SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: May 26, 2000
WINCHESTER MINING CORPORATION
--------------
(New name of registrant as specified in its charter)
Hi-Plains Energy Corp.
--------------------
(Prior name of corporation pre-merger)
Wyoming 0-27311 84-1413868
- ---------------- ------------- ------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.
incorporation pre-merger)
pre-merger)
Delaware 0-30651 84-1413868
- ----------------- ------------- ------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.
incorporation post-merger)
post-merger)
409 Granville Street, Suite #1010, Vancouver, B.C. Canada V6C 1T2
----------------------------------------------------------
(NEW ADDRESS)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (604)609-0409
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On May 15, 2000, Winchester Mining Corp. completed a Share Purchase
Agreement with shareholders of Hi-Plains Energy Corp. in which Winchester Mining
Corp., a Delaware corporation, acquired all 780,000 shares outstanding of the
Registrant for the purposes of accomplishing a Merger of Hi-Plains Energy Corp.
and Winchester Mining Corp. The Merger was completed on May 15, 2000.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
None.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
None.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
None.
ITEM 5. OTHER EVENTS
History of Winchester Mining Corp.
In 1996 the Company was listed on the OTCBB with the symbol WNCR. The prior
management raised funds for a mining property in the Northwest Territories. The
budget was spent and the Company remained inactive until March of 1999. In
September of 1999, the Company raised several hundred thousand dollars to invest
in online gambling. The Company has since divested itself of these acquisitions
due to the questionable nature of the online gambling industry. In September of
1999, Wayne Miller became president of Winchester Mining, Corp. The Company
commissioned Digicorp of Vancouver British Columbia, Canada to develop websites
for the Company: Hollywoodmall.net and Pacificnorthwestmall.net. They have been
under development since October of 1999. An agreement with Cartoon Products was
signed to distribute licensed products from Disney, Warner Bros., NFL, NCAA,
MLB, NBA, etc. Radiant Communications of Vancouver is developing and managing
these websites.
Bullseye Communications Group has been hired to develop an overall
marketing plan for the Company and the two "mall" websites. To date they have
developed the corporate logo for the Pacificnorthwestmall.com and are currently
developing the retail solicitation packages needed to attract retailers to the
sites.
Marketing
The Company's marketing program is being modeled around the "permission
marketing" concept. The Company's promotional program revolves around an
award/reward system used to provide customers with a tangible incentive to make
purchases from its websites. With the Pacificnorthwestmall and Hollywoodmall
credits, customers will be able to purchase additional products from its
websites.
2
<PAGE>
This type of marketing program has been tried and proven, in the Trading
Stamp program. Every time a customer bought something at a participating store,
the customer earned some stamps. They collected the stamps in a little book.
With enough books a customer could get free gifts. This was a way to reward
frequent shopping trips.
This type of component has been adopted to draw customers to the Company's
websites. The concept is that as customers with the Company begin to earn
credits, they will be motivated to earn more credits. The cycle will begin,
customers will tell their friends, neighbors and relatives, and they too will,
hopefully, do the same.
Another important factor to the entire credits program is its cost
effectiveness. It is completely up to the Company to determine the value of
credits, thereby being able to control cost to maximize the effectiveness of the
program.
Product Decisions
The Company will be developing a product mix which will capitalize and
focus on the most popular goods purchased by its target markets. The Company
will constantly survey our account holders in order to be on the cutting edge in
offering the most desireable goods and products.
Objectives
The Company intends to use Banner advertising in conjunction with a strong
affiliate program to introduce Pacificnorthwestmall.com and Hollywoodmall.net to
the target market. The Company's permission marketing program has commenced in
May 2000.
Selling Tactics
E-Mail Newsletter - Anyone visiting the Company websites will have the
opportunity to sign up with the monthly or biweekly newsletter. Initially, the
benefit for signing up to the newsletter will be a tangible item with real value
to the customers. In the future, when the companies "permission marketing"
program has taken hold, the Company will give away credits, information or
something else with a perceived value to attract potential customers to its
newsletter.
Search Engine Positioning - The Company will employ products like
WebPosition Gold (tm), software which has a submitter to submit websites to
optimal positions in all of the major search engines. Further, it will analyze
the website and suggest to improve website rankings. It also has a rank checking
utility to compare against competition.
Press Coverage - The Company will diligently pursue all press coverage
possible.
3
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Expanded Referral Log Reporting - Every time someone visits a website they
will bring valuable information with them, what website they came from and what
keyword they queried the search engine to find us. With this type of
information, the Company can make adjustments to enhance the website
performance. The Company intends to capture and review this information on a
weekly basis.
E-Mail - The Company will rely heavily on staying in contact with customers
with the use of e-mail. E-mail is an extremely cost effective medium to enhance
customer contact and loyalty. The Company recognizes that regular e-mail will
cultivate a relationship with customers. This in turn will cause a majority of
online e-commerce monies spent on by account holders to flow through Company
sponsored or owned websites. This is a result of a high comfort level with the
customer base which is achieved by regular e-mail contact. It is important for
the Company to receive permission from its customers before opening this dialog.
ITEM 6. RESIGNATION AND APPOINTMENT OF OFFICERS AND DIRECTORS
Directors from Winchester Mining Corp. now form the Board after the Merger
of companies. The business experience of the Directors is disclosed herein.
WAYNE MILLER, age 51, President and Director, graduated in 1966 from high
school, attended Simon Fraser University for four years, 2 years in economics
and 2 years in geography. He worked at Sears Canada in Management and sales.
After University he worked for 7 years in the restaurant industry in management
and acquired valuable experience in all facets of business. He became a
stockbroker in 1984 and worked in the financial industry for 15 years raising
funds for junior publicly traded companies on the CDNX market. He was with
Georgia Pacific Securities from 1989 to 1999. He became president of Winchester
Mining Corp. in September 1999 and also became President of Dalmation Res. Ltd.
in February 2000. Dalmation Res. Ltd. is publicly traded on the CDNX exchange
symbol (DTN).
GARY BURNIE, age 50, Secretary and Director, was involved in management of
Travellers Acceptance Corp. for 3 years. He then became a stockbroker in the
financial industry for 13 years raising funds for junior CDNX companies at
Wolverton Securities, Inc. Since 1984 he has raised funding for various
companies on the CDNX market and the OTCBB. He was recently President of First
American Scientific, an OTCBB company.
BARRY MILLER, age 37, Director, was employed with Eaton's Canada in sales.
He became a stockbroker and worked for 2 years in the financial industry at
Merrit Investments (1986-1988). He opened his own business in the electronics
industry for 2 years and returned to the financial industry in public relations
for a number of CDNX companies, most recently International Wayside Gold Mines,
Ltd., symbol (IWA). He was also employed with LML Payment Systems, Inc., a NASD
small cap company, in investor relations.
4
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIALS, & EXHIBITS
Financial Statements - December 31, 1999
- Pro Forma for March 31, 2000 (Unaudited)
Exhibits - 2.1 - Articles of Merger
2.2 - Plan of Merger
2.3 - Certificate of Ownership and Merger
3.1 - Certificate of Incorporation
3.2 - Bylaws
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 26, 2000 Winchester Mining Corp.
By:/s/Wayne Miller
---------------------------
President
<PAGE>
WINCHESTER MINING CORPORATION
Financial Statements
C O N T E N T S
December 31, 1999 and 1998
Independent Auditors' Report . . . . . . . . . . . . . . . . . . .F-1
Consolidated Balance Sheet as of December 31, 1999 and 1998 . F-2
Consolidated Statement of Loss For The Years Ended
December 31, 1999 and 1998 . . . . . . . . . . . . . . . . F-3
Consolidated Statement of Stockholders' Equity For The Years Ended
December 31, 1999 and 1998 . . . . . . . . . . . . F-4
Consolidated Statement of Cash Flows For The Years Ended
December 31, 1999 and 1998 . . . . . . . . . . . . . . . F-5
Notes to the Consolidated Financial Statements . .. . . F-6-F-13
Pro Forma Combined - March 31, 2000 (Unaudited)
Cover Sheet PF-1
Pro Forma Combined Condensed Financial Information PF-2
Pro Forma Combined Condensed Balance Sheet PF-3
Pro Forma Combined Condensed Statements of Loss PF-4-5
Notes to Pro Forma Combined Condensed Financial Statements PF-6
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
<PAGE>
BATEMAN & CO., INC., P.C.
