UNITED STATES
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 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file no. 0001063653
PEPPERMILL CAPITAL CORPORATION
----------------------------------------------
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
Nevada 98-0186841
------------------------------ -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2500-1177 W. Hastings Street
Vancouver, B. C., Canada V6E 2K3
- ---------------------------------------- ----------
(Address of Principal Executive Officer) (Zip Code)
(604) 684-3301
---------------------------
(ISSUER'S TELEPHONE NUMBER)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001 per share
----------------------------------------
(TITLE OF CLASS)
<PAGE>
TABLE OF CONTENTS
ITEM PAGE
PART 1
Item 1 Description of Business 3
Item 2 Management's Discussion and Analysis or Plan
of Operation 12
Item 3 Description and Location of the Star Claims 16
Item 4 Security Ownership of Certain Beneficial
Ownership and Management 16
Item 5 Directors, Executive Officers, Promoters and
Control Persons 18
Item 6 Executive Compensation 19
Item 7 Certain Relationships and Related Transactions 20
Item 8 Description of Securities 21
PART 11
Item 1 Market Price of and Dividends on the Registrant's
Common Equity and Other Stockholders Matters 23
Item 2 Legal Proceedings 24
Item 3 Disagreement With Accountants and Financial Disclosure 24
Item 4 Recent Sales of Unregistered Securities 24
Item 5 Indemnification of Directors and Officers 27
PART F/S
Financial Statements 28
PART 111
Item 1 Index to Exhibits 37
Item 2 Description of Exhibits 37
---------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference: None
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PART 1
Peppermill Capital Corporation (the "Registrant" or the "Company") is filing
this Form 10-SB on a voluntary basis to:
(1) provide current, public information to the investment community;
(2) to expand the availability of secondary trading exemptions under the
Blue Sky laws and thereby expand the trading market in the
Registrant's securities, and
(3) to comply with prerequisites for listing of the Registrant's
securities on NASDAQ.
ITEM 1. DESCRIPTION OF BUSINESS
HISTORICAL OVERVIEW OF THE REGISTRANT
Peppermill Capital Corporation, a Nevada corporation, was incorporated on
April 9, 1998. The Registrant has no subsidiaries and no affiliated companies.
The Registrant's executive offices are located at 2500 - 1177 West Hastings
Street, Vancouver, B. C., Canada, V6E 2K3.
The Registrant is in the development stage, being a company that is in the
early stages of exploration work and does not have any known mineral body or
mine facilities.
The Registrant is seeking a quotation on the OTC Bulletin Board. The
Registrant has filed a Form 15C-211 with NASD Regulations Inc. and received one
deficiency letter prior to January 4, 1999. Upon being deemed a registered
company, management anticipates again filing the necessary information and
documents with the NASD. The market maker for the Registrant is Emerson Bennett
& Associates, LLC, 6261 N.W. 6th Way, Suite 207, Fort Lauderdale, Florida, USA,
33309.
To management's knowledge, the Registrant has not been subject to
bankruptcy, receivership or any similar proceedings.
The Registrant is engaged in the exploration and development of mineral
properties. The Registrant presently has the mineral rights to certain mineral
claims located in the Princeton area of British Columbia, Canada. As noted
within this Form 10-SB, the Registrant has undertaken exploration activities on
its mineral claims in February, 1999 in order to maintain the claims in good
standing with the Gold Commission of British Columbia and to adhere to the
recommendations put forth in the June 16, 1998 geological report prepared by
James W. McLeod, P. Geo. as more fully described within this Form.
The Registrant has no revenue to date from the development of its mineral
claims, and its ability to effect its plans for the future will depend on the
availability of financing. Such financing will be required to develop its
mineral property to a stage where a decision can be made by management as to
whether an ore body exists and can be successfully brought into production. The
Registrant anticipates obtaining such funds from its directors and officers,
financial institutions or by way of the sale of its capital stock in the future
(see Part 1, Item 2 - "Plan of Operations"), but there can be no assurance that
the Registrant will be successful in obtaining
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additional capital for exploration activities from the sale of its capital stock
or in otherwise raising substantial capital.
PLANNED BUSINESS
In addition to exploring and developing its mineral claims, the Registrant
plans to expand its mineral properties through the purchase, staking or joint
venturing of other mineral properties. No other mineral claims have been
examined to date and no other parties have offered to joint venture the
Registrant's mineral properties or other properties. The Registrant is not
considering acquiring any other mineral claims from a related party; being a
director, officer or insider of the Registrant. (See Part 1, Item 2 -
Management's Discussion and Analysis or Plan of Operation").
Much of the discussion contained in this section is "forward looking".
Actual results may materially differ from the Registrant's plans as currently
contemplated.
Information concerning all the factors associated with the Registrant is
set forth in this Item 1 and in Items 2 and 3 below. FOR A COMPLETE
UNDERSTANDING OF SUCH FACTORS, THIS ENTIRE DOCUMENT, INCLUDING THE FINANCIAL
STATEMENTS AND THEIR ACCOMPANYING NOTES, SHOULD BE READ IN ITS ENTIRETY.
1. Exploration and Development of the Registrant's Mineral Claim
a. Description of the Mineral Claim
The Issuer has a 100% interest in certain mineral claims known as the Star
mineral claims situated 12 miles north of the Village of Princeton, British
Columbia, Canada. The Star claims were purchased for a total price of CDN $3,100
(US $ 2,129). The claim area may be located at latitude 49 degrees 38 minutes
north and longitude 120 degrees 38 minutes west on NTS Mapsheet 92H/10. The
mineral claims straddle Allison Creek between Borgeson and Dry lakes and
north-south trending Provincial Highway #5.
Access to the property is provided by traveling north from Princeton, B.C.
for 12 miles or south from the Town of Merritt, British Columbia for 37 miles on
Highway #5.
The property consists to eleven, contiguous located two post, lode mineral
claims which are listed as follows:
<TABLE>
<CAPTION>
Number of Record Assessment
Claim Name Units Number Due Date
---------- --------- ------ ----------
<S> <C> <C> <C>
Star & Star #1 2 353713 - 14 February 16, 2000
Star #3 - Star #6 4 353715 - 18 February 16, 2000
Star #7 - Star #11 5 356670 - 74 June 22, 2000
</TABLE>
The total number of units is 11. The claims area totals approximately 587
acres.
4
<PAGE>
b. History of the Star Claims and the Surrounding Region
The development of the adit on the Star Claims is not known but it likely
dates from the 1930's when the search for precious metals was at a peak. The
first work recorded on the claims was for a geochemical soil survey conducted in
1980 for Nufort Resources Inc. In 1987, James W. McLeod, P. Geo., performed
preliminary mapping, sampling and a limited VLF-EM survey and since that time no
further work has been performed on the Star Claims.
c. Regional Geology
The geology of the general area has been described by Members of the
Geological Survey of Canada and the British Columbia Ministry of Energy, Mines
and Petroleum Resources in their respective reports.
To summarize, the general area is underlain by the northerly trending
occurrence of Upper Triassic aged Nicola Group which is a eugeosynclinal belt of
predominantly tuffs and multicolored lava, minor argillite and limestone and the
possible contemporaneous Upper Triassic to Lower Jurassic aged plutonic rocks.
The next youngest rocks found to occur are the Jurassic or later aged Coast
Intrusions which are mainly as granodiorite and quartz monzonite. The next
youngest rocks in the general area are those assigned to the Lower Cretacious
aged Kingsvale Group which appear to be aerial to subaerial in depositional
environment and which are mainly tuffs, flows and minor sediments. The next
youngest rocks seen to occur in the general area are the Miocene or earlier aged
Princeton Group of rocks which are as varicolored andesite and basalt flows and
lahars and minor sediments, such as boulder conglomerate, grit sandstone and
siltstone. The youngest rock units observed in the general area are the
Pleistocene and Recent valley basalts (gabbro).
The Allison Creek valley in the vicinity of Borgeson Lake apparently is the
location of a major northerly trending fault. This fault trends sub-parallel to
the Summers creek fault which occurs approximately 3.5 miles to the east. These
faults are major features in length (north-south) and in places exhibit
considerable lateral extent as major features (brecciation) zones which may have
had considerable effect on the localization and concentration of mineralization
(alterations).
d. Local Geology
The portions of the Star Claims, so far examined by James McLeod, P.Geo.,
are underlain mainly by a medium-course grained quartz monzonite or granite
which are now thought to belong to the Upper Triassic to Lower Jurassic aged
Allison Lake plutonic suite which may be contemporaneous with the Nicola
volcanic suite found as host to so many of the mineral showings and deposits in
the general area.
A fine grained, dark green crystalline rock is found exposed in a number of
places on the Star Claims and may be Nicola volcanic occurrences. Also in
several places along the eastside of the Adit creek and to the northwest of the
Adit Zone is found occurring a very fine grained, black colored volcanic or dyke
rock transecting the enclosed rocks. This dyke may be of gabbroic composition
which is seen to be high in nickel, cobalt, chromium and magnesium.
5
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A strong east-west fracture which varied in dip from 10 degrees north to
vertical was observed in a number of locations on the Star Claims, especially
near the creek (Adit) which runs in front of the adit. At the adit a hanging
wall shear or fracture of N345/65E trend is evident.
The alteration minerals observed were chlorite, calcite, epidote, sericite
and possibly secondary potassium feldspar in some of the fractures or shear
zones. Although examination of the induction coupled plasma analysis (ICP)
results while rendering limited digestion and subsequently detectability do not
indicate a very significant increase in potassium.
Mineralization observed in order of decreasing abundance was pyrite,
sphalerite (dark colored - iron-rich), chalcopyrite and galena and particular
note should be made of the occurrence of gold and silver values in some of the
samples.
e. Positive Features of the Star Claims
A number of positive features have been revealed about the Star Claims by
both the 1980 geochemical soil survey and the preliminary fieldwork performed by
James McLeod in 1987 and these features are listed as follows:
i. In place sulphide mineralization consisting of pyrite, chalcopyrite
sphalerite and galena are found to carry significant gold and silver values
have been identified on the Star Claims. The values encountered to date
range as high as:
Copper 2.49%
Zinc 1.47%
Lead 0.08%
Gold 0.55 oz/ton
Silver 5.20 oz/ton
ii. A number of soil anomalies in the elements of copper, zinc, lead and silver
were indicated by the 1980 geochemical soil survey. Many of these anomalies
have not yet been explained, but all four elements, copper, zinc, lead and
silver appear anomalous in the vicinity of the adit, - only to the south,
across the creek. This may indicate a continuation of the mineralization to
the south.
iii. Favorable geology, structure, alternation and mineralization are evident
with the Star Claims area and may indicate economic base and precious metal
mineralization.
iv. The VLF-EM response along the creek about the Adit Zone suggests conductive
causes which are possibly related to mineralization and/or structure which
may lead to mineralization. The VLF/EM method should be utilized about
known mineralization and soil anomalies. A magnetometer survey should be
conducted in conjunction with the VLF-EM survey to assist in the
sub-surface mapping and the possibility of delineating basic or ultrabasic
rock occurrences.
v. The area covered by the Star Claims and particularly the area between
Borgeson Lake on the north and Dry Lake on the south is traversed by what
appears to be a deep, well defined fault or faults.
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f. Recommended Work Program on the Star Claims
In a geological report prepared for the Registrant by James W. McLeod, P.
Geo., and dated June 16, 1998 the following recommendations were made as to a
two phase exploration program undertaken to thoroughly test the Star Claims for
significant base and precious metal mineralization. McLeod indicated a number of
positive features in exploring the claims in the immediate future as follows:
"1. An excellent geological setting which has produced numerous
economically viable situations in the past.
2. The possibility of good underlying rock structure as indicated by the
positive results of the VLF-EM test.
3. In places moderate rock alteration is observed which may indicate a
hydrothermally active area.
4. Strong preliminary indications of previous and base metal
mineralization".
A two phase exploration program is recommended for the property. The
program is expected to take approximately two months to complete at an estimated
cost of CDN. $171,000 (US $141,000).
g. Principal Products
As stated above, the Registrant will be involved in the exploration and
development of its claims for the precious metals contained therein. None of the
Registrant's claims contain a known body of commercial ore and there is no
certainty that the exploration of the properties will result in discoveries of
commercial mineable quantities of ore. Most mineral properties do not result in
the discovery of commercially mineable deposits of ore.
h. Status of Publicly Announced New Products or Services
The Registrant has made no public announcements regarding is mineral claims
other than information furnished to potential investors in the capital stock of
the Registrant by way of an Offering Memorandum dated August 20, 1998.
i. Registrant's Recent Exploration Activities
The Registrant completed an exploration program on its mineral claims in
February 1999 that was undertaken by Mr. Edward Skoda, mining consultant. The
program, as performed and reported upon by Mr. Skoda comprised the following.
"In preparation for a proposed geological and geophysical survey, as per
the recommendations in the June 16, 1998 Geological Report by Mr. James W.
McLeod, P. Geo., line cutting and grid establishment was commenced on February
4, 1999.
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The baseline was brushed out and stations were horizontally chained-in
every 100 meters. Chaining was completed using 10 meter intervals and flagged.
The baseline totals were 1,581 meters.
The grid sampling lines were brushed out with stations horizontally
chained-in and flagged every 10 meters, for a total distance of 2,949 meters.
