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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________
Form 10/A-1
GENERAL FORM FOR
REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
________
THE NEW ANACONDA COMPANY
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(Name of Small Business Issuer in its charter)
UTAH 87-0405529
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
136 East South Temple, Suite 1700-A, Salt Lake City, Utah 84111
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(Address of principal executive Offices) (Zip Code)
Registrant's telephone number, including area code: 801-355-1341
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 Par Value
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
This Form 10-SB contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, which act
contains safe harbor provisions for forward looking statements. Statements
made in connection with initial public offerings, however, are not
protected by the safe harbor provisions of the Private Securities
Litigation Reform Act. Nonetheless, the Company believes that investors
will benefit from the cautionary language included in this paragraph. For
this purpose any statements contained in this Form 10-SB that are not
statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, words such as "may," "will,"
"expect," "believe," "anticipate," "estimate," or "continue" or comparable
terminology are intended to identify forward-looking statements. These
statements by their nature involve substantial risks and uncertainties.
Actual results may differ materially depending on a variety of factors,
many of which are not within the Company's control. These factors include
but are not limited to economic conditions generally and in the industries
in which the Company may participate; competition within the Company's
chosen industry, including competition from much larger competitors;
technological advances and failure by the Company to successfully develop
business relationships.
ITEM 1. BUSINESS.
The New Anaconda Company, which is not affiliated or otherwise
associated with the Anaconda Company or any of its affiliates, is a
development stage company in the business of processing mine tailings,
(mineral ore), and selected industrial waste into viable by-products which
include magnetic iron oxide, bulk filler powders, liquid fertilizer base
and precious metals. The Company uses proprietary separating technology
acquired and developed by it to separate oxide materials and precious metal
residues from previously mined and processed ore and selected industrial
waste materials. This proprietary technology, known as the Waste Oxide
Resource System ("WORS") process utilizes environmentally safe chemical
engineering applications to produce commercial by-products from the ore
materials with very little waste discharge. The Company will contract with
mining companies and producers of certain industrial waste to acquire the
tailings and waste the Company will process. The Company also owns real
property and minerals rights and has a joint venture interest in mineral
properties which may be suitable as a source of materials.
To commence operations, the Company will need to complete construction
of its initial pilot plant originally planned to be located in Victoria,
Texas, however, due to transportation costs will now be located close to
the origin of the process materials in West Virginia. The plant design and
equipment is currently over 50% completed. The pilot plant's estimated
capacity will be a minimum of 50 tons of material per day. Once the pilot
plant is commissioned, the Company plans to build a series of main
production facilities with multiple production lines. The Company expects
to install these production facilities over a period of three to five
years, with the first main production facility fully functional by 2003.
This initial main production plant is projected to have capacity of up to
500 tons of material per day.
The Company is currently investigating additional potential sites for
the other main production facilities to be located with a maximum capacity
of up to 2,500 tons of material per day being targeted.
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HISTORY AND DEVELOPMENT
The Company was incorporated on June 13, 1983 in the State of Utah
under the name Trac Control Systems, Inc. On January 16, 1984, the Company
changed its name to Computrac Systems, Inc. From the date of incorporation
through 1988 the Company was in the business of developing security
monitoring devices for use by law enforcement agencies. The business
conducted by the Company was not successful and operations were
discontinued. From 1988 to 1997, the Company conducted no business
activities except for the investigation of new business opportunities
available to the Company.
On August 21, 1997, the Company entered into a reorganization with
Foureyes, plc, a corporation organized under the laws of the United Kingdom
and Great Britain. The name of the Company was changed to Foureyes
Holdings, Inc. As a result of the reverse acquisition of Foureyes, plc,
control of the Company was acquired by Granleigh Holdings Limited
("Granleigh"). Mr. Paul A. de Rome, the President of the Company is also
the Chief Executive Officer of Granleigh. Foureyes, plc became a wholly
owned subsidiary of the Company.
During 1997 and 1998 the Company through Foureyes, plc purchased
several gold production contracts from Harnell Trading Limited,
("Harnell"), a related party of the Company through common ownership and
control. The gold production contracts were purchased from Harnell by the
Company for $500,000. Harnell did not make full delivery of the gold as
required by the terms of the initial gold production contracts. In lieu of
delivery of the gold, Harnell paid Foureyes, plc $492,323, issued 120
additional gold production contracts and delivered 1,000,000 common shares
of Ventura Corporation, ("Ventura") a Niue corporation (located in the
south pacific). Ventura is a related company of the Company and Harnell.
The Company then exchanged the 1,000,000 shares of Ventura for 166,667
shares of Anglo American Metals, Inc., ("Anglo American") a Texas
corporation, which was also a related party of the Company. Anglo American
Metals, Inc., is not affiliated or otherwise associated with Anglo American
Gold, Ltd., or any of its affiliates.
Development costs of Anglo American from 1993 to 1998 were advanced by
Granleigh. The total debt accumulated by Anglo American to Granleigh was
$32,000,000. In November 1998, Granleigh and Anglo American negotiated a
debt restructure.
Under the restructure, Anglo American issued 10,000,000 common shares
to Granleigh. In turn, Granleigh transferred to Anglo American a 65%
ownership interest in Ventura, with an option to acquire the remaining 35%
ownership interest in Ventura. Anglo also received a 50% ownership
interest in a mineral rights Joint Venture Agreement with Round Tower
Holdings Limited, relating to mineral rights on BLM property located in
Bakersfield, California.
On June 7, 1999 the Company divested itself of its subsidiary
Foureyes, plc., however, it retained the shares of Anglo American and the
gold production contracts issued by Harnell. Also on June 7, 1999, the
Company acquired in a stock for stock exchange the remaining issued and
outstanding shares of Anglo American. At that time, the Company changed
its name to The New Anaconda Company.
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In August, 1999 the Company cancelled the outstanding gold production
contracts and issued 20,000,000 common shares to Harnell in exchange for
Harnell's proprietary separating technology. The Company incorporated the
Harnell technology with other technologies the Company had developed and
created the WORS technology. The WORS technology has changed the way the
Company processes ore.
Prior to the acquisition of the Harnell technology, the Company
processed ore using its proprietary smelting and chemical techniques to
extract precious metals contained within complex iron ores. This process
did not allow the base ore material to be used in any way. Using the WORS
process, however, the Company found that it can recover the oxide
materials contained in the ore it processes. These oxide materials are
easily convertible into bulk powders which can be used in a number of
products. Due to volume of bulk powders it can produce, the Company
anticipates a significant portion of its revenue will be generated from
bulk powder sales.
At no time from August 21, 1997 to the present has control of the
Company changed, the transactions of the Company from 1997-1999 were
undertaken to combine assets and technologies held by various related
entities into a unified business entity to pursue the current business
objectives of the Company.
ORGANIZATIONAL STRUCTURE OF THE COMPANY AND ITS SUBSIDIARIES
The current organizational structure of the Company and its
subsidiaries, and the principal assets of each is as follows:
Company Principal Assets
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|The New Anaconda Company, |
|a Utah Corporation |
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-----------------------------
|Pilot Plant & Equipment in |
|Victoria, Texas |
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|Anglo American Metals, Inc. |
|a Texas Corporation, wholly |
|owned by The New Anaconda | -----------------------------
|Company | |Joint venture agreement on |
------------------------------ |mineral rights in |
|Bakersfield, California |
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|Ventura Corporation |
|a Nieu Corporation, owned |
|100% by Anglo American |
|Metals, Inc. |
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------------------------------ -----------------------------
|Ferry Lane Limited, | |Land and mineral rights in |
|a British Virgin Island | |Butte, Montana |
|Corporation, wholly owned | -----------------------------
|by Ventura Corporation |
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DESCRIPTION OF SUBSIDIARIES AND PLANS OF OPERATION
ANGLO AMERICAN METALS, INC. Anglo American was organized as a Nevada
corporation in 1993 and was re-domiciled as a Texas corporation on May 20,
1996. The business objective of Anglo American is to further develop the
proprietary chemical extraction technology for base and precious metals and
to construct and operate a commercial processing facility utilizing that
technology.
THE WORS PROCESS
The WORS process is a separation process used to segregate oxide
minerals from precious metal ore residues to create commercial by-products
which include iron oxide, a combination of non-ferrous or non-magnetic
oxides and ammonium hydroxide. These oxide products will be sold to
existing U.S. markets. The precious metal residues will be sold to
existing refineries for further processing and extraction of the refined
precious metals.
The continued development of the three stage WORS process is expected
to be a key factor to the profitability of Anglo American and related
entities. The first stage of the WORS process separation of the oxide
material from the original ore body is accomplished by passing ground
materials over a magnetic field apparatus which segregates the iron based
oxides from the main bulk ore materials. The second stage of the WORS
process involves chemical processing of the waste oxide material, which may
originate from more than one site, where it is ground to very small
particulate sizes, + 25 microns, mixed with chemicals and heated in a
reactor to allow chemical conversation to occur. Finally, the materials
allow the gas phase extraction of the heavy and precious metals, allowing
the residual hot powdered oxides to be processed through a water system to
magnetically separate the high grade iron oxide from the bulk concrete
filler residues.
The Company uses existing equipment developed for other industries,
and some custom built equipment, to perform the three stage WORS process.
For example, the Company has already tested readily available magnetic
separating equipment from two manufacturers in the United States which is
capable of meeting the Company's anticipated feed rates during stage one.
The grinding equipment used in stage two was specifically designed and
built for the Company by a manufacturer in the United States, and the first
full scale unit has been installed at the facility in Texas. The heating
reactor is a standard unit that the Company modified to suit its
requirements.
Similarly, the storage and feed equipment for the pilot plant are
standard items and have already been installed and are operational at the
Victoria facility. All other ancillary equipment that may be needed is
available off the shelf from a number of manufacturers.
A significant advantage of the WORS process is that there are almost
no emissions of solid particulate, gas or liquid wastes. The Company's
facilities and processes are environmentally safe and will conform to
current environmental regulations governing water and air emission
standards. All processed waste material is non-toxic and may be disposed
of without special permits or handling. The pilot facilities have
qualified for exemptions under the Texas Natural Resources Control
Commission ("TNRCC") as well as local, state and federal regulations,
current review of the regulations for West Virginia is being undertaken to
ensure compliance.
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Another advantage of the WORS process is that the first stage can be
performed on site at the origin of the processing material. By separating
on site, the Company is able to ship a significantly reduced volume of
material from the ore sites to the pilot and main production facilities.
This also significantly reduces the amount of raw material storage space
the Company needs at its facilities. The Company intends to install the
necessary first stage separating equipment at the sites of third party
companies providing the raw materials. This equipment will either be
operated by the Company, or by the third party supplier, as the parties
determine during contract negotiations. After separation, the ore which
the Company wishes to purchase from the supplier, will be transported to
the pilot or main processing plant for further refining.
It is the intent of Anglo American, as funds permit, to further
develop and refine the process and equipment through an extensive research
and development program to reduce processing costs and increase the
applications of the technology to a broader range of raw materials.
PROCESSING FACILITIES
Anglo American will also focus on the construction of the pilot
facility in West Virginia following the closure of the laboratory and test
facility in Victoria, Texas. This pilot facility is to be located on a
large site zoned for industrial use. The facility will be housed in a
building of approximately 30,000 square feet and will comprise of the
relocated research and development laboratory, office space and the pilot
processing facility. The Company has already commenced the dismantling of
the equipment and laboratory fixtures at the Victoria, Texas site, ready
for the relocation to West Virginia. The Company believes the existing
equipment should be sufficient to meet the production capacity of the pilot
plant with the addition of the items of equipment which were identified by
the testing procedures carried out at the Victoria Texas facility.
The Company has reached agreements in principle with a third party who
will supply sufficient ore at competitive prices to meet the projected
capacity of the pilot plant and the initial main production plant. It has
been agreed in principle that the relocation to West Virginia will be to a
site which is adjacent to the third party.
The Company may also exploit properties which it owns or on which it
has mineral rights as a source of ore material for processing. However, the
extensive review and testing of the properties will need to be carried out
to determine the commercial viability of exploiting the mineral rights
compared to the processing of third party originating ore materials.
One of the primary reasons the Company has decided to relocate to West
Virginia is that it is adjacent to the ore supply as well as close to an
inland waterway. This waterway runs within 1 mile of the proposed pilot
plant. The Company expects to rely primarily on commercial trucks to move
the ore material to the pilot plant and barge transport to move the bulk
oxide products to the various bulk distribution centers in the United
States.
Another advantage of the pilot plants proposed location is the ready
availability of water, natural gas, electricity, and other essentials which
are all being supplied by local utility companies, together with the
immediate availability of a significant land fill site owned by the third
party providing the ore materials.
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The Anglo American pilot facility will require additional investment
in equipment and finishing improvements to be fully commissioned. It is
anticipated that the cost to complete the facility and begin full test
production will be approximately $3,300,000 including the first full size
production line. Once fully functional, the pilot plant will have a
through put capacity of up to + 50 tons per day, of which + 40% or +
40,000 lbs. of high grade magnetic iron oxide is produced and the other +
60% or + 30 tons of bulk filler material will be produced. This bulk
filler includes mixed non-magnetic oxide products which are comparable to
Class "C" and Class "F" coal ash derivatives.
