<PAGE> 1
As filed with the Securities and Exchange Commission on
______________, 1999. Registration No. 333-86331
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2/A-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PAXTON MINING CORPORATION
(Name of small business issuer in its charter)
Nevada 1081 Applied For
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(State or Other (Primary Standard (IRS Employer
Jurisdiction of Industrial Classifi- Identification #)
Organization) cation Code)
Paxton Mining Corporation Conrad C. Lysiak, Esq.
400 Burrard Street, Suite 1950 601 West First Avenue, Suite 503
Vancouver, B.C., Canada V6C 3A6 Spokane, Washington 99201
(604) 605-0885 (509) 624-1475
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(Address and telephone of (Name, address and telephone
registrant's executive office) number of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration
Statement.
If this Form is filed to register additional common stock for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering.
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<PAGE> 2
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Securities Amount To Be Offering Price Aggregate Registration
To Be Registered Registered Per Share Offering Price Fee (1)
<S> <C> <C> <C> <C>
Common Stock: 2,000,000 Shares $0.10 $200,000 $ 100.00
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</TABLE>
[1] Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c).
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES
THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, OR UNTIL
THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 3
Prospectus
PAXTON MINING CORPORATION
2,000,000 SHARES OF COMMON STOCK
Prior to this offering, there has been no public market for
the common stock.
Investing in the common stock involves certain risks. See "Risk
Factors" starting at page 6.
<TABLE>
<CAPTION>
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Price Per Aggregate Proceeds to Us
Share Offering Price [1][2]
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<S> <C> <C> <C>
Common Stock $0.10 $200,000 $150,000
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</TABLE>
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is _________________, 1999.
<PAGE>
<PAGE> 4
TABLE OF CONTENTS
Page No.
SUMMARY OF PROSPECTUS. . . . . . . . . . . . . . . . . . 5
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . 6
RISKS ASSOCIATED WITH OUR COMPANY . . . . . . . . . . . 6
RISKS ASSOCIATED WITH THIS OFFERING . . . . . . . . . . 9
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . 11
DETERMINATION OF OFFERING PRICE . . . . . . . . . . . . 11
CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . 12
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES . . . . . 12
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING . . . . . . 14
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . 21
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . 24
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . 25
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . 26
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . 27
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . 28
LITIGATION . . . . . . . . . . . . . . . . . . . . . . . 29
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . 29
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . 29
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . 30
<PAGE> 5
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SUMMARY OF PROSPECTUS
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This summary provides an overview of selected information
contained in this prospectus. It does not contain all the information
you should consider before making a decision to purchase the shares we
are offering. You should very carefully and thoroughly read the more
detailed information in this prospectus, and particularly the Risk
Factors section, review our financial statements and review all other
information that is incorporated by reference in this prospectus.
Summary Information about Our Company
We incorporated in the State of Nevada on June 10, 1999 and we
have not generated any revenues from operations. See the
"Business" section for a more detailed description of our business
operations.
On June 20, 1999, we sold 5,000,000 shares of common stock to Hugh
Grenfal and Robert Jarva, our officers and directors pursuant to the
exemption from registration contained in Section 4(2) of the Securities
Act of 1933.
Our administrative office is located at 400 Burrard Street, Suite
1950, Vancouver, British Columbia, Canada V6C 3A6, telephone (604)
605-0885 and our registered statutory office is located at 5844 South Pecos
Road, Suite D, Las Vegas, Nevada 89120. Our fiscal year end is June
30.
The Offering
Following is a brief summary of this offering. Please see the
"Plan of Distribution; Terms of the Offering" in this prospectus for a
more detailed description of the terms of the offering.
Securities Being Offered . . Up to 2,000,000 shares of common
stock, par value $0.00001.
Offering Price per Share . . $ 0.10
Offering Period . . . The shares are being offered for a
period not to exceed 180 days,
unless extended by our board of
directors for an additional 90
days.
Net Proceeds to Our Company . Approximately $150,000. See "Use of
Proceeds."
<PAGE> 6
Use of Proceeds . . . We will use the proceeds to pay for
offering expenses, research and
exploration. See "Use of Proceeds."
Number of Shares Outstanding
Before the Offering: . . 5,000,000 See "Description of
Securities."
Number of Shares Outstanding
After the Offering: 7,000,000 See "Description of
Securities."
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RISK FACTORS
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AN INVESTMENT IN THESE SECURITIES INVOLVES AN EXCEPTIONALLY HIGH
DEGREE OF RISK AND IS EXTREMELY SPECULATIVE. ^ IN ADDITION TO THE OTHER
INFORMATION REGARDING OUR COMPANY CONTAINED IN THIS PROSPECTUS, YOU
SHOULD CONSIDER MANY IMPORTANT FACTORS IN DETERMINING WHETHER TO
PURCHASE THE SHARES BEING OFFERED. THE FOLLOWING RISK FACTORS ARE SOME
OF THE POTENTIAL AND SUBSTANTIAL RISKS WHICH COULD BE INVOLVED IF YOU
DECIDE TO PURCHASE SHARES IN THIS OFFERING.
RISKS ASSOCIATED WITH OUR COMPANY:
1. We Have No Operating History.
We were incorporated in June 1999 and we have not started our
proposed business operations or realized any revenues. We have no
operating history upon which an evaluation of our future success or
failure can be made. ^Our ability to achieve and maintain
profitability and positive cash flow is dependent upon
^ * our ability to locate a profitable mineral property
* our ability to generate revenues
* our ability to reduce exploration and development costs.
Based upon current plans, we expect to incur operating losses in future
periods. This will happen because there are expenses associated with
the research, exploration and development of our mineral properties.
We cannot guarantee that we will be successful in generating revenues
in the future. Failure to generate revenues will cause us to go out of
business. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business."
<PAGE> 7
2. Speculative Nature of the Mineral Exploration Industry;
Exploration Stage; and No Known Ore Reserves;
Gold, silver and strategic metals exploration is highly
speculative. We are in the very early exploration stage and are
dependent on the proceeds from this offering to start our exploration
program. We cannot guarantee that
* our exploration will be successful,
* any production will be obtained
* or that production, if obtained, will be profitable.
Although we believe there is a sufficient basis to engage in
exploration on our property, it may not result in the discovery of any
known gold or silver. We do not know of any known ore reserves on our
properties. See "Business."
3. Price of Gold is Low.
The price of gold is currently low. When general economic
conditions are good, the price of gold tends to be down. Currently,
the mining industry is depressed and mineral values have been very low
over the last several years, making it difficult to conduct operations
profitably. See "Business."
4. Transportation Difficulties and Weather Interruptions.
Our proposed exploration and development work can only be
performed approximately eight months out of the year. This is because
rain and snow cause roads leading to our claims to be impassible during
four months of the year. When roads are impassible, we are unable to
work and generate income. See "Business."
5. Competition.
There is intense competition in the mineral exploration and
development industry in which we operate. All of our competitors have
greater financial and other resources, better distribution networks and
greater name recognition than us. We don't know whether we will be able
to successfully compete in this industry. See "Business."
6. Supply Factors.
Competition and unforeseen limited sources of supplies in the
industry could result in occasional ^ shortages of supplies of certain
products, equipment or materials we may use in our operations. We
cannot guarantee we will be able to obtain certain products, equipment
and/or materials which we require, without interruption. See
"Business."
<PAGE> 8
7. Factors Affecting Our Operations.
Our success depends on a number of factors, many of which are
beyond our control. These factors are:
* the rates of and costs associated with the exploration and
development of our properties
* capital expenditures and other costs relating to the expansion
of our business operations
* fluctuations in the price of minerals
* changes in operating expenses
* changes in our exploration and development strategy
* personnel changes
* the introduction of alternative mining technologies
* the effect of other potential property acquisitions
* increased competition in our current and prospective markets.