To date the combined gridding for the baseline and gridline layout is 4,530
meters as follows:
Base line with 10 meter intervals and 100 meters stations:
0 + 00S to 1 + 581S 1,581 meters
-----
STATION LAYOUT
0 + 00 South - 0 + 130 West 130 meters
0 + 00 South - 0 + 500 East 500 meters
0 + 100 South - 0 + 120 West 120 meters
0 + 100 South - 0 + 500 East 500 meters
0 + 200 South - 0 + 500 East 500 meters
0 + 474 South - 0 + 070 West 70 meters
0 + 584 South- 0 + 200 West 200 meters
Baseline offset @ 0 + 143 West
1 + 100 South - 0 + 175 East 175 meters
1 + 200 South - 0 + 140 East 140 meters
1 + 300 South - 0 + 140 East 140 meters
1 + 400 South - 0 + 120 East 120 meters
1 + 550 South - 0 + 170 East 170 meters
1 + 581 South - 0 + 184 East 184 meters
-----
2,949 meters
=====
Total Gridding 4,530 meters
=====
On February 8, 1999 the above exploration work was filed with the Ministry
of Energy and Mines under a Statement of Work, Section 29, 30, 31 and 50 of the
Minerals Act. All the Star claims were therefore maintained in good standing as
follows:
CLAIM TENURE
NAME NUMBER UNITS EXPIRY DATE
----- ------ ----- -----------
Star 353713 1 February 16, 2000
Star # 1 353714 1 February 16, 2000
Star # 3 353715 1 February 16, 2000
Star # 4 353716 1 February 16, 2000
Star # 5 353717 1 February 16, 2000
8
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Star # 6 353718 1 February 16, 2000
Star # 7 356670 1 June 22, 2000
Star # 8 356671 1 June 22, 2000
Star # 9 356672 1 June 22, 2000
Star # 10 356673 1 June 22, 2000
Star # 11 356674 1 June 22, 2000
--
TOTAL 11
==
j. Risk Inherent in Star Claims and Mineral Properties in General
There are certain inherent risks with mineral properties from the point of
view of the Registrant and its shareholders as follows:
1. The Star claims do not contain a known body of commercial ore and,
therefore, any future program conducted on the Star claims would be an
exploratory search for ore.
2. There is no certainty that any expenditures made in the exploration of the
Star claims will result in discoveries of commercial quantities of ore.
Most exploration projects do not result in the discovery of commercially
mineable deposits of ore.
3. Resource exploration and development is a speculative business, marked by a
number of significant risks including, among other things, unprofitable
effort resulting not only from the failure to discover mineral deposits but
from finding mineral deposits which, though present, are insufficient in
size or grade to return a profit from production. The marketability of any
minerals acquired or discovered may be affected by numerous factors which
are beyond its control and which cannot be accurately predicted, such as
market fluctuations, the proximity and capacity of milling facilities,
mineral markets and processing equipment, and such other factors as
government regulations, including regulations relating to royalties,
allowable production, importing and exporting of minerals, and
environmental protection. The mineral industry is intensely competitive and
the Registrant competes with other companies that have greater resources.
4. Mining operations generally involve a high degree of risk. Hazards such as
unusual or unexpected formations and other conditions are involved. The
Registrant may become subject to liability for pollution, cave-ins or
hazards against which it cannot insure or which it may not elect to insure.
The payment of such liabilities may have a material, adverse effect on the
Registrant's financial position.
5. Prior to commencing mining operations on any of its properties, which is
considered some years into the future, the Registrant must meet certain
stringent environmental requirements. Compliance with these requirements
may prove to be difficult and expensive. At the stage of development of the
Registrant, being essentially the establishment of a grid and taking soil
samples for assaying, the Registrant does not have any environmental
problems. It does not have to adhere to making applications with the
Minister of Natural Resources in order to obtain a work permit or having to
post a bond prior to any exploration work commencing.
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6. While the Registrant has obtained the usual industry standard title reports
with respect to the Star claims, this should not be construed as a
guarantee of title. The Star claims may be subject to prior unregistered
agreements or transfers or native land claims and title may be affected by
undetected defects. Certain of the units comprising the claims may be under
dispute and resolution of a dispute may result in the loss of some or all
of such units or a reduction in the Registrant's interest therein.
7. The Star claims have never been surveyed and, accordingly, the precise
location of the boundaries of the claims and ownership of mineral rights on
specific tracts of land comprising the claims may be in doubt.
OTHER MINERAL PROPERTIES
The Registrant has not identified any other mineral properties either for
staking or purchasing. It is contemplated that the Registrant will seek other
mineral properties in the near future in order to diversify its holdings into
other areas of interest and minerals. The Registrant has not as yet inaugurated
any steps towards the investigation of any mineral claims, and does not
presently have the financial capacity to do so. Any staking and/or purchasing of
mineral claims may involve the issuance of substantial blocks of the
Registrant's shares.
EMPLOYEES
As at February 28, 1999, the Registrant did not have any employees either
part time or full time.
The Registrant is not a party to any employment contracts or collective
bargaining agreements. The British Columbia area has a relatively large pool of
people experienced in exploration and development of mineral properties; being
mainly geologists and mining consultants. In addition, there is no lack of
people who have experience in working on the mineral claim either as laborers or
prospectors. The Registrant will use independent workers and consultants
initially since the exploration period in the Princeton area is limited to the
summer months and the Registrant does not wish to carry the extra expense of
having full time employees.
COMPETITION
There are numerous other mining companies, both large and small, in the
British Columbia area, including geological work undertaken by the Provincial
Government of British Columbia.
Management believes that the mining industry is at a low point in
development due to weakening mineral prices and a lack of capital being invested
into mining activities. With this inactivity there are various mineral claims
that have expired and are available for staking. On the other hand, there are
numerous small mining companies wishing to enter into a joint venture
arrangement with other mining companies. Accordingly, management does not
believe that competition will be a significant problem in its growth in the
immediate future.
The Provincial Government is not in direct competition with independent
mining companies since its main purpose is to assess the mineral potential of
certain areas in the Province and prepare annual reports detailing their
findings. This is an advantage to all independent mining
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companies since they are able to stake the properties reported on by the
Provincial Government unless the claims are owned by another party.
The exploration and development business is highly competitive and highly
fragmented, dominated by both large and small mining companies. Success will
largely be dependent on the Registrant's ability to attract talent from the
mining field. There is no assurance that the Registrant's mineral expansion
plans will be realized.
The Registrant faces well-established and well-funded competition. There
are many well-established, well-funded successful corporations with financial
resources greatly in excess of that available to the Registrant. Nevertheless,
management is confident that the Registrant will be able to compete effectively
on the basis of the potential precious metal reserves on the Registrant's
claims.
REPORTS TO SECURITY HOLDERS
Prior to filing this Form 10-SB, the Registrant has not been required to
deliver annual reports. To the extent that the Registrant is required to deliver
annual reports to security holders through its status of a reporting company,
the Registrant shall deliver annual reports. Also, to the extent the Registrant
is required to deliver annual reports by the rules or regulations of any
exchange upon which the Registrant's shares are traded, the Registrant shall
deliver annual reports. If the Registrant is not required to deliver annual
reports, the Registrant will not go to the expense of producing and delivering
such reports. If the Registrant is required to deliver annual reports, they will
contain audited financial statements as required.
Prior to the filing of this Form 10-SB, the Registrant has not filed
reports with the Securities and Exchange Commission. Once the Registrant becomes
a reporting company, management anticipates that Forms 3, 4, 5, 10K-SB, 10Q-SB,
8-K and Schedules 13D along with the appropriate proxy material will have to be
filed as they come due. If the Registrant issues additional shares, the
Registrant may file additional registration statements for those shares.
The public may read and copy any material of the Registrant files with the
Securities and Exchange Commission at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding the issuers that file electronically with the Commission. The Internet
address of the Commission's site is (http://www.sec.gov).
YEAR 2000 COMPUTER PROBLEMS
The Registrant is engaged in and dependent on computer technology in its
business operations. Many existing computer programs use only two digits to
identify a year in the date field; i.e., "98" instead of "1998". These programs
were designed and developed without considering the impact of the upcoming
change in the century, i.e., Year 2000. The Registrant uses computer software
programs and systems that are essential to its business operations. If not
corrected, many computer applications could fail or create erroneous results by
or at the Year 2000. The Registrant has:
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(i) diagnosed and repaired the existing and known Year 2000 problems in
its computer software and systems;
(ii) reviewed the possible contingent liabilities the Registrant may have
to third parties as a result of non-compliant systems; and
(iii)has examined the extent the Registrant depends on third parties whose
systems may not be Year 2000 compliant.
However, there may be untold numbers of unforeseen circumstances or unknown
factors which the Registrant has not yet identified, determined or anticipated
regarding the Year 2000 computer problems, and such problems could have a
material adverse affect on the Registrant's business operations and financial
condition. Consequently, the Registrant can give no assurance that the Year 2000
compliance can be fully achieved without costs and uncertainties that may
seriously and substantially adversely affect the Registrant's operations and
financial results.
In summary, the problem is a massive, pervasive, complex, world-wide
phenomena that could, in a worst-case scenario, totally shut down and destroy
the Registrant's business operations.
This discussion contains forward-looking statements regarding the
Registrant's Year 2000 problems and their effect on the Registrant. In this
regard, the Registrant is relying upon the "safe harbor" provided under the
Private Securities Litigation Reform Act of 1995 for protection from liabilities
in the event such statements are not proven accurate.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The discussion contained in this Item 2 is "forward looking" since it
includes, without limitation, statements regarding the Registrant's
expectations, beliefs, intentions or strategies regarding future business
operations and projected earnings from mining operations, which are subject to
may risks.
All forward-looking statements included in this document are based on
information available to the Registrant on the date hereof, and the Registrant
assumes no obligation to update any such forward-looking statements. The
Registrar's actual results may differ materially as a result of certain factors,
including those set forth hereafter and elsewhere in this Form 10-SB. Potential
investors should consider carefully the previously stated factors, as well as
the more detailed information contained elsewhere in this Form 10-SB, before
making a decision to invest in the common stock of the Registrant.
Actual work performed on the Star claims may differ from the recommended
work program as set forth in the geological report dated June 16, 1998 authored
by James W. McLeod, P. Geo.
The Registrant has not received revenues from operation during the two year
period immediately preceding the filing of this Form 10-SB.
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PLAN OF OPERATION
The Registrant has to date concentrated on the Star claims. In the future,
the Registrant will seek to investigate numerous other mining properties to
determine which ones are of merit and are of interest to the Registrant. Subject
to the availability of financing, the Registrant will seek to increase its
inventory of mineral properties and, if acceptable to management, enter into
joint venture agreements to develop mineral its properties. (See Part 1, Item 1
- - "Description of the Business"). The Registrant will seek to generate such
funds through the sale of securities and/or institutional financing. If an
underwriter can be found, a public offering of common stock will be considered;
alternatively the Registrant will seek to raise funds through a private offering
of securities to an institutional buyer or through a registered broker dealer.
The Registrant does not presently have any financing arranged for nor has any
underwriter yet expressed interest in such an offering, and there can be no
assurance that an underwriter can be found on terms acceptable to the
Registrant. In the absence of such financing, the Registrant may be unable to
put its plans into effect.
LIQUIDITY AND CAPITAL RESOURCES
As at February 28, 1999, the Registrant had $18,254 of assets, and $9,316
of liabilities, including cash or cash equivalents amounting to $16,125.
An analysis of the expenses for the period from inception, being April 9,
1998, to December 31, 1998 and for the two months ended February 28, 1999 are as
follows:
<TABLE>
<CAPTION>
From April 9, 1998 For the two months From April 9, 1998
(date of inception) to Ended (date of inception) to
February 28, 1999 February 28, 1999 December 31, 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
Accounting and audit $ 3,050 $ 1,200 $ 1,850
Assessment work 1,800 -- 1,800
Bank charges 119 -- 119
Consulting fees 9,000 -- 9,000
Incorporation costs written off 640 -- 640
Legal 2,500 -- 2,500
Office and miscellaneous 727 -- 727
Report preparation 619 -- 619
Transfer agent's fees 2,777 -- 2,777
Travel 3,000 -- 3,000
------- ------- -------
Total expenses $24,232 $ 1,200 $23,032
======= ======= =======
</TABLE>
An analysis of the above expenses is as follows:
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Accounting and audit
Accounting and audit expenses for the periods were as follows:
<TABLE>
<CAPTION>
Total February 28, 1999 December 31, 1998
----- ----------------- -----------------
<S> <C> <C> <C>
Bookkeeping and accounting $ 350 $ -- $ 350
Audit fees for preparation of
September 18, 1998 financial
Statements (i) 1,500 -- 1,500
Audit fees for preparation of
February 28, 1999 financial
Statements 1,200 1,200 --
------ ------ ------
Accounting and audit $3,050 $1,200 $1,850
====== ====== ======
</TABLE>
(i) The Registrant submitted a Form 15C-211 to the NASD with audited financial
statements for the period ended September 18, 1998.
Assessment work
The Registrant engaged the services of Edward Skoda to perform certain
exploration work on the property more fully described under Item 1, Exploration
and Development of the Registrant's Mineral Claim, (i) Registrant's Recent
Exploration Activities on page 7 above. This work was assigned in December but
was not performed and filed with the Gold Commissioner's Office until February
1999.
Bank charges
Represents bank service charges during the period from inception.
Consulting fees
Consulting fees comprises a payment of $5,000 for preparation of securities
subscription agreements, Offering Memorandum, directors' consent resolutions,
treasury orders, Form 15C-211 and various other documents required by the
Registrant. This amount was paid to an independent consultant. The former
President of the Registrant, Brent Vickers, was paid $4,000 for time spent in
identifying a market marker for the Registrant. The expense was incurred
subsequent to the former President resigning.
Incorporation costs written off
The Registrant decided to write off the cost of incorporation rather than
capital it.
Legal
Legal fees were incurred in obtaining a tradeability letter on the issued
shares of the Registrant. This letter was filed along with the Form 15C-211.
14
<PAGE>
Office and miscellaneous
Office and miscellaneous represents charges paid for photocopying, faxing
and delivery.
Report preparation
The Registrant paid James McLeod the sum of $619 for the preparation of his
geological report on the Star claims dated June 16, 1998 and attached hereto as
Exhibit 99.
Transfer agent's fees
Transfer agent's fees comprised that annual fee of $1,200, printing of
share certificates and obtaining of CUSIP.
Travel
The Registrant reimbursed its former President, Brent Vickers, for travel
costs to Florida to meet with the Registrant's market maker. This expense was
incurred subsequent to the resignation of Brent Vickers as President and
Director of the Registrant.
The Registrant has no contractual obligations for either lease premises,
employment agreements or work commitments on the Star claims and has made no
commitments to acquire any asset of any nature.
Operational and administrative expenses of the Registrant for 1999 are
projected to be approximately $3,500 for exploration work on the Star claims and
$8,000 for general and administrative expenses. The majority of the general and
administrative expenses relate to filing costs, transfer agents fees and audit
and accounting.
To date the Registrant has spent $2,129 for exploration and development of
the Star claims. This expenditure has enabled the Registrant to maintain all its
mineral claims in good standing for an additional year.
Management does not believe the Registrant's operations have been
materially affected by inflation.
