UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
General Form For Registration of Securities of
Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Cigma Metals Corporation
(Name of Small Business Issuer in its Charter)
Florida 98-0203244
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Offices of Eric P. Littman, P.A., 7695 S.W. 104th Street, Offices at Pincrest,
Suite 210, Miami, Florida 33156
(Address of principal executive offices) Zip Code
(604) 687-4432
(Issuer's Telephone Number)
Securities to be Registered under Section 12(b) of the Act: None
Securities to be Registered under Section 12(g) of the Act: common stock,
$.001 par value per share
Page 1 of 58.
Index to exhibits is on Page 24.
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Cigma Metals Corporation
Registration Statement on Form 10-SB
Part I
Page
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Item 1. Description of Business 3
A. General 3
B. Risk Factors Related to the Company's Business 4
Item 2. Management's Discussion and Analysis or Plan of Operation 9
Item 3. Description of Property 12
Item 4. Security Ownership of Certain Beneficial Owners and Management 15
Item 5. Directors, Executive Officers, Promoters and Control Persons 16
Item 6. Executive Compensation 17
Item 7. Certain Relationships and Related Transactions 18
Item 8. Description of Securities 18
Part II
Item 1. Market Price and Dividends on the Registrants' Common Equity
and other Shareholder Matters 19
Item 2. Legal Proceedings 19
Item 3. Changes in and Disagreements with Accountants on Accounting
And Financial Disclosure 19
Item 4. Recent Sales of Unregistered Securities 20
Item 5. Indemnification of Directors and Officers 20
Part F/S
Part III
Item 1. Index to Exhibits 24
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ITEM 1. DESCRIPTION OF BUSINESS
A GENERAL
Cigma Metals Corporation (the "Company" or "Cigma") was incorporated under
the laws of the State of Florida on January 13, 1989, under the name "Cigma
Ventures Corporation". The Company was inactive until it redirected its business
efforts in April 1998 following a change of management, which occurred on April
17, 1998 to the acquisition, exploration and development of exploration projects
that have the potential to become low cost mining operations. The Company
changed its name to Cigma Metals Corporation on April 17, 1998 to more fully
reflect its business activities.
Since its redirection, the Company's activities have been focused primarily
on the examination of prospective mineral properties, the acquisition of rights
to certain mineral properties and the implementation of preliminary exploration
programs on those properties in which it has acquired an interest. Since
commencement of its exploration examinations in 1998, the Company has undertaken
a review of mineral properties in the Russian Federation. See "Item 3.
Description of Property."
All of the mineral properties in which the Company has an interest or a
right to acquire an interest in are currently in the exploration stage. None of
the properties contain any known reserves. The Company's primary objective is to
explore for gold, silver and base metals and to develop those existing
exploration projects that have the potential to become low cost mining
operations. Its secondary objective is to locate, evaluate, and acquire other
mineral properties, and to finance their exploration and development either
through equity financing, by way of joint venture or option agreements or
through a combination of both.
The Company is in the exploration stage and has a limited operating
history. No representation is made, nor is any intended, that the Company will
be able to carry on its activities profitably. Moreover, the likelihood of the
success of the Company must be considered in the light of the expenses,
difficulties, and delays frequently encountered in connection with mineral
resource exploration and development and with the formation of a new business.
The Company encounters strong competition from other exploration and mining
companies in connection with the acquisition of properties producing, or capable
of producing, gold, silver and base minerals. The Company also competes with
other companies both within and outside the mining industry in connection with
the recruiting and retention of qualified employees knowledgeable in mining
operations. Precious and base metals are worldwide commodities and, accordingly,
the Company will sell its future production at world market prices.
All of the Company's exploration activities in the Russian Federation are
subject to regulation by governmental agencies under one or more of the various
environmental laws. These laws address emissions to the air, discharges to
water, management of wastes, management of hazardous substances, protection of
natural resources, protection of antiquities and reclamation of lands which are
disturbed. The Company believes that it is in substantial compliance with
applicable environmental regulations. Many of the regulations also require
permits to be obtained for the Company's activities; these permits are normally
subject to public review processes resulting in public approval of the activity.
While these laws and regulations govern how the Company conducts many aspects of
its business, management of the Company does not believe that they have a
material adverse effect on its results of operations or financial condition at
this time. The Company's projects are evaluated considering the cost and impact
of environmental regulation on the proposed activity. New laws and regulations
are evaluated, as they develop to determine the impact on, and changes necessary
to, the Company's operations. It is possible that future changes in
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these laws or regulations could have a significant impact on some portion of the
Company's business, causing those activities to be economically re-evaluated at
that time.
The Company has not declared or paid dividends on its shares since
incorporation and does not anticipate doing so in the near future.
The Company does not currently file reports with the Securities and
Exchange Commission.
As of September 10, 1999, there were four full-time and two part-time
employees.
The Company's Executive office is located at Offices of Eric P. Littman,
P.A., 7695 S.W. 104th Street, Offices at Pincrest, Suite 210, Miami, Florida
33156, and the Corporate office is located at Suite 1505 - 1060 Alberni Street,
Vancouver, British Columbia, Canada, V6E 4K2.
B. RISK FACTORS RELATED TO THE COMPANY'S BUSINESS
1. General Risks
A. Recently Organized Company
The Company was organized in 1989 and has no operating history. The
Company, therefore, must be considered promotional and in its early
formative years and exploration stage. Prospective investors should be
aware of the difficulties normally encountered by a new enterprise. There
is nothing at this time upon which to base an assumption that the Company's
business plan will prove successful, and there is no assurance that the
Company will be able to operate profitably. The Company has limited assets
and has had no revenues to date.
B. Experience of Management
Although the Company's management ("Management") has general business
experience, prospective investors should be aware that Management has
limited experience in the mining industry and in particular with respect to
the acquisition, exploration and development of mineral resource
properties. See "Directors and Officers."
C. Potential future 144 Sales
Of the 100,000,000 shares of the Company's common stock authorized,
there are presently issued and outstanding 14,000,000, all but
approximately 8,000,000 shares are "restricted securities" as that term is
defined under the Act, and in the future may be sold in compliance with
Rule 144 of the Act, pursuant to a registration statement filed under the
Act, or other applicable exemptions from registration thereunder. Rule 144
provides, in essence, that a person holding restricted securities for a
period of one (1) year may sell those securities in unsolicited brokerage
transactions or in transactions with a market maker, in an amount equal to
one percent (1%) of the Company's outstanding common stock every three (3)
months. Additionally, Rule 144 requires that an issuer of securities make
available adequate current public information with respect to the issuer.
Such information is deemed available if the issuer satisfies the reporting
requirements of Section 13 or 15(d) of the Exchange Act and of Rule 15c2-11
thereunder. Rule 144 also permits, under certain circumstances, the sale
over a period without any quantity limitation and whether or not there is
adequate current public information available. Investors should be aware
that sales under Rule 144, or pursuant to a registration statement filed
under the
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Act, may have a depressive effect on the market price of the Company's
securities in any market that may develop for such shares.
D. Penny Stock Rules
Under Rule 15g-9 under the Exchange Act, a broker or dealer may not
sell a "penny stock" (as defined in Rule 3a51-1) to or affect the purchase
of a penny stock by any person unless:
(1) Such sale or purchase is exempt from Rule 15g-9; or
(2) Prior to the transaction the broker or dealer has (a) approved the
person's account for transaction in penny stocks in accordance with
Rule 15g-9 and (b) received from the person a written agreement to the
transaction setting forth the identity and quantity of the penny stock
to be purchased.
The Commission adopted regulations that generally define a penny stock
to be any equity security other than a security excluded from such
definition by Rule 3a51-1. Such exemptions include, but are not limited to
(a) an equity security issued by an issuer that has (i) net tangible assets
of at least $2,000,000, if such issuer has been in continuous operations
for at least three years, (ii) net tangible assets of at least $5,000,000,
if such issuer has been in continuous operation for less than three years,
or (iii) average revenue of at least $6,000,000, for the preceding three
years; (b) except for purposes of Section 7(b) of the Exchange Act and Rule
419, any security that has a price of $5.00 or more; and (c) a security
that is authorized or approved for authorization upon notice of issuance
for quotation on the NASDAQ Stock Market, Inc.'s Automated Quotation
System.
It is likely that the Company's common stock will be subject to the
regulations on penny stocks; consequently, the market liquidity for the
Company's common stock may be adversely affected by such regulations
limiting the ability of broker/dealers to sell the Company's common stock
and the ability of purchasers in the offering to sell their securities in
the secondary market.
E. Forward Looking Statements
This registration statement includes "forward-looking statements"
within the meaning of Section 27a of the act and Section 21e of the
securities and exchange act of 1934, as amended (the "exchange act"). All
statements other than statement of historical facts included in this
registration statement, including, without limitation, the statements under
and located elsewhere herein regarding industry prospects and the company's
financial position are forward-looking statements. Although the company
believes that the expectations reflected in such forward-looking statements
are reasonable; it can give no assurance that such expectation will prove
to have been correct. Important factors that could cause actual results to
differ materially from the expectations ("cautionary statements") are
disclosed in this registration statement, including, without limitation, in
conjunction with the forward-looking statements included in this
registration statement section entitled "Risk Factors Related to the
Company's Business." All subsequent written and oral forward-looking
statements attributable to the company or persons acting on its behalf are
expressly qualified in their entirety by the cautionary statements. See
"Item 2. Management's Discussion and Analysis or Plan of Operation."
2. Risk Factors of the Company's Mining Business
Resource exploration and development is a speculative business,
characterised by a number of significant risks including, among other
things, unprofitable efforts resulting not only from the failure to
discover mineral deposits, but from finding mineral deposits which, though
present,
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are insufficient in quantity and quality to return a profit from
production. The marketability of minerals acquired or discovered by the
Company may be affected by numerous factors which are beyond the control of
the Company and which cannot be accurately predicted, such as market
fluctuations, the proximity and capacity of mining 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; any combination of these factors may result in the Company not
receiving an adequate return of investment capital.
A. Exploration and Development Risks
All of the Company's properties are in the exploration stages only and
are without a known body of commercial ore. Development of these properties
will only follow if satisfactory exploration results are obtained. Mineral
exploration and development involves a high degree of risk and few
properties which are explored are ultimately developed into producing
mines. There is no assurance that the Company's mineral exploration and
development activities will result in any discoveries of commercial bodies
of ore. The long-term profitability of the Company's operations will be in
part directly related to the cost and success of its exploration programs,
which may be affected by a number of factors.
Substantial expenditures are required to establish ore reserves
through drilling, to develop metallurgical processes to extract the metal
from the ore and, in the case of new properties, to develop the mining and
processing facilities and infrastructure at any site chosen for mining.
Although substantial benefits may be derived from the discovery of a major
mineralised deposit, no assurance can be given that minerals will be
discovered in sufficient quantities and grades to justify commercial
operations or that the funds required for development can be obtained on a
timely basis. Estimates of reserves, mineral deposits and production costs
can also be affected by such factors as environmental permitting
regulations and requirements, weather, environmental factors, unforeseen
technical difficulties, unusual or unexpected geological formations and
work interruptions. In additions, the grade of ore ultimately mined may
differ from that indicated by drilling results. Short term factors relating
to the reserves, such as the need for orderly development of ore bodies or
the processing of new or different grades, may also have and adverse effect
on mining operations and on the results of operations. Material changes in
ore reserves, grades, stripping ratios or recovery rates may affect the
economic viability of any project. Reserves are reported as general
indicators of mine life. Reserves should not be interpreted as assurances
of mine life or of the profitability of current or future operations.
B. Operating Hazards and Risks
Mineral exploration involves many risks, which even a combination of
experience, knowledge and careful evaluation may not be able to overcome.