Anglo eventually plans to build a larger initial main production
plant to capable of accommodating increased processing demands. This plant
will be built adjacent to the proposed pilot plant facility which is
located on a large tract of industrial land adjacent to the third party ore
site. This would continue to reduce transportation costs and increase
profitability. Anglo estimates it will take approximately $14,000,000 to
establish and fully commission this larger 500 ton per day facility.
The Company does not currently have a firm commitment from any sources
for the funds to commission the pilot plant or the larger initial main
production plant.
The larger plant will have a projected through put capacity of + 500
tons per day by the year 2003, producing up to 400,000 lbs. of high grade
magnetic iron oxide and approximately 300 tons of combined oxide products
which are intended for use as manufactured building material products per
day. The secondary recovery of precious metals should produce a precious
metal yield between 500 and 2,000 troy ounces of gold per day.
The Company's secondary precious metal recovery estimates are based on
over four years extensive testing and independent review of the process and
the resultant yields witnessed by qualified professionals. Using standard
acceptable assay and appraisal techniques, the testing has shown that the
average amount of gold produced by the WORS process is 1.18 troy ounces of
gold per ton of oxide concentrate processed.
With economies of scale and superior efficiency of large scale
equipment, it is expected that the average yield per ton of oxide
concentrates will be between one and four troy ounces per ton processed.
PRODUCTS
The WORS process produces high grade iron oxide, which is + 90% pure
at + 10 microns. This is comparable to iron oxides that occur naturally
between one(1) and 2000 microns (1/8 inch). According to the Chemical
Reporter, the current market value for high grade magnetic iron oxides is
+$0.20 per lbs. The product will be shipped in bulk quantities of one ton.
The purchasers will perform purity tests on the material to verify purity.
The Company expects the market for these high grade oxide products to
continue to expand as consumer demand in developed and developing countries
far outstrips world supply. The Company anticipates that a significant
portion of the revenues will be generated by the high grade magnetic iron
oxide and non-ferrous oxide products produced by the Company.
The magnetic iron oxide powder has a number of markets including
recording tape, electronic card readers, rubberized magnetic products and
in certain cases the high grade manufacturing of steel and related
products. There are a number of potential markets within the United States
and a strong market is anticipated. The powdered chemical will be dried,
bagged and loaded on barges or other means of transport for delivery to
third parties who will then distribute the product. This will be done FOB
the pilot plant in West Virginia.
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The residual non-ferrous (non-metallic) oxides have a variety of
uses, mostly relating to bulk fillers which are predominantly used in the
building and construction industries mainly as a concrete additive and
filler. One specific use and revenue source which has been proposed is the
possibility that the gypsum content of wallboards be replaced with the
residual oxide material. This is a potentially large market area because
of the limited availability of gypsum. Further, it is believed that the
fire retardant quality of the oxide material and its strength in wet
environments would produce a better quality product and command a better
price at market. As the material is in a slurry form when it leaves the
separation equipment, it is a simple process to add the binder materials to
construct the wallboard.
The Company is in discussions with wallboard manufacturers for either
purchase of the product or a possible joint venture arrangement. As a bulk
filler medium, the non-ferrous oxides have a comparative value of + $25.00
per ton. This being based on the value of comparable Class F Fly Ash
filler. The current market for such filler products in the United States
being in excess of + 35 million tons per annum.
Liquid by-products of the proprietary ore processing is a high quality
mineral salt solution which may be the basis for commercial agricultural
fertilizer products and another source of revenue for the Company.
The Company is exploring the possibility of accessing the fertilizer
market, with discussions being initiated with large fertilizer
manufacturers, who may establish a facility adjacent to the proposed main
plant site.
It has been indicated that they have a possible interest, subject to
chemical analysis of the solutions and tests by the Agricultural Department
of the University of Texas, Houston.
The final source of revenue which may be derived by the Company will
be from the heavy metal residues which are extracted as part of the overall
process. These products are primarily gold and some silver, with other base
metal residues. The percentage of these by-products relative to total
volume of material produced is extremely small. However, due to the high
value of precious metals, the Company anticipates these by-products will
provide a significant additional revenue stream. As the heavy metal by-products
require further refining before they become precious metals, the
Company will initially negotiate the necessary refining and market the
precious metals or will simply sell the heavy metal residues, although the
pilot plant will have full refining capacity should the Company decide to
process the residues to refined metals.
The Company expects to yield between 50 and 200 troy ounces of gold
per day from the pilot plant through this secondary recovery, and between
500 and 2,000 troy ounces of gold per day from the initial main production
plant. The expansion and construction of subsequent main production plants
will increase the recovery proportionately, with a potential total capacity
projected at 2,500 tons per day, some five times the capacity of the
initial main production plant.
VENTURA CORPORATION. Ventura Corporation is an off-shore holding
company which was formed to acquire the entire issued share capital of
Ferry Lane Limited. Ventura Corporation is incorporated in Niue, and has
no operating business and owns no assets other than 100% of Ferry Lane
Limited.
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FERRY LANE LIMITED. Ferry Lane Limited is an off-shore holding
company incorporated in the British Virgin Islands (BVI). Ferry Lane
Limited owns a large portion of the base and precious mineral properties
and assets of the former Anaconda Company in Butte, Montana. The
properties include approximately 9,000 acres of ground, with up to 3 miles
of existing shafts and tunnels in what has been referred to as "The Richest
Hill on Earth." These assets were previously subject to a detailed
appraisal in 1987 and title insurance issued to a prior owner in the amount
of $142 million by a combination of First American Title Company and
Commonwealth Title Company. The current appraised value is not yet
established by the Company. The audited asset value reflects the
predecessor cost of $30 million.
The Company considers the historical records of the original Anaconda
Company to be a significant asset and is examining the core samples from
the Montana site using the new technology to compare previous evaluations.
The review of the records and core samples is expected to take several
years due to the large volume of the information and samples available,
some dating back to the 1880s.
The Company intends to develop an extensive program to collate and
organize drilling records, core samples, property titles and deeds. The
Company also expects to initiate a maintenance program for the mining
shafts and equipment on properties.
The Company, through Anglo American, intends to implement a detailed
research and testing program using its proprietary processing technology on
the ore deposits on its Butte, Montana and Bakersfield, California
properties. The Company will not commence any operations on the Butte or
Bakersfield properties until testing is complete, which may take several
years. The testing of the core samples will take place at the Company's
relocated laboratory facilities in West Virginia, although eventually the
Company may build a testing facility at the Butte, Montana location. It
may require substantial time and capital resources to obtain the necessary
governmental approvals to obtain mining permits to begin a mining
operation. Therefore, the Company does not intend to seek any such permits
until the testing program is completed.
During the review period, Anglo American will process oxide materials
from ore materials that are either purchased from third party ore suppliers
by the Company or processed by the Company on contract to the third
parties.
REPORTS TO SECURITY HOLDERS
Prior to filing of the registration statement on Form 10 the Company
was not subject to the reporting requirements of Section 13(a) or 15(d) of
the Exchange Act. Upon effectiveness of this registration statement, the
Company will file annual and quarterly reports with the Securities and
Exchange Commission ("SEC"). The public may read and copy materials filed
by the Company with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The Company is an electronic filer and the SEC maintains an Internet
site that contains reports and other information regarding the Company
which may be viewed at http://www.sec.gov.
MARKET AND COMPETITION
The Company intends to participate in four markets: iron oxides,
non-ferrous bulk filler material or manufactured building products, liquid
fertilizer and precious metals.
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The iron oxides produced by the Company's processing technology will
be sold to existing companies in the magnetic product industries. Due to
the economy of bulk large scale production the Company will be capable of
producing iron oxide powder which is much more uniform in size than most of
the competition and as such is capable of maintaining a competitive edge
for the foreseeable future.
The non-ferrous oxides produced by the Company's processing technology
will be sold to two existing markets, the wall board construction industry
and the concrete filler industry. Again, due to the Company's processing
technology, the residual non-ferrous oxides are extremely fine materials
with a uniform density unlike comparable naturally occurring materials.
The products capable of utilizing the oxides is wide ranging and the
Company is planning to explore the manufacturing of the oxides into
finished goods as a secondary market area.
In the interim, the Company expects that the quality of the oxides and
the competitive pricing available will give the Company a continued
economic advantage over the other producers.
The liquid solutions from the Company's processing technology will be
sold to existing fertilizer manufacturers where it is expected that local
manufacturers will utilize the liquid by-products as a base for their
existing fertilizer products. The cost savings available to the fertilizer
industry by utilizing the Company's liquid by-products are expected to
continue for the foreseeable future due to the fact that their current
costs of raw materials far exceeds the cost to the Company for the by-product
-and therefore the Company can always maintain a price structure
with will remain competitive.
The precious metals extracted by the processing technology will be
sold to existing markets where a constant demand exists, all sales being
based on the prevailing bullion prices of the international markets.
The Company believes that its proprietary processing technology will
provide a competitive cost advantage in the markets it will pursue. Also,
because the Company is diversifying its target markets, the Company will
not be dependent upon any single market or product to generate revenue.
Initially, the Company will pursue prospective customers for its
products through existing markets, trade journal advertising and direct
contact. Currently, the Company is discussing sales of non-ferrous oxide
material with potential customers with a joint venture proposal being
discussed to build a wall board manufacturing plant adjacent to the
proposed new main plant to allow the manufacturing of finished goods to be
constructed from the Company's products.
EMPLOYEES
The Company currently has five full time employees which are
sufficient to perform the administration and pre-production operations of
the Company. The Company intends to hire additional employees as required
upon completion and commission of the pilot plant facility. The Company's
employees are not covered under any collective bargaining agreements and
are considered at-will employees.
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ITEM 2. FINANCIAL INFORMATION.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
2000 1999 1998 1997 1996
----------------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Operating Revenues 0 0 0 0 0
Loss from Continuing (8,316,274)(14,997,918) (16,793,773) (2,857,090) (964,500)
Operations
Loss per Share (0.10) (0.22) (0.56) (0.11) 0
Total Assets 29,720,727 30,346,686 1,522,899 983,711 0
Payables Long and 2,646,197 1,598,928 24,771,762 7,700,596 964,500
Short Term
Cash Dividend per 0 0 0 0 0
Share
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash on hand of $1,825 as of March 31, 2000.
Since inception, the Company has been engaged in research and
development and raising the needed capital to bring technology to the
production level and, therefore, is considered a development stage
enterprise. The Company's ability to move from the development stage is
dependent upon its ability to generate sufficient cash flow from operations
to meet its obligations on a timely basis, to obtain additional funding as
may be required, and ultimately to attain successful operations.
Management has been authorized by the board of directors to issue up to
5,000,000 shares of its common stock to the public for additional financing
in the future. Management is negotiating with a source of equity
financing. The Company is also holding discussions with additional private
placement and lending sources in case the current negotiations do not
materialize. No firm commitments have been received. Management is also
negotiating a joint venture with a major raw material source for the
development of a pilot plant on the source's property. These negotiations
are at an early stage and a successful conclusion cannot be assured. There
is no assurance that the Company will be able to raise any capital or that
the Company will receive sufficient capital to continue in operation. The
Company operations have been placed on hold until new financing can be
secured. The minimal cash expenses incurred during the past year have been
funded by the Company's largest shareholder on a long-term loan basis.
Management believes that the shareholder will use its best efforts to
continue to provide subsistence funding, however, no agreement to do so
exists and the shareholder's ability to do so on a extended basis is
doubtful. Future capital commitments, including the funding needed to
complete the plant, are also on hold subject to the receipt of loan or
equity funds as mentioned above. Repayment of debt is anticipated to come
from operating profits to be generated when the pilot plant and or
subsequent plants are in operation. No debt repayment is anticipated from
the anticipated financing, should it be successfully completed. The
Company's long term debt is major shareholder loans. It is not anticipated
that these loans will be paid until cash flow is sufficient to repay these
obligations in an orderly manner. The Company has asked its officers to
defer salaried and wages until financing is obtained. These salaries have
been expensed but remain unpaid. The Company does expect to pay the
accrual or a substantial portion of the accrual upon receipt of funds
should such receipt of funds occur. This accrual as well as other
liabilities is included in the increase in accrued expenses in the year
ending March 31, 2000.
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RESULTS OF OPERATIONS
COMPARISON OF THE YEAR ENDED MARCH 31, 2000 AND THE YEAR ENDED
MARCH 1, 1999.
The Company had no revenue during the year ended March 31, 2000 or
during the same 1999 period.
General and administrative expenses of $8,214,979 incurred in the year
ended March 31, 2000 exceed the $2,532,133 for the year ended March 31,
1999 by $5,682,846. The 2000 period includes $6,750,000 of consulting
expenses not included in the comparable 1999 period. The $6,750,000 was
paid in stock valued at $2.25 per share, which was the market price at the
time of issuance. 1,000,000 of these shares were issued for consulting
activities including, among other things, the identification of potential
funding sources and 2,000,000 were issued to an executive recruiting
service for finding and inducing a Company officer to enter into a three
year consulting agreement with the Company.