Our success will also depend on our ability to identify, produce
and market minerals located on our properties. If minerals are not
located, we will cease operations. If minerals are located, but we
can't market them, we will cease operations. Due to these factors, our
operating results and/or growth rate may be below the expectations of
our management and investors, which could adversely affect the value of
any shares you purchase in this offering. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and
"Business."
8. Year 2000 Compliance.
We are year 2000 compliant. We do not know if people we will be
doing business with in the future are year 2000 compliant. If someone
we do business with is not year 2000 compliant, the services or
products he furnishes to us could be interrupted. If the services or
products are interrupted, we may have to suspend operations while he
corrects his year 2000 compliance.
<PAGE> 9
RISKS ASSOCIATED WITH THIS OFFERING:
9. The Risks of Buying Low-Priced Stocks.
Our common stock is defined as a "penny stock" under the
Securities and Exchange Act of 1934, and its rules. The Exchange Act
and the penny stock rules impose additional sales practice and
disclosure requirements on broker-dealers who sell our securities to
persons other than certain accredited investors. Accredited investors
are:
* institutions with assets in excess of $5,000,000
* individuals with net worth in excess of $1,000,000
* individuals with income exceeding $200,000, or $300,000 jointly
with a spouse).
For transactions covered by the penny stock rules, a broker-dealer
must make a suitability determination for each purchaser and receive
the purchaser's written agreement prior to the sale. In addition, the
broker-dealer must make certain disclosures in penny stock
transactions, including
* the actual sale or purchase price
* the actual bid and offer quotations
* the compensation to be received by the broker-dealer and certain
associated persons, and
* deliver certain disclosures required by the Securities and
Exchange Commission.
Because of the foregoing additional obligations imposed upon
brokers, some brokers will not buy or sell our common stock. This
means that you will not be able to sell your shares as easily as shares
in larger corporations.
10. Control of Our Company After the Offering.
If all the shares we are offering in this prospectus are sold,
which we can't guarantee, you, will own approximately 28.57% of our
outstanding common stock. Our existing stockholders will own
approximately 71.43% of the outstanding shares. As a result, after
completion of this offering, regardless of the number of shares we
sell, our existing stockholders will be able to elect all of our
directors and control our operations. Our Articles of Incorporation
do not provide for cumulative voting. Cumulative voting is a process
<PAGE> 10
that allows a shareholder to multiply the number of shares he owns
times the number of directors to be elected. That number is the total
votes a person can cast for all of the directors. Those votes can be
allocated in any manner to the directors being elected. Cumulative
voting, in some cases, will allow a minority group to elect at least
one director to the board. Our existing stockholders do not intend to
purchase any shares in this offering. This means that existing
shareholders will not be expanding their ownership. See "Principal
Stockholders" and "Description of Securities."
11. Further Dilution of Your Investment
Further dilution is likely if we issue additional shares at a
lower price than the current offering price and either no trading
market exists for our stock or the trading is at a price substantially
lower than this offering price. See "Dilution of the Price You Pay for
Your Shares."
12. Benefits to the Company's Present Shareholders."
This offering will result in certain benefits to Hugh Grenfal Jr.
and Robert Jarva who are our only officers and directors. Messrs.
Grenfal and Jarva own all the outstanding shares of our company. They
have supplied only a mining claim valued at $262 and a loan of $12,000
which has to be repaid. You, on the other hand, will be providing all
of the cash for our company's operations. See "Principal
Stockholders."
^
13. No Public Trading Market for the Shares.
There is currently no trading in our common stock. We cannot
guarantee you that an active trading market in our shares will develop
in the near future, even if this offering is successfully completed.
Even if a trading market is developed, we cannot guarantee that it will
be sustained for any period of time. ^ "See "Plan of Distribution;
Terms of the Offering."
14. You Will Incur Immediate and Substantial Dilution.
Our existing stockholders acquired their shares at a cost
substantially less than that which you will pay for the shares you
purchase in this offering. Accordingly, any investment you make in
these shares will result in the immediate and substantial dilution of
the net tangible book value of those shares. See "Dilution of the Price
you Pay for Your Shares."
<PAGE> 11
15. We Do Not Pay Cash Dividends on Our Common Stock.
We have not paid any cash dividends on our common stock to
date and we will not be paying cash dividends to stockholders in the
foreseeable future. Any income we receive from operations will be
reinvested and devoted to our future business operations and/or to
expansion. See " Description of Securities."
16. Impact of Potential Future Sales of our Common Stock.
A total of 5,000,000 shares of stock were issued to our two
officers and directors. They paid an average price of $0.002. They
will likely sell a portion of their stock if the market price goes
above $0.10 per share. If they do sell there stock into the market,
the sales may cause the market price of the stock to drop. See
"Principal Stockholders." ^
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USE OF PROCEEDS
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The net proceeds from this offering will be $150,000, assuming all
shares are sold, which we can't guarantee, after deducting $50,000, for
estimated offering expenses, including legal and accounting fees. We
will use the proceeds for exploration and working capital. We
expect to spend between $40,000 and $140,000 to complete our
exploration activities.
While we currently intend to use the proceeds of this offering
substantially in the manner set forth above, we reserve the right to
reassess and reassign such use if, in the judgement of our board of
directors, such changes are necessary or advisable. At present, no
material changes are contemplated. Should there be any material changes
in the above projected use of proceeds in connection with this
offering, we will issue an amended prospectus reflecting the same.
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DETERMINATION OF OFFERING PRICE
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The price of the shares we are offering was arbitrarily determined
in order for us to raise up to a total of $200,000 in this offering.
The offering price bears no relationship whatsoever to our assets,
earnings, book value or other criteria of value. Among the factors
considered were
* our lack operating history
* the proceeds to be raised by the offering
<PAGE> 12
* the amount of capital to be contributed by purchasers in this
offering in proportion to the amount of stock to be retained by our
existing Stockholders, and
* our relative cash requirements. See "Plan of Distribution;
Terms of the Offering."
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CAPITALIZATION
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The following table sets forth our capitalization at June 30,
1999, on a historical basis and as adjusted to reflect the sale of the
shares. ^
This table should be read in conjunction with the section
entitled, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" our Financial Statements and Notes; and
other financial and operating data included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
June 30, 1999 As Adjusted
Actual After Offering
<S> <C> <C>
Stockholder's Equity:
Common Stock:
100,000,000 shares authorized,
par value $0.00001
5,000,000 issued and outstanding $ 50
7,000,000 issued and outstanding $ 70
Additional Paid-in Capital
Deficit accumulated during the $ 11,594 $ 161,574
development stage $ (23,282) $ (23,282)
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TOTAL STOCKHOLDERS' EQUITY (deficit) $ (11,638) $ 138,362
========= =========
</TABLE>
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DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
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"Dilution" represents the difference between the offering
price and the net tangible book value per share immediately after
completion of this offering. "Net tangible book value" is the amount
that results from subtracting total liabilities and intangible assets
from total assets. Dilution arises mainly as a result of our arbitrary
determination of the offering price of the shares being offered.
Dilution of the value of the shares you purchase is also a result of
the lower book value of the shares held by our existing stockholders.
See "Principal Stockholders."
<PAGE> 13
As of June 30, 1999, the net tangible book value of our shares of
common stock was a deficit of $(11,638) or approximately $(0.002) per
share based upon 5,000,000 shares outstanding.
Upon completion of this offering the net tangible book value of
the 7,000,000 shares to be outstanding, assuming all shares are sold,
will be $138,362, or approximately $0.02. The net tangible book value
of the shares held by our existing stockholders will be increased by
$0.018 per share without any additional investment on their part. You
will incur an immediate dilution of $0.10 per share) of $0.08 per
Share.
After completion of this offering, you will own approximately
28.57% of the total number of shares then outstanding shares for which
you will have made a cash investment of $200,000, or $0.10 per Share.