Operations in which the Company has a direct or indirect interest will be
subject to all the hazards and risks or unexpected formations, cave-ins,
pollution, all of which could result in work stoppages, damages to
property, and possible environmental damages. The Company does not have
general liability insurance covering its operations and does not presently
intend to obtain liability insurance as to such hazards and liabilities.
Payment of any liabilities as a result could have a materially adverse
effect upon the Company's financial condition.
C. Lack of Cash Flow and Additional Funding Requirements
None of the Company's properties has commenced commercial production
and the Company has no history of earnings or cash flow from its
operations. The Company feels
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that its current cash position is strong enough to fund its 1999 and 2000
capital requirements. The further exploration and the potential development
of any ore deposits found on the Company's exploration license depends upon
the Company's ability to obtain financing through any or all of the joint
venturing of properties, debt financing, equity financing or other means.
There is no assurance that the Company will be successful in obtaining the
required financing. Failure to obtain additional financing on a timely
basis could cause the Company to forfeit its interest in such properties
and reduce or terminate its operations. The Company has no understanding or
agreements with any person regarding such additional funding requirements.
Even if the results of exploration are encouraging, the Company may not
have sufficient funds to conduct the further exploration that may be
necessary to determine whether or not a commercially mineable deposit
exists on any property. While the Company may attempt to generate
additional working capital through the operation, development, sale or
possible joint venture development of its properties, there is no assurance
that any such activity will generate funds that will be available for
operations.
The Company has not declared or paid dividends on its shares since
incorporation and does not anticipate doing so in the foreseeable future.
D. Title Risks
The Company has not obtained an opinion of counsel as to title to its
properties nor has it obtained title insurance. Any of the Company's
properties may be subject to prior unregistered agreements of transfer.
E. Conflicts of Interest
Certain of the directors of the Company are directors of other mineral
resource companies and, to the extent that such other companies may
participate in ventures in which the Company may participate, the directors
of the Company may have a conflict of interest in negotiating and
concluding terms regarding the extent of such participation. In the event
that such a conflict of interest arises at a meeting of the directors of
the Company, a director who has such a conflict will abstain from voting
for or against the approval of such participation or such terms. In
appropriate cases, the Company will establish a special committee of
independent directors to review a matter in which several directors, or
Management, may have a conflict. From time to time several companies may
participate in the acquisition, exploration and development of natural
resource properties thereby allowing for their participating in larger
programs, permitting involvement in a greater number of programs and
reducing financial exposure with respect to any one program. It may also
occur that a particular company will assign all or a portion of its
interest in a particular program to another of these companies due to the
financial position of the company making the assignment. In determining
whether the Company will participate in a particular program and the
interest therein to be acquired by it, the directors will primarily
consider the potential benefits to the Company, the degree of risk to which
the Company may be exposed and its financial position at that time. Other
than as indicated, the Company has no other procedures or mechanisms to
deal with conflicts of interest.
F. Competition and Agreements with Other Parties
The mineral resources industry is intensely competitive and the
Company competes with many companies that have greater financial resources
and technical facilities than itself. Significant competition exists for
the limited number of mineral acquisition opportunities available in the
Company's sphere of operations. As a result of this competition, the
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Company's ability to acquire additional attractive gold mining properties,
on terms it considers acceptable, may be adversely affected.
The Company may be unable in the future to meet its share of costs
incurred under agreements to which it is a party and the Company may have
its interests in the properties subject to such agreements reduced as a
result. Furthermore, if other parties to such agreements do not meet their
share of such costs, the Company may be unable to finance the costs
required to complete the recommended programs.
G. Fluctuating Mineral Prices
The mining industry in general is intensely competitive and there is
no assurance that, even if commercial quantities of mineral resources are
developed, a profitable market will exist for the sale of such minerals.
Factors beyond the control of the Company may affect the marketability of
any minerals discovered. Moreover, significant price movements in mineral
prices over short periods of time may be affected by numerous factors
beyond the control of the Company, including international economic and
political trends, expectations of inflation, currency exchange fluctuations
(specifically, the U.S. dollar relative to other currencies), interest
rates and global or regional consumption patterns, speculative activities
and increased production due to improved mining and production methods. The
effect of these factors on the price of minerals and, therefore, the
economic viability of any of the Company's projects cannot accurately be
predicted. As the Company is in the exploration stage, the above factors
have had no material impact on operations or income.
H. Environmental Regulation
All phases of the Company's operations in the Russian Federation are
subject to environmental regulations. Environmental legislation in the
Russian Federation is evolving in a manner which will require stricter
standards and enforcement, increased fines and penalties of non-compliance,
more stringent environmental assessments of proposed projects and a
heightened degree of responsibility for companies and their officers,
directors and employees. Although the Company believes it is in compliance
with all applicable environmental legislation, there is no assurance that
future changes in environmental regulation, if any, will not adversely
affect the Company's operations.
I. Adequate Labour and Dependence Upon Key Personnel
The Company will depend upon recruiting and maintaining qualified
personnel to staff its operations. The Company believes that such personnel
are currently available at reasonable salaries and wages in the geographic
areas in which the Company intends to operate. There can be no assurance,
however, that such personnel will always be available in the future. In
addition, it cannot be predicted whether the labour staffing at any of the
Company's projects will be unionised. The success of the operations and
activities of the Company is dependent to a significant extent on the
efforts and abilities of its Management. The loss of services of any of its
Management could have a material adverse effect on the Company.
J. No Employment Agreements with Management
The Company currently has no employment agreements with Management and
does not maintain, nor does it intend to obtain, key man life insurance on
any member of its Management.
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K. Political Risks
There are significant political risks involving the Company's
investment in the Russian Federation. These risks include, but are not
limited to political, economic and social uncertainties in such countries.
A change in policies by the government of the countries in which the
company operates could adversely affect the Company's interest by, among
other things, change in laws, regulations, or the interpretations thereof,
confiscatory taxation, restriction on currency conversions, imports and
sources of supplies, or the expropriation of private enterprises. Although
management of the Company does not believe that the political factors
described above have affected the Company's activities to date, these
factors may make it more difficult for the Company to raise funds for the
development of its mineral interests in such developing countries.
L. Year 2000 Risks
Currently the Company does not rely on any computer programs that will
materially impact the operations of the Company in the event of a Year 2000
disruption. However, like any other Company, advances and changes in
available technology can significantly impact its business and operation.
Consequently, although the Company has not identified any specific year
2000 issue, the "Year 2000" problem creates risk for the Company from
unforeseen problems in its own computer systems and from third parties,
including but not limited to financial institutions, with whom it transacts
business. Such failures of the Company and/or third parties computer
systems could have a material impact on the Company's ability to conduct
its business. See "Item 2. Management's Discussion and Analysis or Plan of
Operation."
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
A GENERAL
The Company is a mineral exploration company based in Vancouver,
Canada and Moscow, Russia and is engaged in the exploration of precious
metals. The Company was incorporated under the laws of the State of Florida
on January 13, 1989, under the name "Cigma Ventures Corporation". On April
17, 1998, the Company changed its name to Cigma Metals Corporation and is
in the exploration stage.
The Company was inactive between January 13, 1989 and April 17, 1998.
Since commencement of its exploration operations in late 1998, the
Company has undertaken a review of potential mineral properties in the
Russian Federation.
The management of the Company has developed the following exploration
objectives, the acquisition of properties with large scale potential, to
minimize capital costs on leases or concessions, the acquisition of
properties adjacent or in close proximity to recent discoveries of large
scale mineral reserves, to be the first-in staking where possible, secured
repatriation on mineral rights and royalties and to establish joint
ventures and/or partnerships with established companies that possess the
resources to complete mine development. All of the Company's properties are
in the preliminary exploration stage without any presently known body of
ore.
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The Company had no material revenues between January 13, 1989 and
December 31, 1998. Revenue during the six months ended June 30, 1999 was
the result of interest earned on funds raised during March 1999, as the
Company has no mineral properties in production.
The Company believes that for the current fiscal year ended December
31, 1999 and the fiscal year ended December 31, 2000 all capital
requirements necessary to develop existing properties and to further
develop the Company through the possible acquisition or joint venturing of
additional mineral properties either in the exploration or development
stage will be funded with present cash and cash equivalents. Additional
employees will be hired on a consulting basis as required by the
exploration projects.
B FINANCING
During the six months ended June 30, 1999, the Company raised $700,000
and issued 7,000,000 shares at a price of $0.10 per share for an aggregate
consideration of $700,000 pursuant to Rule 504 of Regulation D.
On April 12, 1999 the Company issued 6,000,000 restricted common
shares ($900,000) upon acquiring three properties in the Komi Republic,
Russian Federation.
No funds were raised between January 13, 1989 and December 31, 1998.
C FINANCIAL INFORMATION
(a) Six Months Ended June 30, 1999 (Fiscal 1999) versus Six Months Ended
June 30, 1998 (Fiscal 1998).
Net loss for the six months ended June 30, 1999 increased by $21,929
to $21,929 (June 30, 1998 - $Nil), due to limited operations in fiscal
1998.
(b) January 13, 1989 (inception) to December 31, 1998.
Between January 13, 1989 and December 31, 1998 the company had
limited financial activity other than as related to organizational
expenses of $1,000.
D FINANCIAL CONDITION AND LIQUIDITY
During the six months ended June 30, 1999, the Company met its capital
requirements through proceeds of the sale of common stock of the Company.
The Company raised $700,000 in March 1999 and issued 7,000,000 shares at a
price of $0.10 per share for an aggregate consideration of $700,000
pursuant to Rule 504 of Regulation D.
At June 30, 1999, the Company had cash of $683,071 (December 31, 1998
- $0, December 31, 1997 - $0); and working capital of $678,071(December 31,
1998 - $0, December 31, 1997 - $0). Total liabilities at June 30, 1999 were
$5,000 (December 31, 1998 - $0, December 31, 1997 - $0).
The Company feels that its current cash position is strong enough to
fund capital requirements in fiscal 1999 and 2000. In the event that a
production decision is made on one of the properties or the Company
acquires additional mineral properties either directly, through joint
ventures, or through the acquisition of operating entities, it is the
Company's intention to raise additional capital either through equity
offerings and/or debt borrowings.
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Management of the Company is committed to further develop the Company
through the possible acquisition or joint venturing of additional mineral
properties either in the exploration or development stage. Additional
employees will be hired on a consulting basis as required by the
exploration projects.
None of the Company's properties has commenced commercial production
and the Company has no history of earnings or cash flow from its
operations. While the Company may attempt to generate additional working
capital through the operation, development, sale or possible joint venture
development of its properties, there is no assurance that any such activity
will generate funds that will be available for operations.
The Company has not declared or paid dividends on its shares since
incorporation and does not anticipate doing so in the foreseeable future.
E YEAR 2000 ISSUES.
The "Year 2000 problem", as it has come to be known, refers to the
fact that many computer programs use only the last two digits to refer to a
year, and therefore recognise a year that begins with "20" as instead
beginning with "19". For example, the year 2000 would be read as being the
year 1900. If not corrected, this problem could cause many computer
applications to fail or create erroneous results.
The Company has modified and tested all the critical applications of
its information technology ("IT"), the result of which is that all such
critical applications are now Year 2000 compliant. The Company believes
that virtually all of the non-critical applications of its IT are or will
be made Year 2000 compliant by June 30, 1999. The Company is using
independent consultants to oversee the Year 2000 project as well, as to
perform certain remediation efforts. In-addition, progress on the Year 2000
project is also monitored by senior management, and reported to the Board
of Directors. The total amount of the payments made to date and to be made
hereafter to such independent consultant are not expected to be material.