Except for this consulting expense other administrative expenses are
less than the 1999 period by $1,067,154. This reduction of expenses is due
to the reduced level of company activity during the twelve months ended
March 31, 2000. Legal and professional fees incurred in the twelve months
ended March 31, 1999 were $236,938 compared to $129,328 in the year ended
March 31, 2000. Public relations and advertising expenses of $420,516 were
incurred in the twelve months ended March 31, 2000 compared to $1,382 in
the prior year. Travel expense increased from $33, 086 in the year ended
March 31,1999 to $114,567 in the year ended March 31, 2000. These
increases were as a result of preparing the Company for registration and
fund raising activities. These increases were offset by reductions in
insurance expense with a credit in the twelve months ended March 31, 2000
of $7,586 compared to an expense of $997,262 in the 1999 year. Electricity
expense was reduced to $4,591 in the year ending March 31, 2000 from
$21,220 in the year ended March 31, 1999. Salaries expenses were reduced
from $810,346 in the twelve months ended March 31, 1999 to $397,110 in the
year ended March 31, 2000. Supplies expenses were reduced from $65,751 in
the year ended March 31, 1999 to $4,521 in the 2000 year. All of these
personnel and facilities expenses were reduced during the year ended March
31, 2000 as a result of ceasing operations pending the receipt of funds.
Research and development activities of $51,802 for the twelve months
ended March 31, 2000 are $44,248 more than the $7,554 incurred in the same
period in 1999. This increase was due to expenses incurred in testing a
new reactor system and gas collection methods associated with the new
reactor.
Interest expense of $11,910 in the year ended March 31,2000 is
significantly less than the $12,010,354 interest expense in the prior year
twelve month period. The Company extinguished most of its third party debt
in November, 1998 and as such the interest expense for the fiscal year
ended March 31, 2000 represents only interest associated with installment
purchases of equipment and vehicles at the Victoria, Texas facility. In
1997 and 1998 the Company entered into a borrowing program with a finance
house in London whereby the Company agreed to repay $250,000 for each
$100,000 borrowed. The loans were for a twelve month period and the
interest portion was expensed ratably over the twelve months. The Company
believed that the monies would be sufficient to complete a plant and that
the loans would be repaid from the resultant cash flows. The Company
12
</Page>
<PAGE>
<PAGE>
entered into this program as it did not have alternative financing at the
time. The Company believed that the high rates of interest could be
covered by the cash flow that resulted from profit from operations and that
it would be able to repay principle and interest within the twelve months.
This belief was based on understandings that the underwriters would raise
sufficient money to complete a facility. The finance house did not
continue the program to that end.
The Company found itself in a position where it had agreed to pay
these high interest rates but did not have the funds to complete the
operating plant to produce the cash flow. The Company negotiated an
agreement in November 1998 to convert this debt to common shares.
Due to cash flow difficulties, the Company was forced to return some
equipment and vehicles during the twelve months ended March 31, 2000. This
disposal resulted in a loss of $73,150. The Company had lost $447,877
during the year ended March 31, 1999, primarily from the sale lease back of
the Victoria, Texas facility.
During the twelve months ended March 31, 1999, the Company had an
extraordinary gain on the extinguishments of debt of $5,705,000. This gain
resulted from the conversion of debt to equity. No such gain occurred in
the March 31, 2000 fiscal year.
COMPARISON OF THE YEAR ENDED MARCH 31, 1999 AND THE YEAR ENDED
MARCH 31, 1998.
The Company had no revenue in the twelve months ended March 31, 1999.
No revenue was generated in the year ended March 31, 1998 .
General and administrative expense for the twelve months ended March
30, 1999 was $2,532,133. This is $1,304,713 less than the $3,736,846
incurred in the twelve months ended March 31, 30, 1998. This reduction is
due to the reduced level of activities during the latter half of fiscal
year 1999.
Research and development activities for the twelve months ended March
31, 1999 was $7,554 compared to $124,574 during the twelve months ended
March 31, 1998. This reduction is due to the general reduction of
activities during the second half of the year ended March 31, 1999.
Interest expense for the twelve months ended March 31, 1999 was
$12,010,354. The 1998 years interest expense was $13,057,375. This
reduction is due to a lesser amount of loans initiated in the 1999 year and
the extinguishments of the debt program in November 1998.
Interest expense incurred in both fiscal years 1999 and 1998 result
from a borrowing program initiated in the latter part of fiscal 1997. In
November 1998 the Company negotiated a stock issuance program to retire the
remaining principal and accrued interest from this program. This negotiated
agreement resulted in the creditors accepting stock at a stated value of
$5,705,000 less than the total interest and principal. This resulted in an
extraordinary gain for the 1999 fiscal year.
During the twelve months ended March 31, 1999, the company sold its
plant facility in Victoria, Texas under a sale-leaseback arrangement. The
sale resulted in a loss of $386,161. No such transaction occurred in the
1998 comparable period.
13
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<PAGE>
<PAGE>
ITEM 3. PROPERTIES.
The Company houses its administrative offices at 136 East South
Temple, Suite 1700-A, Salt Lake City, UT 84111 which are held on a month to
month basis. It is anticipated that the administrative offices of the
Company will remain at such address until the pilot plant and main plant in
West Virginia are in full operation.
The Anglo American pilot processing plant is located at 3701 East Rio
Grande, Victoria, Texas 77901. The plant land and buildings are leased for
$3,500 per month with an option to purchase for market value, estimated at
$350,000. The $350,000 was budgeted as part of the Company's next round of
financing, and represents the cost of reaquiring the land and buildings
which were sold on a sale/lease back arrangement with a local property
developer, however, as the plans to relocate the pilot plant to West
Virginia are almost complete, the budget of $350,000 will be applied to the
construction cost of the new facility in West Virginia. The lease expired
in August 2000 with the Company exercising its option to rent on a month to
month basis
The Company, via its subsidiary Ferry Lane Limited, owns property and
mineral rights in Butte, Montana. The size of the properties, as far as
records indicate, exceeds 9,000 acres comprising surface and underground
mining claims, agricultural land, and listed historical monuments. The
property also includes various warehouse buildings which hold thousands of
drillings samples and records covering the testing and mining conducted on
the properties during the past century. There are hundreds of individual
deeds relating to individual claims, some of which date back to the late
1800's. Physical transfer of the deeds has been initiated, however,
because the transfers are recorded manually, the Company anticipates it
will be several months before all deeds are transferred.
The Company also has a joint venture interest under an Ore Processing
Contract with an entity that has a mineral lease on BLM owned property near
Barstow, California. The Company has no obligation to conduct any mining
operations on the property. All permits and mining activities will be
conducted by the joint venture partner, Cameron Miller and Gold Scout,
LLC., who have other properties in New Mexico and Arizona, and may, at
their discretion, provide ore concentrate material to the Company from
these sites.
The Company will process the materials delivered by the joint venture
partner to the Company's facility in Texas. Currently, there is no date
set when the joint venture activities will commence.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth as of November 7, 2000, the name and
the number of shares of the Registrant's Common Stock, par value of $0.001
per share, held of record or beneficially by each person who held of
record, or was known by the Registrant to own beneficially, more than 5% of
the 95,000,000 issued and outstanding shares of the Company's Common Stock,
and the name and shareholdings of each director and of all officers and
directors as a group.
14
</Page>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Title of Name and Address of Amount and Nature of Percentage
Class Beneficial Owner Beneficial Ownership (2) of Class
-------- ----------------------------- ------------------------ ----------
<S> <C> <C> <C>
Common Paul A. deRome (1, 3-5) 48,272,672 50.81%
54 Rennie Court
Upper Ground
London SE1 9LP
Common John F. Pope (1, 6) 2,228,125 2.35%
13969 Marquesas Way
Suite 101B
Marina del Rey, CA 90292
Common Harriette E. Blum (1) 48,674,748 51.24%
Flat 4, 80A Belvedere Road
Upper Norwood
London SE19 2HZ
Common M. Allen Walker (1,7) 667,004 0.70%
100 Red Bud Lane
Lake Jackson, TX 77566
Common Mark A. deRome (1) 43,129,940 45.40%
54 Rennie Court
Upper Ground
London SE1 9LP
Common SYTCO Limited (4) 46,376,030 48.82%
11 Myrtle Street
Douglas, Isle of Man
IM1 1ED
Common Granleigh Holdings
Limited (5) 42,756,840 45.01%
C/o Unit 19
Enterprise House 59-65
Upper Ground
London SE1 9PQ
Common Parallax Holdings Co.,
Ltd. (6) 2,000,000 2.11%
British Virgin Islands
---------------------------------------------------------------------------
Common Officers, Directors and 54,231,622 57.09%
Nominees as a Group:
5 persons
---------------------------------------------------------------------------
</TABLE>
(1) Officer and/or Director of the Company
(2) The term "beneficial owner" refers to both the voting power (which
includes the power to vote, or to direct the voting of, such security) or
investment power (which includes the power to dispose, or to direct the
disposition of, such security). Inasmuch as these rights or shares may be
held by more than one person, each person who has a beneficial ownership
interest in shares is deemed the beneficial owners of the same shares
because there is shared power of investment or share rights of ownership.
15
</Page>
<PAGE>
<PAGE>
(3) Paul A. de Rome is the owner of record of 2,132,305 shares. Additional
shares attributed to Paul A. de Rome include the SYTCO Limited shares in as
much as Mr. de Rome may be considered to have qualified investment power
over the SYTCO Limited shares in limited circumstances and the 66,100
shares in the name of Patricia Crawford who is the wife of Mr. de Rome and
12,000 shares owned by Classic Enterprises Limited, a company controlled by
Mr. de Rome.
(4) SYTCO Limited is the owner of record of 3,619,190 shares. SYTCO
Limited wholly owns Sorciere, Ltd. which in turn wholly owns Granleigh
Holdings Limited.
(5) Granleigh Holdings Limited is the owner of record of 40,889,023 shares.
Paul A. de Rome is Granleigh Holdings Limited's Chief Executive Officer.
(6) Shares attributed to Mr. Pope include the Parallax Holdings Co., Ltd.
shares in as much as Mr. Pope may be considered to have qualified
investment power over the Parallax shares in limited circumstances.
Parallax Holdings Co., Ltd. is the owner of record of 2,000,000 shares. Mr.
Pope also holds 225,000 shares jointly with his wife Guadalupe H. Pope. In
addition to these shares, Guadalupe H. Pope owns 3,125 in her own name,
which may be attributable to Mr. Pope.
(7) Northeastern Mutual Investments Limited is the owner of record of
139,504 which are attributed to Mr. Walker of which he is the owner.
There are no contracts or other arrangements that could result in a
change of control of the Company.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth as of March 31, 2000, the name, age
and position of each executive officer and director and the term of office
of each director of the Corporation.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR OR OFFICER SINCE
--------------------- ---- ------------------------ -------------------------
<S> <C> <C> <C>
Paul A. de Rome 48 Director and President August 4, 1997
Harriette E. Blum 44 Director, Secretary August 4, 1997
and Treasurer
M. Allen Walker 54 Director August 4, 1997
Mark A. de Rome 43 Director and
Vice President June 7, 1999
John F. Pope 59 Director June 7, 1999
</TABLE>
Each director serves for a period of one year or until his successor
is duly elected and qualified. Officers serve at the will of the Board of
Directors.
The following sets forth certain biographical information relating to
the Company's Officers and Directors:
16
</Page>
<PAGE>
<PAGE>
PAUL A. DE ROME, DIRECTOR AND PRESIDENT. Mr. de Rome holds a Bachelor
of Science degree in Chemistry and a Bachelor of Arts degree in Automotive
Engineering Design. Mr. de Rome brings extensive experience in the area of
international financial management. Following a career in retail sales,
Mr. de Rome became involved in the securities and bullion markets as a
Senior Trader with De Brys Investment Group. While at De Brys, Mr. de Rome
was responsible for the creation and trading of options, futures, arranging
swaps and esoteric "arbitrage" funding as well as trading in staple
commodities and precious metals on the major international markets. Mr. de
Rome moved to Yale Financial Consultants as a Senior Partner where, in
association with a City of London securities house, he was responsible for
the placement of investment funds into managed funds and related bank or
treasury instruments. As CEO of Gourlay Wolff Group of Companies in
London, Mr. de Rome held positions with responsibility for the overall
management of the company and specific responsibility for the direct
liaison with senior clients and their portfolio management. Mr. de Rome
also performed contract and documentary reviews, debt restructuring and
private placement of bank instruments. Currently, Mr. de Rome is CEO and
Administrative Trustee of Foxley Management Limited, a company that acts as
an independent consultant to private and government agencies with specific
attention in the matters of finance and gold related security matters. Mr.
de Rome is also the President and CEO of Anglo American Metals, Inc. and is
responsible for the overall coordination of the group's precious metal and
bulk powder chemical engineering activities. He is also responsible for
the design and construction of the new chemical engineering plant and
refinery in Texas and the implementation of the proprietary technology
owned exclusively by the group. As CEO of European Business Group plc and
Foureyes plc, for the last five years Mr. de Rome has been responsible for
the overall coordination of the group's activities and liaison with the
other group holdings. Mr. de Rome is also CEO of both Sorciere Limited and
Granleigh Holdings Limited.
Mr. de Rome currently resides in London, United Kingdom. He dedicates
almost 100% of his time to the affairs of the Company.
