<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
Form 10
GENERAL FORM FOR
REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
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THE NEW ANACONDA COMPANY
--------------------------
(Name of Small Business Issuer in its charter)
UTAH 87-0405529
- ------------------------------- --------------
(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
- --------------------------------------------------------- -------
(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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<PAGE>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
-----------------------------------------------
This Form 10 contains certain forward-looking statements within the
meaning of the Private Securities Litigation reform Act of 1995. For this
purpose any statements contained in this Form 10 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 is
intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties, and 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, the availability of funds to allow the Company to complete testing of
the technology and construction of physical facilities to commercially
exploit the technology, development and implementation of a marketing and
sales program to sell the bulk chemicals manufactured by the Company and
economic conditions generally in the industries where the Company competes
and sells its products.
Item 1. Business.
- -------------------
The New Anaconda Company is a development stage company in the
business of developing the commercial application of proprietary technology
owned by the Company which is used to separate oxide materials and precious
metal residues from previously mined and processed ore materials. The
proprietary technology utilizes environmentally safe chemical engineering
applications to produce commercial by-products from the ore materials with
very little waste discharge. In addition, the Company owns real property
and minerals rights and has a joint venture interest in mineral properties
which may be suitable to provide additional sources of ore materials to be
processed using the Company's separation technology.
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. For a period of years 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, and 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.
During 1997 and 1998 the Company through its subsidiary, Foureyes, plc
purchased several gold production contracts from Harnell Trading Limited,
(Harnell), a related party of the Company through common ownership and
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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 the amount of $492,323
plus issued 120 additional gold production contracts and delivered
1,000,000 common shares of Ventura Corporation, a Niue corporation (located
in the south pacific). Ventura Corporation is a related company of the
Company and Harnell. The Company exchanged the shares of Ventura for
166,667 shares of Anglo American Metals, Inc., a Texas corporation, which
was also a related party of the Company.
On June 7, 1999 the Company divested itself of its subsidiary
Foureyes, plc, however, the Company 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. In
conjunction with this acquisition the Company changed its name to The New
Anaconda Company. In August, 1999 the Company issued 10,000,000 common
shares to Harnell to purchase the proprietary separating technology and
cancelled the outstanding gold production contracts.
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:
<TABLE>
<CAPTION>
Company Principal Assets
<S> <C>
--------------------------------------- -----------------------------
| The New Anaconda Company, |
| a Utah Corporation |
---------------------------------------
|
| ----------------------------
--------------------------------------- ------- |Pilot Plant & Equipment |
| Anglo American Metals, Inc. | |in Victoria, Texas |
| a Texas Corporation, wholly owned | ----------------------------
| by The New Anaconda Company | ----------------------------
--------------------------------------- ------- |Joint Venture agreement |
| |on mineral rights in |
| |Bakersfield, California |
--------------------------------------- ----------------------------
| Ventura Corporation, |
| a Nieu Corporation, owned 99% by |
| Anglo American Metals, Inc. |
---------------------------------------
|
|
--------------------------------------- ----------------------------
| Ferry Lane Limited, | | Land and mineral rights |
| a British Virgin Island Corporation |--------- | in Butte, Montana |
| wholly owned by Ventura Capital | | |
--------------------------------------- ----------------------------
</TABLE>
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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 was to develop proprietary chemical extraction
technology relating to base and precious metals owned by Harnell and to
construct and operate a commercial processing facility utilizing the
technology.
Anglo Amercian technology 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.
Since 1993, the development costs associated with Anglo American 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 satisfaction of the debt
and Granleigh transferred to Anglo American a 65% ownership interest in
Ventura Corporation, a Niue Corporation, ("Ventura"). Granleigh also
issued Anglo American an option to acquire the remaining 35% ownership
interest in Ventura and 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.
The continued development of the technology, purchased from Harnell,
is expected to be a key factor to the profitability of Anglo American and
related entities. It is the intent of Anglo American to further develop
and refine this process through an extensive research and development
program in order to reduce processing costs and to increase the
applications of the technology to a broader range of raw materials.
Anglo American will focus on the continuing developing a pilot
facility in Victoria, Texas. The current pilot facility is located on a
ten acre parcel zoned for industrial use. The facility is housed in a
building of approximately 30,000 square feet and is comprised of a research
and development laboratory, office space and the pilot chemical processing
facility. The facilities and processes exploiting the proprietary
technology 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.
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 $4,800,000 including the first full scale
production line. Once fully functional, the pilot plant will have a
through put capacity of up to + 200 tons per day, of which + 40% or +
160,000 lbs. of high grade magnetic iron oxide is produced and the other +
60% or + 240,000 lbs. includes mixed non-metal oxide products which are
comparable to Class "C" and Class "F" coal ash derivatives.
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Anglo eventually plans to expand its current plant facilities in
order to accommodate increased processing requirements. This facility will
be a large chemical engineering plant which is projected to have a through
put capacity of + 2,500 tons per day by the year 2002, producing in the
region of 2,000,000 lbs. of high grade magnetic iron oxide and
approximately 1,500 tons of combined oxide products which are intended for
use as manufactured building material products. The secondary recovery of
precious metals should produce a precious metal yield between 2,500 and
10,000 troy ounces of gold per day. Anglo will either build on the
existing land adjacent to the existing facility or, subject to planning
approval, relocate the main plant to a site ten miles from the current
site.
Should the Company receive planning approval from the local Regional
Development Board, it will relocate to the Victoria Port and Canal Basin
area which will reduce transportation costs and increase profitability.
Anglo estimates it will take approximately $34,000,000 to establish and
fully commission the main facility. The Company does not currently have a
firm commitment from any sources for the funds to commission the expansion
plant.
The raw materials to be processed by the Victoria plant will be
obtained from several sources. Anglo American intends, subject to a
detailed research and development testing program using the technology, to
use the Butte, Montana and Bakersfield, California sources of ore for
processing. In the interim, Anglo will obtain ore material from
alternative ore sites and outside sources as well as provide processing
services to third parties who will contract with Anglo to process their
mined raw materials.
The high grade iron oxide is produced at + 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 + $.20 per lbs. The
product will be shipped in bulk quantities of one ton. Purchasers 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 the majority of revenue 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 Victoria, Texas.
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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 a wet
environment 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 a large fertilizer
manufacturer, whose facility is adjacent to the proposed Anglo main plant
site. They have indicated 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 is extremely small.
However, due to the high value of precious metals, the Company anticipates
these by-products will provide a reasonable additional revenue stream. As
the heavy metal by-products require further refining before they become
precious metals, the Company will negotiate the necessary refining and
market the precious metals or will simply sell the heavy metal residues.
The Company expects to yield between 220 and 1,000 troy ounces of gold per
day through this secondary recovery.
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.
Ferry Lane Limited.
-------------------
Ferry Lane Limited is an off-shore holding company incorporated in the
British Virgin Islands (BVI) and owns of 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 3,000 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. However, the
audited asset value will reflect the predecessor cost of $30 million.
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The Company considers the historical records of the original Anaconda
Company to be significant assets 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.First, the Company intends to develop an extensive
program to collate and organize drilling records, core samples, property
titles and deeds. Secondly, the Company intends to initiate a maintenance
program for the mining shafts and equipment on properties.
Thirdly, 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. During
the review period Anglo American will process oxide materials from ore
materials that are either purchased by the Company or processed by the
Company on contract to third parties. The testing of the core samples will
originally take place at the Company's facilities in Texas. Eventually the
Company may build a testing facility at the Butte, Montana location.
In addition, 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.
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, 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 Victoria pilot 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.
- --------------------------------
Liquidity and Capital Resources
- --------------------------------
The Company had cash on hand of $50,016 as of September 30, 1999.
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 8,000,000
shares of its common stock to the public for additional financing sometime
in the future. Management is also pursuing equity financing from venture
capital sources. Anaconda is one of six target companies hoping to benefit
from a venture capital fund, "The Foureyes Guaranteed Equity Fund No. 1
Ltd.", (the fund), incorporated in the British Virgin Islands on June 16,
1999. The purpose of the fund is to raise up to $600,000,000 in venture
capital for the purpose of purchasing up to 30% stock interest in six
target companies. There is no assurance the fund will be able to raise any
capital or that the Company will receive sufficient capital to continue in
operation. The Company is also holding discussions with additional private
placement sources in case the Fund does not materialize.
Results of Operations
- ---------------------
Comparison of the six months ended September 30, 1999 and the six months
ended September 30, 1998.
- --------------------------------------------------------------------------
The Company had no revenue during the six months ended September 30,
1999 or during the same 1998 period.
General and administrative expenses of $6,904, 584 incurred in the six
months ended September 30, 1999 exceed the $1,551,271 for the six months
ended September 30, 1998 by $5,353,313. The 1999 period includes $6,750,000
of consulting expenses not included in the comparable 1998 period. These
consulting activities were incurred as a result of asset acquisitions and
the agreement to be included in Venture capital fund discussed above.
Except for this expense other administrative expenses are less than the
1998 period by $1,393,687.
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<PAGE>
Research and development activities of $3,145 for the six months ended
September 30,1999 are less than half of the $6,792 incurred in the same
period in 1998 due to the generally reduced level of activities.