Based on the Company's analysis to date, the Company believes that its
material non-IT systems are either Year 2000 compliant, or do not need to
be made Year 2000 compliant in order to continue to function in
substantially the same manner in the Year 2000. The Company intends to
continue its analysis of whether its non-IT systems require any Year 2000
remediation. The Company's Year 2000 compliance work has not caused, nor
does the Company expect that it will cause, a deferral on the part of the
Company of any material IT or non-IT projects.
However, there can be no assurance that any of the Company's vendors
or others, with whom it transacts business, will be Year 2000 compliant
prior to such date. The company is unable to predict the ultimate effect
that the Year 2000 problem may have upon the Company, in that there is no
way to predict the impact that the problem will have nation-wide or
world-wide and how the Company will in turn be affected, and, in addition,
the company cannot predict the number and nature of its vendors and
customers who will fail to become Year 2000 compliant prior to January 1,
2000. Significant Year 2000 difficulties on the part of vendors or
customers could have a material adverse impact upon the Company. The
Company intends to monitor the progress of its vendors and customers in
becoming Year 2000 compliant. The Company has not to date formulated a
contingency plan to deal with the potential non-compliance of vendors and
customers, but will be considering whether such a plan would be feasible.
F NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". SFAS
No. 133 requires companies to
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recognize all derivative contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain conditions are
met, a derivative may be specifically designated as a hedge, the object of
which is to match the timing of gain or loss recognition on the hedging
derivative with the recognition of (i) the changes in the fair value of the
hedged asset or liability that are attributable to the hedged risk of (ii)
the earnings effect of the hedged forecasted transaction. For a derivative
not designated as a hedging instrument, the gain or loss is recognized in
income in the period of change. SFAS No. 133 is effective for all quarters
of fiscal years beginning after June 15, 1999.
Historically, the Company has not entered into derivatives contracts
either to hedge existing risks or for speculative purposes, Accordingly,
the Company does not expect adoption of the new standards on January 1,
2000 to affect its financial statements.
In April 1998, the American Institute of Certified Public accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
activities", ("SOP 98-5") which provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs of
start-up activities and organization costs to be expensed as incurred. SOP
98-5 is effective for fiscal years beginning after December 15, 1998 with
initial adoption reported as the cumulative effect of a change in
accounting principle. Adoption of this standard will not have a material
effect on the financial statements.
G Forward Looking Statements
The Registration Statement includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of
the Exchange Act. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but not
always, using words or phrases such as "expects" or "does not expect", "is
expected", "anticipates" or "does not anticipate", "plans", "estimates" or
"intends", or stating that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved) are not
statements of historical fact and may be "forward looking statements". Such
statements are included, among other places in this Registration Statement,
in the sections entitled "Management's Discussion and Analysis or Plan of
Operation," "Description of Business" and "Description of Property."
Forward-looking statements are based on expectations, estimated and
projections at the time the statements are made that involve a number of
risks and uncertainties which could cause actual results or events to
differ materially from those presently anticipated. These include, but are
not limited to, the risks of mining industry (for example, operational
risks of exploring for, developing and producing precious and base metals,
risks and uncertainties involving geology of mineral deposits, the
uncertainty of reserve estimates and estimates relating to production
volumes, cost and expense projections, potential cost overruns and health,
safety and environmental risks), risks relating to the Company's properties
(for example, lack of operating history and transportation), fluctuations
in mineral prices and exchange rates and uncertainties resulting from
potential delays or changes in plans with respect to exploration or
development projects or capital expenditures. See "Risk Factors of the
Company's Business." Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable; it can give no
assurance that such expectations will prove to have been correct.
Item 3. DESCRIPTION OF PROPERTY
All of the Company's properties are in the preliminary exploration
stage and do not contain any known body of ore.
12
<PAGE>
A Acquisition of Property Interests or Options to acquire Property Interests
Since commencement of its exploration examinations in 1998, the Company has
undertaken a review of mineral properties in the Russian Federation.
By Agreement dated April 12, 1999, the Company purchased three properties
in the Komi Republic. The properties are located 120 to 140 km south of the town
of Inta which is serviced daily by local airlines from Siktivkar, the capital of
the Komi Republic, 500 km to the southwest. Access is by dirt road which crosses
the Kozhim river.
The Komi Republic is part of the North-Western Region of Russia and is
nearly 2M square km in size, with less than one million inhabitants. It is one
of the main coal and oil producing regions of Russia and is west of the Urals
and north of the central Region.
The properties are located on a high plateau just 20 km west of
Katalambinski, 1500 meters above sea level within the Lyapin anticlinorium. The
properties have at least 3 known showings: "Chudnoe", "Nesterovskoye" and
"Samshitovoye". All the rocks are metamorphosed to the green schist facies. The
oldest rocks are the Proterozoic Sablegorsk Formation which consists of a lower
unit of basalt and andesite with interlayers of quartz-sericite-pyrhyolite
shales overlain by rhyolite flows and tuffs. Total thickness is 20000-2500
meters. The Sablegorsk formation is intruded by subvolcanic rhyolite bodies and
NE trending rhyolite dikes.
Unconformably overlying the volcanics are up to 100 meters of Late Cambrian
Early Ordovician conglomerates, sandstones, siltstones, siltstones and shales.
These in turn are overlain by up to 1500 meters of grey to crimson conglomerates
and quartzites of the Orbeiz formation and the later grey-green metamorphosed
polymictic sandstones, and chlorite-sericite-quartz shales of the Saledin
Formation which is up to 900 meters thick.
The region is characterized by the NE-trending overturned Maldin anticline
which exposes the rhyolite in it's 'ore and the Paleozoic rocks along its limbs.
The axial plane plunges northwest with a steeply dipping east limb. Gthe
structure is complicated by steeply dipping NE faults and NNW fractures.
(i) Chudnoe Ore Occurrence (65 deg. 14.3' N.Lat; 60 deg. 14.2' E. Lon.)
This showing, exposed on surface, was found in 1994. Previous work
includes mapping, trenching, geochemical and geophysical surveys.
Trenching results indicate ore zones of 1-3 meters in width ranging in
grade from 10-84 g/t gold. Only one hole to 50 meter depth has been
drilled to date.
Mineralization appears related to a major tectonic shear zone within
the rhyolite represented by zones of schistosity and brecciation. The
4-15 meter thick ore-bearing zones strike northeast and dip at
60-70(0) northwest over a strike length of 140 to 360 meters. The ore
zones consist of fuchsite stringers and bands along the planes of
schistosity in the rhyolite and as the matrix of the breccias. The
rhyolite is bleached along the contacts of the stringers. Fine
quartz-albite stringers and albite replacing potassium feldspar
phenocrysts is observed in the altered zones. Both fuchsite and
sericite are observed in the ground-mass.
The mineralization consists of native gold, palladium minerals,
leucoxene, barite, zircon, native silver and mertyite group minerals
(palladium bearing. The native gold contains gold, mercury, copper and
palladium. Mineralization is considered to be hydrothermal in nature
and bears some resemblance to the AU+Pd+U deposit occurring in
Proterozoic
13
<PAGE>
acid volcanics at Coronation Hill in Northern Australia. The main
differences are 1) absence of unconformities, 2) alteration is
albite-sericite-fuchsite-quartz rather than sericite-chlorite-quartz
as at Coronation Hill, 3) absence of uranium, 4) absence of sulphides,
tellurides, nickel and cobalt, 5) absence of graphite and arbon matter
in stringers and altered rocks, 6) development of extensive fuchsite.
(ii) Nesterovskoye Occurrence (65 deg. 13.7' N.Lat; 60 deg. 14.8' E. Lon.)
The showing is exposed on a cirque face and is represented by a strong
gold geochem anomaly about 200 x 300 meters in size on the plateau
above the cirque. To date, 5 holes totalling 1200 meters have been
completed in a section line across the anomaly.
Mineralization occurs as layers of quartz-fuchsite-goldhosted in
Ordovician sandstones and conglomerates. Values up to 180 g/t gold
over 0.5 to 1.5 meters have been reported. Although similar to the
Chudnoe occurrence, the mineralization contains mainly gold and only
minor palladium.
(iii) Samshitovoye Occurrence (65 deg. 14.7' N.Lat; 60 deg. 13.5' E. Lon.)
The showing is located approximately one kilometre northwest of
Chudnoe. It was identified during the 1980's as a result of a
prominent gold anomaly and later investigated by six drill holes. To
date, 6 drill holes totalling 565 meters have been completed,
revealing a 17-metre overburden underlain by Ordovician sandstones,
shales and conglomerates.
Mineralization occurs as layers of quartz-fuchsite-goldhosted in
Ordovician sandstones and conglomerates. Given the stratigraphic
location of the mineralization, it appears likely to be similar to
Nesterovskoye.
B. Exploration Activities and Anticipated Capital Expenditures
The Company has been conducting preliminary exploration work on all of
its properties since August 1998.
The Company has retained the services of Stewart Wallis to evaluate
the mineral concessions on the Company's behalf. In August 1999 the Company
retained MRDI Canada, a division of H.A. Simons Ltd. to act as mineral
consultant for the Company.
There are no long-term agreements or understandings regarding the
continuation of these consulting relationships.
The Company will retain independent mineral consultants on an as when
needed basis.
Consultants and advisors will be employed by the Company based on
their technical expertise, familiarity with the subject matter, ability to
speak the language of the country in which the Company's property interests
are located; knowledge of local mining laws, ordinances and geology.
The Company estimates that approximately $250,000 will be required
from May 1999 through December 31, 1999 in order to complete its
preliminary assessment of its properties.
The Company feels that its current cash position is strong enough to
fund all capital requirements in fiscal 1999 and 2000. In the event that a
production decision is made on one of the properties or the Company
acquires additional mineral properties either directly, through joint
ventures, or through the acquisition of operating entities, it is the
Company's intention to
14
<PAGE>
raise additional capital either through equity offerings and/or debt
borrowings. No assurance can be given that such financing will be available
when required by the Company. The amount of funds that may be available to
the Company may be less than that required by the Company and will be
affected by factors, such as general market and economic conditions that
are beyond the Company's control. The Company has no (i) understandings or
agreements with any person regarding such financing and (ii) present
intentions to effectuate a merger or other business combination.
Notwithstanding the foregoing, if an appropriate opportunity presents
itself to joint venture the continual exploration and if warranted, the
development of its properties the Company intends to fully explore the
viability of any such opportunities.
C. Office Facilities
There are no long term agreements or commitments with respect to the
Company's offices located at 1505 - 1060 Alberni Street, Vancouver, British
Columbia, Canada, V6E 4K2. The office is rented on a month-to-month basis.
The Company is required to give 30 days notice prior to vacancy.
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of April 22, 1999 by
(i) each person who is known by the Company to own beneficially more than
five percent (5%) of the Company's outstanding common stock; (ii) each of
the Company's directors and officers; and (iii) all directors and officers
of the Company as a group. As at September 10, 1999 there were 14,000,000
shares of common stock issued and outstanding.
Name of Shares of Common
Beneficial Stock Beneficially Percentage
Owner Owned Owned
---------- ------------------ -----------
Agustin Gomez de Segura (as Trustee) 6,000,000 42.0%
Suite 1505 - 1060 Alberni Street
Vancouver, Bc Canada V6E 4K2
Carrington International Ltd. (1) 790,000 5.6%
STE 2402,
Bank of America Tower
12 Harcourt , Central Hong Kong
Thibaud a.r.l. (1) 760,000 5.2%
Broadcasring House,
Rouge Bouillon St.
Channel Island
Boavista Securities Ltd. (1) 700,000 5.0%
2402 Bank of America Tower,
12 Harcourt , Central Hong Kong
15
<PAGE>
Officers and Directors
Augustin Gomez de Segura 80,000 *
Raimundo F. Villaverde 26,
E-28003 Madrid, Spain
Jorge L. Lacasa 80,000 *
Valle de Laciana 31
D-28034 Madrid, Spain
Officers and Directors (2 persons) 160,000 0.01%
(1) To the best of the Company's knowledge, none of the above companies are
affiliated to the officers and directors of the Company.