Certified Public Accountants
5 Briardale Court
Houston, Texas 77027-2904
(713) 552-9800
FAX (713) 552-9700
www.batemanhouston.com
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To The Board of Directors and Stockholders
Winchester Mining Corporation
Vancouver, BC, Canada
We have audited the accompanying balance sheets of Winchester Mining Corporation
(a Delaware Corporation) as of December 31, 1999 and 1998 and the related
statements of loss, stockholders' equity (deficit), and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our 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 Winchester Mining Corporation
as of December 31, 1999 and 1998, and the results of its operations and cash
flows for the years then ended 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 to the
financial statements, the Company has suffered recurring losses from operations
and negative cash flows from operations since inception that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to those matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ BATEMAN & CO., INC., P.C.
Houston, Texas
May 12, 2000
Member
INTERNATIONAL ASSOCIATION OF PRACTISING ACCOUNTANTS
Offices in Principal Cities Around The World
F-1
<PAGE>
<TABLE>
<CAPTION>
WINCHESTER MINING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 AND 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MARCH 31,
2000 DECEMBER 31,
---------------------------------------
(UNAUDITED) 1999 1998
--------------------- --------------------- --------------
ASSETS
Current Assets:
Cash $254,116 $219 $149
Note receivable, net of allow-
ance for bad debts of $45,507 0 0 0
Inventory, at cost 3,414 2,816 0
Prepaid expenses 9,707 970 305
--------------------- --------------------- --------------
Total current assets 267,237 4,005 454
--------------------- --------------------- --------------
Total assets $267,237 $4,005 $454
===================== ===================== ==============
LIABILITIES
Current liabilities:
Accounts payable and
accrued expenses 81,275 26,118 4,449
Due to related parties 103,919 36,332 241,667
Accrued liability for
contingencies 25,000 25,000 0
--------------------- --------------------- --------------
Total current liabilities 210,194 87,450 246,116
--------------------- --------------------- --------------
Total liabilities 210,194 87,450 246,116
--------------------- --------------------- --------------
Commitments and contingencies - - -
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.0001 par value,
100,000,000 shares authorized,
35,540,000, 33,750,000
and 25,250,000 shares
issued and outstanding 3,554 3,375 2,525
Capital in excess of par value 1,190,002 923,414 502,643
Deficit accumulated during the
development stage (1,136,513) (1,010,234) (750,830)
--------------------- --------------------- --------------
Total stockholders'
equity (deficit) 57,043 (83,445) (245,662)
--------------------- --------------------- --------------
Total liabilities and
stockholders' equity $267,237 $4,005 $454
===================== ===================== ==============
The accompanying notes are an integral part of these statements.
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
WINCHESTER MINING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF LOSS FOR THE PERIODS ENDED
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 AND 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CUMULATIVE QUARTER
NOVEMBER 6, ENDED
1996 THROUGH MARCH 31,
MARCH 31, 2000 YEARS ENDED DECEMBER 31,
-------------------------------------
2000 (UNAUDITED) 1999 1998
---------------------- --------------------- --------------------- --------------
Revenues $15,537 $0 $15,537 $0
---------------------- --------------------- --------------------- --------------
Less, Costs and expenses:
Cost of revenues 76,201 0 76,201 0
Consulting and
management fees 591,195 35,669 140,309 201,667
Provision for
contingencies 25,000 0 25,000 0
Depreciation and
amortization 539 0 305 108
Writeoffs and abandon-
ments of mineral
properties 276,000 0 0 0
Other general and
administrative 185,420 90,610 33,126 49,728
---------------------- --------------------- --------------------- --------------
Total operating
expenses 1,154,355 126,279 274,941 251,503
---------------------- --------------------- --------------------- --------------
Loss from operations (1,138,818) (126,279) (259,404) (251,503)
---------------------- --------------------- --------------------- --------------
Other income (expense):
Interest income 2,305 0 0 0
Interest expense 0 0 0 0
---------------------- --------------------- --------------------- --------------
Total other income
(expense) 2,305 0 0 0
---------------------- --------------------- --------------------- --------------
Loss before taxes
on income (1,136,513) (126,279) (259,404) (251,503)
Provision for income
taxes 0 0 0 0
---------------------- --------------------- --------------------- --------------
Net loss ($1,136,513) ($126,279) ($259,404) ($251,503)
====================== ===================== ===================== ==============
Basic earnings (loss)
per common share ($0.00) ($0.01) ($0.01)
===================== ===================== ==============
Weighted average number
of shares outstanding 34,104,066 31,895,206 22,429,177
===================== ===================== ==============
The accompanying notes are an integral part of these statements.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
WINCHESTER MINING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) FOR THE PERIODS ENDED
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 AND 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
----------------------- --------------- ----------------------- -------------------- --------------
YEAR ENDED DECEMBER 31, 1998:
Balances,
December 31,
1997 20,050,000 $2,005 $183,163 ($499,327) ($314,159)
Shares issued
for debt 5,200,000 520 319,480 320,000
Development
stage net
loss (251,503) (251,503)
----------------------- --------------- ----------------------- -------------------- -------------
Balances,
December 31,
1998 25,250,000 2,525 502,643 (750,830) (245,662)
YEAR ENDED DECEMBER 31, 1999:
Shares issued
for cash 3,000,000 300 149,700 150,000
Shares issued
for debt 5,500,000 550 274,450 275,000
Less, Related
issuance costs (3,379) (3,379)
Development
stage net
loss (259,404) (259,404)
----------------------- --------------- ----------------------- --------------------- ------------
Balances,
December 31,
1999 33,750,000 3,375 923,414 (1,010,234) (83,445)
QUARTER ENDED MARCH 31, 2000 (UNAUDITED):
Shares issued
for cash 1,790,000 179 288,011 288,190
Less, Related
issuance costs (21,423) (21,423)
Development
stage net
loss (126,279) (126,279)
----------------------- --------------- ----------------------- -------------------- -------------
Balances,
March 31,
2000 35,540,000 $3,554 $1,190,002 ($1,136,513) $57,043
======================= =============== ======================= ==================== =============
The accompanying notes are an integral part of these statements.
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
WINCHESTER MINING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS FOR THE PERIODS ENDED
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 AND 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CUMULATIVE
NOVEMBER 6, QUARTER
1996 ENDED
THROUGH MARCH 31,
MARCH 31, 2000 YEARS ENDED DECEMBER 31,
-----------------------------------
2000 (UNAUDITED) 1999 1998
------------------------ --------------------- --------------------- ------------
Cash flows from operating activities:
Net loss ($1,136,513) ($126,279) ($259,404) ($251,503)
Adjustments to reconcile
net income to cash
provided (used) by develop-
mental stage activities:
Provision for bad
debts 45,507 0 0 45,507
Depreciation and
amortization 539 0 305 108
Change in current assets
and liabilities:
Inventory (3,414) (598) (2,816) 0
Prepaid expenses (10,246) (8,737) (970) 1,313
Accounts payable and
accrued expenses 81,275 55,157 21,669 2,894
Accrued liability
for contingencies 25,000 0 25,000 0
Due to related
parties 698,919 67,587 69,665 201,667
------------------------ --------------------- --------------------- ------------
Cash flows from oper-
ating activities (298,933) (12,870) (146,551) (14)
------------------------ --------------------- --------------------- ------------
Cash flows from investing activities:
Loan to related party (50,000) 0 0 0
Loan repayments 4,493 0 0 0
------------------------ --------------------- --------------------- ------------
Cash flows from inves-
ting activities (45,507) 0 0 0
------------------------ --------------------- --------------------- ------------
Cash flows from financing activities:
Net proceeds from sale
of common stock 598,556 266,767 146,621 0
------------------------ --------------------- --------------------- ------------
Cash flows from finan-
cing activities 598,556 266,767 146,621 0
------------------------ --------------------- --------------------- ------------
Net increase (decrease)
in cash and equivalents 254,116 253,897 70 (14)
Cash and equivalents:
Beginning of period 0 219 149 163
------------------------ --------------------- --------------------- ------------
End of period $254,116 $254,116 $219 $149
======================== ===================== ===================== ============
Supplemental cash flow disclosures:
Cash paid for interest $0 $0 $0 $0
Cash paid for income taxes 0 0 0 0
Non-cash financing and
investing activities:
Shares issued for debt 595,000 0 275,000 320,000
The accompanying notes are an integral part of these statements.