Interest expense of $11,494 in the six months ended September 30, 1999
is significantly less than the $7,754,649 interest expense in the prior
year six-month period. The Company extinguished most of its third party
debt in November, 1998 and as such the interest expense for the 1999 six-
month period represents only interest associated with installment purchases
of equipment and vehicles at the Victoria, Texas Facility.
Due to cash flow difficulties, the Company was forced to return some
equipment and vehicles during the six months ended September 30, 1999. This
disposal resulted in a loss of $73,151. No such transaction occurred in the
1998 comparable period.
Comparison of the twelve months ended March 31, 1999 and the twelve months
ended March 31, 1998.
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The Company had no revenue in the twelve months ended March 31, 1999.
$125,022 was recorded as revenue in the 1998 year. The 1998 revenue is from
the sale of gold produced from various research projects. Because this
revenue was produced in a labor-intensive manner, cost of sales for the
twelve months ended March 31, 1998 was $121,532 resulting in a gross profit
of $3,490 for the 1998 year.
General and administrative expense for the twelve months ended March
31, 1999 was $2,387,655. This is $1,349,191 less than the $3,736,846
incurred in the twelve months ended September 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 $6,792 compared to $3,042 during the twelve months ended March
31,1998.
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.
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.
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 1998 fiscal year.
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<PAGE>
Comparison of the twelve months ended March 31, 1998 and the twelve months
ended March 31, 1997.
- --------------------------------------------------------------------------
The Company had revenues of $125,022 during the twelve months ended
March 31, 1998 compared to$25,097 in the twelve months ended March 31,
1997. Cost of Sales was $121,532 in the 1998 year. Cost of sales for
fiscal year 1997 was $24,721. Gross margins for fiscal 1998 were $3,490
compared to $376 for the twelve months ended March 31, 1997. The revenue in
both years resulted from the sale of gold produced during various research
projects.
General and Administrative expenses in the twelve months ended March
31 , 1998 were $3,736,846 compared to $1,393,086 in the 1997 fiscal year.
This was primarily due to the Company gearing up in anticipation of going
into production during 1998. This build up was subsequently put on hold,
but only after the 1998 expenses were incurred.
Research and Development expenses of $3,042 for the twelve months
ended March 31, 1998 are substantially less than the $694,900 incurred in
the fiscal year 1997. This was due to reducing the research in 1998 as a
result of completing many of the 1997 major programs.
Interest expense for the twelve months ended March 31, 1998 was
$13,057,375. The interest expense for the twelve months ended March 31,
1997 was $770,406. The borrowing program resulting in the 1998 expenses was
begun in the last part of 1997. This resulted in the majority of the
accrued interest being charged to 1998.
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
Victoria, Texas 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
$2,500 per month with an option to purchase for $200,000. The lease
expires in July, 2000 when the Company intends to exercise its option to
purchase the property. The property consists of ten acres of industrial
land, two of which are developed. The facility is approximately 50,000
square feet and houses the research and development laboratory, office
space and the pilot chemical processing facility.
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.
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The Company also has a joint venture interest under an Ore Processing
Contract with a entity who 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.
The Company will process the materials delivered by the joint venture
partner to the Company's facility in Texas. Currently, there is no dated
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 December 31, 1999, 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.
<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%
710 Champion's Row
Victoria, TX 77904
Common John F. Pope (1, 6) 2,000,000 2.11%
13969 Marquesas Way
Suite 101B
Marina del Ray, 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
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Common Mark A. deRome (1) 43,129,940 45.40%
710 Champion's Row
Victoria, TX 77904
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%
710 Champion's Row
Victoria, TX 77904
Common Parallax Holdings Co., Ltd. (6) 2,000,000 2.11%
British Virgin Islands
- ------------------------------------------------------------------------------------
Common Officers, Directors and 54,003,497 56.85%
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.
(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 Sociere, 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) Mr. John Pope does not hold any shares of record of the Company.
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.
13
</Page>
<PAGE>
(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 December 31, 1999, 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 57 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:
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
14
</Page>
<PAGE>
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.
Harriette E. Blum, Director, Secretary and Treasurer.
-----------------------------------------------------
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.
M. Allen Walker, Director.
---------------------------
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.
15
</Page>
<PAGE>
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.
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. John F. Pope, Director 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 Ray, 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
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 also chairs the National Committee of Finance. 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.
16
</Page>
<PAGE>
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.
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;
(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;
17
</Page>
<PAGE>
(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 $100,000 during such period (as
determined at December 31, 1999, the end of the Registrant's last completed
fiscal year).
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
---------------------------
Long Term Compensation
Annual Compensation Award Payout
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restr- Securities All
Annual icted Underlying Other
Compen- Stock Option/
sation Award SAR's
Compensation
Name & Salary Bonus
Principal Year ($) ($) ($) ($) (#) ($) ($)
- ------------------- ----------------------------------------------------------------
<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.
18
</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.
19
</Page>
<PAGE>
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. 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.
</Page>
20
<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 December 31, 1999 the Company had 326 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,
2,560,627 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 0.50 1.875
</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 pursuant
Section 368 (a)(1)(B)of the Internal Revenue Code of 1986, 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.
21
</Page>
<PAGE>
(2) On June 7, 1999, 61,991,008 common shares were issued pursuant
Section 368 (a)(1)(B)of the Internal Revenue Code of 1986, 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 iussed 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, a British Virgin Islands company. 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.
(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.
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.
22
</Page>
<PAGE>
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.
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
23
</Page>
<PAGE>
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.
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
24
</Page>
<PAGE>
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.
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
25
</Page>
<PAGE>
(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:
(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
26
</Page>
<PAGE>
(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.
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- --------------------------------------------------------------------------
(a) 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.
(b) 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.
(c) 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.
(d) 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.
27
</Page>
<PAGE>
Jones, Jensen & Company, Certified Public Accountants, has provided
the Company with a letter pursuant to Rule 304 of Regulation S-K.
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 - September 30, 1999 and
March 31, 1999 and 1998
Consolidated Statements of Operations for the Six Months Ended
September 30, 1999 and September 30, 1998 (unaudited),
for the Years Ended March 31, 1999, 1998 and 1997 and for
the Period from January 1, 1993 (Date of Inception) Through
September 30, 1999
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 and 1999
and for the Six Months Ended September 30, 1999
Consolidated Statements of Cash Flows for the Six Months Ended
September 30, 1999 and September 30, 1998 (unaudited),
for the Years Ended March 31, 1999, 1998 and 1997 and for the
Period from January 1, 1993 (Date of Inception) Through
September 30, 1999
Notes to the Consolidated Financial Statements
<TABLE>
<CAPTION>
Exhibit Number Title of Document Location
- -------------- ---------------------------------- --------------
S> <C> <C>
3.01 Articles of Incorporation See Attached
3.02 Amended Articles of Incorporation See Attached
3.03 Bylaws See Attached
10.01 Material Contracts See Attached
16.01 Letter re change in certifying accountant See Attached
21.01 Subsidiaries See Attached
27.01 Financial data schedule See Attached
</TABLE>
28
</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: February 11, 2000 By: /s/ Paul A. de Rome
----------------- --------------------------
Paul A. de Rome
President
Date: February 11, 2000 By: /s/ Harriette E. Blum
----------------- --------------------------
Harriette E. Blum
Treasurer
29
</Page>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
AND
CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 1999 and March 31, 1999 and 1998 and
For the Six Months Ended September 30, 1999 and 1998, for the
Years Ended March 31, 1999, 1998 and 1997 and for the
Period From January 1, 1993 (Date of Inception) Through
September 30, 1999
HANSON, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANT
F-1
</Page>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
TABLE OF CONTENTS
Page
Report of Independent Certified Public Accountants. . . . . . . . . . F-3
Consolidated Balance Sheets - September 30, 1999 and
March 31, 1999 and 1998 . . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Operations for the Six Months Ended
September 30, 1999 and September 30, 1998 (unaudited),
for the Years Ended March 31, 1999, 1998 and 1997 and for
the Period from January 1, 1993 (Date of Inception) Through
September 30, 1999. . . . . . . . . . . . . . . . . . . . . . . . . F-5
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 and 1999
and for the Six Months Ended September 30, 1999 . . . . . . . . . . F-6
Consolidated Statements of Cash Flows for the Six Months Ended
September 30, 1999 and September 30, 1998 (unaudited),
for the Years Ended March 31, 1999, 1998 and 1997 and for the
Period from January 1, 1993 (Date of Inception) Through
September 30, 1999. . . . . . . . . . . . . . . . . . . . . . . . . F-7
Notes to the Consolidated Financial Statements. . . . . . . . . . . . F-8
F-2
</Page>
<PAGE>
/Letterhead/
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
September 30, 1999 and March 31, 1999 and 1998, and the related
consolidated statements of operations, stockholders' equity (deficit), and
cash flows for the six months ended September 30, 1999, for each of the
three years in the period ended March 31, 1999 and for the cumulative
period from January 1, 1993 (date of inception) through September 30,1999.
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 generally accepted auditing
standards. 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 September 30, 1999 and March 31,
1999 and 1998, and the results of their operations and their cash flows for
the six months ended September 30, 1999, for each of the three years in the
period ended March 31, 1999, and for the period from January 1, 1993 (date
of inception) through September 30, 1999 in conformity with generally
accepted accounting principles.
