABSENCE OF TRADING MARKET. There currently is a minimal or no trading
market for the Company's stock and there is no assurance that a trading market
will develop.
"PENNY" STOCK REGULATION OF BROKER-DEALER SALES OF COMPANY SECURITIES.
For transactions covered by Rule 15g-9 under the Securities Exchange Act of
1934, a broker-dealer must furnish to all investors in penny stocks, a risk
disclosure document required by the rule, 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 penny stock, 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 penny stock 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 penny stock; 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
9
<PAGE>
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 penny stock 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 on the Nasdaq NMS ; (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.
TAXATION. Federal and state tax consequences will, in all likelihood,
be major considerations in any business combination we may undertake. Currently,
such transactions may be structured so as to result in tax-free treatment to
both companies, pursuant to various federal and state tax provisions. The
Company intends to structure any business combination so as to minimize the
federal and state tax consequences to both the Company and the target entity;
however, there can be no assurance that such business combination will meet the
statutory requirements of a tax- free reorganization or that the parties will
obtain the intended tax-free treatment upon a transfer of stock or assets. A
non-qualifying reorganization could result in the imposition of both federal and
state taxes which may have an adverse effect on both parties to the transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Management believes that any potential business opportunity must
provide audited financial statements for review for the protection of all
parties to the business combination. One or more attractive business
opportunities may choose to forego the possibility of a business combination
with the Company, rather than incur the expenses associated with preparing
audited financial statements.
FORWARD LOOKING STATEMENTS. Because management desires to take
advantage of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995 (the "PSLRA"), the Company cautions readers regarding forward
looking statements found in this registration statement and in any other
statement made by, or on the behalf of the Company, whether or not in future
filings with the Securities and Exchange Commission. Forward looking statements
are statements based not on historical information and which relate to future
operations, strategies, financial results or other developments. Forward looking
statements are necessarily based upon estimates and assumptions that are
inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which, with respect to future business decisions, are subject to
change. These uncertainties and contingencies can affect actual results and
could cause actual results to differ materially from those expressed in many
forward looking statements made by or on behalf of the Company. The Company
disclaims any obligation to update forward looking statements. Readers should
also understand that under Section 27A(b)(2)(D) of the Securities Act of 1933,
as amended, and Section 21E(b)(2)(D) of the Securities Exchange Act of 1934, as
amended, the "safe harbor" provisions of the PSLRA do not apply to statements
made in connection with an initial public offering.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Since incorporation on January 26, 1998, the Company has not generated
any revenues. For the period from inception through September 30, 1999, the
Company recorded a cumulative net loss of $27,031, which included the following
costs and expenses: legal ($6,790); consulting ($11,729); transfer agent
($3,335);and accounting and audit ($2,514). This factor, among others, raises
substantial and compelling doubt about the Company's ability to continue as a
going concern.
The Company's continued going concern is dependent upon its ability to
generate sufficient cash flow to meet its obligations on a timely basis, to
obtain additional financing or refinancing as may be required, and ultimately to
attain profitability. There are no assurances that the Company will be able to
obtain such financing or, if the Company is able to obtain additional financing,
that such financing will be on terms favorable to the Company. The inability to
obtain additional financing when needed will have a material adverse effect on
the Company's operating results.
The Company has a positive working capital of $3,597 at September 30,
1999, as compared to $11,431 at December 31, 1998. Management believes the
Company has sufficient working capital to fund the Company's operations through
June 2000.
The Company's primary source of working capital has been through sales
of common stock. To acquire the Mineral Exploration Permit Number 08-103044
issued by the State of Arizona, the Company issued 500,000 shares of common
stock in a private offering. To provide working capital, the Company conducted a
subsequent private offering and sold 8,000,000 shares of common stock at a price
of $0.0025 per share. The Company then conducted another private offering and
sold 50,000 shares of common stock at a price of $0.30 per share. See Part II -
Item 4. Recent Sales of Unregistered Securities. Since incorporation, the
Company has received $26,462 of net proceeds from sales of Common Stock.
Since inception, the Company has a Federal net operating loss
carryforward of $27,031, which will expire in the year 2012.
Since the Company's inception, Mr. Halterman has spent approximately
fifty (50) hours on organizing documentation, property acquisitions and seeking
capital for the Company. The Company is currently occupying a minimal amount of
office space. Management believes that Mr. Halterman's time and the minimal
amount of office space are immaterial to the financial position of the Company.
The above financial data was derived from the financial statements of
the Company as generated by the Company, and as audited by Stark Tinter &
Associates, LLC. See Part F/S Financial Statements.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company is currently using the office of its sole officer and
director, Mr. Leroy Halterman, at 11930 Menaul Boulevard, N.E., Suite 107,
Albuquerque, New Mexico 87112, without charge.
The Company does not own any property.
11
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table provides certain information as to the officers and
directors individually and as a group, and the holders of more than 5% of the
common stock of the Company, as of January 13, 2000:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF OWNER NUMBER OF SHARES PERCENT OF
OWNED CLASS (1)<F1>
<S> <C> <C> <C>
Leroy Halterman Sole Officer and
11930 Menaul Blvd., N.E., Suite 107 Director 500,000 5.8%
Albuquerque, New Mexico 87112
Adney Trading S A
94 Dowdeswell Street 700,000 8.1%
P.O. Box N-3114
Nassau, Bahamas
Sheila Andrews
Bluf Coil Samares Inner Road 700,000 8.1%
St. Clement FOR
Jersey Channel Islands
Heath T. Ellingham
7919 Woodhurst Drive 700,000 8.1%
Burnaby, British Columbia V5A 4C5
Canada
Phyllis Grant
c/o #103-1140 Castle Crescent 700,000 8.1%
Port Coquitlam, British Columbia
Canada
Dave S A Jeffrey
1633 West 8th Avenue, Apt. 801 700,000 8.1%
Vancouver, British Columbia V6J 5H7
Canada
Scott Larson
334 Strand Avenue 700,000 8.1%
New Westminister, British Columbia
V3L 3J2 Canada
Charles Phillips
55 Lateward Road 700,000 8.1%
Brentford Middlesex TW8 0PL
England
Sheldon Silverman
#700-1190 Melville Street 700,000 8.1%
Vancouver, British Columbia
V6E 3W1 Canada
Carey Whitehead
7117 Antrim Avenue, Apt. 201 700,000 8.1%
Burnaby, British Columbia V5J
Officers and Directors as a group 500,000 5.8%
(1 person)
<FN>
<F1>
(1) This table is based on 8,550,000 shares of common stock outstanding
on January 13, 2000. Where the persons listed on this table have the right to
obtain additional shares of common stock within 60 days from January 13,
</FN>
</TABLE>
12
<PAGE>
2000, these additional shares are deemed to be outstanding for the purpose of
computing the percentage of class owned by such persons, but are not deemed to
be outstanding for the purpose of computing the percentage of any other person.
This table does not include the 15.7% of shares being held by Cede & Co.,
located in New York, New York.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The officers and directors of the Company are as follows:
NAME AGE POSITION
Leroy Halterman 52 Sole Officer and Director
The term of office of the director of the Company ends at the next
annual meeting of the Company's stockholders or when the director's successor is
elected and qualified. No date for the next annual meeting of stockholders is
specified in the Company's Bylaws, nor has a meeting been fixed by the Board of
Directors. The term of office of the sole officer of the Company ends at the
next annual meeting of the Company's Board of Directors, which is expected to
take place immediately after the next annual meeting of stockholders, or when
such officer's successor is elected and qualified.
LEROY HALTERMAN, SOLE OFFICER AND DIRECTOR. Mr. Halterman has been a
certified professional geologist for 21 years. In 1968, Mr. Halterman graduated
from the Missouri School of Mines, Rolla, with a Bachelor of Science degree in
Geology. Mr. Halterman performed additional work at the University of New Mexico
from 1969-70, focusing on hydrology and submarine geology. However, Mr.
Halterman did not receive a graduate degree. Since 1985 , Mr. Halterman has been
a consulting geologist for MinSearch, Inc., located in Albuquerque, New Mexico
("MinSearch"). Mr. Halterman's responsibilities at MinSearch included the
evaluation of mineral and petroleum deposits, and ac- cumulations in various
geological environments. Mr. Halterman's evaluations included all phases of the
projects from generation through exploration, reserve estimating, testing, and
mine planning. He has similar experience in petroleum, including prospect
generation and exploration, as well as all phases of well completion and
production. His production specialties include computerized reserve estimation
(both volumetic and decline), production records, and production and transport
agreements for both oil and gas. Mr. Halterman is also the president, director,
and a principal shareholder of Consolidated North American Resources, a private
company in the oil and gas industry, and is the sole officer and director of
Rimpac Resources Ltd., a Nevada corporation engaged in mineral exploration
activities.
In addition to consulting, Mr. Halterman has emphasized in natural
resource appraisals, and damage calculations, both of which included
environmental evaluations and site assessments. Environmental problems and
potential problems encompassed in these type of assessments included hazardous
material and chemicals located in abandoned dumps, mills, mines and other
structures, ground and surface water contamination and pathways, underground
storage tanks, and above ground storage tanks, kinetic and structural hazards,
unstable surfaces, induced erosion problems, and explosives. Within the past six
years, Mr. Halterman perfomed a total of 20 natural resource evaluations and
appraisals according to Uniform Appraisal Standards for Federal Land
Acquisitions for such clients as the United States Park Service, the United
States Department of Justice, the Nature Conservatory, Wellington Financial, and
Maximum Resources.
From 1983 to 1985, Mr. Halterman was the Vice President of Exploration
for Goldsill Mining and Milling, Inc., a corporation located in Denver,
Colorado. Mr. Halterman was responsible for coordination, evaluation,
acquisition, and management of the company's exploration programs and budgets
for both precious metals and petroleum. The company focused its precious metals
efforts in Saskatchewan, Canada, and in Arizona, Montana and Nevada. Prior to
becoming the Vice President, Mr. Halterman was responsible for a district office
engaged in the exploration and acquisition of commercial uranium deposits. He
was thereafter promoted to Minerals Manager, and was responsible for overseeing
the company's precious metals programs and budgets in the Western United States
and locations in Canada. Mr. Halterman began working with Goldsill Mining and
Milling, Inc. in 1979.
13
<PAGE>
From 1975 to 1979, Mr. Halterman was the Senior Exploration Geologist
for Philips Petroleum Corporation. He was responsible for generating,
recommending, acquiring, and administering uranium prospects in New Mexico,
Arizona, Colorado, Utah, Nevada, California and Texas. From 1968 to 1975, Mr.
Halterman was a Geologist for Gulf Oil Corporation. His duties included geologic
evaluation of uranium, coal base and precious metal prospects.
Mr. Halterman is a member of the American Association of Petroleum
Geologists and the Society for Mining, Metallurgy and Exploration.
As shown above, however, Mr. Halterman does not have direct or indirect
experience in identifying emerging companies for investment and/or business
combinations. Mr. Halterman is also associated with other entities involved in a
range of business activities. Consequently, there are potential inherent
conflicts of interest in his acting as an officer and director of the Company.
Mr. Halterman may be deemed to be the "promoter" and "parent" of the
Company within the meaning of the Rules and Regulations promulgated under the
Act.
ITEM 6. EXECUTIVE COMPENSATION.
Mr. Halterman is serving without any compensation. If the Company
generates revenues from operations after consummation of a merger or
acquisition, it is anticipated that executive officers will be compensated by
the Company. The following table sets forth information for the sole officer of
the Company, Mr. Halterman:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
OTHER RESTRICTED
NAME AND ANNUAL STOCK OP- LTIP ALL OTHER
PRINCIPAL COMPEN- AWARD(S) TIONS/SARS PAYOUTS ($) COMPEN-
POSITION YEAR SALARY BONUS SATION ($) ($) ($) SATION ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leroy 1998 -0-(1)<F1> -0- -0- -0- -0- -0- -0-
Halterman, 1999 -0- -0- -0- -0- -0- -0- -0-
President
<FN>
<F1>
(1) Does not indicate consulting fees paid to Mr. Halterman. See Item 7.
Certain Relationships and Related Transactions.
</FN>
</TABLE>
There are no employment agreements with the executive officer of the
Company. The Company does not pay compensation to its director, nor does the
Company compensate its director for attendance at meetings. The Company does
reimburse the director for reasonable expenses incurred during the course of his
performance. The Company does not offer stock options or similar incentive
compensation to its officer or director. The Company anticipates that some form
of incentive based compensation may be offered in the future.
It is possible that, after the Company successfully consummates a
merger or acquisition, that entity may desire to employ or retain one or a
number of members of the Company's management for the purposes of providing
services to the surviving entity or otherwise provide other compensation to such
persons. However, the Company has adopted a policy whereby the offer of any
post-transaction remuneration to members of management will not be a
consideration in the Company's decision to undertake any proposed transaction.
Management has agreed to disclose to the Company's Board of Directors any
discussions concerning possible compensation to be paid to them by any entity
which proposes to undertake a transaction with the Company.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted common stock issued by the Company as part of
the terms of the proposed transaction, or will be in the form of cash
consideration. The amount of such finder's fee cannot
14
<PAGE>
be determined as of the date of this registration statement, but is expected to
be comparable to consideration normally paid in like transactions. No member of
management of the Company will receive any finders fee, either directly or
indirectly, as a result of their respective efforts to implement the Company's
business plan.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Company for the
benefit of its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Carey Whitehead, Scott Larson and Sarah Cabianca, shareholders of the
Company, advanced $5,000 to the Company to pay for the Company's legal retainer.
The Company reimbursed them through the issuance of its common stock in 1998.
On March 28, 1998, the Company entered into an Assignment of Lease and
Purchase Option agreement with Mr. Leroy Halterman, the Company's sole officer
and director, to acquire a mineral exploration permit. See Exhibit 10.1.
According to the agreement, Mr. Halterman assigned to the Company all of his
rights and interests in the Mineral Exploration Permit Number 08-103044 issued
by the State of Arizona in exchange for 500,000 shares of the Company's common
stock. See Exhibit 10.2. The Company assumed all of the terms and obligations of
the permit, and the deemed value of the permit was $1,250.