* Less than 1%.
Item 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following persons are the directors and executive officers of the
Company:
Name Position
---- --------
Augustin Gomez de Segura President and Director since April 17, 1998
Jorge L. Lacasa Secretary and Director since April 17, 1998
All directors and officers of the Company are elected annually to
serve for one year or until their successors are duly elected and
qualified.
Management's business experience during the past five years is as
follows:
Agustin Gomez de Segura
1990 to current, Director and Manager of several trading and
development companies, specializing in the Eastern Europe and Russian
markets and Manager of two investment funds. 1995 to 1998, member of the
board of Allna Moscow Bank. 1980 and 1990, was the Eastern Area Manager of
Labtest (USA) and Labtam (Australia), a group of companies specializing in
scientific research instruments and information technology.
Jorge L. Lacasa
1984 to current, president of Alanco Development Inc., a project
finance company which has financed more than 30 industrial projects in
China and the Commonwealth of Independent States ("CIS"). Advisor to the
European Bank for Reconstruction and Development ("EBRD") and several
Investment funds and advisor to several Spanish banks on China and
Commonwealth of Independent States countries.
16
<PAGE>
Item 6. EXECUTIVE COMPENSATION
(A) General
The following table sets forth information concerning the compensation
of the named executive officers for each of the registrant's last three
completed fiscal years:
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------------- -----------------------------------------------------
Awards Payments
--------------------------- -------------------------
Securities
Other Under- All
Annual Restricted Lying Other
Name And Compen- Stock Options/ LTIP Compen-
Principal Position Year Salary Bonuses Sation Award(s) SARs Payouts Sation
($) ($) ($) ($) (=) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- --------------------------- ----------- ----------- ------------- ------------ ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Agustin Gomez de Segura 1999 (1) -0- -0- -0- None None None -0-
----------- ----------- ------------- ------------ ------------- ------------- ------------ ------------
1998 -0- -0- -0- None None None -0-
----------- ----------- ------------- ------------ ------------- ------------- ------------ ------------
1997 -0- -0- -0- None None None -0-
----------- ----------- ------------- ------------ ------------- ------------- ------------ ------------
- --------------------------- ----------- ----------- ------------- ------------ ------------- ------------- ------------ ------------
Jorge L. Lacasa 1999 (1) -0- -0- -0- None None None -0-
----------- ----------- ------------- ------------ ------------- ------------- ------------ ------------
1998 -0- -0- -0- None None None -0-
----------- ----------- ------------- ------------ ------------- ------------- ------------ ------------
1997 -0- -0- -0- None None None -0-
- --------------------------- ----------- ----------- ------------- ------------ ------------- ------------- ------------ ------------
</TABLE>
(1) For the six months ended June 30, 1999.
None of the Company's officers and directors is currently party to an
employment agreement with the Company. Directors and/or officers will
receive expense reimbursement for expenses reasonably incurred on behalf of
the Company. As the company is in the exploration stage, no value has been
input for donated services.
(B) Options/SAR Grants Table
As of September 10, 1999 no options have been awarded
(C) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table
As of September 10, 1999 no options have been awarded
(D) Long-Term Incentive Plan ("LTIP") Awards Table
The Company does not have a Long-term Incentive Plan.
17
<PAGE>
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The proposed business of the Company raises potential conflicts of
interests between the Company and certain of its officers and directors.
Certain of the directors of the Company are directors of other mineral
resource companies and, to the extent that such other companies may
participate in ventures in which the Company may participate, the directors
of the Company may have a conflict of interest in negotiating and
concluding terms regarding the extent of such participation. In the event
that such a conflict of interest arises at a meeting of the directors of
the Company, a director who has such a conflict will abstain from voting
for or against the approval of such participation or such terms. In
appropriate cases the Company will establish a special committee of
independent directors to review a matter in which several directors, or
Management, may have a conflict. From time to time several companies may
participate in the acquisition, exploration and development of natural
resource properties thereby allowing for their participation in larger
programs, involvement in a greater number of programs and reduction of the
financial exposure with respect to any one program. It may also occur that
a particular company will assign all or a portion of its interest in a
particular program to another of these companies due to the financial
position of the company making the assignment. In determining whether the
Company will participate in a particular program and the interest therein
to be acquired by it, the directors will primarily consider the potential
benefits to the Company, the degree of risk to which the Company may be
exposed and its financial position at that time. Other than as indicated,
the Company has no other procedures or mechanisms to deal with conflicts of
interest. The Company is not aware of the existence of any conflict of
interest as described herein.
During the six months ended June 30, 1999 salaries and wages
aggregating, $0, the fiscal year ended December 31, 1998 $0 (December 31,
1997) were paid or are payable to directors or corporations controlled by
directors in connection with managerial, engineering and administrative
services provided.
In addition, directors and/or officers will receive expense
reimbursement for expenses reasonably incurred on behalf of the Company.
The Company believes that had amounts been paid they would be
comparable to amounts that would have been paid to at arms length third
party providers of such services.
Item 8. DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 100,000,000 shares of common stock,
of which 14,000,000 shares were issued and outstanding as of the date of
this Registration Statement. Each outstanding share of common stock
entitles the holder to one vote, either in person or by proxy, on all
matters that may be voted upon by the owners thereof at meetings of the
stockholders.
The holders of common stock (i) have equal rights to dividends from
funds legally available therefor, when, and if, declared by the Board of
Directors of the Company; (ii) are entitled to share rateably in all of the
assets of the Company available for distribution to the holders of common
stock upon liquidation, dissolution or winding up of the affairs of the
Company; (iii) do not have pre-emptive, subscription or conversion rights,
and (iv) are
18
<PAGE>
entitled to one non-cumulative vote per share on all matters on which
stockholders may vote at all meetings of stockholders.
The holders of shares of common stock of the Company do not have
cumulative voting rights, which means that the holders of more than 50% of
such outstanding shares, voting for the election of directors, can elect
all directors of the Company if they so choose and, in such event, the
holders of the remaining shares will not be able to elect any of the
Company's directors. The present officers and directors of the Company own
approximately 1% of the outstanding shares of the Company.
PART II
Item 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS
(a) The common stock of the Company has been quoted on the OTC
Bulletin Board since March 24, 1998. The following table sets
forth high and low bid prices for the common stock for the
calendar quarters indicated as reported by the OTC Bulletin Board
from March 24, 1998 through September 10, 1999. These prices
represent quotations between dealers without adjustment for
retail mark-up, mark-down or commission and may not represent
actual transactions.
<TABLE>
<CAPTION>
- ------------------- ------------------ ----------------------- ------------------ -------------------
First Quarter Second Quarter Third Quarter Fourth Quarter
- ------------------- ------------------ ----------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
1999 - High $0.3125 $2.437 $2.250 N/A
- ------------------- ------------------ ----------------------- ------------------ -------------------
1999 - Low $0.3125 $0.312 $1.750 N/A
- ------------------- ------------------ ----------------------- ------------------ -------------------
1998 - High N/A $0.5312 $0.5312 $1.0625
- ------------------- ------------------ ----------------------- ------------------ -------------------
1998 - Low N/A $0.5000 $0.5000 $1.0000
- ------------------- ------------------ ----------------------- ------------------ -------------------
1997 - High N/A N/A N/A N/A
- ------------------- ------------------ ----------------------- ------------------ -------------------
1997 - Low N/A N/A N/A N/A
- ------------------- ------------------ ----------------------- ------------------ -------------------
</TABLE>
(b) As of September 10, 1999, there were 29 holders of record of the
common stock.
(c) The Company has not declared any dividends since inception, and
has no present intention of paying any cash dividends on its
common stock in the foreseeable future. The payment by the
Company of dividends, if any, in the future, rests within the
discretion of its Board of Directors and will depend, among other
things, upon the Company's earnings, its capital requirements and
its financial condition, as well as other relevant factors.
(d) No matters were submitted to a Vote of the shareholders during
the last fiscal quarter.
Item 2. LEGAL PROCEEDINGS
The Company is not a party to any litigation, and has no knowledge of
any pending or threatened litigation against it.
Item 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
19
<PAGE>
Item 4. RECENT SALES OF UNREGISTERED SECURITIES
Since inception the Registrant has sold securities in the manner set
forth below without registration under the Securities Act of 1933, as
amended (the "Act").
(1) In March 1999, the Company issued 7,000,000 shares at a price of $0.10
per share for an aggregate consideration of $700,000 pursuant to Rule
504 of Regulation D.
(2) In April 1999 the Company issued 6,000,000 shares at a price of $0.15
per share in connection with its acquisition of certain exploration,
development and production licenses in the Russian Federation.
Except for 8,000,000 shares issued pursuant to Rule 504, such shares
are "restricted securities," as that term is defined in the rules and
regulations promulgated under the Securities Act of 1933, as amended,
subject to certain restrictions regarding resale. Certificates evidencing
all of the above-referenced securities have been stamped with a restrictive
legend and will be subject to stop transfer orders.
The Registrant believes that each of the above-referenced transaction
was exempt from registration under the Act, pursuant to Section 4(2) of the
Act and the rules and regulations promulgated thereunder as a transaction
by an issuer not involving any public offering.
Item 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Except as hereinafter set forth there is no charter provision, bylaw,
contract, arrangement or statute under which any officer or director of the
Registrant is insured or indemnified in any manner against any liability
which he may incur in his capacity as such.
Statutory indemnification of Directors and Officers
The Company's Articles of Incorporation and Bylaws provide for the
indemnification of officers and directors. In addition, the Company's
officers and directors have entered into agreements, which also indemnify
them from certain acts and omissions.
Section 607.0850 of the Florida Business Corporations Act, provides
for the Indemnification of the Company's directors, officers, employees or
agents under certain circumstances as follows:
Indemnification of Officers, Directors, Employee and Agents; Insurance
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fee),
judgements, fines and amounts paid in settlement actually and
20
<PAGE>
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding, by judgement, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a
judgement in its favour by reason of the fact that he if or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defence
or settlement of such action or suit if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the court in
which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person if fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defence
of any action, suit or proceeding referred to in subsections (a) and
(b) of this section, or in defence of any claim, issue or matter
therein, he shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by him in connection
therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of the directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is
not obtainable, or, even, if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in written opinion,
or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of any undertaking by or on behalf of such
director to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation as
authorized in this section.
21
<PAGE>
Such expenses including attorneys' fees incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as
the board of directors deems appropriate.