/s/ Hansen, Barnett & Maxwell
--------------------------------
HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
November 23, 1999, except for
Note 14 as to which the date is
January 20, 2000
F-3
</Page>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
September --------------------------
1999 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
-------
Current Assets
- --------------
Cash $ 50,016 $ 2,457 $ 15,243
Receivable from related party - - 300
Inventory 13,250 13,250 -
Prepaid expenses 10,000 2,500 -
------------ ------------ ------------
Total Current Assets 73,266 18,207 15,543
-------------------- ------------ ------------ ------------
Property and Equipment
- ----------------------
Mineral interests in property 29,181,486 29,181,486 -
Mineral rights 1 1 -
Land - - 80,000
Buildings - - 137,838
Building and leasehold improvements - - 333,953
Office equipment 94,150 94,150 88,708
Plant equipment 790,987 1,013,950 808,183
Automobiles 56,389 131,144 108,221
------------ ------------ ------------
30,123,013 30,420,731 1,556,903
Less: Accumulated Depreciation (86,384) (92,252) (49,547)
------------ ------------ ------------
Net Property and Equipment 30,036,629 30,328,479 1,507,356
------------ ------------ ------------
Total Assets $30,109,895 $30,346,686 $ 1,522,899
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
- -------------------
Accounts payable $ 109,285 $ 55,969 $ 30,985
Accrued liabilities 80,467 56,718 14,919
Accrued interest - - 13,819,482
Current portion of capital
lease obligations 90,288 246,685 74,256
Current portion of notes payable 27,589 86,758 16,375
Related party notes payable 155,000 1,152,798 5,486,181
Short-term financing notes payable - - 5,121,000
------------ ------------ ------------
Total Current Liabilities 462,629 1,598,928 24,563,198
------------ ------------ ------------
Long-Term Liabilities
- ---------------------
Note payable - - 50,124
Note payable to related party 1,141,882 - -
Capital lease obligations - - 158,440
------------ ------------ ------------
Total Long-Term Liabilities 1,141,882 - 208,564
------------ ------------ ------------
</Page>
<PAGE>
Stockholders' Equity (Deficit)
Common stock - $0.001 par value;
100,000,000 shares authorized;
shares issued and outstanding:
September 30, 1999 - 95,000,000,
March 31, 1999 - 47,971,475,
March 31, 1998 - 16,801,459 95,000 60,000 30,000
Additional paid-in capital 67,997,583 61,282,583 230,000
Deficit accumulated during the
development stage (39,587,199) (32,594,825) (23,508,863)
------------ ------------ ------------
Total Stockholders' Equity (Deficit) 28,505,384 28,747,758 (23,248,863)
------------ ------------ ------------
Total Liabilities and
Stockholders' Equity $30,109,895 $30,346,686 $1,522,899
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
</Page>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative from
January 1, 1993
For the Six Months (Date of Inception)
Ended September 30, For the Year Ended March 31, Through
------------------------ ------------------------------------ September 30,
1999 1998 1999 1998 1997 1999
----------- ----------- ----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Sales $ - $ - $ - $ 125,022 $ 25,097 $ 150,119
Cost of
sales - - - 121,532 24,721 146,253
----------- ----------- ----------- ----------- ------------ ----------
Gross
Profit - - - 3,490 376 3,866
----------- ----------- ----------- ----------- ----------- -----------
Operating
Expenses
General
and
admini-
strative 6,904,584 1,551,271 2,387,655 3,736,846 1,393,086 14,422,171
Research
and
develop-
ment 3,145 6,792 6,792 3,042 694,900 4,565,879
----------- ----------- ----------- ----------- ----------- -----------
Total
Operating
Expenses 6,907,729 1,558,063 2,394,447 3,739,888 2,087,986 18,988,050
----------- ----------- ----------- ----------- ------------ ----------
Loss from
Operations (6,907,729) (1,558,063) (2,394,447) (3,736,398) (2,087,610)(18,984,184)
----------- ----------- ----------- ----------- ----------- -----------
Other
Income and
(Expenses)
Interest
expense (11,494) (7,754,649) (12,010,354) (13,057,375) (770,406)(25,849,629)
Loss on
disposal
of
equipment (73,151) - (386,161) - 926 (458,386)
----------- ----------- ----------- ----------- ----------- -----------
Net Other
Expenses 84,645 (7,754,649) (12,396,515) (13,057,375) (769,480) (26,308,015)
----------- ----------- ----------- ----------- ----------- -----------
Loss Before
Extra-
ordinary
Item (6,992,374) (9,312,712)(14,790,962) (16,793,773) (2,857,090) (45,292,199)
----------- ----------- ----------- ----------- ----------- -----------
</Page>
<PAGE>
Extra-
ordinary
gain on
extin-
guishment
of debt,
no tax
effect - - 5,705,000 - - 5,705,000
----------- ----------- ----------- ----------- ------------ ----------
Net (Loss) $(6,992,374) $(9,312,712)$(9,085,962) $(16,793,773)$(2,857,090)$(39,587,199)
=========== ========== =========== ============ =========== ============
(Loss)
Per
Share $ (0.10) $ (0.31) $ (0.21) $ (0.56) $ (0.11) $ (1.00)
Weighted
Average
Number
of Shares
Outstand-
ing 71,247,253 30,000,000 42,280,220 30,000,000 26,456,044 39,619,978
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
</Page>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Deficit
Accumulated Total
Common Stock Additional During Stockholders'
---------------------- 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 share 3,000,000 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
</Page>
<PAGE>
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
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 - - - (9,085,962) (9,085,962)
-------------------------------------------------------------
Balance -
March 31, 1999 60,000,000 60,000 61,282,583 (32,594,825) 28,747,758
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
Loss for the six
months ended
September 30, 1999 - - - (6,992,374) (6,992,374)
-------------------------------------------------------------
Balance -
September 30, 1999 95,000,000 $ 95,000 $67,997,583 $(39,587,199) $28,505,584
=============================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-6
</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)
For the Six Months For the Years Through
Ended September 30, Ended March 31, September
1999 1998 1999 1998 1997 30, 1999
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash Flows
From
Operating
Activities
- ----------
Net loss $(6,992,374)$(9,312,712) $(9,085,962)$(16,793,773)$(2,857,090) $(39,587,199)
Adjustments
to
reconcile
net loss
to net cash
used by
operating
activities:
Depreciation 21,835 24,857 50,112 38,766 13,760 124,473
Amortization
of discount
on notes
payable - - 1,429,989 - - 1,429,989
Stock
issued
for
services 6,750,000 - 536,765 - - 7,286,765
(Gain)
loss
on the
sale
of
property
and
equipment 73,150 - 386,161 - (926) 458,385
Gain on
extingui-
shment
of debt - - (5,705,000) - - (5,705,000)
Exchange
of
services
for
vehicle - - - - 2,000 2,000
Changes in
operating
assets and
liabilities,
net of
effects of
businesses
acquired:
</Page>
<PAGE>
Accounts
receivable - 300 300 (300) - -
Inventory - (13,250) (13,250) - - (13,250)
Prepaid
expenses (7,500) - (2,500) 200 (200) (10,000)
Accounts
payable 53,316 99,282 24,984 24,360 6,625 109,285
Accrued
liabil-
ities 23,749 (567) 41,799 139,919 125,000 330,467
Deposits - (4,520) - - - -
Accrued
interest
payable 131 7,733,284 10,478,963 13,056,890 762,592 24,298,576
--------------------------------------------------------------------------
Net Cash
From
Operating
Activities (77,693) (1,473,326) (1,857,639) (3,533,938) (1,948,239) (11,275,509)
Cash Flows
From
Investing
Activities
Proceeds
from sale
of
property
and
equipment - - 182,731 - - 182,731
Capital
expend-
itures - (146,210) (148,739) (681,945) (517,891) (1,348,575)
--------------------------------------------------------------------------
Net Cash
From
Investing
Activities - (146,210) 33,992 (681,945) (517,891) (1,165,844)
Cash Flows
From
Financing
Activities
Proceeds
from
issuance
of stock - - - - 10,000 10,000
Principal
payments
under
capital
lease (14,755) (34,352) (60,884) (25,330) - (100,969)
Principal
payments
on notes
payable (4,077) (5,128,778) (4,014,719)(3,174,697) (1,276,898) (8,470,391)
Proceeds
from
issuance
of debt - 7,833,763 - 6,636,000 2,900,000 9,536,000
Principal
payments
on related
party debt - (1,053,913) (2,111,539) (400,392) (799,050) (3,310,981)
</Page>
<PAGE>
<PAGE>
Proceeds
from
issuance
of related
party debt 144,084 - 7,998,003 786,123 2,041,500 14,827,710
--------------------------------------------------------------------------
Net Cash
From
Financing
Activities 125,252 1,616,720 1,810,861 3,821,704 2,875,552 12,491,369
Net
Increase
(Decrease)
in Cash 47,559 (2,816) (12,786) (394,179) 409,422 50,016
Cash -
Beginning
of Period 2,457 15,243 15,243 409,422 - -
--------------------------------------------------------------------------
Cash -
End of
Period $50,016 $12,427 $2,457 $15,243 $409,422 $50,016
==========================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-7
</Page>
<PAGE>
THE NEW ANACONDA COMPANY AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 AND
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
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 as 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.
