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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS COMPANYS UNDER SECTION 12(B)
OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file no. 1082673
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THE ZEBALLOS MINING COMPANY
(NAME OF SMALL BUSINESS COMPANY IN ITS CHARTER)
Nevada 98-0201259
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
34 - 3387 King George Highway
Surrey, British Columbia., Canada V4P 1B7
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(Address of Principal Executive Officer) (Zip Code)
(604) 538-5995
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(Company's Telephone Number)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001 per share
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(Title of Class)
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<PAGE>
TABLE OF CONTENTS
ITEM PAGE
- ---- ----
PART 1
Item 1 Description of Business 3
Item 2 Management's Discussion and Analysis or Plan
of Operation 13
Item 3 Description of Property 16
Item 4 Security Ownership of Certain Beneficial
Ownership and Management 17
Item 5 Directors, Executive Officers, Promoters and
Control Persons 19
Item 6 Executive Compensation 20
Item 7 Certain Relationships and Related Transactions 21
Item 8 Description of Securities 25
PART 11
Item 1 Market Price of and Dividends on the Registrant's
Common Equity and Other Stockholders Matters 26
Item 2 Legal Proceedings 26
Item 3 Disagreement With Accountants and Financial Disclosure 26
Item 4 Recent Sales of Unregistered Securities 26
Item 5 Indemnification of Directors and Officers 27
PART F/S
Financial Statements 29
PART 111
Item 1 Index to Exhibits 38
Item 2 Description of Exhibits 38
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DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference: None
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PART 1
The Zeballos Mining Company (the "Registrant" or the "Company") is filing this
Form 10-SB on a voluntary basis to:
1. provide current, public information to the investment community;
2. to expand the availability of secondary trading exemptions under the
Blue Sky laws and thereby expand the trading market in the
Registrant's securities, and
3. to comply with prerequisites for listing of the Registrant's
securities on NASDAQ.
ITEM 1. DESCRIPTION OF BUSINESS
HISTORICAL OVERVIEW OF THE COMPANY
The Registrant was incorporated in the State of Nevada on March 4,
1999. The Registrant has no subsidiaries and no affiliated companies. The
executive offices of the Registrant are located at Suite 34 - 3387 King George
Highway, Surrey, British Columbia, Canada, V4P 1B7.
The Registrant is engaged in the exploration of mineral properties.
(see Part 1, "Exploration and Development of the Zeb Au Mineral Property"). The
Registrant is referred to as being in the "development" stage by its auditors.
This term is generally used in Financial Accounting Standards to describe a
company seeking to develop its ideas and products. The Registrant is not in the
development stage with regards to any mineral claim. No ore body has been
discovered and no substantial exploration has been done on its mineral claim.
The Registrant is purely an exploration company. There is no assurance that any
ore body will ever be found nor that the Registrant will have sufficient funds
to undertake the exploration work required to identify an ore body.
Management anticipates that the Registrant's shares will be qualified
on the system of the National Association of Securities Dealers, Inc. ("NASD")
known as the Bulletin Board.
The Registrant has no revenue to date from the exploration of its
mineral property, and its ability to effect its plans for the future will depend
on the availability of financing. Such financing will be required to develop the
Registrant's mineral property to a stage where a decision can be made by
management as to whether an ore body exists and can be successfully brought into
production. The Registrant anticipates obtaining such funds from its directors
and officers, financial institutions or by way of the sale of its capital stock
in the future (see Part 1, Item 2 - "Plan of Operations"), but there can be no
assurance that the Registrant will be successful in obtaining additional capital
for exploration activities from the sale of its capital stock or in otherwise
raising substantial capital.
PLANNED BUSINESS
In addition to exploring its mineral property, the Registrant plans to
seek out additional mineral properties either by way of purchase, staking or
joint venturing of other mineral properties. (See Part 1, Item 2 - Management's
Discussion and Analysis or Plan of Operation"). No additional mineral properties
have been identified by management to date and there is the possibility that
none will be found.
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Much of the discussion contained in this section is "forward looking"
in that actual results may materially differ from the Registrant's plans as
currently contemplated. Information concerning all the factors associated with
the Registrant is set forth in this Item 1 and in Items 2 and 3 below. FOR A
COMPLETE UNDERSTANDING OF SUCH FACTORS, THIS ENTIRE DOCUMENT, INCLUDING THE
FINANCIAL STATEMENTS AND THEIR ACCOMPANYING NOTES, SHOULD BE READ IN ITS
ENTIRETY.
All dollar amounts shown in this document are stated in US dollars
unless otherwise noted.
EXPLORATION AND DEVELOPMENT OF THE ZEB AU MINERAL PROPERTY
The Registrant was retained Calvin Church, P. Geo. of Vancouver,
British Columbia, to summarize the geology and mineral potential on its mineral
claim near Zeballos, British Columbia. His report was dated April 30, 1999. The
mineral claim was staked February 28, 1999 by Edward Skoda on behalf of the
Registrant and named "Zeb Au".
The claim covers 18 metric units (25.3 square miles) located within the
Zeballos mining camp near the town of Zeballos on the West Coast of Vancouver
Island. Auriferous quartz veins in the Zeballos mining camp produced over
287,811 ounces of gold and 124,700 ounces of silver from ore averaging 0.44
ounces per ton during the period 1934 to 1948 (B.C. Department of Mines).
The present report summarizes geology and mineralization in the
Zeballos mining camp and potential for discoveries on the Zeb Au claim. Church's
report is summarized below. All of the material presented in his report is from
a literature search of British Columbia Department of Mines annual reports and
papers, Geological Survey of Canada Open File maps, memoirs and papers, and
Assessment Report filings with the B.C. Department of Mines. Calvin Church did
not visited the property which was covered in snow at the time of his
preparation of his report.
LOCATION, ACCESS AND TOPOGRAPHY
The property is situated just north of the town of Zeballos, which is
located on the West Coast of Vancouver Island about 300 kilometers (186 miles)
northwest of Victoria. The geographic center of the Zeb Au property is located
at 126(degree)48'35" West Longitude and 50(degree)03'35" North Latitude on
N.T.S. mapsheet 92 L/2. This location may also be described as being in U.T.M.
zone 09 with coordinates Northing 5547300N and Easting 656900E. The claim's
legal corner post is beside the main road about 2.8 kilometers (1.7 miles) up
the Zeballos River from its junction with the Nomash River.
Access is by an all weather road which follows the Zeballos River and
connects Zeballos to the Island highway at Mukwilla Lake. The road comes within
less than one kilometre from the south and east boundaries of the claim from
where steep footpaths follow creeks to higher ground in the northwest area of
the claim.
The terrain is mountainous and rugged. Elevations range from 20 meters
(75 feet) in the Zeballos River valley to above 1,030 meters (Mt. Lukwa 3,749
feet) at some of the local peaks within the mining camp. Many of the creeks flow
down waterfalls in narrow canyons and there are many unscalable bluffs which
make foot traverses difficult. The area is considered coastal rainforest and
total annual precipitation is high, rarely less than 500 centimeters (200
inches). Forests of yellow cedar and hemlock populate the mountaintops and
Douglas fir and red cedar grow well in the river valleys, however, much of the
main drainages were logged in the 1940's.
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CLAIM STATUS
The claim is owned outright by the Registrant. Mineral tenure is secure
for one year from the date of staking as described below.
CLAIM NAME TENURE NO. UNITS EXPIRY DATE
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Zeb Au 367965 18 February 28, 2000
HISTORY
J. S. Stevenson in an article written in 1950 entitled "Lode Gold
Deposits of the Zeballos Area, B.C." published in the British Columbia
Department of Mines gave a detailed account of the mining history of the
Zeballos camp in the British Columbia. An edited excerpt follows:
"Although small amounts of placer gold had been obtained from the
Zeballos River as early as 1907, it was not until 1924 that the first gold vein
was staked on the Tagore property. Two years later the King Midas was staked,
and by 1929 forty claims had been staked in the valley. In that year the first
shipment of ore was made. It consisted of 2 tons of high-grade ore mined from
the Tagore.
A period of inactivity followed until 1934, when the first of the rich
gold-quartz veins that to were make the Zeballos camp an important producer were
found. Small pockets of course placer gold and gold-quartz float boulders had
been found at the mouth of Spud creek. Prospecting upstream along Spud creek and
in its many tributaries resulted in discovery of the veins on the White Star
property in early 1934. In 1935, the Goldfield vein on the Spud Valley property
was found, and in 1936 the No.1 vein on the Privateer. Several discoveries
followed shortly after on Spud Creek and other creeks draining into the Zeballos
River.
Mining really began in the winter of 1934-35 when high-grade ore was
shipped from the property of White Star Gold Mines. In 1937 shipments of ore
were made from the No.1 vein on the Privateer. In 1938 the Privateer mill and
Spud Valley Gold Mines mill began operating. That year nearly 400 men were
employed at thirty properties in prospecting, development work, and production.
In 1939 mills were built at the Mount Zeballos and Central Zeballos mines, and
in 1941 a mill was built at the Homeward. About 1942, the shortage of men and
supplies because of World War II forced all but the Privateer and Prident to
close, and in October 1943, these properties also were forced to close. During
the winter of 1945-46 operations were resumed at Privateer, Prident, Central
Zeballos, and Spud Valley mines, but owing to the increased cost of supplies and
labour relative to the fixed price of gold, these mines were forced to close
again and by the end of 1948 Privateer, the last to operate, had ceased
operations.
Production from the Zeballos mining camp between 1934 and 1948 totaled
287,811 ounces gold and 124,700 ounces silver from approximately 651,000 tons of
ore mined (Table I). This gives an over all grade for the camp, including
dilution, of 0.44 ounces gold per ton; or, based on a yield of 280,623 ounces
from the ore milled, an average of 0.75 ounces per ton milled. The narrow veins
were mined by cut-and-fill and shrinkage methods and resulted in lower grades
due to dilution in areas where stoping widths exceeded vein widths. This is
clearly evident from production figures of the largest producer in the camp,
Privateer, where the average grade based on total production of 154,381 ounces
of gold from 285,771 tons mined and 153,332 tons milled was 0.54 ounces gold per
ton mined and 1.01 ounces gold per ton milled. Production figures for the major
gold producers in the camp are listed below."
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<TABLE>
<CAPTION>
TABLE 1 - Zeballos Gold Production (ounces), 1934 to 1948
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1934 - 1944 -
PRODUCER 1937 1938 1939 1940 1941 1942 1943 1948 TOTAL
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Privateer 3,003 16,023 32,987 28,416 28,328 17,219 9,727 22,678 154,381
- --------------------------------------------------------------------------------------------------------------------------
Spud Valley * 47 473 15,369 18,099 14,031 6,020 54,039
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Mount Zeballos 3,277 14,716 9,744 2,665 123 30,525
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Central Zeballos 152 33 6,610 6,568 4,610 2,499 20,472
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Prident 3,803 5,141 3,758 1,235 13,937
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White Star 541 42 2,122 2,345 1,531 500 7,081
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C.D. (Rey Oro) 1,102 843 1,319 1,336 4,600
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Homeward 897 594 1,491
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Van Isle 1,178 1,178
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Rimy 44 44
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Tagore 8 +38
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Golden Portal 8 12 20
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King Midas 5 5
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TOTALS 3591 17,836 54,647 72,700 62,238 36,749 13,608 26,412 287,811
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Including production from Big Star.
+ Includes 30 oz. Produced in 1930 and 1932.
Just over one kilometre west of the Zeb Au claim is a block of
reverted crown granted claims that outline the Ford Iron Deposit formerly
named the F.L/Ridge claims. Replacement bodies of almost pure magnetite
were mined from this deposit between 1962 and 1969 mostly by underground
methods. The deposit produced 1,282,233,396 kilograms of iron concentrate
from 1,681,283 tonnes mined (Assessment Report - B.C. Department of Mines).
In 1937, several vein showings were discovered and staked on ground
now covered by the Zeb Au property. Most of this early work consisted of
surface stripping and a number of open cuts or short adits driven on
high-grade veins. During 1938 and 1939 Zeballos Goldspring Mines explored
northerly striking veins on the south bank of Fault Creek. The workings
consist of two adits and several surface strippings between the elevations
of 470 meters (1,410 feet) 536 meters (1,680 feet). No production was ever
reported from the Goldspring veins. Detailed accounts of these early
exploration programs were recorded by M.F. Bancroft in an article written
in 1940
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entitled "Zeballos Mining District and Vicinity" published in Geological Survey
of Canada, Paper 40-12, and by J.S. Stevenson in 1938 in an article entitled
"Lode Gold Deposits of the Zeballos Area, B.C. British Columbia Department of
Mines.
REGIONAL GEOLOGY
Geologists from the Geological Survey of Canada, beginning with G.M.
Dawson (1887), carried out the earliest geological investigations of Vancouver
Island. D.H. Gunning made important contributions to the geological picture when
he completed a systematic geological survey in 1932 of the Nimpkish and Woss
lake areas of northern Vancouver Island. A compilation of Gunning's work was
combined with investigations by J.W.Hoadley and published as GSC Memoir 272:
Geology and Mineral Deposits of the Zeballos-Nimpkish Area in 1953. The
geological mapping of several geologists working for the Geological Survey of
Canada in the 1960's was compiled at a scale of 1.250,000 by J.E. Muller in 1977
and published as Geological Survey of Canada, Open File 463.