Our existing stockholders will own approximately 71.43% of the total
number of shares then outstanding, for which they have made
contributions of cash and/or services and/or other assets, totaling
$11,644, or approximately $0.002 per share. ^
The following table compares the differences of your investment in
our shares with the investment of our existing stockholders.
EXISTING STOCKHOLDERS
<TABLE>
<S> <C>
Price per Share . . . . . . . . . . . . . . . . . . . .$ 0.002
Net tangible book value per Share before Offering . . .$ (11,638)
Net tangible book value per Share After Offering. . . .$ 138,362
Increase to present Stockholders in net tangible book
value per Share after Offering . . . . . . . . . . . .$ 0.018
Capital contributions . . . . . . . . . . . . . . . . .$ 11,644
Number of Shares Outstanding before the Offering. . . .5,000,000
Number of Shares after Offering held by
Existing Stockholders . . . . . . . . . . . . . . . .5,000,000
Percentage of ownership after Offering . . . . . . . .73.43%
</TABLE>
PURCHASERS OF SHARES IN THIS OFFERING
<TABLE>
<S> <C>
Price per Share. . . . . . . . . . . . . . . . . . . . $ 0.10
Dilution per Share . . . . . . . . . . . . . . . . . . $ 0.08
Capital contributions. . . . . . . . . . . . . . . . . $ 200,000
Number of Shares after Offering held by
Public Investors . . . . . . . . . . . . . . . . . . 2,000,000
Percentage of ownership after Offering . . . . . . . . 28.57%
</TABLE>
<PAGE> 14
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PLAN OF DISTRIBUTION; TERMS OF THE OFFERING
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Offering Will Be Sold By One of Our Officers ^
We will sell the shares in this offering through Robert Jarva, one
of our officers and directors. Mr. Jarva will receive no commission
from the sale of any shares. Mr. Jarva will not register as a
broker-dealer pursuant to Section 15 of the Securities Exchange Act of
1934 in reliance upon Rule 3a4-1. Rule 3a4-1 sets forth those
conditions under which a person associated with an Issuer may
participate in the offering of the Issuer's securities and not be
deemed to be a broker-dealer. The conditions are that:
1. None of such persons are subject to a statutory
disqualification, as that term is defined in Section 3(a)(39) of the
Act, at the time of his participation; and,
2 None of such persons are compensated in connection with his or
her participation by the payment of commissions or other remuneration
based either directly or indirectly on transactions in securities; and
3. None of such persons are, at the time of his participation, an
associated person of a broker-dealer; and
4. All of such persons meet the conditions of Paragraph (a)(4)(ii)
of Rule 3a4-1 of the Exchange Act, in that they (A) primarily perform,
or are intended primarily to perform at the end of the offering,
substantial duties for or on behalf of the Issuer otherwise than in
connection with transactions in securities; and (B) are not a broker or
dealer, or an associated person of a broker or dealer, within the
preceding twelve (12) months; and (C) do not participate in selling and
offering of securities for any Issuer more than once every twelve (12)
months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
We intend to advertise and hold investment meetings in various
states where the offering will be registered. We will also distribute
the prospectus to potential investors at the meetings and to our
friends and relatives who are interested in us and a possible
investment in the offering.
^
Offering Period and Expiration Date
This offering will commence on the date of this prospectus and
continue for a period of 180 days. We may extend the offering period
for an additional 90 days, or unless the offering is completed or
otherwise terminated by us.
<PAGE> 15
Procedures for Subscribing
If you decide to subscribe for any shares in this offering,
you must
1. execute and deliver a subscription agreement
2. deliver a check or certified funds to us for acceptance or
rejection.
All checks for subscriptions must be made payable to "Paxton
Mining Corporation."
Right to Reject Subscriptions
We have the right to accept or reject subscriptions in whole or in
part, for any reason or for no reason. All monies from rejected
subscriptions will be returned immediately by us to the subscriber,
without interest or deductions. Subscriptions for securities will
be accepted or rejected within 48 hours after we receive them.
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BUSINESS
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General
We were incorporated in the State of Nevada on June 10, 1999. We
are engaged in the acquisition, exploration and development of mining
properties. We maintain our statutory registered agent's office at 5844
South Pecos Road, Suite D, Las Vegas, Nevada 89120 and our business
office is located at 400 Burrard Street, Suite 1950, Vancouver, British
Columbia, Canada V6C 3A6. Our telephone number is (604) 605-0885. See
"Business - Office Facilities."
Background
In June 1999, Hugh Grenfal our President and a member of the board
of directors, entered into an Option to Purchase Agreement with James
Thom, an unrelated third party, to acquire ^ one property containing
three mining claims in British Columbia, Canada, in exchange for
US$10.00 in cash. On June 20, 1999, we, through Mr. Grenfal exercised
the option and acquired the mining claims. The claims are recorded in
Mr. Grenfal's name for tax purposes, however, title to the claims has
been conveyed to us by an unrecorded deed. To date we have not
performed any work on our property.
<PAGE> 16
Location and Access
The property is located at the north end of the Kokanee Range in
the Selkirk Mountains, on the lower reaches of Twelve Mile Creek, a
tributary of the Kaslo River. It lies to the immediate south of Highway
31A, approximately 17 kilometers to the northwest of Kaslo.
The Utica mine road runs through the eastern part of the property.
This gravel road leads to the now abandoned Utica Mine site, adjoining
to the south of the property . However, the bridge crossing the
Kaslo River has been removed and a washout 2 kilometers up from Highway
31A makes the road impassable to vehicles. Numerous overgrown logging
roads traverse the eastern portion of the claim group. A foot trail
runs northwest from the Utica mine road towards the showings in the
center of the claims.
At present the Kaslo River can be crossed either by wading or by
canoe. A helicopter can also provides access to the claims for
preliminary exploration. Any advanced stages of exploration and
development of the property would require the emplacement of a sturdy
bridge crossing the Kaslo River and access roads to the showings.
The existing roads leading to our property are rough-graded
dirt. During rainy weather the roads are sometimes inaccessible or
washed out.
Physiography
The property lies between the elevations of 1,066 meters and 2,130
meters. The main areas of interest lies between approximately 1,200
meters and 1,800 meters. Slopes are in the range of 200 to 400, with
occasional bluffs. Vegetation is moderate to heavy at lower elevations,
particularly in areas of glacial cover. Higher elevations are more
lightly vegetated, with many areas of outcrop. There is ample timber
and water within the property to support all phases of exploration.
The property is snow free from June through November providing a
five to six month exploration season.
The property is within easy commuting distance of Kaslo. Kaslo
offers full facilities of a small town having a hotel, motel, bank and
supermarket. Nelson, which is one hour and a half to the south, is the
nearest major center.
<PAGE> 17
History of Previous Work
Exploration in the area dates back to the turn of the century when
native guides led a group of prospectors northwest from the Ainsworth
Camp. The group subsequently located a high grade silver - lead
showing which was staked as the Noble Five claim. This discovery
initiated a staking rush in the area which led to the discovery and
development of a vast number of mineral deposits with over 300
properties having reached some form of production. Production records
show silver, lead, zinc, cobalt, gold and platinum ^ were produced from
these properties.
^ British Columbia government production records are incomplete as
it was common practice for the miners in the 1910 to 1930 period to
ship their ore south down Kootenay Lake and the Kootenai River directly
to mills at Coeur d'Alene in Idaho for smelting.
The area saw a resurgence of activity during World War II as the
demand for zinc and other base metals increased. Production in the
region has continued continuously through to the 1970s. Since that time
production has been mainly limited to high grading tailings and
reserves of the old producers.
The property adjoins the Utica Mine to the west. The Utica Mine
produced in excess of 50,000 tons of high grade silver and lead ore.
Zinc is also reported in the mines production records.