On June 7, 1999, Foureyes Holdings, Inc. (Foureyes), a corporation with
public shareholders but under common control with Anglo, 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.
F-8
</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, 1998 and 1997. 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 $6,992,374, $14,790,962, $16,793,773 and $2,857,090
during the six months ended September 30, 1999 and for the years ended
March 31, 1999, 1998, and 1997, respectively, accumulated a deficit during
the development stage of $39,587,199 through September 30, 1999, had a
working capital deficit of $389,363 at September 30, 1999 and used cash in
operating activities of $77,693, $1,857,639, $3,533,938 and $1,948,239
during the six months ended September 30, 1999 and during the years ended
March 31, 1999, 1998 and 1997, respectively. Subsequent to September 30,
1999, management has addressed certain issues relating to its financial
condition which are described in Note 14.
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 8,000,000 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. Anaconda is one of six target companies hoping to benefit
from a venture capital fund, "The Foureyes Guaranteed Equity Fund No. 1
Ltd." (the Fund). The purpose of the Fund is to raise venture capital for
the purpose of purchasing up to a 30% equity interest in the six target
companies. There is no assurance the Fund will be able to raise any
capital or that the Company will receive sufficient capital to continue its
operations.
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
consists of production supplies at September 30, 1999 and March 31, 1999
valued at $13,250.
Cash and Cash Equivalents - The company considers all short-term
investments with an original maturity of three months or less to be cash
equivalents.
F-9
</Page>
<PAGE>
Property and Equipment - Property and equipment are recorded at cost.
Mineral interests are accounted for by the full cost method. All direct
costs incurred to acquire and place mineral interests into operations are
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. The
company has elected to defer recording any depreciation on equipment or
plant that is used in the extraction and production process until such time
as the property is placed into operation.
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.
Income (Loss) Per Share - Income (loss) per share is computed by dividing
net income (loss) by the weighted-average number of common shares
outstanding during the period.
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 due to the time they
were outstanding, as explained above, 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
F-10
</Page>
<PAGE>
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 established production
techniques and determined those net cash flows were in excess of the
recorded value of the property.
Acquisition of Mineral Rights
- -----------------------------
Prior to the incorporation of Anglo, the incorporators had acquired a 50%
mineral interest in 160 acres of property near Bakersfield, California.
This acquisition allowed the incorporators to secure a source of minerals
believed to have a high precious metals content in exchange for an
agreement to use their technology to extract the metals and share the
results with the owner. In November 1998, 4,279,584 shares of common stock
were issued in partial payment for these mineral interests and on June 7,
1999, an additional 3,991,999 shares of common stock were issued for the
balance. Because the transactions were between related parties, the
acquisition of these mineral rights has been recorded at the predecessor's
historical cost of $1.
Acquisition of Technology
- -------------------------
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
10,000,000 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 September 30,
1999, March 31, 1999, 1998, 1997 amount to $21,835, $50,112, $38,766, and
$13,760, 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 $389,196 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.
F-11 </Page>
<PAGE>
NOTE 6 - RELATED PARTY TRANSACTIONS
- -----------------------------------
Shareholders loaned the Company $2,041,500 during the year ended March 31,
1997 of which $799,050 was repaid by year end.
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.
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. 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.
In September 1999, the Company issued 20,000,000 shares to a company
related through common management for technology with no recorded value.
NOTE 7 - LEASE OBLIGATIONS
- --------------------------
Capital Leases
- --------------
During the years ended March 31, 1998 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 $109,936, $258,026, and $332,899, with
accumulated amortization of $6,129, $1,779, and $4,332, as of September 30,
1999, and March 31, 1999, and 1998, respectively.
At September 30, 1999, these capital leases had either been terminated or
were in default for nonpayment. As a result, the capital lease obligations
at September 30, 1999 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.
At September 30, 1999, commitments for future minimum rental payments
required under operating leases were $12,500 due during the year ending
March 31, 2000.
Rental expense for the six months ended September 30, 1999 was $25,675 and
during the years ended March 31, 1999, 1998 and 1997 was $25,281, $6,133
and none, respectively.
F-12
</Page>
<PAGE>
NOTE 8 - NOTES PAYABLE
- ----------------------
Notes payable consist of the following:
<TABLE>
<Cation>
September March March
30, 1999 31, 1999 31, 1998
----------- ----------- -----------
<S> <C> <C> <C>
Finance company; bearing interest at 11.9%;
secured by vehicle; due May 2000 $ - $ 15,574 $ 17,831
Bank; bearing interest at 7.75%; secured by
vehicle; due February 2001 10,168 11,386 15,282
Bank; bearing interest at 8.2%; secured by
vehicle; due October 2001 17,421 18,276 20,363
Bank; bearing interest at 8.75%; secured
by vehicle; due April 2001 - - 13,023
Bank; bearing interest at 8.96%; secured
by vehicle; due June 2004 - 41,522 -
Total $ 27,589 $ 86,758 $ 66,499
Less: Current portion (27,589) (86,758) (16,375)
----------- ----------- -----------
Long-Term Debt $ - $ - $ 50,124
=========== =========== ===========
</TABLE>
During the six months ended September 30, 1999, the Company ceased making
payments on the above debt and certain assets were repossessed. Therefore,
all of the debt is considered current as of March 31, 1999 and September
30, 1999.
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, 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 period ended September 30, 1999 and the years ended March 31,
1999 and 1998 the company received cash in exchange for unsecured notes. As
of September 30, 1999, March 31, 1999 and 1998 the notes consisted of the
following:
<TABLE>
<CAPTION>
September 30, March 31,
------------ ------------------------
1999 1999 1998
------------ ------------------------
<S> <C> <C> <C>
Current Notes Payable:
Notes payable to shareholders; non-interest
bearing; unsecured; due upon demand $ 155,000 $ 1,152,798 $ 5,486,181
Note payable to finance companies;
250% interest; unsecured; due upon
demand - - 5,121,000
------------ ------------------------
F-13
</Page>
<PAGE>
$ 155,000 $1,152,798 $10,607,181
============ =======================
<CAPTION>
September 30, March 31,
------------ ------------------------
1999 1999 1998
------------ ------------------------
Long-Term Notes Payable:
Note payable to shareholder;
non-interest bearing; unsecured;
due March 31, 2002 $ 1,141,882 $ - $ -
</TABLE>
NOTE 9 - INCOME TAXES
- ---------------------
The Company did not have a current or deferred provision for income taxes
for the six months ended September 30, 1999 or for the years ended March
31, 1999, 1998 or 1997. The following presents the components of the net
deferred tax asset.
<TABLE>
<CAPTION>
September 30, March 31,
------------ ------------------------
1999 1999 1998
------------ ------------------------
<S> <C> <C> <C>
Operating loss carryforwards $13,204,910 $10,622,551 $ 7,261,341
Accumulated depreciation/amortization (2,601) (2,118) (6,932)
------------ ------------------------
Net Deferred Tax Assets Before
Valuation Allowance 13,202,309 10,620,433 7,254,409
Less: Valuation Allowance (13,202,309) (10,620,433) (7,254,409)
------------ ------------------------
Net Deferred Tax Asset $ - $ - $ -
============ ========================
</TABLE>
The valuation allowance increased $2,581,875, $3,358,024 and $6,207,368
during the period ended September 30, 1999 and the years ended March 31,
1999 and 1998, respectively. The Company has net operating loss
carryforwards of $35,717,626 that expire, if unused, in years 2017 through
2020.
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, 1999 and 1998:
<TABLE>
<CAPTION>
September 30, March 31,
------------ ------------------------
1999 1999 1998
------------ ------------------------
<S> <C> <C> <C>
Income tax (benefit) at statutory rate (34%) $(2,377,407) $(3,089,227)$(5,709,883)
Deferred tax valuation allowance change 2,581,875 3,358,024 6,207,368
Non deductible expenses 3,025 1,056 1,290
State taxes net of federal benefit (2.97%) (207,674) (269,853) (498,775)
------------ ------------------------
Provision for Income Taxes $ - $ - $ -
============ ========================
</TABLE>
F-14
</Page>
<PAGE>
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 $3,145, $6,791, $3,042 and $694,900 for the six months ended
September 30, 1999 and the fiscal years ended March 31, 1999, 1998, and
1997 respectively.
NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION
- --------------------------------------------
Non-Cash Investing and Financing Activities
- -------------------------------------------
During the year ended March 31, 1997, the Company acquired equipment valued
at $101,254 in exchange for notes payable. As part of these transactions,
the Company exchanged a vehicle with a net book value of $22,131, a note
payable of $18,247, and cash of $1,100 for a similar vehicle with a cost of
$28,046 and a note payable of $26,946 resulting in a basis in the new
vehicle of $31,750.
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 converted $19,723,900
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 six months ended September 30, 1999, 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 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.
During the period ended September 30, 1999, 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 the
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 period ended September 30, 1999 and the years ended March 31,
F-15
</Page>
<PAGE>
1999, 1998, and 1997, and the, the Company paid cash of $11,494, $37,975,
$485,and $7,814 respectively, for interest expense.