INVESTMENT POLICY
The Registrant's plan of operations is focused on the continued development
and exploration of its properties in Item 1. Accordingly, the Registrant has no
particular policy regarding each of the following types of investment:
1. Investment in real estate or interest in real estate;
2. Investment in real estate mortgages; or
3. Securities of or interest in persons primarily engaged in real estate
activities.
15
<PAGE>
ITEM 3. DESCRIPTION AND LOCATION OF THE STAR CLAIMS
The Star mineral claims are situated 20 km. (12 miles) north of the Village of
Princeton, British Columbia, Canada. The claim area may be located at latitude
49 degrees 38 minutes north and longitude 120 degrees 38 minutes west on NTS
Mapsheet 92WI0. The mineral claims straddle Allison Creek between Borgeson and
Dry lakes and the north-south trending Provincial Highway 45.
Access to the property is provided by traveling north from Princeton, B.C. for
20 km. (12 miles) or south from the Town of Merritt, B.C. for 61 km. (37 miles)
on Highway 45.
OFFICES
The Registrant's executive offices are located at 2500 - 1177 West Hastings
Street, Vancouver, British Columbia, Canada, V6E 2K3. The office is located in
the business office of the Registrant's Secretary Treasury.
OTHER PROPERTY
The Registrant does not own any other property other than the rights to the
minerals located on the Star claims. At the present time, the Registrant has no
plans to acquire any other property, either mineral or otherwise.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSHIP AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of each person who is known to the Registrant to be the
beneficial owner of more than 5% of the Registrant's Common Stock as of February
28, 1999.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Title Name and Address Amount and Nature Percent
of of Beneficial of Beneficial of
Class Owner Ownership (1),(2) Class (2)
----- ------ ----------------- ---------
<S> <C> <C> <C>
Common MICHAEL MITSIADIS 1,000,000 8.90%
Shares 2365 Paulus Crescent
Burnaby, B.C.
Canada, V5A 2M5
Common RAYMON PAQUETTE 2,000,000 17.80%
Shares 2001-1500 Howe Street
Vancouver, B.C.
Canada, V6N 2N1
Common RICHARD HADERER 1,000,000 8.90 %
Shares 71 Hidden Ranch Terrace
Calgary, Alberta
Canada, T3A 5Z4
</TABLE>
16
<PAGE>
(1) As of February 28, 1999, there were 11,239,700 common shares outstanding.
Unless otherwise noted, the security ownership disclosed in this table is
of record and beneficial.
(2) Under Rule 13-d under the Exchange Act, shares not outstanding but subject
to options, warrants, rights, conversion privileges pursuant to which such
shares may be acquired in the next 60 days are deemed to be outstanding for
the purpose of computing the percentage of outstanding shares owned by the
persons having such rights, but are not deemed outstanding for the purpose
of computing the percentage for such other persons.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of each officer and director, and of all directors and
executive officers as a group as of February 28, 1999.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Title Name and Address Amount and Nature Percent
of of Beneficial of Beneficial of
Class Owner Ownership (1),(2) Class (2)
----- ------ ----------------- ---------
<S> <C> <C> <C>
Common MICHAEL MITSIADIS 1,000,000 (3) 8.90 %
Shares 2365 Paulus Crescent
Burnaby, B.C.
Canada, V5A 2M5
Common RAYMON PAQUETTE 2,000,000 (4) 17.80 %
Shares 2001-1500 Howe Street
Vancouver, B.C.
Canada, V6N 2N1
Common RICHARD HADERER 1,000,000 (5) 8.90 %
Shares 71 Hidden Ranch Terrance
Calgary, Alberta
Canada, T3A 5Z4
All officers and directors as a 4,000,000 35.60 %
group (three persons)
</TABLE>
(1) As of February 28, 1999, there were 11,239,700 common shares outstanding.
Unless otherwise noted, the security ownership disclosed in this table is
of record and beneficial.
(2) Under Rule 13-d under the Exchange Act, shares not outstanding but subject
to options, warrants, rights, conversion privileges pursuant to which such
shares may be acquired in the next 60 days are deemed to be outstanding for
the purpose of computing the percentage of outstanding shares owned by the
persons having such rights, but are not deemed outstanding for the purpose
of computing the percentage for such other persons.
(3) Mr. Mitsiadis is President of the Registrant and one of the controlling
shareholders. This stock is restricted since it was issued in compliance
with the exemption from registration provided by Section 4 (2) of the
Securities Act of 1933, as amended. After this stock has been held for one
(1) year, Mr. Mitsiadis could sell 1% of the outstanding stock every
17
<PAGE>
three months. Therefore, this stock cannot be sold except in compliance
with the provisions of Rule 144.
(4) Mr. Paquette is Secretary Treasurer and a director of the Registrant and
one of the controlling shareholders. This stock is restricted since it was
issued in compliance with the exemption from registration provided by
Section 4 (2) of the Securities Act of 1933, as amended. After this stock
has been held for one (1) year, Mr. Paquette could sell 1% of the
outstanding stock every three months. Therefore, this stock cannot be sold
except in compliance with the provisions of Rule 144.
(5) Mr. Haderer is a director of the Registrant and one of the controlling
shareholders. This stock is restricted since it was issued in compliance
with the exemption from registration provided by Section 4 (2) of the
Securities Act of 1933, as amended. After this stock has been held for one
(1) year, Mr. Haderer could sell 1% of the outstanding stock every three
months. Therefore, this stock cannot be sold except in compliance with the
provisions of Rule 144.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
The following table identifies the Registrant's directors and executive
officers as of February 28, 1999. Directors are elected at the Registrant's
annual meeting of stockholders and hold office until their successors are
elected and qualified. The Registrant's officers are appointed annually by the
Board of Directors and serve at the pleasure of the Board.
Term as Director
Name Position Held Expires
---- ------------- ----------------
MICHAEL MITSIADIS President and Director 1999
RICHARD HADERER Director 1999
RAYMON PAQUETTE Secretary/Treasurer and 1999
Director
MICHAEL MITSIADIS, 41, was born in Greece and came to Canada during his early
childhood. After graduation from high school, he spent several years at Langara
College before deciding to obtain his real estate license. Once this had been
obtained, Mr. Mitsiadis was employed with Royal Pacific Realty for two years and
subsequently for five years with Sutton Group Realty. After leaving this
employer, Mr. Mitsiadis become the corporate finance officer for Georgian Group
and remained there for ten years.
RAYMON PAQUETTE, 48, attended the University of Saskatchewan and subsequently
operated eight large clothing operations, three commercial buildings, developed
real estate property and established eight significant theme restaurants.
Currently the Managing Director of The Canadian Mining Company, a listed public
company on the Alberta Stock Exchange.
RICHARD HADERER, 35, was educated in Alberta, Canada and graduated from high
school prior to going to Mount Royal College in Calgary where he obtained a
diploma in Business Administration, with a major in marketing. Subsequently he
attended the University of Calgary for a brief period of time. After leaving
university he became employed with the Alberta Stock Exchange from
18
<PAGE>
November 1989 to July 1992 as a Listing and Filing Assistant and from July 1992
to April 1996 as a Listing Officer. Since April 1996 he has become President of
PubCo Services Inc., a firm providing consulting services to public companies
and companies going public.
None of the Directors or Executive Officers work full time for the
Registrant, but intend to devote such time as their responsibilities require.
None of the Registrant's Directors are currently directors of other companies
registered under the Securities Act of 1934. Nevertheless Messrs. Paquette and
Haderer are directors and officers of The Canadian Mining Company, a company
listed on the Alberta Stock Exchange. In addition, Mr. Haderer is a director or
officer of the following public companies:
Assistant Secretary of Gallery Resource Ltd. - listed on the Vancouver
Stock Exchange;
Vice-President of Canadian Energy Ltd. - listed on the Alberta Stock
Exchange
Secretary of CallDirect Capital Corp. - listed on the Alberta Stock
Exchange
Director of Jafetica Ventures Inc. - Junior Capital Pool company listed on
the Alberta Stock Exchange
There are no family relationships between the directors, executive officers
or with any person under consideration for nomination as a director or
appointment as an executive officer of the Registrant.
CHANGES IN CONTROL
There is no arrangement which may result in a change of control.
ITEM 6. EXECUTIVE COMPENSATION
None of the Registrant's executive officers have received compensation
since the Registrant's inception except as noted below.
The following table sets forth compensation paid or accrued by the
Registrant during the period ended February 28, 1999 to the Registrant's
President and shows compensation paid to any other officers or directors.
SUMMARY COMPENSATION TABLE (1998 - 1999)
<TABLE>
<CAPTION>
Long Term Compensation (US Dollars)
-----------------------------------
Annual Compensation Awards Payouts
------------------- ------ -------
(a) (b) (c) (e) (f) (g) (h) (i)
Other Restricted All other
annual stock Options/ LTIP compen-
Name and Princi- Comp. awards SAR payouts sation
pal position Year Salary ($) ($) (#) ($) ($)
------------ ---- ------ --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Michael Mitsiadis, 1998-1999 -0- -0- -0- -0- -0- -0-
President
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Long Term Compensation (US Dollars)
-----------------------------------
Annual Compensation Awards Payouts
------------------- ------ -------
(a) (b) (c) (e) (f) (g) (h) (i)
Other Restricted All other
annual stock Options/ LTIP compen-
Name and Princi- Comp. awards SAR payouts sation
pal position Year Salary ($) ($) (#) ($) ($)
------------ ---- ------ --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Richard Haderer, 1998-1999 -0- -0- -0- -0- -0- -0-
Director
Raymon Paquette, 1998-1999 -0- -0- -0- -0- -0- -0-
Secretary/Treasurer
and Director
</TABLE>
There has been no compensation given to any of the Directors or Officers
during 1999 other than $4,000 was paid to the former president and director,
Brent Vickers, in consulting and $3,000 in traveling fees in connection with
meetings with the market marker for the Registrant; Emerson Bennett &
Associates, LLC, 6261 North West 6th Way, Suite 207, Fort Lauderdale, Florida,
33309. Brent Vickers was appointed to the Board of Directors on April 14, 1998
and resigned as President and Director on May 27, 1998. He was replaced as a
director and officer by Michae Mitsiadis.
There are no stock options outstanding as at February 28, 1999 and no
options have been granted in 1999, but it is contemplated that the Registrant
may issue stock options in the future to officers, directors, advisers and
future employees.
COMPENSATION OF DIRECTORS
Members of the Board of Directors do not receive cash compensation for
their services as Directors. Directors are not presently reimbursed for expenses
incurred in attending Board meetings.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
None of the officers and directors of the Registrant have been involved in
the past five (5) years in any of the following:
(1) Bankruptcy proceedings;
(2) Subject to criminal proceedings or convicted of a criminal act;
(3) Subject to any order, judgment or decree entered by any Court for
violating any laws relating to business, securities or banking
activities; or
(4) Subject to any order for violation of federal or state securities laws
or commercial laws.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the period from April 9, 1998 to February 28, 1999, the Registrant
has not entered into a transactions with a value in excess of $60,000 with a
director, officer or beneficial owner of 5% or more of the Registrant's capital
stock, except as follows:
On or about May 28, 1998, the Registrant approved the issuance of 4,000,000
shares of its common stock between Michael Mitsiadis, as to 1,000,000 shares,
Raymon Paquette, as to 2,000,000 shares, Richard Haderer, as to 1,000,000
shares, in consideration of their services in organizing the Registrant and
becoming directors. The terms of this transaction were determined by the Board
of
20
<PAGE>
Directors at the time there were no other stockholders. These shares are
restricted since they were issued in compliance with the exemption form
registration provided by Section 4 (2) of the Securities Act of 1933, as
amended. After these shares have been held for one (1) year, the directors,
noted above, could sell, in a given three month period, shares based on 1% of
the outstanding stock of the Registrant. Therefore, these shares cannot be sold
except in compliance with the provisions of Rule 144. The share certificates
registered in the names of each of the directors noted above have a legend
affixed to them restricting their sale.
Certain parties interested in the Registrant's success have contributed and
continue to contribute time, office space, telephone, and other expenses,
without compensation or reimbursement.
Certain directors of the Registrant are directors, officers, stockholders
and employees of other companies engaged in the mining industry, and conflicts
of interest may arise between their duties as directors of the Registrant and as
directors and officers of other companies. Mr. Paquette is a director and
officer of The Canadian Mining Company, a public company listed on the Alberta
Stock Exchange. The Canadian Mining Company is engaged in exploration and
development of mineral claims in both Canada and the United States. Mr. Haderer
is also a director and officer of The Canadian Mining Company.
ITEM 8. DESCRIPTION OF SECURITIES
The Registrant's articles of incorporation currently provide that the
Registrant is authorized to issue 200,000,000 shares of common stock, par value
$0.001 per share. As at February 28, 1999, 11,239,700 shares were outstanding.
The Registrant issued 4,000,000 shares at a price of $0.001 per share to
three of its directors. These shares are restricted since they were issued in
compliance with the exemption from registration provided by Section 4 (2) of the
Securities Act of 1933, as amended. Therefore, these shares cannot be sold
except in compliance with the provisions of Rule 144. The share certificates
registered in the names of each of the directors noted above have a legend
affixed to them restricting their sale.
The Registrant issued 1,150,000 shares at a price of $0.001 per share to
two individuals unrelated to the directors and officers. Subsequent to the
issuance of these shares one of the individuals advised the Registrant that they
had sold part of their share position to a third party. None of these
shareholders have in excess of 5% of the issued and outstanding shares of the
Registrant.
The Registrant issued 6,000,000 shares at a price of $0.001 per share to
six corporate shareholders for a total consideration of $6,000. None of these
corporate shareholders are either US residents or corporations. Subsequent to
the issuance of these shares the Registrant was advised by each of these
shareholders that they had sold part of their share position to a third part.
None of these shareholders hold in excess of 5% of the issued and outstanding
share capital of the Registrant.
The Registrant issued 2,700 shares at a price of $0.01 per share to 27
individuals.
Under an Offering Memorandum dated August 20, 1998 the Registrant offered
300,000 shares at a price of $0.25 per share of which 87,000 shares were
subscribed for a total consideration of $21,750. Refer to Exhibit 99 (a).
For the status of the tradability of the above noted issuances of shares
refer to Part 11, Item 4 - Recent Sales of Unregistered Securities.