In determining the Company's prior plan of operations, the Company used
the report and evaluation of the Goldstone Prospect created by Mr. Halterman on
December 15, 1997. Please see Exhibit 10.3.
Since inception through September 30, 1999, Mr. Halterman has provided
consulting services to the Company in the amount of $4,579. On August 11, 1999,
the Company also paid an amount of $2,000 in consulting fees to 465628 B.C.
Ltd., a separate company controlled by Sheldon Silverman, a shareholder of the
Company.
On February 17, 1999, the Company paid an expense in the amount of $142
on behalf of Minesearch, a related company owned and operated by Mr. Haltermna.
Minesearch repaid the Company on June 11, 1999.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company consists of 50,000,000
shares of common stock, each with $0.001 par value per share, and 5,000,000
shares of preferred stock, each with $.001 par value per share.
COMMON STOCK
Each share of common stock has one vote with respect to all matters
voted upon by the shareholders. The shares of common stock do not have
cumulative voting rights.
Holders of common stock are entitled to receive dividends, when and if
declared by the Board of Directors, out of funds of the Company legally
available therefor. The Company has never declared a dividend on its common
stock and has no present intention of declaring any dividends in the future.
Holders of common stock do not have any preemptive rights or other
rights to subscribe for additional shares, or any conversion rights. Upon a
liquidation, dissolution, or winding up of the affairs of the Company, holders
of the common stock will be entitled to share ratably in the assets available
for distribution to such stockholders after the payment of all liabilities.
The outstanding shares of the common stock of the Company are fully
paid and non-assessable.
15
<PAGE>
The registrar and transfer agent for the Company's Common Stock is
American Securities Transfer & Trust, Inc., 12309 W. Alameda Parkway, Suite Z-2,
Lakewood, Colorado 80228.
PREFERRED STOCK
The Articles of Incorporation permit the Board of Directors, without
further shareholder authorization, to issue preferred stock in one or more
series and to fix the price and the terms and provisions of each series,
including dividend rights and preferences, conversion rights, voting rights,
redemption rights, and rights on liquidation, including preferences over the
common stock, all of which could adversely affect the rights of the holders of
the common stock. The Board of Directors has not issued nor established a series
of preferred stock.
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock is traded on the NASDAQ OTC Bulletin Board,
under the symbol RIMP. The Company's common stock was first listed on the
bulletin board as of October 2, 1998. As of January 13, 2000, there were
fourteen (14) record holders of the Company's common stock. Since the Company's
inception, no cash dividends have been declared on the Company's common stock.
As of February 2, 2000, the closing quoted bid price was $0.625 and the closing
quoted ask price was $1.031.
ITEM 2. LEGAL PROCEEDINGS.
None.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCING DISCLOSURE.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Since the Company's inception, it has sold shares of common stock which
were not registered under the Securities Act of 1933, as amended.
On February 5, 1998, in exchange for the Mineral Exploration Permit
Number 08-103044, the Company issued 500,000 shares of common stock to Mr. Leroy
Halterman, at a deemed price of $0.0025 per share, pursuant to Section 3(b) and
4(2) of the Securities Act of 1933, as amended, and Rule 504 of Regulation D
promulgated thereunder.
On March 25, 1998, the Company conducted a private offering and sold
8,000,000 shares of common stock at a price of $0.0025 per share pursuant to
Section 3(b) and 4(2) of the Securities Act of 1933, as amended, and Rule 504 of
Regulation D promulgated thereunder.
On May 14, 1998, the Company conducted another private offering and
sold 50,000 shares of common stock at a price of $0.30 per share pursuant to
Section 3(b) and 4(2) of the Securities Act of 1933, as amended, and Rule 504 of
Regulation D promulgated thereunder.
No underwriting discounts or commissions were paid in either offering
in that such transactions did not involve any public offering.
16
<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.7502 of the General Corporation Law of Nevada and Article V
and Article VI of the Company's Articles of Incorporation permit the Company to
indemnify its officers and directors and certain other persons against expenses
in defense of a suit to which they are parties by reason of such office, so long
as the persons conducted themselves in good faith and the persons reasonably
believed that their conduct was in the Company's best interests or not opposed
to the Company's best interests, and with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
Indemnification is not permitted in connection with a proceeding by or in the
right of the corporation in which the officer or director was adjudged liable to
the corporation or in connection with any other proceeding charging that the
officer or director derived an improper personal benefit, whether or not
involving action in an official capacity.
PART F/S
FINANCIAL STATEMENTS.
(A) BALANCE SHEET DATED SEPTEMBER 30, 1999
STATEMENT OF OPERATIONS AND DEFICIT FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1999
STATEMENT OF STOCKHOLDER'S EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1999
STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
NOTES TO FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1999
(B) BALANCE SHEET DATED DECEMBER 31, 1998
STATEMENT OF OPERATIONS FOR THE PERIOD JANUARY 26, 1998 (INCEPTION) TO
DECEMBER 31, 1998
STATEMENT OF STOCKHOLDER EQUITY FOR THE PERIOD JANUARY 26, 1998
(INCEPTION) TO DECEMBER 31, 1998
STATEMENT OF CASH FLOWS FOR THE PERIOD JANUARY 26, 1998 (INCEPTION) TO
DECEMBER 31, 1998
NOTES TO FINANCIAL STATEMENTS FOR THE PERIOD FROM JANUARY 26, 1998
(INCEPTION) TO DECEMBER 31, 1998
17
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Rimpac Resources Ltd.
Albuquerque, New Mexico
We have audited the accompanying balance sheet of Rimpac Resources Ltd. as of
December 31, 1998 and the related statements of operations, stockholders'
equity, and cash flows for the period from January 26, 1998 (inception) to
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rimpac Resources Ltd. as of
December 31, 1998, and the results of its operations, and its cash flows for the
period from January 26, 1998 (inception) to December 31, 1998, in conformity
with generally accepted accounting principles.
/s/ Stark Tinter & Associates, LLC
Stark Tinter & Associates, LLC
Englewood, Colorado
April 8, 1999
F-1
<PAGE>
<TABLE>
RIMPAC RESOURCES LTD.
BALANCE SHEETS
(Expressed in US dollars)
<CAPTION>
==================================================================================================================================
September 30, December 31,
1999 1998
- ----------------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT
Cash $ 4,097 $ 13,126
ORGANIZATIONAL COSTS, net of accumulated amortization 834 1,026
INVESTMENT IN MINERAL PROPERTIES (Note 4) 1,250 1,250
-------------- --------------
$ 6,181 $ 15,402
==================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 500 $ 1,695
-------------- ----------------
SHAREHOLDERS' EQUITY (Note 2)
Preferred stock, $0.01 par value,
1,000,000 shares authorized, none outstanding
Common stock, $0.001 par value,
50,000,000 shares authorized,
8,550,000 shares issued 8,550 8,550
Additional paid in capital 24,162 24,162
Deficit accumulated (27,031) (19,005)
-------------- --------------
5,681 13,707
-------------- --------------
$ 6,181 $ 15,402
==================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<TABLE>
RIMPAC RESOURCES LTD.
STATEMENTS OF OPERATIONS AND DEFICIT
(Expressed in US dollars)
<CAPTION>
====================================================================================================================================
Cumulative
Amounts
From Nine Month
Inception to Period Ended Year Ended
September 30, September 30, December 31,
1999 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Audited)
<S> <C> <C> <C>
REVENUE $ - $ - $ -
------------- ------------- -------------
EXPENSES
Accounting and audit 2,514 1,860 654
Amortization 449 192 257
Bank charges 247 206 41
Consulting 11,729 3,463 8,266
Filing fees 185 85 100
Legal 6,790 794 5,996
Office and miscellaneous 675 182 493
Shareholder costs 442 - 442
Transfer agent 3,335 1,359 1,976
Foreign exchange (gain) loss 665 (115) 780
------------- ------------- -------------
27,031 8,026 19,005
------------- ------------- -------------
NET LOSS FOR THE PERIOD $ (27,031) $ (8,026) $ (19,005)
====================================================================================================================================
PER SHARE INFORMATION:
Weighted average number
of common shares outstanding - basic 8,550,000 5,193,175
====================================================================================================================================
NET LOSS PER COMMON SHARE - basic $ (0.001) $ (0.004)
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
RIMPAC RESOURCES LTD.
STATEMENTS OF SHAREHOLDERS' EQUITY
(Expressed in US dollars)
<CAPTION>
====================================================================================================================================
Common Stock Additional
-------------------------------- Paid Accumulated
Shares Amount in Capital Deficit Total
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT INCEPTION - $ - $ - $ - $ -
Issuance of stock for cash at $0.0025 per share
(net of issuance costs) (Note 2) 6,000,000 6,000 5,462 - 11,462
Issuance of stock for repayment of advances at
$0.01 per share (Note 3) 2,000,000 2,000 3,000 - 5,000
Issuance of stock in exchange for assignment
of mineral property rights (Note 3) 500,000 500 750 - 1,250
Issuance of stock for cash at $0.30 per share
(net of issuance costs) (Note 2) 50,000 50 14,950 - 15,000
Net loss for the year - - - (19,005) (19,005)
--------------- ------------- ------------- ---------------- -------------
BALANCE AT DECEMBER 31, 1998 (audited) 8,550,000 8,550 24,162 (19,005) 13,707
Net loss for the period - - - (8,026) (8,026)
--------------- ------------- ------------- ---------------- -------------
BALANCE AT SEPTEMBER 30, 1999 (unaudited) 8,550,000 $ 8,550 $ 24,162 $ (27,031) $ 5,681
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
RIMPAC RESOURCES LTD.
STATEMENTS OF CASH FLOWS
(Expressed in US dollars)
<CAPTION>
====================================================================================================================================
Cumulative
Amounts
From Nine Month
Inception to Period Ended Year Ended
September 30, September 30, December 31,
1999 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Audited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (27,034) $ (8,026) $ (19,005)
Adjustments to reconcile net loss to net cash
Increase (decrease) in accounts payable and accrued liabilities 500 (1,195) 1,695
Amortization 449 192 257
------------ ------------ -----------
Net cash used in operating activities (26,082) (9,029) (17,053)
------------ ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in mineral claims (1,250) - (1,250)
Organization costs (1,283) - (1,283)
------------ ------------ -----------
Net cash used in investing activities (2,533) - (2,533)
------------ ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuance, net of issuance costs 26,462 - 26,462
Proceeds from stock issuance for assignment of mineral
property rights 1,250 - 1,250
Proceeds from stock issuance for repayment of advances 5,000 - 5,000
------------ ------------ -----------
Net cash provided by financing activities 32,712 - 32,712
------------ ------------ -----------
CHANGE IN CASH FOR THE PERIOD 4,097 (9,029) 13,126
CASH POSITION, BEGINNING OF PERIOD - 13,126 -
------------ ------------ -----------
<PAGE>
CASH POSITION, END OF PERIOD $ 4,097 $ 4,097 $ 13,126
====================================================================================================================================
ISSUANCE OF STOCK FOR REPAYMENT OF ADVANCES $ 5,000 $ - $ 5,000
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
RIMPAC RESOURCES LTD.
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US dollars)
SEPTEMBER 30, 1999
(Unaudited - Prepared by Management
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Company was incorporated on January 26, 1998 in the State of
Nevada. The Company has acquired mineral property claims located in
Arizona (see Note 3).
ORGANIZATIONAL COSTS
Organizational costs include costs for professional fees and are
amortized using the straight-line method over five years.
NET LOSS PER SHARE
The net loss per share is computed by dividing the net loss for the
period by the weighted average number of common shares outstanding for
the period.
ESTIMATES
The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
COMPREHENSIVE LOSS
Other comprehensive loss from January 26, 1998 (inception) to September
30, 1999, consisted of a foreign currency translation adjustment in the
amount of $115.
2. SHAREHOLDERS' EQUITY
Since January 26, 1998 the Company has issued 8,000,000 shares of its
$0.001 par value common stock to various investors at $0.0025 per share
for cash of $15,000. Issuance costs were $3,538.
Additionally, 50,000 shares of $0.001 par value common stock has been
issued at $0.30 per share for cash of $15,000.
3. RELATED PARTY TRANSACTIONS
On March 22, 1998, the sole officer and director ("the officer") of the
Company assigned his rights and interest in mineral property rights to
the Company in exchange for 500,000 shares of $0.001 common stock for a
value of $1,250 (Note 4).
F-6
<PAGE>
RIMPAC RESOURCES LTD.
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US dollars)
SEPTEMBER 30, 1999
(Unaudited - Prepared by Management)
3. CONT'D...
The officer also provided consulting services in the amount of $4,579
to the Company
During the period from January 26, 1998 (inception) to September 30,
1999, a shareholder of the Company advanced to the Company $5,000 for a
legal retainer which was reimbursed to the shareholder through the
issuance of common stock
On February 17,1999 the Company paid for an expense on behalf of a
related company of $142. The expense was reimbursed to the Company on
June 11, 1999.
On August 11, 1999, the Company paid $2,000 in consulting fees to a
company controlled by a director of the Company.
4. INVESTMENT IN MINERAL CLAIMS
The Company entered into an assignment of lease and purchase option
agreement with the officer on March 22, 1998, in order to acquire the
rights to mineral property claims located in Arizona. The agreement
assigns to the Company a mineral exploration permit issued by the State
of Arizona to the officer. The permit gives the holder the right to
prospect on the surface of a one hundred sixty acre parcel of real
estate in Cochise County, Arizona. The permit is valid for five years
and expires on September 16, 2002.
5. YEAR 2000
The Company has assessed its exposure to date sensitive computer
programs that may not be operative subsequent to 1999 and has
implemented a requisite course of action to minimize Year 2000 risk and
ensure that neither significant costs nor disruption of normal business
operations are encountered. However, because there is no guarantee that
all systems of outside vendors or other entities on which the Company's
operations rely will be 2000 compliant, the Company remains susceptible
to consequences of the Year 2000 issue.
6. INCOME TAXES
The Company has a Federal net operating loss carryforward of
approximately $27,031 which will expire in the year 2012. The tax
benefit of this net operating loss of approximately $3,800 has been
offset by a full allowance for realization. This carryforward may be
limited upon the consummation of a business combination under Internal
Revenue Code Section 381.
