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 (g)
of the Securities Exchange Act of 1934
CAN-EX MINERALS CORPORATION
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(Name of Small Business Issuer in its Charter)
Nevada 84-1485618
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(State of other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
6395 Blazing Star Drive - Colorado Springs, Colorado 80922
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(Address of principal executive offices) (Zip Code)
Issuer's Telephone number: (719) 380-9862
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Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001 Per Share
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(Title of Class)
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PART I
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ITEM 1. DESCRIPTION OF BUSINESS
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(a) Business Development
Can-Ex Minerals Corporation (the "Company" or the "Registrant" ) is a
Nevada corporation which was originally incorporated on December 15, 1997. The
Company was authorized to issue an aggregate of 50,000,000 shares of capital
stock with a par value of $0.001 per share.
As of March 31, 1998, 11,422,000 shares of the Company's authorized
shares of common stock were issued and outstanding.
To management's knowledge, the Company has not been subject to
bankruptcy, receivership or any similar proceedings.
The Company maintains offices at 6395 Blazing Star Drive, Colorado
Springs, Colorado 80922.
(b) Business of the Issuer
Since its inception, the Company has operated in a development stage.
The Company was established to engage in the acquisition, exploration and
development of natural resource properties. The Company's main area of interest
is in the Republic of Chile where it has staked certain mineral claims more
fully described below.
Acquisition of Minerals Claims. In a Purchase Agreement dated May 26,
1998 between Garth Johnson and the Company, it was agreed that the Company would
acquire from Mr. Johnson 600 hectares of mineral claims on the salt flats known
as Piedra Parada Salar and more specifically described as the Constelacion Duo
and Constelacion Cuatro for the following consideration:
a. The Company will pay Johnson the cost of staking and
recording of the claims the sum of $85,000 by no later than June 30, 1998;
b. The Company has granted Johnson a 3% net smelter royalty
which the Company can buy from Johnson for the sum of $2,000,000 at any time
prior to or during production of the claims and all royalty payments shall apply
to reduce the $2,000,000 purchase price of the net smelter royalty; and
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c. The Company agreed to issue to Johnson 800,000 shares of
the Company's capital stock, having the equivalent market value of $500,000, of
which 150,000 shares will be free trading and 650,000 shares will be restricted
under Rule 144 and subject to a Pooling Agreement.
In consideration for the above, Johnson agreed to:
i. Commence and complete staking, site engineering, the
Mensura, being the equivalent to a legal survey, and filing the inscription of
Mensura in the Conservator of Mines for Chile and will negotiate on behalf of
the Company the balance of 50% of the Constelacion Group held by a third party
known personally to Johnson which will give the Company 98% of the Constelacion
claim block (Con 1-4) for an area of approximately 1200 hectares.;
ii. Transfer title to the claims within 60 days of receiving
the final cash payment towards the staking and recording of the claims;
iii. Assist the Company and its engineers by providing
assistance and any and all geological and engineering documents, including, but
not limited to maps, reports, assays, studies available on the claims or their
surrounding area; and
iv. Immediately enter into a Pooling Agreement with the
Company regarding the 650,000 shares issued to him out of the 800,000 shares
noted above.
Description of the Mineral Claims, the Republic of Chile and Geological
Structures. The mineral claims cover a portion of an enclosed evaporated body or
salt flat known as the Piedra Parada Salar, and total approximately 3,500 acres
in the Republic of Chile.
Chile is located on the west coast of southern South America, bordered
by the Pacific Ocean on the west, Argentina and Bolivia on the east and Peru on
the north. Chile covers a geographical area slightly larger than the State of
Texas. The average width from east to west is only 110 miles, but the
north-south dimension of 2,650 miles is equivalent to the distance between
Washington, DC and the US West Coast.
The Company's mineral claims are located in Region 3 of Chile which is
largely a mining region. This area produced almost $2,000,000,000 worth of
exported mineral products in 1995. Most of the world's largest mining companies
have operations or exploration offices located in this region.
The actual claims held in trust for the Company by its President, Grant
Dion, are part of the Constelacion Group, being the Constelacion Dos and
Constelacion Cuatro and form the majority of the assets of the Company. The
claims consist of two
contiguous mineral properties covering an area of 600 hectares. The Salar, where
the Company's property is located, is centered in a drainage basin covering
about 200 miles of land area, and receives water inflows in the form of local
runoff and from thermal springs which enter the Salar at the margins. This area
was anciently the lowest area of the drainage basin and thus received the influx
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of mineral and erosional products. Due to local and regional block-faulting,
some of the area has been uplifted some 30 to 35 feet above the portion of the
Salars to the west. The uplifting has exposed a series of horizontal beds which
contain a number of minerals. The Piedra Parada claims cover this uplifted area.
The southern portion of the mineral reserves are more exposed to the prevailing
northwesterly winds, which have subsequently carved the uplifted horizontal beds
into low scraps and terraces reminiscent of dunelike formations.
The mineral reserves were uplifted in the eastern portion of the Salar
due to local block-faulting and consist of layered beds composed largely of
gypsum interbedded with silt-stone, sandstone and iron minerals.
In general, the dynamics of Salars and other evaporate bodies are
poorly researched and understood. Recent development of the large lithium and
potassium reserves at the Salar de Atacama in Chile's Region 11 has spawned new
studies which help to shed some light on the geologic formation and development
of the Salars. In most Salars, the rate of water evaporation is much greater
than the rate of replenishment, causing the water-borne minerals and salts to
deposit out of solution as the water evaporates. Studies done by CORFO and Foote
Minerals suggest that the evaporation rates in this area of Chile are among the
highest in the world. This is due to the high degree of solar radiation at these
high altitudes and the general lack of cloud cover for most of the year. Most of
the Salars have large surface areas compared to the amount of water inflow, so
as is the case with Piedra Parada, most of the Salar is covered with no more
than maybe a foot or so of water, even during spring runoff. Another factor is
the constant afternoon windy condition, where winds often average 20 to 30 miles
per hour.
Location and Access. The Piedra Parada mineral claims are located in
NorthCentral Chile along the border with Argentina in a remote area of Region 3.
The claims lie at a mean elevation of 13,000 feet, surrounded by hills and peaks
ranging from 1,000 to 5,000 feet above the level of the mineral properties. The
properties are located approximately 120 kilometers east of the city of El
Salvador and are accessible by following the road from El Salvador to La Ola for
a distance of about 70 kilometers, then turning east for the remainder of the
distance, most of which is traversed along a combination of unimproved dirt road
and trail.
Historical Background of Region 3. Although not founded until mid-1740,
Copiapo, the capital of Region 3 and the largest city therein, was actually the
site of the first camps of the Spaniards who entered Chile from Peru beginning
in 1536 and subsequently served as a way station for the Spanish Conquistadors
traveling from Lima to Santiago. Although Copiapo's mining roots go back
hundreds of years, it was not until 1832 that mining became a dominant economic
force. In that year, a huge silver strike was found about 40 miles south of
Chanarcillo and the first large commercial mining operation in Chile was
initiated. Chanarcillo would eventually become the world's third largest silver
producer, netting sales through the 1870's of more than $200,000,000 in silver
bullion, which adjusted for inflation is equivalent to several billion dollars
today.
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Although the mine began to play out in the 1880's, a number of miners
stayed in the area to work other subsequent strikes of gold and silver. A number
of small copper operations were initiated prior to the turn of the century in
the area, the most notable being the mines and smelter at Canto de Agua and
Cerro Blanco, located about 60 miles south of Copiapo. The crude smelters
produced a copper dore containing 4 to 5 lb. Per ton of gold and silver. The
dore was shipped to the US buyers, principally Asarco, for further refining.
Towards the end of World War I, an American company known as Andes
Copper Company began exploration and development of a large porphyry copper
deposit located about 100 miles northeast of Copiapo near what is today known as
Potrerillos. Port facilities were built in Chanaral and an open pit mine
engineered along with facilities for ore processing and smelting. A railroad was
subsequently added for transporting smelted copper to port. This was one of the
first major construction projects undertaken in the world following construction
of the Panama Canal in 1914 and initiation of the hostilities of World War I the
same year. The scale of the mining project at Potrerillos, its relative
remoteness and lack of infrastructure made this one of the great engineering
feats in mining history and is a credit to the "can do" attitude of American
engineering in its infancy.
During the 1950's, a number of small copper projects were started in
the region due in large part to strong copper prices prevalent during the
decade. Many of these projects remain in operation today and include the
operations of Sali Hochschild, San Rafael, San Jose and others. These projects
have expanded and contracted along with the world market conditions over the
last 40 years.
The Chilean government agency, Enami or Empresa Nacional de Mineria,
constructed a smelter and refinery during the latter part of the 1950"s at
Paipote some five miles south of Copiapo to handle production of copper and gold
concentrates from small and medium size producers, and to encourage development
of other small mining operations. Today, Enami buys from dozens of small mills
and producers, some of which may produce only a few kilos a day of mineralized
concentrates. In addition, Enami built concentrating plants at El Salado, north
of Copiapo, and at Domeyko, located in the southern portion of the region to
help foment mineral production from small and medium sized mining operations.