HARRIETTE E. BLUM, DIRECTOR, VICE PRESIDENT, AND SECRETARY. Ms. Blum
has extensive work experience in administrative areas. She is currently a
director for Foxley Management Limited where she handles all aspects of
administration for UK and offshore companies and receives and processes
venture capital applications. From February 1997 to the present Ms. Blum
has been serving as the secretary for the Company. From July 1992 to
February 1997, Ms. Blum served a director with responsibility of overall
administrative matters for Linwood Investments, a company formed to act as
an independent consultant to private and government agencies in matters of
finance and related security matters. From 1986 to 1992, Ms. Blum was
employed as the personal assistant to the Chairman of Gourlay Wolff Group
of Companies, a securities and commodity house. As personal assistant, Ms.
Blum was responsible for all personal and office administrative functions.
From 1980 to 1986, Ms. Blum served as PA/Secretary to Commercial Manager of
Marathon Oil Limited and was responsible for the administrative functions
for a department of over 200 staff. From 1974 to 1980, Ms. Blum was
employed in various administrative capacities with increasing
responsibilities. As Operations Director of European Business Group plc
and Foureyes plc, Ms. Blum has been responsible for the overall
coordination of the group's activities and liaison with the other group
holdings. Ms. Blum is also a Director of both Sorciere Limited and
Granleigh Holdings Limited.
Ms. Blum resides in London, United Kingdom, and devotes approximately
20% of her time to Company affairs.
17
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<PAGE>
<PAGE>
M. ALLEN WALKER, DIRECTOR AND VICE PRESIDENT. Mr. Walker holds a B.S.
degree in Chemical Engineering from the University of New Mexico. Mr.
Walker has more than twenty-five years experience in process design,
engineering, maintenance, operations, start-up and construction of process
plants. Mr. Walker's experience is primarily in chemical and plastics
production processes. Areas of expertise include conceptual process
design, computer simulations, flow-sheet, piping and instruments drawings
development, relief systems, design and sizing, plan equipment operations
optimization, and programming operations computer control systems. Mr.
Walker has a broad background in environmental operations and services.
Mr. Walker's previous work experience include two years with Hasco
Consultants, 18 years with Dow Chemical Company and six years with
Universal Contractors of Albuquerque. After the six years with Universal
Contractors of Albuquerque Mr. Walker was hired by the Company in 1997
where he is currently employed as Plant and Planning Director for Anglo
American Metals, Inc., and is responsible for planning in respect to
installation of production equipment and environmental requirements.
Throughout his career, Mr. Walker has held the position of Environmental
Specialist, Senior Research Engineer, Productions Engineer, Senior
Environmental Technician, Chemical Aide to Senior Research Technician and
Assistant Superintendent.
Mr. Walker resides in Lake Jackson, Texas. He is currently devoting
100% of his time to Company matters.
MARK A. DE ROME, DIRECTOR AND VICE PRESIDENT. Mr. de Rome holds a
mechanical engineering qualification (distinction) from the City & Guilds
London Institute. He is skilled in welding fabrication and vehicle body
craft. Mr. de Rome has held positions in metal design and engineering,
construction engineering and automotive design. Mr. de Rome owned a
professional automotive custom design body shop for eight years prior to
his current position with Anglo American Metals, Inc., where he is employed
as Executive Vice President as of June of 1999.
Mr. de Rome is responsible for the construction and daily operations
of the plant administration and offices, dealing with overseeing the
financial and administrative affairs of the Company. Mr. de Rome is also a
Director of both Sorciere Limited and Granleigh Holdings Limited.
Mr. de Rome resides in London, United Kingdom. Mr. de Rome devotes
100% of his time to the Company.
MR. JOHN F. POPE, DIRECTOR, TREASURER AND CHIEF FINANCIAL OFFICER Mr.
Pope began his professional career in 1963 as an auditor in public
accounting and subsequently on the corporate staff of Olivetti Underwood in
New York. He joined Burger King Corporation in Miami, Florida, in July
1968 and progressed to the position of Controller, Company Stores Division.
He joined Orange Julius International, Inc., Santa Monica, California, in
1974 as Vice President, Finance and a Director for the parent company and
its national and international subsidiaries. In 1980, Mr. Pope became
President of Inflation Management, Inc., Los Angeles, California. From
February 1982 until February 1984, he was Vice President, Finance of
Aerobic Dancing, Inc. In 1984 he became Senior Vice President of Animated
Playhouses Incorporated and Subsidiaries, before moving to become Executive
Vice President Finac International, Inc., an investment and venture capital
firm in Torrance, California. From 1986 through November 1987, Mr. Pope
acted as Vice President, Finance and Administration for ASI Sign Systems of
Marina Del Rey, Inc. After leaving ASI in late 1987, Mr. Pope became an
independent financial consultant assisting a number of domestic and
international public and private companies in franchising, financial
structure, and internal and SEC reporting. This has been the principal
18
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<PAGE>
<PAGE>
business activity for Mr. Pope from 1987 to the present time. He continues
to serve on the Board of Directors of several companies he helped to become
public companies. Mr. Pope is a Certified Management Accountant (CMA) and
serves on the National Board of Directors of the Institute of Management
Accountants, where he is currently a member of the National Strategic
Planning Committee, having previously chaired the National Committee of
Finance, National Member Interest Groups Committee. He has also been
Certified in Financial Management (CFM) by the same institute. He is a
Certified Public Accountant (CPA) and a member of the American Institute of
Certified Public Accountants (AICPA), the California Society of Certified
Public Accountants and the Maryland Association of Certified Public
Accountants. He has been a member of the Curriculum Steering Committee,
School of Accountancy, University of Southern California, and a number of
other professional and civic organizations. Mr. Pope brings extensive
experience and knowledge to the Company with a background in public
accounting and management from numerous public and private companies.
Mr. Pope resides in Marina del Rey, California. He presently devotes
75% of his time to the Company.
Mr. Paul A. de Rome, President and Director of the Company and Mr.
Mark A. de Rome, vice President and Director of the Company are brothers.
There are no other familial relationships within the Company.
Mr. John F. Pope has directorship in The Quantum Group, Inc. which is
a reporting company, and in "The Guaranteed Equity Fund No. 1 Ltd."
To the knowledge of management, during the past five years, no present
or former director, executive officer or person nominated to become a
director or an executive officer of the Company:
(1) filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer
appointed by a court for the business or property of such person, or
any partnership in which he was a general partner at or within two
years before the time of such filing, or any corporation or business
association of which he was an executive officer at or within two
years before the time of such filing;
(2) was convicted in a criminal proceeding or named subject of a
pending criminal prosecution (excluding traffic violations or other
minor offenses);
(3) was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from or
otherwise limiting, the following activities;
(i) acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, associated person of any of the
foregoing, or as an investment advisor, underwriter, broker or
dealer in securities, or as an affiliate person, director or
employee of any investment company, or engaging in or continuing
any conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase
or sale of any security or commodity or in connection with any
violation of federal or state securities laws or federal
commodities laws;
19
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<PAGE>
<PAGE>
(4) was the subject of any order, judgment, or decree, not
subsequently reversed, suspended, or vacated, of any federal or state
authority barring, suspending, or otherwise limiting for more than 60
days the right of such person to engage in any activity described
above under this Item, or to be associated with persons engaged in
any such activity;
(5) was found by a court of competent jurisdiction in a civil action
or by the Securities and Exchange Commission to have violated any
federal or state securities law, and the judgment in such civil action
or finding by the Securities and Exchange Commission has not been
subsequently reversed, suspended, or vacated
(6) was found by a court of competent jurisdiction in a civil action
or by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or
finding by the Commodity Futures Trading Commission has not been
subsequently reversed, suspended or vacated.
ITEM 6. EXECUTIVE COMPENSATION.
The following chart sets forth certain summary information concerning
the compensation paid or accrued for each of the Registrant's last three
completed fiscal years to the Registrant's or its principal subsidiaries'
chief executive officers and each of its other executive officers that
received compensation in excess of $100,000 during such period (as
determined at March 31, 2000, the end of the Registrant's last completed
fiscal year).
<TABLE>
<CAPTION> SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (I)
Securities
Under-
lying
Other Restr- Option
Annual icted /SAR's
Compen- Stock Compen- All
sation Awards sation Other
Salary Bonus
Position Year ($) ($) ($) ($) (#) ($ ($)
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul A. de Rome 1999 -0- -0- -0- -0- -0- -0- -0-
President 1998 -0- -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0- -0-
Harriette E. Blum 1999 -0- -0- -0- -0- -0- -0- -0-
Secretary 1998 -0- -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0- -0-
John F. Pope 1999 20,000 -0- -0- -0- -0- -0- -0-
Treasurer 1998 -0- -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0- -0-
</TABLE>
COMPENSATION OF DIRECTORS
None.
20
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<PAGE>
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS.
There are no employment contracts between the Company and any of its
Officers or Directors.
There are no compensatory plans or arrangements, including payments to
be received from the Company, with respect to any person named in Cash
Compensation set out above which would in any way result in payments to any
such person because of his resignation, retirement, or other termination of
such person's employment with the Company or its subsidiaries, or any
change in control of the Company, or a change in the person's
responsibilities following a change in control of the Company.
The Company has no retirement, pension, profit-sharing, insurance,
medical, options, SAR's, Long Term Incentive Plan, defined benefit or
actuarial plan, or reimbursement plan covering its officers and directors.
Further, the Company does not contemplate implementing any such plan at
this time. None of the Officers or directors of the Company has any
options or warrants to purchase shares of the Company's common stock.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Mr. Paul A. de Rome, President and Director of the Company and Mr.
Mark A. de Rome, vice President and Director of the Company are brothers.
There are no other familial relationships within the Company.
ITEM 8. LEGAL PROCEEDINGS.
The Company's legal counsel for environmental affairs, Doney, Crowley,
Bloomquist & UDA, P.C. has provided information regarding potential
liability to the Company under the Comprehensive Environmental Remediation,
Compensative, and Liability Act ("CERCLA" or "Superfund").
Ferry Lane Limited, has been designated a potentially responsible
party ("PRP") under the federal Superfund law (42. U.S.C. 9601 et seq.) at
four sites in Butte, Montana. Prior to acquisition of the Butte property
by Ferry Lane, certain corrective and/or cleanup activities were taken by
prior owners from approximately June 30, 1988 to June 1999 and no specific
further actions (either administrative or judicial) have been taken or
ordered by the Environmental Protection Agency ("EPA") regarding Ferry
lane. The Atlantic Richfield Company ("ARCO"), another PRP at these sites
has been acting as the "lead PRP" at the areas where the EPA has required
action.
The specific sites covered by the EPA action are the Butte Mine
Flooding Operable Unit, Butte Priority Soils Operable Unit, Butte Non-
Priority Soils Operable Unit and the Butte Open Pit Mining and Milling
Operable Unit.
The sites have been and are at various stages of assessment and
remediation pursuant to procedures used by the EPA under the federal
Superfund law. Such assessment is nearing completion at the Butte Priority
Soils Operable Unit. Assessment, remediation and EPA decision-making at
the Non-Priority Soils Operable Unit may continue for many years. The
Butte Mine Flooding Operable Unit environmental study was completed in 1994
and in September of 1994, the EPA issued its record of decision ("ROD")
calling for various present and future remedial measures to be undertaken
at the Berkeley Pit and vicinity.
21
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<PAGE>
A unilateral administrative order for these remedial actions has been
issued by the EPA to ARCO and mine flooding PRP's other than Ferry Lane
have begun to implement the initial remedial measures. Although Ferry Lane
is a mine flooding PRP, Ferry Lane is not expected to be charged with any
specific responsibilities under the order.
In July of 1999, the EPA communicated by letter with Ferry Lane
reaffirming the PRP status of Ferry Lane as a PRP at the Butte Priority
Soils Operable Unit and related operable units and requesting Ferry Lane to
resume contact with the EPA regarding resolution of its alleged
liabilities, in particular its responsibilities at the Butte Priority Soils
Operable Unit. This communication by the EPA apparently signals a call by
the EPA for Ferry Lane to become active in resolving its liabilities, and
this may take the form of financial payments, transfer of properties to
ARCO, assumption of operation and maintenance responsibilities on its
properties, or a combination of these and/or other activities.
Having long ago been named as a PRP (via predecessor owners) Ferry
Lane continues to face the potential for strict, joint and several
liability for both cost recovery actions from the EPA (and from other PRP's
such as ARCO for contribution for monies spent by such PRP's) and for
orders to conduct cleanup or other related actions at any of the sites
where Ferry Lane is named as a PRP. Moreover, both the State and federal
governments have the right to pursue the PRP's (including Ferry Lane) for
damages to natural resources. These potential liabilities (for cost
recovery, contribution, cleanup, property transfers, and/or natural
resource damages) could have values reaching into the millions of dollars.
The Butte properties now owned by Ferry Lane were previously owned by
ARCO who in turn sold the properties to a Montana business group which in
turn sold the properties to Butte Mining. Ferry Lane acquired the
properties from Butte Mining. When ARCO sold the properties, the terms
included a full indemnity agreement regarding the EPA claims, which
indemnity was assigned later to Butte Mining. It is the belief of the
Company that the indemnification by ARCO was transferred to Ferry Lane when
it acquired the properties and thereby should provide protection from
liability. However, the validity of the assignment of the indemnification
has not been tested.