7. MINERAL EXPLORATION ACTIVITY DISCONTINUED
On September 20, 1999, the Company announced that it will discontinue
its efforts in the gold mining business due to low commodity prices and
the lack of financial commitments. The Company is actively seeking
other business opportunities in order to add vale to the corporation.
F-7
<PAGE>
PART III
<TABLE>
ITEM 1. INDEX TO EXHIBITS
<CAPTION>
REGULATION SEQUENTIAL
S-B NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
3.1 Articles of Incorporation filed January 26, 1998 26
3.2 Bylaws adopted as of January 27, 1998 33
10.1 Assignment of Lease and Purchase Option between the Company and Leroy 55
Halterman dated March 22, 1998
10.2 State Land Department, State of Arizona, Mineral Exploration Permit No. 58
08-103044, dated September 17, 1997
10.3 Goldstone Prospect, Cochise County, Arizona, Section 28, T20S R23E, A 65
Gold Prospect, dated December 15, 1997, prepared by Leroy Halterman
CPG, RPG, Consulting Geologist
11 Statement Regarding Computation of Per Share Earnings See Financial
Statements
27 Financial Data Schedule 85
- ------------------ ----------------------------------------------------------------------------- -------------------
</TABLE>
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.
RIMPAC RESOURCES LTD.
Date: Feb 11, 2000 By:/S/LEROY HALTERMAN
Leroy Halterman, President
25
<PAGE>
EXHIBIT 3.1
Rimpac Resources Ltd.
Articles of Incorporation dated filed January 26, 1998
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JAN 26 1998
NO C1438-98
DEAN HELLER, SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
RIMPAC RESOURCES LTD.
ARTICLE I
The name of the corporation is Rimpac Resources Ltd. (the
"Corporation").
ARTICLE II
The amount of total authorized capital stock which the Corporation
shall have authority to issue is 50,000,000 shares of common stock, each with
$0.001 par value, and 1,000,000 shares of preferred stock, each with $0.01 par
value. To the fullest extent permitted by the laws of the State of Nevada
(currently set forth in NRS 78.195), as the same now exists or may hereafter be
amended or supplemented, the Board of Directors may fix and determine the
designations, rights, preferences or other variations of each class or series
within each class of capital stock of the Corporation.
ARTICLE III
The business and affairs of the Corporation shall be managed by a Board
of Directors which shall exercise all the powers of the Corpora tion except as
otherwise provided in the Bylaws, these Articles of Incorporation or by the laws
of the State of Nevada. The number of members of the Board of Directors shall be
set in accordance with the Company's Bylaws; however, the initial Board of
Directors shall consist of one member. The name and address of the person who
shall serve as the director until the first annual meeting of stockholders and
until his successors are duly elected and qualified is as follows:
NAME ADDRESS
Leroy Halterman 11930 Menaul Boulevard NE, #112
Albuquerque, New Mexico 87112
1
<PAGE>
ARTICLE IV
The name and address of the incorporator of the Corporation is Craig A.
Stoner, 455 Sherman Street, Suite 300, Denver, Colorado 80203.
ARTICLE V
To the fullest extent permitted by the laws of the State of Nevada
(currently set forth in NRS 78.037), as the same now exists or may hereafter be
amended or supplemented, no director or officer of the Corporation shall be
liable to the Corporation or to its stockholders for damages for breach of
fiduciary duty as a director or officer.
ARTICLE VI
The Corporation shall indemnify, to the fullest extent permitted by
applicable law in effect from time to time, any person against all liability and
expense (including attorneys' fees) incurred by reason of the fact that he is or
was a director or officer of the Corporation, he is or was serving at the
request of the Corporation as a director, officer, employee, or agent of, or in
any similar managerial or fiduciary position of, another corporation,
partnership, joint venture, trust or other enterprise. The Corporation shall
also indemnify any person who is serving or has served the Corporation as a
director, officer, employee, or agent of the Corporation to the extent and in
the manner provided in any bylaw, resolution of the shareholders or directors,
contract, or otherwise, so long as such provision is legally permissible.
ARTICLE VII
The owners of shares of stock of the Corporation shall not have a
preemptive right to acquire unissued shares, treasury shares or securities
convertible into such shares.
2
<PAGE>
ARTICLE VIII
Only the shares of capital stock of the Corporation designated at
issuance as having voting rights shall be entitled to vote at meetings of
stockholders of the Corporation, and only stockholders of record of shares
having voting rights shall be entitled to notice of and to vote at meetings of
stockholders of the Corporation.
ARTICLE IX
The initial resident agent of the Corporation shall be the Corpora tion
Trust Company of Nevada, whose street address is 1 East 1st Street, Reno, Nevada
89501.
ARTICLE X
The provisions of NRS 78.378 to 78.3793 inclusive, shall not apply to
the Corporation.
ARTICLE XI
The purposes for which the Corporation is organized and its powers are
as follows:
To engage in all lawful business; and
To have, enjoy, and exercise all of the rights, powers, and
privileges conferred upon corporations incorporated pursuant to Nevada law,
whether now or hereafter in effect, and whether or not herein specifically
mentioned.
ARTICLE XII
One-third of the votes entitled to be cast on any matter by each
shareholder voting group entitled to vote on a matter shall constitute a quorum
of that voting group for action on that matter by shareholders.
3
<PAGE>
ARTICLE XIII
The holder of a bond, debenture or other obligation of the Corporation
may have any of the rights of a stockholder in the Corpora tion to the extent
determined appropriate by the Board of Directors at the time of issuance of such
bond, debenture or other obligation.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 21st day of January, 1998.
By/s/CRAIG A. STONER
-------------------------
Craig A. Stoner
Incorporator
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
Personally appeared before me this 21st day of January, 1998, Craig A.
Stoner who, being first duly sworn, declared that he executed the foregoing
Articles of Incorporation and that the statements therein are true and correct
to the best of his knowledge and belief.
Witness my hand and official seal.
/s/NANCY J. PARKS
[NOTARY SEAL] --------------------
Notary Public
My commission expires: Address:
455 SHERMAN STREET
10/26/98 SUITE 300
- ---------- DENVER, CO 80237
K:\FMM\RIMPAC\ARTICLES.INC
.01
5
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JAN 26 1998
NO C1438-98
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT
BY RESIDENT AGENT
I, Corporation Trust Company of Nevada, with address at One East First Street,
Town of Reno, County of Washoe, State of Nevada, hereby accept the appointment
as Resident Agent of Rimpac Resources Ltd. in accordance with NRS 78.090.
In Witness Whereof, I have hereunto set my hand this 23rd day of January, 1998.
/s/MARCIA J. SUNAHARA
-------------------------------------
Resident Agent
6
<PAGE>
EXHIBIT 3.2
Rimpac Resources Ltd.
Bylaws adopted as of January 27, 1998
<PAGE>
RIMPAC RESOURCES LTD.
BYLAWS
- -----------------------------
Adopted as of January 27, 1998
<PAGE>
RIMPAC RESOURCES LTD.
BYLAWS
<TABLE>
TABLE OF CONTENTS
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE I
OFFICES
1.1 Registered Office................................................................................ 1
1.2 Principal Office................................................................................. 1
ARTICLE II
STOCKHOLDERS
2.1 Annual Meeting .................................................................................. 1
2.2 Special Meetings................................................................................. 1
2.3 Place of Meeting................................................................................. 2
2.4 Notice of Meeting................................................................................ 2
2.5 Adjournment...................................................................................... 2
2.6 Organization..................................................................................... 2
2.7 Closing of Transfer Books or Fixing of Record Date............................................... 3
2.8 Quorum........................................................................................... 3
2.9 Proxies.......................................................................................... 3
2.10 Voting of Shares................................................................................. 3
2.11 Action Taken Without a Meeting................................................................... 4
2.12 Meetings by Telephone............................................................................ 4
-i-
<PAGE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE III
DIRECTORS
3.1 Board of Directors; Number; Qualifications; Election............................................. 4
3.2 Powers of the Board of Directors: Generally...................................................... 4
3.3 Committees of the Board of Directors............................................................. 5
3.4 Resignation...................................................................................... 5
3.5 Removal.......................................................................................... 5
3.6 Vacancies........................................................................................ 5
3.7 Regular Meetings................................................................................. 5
3.8 Special Meetings................................................................................. 6
3.9 Notice........................................................................................... 6
3.10 Quorum........................................................................................... 6
3.11 Manner of Acting................................................................................. 6
3.12 Compensation..................................................................................... 6
3.13 Action Taken Without a Meeting................................................................... 6
3.14 Meetings by Telephone............................................................................ 6
ARTICLE IV
OFFICERS AND AGENTS
4.1 Officers of the Corporation...................................................................... 7
4.2 Election and Term of Office...................................................................... 7
4.3 Removal.......................................................................................... 7
4.4 Vacancies........................................................................................ 7
4.5 President........................................................................................ 8
4.6 Vice Presidents.................................................................................. 8
4.7 Secretary........................................................................................ 8
4.8 Treasurer........................................................................................ 9
4.9 Salaries......................................................................................... 9
4.10 Bonds............................................................................................ 9
-ii-
<PAGE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE V
STOCK
5.1 Certificates..................................................................................... 10
5.2 Record........................................................................................... 11
5.3 Consideration for Shares......................................................................... 11
5.4 Cancellation of Certificates..................................................................... 11
5.5 Lost Certificates................................................................................ 11
5.6 Transfer of Shares............................................................................... 11
5.7 Transfer Agents, Registrars, and Paying Agents................................................... 12
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
6.1 Indemnification; Advancement of Expenses......................................................... 12
6.2 Insurance and Other Financial Arrangements Against
Liability of Directors, Officers, Employees, and
Agents......................................................................................... 12
ARTICLE VII
ACQUISITION OF CONTROLLING INTEREST
7.1 Acquisition of Controlling Interest.............................................................. 13
ARTICLE VIII
EXECUTION OF INSTRUMENTS; LOANS, CHECKS AND ENDORSEMENTS;
DEPOSITS; PROXIES
8.1 Execution of Instruments......................................................................... 13
8.2 Loans............................................................................................ 13
8.3 Checks and Endorsements.......................................................................... 13
8.4 Deposits......................................................................................... 14
8.5 Proxies.......................................................................................... 14
8.6 Contracts........................................................................................ 14
-iii-
<PAGE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE IX
MISCELLANEOUS
9.1 Waivers of Notice................................................................................ 14
9.2 Corporate Seal................................................................................... 14
9.3 Fiscal Year...................................................................................... 15
9.4 Amendment of Bylaws.............................................................................. 15
9.5 Uniformity of Interpretation and Severability.................................................... 15
9.6 Emergency Bylaws................................................................................. 15
Secretary's Certification................................................................................. 16
</TABLE>
-iv-
<PAGE>
BYLAWS
OF
RIMPAC RESOURCES LTD.
ARTICLE I
OFFICES
1.1 REGISTERED OFFICE. The registered office of the Corporation
required by the General Corporation Law of Nevada, Nevada Revised Statutes, 1957
("NRS"), Chapter 78, to be maintained in Nevada may be, but need not be,
identical with the principal office if in Nevada, and the address of the
registered office may be changed from time to time by the Board of Directors.
1.2 PRINCIPAL OFFICE. The Corporation may have such other office or
offices either within or outside of the State of Nevada as the business of the
Corporation may require from time to time if so designated by the Board of
Directors.
ARTICLE II
STOCKHOLDERS
2.1 ANNUAL MEETING. Unless otherwise designated by the Board of
Directors, the annual meeting shall be held on the date and at the time and
place fixed by the Board of Directors; provided, however, that the first annual
meeting shall be held on a date that is within 18 months after the date on which
the Corporation first has stockholders, and each successive annual meeting shall
be held on a date that is within 18 months after the preceding annual meeting.
2.2 SPECIAL MEETINGS. Special meetings of stockholders of the
Corporation, for any purpose, may be called by the Chairman of the Board, the
president, any vice president, any two members of the Board of Directors, or the
holders of at least 10% of all of the shares entitled to vote at such meeting.
Any holder or holders of not less than 10% of all the outstanding shares of the
Corporation who desire to call a special meeting pursuant to this Section 2 of
Article II shall notify the president that a special meeting of the stockholders
shall be called. Within 30 days after notice to the president, the president
shall set the date, time, and location of a stockholders' meeting. The date set
by the president shall be not less than 30 nor more than 120 days after the date
of notice to the president. If the president fails to set the date, time, and
location of special meeting within
1
<PAGE>
the 30-day time period described above, the stockholder or stockholders calling
the meeting shall set the date, time, and location of the special meeting. At a
special meeting no business shall be transacted and no corporate action shall be
taken other than that stated in the notice of the meeting.
2.3 PLACE OF MEETING. The Board of Directors may designate any place,
either within or outside the State of Nevada, as the place for any annual
meeting or special meeting called by the Board of Directors. If no designation
is made, or if a meeting shall be called otherwise than by the Board, the place
of meeting shall be the Company's principal offices, whether within or outside
the State of Nevada.
2.4 NOTICE OF MEETING. Written notice signed by an officer designated
by the Board of Directors, stating the place, day, and hour of the meeting and
the purpose for which the meeting is called, shall be delivered personally or
mailed postage prepaid to each stockholder of record entitled to vote at the
meeting not less than 10 nor more than 60 days before the meeting. If mailed,
such notice shall be directed to the stockholder at his address as it appears
upon the records of the Corporation, and notice shall be deemed to have been
given upon the mailing of any such notice, and the time of the notice shall
begin to run from the date upon which the notice is deposited in the mail for
transmission to the stockholder. Personal delivery of any such notice to any
officer of a corporation or association, or to any member of a partnership,
constitutes delivery of the notice to the corporation, association or
partnership. Any stockholder may waive notice of any meeting by a writing signed
by him, or his duly authorized attorney, either before or after the meeting.
2.5 ADJOURNMENT. When a meeting is for any reason adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
2.6 ORGANIZATION. The president or any vice president shall call
meetings of stockholders to order and act as chairman of such meetings. In the
absence of said officers, any stockholder entitled to vote at that meeting, or
any proxy of any such stockholder, may call the meeting to order and a chairman
shall be elected by a majority of the stockholders entitled to vote at that
meeting. In the absence of the secretary or any assistant secretary of the
Corporation, any person appointed by the chairman shall act as secretary of such
meeting. An appropriate number of inspectors for any meeting of stockholders may
be appointed by the chairman of such meeting. Inspectors so appointed will open
and close the polls, will receive and take charge of proxies and ballots, and
will decide all questions as to the qualifications of voters, validity of
proxies and ballots, and the number of votes properly cast.