Declining copper prices during the 1970's and early 1980's put the
Copiapo area in a prolonged recession. In 1983, as part of an overall economic
reform, Chile adopted a new mining law which gave ownership guarantees to
foreign companies and projects. By 1985, a number of the world's foremost mining
companies were active in the region, exploring and developing different
projects. More than $1,000,000,000 has been spent in the last decade in the
Copiapo area by international mining companies developing a variety of mineral
prospects.
In 1955, Region 3 produced some $1,900,000,000 worth of mineral
commodities, almost all of which was exported to offshore buyers in Japan,
Europe and the United States. Of this amount, about 60% of $1,200,000,000 was
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copper. About one-half of the copper is refined in the region at the smelters
located at Potrerillos and Paipote. The balance is exported as concentrates. The
remaining metal exports are as follows:
Gold $450,000,000
Silver $140,000,000
Iron $120,000,000
Metal and mineral concentrates are mostly exported form the ports of Chanaral
and Caldera while the iron ore is largely exported form the port of Huasco
located in the southern portion of Region 3.
Mineralization on or near the Constelacion Dos and Constelacion Cuatro.
Precious metals appear to be largely confined and associated with iron
mineralization which occurs above ground in two distinct beds totaling some 1.5
meters in depth. Based on preliminary assays of the mineral unites, gold and
silver values in the iron beds, allowing a dilution during mining, have been
extrapolated at 1.44 g/ton gold and 1.6 oz./ton silver. Other tests indicate
additional values of gold contained as tellurides averaging 0.51 oz/ton over the
entire 10 meter thickness of the exposed reserves. It is not known how much, if
any, of these tellurides can be recovered for processing. Recovery of any
portion of these telluride values would enhance project economics tremendously.
Even without the tellurides, reserves of the iron ore beds when combined with a
dilution factor of one meter total more than 31,000,000 metric tons, sufficient
to support a processing operation of 11,500 metric tons per day for a period of
nine years, including construction and start-up. At that rate of production, the
project would produce about 175,000 troy ounces of gold per year, and more than
6,000,000 ounces of silver. At current market prices, the precious metals would
bring income to the project in excess of $90,000,000 per year, factored at 90%
to allow for refinery charges and marketing costs.
(1) Principal Products
As stated above, the Company will be involved in the exploration and
development of its claims for the precious metals contained therein. None of the
Company's properties contain a known body of commercial ore and, therefore, any
program conducted on such properties would be an exploratory search of ore.
There is no certainty that the exploration of the properties will result in
discoveries of commercially mineable quantities of ore. Most exploration
projects do not result in the discovery of commercially mineable deposits of
ore.
(2) Status of Publicly Announced New Products or Services
The Company has not made any public announcements regarding its
products or services.
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(3) Competition
The Company faces well-established and well-funded competition. The
exploration and development of mining properties is highly competitive. There
are many well-established, well-funded successful corporations with financial
resources greatly in excess of that available to the Company. Management is
confident that the Company will be able to compete effectively on the basis of
the potential precious metal reserves on the Company's claims.
The mineral industry is intensely competitive and the Company competes
with other companies that have greater resources.
(4) Risks Associated With Mining Exploration and Development
Mining operations generally involve a high degree of risk. Hazards such
as unusual or unexpected formations and other conditions are involved. The
Company may become subject to liability for pollution, cave-ins or hazards
against which it cannot ensure or which it may not elect to ensure. The payment
of such liabilities may have a material adverse effect on the Company's
financial position.
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.
(5) Title to Properties
While the Company has obtained the usual industry standard title
reports with respect to its properties, this should not be construed as a
guarantee of title. The properties may be subject to prior unregistered
agreements and title may be affected by undetected defects. Certain of the
claims may be under dispute and resolutions of a dispute may result in the loss
of some or all of such claims or a reduction in the Company's interest therein.
None of the Company's properties have 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.
(6) Governmental Approval, Effect of Governmental Regulation and Costs
and Effects of Compliance with Environmental Laws
Prior to commencing mining operations on any of its properties, the
Company must meet certain stringent environmental requirements. Compliance with
these requirements may prove to be difficult and expensive.
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The Republic of Chile maintains a regulatory structure to address
environmental issues, including mining operations, tailings, water and airborne
emissions. The Chilean government enacted an environmental framework law in
1994. All regulations pertinent to the environmental framework law will be
adopted and strictly adhered to by the Company. Regulations have not been
published regarding environmental impact statements. The costs associated with
compliance of these laws cannot be accurately assessed until the complete
regulation program has been disseminated and implemented. However, based on
current available information, as it relates to the applicable regulations, the
Company anticipates the application regulations will not materially affect
operations in Chile.
(7) Employees
The officers and directors who are identified below are the significant
employees of the Company. The Company has no other employees.
(c) Reports to Security Holders
Prior to filing this Form 10-SB, the Company has not been required to
deliver annual reports. To the extent that the Company is required to deliver
annual reports to security holders through its status as a reporting company,
the Company shall deliver annual reports. Also, to the extent the Company is
required to deliver annual reports by the rules or regulations of any exchange
upon which the Company's shares are traded, the Company shall deliver annual
reports. If the Company is not required to deliver annual reports, the Company
will not go the expense of producing and delivering such reports. If the Company
is required to deliver annual reports, they will contain audited financial
statements as required.
Prior to the filing of this Form 10-SB, the Company has not filed
reports with the Securities and Exchange Commission. Once the Company becomes a
reporting company, management anticipates that Forms 3, 4, 5, 10K-SB, 10Q-SB,
8-K and Schedules 13D along with appropriate proxy materials will have to be
filed as they come due. If the Company issues additional shares, the Company may
file additional registration statements for those shares.
The public may read and copy any materials the Company 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 call the Commission
at 1-800-SEC- 0330. The Commission maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the Commission. The Internet address of
the Commission's site is (http://www.sec.gov).
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(d) Year 2000 Disclosure
The Company does not anticipate any problem in dealing with computer
entries in the year 2000 or thereafter, with any computers currently used at any
of their facilities. All of the Company's computer systems are new and have been
year 2000 compliant from their acquisition. The Company keeps current with all
updates and revisions with all software the Company currently use. It is
anticipated that the software updates reflect required revisions to accommodate
transactions in the year 2000 and thereafter. Though it is not anticipated that
the Company will have a problem at the turn of the century, the Company intends
to coordinate the resolution of any year 2000 problems with the vendors of the
software the Company utilizes.
The Company presently uses Pentium Class computers with the latest
software, i.e., Window 98, Office 97. These products are Y2K compliant. The
Company does not use any industry specific software, but if the Company does
acquire such in the future, management will make certain that all software isY2K
compliant.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
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The Company has not received revenues from operation during the
two-year period immediately preceding the filing of this Form 10-SB.
Plan of Operation
During the next twelve months, the Company intends to continue its
exploration on the Consellation Dos and Cuatro claims located in the Piedra
Parada Solar. The Solar is located in the Chilean Andes near the Argentine
border.
The Company's exploration plans during the next twelve months involve
physical sampling of the properties and analysis of those samples. The Company
has implemented a hand-auger drill sample program for sampling of the ores on
the Constellation Dos and Cuatro claims. The Company intends to continue its
sampling program during 1999.
Once the Company's sampling program has been completed, the Company
will compile and analyze the sampling data in order to deliniate the grade and
content of the minerals present in the Solar basin. Based on the results of that
analysis, the Company will develop and implement plans/operatoins on the Solar.
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The Company has limited cash available for its operations during the
next twelve months and no sources of revenue to meet its cash flow needs.
Operations will either be funded through the private placement of the Company's
equity securities or through long-term financing arrangements management is
attempting to obtain.
The only present source of funds available to the Company is through
the sale of equity shares, advances from the directors and officers or obtaining
funds through bank financing. Even if the results of exploration are
encouraging, the Company may not have sufficient funds to conduct further
exploration that may be necessary to determine whether or not a commercially
mineable deposit exists on any of its properties. While additional working
capital may be generated through the operation, development, sale or possible
joint venturing of properties, there is no assurance that any such funds will be
available.
The Company's future success is based upon a business plan for the next
twelve months which involves a high degree of risk and as the Company's
financial statements indicate, management recognizes that if it is unable to
raise additional capital that the Company cannot operate and will not be able to
complete its plan of operations for the next twelve months.
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ITEM 3. DESCRIPTION OF PROPERTY
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(a) Principal Plants and Property and Description of Real Estate and
Operating Data.
Acquisition of Minerals Claims. In a Purchase Agreement dated May 26,
1998 between Garth Johnson and the Company, it was agreed that the Company would
acquire from Mr. Johnson 600 hectares of mineral claims on the sale flats known
as Piedra Parada Salar and more specifically described as the Constelacion Duo
and Constelacion Cuatro for the following consideration:
a. The Company will pay Johnson the cost of staking and
recording of the claims the sum of $85,000 by no later than June 30, 1998;
b. The Company has granted Johnson a 3% net smelter royalty
which the Company can buy from Johnson for the sum of $2,000,000 at any time
prior to or during production of the claims and all royalty payments shall apply
to reduce the $2,000,000 purchase price of the net smelter royalty; and
c. The Company agreed to issue to Johnson 800,000 shares of
the Company's capital stock, having the equivalent market value of $500,000, of
which 150,000 shares will be free trading and 650,000 shares will be restricted
under Rule 144 and subject to a Pooling Agreement.