21
<PAGE>
COMMON STOCK
Each holder of record of the Registrant's common stock is entitled to one
vote per share in the election of the Registrant's directors and all other
matters submitted to the Registrant's stockholders for a vote. Holders of the
Registrant's common stock are also entitled to share ratably in all dividends
when, as, and if declared by the Registrant's Board of Directors from funds
legally available therefor, and to share ratably in all assets available for
distribution to the Registrant's stockholders upon liquidation or dissolution,
subject in both cases to any preference that may be applicable to any
outstanding preferred stock. There are no preemptive rights to subscribe to any
of the Registrant's securities, and no conversion rights or sinking fund
provisions applicable to the common stock.
Neither the Registrant's Articles of Incorporation nor its Bylaws provide
for cumulative voting. Accordingly, persons who own or control a majority of the
shares outstanding may elect all of the Board of Directors, and persons owning
less than a majority could be foreclosed from electing any.
OPTIONS OUTSTANDING
There are no outstanding options. It is the intention of the Board of
Directors to grant stock options to directors, officers and future employees at
some time in the future. At the present time no consideration has been given to
the granting of stock options.
MARKET INFORMATION
The common stock of the Registrant currently is not trading on any
exchange. Management Anticipates that the Registrant's shares will be qualified
on the system of the National Association of Securities Dealers, Inc. ("NASD")
known as the Bulletin Board.
There has been no market for the Registrant's stock in the last two years.
Accordingly, the Registrant has no range of high and low bid prices for the
Registrant's common stock to report.
There is no public market for the shares of the Registrant and there can be
no assurance that an active public market for the shares will develop or be
sustained. In addition, the shares of the Registrant are subject to various
governmental and regulatory body rules which affect the liquidity of the shares.
22
<PAGE>
PART 11
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
MARKET INFORMATION
The Registrant's stock is not presently traded or listed on any public
market. The Registrant has filed Form 15C-211 with the NASD Regulators Inc. but
was not receipted for trading prior to January 4, 1999. The market maker filing
the Form 15C-211 with the NASD was Emerson, Bennett & Associates, LLC, 6261
North West 6th Way, Suite 207, Fort Lauderdale, Florida, 33309. Upon
effectiveness of the Registrant's registration statement under the Securities
Exchange Act of 1934, it is anticipated one or more broker dealers may make a
market in its securities over the counter, with quotations carried on the
National Association of Securities Dealers, Inc.'s "OTC Bulletin Board".
HOLDERS
The number of record holders of the Registrant's common stock as at
February 28, 1999 was 52 of which 3 are directors. The Registrant has sold no
additional shares since February 28, 1999 and its Offering Memorandum dated
August 20, 1998 has been closed.
DIVIDENDS
The Registrant has never paid cash dividends on its common stock and does
not intend to do so in the foreseeable future. The Registrant currently intends
to retain any earnings for the operation and expansion of its business.
The Securities and Exchange Commission has adopted regulations which
generally define a "penny stock" to be equity securities that has a market price
(as defined) of less than $5.00 per share, subject to certain exemptions. The
Registrant's Common Stock may be deemed to be a "penny stock" and thus, if and
when it becomes listed and trading, of which there can be no assurance, will
become subject to rules that impose additional sales practice requirements on
broker/dealers who sell such securities to persons other than established
customers and accredited investors, unless the Common Stock is listed on The
NASDAQ Small Cap Market.
Consequently, the "penny stock" rules may restrict the ability of
broker/dealers to sell the Registrant's securities, and may adversely affect the
ability of holders of the Registrant's Common Stock to resell their shares in
the secondary market, assuming such market develops, of which there can be no
assurance.
FINANCIAL INFORMATION
The Registrant will furnish annual financial reports to stockholders,
certified by its independent auditor, and furnish management prepared unaudited
quarterly reports to its shareholders. Contained within this Form 10SB are the
audited financial statements for the period from April 9, 1998, the date of
inception, to February 28, 1999.
23
<PAGE>
The Registrant has elected for a year-end of March 31, 1999 and every
twelve months thereafter.
TRANSFER AGENT
The Registrant's transfer agent is Nevada Agency & Trust Co., 50 West
Liberty Street, Suite 880, Reno, Nevada, 89501.
ITEM 2. LEGAL PROCEEDINGS
There are no legal proceedings to which the Registrant is a party or to
which its property is subject, nor to the best of management's knowledge are any
material legal proceedings contemplated.
ITEM 3. DISAGREEMENT WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE
From inception to date, the Registrant's principal accountant is Andersen
Andersen & Strong, L.C. of Salt Lake City, Utah. The firm's report for the
period from inception to February 28, 1999 did not contain any adverse opinion
or disclaimer, nor were there any disagreements between management and the
Registrant's accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The Registrant is registering all of its issued and outstanding shares of
its capital stock with a par value of One Mill ($0.001) per share. From
inception through to February 28, 1999, the Registrant has issued and sold the
following unregistered shares of its common stock (the aggregated value of all
such offerings did not exceed US$1,000,000):
(A) ISSUANCE OF SHARES AT $0.001 PER SHARE
For the following shares issued for $0.001 no Offering Memorandum was
issued by the Registrant due to either being issued to the directors and
officers themselves or to friends, relatives and business associates of one
or more of the directors and officers.
(i) Issuance of 4,000,000 shares
The Registrant offered 4,000,000 shares at a price of $0.001 per share to
its directors and officers for a total consideration of $4,000. These
shares are restricted under Rule 144 since they were issued to insiders and
controlling shareholders of the Registrant. A Form D was filed with the
SEC. The directors in receipt of these shares are as follows:
Michael Mitsiadis 1,000,000 shares
Raymon Paquette 2,000,000 shares
Richard Haderer 1,000,000 shares
24
<PAGE>
(ii) Issuance of 1,150,000 shares
Originally two individual shareholders acquired 1,150,000 shares at a price
of $0.001 per share for a total consideration of $1,150. Both these
investors are friends of one of the directors. This stock was issued in
compliance with Rule 504 of the Securities Act of 1933, as amended. The
applicable Form D was filed with the SEC. This stock can be traded by
non-controlling shareholders. Subsequent to the issuance of these shares
the Registrant was advised that one of these two shareholders had sold part
of their share position to a third party. None of these shareholders hold
in excess of 5% of the issued and outstanding stock of the Registrant. The
names of the three shareholders now holding 1,150,000 shares between them
are as follows:
Chris Acheson 500,000 shares
Rene Payne 150,000 shares
L. Gordon 500,000 shares
(iii) Issuance of 6,000,000 shares
The Registrant offered 6,000,000 shares at a price of $0.001 per share to
six corporations resident outside of the United States. The total funds
received from the sale of the shares were $6,000. The directors, officers
and shareholders of these six corporations are business associates of one
or more of the directors and officers of the Registrant. This stock was
issued in compliance with Rule 504 of the Securities Act of 1933, as
amended and the applicable Form D was filed with the SEC. Subsequent to the
issuance of the 6,000,000 shares the Registrant was advised by each of the
shareholders that they had sold part of their share position to a third
party. None of the shareholders have in excess of 5% of the issued and
outstanding share capital of the Registrant. The names of the shareholders
holding the 6,000,000 shares are as follows:
Brookside Estates S.A. 500,000 shares
Archer Investments Inc. 500,000 shares
Brent Vickers 500,000 shares
A. Beitel 500,000 shares
Don Vickers 500,000 shares
Keith DeCoursey 500,000 shares
549242 B.C. Ltd. 500,000 shares
Nancy Mitsiadis 500,000 shares
John Purdon 500,000 shares
Lorie Holt 500,000 shares
545907 B.C. Ltd. 500,000 shares
Genie Kouris 500,000 shares
(B) ISSUANCE OF SHARES AT $0.01 PER SHARE
The Issuer offered 2,700 shares at a price of $0.01 per share to 27
individual shareholders resident outside of the United States for a total
consideration of $270. All 27 shareholders investing were either friends,
relatives or business associates of one or more of the directors or
officers of the Registrant. This stock was issued in compliance with Rule
504
25
<PAGE>
of the Securities Act of 1933, as amended. The applicable Form D was filed
with the SEC.
Of the 27 shareholders, 5 shareholders were immediately family to one or
more of the directors or living in the same premises. Therefore, 500 shares
out of the 2,700 shares subscribed for have been restricted and the
applicable legend has been imprinted on each certificate. The names of the
shareholders subscribing for the 2,700 shares are as follows:
Linda Mitsiadis (*) 100 shares
Greg Mitsiadis (*) 100 shares
Chris Mitsiadis (*) 100 shares
Nicholas Mitsiadis (*) 100 shares
Kimon Mitsiadis 100 shares
Nancy Mitsiadis 100 shares
Angelo Kouris 100 shares
Genie Kouris 100 shares
Dean Kouris 100 shares
Kevin Kouris 100 shares
Stephanie Kouris 100 shares
John Purdon 100 shares
Shirley Purdon 100 shares
Ryan Purdon 100 shares
Megan Purdon 100 shares
Alexander Purdon 100 shares
Susan Purdon 100 shares
C. McInnis 100 shares
Jo-Anna Fiddler 100 shares
Garry McInnis 100 shares
Bryon McInnis 100 shares
Rhonda J. Caldwell (*) 100 shares
Kevin Caldwell 100 shares
Greg Caldwell 100 shares
Florence Caldwell 100 shares
Anca Osteanu 100 shares
Maren Hills-Amazzal 100 shares
(*) These shares have a one-year hold period attached due to being
individuals who live in the same premises as either a director or officer.
(C) OFFERING MEMORANDUM ISSUING SHARES AT $0.25 PER SHARE
Under an Offering Memorandum dated August 20, 1998 the Registrant offered
300,000 shares at a price of $0.25 per share of which 87,000 shares were
subscribed for a total consideration of $21,750. This stock was issued in
compliance with Rule 504 of the Securities Act of 1933, as amended and the
applicable Form D was filed with the SEC. The subscribers under the above
mentioned Offering Memorandum are as follows:
Joan Haderer 10,000 shares
Allan Haderer 10,000 shares
26
<PAGE>
Scott Haderer 10,000 shares
Don Nemeth 10,000 shares
Bruce Kennedy 10,000 shares
Andy Vickers 10,000 shares
Rene Payne 10,000 shares
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of the Nevada General Corporation Law allows the Registrant
to indemnify any person who was or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Registrant, or is or was serving at the request of the Registrant as a director,
officer, employee, or agent of any corporation, partnership, joint venture,
trust, or other enterprise. The Registrant's Bylaws provide that such person
shall be indemnified and held harmless to the fullest extent permitted by Nevada
law.
Nevada law permits the Registrant to advance expenses in connection with
defending any such proceedings, provided that the indemnitee undertakes to repay
any such advances if it is later determined that such persons were not entitled
to be indemnified by the Registrant. The Registrant's Bylaws require that the
Registrant advance such funds upon receipt of such an undertaking with respect
to repayment.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in such act, and is
therefore unenforceable.
27
<PAGE>
PART F/S
FINANCIAL STATEMENTS
The following financial statements are filed with this Form 10-SB:
Page
----
Report of Independent Certified Public Accountants 29
Financial Statements of Peppermill Capital Corporation
Balance Sheet as at February 28, 1999 30
Statement of Operations for the Period from April 9, 1998 (Date
of Inception) to February 28, 1999 31
Statement of Cash Flows for the Period from April 9, 1998 (Date
of Inception) to February 28, 1999 32
Statement of Changes in Stockholders' Equity for the Period from
April 9, 1998 (Date of Inception) to February 28, 1999 33
Notes to Financial Statements 34
28
<PAGE>
ANDERSEN ANDERSEN & STRONG, L.C. 941 East 3300 South, Suite 220
Certified Public Accountants and Business Salt Lake City, Utah, 84106
Consultants Board Telephone 801-486-0096
Member SEC Practice Section of the AICPA Fax 801-486-0098
E-mail Kandersen @ msn.com
Board of Directors
Peppermill Capital Corporation
Vancouver, B.C., Canada
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheet of Peppermill Capital Corporation
(a development stage company) at February 28, 1999, and December 31, 1998 the
statement of operations, stockholders' equity, and cash flows for the two months
ended February 28, 1999 and the period from April 9, 1998 to December 31, 1998
and the period from April 9, 1998 (date of inception) to February 28, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Peppermill Capital Corporation
at February 28, 1999 and December 31, 1998, and the results of operations, and
cash flows for the two months ended February 28, 1999 and the period from April
9, 1998 to December 31, 1998 and the period from April 9, 1998 (date of
inception) to February 28, 1999 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage and will need additional working capital for its planned activity, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 5. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Salt Lake City, Utah /s/ "Andersen Andersen & Strong"
April 12, 1999
A member of ACF International with affiliated offices worldwide
29
<PAGE>
PEPPERMILL CAPITAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
FEBRUARY 28, 1999 AND DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
Feb 28 Dec 31
ASSETS 1999 1998
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash $ 16,125 $ 1,125
Note Receivable -- 15,000
-------- --------
Total Current Assets 16,125 16,125
-------- --------
OTHER ASSETS
Mineral lease - Note 3 2,129 2,129
-------- --------
$ 18,254 $ 18,254
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - related parties $ 6,800 $ 6,800
Accounts payable 2,516 1,316
-------- --------
Total Current Liabilities 9,316 8,116
-------- --------
STOCKHOLDERS' EQUITY
Common stock
200,000,000 shares authorized, at $0.001 par
value; 11,239,700 shares issued and outstanding 11,240 11,240
Capital in excess of par value 21,930 21,930
Deficit accumulated during the development stage (24,232) (23,032)
-------- ========
Total Stockholders' Equity 8,938 10,138
-------- --------
$ 18,254 $ 18,254
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
PEPPERMILL CAPITAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE TWO MONTHS ENDED FEBRUARY 28, 1999 AND THE PERIOD
APRIL 9, 1998 TO DECEMBER 31, 1998 AND THE PERIOD
APRIL 9, 1998 (DATE OF INCEPTION) TO FEBRUARY 28, 1999
================================================================================
<TABLE>
<CAPTION>
April 9, 1998
Feb 28, Dec 31, (date of inception)
1999 1998 to Feb 28, 1999
------- ------- -------------------
<S> <C> <C> <C>
REVENUE $ -- $ -- $ --
EXPENSES 1,200 23,032 24,232
------------ ------------ ------------
NET LOSS $ (1,200) $ (23,032) $ (24,232)
============ ============ ============
NET LOSS PER COMMON SHARE
Basic $ -- $ (0.002)
------------ ============
AVERAGE OUTSTANDING SHARES
Basic 11,239,700 11,239,700
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
PEPPERMILL CAPITAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE TWO MONTHS ENDED FEBRUARY 28, 1999 AND THE PERIOD
APRIL 9, 1999 TO DECEMBER 31, 1998 AND THE PERIOD APRIL 9, 1998
(DATE OF INCEPTION) TO FEBRUARY 28, 1999
================================================================================
<TABLE>
<CAPTION>
Apr 9, 1998
Feb 28, Dec 31, (date of inception)
1999 1998 to Feb 28, 1999
------- ------- -------------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (1,200) $(23,032) $(24,232)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Change in accounts payable 1,200 8,116 9,316
Net Cash From Operations -- (14,916) (14,916)
-------- ======== ========
CASH FLOWS FROM INVESTING
ACTIVITIES:
Change in note receivable 15,000 (15,000) --
Purchase of mineral lease -- (2,129) (2,129)
-------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of common stock -- 33,170 33,170
-------- -------- --------
Net Increase in Cash 15,000 1,125 16,125
Cash at Beginning of Period 1,125 -- --
-------- -------- --------
Cash at End of Period $ 16,125 $ 1,125 $ 16,125
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
PEPPERMILL CAPITAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1998 (DATE OF INCEPTION)
TO FEBRUARY 28, 1999
================================================================================
<TABLE>
<CAPTION>
Common Stock Capital in
------------------------- Excess of Accumulated
Shares Amount Par Value Deficit
------ ------ --------- -------
<S> <C> <C> <C> <C>
BALANCE DECEMBER 2, 1998
(date of inception) -- $ -- $ -- $ --
Issuance of common stock for cash
at $.001 - June 6, 1999 4,000,000 4,000 -- --
Issuance of common stock for cash
at $.001 - June 23, 1998 6,000,000 6,000 -- --
Issuance of common stock for cash
at $.001 - June 25, 1998 1,150,000 1,150 -- --
Issuance of common stock for cash
at $.10 - June 26, 1998 2,700 3 267 --
Issuance of common stock for cash
at $0.25 - September 17, 1998 87,000 87 21,663 --
Net operating loss for the period from
April 9, 1998 to December 31, 1998 -- -- -- (23,032)
BALANCE DECEMBER 31, 1998 11,239,700 11,240 21,930 (23,032)
Net operating loss for the two
Months ended February 28, 1999 -- -- -- (1,200)
BALANCE FEBRUARY 28, 1999 11,040,050 $ 11,240 $ 21,930 $ (24,232)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
PEPPERMILL CAPITAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCLAL STATEMENTS
================================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on April 9,
1998 with authorized common stock of 200,000,000 shares at $0.001 par value.