NOTE 12 - CONTINGENCY
- ---------------------
The Company, through its wholly owned subsidiary, Ventura, which in turns
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. 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 from 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.
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.
In connection with the acquisition of Ferry Lane on June 30, 1998, the
Company issued notes payable of $9,433,918, net of a discount of $566,082
from interest imputed at 12%. 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 salary for 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 six months ended September 30, 1999, the Company issued
3,000,000 shares for services.
</Page>
<PAGE>
NOTE 14 - SUBSEQUENT EVENTS
- ---------------------------
On January 20, 2000, the Company restructured its debt to a related party
which had been due upon demand. A note was signed whereby the amount due,
$1,141,882, is payable on March 31, 2002 and remains non-interest bearing.
This amount is reported as a long-term note payable on the September 30,
1999 balance sheet. In addition, the major shareholder committed to provide
additional financing to the Company. The shareholder has agreed that any
additional amounts provided will be non-interest bearing and due on March
31, 2002.
Subsequent to September 30, 1999, the major shareholder paid $145,000 of
current notes payable on behalf of the Company which will be reported as a
capital contribution.
F-17
</Page>
<PAGE>
EXHIBIT 3.01
ARTICLES OF INCORPORATION
</Page>
<PAGE>
ARTICLES OF INCORPORATION
--------------------------
OF
--
TRAC CONTROL SYSTEMS, INC.
--------------------------
We, the undersigned natural persons of the age of twenty-one (21)
years or more, citizens of the United States, acting as incorporators under
the Utah Business Corporation Act, adopt the following Articles of
Incorporation for Trac Control Systems, Inc.
ARTICLE I
----------
CORPORATE NAME
---------------
The name of the corporation is: Trac Control Systems, Inc.
ARTICLE II
PRINCIPAL OFFICE AND REGISTERED AGENT
--------------------------------------
The principal office and the principal place of business for the
corporation shall be located at the following address: 2833 Comanche
Drive, Salt Lake City, Utah 84108. Registered agent for the corporation
shall be Craig A. Christensen located at the above address.
ARTICLE III
CORPORATE PURPOSES
-------------------
The purposes for which the corporation is organized is to engage in
any lawful activity including the electronic monitoring and cont5rol
devices for confinement of parolees of sentenced criminals or any related
electronic in computer services related thereto, real estate development,
real estate ownership or leasing, and the performance of all services and
activities related and ancillary thereto, and in carrying out these general
purposes the corporation shall have, to the extent permitted by law, the
power:
(a) To make all contracts necessary and proper to affect its
purposes and conduct its authorized business: to won real estate and
personal property necessary or appropriate for the conduct of its business
and matters related or ancillary thereto; to invest its funds in electronic
monitoring devices, computers, computer software, other electronic
equipment, real estate, mortgages, stocks, bonds and any other type of
investments; to hold property including shares of its own stock.
(b) To do all things to the same extent and as fully as natural
persons now do or could do in their place; to do all things and engage in
all lawful transactions which a corporation organized or existing under the
laws of the State of Utah might do or engage in, even though not expressly
stated herein.
The forgoing shall be construed both as objects and power, but no
recitation or declaration of specific or special powers or purposes herein
enumerates shall be deemed to be exclusive; and it is hereby expressly
declared that all other lawful purposes, powers and activities are hereby
included.
</Page>
<PAGE>
ARTICLE IV
CAPITAL STOCK
--------------
The aggregate number of shares which this corporation shall have
authority to issue is FIFTY THOUSAND (50,000) SHARES of Common Stock having
no par value. All stock of the corporation shall be of the same class and
have the same rights and preferences.
ARTICLE V
DIRECTORS
----------
The corporation shall be governed by a Board of Directors which shall
consist of a variable number of three (3) to nine (9) members as the
Stockholders may from time to time determine; until a determination is made
in the future, the Board shall consist if three (3) directors. The names
and addresses of the persons who are to serve as directors until the first
annual meeting of the shareholders or until their successors be elected are
as follows:
<TABLE>
<CAPTION>
Name Address
-------------------- --------------------------
<S> <C>
George Q. Nielsen 2678 Comanche Circle
Salt Lake City, Utah
84108
Craig A. Christensen 2833 Comanche Drive
Salt Lake City, Utah
84108
D. Scott McGregor 1569 East Stonemoor Circle
Salt lake City, Utah
84121
</TABLE>
ARTICLE VI
STOCK NON ASSESSABLE
---------------------
Fully paid stock shall not be liable nor subject to any call or
assessment by the shareholders or Board of Directors.
ARTICLE VII
INCORPORATORS
--------------
The name and address of each incorporator is as follows:
<TABLE>
<S> <C>
Craig A. Christensen 2833 Comanche Drive
Salt Lake City, Utah
84108
George Q. Nielsen 2678 Comanche Circle
Salt Lake City, Utah
84108
D. Scott McGregor 1569 East Stonemoor Circle
Salt Lake City, Utah
84121
</Page>
<PAGE>
ARTICLE VIII
DURATION OF CORPORATION
------------------------
The corporation is to have perpetual existence unless dissolved or
terminated according to law.
ARTICLE IX
PRE EMPTIVE RIGHTS
-------------------
The authorized stock of this corporation may be issued by the Board of
Directors at such times, upon such terms and conditions, and for such
considerations as the Board of Directors shall determine. Stockholders
shall have no pre-emptive rights in issues of authorized stock.
ARTICLE X
CUMULATIVE VOTING
------------------
At each election for directors every shareholder entitles to vote at
such election shall have the right to accumulate his vote by giving one
candidate as many votes as the ;umber of such directors multiplied by the
number of his shares shall equal, or by distributing such votes (computed
on the sane principle) among any number of such candidates.
ARTICLE XI
INTERNAL AFFAIRS
-----------------
The Directors shall adopt By-laws for the regulation of the internal
affairs of the corporation, which By-laws may be amended from time to time
or repealed pursuant to laws.
ARTICLE XII
POWER TO SELL ASSETS AND CREATE INDEBTEDNESS
----------------------------------------------
In carrying on the business of the corporation, the Board of Directors
is authorized and empowered to well, exchange, mortgage, bond, or
otherwise dispose of, deal with and encumber any or all f the property
of the corporation, upon such terms and conditions as the Board of
Directors may deem just and proper and for the best interests of the
corporation, without prior authorization or subsequent confirmation by
a vote of the stockholders or otherwise.
</Page>
<PAGE>
ARTICLE XIII
AMENDMENT OF ARTICLES
-----------------------
This corporation reserves the right to amend, alter, change or repeal
any provision contained in the Articles of Incorporation, in the
manner now or hereafter prescribed by statute, or by the Articles of
Incorporation, and all rights conferred upon stockholders herein are
granted subject to this reservation.
ARTICLE XIV
OFFICERS AND DIRECTORS CONTRACTS
------------------------------------
No contract of other transaction between this corporation and any
other corporation shall be affected or invalidated aby the fact that a
Director or Officer of this corporation is interested in or is a Director
of Officer of such other corporation; and any Director of Officer,
individually or jointly, may be a party to or may be interested in any
transaction with this corporation or in which this corporation is
interested; and no contract or other transaction of this corporation with
any person, firm or corporation shall be affected by the fact that any
Director or Officer of this corporation is a party to or is interested in
such contract, act or transaction or in any way connected with such person,
firm or corporation, and every person who may become a Director or Officer
if this corporation is hereby relieved from liability that might otherwise
exist from contracting with the corporation for the benefit of himself or
any firm, association or corporation in which he may be in any way
interested, provided said Director or Officer acts in good faith.
ARTICLE XV
SECTION 1244 STOCK
-------------------
Shares of stock of this corporation authorized and issued pursuant to
these Articles within two years from the date of incorporation are, for
purposes of the Internal Revenue Code of 1954, and shall be known as
"Section 1244 Stock".
ARTICLE XVI
QUORUMS AND VOTE REQUIRED
----------------------------
A quorum of the Board of Directors shall consist of a majority of the
total number of directors. The Board of Directors may transact business or
otherwise act only upon a majority of the total number of directors.
A quorum of the stockholders shall consist of a majority of th total
shares outstanding. The stockholders may act only upon a vote of a
majority of th total outstanding shares unless state law requires greater
that a simple majority.
ARTICLE XVII
MINIMUM PAID IN CAPITAL
------------------------
The corporation shall not commence business until consideration of the
value of at least One Thousand Dollars ($1,000.00) has been received by it
for the issuance of capital stock.
</Page>
<PAGE>
Dated this 13th day of June, 1983
/s/ Craig A. Christensen
-----------------------------
/s/ George Q. Nielsen
-----------------------------
/s/ D. Scott McGregor
-----------------------------
STATE OF UTAH )
: as
COUNTY OF SALT LAKE )
I, the undersigned, a Notary Public, hereby certify that Craig A.
Christensen, George Q. Nielsen and D. Scott McGregor personally appeared
before ;mem and being duly sworn by me, severally declared that they are
the persons who signed the foregoing document as Incorporators and that the
statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 13th day
of June, 1983.
/s/ Janet B. Macchione
-------------------------------
Notary Public
Residing at Salt Lake City, Utah
My Commission Expires:
1/20/87
</Page>
</TABLE>
<PAGE>
EXHIBIT 3.02
AMENDED ARTICLES
OF INCORPORATION
</Page>
<PAGE>
REVISED
ARTICLES OF INCORPORATION
OF
COMPUTRAC SYSTEMS, INC
(Formerly Trac Control Systems, Inc.)