In consideration for the above, Johnson agreed to:
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i. Commence and complete staking, site engineering, the
Mensura, being the equivalent to a legal survey, and filing the inscription of
Mensura in the Conservator of Mines for Chile and will negotiate on behalf of
the Company the balance of 50% of the Constelacion Group held by a third party
known personally to Johnson which will give the Company 98% of the Constelacion
claim block (Con 1-4) for an area of approximately 1200 hectares.;
ii. Transfer title to the claims within 60 days of receiving
the final cash payment towards the staking and recording of the claims;
iii. Assist the Company and its engineers by providing
assistance and any and all geological and engineering documents, including, but
not limited to maps, reports, assays, studies available on the claims or their
surrounding area; and
iv. Immediately enter into a Pooling Agreement with the
Company regarding the 650,000 shares issued to him out of the 800,000 shares
noted above.
Description of the Mineral Claims, the Republic of Chile and Geological
Structures. The mineral claims cover a portion of an enclosed evaporated body or
salt flat known as the Piedra Parada Salar, and total approximately 3,500 acres
in the Republic of Chile.
Chile is located on the west coast of southern South America, bordered
by the Pacific Ocean on the west, Argentina and Bolivia on the east and Peru on
the north. Chile covers a geographical area slightly larger than the State of
Texas. The average width from east to west is only 110 miles, but the
north-south dimension of 2,650 miles is equivalent to the distance between
Washington, DC and the US West Coast.
The Company's mineral claims are located in Region 3 of Chile which is
largely a mining region. This area produced almost $2,000,000,000 worth of
exported mineral products in 1995. Most of the world's largest mining companies
have operations or exploration offices located in this region.
The actual claims held in trust for the Company by its President, Grant
Dion, are part of the Constelacion Group, being the Constelacion Dos and
Constelacion Cuatro and form the majority of the assets of the Company. The
claims consist of two contiguous mineral properties covering an area of 600
hectares. The Salar, where the Company's property is located, is centered in a
drainage basin covering about 200 miles of land area, and receives water inflows
in the form of local runoff and from thermal springs which enter the Salar at
the margins. This area was anciently the lowest area of the drainage basin and
thus received the influx of mineral and erosional products. Due to local and
regional block-faulting, some of the area has been uplifted some 30 to 35 feet
above the portion of the Salars to the west. The uplifting has exposed a series
of horizontal beds which contain a number of minerals. The Piedra Parada claims
cover this uplifted area. The southern portion of the mineral reserves are more
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exposed to the prevailing northwesterly winds, which have subsequently carved
the uplifted horizontal beds into low scraps and terraces reminiscent of
dunelike formations.
The mineral reserves were uplifted in the eastern portion of the Solar
due to local block-faulting and consist of layered beds composed largely of
gypsum interbedded with silt-stone, sandstone and iron minerals.
Location and Access. The Piedra Parada mineral claims are located in
NorthCentral Chile along the border with Argentina in a remote area of Region 3.
The claims lie at a mean elevation of 13,000 feet, surrounded by hills and peaks
ranging from 1,000 to 5,000 feet above the level of the mineral properties. The
properties are located approximately 120 kilometers east of the city of El
Salvador and are accessible by following the road from El Salvador to La Ola for
a distance of about 70 kilometers, then turning east for the remainder of the
distance, most of which is traversed along a combination of unimproved dirt road
and trail.
Mineralization on or near the Constelacion Dos and Constelacion Cuatro.
Precious metals appear to be largely confined and associated with iron
mineralization which occurs above ground in two distinct beds totaling some 1.5
meters in depth. Based on preliminary assays of the mineral unites, gold and
silver values in the iron beds, allowing a dilution during mining, have been
extrapolated at 1.44 g/ton gold and 1.6 oz./ton silver. Other tests indicate
additional values of gold contained as tellurides averaging 0.51 oz/ton over the
entire 10 meter thickness of the exposed reserves. It is not known how much, if
any, of these tellurides can be recovered for processing. Recovery of any
portion of these telluride values would enhance project economics tremendously.
Even without the tellurides, reserves of the iron ore beds when combined with a
dilution factor of one meter total more than 31,000,000 metric tons, sufficient
to support a processing operation of 11,500 metric tons per day for a period of
nine years, including construction and start-up. At that rate of production, the
project would produce about 175,000 troy ounces of gold per year, and more than
6,000,000 ounces of silver. At current market prices, the precious metals would
bring income to the project in excess of $90,000,000 per year, factored at 90%
to allow for refinery charges and marketing costs.
(b) Investment Policies
The Company's plan of operations is focused on the continued
development and exploration of its properties described in Item 1. Accordingly,
the Company has no particular policy regarding each of the following types of
investments:
1. Investments in real estate or interest in real estate;
2. Investments in real estate mortgages; or
3. Securities of or interests in persons primarily engaged in
real estate activities.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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(a) Security Ownership of Certain beneficial Owners:
The following information sets forth certain information as of March
31, 1999 about each person who is known to the Company to be the beneficial
owner of more than five percent (5%) of the Company's Common Stock:
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
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Common RFC International Corp1 4,000,000 35%
Attn: Grant Dion
6395 Blazing Star Drive
Colorado Springs, CO 80922
Common Garth Johnson 800,000 7%
7645 Cambie Street
Vancouver, B.C. CANADA V6P 3H8
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1These shares are held in the name of RFC International Corp., a
company owned and controlled by Grant Dion, President of the Company. The
4,000,000 shares have been deemed to be Rule 144 stock and are, therefore,
restricted from trading and any such trading will be in conformity with the
Exchange Act.
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(b) Security Ownership of Management:
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
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Common Grant N. Dion 4,000,000(2) 35%
6395 Blazing Star Drive
Colorado Springs, CO 80922
Common Terry W. Mueller 515,000(3) 4.38%
672 English Bluff Road
Delta, B.C. CANADA V4M 3N4
All Directors and 4,500,000 40%
Officers as a Group
(c) Changes in Control:
There is no arrangement which may result in a change in control.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
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(a) Directors and Executive Officers
As of March 31, 1999, the directors and executive officers of the
Company, their ages, positions in the Company, the dates of their initial
election or appointment as director or executive officer, and the expiration of
the terms as directors are as follows:
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2 These shares are held in the name of RFC International Corp., a
company owned and controlled by Grant Dion, President of the Company.
3 Of this amount, 5,000 shares are owned by Margaret Mueller, Terry
Mueller's wife; 5,000 shares are owned by Karen Mueller, Terry Mueller's
daughter; 2,500 shares are owned by Jason Mueller, Terry Mueller's son; and
2,500 shares are owned by Davie Mueller, Terry Mueller's son.
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Name Age Position Officer/Director*
- ---- --- -------- -----------------
Grant N. Dion 35 President 12-15-97 to present
and Director
William Larry Owen 79 Secretary and 12-15-97 to present
Director
Terry W. Mueller 57 Director 12-15-97 to present
*The Company's directors are elected at the annual meeting of stockholders and
hold office until their successors are elected and qualified. The Company's
officers are appointed annually by the Board of Directors and serve at the
pleasure of the Board.
(b) Business Experience:
Grant N. Dion, age 35, is the President and a Director of Can-Ex
Minerals Corporation. Mr. Dion received a Bachelor of Science and Marketing
degree from the University of Denver. From August of 1998 to January 1999, Mr.
Dion has been the exclusive marketing agent for all custom homes built by Willis
Homes, Inc. From 1992 to the present, he has been the Marketing Director for
NHBR/Information Advantage. From Sept. Of 1991 to May of 1992 salesman for
Prudential Insurance. From December of 1990 to September of 1991, he worked for
Security Mutual Life where he obtained extensive knowledge of pension plans,
variable benefits packages, insurance and tax laws as they related to the IRS.
From January of 1990 to November of 1990, he performed health benefits and
retirement pension plan analysis and sales. While attending college, Mr. Dion
spent his summers staking mineral claims, taking soil samples and doing general
prospecting work in a wide range of geological areas from the Northwest
Territories in Canada, placer operations in the B.C. Interior, Lode claims in
Oregon and operations in the Mojave Desert. He played two years for the Edmonton
Oilers, a professional hockey team.
William Larry Owen, age 79, is the Secretary and a Director of Can-Ex
Minerals Corporation. Mr. Owen graduated with a B.A. degree from George
Pepperdine College in 1947 and received a M.A. degree in Education from the
University of Southern California and completed 95% of his Doctorate in
Education. He edited the Shemya Daily News through out his Army career of four
years. From 1948 to 1950 taught in the Norwalk City School system. In 1950 and
1951 was VicePrincipal in the Norwalk City School system. From 1951 to 1959 was
Principal in the Norwalk-La Marida City School system. In 1967 he discovered one
of British Columbia's largest Jade deposits. In 1981 and 1982 he was President
of Great Central ;Mines. In 1982 and 1983 was President of International Phasor
Telecom. From 1986 to 1988 was a principal of Rockford Technologies Corp. From
1989 to the present, he has been President of Rhombic Corporation.
-14-
<PAGE>
Terry W. Mueller, age 57, is a Director of Can-Ex Minerals Corporation.