Since its inception the company has completed two Regulation D offerings of
7,239,700 shares of its capital stock for cash.
The Company is in the development stage and was organized for the purpose of
engaging in the business of mineral development.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICILES
Accounting, Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
On December 31, 1998, the Company had a net operating loss carry forward of
$23,032. The income tax benefit from the loss carry forward has been fully
offset by a valuation reserve because the use of the future tax benefit is
doubtful since the Company has no operations. The loss carryforward will expire
in the year 2019.
Earning (Loss) Per Share
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding using the treasury stock method in
accordance with FASB statement No. 128.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity,
at the time of purchase, of less than three months, to be cash equivalents.
34
<PAGE>
PEPPERMILL CAPITAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Foreign Currency Translation
The transactions of the Company completed in Canadian dollars have been
translated to US dollars. Assets and liabilities are translated at the year end
exchange rates and the income and expenses at the average rates of exchange
prevailing during the period reported on.
Amortization of Capitalized Mineral Lease Costs
The Company will use the successful efforts method to amortize the capitalized
costs of any mineral leases it acquires, which provides for capitalizing the
purchase price of the project and the additional costs directly related to
proving the properties, and amortizing these amounts over the life of the
mineral deposit. All other costs will be expensed as incurred. Unamortized
capitalized costs will be expensed if the property is proven to be of no value.
Financial Instruments
The carrying amounts of financial instruments, including cash, mineral leases,
and accounts payable, are considered by management to be their estimated fair
values. These values are not necessarily indicative of the amounts that the
Company could realize in a current market exchange.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
3. PURCHASE OF MINERAL LEASES
On June 18, 1998 the Company acquired mineral claims known as "Star Claims"
consisting of 11 units located near the town of Merritt, British Columbia, for
$2,129 with expiration dates in 1999. The units cover 587 acres.
35
<PAGE>
PEPPERMILL CAPITAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCLAL STATEMENTS (CONTINUED)
================================================================================
4. RELATED PARTY TRANSACTIONS
Related parties have acquired 36% of the common stock issued for cash.
The officers and directors of the Company are involved in other business
activities and they may, in the future, become involved in additional business
ventures which also may require their attention. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The Company has
formulated no policy for the resolution of such conflicts.
5. GOING CONCERN
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through additional
equity funding, and long term financing, which will enable the Company to
operate in the future.
Management recognizes that, if it is unable to raise additional capital, the
Company cannot operate in the future.
36
<PAGE>
PART 111
ITEM 1. INDEX TO EXHIBITS
EXHIBIT
NO.
(2) Charter and By-Laws
(a) Articles of Incorporation of Peppermill Capital Corporation filed
April 9, 1998 (filed herewith, page 39)
(b) Bylaws (filed herewith, page 43)
(3) Instruments Defining Rights of Securities Holders
(a) Text of stock certificates for common stock (filed herewith, page 55)
(5) Voting Trust Agreements
None
(6) Material Contracts
(a) Not Made in the ordinary course of business
(i) Transfer Agent and Registrant Agreement between Registrant and
Nevada Agency & Trust Co., dated June 10, 1998 (filed herewith,
page 56)
(10) Consent of experts and counsel
(i) Consent of Andersen Andersen & Strong, L.C., independent certified
public accountants (filed herewith, page 60)
(11) Statement re computation of per share earnings
Not applicable
(16) Letter of change in certifying accountant
Not applicable
(21) Subsidiaries of the Registrant
Not applicable
(24) Power of Attorney
Note
(99) Addition Exhibits
(a) Geology Report on the Star Mineral Claims prepared by James W. McLeod
dated June 16, 1998 (filed herewith, page 60)
ITEM 2. DESCRIPTIONS OF EXHIBITS
[Attached, pages 39 through 77]
37
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
PEPPERMILL CAPITAL CORPORATION
(Registrant)
by /s/ Raymon Paquette
-----------------------------
Raymon Paquette, Secretary
Dated: April 26, 1999
38
ARTICLES OF INCORORATION
EXHIBIT NO. 2 (A)
OF
PEPPERMILL CAPITAL CORPORATION
* * * * *
The undersigned, acting as incorporator, pursuant to the provisions of the
laws of the State of Nevada relating to private corporations, hereby adopts the
following Articles of Incorporation:
ARTICLE ONE. [NAME]. The name of the corporation is:
PEPPERMILL CAPITAL CORPORATION
ARTICLE TWO. [RESIDENT AGENT]. The initial agent for service of process is
Nevada Agency and Trust Company, 50 West Liberty Street, Suite 880, City of
Reno, County of Washoe, State of Nevada 89501.
ARTICLE THREE. [PURPOSES]. The purposes for which the corporation is
organized are to engage in any activity or business not in conflict with the
laws of the State of Nevada or of the United States of America, and without
limiting the generality of the foregoing, specifically:
1. [OMNIBUS] . To have to exercise all the powers now or hereafter
conferred by the laws of the State of Nevada upon corporations organized
pursuant to the laws under which the corporation is organized and any and
all acts amendatory thereof and supplemental thereto.
11. [CARRYING ON BUSINESS OUTSIDE STATE). To conduct and carry on its
business or any branch thereof in any state or territory of the United
States or in any foreign country in conformity with the laws of such state,
territory, or foreign country, and to have and maintain in any state,
territory, or foreign country a business office, plant, store or other
facility.
111. [PURPOSES TO BE CONSTRUED AS POWERS] . The purposes specified herein
shall be construed both as purposes and powers and shall be in no wise
limited or restricted by reference to, or inference from, the terms of any
other clause in this or any other article, but the purposes and powers
specified in each of the clauses herein shall be regarded as independent
purposes and powers, and the enumeration of specific purposes and powers
shall not be construed to limit or restrict in any manner the meaning of
general terms or of the general powers of the
<PAGE>
corporation; nor shall the expression of one thing be deemed to exclude
another, although it be of like nature not expressed.
ARTICLE FOUR. [CAPITAL STOCK]. The corporation shall have authority to
issue an aggregate of TWO HUNDRED MILLION (200,000,000) Common Capital Shares,
PAR VALUE ONE MILL ($0.001) per share for a total capitalization OF TWO HUNDRED
THOUSAND DOLLARS ($200,000).
The holders of shares of capital stock of the corporation shall not be
entitled to pre-emptive or preferential rights to subscribe to any unissued
stock or any other securities which the corporation may now or hereafter be
authorized to issue.
The corporation's capital stock may be issued and sold from time to time
for such consideration as may be fixed by the Board of Directors, provided that
the consideration so fixed is not less than par value.
The stockholders shall not possess cumulative voting rights at all
shareholders meetings called for the purpose of electing a Board of Directors.
ARTICLE FIVE. [DIRECTORS]. The affairs of the corporation shall be governed
by a Board of Directors of no more than eight (8) nor less than one (1) person.
The names and addresses of the first Board of Director are:
NAME ADDRESS
- ---- -------
Brent Vickers 130 Monteith Drive
Salt Spring Island, British Columbia
Canada V8K 1H4
Richard Haderer 7218 - 4th Street
Burnaby, British Columbia
Canada, V3N 2N6
Raymond Paquette 2001 - 1500 Howe Street
Vancouver, British Columbia
Canada, V6Z 2N1
ARTICLE SIX. [ASSESSMENT OF STOCK]. The capital stock of the corporation,
after the amount of the subscription price or par value has been paid in, shall
not be subject to pay debts of the corporation, and no paid up stock and no
stock issued as fully paid up shall ever be assessable or assessed.
2
<PAGE>
ARTICLE SEVEN. [INCORPORATOR]. The name and address of the incorporator of
the corporation is as follows:
NAME ADDRESS
---- -------
Amanda Cardinalli 50 West Liberty Street, Suite 880
Reno, Nevada 89501
ARTICLE EIGHT. [PERIOD OF EXISTENCE]. The period of existence of the
corporation shall be perpetual.
ARTICLE NINE. [BY-LAWS]. The initial By-laws of the corporation shall be
adopted by its Board of Directors. The power to alter, amend, or repeal the
By-laws, or to adopt new By-laws, shall be vested in the Board of Directors,
except as otherwise may be specifically provided in the By-laws.
ARTICLE TEN. [STOCKHOLDERS' MEETINGS]. Meeting of stockholders shall be
held at such place within or without the State of Nevada as may be provided by
the By-laws of the corporation. Special meetings of the stockholders may be
called by the President or any other executive officer of the corporation, the
Board of Directors, or any member thereof, or by the record holder or holders of
at least ten percent (10%) of all shares entitled to vote at the meeting. Any
action otherwise required to be taken at a meeting of the stockholders, except
election of directors, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by stockholders having at
least a majority of the voting power.
ARTICLE ELEVEN. [CONTRACTS OF CORPORATION]. No contract or other
transaction between the corporation and any other corporation, whether or not a
majority of the shares of the capital stock of such other corporation is owned
by this corporation, and no act of this corporation shall in any way be affected
or invalidated by the fact that any of the directors of this corporation are
pecuniarily or otherwise interested in, or are directors or officers of such
other corporation. Any director of this corporation, individually, or any firm
of which such director may be a member, may be a party to, or may be pecuniarily
or otherwise interested in any contract or transaction of the corporation;
provided, however, that the fact that he or such firm is so interested shall be
disclosed or shall have been known to the Board of Directors of this
corporation, or a majority thereof; and any director of this corporation who is
also a director or officer of such other corporation, or who is so interested,
may be counted in determining the existence of a quorum at any meeting of the
Board of Directors of this corporation that shall authorize such contract or
transaction, and may vote thereat to authorize such contract or transaction,
with like force and effect as if he were not such director or officer of such
other corporation or not so interested.
3
<PAGE>
ARTICLE TWELVE. [LIABILITY OF DIRECTORS AND OFFICERS]. No director or
officer shall have any personal liability to the corporation or its stockholders
for damages for breach of fiduciary duty as a director or officer, except that
this Article Twelve shall not eliminate or limit the liability of a director or
officer for (i) acts or omissions which involve intentional misconduct, fraud or
a knowing violation of law, or (ii) the payment of dividends in violation of the
Nevada Revised Statutes.
IN WITNESS WHEREOF, the undersigned incorporator has hereunto affixed her
signature at Reno, Nevada this 9th day of April, 1998.
by /s/ "Amanda Cardinalli"
------------------------
AMANDA CARDINALLI
STATE OF NEVADA }
: SS.
COUNTY OF WASHOE }
On the 9th day of April, 1998, before me, the undersigned, a NOTARY PUBLIC
in and for he State of Nevada, personally appeared AMANDA CARDINALLI, known to
me to be the person described in and who executed the foregoing instrument, and
who acknowledged to me that she executed the same freely and voluntarily for the
uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
by /s/ "Margaret Oliver"
-------------------------
NOTARY PUBLIC
Residing in Reno, Nevada
My Commission Expires:
October 10, 1998
- -------------------------
4
BY LAWS
EXHIBIT NO. 2 (B)
OF
PEPPERMILL CAPITAL CORPORATION
A NEVADA CORPORATION
ARTICLE I
OFFICES
SECTION 1. The registered office of this corporation shall be in the City of
Reno, State of Nevada.
SECTION 2. The Corporation may also have offices at such other places both
within and without the State of Nevada as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
SECTION 1. All annual meetings of the stockholders shall be held at the
registered office of the corporation or at such other place within or without
the State of Nevada as the Directors shall determine. Special meetings of the
stockholders may be held at such time and place within or without the State of
Nevada as shall be stated in the notice of the meeting, or in a duly executed
waiver of notice thereof.
SECTION 2. Annual meetings of the stockholders shall be held on the anniversary
date of incorporation each year if not a legal holiday and, and if a legal
holiday, then on the next secular day following, or at such other time as may be
set by the Board of Directors from time to time, at which the stockholders shall
elect by vote a Board of Directors and transact such other business as may
properly be brought before the meeting.