(f) The indemnification and advancement expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification
or advancement expenses may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another
capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent
corporation including (any constituent of a constituent) absorbed in a
consolidation or merger which, if separate existence had continued,
would have had power and authority to indemnify its directors,
officers and employees or agents so that any person who is or was a
director, officer, employee or agent of such constituent corporation,
or is or was serving at the request of such constituent corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in
the same position under this section with respect to the resulting or
surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this section, reference to "other enterprises" shall
include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the
corporation" shall include any services as a director, officer,
employee or agent of the corporation which imposes duties on, or
involve services by, such director, officer, employee, or agent with
respect to any employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have
acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
The Securities and Exchange Commission's Policy on Indemnification
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to any provisions contained
in its Certificate of Incorporation, or by-laws, 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 the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defence of any
action, suit or proceeding) is asserted by such director, officer or
22
<PAGE>
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
23
<PAGE>
PART III
Item 1. INDEX TO EXHIBITS
1.1 Articles of Incorporation of Cigma Ventures Corporation 27
1.2 Company By-laws Cigma Ventures Corporation 30
1.3 Consent action of the Board of Directors of Cigma
Ventures Corporation to reinstate the corporation
in the State of Florida 36
1.4 Articles of Amendment to Cigma Ventures Corporation changing
the name of the Corporation to Cigma Metals Corporation. 37
3.1 Agreement dated April 12, 1998 between The Company and
Delta Capital; Oil-Impex Limited; Gasinvest Ltd;
Lloydinvest and Landa Ltd. 38
21.1 Subsidiaries of the Company 46
27.1 Financial Data Schedule 47
24
<PAGE>
PART F/S
FINANCIAL STATEMENTS
CIGMA METALS CORPORATION
Audited Financial Statements:
Report of the Independent Accountants F2
Consolidated Balance Sheets as at June 30, 1999, December
31, 1998 and 1997 F3
Statement of Stockholders' Equity for the six month periods
ended June 30, 1999, June 30, 1998 (unaudited) and for the
years ended December 31, 1998 and 1997 F4
Statement of Operations for the six month periods ended June
30, 1999, June 30, 1998 (unaudited) and for the years ended
December 31, 1998 and 1997 F5
Statements of Cash Flows for the six-month periods ended
June 30, 1999, June 30, 1998 (unaudited) and for the years
ended December 31, 1998 and 1997 F6
Summary of Significant Accounting Policies F7
Notes to the Consolidated financial Statements F11
25
<PAGE>
SIGNATURES
In accordance with Section 12 of the securities exchange Act of 1934,
the registrant caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: September 10, 1999
Cigma Metals Corporation
By: /s/ Agustin Gomez de Segura
----------------------------------
Agustin Gomez de Segura, President
26
<PAGE>
CIGMA METALS CORPORATION
(A development stage enterprise)
(Formerly Cigma Ventures Corp.)
Consolidated Financial Statements
June 30, 1999, December 31, 1998 and 1997
(Expressed in US Dollars)
Index
Report of Independent Accountants
Consolidated Balance Sheets
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
F1
<PAGE>
MOORE STEPHENS
ELLIS FOSTER LTD.
CHARTERED ACCOUNTANTS
1650 West 1st Avenue
Vancouver, BC Canada V6J 1G1
Telephone: (604) 737-8117 Facsimile: (604) 714-5916
E-Mail: [email protected]
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
CIGMA METALS CORPORATION (formerly Cigma Ventures Corp.)
(A development stage enterprise)
We have audited the consolidated balance sheets of Cigma Metals Corporation (A
development stage enterprise) (formerly Cigma Ventures Corp.) as at June 30,
1999, December 31, 1998 and 1997, the consolidated statements of stockholders'
equity for the periods from January 13, 1989 (inception) to June 30, 1999, the
consolidated statements of operations and cash flows for the periods from
January 13, 1989 (inception) to June 30, 1999 and for the periods ended June 30,
1999, December 31, 1998 and 1997. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at June 30, 1999,
December 31, 1998 and 1997 and the results of its operations and its cash flows
for the period from January 13, 1989 (inception) to June 30, 1999 and for the
periods ended June 30, 1999, December 31, 1998 and 1997 in conformity with
generally accepted accounting principles in the United States.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates, among
other things, the realization of assets and the satisfaction of liabilities in
the normal course of business. As discussed in Note 1 to the consolidated
financial statements, the Company has incurred a loss from operations and lacks
liquidity which raises substantial doubt about its ability to continue as a
going concern. The continued operations of the Company as a going concern is
dependent upon its ability to obtain necessary financing to complete the
development. Management's plans concerning these matters are described in Note
1. These consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Vancouver, Canada "MOORE STEPHENS ELLIS FOSTER LTD."
July 13, 1999 Chartered Accountants
F2
- --------------------------------------------------------------------------------
MS
An independently owned and operated member of Moore Stephens North America Inc.
Members in principal cities throughout North America. Moore Stephens North
America Inc. is a member of Moore Stephens International Limited, members in
principal cities throughout the world
<PAGE>
CIGMA METALS CORPORATION
(A development stage enterprise)
(Formerly Cigma Ventures Corp.)
<TABLE>
<CAPTION>
Consolidated Balance Sheets
(Expressed in US Dollars)
- -----------------------------------------------------------------------------------------
December 31
June 30 ------------------------
1999 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Current
Cash $ 683,071 $ -- $ --
Non-current
Mineral property costs (Note 3) 600 600 --
- -----------------------------------------------------------------------------------------
Total assets $ 683,671 $ 600 $ --
=========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current
Accounts payable and accrued
liabilities $ 5,000 $ -- $ --
- -----------------------------------------------------------------------------------------
Stockholders' Equity
Share capital
Authorized:
100,000,000 common shares at par
value of $0.0001 each
Issued:
14,000,000 (1998 - 1,000,000;
1997 - 1,000,000) 1,400 700 100
Additional paid in capital 700,200 900 900
Deficit accumulated during the
development stage (22,929) (1,000) (1,000)
- -----------------------------------------------------------------------------------------
Stockholders' equity 678,671 600 --
- -----------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 683,671 $ 600 $ --
=========================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
APPROVED BY THE BOARD: /s/ AGUSTIN GOMEZ DE SEGURA /s/ JORGE L. LACASA
--------------------------- -------------------
Director Director
F3
<PAGE>
CIGMA METALS CORPORATION
(A development stage enterprise)
(Formerly Cigma Ventures Corp.)
Consolidated Statements of Stockholders' Equity
Period Ended June 30, 1999, December 31, 1998 and 1997
(Expressed in US Dollars)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Deficit
accumulated Total
Common stock Additional during the Stock-
--------------------------- paid-in development holders'
Shares Amount capital stage equity
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 1,000,000 $ 100 $ 900 $ (1,000) $ --
Net loss for the year -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 1,000,000 100 900 (1,000) --
Issuance of common stock
for mineral properties 6,000,000 600 -- -- 600
Net loss for the year -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 7,000,000 700 900 (1,000) 600
Issuance of common stock
for cash 7,000,000 700 699,300 -- 700,000
Net loss for the year -- -- -- (21,929) (21,929)
- -------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1999 14,000,000 $ 1,400 $700,200 (22,929) $ 678,671
===============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F4
<PAGE>
CIGMA METALS CORPORATION
(A development stage enterprise)
(Formerly Cigma Ventures Corp.)
Consolidated Statement of Operations
(Expressed in US Dollars)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
January 13
1989 Six
(inception) months Twelve months ended
to June 30 ended December 31
1999 June 30 ----------------------------------
(cumulative) 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
General and administrative expenses
Consultants $ 15,000 $ 15,000 $ -- $ --
Interest, bank charges and
foreign exchange 63 63 -- --
Office and miscellaneous,
net of recoveries 1,000 -- -- --
Professional fees
Legal 5,000 5,000 -- --
Accounting 5,000 5,000 -- --
Transfer agents, listing and
filing fees 3,322 3,322 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
29,385 28,385 -- --
Less: Interest income (6,456) (6,456) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net loss for the period $ 22,929 $ 21,929 $ -- $ --
==================================================================================================================================
Loss per share
Basic and diluted $ -- $ -- $ --
==================================================================================================================================
Weighted average common
shares outstanding
Basic and diluted 7,527,778 3,633,333 1,000,000
==================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F5
<PAGE>
CIGMA METALS CORPORATION
(A development stage enterprise)
(Formerly Cigma Ventures Corp.)
Consolidated Statement of Cash Flows
(Expressed in US Dollars)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
January 13
1989 Six
(inception) months Twelve months ended
to June 30 ended December 31
1999 June 30 ----------------------------------
(cumulative) 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows from (used by)
operating activities
Net loss for the period $ (22,929) $ (21,929) $ -- $ --
Adjustment for item not involving cash:
- issuance of shares for services rendered 1,000 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
(21,929) (21,929) -- --
Changes in assets and liabilities
Increase in accounts payable 5,000 5,000 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
(17,929) (16,929) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from issuance of
of common stock 700,000 700,000 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in cash for the period 683,071 683,071 -- --
Cash, beginning of period -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Cash, end of period $ 683,071 $683,071 $ -- $ --
==================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F6
<PAGE>
CIGMA METALS CORPORATION
(A development stage enterprise)
(Formerly Cigma Ventures Corp.)
Notes to Consolidated Financial Statements
June 30, 1999, December 31, 1998 and 1997
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
1. Nature of Business and Going Concern
The Company was formed on January 13, 1989 as Cigma Ventures Corp. under
the laws of the State of Florida. The Company changed its name to Cigma
Metals Corporation on April 17, 1998. The Company is in the business of
exploration and development of mineral properties. The Company has not yet
determined whether its properties contain mineral resources that may be
economically recoverable.
These consolidated financial statements have been prepared with generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. The general business
strategy of the Company is to acquire mineral properties either directly or
through the acquisition of operating entities. The continued operations of
the Company and the recoverability of mineral property costs is dependent
upon the existence of economically recoverable reserves, or proceeds from
the disposition thereof, confirmation of the Company's interest in the
underlying mineral claims, the ability of the Company to obtain necessary
financing to complete the development and upon future profitable
production. Management's plans in this regard are to raise equity financing
as required. These consolidated financial statements do not include any
adjustments that might result from this uncertainty.
2. Significant Accounting Policies
(a) Basis of Consolidation
These consolidated financial statements, prepared in accordance with
accounting principles generally accepted in the United States, include
the accounts of the Company and its wholly-owned Russian subsidiary,
Northgold Company. All inter-company transactions and balances have
been eliminated.
(b) Principles of Accounting
These financial statements are stated in US Dollars and have been
prepared in accordance with accounting principles generally accepted
in the United States.
F7
<PAGE>
CIGMA METALS CORPORATION
(A development stage enterprise)
(Formerly Cigma Ventures Corp.)
Notes to Consolidated Financial Statements
June 30, 1999, December 31, 1998 and 1997
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
2. Significant Accounting Policies (continued)
(c) Mineral Properties and Exploration Expenses
Exploration costs are charged to operations as incurred as are normal
development costs until such time that proven reserves are discovered.
From that time forward, the Company will capitalize all costs to the
extent that future cash flow from reserves equals or exceeds the costs
deferred. As at June 30, 1999, December 31, 1998 and 1997, the Company
did not have proven reserves. Cost of initial acquisition of mineral
rights and concessions are capitalized until the properties are
abandoned or the right expires.
Exploration activities conducted jointly with others are reflected at
the Company's proportionate interest in such activities.
(d) Foreign Currency Transactions
The Company and Northgold maintain their accounting records in their
functional currencies (i.e., U.S. dollars and Russian ruble,
respectively). They translate foreign currency transactions into their
functional currency in the following manner.
At the transaction date, each asset, liability, revenue and expense is
translated into the functional currency by the use of the exchange
rate in effect at that date. At the period end, monetary assets and
liabilities are translated into functional currency by using the
exchange rate in effect at that date. The resulting foreign exchange
gains and losses are included in operations.
(e) Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
F8
<PAGE>
CIGMA METALS CORPORATION
(A development stage enterprise)
(Formerly Cigma Ventures Corp.)
Notes to Consolidated Financial Statements
June 30, 1999, December 31, 1998 and 1997
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
2. Significant Accounting Policies (continued)
(f) Financial Instruments
The respective carrying value of certain on-balance-sheet financial
instruments approximated their fair values. These financial
instruments include cash and accounts payable and accrued liabilities.
Fair values were assumed to approximate carrying values for these
financial instruments, except where noted, since they are short term
in nature and their carrying amounts approximate fair values or they
are receivable or payable on demand. Management is of the opinion that
the Company is not exposed to significant interest, credit, or
currency risks arising from these financial instruments.
(g) Income Taxes
The Company has adopted Statement of Financial Accounting Standards
(SFAS") No. 109, which requires the Company to recognize deferred tax
liabilities and assets for the expected future tax consequences of
events that have been recognized in the Company's financial statements
or tax returns. Under this method, deferred tax liabilities and assets
are determined based on the difference between the financial statement
carrying amounts and tax bases of assets using enacted rates in effect
in the years in which the differences are expected to reverse.