Mr. Mueller's education includes attendance at Vancouver Vocation Institute in
Electronics, Chicago Vocational Institute of Vancouver in Drafting and British
Columbia Institute of Technology in Electro-Mechanics. From 1969 through 1977 he
was a Delta Cable Television Co. Ltd. Technician. From 1977 to the present, he
has been President of Inglewood Construction Limited, general contractor, high
end residential construction.
(c) Directors of Other Reporting Companies:
None of the directors are directors of other reporting companies.
(d) Employees:
The officers and directors who are identified above are the significant
employees of the Company.
(e) Family Relationships:
There are no family relationships between the officers and/or directors
of the Company.
(f) Involvement in Certain Legal Proceedings:
None of the officers and directors of the Company 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 commodities laws.
- ---------------------------------------------------------------------------
ITEM 6. EXECUTIVE COMPENSATION
- -----------------------------------------------------------------------------
The following table sets forth information about compensation paid or
-15-
<PAGE>
accrued by the Company during the years ended December 31, 1998 and 1997 to the
Company's officers and directors. None of the Executive Officers of the Company
earned more than $100,000 during the years ended December 31, 1998 and 1997.
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term Compensation
----------------------------------------------
Annual Compensation Awards Payouts
--------------------- ------------------ ---------------
(e) (g)
Other (f) Securities (i)
(a) Annual Restricted Under- (h) Other
Name and (c) (d) Compen- Stock Lying LTIP Compen-
Principal (b) Salary Bonus sation Awards Options/ Payouts sation
Position Year $ ($) ($) ($) SARs(#) ($) ($)
- -------- ------ ------ ----- ------ ---------- ---------- ------- -------
Grant N. Dion
<S> <C> <C> <C> <C> <C> <C> <C> <C>
President 1998 $ None $ None $ None $ None None None None
and Director 1997 $ None $ None $ None $ None None None None
William Larry Owen
Secretary and 1998 $ None $ None $ None $ None None None None
a Director 1997 $ None $ None $ None $ none None None None
Terry W. Mueller
Director 1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ none None None None
</TABLE>
- --------------------------------------------------------------------------------
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
During the past two (2) years, the Company has not entered into a
transaction with a value in excess of $60,000 with a director, officer or
beneficial owner of 5% or more of the Company's capital stock, except as
follows:
On or about June 29, 1998, the Company issued 500,000 shares of its
capital stock to Terry Mueller in exchange for $500 in cash. Such shares were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended. Such shares also are subject to a Pooling
Agreement with the Company which provides that:
i. One year from the date of the Agreement, ten percent of the
-16-
<PAGE>
Shares will be issued to the Shareholders and be deemed to be
free trading unless the Shares are restricted by the
Regulatory Bodies having jurisdiction over the affairs of the
Company; and
ii. Each and every month, starting from the thirteenth month from
the date of signing of the Agreement, five percent of the
remaining balance of the Shares, after the release of ten
percent of the Shares noted (I.) Above have been made, will be
released to the Shareholder until such time as all the Shares
have been released.
On May 26, 1998, the Company entered into a Purchase Agreement with
Garth Johnson. Pursuant to that agreement, the Company acquired from Mr. Johnson
600 hectares of mineral claims on the salt flats known as Piedra Parada Salar
and more specifically described as the Constelacion Duo and Constelacion Cuatro
for the following consideration:
a. The Company will pay Johnson the cost of staking and
recording of the claims the sum of $85,000 by no later than June 30, 1998;
b. The Company has granted Johnson a 3% net smelter royalty
which the Company can buy from Johnson for the sum of $2,000,000 at any time
prior to or during production of the claims and all royalty payments shall apply
to reduce the $2,000,000 purchase price of the net smelter royalty; and
c. The Company agreed to issue to Johnson 800,000 shares of
the Company's capital stock, having the equivalent market value of $500,000, of
which 150,000 shares will be free trading and 650,000 shares will be restricted
under Rule 144 and subject to a Pooling Agreement.
In consideration for the above, Johnson agreed to:
i. Commence and complete staking, site engineering, the
Mensura, being the equivalent to a legal survey, and filing the inscription of
Mensura in the Conservator of Mines for Chile and will negotiate on behalf of
the Company the balance of 50% of the Constelacion Group held by a third party
known personally to Johnson which will give the Company 98% of the Constelacion
claim block (Con 1-4) for an area of approximately 1200 hectares;
ii. Transfer title to the claims within 60 days of receiving
the final cash payment towards the staking and recording of the claims;
iii. Assist the Company and its engineers by providing
assistance and any and all geological and engineering documents, including, but
not limited to maps, reports, assays, studies available on the claims or their
surrounding area; and
-17-
<PAGE>
iv. Immediately enter into a Pooling Agreement with the
Company regarding the 650,000 shares issued to him out of the 800,000 shares
noted above.
- --------------------------------------------------------------------------------
ITEM 8. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
- --------------------------------------------------------------------------------
The Company is registering all of its issued and outstanding shares of
its capital stock with a par value of One Mill ($0.001) per share. On December
31, 1998, there were 11,422,000 shares of stock issued and outstanding.
Capital Stock
Each of the holders of record of stock is entitled to one (1) vote per
share thereof at all shareholder meetings for all purposes, including the
election of the Company's directors and all other matters submitted to such
holders for a vote of stockholders; to share ratably in all dividends, when, as,
and if declared by the Company's Board of Directors from funds legally available
therefor; and to share ratably in all assets available for distribution to
holders of record of capital stock upon liquidation or dissolution after the
payment of all debts and other liabilities. Shares of common stock are not
redeemable and the holders have no conversion rights, pre-emptive or other
rights to subscribe to or purchase additional shares in the event of a
subsequent offering. The common stock does not carry cumulative voting rights.
All issued and outstanding shares of common stock are fully-paid and
non-assessable.
There are no limitations or restrictions upon the rights of the Board
of Directors to declare dividends out of any funds legally available therefor.
The Company has not paid dividends to date and it is not anticipated that any
dividends will be paid in the foreseeable future. The Board of Directors
initially may follow a policy of retaining earnings, if any, to finance the
future growth of the Company. Accordingly, future dividends, if any, will depend
upon, among other considerations, the Company's need for working capital and its
financial condition at the time.
The Company may, if approved at the general meeting of shareholders,
resolve to authorize the Board of Directors to declare and pay dividends to the
Company's shareholders in the form of bonus shares. The shareholders would
receive bonus shares in lieu of cash dividends, if any, declared and paid by the
Company.
"Anti-Takeover" Provisions. Although the Board of Directors is not
presently aware of any takeover attempts, the Company's Certificate of
-18-
<PAGE>
Incorporation and By-laws contain certain provisions which may be deemed to be
"anti-takeover" in nature in that such provisions may deter, discourage, or make
more difficult the assumption of control of the Company by another corporation
or person through a tender offer, merger, proxy contest or similar transaction
or series of transactions. These provisions were adopted unanimously by the
Board of Directors and approved by the stockholders of the Company.
Authorized but Unissued Shares. The Company has authorized 50,000,000
shares of common stock. These shares were authorized for the purpose of
providing the Board of Directors of the Company with as much flexibility as
possible to issue additional shares for proper corporate purposes including
equity financing, acquisitions, mergers, stock dividends, stock splits, stock
options and other purposes. The Company has no agreements, commitments or plans
at this time for the sale or use of its shares of common stock except as
described herein. Through March 31, 1998, the Company had issued 11,422,000
shares of stock.
No Cumulative Voting. The Company's Certificate of Incorporation and
By-laws do not contain any provisions for cumulative voting. Cumulative voting
entitles stockholders to as many votes as equal the number of shares owned by
such holder multiplied by the number of directors to be elected. A stockholder
may cast all these votes for one candidate or distribute them among any two or
more candidates. Thus, cumulative voting for the election of directors allows a
stockholder or group of stockholders who hold less than fifty percent (50%) of
the outstanding shares voting to elect one or more members of a Board of
Directors. Without cumulative voting for the election of directors, the vote of
holders of a plurality of the shares voting is required to elect any member of a
Board of Directors and would be sufficient to elect all the members of the Board
of Directors being elected.
General Effect of Anti-Takeover Provisions. The overall effect of these
provisions may be to deter a future tender offer or other takeover attempt that
some stockholders might view to be in their best interest as the offer might
include a premium over the market price of the Company's capital stock at that
time. In addition, these provisions may have the effect of assisting the
Company's current management in retaining its position and place it in a better
position to resist changes which some stockholders may want to make if
dissatisfied with the conduct of the Company's business.
Voting Rights. Except as set forth below, every holder of shares
present in person or by proxy or by representative, attorney or proxy appointed
under the Company's By-laws at a meeting of shareholders has one vote on a vote
taken by a show of hands, and on a poll every holder of shares who is present in
person or by proxy or representative has one vote for every fully paid share
held by him, registered in each shareholder's name on the Company's stockholder
list. Unless a poll is demanded, every question submitted to a meeting of
holders of shares shall be decided by a show of hands of the shareholders
present and entitled to vote. In the case of an equality of votes, in either a
-19-
<PAGE>
poll or a show of hands, the chairman shall have a second or casting vote.