SECTION 3. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the Articles of Incorporation, may
be called by the President or the Secretary, by resolution of the Board of
Directors or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose of the proposed meeting.
SECTION 4. Notices of meetings shall be in writing and signed by the President
or Vice-President or the Secretary or an Assistant Secretary or by such other
person or
<PAGE>
persons as the Directors shall designate. Such notice shall state the purpose or
purposes for which the meeting is called and the time and the place, which may
be within or without this State, where it is to be held. A copy of such notice
shall be either delivered personally to or shall be mailed, postage prepaid, to
each stockholder of record entitled to vote at such meeting not less than ten
nor more than sixty days before such meeting. If mailed, it shall be directed to
a stockholder at his address as it appears upon the records of the corporation
and upon such mailing of any such notice, the service thereof shall be complete
and the time of the notice shall begin to run from the date upon which such
notice is deposited in the mail for transmission to such stockholder. Personal
delivery of any such notice to an officer of the corporation or association, or
to any member of a partnership shall constitute delivery of such notice to such
corporation, association or partnership. In the event of the transfer of stock
after delivery of such notice of and prior to the holding of the meeting, it
shall not be necessary to deliver or mail such notice of the meeting to the
transferee.
SECTION 5. Business transactions at any special meeting of stockholders shall be
limited to the purpose stated in the notice.
SECTION 6. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the Articles of
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcements at the
meeting, until a quorum shall be presented or represented. At such adjourned
meetings 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.
SECTION 7. When a quorum is present or represented at any meeting, the vote of
the holders of 10% of the stock having voting power present in person or
represented by proxy shall be sufficient to elect Directors or to decide any
question brought before such meeting, unless the question is one upon which by
express provision of the statute or of the Articles of Incorporation, a
different vote shall govern and control the decision of such question.
SECTION 8. Each stockholder of record of the corporation shall be entitled at
each meeting of the stockholders to one vote for each share standing in his name
on the books of the corporation. Upon the demand of any stockholder, the vote
for Directors and the vote upon any question before the meeting shall be by
ballot.
SECTION 9. At any meeting of the stockholders any stockholder may be represented
and vote by a proxy or proxies appointed by an instrument in writing. In the
event that any such instrument in writing shall designate two or more persons to
act as proxies, a majority of such persons present at the meeting, or, if only
one shall be present,
2
<PAGE>
then that one shall have and may exercise all the powers conferred by such
written instruction upon all of the persons so designated unless the instrument
shall otherwise provide. No proxy or power of attorney to vote shall be voted at
a meeting of the stockholders unless it shall have been filed with the Secretary
of the meeting when required by the inspectors of election. All questions
regarding the qualifications of voters, the validity of proxies and the
acceptance of or rejection of votes shall be decided by the inspectors of
election who shall be appointed by the Board of Directors, or if not so
appointed, then by the presiding officer at the meeting.
SECTION 10. Any action which may be taken by the vote of the stockholders at a
meeting may be taken without a meeting if authorized by the written consent of
stockholders holding at least a majority of the voting power, unless the
provisions of the statute or the Articles of Incorporation require a greater
proportion of voting power to authorize such action in which case such greater
proportion of written consents shall be required.
ARTICLE 3
DIRECTORS
SECTION 1. The business of the corporation shall be managed by its Board of
Directors which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the Articles of Incorporation
or by these Bylaws directed or required to be exercised or done by the
stockholders.
SECTION 2. The number of Directors which shall constitute the whole board shall
be riot less than one and not more than eight. The number of Directors may from
time to time be increased or decreased to not less than one nor more than eight
by action of the Board of Directors. The Directors shall be elected at the
annual meeting of the stockholders and except as provided in section 2 of this
Article, each Director elected shall hold office until his successor is elected
and qualified. Directors need not be stockholders.
SECTION 3. Vacancies in the Board of Directors including those caused by an
increase in the number of Directors, may be filed by a majority of the remaining
Directors, though less than a quorum, or by a sole remaining Director, and each
Director so elected shall hold office until his successor is elected at the
annual or a special meeting of the stockholders. The holders of a two-thirds of
the outstanding shares of stock entitled to vote may at any time peremptorily
terminate the term of office of all or any of the Directors by vote at a meeting
called for such purpose or by a written statement filed with the Secretary or,
in his absence, with any other officer. Such removal shall be effective
immediately, even if successors are not elected simultaneously and the vacancies
on the Board of Directors resulting therefrom shall only be filled from the
stockholders.
A vacancy or vacancies on the Board of Directors shall be deemed to exist
in case of death, resignation or removal of any Director, or if the authorized
number
3
<PAGE>
of Directors be increased, or if the stockholders fail at any annual or special
meeting of stockholders at which any Director or Directors are elected to elect
the full authorized number of Directors to be voted for at that meeting.
The stockholders may elect a Director or Directors at any time to fill any
vacancy or vacancies not filled by the Directors. If the Board of Directors
accepts the resignation of a Director tendered to take effect at a future time,
the Board or the stockholders shall have power to elect a successor to take
office when the resignation is to become effective
No reduction of the authorized number of Directors shall have the effect of
removing any Director prior to the expiration of his term of office.
ARTICLE 4
MEETING OF THE BOARD OF DIRECTORS
SECTION 1. Regular meetings of the Board of Directors shall be held at any place
within or without the State which has been designated from time to time by
resolution of the Board or by written consent of all members of the Board. In
the absence of such designation regular meetings shall be held at the registered
office of the corporation. Special meetings of the Board may be held either at a
place so designated or at the registered office.
SECTION 2. The first meeting of each newly elected Board of Directors shall be
held immediately following the adjournment of the meeting of stockholders and at
the place thereof. No notice of such meeting shall be necessary to the Directors
in order legally to constitute the meeting, provided a quorum be present. In the
event such meeting is not so held, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors.
SECTION 3. Regular meetings of the Board of Directors may be held without call
or notice at such time and at such place as shall from time to time be fixed and
determined by the Board of Directors.
SECTION 4. Special meetings of the Board of Directors may be called by the
Chairman or the President or by the Vice-President or by any two Directors.
Written notice of the time and place of special meetings shall be delivered
personally to each Director, or sent to each Director by mail or by other form
of written communication, charges prepaid, addressed to him at his address as it
is shown upon the records or if not readily ascertainable, at the place in which
the meetings of the Directors are regularly held. In case such notice is mailed
or telegraphed, it shall be deposited in the postal service or delivered to the
telegraph company at least forty-eight (48) hours prior to the time of the
holding of the meeting. In case such notice is delivered or taxed, it shall be
so delivered or
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taxed at least twenty-four (24) hours prior to the time of the holding of the
meeting. Such mailing, telegraphing, delivery or taxing as above provided shall
be due, legal and personal notice of such Director.
SECTION 5. Notice of the time and place of holding an adjourned meeting need not
be given to the absent Directors if the time and place be fixed at the meeting
adjourned.
SECTION 6. The transaction of any meeting of the Board of Directors, however
called and noticed or wherever held, shall be as valid as though transacted at a
meeting duly held after regular call and notice, if a quorum be present, and if,
either before or after such meeting, each of the Directors not present signs a
written waiver of notice, or a consent of holding such meeting, or approvals of
the minutes thereof. All such waivers, consents or approvals shall be filed with
the corporate records or made a part of the minutes of the meeting.
SECTION 7. The majority of the authorized number of Directors shall be necessary
to constitute a quorum for the transaction of business, except to adjourn as
hereinafter provided. Every act or decision done or made by a majority of the
Directors present at a meeting duly held at which a quorum is present shall be
regarded as the act of the Board of Directors, unless a greater number be
required by law or by the Articles of Incorporation. Any action of a majority,
although not at a regularly called meeting, and the record thereof, if assented
to in writing by all of the other members of the Board shall be as valid and
effective in all respects as if passed by the Board in regular meeting.
SECTION 8. A quorum of the Directors may adjourn any Directors meeting to meet
again at stated day and hour; provided, however, that in the absence of a
quorum, a majority of the Directors present at any Directors meeting, either
regular or special, may adjourn from time to time until the time fixed for the
next regular meeting of the Board.
ARTICLE 5
COMMITTEES OF DIRECTORS
SECTION 1. The Board of Directors may, by resolution adopted by a majority of
the whole Board, designate one or more committees of the Board of Directors,
each committee to consist of two or more of the Directors of the corporation
which, to the extent provided in the resolution, shall and may exercise the
power 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 which may require it. Such committee or committees
shall have such name or names as may be determined from time to time by the
Board of Directors. The members of any such committee present at any meeting and
not disqualified from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. At meetings of
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such committees, a majority of the members or alternate members at any meeting
at which there is a quorum shall be the act of the committee.
SECTION 2. The committee shall keep regular minutes of their proceedings and
report the same to the Board of Directors.
SECTION 3. Any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting if
a written consent thereto is signed by all members of the Board of Directors or
of such committee, as the case may be, and such written consent is filed with
the minutes of proceedings of the Board or committee.
ARTICLE 6
COMPENSATION OF DIRECTORS
SECTION 1. The Directors may be paid their expenses of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for attendance at
each meeting of the Board of Directors or a stated salary as Director. No such
payment shall preclude any Director from serving the corporation in any other
capacity and receiving compensation therefore. Members of special or standing
committees may be allowed like reimbursement and compensation for attending
committee meetings.
ARTICLE 7
NOTICES
SECTION 1. Notices to Directors and stockholders shall be in writing and
delivered personally or mailed to the Directors or stockholders at their
addresses appearing on the books of the corporation. Notices to Directors may
also be given by fax and by telegram. Notice by mail, fax or telegram shall be
deemed to be given at the time when the same shall be mailed.
SECTION 2. Whenever all parties entitled to vote at any meeting, whether of
Directors or stockholders, consent, either by a writing on the records of the
meeting or filed with the Secretary, or by presence at such meeting or oral
consent entered on the minutes, or by taking part in the deliberations at such
meeting without objection, the doings of such meeting shall be as valid as if
had at a meeting regularly called and noticed, and at such meeting any business
may be transacted which is not excepted from the written consent to the
consideration of which no objection for want of notice is made at the time, and
if any meeting be irregular for want of notice or such consent, provided a
quorum was present at such meeting, the proceedings of said meeting may be
ratified and approved and rendered likewise valid and the irregularity or defect
therein waived by a writing signed by all parties having the right to vote at
such meeting; and such consent or
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approval of stockholders may be by proxy or attorney, but all such proxies and
powers of attorney must be in writing.
SECTION 3. Whenever any notice whatever is required to be given under the
provisions of the statute, of the Articles of Incorporation or of these Bylaws,
a waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE 8
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the Board of
Directors and shall be a President, a Secretary and a Treasurer. Any person may
hold two or more offices.
SECTION 2. The Board of Directors at its first meeting after each annual meeting
of stockholders shall choose a Chairman of the Board who shall be a Director,
and shall choose a President, a Secretary and a Treasurer, none of whom need be
Directors.
SECTION 3. The Board of Directors may appoint a Vice-Chairman of the Board,
Vice-Presidents and one or more Assistant Secretaries and Assistant Treasurers
and such other officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Directors.
SECTION 4. The salaries and compensation of all officers of the corporation
shall be fixed by the Board of Directors.
SECTION 5. The officers of the corporation shall hold office at the pleasure of
the Board of Directors. Any officer elected or appointed by the Board of
Directors may be removed any time by the Board of Directors. Any vacancy
occurring in any office of the corporation by death, resignation, removal or
otherwise shall be filled by the Board of Directors.
SECTION 6. The CHAIRMAN OF THE BOARD shall preside at meetings of the
stockholders and the Board of Directors, and shall see that all orders and
resolutions of the Board of Directors are carried into effect.
SECTION 7. The VICE-CHAIRMAN shall, in the absence or disability of the Chairman
of the Board, perform the duties and exercise the powers of the Chairman of the
Board and shall perform other such duties as the Board of Directors may from
time to time prescribe.
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SECTION 8. The PRESIDENT shall be the chief executive officer of the corporation
and shall have active management of the business of the corporation. He shall
execute on behalf of the corporation all instruments requiring such execution
except to the extent the signing and execution thereof shall be expressly
designated by the Board of Directors to some other officer or agent of the
corporation.
SECTION 9. The VICE-PRESIDENTS shall act under the direction of the President
and in absence or disability of the President shall perform the duties and
exercise the powers of the President. They shall perform such other duties and
have such other powers as the President or the Board of Directors may from time
to time prescribe. The Board of Directors may designate one or more Executive
Vice-Presidents or may otherwise specify the order of seniority of the
Vice-Presidents. The duties and powers of the President shall descend to the
Vice-Presidents in such specified order of seniority.
SECTION 10. The SECRETARY shall act under the direction of the President.
Subject to the direction of the President he shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record the
proceedings. He shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, and will perform
other such duties as may be prescribed by the President or the Board of
Directors.
SECTION 11. The ASSISTANT SECRETARIES shall act under the direction of the
President. In order of their seniority, unless otherwise determined by the
President or the Board of Directors, they shall, in the absence or disability of
the Secretary, perform the duties and exercise the powers of the Secretary. They
shall perform other such duties and have such other powers as the President and
the Board of Directors may from time to time prescribe.
SECTION 12. The TREASURER shall act under the direction of the President.
Section Subject to the direction of the President he shall have custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all money and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the President or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
corporation.
If required by the Board of Directors, the Treasurer shall give the
corporation a bond in such sum and with such surety as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his office
and for the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation.
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SECTION 13. The ASSISTANT TREASURERS in order of their seniority, unless
otherwise determined by the President or the Board of Directors, shall, in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer. They shall perform such other duties and have such
other powers as the President or the Board of Directors may from time to time
prescribe.
ARTICLE 9
CERTIFICATES OF STOCK
SECTION 1. Every stockholder shall be entitled to have a certificate signed by
the President or a Vice- President and the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary of the corporation, certifying the
number of shares owned by him in the corporation. If the corporation shall be
authorized to issue more than one class of stock or more that one series of any
class, the designations, preferences and relative, participating, optional or
other special rights of the various classes of stock or series thereof and the
qualifications, limitations or restrictions of such rights, shall be set forth
in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such stock.