Pursuant to the provisions of Section 16 - 10- 60 of the Utah
Business Corporation Act, the undersigned corporation adopts the following
revision to its Articles of Incorporation which supersedes the original
Articles of Incorporation and any amendments thereto. These revised
Articles were adopted by the unanimous vote of the shareholders as of
December 1, 1983 , as provided by law. There were 50,000 shares outstanding
at the time with 50,000 shares approving adoption of the revised Articles
and no shares voting to the contrary.
ARTICLE I - CORPORATE NAME
----------------------------
The name of the corporation is Computrac Systems, Inc
ARTICLE II - DURATION OF CORPORATION
-------------------------------------
The corporation is to have perpetual existence
ARTICLE III - CORPORATE PURPOSES
--------------------------------
The general purposes and objects for which the corporation is
organized are:
(a) To develop, manufacture, assemble, fabricate, import, lease,
purchase, or otherwise acquire, invest in, hold, use, license the use of,
install, handle, maintain, service or repair, sell, pledge, mortgage,
exchange, export, distribute, lease, assign, dispose of, and generally to
trade and deal in and with, and otherwise as principal or agent, at
wholesale, retail, on commission, or otherwise, electronic and computer
systems and services, equipment and components, and electrical, mechanical,
and electro-mechanical apparatus and equipment of every kind and
description, electronic, computer, telecommunication, communication,
</Page>
<PAGE>
transmitting, teceiving, recording, reproducing, and similar equipment of
every description, microwave devices and equipment, radio, sonar, radar,
television, and related devices and equipment, and similar goods, wares,
merchandise, commodities, articles of commerce, and property of every kind
and description, and any and all products, machinery, equipment, services
and supplies used or useful in connection therewith.
(b) To acquire by purchase, exchange, gift, bequest, subscription or
otherwise, and to hold, own, mortgage, pledge, hypothecate, sell, assign,
transfer, exchange or otherwise dispose of or deal in or with its own
corporate securities or stock or other securities, including, without
limitation, any shares of stock, bonds, debentures, notes, mortgages, or
other obligations, and any certificates, receipts or other instruments
representing rights or interests therein, or any property or assets created
or issued by any person, firm, associations, or corporations, or any
government or subdivisions, agencies ro instrumentalities thereof; to make
payment therefor in any lawful manner or to use its unrestricted and
unreserved earned surplus for the purchase of its own shares, and to
exercise as owner or holder of any securities any and all rights, powers
and privileges in respect thereof.
(c) To mortgage or pledge all, substantially all or part of the
property or assets of the corporation, with or without the goodwill of the
corporation.
(d) To do each and every thing necessary, suitable or proper for the
accomplishment of any of the purposes or the attainment of any one or more
of the subjects herein enumerated, or which may at any time appear
conducive to or expedient for protection or benefit of this corporation,
and to do said acts as fully and to the same extent as and natural persons
might, or could do, in any part of the world as principals, agents,
partners, trustees or otherwise, either alone or in conjunction with any
other person, association or corporation.
(e) The foregoing clauses shall be construed both as objects and
</Page>
<PAGE>
powers and shall not be held to limit or restrict in any manner the general
powers of the corporation and the enjoyment and exercise thereof as
conferred by the laws of the State of Utah; and it is the intention that
the purposes , objects and powers specified in each of the paragraphs of
this Article III shall be regarded as independent purposes, objects and
powers.
ARTICLE IV - SHARES
--------------------
The aggregate number of shares which the Corporation shall have
authority to issue is 20,000,000, par value of $.001 per share. All shares
of the Corporation shall be of the same class and shall have the same
rights and preferences. Fully paid shares of the Corporation shall not be
liable to any further call or assessment.
ARTICLE V - SHAREHOLDER RIGHTS
-------------------------------
The authorized shares of stock of the Corporation may be issued at
such time, upon such terms and conditions, and for such consideration as
the Board of Directors shall determine. Shareholders shall not have
preemptive rights to acquire unissued shares of the stock of the
Corporation.
ARTICLE VI - BYLAWS
--------------------
The Directors shall adopt Bylaws which are not inconsistent with law
or these Articles for the regulation and management of the affairs of the
Corporation. The Bylaws may be amended from time to time or repealed
pursuant to law.
ARTICLE VII - OFFICERS' AND DIRECTORS' CONTRACTS
-------------------------------------------------
No contract or other transaction between this corporation and one or
more of its directors or any other corporation, firm, association or
entity in which one or more of its directors are directors or officers or
are financially interested, shall be either void or voidable because of
such relationship or interest, or because such directors are present at the
meeting of the Board of Directors, or a committee thereof, which
</Page>
<PAGE>
authorizes, approved or ratifies such contract or transaction, or because
his or their votes are counted for such purpose if: (a) the fact of such
relationship or interest is disclosed or known to the Board of Directors or
committee which authorizes, approves or ratifies the contract or
transaction by vote or consent sufficient for the purpose without counting
the votes or consents of such interested director; or (b) the fact of such
relationship or interest is disclosed or known to the shareholders entitled
to vote and they authorize, approve or ratify such contract or transaction
by vote or written consent; or (c) the contract or transaction is fair and
reasonable to the corporation.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or committee
thereof which authorizes, approves or ratifies such contract or
transaction.
DATED this 16th day of January, 1984.
TRAC CONTROL SYSTEMS, INC.
By /s/ George Q. Nielsen
----------------------------------
By /s/ Craig A. Christensen
----------------------------------
STATE OF UTAH )
:SS.
COUNTY OF SALT LAKE )
On the 17th day of January, 1984,personally appeared before me George
Q. Nielsen and Craig A. Christensen who being by me first duly sworn
severally declared that they are the persons who signed the foregoing
document as president and secretary, respectively, and that the statements
therein contained are true.
/s/ Marcia A. Hedenstrom, Notary Public
---------------------------------------
My Commission Expires: 8-18-86 Residing at Salt Lake County
</Page>
<PAGE>
CORPORATE RESOLUTION
COMPUTRAC SYSTEMS, INC.
RESOLVED, that Kent B. Hansen, President of Computrac Systems, Inc. is
hereby authorized, directed and empowered to execute on behalf of the
corporation all bank drafts in each of its checking accounts on Valley Bank
& Trust, Broadway Office and the execution of such drafts is hereby ratified
and approved; and this resolution shall remain in full force and effect until
written notice of its revocation is received by said bank.
BE IT FURTHER RESOLVED, that the authority granted by this resolution
shall apply with equal force and effect to the respective successors in
office of the individuals herein named.
* * * * * * * *
I, John M. Wunderli, Secretary of Computrac Systems, Inc., a corporation
incorporated under the laws of the State of Utah, do hereby certify that the
foregoing is a full, true and correct copy of a resolution of the Board of
Directors of said corporation, duly and regularly passed and adopted at t
meeting on the Board of Directors of said corporation which was duly and
regularly called and held in all respects as required aby law and by the by-
laws of said corporation, at the office thereof on the 30th day of July,
1985, at which meeting the majority of the Board of Directors of said
corporation was present and voted in favor of such resolution.
I further certify that said resolution is still in full force and effect
and has not been amended or revoked, and that the specimen signatures
appearing below are the signatures of the officers authorized to sign for
this corporation by virtue of this resolution.
I further certify that Kent B. Hansen is President of said corporation.
IN WITNESS WHEREOF, I have hereto set my hand as such Secretary this
15th day of August, 1985.
SPECIMEN SIGNATURES
/s/ Kent B. Hansen /s/ John M. Wunderli
- ------------------------- ------------------------
Kent B. Hansen, President Secretary of
Computrac Systems, Inc.
</Page>
<PAGE>
AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
COMPUTRAC SYSTEMS, INC.
Computrac Systems, Inc., a corporation organized under the laws of the
State of Utah on June 13, 1983, hereby adopts the following Amendment to its
Articles of Incorporation pursuant to the provisions of Utah Revised Business
Corporation Act, Sections 16-10a-1006.
I
The Articles of Incorporation shall be amended to read as follows:
ARTICLE 1 - CORPORATE NAME
----------------------------
The name of the corporation shall be Foureyes Holdings, Inc.
II
The shareholders voted and approved a one for twenty five reverse split
of the outstanding shares of the Corporation. The authorized shares of
common stock will remain at 20,000,000, $.001 par value common voting shares.
There are currently 12,700,001 shares issued and outstanding in the
Corporation. Following the reverse split and issuance of shares pursuant to
the Agreement and Plan of Reorganization there will be 10,008,000 common
shares outstanding.
III
The date of the adoption of the foregoing amendment and reverse split by
the shareholders was August 21, 1997. The number of shares outstanding in
the corporation and entitled to vote, as of the record date, on the amendment
was 12,653,122. All stock in the Corporation is entitled to one vote per
share for each matter coming before the meeting of the shareholders.
IV
The number of shares that vote in favor of the above amendments was
11,999,385. The number os shares that voted against the above amendments was
1,000.
Dated this 21st day of August, 1997.
</Page>
<PAGE>
COMPUTRAC SYSTEMS, INC.