</TABLE>
F-5
<PAGE>
WINCHESTER MINING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 AND 1998
-------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Following is a summary of the Company's organization and significant accounting
policies:
ORGANIZATION AND NATURE OF BUSINESS - The Company was incorporated as
Winchester Mining Corporation on November 6, 1996 in the state of Delaware,
and is a development stage enterprise engaged in searching for capital, and
in organizing and developing internet businesses. Its goal is to develop an
on-line international network of entertainment based websites and payment
clearing systems, including a shopping mall. It has also engaged in
referrals of internet browsers for a fee to an offshore online gambling
casino. Although its principal office is in Vancouver, BC, Canada, it
expects its internet businesses to invite customers from anywhere in the
world. In 1996 through 1997, the company attempted to establish a mining
business and pursued several unsuccessful Canadian mining opportunities.
As a development stage enterprise, the Company anticipates incurring
substantial additional losses as it pursues its internet businesses and as
it investigates other business opportunities.
On May 13, 2000, in connection with its merger with Hi-Plains Energy Corp.
(see "Subsequent Events," below), the Company changed its name from
Winchester Mining Corporation to PNW Capital Corp.
BASIS OF PRESENTATION - The accounting and reporting policies of the
Company conform to generally accepted accounting principles of development
stage enterprises.
USES OF 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 amount of revenues and
expenses during the reporting period. Actual results could differ from
those estimates. The Company's periodic filings with the Securities and
Exchange Commission include, where applicable, disclosures of estimates,
assumptions, uncertainties and concentrations in products and markets which
could affect the financial statements and future operations of the Company.
FOREIGN CURRENCY TRANSLATION - Foreign currency transactions have been
translated into U.S. dollars using:
o Year-end rates for monetary assets and liabilities;
o Historical rates for all other assets and liabilities; and
o Average rates during the year for revenues and expenses.
Exchange gains and losses arising from these foreign currency translations
are reflected in income or expense as incurred.
CASH AND CASH EQUIVALENTS - For purposes of the statement of cash flows,
the Company considers all cash in banks, money market funds, and
certificates of deposit with a maturity of less than one year to be cash
equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS -
The carrying amounts of cash, accounts receivable, accounts payable, due to
related parties, and accrued expenses approximate fair value because of the
short maturity of these items. These fair value estimates are subjective in
nature and involve uncertainties and matters of significant judgment, and,
therefore, cannot be determined with precision. Changes in assumptions
could significantly affect these estimates. At March 31, 2000, December 31,
1999, and December 31, 1998, the Company had no derivative financial
instruments.
F-6
<PAGE>
WINCHESTER MINING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 AND 1998
-------------------------------------------------------------------------------
INVENTORY - Inventories are stated at the lower of cost or market, with
cost determined using the first-in first-out (FIFO) method.
FEDERAL INCOME TAXES - Deferred income taxes are reported for timing
differences between items of income or expense reported in the financial
statements and those reported for income tax purposes in accordance with
Statement of Financial Accounting Standards Number 109 accounting for
income taxes, which requires the use of the asset/liability method of
accounting for income taxes. Deferred income taxes and tax benefits are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases, and for tax loss and credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The
Company provides deferred taxes for the estimated future tax effects
attributable to temporary differences and carryforwards when realization is
more likely than not.
Differences between book and tax income arise primarily from the valuation
of stock issued for services.
EARNINGS (LOSS) PER SHARE OF COMMON STOCK - Earnings (loss) per share is
computed on the weighted average number of shares outstanding during the
year, in accordance with FASB Statement Number 128, earnings per share.
NOTE 2 - GOING CONCERN ASSUMPTION:
Since its inception in 1996, the Company has incurred operating losses
approximating $1,100,000 and negative cash flows from operations since inception
approximating $298,000. Operating revenues since inception have been
insignificant. Although the Company sold common stock in March, 2000 and May,
2000 resulting in cash proceeds approximating $413,000, a substantial part of
the proceeds has been or will be utilized in connection with the merger with
Hi-Plains (see "Subsequent Events," below). Therefore, management expects that
additional debt or equity financing will be required to complete its business
plan. When the merger with Hi-Plains is consummated, the Company intends to seek
additional equity financing; however, there is no assurance these endeavors will
be successful.
These factors create substantial doubt about the Company's ability to continue
as a going concern. The ability of the Company to continue as a going concern is
dependent upon (a) obtaining sufficient additional debt or equity financing to
finance operations, capital improvements, and other necessary activities, (b)
achieving a profitable level of operations, (c) acquiring a profitable business,
or (d) a combination of these actions. The financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as
a going concern.
F-7
<PAGE>
<TABLE>
<CAPTION>
WINCHESTER MINING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 AND 1998
-------------------------------------------------------------------------------
NOTE 3 - RELATED PARTY TRANSACTIONS:
Due to related parties consists of the following:
<S> <C> <C> <C>
DECEMBER 31,
---------------------------------------
MARCH 31,
------------------------------------------------ 2000 1999 1998
---------------- ---------------- -----------------
DESCRIPTION
Due to companies controlled by
a former officer/director $89,952 $36,332 $ -
Consulting fees payable - - 241,667
Due to the Company's President 13,967 - -
---------------- ---------------- -----------------
Total $103,919 $36,332 $241,667
================ ================ =================
Management fees include the following for the periods ended:
DECEMBER 31,
---------------------------------------
MARCH 31,
DESCRIPTION 2000 1999 1998
---------------- ---------------- -----------------
Paid to former officers/
directors $ - $13,900 $ -
Paid to a current officer/
director - 3,365 -
Accrued to companies controlled
by a former director 13,390 14,398 -
</TABLE>
In June, 1997, the Company loaned $50,000 to Trimac Financial Corporation, a
company controlled by a then director, on a promissory note bearing 12% interest
and becoming due in September, 1997. Payments totaling $4,493 were received in
October 1997, reducing the balance to $45,507. The Company determined that the
note became uncollectible in 1998, and accordingly provided an allowance for bad
debts for the entire remaining balance. The debtor company's corporate charter
was revoked in early 2000. Because the note was deemed to be on nonaccrual
status, no interest income was ever recognized on the note.
NOTE 4 - ACCRUED LIABILITY FOR CONTINGENCIES:
Certain former officers and directors of the Company, or companies controlled by
the former officers and directors, have asserted two claims against the Company,
as follows:
o A convertible debenture dated April 15, 1998 in the amount of
$150,000, bearing 5% interest payable semi-annually, convertible into
common shares at the rate of $0.05 per share at the option of the
debenture holder for the then remaining balance of unpaid principal
and interest. The former officers and directors assert this debenture
was issued as consideration for expenditures made on the Company's
behalf in connection with a 1997 option agreement to purchase 50%
interest in certain mineral properties in the Northwest Territories,
Canada. The option agreement was abandoned by the Company, resulting
in losses of approximately $276,000.
o A convertible debenture dated April 15, 1998 in the amount of
$100,000, bearing 5% interest payable semi-annually, convertible into
common shares at the rate of $0.05 per share at the option of the
debenture holder for the then remaining balance of unpaid principal
and interest. The former officers and directors assert this debenture
was issued as consideration for the pledge of Company shares owned by
a company controlled by former officers and directors as collateral in
connection with a proposed mineral property deal. The mineral property
deal was not consummated.
F-8
<PAGE>
WINCHESTER MINING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 AND 1998
-------------------------------------------------------------------------------
The debenture holders have demanded that the Company convert the debentures into
common shares. However, current management of the Company disputes the validity
of the debentures, and believes they do not represent either bonafide
transactions or legally enforceable obligations. Accordingly, the debentures
have not been recognized as liabilities on the accompanying balance sheets.
Current management intends to vigorously contest the validity of these two
asserted debentures, and has made a provision of $25,000 in 1999 as the
estimated cost of defending against these claims.