SECTION 2. If a certificate is signed (a) by a transfer agent other than the
corporation or its employees or (b) by a Registrant other than the corporation
or its employees, the signatures of the officers of the corporation may be
facsimiles. In case any officer who has signed or whose facsimile signatures
have been placed upon a certificate shall cease to be such officer before such
certificate is issued, such certificate may be issued with the same effect as
though the person had not ceased to be such officer. The seal of the
corporation, or a facsimile thereof, may, but need not be, affixed to
certificates of stock.
SECTION 3. The Board of Directors may direct a new certificate or certificates
to be issued in place of any certificate or certificates theretofore issued by
the corporation alleged to have been lost or destroyed upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost or
destroyed.
SECTION 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duty endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation, if it is satisfied that all provisions of the laws and
regulations applicable to the corporation
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regarding transfer and ownership of shares have been compiled with, to issue a
new certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
SECTION 5. The Board of Directors may fix in advance a date not exceeding sixty
(60) days nor less than ten (IO) days preceding the date of any meeting of
stockholders, or the date of the payment of any dividend, or the date of the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining the
consent of stockholders for any purpose, as a record date for the termination of
the stockholders entitled to notice of and to vote at any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
give such consent, and in the such case, such stockholders, and only such
stockholders as shall be stockholders of record on the date so fixed, shall be
entitled to notice of and to vote as such meeting, or any adjournment thereof,
or to receive such payment of dividend, or to receive such allotment of rights,
or to exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the corporation after
such record date fixed as aforesaid.
SECTION 6. The corporation shall be entitled to recognize the person registered
on its books as the owner of the share to be the exclusive owner for all
purposes including voting and dividends, and the corporation shall not be bound
to recognize any equitable or other claims to or interest in such shares or
shares on the part of any -other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Nevada.
ARTICLE 10
GENERAL PROVISIONS
SECTION 1. Dividends upon the capital stock of the corporation, subject to the
provisions of the Articles of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property or in shares of the capital stock, subject to
the provisions of the Articles of Incorporation.
SECTION 2. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends or for
repairing and maintaining any property of the corporation, or for such other
purpose as the Directors shall think conducive to the interests of the
corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
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SECTION 3. All checks or demands for money and notes of the corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
SECTION 4. The fiscal year of the corporation shall be fixed by resolution of
the Board of Directors.
SECTION 5. The corporation may or may not have a corporate seal, as may be from
time to time determined by resolution of the Board of Directors. If a corporate
seal is adopted, it shall have inscribed thereon the name of the corporation and
the words "Corporate Seal" and "Nevada". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
ARTICLE 11
INDEMNIFICATION
Every person who was or is a party or is a threatened to be made a party to
or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or a person of
whom he is the legal representative is or was a Director or officer of the
corporation or is or was serving at the request of the corporation or for its
benefit as a Director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless to the fullest legally permissible under the
General Corporation Law of the State of Nevada from time to time against all
expenses, liability and loss (including attorney's fees, judgments, fines and
amounts paid or to be paid in settlement) reasonably incurred or suffered by him
in connection therewith. The expenses of officers and Directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
Director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. Such right of indemnification shall be a contract right which may
be enforced in any manner desired by such person. Such right of indemnification
shall not be exclusive of any other right which such Directors, officers or
representatives may have or hereafter acquire and, without limiting the
generality of such statement, they shall be entitled to their respective rights
of indemnification under any bylaw, agreement, vote of stockholders, provision
of law or otherwise, as well as their rights under this Article.
The Board of Directors may cause the corporation to purchase and maintain
insurance on behalf of any person who is or was a Director or officer of the
corporation, or is or was serving at the request of the corporation as a
Director or officer of another corporation, or as its representative in a
partnership, joint venture. trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or
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arising out of such status, whether or not the corporation would have the power
to indemnify such person.
The Board of Directors may form time to time adopt further Bylaws with
respect to indemnification and amend these and such Bylaws to provide at all
times the fullest indemnification permitted by the General Corporation Law of
the State of Nevada.
ARTICLE 12
AMENDMENTS
SECTION 1. The Bylaws may be amended by a majority vote of all the stock issued
and outstanding and entitled to vote at any annual or special meeting of the
stockholders, provided notice of intention to amend shall have been contained in
the notice of the meeting.
SECTION 2. The Board of Directors by a majority vote of the whole Board at any
meeting may amend these Bylaws, including Bylaws adopted by the stockholders,
but the stockholders may from time to time specify particulars of the Bylaws
which shall not be amended by the Board of Directors.
APPROVED AND ADOPTED APRIL 9,1998.
CERTIFICATE OF THE SECRETARY
I, Ray Paquette, hereby certify that I am the Secretary of PEPPERMILL CAPITAL
CORPORATION, and the foregoing Bylaws, consisting of 8 pages, constitute the
code of Bylaws of this company as duly adopted at a regular meeting of the Board
of Directors of the corporation held on April 9, 1998.
IN WITNESS WHEREOF, I have hereunto subscribed my name on April 9, 1998.
/s/ "Raymon Paquette"
- ---------------------------
Secretary
EXHIBIT 3(A)
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
SPECIMEN STOCK CERTIFICATES
NUMBER SHARES
PEPPERMILL
CAPITAL
CORPORATION
CUSIP NO. 713398 10 5
Authorized Common Stock: 200,000,000 Shares
Par Value: $0.001
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
-Shares of PEPPERMILL CAPITAL CORPORATION Common Stock - transferable on
the books of the Corporation in person or by duly authorized attorney upon
surrender of this Certificate properly endorsed. This Certificate is not valid
until countersigned by the Transfer Agent and registered by the Registrant.
Witness the facsimile seal of the Corporation and the facsimile of its duly
authorized officers.
Dated:
- ------------------------------------- --------------------------------------
Secretary President
Not valid unless countersigned by transfer agent
Countersigned Registered:
NEVADA AGENCY AND TRUST COMPANY
50 WEST LIBERTY STREET, SUITE 880
RENO, NEVADA, 89501 By
----------------------
Authorized Signature
EXHIBIT 6(A)(I)
TRANSFER AGENT AND REGISITRAR AGREEMENT
THIS AGREEMENT made and entered into this 10th day of June, 1998, by and
between:
NEVADA AGENCY AND TRUST COMPANY, 50 West Liberty Street, Suite 880, Reno, Nevada
89501, hereinafter called "TRANSFER AGENT," and
PEPPERMILL CAPITAL CORPORATION, 250 - 1075 West Georgia Street, Vancouver, B.C.
V6E 3C9, a Nevada corporation, hereinafter called "COMPANY."
NOW THEREFORE, for valuable consideration and the mutual promises herein
contained, the parties hereto agree as follows, to wit:
1. [APPOINTMENT OF TRANSFER AGENT] The COMPANY hereby appoints TRANSFER
AGENT as the Transfer Agent and Registrant for the COMPANY'S Common
Stock,commencing on this 10th day of June, 1998.
2. [COMPANY'S DUTY] The COMPANY agrees to deliver to TRANSFER AGENT a
complete up-to-date stockholder list showing the name of the individual
stockholder, current address, the number of shares and the certificate numbers,
it being specifically understood and agreed that the TRANSFER AGENT is not to be
held responsible for any omissions or error, that may leave occurred prior to
this Agreement whether on the part of the COMPANY itself or its previous
transfer agent or agents. The COMPANY hereby agrees to indemnify TRANSFER Agent
in this regard.
3. [STOCK CERTIFICATES] The COMPANY agrees to provide an adequate number of
stock certificates to handle the COMPANY'S transfers oil a current basis. Upon
receipt of TRANSFER AGENT'S request, the COMPANY agrees to furnish additional
stock certificates as TRANSFER AGENT deems necessary considering the volume of
transfers. The stork certificates shall be supplied at COMPANY'S cost. The
TRANSFER AGENT agrees to order stock certificates from its printer upon request
of the COMPANY.
4. [TRANSFER AGENT DUTIES] TRANSFER AGENT agrees to handle the COMPANY'S
transfers, record the same, and maintain a ledger, together with a file
containing all correspondence relating to said transfers, which records shall be
kept confidential and be available to the COMPANY and its Board of Directors, or
to any person specifically authorized by the Board of Directors to review the
records which shall be made available by TRANSFER AGENT during the regular
business hours.
<PAGE>
5. [TRANSFER AGENT REGISTRATION] TRANSFER AGENT warrants that it is
registered as a Transfer Agent with the United Stakes Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended.
6. [STOCKHOLIDER LIST] From time to time, as necessary for Company
stockholders meeting or mailings, the TRANSFER AGENT will certify and make
available to the current, active stockholders list for COMPANY purposes. it is
agreed that a reasonable charge for supplying such list will be made by TRANSFER
AGENT to the COMPANY. It is further agreed that in the event the TRANSFER AGENT
received a request or a demand from a stockholder or the attorney of agent for a
stockholder, for a list of stockholders, the TRANSFER AGENT will serve notice of
such request by certified mail to the COMPANY. The COMPANY will have forty-eight
(48) hours to respond in writing to the TRANSFER AGENT. If the COMPANY orders
the TRANSFER AGENT to withhold delivery of a list of stockholders as requested,
the TRANSFER AGENT agrees to follow the orders of the COMPANY. The COMPANY will
then follow the procedure set forth in the Uniform Commercial Code to restrain
the TRANSFER AGENT from making delivery of a stockholders list.
7. [TRANSFER FEE] TRANSFER AGENT agrees to assess and collect from the
person requesting a transfer and/or the transferor, a fee of Fifteen and No/100
dollars ($15.00) for each stock certificate issued, except original issues of
stock or warrant certificates, which fees shall be paid by the COMPANY. This fee
may be decreased or increased at any time by the TRANSFER AGENT. This fee shall
be the property of the TRANSFER AGENT.
8. [ANNUAL FEE] The COMPANY agaves to pay the TRANSFER AGENT an annual fee
of TWELVE HUNDRED DOLLARS ($1,200.00) each year. This fee reimburses the
TRANSFER AGENT for the expense and time required to respond to the written and
oral inquiries from brokers and the investing public, as well as maintaining the
transfer books and records of the corporation. The annual fee will be due on 1st
of January of each year and is subject to annual review.
9. [TERMINATION] This Agreement may be terminated by either party given
written notice of such termination to the other party at least ninety (90) days
before the effective date. The TRANSFER AGENT shall return all of the transfer
records to the COMPANY and its duties and obligations as TRANSFER AGENT shall
cease at that time. The TRANSFER AGENT will be paid a Termination Fee of $1.00
per registered stockholder of the Company at the time the written termination
notice is served.
10. [COMPANY STATUS] The COMPANY will promptly advise the TRANSFER AGENT of
any changes or amendments to the Articles of Incorporation, any significant
changes in corporate status, changes in officers, etc., and of all changes in
filing status with the Securities and Exchange Commission, or any state entity,
and to hold the, TRANSFER AGENT harmless from its failure to do so.
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<PAGE>
11. [INDEMNIFICATION OF TRANSFER AGENT] The COMPANY agrees to indemnify and
hold harmless the TRANSFER AGENT, from any and all loss, liability of damage,
including reasonable attorneys' fees and expenses, arising out of, or resulting
from the assertion against the TRANSFER AGENT of any claims, debts or
obligations in connection with any of the TRANSFER AGENT'S duties as set forth
in the Agreement, and specifically it is understood that the TRANSFER AGENT
shall have the right to apply to independent counsel at the COMPANY'S expense in
following the COMPANY'S directions and orders.
12. [COUNTERPARTS] This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original,
but all such counterparts shall constitute one and the same instrument.
13. [NOTICE] Any notice under this Agreement shall be deemed to have been
sufficiently given if sent by registered or certified mail, postage
prepaid, addressed as follows:
TO THE COMPANY:
Michael Mitsiadis, President
Raymond Paquette
PEPPERMILL CAPITAL CORPORATION
250 - 1075 West Georgia Street
Vancouver, B.C. V6E 3C9
TO THE TRANSFER AGENT:
NEVADA AGENCY AND TRUST COMPANY
50 West Liberty Street, Suite 880 Reno,
Nevada 89501
14. [MERGER CLAUSE] This Agreement supersedes all prior agreements and
understandings between the parties and may not be changed or terminated orally,
and no attempted change, termination or waiver of any of the provisions hereof
shall binding unless in writing and signed by the parties hereto.
15. [GOVERNING LAW] This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
THIS AGREEMENT has been executed by the parties hereto as of the day
and year 1st above written, by the duly authorized officer or officers of
said parties, and the same will be binding upon the assigns and successors
in interest of the parties hereto.
3
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NEVADA AGENCY AND TRUST COMPANY
TRANSFER AGENT
BY /S/ "AMANDA CARDINALLI"
----------------------------------
AMANDA CARDINALLI, VICE PRESIDENT
PEPPERMILL CAPITAL CORPORATION
BY /S/ "MICHAEL MITSIADIS" BY /S/ "RAYMON PAQUETTE"
--------------------------------- ---------------------------------
MICHAEL PAQUETTE RAYMON PAQUETTE
PRESIDENT SECRETARY
4
EXHIBIT 10 (I)
ANDERSEN ANDERSEN & STRONG, L.C. 941 East 3300 South, Suite 220
Certified Public Accountants and Business Salt Lake City, Utah, 84106
Consultants Board Telephone 801-486-0096
Member SEC Practice Section of the AICPA Fax 801-486-0098
e-mail Kandersen @ msn.com
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
PEPPERMILL CAPITAL CORPORATION
We hereby consent to the use of our report dated April 12, 1999, in the
registration statement of Peppermill Capital Corporation filed in Form 10-SB in
accordance with Section 12 of the Securities Exchange Act of 1934.
/s/ L. REX ANDERSEN
ANDERSEN ANDERSEN & STRONG, L.C.
Salt Lake City, Utah
April 7, 1999
A member of ACF International with affiliated offices worldwide
EXHIBIT 99(a)
REPORT
ON THE
STAR MINERAL CLAIMS
PRINCETON AREA
SIMILKAMEEN MINING DIVISION, B.C.
LATITUDE 49 DEGREES 38 MINUTES NORTH
LONGITUDE 120 DEGREES 38 MINUTES WEST
MAP REFERENCE - NTS 92H/10
BY
JAMES W. MCLEOD, P.GEO.