Vancouver Island is the main component of the Insular Belt, the
westernmost major tectonic subdivision of the Canadian Cordillera. The Insular
Belt contains a middle Paleozoic and a Jurassic volcanic-plutonic complex, both
apparently underlain by gneiss-migmatite terranes and overlain respectively by
Permo-Pennsylvanian and Cretaceous clastic sediments. A thick shield of Upper
Triassic basalt, overlain by carbonate clastic sediments, separates these two
complexes in space and time. In the Zeballos-Nimpkish lake area H.C. Gunning in
an article written in 1932 entitled "Preliminary Report on the Nimpkish Lake
Quadrangle, Vancouver, Island, British Columbia" published in the Geological
Survey of Canada, Memior 272, defined this volcanoclastic sequence the Vancouver
Group. The Vancouver Group is intruded by various bodies of the Coast Plutonic
Complex which were emplaced from late Jurassic to early Cretaceous time. Post
orogenic Tertiary clastic sediments fringe the West Coast.
STRATIGRAPHY
The volcanic and sedimentary rocks of the Vancouver Group comprise a
conformable series that strikes, in general, northerly to northwesterly and dips
westward to southwestward. Consequently the oldest rocks are found to the east
and the youngest to the west. Upper Triassic Karmutsen volcanics (muTRK) form
the base of the Vancouver Group and consist of a thick series of medium to
basic, highly amygdaloidal volcanic flows, with very little interbedded
sedimentary material. Except in contact zones with granitic intrusions the
volcanics exhibit low-grade metamorphism. The basaltic eruptions started with
pillow lavas in a deep marine rift basin, continued with aquagene tuff and
breccia as the basin became shallower, and terminated with subareal basalt
flows.
Conformably above the Karmutsen Formation is the Quatsino Formation
(uTRQ), which is composed of massive to thickly bedded white to blue crystalline
limestone. Poorly preserved ammonite fossils from the Quatsino limestone
indicates an Upper Triassic age. The succeeding Parson Bay Formation (uTRPB) is
composed of interbedded calcareous black argillite, calcareous greywacke and
sandy to shaly limestone. A general coarsening of grain size is seen moving
upward in the stratigraphic succession. The Bonanza Group (IJB) was originally
named by Gunning (1932) and included an upper unit composed of mainly rhyolitic
and basaltic tuffs and breccias. Muller (1977) has reclassified the lower
calcareous sedimentary unit as belonging to the Parsons Bay Formation. The
Bonanza represents several eruptive centres of a volcanic arc and consequently
its stratigraphy varies considerably.
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INTRUSIVES
Most of the intrusive rocks on Vancouver Island form part of the Coast
Intrusions, which range in composition from quartz diorite to granite and were
emplaced during Jurassic or Cretaceous time. On northern Vancouver Island these
intrusive rocks form regional patterns of narrow northwest trending belts
separated by slightly wider belts of Upper Triassic volcanic and sedimentary
rocks. On the west side of the island the pattern is more pronounced where a 3
kilometre wide belt, just west of Nimpkish Lake, has been traced southeast to
Vernon Lake, a distance of 80 kilometres. Within the Vancouver and Bonanza
Groups the intrusives form sills, dykes and high level stocks of
hornblende-quartz-feldspar porphyry and there is an apparent comagmatic
relationship between intrusions and volcanics. Much of the economic
mineralization within the Zeballos mining camp was developed in or in close
association to these intruding batholiths and stocks.
STRUCTURE
The structures of northern Vancouver Island are probably due to several
periods of deformation occurring from late Mesozoic to early Tertiary time.
Vancouver Group rocks are folded into broad regional anticlinoria and
synclinoria that strike northwesterly and have average trough to crest distances
of 11 to 16 kilometres. A well-developed synclinal structure was mapped between
Bonanza and Nimpkish lakes however the fold pattern becomes increasingly
disrupted toward the southwest. The regional structure in the Zeballos map area
is complex due to the predominance of intrusive bodies that disrupt the broad
folds. J. W. Hoadley in his article written in 1953 entitled "Geology and
Mineral Deposits of the Zeballos-Nimpkish Area, Vancouver Island, Britihs
Columbia" published in the Geological Survey of Canada, Memior 272, described
these structures as follows:
"In the vicinity of major batholithic intrusive bodies, regional structures have
been largely obliterated or masked by secondary structures imposed during
intrusion. Where the intrusions have invaded volcanic rocks, general upwarping
and relatively mild folding are observed, and some of the smaller roof pendants
have, apparently, been tilted en masse from their original position. However,
where the intrusive bodies have invaded the Quatsino limestone or the
sedimentary part of the Bonanza Group (Parson Bay Formation), the degree of
secondary folding is much more pronounced. The rocks are intricately folded or
overturned, and, in places, recumbent folds are common."
Several major north or northwest trending fault zones are mapped in the
Zeballos map area. The most pronounced fault follows the North Fork of the
Zeballos River and trends slightly west of north and dips steeply east where
observed. This fault is thought to be later than steeply dipping east to
east-northeast striking cross faults.
PROPERTY GEOLOGY
Detailed geological mapping of the Zeballos Mining Camp was completed
by J.S. Stevenson in 1950 and published by the British Columbia Department of
Mines as Bulletin No.27. Mesozoic volcanics and sediments of the Vancouver Group
outcrop and are intruded by Coast intrusives of probable Jurassic age over this
relatively small area (58 km(2)). Geological mapping by Stevenson did not
attempt to make regional correlations but instead used lithology of the rocks to
define the mappable units.
8
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The volcanic and sedimentary rocks comprise a conformable series that
strikes north-northwest and dips south to southwesterly so that the oldest rocks
are found to the east and the youngest to the west. Andesitic lava of the
Karmutsen volcanics outcrop west of the North Fork of the Zeballos river and
represent the oldest mapped unit. Massive limestone of the Quatsino Formation
overlies the lava to the west along Contact creek. A large assemblage of
volcanics, mainly pyroclastics and minor flows of the Bonanza Formation,
overlies the limestone conformably to the west and outcrops over the southwest
quadrant of the mining camp. A northwesterly belt of Coast intrusives that
include, from oldest to youngest, gabbro and hornblende diorite, granodiorite,
quartz diorite, and several varieties of dykes, invade the stratified rocks. The
intrusives are a dominant feature within the Zeballos mining camp and as most
mineral deposits are associated with it, is of considerable economic and
geological interest.
The major structure of the area is a monoclinal fold that strikes
northwest and dips 40 to 60 degrees southwest. This fold is modified by a major
northwest trending dragfold between Lime and Contact creeks in which the crest
follows Lime creek and the trough follows the ridge 600 metres to the east.
Minor dragfolds occur near contacts with the quartz diorite. A major northerly
trending fault of indeterminate displacement follows the North Fork of the
Zeballos River and appears to dip vertical or steeply east. About 800 metres up
Fault Creek from the junction with the North Fork is a second fault of major
importance. The fault strikes east-southeast and dips steeply north-northeast
offsetting the west dipping contact between Quatsino limestone and Karmutsen
volcanic rocks about 600 metres to the west on the south side of the fault.
MINERALIZATION AND ALTERATION
Mineral deposits of the area include gold-bearing quartz veins and high
temperature replacement (skarn) or contact metamorphic deposits in limestone or
calcareous sedimentary rocks. Deposits of the latter type are confined to areas
where Quatsino limestone and sedimentary parts of the Karmutsen and Bonanza
group rocks have been invaded by Coast intrusions. The replacements typically
contain chiefly magnetite with lesser amounts of pyrrhotite (F.L., Ridge,
Churchill) or they contain mainly chalcopyrite and only minor magnetite and
pyrrhotite (Maquinna and Central Zeballos) and sometimes appreciable gold
(Beano). In the Ford skarn deposit a 21 metre thick tabular body of magnetite
follows a limestone-tuff contact and has been traced along 400 metres of strike.
Auriferous gold-bearing veins of the Zeballos camp are
characteristically narrow, with widths less than one foot (30 cm), but commonly
contain gold in excess of one ounce to the ton (35 g/tonne). Some of the veins
occur in sheeted zones up to 4 feet (1.2 m) wide that may pinch and swell along
strike forming lenticular quartz-sulphide zones (Goldfield Vein). The veins
follow fairly continuous fault fissures and are often banded by an alternation
of quartz and sulphides where the abundance of sulphide varies from 10 to 50
percent and averages about 25 percent. Sulphides, in order of abundance are
pyrite, sphalerite, arsenopyrite, chalcopyrite, galena, pyrrhotite, and rarely
marcasite.
The producing mines in the camp were located at the northwest end or
nose of the quartz diorite intrusive body and related to structural deformation
and mineralization there. It has been found that veins, or parts of veins, that
follow the direction of tension in any fracture pattern are the most favourable
for the localization of ore. A study of fracture patterns in the Zeballos camp
by J. S. Stevenson in 1950 determined that veins that strike close to north 62
degrees east and dip vertically were formed by tension and thus most likely to
contain higher grade oreshoots. This discovery has been proven by practical
experience where several high grade veins (Privateeer No.3, Goldfield Vein) and
gash veins in the Zeballos camp are orientated in this direction.
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On the Zeb Au claim there are more than three sheared-vein showings of
limited extent containing minor amounts of gold and base metals. The shears
zones are generally less than one metre wide, strike 035 to 090 degrees, and dip
steeply north or south. The quartz veins within the shears are usually 5 to 30
centimetres wide and mineralized with pyrite-arsenopyrite and lesser amounts of
pyrrhotite, chalcopyrite, sphalerite and galena. Near the headwaters of Fault
Creek, in the northwest corner of the claim, several small lens shaped
replacement bodies of magnetite are exposed along the contact of intruding
diorite and Quatsino limestones. These showings are the southern extension of
the Churchill showings which follow the northwest trending strike of the
contact. Outcrop areas of magnetite are characterized by large areas of
limonitic material alternating with coal-black patches of magnetite.
The Goldspring Vein is exposed in the creek bed of Fault Creek and on
the south bank of the creek between two adits. The vein follow a rusty shear
zone up to 30 centimetres wide with an orientation of 355 degrees dipping 55 to
70 degrees east and is mineralized with abundant pyrite and patches of
chalcopyrite. At the lower portal a sample taken across the 20 centimetre width
of vein assayed 0.40 oz/ton gold and 0.1 oz/ton silver.
RECOMMENDATIONS
o Airphoto interpretation and reconnaissance mapping is required to determine
structural breaks and intersecting fault structures very important to
ground preparation and the formation of mineral deposits in the area.
o Construction of a soil geochemical grid across structural features sampled
at 20 metre intervals on lines spaced 100 metres apart. Major northeast
striking stratigraphic contacts and shear zones should be prospected and
the grids orientated perpendicular to them should they appear to be
mineralized. If terrain conditions prohibit establishing a grid, closely
spaced contour sampling traverses should be considered.
o Ground geophysical surveys using VLF-EM and magnetometer instruments to
locate less obvious linear features (faults), geological contacts and
mineralized horizons.
o Prospecting and detailed geological mapping at 1:2000 scale or better over
the entire claim area. Prospecting could be prioritized according to
favorable geologic contacts especially where VLF-EM conductors have already
been identified.
o Providing favorable results are obtained in the soil geochemical sampling
program additional exploration consisting of trenching and drilling would
be recommended to target anomalies from that program.
REGISTRANT'S MAIN PRODUCT
The Registrant's primary product will be the exploration of its mineral
property which might eventually result in the sale of minerals, both precious
and commercial. The Registrant is not at the stage of development whereby
minerals can be mined and sold thereby giving the Registrant a cash flow. There
is also no guarantee that the Registrant will ever be able to sell any minerals
of any kind from its mineral claim.
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REGISTRANT'S EXPLORATION FACILITIES
The Registrant will be exploring its mineral claims initially in the
Zeballos area of British Columbia and does not plan to build any mill or smelter
facilities until such time as a production decision is made. This will be
several years into the future, or maybe never, before the need to build a
permanent facility is warranted. During the exploration period, the Registrant
will use tent facilities to house its geological workers since this will be by
far the most economic way to proceed.
RISK INHERENT IN MINERAL PROPERTIES
There are certain inherent risks with mineral properties from the point
of view of the Registrant and its shareholders as follows:
1. The Zeb Au claim does not contain a known body of commercial ore and,
therefore, any program conducted on these properties would be an
exploratory search of ore.
2. There is no certainty that any expenditures made in the exploration of
the Zeb Au property will result in discoveries of commercial quantities
of ore. Most exploration projects do not result in the discovery of
commercially mineable deposits of ore.
3. Resource exploration is a speculative business since there is no
assurance after the initial funds are raised that the Registrant can
raise any further funds from the market place.
4. Failure to discover mineral deposits or finding mineral deposits which,
though present, are insufficient in size or grade to return a profit
from production. The marketability of any minerals acquired or
discovered may be affected by numerous factors which are beyond its
control and which cannot be accurately predicted, such as market
fluctuations, the proximity and capacity of milling facilities, mineral
markets and processing equipment, and such other factors as government
regulations, including regulations relating to royalties, allowable
production, importing and exporting of minerals, and environmental
protection. The mineral industry is intensely competitive and the
Registrant competes with other companies that have greater resources.
5. Mining operations generally involve a high degree of risk. Hazards such
as unusual or unexpected formations and other conditions are involved.
The Registrant may become subject to liability for pollution, cave-ins
or hazards against which it cannot insure or which it may not elect to
insure. The payment of such liabilities may have a material, adverse
effect on the Registrant's financial position.
6. Prior to commencing mining operations on any of its properties, the
Registrant must meet certain environmental requirements. Compliance
with these requirements may prove to be difficult and expensive.