2
<PAGE>
2.7 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The directors
may prescribe a period not exceeding 60 days before any meeting of the
stockholders during which no transfer of stock on the books of the Corporation
may be made, or may fix a day not more than 60 days before the holding of any
such meeting as the day as of which stockholders entitled to notice of and to
vote at such meetings must be determined. Only stockholders of record on that
day are entitled to notice or to vote at such meeting.
2.8 QUORUM. Unless otherwise provided by the Articles of Incorporation,
one- third of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
stockholders. If fewer than one-third of the outstanding shares are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
without further notice for a period not to exceed 60 days at any one
adjournment. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. The stockholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of stockholders so that less than a quorum remains.
If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the stockhold ers, unless the vote of a greater number or
voting by classes is required by law or the Articles of Incorporation.
2.9 PROXIES. At all meetings of stockholders, a stockholder may vote by
proxy, as prescribed by law. Such proxy shall be filed with the secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
6 months from the date of its creation, unless it is coupled with an interest,
or unless the stockholder specifies in it the length of time for which it is to
continue in force, which may not exceed 7 years from the date of its creation.
2.10 VOTING OF SHARES. Each outstanding share, regardless of class,
shall be entitled to one vote, and each fractional share shall be entitled to a
corresponding fractional vote on each matter submitted to a vote at a meeting of
stockholders, except as may be otherwise provided in the Articles of
Incorporation or in the resolution providing for the issuance of the stock
adopted by the Board of Directors pursuant to authority expressly vested in it
by the provisions of the Articles of Incorporation. If the Articles of
Incorporation or any such resolution provide for more or less than one vote per
share for any class or series of shares on any matter, every reference in the
Articles of Incorporation, these Bylaws and the General Corporation Law of
Nevada to a majority or other proportion or number of shares shall be deemed to
refer to a majority or other proportion of the voting power of all of the shares
or those classes or series of shares, as may be required by the Articles of
Incorporation, or in the resolution providing for the issuance of the stock
adopted by the Board of Directors pursuant to authority expressly vested in it
by the Articles of
3
<PAGE>
Incorporation, or the General Corporation Law of Nevada. Cumulative voting shall
not be allowed. Unless the General Corporation Law of Nevada, the Articles of
Incorporation, or these Bylaws provide for different proportions, an act of
stockholders who hold at least a majority of the voting power and are present at
a meeting at which a quorum is present is the act of the stockholders.
2.11 ACTION TAKEN WITHOUT A MEETING. Unless otherwise provided in the
Articles of Incorporation or these Bylaws, any action required or permitted to
be taken at a meeting of the stockholders may be taken without a meeting if a
written consent thereto is signed by stockholders holding at least a majority of
the voting power, except that if a different proportion of voting power is
required for such an action at a meeting, then that proportion of written
consents is required. In no instance where action is authorized by written
consent need a meeting of stockholders be called or notice given. The written
consent must be filed with the minutes of the proceedings of the stockholders.
2.12 MEETINGS BY TELEPHONE. Unless other restricted by the Articles of
Incorpora tion or these Bylaws, stockholders may participate in a meeting of
stockholders by means of a telephone conference or similar method of
communication by which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this Section constitutes presence
in person at the meeting.
ARTICLE III
DIRECTORS
3.1 BOARD OF DIRECTORS; NUMBER; QUALIFICATIONS; ELECTION. The
Corporation shall be managed by a Board of Directors, all of whom must be
natural persons at least 18 years of age. Directors need not be residents of the
State of Nevada or stockholders of the Corporation. The number of directors of
the Corporation shall be not less than one nor more than twelve. Subject to such
limitations, the number of directors may be increased or decreased by resolution
of the Board of Directors, but no decrease shall have the effect of shortening
the term of any incumbent director. Subject to the provisions of Article III of
the Corporation's Articles of Incorporation, each director shall hold office
until the next annual meeting of shareholders or until his successor has been
elected and qualified.
3.2 POWERS OF THE BOARD OF DIRECTORS: GENERALLY. Subject only to such
limitations as may be provided by the General Corporation Law of Nevada or the
Articles of Incorporation, the Board of Directors shall have full control over
the affairs of the Corporation.
4
<PAGE>
3.3 COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors may,
by resolution or resolutions passed by a majority of the whole Board, designate
one or more committees, each committee to consist of one or more directors,
which, to the extent provided in the resolution or resolutions or in these
Bylaws, shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and may have power to
authorize the seal of the Corporation to be affixed to all papers on which the
Corporation desires to place on a seal. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors. Unless the Articles of Incorporation or these Bylaws
provide otherwise, the Board of Directors may appoint natural persons who are
not directors to serve on committees.
3.4 RESIGNATION. Any director of the Corporation may resign at any time
by giving written notice of his resignation to the Board of Directors, the
president, any vice president, or the secretary of the Corporation. Such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. When
one or more directors shall resign from the Board, effective at a future date, a
majority of the directors then in office.
3.5 REMOVAL. Except as otherwise provided in the Articles of
Incorporation, any director may be removed, either with or without cause, at any
time by the vote of the stockholders representing not less than two-thirds of
the voting power of the issued and outstanding stock entitled to voting power.
3.6 VACANCIES. All vacancies, including those caused by an increase in
the number of directors, may be filled by a majority of the remaining directors,
though less than a quorum, unless it is otherwise provided in the Articles of
Incorporation. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. A director elected to fill a
vacancy caused by an increase in the number of directors shall hold office until
the next annual meeting of stockholders and until his successor has been elected
and has qualified.
3.7 REGULAR MEETINGS. A regular meeting of the Board of Directors shall
be held without other notice than this Bylaw immediately after and at the same
place as the annual meeting of stockholders. The Board of Directors may provide
by resolution the time and place, either within or outside the State of Nevada,
for the holding of additional regular meetings without other notice than such
resolution.
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3.8 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by or at the request of the president or a one-third of the directors
then in office. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or outside Nevada, as the
place for holding any special meeting of the Board of Directors called by them.
3.9 NOTICE. Notice of any special meeting shall be given at least two
days previously thereto by written notice delivered personally or mailed to each
director at his business address. Any director may waive notice of any meeting.
A director's presence at a meeting shall constitute a waiver of notice of such
meeting if the director's oral consent is entered on the minutes or by taking
part in the deliberations at such meeting without objecting. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
3.10 QUORUM. A majority of the number of directors elected and
qualified at the time of the meeting shall constitute a quorum for the
transaction of business at any such meeting of the Board of Directors, but if
less than such majority is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without further notice.
3.11 MANNER OF ACTING. If a quorum is present, the affirmative vote of
a majority of the directors present at the meeting and entitled to vote on that
particular matter shall be the act of the Board, unless the vote of a greater
number is required by law or the Articles of Incorporation.
3.12 COMPENSATION. By resolution of the Board of Directors, any
director may be paid any one or more of the following: his expenses, if any, of
attendance at meetings; a fixed sum for attendance at such meeting; or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
3.13 ACTION TAKEN WITHOUT A MEETING. Unless otherwise provided in the
Articles of Incorporation or these Bylaws, any action required or permitted to
be taken at a meeting of the Board of Directors or a committee thereof may be
taken without a meeting if, before or after the action, a written consent
thereto is signed by all the members of the Board or of the committee. The
written consent must be filed with the minutes of the proceedings of the Board
or committee.
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3.14 MEETINGS BY TELEPHONE. Unless other restricted by the Articles of
Incorpora tion or these Bylaws, members of the Board of Directors or of any
committee designated by the Board, may participate in a meeting of the Board or
committee by means of a telephone conference or similar method of communication
by which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section constitutes presence in
person at the meeting.
ARTICLE IV
OFFICERS AND AGENTS
4.1 OFFICERS OF THE CORPORATION. The Corporation shall have a
president, a secretary, and a treasurer, each of whom shall be elected by the
Board of Directors. The Board of Directors may appoint one or more vice
presidents and such other officers, assistant officers, committees, and agents,
including a chairman of the board, assistant secretaries, and assistant
treasurers, as they may consider necessary, who shall be chosen in such manner
and hold their offices for such terms and have such authority and duties as from
time to time may be determined by the Board of Directors. One person may hold
any two or more offices. The officers of the Corporation shall be natural
persons 18 years of age or older. In all cases where the duties of any officer,
agent, or employee are not prescribed by the Bylaws or by the Board of
Directors, such officer, agent, or employee shall follow the orders and
instructions of (a) the president, and if a chairman of the board has been
elected, then (b) the chairman of the board.
4.2 ELECTION AND TERM OF OFFICE. The officers of the Corporation shall
be elected by the Board of Directors annually at the first meeting of the Board
held after each annual meeting of the stockholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as may be convenient. Each officer shall hold office until the first
of the following occurs: until his successor shall have been duly elected and
shall have qualified; or until his death; or until he shall resign; or until he
shall have been removed in the manner hereinafter provided.
4.3 REMOVAL. Any officer or agent may be removed by the Board of
Directors or by the executive committee, if any, whenever in its judgment the
best interests of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
4.4 VACANCIES. A vacancy in any office, however occurring, may be
filled by the Board of Directors for the unexpired portion of the term.
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4.5 PRESIDENT. The president shall, subject to the direction and
supervision of the Board of Directors, be the chief executive officer of the
Corporation and shall have general and active control of its affairs and
business and general supervision of its officers, agents, and employees. He
shall, unless otherwise directed by the Board of Directors, attend in person or
by substitute appointed by him, or shall execute, on behalf of the Corporation,
written instruments appointing a proxy or proxies to represent the Corporation,
at all meetings of the stockholders of any other corporation in which the
Corporation shall hold any stock. He may, on behalf of the Corporation, in
person or by substitute or by proxy, execute written waivers of notice and
consents with respect to any such meetings. At all such meetings and otherwise,
the president, in person or by substitute or proxy as aforesaid, may vote the
stock so held by the Corporation and may execute written consents and other
instruments with respect to such stock and may exercise any and all rights and
powers incident to the ownership of said stock, subject however to the instruc
tions, if any, of the Board of Directors. The president shall have custody of
the treasurer's bond, if any. If a chairman of the board has been elected, the
chairman of the board shall have, subject to the direction and modification of
the Board of Directors, all the same responsibilities, rights, and obligations
as described in these Bylaws for the president.
4.6 VICE PRESIDENTS. The vice presidents, if any, shall assist the
president and shall perform such duties as may be assigned to them by the
president or by the Board of Directors. In the absence of the president, the
vice president designated by the Board of Directors or (if there be no such
designation) the vice president designated in writing by the president shall
have the powers and perform the duties of the president. If no such designation
shall be made, all vice presidents may exercise such powers and perform such
duties.
4.7 SECRETARY. The secretary shall perform the following: (a) keep the
minutes of the proceedings of the stockholders, executive committee, and the
Board of Directors; (b) see that all notices are duly given in accordance with
the provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation and affix the seal to all
documents when authorized by the Board of Directors; (d) keep, at the
Corporation's registered office or principal place of business within or outside
Nevada, a record containing the names and addresses of all stockholders and the
number and class of shares held by each, unless such a record shall be kept at
the office of the Corporation's transfer agent or registrar; (e) sign with the
president or a vice president, certificates for shares of the Corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
Corporation, unless the Corporation has a transfer agent; and (g) in general,
perform all duties incident to the office of secretary and such other duties as
from time to time may be assigned to him by the president or by the Board of
Directors. Assistant secretaries, if any, shall have the same duties and powers,
subject to supervision by the secretary.
8
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4.8 TREASURER. The treasurer shall be the principal financial officer
of the Corporation and shall have the care and custody of all funds, securities,
evidences of indebtedness, and other personal property of the Corporation, and
shall deposit the same in accordance with the instructions of the Board of
Directors. He shall receive and give receipts and acquittances for monies paid
in or on account of the Corporation, and shall pay out of the funds on hand all
bills, payrolls, and other just debts of the Corporation of whatever nature upon
maturity. He shall perform all other duties incident to the office of the
treasurer and, upon request of the Board, shall make such reports to it as may
be required at any time. He shall, if required by the Board, give the
Corporation a bond in such sums and with such sureties as shall be satisfactory
to the Board, conditioned upon the faithful performance of his duties and for
the restoration to the Corporation of all books, papers, vouchers, money, and
other property of whatever kind in his possession or under his control belonging
to the Corporation. He shall have such other powers and perform such other
duties as may be from time to time prescribed by the Board of Directors or the
president. The assistant treasurers, if any, shall have the same powers and
duties, subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting officer of the
Corporation. He shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account, prepare
and file all local, state, and federal tax returns, prescribe and maintain an
adequate system of internal audit, and prepare and furnish to the president and
the Board of Directors statements of account showing the financial position of
the Corporation and the results of its operations.
4.9 SALARIES. Officers of the Corporation shall be entitled to such
salaries, emoluments, compensation, or reimbursement as shall be fixed or
allowed from time to time by the Board of Directors.
4.10 BONDS. If the Board of Directors by resolution shall so require,
any officer or agent of the Corporation shall give bond to the Corporation in
such amount and with such surety as the Board of Directors may deem sufficient,
conditioned upon the faithful performance of that officer's or agent's duties
and offices.