ON BEHALF OF
PEPPERMILL CAPITAL CORPORATION
JUNE 16, 1998
DELTA, BRITISH COLUMBIA
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY 3
INTRODUCTION 4
LOCATION AND ACCESS 4
TOPOGRAPHICAL AND PHYSICAL ENVIRONMENT 4
PROPERTY AND OWNERSHIP 5
HISTORY 5
REGIONAL GEOLOGY 5
LOCAL GEOLOGY 6
CONCLUSIONS 7
RECOMMENDATIONS 8
COST ESTIMATE 9
CERTIFICATE 11
REFERENCES 12
APPENDICES
APPENDIX I - GEOCHEMICAL ANALYSES AND ASSAYS 13
FIGURES
1. LOCATION MAP AFTER 4
2. CLAIM MAP AFTER 5
3. ADIT ZONE PLAN AFTER 6
<PAGE>
3
SUMMARY
During 1987 the writer examined the area presently covered by the Star mineral
claims and conducted preliminary mapping, rock sampling and a reconnaissance
very low frequency (VLF-EM) electromagnetic survey. This field information
augmented geochemical results obtained from a 1980 soil survey conducted over
portions of the present claim area. A number of positive features are recognized
from this data which are listed as follows:
1) An excellent geological setting which has produced numerous economically
viable situations in the past.
2) The possibility of good underlying rock structure as indicated by the
positive results of the VLF-EM test.
3) In places moderate rock alteration is observed which may indicate a
hydrothermally active area.
4) Strong preliminary indications of precious and base metal mineralization.
For example, selective samples taken by the writer have returned values up to
2.49% copper, 1.47% zinc, 0.08% lead, 5.20 oz/t. silver and 0.55 oz/t. gold.
A two phase exploration program is recommended for the property. The program is
expected to take approximately two months to complete at an estimated cost of
$171,000.
<PAGE>
4
INTRODUCTION
During 1987 the writer made a number of trips to the Star claim area to conduct
property examinations and to perform various preliminary fieldwork programs
which are described in this report. The fieldwork included rock exposure mapping
and sampling and a preliminary VLF-EM survey. This data added to the information
gained from a previous geochemical soil survey conducted during 1980. In 1997
the writer had occasion to again visit the Star mineral claim area.
This report is being prepared at the request of the Directors of Peppermill
Capital Corporation.
LOCATION AND ACCESS
The Star mineral claims are situated 20 km. (12 miles) north of the Village of
Princeton, British Columbia, Canada. The claim area may be located at latitude
49 degrees 38 minutes north and longitude 120 degrees 38 minutes west on NTS
Mapsheet 92WI0. The mineral claims straddle Allison Creek between Borgeson and
Dry lakes and the north-south trending Provincial Highway 45.
Access to the property is provided by traveling north from Princeton, B.C. for
20 km. or south from the Town of Merritt, B.C. for 61 km. (37 miles) on
Highway,45.
TOPOGRAPHICAL AND PHYSICAL ENVIRONMENT
The Star mineral claims lie in the rather restricted, steep-sided, U-shaped
Allison creek valley. The claims cover Bergeson Lake. The elevation of the
property ranges from 840 metres (2,750 feet) to 1,200 metres (4,200 feet) mean
sea level and is conifer covered by Douglas spruce, western yellow pine
(Ponderosa) and lodgepole pine. The area used to be an active logging area. The
property lies on the western edge of the Interior Dry belt and as such reflects
generally low precipitation, 40 - 60 cm. (I 5 - 25 inches) with a low to
moderate amount occurring as snow. The summers are long and warm while
<PAGE>
FIGURE 1
MAP LOCATION
(Not included herein)
<PAGE>
5
the winters are often short, but brief periods of cold weather can occur. The
claim area while being quite dry has abundant water close at hand to support
either an exploratory drilling program or if the need arises, a production
situation.
PROPERTY AND OWNERSHIP
The property consists of eleven, contiguous located two post, lode mineral
claims which are listed as follows:
<TABLE>
<CAPTION>
- ---------- ------------ ---------- --------
Claim Name No. of Units Record No. Due Date
- ---------- ------------ ---------- --------
<S> <C> <C> <C>
Star & Star #1 2 353713-14 February 16
Star #3 - Star #6 4 353715-18 February 16
Star #7 - Star #11 5 356670-74 June 22
- ------------------------------------------------------------------------------------------
TOTAL 11 Units
</TABLE>
The claim area totals approximately 238 hectares (587 acres). The claims are
owned by Peppermill Capital Corporation of #250 - 1075 West Georgia Street,
Vancouver, B.C., V6E 3C9.
HISTORY
The development of the adit (Adit Zone) on the Star mineral claims is not known,
but it likely dates from the 1930's when the search for precious metals was at a
peak.
The first work recorded on the claim area was for a geochemical soil survey
conducted in 1980 for Nufort Resources Inc.
The writer performed preliminary mapping, sampling and a limited VLF-EM in 1987
and since that time no further work has been performed on the claim area.
REGIONAL GEOLOGY
The geology of the general area has been described by Members of the Geological
Survey of Canada (GSC) and the British Columbia Ministry of Energy, Mines and
Petroleum Resources (BCME), see References for
<PAGE>
6
further regional geological information on the area. To summarize, the general
area is underlain by the northerly trending occurrence of Upper Triassic aged
Nicola Group which is a eugeosynclinal belt of predominantly tuffs and
multi-coloured lava, minor argillite and limestone and the possible
contemporaneous Upper Triassic to Lower Jurassic aged plutonic rocks. The next
youngest rocks found to occur are the Jurassic or later aged Coast Intrusions
which are mainly as granodiorite and quartz monzonite. The next youngest rocks
in the general area are those assigned to the Lower Cretaceous aged Kingsvale
Group which appear to be aerial to subaerial in depositional environment and
which are mainly tuffs, flows and minor sediments. The next youngest rocks seen
to occur in the general area are the Miocene or earlier aged Princeton Group
rocks which are as vanicoloured andesite and basalt flows and lahars and minor
sediments, such as boulder conglomerate, grit sandstone and slitstone. -The
youngest rock units observed in the general area are the Pleistocene and Recent
valley basalts (gabbro).
The Allison Creek valley in the vicinity of Borgeson Lake apparently is the
location of a major northerly trending fault. This fault trends sub-parallel to
the Summers creek fault which occurs approximately 6 km. (3.5 miles) to the
east. These faults are major features in length (north-south) and in places
exhibit considerable lateral extent as major fracture (brecciation) zones which
may have had considerable effect on the localization and concentration of
mineralization (alteration).
LOCAL GEOLOGY
The portions of the property, so far examined by the writer are underlain mainly
by a medium-coarse grained quartz monzonite or granite which are now thought to
belong to the Upper Triassic to Lower Jurassic aged Allison Lake plutonic suite
which may be contemporaneous with the Nicola volcanic suite which is found as
host to so many of the mineral showings and deposits in the general area. A fine
grained, dark green crystalline rock is found exposed in a number of places on
the property and may be Nicola volcanic occurrences. Also in several places
along the eastside of the Adit creek and to the northwest of the Adit Zone is
found occurring a very fine grained, black coloured volcanic or dyke rock
transecting the enclosing rocks. This dyke may be of gabbroic
<PAGE>
FIGURE 2
CLAIM MAP
(Not included herein)
<PAGE>
7
composition (see sample analyses 2A - Appendix 1) which is seen to be high in
nickel, cobalt, chromium and magnesium.
A strong east-west fracture which varied in dip from 10 degrees north to
vertical was observed in a number of locations on the property, especially near
the creek (Adit) which runs in front of the adit. At the adit a hanging wall
shear or fracture of N345/65E trend is evident.
The alteration minerals observed were chlorite, calcite, epidote, sericite and
possibly secondary potassium feldspar in some of the fractures or shear zones.
Although examination of the induction coupled plasma analyses (ICP) results
while rendering limited digestion and subsequent delectability do not indicate a
very significant increase in potassium.
Mineralization observed in order of decreasing abundance was pyrite, sphalenite
(dark coloured - iron-rich), chalcopyrite and galena and particular note should
be made of the occurrence of gold and silver values in some of the samples (see
Appendix 1).
CONCLUSIONS
A number of positive features have been revealed about the Star mineral claim
area by both the 1980 geochemical soil survey and the preliminary fieldwork
performed by the writer in 1987 and these features are listed as follows:
1) In place sulphide mineralization consisting of pyrite, chalcopyrite,
sphalerite and galena are found to carry significant gold and silver
values have been identified on the property. The values encountered to
date range as high as-. copper - 2.49%; zinc - 1.47%; lead - 0.08%;
gold - 0.55 oz/t and silver - 5.20 oz/t.
2) A number of soil anomalies in the elements copper, zinc, lead and
silver were indicated by the 1980 geochemical survey. Many of these
anomalies have not yet been explained, but all four elements, copper,
zinc, lead and silver appear anomalous in the vicinity of the adit, -
only to the south, across the creek. This may indicate a continuation
of the mineralization to the south.
<PAGE>
8
3) Favourable geology, structure, alteration and mineralization are
evident within the Star mineral claim area and may indicate economic
base and precious metal mineralization.
4) The VLF-EM response along the creek about the Adit Zone suggests
conductive causes which are possibly related to mineralization and/or
structure which may lead to mineralization. The VLF-EM method should
be utilized about known mineralization and soil anomalies. A
magnetometer survey should be conducted in conjunction with the VLF-
EM survey to assist in sub-surface mapping and the possibility of
delineating basic or ultrabasic rock occurrences.
5) The area covered by the Star mineral claims and particular the area
between Borgeson Lake on the north and Dry Lake on the south (see
Figure 2) is traversed by what appears to be a deep, well defined
fault or faults (Allison and/or "Asp Creek").
It should be kept in mind that regional mapping along the Allison Creek valley
(northwest-southeast trend) indicates a number of sub-parallel faults with this
same trend i.e. to the north of Allison Lake. Also, topography is suggestive of
the possibility of northeast-southwest trending structures which presents the
opportunity of there being areas of intersection of faults with different
directions of trend. One such possibility is the area on the eastside of the
mineral claims in between Borgeson and Dry lakes (see Figure 2).
RECOMMENDATIONS
The writer recommends that the following two phase exploration program be
undertaken to thoroughly test the Star mineral claim area for significant base
and precious metal mineralization.
Undertaking the Phase 11 program is contingent on the results obtained from the
Phase I program.
PHASE I
Geological mapping and prospecting of the entire property. The continuation of
the wide-spaced (100 metre x 50 metre) grid. The installation of close-
<PAGE>
9
spaced (30 metre x 15 metre) grids about all of the anomalous or mineralized
areas. Geochemical soil sampling at both grid spacings with subsequent analyses
for copper, zinc, silver and gold with selected analyses for platinum group
elements (PGE). Conduct magnetometer and VLF-EM surveys over the gridded areas
to assist in sub-surface mapping and to delineate conductors, respectively. Hand
trenching should be performed on the anomalous zones, where practical, to
explain the cause of the anomalies.
PHASE II
Areas of mineralization and/or coincidently anomalous zones that cannot be
checked by hand trenching should be bulldozer trenched where possible. More
detailed investigations of such zones or areas of mineralization could be
performed by percussion drilling. Some diamond core drilling should be
undertaken to provide a continuous geological section and assay data.
COST ESTIMATE
PHASE I
Geological mapping and supervision 18,000
Grid installation 9,000
Magnetometer survey with base recording 10,000
VLF-EM survey 7,500
Transportation 3,000
Hand trenching 2,500
Room and board 6,000
Equipment and supplies 500
Analyses and assays 20,000
Permits, fees, filings, insurance, etc 4,000
Reports and maps 2,000
Contingency 5,500
-------
Sub-Total $88,000
=======
<PAGE>
FIGURE 3
ADIT ZONE PLAN
(Not included herein)
<PAGE>
10
PHASE II
Bulldozer trenching and drill access roads - D8 with ripper $ 12,000
Percussion drilling 1,000 m. @ $36/m., all inclusive $ 36,000
250 metres BQ wireline diamond core drilling @ $140/m.,
all inclusive 35,000
Sub-Total $ 83,000
--------
TOTAL $171,000
========
Respectfully submitted
/ c / "James W. McLeod"
James W. McLeod, P. Geo.
<PAGE>
11
CERTIFICATE
I, JAMES W. McLEOD, of the Municipality of Delta, Province of British Columbia,
hereby certify as follows:
1) I am a Consulting Geologist with an office at #203 - 1318 56th Street,
Delta, B.C., V4L 2A4.
2) I am a Professional Geoscientist registered in the Province of British
Columbia and a Fellow of the Geological Association of Canada.
3) I graduated with a degree of Bachelor of Science, Major Geology, from
the University of British Columbia in 1969.
4) I have practiced my profession since 1969.
5) I do not have any interest nor do I expect to receive any interest in
Peppermill Capital Corporation or the Star mineral claims.
6) The above report is based on personal field experience gained by
working on the property during 1987.
7) DATED at Delta, Province of British Columbia this 16th day of June
1998,
/c/ "James W. McLeod"
James W. McLeod
Consulting Geologist
<PAGE>
12
REFERENCES
McLeod, J.W. (1988): Report on the Dry Claim Group, Private report for Rocket
Energy Resources Ltd.
McMechan, R.D. (1983): Geology of the Princeton Basin, B.C., BCMEMPR, Paper
1983-3.
Montgomery, J.H. (1967): Petrology, Structure and Origin of the Copper Mountain
Intrusions near Princeton, British Columbia, unpublished Ph.D. thesis,
University of British Columbia.
Preto, V.A. (1972): Geology of Copper Mountain, B.C., Department of Mines and
Petroleum Resources, Bulletin 59.
Preto, V.A. (1979): Geology of the Nicola Group between Merritt and Princeton,
B.C., BCMEMPR, Bulletin 69.
Rice, H.M.A. (1947): Geology and Mineral Deposits of the Princeton Map Area,
British Columbia, Department of Mines and Resources, Canada, Memoir 243,
including Map 888A.
White, Glen E. (I 980): Geochemical Report on the Dry and Lake Claims, B.C.
Assessment Report No. 8184.
<PAGE>
13
APPENDIX 1
Geochemical Analyses and Assays
<PAGE>
14
GEOCHEMICAL ICP ANALYSIS
(Dated September 10, 1987)
(Not included herein)
<PAGE>
15
GEOCHEMICAL / ASSAY CERTIFICATE
(Dated November 27, 1987)
(Not included herein)