The original showings on the Arch Silver Property were discovered
in the early 1900s. The majority of the development work was done in
the 1910 - 1926 period. The recorded production from the property is
less than 30 tons of hand cobbed silver - lead ore from three of the
six showings.
Regional Geology
The Arc property occurs within the central section of the Kootenay
Arc. The Arc is composed of a band of sedimentary, volcanic and
metamorphic rocks that extend from northern Washington State where they
strike northeasterly, to north of Revelstoke where they strike
northwesterly. The age of the rocks varies form Precambrian to
Jurassic.
The Milford Group is the lowest member of the stratigraphic
sequence exposed in the vicinity, and is of Mississippian to Permian
age. From the base the rocks consist of conglomerate, amygdaloidal
metabasaltic flows, limestone phyllite, sandstone and chert. This
sequence is itself underlain by rocks of the Lardeau Group.
<PAGE> 18
The oldest rocks on the property are those of the Kaslo Group
which occur near the northeast comer of the property. These rocks are
thought to be of upper Permian to lower Triassic in age and overlay the
Milford Group. The Kaslo Group rocks consist of mafic volcanic breccia,
andesite, basalt, chlorite schist, tuffaceous argiillite, talc and
serpentinite. Sills and small plugs of gabbro or diorite that probably
are of this group occur throughout the older sediments.
The Slocan Group is the youngest and is Upper Triassic in age.
this group consists of undifferentiated slate, argillite, limestone,
quartzite and tuffaceous sediments with some dolomite.
We obtained the foregoing from ten independent sources.
Property Geology
The Slocan Group covers most of the property and outcrops locally
as slate, limestone and argillite. The sediments were observed to have
a predominant strike of northwest with variable southwesterly dips.
These rocks are cut by both concordant and discordant dykes which
appear to be mostly felsic. The Slocan Group sediments are highly
metamorphosed in areas where they come into contact with the
intrusives.
The Nelson Batholith occurs along the southern edge of the
property and along two northwesterly trends within the center of the
property, and is of Jurassic age. This batholith was observed during
the most recent examination of the property as consisting of unaltered
porphyritic granite with smaller stocks of quartz diorite.
Dyke-shaped intrusives trend northwesterly and north-northwesterly
through the northern half of the property. The petrology of these dykes
varies from granite to quartz diorite and is of unknown age.
Our Proposed Exploration Program
Previous exploration work on adjacent properties indicates to
us that mineral occurrences exist in the area of our properties;
however, we must conduct further exploration and development to
determine what amount of minerals, if any, exist on our properties and
if any minerals which are found can be economically extracted and
profitably processed.
We believe there are numerous valuable unexplored and ^ unclaimed
prospects in the area where our property is located. Our exploration
program is designed to economically explore, evaluate and acquire
properties which we believe merit exploration.
We do not claim to have any ores or reserves whatsoever at this
time on any of our properties.
<PAGE> 19
We intend to implement an exploration program and intend to
proceed in the following three phases:
Phase 1 will begin with research of the available geologic
literature, personal interviews with geologists, mining engineers and
others familiar with the prospect sites. We have recently begun this
phase of the exploration process on our properties.
When the research is completed, our initial work will be augmented
with geologic mapping, geophysical testing and geochemical testing of
our claims. When available, existing workings, such as trenches,
prospect pits, shafts or tunnels will be examined. If an apparent
mineralized zone is identified and narrowed down to a specific area by
the studies, we will to begin trenching the area. Trenches are
generally approximately 150 ft. in length and 10-20 ft. wide. These
dimensions allow for a thorough examination of the surface of the vein
structure types generally encountered in the area. They also allow for
efficient reclamation, re-contouring and re-seeding of disturbed areas
Once excavation of a trench is completed, ^ samples are taken and then
analyzed for economically potential minerals that are known to have
occurred in the area. Careful interpretation of this available data
collected from the various tests aid in determining whether or not the
prospect ^ has current economic potential and whether further
exploration is warranted.
Phase 1 will take about 3 months and cost about $20,000.
Phase 2 involves an initial examination of the underground
characteristics of the vein structure that was identified by Phase 1 of
exploration. Phase 2 is aimed at identifying any mineral deposits of
potential economic importance. The methods employed are
* more extensive trenching
* more advanced geophysical work
* drift driving
Drift driving is the process of constructing a tunnel to take
samples of ore for testing. Later, the tunnel can be used for
mining ore. The geophysical work gives a general understanding of the
location and extent of mineralization at depths that are unreachable by
surface excavations and provides a target for more extensive trenching
and core drilling. Trenching identifies the continuity and extent of
mineralization, if any, below the surface. After a thorough analysis of
the data collected in Phase 2, we will decide if the property warrants
a Phase 3 study.
Phase 2 will take about 3 months and cost about $20,000.
<PAGE> 20
Phase 3 is aimed at precisely defining the depth, the width, the
length, the tonnage and the value per ton of any ore body. ^ This is
accomplished through extensive drift driving. An ore body is not a
proven ore body until it has been technically, economically and legally
proven.
Phase 3 will take about 6 months and cost about $80,000.
Regulations
Our mineral exploration program is subject to the Canadian Mineral
Tenure Act Regulation. This act sets forth rules for
- locating claims
- posting claims
- working claims
- reporting work performed
We are also subject to the British Columbia Mineral Exploration Code
which tells us how and where we can explore for minerals. We must
comply with these laws in order to operate our business. Compliance
with these rules and regulations will not effect our operations.
^
Employees
Initially, we intend to use the services of subcontractors for
manual labor exploration work on our properties. Our only technical
employees will be Hugh Grenfal and Robert Jarva, our officers and
directors.
Employees and Employment Agreements
At present, we have no employees, other than Messrs. Grenfal
and Jarva, our officers and directors, who are not compensated for
their services. Messrs. Grenfal and Jarva do not have employment
agreements with us. We presently do not have pension, health,
annuity, insurance, stock options, profit sharing or similar benefit
plans; however, we may adopt such plans in the future. There are
presently no personal benefits available to any employees.
Legal Proceeding
We are not involved in any pending legal proceeding.
<PAGE> 21
- ---------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ---------------------------------------------------------------------
^
We are a start-up, exploration stage company and have not yet
generated or realized any revenues from our business operations.
^
We have enough cash to operate one year if we raise $140,000. To
operate for more than one year we will need to raise more money. We
think we can only raise more money from the sale of stock or a loan
from one of our officers. We have not made plans to do either at the
present time. If we don't raise more money in the future, we will have
to stop operations.
We will not be conducting any research, but we will be exploring
our property. We are not going to buy or sell any plant or significant
equipment. We do not expect a change in our number of employees.
Phase 1 involves research, examination of the property, and
trenching. Phase 1 will take about 3 months and cost about $20,000. ^
Phase 2 involves an initial examination of the underground
characteristics of the vein structure that was identified by Phase 1 of
exploration. Phase 2 will take about 3 months and cost about $20,000.
Phase 3 is aimed at precisely defining the depth, the width, the
length, the tonnage and the value per ton of any ore body. Phase 3
will take about 6 months and cost about $80,000.
Mr. Thom extended the date of completion and development of the
work until six months after we get money from this offering.
Limited Operating History; Need for Additional Capital
There is ^ no historical financial information about our company
upon which to base an evaluation of our performance. ^ We are an
exploration stage company and have not generated any revenues from
operations. We cannot guarantee we will be successful in our business
operations^. Our business is subject to ^ risks inherent in the
establishment of a new business enterprise, including limited capital
resources, possible delays in the exploration and/or development of our
properties, and possible cost overruns due to price and cost increases
in services. ^
<PAGE> 22
To become ^ profitable and competitive, we conduct into the
research and exploration of our properties before we commence
production of any minerals we may find. We are seeking ^ equity
financing in order to provide for the capital required to implement our
research and exploration phases. ^
We cannot predicted the timing and total amount of capital we
need at this time. We have no assurance that future financing will be
available to us on acceptable terms. ^ If such financing is not
available on satisfactory terms, we may be unable to continue, develop
or expand our operations. ^ Equity financing could result in additional
dilution to existing shareholders.