Fortunately the Registrant is currently in the exploration stage where
a system of constructing grids and soil sampling will be the first
exploration procedure. Under the Mines Act of British Columbia, the
Registrant is not required to complete an application for submission to
the district inspector. No bond will have to be posted with the mining
branch to ensure environmental clean up. Nevertheless, the Registrant
will be required to file an application if it decides to continue
exploration activities by either trenching, bulk sampling, drilling or
developing an adit. A bond, the amount to be determined by the district
inspector, will have to be posted to ensure adequate clean up of the
site upon abandonment. At this point the Registrant will have to
prepare a
11
<PAGE>
detailed application that will include a deactivation or reclamation
plan. The reclamation plan will have to be completed within one year of
cessation of exploration unless otherwise approved by the district
inspector. At this time, management is unable to assess the financial
impact of any environmental damage other than knowing that the posted
bond will be forfeited in full if the Registrant does not complete the
reclamation correctly.
7. While the Registrant has obtained the usual industry standard title
reports with respect to the Zeb Au claim, this should not be construed
as a guarantee of title. This property may be subject to prior
unregistered agreements or transfers or native land claims 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
all of such property or a reduction in the Registrant's interest
therein.
8. The Zeb Au claim has never been surveyed and, accordingly, the precise
location of the boundaries of the property and ownership of mineral
rights on specific tracts of land comprising the property may be in
doubt.
L. OTHER MINERAL PROPERTIES
The Registrant has not identified any other mineral properties either
for staking, purchasing or joint venture. No negotiations or agreements have
been entered into on any other mineral property and none are expected over the
foreseeable future.
EMPLOYEES
As at June 30, 1999, the Registrant did not have any employees either
part time or full time. Initially the Registrant will not wish to bear the
burden of carrying full time employees especially during periods when it is
difficult to work on the property due to weather conditions. Nevertheless the
executive officers undertook the responsibility of initially identifying a
mineral property of merit, incorporating the Registrant, obtaining the
assistance of professionals as needed, identifying potential investors to
contribute the initial "seed capital", coordinating various filing requirements
and other matters normally performed by the executive officers. They were not
paid for these services in cash by the Registrant but the Registrant has given
recognition in the financial statements to this contribution by expensing $1,000
for services of the President and crediting capital contribution for a like
amount.
The Registrant is not a party to any employment contracts or collective
bargaining agreements. The British Columbia area has a relatively large pool of
people experienced in exploration and development of mineral properties - being
mainly geologists and mining consultants. In addition, there is no lack of
people who have experience in working on mineral properties either as laborers
or prospectors. The Registrant will use independent workers and consultants
initially on a part time basis.
COMPETITION
In Canada there are numerous mining and exploration companies, both big
and small. All of these mining and exploration companies are seeking properties
of merit and availability of funds. The Registrant will have to compete against
such companies to acquire the funds to develop its mineral claim. The
availability of funds for exploration is sometimes limited and the Registrant
might find it difficult to compete with larger and more well-known companies for
capital. Even though the Registrant has the rights to the mineral on its claim
there is no guarantee it will be able to raise sufficient funds in the future to
maintain its mineral claim in good standing. Therefore, if the situation occurs
that it does not have sufficient funds for exploration the claim might lapse and
be staked by other mining interests. The Registrant might be forced to seek a
joint venture partner to assist in the
12
<PAGE>
development of its mineral claim. In this case, there is the possibility that
the Registrant might not be able to pay its proportionate share of the
exploration costs and might be diluted to an insignificant carried interest.
Even when a commercially viable ore body is discovered, there is no
guarantee competition in refining the ore will not exist. Other companies may
have long term contracts with refining companies thereby inhibiting the
Registrant's ability to process its ore and eventually market it. At this point
in time the Registrant does not have any contractual agreements to refine any
potential ore it might discover on its mineral claims.
The exploration and development business is highly competitive and
highly fragmented, dominated by both large and small mining companies. Success
will largely be dependent on the Registrant's ability to attract talent from the
mining field. There is no assurance that the Registrant's mineral expansion
plans will be realized.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
The discussion contained in this Item 2 is "forward looking" in that
actual work performed on the Registrant's mineral property may differ from the
recommended work program as set forth in the geological report dated April 30,
1999 prepared by Calvin Church, Pigeon. and summarized herein. Factors that
could cause the work program to differ are described throughout this Form.
PLAN OF OPERATION
To date the Registrant has concentrated on the Zeb Au claim. In the
future, the Registrant will seek to investigate other mining properties to
determine which ones are of merit and are of interest to the Registrant. Subject
to the availability of financing, the Registrant will seek to increase its
inventory of mineral properties and, if acceptable to management, enter into
joint venture agreements to develop various other mineral properties of merit.
(See Part 1, Item 1 - "Description of the Business"). The Registrant will seek
to generate such funds through the sale of securities and/or institutional
financing. If an underwriter can be found, a public offering of common stock
will be considered; alternatively the Registrant will seek to raise funds
through a private offering of securities to an institutional buyer or through a
registered broker dealer. The Registrant does not presently have any financing
arranged for nor has any underwriter yet expressed interest in such an offering,
and there can be no assurance that an underwriter can be found on terms
acceptable to the Registrant. In the absence of such financing, the Registrant
may be unable to put its plans into effect.
LIQUIDITY AND CAPITAL RESOURCES
As at April 30, 1999, the Registrant had $9,895 of assets, and $3,390
of liabilities. The cash equivalent as at April 30, 1999 was $9,845.
The Registrant has no contractual obligations for either lease
premises, employment agreements or work commitments on the Zeb Au claim and has
made no commitments to acquire any asset of any nature.
Operational and administrative expenses of the Registrant for 1999 are
projected to be approximately $4,450 which will comprise audit ($1,500), filing
fees with regulatory authorities -Edgar ($1,000), transfer agent's fees ($1,200)
and miscellaneous ($750). The Zeb Au claim is in good standing until February
2000 and if warranted the Registrant need not spend any money on its claim
13
<PAGE>
until that date. The current cash position is sufficient to pay the above noted
expenses and if required the officers and directors can advance additional funds
to the Registrant.
Since March 4, 1999, the date of inception, the Registrant has incurred
the following expenses:
Accounting and audit (1) $ 2,250
Bank charges (2) 87
Geology report (3) 1,200
Incorporation costs written-off (4) 670
Management fee (5) 1,000
Office and miscellaneous (6) 170
Rent (7) 600
Staking costs (8) 368
Telephone (9) 200
Transfer agent's fees (10) 2,340
------
Total expenses for the period $ 8,885
======
(1) Audit fee - $2,250
The Registrant had its financial statements audited as at April 30, 1999,
as attached to this Form 10-SB, for a fee of $1,500. In addition,
accounting services in the preparation of a working paper file and the
accounting records of the Registrant resulted in an invoice of $750.
(2) Bank changes - $87
Monthly service charges for operating the account as charged by the Bank of
Montreal.
(3) Geology report - $1,200
The Registrant engaged the services of Calvin Church, P. Geo., to write a
report to the Registrant detailing the mineralization on the Zeb Au claim
and recommending a future work program. This report was completed on April
30, 1999 and has been summarized in part in this Form under the heading of
"Exploration and Development of Zeb Au Mineral Property."
(4) Incorporation costs written-off - $670
The Registrant has treated the costs of incorporation as period costs and
has written them off as an expense in the current period rather than
capitalize them and amortize them over a period of time.
(5) Management fee - $1,000
The Registrant has not paid any fees to its directors or officers during
the current period. Nevertheless, the Registrant realizes that there is a
cost involved in the directors and officers devoting time and effort to the
affairs of the Registrant. Therefore, a management fee of $1,000 has been
expensed and credited to capital contribution during the current period.
(6) Office and miscellaneous - $170
Office and miscellaneous represents the printing of cheques for use by the
Registrant, photocopying, courier and fax charges for the period.
14
<PAGE>
(7) Rent - $600
The Registrant uses the personal residence of the President of the
Registrant as an office. No charge has been incurred by the Registrant.
Nevertheless, the Registrant recognizes that there is a cost to using an
office and therefore has expensed $600 and credited to capital contribution
a similar amount.
(8) Staking costs - $368
The Registrant engaged the services of Edward Skoda to stake the Zeb Au
claim in the Zeballos area of British Columbia. Mr. Skoda invoiced the
Registrant for his staking and recording costs.
(9) Telephone - $200
The Registrant has not incurred any telephone charges to date.
Nevertheless, the Registrant recognizes the fact that there is a telephone
cost to operating a business and therefore has expensed $200 with an
offsetting credit to capital contribution. This expense was determined on
the fair market value of obtaining a telephone line and operating for it a
three month period.
(10) Transfer agent's fees - $2,340
Transfer agent's fees comprise $1,200 for the annual fee paid to maintain
an account with the transfer agent and $1,040 for preparation and issuance
of share certificates. The Registrant has treated for accounting purposes
the annual fee of $1,200 as a period cost and has written it off in the
current period rather than amortizating it over the entire year.
Management feels that its present cash position, after the payment of
all outstanding accounts payable, is sufficient to meet its present needs other
than undertaking any exploration program on the Zeb Au claim. Maintaining the
Zeb Au claim in good standing for an additional year, being to the end of
February 2001, would result in cash been spent in the amount of approximately
$1,000. Other expenses required by the Registrant in the immediate future would
be for accounting, transfer agent charges, office expenses and audit. If the
Registrant wishes to explore the Zeb Au claim it will require additional funds.
These funds might be provided by the directors and officers, by way of bank
financing or the selling of the Registrant's capital stock. No consideration, at
this time, has been given to the raising of additional funds.
The Registrant's auditor has qualified his audit opinion as to whether
the Registrant is a going concern as follows:
"The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The Company is in the development
stage and will need additional working capital for its planned activity, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 6. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty."
In Note 6 management has indicated the Registrant will need additional
capital to be successful in its planned activity and continuation of the
Registrant as a going concern is dependent upon obtaining additional working
capital and the management of the Registrant has developed a strategy, which it
believes will accomplish this objective through additional equity funding, and
long term financing, which will enable the Registrant to operate in the future.
The management is willing to advance the necessary funds, comprising of
assessment payments on the Zeb Au claim ($1,200), audit ($1,500), accounting
($500), filing fees ($1,000), transfer agent fees ($1,200) and miscellaneous
($500). The
15
<PAGE>
advancement of these funds will maintain the Registrant in good standing
financially for an additional year. To undertake an exploration program the
Registrant will require additional funds over and above the above mentioned
funds. These funds might be obtained through institutional funding or the sale
of the Registrant's common stock. If these funds cannot be raised, the
Registrant as an entity might cease to operate. The auditor made this
qualification in his report in order to alter the reader that there is a chance
that the Registrant might not survive as a company without additional funds.
Management does not believe the Registrant's operations have been
materially affected by inflation.
ITEM 3. DESCRIPTION OF PROPERTY
The Zeb Au claim consists of one 18 unit metric (25.3 square miles)
claim situated within the Zeballos mining camp near the town of Zeballos about
300 kilometers (186 miles) northwest of Victoria, British Columbia. The property
is 100 percent owned by The Zeballos Mining Company.
The Zeballos mining camp was a significant gold producer between 1934
and 1948 and achieved total output figures of 287,811 ounces of gold and 124,700
ounces of silver during that time. Typically gold and silver was mined from
high-grade ore shoots in auriferous quartz veins averaging less than one foot
(30cm) wide along fairly continuous strike lengths. The overall grade for the
camp was approximately 0.44 ounces gold per ton mined; however the actual grade
of most veins before dilution from mining is much higher (> 1.0 oz/ton).
Gold-bearing quartz veins developed in shear zones near border phases
of intrusive rocks and in adjacent host rocks. Shearing patterns and related
planes of tension that developed in the intrusive bodies due to their structural
deformation were important to the localization of economic accumulations of
gold. High-grade ore shoots formed in veins and tension gashes with an
orientation of 062(degree)/90. In quartz-sulphide ores the amount of gold is
proportional to the amount of sulphide and the presence of galena and
sphalerite.
Many of the mineralogical associations and structural patterns found in
the area of the former producing mines in the Zeballos mining camp are evident
in the area of the Zeb Au claim. Although gold-bearing veins on the property are
considered to be too small or low grade to be economic the potential for new
discoveries is possible. An exploration program including reconnaissance
mapping, geophysics and geochemical sampling is recommended to determine the
extent of the mineralizing system on the Zeb Au property. Further programs of
trenching and drilling are recommended contingent on favorable results of each
preceding exploration phase.
OFFICES
The Registrant's executive offices are located at 34 - 3387 King George
Highway, Surrey, British Columbia, Canada. The office is located in the home of
the President of the Registrant. There is no charge to the Registrant for having
an office there but an imputed charge of $600 has been expensed during the
current period with an offsetting entry to capital contribution. The Registrant
realizes it will eventually have to acquire office space of its own. No office
space has been selected to date.
INCORPORATION IN THE STATE OF NEVADA
The Registrant incorporated in the State of Nevada rather than British
Columbia mainly due to the tax reasons. In British Columbia the provincial
government imposes a capital tax based on the number of issued and outstanding
shares. This is an annual tax. In addition both the Federal and
16
<PAGE>
Provincial Governments impose tax on any profits made. This tax could range as
high as 51% of net income. By having a Nevada based company the Registrant will
only be subject to a 15% withholding tax as set forth in the Canada/ US Tax
Treaty. The State of Nevada has no corporate tax.