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ARTICLE V
STOCK
5.1 CERTIFICATES. The shares of stock shall be represented by
consecutively numbered certificates signed in the name of the Corporation by its
president or a vice president and by the treasurer or an assistant treasurer or
by the secretary or an assistant secretary, and shall be sealed with the seal of
the Corporation, or with a facsimile thereof. Whenever any certificate is
countersigned or otherwise authenticated by a transfer agent or transfer clerk,
and by a registrar, then a facsimile of the signatures of the officers or
agents, the transfer agent or transfer clerk or the registrar of the Corporation
may be printed or lithographed upon the certificate in lieu of the actual
signatures. If the Corporation uses facsimile signatures of its officers and
agents on its stock certificates, it cannot act as the registrar of its own
stock, but its transfer agent and registrar may be identical if the institution
acting in those dual capacities countersigns or otherwise authenticates any
stock certificates in both capacities. In case any officer who has signed or
whose facsimile signature has been placed upon such certificate shall have
ceased to be such officer before such certificate is delivered by the
Corporation, the certificate or certificates may nevertheless be adopted by the
Corporation and be issued and delivered as though the person or persons who
signed the certificates, or whose facsimile signature has been used thereon, had
not ceased to be an officer of the Corporation. If the Corporation is authorized
to issue shares of more than one class or more than one series of any class,
each certificate shall set forth upon the face or back of the certificate or
shall state that the Corporation will furnish to any stockholder upon request
and without charge a full statement of the designations, preferences,
limitations, and relative rights of the shares of each class authorized to be
issued and, if the Corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series, so far as the same have been fixed and
determined, and the authority of the Board of Directors to fix and determine the
relative rights and preferences of subsequent series.
Each certificate representing shares shall state the following upon the
face thereof: the name of the state of the Corporation's organization; the name
of the person to whom issued; the number and class of shares and the designation
of the series, if any, which such certificate represents; the par value of each
share represented by such certificate or a statement that the shares are without
par value. Certificates of stock shall be in such form consistent with law as
shall be prescribed by the Board of Directors. No certificate shall be issued
until the shares represented thereby are fully paid.
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5.2 RECORD. A record shall be kept of the name of each person or other
entity holding the stock represented by each certificate for shares of the
Corporation issued, the number of shares represented by each such certificate,
the date thereof and, in the case of cancellation, the date of cancellation. The
person or other entity in whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof, and thus a holder of record of
such shares of stock, for all purposes as regards the Corporation.
5.3 CONSIDERATION FOR SHARES. Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof) as
shall be fixed from time to time by the Board of Directors. That part of the
surplus of the Corporation which is transferred to stated capital upon the
issuance of shares as a share dividend shall be deemed the consideration for the
issuance of such dividend shares. Such consideration may consist, in whole or in
part, of money, promissory notes, other property, tangible or intangible, or in
labor or services actually performed for the Corporation, contracts for services
to be performed or other securities of the Corporation.
5.4 CANCELLATION OF CERTIFICATES. All certificates surrendered to the
Corporation for transfer shall be canceled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of shares
shall have been surrendered and canceled, except as herein provided with respect
to lost, stolen, or destroyed certificates.
5.5 LOST CERTIFICATES. In case of the alleged loss, destruction, or
mutilation of a certificate of stock, the Board of Directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as it may prescribe. The Board of Directors may in its
discretion require a bond, in such form and amount and with such surety as it
may determine, before issuing a new certificate.
5.6 TRANSFER OF SHARES. Upon surrender to the Corporation or to a
transfer agent of the Corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, and such documentary stamps as may be required by law, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock shall be
entered on the stock book of the Corporation which shall be kept at its
principal office or by its registrar duly appointed.
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof, and accordingly shall not be bound
to recognize any equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express or other notice
thereof, except as may be required by the laws of Nevada.
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5.7 TRANSFER AGENTS, REGISTRARS, AND PAYING AGENTS. The Board may at
its discretion appoint one or more transfer agents, registrars, and agents for
making payment upon any class of stock, bond, debenture, or other security of
the Corporation. Such agents and registrars may be located either within or
outside Nevada. They shall have such rights and duties and shall be entitled to
such compensation as may be agreed.
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
6.1 INDEMNIFICATION; ADVANCEMENT OF EXPENSES. To the fullest extent
permitted by the laws of the State of Nevada (currently set forth in NRS
78.751), as the same now exists or may hereafter be amended or supplemented, the
Corporation shall indemnify its directors and officers, including payment of
expenses as they are incurred and in advance of the final disposition of any
action, suit, or proceeding. Employees, agents, and other persons may be
similarly indemnified by the Corporation, including advancement of expenses, in
such case or cases and to the extent set forth in a resolution or resolutions
adopted by the Board of Directors. No amendment of this Section shall have any
effect on indemnification or advancement of expenses relating to any event
arising prior to the date of such amendment.
6.2 INSURANCE AND OTHER FINANCIAL ARRANGEMENTS AGAINST LIABILITY OF
DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS. To the fullest extent permitted by
the laws of the State of Nevada (currently set forth in NRS 78.752), as the same
now exists or may hereafter be amended or supplemented, the Corporation may
purchase and maintain insurance and make other financial arrangements on behalf
of any person who is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, for any liability asserted against such
person and liability and expense incurred by such person in its capacity as a
director, officer, employee, or agent, or arising out of such person's status as
such, whether or not the Corporation has the authority to indemnify such person
against such liability and expenses.
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ARTICLE VII
ACQUISITION OF CONTROLLING INTEREST
7.1 ACQUISITION OF CONTROLLING INTEREST. The provisions of the General
Corporation Law of Nevada pertaining to the acquisition of a controlling
interest (currently set forth NRS 78.378 to 78.3793, inclusive), as the same now
exists or may hereafter be amended or supplemented, shall not apply to the
Corporation.
ARTICLE VIII
EXECUTION OF INSTRUMENTS; LOANS, CHECKS AND ENDORSEMENTS;
DEPOSITS; PROXIES
8.1 EXECUTION OF INSTRUMENTS. The president or any vice president shall
have the power to execute and deliver on behalf of and in the name of the
Corporation any instrument requiring the signature of an officer of the
Corporation, except as otherwise provided in these Bylaws or where the execution
and delivery thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the Corporation. Unless authorized to do so by
these Bylaws or by the Board of Directors, no officer, agent, or employee shall
have any power or authority to bind the Corporation in any way, to pledge its
credit, or to render it liable pecuniarily for any purpose or in any amount.
8.2 LOANS. The Corporation may lend money to, guarantee the obligations
of, and otherwise assist directors, officers, and employees of the Corporation,
or directors of another corporation of which the Corporation owns a majority of
the voting stock, only upon compliance with the requirements of the General
Corporation Law of Nevada.
No loans shall be contracted on behalf of the Corporation and no
evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be general or confined
to specific instances.
8.3 CHECKS AND ENDORSEMENTS. All checks, drafts, or other orders for
the payment of money, obligations, notes, or other evidences of indebtedness,
bills of lading, warehouse receipts, trade acceptances, and other such
instruments shall be signed or endorsed by such officers or agents of the
Corporation as shall from time to time be determined by resolution of the Board
of Directors, which resolution may provide for the use of facsimile signatures.
8.4 DEPOSITS. All funds of the Corporation not otherwise employed shall
be deposited from time to time to the Corporation's credit in such banks or
other depositories as shall from time to time be determined by resolution of the
Board of Directors, which
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<PAGE>
resolution may specify the officers or agents of the Corporation who shall have
the power, and the manner in which such power shall be exercised, to make such
deposits and to endorse, assign, and deliver for collection and deposit checks,
drafts, and other orders for the payment of money payable to the Corporation or
its order.
8.5 PROXIES. Unless otherwise provided by resolution adopted by the
Board of Directors, the president or any vice president may from time to time
appoint one or more agents or attorneys-in-fact of the Corporation, in the name
and on behalf of the Corpora tion, to cast the votes which the Corporation may
be entitled to cast as the holder of stock or other securities in any other
corporation, association, or other entity any of whose stock or other securities
may be held by the Corporation, at meetings of the holders of the stock or other
securities of such other corporation, association, or other entity or to consent
in writing, in the name of the Corporation as such holder, to any action by such
other corpora tion, association, or other entity, and may instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent, and may execute or cause to be executed in the name and on behalf of
the Corporation and under its corporate seal, or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the premises.
8.6 CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
ARTICLE IX
MISCELLANEOUS
9.1 WAIVERS OF NOTICE. Whenever notice is required by the General
Corporation Law of Nevada, by the Articles of Incorporation, or by these Bylaws,
a waiver thereof in writing signed by the director, stockholder, or other person
entitled to said notice, whether before, at, or after the time stated therein,
or his appearance at such meeting in person or (in the case of a stockholders'
meeting) by proxy, shall be equivalent to such notice.
9.2 CORPORATE SEAL. The Board of Directors may adopt a seal circular in
form and bearing the name of the Corporation, the state of its incorporation,
and the word "Seal" which, when adopted, shall constitute the seal of the
Corporation. The seal may be used by causing it or a facsimile of it to be
impressed, affixed, manually reproduced, or rubber stamped with indelible ink.
9.3 FISCAL YEAR. The Board of Directors may, by resolution, adopt a
fiscal year for the Corporation.
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9.4 AMENDMENT OF BYLAWS. The provisions of these Bylaws may at any
time, and from time to time, be amended, supplemented or repealed by the Board
of Directors.
9.5 UNIFORMITY OF INTERPRETATION AND SEVERABILITY. These Bylaws shall
be so interpreted and construed as to conform to the Articles of Incorporation
and the laws of the State of Nevada or of any other state in which conformity
may become necessary by reason of the qualification of the Corporation to do
business in such state, and where conflict between these Bylaws, the Articles of
Incorporation or the laws of such a state has arisen or shall arise, these
Bylaws shall be considered to be modified to the extent, but only to the extent,
conformity shall require. If any provision hereof or the application thereof
shall be deemed to be invalid by reason of the foregoing sentence, such
invalidity shall not affect the validity of the remainder of these Bylaws
without the invalid provision or the application thereof, and the provisions of
these Bylaws are declared to be severable.
9.6 EMERGENCY BYLAWS. Subject to repeal or change by action of the
stockholders, the Board of Directors may adopt emergency bylaws in accordance
with and pursuant to the provisions of the laws of the State of Nevada.
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SECRETARY'S CERTIFICATION
The undersigned Secretary of Rimpac Resources Ltd. (the "Corporation")
hereby certifies that the foregoing Bylaws are the Bylaws of the Corporation
adopted by the Board of Directors as of the 27th day of January, 1998.
By/s/LEROY HALTERMAN
Leroy Halterman
Secretary
K:\FMM\RIMPAC\BYLAWS.WPD
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EXHIBIT 10.1
Assignment of Lease and Purchase Option
between the Company and Leroy Halterman dated March
22, 1998
<PAGE>
ASSIGNMENT OF LEASE AND PURCHASE OPTION
1. PARTIES. This Assignment is made as of March 22, 1998, between Leroy
Halterman (the "Assignor"), and Rimpac Resources Ltd., a Nevada corporation,
with principal offices at 11930 Menaul NE, Suite 219, Albuquerque, New Mexico
87112 (the "Assignee").
2. EXPLORATION PERMIT. Assignor has been issued a Mineral Exploration Permit
dated September 17, 1997 (the "Permit") by the State Land Department of the
State of Arizona (the "State"). A true and complete copy of the Permit is
attached as Exhibit A.
3. ASSIGNMENT AND ASSUMPTION.
a. ASSIGNMENT BY ASSIGNOR. Assignor assigns and transfers to Assignee
all of Assignor's rights and interest in the Permit and the land
described in the Permit. This Assignment is effective as of March 22,
1998 (the "Effective Date").
b. ASSUMPTION BY ASSIGNEE. Assignee assumes, as of the Effective Date,
all of the terms and obligations of the Permit that are imposed on
Assignor, and agrees to be bound by the provisions of the Permit as if
Assignee were a party to the Permit. Assignee will indemnify and hold
Assignor harmless against any claims or damages (including reasonable
attorneys' fees) arising out of Assignee's default in performing the
terms of the Permit for the period on or after the Effective Date.
c. CONSIDERATION. In consideration for the transfer and assignment of
the Assignor's rights and interest in the Permit, Assignee agrees to:
1. Assume such terms and obligations of the Permit
imposed on Assignor; and
2. Issue five hundred thousand shares of the Assignee's
Common Stock (the "Shares") to Assignor.
Unless otherwise agreed or extended, Assignee shall issue the Shares no
later than the Effective Date.
4. ASSIGNOR'S REPRESENTATIONS.
a. FULL FORCE. Assignor represents and warrants that the Permit is in
full force and effect, and that, to Assignor's best knowledge, no
default is outstanding on either Assignor's or the State's part under
the Permit.
b. NO ENCUMBRANCES. Assignor represents and warrants that neither
Assignor's interest in the Permit nor the land described in the Permit
have been encumbered by Assignor or any prior tenant. In addition,
Assignor has the authority to assign the Permit, subject to Paragraph
12 of the Permit, and has not previously assigned or agreed to assign
the Permit.
<PAGE>
c. NO AMENDMENTS. Assignor represents and warrants that the Permit will
not be amended in any manner after the date of this Assignment.
d. TRUTH AT CLOSING. All of Assignor's representations and warranties
contained in this Paragraph 4 or otherwise contained in this Assignment
must be true as of the Effective Date. This condition is an express
condition to Assignee's obligations under this Assignment.
5. STATE'S CONSENT. The State's consent is required for the assignment of the
Permit, as stated in Paragraph 12 of the Permit. In the event the State
withholds its consent to the assignment of the Permit, this Assignment shall be
void and all parties hereto shall return any and all property received hereunder
to the party from which the property was received.
6. ASSIGNOR'S OBLIGATIONS.
a. VACANT PREMISES. Assignor agrees to deliver to Assignee actual
possession of the land described in the Permit on the Effective Date.
The land will be delivered vacant.
b. FURTHER INSTRUMENTS. Assignor will execute and deliver to Assignee
any further instruments and do such further acts as are necessary to
effectuate this Assignment, within reasonable request.
c. INDEMNIFICATION. Assignor will indemnify and hold Assignee harmless
against any claims or damages (including reasonable attorneys' fees)
arising out of Assignor's default in performing the terms of the Permit
for the period prior to the Effective Date.
7. GOVERNING LAW. This Agreement shall be governed by the laws of the State of
Nevada.
8. MODIFICATION. This Agreement shall only be modified by a writing signed by
all parties hereto.
ASSIGNOR:
/s/LEROY HALTERMAN
- -----------------------------------
Leroy Halterman
ASSIGNEE:
RIMPAC RESOURCES LTD.