The Company has communicated with ARCO regarding the EPA claims and
ARCO has responded that they are anxious to open discussions and prefers a
negotiated resolution, having indicated to Ferry Lane that it may give a
full release from cost recovery liability under certain conditions. The
Company is of the opinion that an acceptable resolution will likely be
negotiated with ARCO.
Other than described above relative to the potential Environmental
Protection Agency liability, no legal proceedings are threatened or pending
against the Company or any of its officers or directors. Further, none of
the Company's officers or directors or affiliates of the Company are
parties against the Company or have any material interests in actions that
are adverse to the Company's interests.
22
</Page>
<PAGE>
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.
The Company's common stock is listed on the Over the Counter Bulletin
Board ("OTCBB") and is currently listed on the NQB Pink Sheets under the
symbol "NANA". As of November 7, 2000, the Company had 648 shareholders
holding 95,000,000 shares of common stock which is computed or based upon
the number of record holders. Of the issued and outstanding common stock,
3,162,489 are free trading, the balance are restricted stock as that term
is used in Rule 144. The Company has never declared a dividend on its
common stock.
<TABLE>
<CAPTION>
CLOSING BID CLOSING ASK
HIGH LOW HIGH LOW
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1997
----
July 1 thru Aug 21 Unpriced Unpriced
Aug 22 thru Sept 30 1.25 0.5 2.00 1.00
(After a 1 for 25
reverse split)
4th Quarter 3.25 1.125 5.50 2.25
1998
----
1st Quarter 2.00 1.00 3.625 2.00
2nd Quarter 1.00 0.625 6.00 1.75
3rd Quarter 0.625 0.625 ----- -----
4th Quarter 3.25 0.625 3.625 1.25
1999
----
1st Quarter 1.50 0.25 3.50 0.625
2nd Quarter 1.875 0.25 6.125 0.75
3rd Quarter 2.50 0.375 5.00 1.875
4th Quarter 2.75 1.0625 5.00 1.50
2000
----
1st Quarter 3.80 1.50 4.25 1.75
2nd Quarter 3.00 0.75 3.75 0.90
</TABLE>
The above quotations, as provided by the National Quotation Bureau,
LLC., represent prices between dealers and do not include retail markup,
markdown or commission. In addition, these quotations do not represent
actual transactions.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
(1) On August 21, 1997, 9,500,000 common shares were issued in a share
for share exchange to acquire Foureyes PLC, a privately held corporation
organized under the laws of the United Kingdom and Great Britain. The
shares were issued pursuant to an exemption from registration under section
4(2) of the Securities Act of 1933 to the three shareholders of Foureyes
PLC, which became the controlling shareholders of the Company.
23
</Page>
<PAGE>
<PAGE>
(2) On June 7, 1999, 61,991,008 common shares were issued in a share
for share exchange to acquire Anglo American Metals, Inc., a privately held
Texas corporation. Anglo American Metals, Inc. was a corporation
controlled by Granleigh Holdings, Ltd, a related party and control
shareholder of the Company and therefore, the Company issued the shares
pursuant to an exemption from registration under section 4(2) of the
Securities Act of 1933.
(3) On September 27, 1999, 20,000,000 common shares were issued to
acquire proprietary processing technology rights from Harnell Trading, Ltd,
a related party of the Company, pursuant to an exemption from registration
under section 4(2) of the Securities Act of 1933 for services rendered, no
cash was received by the Company.
(4) On October 5, 1999, 2,000,000 common shares were issued to
Parallax, Holdings Co., Ltd, an executive recruiting service based in the
British Virgin Islands. The shares were issued in consideration of
Parallax's efforts to identify and convince Mr. Pope to enter into a three
year employment agreement with of the Company. These shares were issued
pursuant to an exemption from registration under section 4(2) of the
Securities Act of 1933 for services rendered. No cash was received by the
Company. The shares were valued at the closing bid price on October 5,
1999.
(5) On October 5, 1999, 1,000,000 common shares were issued to
Euronet, Inc., a Delaware corporation. The shares were issued pursuant to
an exemption from registration under section 4(2) of the Securities Act of
1933 for services rendered, no cash was received by the Company. The
shares were valued at the closing bid price of those shares on October 5,
1999.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
The Company is presently authorized to issue 100,000,000 shares of
$0.001 par value Common Stock. All shares when issued, will be fully paid
and non-assessable. All shares are equal to each other with respect to
liquidation and dividend rights. Holders of voting shares are entitled to
one vote for each share they own at any Shareholders' meeting.
Holders of Shares of Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of funds
legally available therefor, and upon liquidation are entitled to
participate pro-rata in a distribution of assets available for such a
distribution to Shareholders. There are no conversion, pre-emptive or
other subscription rights or privileges with respect to any shares.
Reference is made to the Company's Articles of Incorporation and its
Bylaws for a more complete description of the rights and liabilities of
holders of Common Stock. The Company does not have cumulative voting rights
which means that the holders of more the 50% of the Shares voting for each
election of directors may elect all of the directors if they choose to do
so. In such event, the holders of the remaining Shares aggregating less
than 50% will not be able to elect any directors.
The Company will furnish annual reports to its shareholders which will
include financial statements and other interim reports as Management deems
appropriate.
The Company has appointed Interwest Transfer Company, Inc., 1981 E.
4800 S., Suite 100, Salt Lake City, UT 84117, as the transfer agents and
registrar for the Company's securities.
24
</Page>
<PAGE>
<PAGE>
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The statutes, charter provisions, bylaws, contracts or other
arrangements under which controlling persons, directors or officers of the
registrant are insured or indemnified in any manner against any liability
which they may incur in such capacity are as follows:
The by-laws of the Company provide:
SECTION 6.01 INDEMNIFICATION OF DIRECTORS.
(a) PERMITTED INDEMNIFICATION. Pursuant to Section 902 of the Act,
unless otherwise provided in the articles of incorporation as permitted by
Section 909 of the Act, the corporation may indemnify any individual made a
party to a proceeding because such individual is or was a director of the
corporation, against liability incurred in the proceeding if the
corporation has authorized the payment in accordance with Section 906 of
the Act and a determination has been made in accordance with the procedures
set forth in Section 906(2) of the Act that the director has met the
applicable standards of conduct as set forth below and in Section 902 of
the Act:
(i) the individual's conduct was in good faith; and
(ii) the individual reasonably believed that his or her conduct was
in, or not opposed to, the corporation's best interests; and
(iii) in the case of any criminal proceeding, the individual had no
reasonable cause to believe his or her conduct was unlawful.
(b) LIMITATION ON PERMITTED INDEMNIFICATION. As provided in Section
902(4) of the Act, the corporation shall not indemnify a director under
Section 6.01(a) above:
(i) in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation;
or
(ii) in connection with any other proceeding charging that the
director derived an improper personal benefit, whether or not involving
action in the director's official capacity, in which proceeding the
director was adjudged liable on the basis that the director derived an
improper personal benefit.
(c) INDEMNIFICATION IN DERIVATIVE ACTIONS LIMITED. Indemnification
permitted under Section 6.01(a) and Section 902 of the Act in connection
with a proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
(d) MANDATORY INDEMNIFICATION. As set forth in Section 903 of the Act,
unless limited by its articles of incorporation, a corporation shall
indemnify a director who was successful, on the merits or otherwise, in the
defense of any proceeding, or in the defense of any claim, issue, or matter
in the proceeding, to which the director was a party because the director
is or was a director of the corporation, against reasonable expenses
incurred by the director in connection with the proceeding or claim with
respect to which the director has been successful.
25
</Page>
<PAGE>
SECTION 6.02 ADVANCE EXPENSES FOR DIRECTORS. Pursuant to the
provisions of Section 904 of the Act, if a determination is made, following
the procedures of Section 906(b) of the Act, that a director has met the
following requirements; and if an authorization of payment is made,
following the procedures and standards set forth in Section 906 of the Act,
then unless otherwise provided in the articles of incorporation, the
corporation may pay for or reimburse the reasonable expenses incurred by a
director who is a party to a proceeding in advance of final disposition of
the proceeding, if:
(i) the director furnishes the corporation a written affirmation of
the director's good faith belief that the director has met the applicable
standard of conduct described in Section 5.01 of these bylaws and Section
902 of the Act;
(ii) the director furnishes to the corporation a written undertaking,
executed personally or on such director's behalf, to repay the advance if
it is ultimately determined that the director did not meet the standard of
conduct; and
(iii) a determination is made that the facts then known to those
making the determination would not preclude indemnification under Sections
901 through 909 of the Act.
SECTION 6.03 INDEMNIFICATION OF OFFICERS. Employees. Fiduciaries. and
Agents. Unless otherwise provided in the articles of incorporation, and
pursuant to Section 907 of the Act:
(i) an officer of the corporation is entitled to mandatory
indemnification under Section 903 of the Act, and is entitled to apply for
court-ordered indemnification under Section 905 of the Act, in each case to
the same extent as a director;
(ii) the corporation may indemnify and advance expenses to an officer,
employee, fiduciary, or agent of the corporation to the same extent as to a
director; and
(iii) the corporation may also indemnify and advance expenses to an
officer, employee, fiduciary, or agent who is not a director to a greater
extent, if not inconsistent with public policy, and if provided for by its
articles of incorporation, these bylaws, action of the board of directors,
or contract.
SECTION 6.04 INSURANCE. As provided in Section 908 of the Act, the
corporation may purchase and maintain liability insurance on behalf of a
person who is or was a director, Officer, employee, fiduciary, or agent of
the corporation, or who, while serving as a director, officer, employee,
fiduciary, or agent of the corporation, is or was serving at the request of
the corporation as a director, officer, partner, trustee, employee,
fiduciary, or agent of another foreign or domestic corporation or other
person, or of an employee benefit plan, against liability asserted against
or incurred by such person in that capacity or arising from such person's
status as a director, officer, employee, fiduciary, or agent, whether or
not the corporation would have power to indemnify such person against the
same liability under Article VI of these bylaws or Sections 902, 903 or 907
of the Act. Insurance may be procured from any insurance company designated
by the board of directors, whether the insurance company is formed under
the laws of this state or any other jurisdiction, including any insurance
company in which the corporation has an equity or any other interest
through stock ownership or otherwise.
26
</Page>
<PAGE>
<PAGE>
SECTION 6.05 SCOPE OF INDEMNIFICATION. The indemnification and
advancement of expenses authorized by this Article VI is intended to permit
the corporation to indemnify to the fullest extent permitted by the laws of
the State of Utah any and all persons whom it shall have power to indemnify
under such laws from and against any and all of the expenses, disabilities,
or other matters referred to in or covered by such laws. Any
indemnification or advancement of expenses hereunder, unless otherwise
provided when the indemnification or advancement of expenses is authorized
or ratified, is intended to be applicable to acts or omissions that
occurred prior to the adoption of this Article, shall continue as to any
party during the period such party serves in any one or more of the
capacities covered by this Article, shall continue thereafter so long as
the party may be subject to any possible proceeding by reason of the fact
that such party served in any one or more of the capacities covered by this
Article, and shall inure to the benefit of the estate and personal
representatives of such person. Any repeal or modification of this Article
or of any Section or provision hereof shall not affect any right or
obligations then existing. All rights to indemnification under this Article
shall be deemed to be provided by a contract between the corporation and
each party covered hereby.
SECTION 6.06 OTHER RIGHTS AND REMEDIES. The rights to indemnification
and advancement of expenses provided in this Article VI shall be in
addition to any other rights which a party may have or hereafter acquire
under any applicable law, contract, order, or otherwise.
SECTION 6.07 SEVERABILITY. If any provision of this Article shall be
held to be invalid, illegal or unenforceable for any reason, the remaining
provisions of this Article shall not be affected or impaired thereby, but
shall, to the fullest extent possible, be construed so as to give effect to
the intent of this Article that each party covered hereby is entitled to
the fullest protection permitted by law.
Section 16-10a-901 et. seq. of the Utah Revised Business Corporation
Act provides that each corporation shall have the following powers:
16-10a-902. Authority to indemnify directors.
1. Except as provided in Subsection (4), a corporation may
indemnify an individual made a party to a proceeding because he
is or was a director, against liability incurred in the
proceeding if:
(a) his conduct was in good faith; and
(b) he reasonably believed that his conduct was in, or not
opposed to, the corporation's best interests; and
(c) in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
2. A director's conduct with respect to any employee benefit
plan for a purpose he reasonably believed to be in or not opposed
to the interest of the participants in and beneficiaries of the
plan is conduct that satisfies the requirement of Subsection
(1)(b).
3. The termination of a proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the director did
not meet the standard of conduct described in this section.
4. A corporation may not indemnify a director under this
section:
27 </Page>
<PAGE>
(a) in connection with a proceeding by or in the right of
the corporation in which the director was adjudged liable to
the corporation; or
(b) in connection with any other proceeding charging that
the director derived an improper personal benefit, whether
or not involving action in his official capacity, in which
proceeding he was adjudged liable on the basis that he
derived an improper personal benefit.