<TABLE>
<CAPTION>
NOTE 5 - FEDERAL INCOME TAX:
The currently payable (refundable) provision (credit) for Federal income tax
consists of the following:
<S> <C> <C> <C>
DECEMBER 31,
---------------------------------------
MARCH 31,
2000 1999 1998
---------------- ---------------- -----------------
Currently payable (refundable)
provision(credit)
attributable to:
Current operations ($42,900) ($88,100) ($85,500)
Less:
Limitation due to absence
of prior taxable income 42,900 88,100 85,500
---------------- ---------------- -----------------
Net amount payable
(refundable) $ - $ - $ -
================ ================ =================
</TABLE>
<TABLE>
<CAPTION>
The Company follows Statement of Financial Accounting Standards Number 109 (SFAS
109), accounting for income Taxes. Deferred income taxes reflect the net effect
of (a) temporary difference between carrying amounts of assets and liabilities
for financial purposes and the amounts used for income tax reporting purposes,
and (b) net operating loss carryforwards. The cumulative tax effect at the
expected rate of 34% of significant items comprising the Company's net deferred
tax amounts are as follows:
<S> <C> <C> <C>
DECEMBER 31,
---------------------------------------
MARCH 31,
2000 1999 1998
---------------- ---------------- -----------------
Deferred tax assets
attributable to:
Net operating loss carry-
forward $386,400 $343,400 $255,200
Less, Valuation allowance (386,400) (343,400) (255,200)
---------------- ---------------- -----------------
Net deferred tax assets $ - $ - $ -
================ ================ =================
</TABLE>
At December 31, 1999 the Company had net operating loss carryovers which expire
as follows:
EXPIRES: AMOUNT
December 31, 2011 $10,100
December 31, 2012 489,200
December 31, 2013 251,500
December 31, 2014 259,400
-----------------
Total $1,010,200
=================
F-9
<PAGE>
WINCHESTER MINING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 AND 1998
-------------------------------------------------------------------------------
NOTE 6 - COMMITMENTS:
On October 1, 1999, the Company entered into a three year management agreement
with a company controlled by a former director of the company. The future
minimum management fees are as follows:
YEAR ENDING DECEMBER 31, AMOUNT
2000 $41,571
2001 41,571
2002 31,179
-----------------
Total $114,321
=================
On October 1, 1999, the Company entered into a three year operating lease for
office space with a company controlled by a former director of the Company. The
future minimum rent payments are as follows:
YEAR ENDING DECEMBER 31, AMOUNT
2000 $4,367
2001 4,367
2002 3,275
-----------------
Total $12,009
=================
The Company incurred rent expense of $409 (March 31, 2000) and $2,302 (December
31, 1999).
On March 18, 1999, the Company entered into an internet casino license agreement
for a period of three years. During fiscal 1999, Hollywood Casino Corporation
filed a domain name dispute complaint regarding the domain names used by the
Company in its internet casino referral operations. Subsequent to December 31,
1999, the National Arbitration Forum rendered a decision under which the Company
lost rights to all but one internet casino domain name. Even though the casino
license has been cancelled, the Company has committed to make the following
future license fee payments:
YEAR ENDING DECEMBER 31, AMOUNT
2000 $15,000
2001 12,000
2002 3,000
-----------------
Total $30,000
=================
Included in Costs of revenues for the year ended December 31, 1999 are $13,000
of casino licensing fees and $50,026 for the initial license payment.
F-10
<PAGE>
<TABLE>
<CAPTION>
WINCHESTER MINING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 AND 1998
-------------------------------------------------------------------------------
NOTE 7 - COMMON STOCK:
During the development stage, the Company has issued shares of its common stock
as follows:
<S> <C> <C> <C>
PRICE PER
DESCRIPTION AND DATES SHARES SHARE AMOUNT
------------------------------------------------ ----------------- ------------------- ------------------
SHARES ISSUED FOR CASH:
November 7, 1996 50,000 $0.010 $500
February 27, 1997 20,000,000 0.010 200,000
July 17, 1998 5,200,000 0.062 320,000
March 15, 1999 2,000,000 0.050 100,000
March 31, 1999 1,000,000 0.050 50,000
March 13, 2000 1,790,000 0.161 288,190
SHARES ISSUED FOR DEBT (1):
March 15, 1999 3,500,000 0.050 175,000
March 31, 1999 2,000,000 0.050 100,000
(1) Value based on face value of obligation relieved.
</TABLE>
In May, 2000, the Company sold an additional 6,700,000 shares for cash for total
consideration of $156,760, or $0.02 per share
NOTE 8 - SUBSEQUENT EVENTS:
On May 9, 2000, the Company acquired all the outstanding stock of Hi-Plains
Energy Corp., a Wyoming corporation that is also in the development stage, for
$15,600. Concurrently therewith, the Company paid consulting and legal fees of
$134,400 to facilitate the merger of Hi-Plains into Winchester, and the filing
of related forms with the Securities and Exchange Commission.
On May 12, 2000, the Company entered into a Plan of Merger under which:
o Hi-Plains would be merged into Winchester effective May 13, 2000.
o Winchester would change its name to PNW Ccapital, Inc.
o Each share issued and outstanding immediately prior to the effective
date would remain as issued and outstanding common stock in Winchester
(renamed PNW) without change.
A summary balance sheet of Hi-Plains as of March 31, 2000 is as follows:
Assets:
Cash $213
Investment in Western Technology 750
-----------------
Total assets $963
=================
Liabilities and stockholders' equity:
Common stock $780
Additional paid-in capital 1,470
Deficit accumulated during the development stage (1,287)
-----------------
Total liabilities and stockholders' equity $963
=================
F-11
<PAGE>
WINCHESTER MINING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 AND 1998
-------------------------------------------------------------------------------
A summary statement of operations of Hi-Plains is as follows:
QUARTER YEAR
ENDED ENDED
MARCH 31, DECEMBER 31, 1999
2000
---------------- ----------------------
Revenue $ -
Costs and expenses 25 1,149
---------------- ----------------------
Net loss ($25) ($1,149)
================ ======================
NOTE 9 - NEW ACCOUNTING PRONOUNCEMENTS:
The Financial Accounting Standards Board has issued several new accounting
pronouncements which may affect the Company in future years. FASB Statement
Number 128, earnings per share, became effective for periods ending after
December 15, 1997, simplifies the standards for computing earnings per share,
and makes them comparable to international EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS. It also requires
dual presentation of basic and diluted EPS on the face of the income statement
for all entities with complex capital structures and requires a reconciliation
of the numerator and denominator of the basic EPS computation to the numerator
and denominator of the diluted EPS computation.
FASB STATEMENT NUMBER 129, DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE, is
effective for periods ending after December 15, 1997, and establishes standards
for disclosing information about an entity's capital structure. This
pronouncement did not have a significant effect on the Company's financial
statement disclosures.
FASB STATEMENT NUMBER 130, REPORTING COMPREHENSIVE INCOME, became effective for
fiscal years beginning after December 15, 1997, and establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general-purpose financial
statements. This Statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. The Company had no comprehensive income other than
net income during the last two fiscal years.
FASB STATEMENT NUMBER 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND
RELATED INFORMATION, became effective for fiscal years beginning after December
15, 1997, and establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. As the Company has only one business
segment, the pronouncement had no material effect during the current periods.
FASB STATEMENT NUMBER 132, EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER
POSTRETIREMENT BENEFITS, became effective for fiscal years beginning after
December 15, 1997, and revises employers' disclosures about pension and other
postretirement benefit plans. It does not change the measurement or recognition
of those plans. It standardizes the disclosure requirements for pensions and
other postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis, and eliminates certain disclosures.
Since the Company has no pension or postretirement benefit plans, the
pronouncement had no effect in the current periods.
F-12
<PAGE>
WINCHESTER MINING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 AND 1998
-------------------------------------------------------------------------------
FASB STATEMENT NUMBER 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, becomes effective for fiscal years beginning after June 15, 1999,
and establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. The
Company does not believe this pronouncement will have a material effect on its
financial statements in the near future.
FASB STATEMENT NUMBER 134, ACCOUNTING FOR MORTGAGE-BACKED SECURITIES RETAINED
AFTER THE SECURITIZATION OF MORTGAGE LOANS HELD FOR SALE BY A MORTGAGE BANKING
ENTERPRISE, becomes effective for fiscal years beginning after December 15,
1998. It is not expected to apply to the Company.
NOTE 10 - YEAR 2000 COMPLIANCE:
The Company utilizes "off-the-shelf" computer software in its operations
obtained from major vendors such as Intuit and Microsoft. Currently, management
believes that most critical systems are year 2000 compliant, or will be made
compliant prior to December 31, 2000. The estimated cost of becoming compliant
is minimal, and is not expected to have a material effect on the financial
statements or the Company's ability to serve its customers.