By: /s/LEROY HALTERMAN
Leroy Halterman
President
K:\FMM\RIMPAC\ASSIGN.AGT
Page 2
<PAGE>
EXHIBIT 10.2
State Land Department, State of Arizona,
Mineral Exploration Permit No. 08-103044, dated September 17, 1997
<PAGE>
PERMIT NO. 08-103044
EFFECTIVE DATE SEPTEMBER 17, 1997
STATE LAND DEPARTMENT
STATE OF ARIZONA
MINERAL EXPLORATION PERMIT
THE STATE OF ARIZONA grants to LEROY HALTERMAN the exclusive right, for a period
of one (1) year from date, subject to renewals as hereinafter set forth, but in
no event beyond the 16TH day of SEPTEMBER , 2002 , to prospect for minerals on
the State land hereinafter described upon the following expressed conditions
which are a part of the permit.
1. The Permittee shall have those surface rights necessary for the prospecting
and exploration for mineral, but may remove from the land only that amount of
mineral required for sampling, assay and metallurgical testing purposes.
2. The Permittee shall have the right of ingress to and egress from the land
covered by the permit but only along routes first approved by the State Land
Commissioner.
3. The Permittee shall be liable to and shall compensate the owner and lessee of
the surface of the State land covered by this permit, or across which the
Permittee exercises the right of ingress and egress, for any loss to such owner
and lessee from damage or destruction caused by the Permittee, his or its agents
or employees, to grasses, forage, crops or improvements upon such State land.
4. This permit shall terminate automatically, as of the end of any annual period
from and after the date of issuance thereof unless during such annual period the
Permittee shall have expended in exploration for valuable mineral deposits on
the Subject Land covered by this Permit the prescribed amount per acre, file an
application for renewal and submit proof of the amount expended on exploration.
The amount to be expended during each of the first two (2) annual periods in
which this permit may be in effect shall not be less than ten dollars ($10.00)
for each acre of land covered by this permit at the commencement of such annual
period, and the amount to be expended during each of the last three annual
periods in which this Permit may be in effect shall be not less than twenty
dollars ($20.00) for each acre covered by this Permit at the commencement of
such annual period.
5. Prior to the termination of any annual period, the Permittee may file a
release with the State Land Department, releasing acreage covered by this
permit, provided that the acreage released be contained within one or more
rectangular subdivisions of twenty (20) acres more or less, or lots, according
to the lines of the public land survey.
6. Upon any partial or total relinquishment, or the cancellation or expiration
of the permit, other than by issuance of a mineral lease, the Permittee shall
fill any holes, ditches, or other excavations as
<PAGE>
may be required by the State Land Commissioner and so far as reasonably
possible, restore the surface to its former condition.
7. The Permittee may, prior to expiration of the annual period for which the
permit was issued, or prior to the expiration period for which this permit was
renewed, file with the State Land Department an application for renewal for the
ensuing annual period. This permit shall not be renewed for more than four (4)
successive annual periods following expiration of the first annual period.
8. No rental shall be payable for the first annual period for which the permit
may be renewed. The rental for each of the three (3) subsequent annual periods
following the first annual period for which a permit may be renewed, shall be
one dollar ($1.00) for each acre of State land for which the application for
renewal is filed.
9. The Permittee shall file an affidavit of expenditure of the required amount
in exploration during the current annual period, together with proof in support
of such expenditure.
10. Following discovery of a valuable mineral deposit on the State land covered
by this permit within a rectangular subdivision of twenty (20) acres, more or
less, or lot, of the public land survey, the Permittee may apply to the State
Land Commissioner for a mineral lease upon the State land within such
rectangular subdivision, or lot.
11. This permit is subject to existing laws and rules and regulations and any
laws or rules and regulations hereinafter enacted, or adopted, and in no event
shall the State be liable for damages or otherwise under the provisions hereof.
12. The Permittee shall not assign or sub-let this mineral exploration permit,
or any right or rights thereunder, without first obtaining the written consent
of the State Land Commissioner thereto.
In order to minimize or prevent surface or underground waste and pollution and
promote maximum conservation, the Permittee shall seal or separate oil, gas,
helium, water, mineral or other natural resource strata in order to prevent
their contents from passing into another stratum.
The Lessee agrees to indemnify, hold and save Lessor harmless against all loss,
damage, liability, expense, costs and charges incident to or resulting in any
way from any injuries to person or damage to property caused by or resulting
from the use, condition or occupation of the land.
The Permittee shall not, for exploration purposes, enter upon that part of the
permitted area encompassed by rights-of-way and permits granted to the Arizona
State Highway Department without the express written permission of the State
Highway Engineer and not then until the State Land Commissioner has, in writing,
approved such entry.
The Permittee agrees that any mineral lease of a claim issued as a result of
exploratory activity under this permit shall contain an additional and special
condition denying the Lessee entry to the area encompassed by those
rights-of-way and permits mentioned next above for the purposes of extracting
and shipping mineral unless and until the State Highway Engineer has given
express written permission and not then until the State Land Commissioner has,
in writing, approved such entry.
If at any time during the duration of the permit, the whole or any part of the
permitted premises shall
2
<PAGE>
be taken for any quasi-public or public purpose by any person, private or public
corporation, or any governmental agency having authority to exercise the power
of eminent domain or condemnation proceedings pursuant to any law, general,
special or otherwise, this permit shall expire on the date when the permitted
propety shall be so taken or acquired and the Permittee shall have no
compensable right or interest in the real property being condemned and shall
have no compensable right or interest in severance damages which may accrue to
the remaining permitted proerty not acquired by condemnation proceedings. Net
rent to be paid by the tenant shall be apportioned and paid to the date of such
taking.
The State shall be entitled to and shall receive any and all awards, including
severance damages to remaining State lands, that may be made for any eminent
domain or condemnation proceedings concerning the land which is the subject of
this permit, except that the Permittee shall have the right to receive any and
all awards or payments made for any buildings or other improvements lawfully
placed on the subject property by the Permittee with the approval of the State
Land Department.
This permit is issued for such leasable minerals now owned by the State of
Arizona and in regard to which there has been no reservation by a predecessor in
title to the State of Arizona.
Federal records may or may not reflect mineral interest claims that pre-date the
State's claim to some or all of these lands; the State does not warrant that it
owns the minerals sought to be prospected under this permit.
This permit issued subject to all the rights of the owner of the non-mineral
land estate.
Provided however, in regard to those parcels of State lands sold under the
provisions of ARS 37-231, providing for a reservation of minerals to the State,
there shall be no entry upon such lands by an Arizona State Land Department
lessee or permittee without express written approval of the Arizona State Land
Commissioner following compliance with Arizona State Land Department Rule
#12-5-707D by such lessee or permittee.
"Before significant earth movement may commence, the Lessee or Permittee hereof
shall satisfy the Arizona State Land Department, in writing, that no significant
cultural, historical, antiquity or archaeological values will be destroyed, and,
in the event such values will be destroyed, that proper mitigation measures have
been agreed upon between said Lessee or Permittee and the Arizona State Land
Department, and further said Lessee or Permittee shall report all of such values
as they are later discovered after such approval is given initially."
NOTICE OF STATE AUTHORITY TO CANCEL THIS CONTRACT:
A. The State may cancel any contract, without penalty or further obligation,
made after September 4, 1978 by the State or any of its departments or agencies
if any person significantly involved in initiating, negotiating, securing,
drafting or creating the contract on behalf of the State or any of its
departments or agencies is, at any time while the contract or any extension of
the contract is in effect, an employee of any other party to the contract in any
capacity or a consultant to any other party of the contract with respect to the
subject matter of the contract.
B. This contract is subject to cancellation pursuant to A.R.S. 38-511.
3
<PAGE>
NATIVE PLANT LAW:
If the removal of plants protected under the Arizona Native Plant Law is
necessary to enjoy the privilege of this document, the Permittee hereunder must
previously acquire the written permission of the Arizona State Land Department
and the Arizona Department of Agriculture to remove those plants.
ADDITIONAL CONDITION
PRIOR TO THE BEGINNING OF ANY EXPLORATION, A PLAN OF OPERATIONS AND RESTORATION
MUST BE FILED WITH THE STATE LAND DEPARTMENT AND APPROVED BY THE STATE LAND
COMMISSIONER OR HIS DEPUTY.
4
<PAGE>
DESCRIPTION OF LAND LEASED CONTAINED IN LEASE SUPPLEMENT ATTACHED HERETO AND
MADE A PART HEREOF.
/s/LEROY HALTERMAN
----------------------------------
Permittee Signature
----------------------------------
Permittee Signature
Signed in the County of BERNALILLO, State of NEW MEXICO, on the 17TH day of
SEPTEMBER, 1997.
/S/[UNKNOWN]
- --------------------------------
Notary Public
(SEAL)
My commission expires:APRIL 25, 1999
(SEAL)
STATE LAND DEPARTMENT
BY/S/[UNKNOWN]
State Land Commissioner
<PAGE>
EXHIBIT 10.3
Goldstone Prospect, Cochise County, Arizona, Section 28,
T20S R23E, A Gold Prospect, dated December 15, 1997, prepared by Leroy
Halterman CPG, RPG, Consulting Geologist
<PAGE>
GOLDSTONE PROSPECT
COCHISE COUNTY, ARIZONA
SECTION 28, T20S R23E
A Gold Prospect
December 15, 1997
Prepared by Leroy Halterman CPG, RPG
Consulting Geologist
11930 Menaul NE, suite 219
Albuquerque, New Mexico 87112
<PAGE>
TABLE OF CONTENTS
Executive Summary 1
Location, Access, Vegetation, and Topography 2
Land Status 2
Previous Exploration Activities 5
Regional Geology 7
Local Geology and Stratigraphy 7
Structure 8
Geology-Epithermal Model 8
Geology-Other Models 10
Miscellaneous and Associated Sample Discussion 10
Conclusions 13
Recommendations 14
Recommended Program Budgets 16
Certificate of Qualification 17
FIGURES
Project Location Map 3
Prospecting Permit Location 4
Mineral Reserve Polygon Map 6
Epithermal Model 9
<PAGE>
<PAGE>
GOLDSTONE PROSPECT REPORT
COCHISE COUNTY, ARIZONA
DECEMBER, 1997
EXECUTIVE SUMMARY
This report was prepared at the request of for the owners of the Goldstone
Arizona State Prospecting Permits. It is based on both numerous past visits to
the property the most recent being recent one that took place in August 1997.
The work performed on this property included field mapping, sampling,
geochemical and geophysical surveys and supervising drilling programs and report
preparation. The report not only included the author's observations and data but
also pertinent factual and interpretative data from past permitees and joint
venture operators. All of the aforementioned information and data was integrated
into this report.
The property totals approximately 160 acres more or less that includes all of
north half of the southwest quarter and south half of the northwest quarter of
section 28, T20S, R23E and consists of an Arizona State Prospecting Permit. The
prospecting permits require an annual rental payment of $l per acre per year and
a $100 filing fee per permit per year. There is an annual work requirement of
$10 per acre for the first two years and a $20 per acre for the final three
years. When the prospecting permits are convened to state leases, they will be
subject to a net value production royalty
The Goldstone property intermittently has been the site of precious metals
exploration for over the past 15 years. The surface has been geologically mapped
and sampled and limited drilling has taken place on selected areas of the
property. The subject of this report is an Arizona State Prospecting Permit that
occupies the north half of the southwest quarter and south half of the northwest
quarter of Section 28 T20S R23E that has received a large portion of this
drilling. One near surface mineral body has been located that contains drill
indicates proven gold reserves of 100,632 ton containing 9,252 ounces and this
mineral body still remains open in several directions. In addition to this
mineral body, other significant surface mineralization occurs on the permit area
that may be extensions of the mineral body or associated pods that would
increase the permit's drill proven reserves significantly and to an economic
level. It should also be noted that the quarter section held under the
prospecting permit and described in this report appears to be the center of the
mineralization for this area. The strongest alteration, mineralization, and gold
values are located on this permit. In addition, Phelps Dodge Corporation and
another company hold the surrounding permits and have held them for a number of
years indicating a strong interest in the area.
In late 1995 seven holes were drilled away from the mineral body by Sunshine
Mining. Most of these holes did not intercept significant mineralization.
However, one hole that was drilled to test the possibility of mineralization
along the range front fault did intercept a thick low grade interval from 200
feet to 260 feet that was associated with fault clays (argillic alteration?) and
quartz. This hole was never offset.
The author believes that this prospecting permit warrants further testing. A
geochemical survey should be ran over the area where the mineralized range-front
fault crosses the property to determine the best location for additional
drilling. Also, the shallow gold reserve and a number of areas of ore
<PAGE>
grade surface mineralization, remains untested in several directions and should
receive additional drilling to expand the size of the deposit and to find out if
the mineralization leads to a larger deposit laterally or at depth.
LOCATION, ACCESS, VEGETATION, AND TOPOGRAPH
The Goldstone prospect is located in the north half of the southwest quarter and
south half of the northwest quarter section 28 of T20S, R23E SE (Latitude 31 0
39' North, Longitude 110 0 00' West) Cochise County, Arizona. Elevation varies
between 4,600 and 5,000 feet The closest major habitation is the historic town
of Tombstone which is three miles northwest of he property The nearest
commercial air service Is Tucson, Arizona, approximately 60 miles northwest of
the prospect (Figure I). It should be noted that Tombstone was a major producer
of silver, gold, and lead from veins and replacement deposits Production from
these mines totaled over 30 million ounces of silver and 200,000 ounces of gold.
The northern portion of the Goldstone property is most easily accessed by
traveling south on highway 80 from Tombstone for three miles, then proceeding
east on a paved road for two miles towards McNeil, and then turning south on an
unimproved dirt road immediately after one passes through a cattle-guard. Th
northern edge of the prospect lies approximately two thousand feet south of the
paved road
The topography in the prospect area is moderately hilly to flat, with primitive
roads crossing most of the low-lying terrain. Vegetation consists of sparse
desert grasses, cactus yucca, creosote bushes, cat claw, and occasional mesquite
trees and ocotia. Mild arid winters make year-around operations possible,
although mid-summer temperatures are somewhat distressing for both men and
machines.