OTHER PROPERTY
The Registrant does not own any other property other than the rights to
the minerals located on the Zeb Au claim.
PUBLIC ANNOUNCEMENTS
The Registrant has made no public announcements of any kind prior to
the filing of this Form 10-SB.
PATENTS, TRADEMARKS, LICENSES, ETC.
The Registrant does not have any patents, trademarks, licenses,
franchises, commissions, royalty payments or labor contracts.
RESEARCH AND DEVELOPMENT
The Registrant has spent no money since inception on research and
development activities.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERSHIP AND MANAGEMENT
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to the
beneficial ownership of each person who is known to the Registrant to be the
beneficial owner of more than 5% of the Registrant's Common Stock as of June 30,
1999.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
TITLE NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF OF BENEFICIAL OF BENEFICIAL OF
CLASS OWNER OWNERSHIP (1),(2) CLASS (2)
----- ------ ----------------- ---------
<S> <C> <C> <C>
Common E. DEL THACHUK 2,525,000 (i) 22.80%
Shares 34-3387 King Edward Highway
Surrey, B.C.
Canada, V7S 2X7
Common JAMES BRUCE 2,525,000 (ii) 22.80%
Shares 114-2274 Folkstone Way
West Vancouver, B. C
Canada, V7S 2X7
</TABLE>
- -----------
(1) As of June 30, 1999 there were 11,075,400 common shares outstanding. Unless
otherwise noted, the security ownership disclosed in this table is of record
and beneficial.
(2) Under Rule 13-d under the Exchange Act, shares not outstanding but subject
to options, warrants, rights, conversion privileges pursuant to which such
shares may be acquired in the next 60 days are deemed to be outstanding for
the purpose of computing the percentage of
17
<PAGE>
outstanding shares owned by the persons having such rights, but are not
deemed outstanding for the purpose of computing the percentage for such
other persons.
(i) Del Thachuk, the President and Director of the Registrant, purchased
for cash 2,500,000 shares at a price of $0.001 per share. In addition,
Mr. Thachuk purchased for cash 25,000 shares at $0.10 per share. All
these shares were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended. Each of
the share certificates has the appropriate legend restricting its sale
and transfer.
(ii) James Bruce, a director of the Registrant, purchased for cash
2,500,000 shares at a price of $0.001 per share. In addition, Mr. Bruce
purchased for cash 25,000 shares at a price of $0.10 per shares. All
these shares were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended. Each of
the share certificates has the appropriate legend restricting its sale
and transfer.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of each officer and director, and of all directors and
executive officers as a group as of June 30, 1999.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
TITLE NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF OF BENEFICIAL OF BENEFICIAL OF
CLASS OWNER OWNERSHIP (1),(2) CLASS (2)
----- ------ ----------------- ---------
<S> <C> <C> <C>
Common E. DEL THACHUK 2,525,000 (3) 22.80%
Shares 34-3387 King George Highway
Surrey, British Columbia
Canada, V4P 1B7
Common JAMES BRUCE 2,525,000 (3) 22.80%
Shares 114-2274 Folkstone Way
West Vancouver, B. C.
Canada, V7S 2X7
Common STACEY BLIGH NIL 0.00%
Shares 2406-1050 Burrard Street
Vancouver, British Columbia
Canada, V6Z 2S3
All officers and directors as a 5,050,000 45.60%
group (three persons)
</TABLE>
- -----------
(1) As of June 30, 1999, there were 11,075,400 common shares outstanding. Unless
otherwise noted, the security ownership disclosed in this table is of record
and beneficial.
(2) Under Rule 13-d under the Exchange Act, shares not outstanding but subject
to options, warrants, rights, conversion privileges pursuant to which such
shares may be acquired in the next 60 days are deemed to be outstanding for
the purpose of computing the percentage of outstanding shares owned by the
persons having such rights, but are not deemed outstanding for the purpose
of computing the percentage for such other persons. None of the directors or
officers have any options, warrants, rights or conversion privileges
outstanding.
18
<PAGE>
(3) Mr. Thachuk is President and a Director of the Registrant and one of the
controlling shareholders. This stock is restricted since it was issued in
compliance with the exemption form registration provided by Section 4 (2) of
the Securities Act of 1933, as amended. After this stock has been held for
one (1) year, Mr. Thachuk could sell a percentage of his shares every three
months based on 1% of the outstanding stock. Therefore, this stock cannot be
sold except in compliance with the provisions of Rule 144.
Mr. Bruce is a Director of the Registrant and one of the controlling
shareholders. This stock is restricted since it was issued in compliance
with the exemption form registration provided by Section 4 (2) of the
Securities Act of 1933, as amended. After this stock has been held for one
(1) year, Mr. Bruce could sell a percentage of his shares every three months
based on 1% of the outstanding stock. Therefore, this stock cannot be sold
except in compliance with the provisions of Rule 144.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
The following table identifies the Registrant's directors and executive
officers as of June 30, 1999. Directors are elected at the Registrant's annual
meeting of stockholders and hold office until their successors are elected and
qualified. The Registrant's officers are appointed annually by the Board of
Directors and serve at the pleasure of the Board.
TERM AS
DIRECTOR
NAME POSITION HELD EXPIRES
------- ------------- --------
E. Del Thachuk President and Director 2000
James Bruce Director 2000
Stacey Bligh Secretary Treasurer --
DEL THACHUK, 63, has been the President and a Director of the
Registrant since its inception. Mr. Thachuk graduated from Victoria Composite
High School in Edmonton, Alberta before spending nine months articling as a
chartered accountant student. Subsequently Mr. Thachuk worked for two years for
the City of Edmonton as a surveyor before entering professional football for
four years. He was a player for London Lords in London, Ontario and subsequently
was hired by the Edmonton Eskimos. From 1962 to 1969, Mr. Thachuk was owner and
president of Civic Tire & Battery Ltd. located in Olds, Alberta. His company
owned three tire shops and was in partnership with an additional two. Subsequent
to the sale of his company he became a contractor for a short period of time
during which time he build and sold five houses and approximately thirty pre-fab
homes. In 1971, Mr. Thachuk commenced mining a placer gold property he owned in
Atlin, British Columbia. During the fifteen years he mined his placer property
he extracted in excess of 30,000 ounces of gold. With the sale of the placer
property, Mr. Thachuk, over the next five years, entered into various mining
ventures in Nevada, Washington State and British Columbia. During this same
period of time, Mr. Thachuk was president of Red Fox Minerals Ltd., a company
listed for trading on the Vancouver Stock Exchange. In 1991, he became part
owner and general manager for Koben Sand & Gravel which employed 36 employees
and in its third year of operations had in excess of CDN $6,000,000 in sales. In
1994, Mr. Thachuk became a consultant for various companies until 1997 when he
incorporated and became president of Mine A Max Corporation, a company called
for trading on the OTC Bulletin Board in United States.
19
<PAGE>
JAMES BRUCE, 71, has been a Director of the Registrant since its
inception. Mr. Bruce received a degree from the University of British Columbia
in Agriculture in 1950. After graduation he became Vice President of Sales and
General Manager for Imperial School Furniture where he worked for 14 years
before becoming Vice President of Sales for Co-ordinated Business Interiors.
Subsequent to his departure from Co-ordinated Business Interiors he became a
registered broker for Hemsworth Turton where his responsibilities were to
promote equity funding for public and private companies. In 1969 he became
President of White Water International and Inter-American Nickel Corp. which was
in the process of developing a water purification system. In 1972, he accepted
the position of Senior Account Manager for Finning Tractor (Caterpillar
Distributor) where he was employed until 1981. Since that time, Mr. Bruce has
been President and Chief Executive Officer for Newgen Environmental Systems Inc.
(formerly New Generation Power Corp.), a public company currently trading on the
Alberta Stock Exchange.
STACEY BLIGH, 26, has been the Secretary Treasurer of the Registrant
since its inception. She graduated from Edward Milne Secondary School in 1990
with the Dogwood Diploma after having achieved the Honor Roll Status for four
consequent years before obtaining a position with Westport Design Centre where
her responsibilities were preparing bid sheets for large development projects,
job costing and co-coordinating activities with various departments. In 1992 she
attended the University of Victoria for two years where she majored in Biology.
Subsequent to leaving university Ms. Bligh became an assistant appraiser for
D.R. Coell & Associates in Victoria, British Columbia where her duties comprised
proof reading all residential property appraisals and ensuring that legal
matters were attended to. In 1995 she moved to Whistler, British Columbia and
worked for Re/Max, completing all closing documentation for real estate
projects. Subsequently she was employed by Whistler Resort Association where she
was responsible for food and beverage accounting and supervising all staff at
functions involving cash sales. Presently Ms. Bligh is employed by her personal
wholly-owned company undertaking administrative work for various other
companies.
Mr. Edward Skoda was the incorporating director of the Registrant but
resigned as a director on March 15, 1999 due to moving permanently to Mexico. It
was felt in the best interest of the Registrant that the current directors
accept Mr. Skoda's resignation since he would not be available to attend to the
affairs of the Registrant.
None of the Directors or Executive Officers work full time for the
Registrant, but intend to devote such time as their responsibilities require.
None of the Registrant's Directors are currently directors of other companies
registered under the Securities and Exchange Act of 1934 except Del Thachuk who
is president and a director of Mine A Max Corporation, a company trading on the
OTC Bulletin Board in the United States.
There are no family relationships between the directors, executive
officers or with any person under consideration for nomination as a director or
appointment as an executive officer of the Registrant. The directors and
officers of the Registrant act as promoters. There are no other individuals who
act or are considered to be promoters for the Registrant.
ITEM 6. EXECUTIVE COMPENSATION
None of the Registrant's executive officers have received compensation
since the Registrant's inception.
The following table sets forth compensation paid or accrued by the
Registrant during the period ended April 30, 1999 to the Registrant's President
and shows compensation paid to any other officers or directors.
20
<PAGE>
SUMMARY COMPENSATION TABLE (1999)
<TABLE>
<CAPTION>
LONG TERM COMPENSATION (US DOLLARS)
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------ -------
(a) (b) (c) (e) (f) (g) (h) (i)
OTHER RESTRICTED ALL OTHER
ANNUAL STOCK OPTIONS/ LTIP COMPEN-
NAME AND PRINCIPAL COMP. AWARDS SAR PAYOUTS SATION
POSITION YEAR SALARY ($) ($) (#) ($) ($)
----------- ----- ------- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
E. Del Thachuk 1999 -0- -0- -0- -0- -0- -0-
President and
Director
James Bruce, 1999 -0- -0- -0- -0- -0- -0-
Director
Stacey Bligh, 1999 -0- -0- -0- -0- -0- -0-
Secretary Treasurer
</TABLE>
There has been no compensation given to any of the Directors or Officers during
1999. There are no stock options outstanding as at June 30, 1999 and no options
have been granted in 1999, but it is contemplated that the Registrant may issue
stock options in the future to officers, directors, advisers and future
employees.
COMPENSATION OF DIRECTORS
Members of the Board of Directors do not receive cash compensation for
their services as Directors. Directors are not presently reimbursed for expenses
incurred in attending Board meetings.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Registrant has never before filed a prospectus specified under
Section 10(a) of the Securities Act of 1933 at this time. The Registrant raised
funds from its officers' and directors' relatives, friends and business
associates as more fully described below.
Shares issued to Directors
On March 14, 1999 the directors of the Registrant subscribed for
5,000,000 shares at $0.001 per share for cash consideration totaling $5,000. In
addition, on March 27, 1999 both directors subscribed for a further 25,000
shares each at $0.10 per share for a total consideration of $5,000.
The breakdown of the shares issued to these two directors at both
$0.001 per share and $0.10 per share is as follows:
E. Del Thachuk 2,525,000 shares
James Bruce 2,525,000 shares
All the above noted stock is restricted since it was issued in
compliance with the exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended. After this stock has been held for one year,
the holders of these shares of the Registrant could sell a percentage of their
shares every three months based on 1% of the outstanding stock in the
Registrant. Therefore, this stock can be sold after the expiration of one year
in compliance with
21
<PAGE>
the provisions of Rule 144. There are "stop transfer" instructions placed
against this stock and a legend is imprinted on each stock certificate.
Shares issued at $0.001 to non-directors and officers
On March 16, 1999 the Registrant accepted subscription agreements from
12 individual corporations for a total number of 6,000,000 shares at a price of
$0.001 per share. All shares were paid for in cash which amounted to total
receipts of $6,000. 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. The names of the corporation, the principal officer
and the number of shares purchased for each corporation are listed below:
<TABLE>
<CAPTION>
NAME OF CORPORATION PRINCIPAL NUMBER OF SHARES
------------------- --------- ----------------
<S> <C> <C>
Portsail Overseas Ltd. Maria Scott 535,000
Flametree Properties Ltd. Richard Smith 540,000
Lionus Productions Inc. Michael Laidlaw 550,000
Principal Corp. Amir Sosa 390,000
Larkspur Limited Ronald Lui 545,000
Kingmoor Capital Ltd. Tracey Williams 455,000
Waterloo Investments Inc. Clifford Wilkins 525,000
Ravensburg Kapital GmbH Marie Gabb 450,000
Camaret Freres S.A. Joy Vernon-Godfrey 480,000
Nova International Ltd. Keith King 500,000
Viceroy Capital Inc. Jessica Garbutt 500,000
Strathaven International Inc. David Finzer 530,000
</TABLE>
Shares issued at $0.10 per share to other shareholders
On or about March 27, 1999, the Registrant approved the issuance of the
following shares to individuals listed below for the consideration of $0.10 per
share. All shares were paid for in cash for a total consideration of $2,540.