5. Indemnification permitted under this section in connection
with a proceeding by or in the right of the corporation is
limited to reasonable expenses incurred in connection with the
proceeding.
Section 16-10a-903. Mandatory indemnification of directors.
Unless limited by its articles of incorporation, a corporation
shall indemnify a director who was successful, on the merits or
otherwise, in the defense of any proceeding, or in the defense of
any claim, issue, or matter in the proceeding, to which he was a
party because he is or was a director of the corporation, against
reasonable expenses incurred by him in connection with the
proceeding or claim with respect to which he has been successful.
Section 16-10a-907. Indemnification of officers, employees,
fiduciaries, and agents.
Unless a corporation's articles of incorporation provide
otherwise:
(1) an officer of the corporation is entitled to mandatory
indemnification under Section 16-10a-903, and is entitled to
apply for court-ordered indemnification under Section 16-
10a-905, in each case to the same extent as a director.
(2) the corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation to
the same extent as to a directors; and
(3) a corporation may also indemnify and advance expenses to
an officer, employee, fiduciary, or agent who is not a
director to a greater extent, if not inconsistent with
public policy, and if provided for by its articles of
incorporation, bylaws, general or specific action of its
board of directors, or by contract.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to officers and directors of the
Company pursuant to the provisions of the Company's Certificate of
Incorporation, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is therefore
unenforceable.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Reference is made to the financial statement of the Company prepared
by Hansen, Barnett & Maxwell, certified public accountant together with the
notes thereto and the report thereon beginning at page F-1 of this Form
10.
28
</Page>
<PAGE>
<PAGE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
1. On June 2, 1999, the Company engaged Hansen, Barnett & Maxwell,
P.C. as its independent accountant. The decision to engage
Hansen, Barnett & Maxwell as the Company's independent accountant
was recommended and approved by the Company's Chief Executive
Officer.
2. In a report dated July 23, 1997, Jones, Jensen & Company,
Certified Public Accountants, reported on the Company's financial
statements as of June 30,1997 and 1996 and the related statements
of operations, stockholders' equity (deficit), and cash flows for
the years ended June 30, 1997, 1996 and 1995 and from inception
on June 13, 1983 through June 30, 1997. Such report did not
contain an adverse opinion or disclaimer of opinion, nor was such
report qualified or modified as to uncertainty, audit scope, or
accounting principles. Jones, Jensen & Company, Certified Public
Accountants, understands that they were dismissed as the
Company's independent accountants when the Company engaged
Hansen, Barnett & Maxwell as its independent accountants on June
2, 1999.
3. During the Company's two fiscal years ended March 31, 1998 and
1999, and the subsequent interim period preceding the decision to
engage independent accountants, there were no reportable events
(hereinafter defined) requiring disclosure pursuant to Item 304
of Regulation S-K.
4. Effective June 2, 1999, the Company engaged Hansen, Barnett &
Maxwell, P.C. as its independent accountants. During the two
years ended March 31, 1998 and 1999, and the subsequent interim
period preceding the decision to engage independent accountants,
neither the Company nor anyone on its behalf consulted Hansen,
Barnett & Maxwell regarding either the application of accounting
principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on
the Company's financial statements, nor has Hansen, Barnett &
Maxwell provided to the Company a written report or oral advise
regarding such principles or audit opinion.
Jones, Jensen & Company, Certified Public Accountants, has provided
the Company with a letter pursuant to Rule 304 of Regulation S-K.
29
</Page>
<PAGE>
<PAGE>
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
The Financial Statements that are included in this registration
statement are as follows:
Report of Independent Certified Public Accountants
Consolidated Balance Sheets - March 31, 2000 and
March 31, 1999
Consolidated Statements of Operations for the Years Ended
March 31, 2000, 1999 and 1998 and for the Period from
January 1, 1993 (Date of Inception) through March 31, 2000
Consolidated Statement of Stockholders' Equity (Deficit) for the
Period From January 1, 1993 (Date of Inception) Through May
14, 1996, for the Years Ended March 31, 1997, 1998, 1999
and 2000
Consolidated Statements of Cash Flows for the Years Ended
March 31, 2000, 1999 and 1998 and for the Period from
January 1, 1993 (Date of Inception) Through March 31, 2000
Notes to the Consolidated Financial Statements
<TABLE>
<CAPTION>
Exhibit Number Title of Document Location
---------------- -------------------------------------- -----------
<S> <C> <C>
3.01 Articles of Incorporation As Filed
3.02 Amended Articles of Incorporation As Filed
3.03 Bylaws As Filed
10.01 Material Contracts As Filed
16.01 Letter re change in certifying
accountant As Filed
21.01 Subsidiaries As Filed
27.01 Financial data schedule See Attached
</TABLE>
30
</Page>
<PAGE>
--------------------------------------------------------------------------
SIGNATURES
--------------------------------------------------------------------------
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to
be signed on its behalf, thereunto duly authorized.
The New Anaconda Company
Date: November 9, 2000 /s/ Paul A. de Rome
--------------------------------
Paul A. de Rome
President
Date: November 9, 2000 /s/ John F. Pope
--------------------------------
John F. Pope
Chief Financial Officer
31
</Page>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
AND
CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2000 and 1999 and
Years Ended March 31, 2000, 1999 and 1998 and for the
Period From January 1, 1993 (Date of Inception) Through
March 31, 2000
</Page>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
TABLE OF CONTENTS
Page
Report of Independent Certified Public Accountants. . . . . . . . . . . 1
Consolidated Balance Sheets - March 31, 2000 and 1999 . . . . . . . . . 2
Consolidated Statements of Operations for the Years
Ended March 31, 2000, 1999 and 1998 and for the Period
from January 1, 1993 (Date of Inception) Through
March 31, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statement of Stockholders' Equity (Deficit)
for the Period From January 1, 1993 (Date of Inception)
Through May 14, 1996, for the Years Ended March 31, 1997,
1998, 1999 and 2000 . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the Years Ended
March 31, 2000, 1999 and 1998 and for the Period from
January 1, 1993 (Date of Inception)
Through March 31, 2000 . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to the Consolidated Financial Statements. . . . . . . . . . . . . 6
-----------------------------------
</Page>
<PAGE>
HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
(801) 532-2200
Member of AICPA Division of Firms Fax (801) 532-7944
Member of SECPS 345 East 300 South, Suite 200
Member of Summit International Associates Salt Lake City, Utah 84111-2693
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and the Stockholders
The New Anaconda Company
We have audited the accompanying consolidated balance sheets of The New
Anaconda Company and subsidiaries (a development stage company) as of March
31, 2000 and 1999, and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for each of the three years
in the period ended March 31, 2000 and for the cumulative period from
January 1, 1993 (date of inception) through March 31, 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The New
Anaconda Company and subsidiaries as of March 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the three
years in the period ended March 31, 2000, and for the period from January
1, 1993 (date of inception) through March 31, 2000 in conformity with
accounting standards generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred an accumulated deficit of
$41,118,055 at March 31, 2000. In addition, the Company has incurred losses
of $8,316,274, $9,292,918 and $16,793,773 and had negative cash flows from
operating activities of $642,439, $1,857,639 and $3,533,938 during the
years ended March 31, 2000, 1999 and 1998, respectively. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described
in Note 1. The financial statements do not include any adjustments relating
to the recoverability and classification of asset carrying amounts or the
amount and classification of liabilities that might result should the
Company be unable to continue as a going concern.
/S/ HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
August 15, 2000
</Page>
<PAGE>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
2000 1999
------------ ------------
<S> <S> <S>
ASSETS
CURRENT ASSETS
Cash $ 1,825 $ 2,457
Inventory - 13,250
Prepaid expenses 21,204 2,500
------------ ------------
Total Current Assets 23,029 18,207
------------ ------------
PROPERTY AND EQUIPMENT
Mineral interests in property 29,146,369 29,181,486
Mineral rights 1 1
Office equipment 93,867 94,150
Plant equipment 790,987 1,013,950
Automobiles 56,388 131,144
------------ ------------
30,087,612 30,420,731
Less: Accumulated Depreciation (389,914) (299,208)
------------ ------------
Net Property and Equipment 29,697,698 30,121,523
------------ ------------
Total Assets $ 29,720,727 $ 30,139,730
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 81,483 $ 55,969
Accrued liabilities 675,683 56,718
Capital lease obligations 122,076 246,685
Notes payable - current portion 21,986 86,758
Notes payable - related party 1,152,798
------------ ------------
TOTAL CURRENT LIABILITIES 901,228 1,598,928
------------ ------------
LONG-TERM LIABILITIES
Note payable to related party 1,744,971 -
------------ ------------
TOTAL LONG-TERM LIABILITIES 1,744,971
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock - $0.001 par value; 100,000,000
shares authorized; shares issued and
outstanding:
March 31, 2000 - 95,000,000 and March 31,
1999 - 60,000,000 95,000 60,000
Additional paid-in capital 68,097,583 61,282,583
Deficit accumulated during the development
stage (41,118,055) (32,801,781)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 27,074,528 28,540,802
------------ ------------
Total Liabilities and
Stockholders' Equity $ 29,720,727 $ 30,139,730
============ ============
The accompanying notes are an integral part of these financial statements
</Page>
<PAGE>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
Cumulative from
January 1, 1993
(Date of Inception)
Through
For the Year Ended March 31,March 31,
2000 1999 1998 2000
------------- -------------------------- -------------
<S> <C> <C> <C> <C>
Sales $ - $ -$ - $ -
------------- -------------------------- -------------
Cost of sales - - - -
------------- -------------------------- -------------
Gross Profit - - - -
------------- -------------------------- -------------
Operating Expenses
General and administrative 8,214,979 2,532,133 3,736,846 15,877,044
Research and development 51,802 7,554 124,574 4,761,551
------------- -------------------------- -------------
Total Operating Expenses 8,266,781 2,539,687 3,861,420 20,638,595
------------- -------------------------- -------------
Loss from Operations (8,266,781) (2,539,687) (3,861,420) (20,638,595)
------------- -------------------------- -------------
Other Income and (Expenses)
Other income 35,567 - - 60,664
Sale of precious metals - - 125,022 125,022
Interest expense (11,910) (12,010,354) (13,057,375) (25,850,045)
Loss on disposal of
equipment (73,150) (447,877) - (520,101)
------------- -------------------------- -------------
Net Other Expenses (49,493) (12,458,231) (12,932,353) (26,184,460)
------------- -------------------------- -------------
Loss Before Extraordinary Item (8,316,274) (14,997,918) (16,793,773) (46,823,055)
------------- -------------------------- -------------
Extraordinary gain on
extinguishment of debt,
no tax effect - 5,705,000 - 5,705,000
------------- -------------------------- -------------
Net (Loss) $ (8,316,274) $ (9,292,918)$(16,793,773) $(41,118,055)
============= ========================== =============
Basic (Loss) Per Share $ (0.10) $ (0.22)$ (0.56) $ (0.92)
============= ========================== =============
Weighted Average Number
of Shares Outstanding 83,156,164 42,280,220 30,000,000 44,860,404
============= ========================== =============
</TABLE>
The accompanying notes are an integral part of these financial statements
</Page>
<PAGE>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Deficit Total
Accumulated Stock-
Common Stock Additional During holders'
-------------------- Paid In Development Equity
Shares Amount Capital Stage (Deficit)
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance - January 1, 1993
(Date of Inception) - $ - $ - $ - $ -
Net Loss January 1, 1993
to May 14, 1996 - - - (3,858,000) (3,858,000)
---------------------------------------------------------
Balance - May 14, 1996 - - - (3,858,000) (3,858,000)
May 14, 1996 shares issued
for cash;$0.00 per share 30,000,000 30,000 (20,000) - 10,000
Loss for the year ended
March 31, 1997 - - - (2,857,090) (2,857,090)
---------------------------------------------------------
Balance - March 31, 1997 30,000,000 30,000 (20,000) (6,715,090) (6,705,090)
Contribution of 150,000
shares by majority
shareholders for services,
$1.67 per share - - 250,000 - 250,000
Loss for the year ended
March 31, 1998 - - - (16,793,773)(16,793,773)
---------------------------------------------------------
Balance - March 31, 1998 30,000,000 30,000 230,000 (23,508,863)(23,248,863)
November 1998 shares issued
for related party debt;
$1.91 per share 4,470,414 4,470 8,548,922 - 8,553,392
November 1998 shares issued
for debt; $1.91 per share 5,250,000 5,250 10,039,750 - 10,045,000
November 1998 shares issued
for payment of related
party debt; $3.78 per share3,000,000 3,000 11,332,950 - 11,335,950
November 1998 contribution
of 322,059 shares for
services, $1.67 per share - - 536,765 - 536,765
November 1998 shares issued
for assumption of debt;
$2.06 per share 10,000,002 10,000 20,601,475 - 20,611,475
November 1998 shares issued
for conversion of debt;
$1.67 per share 3,000,000 3,000 4,997,000 5,000,000
The accompanying notes are an integral part of these financial statements
</Page>
<PAGE>
<PAGE>
November 1998 shares issued
for mineral rights;
$0.00 per share 4,279,584 4,280 (4,279) - 1
January 1999 contribution of
3,000,000 shares by
shareholder for debt
satisfaction - - 5,000,000 - 5,000,000
Loss for the year ended
March 31, 1999 - - - (9,292,918) (9,292,918)
---------------------------------------------------------
Balance - March 31, 1999 60,000,000 60,000 61,282,583 (32,801,781) 28,540,802
June 1999 shares issued for
mineral rights; $0.00 per
share 3,991,999 3,992 (3,992) - -
June 7, 1999 to acquire
Foureyes Holding, Inc. 10,008,002 10,008 (10,008) - -
June 7, 1999 cancellation
of shares (2,000,001) (2,000) 2,000 - -
September 1999 shares
issued to related
parties for technology;
$0.00 per share 20,000,000 20,000 (20,000) - -
September 1999 shares
issued for services;
$2.25 per share 3,000,000 3,000 6,747,000 - 6,750,000
October 1999 related
party shares issued
for investor relations
$2.00 per share - - 100,000 - 100,000
Loss for the year ended
March 31, 2000 - - - (8,316,274) (8,316,274)
---------------------------------------------------------
Balance - March 31, 2000 95,000,000 $95,000$68,097,583 $(41,118,055) $27,074,528
=========================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
</Page>
<PAGE>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative from
January 1, 1993
(Date of Inception)
Through
For the Year Ended March 31, March 31,
2000 1999 1998 2000
-------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Cash Flows From Operating
Activities
Net loss $(8,316,274) $(9,292,918)$(16,793,773) $(41,118,055)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation 160,895 257,068 38,766 470,489
Amortization of discount
on notes payable - 1,429,989 - 1,429,989
Stock issued for services 6,850,000 536,765 7,386,765
Loss on the sale of
property and equipment 30,948 386,161 - 416,183
Gain on extinguishment of
debt - (5,705,000) - (5,705,000)
Exchange of services for
vehicle - - - 2,000
Changes in operating assets
and liabilities, net of effects
of businesses acquired:
Accounts receivable - 300 (300) -
Inventory 13,250 (13,250) - -
Prepaid expenses (18,704) (2,500) 200 (21,204)
Accounts payable 25,514 24,984 24,360 81,483
Accrued liabilities 611,801 41,799 139,919 918,519
Accrued interest payable 131 10,478,963 13,056,890 24,298,576
------------- ------------ ------------- -------------
Net Cash From Operating
Activities (642,439) (1,857,639) (3,533,938) (11,840,255)
Cash Flows From Investing
Activities
Proceeds from sale of
property and equipment 35,117 182,731 - 217,848
Capital expenditures (148,739) (681,945) (1,348,575)
-------------- ----------- ------------- -------------
Net Cash From Investing
Activities 35,117 33,992 (681,945) (1,130,727)
</Page>
<PAGE>
<PAGE>
Cash Flows From
Financing Activities
Proceeds from issuance
of stock - - - 10,000
Principal payments under
capital lease (14,755) (60,884) (25,330) (100,969)
Principal payments on
notes payable (2,647) (4,014,719) (3,174,697) (8,468,961)
Proceeds from issuance
of debt 31,919 - 6,636,000 9,567,919
Principal payments on
related party debt - (2,111,539) (400,392) (3,310,981)
Proceeds from issuance of
related party debt 592,173 7,998,003 786,123 15,275,799
------------- ------------- ------------ -------------
Net Cash From Financing
Activities 606,690 1,810,861 3,821,704 12,972,807
Net Increase (Decrease)
in Cash (632) (12,786) (394,179) 1,825
Cash - Beginning of Period 2,457 15,243 409,422 -
-------------- ------------ ------------- -------------
Cash - End of Period $ 1,825 $ 2,457 $ 15,243 $ 1,825
============== ============ ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements
</Page>
<PAGE>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2000, 1999 AND 1998
NOTE 1 ORGANIZATION
In 1993, certain individuals formed Anglo American Precious Metals, Inc., a
Nevada corporation, (Anglo) which began research and development activities
in an effort to develop a new process to extract precious metals from ore.