LAND STATUS
The property totals approximately 160 acres more or less and includes all of
north half of the southwest quarter and south half of the northwest quarter of
section 28, T20S, R23E and consists of an Arizona State Prospecting Permit
(Figure 2). Details of permit number 08-103044 are as follows:
I State of Arizona Prospecting permit No. 08- 103044, N/2 SW/4,
and S/2NW/4 Section 28, Township 20 South, Range 23 East,
Cochise County, Arizona. Expiration date: September 16, 2002.
The prospecting permits require an annual rental payment of $l per acre per year
and a $100 filing fee per year. There is an annual work requirement of $10 per
acre for the first two years and a $20 per acre for the final three years. When
the prospecting permits are converted to state mining leases, they will be
subject to a net value production royalty.
2
<PAGE>
[FIGURE 1 - GOLDSTONE PROJECT LOCATION MAP]
3
<PAGE>
[FIGURE 2 - MAP OF SECTION 28, T20S R23E, COCHISE COUNTY,
AZ WITH LOCATION OF ARIZONA PROSPECTING PERMIT #08-103044]
4
<PAGE>
The surrounding leases are held by Phelps Dodge Corporation and by another
company JABA that is believed to be involved in a joint venture with Phelps
Dodge Corporation. Phelps Dodge has performed extensive geophysics on their
leases and have continued to hold them and re-acquire them for a number of
years. Speculation is that these leases are not only being held for their gold
potential but also for a deep copper/molybdenum porphyry type of deposit.
PREVIOUS EXPLORATION ACTIVITIES
During the past 15 years a number of companies have performed various
exploration activities on the area of this permit and on the areas that surround
this permit. The work performed included field mapping, sampling, geochemical,
and geophysical surveys, drilling programs and summary reports. These past
activities and reports have served to provide the factual and interpretative
data used to prepare this report and the author has received permission from the
former permitees to use this information in this report. From this information
it is apparent that the most significant discoveries took place on the permit
area described in this report, north half of the southwest quarter and south
half of the northwest quarter of section 28, T20S R23E. As previously stated
this area has been the focus of most of the past drilling which has discovered a
partially drilled out gold mineral body and several other prospective targets.
The near surface mineral body that has been located under the permit area
contains drill indicates proven gold reserves of 100,632 ton containing 9,252
ounces and this mineral body still remains open in several directions (Table I,
Figure 3). The other prospective targets are the mineralized hole drilled by
Sunshine Mining along the range-front fault and surface mineralization that has
yet to be drill tested. Some of this mineralization may be untested extensions
or associate pods of the gold mineral body that has already been partially
drilled-out.
<TABLE>
TABLE I
GOLDSTONE PROSPECT GOLD RESERVE SUMMARY
<CAPTION>
HOLE # Depth True Thick True Grade Area Vol. Vol. Tons Ounce
DEPTH NESS THICK OZ/TON ORE/YD WASTE GOLD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
28-4 0 0 10 10 .069 7220 2674 0 5776 398
20 20 10 10 .041 7220 2674 2574 5776 236
28-3 50 50 20 20 .047 9701 7185 17964 15521 729
89-1 25 25 5 5 .098 14334 2654 13272 5733 561
89-2 45 45 5 5 .085 9013 1669 15021 3605 306
90-2 0 0 45 40.8 .182 9485 14332 0 30959 5634
90-3 25 22.7 10 9.1 .077 9566 3224 8025 6964 531
90-4 15 13.6 20 18.2 .031 6515 4391 3281 9485 294
90-5 15 13.6 10 9.1 .041 11377 3834 5726 8200 336
90-6 0 0 10 9.1 .024 11832 3988 0 8613 207
Total 100632 9252
</TABLE>
5
<PAGE>
[FIGURE 3 - GOLDSTONER PROSPECT GOLD RESERVE SUMMARY]
6
<PAGE>
REGIONAL GEOLOGY
The Goldstone prospect lies along the axis and slightly west of the deepest
portion of the Sonoran geosyncline in an area known as the Pedregosa Basin. It
also lies within a belt of north-northwest tending mountain ranges that are
separated by broad alluvial-filled valleys that extend from the Colorado Plateau
in central Arizona to Sonora, Mexico. Regional tectonic compression in the area
began in the late Cretaceous and lasted through the Tertiary Laramide orogeny
and was directed northeast southwest. Release after the compression was
accomplished by north-northwest trending folding and by faulting along abundant
northwest trending low angle thrust which, in places, steepen to become
high-angle reverse faults. During the middle Tertiary, extension produced the
present basin and range topography the deformation dominated by movement along
normal faults in several orientations. Intrusions and extrusions of igneous
rocks accompanied this movement.
LOCAL GEOLOGY AND STRATIGRAPHY
The prospect area itself is underlain by a relatively thick blanket of Paleozoic
and Mesozoic sediments with outcrops of predominately Permian Colina Limestone
on the surface and small Tertiary rhyolitic intrusives, that are the only other
outcropping rocks. They are located in and along the west section line of
section 28 and 29, T20S, R23E and the south half of the northwest quarter of
section 28, T20S, R23E. These two identical intrusives lie approximately 1,000
feet apart and are relatively close to the surface; subsurface connection may
exist. Also, both of these intrusives are in close proximity to both high-grade
vein and lower grade replacement mineralization. A nearby rhyolite intrusive of
similar composition to the ones located on the Goldstone property has been age
dated at 63 million years.
Stratigraphically, only two Permian formations, the Earp Formation and the
Colina Limestone, will be discussed in this report. Their lithologies make them
favorable host for mineralization which makes them the only two targets large
enough to host significant economic gold deposit.
The Earp Formation is Pennsylvanian and Permian in age and does not outcrop on
the property. It is composed of interbedded siltstone, sandstone, light-gray
limestone, and dolomite beds. To the west the limestone content is sparse.
However, to the east, of the Goldstone prospect area, the limestone content
increases up section. Consequently, moving up section, there is a transitional
contact rather than a sharp contact between the Colina Limestone and the Earp
Formation. In the nearby Tombstone hills, a 584-foot section of Earp Formation
was measured.
The Permian Colina Limestone is composed of limestones, silty limestone, thin
shale units, siltstone, and dolomite beds. The sediments are generally medium
tannish gray to gray, and the limestone is often fossiliferous and contains
light to dark gray chert nodules. These characteristics of being fossiliferous
and/or containing chert can be used for correlation. Some beds vary from weak to
moderately feted along with having a medium dark gray color which may also help
with correlation. Deformation of the sediments has occurred though folding and
faulting The Colina Limestone probably approaches its maximum thickness of 650
feet on the property. In the nearby Tombstone hills, a 633-foot section of
Colina Formation was measured
7
<PAGE>
STRUCTURE
Within the prospect area, the overall structure consists of gently dipping beds
in various orientations, mainly to the north and east, with variations in dip
caused by gentle folding, within the fault blocks, and by gentle to moderate
rotation between fault blocks. The faults are normal faults associated with
middle Tertiary deformation
Locally, numerous structures have been identified on the prospect. All of the
major and many of the minor structures have large jasperoid type of
silicification and anomalous gold. Outcrops of these generally are linear,
exhibiting selective bed replacement which make bold outcrops Where cross
structures intersect these large fractures, silicified breccia may he found and
the size of the silicified area expands along the trend of the cross-structures
The strongest structural trend is along the regional northwest-southeast fabric.
The secondary and weaker trend is northeast southwest. Dips on both of these
structural trends are near vertical. The only exception on the property is the
low angle of 5 to 10 degree movements noted in section 34 near the Zebra Rock.
GEOLOGY-EPITHERMAL MODEL
The epithermal model has been used to explain the origin of many
low-temperature, disseminated precious-metal deposits and has been used numerous
times to successfully guide exploration for these types of deposits. Although
the Goldstone prospect has identified targets that conform to this model and
should be tested, this same model can be used to further explore the potential
for deeper targets. The prospecting permit areas itself as well as the area that
surrounds this permits have the characteristics of this model.
The epithermal model implies that a buried intrusive or other heat source acts
as a thermal pump to circulate meteoric waters. These fluids leach trace amounts
of metals from the country rock along their circulating path. The metal enriched
solutions then rise along the paths of least resistance and as the solutions
cool they precipitate their dissolved metal content along with other elements. A
vertical zonation of metals, gangue and alteration forms within this system. The
precious metals and their associated gangue are normally the last economically
important elements to precipitate. The precipitation is often associated with
boiling of these ascending solutions. In addition to gold and silver, barium,
arsenic, antimony and mercury are common pathfinder elements that also
precipitate in association with the precious metal mineralization. These
elements are used to assist in the exploration for hidden epithermal deposits
(figure 4).
Wall rock alteration and its zoning are important guides in exploration for
deposits within the epithermal system. In disseminated epithermal deposits, such
as those that may comprise the Goldstone prospect, silicification and argillic
alteration of the limestone along and near structures as well as fluorite,
arsenic and antimony compounds along with trace amounts of gold are common.
8
<PAGE>
[FIGURE 4 - CARLIN MODEL OF PRECIOUS METALS,
DISSEMINATED REPLACEMENT TYPE DEPOSIT]
9
<PAGE>
It should also be noted that many of the described characteristics of the
Goldstone property are present in the Tombstone mineral deposits. However, the
carbonate replacement deposits at Tombstone are within a different rock
formation. Also, because of the base metal content, these deposits were
evidently deposited below or at the bottom of the epithermal system, as we
understand it. At Goldstone, only three miles away, silver values are low but
gold values are high. This may indicate a district wide zonation that could have
important implications in an expanded exploration program.
GEOLOGY-OTHER MODELS
There appears to be some evidence that an intrusive-limestone contact
silicification model may also be present in the Zebra prospect. Personal
communication about recent work by Phelps Dodge has been directed towards a
SKARN MODEL. Some evidence of this may be the silicification associated with the
contact between the limestone and intrusive in section 28. Anomalous gold values
up to .29 ounces of gold per ton have been taken from the limited amount of
outcrop in the area. However, it is also possible that this contact between the
intrusive and the limestone served as a path for ascending auriferous solutions
much like a fault or fracture resulting in replacement and mineralization.
MINERALIZATION AND ASSOCIATED SAMPLE DISCUSSION
The mineralization at the Goldstone prospect can be divided into three groups
with a number of variations, characteristics, and associations. These three
types of mineralization are: I) jasperoid (silica) veins and veins with
associated breccia, 2) jasperoid bed replacements at structural intersections
and occasional associated breccia, and 3) jasperoid bed replacements. The last
two types of mineralization share many of the same characteristics and probably
represent a hybrid of the other The following is a brief discussion of each.
1. The first type of mineralization is the jasperoid (silica)
veins and veins with associated breccia that occur over the
mineral body in sections 28, just off the west section line of
28. A possible hybrid of this mineralization may occur off the
permit area in section 34 in the fault gouge and red silica
filling in section 34. It should also he noted that in the
case of mineralization in 28 and 29, both of these occurrences
lie within 1,000 feet of the two mapped rhyolite intrusives on
the property. Discrete veins, vein swarms, and occasionally
horsetailing, surrounded by relatively fresh limestone and
dolomite characterize this type of mineralization.
Occasionally, small-brecciated areas are found in these veins
when they are the widest and at structural intersections.
Examples of this type of mineralization are in the past
samples over the mineral body in section 28, +1 oz per ton
gold, sample #2124, 42 ppm, and sample #2124, 62 ppm. The last
sample, #2124, was taken in Section 34 of fault gouge and red
silica. Reportedly, past sampling by Mahogany Resources, found
veins of similar characteristics in this area that assayed 2/3
oz ton gold. The highest-grade mineralization is confined to
the dark brown to black silica and breccia. The over one
10
<PAGE>
ounce material occurs in dark brown to black silica breccia
where the breccia fragments are black and integrated into the
matrix
2. The second type of mineralization is jasperoid bed
replacements at structural intersections and occasional
associated breccia. White quartz flooding is common in these
bodies. This is the most common mineralization on the
property. The strongest structural trend parallels the NW
basin and range, range front faults with the minor, cross
trend, being northeast The size of these bodies vary from a
few tens of square feet to clusters extending over several
thousand square feet (west center of section 28). The silica
bodies are generally larger and trend in the northwest
direction and widen at the intersection of the lessor trend
Assays from these bodies vary from trace to several ppm.
However, the highest-grade material appears to be concentrated
in the areas of breccia that has a dark brown to black color.
Samples #2117 (10 ppm gold) and #2112(2.1 ppm gold) are
examples of this correlation with the color of the jasperoid
and gold content.
<TABLE>
TABLE 2
SAMPLES SUMMARIZED BY ROCK TYPE
<CAPTION>
ROCK TYPE Number of Samples Average ppm Au High ppm Au
<S> <C> <C> <C>
Dark Brown-black jasperoid breccia 3 4.2 10.00
Red-brown jasperoid breccia 6 0.47 1.3
Red-brown jasperoid and gray 7 0.73 2.7
Gray to cream minor red jasperoid 5 0.19 0.54
</TABLE>
3. The third the of mineralization, jasperoid bed replacement, is
best exhibited in section 28 and section 34 where the
so-called "Zebra Rock" occurs. However, it should be noted
that with the exception of mineralization of the vein type,
limited bed replacement occurs in all mineralized outcrops
In section 28 the mineralized bed occurs as an outcrop
approximately 200 feet long and 4 feet thick. This body trends
N 500 W, dipping 5 to I50 N, and is composed of modeled
red-gray, brown and white jasperoid. Sample #2114 taken at
this outcrop assayed .24 ppm gold. Also, surrounding this type
of minor mineralization in the mineral body located in section
28, much of the surrounding mineralization is the replacement
type but extends for a strike length of only a few tens of
feet.
Section 34, northeast of the southwest quarter is the best
example of the bed replacement type of mineralization and is
one of the locations of the so-called Zebra Rock. It is also
an area of associated intense fluorite mineralization
silicification and alteration of beds extending for up to 600
feet and is only limited because the dip of the beds has
either allowed the host bed to he truncated by erosion or dip
underneath the valley to the north.