F-13
<PAGE>
WINCHESTER MINING CORPORATION
PRO FORMA FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
PF-1
<PAGE>
WINCHESTER MINING CORPORATION
(A development stage enterprise)
Pro Forma Combined Condensed Financial Information
March 31, 2000 and December 31, 1999 (Unaudited)
- -------------------------------------------------------------------------------
On May 9, 2000, the Company acquired all the outstanding stock of Hi-Plains
Energy Corp., a Wyoming corporation that is also in the development stage, for
$15,600. Concurrently therewith, the Company paid consulting and legal fees of
$134,400 to facilitate the merger of Hi-Plains into Winchester, and the filing
of related forms with the Securities and Exchange Commission.
On May 12, 2000, the Company entered into a Plan of Merger under which:
o Hi-Plains would be merged into Winchester effective May 13, 2000.
o Winchester would change its name to PNW Capital, Inc.
o Each share issued and outstanding immediately prior to the effective date
would remain as issued and outstanding common stock in Winchester (renamed PNW)
without change.
The acquisition of Hi-Plains will be accounted for as a purchase, whereby the
basis for accounting for Hi-Plains' assets and liabilities will be based upon
their fair market value at the date of acquisition.
The unaudited Pro Forma Condensed Statements of Loss (Pro Forma Statements of
Operations) for the year ended December 31, 1999 and the three months ended
March 31, 2000 gives pro forma effect to the acquisition and merger of Hi-Plains
as if they had occurred on January 1, 1999. The Pro Forma Statements of Loss are
based on the historical results of operations of the Company and Hi-Plains for
the year ended December 31, 1999 and the three months March 31, 2000.
The unaudited Pro Forma Combined Condensed Balance Sheet as of March 31, 2000
gives pro forma effect to the acquisition of Hi-Plains as if it had occurred on
that date.
The unaudited Pro Forma financial statements and accompanying notes should be
read in conjunction with and are qualified by the historical financial
statements of the Company and notes thereto, included elsewhere herein.
PF-2
<PAGE>
<TABLE>
<CAPTION>
WINCHESTER MINING CORPORATION
(A development stage enterprise)
Pro Forma Combined Condensed Balance Sheet
March 31, 2000
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Winchester Hi-Plains
Mining Energy Pro Forma Pro Forma
Corporation Corp. Adjustments Combined
---------------------- --------------------- --------------------- -------------------
ASSETS
Current assets:
Cash $254,116 $213 ($3,646)A 250,683
Note receivable, net 0 0
Inventory, at cost 3,414 0 3,414
Goodwill 13,417 B 13,417
Other assets 9,707 750 10,457
---------------------- --------------------- -------------------
Total current assets 267,237 963 277,971
---------------------- --------------------- --------------------- -------------------
Total assets $267,237 $963 $9,771 $277,971
====================== ===================== ===================== ===================
LIABILITIES
Current liabilities:
Accounts payable and
accrued expenses $81,275 81,275
Due to related parties 103,919 103,919
Accrued liability for
contingencies 25,000 25,000
Total current
---------------------- --------------------- -------------------
liabilities 210,194 0 210,194
---------------------- --------------------- -------------------
Total liabilities 210,194 0 210,194
---------------------- --------------------- -------------------
Commitments and contingencies
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock 3,554 780 (110)B 4,224
Capital in excess of
par value 1,190,002 1,470 9,814 B 1,201,286
Deficit accumulated during
the development stage (1,136,513) (1,287) 67 (1,137,733)
---------------------- --------------------- --------------------
Total stockholders'
equity (deficit) 57,043 963 67,777
---------------------- --------------------- --------------------- --------------------
Total liabilities
and stockholders'
equity $267,237 $963 $9,771 $277,971
====================== ===================== ===================== ====================
The accompanying notes are an integral part of these statements.
</TABLE>
PF-3
<PAGE>
<TABLE>
<CAPTION>
WINCHESTER MINING CORPORATION
(A development stage enterprise)
Pro Forma Combined Condensed Statements of Loss For The Three Months Ended
March 31, 2000 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Winchester Hi-Plains
Mining Energy Pro Forma Pro Forma
Corporation Corp. Adjustments Combined
---------------------- --------------------- --------------------- ---------------------
Revenues $0 $0 $0
---------------------- --------------------- --------------------- ---------------------
Less, Costs and expenses:
Cost of revenues 0 0 0
Consulting and
management fees 35,669 35,669
Provision for
contingencies 0 0 0
Depreciation and
amortization 0 0 244 B 244
Writeoffs and abandon-
ments of mineral
properties 0 0 0
Other general and
administrative 90,610 90,610
---------------------- --------------------- --------------------- ---------------------
Total operating
expenses 126,279 0 244 126,523
---------------------- --------------------- --------------------- ---------------------
Loss from operations (126,279) 0 (244) (126,523)
---------------------- --------------------- --------------------- ---------------------
Other income (expense):
Interest income 0 0 0
Interest expense 0 0 0
---------------------- --------------------- --------------------- ---------------------
Total other income
(expense) 0 0 0 0
---------------------- --------------------- --------------------- ---------------------
Loss before taxes
on income (126,279) 0 (244) (126,523)
Provision for income
taxes 0 0 0 0
---------------------- --------------------- --------------------- ---------------------
Net loss ($126,279) $0 ($244) ($126,523)
====================== ===================== ===================== =====================
Basic earnings (loss)
per common share ($0.00) $0.00 ($0.00)
====================== ===================== =====================
Weighted average number
of shares outstanding 34,104,066 780,000 40,804,066
====================== ===================== =====================
The accompanying notes are an integral part of these statements.
</TABLE>
PF-4
<PAGE>
<TABLE>
<CAPTION>
WINCHESTER MINING CORPORATION
(A development stage enterprise)
Pro Forma Combined Condensed Statements of Loss For The Year Ended
December 31, 1999 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Winchester Hi-Plains
Mining Energy Pro Forma Pro Forma
Corporation Corp. Adjustments Combined
---------------------- --------------------- --------------------- ------------
Revenues $15,537 $0 $15,537
---------------------- --------------------- --------------------- ------------
Less, Costs and expenses:
Cost of revenues 76,201 0 76,201
Consulting and
management fees 140,309 140,309
Provision for
contingencies 25,000 0 25,000
Depreciation and
amortization 305 0 976 B 1,281
Writeoffs and abandon-
ments of mineral
properties 0 0 0
Other general and
administrative 33,126 1,149 34,275
---------------------- --------------------- --------------------- ------------
Total operating
expenses 274,941 1,149 976 277,066
---------------------- --------------------- --------------------- ------------
Loss from operations (259,404) (1,149) (976) (261,529)
---------------------- --------------------- --------------------- ------------
Other income (expense):
Interest income 0 0 0
Interest expense 0 0 0
---------------------- --------------------- --------------------- ------------
Total other income
(expense) 0 0 0 0
---------------------- --------------------- --------------------- ------------
Loss before taxes
on income (259,404) (1,149) (976) (261,529)
Provision for income
taxes 0 0 0 0
---------------------- --------------------- --------------------- ------------
Net loss ($259,404) ($1,149) ($976) ($261,529)
====================== ===================== ===================== ============
Basic earnings (loss)
per common share ($0.01) $0.00 ($0.01)
====================== ===================== ============
Weighted average number
of shares outstanding 31,895,206 780,000 38,595,206
====================== ===================== ============
The accompanying notes are an integral part of these statements.