(h) Loss Per Share
Loss per share is computed using the weighted average number of shares
outstanding during the year. Effective for the year ended December 31,
1997, the Company adopted SFAS No. 128, "Earnings per share". Diluted
loss per share is equal to the basic loss per share.
F9
<PAGE>
CIGMA METALS CORPORATION
(A development stage enterprise)
(Formerly Cigma Ventures Corp.)
Notes to Consolidated Financial Statements
June 30, 1999, December 31, 1998 and 1997
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
2. Significant Accounting Policies (continued)
(i) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities".
SFAS No. 133 requires companies to recognize all derivatives contracts
as either assets or liabilities in the balance sheet and to measure
them at fair value. If certain conditions are met, a derivative may be
specifically designated as a hedge, the objective of which is to match
the timing of gain or loss recognition on the hedging derivative with
the recognition of (i) the changes in the fair value of the hedged
asset or liabilty that are attributable to the hedged risk or (ii) the
earnings effect of the hedged forecasted transaction. For a derivative
not designated as a hedging instrument, the gain or loss is recognized
in income in the period of change. SFAS No. 133 is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999.
Historically, the Company has not entered into derivatives contracts
either to hedge existing risks or for speculative purposes.
Accordingly, the Company does not expect adoption of the new standards
on January 1, 2000 to affect its financial statements.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-up
Activities", ("SOP 98-5") which provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs
of start-activities and organization costs to be expensed as incurred.
SOP 98-5 is effective for fiscal years beginning after December 15,
1998 with initial adoption reported as the cumulative effect of a
change in accounting principle. Adoption of this standard has no
material effect on the financial statements.
F10
<PAGE>
CIGMA METALS CORPORATION
(A development stage enterprise)
(Formerly Cigma Ventures Corp.)
Notes to Consolidated Financial Statements
June 30, 1999, December 31, 1998 and 1997
(Expressed in US Dollars)
- --------------------------------------------------------------------------------
3. Mineral Properties and Exploration Licences
The Company owns the following mineral properties located in Kozhim Region,
Komi Republic, Russia, as follows:
Area Central Point Co-ordinates
---- --------------------------
Samshitovoye 65 deg 14.7o N. Lat; 60 deg 13.5o E. Lon.
Nesterovskoye 65 deg 13.7o N. Lat; 60 deg 14.8o E. Lon.
Chudnoye 65 deg 14.3o N. Lat; 60 deg 14.2o E. Lon.
Pursuant to an agreement dated April 12, 1998, the Company acquired these
mineral properties by issuing 6,000,000 restricted common shares to the
vendors. The individual who acted as trustee for the vendors is currently a
director of the Company. As the vendors are the controlling shareholders of
the Company after the above-mentioned transactions, the properties are
carried at a nominal amount of $600 which is equal to the par value of the
shares issued.
Pursuant to another agreement, the Company has entered into a joint venture
agreement with Poliarural Geologia ("PUG") to jointly explore the
properties. PUG is a Russian stated-owned geological exploration and
development company which owns the exploration, development and production
licences for the properties owned by the Company.
The Company will own 49% of the joint venture, but it has the option to
increase its stake to 75% by expending US$400,000 on the properties.
4. Non-Cash Investing and Financing Activities
(a) On August 2, 1991, the Company issued 1,000,000 shares of its $0.001
par value common stock for services of $1,000.
(b) The Company issued 6,000,000 common shares to acquire the mineral
properties as described in Note 3.
F11
ARTICLES OF INCORPORATION
OF
CIGMA VENTURES CORP.
The undersigned subscriber to these Articles of Incorporation, a natural
person competent to contract, hereby forms a corporation under the laws of the
State of Florida.
ARTICLE I
NAME
The name or this corporation is CIGMA VENTURES CORP.
ARTICLE II
NATURE OF THE BUSINESS
This corporation shall have the power to transact or engage in any business
permitted under the laws of the United States and of the State of Florida.
ARTICLE III
CAPITAL STOCK
The capital stock of this corporation shall consist of 100,000,000 shares
of common stock having a par value of $.0001 per share. All of said stock shall
be issued only for cash or other property or for services at a just valuation as
shall be determined by the Board of Directors.
ARTICLE IV
INITIAL CAPITAL
The amount of capital with which this corporation shall commence business
shall be not less than One Hundred ($100.00) Dollars.
ARTICLE V
TERM OF EXISTENCE
This corporation shall have perpetual existence.
ARTICLE VI
INITIAL ADDRESS
The initial address of the principal place of business of this corporation
in the State of Florida shall be 3161 N.W. 47th Avenue, Suite 214, Lauderdale
Lakes, FL 33319. The Board of Directors may at any time and from time to time
move the principal office of this corporation to any location within or without
the State of Florida.
ARTICLE VII
<PAGE>
DIRECTORS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not be less than one (1) and,
subject to such minimum may be increased or decreased from time to time in the
manner provided in the By-Laws. The number of persons constituting the initial
Board of Directors shall be 1.
ARTICLE VIII
INITIAL DIRECTORS
The names and addresses of the initial Board of Directors are as follows:
Stanley Bo Fineberg
3161 N.W. 47th Terrace
Suits 214
Lauderdale Lakes, FL 33319
ARTICLE IX
SUBSCRIBER
The name and address of the person signing these Articles of Incorporation
as subscriber is:
Eric P. Littman
Suits 202
1428 Brickell Avenue
Miami, FL 33131
ARTICLE X
VOTING FOR DIRECTORS
The Board of Directors shall be elected by the Stockholders of the
corporation at such time and in such manner as provided in the By-Laws.
ARTICLE XI
CONTRACTS
No contract or other transaction between this corporation and any person,
firm or corporation shall be affected by the fact that any officer or director
of this corporation is such other party or is, or at some time in the future
becomes, an officer, director or partner of such other contracting party, or has
now or hereafter a direct or indirect interest in such contract.
ARTICLE XII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
This corporation shall have the power, in its By-Laws or in any resolution
of its stockholders or directors, to undertake to indemnify the officers and
directors of this corporation against any contingency or peril as may be
determined to be in the best interests of this corporation, and in conjunction
therewith to procure, at this corporation's expense, policies of insurance.
ARTICLE XIV
FLORIDA STATUTES
The corporation expressly elects not to be governed by the provisions of
Sections 607.108 and 607.109, Florida Statutes.
ARTICLE XV
RESIDENT AGENT
The name and address of the initial resident agent of this corporation is:
Eric F. Littman
Suite 202
1428 Brickell Avenue
Miami, FL 33131
IN WITNESS WHEREOF, I have hereunto subscribed to and executed these Articles of
Incorporation this 9th day of January, 1989.
/s/ Eric P. Littman
-------------------------------
Eric P. Littman, Subscriber
Subscribed and Sworn to this 9th day of January 1989.
Before me:
/s/
- -------------------------------------------------------
Notary Public
My Commission Expires:
Notary Public, State of Florida at Large
My Commission Expires Feb. 25, 1991
BY-LAWS
of
CIGMA VENTURES CORP.
ARTICLE 1. MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting
The annual meeting of the shareholders of this corporation shall be held on
the 30th day of June of each year or at such other time and place designated by
the Board of Directors of the corporation. Business transacted at the annual
meeting shall include the election of directors of the corporation. If the
designated day shall fall on a Sunday or legal holiday, then the meeting shall
be held on the first business day thereafter.
Section 2. Special Meeting
Special meetings of the shareholders shall be held when directed by the
President or the Board of Directors, or when requested in writing by the holders
of not less than 10% of all the shares entitled to vote at the meeting. A
meeting requested by shareholders shall be called for a date not less than 3 nor
more than 30 days after the request is made, unless the shareholders requesting
the meeting designate a later date. The call for the meeting shall be issued by
the Secretary, unless the President, Board of Directors, or shareholders
requesting the meeting shall designate another person to do so.
Section 3. Place
Meetings of shareholders shall be held at the principal place of business
of the corporation or at such other place as may be designated by the Board of
Directors.
Section 4. Notice
Written notice stating the place, day and hour of the meeting and in the
case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than 3 nor more than 30 days before the
meeting, either personally or by first class mail, or by the direction of the
President, the Secretary or the officer or persons calling the meeting to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
Section 5. Notice of Adjourned Meeting
When a meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
If, however, after the adjournment the Board of Directors fixes a new record
date for the adjourned meeting, a notice of the adjourned meeting shall be given
as provided in this Article to each shareholder of record on a new record date
entitled to vote at such meeting.
Section 6. Shareholder Quorum and Voting
A majority of the shares entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of shareholders. If a quorum is
present, the affirmative vote of a majority of the shares represented at the
meeting and entitled to vote on the subject matter shall be the act of the
shareholders unless otherwise provided by law.
Section 7. Voting of Shares
Each outstanding share shall be entitled to one vote on each matter
submitted to a vote at a meeting of shareholders.
<PAGE>
Section 8. Proxies
A shareholder may vote either in person or by proxy executed in writing by
the shareholder or his duly authorized attorney-in-fact. No proxy shall be valid
after the duration of 11 months from the date thereof unless otherwise provided
in the proxy.
Section 9. Action by Shareholders Without a Meeting
Any action required by law or authorized by these by-laws or the Articles
of Incorporation of this corporation or taken or to be taken at any annual or
special meeting of shareholders, or any action which may be taken at any annual
or special meeting of shareholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorise or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted.
ARTICLE II. DIRECTORS
Section 1. Function
All corporate powers shall be exercised by or under the authority of, and
the business and affairs of the corporation shall be managed under the direction
of, the Board of Directors.
Section 2. Qualification
Directors need not be residents of this state or shareholders of this
corporation.
Section 3. Compensation
The Board of Directors shall have authority to fix the compensation of
directors.
Section 4. Presumption of Assent
A director of the corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless he votes against such action or
abstains from voting in respect thereto because of an asserted conflict of
interest.
Section 5. Number
This corporation shall have a minimum of 1 director but no more than 7.
Section 6. Election and Term
Each person named in the Articles of Incorporation as a member of the
initial Board of Directors shall hold office until the first annual meeting of
shareholders, and until his successor shall have been elected and qualified or
until his earlier resignation, removal from office or death. At the first annual
meeting of shareholders and at each annual meeting thereafter the shareholders
shall elect directors to hold office until the next succeeding annual meeting.
Each director shall hold office for a term for which he is elected and until his
successor shall have been elected and qualified or until his earlier
resignation, removal from office or death.
Section 7. Vacancies
Any vacancy occurring in the Board of Directors, including any vacancy
created by reason of an increase in the number of Directors, may be filled by
the affirmative vote of a majority of the remaining directors though less than a
quorum of the Board of Directors. A director elected to fill a vacancy shall
hold office only until the next election of directors by the shareholders.
<PAGE>
Section 8. -Removal of Directors
At a meeting of shareholders called expressly for that purpose, any
director or the entire Board of Directors may be removed, with or without cause,
by a vote of the holders of a majority of the shares then entitled to vote at an
election of directors.
Section 9. Quorum and Voting
A majority of the number of directors fixed by these by-laws shall
constitute a quorum for the transaction of business. The act of a majority of
the directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
Section 10. Executive and Other Committees
The Board of Directors, by resolution adopted by a majority of the full
Board of Directors, may designate from among its members an executive committee
and one or more other committees each of which, to the extent provided in such
resolution shall have and may exercise all the authority of the Board of
Directors, except as is provided by law.
Section 11. Place of Meeting
Regular and special meetings of the Board of Directors shall be held at the
principal place of business of the corporation or as otherwise determined by the
Directors.