By: /s/ Christopher Darke
----------------------------------
Christopher Darke, President
By: /s/ H.E. Blum
---------------------------------
Harriette E. Blum, Secretary
STATE OF UTAH )
: ss
COUNTY OF __________ )
On the ___ day of August, 1997, personally appeared before me
Christopher Darke and Harriette E. Blum, and duly acknowledged to me that
they are the persons who signed the foregoing instrument as President and
Secretary respectively and that they have read the foregoing instrument and
know the contents there4of and that the same is true of their own knowledge
except as to those matters upon which they operate on information and belief
and as to those matter believe them to be true.
________________________________________
NOTARY PUBLIC
Residing in:_______________________________
My Commission Expires: ______________
</Page>
<PAGE>
AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
FOUREYES HOLDINGS, INC.
Foureyes Holdings, Inc., a corporation organized under the laws of the
State of Utah, June 13, 1988, hereby adopts the following Articles of
Amendment to its Articles of Incorporation pursuant to the provisions of the
Utah Business Corporation Act Section 16-10a-1006.
I
The Articles of Incorporation shall be amended to read as follows:
ARTICLE I
The name of the corporation is The New Anaconda Company.
ARTICLE IV
AUTHORIZED SHARES
The Corporation shall have the authority to issue one hundred million
(100,000,000) shares of Common Stock with a par value of $.001 per share.
All shares of the Corporation shall be of the same class and shall have the
same rights and preferences. Fully paid shares of the Corporation shall not
be liable to any further call or assessment.
II
The date of the adoption of the foregoing amendments was June 7th ,
1999. Pursuant to Section 16-10a-850 et. seq., Conflicting Interest
Transactions, the number of shares entitled to vote on the amendments was
987,699.
</Page>
<PAGE>
III
The number of shares that voted in favor of the above amendments was
631,791. The number of shares that voted against the above amendments was 0
(zero).
DATED this 7th day of June, 1999.
FOUREYES HOLDINGS, INC.
By: /s/ Paul de Rome
------------------------------
Paul de Rome, President
</Page>
<PAGE>
EXHIBIT 3.03
BYLAWS
</Page>
<PAGE>
BYLAWS
OF
THE NEW ANACONDA COMPANY
A Utah Corporation
</Page>
<PAGE>
INDEX TO BYLAWS
OF
THE NEW ANACONDA COMPANY
Page
ARTICLE I - Offices
Section 1.01 Business Offices. . . . . . . . . . . . . . . . . . . . . . .1
Section 1.02 Principal Office. . . . . . . . . . . . . . . . . . . . . . .1
Section 1.03 Registered Office . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II - Shareholders
Section 2.01 Annual Meeting. . . . . . . . . . . . . . . . . . . . . . . .1
Section 2.02 Special Meetings. . . . . . . . . . . . . . . . . . . . . . .2
Section 2.03 Place of Meetings . . . . . . . . . . . . . . . . . . . . . .2
Section 2.04 Notice of Meetings. . . . . . . . . . . . . . . . . . . . . .2
Section 2.05 Fixing of Record Date . . . . . . . . . . . . . . . . . . . .3
Section 2.06 Shareholder List for Meetings . . . . . . . . . . . . . . . .4
Section 2.07 Shareholder Quorum and Voting
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 2.08 Increasing Quorum or Voting
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 2.09 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 2.10 Voting of Shares. . . . . . . . . . . . . . . . . . . . . . .6
Section 2.11 Corporation's Acceptance of Votes . . . . . . . . . . . . . .6
Section 2.12 Action Without a Meeting. . . . . . . . . . . . . . . . . . .7
Section 2.13 Meetings by Telecommunication . . . . . . . . . . . . . . . .8
Section 2.14 Voting Trusts and Agreements. . . . . . . . . . . . . . . . .8
Section 2.15 Voting for Directors. . . . . . . . . . . . . . . . . . . . .9
Section 2.16 Maintenance of Records and Shareholder
Inspection Rights. . . . . . . . . . . . . . . . . . . . . . . .9
Section 2.17 Financial Statements and Share
Information. . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.18 Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . 10
Section 2.19 Shares Held by Nominees . . . . . . . . . . . . . . . . . . 10
ARTICLE III - Board of Directors
Section 3.01 General Powers. . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.02 Number, Tenure and Qualifications . . . . . . . . . . . . . 11
Section 3.03 Resignation . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.04 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . 11
xix
</Page>
Section 3.05 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.06 Regular Meetings. . . . . . . . . . . . . . . . . . . . . . 12
Section 3.07 Special Meetings. . . . . . . . . . . . . . . . . . . . . . 12
Section 3.08 Place of Meetings -- Meetings by
Telephone. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.09 Notice of Meetings. . . . . . . . . . . . . . . . . . . . . 12
Section 3.10 Waiver of Notice. . . . . . . . . . . . . . . . . . . . . . 13
Section 3.11 Quorum and Manner of Acting . . . . . . . . . . . . . . . . 13
Section 3.12 Action Without a Meeting. . . . . . . . . . . . . . . . . . 14
Section 3.13 Altering Quorum or Voting
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.14 Compensation. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.15 Committees. . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.16 Standards of Conduct. . . . . . . . . . . . . . . . . . . . 15
Section 3.17 Limitation of Liability . . . . . . . . . . . . . . . . . . 15
Section 3.18 Liability for Unlawful Distributions. . . . . . . . . . . . 16
Section 3.19 Conflicting Interest Transactions . . . . . . . . . . . . . 16
ARTICLE IV - Officers
Section 4.01 Number and Qualifications . . . . . . . . . . . . . . . . . 16
Section 4.02 Appointment and Term of Office. . . . . . . . . . . . . . . 17
Section 4.03 Removal and Resignation of Officers . . . . . . . . . . . . 17
Section 4.04 Authority and Duties. . . . . . . . . . . . . . . . . . . . 17
Section 4.05 Surety Bonds. . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.06 Compensation. . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V - Standards of Conduct for Officers and Directors
Section 5.01 Standards of Conduct. . . . . . . . . . . . . . . . . . . . 19
Section 5.02 Reliance on Information and Reports . . . . . . . . . . . . 19
Section 5.03 Limitation on Liability . . . . . . . . . . . . . . . . . . 20
ARTICLE VI - Indemnification
Section 6.01 Indemnification of Directors. . . . . . . . . . . . . . . . 20
Section 6.02 Advance Expenses for Directors. . . . . . . . . . . . . . . 21
Section 6.03 Indemnification of Officers, Employees,
Fiduciaries, and Agents. . . . . . . . . . . . . . . . . . . . 21
Section 6.04 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.05 Scope of Indemnification. . . . . . . . . . . . . . . . . . 22
Section 6.06 Other Rights and Remedies . . . . . . . . . . . . . . . . . 22
Section 6.07 Severability. . . . . . . . . . . . . . . . . . . . . . . . 22
xx
</Page>
<PAGE>
ARTICLE VII - Stock
Section 7.01 Issuance of Shares. . . . . . . . . . . . . . . . . . . . . 23
Section 7.02 Certificates for Shares; Shares
Without Certificates . . . . . . . . . . . . . . . . . . . . . 23
Section 7.03 Restrictions on Transfer of Shares
Permitted. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.04 Acquisition of Shares by the
Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VIII - Amendments to Bylaws
Section 8.01 Authority to Amend. . . . . . . . . . . . . . . . . . . . . 25
Section 8.02 Bylaw Changing Quorum or Voting
Requirement for Shareholders . . . . . . . . . . . . . . . . . 25
Section 8.03 Bylaw Changing Quorum or Voting
Requirement for Directors. . . . . . . . . . . . . . . . . . . 26
ARTICLE IX - Miscellaneous
Section 9.01 Corporate Seal. . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.02 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . 26
</Page>
xxi
BYLAWS
OF
THE NEW ANACONDA COMPANY
ARTICLE I
Offices
Section 1.01 Business Offices. The corporation may have such offices,
either within or outside Utah, as the Board of Directors may from time to
time determine or as the business of the corporation may from time to time
require.
Section 1.02 Principal Office. The principal office of the corporation
shall be located at any place either within or outside Utah as may be
designated in the most recent document on file with the Utah Department of
Commerce, Division of Corporations and Commercial Code (the "Division")
providing information regarding the principal office of the corporation.
The corporation shall maintain at its principal office a copy of such
corporate records as may be required by Section 1601 of the Utah Revised
Business Corporation Act ("the "Act") and Section 2.16 of these bylaws.
Section 1.03 Registered Office. The registered office of the
corporation required by Section 501 of the Act to be maintained in Utah
shall be the registered office as originally so designated in the
corporation's articles of incorporation or subsequently designated as the
corporation's registered office in the most recent document on file with
the Division providing such information. The corporation shall maintain a
registered agent at the registered office, as required by Section 501 of
the Act. The registered office and registered agent may be changed from
time to time as provided in Sections 502 and 503 of the Act.