</TABLE>
PF-5
<PAGE>
WINCHESTER MINING CORPORATION
(A development stage enterprise)
Notes to Pro Forma Combined Condensed Financial Information
March 31, 2000 and December 31, 1999 (Unaudited)
- -------------------------------------------------------------------------------
A. Adjustments to cash reflect the following
Sale of 6,700,000 shares of stock in May, 2000 for
$156,760, less $10,406 in related offering costs
$146,354
Purchase of all the outstanding shares of Hi-Plains
Energy Corp. (15,600)
Payment of fees and costs in connection with merger
and SEC filings (134,400)
--------------------------
($3,646)
==========================
B. Reflects the allocation of the purchase price of Hi-Plains, calculated as
follows:
Total purchase price of Hi-Plains $15,600
Less, Amount allocated to tangible assets (963)
--------------------------
Amount allocated to Goodwill 14,637
Less, Amortization, based on fifteen year
amortization period:
Year ended December 31, 1999 (976)
Three months ended March 31, 2000 (244)
--------------------------
$13,417
==========================
C. Common stock adjustments reflect the following:
Sale of 6,700,000 shares of stock in May, 2000 for
$156,760, less $10,406 in related offering costs $670
Elimination of Hi-Plains common stock (780)
--------------------------
($110)
==========================
D. Capital in excess of par adjustments reflect the following:
Sale of 6,700,000 shares of stock in May, 2000 for
$156,760, less $10,406 in related offering costs $145,684
Payment of fees and costs in connection with merger
and SEC filings (134,400)
Elimination of Hi-Plains common stock (1,470)
--------------------------
$144,214
==========================
E. Adjustments to Deficit accumulated during the development stage include the
following:
Elimination of Hi-Plains deficit $1,287
Amortization of Goodwill, year ended December 31,
1999 (976)
Amortization of Goodwill, three months ended
March 31, 2000 (244)
--------------------------
$67
==========================
PF-6
ARTICLES OF MERGER
OF
WINCHESTER MINING CORP.
(A DELAWARE CORPORATION)
AND
HI-PLAINS ENERGY CORP.
(A WYOMING CORPORATION)
The Undersigned, being, and the President of Winchester Mining Corp. a
Delaware corporation, hereby certify as follows:
1. A merger has been approved by the boards of directors of Winchester Mining
Corp., a Delaware corporation (the parent) and its, wholly owned
subsidiary, Hi-Plains Energy Corp., a Wyoming corporation, by resolution
dated May 13, 2000.
2. Winchester Mining Corp. is the Parent and Hi-Plains Energy Corp. is the
wholly owned subsidiary.
3. No vote of Shareholders is necessary because 100% of the outstanding shares
of Hi-Plains Energy Corp. consisting of 780,000 common shares are owned by
Winchester Mining Corp. and
a) The corporation, Winchester Mining Corp. is the sole survivor and the
name of the corporation will be changed to PNW Capital Corp. by Amendments to
the Articles of Incorporation.
b) The Articles of Incorporation will not differ from Articles of
Incorporation prior to merger, except as to a name change
c) Each shareholder of the corporation whose shares were outstanding
immediately before the effective date of the merger will hold the same number of
shares, with identical designations, preferences, limitations and relative
rights immediately after the effective date of the merger.
d) The voting power of the number of shares outstanding immediately after
the merger will not be changed from that existing prior to the merger since no
shares are being issued as a result of the merger.
e) The number of participating shares outstanding immediately after the
merger is the same as immediately before the merger and there will be no change
in shares.
f) The Board of Directors of each corporation has adopted a resolution
approving the Plan of Merger, which is attached hereto as Exhibit A.
4. The merger shall be effective on May 13, 2000 or as soon thereafter as the
Articles of Merger are filed with the Secretary of State of Delaware.
Winchester Mining Corp. Hi-Plains Energy Corp.
By: /s/Wayne Miller By: /s/M.A. Littman
_____________________ ________________________
President M.A. Littman as Attorney-in Fact
for Z.S. Merritt, President
<PAGE>
* * * * * * * * * * * * * * * * * * * * * * *
State of Vancouver, B.C. )
) ss.
County of ______________________ )
On this 15th day of May, 2000, before me, a Notary Public, personally
appeared Wayne Miller as President of Winchester Mining Corp., and executed on
this date the foregoing instrument for the purposes therein contained, by
signing on behalf of the above named corporations as a duly authorized officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
My Commission Expires:
/s/
------------------------------
Notary Public
Residing at: ____________________
State of Colorado )
) ss.
County of Jefferson )
On this 15th day of May, 2000, before me, a Notary Public, personally
appeared M.A. Littman as Attorney-in-Fact for Z.S. Merritt as President of
Hi-Plains Energy Corp. and executed on this date the foregoing instrument for
the purposes therein contained, by signing on behalf of the above named
corporations as a duly authorized officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
My Commission Expires:
/s/Jodie L. Ball
------------------------------
Notary Public
Residing at: Jefferson County, CO
EXHIBIT A
PLAN OF MERGER
THIS PLAN OF MERGER (this "Plan of Merger"), dated as of May 12, 2000,
is among PNW Capital, Inc., a Delaware corporation ("Parent"), and Hi-Plains
Energy Corp., a Wyoming corporation (the "Company") (collectively "Constituent
Corporations").
WHEREAS, Parent owns 100% of the shares of the Company and the parties
thereto have agreed to the merger of the Company with and into Parent; and
WHEREAS, Parent, as the sole shareholder of Company and, the
respective Boards of Directors of Parent and the Company,) have each approved
the merger of the Company into Parent in accordance with the Delaware General
Law and
WHEREAS, this Plan of Merger shall be filed with Articles of Merger
with the Secretaries of State of Delaware and Wyoming in order to consummate the
merger of the Company with and into Parent; and
WHEREAS, Parent and the Company have agreed to execute and file this
Plan of Merger as provided under the Delaware Law and the Wyoming Statutes.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Parent and the Company hereby agree as follows:
1. THE MERGER. At the Effective Time, in accordance with this Plan of
Merger, and Delaware Law and the Wyoming Statutes, the Company shall be merged
(such merger being herein referred to as the "Merger") with and into the Parent,
the separate existence of the Company shall cease, and Parent shall continue as
the surviving corporation. Parent hereinafter sometimes is referred to as the
"Surviving Corporation."
2. EFFECT OF THE MERGER. When the Merger has been effected, the
Surviving Corporation shall change its name to "PNW Capital, Inc."; and the
Surviving Corporation shall thereupon and thereafter possess all the rights,
privileges, powers and franchises of a public as well as of a private nature,
and be subject to all the restrictions, disabilities and duties of each of the
Corporations; and all and singular, the rights, privileges, powers and
franchises of each of the Constituent Corporations and all property, real,
personal and mixed, and all debts due to either of the Corporations on whatever
account, as well for stock subscriptions as all other things in action or
belonging to each of such corporations shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and franchises, and
all and every other interest shall be thereafter as effectually the property of
the Surviving Corporation as they were of the Constituent Corporations, and the
title to any real estate vested by deed or otherwise, in any of such Constituent
Corporations, shall not revert or be in any way impaired by reason of the
Merger; but all rights of creditors and all liens upon any property of any of
said Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the respective Constituent Corporations shall
thenceforth attach to the Surviving Corporation, and may be enforced against it
to the same extent as if said debts, liabilities and duties had been incurred or
contracted by it.
<PAGE>
3. CONSUMMATION OF THE MERGER. The parties hereto will cause the Merger
to be consummated by filing with the Secretary of State of Delaware and Wyoming
an articles of merger and this Plan of Merger in such form as required by, and
executed in accordance with, the relevant provisions of the Delaware Law and the
Wyoming Statutes (the time of such filing being the "Effective Time" and the
date of such filing being the "Effective Date").
4. ARTICLES OF INCORPORATION: BYLAWS: DIRECTORS AND OFFICERS. The
Articles of Incorporation and bylaws of the Surviving Corporation shall be
identical with the Articles of Incorporation and bylaws of the Parent as in
effect immediately prior to the Effective Time until thereafter amended as
provided therein and under Delaware Statues.
5. CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, the Company or the holder
of any of the shares (the "Shares") of common stock, (the "Common Stock") of the
Company:
(a) Each Share issued and outstanding immediately prior to the
Effective Time shall remain as issued and outstanding common stock of parent
without change.
(b) Each Share which is held in the treasury of the Company or which
is owned by any direct or indirect subsidiary of the Company shall be canceled
and retired, and no payment shall be made with respect thereto.
(c) Each outstanding or authorized subscription, option, warrant,
call, right (including any preemptive right), commitment, or other agreement of
any character whatsoever which obligates or may obligate the Parent to issue or
sell any additional shares of its capital stock or any securities convertible
into or evidencing the right to subscribe for any shares of its capital stock or
securities convertible into or exchangeable for such shares, if any, shall
remain unchanged.
(d) Each share of Common Stock of Company issued and outstanding
immediately prior to the Effective Time shall be retired into treasury, of the
Surviving Corporation.
(e) No Fractional Shares and no certificates or scrip
representing such fractional Merger Shares, shall be issued.