Section 12. Time, Notice and Call of Meetings
Regular meetings of the Board of Directors shall be held without notice on
the first Monday of the calendar month two (2) months following the end of the
corporation's fiscal, or if the said first Monday is a legal holiday, then on
the next business day. Written notice of the time and place of special meetings
of the Board of Directors shall be given to each director by either personal
delivery, telegram or cablegram at least three (3) days before the meeting or by
notice mailed to the director at least 3 days before the meeting.
Notice of a meeting of the Board of Directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, any objection to
the transaction of business because the meeting is not lawfully called or
convened.
Neither the business to be transacted at, nor the purpose, of any regular
or special meeting of the Board of Directors need be specified in the notice of
waiver of notice of such meeting. A majority of the directors present, whether
or not a quorum exists may adjourn any meeting of the Board of Directors to
another time and place. Notice of any such adjourned meeting shall be given to
the directors who were not present at the time of the adjournment, and unless
the time and place of adjourned meeting are announced at the time of the
adjournment, to the other directors. Meetings of the Board of Directors may be
called by the chairman of the board, by the president of the corporation or by
any two directors.
Members of the Board of Directors may participate in a meeting of such
board by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at a meeting.
Section 13. Action Without a Meeting
Any action, required to be taken at a meeting of the Board of Directors, or
any action which may be taken at a meeting of the Board of Directors or a
committee thereof, may be taken without a meeting if a consent in writing,
setting forth the action so to be taken, is signed by such number of the
directors, or such number of
<PAGE>
the members of the committee, as the case may be, as would constitute the
requisite majority thereof for the taking of such actions, is filed in the
minutes of the proceedings of the board or of the committee. Such actions shall
then be deemed taken with the same force and effect as though taken at a meeting
of such board or committee whereat all members were present and voting
throughout and those who signed such action shall have voted in the affirmative
and all others shall have voted in the negative. For informational purposes, a
copy of such signed actions shall be mailed to all members of the board or
committee who did not sign said action, provided however, that the failure to
mail said notices shall in no way prejudice the actions of the board or
committee.
ARTICLE Ill. OFFICERS
Section 1. Officers
The officers of this corporation shall consist of a president, a secretary
and a treasurer, each of whom shall be elected by the Board of Directors. Such
other officers and assistant officers and agents as may be deemed necessary may
be elected or appointed by the Board of Directors from time to time. Any two or
more offices may be held by the same person.
Section 2. Duties
The officers of this corporation shall have the following duties:
(1) The President shall be the chief executive officer of the corporation,
shall have general and active management of the business and affairs of the
corporation subject to the directions of the Board of Directors, and shall
preside at all meetings of the shareholders and Board of Directors.
(2) The Secretary shall have custody of, and maintain, all of the corporate
records except the financial records; shall record the minutes of all
meetings of the shareholders and Board of directors, send all notices of
all meetings and perform such other duties as may be prescribed by the
Board of Directors or the President.
(3) The Treasurer shall have custody of all corporate funds and financial
records, shall keep full and accurate accounts of receipts and
disbursements and render accounts thereof at the annual meetings of
shareholders and whenever else required by the Board of Directors or the
President, and shall perform such other duties as may be prescribed by the
Board of Directors or the President.
Section 3. Removal of Officers
An officer or agent elected or appointed by the Board of Directors may be
removed by the board whenever in its judgement the best interests of the
corporation will be served thereby. Any vacancy in any office may be filed by
the Board of Directors.
ARTICLE IV. STOCK CERTIFICATES
Section 1. Issuance
Every holder of shares in this corporation shall be entitled to have a
certificate representing all shares to which he is entitled. No certificate
shall be issued for any share until such share is fully paid.
Section 2. Form
Certificates representing shares in this corporation shall be signed by the
President or Vice President and the Secretary or an Assistant Secretary and may
be sealed with the seal of this corporation or a facsimile thereof.
<PAGE>
Section 3. Transfer of Stock
The corporation shall register a stock certificate presented to it for
transfer if the certificate is properly endorsed by the holder of record or by
his duly authorized attorney.
Section 4. Lost, Stolen or Destroyed Certificates
If the shareholder shall claim to have lost or destroyed a certificate of
shares issued by the corporation, a new certificate shall be issued upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed, and, at the discretion of the Board of
Directors, upon the deposit of a bond or other indemnity in such amount and with
such sureties, if any, as the board may reasonably require.
ARTICLE V. BOOKS AND RECORDS
Section 1. Books and Records
This corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its shareholders, Board of
Directors and committee of directors.
This corporation shall keep at its registered office or principal place of
business a record of its shareholders, giving the names and addresses of all
shareholders and the number of the shares held by each.
Any books, records and minutes may be in written form or in any other form
capable of being converted into written form within a reasonable time.
Section 2. Shareholders' Inspection Rights
Any person who shall have been a holder of record of shares of voting trust
certificates therefor at least six months immediately preceding his demand or
shall be the holder of record of, or the holder of record of voting trust
certificates for, at least five percent of the outstanding shares of the
corporation, upon written demand stating the purpose thereof, shall have the
right to examine, in person or by agent or attorney, at any reasonable time or
times, for any proper purpose its relevant books and records of accounts,
minutes and records of shareholders and to make extracts therefrom.
Section 3. Financial Information
Not later than four months after the close of each fiscal year, this
corporation shall prepare a balance sheet showing in reasonable detail the
financial condition of the corporation as of the close of its fiscal year, and a
profit and loss statement showing the results of the operations of the
corporation during the fiscal year.
Upon the written request of any shareholder or holder of voting trust
certificates for shares of the corporation, the corporation shall mail to each
shareholder or holder of voting trust certificates a copy of the most recent
such balance sheet and profit and loss statement. The balance sheets and profit
and loss statements shall be filed in the registered office of the corporation
in this state, shall be kept for at least five years, and shall be subject to
inspection during business hours by any shareholder or holder of voting trust
certificates, in person or by agent.
ARTICLE VI. DIVIDENDS
The Board of Directors of this corporation may, from time to time, declare
and the corporation may pay dividends on its shares in cash, property or its own
shares, except when the corporation is insolvent or when the payment thereof
would render the corporation insolvent subject to the provisions of the Florida
Statutes.
<PAGE>
ARTICLE VII. CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be in
circular form.
ARTICLE VIII. AMENDMENT
These by-laws may be altered, amended or repealed, and new by-laws may be
adopted by a majority vote of the directors of the corporation.
CONSENT ACTION OF THE BOARD OF DIRECTORS
OF CIGMA VENTURES CORP.
The undersigned, being the sole director of Cigma Ventures Corp., a Florida
corporation (hereinafter the "Company") does hereby unanimously consent to the
following actions taken at a meeting on March 10, 1998.
RESOLVED: To reinstate the corporation in the State of Florida.
RESOLVED: To retain the following to assist the Company in applying for a
listing on the OTC Bulletin Board:
Law firm of Eric P. Littman; accounting firm of Barry L. Friedman, P.C.;
Interwest Transfer Co., Inc., as the Company's transfer agent; and J. Alexander
Securities, Inc. to prepare and submit the necessary filings with the NASD.
There being no further business before this Board at this time, the Meeting was
adjourned.
/s/ Eric P. Littman
- -------------------------------------------------------
Eric P. Littman, Sole Director
ARTICLES OF AMENDMENT TO
CIGMA VENTURES CORP.
THE UNDERSIGNED, being the sole director and president of CIGMA VENTURES
CORP., does hereby amend the Articles of Incorporation of CIGMA VENTURES CORP.,
effective March 23, 1999 as follows:
ARTICLE I
CORPORATE NAME
The name of the Corporation shall be CIGMA METALS CORPORATION.
I hereby certify that the following was adopted by a majority vote of the
shareholders and directors of the corporation on April 17, 1999 and that the
number of votes cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed this Amendment to
the Articles of Incorporation on April 17, 1999.
/s/ Agustin Gomez
- ---------------------------
Agustin Gomez, President
The foregoing instrument was acknowledged before me on March 23, 1999, by
Agustin, who is personally known to me.
/s/ Eric P. Littman
----------------------------------------
Notary Public
My commission expires: E. P. LITTMAN
MY COMMISSION # CC 527626
EXPIRES: March 29, 2000
Bonded thru Notary Public Underwriters
THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"), NOR REGISTERED UNDER ANY
STATE SECURITIES LAW, AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN
RULE 144 UNDER THE 1933 ACT. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933
ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY.
ASSET PURCHASE AGREEMENT
AGREEMENT made this 12th day of April, 1998 by and between CIGMA VENTURES CORP.,
a Florida corporation, (the "ISSUER") and DELTA CAPITAL; OIL-IMPEX LIMITED;
GASINVEST LTD.; LLOYDINVEST and LANDA LTD. ("SELLER")
In consideration of the mutual promises, convenants, and representations
contained herein and other good and valuable consideration,
THE PARTIES HERETO AGREE AS FOLLOWS:
1. ASSETS PURCHASED; LIABILITIES ASSUMED; PURCHASE PRICE.
SELLERS agrees to sell to ISSUER and ISSUER agrees to purchase from
SELLERS, on the terms and conditions set forth in this Agreement, all of
SELLERS' Russian mineral properties, all of which are set forth in Schedule
1 annexed hereto (the "Assets"). The purchase price for the Assets shall be
6,000,000 shares of ISSUER'S restricted common stock, par value $.001 (the
"Shares"). The division of the shares is set forth in Schedule 2.
2. REPRESENTATIONS AND WARRANTIES.
ISSUER represents and warrants to SELLERS the following:
i Organization.
ISSUER is a corporation duly organised, validly existing, and in good
standing under the laws of Florida, and has all necessary corporate
powers to own properties and carry on a business, and is duly
qualified to do business and is in good standing in Florida. All
actions taken by the Incorporators, directors and shareholders of
ISSUER have been valid and in accordance with the laws of the State of
Florida.
ii Capital.
The authorized capital stock of ISSUER consists of 50,000,000 shares
of common stock, $.001 par value, of which 1,000,000 are issued and
outstanding. All outstanding shares are fully paid and non-assessable,
free of liens, encumbrances, options, restrictions and legal or
equitable rights of others not a party to this Agreement. At closing,
there will be no outstanding subscriptions, options, rights, warrants,
convertible securities, or other agreements or commitments obligating
ISSUER to issue or to transfer from treasury any additional shares of
its capital stock. None of the outstanding shares of ISSUER are
subject to any stock restriction agreements. All of the shareholders
of ISSUER have valid title to
<PAGE>
such shares and acquired their shares in a lawful transaction and in
accordance with the laws of Florida.
iii Financial Statements.
Annexed hereto as Exhibit B to this Agreement are the audited
Financial Statements of the ISSUER as of March 31, 1998, and the
related statements of income and retained earnings for the period then
ended. The financial statements have been prepared in accordance with
generally accepted accounting principles consistently followed by
ISSUER throughout the periods indicated, and fairly present the
financial position of ISSUER as of the date of the balance sheet in
the financial statements, and the results of its operations for the
periods indicated.
iv Absence of Changes.
Since the date of the financial statements, there has not been any
change in the financial condition or operations of ISSUER, except
changes in the ordinary course of business, which changes have not in
the aggregate been materially adverse.
v Liabilities.
ISSUER does not have any debt, liability, or obligation of any nature,
whether accrued, absolute, contingent, or otherwise, and whether due
or to become due, that is not reflected on the ISSUER'S financial
statement. ISSUER is not aware of any pending, threatened or asserted
claims, lawsuits or contingencies involving ISSUER or its common
stock. There is no dispute of any kind between ISSUER and any third
party; and no such dispute will exist at the closing of this
Agreement. At closing, ISSUER will be free from any and all
liabilities, liens, claims and/or commitments.
vi Ability to Carry Out Obligations.