Results of Operations
From Inception on June 10, 1999
We just recently acquired our first property and are commencing
the research and exploration stage of our mining operations on that
property at this time.
Since inception, we have used our common stock to raise money for
our property acquisition and to repay outstanding indebtedness. Net
cash provided by financing activities from inception on June 10, 1999
to June 30, 1999 was $11,282, as a result of proceeds received from
sales of our common stock.
Liquidity and Capital Resources
As of the date of this registration statement, we have yet to
generate any revenues from our business operations.
We issued 5,000,000 shares of common stock at $0.0023 per share
through a Section 4(2) offering in June 1999. The total proceeds we
received from the sale of the shares was $11,282 in cash and one mining
property.
As of June 30, 1999, our total assets were $362 and our total
liabilities were $12,000.
Year 2000 Compliance
The Year 2000 issue is the result of computer programs using two
digits rather than four to define the applicable year. Date-sensitive
software may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in system failures or miscalculations,
causing disruptions of operations, including, among others, a temporary
inability to process transactions, send invoices or engage in similar
normal business activities.
<PAGE> 23
Year 2000 State of Readiness
In order to address Year 2000 issues, we developed and implemented
a plan to become Year 2000 ready. The Year 2000 Plan covers the
computers and technology which we use in the research and exploration
of our properties. We have reviewed our technology consisting of
computer hardware and software systems and found them to be Year 2000
ready. Since we do not have any vendors we cannot make any assessment
of third parties. In the future, we intend to evaluate and assess the
systems of any third party providers with whom we do business.
Year 2000 Costs
To date, we have incurred no historical costs associated with our
Year 2000 readiness and the magnitude of any future costs will depend
upon the nature and extent of any problems that are identified.
Year 2000 Risks
Our failure to correct a material Year 2000 problem could result
in a complete failure or degradation of the performance of our
computers which will interrupt our operations.
Presently, however, we believe that our most reasonably likely
worst case scenario related to the Year 2000 issue is associated with
potential concerns with third party providers' services or products.
In the future, we will be dependent on third-party vendors to provide
manual labor, research data and studies on our properties. A
significant Year 2000-related disruption to one of these vendor's
computer software and/or equipment could cause a delay in our proposed
research and explorations which in turn could materially and adversely
affect our results of operations, liquidity and financial condition.
Since we have not started business, we have not hired any third party
vendors. As such we are not presently aware of any vendor-related Year
2000 issues that are likely to result in such a disruption. There is
no assurance that Year 2000 third party vendors will not occur in the
future.
Year 2000 Contingency Plans
Since our equipment is Year 2000 ready, we have not adopted any
Year 2000 contingency plans. See "Risk Factors - The Year 2000 Issue."
<PAGE> 24
- ---------------------------------------------------------------------
MANAGEMENT
- ---------------------------------------------------------------------
Officers and Directors
Each of our directors is elected by the Stockholders to a term of
one (1) year and serves until his or her successor is elected and
qualified. Each of our officers is elected by the board of directors to
a term of one (1) year and serves until his or her successor is duly
elected and qualified, or until he or she is removed from office. The
board of directors has no nominating, auditing or compensation
committees.
The name, address, age and position of our present sole officer
and director is set forth below:
Name and Address Age Position(s)
Hugh Grenfal 30 President, Treasurer, Chief
3337 West 30th Ave. Financial Officer, and a member
Vancouver, B.C. of the Board of Directors
Canada V6S 1W3
Robert Jarva 36 Secretary and a member of the
2613 Harrier Drive Board of Directors
Coquitlam B.C.
Canada V3E 2A7
The person named above has held his office/position since
inception of our company and is expected to hold his office/position
until the next annual meeting of our stockholders.
Background of Officer and Director
Hugh Grenfal has been the President, Treasurer, Chief Financial
Officer and a member of the board of directors of the company since
inception. From January 1997 to August 1997, Mr. Grenfal was President
of Booker Gold Explorations Ltd., a mining and exploration corporation
located in Vancouver, British Columbia. Since October 1996, Mr.
Grenfal has been a Director of Callinan Mines Ltd., a mining and
exploration corporation located in Vancouver, British Columbia with
revenue producing copper and zinc properties located in Manitoba,
Canada. Since September 1999, Mr. Grenfal has been President of Palal
Mining Corporation located in Vancouver, British Columbia. Palal
Mining is a mining company. Since September 1999, Mr. Grenfal has been
President of Ancona Mining Corporation located in Vancouver, British
Columbia. Ancona Mining Corporation is a mining company. Mr. Grenfal
is currently not a full-time employee with another entity.
<PAGE> 25
Robert Jarva has been the Secretary and a member of the board of
directors of the company since inception. From October 1996 to June
1999, Mr. Jarva was a Personal Financial Analyst with Primerica
Financial Services located in Vancouver, British Columbia providing
financial services such as pension and educational plans and life
insurance for individual clients. From January 1993 to October 1996,
Mr. Jarva was employed by D & K Enterprises Ltd. located in Vancouver
British Columbia which was engaged in the hospitality industry. Mr.
Jarva's responsibilities included public relations and funds
supervision. Mr. Jarva is currently not a full-time employee with
another entity.
- ---------------------------------------------------------------------
EXECUTIVE COMPENSATION
- ---------------------------------------------------------------------
Messrs. Grenfal and Jarva, our officers and directors, have not
been compensated for their services and there are no plans to
compensate them in the near future, unless and until we begin to
realize revenues and become profitable in our business operations.
Indemnification
Pursuant to the Articles of Incorporation and Bylaws of the
corporation, we may indemnify an officer or director who is made a
party to any proceeding, including a law suit, because of his position,
if he acted in good faith and in a manner he reasonably believed to be
in our best interest. In certain cases, we may advance expenses
incurred in defending any such proceeding. To the extent that the
officer or director is successful on the merits in any such proceeding
as to which such person is to be indemnified, we must indemnify him
against all expenses incurred, including attorney's fees. With respect
to a derivative action, indemnity may be made only for expenses
actually and reasonably incurred in defending the proceeding, and if
the officer or director is judged liable, only by a court order. The
indemnification is intended to be to the fullest extent permitted by
the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the
Securities Act of 1933, as amended, which may be permitted to directors
or officers pursuant to the foregoing provisions, we are informed 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.
<PAGE> 26
- ---------------------------------------------------------------------
PRINCIPAL STOCKHOLDERS
- ---------------------------------------------------------------------
The following table sets forth, as of the date of this prospectus,
the total number of shares owned beneficially by each of our directors,
officers and key employees, individually and as a group, and the
present owners of 5% or more of our total outstanding shares. The table
also reflects what such ownership will be assuming completion of the
sale of all shares in this offering, which we can't guarantee. The
stockholder listed below has direct ownership of his shares and
possesses sole voting and dispositive power with respect to the shares.
<TABLE>
<CAPTION>
Name and Address Number of Number Percentage of
Beneficial Shares Before of Shares of Ownership
Owner [1] Offering After Offering After Offering
- ------------------ --------- --------- --------------
<S> <C> <C> <C>
Hugh Grenfal 2,500,000 2,500,000 35.71%
3337 West 30th Ave.
Vancouver, B.C.
Canada V6S 1W3
Robert Jarva 2,500,000 2,500,000 35.71%
2613 Harrier Drive
Coquitlam, B.C.
Canada V3E 2A7
- ------------------
All Officers and
Directors as a Group (2) 5,000,000 5,000,000 71.43%
</TABLE>
[1] The persons named above may be deemed to be a "parent" and
"promoter" of our company, within the meaning of such terms under
the Securities Act of 1933, as amended, by virtue of his/its
direct and indirect stock holdings. Messrs. Grenfal and Jarva are
the only "promoters" of our company.