<PAGE>
6. TAKING OF NECESSARY ACTION: FURTHER ACTION. Each of Parent, and the
Company shall use all reasonable efforts to take all such actions as may be
necessary or appropriate in order to effectuate the Merger under the Delaware
Law, the Wyoming Statutes or federal law as promptly as possible. If, at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of the Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of either of the Constituent Corporations, the
officers and directors of the Surviving Corporation are fully authorized in the
name of their corporation or otherwise to take, and shall take, all such lawful
and necessary action.
IN WITNESS WHEREOF, Parent, and the Company have caused this Plan of Merger to
be executed as of the date first above written.
WINCHESTER MINING CORP.
(A Delaware corporation)
By:/s/Wayne Miller
_______________________________
President
HI-PLAINS ENERGY CORP.
(A Wyoming corporation)
By:/s/M.A. Littman
__________________________
M.A. Littman as Attorney-in-Fact for Z.S. Merritt,
President of Hi-Plains Energy Corp.
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF OWNERSHIP, WHICH MERGES:
"HI-PLAINS ENERGY CORP.", A WYOMING CORPORATION,
WITH AND INTO "WINCHESTER MINING CORPORATION" UNDER THE NAME
OF "PNW CAPITAL, INC.", A CORPORATION ORGANIZED AND EXISTING
UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED AND FILED
IN THIS OFFICE THE SIXTEENTH DAY OF MAY, A.D. 2000, AT 9 O'CLOCK
A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE
NEW CASTLE COUNTY RECORDER OF DEEDS.
Seal
/s/Edward J. Freel
Edward J. Freel, Secretary of State
2680091 8100M Authentication: 0448997
001250985 Date: 5-19-00
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
OF
HI-PLAINS ENERGY CORP.
(a Wyoming corporation)
into
WINCHESTER MINING CORPORATION
(a Delaware corporation)
It is hereby certified that:
1. Winchester Mining Corporation (hereinafter sometimes referred to as the
"Corporation") is a business corporation of the State of Delaware.
2. The Corporation is the owner of all the outstanding shares of common
stock of Hi-Plains Energy Corp., which is a business corporation of the state of
Wyoming.
3. The laws of the jurisdiction of organization of Hi-Plains Energy Corp.
permit the merger of a business corporation that jurisdiction with a business
corporation of another jurisdiction.
4. The Corporation hereby merges Hi-Plains Energy Corp. into the
Corporation.
5. The following is a copy of the resolutions adopted on May 16, 2000 by
the Board of Directors of the corporation to merge the said Hi-Plains Energy
Corp. into the Corporation:
RESOLVED, that Hi-Plains Energy Corp. be merged into this Corporation, and
that all the estate, property, rights, privileges, powers, and franchises
of Hi-Plains Energy Corp. be vested in and held and enjoyed by this
Corporation as fully and entirely and without change or diminution as the
same were before held and enjoyed by Hi-Plains Energy Corp. in its name.
RESOLVED that this Corporation assume all the obligations of Hi-Plains
Energy Corp.
RESOLVED that this Corporation shall cause to be executed and filed and/or
recorded the documents prescribed by the laws of the State of Delaware, by
the laws of the State of Wyoming, and by the laws of any other appropriate
jurisdiction and will cause
<PAGE>
to be performed all necessary acts within the jurisdiction of organization
of Hi-Plains Energy Corp. and of this Corporation and in any other
appropriate jurisdiction.
RESOLVED that this Corporation shall change its corporate name to PNW
Capital, Inc.
RESOLVED that the effective time of the Certificate of Ownership and Merger
setting forth a copy of these resolutions shall be May 16, 2000, and that,
insofar as the General Corporation Law of the State of Delaware shall
govern the same, said time shall be the effective merger time.
Executed on May 16, 2000
WINCHESTER MINING CORPORATION
By:/s/Wayne Miller
Wayne Miller, President
Providence of British Columbia
Country of Canada
The foregoing Certificate of Ownership and Merger was acknowledged before
me this 16th day of May 2000, by Wayne Miller, President of Winchester Mining
Corporation who affirmed the facts contained therein under penalties of perjury.
/s/G. Roy Long Jr.
G. Roy Long Jr.
A Notary Public in and for the
Province of British Columbia,
Commission expires with life.
Secretary of State
Division of Corporations
Filed 09:00 AM 11/6/1996
960323447-2680091
CERTIFICATE OF INCORPORATION
OF
WINCHESTER MINING CORPORATION
FIRST: The name of this corporation is Winchester Mining Corporation.
SECOND: Its registered office in the State of Delaware is to be located at
1313 N. Market Street, Wilmington, DE 19802-1351, County of New Castle. The
registered agent in charge thereof is The Company Corporation, address "same as
above."
THIRD: The nature of the business and, the objects and purposes proposed to
be transacted, and carried on, are to do any or all the things herein mentioned
as fully and to the same extent as natural persons might or could do, and in any
party of the world: The purpose of the corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The amount of the total authorized capital stock of this
corporation is divided into:
100,000,000 shares of stock at $.0001 par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Regina Cephas, 1313 N. Market St., Wilmington, DE 19801-1151
SIXTH: The Directors shall have power to make and to alter or amend the
By-Laws, to fix the amount to be reserved as working capital, and to authorize
and cause to be executed, mortgages and liens without limit as to the amount,
upon the property and franchise of the Corporation. With the consent in writing,
and pursuant to a vote of the holders of a majority of the capital stock issued
and outstanding, the Directors shall have the authority to dispose, in any
manner, of the whole property of this corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of the
stockholder; and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as conferred by the law of the
By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings and
keep the books, documents and papers of the Corporation outside of the State of
Delaware, at such places as may be from time to time designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
SEVENTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation; or (4) a transaction from which the director
derived as improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws
of the State of Delaware, do make, file and record this Certificate and do
certify that the facts herein are true; and I have accordingly hereunto set my
hand.
Dated: November 6, 1996
/s/Regina Cephas
Regina Cephas
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF RENEWAL OF
"WINCHESTER MINING CORPORATION" FILED IN THIS OFFICE ON THE TWENTY-SECOND DAY OF
FEBRUARY, A.D. 2000, AT 11:49 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
SEAL
/s/Edward J. Freel, Secretary of State
Authentication: 0318925
Date: 03-16-00
<PAGE>
STATE OF DELAWARE
CERTIFICATE FOR RENEWAL
AND REVIVAL OF CHARTER
Winchester Mining Corporation, a corporation organized under the laws of
Delaware, the charter of which was voided for non-payment of taxes, now desires
to procure a restoration, renewal and revival of its charter, and hereby
certifies as follows:
1. The name of the corporation is Winchester Mining Corporation.
2. Its registered office in the State of Delaware is located at 1013 Centre
Road, City of Wilmington, Zip Code 19805, County of Newcastle. The name and
address of its registered agent is The Company Corporation, 1013 Centre Road,
Wilmington, Delaware 19805.
3. The date of filing of the original Certificate of Incorporation in
Delaware was November 6, 1996.
4. The date when restoration, renewal, and revival of the charter of this
company is to commence is the 28th day of February, same being prior to the date
of the expiration of the charter. This renewal and revival of the charter of
this corporation is to be perpetual.
5. This corporation was duly organized and carried on the business
authorized by its charter until the 1st day of March, A.D., 1999, at which time
its charter became inoperative and void for non-payment of taxes and this
certificate for renewal and revival is filed by authority of the duly elected
certificate for renewal and revival is filed by authority of the duly elected
directors of the corporation in accordance with the laws of the State of
Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312
of the General Corporation Law of the State of Delaware, as amended, providing
for the renewal, extension and restoration of charters, Gary Burnie, the last
and acting authorized officer hereunto set his hand to this certificate this
10th day of February, A.D. 2000.
By:/s/Wayne Miller
Authorized Officer
Name: Wayne Miller
Print or Type
Title: President
BYLAWS
OF
WINCHESTER MINING CORPORATION
(a Delaware corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in the
corporation shall be signed by, or in the name of, the corporation by the
Chairperson or Vice-Chairperson of the Board of Directors, if any, or by the
President or a Vice-President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were such officer, transfer
agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of Stock of any class a series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or such owner's legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the General
Corporation Law, the Board of Directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any
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<PAGE>
uncertificated shares, the corporation shall send to the registered owner
thereof any written notice prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) range for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate a uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares or stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by the registered holder's attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the corporation or with a transfer
agent or a registrar, if any, and, in the case of shares represented by
certificates, on surrender of the certificate or certificates for such shares of
stock properly endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockho1ders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of'
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day an which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however
that the Board of Directors may fix a new record date for to adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
2
<PAGE>
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the dose of business on the day on which the board
of directors adopts the resolution taking such prior action. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion, or
exchange of stock, or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty days prior to such action. If no record date
is fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.