On May 14, 1996, Anglo changed its domicile to Texas by forming and
reorganizing into Anglo American Metals, Inc., a Texas corporation. The
individuals transferred a majority of Anglo's common stock to Granleigh
Holdings Limited (Granleigh) thereby making Granleigh a majority
shareholder of Anglo. The accompanying consolidated financial statements
include the activities and operations of Anglo since its inception.
In January 1997, Granleigh formed Ventura Corporation, a Niue (South
Pacific) corporation, and effective June 30, 1998, Ventura acquired Ferry
Lane Limited, a British Virgin Islands company (Ferry Lane), as further
discussed in Note 3. During November 1998, Granleigh transferred all of
Ventura's outstanding common shares to Anglo and assumed $20,611,475 of
Ventura's debt in exchange for 10,000,002 common shares of Anglo. The
transfer was accounted for as the reorganization of entities under common
control and accounted for in a manner similar to a pooling-of-interests.
The accompanying consolidated financial statements have been restated on a
combined basis for all periods prior to the transfer. The issuance of the
common stock has been accounted for as the conversion of debt on the date
issued. The consolidated financial statements include the operations and
transactions of Ventura since its inception.
Trac Control Systems, Inc., a public company, was incorporate in June 1983
and in 1984 changed its name to Computrac Systems, Inc. (Computrac).
Computrac's business activities were not successful and it ceasd operations
in 1988. In August 1997 Computrac entered into a reorganization with
Foureyes, PLC, a corporation organized under the laws of the United Kingdom
and Great Britain, and Computrac changed its name to Foureyes Holdings,
Inc. (Foureyes) and Foureyes PLC became a wholly owned subsidiary of
Foureyes. As a result of this reorganization, Foureyes came under common
control with Anglo due to Granleigh's being the major shareholder of both
companies. On June 7, 1999, Foureyes issued 61,991,998 common shares to the
shareholders of Anglo in exchange for all 20,000,000 outstanding common
shares of Anglo. Prior to the reorganization, Foureyes transferred its
subsidiary, Foureyes, PLC, to European Business Group, an entity under
common control with Foureyes and Anglo and changed the name of Foureyes to
The New Anaconda Company. The former shareholders of Anglo held a majority
of the common shares of Foureyes immediately after the acquisition and
Anglo's management became the management of Foureyes; accordingly, the
acquisition was accounted for as the reorganization of Anglo in a 3-for-1
stock split and the acquisition of Foureyes by Anglo at historical cost.
The accompanying consolidated financial statements have been restated for
all periods presented to reflect the effects of the reorganization stock
split. The operations of Foureyes, have been included in the accompanying
consolidated financial statements from June 7, 1999.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial
statements include the accounts of Anaconda and its wholly-owned
subsidiaries: Anglo American Metals, Inc., Ventura Corporation and Ferry
Lane Limited, from the dates of their formation or acquisitions. All
intercompany transactions have been eliminated in consolidation.
</Page>
<PAGE>
NATURE OF OPERATIONS From 1993 through 1995, a series of in depth due
diligence tests, research and development testing and mineral surveys were
carried out. In May, 1996, the Company acquired property in Texas
consisting of land, building and equipment and continued testing and
research efforts. Costs incurred of $3,858,000 has been expensed as
research and development. Small amounts of precious metals were extracted
by the Texas facility and were sold to third parties in the fiscal years
ended March 31, 2000 and 1998. The Company is considered to be a
development stage enterprise.
USE OF ESTIMATES - The preparation of consolidated 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 at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS - In Management's opinion, there is no
material difference between carrying amounts and estimated fair values of
financial instruments as presented in the accompanying balance sheets.
BUSINESS CONDITION - The Company has incurred losses from operations before
extraordinary item of $8,316,274, $9,292,918 and $16,793,773 during the
years ended March 31, 2000, 1999, and 1998, respectively, accumulated a
deficit during the development stage of $41,118,055 through March 31, 2000
and used cash in operating activities of $8,266,781, $2,539,687 and
$3,861,420 during the three years ended March 31, 2000.
Since inception, the Company has been engaged in research and development
and raising the needed capital to bring technology to the production level
and, therefore, is considered to be a development stage enterprise. The
Company's ability to move from the development stage is dependent upon its
ability to generate sufficient cash flow from operations to meet its
obligations on a timely basis, to obtain additional financing as may be
required, and ultimately to attain successful operations. Management has
been authorized by the board of directors to issue up to 5,000,000 shares
of its common stock to the public for additional financing sometime in the
future. Management is also pursuing equity financing from various venture
capital sources.
INVENTORIES Inventories are stated at the lower of cost or market value.
Cost is determined by the first-in, first-out method and market represents
the lower of replacement cost or estimated net realizable value. Inventory
consisted of production supplies at March 31, 1999 valued at $13,250.
During the year ended March 31, 2000, the inventory was written off because
of obsolescence.
CASH AND CASH EQUIVALENTS The Company considers all short-term
investments with an original maturity of three months or less to be cash
equivalents.
PROPERTY AND EQUIPMENT Property and equipment are recorded at cost. The
acquisition of commercially mineable mineral interests has been
capitalized. Capitalized costs will be depleted over the periods during
which the estimated mineral reserves are extracted.
The Company's policy is to capitalize all expenditures for land, building,
and equipment in excess of $500. Major repairs and replacements that extend
an assets useful life are also capitalized. Vehicles are carried at cost
and depreciated over five years using the straight line method.
</Page>
<PAGE>
<PAGE>
LONG-LIVED ASSETS Long-lived assets are evaluated periodically for
impairment when indicators of impairment are present and undiscounted
estimated future cash flows to be generated by those assets are less than
their carrying amounts. Impairment losses are recognized to the extent
estimated discounted net future cash flows expected to be generated from
those assets are less than their carrying amounts.
INCOME TAXES Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences in the balances assets
and liabilities and their respective tax bases and attributable to
operating loss carry forwards. Deferred taxes are computed at the enacted
tax rates for the periods when such amounts are expected to be realized or
settled.
BASIC AND DILUTED LOSS PER SHARE Basic loss per common share is computed
by dividing net loss by the weighted-average number of common shares
outstanding during the period. Diluted loss per share is calculated to give
effect to potentially issuable common shares except during loss periods
when those potentially issuable common shares would decrease the loss per
share. There were no potentially issuable shares at March 31, 2000, 1999,
or 1998.
NOTE 3 PROPERTY ACQUISITIONS
ACQUISITION OF BUTTE, MONTANA MINING PROPERTY
In January 1997, Granleigh organized Ventura for the purpose of acquiring
Ferry Lane from unrelated third parties. Ferry Lane's assets consisted of
approximately 9,000 acres of both surface and underground mining claims,
and agricultural land in and around Butte, Montana which comprised much of
the former Montana mining property of the Anaconda Mining Company. On June
30, 1998, Ventura acquired all of Ferry Lane's outstanding capital stock
for $30,611,475 of non-interest bearing notes which were due June 30, 1999.
The notes, and the property, were recorded at $29,181,486, net of
$1,429,989 of unamortized discount based upon imputed interest at 12%. The
Butte property was not used as collateral for the notes; instead, Granleigh
secured insurance on behalf of the seller to guarantee payment of the
notes.
Management evaluated the following factors in determining the cost of the
Ferry Lane acquisition:
(a) The notes given in exchange for the property were converted into
common stock by the sellers of Ferry Lane and by Granleigh. At the
same time the property was acquired, stock was issued upon conversion
of short-term debt at $1.91 per share or higher. The conversion of the
notes issued for the property was therefore recorded at an average
price of $1.91 per share. After discounting the notes at 12%, the
property was recorded at the fair value of the notes issued, based on
the $1.91 market price of Anglo's stock.
(b)Management received title insurance policies obtained by the
previous owners which showed an appraised value in excess of the
recorded value of the property. Management also received an appraisal
on a portion of the property which had been obtained by the prior
owners which indicated an appraised value from production of the
mineral interests in excess of the recorded value of the entire
property. The appraisal was provided by independent geologists and
engineers.
(c)Management estimated the discounted net future cash flows from the
property using current prices and costs and estimated production
techniques and determined those net cash flows were in excess of the
recorded value of the property.
</Page>
<PAGE>
<PAGE>
ACQUISITION OF MINERAL RIGHTS
Prior to Anglo's incorporation, certain related parties licensed technology
from an unrelated third party. The third party was to receive royalties
from the use of the technology. The related parties in turn, licensed the
use of the technology to Anglo in exchange for future royalties. Effective
September 27, 1999, the Company issued 20,000,000 shares of common stock to
acquire the technology free of any future royalty obligations to any other
parties. Anaconda issued 10,000,000 shares to the related parties and
10,000,00 shares to the third party. The technology acquisition and
satisfaction of future royalty payments has been accounted for as a
transaction between related parties and recorded at the related parties'
historical cost of zero with the excess of the fair value of the shares
issued treated as a capital contribution.
NOTE 4 PROPERTY AND EQUIPMENT
DEPRECIATION LIVES
The cost of property and equipment is being charged to operations using the
straight-line method over the estimated useful life of the assets which is
five to seven years for office equipment and three years for computer
equipment.
Depreciation charged to operations for the periods ended March 31, 2000 and
March 31, 1999 amount to $90,706 and $195,347, respectively.