Future Sales by Existing Stockholders
A total of 5,000,000 shares of common stock were issued to the
existing Stockholders, all of which are "restricted securities", as
that term is defined in Rule 144 of the Rules and Regulations of the
SEC promulgated under the Securities Act. Under Rule 144, such shares
can be publicly sold, subject to volume restrictions and certain
restrictions on the manner of sale, commencing one (1) year after their
acquisition.
<PAGE> 27
Shares purchased in this offering, which will be immediately
resalable, and sales of all of our other shares after applicable
restrictions expire, could have a depressive effect on the market
price, if any, of our common stock and the shares we are offering. See
"Dilution of the Price You Pay for Your Shares-Restricted Shares
Eligible for Future Sale."
- ---------------------------------------------------------------------
DESCRIPTION OF SECURITIES
- ---------------------------------------------------------------------
Common Stock
Our authorized capital stock consists of 100,000,000 shares of
common stock, par value $0.00001 per share. The holders of our common
stock:
- - have equal ratable rights to dividends from funds legally
available therefor, when, as and if declared by our board of
directors;
- - are entitled to share ratably in all of our assets available for
distribution to holders of common stock upon liquidation,
dissolution or winding up of our affairs;
- - do not have preemptive, subscription or conversion rights and
there are no redemption or sinking fund provisions or rights; and
- - are entitled to one non-cumulative vote per share on all matters
on which stockholders may vote.
All shares of common stock now outstanding are fully paid for and
non-assessable and all shares of common stock which are the subject of
this offering, when issued, will be fully paid for and non-assessable.
We refer you to our Articles of Incorporation, Bylaws and the
applicable statutes of the State of Nevada for a more complete
description of the rights and liabilities of holders of our securities.
Non-cumulative Voting
Holders of shares of our common stock do not have cumulative
voting rights, which means that the holders of more than 50% of the
outstanding shares, voting for the election of directors, can elect all
of the directors to be elected, if they so choose, and, in such event,
the holders of the remaining shares will not be able to elect any of
our directors. After this offering is completed, the present
stockholders will own approximately 97% of our outstanding shares. See
"Principal Stockholders."
<PAGE> 28
Cash Dividends
As of the date of this prospectus, we have not paid any cash
dividends to stockholders. The declaration of any future cash dividend
will be at the discretion of our board of directors and will depend
upon our earnings, if any, our capital requirements and financial
position, our general economic conditions, and other pertinent
conditions. It is our present intention not to pay any cash dividends
in the foreseeable future, but rather to reinvest earnings, if any, in
our business operations.
Reports
After we complete this offering, we will be subject to certain
reporting requirements and will furnish annual financial reports to you
certified by our independent accountants, and may, in our discretion,
furnish unaudited quarterly financial reports.
Stock Transfer Agent
Our stock transfer agent for our securities is Pacific Stock
Transfer Company, 5844 South Pecos Road, Suite D, Las Vegas, Nevada
89120 and its telephone number is (702) 361-3033.
- ---------------------------------------------------------------------
CERTAIN TRANSACTIONS
- ---------------------------------------------------------------------
In June 1999 we issued a total of 5,000,000 shares of restricted
common stock to Hugh Grenfal and Robert Jarva, officers and directors
of our company, in exchange for $262 and one mining property consisting
of three claims.
Since our inception, Mr. Grenfal, advanced loans to us in the
total sum of $12,000, which were used for organizational and start-up
costs and operating capital. The loans do not bear interest and have
not been paid as of the date hereof. There are no documents
reflecting the loan and they are not due on any date certain. Mr.
Grenfal will accept repayment from us when money is available.
In June 1999, we entered into an Option to Purchase Agreement
with James Thom, an unrelated third party, and acquired 100% of the ^
the three claims which make up our property. The consideration for the
property was $10.00. On March 16, 1999, we exercised the Option and
acquired the three mining claims.
<PAGE> 29
- ---------------------------------------------------------------------
LITIGATION
- ---------------------------------------------------------------------
We are not a party to any pending litigation and ^ none is
contemplated or threatened.
- ---------------------------------------------------------------------
EXPERTS
--------------------------------------------------------------------
Our financial statements for the period from inception to June 30,
1999, included in this prospectus have been audited by Williams and
Webster, P.C., Independent Certified Public Accountants, Seafirst
Financial Center, 601 West Riverside Avenue, Suite 1970, Spokane,
Washington 99201, as set forth in their report included in this
prospectus.
- ---------------------------------------------------------------------
LEGAL MATTERS
- ---------------------------------------------------------------------
Conrad C. Lysiak, Attorney at Law, 601 West First Avenue, Suite
503, Spokane, Washington 99201, telephone (509) 624-1475 has acted as
legal counsel for our company.
- ---------------------------------------------------------------------
FINANCIAL STATEMENTS
- ---------------------------------------------------------------------
Our fiscal year end is June 30. We will provide audited financial
statements to our stockholders on an annual basis; the statements will
be prepared by an Independent Certified Public Accountant.
Our audited financial statement from inception to June 30, 1999
immediately follows:
INDEPENDENT AUDITOR'S REPORT F-1
FINANCIAL STATEMENTS
Balance Sheet F-2
Statement of Operations and Accumulated Deficit F-3
Statement of Stockholders' Equity (Deficit) F-4
Statement of Cash Flows F-5
NOTES TO FINANCIAL STATEMENTS F-6 - F-8
<PAGE> 30
Williams & Webster, P.S.
Certified Public Accountants
601 West Riverside, Suite 1970
Spokane, WA 99201-0611
Phone (509) 838-5111 Fax (509) 624-5001
Board of Directors
Paxton Mining Corporation
Las Vegas, Nevada
Independent Auditor's Report
We have audited the accompanying balance sheet of Paxton Mining
Corporation, (an exploration stage enterprise), as of June 30, 1999,
and the related statements of operations and accumulated deficit,
stockholders' equity (deficit) and cash flows for the period from June
10, 1999 (inception) to June 30, 1999. These financial statements are
the responsibility of our Company's management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Paxton
Mining Corporation, as of June 30, 1999, and the results of its
operations and its cash flows for the period from June 10, 1999
(inception) to June 30, 1999, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2,
the Company has been in the exploration stage since its inception on
June 10, 1999. Realization of a major portion of the assets is
dependent upon the Company's ability to meet its future financing
requirements, and the success of future operations. These factors
raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans regarding those matters also are
described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
August 13, 1999, except as to certain line items of the Statement of
Stockholders' Equity (Deficit), Statement of Cash Flows, and Notes 2 and
3 which are as of October 21, 1999.