Notwithstanding the above, restrictions are imposed on voting rights in the
following circumstances: (a) if two or more persons are registered as the holder
of the share, the only one of the holders entitled to vote is the senior who
tenders a vote, seniority being determined by the order of names in the
company's list of stockholders; (b) if the terms upon which the shares was
issued restrict the voting rights attaching to that share, the holder is
entitled to vote only in accordance with the terms upon which that share was
issued (neither any shares currently outstanding nor the common shares have
restricted voting rights).
Article II Section 5 of the Company's By-laws allows that the holders
of a majority of the issued and outstanding shares of the common stock of the
Company entitled to vote thereat, present in person or represented by proxy,
shall constitute a quorum for the transaction of business at all meetings of the
stockholders. All resolutions (e.g. resolutions for the election of directors,
the approval of increase in authorized capital, approval of financial
statements, amending the Articles of Incorporation and By-laws; authorizing
liquidation or a going private transaction) require the affirmative vote of the
holders of a majority of the issued and outstanding shares of the common stock
of the Company entitled to vote.
Not less than ten days' notice of any general shareholders meeting,
specifying the place, day and hour of the meeting, specifying the general nature
of the business, shall be given to the shareholders.
Article III Section 4 of the Company's By-laws allows that any director
or the entire Board of Directors may be removed, at any time, with or without
cause, by the holders of a majority of the shares then entitled to vote with or
without a stockholders meeting.
Certain Voting Requirements. The affirmative vote of the holders of a
majority of the shares present at a shareholders meeting and entitled to vote
generally constitutes shareholder approval or authorization of matters for which
such approval or authorization is required. A sale or transfer of substantially
all of the Company's assets, liquidation, merger, consolidation, reorganization
or similar extraordinary corporate action generally requires the affirmative
vote of a majority of the shares outstanding and entitled to vote thereon.
Restricted Shares. Restricted shares may not be sold unless they are
registered or are sold pursuant to an applicable exemption from registration,
including pursuant to Rule 144.
Reports to Shareholders. The Company intends to furnish its
shareholders with annual reports containing financial statements for each fiscal
year containing unaudited summary financial information and such other periodic
reports as it may deem appropriate or as required by law.
-20-
<PAGE>
PART II
- --------------------------------------------------------------------------------
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
- --------------------------------------------------------------------------------
Market Information:
The common stock of the Company currently is not trading on any
exchange. Management anticipates that the Company'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 Company's stock in the last two years.
Accordingly, the Company has no range of high and low bid prices for the
Company's common stock to report.
There is no public market for the shares of the Company 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 Company are subject to various
governmental and regulatory body rules which affect the liquidity of the shares.
Holders:
There were approximately 45 holders of record of the Company's common
stock as of May 24, 1999.
Dividends:
The Company has never paid cash dividends on its stock and does not
intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business. The
Company's continued need to retain earnings for operations and expansion are
likely to limit the Company's ability to pay dividends in the future.
- --------------------------------------------------------------------------------
ITEM 2. LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
The Company is not party to, and none of the Company's property is
subject to, any pending or threatened legal, governmental, administrative or
judicial proceedings that will have a materially adverse effect upon the
Company's financial condition or operation.
-21-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- --------------------------------------------------------------------------------
There have been no disagreements with the Company's independent
accountants over any item involving the Company's financial statements. The
Company's independent accountants are Andersen, Andersen & Strong, L.C.,
Certified Public Accountants, 941 East 3300 South, Suite 202, Salt Lake City,
Utah 84106.
- --------------------------------------------------------------------------------
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
- --------------------------------------------------------------------------------
On or about June 29, 1998, the Company issued 4,000,000 shares of its
capital stock to RFC International Corp. in exchange for $4,000 in cash. Such
shares were issued pursuant to the exemption from registration under Section
4(2) of the Securities Act of 1933, as amended.
On or about June 29, 1998, the Company issued 500,000 shares of its
capital stock to Terry Mueller in exchange for $500 in cash. Such shares were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended. Such shares also are subject to a Pooling
Agreement with the Company which provides that:
i. One year from the date of the Agreement, ten percent of the
Shares will be issued to the Shareholders and be deemed to be
free trading unless the Shares are restricted by the
Regulatory Bodies having jurisdiction over the affairs of the
Company; and
ii. Each and every month, starting from the thirteenth month from
the date of signing of the Agreement, five percent of the
remaining balance of the Shares, after the release of ten
percent of the Shares noted (I.) Above have been made, will be
released to the Shareholder until such time as all the Shares
have been released.
On or about June 29, 1998, the Company issued 800,000 shares of its
capital stock to Garth Johnson in connection with the agreement between Johnson
and the Company dated May 26, 1998 and described in Item 7 above. Such shares
were issued pursuant to the exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended.
-22-
<PAGE>
On or about June 29, 1998, the Company issued 5,000 shares of its
capital stock to Karen Mueller in exchange for $500 in cash. Such shares were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
On or about June 29, 1998, the Company issued 5,000 shares of its
capital stock to Margaret Mueller in exchange for $500 in cash. Such shares were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
On or about June 29, 1998, the Company issued 2,500 shares of its
capital stock to Jason Mueller in exchange for $250 in cash. Such shares were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
On or about June 29, 1998, the Company issued 2,500 shares of its
capital stock to David Mueller in exchange for $250 in cash. Such shares were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
On or about June 29, 1998, the Company issued 2,500 shares of its
capital stock to Lucy Owen in exchange for $250 in cash. Such shares were issued
pursuant to the exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended.
On or about June 29, 1998, the Company issued 2,500 shares of its
capital stock to Mark Owen in exchange for $250 in cash. Such shares were issued
pursuant to the exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended.
On or about June 29, 1998, the Company issued the following listed
shares to the individuals listed for the consideration of $0.10 per share. These
shares were issued in accordance with the exemption from registration provided
by Rule 504 of Regulation D of the Securities Act of 1933, as amended and an
appropriate Form D was filed in connection with the issuance of these shares:
Registered Owner No. Shares
---------------- ----------
Jack Forbes 5,000
Howard Guerin 5,000
Victor Hobart 5,000
Jamish McPhee 5,000
Harry Van Tol 5,000
Greg Van Tol 5,000
Richard Perkins 10,000
Jan Behm 5,000
Gordon Ross Krushinsky 2,500
Carol D. Krushinsky 2,500
-23-
<PAGE>
Lucy Owen 2,500
Robert C. Krushinsky 5,000
James Ingram 5,000
Herb Sievers 5,000
Gary V. Sweezey 5,000
Douglas Inc. 1,000,000
Corporate House S.A. 1,000,000
Peregrine Corporation 1,000,000
Scovest Financial Ltd. 1,000,000
Bond Mercantile Limited 1,000,000
Commodore Management Corp. 1,000,000
The 1,000,000 shares issued to Commodore Management Corp. are subject
to a Pooling Agreement with the Company which provides:
i. One year from the date of the Agreement, ten percent of the
Shares will be issued to the Shareholders and be deemed to be
free trading unless the Shares are restricted by the
Regulatory Bodies having jurisdiction over the affairs of the
Company; and
ii. Each and every month, starting from the thirteenth month from
the date of signing of the Agreement, five percent of the
remaining balance of the Shares, after the release of ten
percent of the Shares noted (I.) Above have been made, will be
released to the Shareholder until such time as all the Shares
have been released.
On or about November 23, 1998, the Company issued the following listed
shares to the individuals listed for the consideration of $0.10 per share. These
shares were issued in accordance with the exemption from registration provided
by Rule 504 of Regulation D of the Securities Act of 1933, as amended, and an
appropriate Form D was filed in connection with the issuance of these shares.