7. STOCKHOLDERS MEETINGS
- TIME. The annual meeting shall be held on the date and at the time fixed,
from time to time, by the directors, provided, that the first annual meeting
shall be held on a date
3
<PAGE>
within thirteen months after the organization of the corporation, and each
successive annual meeting shall be held on a date within thirteen months after
the date of the preceding annual meeting. A special meeting shall be held on the
date and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shell he held at such place
within or without the State of Delaware, as the directors may, from time to
time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
- CALL. Annual meetings and special meetings may be called by the directors
or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. The notice of any meeting shall also included or be
accompanied by, any additional statements, information, or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at such stockholder's record address or
at such other address which such stockholder may have furnished by request in
writing to the secretary of the corporation. Notice by mail shall be deemed to
be given when deposited, with postage thereon prepaid, in the United States
mail. If a meeting is adjourned to another time, not more than thirty days
hence, and/or to another place, and if an announcement of the adjourned time
and/or place is made at the meeting, it shall not be necessary to give notice of
the adjourned meeting unless the directors, after adjournment, fix a new record
date for the adjourned meeting. Notice need not be given to any stockholder who
submits a written waiver of notice signed by such stockholder before or alter
the time stated therein. Attendance of a stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any 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 stockholders need be
specified in any written waiver of notice.
STOCKHOLDER LIST. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall
4
<PAGE>
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city or other municipality or
community where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The stock ledger shall be the only evidence as to
who are the stockholders entitled to examine the stock ledger, the list required
by this section or the books of the corporation, or to vote at any meeting of
stockholders.
CONDUCT OF MEETING. Meetings of the stockholders shall be presided over by
one of the following officers in the order of seniority and if present and
acting - the Chairperson of the Board, if any, the Vice-Chairperson of the
Board, if any, the President a Vice-President or, if none of the foregoing is in
office and present and acting, by a chairperson to be chosen by the
stockholders. The Secretary of the corporation, or in such Secretary's absence,
an Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the chairperson of the
meeting shall appoint a secretary of the meeting.
PROXY REPRESENTATION. Every stockholder may authorize another person or
persons to act for such stockholder by proxy in all matters in which a
stockholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder or by such
stockholder's attorney-in-fact. No proxy shall be voted or acted upon after
three years from its date unless such proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and, it
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally.
INSPECTORS. The directors, in advance of any meeting, may, but need not,
appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of duties of inspector, shall take and
sign an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of such inspector's ability. The
inspectors, if any, shall determine the number of shares of stock outstanding
and the voting power of each, the shares of stock represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots, or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots, or consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all stockholders. On request of
the
5
<PAGE>
person presiding at the meeting, the inspector or inspectors, if any, shall make
a report in writing of any challenge, question, or matter determined by such
inspector or inspectors and execute a certificate of any fact found by such
inspector or inspectors. Except as may otherwise be required by subsection (e)
of Section 231 of the General Corporation Law, the provisions of that Section
shall not apply to the corporation.
QUORUM. The holders of a majority of the outstanding shares of stock shall
constitute a quorum at a meeting of stockholders for the transaction of any
business. The stockholders present may adjourn the meeting despite the absence
of a quorum.
VOTING. Each share of stock shall entitle the bolder thereof to one vote.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Any other action shall be authorized by a majority of the
votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot
8. STOCKHOLDER ACTION WITHOUT MEETING. Except as any provision of the
General Corporation Law may otherwise require, any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, 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 authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. Action taken pursuant to this paragraph shall be
subject to the provisions of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors of the
corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of 3 persons. Thereafter the number of
directors constituting the whole board shall be at least one. Subject to the
foregoing limitation and except for the first Board of
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<PAGE>
Directors, such number may be fixed from time to time by action of the
stockholders or of the directors, or, if the number is not fixed, the number
shall be 5. The number of directors may be increased or decreased by action of
the stockholders or of the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualified or until their earlier resignation or removal. Except
as the General Corporation Law may otherwise require, in the interim between
annual meetings of stockholders or of special meetings of stockholders called
for the election of directors and/or for the removal of one or more directors
and for the filling of any vacancy in that connection, newly created
directorships and any vacancies in the Board of Directors, including unfilled
vacancies resulting from the removal of directors for cause or without cause,
may be filled by the vote of a majority of the remaining directors then in
office, although less than a quorum, or by the sole remaining director.
4. MEETINGS
TIME. Meetings shall be held at such time as the Board shall fix, except
that the first meeting of a newly elected Board shall be held as soon after its
election as the directors way conveniently assemble.
PLACE. Meetings shall be held at such place within or without the State of
Delaware as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which the time and
place have been fixed. Special meetings may be called by or at the direction of
the Chairperson of the Board, if any, the Vice-Chairperson of the Board, if any,
of the President, or of a majority of the directors in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for
regular meetings for which the time and place have been fixed, written, oral, or
any other mode of notice of the time and place shall be given for special
meetings in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by such
director or member before or alter the time stated therein. Attendance of any
such person at a meeting shall constitute a waiver of notice of such meeting,
except when such person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to
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<PAGE>
be transacted at, nor the purpose of any regular or special meeting of the
directors need be specified in any written waiver of notice.
QUORUM AND ACTION. A majority of the whole Board shall constitute a quorum
except when a vacancy or vacancies prevents such majority, whereupon a majority
of the directors in office shall constitute a quorum, provided, that such
majority shall constitute at least one-third of the whole Board. A majority of
the directors present, whether or not a quorum is present, may adjourn a meeting
to another time and place. Except as herein otherwise provided, and except as
otherwise provided by the General Corporation Law, the vote of the majority of
the directors present at a meeting at which a quorum is present shall be the act
of the Board. The quorum and voting provisions herein stated shall not be
construed as conflicting with any provisions of the General Corporation Law and
these Bylaws which govern a meeting of directors held to fill vacancies and
newly created directorships in the Board or action of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
CHAIRPERSON OF THE MEETING. The Chairperson of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairperson of the Board, if any and if present and acting, or the
President if present and acting, or any other director chosen by the Board,
shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the General
Corporation Law, any director or the entire Board of Directors may be removed,
with or without cause, by the holders of a majority of the shares then entitled
to vote at an election of directors.
6. COMMITTEES. The Board of Directors may designate one or more committees,
each committee to consist of one or more of the directors of to corporation. The
Board way designate one or more directors as alternate members of any committee~
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of any member of any such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board, shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation with
the exception of any power or authority the delegation of which is prohibited by
Section 141 of the General Corporation Law, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
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7. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board or committee, as the case may be, consent
thereto in writing and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a Secretary,
a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of
Directors, a Chairperson of the Board, a Vice-Chairperson of the Board, an
Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
with such titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing such officer, no officer other than the Chairperson or
Vice-Chairperson of the Board, if any, need be a director. Any number of offices
may be held by the same person, as the directors may determine.
Unless otherwise provided in the resolution choosing such officer, each
officer shall be chosen for a term which shall continue until the meeting of the
Board of Directors following the next annual meeting of stockholders and until
such officer's successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform such
duties in the management and operation of the corporation as shall be prescribed
in the resolutions of the Board of Directors designating and choosing such
officers and prescribing their authority and duties, and shall have such
additional authority and duties as are incident to their office except to the
extent that such resolutions may be inconsistent therewith. The Secretary or an
Assistant Secretary of the corporation shall record all of the proceedings of
all meetings any actions in writing of stockholders, directors, and committees
of directors, and shall exercise such additional authority and perform such
additional duties as the Board shall assign to such Secretary or Assistant
Secretary. Any officer may be removed, with or without cause, by the Board of
Directors. Any vacancy in any office may be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
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ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter, or repeal
these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors
or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of
the Bylaws of Winchester Mining Corporation, a Delaware corporation, as in
effect on the date hereof.
Dated: September 27, 1999
/s/_______________________________________
Secretary of Winchester Mining Corporation
(SEAL)