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.
NUMBER OF
SHAREHOLDER SHARES
----------- ----------
Glyn Hethey 1,000
Robin Hethey 1,000
Charles Hethey 2,000
James Hethey 2,000
Colleen Watalla 500
Carol Krushnisky 1,200
Carrie Page 900
John R. Krushnisky 1,000
Gordon Krushnisky 800
Jako Krushnisky 750
Steven Bruce 1,500
Linda Bruce 1,000
Raymond Miller 500
22
<PAGE>
Mary Hethey 2,000
Doris O'Brien 1,000
Auggnetha Quashie 900
Carrie Thachuk 750
Mike Thachuk 750
John W. Walker 1,200
Carol Finley 1,000
Michael Kennaugh 850
Carsten Mide 600
Raymond Contoli 700
Randy Contoli 500
Raymond Levesque 1,000
The directors and officers have contributed and continue to contribute
time, office space, telephone, and other expenses, without compensation or
reimbursement. The Registrant has given recognition to this contribution by
including them in expenses and crediting capital surplus the following amounts:
Management fees $ 1,000
Rent 600
Telephone 200
-------
$ 1,800
Certain directors of the Registrant are directors, officers,
stockholders and/or employees of other companies, and conflicts of interest may
arise between their duties as directors of the Registrant and as directors,
officers of other companies. All such possible conflicts will be disclosed and
the directors concerned will govern themselves in respect thereof to the best of
their ability in accordance with the obligations imposed on them under the laws
of the State of Nevada.
All officers and directors are aware of their fiduciary
responsibilities under corporate law, especially insofar as taking advantage,
directly or indirectly, of information or opportunities acquired in their
capacities as officers and directors of the Registrant. Any transaction with
officers or directors will only be on terms consistent with industry standards
and sound business practice in accordance with the fiduciary duties of those
persons to the Registrant, and depending upon the magnitude of the transactions
and the absence of any disinterested board members, the transactions may be
submitted to the shareholders for their approval in the absence of any
independent board members.
REPORTS TO SECURITIES HOLDERS
Prior to filing this Form 10-SB, the Registrant has not been required
to deliver annual reports. To the extent that the Registrant is required to
deliver annual reports to security holders through its status as a reporting
company, the Registrant shall deliver annual reports. Also, to the extent the
Registrant is required to deliver annual reports by the rules or regulations of
any exchange upon which the Registrant's shares are traded, the Registrant shall
deliver annual reports. If the Registrant is not required to deliver annual
reports, the Registrant will not go to the expense of producing and delivering
such reports. If the Registrant is required to deliver annual reports, they will
contain audited financial statements as required.
23
<PAGE>
Prior to the filing of this Form 10-SB, the Registrant has not filed
reports with the Securities and Exchange Commission. Once the Registrant becomes
a reporting company, management anticipates that Forms 3, 4, 5, 10K-SB, 10Q-SB,
8-K and Schedules 13D along with the appropriate proxy material will have to be
filed as they come due. If the Registrant issues additional shares, the
Registrant may file additional registration statements for those shares.
The public may read and copy any material which the Registrant files
with the Securities and Exchange Commission at the Commission's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding the issuers that file electronically with the Commission. The Internet
address of the Commission's site is (http://www.sec.gov).
YEAR 2000 COMPUTER PROBLEMS
The Registrant is dependent on computer technology in its business
operations even though it does not itself own any computers at the present time.
Nevertheless every business and professional person the Registrant uses are
reliant on computers which reliance has a direct effect on the Registrant.
The "Year 2000 problem" arose because many existing computer programs
use only the last two digits of a year. Therefore, these computer programs do
not properly recognize a year that begins with "20" instead of "19". If not
corrected, many computer applications could fail or create erroneous results.
The extent of the potential impact of the Year 2000 problem is not yet known,
and if not timely corrected, it could affect the global economy. No country,
government, business, or person is immune from the potential far-reaching
effects of Year 2000 problems. Some estimates that include not only software and
hardware costs, but also cost related to business interruption, litigation and
liability, run into the hundreds of billions of dollars.
The Registrant has determined that the consequences of its Year 2000
issues are likely to be material, in that a breakdown in the economy due to the
Year 2000 problem might endanger its chances of exploring its property since
assay companies, geologists and report writers are reliant upon computers. The
Registrant has:
1. investigated computer software for future purchase whereby the Year
2000 issue has been addressed and corrected. The Registrant is in the
state of readiness to purchase software, if it proves to have resolved
the Year 2000 problem, at the time it acquires its own computer
hardware.
2. incurred no cost, as yet, to address the Year 2000 issue but expects
its costs in the future will be for the purchase of computers and
software which have resolved the Year 2000 problem.
3. acknowledged the risk it faces with the Year 2000 issue from its
geologists and professionals who have not addressed the Year 2000 issue
and hence can no longer operate once the Year 2000 is upon the business
community.
24
<PAGE>
4. a contingency plan in that it will discuss with its geologists and
professionals their contingency plans and if they have not addressed
the Year 2000 problem the Registrant will switch to other geologists
and professionals who have. There is no guarantee the Registrant will
be successful in identifying those geologists and professions who have
addressed the Year 2000 issue.
In summary, the problem is a massive, pervasive, complex, world-wide
phenomena that could, in a worst-case scenario, totally shut down and destroy
the Registrant's business operations.
This discussion contains forward-looking statements regarding the
Registrant's Year 2000 problems and their effect on the Registrant.
ITEM 8. DESCRIPTION OF SECURITIES
The Registrant's articles of incorporation currently provide that the
Registrant is authorized to issue 200,000,000 shares of common stock, par value
$0.001 per share. As at June 30, 1999, 11,075,400 shares were outstanding.
COMMON STOCK
Each holder of record of the Registrant's common stock is entitled to
one vote per share in the election of the Registrant's directors and all other
matters submitted to the Registrant's stockholders for a vote. Holders of the
Registrant's common stock are also entitled to share ratably in all dividends
when, as, and if declared by the Registrant's Board of Directors from funds
legally available therefore, and to share ratably in all assets available for
distribution to the Registrant's stockholders upon liquidation or dissolution.
There are no preemptive rights to subscribe to any of the Registrant's
securities, and no conversion rights or sinking fund provisions applicable to
the common stock.
Neither the Registrant's articles of incorporation nor its bylaws
provide for cumulative voting. Accordingly, persons who own or control a
majority of the shares outstanding may elect all of the Board of Directors, and
persons owning less than a majority could be foreclosed from electing any.
OPTIONS OUTSTANDING
There are no outstanding options. It is the intention of the Board of
Directors to grant stock options to directors, officers and future employees at
some time in the future. At the present time no consideration has been given to
the granting of stock options.
25
<PAGE>
PART 11
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
MARKET INFORMATION
The Registrant's stock is not presently traded or listed on any public
market. Upon effectiveness of the Registrant's registration statement under the
Securities Exchange Act of 1934, it is anticipated one or more broker dealers
may make a market in its securities over the counter, with quotations carried on
the National Association of Securities Dealers, Inc.'s "OTC Bulletin Board".
There is no established market price for the shares. There are no
common shares subject to outstanding options or warrants or securities
convertible into common equity of the Registrant. The number of shares subject
to Rule 144 is 5,050,000. Each share certificate has the appropriate legend
affixed thereto. There are no shares being offered to the public and no shares
have been offered pursuant to an employee benefit plan or dividend reinvestment
plan.
HOLDERS
The approximate number of record holders of the Registrant's common
stock as at June 30, 1999 is 39 of which two are directors of the Registrant.
DIVIDENDS
The Registrant has never paid cash dividends on its common stock and
does not intend to do so in the foreseeable future. The Registrant currently
intends to retain any earnings for the operation and expansion of its business.
TRANSFER AGENT
The Registrant's transfer agent is Nevada Agency & Trust Co., 50 West
Liberty Street, Suite 880, Reno, Nevada, 89501.
ITEM 2. LEGAL PROCEEDINGS
There are no legal proceedings to which the Registrant is a party or to
which its property is subject, nor to the best of management's knowledge are any
material legal proceedings contemplated.
ITEM 3. DISAGREEMENT WITH ACCOUNTANTS AND
FINANCIAL DISCLOSURE
From inception to date, the Registrant's principal accountant is
Andersen Andersen & Strong, L.C. of Salt Lake City, Utah. The firm's report for
the period from inception to April 30, 1999 did not contain any adverse opinion
or disclaimer, nor were there any disagreements between management and the
Registrant's accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
From inception through to June 30, 1999, the Registrant has issued and
sold the following unregistered shares of its common stock (the aggregated value
of all such offerings did not exceed US$1,000,000):
26
<PAGE>
(i) Subscription for 5,050,000 shares by the Directors of the Registrant
On March 16,1999 the Registrant approved the issuance to its directors
of 5,000,000 shares at a price per share of $0.001. Mr. Thachuk, President of
the Registrant, purchased for cash 2,500,000 shares and Mr. Bruce, Director of
the Registrant, purchased for cash 2,500,000 shares.
On March 27, 1999 the Registrant approved the issuance of 25,000 shares
each to its two directors at a price of $0.10 per share.
All of these shares are restricted since they were issued in compliance
with the exemption from registration provided by Section 4(2) of the Securities
Act of 1933, as amended. After this stock has been held for one year, the
Directors could sell within a three month period a percentage of their shares
based on 1% of the outstanding stock in the Registrant. Therefore, this stock
can be sold after the expiration of one year in compliance with the provisions
of Rule 144. There are "stop transfer" instructions placed against these
certificates and a legend has been imprinted on the stock certificates
themselves.
(ii) Subscription for 6,000,000 shares at a price of $0.001 per share
On March 16, 1999, the Registrant accepted share subscriptions from
twelve corporate investors of a total of 6,000,000 shares at a price of $0.001
per share. All shares were paid for in cash which resulted in proceeds to the
Registrant of $6,000. 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. All of these corporations reside outside the United
States and none of the principals are residents or citizens of the United
States.
(iii) Subscriptions for 25,400 shares at a price of $0.10 per share
On March 27, 1999, the Registrant accepted subscriptions from
twenty-five investors in the amount of 25,400 shares at a price of $0.10 per
share. In all cases the consideration was cash. 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. All the
shareholders live outside the United States and none are US citizens.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of the Nevada General Corporation Law allows the
Registrant to indemnify any person who was or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, by reason
of the fact that he or she is or was a director, officer, employee or agent of
the Registrant, or is or was serving at the request of the Registrant as a
director, officer, employee, or agent of any corporation, partnership, joint
venture, trust, or other enterprise. The Registrant's bylaws provide that such
person shall be indemnified and held harmless to the fullest extent permitted by
Nevada law.
Nevada law permits the Registrant to advance expenses in connection
with defending any such proceedings, provided that the indemnitee undertakes to
repay any such advances if it is later determined that such person was not
entitled to be indemnified by the Registrant. The Registrant's bylaws require
that the Registrant advance such funds upon receipt of such an undertaking with
respect to repayment.
27
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in such act, and is
therefore unenforceable.
28
<PAGE>
PART F/S
FINANCIAL STATEMENTS
The following financial statements are filed with this Form 10-SB:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Certified Public Accountants 30
Financial Statements of The Zeballos Mining Company
Balance Sheet as at April 30, 1999 31
Statement of Operations for the Period from March 4, 1999 (Date
of Inception) to April 30, 1999 32
Statement of Changes in Stockholders' Equity for the Period from
March 4, 1999 (Date of Inception) to April 30, 1999 33 Statement of
Cash Flows for the Period from March 4, 1999 (Date
of Inception) to April 30, 1999 34
Notes to Financial Statements 35
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ANDERSEN ANDERSEN & STRONG, L.C. 941 East 3300 South, Suite 220
Certified Public Accountants and Business Consultants Board Salt Lake City, Utah, 84106
Member SEC Practice Section of the AICPA Telephone 801-486-0096
Fax 801-486-0098
E-mail Kandersen @ msn.com
</TABLE>
Board of Directors
The Zeballos Mining Company
Vancouver B. C. Canada
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheet of The Zeballos Mining Company (a
development stage company) at April 30, 1999 and the statement of operations,
stockholders' equity, and cash flows for the period from March 4, 1999 (date of
inception) to April 30, 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 The Zeballos Mining Company at
April 30, 1999 and the results of operations, and cash flows for the period from
March 4, 1999 (date of inception) to April 30, 1999 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage and will need additional working capital for its planned activity, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 5. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Salt Lake City, Utah /s/ "Andersen Andersen & Strong"
May 25, 1999
A member of ACF International with affiliated offices worldwide
30
<PAGE>
THE ZEBALLOS MINING COMPANY
(A DEVELOPMENT STAGE COMPANY)
BALANCE
APRIL 30, 1999
ASSETS
CURRENT ASSETS
Cash $ 9,845
Accounts receivable 50
--------
Total Current Assets 9,895
OTHER ASSETS
Mineral claims - Note 3 --
--------
$ 9,895
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,390
--------
Total Current Liabilities 3,390
--------
STOCKHOLDERS' EQUITY
Common stock
200,000,000 shares authorized, at $0.001 par
value; 11,075,400 shares issued and outstanding 11,075
Capital in excess of par value 4,315
Deficit accumulated during the development stage (8,885)
--------
Total Stockholders' Equity 6,505
--------
$ 9,895
========
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
THE ZEBALLOS MINING COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 4, 1999
(DATE OF INCEPTION) TO APRIL 30, 1999
SALES $ --
EXPENSES 8,885
NET LOSS $ (8,885)
============
NET LOSS PER COMMON SHARE
Basic $ (.001)
============
AVERAGE OUTSTANDING SHARES
Basic 11,030,000
============
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
THE ZEBALLOS MINING COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 4, 1999 (DATE OF INCEPTION)
TO APRIL 30, 1999
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN
----------------------- EXCESS OF ACCUMULATED
SHARES AMOUNT PAR VALUE DEFICIT
------ ------ --------- -------
<S> <C> <C> <C> <C>
BALANCE MARCH 4, 1999 (date of inception) -- $ -- $ -- $ --
Issuance of common stock for cash
at $.001 - March 14, 1999 5,050,000 5,050 -- --
Issuance of common stock for cash
at $.001 - March 16, 1999 6,000,000 6,000 -- --
Issuance of common stock for cash
At $.10 - March 27, 1999 25,400 25 2,515 --
Capital contribution - expenses -- -- 1,800 --
Net operating loss for the period from
March 4, 1999 to April 30, 1999 -- -- -- (8,885)
---------- ---------- ---------- ----------
BALANCE APRIL 30, 1999 11,075,400 $ 11,075 $ 4,315 $ (8,885)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
THE ZEBALLOS MINING COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 4, 1999
(DATE OF INCEPTION) TO APRIL 30, 1999
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (8,885)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Change in accounts receivable (50)
Change in accounts payable 3,390
Capital contributions - expenses 1,800
--------
Net Cash From Operations (3,745)
CASH FLOWS FROM INVESTING
ACTIVITIES: --
--------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of common stock 13,590
--------
Net Increase in Cash 9,845
--------
Cash at Beginning of Period --
Cash at End of Period $ 9,845
========
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Capital contributions - expenses $ 1,800
========
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
THE ZEBALLOS MINING COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCLAL STATEMENTS
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on March 4,
1999 with authorized common stock of 200,000,000 shares at $0.001 par value.