ISSUER has the right, power, and authority to enter into and perform
its obligations under this Agreement. The execution and delivery of
this Agreement by ISSUER and the performance by ISSUER of its
obligations hereunder will not cause, constitute, or conflict with or
result in (a) any breach of violation or any of the provisions of or
constitute a default under any license, indenture, mortgage, charter,
instrument, articles of incorporation, bylaw, or other agreement or
instrument to which ISSUER or its shareholders are a party, or by
which they may be bound, nor will any consents or authorizations of
any party other than those hereto be required, (b) an event that would
cause ISSUER to be liable to any part, or (c) an event that would
result in the creation or imposition or any lien, charge or
encumbrance on any asset of ISSUER or upon the securities or ISSUER to
be acquired by SHAREHOLDERS.
vii Full Disclosure.
None of the representations and warranties made by the ISSUER, or in
any certificate or memorandum furnished or to be furnished by the
ISSUER, contains or will contain any untrue statement of a material
fact, or omit any material fact the omission of which would be
misleading.
viii Contract and leases.
ISSUER is not currently carrying on any business and is not a party to
any contract, agreement or lease. No person holds a power of attorney
from ISSUER.
<PAGE>
ix Compliance with Laws.
To the best of its knowledge, ISSUER has complied with, and is not in
violation of any federal, state, or local statute, law, and/or
regulation
x Litigation.
ISSUER is not (and has not been) a party to any suit, action,
arbitration, or legal, administrative, or other proceeding, or pending
governmental investigation. To the best knowledge of the ISSUER, there
is no basis for any such action or proceeding and no such action or
proceeding is threatened against ISSUER and ISSUER is not subject to
or in default with respect to any order, writ, injunction, or decree
of any federal, state, local, or foreign court, department, agency, or
instrumentality.
xi Conduct of Business.
Prior to the closing, ISSUER shall conduct its business in the normal
course, and shall not (1) sell, pledge, or assign any assets (2) amend
its Articles of Incorporation or Bylaws, (3) declare dividends, redeem
or sell stock or other securities, (4) incur any liabilities, (5)
acquire or dispose of any assets, enter into any contract, guarantee
obligations of any third part, or (6) enter into any other
transaction.
xii Corporate Documents.
Copies of each of the following documents, which are true complete and
correct in all material respects, will be attached to and made part of
this Agreement:
xiii Articles of Incorporation
xiv Bylaws;
(1) Minutes of Shareholders Meetings;
(2) Minutes of directors Meetings;
(3) List of Officers and Directors;
(4) Audited Financial Statements of the Company dated March 13, 1998,
Statements described in Section 2(iii);
(5) Stock register and stock records of ISSUER and a current,
accurate list of ISSUER's shareholders.
xv Documents.
All minutes, consents or other documents pertaining to ISSUER to be
delivered at closing shall be valid and in accordance with the laws of
Florida.
xvi Title.
The Shares to be issued pursuant to this Agreement will be, at
closing, free and clear of all liens, security interest, pledges,
charges, claims encumbrances and restrictions of any kind. None of
such Shares are or will be subject to any voting trust or agreement.
No person holds or has the right to receive any proxy or similar
instrument with respect to such shares, except as provided in this
Agreement. The ISSUER is not a party to any agreement, which offers or
grants to any person the right to purchase or acquire any of the
securities to be issued to pursuant to this Agreement. There is no
applicable local, state or federal law, rule,
<PAGE>
regulation, or decree, which would, as a result of the issuance of the
Shares, impair, restrict or delay any voting rights with respect to
the Shares.
3. SELLERS represent and warrant to ISSUER the following:
i Assets.
SELLERS own and are the sole owners of the Assets, free and clear of
all liens, encumbrances and has the necessary powers to sell the
Assets to ISSUER.
ii Counsel.
SELLERS represent and warrant that prior to Closing, they have been
represented by independent counsel.
iii Declaration of SELLERS
The declaration of the SELLERS is set forth in Schedule 3
4. INVESTMENT INTENT.
SELLERS are acquiring the Shares for their own accounts for the purposes of
investment and without expectation, desire, or need for resale and not with
the view toward distribution, resale, subdivision, or fractionalization of
the Shares.
5. CLOSING.
The closing of this transaction shall take place at the law offices of Eric
P. Litman, 1428 Brickell Avenue, 8th Floor, Miami, Florida 33156. Unless
the closing of this transaction takes place on or before April 20, 1998,
then either part may terminate this Agreement.
6. DOCUMENTS TO BE DELIVERED AT CLOSING.
i By the ISSUER
(1) Board of Directors Minutes authorising the issuance of a
certificate or certificates for the 6,000,000 Shares to be issued
pursuant to this Agreement.
(2) The resignation of the current officers and directors of ISSUER
(3) A Board of Directors resolution appointing such person as MEC
designate as a director(s) of ISSUER.
(4) Audited financial statements of ISSUER for the period ended March
13, 1998.
(5) All of the business and corporate records of ISSUER, including
but not limited to correspondence files, bank statements,
checkbooks, savings account books, minutes of shareholder and
director meetings, financial statements, shareholder listings,
stock transfer records, agreements and contracts.
<PAGE>
7. MISCELLANEOUS.
i Captions and Headings.
The Article and paragraph headings throughout this Agreement are for
convenience and reference only, and shall in no way be deemed to
define, limit, or add to the meaning or any provision of this
Agreement.
ii No oral Change
This Agreement and any provision hereof, may not be waived, changed
modified, or discharged orally, but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, or discharge is sought.
iii This Agreement shall be exclusively governed by and construed in
accordance with the laws of the State of Florida. If any action is
brought among the parties with respect to this Agreement or otherwise,
by way of a claim or counterclaim, the parties agreed that in any such
action, and on all issues, the parties irrevocably waive their right
to a trial by jury. Exclusive jurisdiction and venue for any such
action shall be the State Courts of Miami-Dade County, Florida. In the
event suit or action is brought by any party under this Agreement to
enforce any of its terms, or in any appeal therefrom, it is agreed
that the prevailing party shall be entitled to reasonable attorney
fees to be fixed by the arbitrator, trial court, and/or appellate
court.
iv Non Waiver.
Except as otherwise expressly provided herein, no waiver of any
convenant, condition, or provision of this Agreement shall be deemed
to have been made unless expressed in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party
to insist in any one or more cases upon the performance of any of the
provisions, convenants, or conditions of this Agreement or to exercise
any option herein contained shall not be construed as a waiver or
relinquishment for the future of any such provision, convenants, or
conditions, (ii) the acceptance of performance of anything required by
this Agreement to be performed with knowledge of the breach or failure
of a covenant, condition, or provision hereof shall not be deemed a
waiver of such breach or failure, and (iii) no waiver by any party of
one breach by another party shall be construed as a waiver with
respect to any other or subsequent breach.
v Time of Essence
Time is of the essence of this Agreement and each and every provision
hereof.
vi Entire Agreement.
This Agreement contains the entire Agreement and understanding between
the parties hereto, and supersedes all prior agreements and
understandings.
vii Counterparts.
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement on April 12,
1998.
CIGMA VENTURE CORP.
By: /s/ ERIC P. LITTMAN By: /s/ DELTA CAPITAL
----------------------------------- -----------------------------
ERIC P. LITTMAN, PRESIDENT DELTA CAPITAL
By: /s/ OIL-IMPEX LIMITED
-----------------------------
OIL-IMPEX LIMITED
By: /s/ GASINVEST LTD.
-----------------------------
GASINVEST LTD.
By: /s/ LLOYDINVEST
-----------------------------
LLOYDINVEST
By: /s/ LANDA LTD.
-----------------------------
LANDA LTD.
<PAGE>
SCHEDULE 1
(1) Chudnoe Ore Occurrence (65 deg. 14.3' N.Lat; 60 deg. 14.2' E. Lon.)
This showing, exposed on surface, was found in 1994. Previous work
includes mapping, trenching, geochemical and geophysical surveys.
Trenching results indicate ore zones of 1-3 meters in width ranging in
grade from 10-84 g/t gold. Only one hole to 50-meter depth has been
drilled to date.
Mineralization appears related to a major tectonic shear zone within
the rhyolite represented by zones of schistosity and brecciation. The
4-15 meter thick ore-bearing zones strike northeast and dip at
60-70(0) northwest over a strike length of 140 to 360 meters. The ore
zones consist of fuchsite stringers and bands along the planes of
schistosity in the rhyolite and as the matrix of the breccias. The
rhyolite is bleached along the contacts of the stringers. Fine
quartz-albite stringers and albite replacing potassium feldspar
phenocrysts is observed in the altered zones. Both fuchsite and
sericite are observed in the groundmass.
The mineralization consists of native gold, palladium minerals,
leucoxene, barite, zircon, native silver and mertyite group minerals
(palladium bearing. The native gold contains gold, mercury, copper and
palladium. Mineralization is considered to be hydrothermal in nature
and bears some resemblance to the AU+Pd+U deposit occurring in
Proterozoic acid volcanics at Coronation Hill in Northern Australia.
The main differences are 1) absence of unconformities, 2) alteration
is albite-sericite-fuchsite-quartz rather than sericite-chlorite
-quartz as at Coronation Hill, 3) absence of uranium, 4) absence of
sulphides, tellurides, nickel and cobalt, 5) absence of graphite and
arbon matter in stringers and altered rocks, 6) development of
extensive fuchsite.
(2) Nesterovskoye Occurrence (65 deg. 13.7' N.Lat; 60 deg. 14.8' E. Lon.)
The showing is exposed on a cirque face and is represented by a strong
gold geochem anomaly about 200 x 300 meters in size on the plateau
above the cirque. To date, 5 holes totalling 1200 meters have been
completed in a section line across the anomaly.
Mineralization occurs as layers of quartz-fuchsite-goldhosted in
Ordovician sandstones and conglomerates. Values up to 180 g/t gold
over 0.5 to 1.5 meters have been reported. Although similar to the
Chudnoe occurrence, the mineralization contains mainly gold and only
minor palladium.
(3) Samshitovoye Occurrence (65 deg. 14.7' N.Lat; 60 deg. 13.5' E. Lon.)
The showing is located approximately one kilometre northwest of
Chudnoe. It was identified during the 1980's as a result of a
prominent gold anomaly and later investigated by six drill holes. To
date, 6 drill holes totalling 565 meters have been completed,
revealing a 17-metre overburden underlain by Ordovician sandstones,
shales and conglomerates.
Mineralization occurs as layers of quartz-fuchsite-goldhosted in
Ordovician sandstones and conglomerates. Given the stratigraphic
location of the mineralization, it appears likely to be similar to
Nesterovskoye.
<PAGE>
SCHEDULE 2
SELLERS Number of shares to be issued
- ------- -----------------------------
DELTA CAPITAL 1,200,000
OIL-IMPEX LIMITED 1,200,000
GASINVEST LTD. 1,200,000
LLOYDINVEST 1,200,000
LANDA LTD. 1,200,000
---------
6,000,000
---------
SUBSIDIARIES OF THE COMPANY
SUBSIDIARIES OF THE COMPANY
Percentage of Voting
Name Jurisdiction of Incorporation Securities Owned
---- ----------------------------- ----------------
Northgold Russia 100 (a)
(a) Included in the consolidated financial statements filed herein.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> JUN-30-1999 DEC-31-1998
<CASH> 683,071 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 683,071 0
<PP&E> 600 600
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 683,671 600
<CURRENT-LIABILITIES> 5,000 0
<BONDS> 0 0
0 0
0 0
<COMMON> 1,400 700
<OTHER-SE> 677,271 (100)
<TOTAL-LIABILITY-AND-EQUITY> 683,671 600
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 21,929 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (21,929) 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (21,929) 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (21,929) 0
<EPS-BASIC> (0.00) (0.00)
<EPS-DILUTED> (0.00) (0.00)
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