Registered Owner No. Shares
---------------- ----------
Richard T. Hethey 25,000
Christopher Begin 1,300
Sandra Begin 1,200
Deborah Dion 1,000
Trevor Dion 1,500
Tracy Toms 1,000
Stephen Toms 1,000
-24-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
Section 78.751 of the Nevada General Corporation Law allows the Company
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
Company or is or was serving at the request of the Company as a director,
officer, employee or agent of any corporation, partnership, joint venture, trust
or other enterprise. The Company may advance expenses in connection with
defending any such proceeding, provided the indemnitee undertakes to pay any
such amounts if it is later determined that such person was not entitled to be
indemnified by the Company.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
PART F/S
- --------------------------------------------------------------------------------
Financial Statements
- --------------------------------------------------------------------------------
The following financial statements and pro forma information are filed
with this Form 10-SB:
-25-
<PAGE>
CAN-EX MINERALS CORPORATION
FINANCIAL STATEMENTS AND REPORT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
March 31, 1999 and December 31, 1998
-26-
<PAGE>
Board of Directors
Can-Ex Minerals Corporation
Vancouver B. C. Canada
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheet of Can-Ex Minerals Corporation (a
development stage company) at March 31, 1999 and December 31. 1998, and the
statement of operations, stockholders' equity, and cash flows for the three
months ended March 31, 1998 and the year ended December 31, 1998 and the period
from December 15, 1997 to December 31, 1997 and the period from December 15,
1997 (date of inception) to March 31, 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 Can-Ex Minerals Corporation at
March 31, 1999 and December 31, 1998, and the results of operations, and cash
flows for the three months ended March 31, 1999 and the year ended December 31,
1998 and the period from December 15, 1997 to December 31, 1997 and the period
from December 15, 1997 (date of inception) to March 31, 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 does not have the necessary 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
April 20, 1999
-27-
<PAGE>
<TABLE>
CAN-EX MINERALS CORPORATION
(A Development Stage Company)
BALANCE SHEETS
March 31, 1999 and December 31, 1998
====================================================================================================
<CAPTION>
March 31, December 31,
1999 1998
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 12,112 $ 19,077
--------- ---------
Total Current Assets 12,112 19,077
--------- ---------
OTHER ASSETS
Mineral claims - Note 2 & 3 85,000 85,000
--------- ---------
$ 97,112 $ 104,077
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,341 $ 104
Accounts payable - related parties 152,615 100,326
--------- ---------
Total Current Liabilities 157,956 100,430
--------- ---------
STOCKHOLDERS' EQUITY
Common stock
50,000,000 shares authorized at $0.001 par
value; 11,422,000 shares issued and outstanding 11,422 11,422
Capital in excess of par value 12,078 12,078
Deficit accumulated during the development stage (84,344) (19,853)
--------- ---------
Total Stockholders' Equity (60,844) 3,647
--------- ---------
$ 97,112 $ 104,077
========= =========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
-28-
<PAGE>
<TABLE>
CAN-EX MINERALS CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1999 and the Year Ended December 31, 1998
and the Period December 15, 1997 to December 31, 1997, and the
Period December 15, 1997 (date of inception) to March 31, 1999
<CAPTION>
================================================================================================
Mar. 31, Dec. 31, Dec. 15 1997 Dec. 15, 1997
1999 1998 to Dec. 31 1997 to Mar. 31, 1999
------------ ------------ --------------- ----------------
<S> <C> <C> <C> <C>
REVENUES $ -- $ -- $ -- $ --
EXPENSES 64,491 19,853 -- 84,344
------------ ------------ --------------- ----------------
NET LOSS $ (64,491) $ (19,853) $ -- $ (84,344)
------------ ------------ --------------- ----------------
NET LOSS PER COMMON SHARE
Basic $ (.005) $ --
------------ ------------
AVERAGE OUTSTANDING SHARES
Basic 11,422,000 5,700,000
------------ ------------
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
-29-
<TABLE>
CAN-EX MINERALS CORPORATION
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from December 15, 1997 (Date of Inception)
to March 31, 1999
===========================================================================================================
<CAPTION>
Capital in
Common Stock Excess of Accumulated
Shares Amount Par Value Deficit
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Balance December 15, 1997 (date of inception) -- $ -- $ -- $ --
Net operating loss December 15 to
December 31, 1997 -- -- -- --
Issuance of common stock for cash 4,000,000 4,000 -- --
at $.001 - June 16, 1998
Issuance of common stock for cash
at $.001 - June 20, 1998 500,000 500 -- --
Issuance of common stock for expenses
at $.001 - June 20, 1998 800,000 800 -- --
Issuance of common stock for cash
at $.001 - June 23, 1998 6,000,000 6,000 -- --
Issuance of common stock for cash
at $.10 - June 27, 1998 90,000 90 8,910 --
Issuance of common stock for cash
at $.10 - October 16, 1998 32,000 32 3,168 --
Net operating loss for the year
ended December 31, 1998 -- -- -- (19,853)
---------- ---------- ---------- ----------
Balance December 31, 1998 11,422,000 11,422 12,078 (19,853)
Net operating loss for three months
ended March 31, 1999 -- -- -- (64,491)
---------- ---------- ---------- ----------
Balance March 31, 1999 11,422,000 $ 11,422 $ 12,078 $ (84,344)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
-30-
<PAGE>
<TABLE>
CAN-EX MINERALS CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 1999 and the
Year Ended December 31, 1998 and the Period
December 15, 1997 to December 31, 1997 and the
Period December 15, 1997 (date of inception) to March 31, 1999
================================================================================
<CAPTION>
Mar. 31, Dec. 31, Dec. 15, 1997 Dec. 15, 1997
1999 1998 to Dec. 31, 1997 to Mar. 31, 1999
--------- --------- ---------------- ----------------
CASH FLOWS FROM
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net loss $ (64,491) $ (19,853) $ -- $ (84,344)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Changes in current assets and liabilities
Accounts payables 7,526 2,947 -- 10,473
Issuance of common stock for expenses 800 -- 800
Net Cash used by Operations (56,965) (16,106) -- (73,071)
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of mineral claims -- (85,000) -- (85,000)
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from loan - related party 50,000 97,483 -- 147,483
Proceeds from issuance of common stock -- 22,700 -- 22,700
--------- --------- --------- ---------
Net Change in Cash (6,965) 19,077 -- 12,112
Cash at Beginning of Period 19,077 -- -- --
--------- --------- --------- ---------
Cash at End of Period $ 12,112 $ 19,077 $ -- $ 12,112
========= ========= ========= =========
SCHEDULE OF NONCASH OPERATING ACTIVITIES
Issuance of 800,000 common shares for expenses - 1998 $ 800
---------
</TABLE>
The accompanying notes are an integral part
of these financial statements.
-31-
<PAGE>
CAN-EX MINERALS CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on December
15, 1997 with authorized common stock of 50,000,000 shares at $0.001 par value.
The Company was organized for the purpose of acquiring and developing mineral
properties. At the report date a mineral property had been acquired. (see note
3).
Since its inception the company has completed Regulation D offerings of 182,000
shares of its common capital stock for cash.
The Company is in the development stage.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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
$19,853. The 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 expires in the year 2019.
Earnings (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.
-32-
<PAGE>
CAN-EX MINERALS CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - 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 Mining Claim Costs
- ----------------------------------------------
The Company will use the successful efforts method to amortize the capitalized
costs of any mineral claims it acquires, which provides for capitalizing the
purchase price of the project and the additonal 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 incured. Unamortized
capitalized costs will be expensed if the property is is shown to have an
impairment in value or proven to be of no value.
Environmental Requirements
- --------------------------
At the report date environmental requirements related to the mineral claims
acquired (note 3) are unknown and therefore an estimate of any future cost
cannot be made.
Financial Instruments
- ---------------------
The carrying amounts of financial instruments, including cash, mineral claims,
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. MINERAL CLAIMS
On May 26, 1998 the company acquired a 98% interest in staked mineral claims,
from a related party, consisting of 600 hectares and known as the Piedra Parada
Salar Mineral Claims located in Region 111 in the nothern part of the Republic
of Chile for payments of $85,000. The purchase agreement provides for a 3% net
smelter royalty due to the transferor with a right to purchase the royalty by
the Company for $2,000,000 with any royalty payments made to apply against the
purchase price.
-33-
<PAGE>
CAN-EX MINERALS CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
4. RELATED PARTY TRANSACTIONS
Related parties have acquired 42% of the common stock.
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 the
additional working capital necessary for its planned activity 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.
-34-
<PAGE>
PART III
- --------------------------------------------------------------------------------
ITEM 1. Index to Exhibits
- --------------------------------------------------------------------------------
The following exhibits are filed with this Form 10-SB:
Assigned Number Description
- ---------------------------
(2) Plan of acquisition, reorganization, arrangement, liquid, or
succession: None
(3)(ii) By-laws of the Company: Included
(4) Instruments defining the rights of holders including indentures:
None
(9) Voting Trust Agreement: None
(10) Material Contracts: None
(11) Statement regarding computation of per share
earnings: Computations can be determined from
financial statements.
(16) Letter on change in certifying accountant: None
(21) Subsidiaries of the registrant: None
(24) Power of Attorney: None
(27) Financial Data Schedule: Included
(99) Additional Exhibits: None
-35-
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURES
- --------------------------------------------------------------------------------
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: May 28, 1999.
--------------
CAN-EX MINERALS CORPORATION
By: /s/ Grant N. Dion
---------------------------------
Grant N. Dion
President
By: /s/ William L. Owen
---------------------------------
William L. Owen
Secretary
-36-
BY-LAWS FOR THE REGULATION
EXCEPT AS OTHERWISE PROVIDED BY STATUTE
OR ITS ARTICLES OF INCORPORATION OF
CAN-EX MINERALS CORPORATION
A NEVADA CORPORATION
* * * * *
ARTICLE I.
Offices
Section 1. PRINCIPAL OFFICE. The principal office for the transaction
of the business of the corporation is hereby fixed and located at Suite 880,
Bank of America Plaza, 50 West Liberty Street, Reno, Nevada 89501, being the
offices of THE NEVADA AGENCY AND TRUST COMPANY. The board of directors is hereby
granted full power and authority to change said principal office from one
location to another in the State of Nevada.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any
time be established by the board of directors at any place or places where the
corporation is qualified to do business.
ARTICLE II.
Meetings of Shareholders
Section 1. MEETING PLACE. All annual meetings of shareholders and all
other meetings of shareholders shall be held either at the principal office or
1
<PAGE>
at any other place within or without the State of Nevada which may be designated
either by the board of directors, pursuant to authority hereinafter granted to
said board, or by the written consent of all shareholders entitled to vote
thereat, given either before or after the meeting and filed with the Secretary
of the corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of shareholders shall
be held on the 1st day of July each year, at the hour of 10:00 o'clock a.m. of
said day commencing with the year 1999, provided, however, that should said day
fall upon a legal holiday then any such annual meeting of shareholders shall be
held at the same time and place on the next day thereafter ensuing which is not
a legal holiday. The board of directors of the corporation shall have the power
to change the date of the annual meeting as it deems appropriate.