F-1
<PAGE> 31
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
BALANCE SHEET
June 30, 1999
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 100
--------
Total Current Assets 100
--------
OTHER ASSETS
Mining claims 262
--------
TOTAL ASSETS $ 362
========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Loans to a related party $ 12,000
--------
Total Current Liabilities 12,000
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock,100,000,000 shares authorized,
$0.00001 par value; 5,000,000 shares issued
and outstanding 50
Additional paid-in-capital 11,594
Deficit accumulated during the
exploration stage (23,282)
--------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (11,638)
--------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 362
========
</TABLE>
The accompanying notes are an integral part of these financial
statements
F-2
<PAGE> 32
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
For the Period Ended June 30, 1999
<TABLE>
<S> <S>
REVENUES $ -
---------
EXPENSES
Consulting services provided by directors 10,000
Filing fees 400
Legal and professional 11,600
Office expense 31
Transfer agent -
Mining exploration expense 1,251
---------
TOTAL EXPENSES 23,282
---------
NET LOSS FROM OPERATIONS (23,282)
INCOME TAXES -
---------
NET LOSS (23,282)
ACCUMULATED DEFICIT, BEGINNING BALANCE -
---------
ACCUMULATED DEFICIT, ENDING BALANCE $ (23,282)
=========
NET LOSS PER COMMON SHARE $ (0.0047)
=========
WEIGHTED AVERAGE NUMBER OF COMMON STOCK
SHARES OUTSTANDING 5,000,000
=========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-3
<PAGE> 33
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Period Ended June 30, 1999
<TABLE>
<CAPTION>
Total
Common Stock Additional Stockholders'
Number Paid-In Accumulated Equity
of Shares Amount Capital Deficit (Deficit)
<S> <C> <C> <C> <C> <C>
Issuance of common
stock for services
and in payment of
advances for
approximately
$.0023 per share 5,000,000 $ 50 $ 11,594 $ - $ 11,644
Loss for year ending,
June 30, 1999 - - - (23,282) (23,282)
--------- ---- -------- --------- ---------
Balance
June 30, 1999 5,000,000 $ 50 $ 11,594 $ (23,282) $ (11,638)
========= ==== ======== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-4
<PAGE> 34
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
For the Period Ended June 30, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (23,282)
Adjustments to reconcile net loss
to net cash used by operating activities:
Payment of expenses from issuance of stock 11,282
---------
Net cash (used) in operating activities (12,000)
CASH FLOWS FROM INVESTING ACTIVITIES -
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances 100
Proceeds from short-term loan payable 12,000
---------
Net cash provided by financing activities 12,100
Change in cash 100
Cash, beginning of period -
---------
Cash, end of period $ 100
=========
Supplemental disclosures:
Interest paid $ -
=========
Income taxes paid $ -
=========
NON-CASH TRANSACTIONS
Stock issued in payment of consulting and
other expenses $ 11,282
Stock issued in payment of advances $ 100
Stock issued in payment of mining claims $ 262
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-5
<PAGE> 35
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 1999
NOTE 1 ORGANIZATION AND DESCRIPTION OF BUSINESS
Paxton Mining Corporation (hereinafter "the Company") was incorporated
on June 10, 1999 under the laws of the State of Nevada for the purpose
of acquiring, exploring and developing mining properties. The Company
maintains offices in Las Vegas, Nevada and in Vancouver, British
Columbia. The Company's fiscal year end is June 30.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Paxton Mining
Corporation is presented to assist in understanding the Company's
financial statements. The financial statements and notes are
representations of the Company's management which is responsible for
their integrity and objectivity. These accounting policies conform to
generally accepted accounting principles and have been consistently
applied in the preparation of the financial statements.
Exploration Stage Activities
The Company has been in the exploration stage since its formation in
June 1999 and has not yet realized any revenues from its planned
operations. It is primarily engaged in the acquisition, exploration
and development of mining properties. Upon location of a commercial
mineable reserve, the Company will actively prepare the site for its
extraction and enter a development stage.
Going Concern
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern.
As shown in the accompanying financial statements, the Company incurred
a net loss of $23,282 for the year ended June 30, 1999 and had no
sales. The future of the Company is dependent upon its ability to
obtain financing and upon future successful explorations for and
profitable operations from the development of mineral properties.
Management has plans to seek additional capital through a private
placement of its common stock. The financial statements do not include
any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that
might be necessary in the event the Company cannot continue in
existence.
Accounting Method
The Company's financial statements are prepared using the accrual method
of accounting.
F-6
<PAGE> 36
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 1999
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Loss Per Share
Loss per share was computed by dividing the net loss by the weighted
average number of shares outstanding during the period. The weighted
average number of shares was calculated by taking the number of shares
outstanding and weighting them by the amount of time that they were
outstanding.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
Provision for Taxes
At June 30, 1999, the Company had net operating loss of approximately
$23,000. No provision for taxes or tax benefit has been reported in
the financial statements, as there is not a measurable means of
assessing future profits or losses.
Use of Estimates
The process of preparing financial statements in conformity with
generally accepted accounting principles requires the use of estimates
and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ from estimated
amounts.
Impaired Asset Policy
In March 1995, the Financial Accounting Standards Board issued a
statement titled "Accounting for Impairment of Long-lived Assets."
This standard is effective for years beginning after December 15, 1995.
In complying with this standard, the Company reviews its long-lived
assets quarterly to determine if any events or changes in circumstances
have transpired which indicate that the carrying value of its assets
may not be recoverable. The Company does not believe any adjustments
are needed to the carrying value of its assets at June 30, 1999.
Exploration Costs
In accordance with generally accepted accounting principles, the
Company will expense exploration costs as incurred.
F-7
<PAGE> 37
PAXTON MINING CORPORATION
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 1999
NOTE 3 COMMON STOCK
On June 20, 1999, 5,000,000 shares of common stock were issued to
officers and directors only. There was no public offering of any
securities. The above referenced shares were issued in payment for
services valued at $10,000 and repayment for mining claim recording
fees of $262, expenses of $1,282 and advances of $100. These shares
were issued pursuant to exemption from registration contained in
Section 4 (2) of the Securities Act of 1933.
In June, 1999 the Company, through Hugh Grenfal, President and a member
of the Board of Directors entered into an Option to Purchase Agreement
with an unrelated third party, to acquire 100% of the rights, titles
and interests in three unpatented mining claims in the Twelve Mile
Creek, Kalso Area, Slocan Mining Division, B.C. Canada in exchange for
$7 in cash. In addition, payment of $255 was required to record the
three mining claims totaling 36 units. These amounts were paid by the
shareholders and repaid by the Company in the form of stock as denoted
above. The Company, through Mr. Grenfal, exercised the option and
acquired the mining claims. The claims are recorded in Mr. Grenfal's
name for tax purposes, however, title to the claims has been conveyed
to the Company via an unrecorded deed.
NOTE 4 RELATED PARTIES
The Company occupies office space provided by Hugh Grenfal, the
President of the Company, in his capacity as Vice President and
Director of Callinan Mines Limited at no charge. The value of this
space is not considered materially significant for financial reporting
purposes.
Hugh Grenfal, the President of the Company, has advanced monies to the
Company to open a checking account and in payment of expenses. These
have been recorded as short-term loans, bearing no interest and having
no specific due date.
NOTE 5 YEAR 2000 ISSUES
Like other companies, Paxton Mining Corporation could be adversely
affected if the computer systems the Company, its suppliers or
customers use do not properly process and calculate date-related
information and data from the period surrounding and including January
1, 2000. This is commonly known as the "Year 2000" issue.
Additionally, this issue could impact non-computer systems and devices
such as production equipment and elevators, etc. At this time, because
of the complexities involved in the issue, management cannot provide
assurance that the Year 2000 issue will not have an impact on the
Company's operations. Any costs associated with Year 2000 compliance
are expensed when incurred.
F-8
<PAGE> 38
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The only statute, charter provision, bylaw, contract, or other
arrangement under which any controlling person, director or officer
of the Registrant is insured or indemnified in any manner against any
liability which he may incur in his capacity as such, is as follows:
1. Article XII of the Articles of Incorporation of the company,
filed as Exhibit 3.1 to the Registration Statement.
2. Article XI of the Bylaws of the company, filed as Exhibit 3.2
to the Registration Statement.
3. Nevada Revised Statutes, Chapter 78.
The general effect of the foregoing is to indemnify a control
person, officer or director from liability, thereby making the company
responsible for any expenses or damages incurred by such control
person, officer or director in any action brought against them
based on their conduct in such capacity, provided they did not
engage in fraud or criminal activity.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the offering (assuming all shares are
sold), all of which are to be paid by the registrant, are as follows:
SEC Registration Fee $ 100.00
Printing Expenses 6,500.00
Accounting Fees and Expenses 5,000.00
Legal Fees and Expenses 25,000.00
Blue Sky Fees/Expenses 5,000.00
Transfer Agent Fees 3,000.00
Miscellaneous Expenses 5,400.00
-----------
TOTAL $ 50,000.00
===========
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Registrant has sold the
following securities which were not registered under the
Securities Act of 1933, as amended.