NOTE 5 SALE AND LEASEBACK OF BUILDING
In November 1996, the Company purchased its test facility on 10 acres of
land for $217,839 cash and made subsequent improvements of $346,357. In
February 1999, to meet certain financing needs, the building was sold for
$175,000 and leased back for $2,500 a month under the terms of an operating
lease which expires in January 2000. The Company recognized a $366,604 loss
on the transaction. At the end of the lease term, the Company may
renegotiate with the purchaser to either extend the terms of the lease or
repurchase the building. There are no guaranteed renewal or purchase
options available to the Company.
NOTE 6 RELATED PARTY TRANSACTIONS
During the year ended March 31, 1998, a related party issued 150,000 of its
shares of the Company's common stock in satisfaction of liabilities for
directors' salaries and management services valued at $250,000.
Shareholders loaned the Company $786,123 of which $400,392 was repaid by
year end.
In the year ended March 31, 1999, shareholders loaned the Company
$7,998,003. Shareholders also assumed debt due to third parties of
$7,336,000. The Company repaid $2,111,539. The Company issued 4,470,414
shares of stock in satisfaction of $6,219,897 of debt to related parties
and $2,553,495 of additional interest expense arising from a beneficial
exchange rate for the stock. The Company also issued 3,000,000 shares of
common stock to a related party in exchange for $7,336,000 of debt
assumption and the payment of $3,999,950 of debt on the Company's behalf.
The total amount of $11,335,950 was recorded as paid in capital. A related
party issued 322,059 of its shares of the Company's common stock in
satisfaction of director's salaries and management services valued at
$536,765. This was recorded as an expense and paid in capital. The Company
acquired mineral rights from a company related through common management
for 4,279,584 shares of common stock which were recorded at historical cost
of $1. During the year ended 1999, the Company issued 20,000,000 shares to
a company related through common management for technology with no recorded
value.
</Page>
<PAGE>
<PAGE>
During the year ended March 31, 2000, a related party issued 50,000 shares
of common stock from its holdings to pay for professional services on
behalf of the Company valued at $100,000 or $2.00 per share, which equaled
the value of shares publically traded at that time.
NOTE 7 LEASE OBLIGATIONS
CAPITAL LEASES
During the years ended March 31, 2000 and 1999, the Company entered into
various capital leases for plant and office equipment. The leased property
is included as equipment under property and equipment on the balance sheet
and has a carrying value of $122,076 and $246,685, with accumulated
amortization of $97,632 and $66,787 as of March 31, 2000 and March 31,
1999, respectively.
At March 31, 2000, these capital leases had either been terminated or were
in default for nonpayment. As a result, the capital lease obligations at
March 31, 2000 are considered to be current liabilities.
OPERATING LEASES
The Company leases a building and office equipment with lease terms ranging
from month-to-month to 1 year. These leases are accounted for as operating
leases.
Rental expense for the years ended March 31, 2000 and 1999 was none and
$25,281, respectively.
NOTE 8 NOTES PAYABLE
Notes payable consist of the following:
<TABLE>
<CAPTION>
March 31, March 31,
2000 1999
---------- ----------
<S> <C> <C>
Finance company; bearing interest at 11.9%;
secured by vehicle; due May 2000. . . . . . . . .$ - . $ 15,574
Bank; bearing interest at 7.75%; secured by
vehicle; due February 2001. . . . . . . . . . . . . .6,573 . . .11,386
Bank; bearing interest at 8.2%; secured by
vehicle; due October 2001 . . . . . . . . . . . . . 15,411 . . .18,276
Bank; bearing interest at 8.96%; secured by
vehicle; due June 2004. . . . . . . . . . . . . . . . . .- . . .41,522
---------- ----------
Total $ 21,984 $ 86,758
Less: Current portion (21,984) (86,758)
---------- ----------
Long-Term Debt $ - $ -
========== ==========
</TABLE>
During the year ended March 31, 2000, the Company ceased making
payments on the above debt and certain assets were repossessed.
All of the debt is considered current as of March 31, 2000 and 1999.
</Page>
<PAGE>
<PAGE>
RELATED PARTY AND FINANCING NOTES PAYABLE
During 1997 and 1998, the Company obtained $9,536,000 of financing debt
from unrelated finance companies at an interest rate of 250%. Payments were
made on the debt and in November 1998, the Company extinguished the
remaining principal and interest of $23,086,000 through the assumption of
$7,336,000 of debt by a related party, Granleigh, later converted to stock
at $3.78 per share, and by the conversion of the remaining $15,750,000 of
debt to common stock through the issuance of 5,250,000 shares of common
stock valued at $1.91. A $5,705,000 gain on the extinguishment of debt
resulted which represents the difference between the contract interest rate
of 250% and the fair market value of the stock. The gain is reported as an
extraordinary gain in the statement of operations.
During the years ended March 31, 2000 and 1999, the Company received cash
in exchange for unsecured notes. As of March 31, 2000 and 1999, the notes
consisted of the following:
<TABLE>
<CAPTION>
March 31,
-----------------------
2000 1999
----------- -----------
<S> <C> <C>
CURRENT NOTES PAYABLE:
Notes payable to shareholders;
non-interest bearing; unsecured; due
upon demand $ - $ 1,152,798
=========== ===========
LONG-TERM NOTES PAYABLE:
Note payable to shareholder; non-interest
bearing; unsecured; due March 31, 2002 1,744,971 -
----------- -----------
TOTAL $ 1,744,971 $ 1,152,798
=========== ===========
</TABLE>
NOTE 9 INCOME TAXES
The following presents the components of the net deferred tax asset.
<TABLE>
<CAPTION>
March 31,
-----------------------
2000 1999
----------- -----------
<S> <C> <C>
Operating loss carryforwards $13,647,780 $10,622,551
Accumulated depreciation/amortization (53,506) (2,118)
----------- -----------
Net Deferred Tax Assets Before
Value Allowance 13,594,274 10,620,433
Less: Valuation Allowance (13,594,274)(10,620,433)
----------- -----------
Net Deferred Tax Asset $ - $ -
=========== ===========
</TABLE>
The valuation allowance increased $3,025,229 during the year ended March
31, 2000. The Company has net operating loss carryforwards of $36,160,496
that expire, if unused, in years 2018 through 2021.
</Page>
<PAGE>
<PAGE>
The following is a reconciliation of the income tax benefit computed at the
federal statutory tax rate with the provision for income taxes for the
years ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
March 31,
-------------------------
2000 1999
------------ -----------
<S> <C> <C>
Income tax (benefit) at statutory rate (34%) $(2,827,533) $(3,089,227)
Deferred tax valuation allowance change 2,973,841 3,358,024
Non deductible expenses - 1,056
State taxes net of federal benefit (2.97%) (146,308) (269,853)
------------ -----------
PROVISION FOR INCOME TAXES $ - $ -
============ ===========
</TABLE>
NOTE 10 RESEARCH AND DEVELOPMENT EXPENSE
Expenses in the accompanying consolidated financial statements include
certain costs which are directly associated with the Company's research and
development of precious metals extraction processes. These costs, which
consist primarily of fees paid to individuals, materials and supplies
amounted to $51,802, $7,554 and $124,574 for the fiscal years ended
March 31, 2000, 1999 and 1998, respectively.
NOTE 11 SUPPLEMENTAL CASH FLOW INFORMATION
During the year ended March 31, 1998, the Company acquired a vehicle with a
cost of $20,267 in exchange for a note payable of $20,267. The Company also
entered into capital leases for equipment valued at $258,026.
During the year ended March 31, 1999, the Company exchanged a vehicle with
a net book value of $16,913, a note payable of $12,795, and cash of $1,800
for a similar vehicle with a cost of $47,823, and a note payable of $46,023
resulting in a basis in the new vehicle of $51,242. The Company also
entered into capital leases for equipment valued at $250,000.
During the year ended March 31, 1999, the Company acquired mineral rights
in certain California property in exchange for 4,279,584 shares of stock.
The Company has valued these interests at a nominal $1.00 amount. In June
of 1998, the Company also acquired mineral interests valued at $29,181,486
in exchange for debt. In November 1999, the Company also acquired mineral
interests valued at $29,181,486 in exchange for debt. In November 1999, the
Company converted $19,723,000 of the debt and related accrued interest of
$887,575 into 10,000,002 shares of common stock. The remaining notes of
$9,457,586 and accrued interest of $542,414 were satisfied through the
issuance of 3,000,000 shares of common stock by the Company and the
contribution of 3,000,000 shares of Anglo by a major shareholder.
During the year ended March 31, 2000, the Company acquired the net assets
of Foureyes Holdings, Inc. valued at $0 in exchange for 10,008,002 Anglo
shares. At the time of the acquisition, 2,000,001 shares of Anglo's common
stock were cancelled representing shares that had been owned by Foureyes
Holding, PLC, the subsidiary of Foureyes Holding, Inc. The Company also
acquired technology rights valued at a historical cost of zero in exchange
for 20,000,000 shares of common stock. The Company also issued 3,991,999
shares of common stock to complete the acquisition of the California
mineral rights from related parties.
</Page>
<PAGE>
<PAGE>
During the year ended March 31, 2000, due to engineering delays and cash
flows difficulties, the Company defaulted on several capital lease
obligations and notes payable in the amount of $196,864 resulting in a
repossession of equipment and vehicles with a cost of $297,718 and
accumulated depreciation of $27,703. The Company has recorded a loss on
disposal in the amount of $73,151 for the difference between the fair value
and the related liabilities.
CASH PAID FOR INTEREST
During the year ended March 31, 2000 and 1999, the Company paid cash of
$11,910 and $37,975, respectively, for interest expense.
NOTE 12 CONTINGENCY
The Company, through its wholly owned subsidiary, Ventura, which in turn
owns Ferry Lane, owns certain property located in and around Butte, Montana
which was owned by the former Anaconda Mining Company. The property is a
subject property of the U.S. Environmental Protection Agency (EPA) and is
considered to be a superfund cleanup site. Ferry Lane is among several
companies that have been designated potentially responsible parties (PRPs)
with potential responsibility for certain clean-up costs. The former
owners, from whom Ferry Lane purchased the property, were given an
indemnification, from environmental remediation costs, by Atlantic
Richfield Company (ARCO). ARCO has not, however, formally confirmed the
transfer of the indemnification to Ferry Lane and may have intended to
qualify the indemnification. Ferry Lane may not be able to assert its
rights under the indemnity. Accordingly, Ferry Lane may be subject to
remediation and clean-up costs relating to its property should the EPA
assert a claim against Ferry Lane and prevail in the claim. ARCO is the
lead PRP and reserves the right to cost recovery actions against all other
PRPs, including Ferry Lane. ARCO represents that it has spent in excess of
$30,000,000 for remediation on the property owned by Ferry Lane and ARCO
potentially could seek recovery of those costs from Ferry Lane and other
PRPs. If Ferry Lane is subject to cost recovery by ARCO, Ferry Lane would,
in turn, seek recovery form the property's previous owners. ARCO has not
initiated any claims to date against Ferry Lane. The amount of the possible
loss to Ferry Lane cannot be presently estimated and Management believes
that the amount of any liability likely to be paid is not material.
Accordingly, no liability has been accrued in the accompanying financial
statements for Ferry Lane's potential liability for remediation costs
relating to its property.
In the past, the EPA has required the Company transfer certain surface
rights to ARCO for ARCO to maintain under EPA supervision. Future transfers
may also occur. All transfers of assets have included the surface rights
only and no mineral rights. The mineral rights are retained by the Company.
The EPA has also considered requiring the Company to provide periodic
maintenance of certain land which would include controlling the spread of
certain vegetation. These are likely to be immaterial in cost and would be
recorded as period maintenance expense.
NOTE 13 STOCK TRANSACTIONS
At the inception of the Company, 10,000,000 shares of common stock were
issued to the incorporator in exchange for $10,000 of cash.
During the year ended March 31, 1998, 150,000 shares of common stock were
distributed by the major shareholder in exchange for director services
provided to the Company valued at $250,000, or $1.67 per share, based on
the price shares had been traded in an open market for cash.
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In connection with the acquisition of Ferry Lane on June 30, 1998, the
Company issued notes payable of $29,181,486, net of a discount of
$1,429,989 from interest imputed at 12%. In November 1998, as part of the
acquisition of Ventura by Anglo, 20,611,475 of the notes were assumed by
Granleigh, for which Granleigh received 10,000,002 shares of Anglo common
stock. Also, in November 1998, 3,000,000 Anglo shares were issued by the
Company and in January 1999, 3,000,000 Anglo shares were contributed by
Granleigh upon conversion of and in full satisfaction of the $10,000,000
notes payable.
During the year ended March 31, 1999, 322,059 shares of common stock were
distributed by the major shareholder in exchange for administrative
salaries and services provided to the Company valued at $536,765, or $1.67
per share based on the price shares had been traded in an open market for
cash.
During the year ended March 31, 2000, the Company issued 3,000,000 shares
for administration salaries and services valued at $2.25 per share equal to
the trading price on September 30, 1999, the date of issuance. On October
1, 1999, a related party transferred 50,000 shares of common stock from
their own holdings to a third party on behalf of the Company for investor
relation services. The shares were valued at $2.00 per share equal to the
trading price on the date of issuance.
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