Written notice of each annual meeting signed by the president or a
vice president, or the secretary, or an assistant secretary, or by such other
person or persons as the directors shall designate, shall be given to each
shareholder entitled to vote thereat, either personally or by mail or other
means of written communication, charges prepaid, addressed to such shareholder
at his address appearing on the books of the corporation or given by him to the
corporation for the purpose of notice. If a shareholder gives no address, notice
2
<PAGE>
shall be deemed to have been given to him, if sent by mail or other means of
written communication addressed to the place where the principal office of the
corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said office is located. All such
notices shall be sent to each shareholder entitled thereto not less than ten
(10) nor more than sixty (60) days before each annual meeting, and shall specify
the place, the day and the hour of such meeting, and shall also state the
purpose or purposes for which the meeting is called.
Section 3. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes whatsoever, may be called at any time by the president
or by the board of directors, or by one or more shareholders holding not less
than 10% of the voting power of the corporation. Except in special cases where
other express provision is made by statute, notice of such special meetings
shall be given in the same manner as for annual meetings of shareholders.
Notices of any special meeting shall specify in addition to the place, day and
hour of such meeting, the purpose or purposes for which the meeting is called.
3
<PAGE>
Section 4. ADJOURNED MEETINGS AND NOTICE THEREOF. Any shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum, no other business may be transacted at any such meeting.
When any shareholders' meeting, either annual or special, is adjourned
for thirty (30) days or more, notice of the adjourned meeting shall be given as
in the case of an original meeting. Save as aforesaid, it shall not be necessary
to give any notice of an adjournment or of the business to be transacted at an
adjourned meeting, other than by announcement at the meeting at which such
adjournment is taken.
Section 5. ENTRY OF NOTICE. Whenever any shareholder entitled to vote
has been absent from any meeting of shareholders, whether annual or special, an
entry in the minutes to the effect that notice has been duly given shall be
conclusive and incontrovertible evidence that due notice of such meeting was
given to such shareholders, as required by law and the By-Laws of the
corporation.
Section 6. VOTING. At all annual and special meetings of stockholders
entitled to vote thereat, every holder of stock issued to a bona fide purchaser
of the same, represented by the holders thereof, either in person or by proxy in
writing, shall have one vote for each share of stock so held and represented at
4
<PAGE>
such meetings, unless the Articles of Incorporation of the company shall
otherwise provide, in which event the voting rights, powers and privileges
prescribed in the said Articles of Incorporation shall prevail. Voting for
directors and, upon demand of any stockholder, upon any question at any meeting
shall be by ballot. Any director may be removed from office by the vote of
stockholders representing not less than two-thirds of the voting power of the
issued and outstanding stock entitled to voting power.
Section 7. QUORUM. The presence in person or by proxy of the holders
of a majority of the shares entitled to vote at any meeting shall constitute a
quorum for the transaction of business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum.
Section 8. CONSENT OF ABSENTEES. The transactions of any meeting of
shareholders, either annual or special, however called and noticed, shall be as
valid as though at a meeting duly held after regular call and notice, if a
quorum be present either in person or by proxy, and if either before or after
5
<PAGE>
the meeting, each of the shareholders entitled to vote, not present in person or
by proxy, sign a written Waiver of Notice, or a consent to the holding of such
meeting, or an approval 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 this meeting.
Section 9. PROXIES. Every person entitled to vote or execute consents
shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed with the secretary of the corporation; provided that no such
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution, unless the shareholder executing it specifies therein the length
of time for which such proxy is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution.
ARTICLE III
Section 1. POWERS. Subject to the limitations of the Articles of
Incorporation or the By-Laws, and the provisions of the Nevada Revised Statutes
as to action to be authorized or approved by the shareholders, and subject to
the duties of directors as prescribed by the By-Laws, all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by the board of directors. Without prejudice to
6
<PAGE>
such general powers, but subject to the same limitations, it is hereby expressly
declared that the directors shall have the following powers, to wit:
First - To select and remove all the other officers, agents and
employees of the corporation, prescribe such powers and duties for them as may
not be inconsistent with law, with the Articles of Incorporation or the By-Laws,
fix their compensation, and require from them security for faithful service.
Second - To conduct, manage and control the affairs and business of
the corporation, and to make such rules and regulations therefor not
inconsistent with law, with the Articles of incorporation or the By-Laws, as
they may deem best.
Third - To change the principal office for the transaction of the
business of the corporation from one location to another within the same county
as provided in Article I, Section 1, hereof; to fix and locate from time to time
one or more subsidiary offices of the corporation within or without the State of
Nevada, as provided in Article I, Section 2, hereof; to designate any place
within or without the State of Nevada for the holding of any shareholders'
meeting or meetings; and to adopt, make and use a corporate seal, and to
7
<PAGE>
prescribe the forms of certificates of stock, and to alter the form of such seal
and of such certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at all times comply with
the provisions of law.
Forth - To authorize the issue of shares of stock of the corporation
from time to time, upon such terms as may be lawful, in consideration of money
paid, labor done or services actually rendered, debts or securities canceled, or
tangible or intangible property actually received, or in the case of shares
issued as a dividend, against amounts transferred from surplus to stated
capital.
Fifth - To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities therefore.
Sixth - To appoint an executive committee and other committees and to
delegate to the executive committee any of the powers and authority of the board
in management of the business and affairs of the corporation, except the power
to declare dividends and to adopt, amend or repeal By-Laws. The executive
committee shall be composed of one or more directors.
8
<PAGE>
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS.
The authorized number of directors of the corporation shall be not less than one
(1) and no more than fifteen (15).
Section 3. ELECTION AND TERM OF OFFICE. The directors shall be elected
at each annual meeting of shareholders, but if any such annual meeting is not
held, or the directors are not elected thereat, the directors may be elected at
any special meeting of shareholders. All directors shall hold office until their
respective successors are elected.
Section 4. VACANCIES. Vacancies in the board of directors may be
filled 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 an annual or a special meeting of the
shareholders.
A vacancy or vacancies in the board of directors shall be deemed to
exist in case of the death, resignation or removal of any director, or if the
authorized number of directors be increased, or if the shareholders fail at any
annual or special meeting of shareholders at which any director or directors are
elected to elect the full authorized number of directors to be voted for at that
meeting.
9
<PAGE>
The shareholders 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
accept the resignation of a director tendered to take effect at a future time,
the board or the shareholders shall have the 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.
Section 5. PLACE OF MEETING. 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, a regular meeting
shall be held at the principal office of the corporation. Special meetings of
the board may be held either at a place so designated, or at the principal
office.
Section 6. ORGANIZATION MEETING. Immediately following each annual
meeting of shareholders, the board of directors shall hold a regular meeting for
the purpose of organization, election of officers, and the transaction of other
business. Notice of such meeting is hereby dispensed with.
10
<PAGE>
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the board
of directors shall be held without call and the day of each month and at an hour
deemed appropriate and set by the board of directors; provided, however, should
such set day fall upon a legal holiday, then said meeting shall be held at the
same time on the next day thereafter ensuing which is not a legal holiday.
Notice of all such regular meetings of the board of directors is hereby
dispensed with.
Section 8. SPECIAL MEETINGS. Special meetings of the board of
directors for any purpose or purposes shall be called at any time by the
president, or, if he is absent or unable or refuses to act, by any vice
president or by any two (2) directors.
Written notice of the time and place of special meetings shall be
delivered personally to the directors or sent to each director by mail or other
form of written communication, charges prepaid, addressed to him at his address
as it is shown upon the records of the corporation, or if it is not shown on
such records or is 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 United States mail or delivered to the
telegraph company in the place in which the principal office of the corporation
11
<PAGE>
is located at least forty-eight (48) hours prior to the time of the holding of
the meeting. In case such notice is delivered as above provided, it shall be so
delivered at least twenty-four (24) hours prior to the time of the holding of
the meeting. Such mailing, telegraphing or delivery as above provided shall be
due, legal and personal notice to such director.
Section 9. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given to absent directors, if the time
and place be fixed at the meeting adjourned.
Section 10. ENTRY OF NOTICE. Whenever any director has been absent
from any special meeting of the board of directors, an entry in the minutes to
the effect that notice has been duly given shall be conclusive and
incontrovertible evidence that due notice of such special meeting was give to
such director, as required by law and the By-Laws of the corporation.
Section 11. WAIVER OF NOTICE. The transactions of any meeting of the
board of directors, however called and noticed or wherever held, shall be as
valid as though had a meeting duly held after regular call and notice, if a
quorum be present, and if, either before or after the meeting, each of the
directors not present sign a written waiver of notice or a consent to the
12
<PAGE>
holding of such meeting or an approval 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 12. QUORUM. A 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.
Section 13. ADJOURNMENT. A quorum of the directors may adjourn any
directors' meeting to meet again at a 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.