Name and Address Date Shares Consideration
- ---------------- ---- ------ -------------
Hugh Grenfal 6/20/99 2,500,000 Services and
3337 W. Thirtieth Avenue $641 in Cash
Vancouver, British Columbia
Canada V6S 1W3
<PAGE> 39
Robert Jarva 6/20/99 2,500,000 Services and
2613 Harrier Drive $641 in Cash
Coquitlam, British Columbia
Canada V3E 2A7
We issued the foregoing restricted shares of common stock to Messrs.
Grenfal and Jarva pursuant to Section 4(2) of the Securities Act of
1933. Messrs. Grenfal and Jarva are sophisticated investors, are
officers and directors of the company, and where in possession of all
material information relating to the company. Further, no commissions
were paid to anyone in connection with the sale of the shares and
general solicitation was made to anyone.
ITEM 27. EXHIBITS.
The following Exhibits are filed as part of this Registration
Statement, pursuant to Item 601 of Regulation K. All Exhibits have
been previously filed unless otherwise noted.
Exhibit No. Document Description
- ------------ --------------------
3.1* Articles of Incorporation.
3.2* Bylaws.
4.1* Specimen Stock Certificate.
5.1 Opinion of Conrad C. Lysiak, Esq. regarding the legality
of the Securities being registered.
10.1* Keno Mining Claim.
10.2* Marble Arch Mining Claim.
10.3* Bill of Sale.
10.4* Statement of Trustee.
23.1 Consent of Williams & Webster, P.S., Certified Public
Accountants.
23.2 Consent of Conrad C. Lysiak, Esq.
27.1* Financial Data Schedule.
99.1* Subscription Agreement.
* Previously Filed
ITEM 28. UNDERTAKINGS.
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 the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in 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 defense of any
action, suit or proceeding) is asserted by such director, officer or
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 such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
<PAGE> 40
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
a. To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
b. To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement;
c. To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any change to such information
in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
<PAGE> 41
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing of this Form SB-2 Registration
Statement and has duly caused this Amendment No. 1 to the Form SB-2
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Vancouver, British Columbia, on this 28th
day of October, 1999.
PAXTON MINING CORPORATION
BY: /s/ Hugh Grenfal
Hugh Grenfal, President
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints Hugh Grenfal, as true and lawful
attorney-in-fact and agent, with full power of substitution, for his
and in his name, place and stead, in any and all capacities, to sign
any and all amendment (including post-effective amendments) to this
registration statement, and to file the same, therewith, with the
Securities and Exchange Commission, and to make any and all state
securities law or blue sky filings, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in about the premises,
as fully to all intents and purposes as he might or could do in person,
hereby ratifying the confirming all that said attorney-in-fact and
agent, or any substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Form SB-2 Registration Statement has been signed
by the following persons in the capacities and on the dates indicated:
Signature Title Date
/s/ Hugh Grenfal President, Treasurer, October 28, 1999
Hugh Grenfal Chief Financial Officer
and a member of the
Board of Directors
/s/ Robert Jarva Secretary and a member October 28, 1999
Robert Jarva of the Board of Directors
<PAGE> 42
EXHIBIT 5.1
CONRAD C. LYSIAK
Attorney and Counselor at Law
601 West First Avenue
Suite 503
Spokane, Washington 99204
(509) 624-1478
FAX (509) 747-1770
October 28, 1999
Securities and Exchange Commission
450 Fifth Avenue N.W.
Washington, D. C. 20549
RE: Paxton Mining Corporation
Gentlemen:
Please be advised that, I have reached the following
conclusions regarding the above offering:
1. Paxton Mining Corporation (the "Company") is a duly and
legally organized and exiting Nevada state corporation, with its
registered office located in Las Vegas, Nevada and its principal
place of business located in Vancouver, British Columbia, Canada.
The Articles of Incorporation and corporate registration fees
were submitted to the Nevada Secretary of State's office and
filed with the office on June 10, 1999. The Company's existence
and form is valid and legal pursuant to the representation above.
2. The Company is a fully and duly incorporated Nevada
corporate entity. The Company has one class of Common Stock at
this time. Neither the Articles of Incorporation, Bylaws, and
amendments thereto, nor subsequent resolutions change the
non-assessable characteristics of the Company's common shares of
stock. The Common Stock previously issued by the Company is in
legal form and in compliance with the laws of the State of
Nevada, and when such stock was issued it was fully paid for and
non-assessable. The common stock to be sold under this Form SB-2
Registration Statement is likewise legal under the laws of the
State of Nevada.
3. To my knowledge, the Company is not a party to any legal
proceedings nor are there any judgments against the Company, nor
are there any actions or suits filed or threatened against it or
its officers and directors, in their capacities as such, other
than as set forth in the registration statement. I know of no
disputes involving the Company and the Company has no claim,
actions or inquires from any federal, state or other government
agency, other than as set forth in the registration statement. I
know of no claims against the Company or any reputed claims
against it at this time, other than as set forth in the
registration statement.
<PAGE> 43
Securities and Exchange Commission
RE: Paxton Mining Corporation
October 28, 1999
Page 2
4. The Company's outstanding shares are all common shares.
There are no liquidation preference rights held by any of the
Shareholders upon voluntary or involuntary liquidation of the
Company.
5. The directors and officers of the Company are
indemnified against all costs, expenses, judgments and
liabilities, including attorney's fees, reasonably incurred by or
imposed upon them or any of them in connection with or resulting
from any action, suit or proceedings, civil or general, in which
the officer or director is or may be made a party by reason of
his being or having been such a director or officer. This
indemnification is not exclusive of other rights to which such
director or officer may be entitled as a matter
of law.
6. All tax benefits to be derived from the Company's
operations shall inure to the benefit of the Company.
Shareholders will receive no tax benefits from their stock
ownership, however, this must be reviewed in light of the Tax
Reform Act of 1986.
7. By director's resolution, the Company has authorized
the issuance of up to 2,000,000 shares of Common Stock.
The Company's Articles of Incorporation presently provide
the authority to the Company to issue 100,000,000 shares of
Common Stock, $0.00001 par value. Therefore, a Board of
Directors' Resolution which authorized the issuance for sale of
up to 2,000,000 of Common Stock, would be within the authority of
the Company's directors and the shares, when issued, will be
validly issued, fully paid and non-assessable.
Yours truly,
/s/ Conrad C. Lysiak
<PAGE> 44
EXHIBIT 23.1
WILLIAMS & WEBSTER, P.C.
Certified Public Accountants
601 West Riverside
Suite 1970
Spokane, Washington 99201-0611
(509) 838-5111
FAX (509) 624-5001
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Paxton Mining Corporation
Spokane, Washington
We consent to the use of our report dated October 21, 1999, on
the financial statements of Paxton Mining Corporation as of June
30, 1999, and the period then ended, and the inclusion of our
name under the headings "Experts" in the Form SB-2 Registration
Statement filed with the Securities and Exchange Commission.
/s/ Williams & Webster P.S.
Williams & Webster, P.S.
Spokane, Washington
October 28, 1999
<PAGE> 45
EXHIBIT 23.2
CONRAD C. LYSIAK
Attorney and Counselor at Law
601 West First Avenue
Suite 503
Spokane, Washington 99201
(509) 624-1475
FAX: (509) 747-1770
CONSENT
I HEREBY CONSENT to the inclusion of my name in
connection with the Form SB-2 Registration Statement filed with the
Securities and Exchange Commission as attorney for the registrant,
Paxton Mining Corporation and to the reference to my firm under the
subcaption "Legal Matters."
DATED this 28th day of October, 1999.
Yours truly,
/s/ Conrad C. Lysiak