The Company was organized for the purpose of developing mineral properties
however operations had not been started by the report date.
The Company is in the development stage.
Since its inception the Company has completed a Regulation D offerings of
11,075,400 shares of its capital stock for cash.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICILES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
The Company has elected a fiscal year ending December 31, and has not completed
an operating period and therefore has not filed an income tax return.
Earning (Loss) Per Share
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding.
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.
35
<PAGE>
THE ZEBALLOS MINING COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Foreign Currency Translation
The transactions of the Company completed in Canadian dollars have been
translated to US dollars. Assets and liabilities are translated at the year end
exchange rates and the income and expenses at the average rates of exchange
prevailing during the period reported on.
Amortization of Capitalized Mineral Lease Costs
The Company will use the successful efforts method to amortize the capitalized
costs of any mineral leases it acquires, which provides for capitalizing the
purchase price of the project and the additional costs directly related to
proving the properties, and amortizing these amounts over the life of the
mineral deposit. All other costs will be expensed as incurred. Unamortized
capitalized costs will be expensed if the property is proven to be of no value.
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 leases,
and accounts payable, are considered by management to be their estimated fair
values. These values are not necessarily indicative of the amounts that the
Company could realize in a current market exchange.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
3. MINERAL CLAIMS
The Company has acquired one 18 unit metric mineral claim known as the Zeb Au
Claim claims located in the Zeballos mining area near the town of Zeballos about
300 kilometres northwest of Victoria, British Columbia with an expiration date
of February 29, 2000. The cost of staking and filing have been expensed.
36
<PAGE>
THE ZEBALLOS MINING COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCLAL STATEMENTS (CONTINUED)
4. RELATED PARTY TRANSACTIONS
Related parties have acquired 45% of the common stock issued .
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
The Company will need additional working capital to be successful in its efforts
to develop the mineral claims acquired and therefore continuation of the Company
as a going concern is dependent upon obtaining additional working capital and
the management of the Company has developed a strategy, which it believes will
accomplish this objective through additional equity funding, and long term
financing, which will enable the Company to operate in the future.
Management recognizes that, if it is unable to raise additional capital, the
Company cannot be successful in its efforts.
37
<PAGE>
PART II
ITEM 1. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -----
<S> <C>
(2) Charter and By-Laws
(a) Certificate of Incorporation of The Zeballos Mining Company (filed herewith, page 40)
(b) Bylaws (filed herewith, page 44)
(3) Instruments Defining Rights of Securities Holders
(a) Text of stock certificates for common stock (filed herewith, page 55)
(5) Voting Trust Agreements
None
(6) Material Contracts
(a) Not made in the ordinary course of business
(i) Transfer Agent and Registrar Agreement between
Registrant and Nevada Agency & Trust Co., dated March
10, 1999 (filed herewith, page 56)
(10) Consent of experts and counsel
(i) Consent of Andersen Andersen & Strong, L.C., independent
certified public accountants (filed herewith, page 59)
(11) Statement re computation of per share earnings
Not applicable
(16) Letter of change in certifying accountant
Not applicable
(21) Subsidiaries of the Registrant
Not applicable
(24) Power of Attorney
None
(99) Addition Exhibits
None
</TABLE>
ITEM 2. DESCRIPTIONS OF EXHIBITS
[Attached, pages 40 through 59]
38
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant has caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
THE ZEBALLOS MINING COMPANY
(Registrant)
By /s/ "E. DEL THACHUK"
-------------------------------------
E. Del Thachuk
President and Director
By /s/ "STACEY BLIGH"
-------------------------------------
Stacey Bligh
Secretary Treasurer
Dated: July 12, 1999
39
EXHIBIT 2(a)
ARTICLES OF INCORORATION
OF
THE ZEBALLOS MINING COMPANY
* * * * *
The undersigned, acting as incorporator, pursuant to the
provisions of the laws of the State of Nevada relating to private corporations,
hereby adopts the following Articles of Incorporation:
ARTICLE ONE. [NAME]. The name of the corporation is:
THE ZEBALLOS MINING COMPANY
ARTICLE TWO. [RESIDENT AGENT]. The initial agent for service of process
is Nevada Agency and Trust Company,
50 West Liberty Street, Suite 880, City of Reno, County of Washoe, State of
Nevada 89501.
ARTICLE THREE. [PURPOSES]. The purposes for which the corporation is
organized are to
engage in any activity or business not in conflict with the laws of the State of
Nevada or of the United States of America, and without limiting the generality
of the foregoing, specifically:
I. [OMNIBUS] . To have to exercise all the powers now or hereafter
conferred by the laws of the State of Nevada upon corporations
organized pursuant to the laws under which the corporation is organized
and any and all acts amendatory thereof and supplemental thereto.
II. [CARRYING ON BUSINESS OUTSIDE STATE). To conduct and carry on its
business or any branch thereof in any state or territory of the United
States or in any foreign country in conformity with the laws of such
state, territory, or foreign country, and to have and maintain in any
state, territory, or foreign country a business office, plant, store or
other facility.
III. [PURPOSES TO BE CONSTRUED AS POWERS] . The purposes specified
herein shall be construed both as purposes and powers and shall be in
no wise limited or restricted by reference to, or inference from, the
terms of any other clause in this or any other article, but the
purposes and powers specified in each of the clauses herein shall be
regarded as independent purposes and powers, and the enumeration of
specific purposes and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or of the general
powers of the corporation; nor shall
40
<PAGE>
the expression of one thing be deemed to exclude another, although it
be of like nature not expressed.
ARTICLE FOUR. [CAPITAL STOCK]. The corporation shall have authority to
issue an aggregate of TWO HUNDRED MILLION (200,000,000) Common Capital Shares,
PAR VALUE ONE MILL ($0.001) per share for a total capitalization OF TWO HUNDRED
THOUSAND DOLLARS ($200,000.00).
The holders of shares of capital stock of the corporation shall not be
entitled to pre-emptive or preferential rights to subscribe to any unissued
stock or any other securities which the corporation may now or hereafter be
authorized to issue.
The corporation's capital stock may be issued and sold from time to
time for such consideration as may be fixed by the Board of Directors, provided
that the consideration so fixed is not less than par value.
The stockholders shall not possess cumulative voting rights at all
shareholders meetings called for the purpose of electing a Board of Directors.
ARTICLE FIVE. [DIRECTORS]. The affairs of the corporation shall be
governed by a Board of Directors of no more than eight (8) nor less than one (1)
person. The names and addresses of the first Board of Director are:
NAME ADDRESS
------ --------
Edward Skoda 329 - 1100 Melville Street
Vancouver, British Columbia
Canada, V6E 4A6
ARTICLE SIX. [ASSESSMENT OF STOCK]. The capital stock of the
corporation, after the amount of the subscription price or par value has been
paid in, shall not be subject to pay debts of the corporation, and no paid up
stock and no stock issued as fully paid up shall ever be assessable or assessed.
ARTICLE SEVEN. [INCORPORATOR]. The name and address of the incorporator
of the corporation is as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
------ ---------
<S> <C>
Amanda Cardinalli 50 West Liberty Street, Suite 880
Reno, Nevada 89501
</TABLE>
ARTICLE EIGHT. [PERIOD OF EXISTENCE]. The period of existence of the
corporation shall be perpetual.
ARTICLE NINE. [BY-LAWS]. The initial By-laws of the
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corporation shall be adopted by its Board of Directors. The power to alter,
amend, or repeal the By-laws, or to adopt new By-laws, shall be vested in the
Board of Directors, except as otherwise may be specifically provided in the
By-laws.
ARTICLE TEN. [STOCKHOLDERS' MEETINGS]. Meeting of stockholders shall be
held at such place within or without the State of Nevada as may be provided by
the By-laws of the corporation. Special meetings of the stockholders may be
called by the President or any other executive officer of the corporation, the
Board of Directors, or any member thereof, or by the recordholder or holders of
at least ten percent (10%) of all shares entitled to vote at the meeting. Any
action otherwise required to be taken at a meeting of the stockholders, except
election of directors, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by stockholdershaving at
least a majority of the voting power.
ARTICLE ELEVEN . [CONTRACTS OF CORPORATION]. No contract or other
transaction between the corporation and any other corporation, whether or not a
majority of the shares of the capital stock of such other corporation is owned
by this corporation, and no act of this corporation shall in any way be affected
or invalidated by the fact that any of the directors of this corporation are
pecuniarily or otherwise interested in, or are directors or officers of such
other corporation. Any director of this corporation, individually, or any firm
of which such director may be a member, may be a party to, or may be pecuniarily
or otherwise interested in any contract or transaction of the corporation;
provided, however, that the fact that he or such firm is so interested shall be
disclosed or shall have been known to the Board of Directors of this
corporation, or a majority thereof; and any director of this corporation who is
also a director or officer of such other corporation, or who is so interested,
may be counted in determining the existence of a quorum at any meeting of the
Board of Directors of this corporation that shall authorize such contract or
transaction, and may vote thereat to authorize such contract or transaction,
with like force and effect as if he were not such director or officer of such
other corporation or not so interested.
ARTICLE.TWELVE. [LIABILITY OF DIRECTORS AND OFFICERS]. No director or
officer shall have any personal liability to the corporation or its stockholders
for damages for breach of fiduciary duty as a director or officer, except that
this Article Twelve shall not eliminate or limit the liability of a director or
officer for (i) acts or omissions which involve intentional misconduct, fraud or
a knowing violation of law, or (ii) the payment of dividends in violation of the
Nevada Revised Statutes.
IN WITNESS WHEREOF, the undersigned incorporator has hereunto affixed her
signature at Reno, Nevada this 3rd day of March, 1999.
by /s/ "Amanda Cardinalli"
----------------------------
AMANDA CARDINALLI
STATE OF NEVADA }
: SS.
COUNTY OF WASHOE }
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On the 3rd day of March, 1999, before me, the undersigned, a
NOTARY PUBLIC in and for the State of Nevada, personally appeared AMANDA
CARDINALLI, known to me to be the person described in and who executed the
foregoing instrument, and who acknowledged to me that she executed the same
freely and voluntarily for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal
the day and year first above written.
by /s/ "Margaret Oliver"
----------------------------
NOTARY PUBLIC
Residing in Reno, Nevada
My Commission Expires:
October 10, 2002
43
EXHIBIT 2(b)
BY LAWS
OF
THE ZEBALLOS MINING COMPANY
A NEVADA CORPORATION
ARTICLE I
OFFICES
SECTION 1. The registered office of this corporation shall be in the City of
Reno, State of Nevada.
SECTION 2. The Corporation may also have offices at such other places both
within and without the State of Nevada as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
SECTION 1. All annual meetings of the stockholders shall be held at the
registered office of the corporation or at such other place within or without
the State of Nevada as the Directors shall determine. Special meetings of the
stockholders may be held at such time and place within or without the State of
Nevada as shall be stated in the notice of the meeting, or in a duly executed
waiver of notice thereof.
SECTION 2. Annual meetings of the stockholders shall be held on the anniversary
date of incorporation each year if not a legal holiday and, and if a legal
holiday, then on the next secular day following, or at such other time as may be
set by the Board of Directors from time to time, at which the stockholders shall
elect by vote a Board of Directors and transact such other business as may
properly be brought before the meeting.
SECTION 3. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the Articles of Incorporation, may
be called by the President or the Secretary, by resolution of the Board of
Directors or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose of the proposed meeting.