11
<PAGE>
The Zebra Rock varies from two to four feet thick in outcrop
and is composed of alternate red jasperoid) and white (quartz
and fluorite) bands. These bands vary in thickness but are
generally l/8 to 1/4 inch. These replacement beds conform to
bedding and can be traced a considerable distance. Some areas
appear to exhibit an association with cross-structures but in
these instances the result is the widening of the body at that
point but not a focus of the body. It should also be noted
that in this area low angle movement occurs which could have
provided additional avenues for fluid migration. The Zebra
Rock is rich in fluorite and a recent sample #2121 assayed 1.9
ppm gold with 6~8% fluorite and 265 ppm arsenic. Limestone
beds in the area are medium bedded, one to three feet thick,
some are fossiliferous and many are feted
Fluorite occurs as vuggy crystalline fluorite and as
replacements associated with both silica replacements or as
silica replacement nodules surrounded by argillic material.
The fluorite is mostly white to purple, although some green
and brown in color. It appears that the small diggings in this
area were made to explore the fluorite and not gold. Sample
#2120, taken in one of these fluorite pits and assayed 1.4 ppm
gold, 27% fluorite and 50 ppm arsenic Although the 50 ppm
arsenic is relatively low for the property, it would preclude
any commercial value to fluorite.
In approximately 1981, Energy Reserve Croup (ERG), a former
permitee , had a University of New Mexico graduate student,
with help from his professor, examine and perform a detailed
microscopic examination of the Zebra Rock, His description
later modified by John Payne, a registered British Columbia
Engineer, is as follows:
AN EARLIER STAGE OF MINERALIZATION PRODUCED DEPOSITS OF
COLORLESS TO CREAM, IN PART BANDED CHALCEDONIC QUARTZ AS
FRACTURE FILLINGS AND REPLACEMENT. ELSE WBERE, THE DEPOSITS
HAVE A DISTINCTIVE BANDED "ZEBRA" TEXTURE WHICH GIVES THE
FORMER OWNERS THE NAME TO THE PROPERTY. THESE ZONES CONSIST OF
AN EARLY FORMED, EXTREMELY FINE GRAINED CHALCEDONIC QUARTZ
AGGREGATE, WHICH APPEARS TO HAVE CONTRACTED, PRODUCING A
SERIES OF CLOSELY SPACED-SUB PARALLEL FRACTURES ALONG WHICH
LATER SOLUTIONS DEPOSITED (INC TO MEDIUM GRAINED QUARTZ
AGGREGATES WITH EUHEDRAL CRYSTAL TERMINATIONS INTO THE OPEN
SPACES OF THE CAVITIES. THE EARLY-FORMED CHALCEDONY CONTAINS
ABUNDANT (UP TO 50%) PROPHYROBLAST OF SUBHEDRAL TO EUHEDRAL
FLUORITE AVERAGING 0.05-1.5 MM IN SIZE. THESE COMMONLY CONTAIN
ABUNDANT DUSTY HEMATITE, GIVING THE EARLY CHALCEDONIC LENSES A
PINK TO RED COLOR. LATER-FORMED QUARTZ COMMONLY CONTAINS DUSTY
OPAQUE INCLUSIONS, BUT THESE DO NOT SIGNIFICANTLY COLOR THE
QUARTZ. THE AGE OF THE FLUORITE PROPHYROBLASTS I UNCERTAIN BUT
THEY DO APPEAR TO BE A REPLACEMENT OF CHALCEDONY. CAVITIES ARE
PARTLY FILLED BY CLEAR QUARTZ WHICH CONTAINS NO OPAQUE
INCLUSIONS AND WHICH SHOW COMPLEX TWINNING, SUGGESTIVE OF LOW
TEMPERATURE FORMATION. OTHER CAVITIES ARE PARTLY FLIED WITH
EXTREMELY FINE GAINED AGGREGATES OF CALCITE, THAT SHOW CREAM
TO WHITE
12
<PAGE>
FLUORESCENCE UNDER ULTRAVIOLET LIGHT. IN A FEW SAMPLES,
VEINLETS OF WHITE QUARTZ CUT THE BANDED ZEBRA ROCK.
Coarser grained fracture-filling veins and replacement zones consist of variable
amounts of quartz, fluorite, calcite, and minor barite. Quartz is mainly
colorless to white, and forms clusters of euhedrally terminated crystals growing
into cavities. Fluorite forms massive, medium to coarse-grained aggregates with
colors from colorless and pale green to medium green, mauve, and purple. In
places veinlets of colorless to green fluorite cut purple fluorite.
Late solutions deposited thin, very fine-grained coatings of quartz in vugs in
massive fluorite. Fluorite is reported by ERG to occur locally with fluorite in
massive fracture-fillings veins. The presence of barite and the results of fluid
inclusions studies by ERG led them to conclude that intense boiling of the
hydrothermal solutions took place at this level in the deposit.
Results of some of the sampling by rock type both in the in and out of the
permit area of the Goldstone prospect taken by ERG-Noranda (1983), and Sunshine
(1995) are summarized in the following table.
<TABLE>
TABLE 3
COMBINED SUMMARY OF SAMPLES BY ROCK TYPES
<CAPTION>
COMPANY ROCK TYPE NUMBER OF SAMPLES AVERAGE PPM AU HIGH PPM AU
<S> <C> <C> <C> <C>
ERG Banded jasperoid 8 .80 2.35
Sunshine Banded jasperoid 1 1.90 1.90
ERG Chalcedony 6 .17 .31
ERG Altered limestone 2 .13 .13
Sunshine Altered Limestone 1 .02 .02
Sunshine Other Rock Types 2 1.01 1.40
Noranda Unknown 10 1.38 4.80
</TABLE>
CONCLUSIONS
The Goldstone prospect represents a large epithermal gold system that shares
many common characteristics with other systems that host disseminated gold
deposits in the western United States. First, they are initially a gold system.
Second, they contain high arsenic and/or antimony and other pathfinder elements.
Third, they are developed in carbonate rocks and carbonaceous sediments. Fourth,
they contain the structural setting for feeding large amounts of mineralizing
fluids into the host. Fifth, pervasive silica bodies and replacement bodies are
common. Sixth, they share a close proximity to other metalogenic occurrences
Unlike similar geological environment in Nevada, this area has received only
limited attention by the drill bit. Past programs have been guided by targeting
and offsetting known mineralization and daunted by limited funds that placed
more emphasis on the economic efficiency of the logistics of the drilling
program than the success of the program itself
The known mineralized trend on the Goldstone prospect parallels the northwest
trending range front faults trend and extends at least two miles along the
strike. All known significant mineralization occurs within one-half mile of the
range front. The most significant mineralization occurs within one-quarter mile
of this structure. This gives a strong indication that
13
<PAGE>
the source of the gold mineralization probably lies west at an unknown depth in
the valley just off the range front. However, the epithermal nature of the
mineralization also indicates that it would not lie at a great depth, unlike the
molybdenum/copper rich intrusive postulated to lie underneath the city of
Tombstone. This same northwest-southeast structural deformation is the
predominate trend of the structures that provided the primary pathways for the
known mineralization.
The highest-grade mineralization occurs in dark brown and black jasperoid and
jasperoid breccia. It is interesting to note that some of the best
mineralization in the Tombstone district occurs associated with manganese which
may be the black noted in the mineralization and not geothite as originally
suspected This stage of manganese rich mineralization was believed to be the
last stage of mineralization. However, other characterization of the
mineralization seems more tenuous. Red, iron oxide rich rock, tends to have more
mineralization than the gray-cream colored jasperoid and silicified limestone.
Little correlation was shown between gold values in the red jasperoid and the
red jasperoid breccia
There is also evidence of selective bed replacement along favorable host beds.
The strongest evidence of this type of mineralization is in section 34 where the
bed that accepted the "Zebra" mineralization. It is altered and can be traced
down dip for hundreds of feet where it dips underneath the valley and most
likely into the mineralizing structures and a potential ore body. In this same
area the beds appear to be more fossiliferous and weakly to moderately feted. It
is a well-known fact that both recrystallitation and/or dolomitization may
significantly increase porosity and permeability. The combination of potential
higher porosity and permeability from any of the aformentioned processes and the
reduction by organics, further enhanced by the structural preparation by a major
fault intersections, makes this an excellent target. Beds of similar
characteristics have been noted in section 28 in both outcrop and the
subsurface. This is of particular interest because mineralization occurred in
dark-colored (feted?) limestone or fossiliferous limestones in several drill
holes and not in silicified rocks.
RECOMMENDATIONS
PHASE I
The phase I program will be limited to defining drill targets for the Phase II
program. It is anticipated to cost approximately $20,000 US. The following
discussion gives a brief description of the phase I program.
1. Additional mapping to confirm earlier sampling in order to better
target drill holes, and to evaluate untested mineralized areas of
section 28. A number of areas of strong mineralization on Permit #
08-103044 have not been tested and may significantly add to the total
drill proven reserves.
2. Perform close spaced geochemical soil sampling across th trace of the
range-front fault that was found to carry thick low-grade
mineralization during the Sunshine Mining Drilling Program. This type
of sample would be would collect samples from approximately 1-2 feet
below the surface and have them tested for gold, silver, antimony,
14
<PAGE>
mercury and arsenic. In addition to this technique a new geochemical
technique called Enzyme Leach should be tested. This new technique has
recently been used with some success in tests and also in exploration.
This technique is called Enzyme-Leach and is based on an enzyme
reaction that preferentially leaches amorphous manganese oxides (MnO2).
Those oxides are commonly found as coatings on mineral grains,
particularly in the "B" horizon of zoned soils. Amorphous MnO2 is a
particularly effective trap for a wide variety of cations, ions, and
polar molecules. The association of halogens with many of the trapped
trace elements suggests transport to the surface as volatile halides or
oxyhalides, normally formed under highly oxidizing conditions. Such
conditions could occur in association with electrochemical cells
resulting from the oxidation of a metal deposit. Soil samples are
analyzed for up to 59 trace elements after leaching, by means of
inductively coupled plasma/mass spectrometry.
The Quaternary gravel that covers most of the prospect may limit the
usefulness of conventional soil geochemistry but test grids will have
to be surveyed, sampled and analyzed to determine its usefulness. The
Enzyme-Leach method may be a more useful geochemical tool. However,
more information and results from test and exploration programs that
are currently employing this technique needs to be analyzed to
determine if Enzyme-Leach is a cost-effective exploration tool. It
should be noted that because of the limited size of the fault trace on
this property. The cost of both techniques will not be excessive.
PHASE II PROGRAM
The phase II program will involve the offsetting the unoffset mineralized drill
holes on the edges of mineral body, offsetting other known mineralization,
offsetting the mineralization found by Sunshine Mining along the range-front
fault and testing geochemical targets. The holes that adjoin the mineral body
will be drilled to a depth of 150 feet while all of the other holes will be
drilled to a depth of 300 to 400. The approximate cost of this program would be
$80,000.
15
<PAGE>
<TABLE>
COST ESTIMATES PHASE I PROGRAM
<CAPTION>
Item Estimated Cost
<S> <C>
Sample 200 soil and 50 Enzyme -Leach samples, average $30/Sample $ 7,500
Sampling supplies 250 samples @ $2.00/ sample 500
Rock samples 50 samples @ $20/ sample 1,000
Geologist, 20 days @ $400/day 8,000
Per diem 15 days @ $100/day 1,500
Vehicle Mileage 2,000 @ $.45 / Mile 900
Miscelaneous and field supplies 600
-------
TOTAL PHASE I COST $20,000
</TABLE>
<TABLE>
ESTIMATED COST PHASE II PROGRAM
<CAPTION>
Item Estimated Cost
<S> <C>
Drilling
Mineral Body 10 holes 150 feet @ $14.00/ ft $21,000
Mineralized Outcrops 3 holes 300 ft. each /$14.00/ft. 12,600
Offset Sunshine Hole, 3 holes 300 ft. each/$14.00/ft 12,600
Test Geochemical Anomalies 2 holes 400 ft each./ $14.00/ft 11,200
Assaying, 480 samples $12.00 5,760
Geologist 25 days @ $400/ day 10,000
Per diem 30 days @ $100/ day 3,000
Vehicle 4000 miles @$.45/mile 1,800
Miscelaneous 2,000
-------
TOTAL PHASE II COST $79,960
TOTAL PHASE I & II COST $99,960
</TABLE>
16
<PAGE>
CERTIFICATE OF QUALIFICATIONS
I Leroy Halterman do hereby of 11930 Menaul NE, Suite 219, Albuquerque, New
Mexico 87112, do hereby certify:
1. I am a graduate of the University of Missouri at Rolla, formerly the
Missouri School of Mines and hold a Bachelor of Science in Geology.
2. I have been employed as an exploration geologist on a full time basis
since 1968.
3. I am a member of the American Institute of Professional geologist
(AIPG), Certified Professional Geologist #3444.
4. I am a Registered Geologist in the State of Wyoming, #1226.
5. The information contained in this report is based upon numerous field
trips to the subject property and work projects to evaluate the
property. This work was performed for the previous leasees or
assignees.
6. I consent to and authorize the use of the attached repor and my name in
the Company's Prospectus, Statement of Material Facts or other public
documents, providing the report is used in its entirety or any summary
thereof is approved by the author.
/s/LEROY HALTERMAN
Leroy Halterman, CPG #3444, RPG #1226
Dated at Albuquerque, New Mexico, the 15th day of December, 1997
17
<PAGE>
EXHIBIT 27
Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS, STATEMENTS OF OPERATIONS AND DEFICIT, STATEMENTS OF SHAREHOLDERS'
EQUITY, STATEMENTS OF CASH FLOWS, AND THE NOTES THERETO, WHICH MAY BE FOUND ON
PAGES F-1 THROUGH F-7 OF THE COMPANY'S FORM 10-SB, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-26-1998
<PERIOD-END> SEP-30-1999 DEC-31-1998
<EXCHANGE-RATE> 1 1
<CASH> 4,097 13,126
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 4,097 13,126
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 6,181 15,402
<CURRENT-LIABILITIES> 500 1,695
<BONDS> 0 0
0 0
0 0
<COMMON> 8,550 8,550
<OTHER-SE> (2,869) 5,157
<TOTAL-LIABILITY-AND-EQUITY> 6,181 15,402
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 8,026 19,005
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (8,026) (19,005)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (8,026) (19,005)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (8,026) (19,005)
<EPS-BASIC> (0.001) (0.004)
<EPS-DILUTED> (0.001) (0.004)
</TABLE>