Section 14. FEES AND COMPENSATION. Directors shall not receive any
stated salary for their services as directors, but by resolution of the board, a
fixed fee, with or without expenses of attendance may be allowed for attendance
at each meeting. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation therefor.
13
<PAGE>
ARTICLE IV.
Officers
Section 1. OFFICERS. The officers of the corporation shall be a
president, a vice president and a secretary/treasurer. The corporation may also
have, at the discretion of the board of directors, a chairman of the board, one
or more vice presidents, one or more assistant secretaries, one or more
assistant treasurers, and such other officers as may be appointed in accordance
with the provisions of Section 3 of this Article. Officers other than president
and chairman of the board need not be directors. Any person may hold two or more
offices.
Section 2. ELECTION. The officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article, shall be chosen annually by the board of directors,
and each shall hold his office until he shall resign or shall be removed or
otherwise disqualified to serve, or his successor shall be elected and
qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The board of directors may
appoint such other officers as the business of the corporation may require, each
14
<PAGE>
of whom shall hold office for such period, have such authority and perform such
duties as are provided in the By-Laws or as the board of directors may from time
to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed, either
with or without cause, by a majority of the directors at the time in office, at
any regular or special meeting of the board.
Any officer may resign at any time by giving written notice to the
board of directors or to the president, or to the secretary of the corporation.
Any such resignation shall take effect at the date of the receipt of such notice
or at any later time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the By-Laws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board, if there
shall be such an officer, shall, if present, preside at all meetings of the
board of directors, and exercise and perform such other powers and duties as may
be from time to time assigned to him by the board of directors or prescribed by
the By-Laws.
15
<PAGE>
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as
may be given by the board of directors to the chairman of the board, if there be
such an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction and control of the business and officers of the
corporation. He shall preside at all meetings of the shareholders and in the
absence of the chairman of the board, or if there be none, at all meetings of
the board of directors. He shall be ex-officio a member of all the standing
committees, including the executive committee, if any, and shall have the
general powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the board of directors or the By-Laws.
Section 8. VICE PRESIDENT. In the absence or disability of the
president, the vice presidents in order of their rank as fixed by the board of
directors, or if not ranked, the vice president designated by the board of
directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
board of directors or the By-Laws.
16
<PAGE>
Section 9. SECRETARY. The secretary shall keep, or cause to be kept, a
book of minutes at the principal office or such other place as the board of
directors may order, of all meetings of directors and shareholders, with the
time and place of holding, whether regular or special, and if special, how
authorized, the notice thereof given, the names of those present at directors'
meetings, the number of shares present or represented at shareholders' meetings
and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
office, a share register, or a duplicate share register, showing the names of
the shareholders and their addresses; the number and classes of shares held by
each; the number and date of certificates issued for the same, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the
meetings of the shareholders and of the board of directors required by the
By-Laws or by law to be given, and he shall keep the seal of the corporation in
safe custody, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or the By-Laws.
17
<PAGE>
Section 10. TREASURER. The treasurer shall keep and maintain, or cause
to be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursement, gains, losses, capital, surplus and shares.
Any surplus, including earned surplus, paid-in surplus and surplus arising from
a reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all times be open to
inspection by any director.
The treasurer shall deposit all moneys and other valuables in the name
and to the credit of the corporation with such depositaries as may be designated
by the board of directors. He shall disburse the funds of the corporation as may
be ordered by the board of directors, shall render to the president and
directors, whenever they request it, an account of all of his transactions as
treasurer and of the financial condition of the corporation, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or the By-Laws.
18
<PAGE>
ARTICLE V.
INDEMNIFICATION OF OFFICERS, DIRECTORS
AND KEY PERSONEL
Section 1. The corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by reason
of the fact that such person is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses including attorneys fees,
judgments, fines and amounts paid in settlement actually and reasonable incurred
by such person in connection with the action, suit or proceeding if such person
acted in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendre or its
equivalent, does not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interest of the corporation, and that, with respect to any
criminal action or proceeding, such person had reasonable cause to believe that
his conduct was unlawful.
19
<PAGE>
Section 2. The corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in the corporation's favor by reason of the fact that such person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses including amount paid in settlement and attorneys
fees actually and reasonable incurred by such person in connection with the
defense or settlement of the action or suit if such person acted in good faith
and in a manner which such person reasonably believed to be in or not opposed to
the best interests of the corporation. Indemnification may not be made for any
claim, issue or matter as to which such a person has been adjudged by a court of
competent jurisdiction determining, after exhaustion of all appeals therefrom,
to be liable to the corporation or for amount paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
Section 3. To the extent that a director, officer, employee or
agent of a corporation had been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in Sections 1 and 2 of this
Article V, or in defense of any claim, issue or matter therein, the corporation
shall indemnify him against expenses, including attorneys fees, actually and
reasonably incurred by such person in connection with the defense.
20
<PAGE>
Section 4. The procedure for authorizing the indemnifications listed
in Section 1, 2 and 3 of this Article V, and the limitations on such
indemnification and advancement of expenses, shall be that set forth in Section
78.751 of the Nevada Revised Statutes, and shall be amended from time to time as
such statute is amended.
ARTICLE VI.
Miscellaneous
Section 1. RECORD DATE AND CLOSING STOCK BOOKS. The board of directors
may fix a time, in the future, not exceeding fifteen (15) days preceding the
date of any meeting of shareholders, and not exceeding thirty (30) days
preceding the date fixed for the payment of any dividend or distribution, or for
the allotment of rights, or when any change or conversion or exchange of shares
shall go into effect, as a record date for the determination of the shareholders
entitled to notice of and to vote at any such meeting, or entitled to receive
any such dividend or distribution, or any such allotment of rights, or to
exercise the rights in respect to any such change, conversion or exchange of
shares, and in such case only shareholders of record on the date so fixed shall
be entitled to notice of and to vote at such meetings, or to receive such
dividend, distribution or allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after any record date fixed as aforesaid. The board of directors may
close the books of the corporation against transfers of shares during the whole,
or any part of any such period.
21
<PAGE>
Section 2. INSPECTION OF CORPORATE RECORDS. The share register or
duplicate share register, the books of account, and minutes of proceedings of
the shareholders and directors shall be open to inspection upon the written
demand of a shareholder or the holder of a voting trust certificate, as limited
herein, at any reasonable time, and for a purpose reasonably related to his
interests as a shareholder, or as the holder of a voting trust certificate. Such
inspection rights shall be governed by the applicable provisions of the Nevada
Revised Statutes and shall be no more permissive than such statutes as to
percentage of ownership required for inspection and scope of the permitted
inspection. Demand of inspection other than at a shareholders' meeting shall be
made in writing upon the president, secretary or assistant secretary of the
corporation.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the board of directors.
Section 4. ANNUAL REPORT. The board of directors of the corporation
shall cause to be sent to the shareholders not later than one hundred twenty
(120) days after the close of the fiscal or calendar year an annual report.
Section 5. CONTRACT, ETC., HOW EXECUTED. The board of directors,
except as in the By-Laws otherwise provided, may authorize any officer or
officers, agent or agents, to enter into any contract, deed or lease or execute
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances; and unless so
authorized by the board of directors, no officer, agent or employee shall have
any power or authority to bind the corporation by any contract or engagement or
to pledge its credit to render it liable for any purpose or to any amount.
22
<PAGE>
Section 6. CERTIFICATES OF STOCK. A certificate or certificates for
shares of the capital stock of the corporation shall be issued to each
shareholder when any such shares are fully paid up. All such certificates shall
be signed by the president or a vice president and the secretary or an assistant
secretary, or be authenticated by facsimiles of the signature of the president
and secretary or by a facsimile of the signature of the president and the
written signature of the secretary or an assistant secretary. Every certificate
authenticated by a facsimile of a signature must be countersigned by a transfer
agent or transfer clerk.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the board of directors or the By-Laws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state the amount remaining unpaid and the terms of payment
thereof.
Section 7. REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS. The
president or any vice president and the secretary or assistant secretary of this
corporation are authorized to vote, represent and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
granted to said officers to vote or represent on behalf of this corporation or
corporations may be exercised either by such officers in person or by any person
authorized so to do by proxy or power of attorney duly executed by said
officers.
23
<PAGE>
Section 8. INSPECTION OF BY-LAWS. The corporation shall keep in its
principal office for the transaction of business the original or a copy of the
By-Laws as amended, or otherwise altered to date, certified by the secretary,
which shall be open to inspection by the shareholders at all reasonable times
during office hours.
ARTICLE VI.
Amendments
Section 1. POWER OF SHAREHOLDERS. New By-Laws may be adopted or these
By-Laws may be amended or repealed by the vote of shareholders entitled to
exercise a majority of the voting power of the corporation or by the written
assent of such shareholders.
Section 2. POWER OF DIRECTORS. Subject to the right of shareholders as
provided in Section 1 of this Article VI to adopt, amend or repeal By-Laws,
By-Laws other than a ByLaw or amendment thereof changing the authorized number
of directors may be adopted, amended or repealed by the board of directors.
Section 3. ACTION BY DIRECTORS THROUGH CONSENT IN LIEU OF MEETING. 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 the members of the board or of such
committee. Such written consent shall be filed with the minutes of proceedings
of the board or committee.
/s/William L. Owen
---------------------------
Secretary
24
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