SECTION 4. Notices of meetings shall be in writing and signed by the President
or Vice-President or the Secretary or an Assistant Secretary or by such other
person or persons as the Directors shall designate. Such notice shall state the
purpose or purposes for which the meeting is called and the time and the place,
which may be within or without this State, where
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it is to be held. A copy of such notice shall be either delivered personally to
or shall be mailed, postage prepaid, to each stockholder of record entitled to
vote at such meeting not less than ten nor more than sixty days before such
meeting. If mailed, it shall be directed to a stockholder at his address as it
appears upon the records of the corporation and upon such mailing of any such
notice, the service thereof shall be complete and the time of the notice shall
begin to run from the date upon which such notice is deposited in the mail for
transmission to such stockholder. Personal delivery of any such notice to an
officer of the corporation or association, or to any member of a partnership
shall constitute delivery of such notice to such corporation, association or
partnership. In the event of the transfer of stock after delivery of such notice
of and prior to the holding of the meeting, it shall not be necessary to deliver
or mail such notice of the meeting to the transferee.
SECTION 5. Business transactions at any special meeting of stockholders shall be
limited to the purpose stated in the notice.
SECTION 6. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the Articles of
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcements at the
meeting, until a quorum shall be presented or represented. At such adjourned
meetings at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 7. When a quorum is present or represented at any meeting, the vote of
the holders of 10% of the stock having voting power present in person or
represented by proxy shall be sufficient to elect Directors or to decide any
question brought before such meeting, unless the question is one upon which by
express provision of the statute or of the Articles of Incorporation, a
different vote shall govern and control the decision of such question.
SECTION 8. Each stockholder of record of the corporation shall be entitled at
each meeting of the stockholders to one vote for each share standing in his name
on the books of the corporation. Upon the demand of any stockholder, the vote
for Directors and the vote upon any question before the meeting shall be by
ballot.
SECTION 9. At any meeting of the stockholders any stockholder may be represented
and vote by a proxy or proxies appointed by an instrument in writing. In the
event that any such instrument in writing shall designate two or more persons to
act as proxies, a majority of such persons present at the meeting, or, if only
one shall be present, then that one shall have and may exercise all the powers
conferred by such written instruction upon all of the persons so designated
unless the instrument shall otherwise provide. No proxy or power of attorney to
vote shall be voted at a meeting of the stockholders unless it shall have been
filed with the Secretary of the meeting when required by the inspectors of
election. All questions regarding the qualifications of voters, the validity of
proxies and the acceptance of or rejection of votes shall be decided by the
inspectors of election who shall be appointed by the Board of Directors, or if
not so appointed, then by the presiding officer at the meeting.
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SECTION 10. Any action which may be taken by the vote of the stockholders at a
meeting may be taken without a meeting if authorized by the written consent of
stockholders holding at least a majority of the voting power, unless the
provisions of the statute or the Articles of Incorporation require a greater
proportion of voting power to authorize such action in which case such greater
proportion of written consents shall be required.
ARTICLE 3
DIRECTORS
SECTION 1. The business of the corporation shall be managed by its Board of
Directors which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the Articles of Incorporation
or by these Bylaws directed or required to be exercised or done by the
stockholders.
SECTION 2. The number of Directors which shall constitute the whole board shall
be riot less than one and not more than eight. The number of Directors may from
time to time be increased or decreased to not less than one nor more than eight
by action of the Board of Directors. The Directors shall be elected at the
annual meeting of the stockholders and except as provided in section 2 of this
Article, each Director elected shall hold office until his successor is elected
and qualified. Directors need not be stockholders.
SECTION 3. Vacancies in the Board of Directors including those caused by an
increase in the number of Directors, may be filed by a majority of the remaining
Directors, though less than a quorum, or by a sole remaining Director, and each
Director so elected shall hold office until his successor is elected at the
annual or a special meeting of the stockholders. The holders of a two-thirds of
the outstanding shares of stock entitled to vote may at any time peremptorily
terminate the term of office of all or any of the Directors by vote at a meeting
called for such purpose or by a written statement filed with the Secretary or,
in his absence, with any other officer. Such removal shall be effective
immediately, even if successors are not elected simultaneously and the vacancies
on the Board of Directors resulting therefrom shall only be filled from the
stockholders.
A vacancy or vacancies on the Board of Directors
shall be deemed to exist in case of death, resignation or removal of any
Director, or if the authorized number of Directors be increased, or if the
stockholders fail at any annual or special meeting of stockholders at which any
Director or Directors are elected to elect the full authorized number of
Directors to be voted for at that meeting.
The stockholders may elect a Director or Directors
at any time to fill any vacancy or vacancies not filled by the Directors. If the
Board of Directors accepts the resignation of a Director tendered to take effect
at a future time, the Board or the stockholders shall have power to elect a
successor to take office when the resignation is to become effective
No reduction of the authorized number of Directors
shall have the effect of removing any Director prior to the expiration of his
term of office.
<PAGE>
ARTICLE 4
MEETING OF THE BOARD OF DIRECTORS
SECTION 1. Regular meetings of the Board of Directors shall be held at any place
within or without the State which has been designated from time to time by
resolution of the Board or by written consent of all members of the Board. In
the absence of such designation regular meetings shall be held at the registered
office of the corporation. Special meetings of the Board may be held either at a
place so designated or at the registered office.
SECTION 2. The first meeting of each newly elected Board of Directors shall be
held immediately following the adjournment of the meeting of stockholders and at
the place thereof. No notice of such meeting shall be necessary to the Directors
in order legally to constitute the meeting, provided a quorum be present. In the
event such meeting is not so held, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors.
SECTION 3. Regular meetings of the Board of Directors may be held without call
or notice at such time and at such place as shall from time to time be fixed and
determined by the Board of Directors.
SECTION 4. Special meetings of the Board of Directors may be called by the
Chairman or the President or by the Vice-President or by any two Directors.
Written notice of the time and place of special meetings shall be delivered
personally to each Director, or sent to each Director by mail or by other form
of written communication, charges prepaid, addressed to him at his address as it
is shown upon the records or if not readily ascertainable, at the place in which
the meetings of the Directors are regularly held. In case such notice is mailed
or telegraphed, it shall be deposited in the postal service or delivered to the
telegraph company at least forty-eight (48) hours prior to the time of the
holding of the meeting. In case such notice is delivered or taxed, it shall be
so delivered or taxed at least twenty-four (24) hours prior to the time of the
holding of the meeting. Such mailing, telegraphing, delivery or taxing as above
provided shall be due, legal and personal notice of such Director.
SECTION 5. Notice of the time and place of holding an adjourned meeting need not
be given to the absent Directors if the time and place be fixed at the meeting
adjourned.
SECTION 6. The transaction of any meeting of the Board of Directors, however
called and noticed or wherever held, shall be as valid as though transacted at a
meeting duly held after regular call and notice, if a quorum be present, and if,
either before or after such meeting, each of the Directors not present signs a
written waiver of notice, or a consent of holding such meeting, or approvals of
the minutes thereof. All such waivers, consents or approvals shall be filed with
the corporate records or made a part of the minutes of the meeting.
SECTION 7. The majority of the authorized number of Directors shall be necessary
to constitute a quorum for the transaction of business, except to adjourn as
hereinafter provided. Every act or decision done or made by a majority of the
Directors present at a meeting duly held at which a quorum is present shall be
regarded as the act of the Board of Directors, unless a greater number be
required by law or by the Articles of Incorporation. Any action of a
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majority, although not at a regularly called meeting, and the record thereof, if
assented to in writing by all of the other members of the Board shall be as
valid and effective in all respects as if passed by the Board in regular
meeting.
SECTION 8. A quorum of the Directors may adjourn any Directors meeting to meet
again at stated day and hour; provided, however, that in the absence of a
quorum, a majority of the Directors present at any Directors meeting, either
regular or special, may adjourn from time to time until the time fixed for the
next regular meeting of the Board.
ARTICLE 5
COMMITTEES OF DIRECTORS
SECTION 1. The Board of Directors may, by resolution adopted by a majority of
the whole Board, designate one or more committees of the Board of Directors,
each committee to consist of two or more of the Directors of the corporation
which, to the extent provided in the resolution, shall and may exercise the
power of the Board of Directors in the management of the business and affairs of
the corporation and may have power to authorize the seal of the corporation to
be affixed to all papers which may require it. Such committee or committees
shall have such name or names as may be determined from time to time by the
Board of Directors. The members of any such committee present at any meeting and
not disqualified from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. At meetings of such
committees, a majority of the members or alternate members at any meeting at
which there is a quorum shall be the act of the committee.
SECTION 2. The committee shall keep regular minutes of their proceedings and
report the same to the Board of Directors.
SECTION 3. Any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting if
a written consent thereto is signed by all members of the Board of Directors or
of such committee, as the case may be, and such written consent is filed with
the minutes of proceedings of the Board or committee.
ARTICLE 6
COMPENSATION OF DIRECTORS
SECTION 1. The Directors may be paid their expenses of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for attendance at
each meeting of the Board of Directors or a stated salary as Director. No such
payment shall preclude any Director from serving the corporation in any other
capacity and receiving compensation therefore. Members of special or standing
committees may be allowed like reimbursement and compensation for attending
committee meetings.
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ARTICLE 7
NOTICES
SECTION 1. Notices to Directors and stockholders shall be in writing and
delivered personally or mailed to the Directors or stockholders at their
addresses appearing on the books of the corporation. Notices to Directors may
also be given by fax and by telegram. Notice by mail, fax or telegram shall be
deemed to be given at the time when the same shall be mailed.
SECTION 2. Whenever all parties entitled to vote at any meeting, whether of
Directors or stockholders, consent, either by a writing on the records of the
meeting or filed with the Secretary, or by presence at such meeting or oral
consent entered on the minutes, or by taking part in the deliberations at such
meeting without objection, the doings of such meeting shall be as valid as if
had at a meeting regularly called and noticed, and at such meeting any business
may be transacted which is not excepted from the written consent to the
consideration of which no objection for want of notice is made at the time, and
if any meeting be irregular for want of notice or such consent, provided a
quorum was present at such meeting, the proceedings of said meeting may be
ratified and approved and rendered likewise valid and the irregularity or defect
therein waived by a writing signed by all parties having the right to vote at
such meeting; and such consent or approval of stockholders may be by proxy or
attorney, but all such proxies and powers of attorney must be in writing.
SECTION 3. Whenever any notice whatever is required to be given under the
provisions of the statute, of the Articles of Incorporation or of these Bylaws,
a waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE 8
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the Board of
Directors and shall be a President, a Secretary and a Treasurer. Any person may
hold two or more offices.
SECTION 2. The Board of Directors at its first meeting after each annual meeting
of stockholders shall choose a Chairman of the Board who shall be a Director,
and shall choose a President, a Secretary and a Treasurer, none of whom need be
Directors.
SECTION 3. The Board of Directors may appoint a Vice-Chairman of the Board,
Vice-Presidents and one or more Assistant Secretaries and Assistant Treasurers
and such other officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Directors.
SECTION 4. The salaries and compensation of all officers of the corporation
shall be fixed by the Board of Directors.
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SECTION 5. The officers of the corporation shall hold office at the pleasure of
the Board of Directors. Any officer elected or appointed by the Board of
Directors may be removed any time by the Board of Directors. Any vacancy
occurring in any office of the corporation by death, resignation, removal or
otherwise shall be filled by the Board of Directors.
SECTION 6. The CHAIRMAN OF THE BOARD shall preside at meetings of the
stockholders and the Board of Directors, and shall see that all orders and
resolutions of the Board of Directors are carried into effect.
SECTION 7. The VICE-CHAIRMAN shall, in the absence or disability of the Chairman
of the Board, perform the duties and exercise the powers of the Chairman of the
Board and shall perform other such duties as the Board of Directors may from
time to time prescribe.
SECTION 8. The PRESIDENT shall be the chief executive officer of the corporation
and shall have active management of the business of the corporation. He shall
execute on behalf of the corporation all instruments requiring such execution
except to the extent the signing and execution thereof shall be expressly
designated by the Board of Directors to some other officer or agent of the
corporation.
SECTION 9. The VICE-PRESIDENTS shall act under the direction of the President
and in absence or disability of the President shall perform the duties and
exercise the powers of the President. They shall perform such other duties and
have such other powers as the President or the Board of Directors may from time
to time prescribe. The Board of Directors may designate one or more Executive
Vice-Presidents or may otherwise specify the order of seniority of the
Vice-Presidents. The duties and powers of the President shall descend to the
Vice-Presidents in such specified order of seniority.
SECTION 10. The SECRETARY shall act under the direction of the President.
Subject to the direction of the President he shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record the
proceedings. He shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, and will perform
other such duties as may be prescribed by the President or the Board of
Directors.
SECTION 11. The ASSISTANT SECRETARIES shall act under the direction of the
President. In order of their seniority, unless otherwise determined by the
President or the Board of Directors, they shall, in the absence or disability of
the Secretary, perform the duties and exercise the powers of the Secretary. They
shall perform other such duties and have such other powers as the President and
the Board of Directors may from time to time prescribe.
12. SECTION The TREASURER shall act under the direction of the President.
Section Subject to the direction of the President he shall have custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all money and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the President or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so
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requires, an account of all his transactions as Treasurer and of the financial
condition of the corporation.
If required by the Board of Directors, the Treasurer
shall give the corporation a bond in such sum and with such surety as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
SECTION 13. The ASSISTANT TREASURERS in order of their seniority, unless
otherwise determined by the President or the Board of Directors, shall, in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer. They shall perform such other duties and have such
other powers as the President or the Board of Directors may from time to time
prescribe.
ARTICLE 9
CERTIFICATES OF STOCK
SECTION 1. Every stockholder shall be entitled to have a certificate signed by
the President or a Vice- President and the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary of the corporation, certifying the
number of shares owned by him in the corporation. If the corporation shall be
authorized to issue more than one class of stock or more that one series of any
class, the designations, preferences and relative, participating, optional or
other special rights of the various classes of stock or series thereof and the
qualifications, limitations or restrictions of such rights, shall be set forth
in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such stock.
SECTION 2. If a certificate is signed (a) by a transfer agent other than the
corporation or its employees or (b) by a registrar other than the corporation or
its employees, the signatures of the officers of the corporation may be
facsimiles. In case any officer who has signed or whose facsimile signatures
have been placed upon a certificate shall cease to be such officer before such
certificate is issued, such certificate may be issued with the same effect as
though the person had not ceased to be such officer. The seal of the
corporation, or a facsimile thereof, may, but need not be, affixed to
certificates of stock.
SECTION 3. The Board of Directors may direct a new certificate or certificates
to be issued in place of any certificate or certificates theretofore issued by
the corporation alleged to have been lost or destroyed upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost or
destroyed.
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SECTION 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duty endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation, if it is satisfied that all provisions of the laws and
regulations applicable to the corporation regarding transfer and ownership of
shares have been compiled with, to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon its
books.
SECTION 5. The Board of Directors may fix in advance a date not exceeding sixty
(60) days nor less than ten (IO) days preceding the date of any meeting of
stockholders, or the date of the payment of any dividend, or the date of the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining the
consent of stockholders for any purpose, as a record date for the termination of
the stockholders entitled to notice of and to vote at any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
give such consent, and in the such case, such stockholders, and only such
stockholders as shall be stockholders of record on the date so fixed, shall be
entitled to notice of and to vote as such meeting, or any adjournment thereof,
or to receive such payment of dividend, or to receive such allotment of rights,
or to exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the corporation after
such record date fixed as aforesaid.
SECTION 6. The corporation shall be entitled to recognize the person registered
on its books as the owner of the share to be the exclusive owner for all
purposes including voting and dividends, and the corporation shall not be bound
to recognize any equitable or other claims to or interest in such shares or
shares on the part of any -other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Nevada.
ARTICLE 10
GENERAL PROVISIONS
SECTION 1. Dividends upon the capital stock of the corporation, subject to the
provisions of the Articles of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property or in shares of the capital stock, subject to
the provisions of the Articles of Incorporation.
SECTION 2. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends or for
repairing and maintaining any property of the corporation, or for such other
purpose as the Directors shall think conducive to the interests of the
corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
SECTION 3. All checks or demands for money and notes of the corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
SECTION 4. The fiscal year of the corporation shall be fixed by resolution of
the Board of Directors.
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SECTION 5. The corporation may or may not have a corporate seal, as may be from
time to time determined by resolution of the Board of Directors. If a corporate
seal is adopted, it shall have inscribed thereon the name of the corporation and
the words "Corporate Seal" and "Nevada". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
ARTICLE 11
INDEMNIFICATION
Every person who was or is a party or is a threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or a
person of whom he is the legal representative is or was a Director or officer of
the corporation or is or was serving at the request of the corporation or for
its benefit as a Director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless to the fullest legally permissible under the
General Corporation Law of the State of Nevada from time to time against all
expenses, liability and loss (including attorney's fees, judgments, fines and
amounts paid or to be paid in settlement) reasonably incurred or suffered by him
in connection therewith. The expenses of officers and Directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
Director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. Such right of indemnification shall be a contract right which may
be enforced in any manner desired by such person. Such right of indemnification
shall not be exclusive of any other right which such Directors, officers or
representatives may have or hereafter acquire and, without limiting the
generality of such statement, they shall be entitled to their respective rights
of indemnification under any bylaw, agreement, vote of stockholders, provision
of law or otherwise, as well as their rights under this Article.
The Board of Directors may cause the corporation to purchase and
maintain insurance on behalf of any person who is or was a Director or officer
of the corporation, or is or was serving at the request of the corporation as a
Director or officer of another corporation, or as its representative in a
partnership, joint venture. trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the corporation would have the power to indemnify
such person.
The Board of Directors may form time to time adopt further Bylaws with
respect to indemnification and amend these and such Bylaws to provide at all
times the fullest indemnification permitted by the General Corporation Law of
the State of Nevada.
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ARTICLE 12
AMENDMENTS
SECTION 1. The Bylaws may be amended by a majority vote of all the stock issued
and outstanding and entitled to vote at any annual or special meeting of the
stockholders, provided notice of intention to amend shall have been contained in
the notice of the meeting.
SECTION 2. The Board of Directors by a majority vote of the whole Board at any
meeting may amend these Bylaws, including Bylaws adopted by the stockholders,
but the stockholders may from time to time specify particulars of the Bylaws
which shall not be amended by the Board of Directors.
APPROVED AND ADOPTED MARCH 5, 1999.
CERTIFICATE OF THE SECRETARY
I, Stacey Bligh, hereby certify that I am the Secretary of THE ZEBALLOS MINING
COMPANY., and the foregoing Bylaws, consisting of 12 pages, constitute the code
of Bylaws of this company as duly adopted at a regular meeting of the Board of
Directors of the corporation held on .
IN WITNESS WHEREOF, I have hereunto subscribed my name on March 5, 1999.
/s/ "Stacey Bligh"
- ------------------------
Stacey Bligh - Secretary
54
Exhibit 3(a)
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
SPECIMEN STOCK CERTIFICATES
CUSIP NO. 989204 10 2
NUMBER SHARES
(LOGO)
ZEBALLOS MINING COMPANY
Authorized Common Stock: 200,000,000 Shares
Par Value: $0.001
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
-Shares of ZEBALLOS MINING COMPANY Common Stock -
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the
facsimile of its duly authorized officers.
Dated:
"Del Thachuk"
----------------------------------
President
(SEAL)
"Stacey Bligh"
----------------------------------
Secretary
Countersigned Registered:
NEVADA AGENCY AND TRUST COMPANY
50 WEST LIBERTY STREET, SUITE 880
RENO, NEVADA, 89501
By
-------------------------------
Authorized Signature
55
EXHIBIT (6)(a)(i)
TRANSFER AGENT AND REGISITRAR AGREEMENT
THIS AGREEMENT made and entered into this 10th day of March, 1999 by and
between:
NEVADA AGENCY AND TRUST COMPANY, 50 West Liberty Street, Suite 880, Reno, Nevada
89501, hereinafter called "TRANSFER AGENT," and
THE ZEBALLOS MINING COMPANY., 320 - 1100 Melville Street, Vancouver, B.C. V6E
4A6, a Nevada corporation, hereinafter called "COMPANY."
NOW THEREFORE, for valuable consideration and the mutual promises
herein contained, the parties hereto agree as follows, to wit:
1. [APPOINTMENT OF TRANSFER AGENT] The COMPANY hereby appoints
TRANSFER AGENT as the Transfer Agent and Registrar for the COMPANY'S Common
Stock, commencing on this 10th day of March, 1999.
2. [COMPANY'S DUTY] The COMPANY agrees to deliver to TRANSFER AGENT
a complete up-to-date stockholder list showing the name of the individual
stockholder, current address, the number of shares and the certificate numbers,
it being specifically understood and agreed that the TRANSFER AGENT is not to be
held responsible for any omissions or error, that may leave occurred prior to
this Agreement whether on the part of the COMPANY itself or its previous
transfer agent or agents. The COMPANY hereby agrees to indemnify TRANSFER AGENT
in this regard.
3. [STOCK CERTIFICATES] The COMPANY agrees to provide an adequate
number of stock certificates to handle the COMPANY'S transfers on a current
basis. Upon receipt of TRANSFER AGENT'S request, the COMPANY agrees to furnish
additional stock certificates as TRANSFER AGENT deems necessary considering the
volume of transfers. The stork certificates shall be supplied at COMPANY'S cost.
The TRANSFER AGENT agrees to order stock certificates from its printer upon
request of the COMPANY.
4. [TRANSFER AGENT DUTIES] TRANSFER AGENT agrees to handle the
COMPANY'S transfers, record the same, and maintain a ledger, together with a
file containing all correspondence relating to said transfers, which records
shall be kept confidential and be available to the COMPANY and its Board of
Directors, or to any person specifically authorized by the Board of Directors to
review the records which shall be made available by TRANSFER AGENT during the
regular business hours.
5. [TRANSFER AGENT REGISTRATION] TRANSFER AGENT warrants that it is
registered as a Transfer Agent with the United Stakes Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended.
6. [STOCKHOLIDER LIST] From time to time, as necessary for Company
stockholders meeting or mailings, the TRANSFER AGENT will certify and make
available to the current, active stockholders list for COMPANY purposes. it is
agreed that a reasonable charge
56
<PAGE>
for supplying such list will be made by TRANSFER AGENT to the COMPANY. It is
further agreed that in the event the TRANSFER AGENT received a request or a
demand from a stockholder or the attorney of agent for a stockholder, for a list
of stockholders, the TRANSFER AGENT will serve notice of such request by
certified mail to the COMPANY. The COMPANY will have forty-eight (48) hours to
respond in writing to the TRANSFER AGENT. If the COMPANY orders the TRANSFER
AGENT to withhold delivery of a list of stockholders as requested, the TRANSFER
AGENT agrees to follow the orders of the COMPANY. The COMPANY will then follow
the procedure set forth in the Uniform Commercial Code to restrain the TRANSFER
AGENT from making delivery of a stockholders list.
7. [TRANSFER FEE] TRANSFER AGENT agrees to assess and collect from
the person requesting a transfer and/or the transferror, a fee of Fifteen and
No/100 dollars ($15.OO) for each stock certificate issued, except original
issues of stock or warrant certificates, which fees shall be paid by the
COMPANY. This fee may be decreased or increased at any time by the TRANSFER
AGENT. This fee shall be the property of the TRANSFER AGENT.
8. [ANNUAL FEE] The COMPANY agrees to pay the TRANSFER AGENT an
annual fee of TWELVE HUNDRED DOLLARS ($1,200.00) each year. This fee reimburses
the TRANSFER AGENT for the expense and time required to respond to the written
and oral inquiries from brokers and the investing public, as well as maintaining
the transfer books and records of the corporation. The annual fee will be due on
1st of July of each year and is subject to annual review.
9. [TERMINATION] This Agreement may be terminated by either party
given written notice of such termination to the other party at least ninety (90)
days before the effective date. The TRANSFER AGENT shall return all of the
transfer records to the COMPANY and its duties and obligations as TRANSFER AGENT
shall cease at that time. The TRANSFER AGENT will be paid a Termination Fee of
$1.00 per registered stockholder of the Company at the time the written
termination notice is served.
10. [COMPANY STATUS] The COMPANY will promptly advise the TRANSFER
AGENT of any changes or amendments to the Articles of Incorporation, any
significant changes in corporate status, changes in officers, etc., and of all
changes in filing status with the Securities and Exchange Commission, or any
state entity, and to hold the, TRANSFER AGENT harmless from its failure to do
so.
11. [INDEMNIFICATION OF TRANSFER AGENT] The COMPANY agrees to
indemnify and hold harmless the TRANSFER AGENT, from any and all loss, liability
of damage, including reasonable attorneys' fees and expenses, arising out of, or
resulting from the assertion against the TRANSFER AGENT of any claims, debts or
obligations in connection with any of the TRANSFER AGENT'S duties as set forth
in the Agreement, and specifically it is understood that the
TRANSFER AGENT shall have the right to apply to independent counsel at the
COMPANY'S expense in following the COMPANY'S directions and orders.
57
<PAGE>
12. [COUNTERPARTS] This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original,
but all such counterparts shall constitute one and the same instrument.
13. [NOTICE] Any notice under this Agreement shall be deemed to
have been sufficiently given if sent by registered or
certified mail, postage prepaid, addressed as follows:
TO THE COMPANY:
Edward Skoda
THE ZEBALLOS MINING COMPANY
320 - 1100 Melville Street
Vancouver, B.C. V6E 4A6
TO THE TRANSFER AGENT:
NEVADA AGENCY AND TRUST COMPANY
50 West Liberty
Street, Suite 880
Reno, Nevada 89501
14. [MERGER CLAUSE] This Agreement supersedes all prior agreements
and understandings between the parties and may not be changed or terminated
orally, and no attempted change, termination or waiver of any of the provisions
hereof shall binding unless in writing and signed by the parties hereto.
15. [GOVERNING LAW] This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada.
THIS AGREEMENT has been executed by the parties hereto as of the day and
year 1st above written, by the duly authorized officer or officers of said
parties, and the same will be binding upon the assigns and successors in
interest of the parties hereto.
NEVADA AGENCY AND TRUST COMPANY
TRANSFER AGENT
BY /S/ "AMANDA CARDINALLI"
---------------------------------
AMANDA CARDINALLI, VICE PRESIDENT
THE ZEBALLOS MINING COMPANY
COMPANY
BY /S/ "STACEY BLIGH"
---------------------------------
STACEY BLIGH
58
EXHIBIT 10(i)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
ZEBALLOS MINING COMPANY
We hereby consent to the use of our report dated May 25, 1999, in the
registration statement of Zeballos Mining Company filed in Form 10-SB in
accordance with Section 12 of the Securities Exchange Act of 1934.
/s/ L. REX ANDERSEN
ANDERSEN ANDERSEN & STRONG, L.C.
Salt Lake City, Utah
May 25, 1999
59