ARTICLE II
Shareholders
Section 2.01 Annual Meeting. The annual meeting of shareholders shall
be held each year on a date and at a time designated by the Board of
Directors. In the absence of such designation, the annual meeting of
shareholders shall be held on the fifteenth day of June in each year at
7:30 p.m. However, if the day fixed for the annual meeting is a legal
holiday in Utah, then the meeting shall be held at the same time and place
on the next succeeding business day. At the meeting, directors shall be
elected and any other proper business may be transacted. If the election of
directors shall not be held on the day designated herein for any annual
meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a meeting of the
shareholders as soon thereafter as may be convenient. Failure to hold an
annual meeting as required by these bylaws shall not affect the validity of
any corporate action or work a forfeiture or dissolution of the
corporation. (Section 701 of the Act).
1
</Page>
<PAGE>
Section 2.02 Special Meetings. Special meetings of the shareholders
may be called at any time by the Board of Directors, by the Chairman of the
Board, by the President of the corporation, by any two directors of the
corporation, or by such other officers or persons as may be authorized by
these Bylaws to call a special meeting, or by the holders of shares
representing at least fifty-one percent (51%) of all of the votes entitled
to be cast on any issue proposed to be considered at the meeting, all in
accordance with Section 702 of the Act.
Section 2.03 Place of Meetings. Each annual or special meeting of the
shareholders shall be held at such place, either within or outside Utah, as
may be designated by the Board of Directors. In the absence of any such
designation, meetings shall be held at the principal office of the
corporation. (Sections 701 and 702 of the Act)
Section 2.04 Notice of Meetings.
(a) Required Notice. The corporation shall give notice to shareholders
of the date, time, and place of each annual and special meeting of
shareholders no fewer than ten (10) nor more than thirty (30) days before
the meeting date, in accordance with the requirements of Sections 103 and
705 of the Act. Unless otherwise required by law or the articles of
incorporation, the corporation is required to give the notice only to
shareholders entitled to vote at the meeting. The notice requirement will
be excused under certain circumstances with respect to shareholders whose
whereabouts are unknown, as provided in Section 705(5) of the Act.
If the proposed corporate action creates dissenters' rights, the
notice must be sent to all shareholders of the corporation as of the
applicable record date, whether or not they are entitled to vote at the
meeting (Section 1320(1) of the Act).
(b) Contents of Notice. The notice of each special meeting must
include a description of the purpose or purposes for which the meeting is
called (see Section 702(4) of the Act). Except as provided in this Section
2.04(b), or as otherwise required by the Act, other applicable law, or the
articles of incorporation, notice of an annual meeting need not include a
description of the purpose or purposes for which the meeting is called.
If a purpose of any shareholder meeting is to consider: (1) a proposed
amendment to the articles of incorporation (Section 1003(4) of the Act);
(2) a plan of merger or share exchange (Section 1103(4) of the Act); (3)
the sale, lease, exchange or other disposition of all, or substantially all
of the corporation's property (Section 1202(5) of the Act); (4) the
dissolution of the corporation (Section 1402(4) of the Act); or (5) the
removal of a director (Section 808(4) of the Act), the notice must so state
and be accompanied by a copy or summary of the transaction documents, as
set forth in the above-referenced sections of the Act.
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If the proposed corporate action creates dissenters' rights, the
notice must state that shareholders are, or may be, entitled to assert
dissenters' rights, and must be accompanied by a copy of Part 13 of the Act
(see Section 1320(1) of the Act).
(c) Adjourned Meeting. If any annual or special meeting of
shareholders is adjourned to a different date, time or place, then subject
to the requirements of the following sentence notice need not be given of
the new date, time and place if the new date, time and place are announced
at the meeting before adjournment. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date for the
adjourned meeting is or must be fixed under Section 707 of the Act and
Section 2.05 of these bylaws, notice of the adjourned meeting must be given
pursuant to the requirements of paragraph 2.04(a) of these bylaws to
shareholders of record entitled to vote at the meeting, as provided in
Section 705(4)(b) of the Act.
(d) Waiver of Notice. A shareholder may waive notice of any meeting
(or any other notice required by the Act, the articles of incorporation or
these bylaws) by a writing signed by the shareholder entitled to the
notice, which is delivered to the corporation (either before or after the
date and time stated in the notice as the date and time when any action
will occur), for inclusion in the minutes or filing with the corporation
records. A shareholder's attendance at a meeting: (a) waives objection to
lack of notice or defective notice of the meeting, unless the shareholder
at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting because of lack of notice or defective
notice; and (b) waives objection to consideration of a particular matter at
the meeting that is not within the purpose or purposes described in the
meeting notice, unless the shareholder objects to considering the matter
when it is presented. (Section 706 of the Act).
Section 2.05 Fixing of Record Date. For the purpose of determining
shareholders of any voting group entitled to: (i) notice of or to vote at
any meeting of shareholders or any adjournment thereof; (ii) take action
without a meeting; (iii) demand a special meeting; (iv) receive payment of
any distribution or share dividend; or (v) take any other action, the board
of directors may fix in advance a date as the record date (as defined in
Section 102(28) of the Act) for one or more voting groups. As provided in
Section 707(3) of the Act, a record date fixed pursuant to such section may
not be more than 70 days prior to the date on which the particular action
requiring such determination of shareholders is to be taken. If no record
date is otherwise fixed by the board as provided herein, then the record
date for the purposes set forth below shall be the close of business on the
dates indicated:
(a) With respect to a determination of shareholders entitled to notice
of and to vote at an annual or special meeting of shareholders, the day
before the first notice is delivered to shareholders (see Section 707(2) of
the Act);
(b) With respect to a determination of shareholders entitled to demand
a special meeting of shareholders pursuant to Section 702(1)(b) of the Act,
the later of (i) the earliest date of any of the demands pursuant to which
the meeting is called, and (ii) the date that is thirty days prior to the
date the first of the written demands pursuant to which the meeting is
called is received by the corporation (see Section 702(2) of the Act);
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(c) With respect to a determination of shareholders entitled to a
share dividend, the date the board authorizes the share dividend (see
Section 623(3) of the Act);
(d) With respect to a determination of shareholders entitled to take
action without a meeting (pursuant to Section 2.12 of these bylaws and
Section 704 of the Act) or entitled to be given notice of an action so
taken, the date the first shareholder delivers to the corporation a writing
upon which the action is taken (see Section 704(6) of the Act); and
(e) With respect to a determination of shareholders entitled to a
distribution (other than one involving a purchase or reacquisition of
shares for which no record date is necessary), the date the board of
directors authorizes the distribution (see Section 640(2) of the Act).
A determination of shareholders entitled to notice of or to vote at
any meeting of shareholders is effective for any adjournment of the meeting
unless the board of directors fixes a new record date, which it must do if
the meeting is adjourned to a date more than 30 days after the date fixed
for the original meeting (see Section 707(4) of the Act).
Section 2.06 Shareholder List for Meetings. The officer or agent
having charge of the stock transfer books for shares of the corporation
shall prepare a list of the names of all shareholders entitled to be given
notice of, and to vote at, each meeting of shareholders, in compliance with
the requirements of Section 720 of the Act. The list must be arranged by
voting group and within each voting group by class or series of shares. The
list must be in alphabetical order within each class or series of shares
and must show the address of, and the number of shares held by, each
shareholder. The shareholder list must be available for inspection by any
shareholder, beginning on the earlier of (i) ten days before the meeting
for which the list was prepared, or (ii) two business days after notice of
the meeting is given, and continuing through the meeting and any
adjournments thereof. The list must be available at the corporation's
principal office or at a place identified in the meeting notice in the city
where the meeting is to be held. A shareholder or a shareholder's agent or
attorney is entitled on written demand to the corporation, and subject to
the provisions of Sections 720, 602 and 1603 of the Act, to inspect and
copy the list during regular business hours, during the period it is
available for inspection. The list is to be available at the meeting for
which it was prepared, and any shareholder or any shareholder's agent or
attorney is entitled to inspect the list at any time during the meeting for
any purpose germane to the meeting. The shareholder list is to be
maintained in written form or in another form capable of conversion into
written form within a reasonable time (see Section 1601(4) of the Act).
Section 2.07 Shareholder Quorum and Voting Requirements. If the
articles of incorporation or the Act provides for voting by a single voting
group on a matter, action on that matter is taken when voted upon by that
voting group.
Shares entitled to vote as a separate voting group may take action on
a matter at a meeting only if a quorum of such shares exists with respect
to that matter. Unless the articles of incorporation, a bylaw adopted
pursuant to Section 2.08 hereof, or the Act provide otherwise, a majority
of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that group for action on that matter.
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If the articles of incorporation or the Act provides for voting by two
or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately. One voting
group may vote on a matter even though another voting group entitled to
vote on the matter has not voted.
Once a share is represented for any purpose at a meeting, including
the purpose of determining that a quorum exists, it is deemed present for
quorum purposes for the remainder of the meeting and for any adjournment of
the meeting, unless a new record date is or must be set for the adjourned
meeting.
If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the
voting group favoring the action exceed the votes cast within the voting
group opposing the action, unless the articles of incorporation, a bylaw
adopted pursuant to Section 2.08 hereof, or the Act requires a greater
number of affirmative votes. (See Sections 725 and 726 of the Act). Those
matters as to which the Act provides for a special voting requirement,
typically requiring the vote of a majority of all votes entitled to be
cast, or a majority of all voting shares within each voting group which is
entitled to vote separately, include certain amendments to the articles of
incorporation, mergers, sales of substantially all corporate assets, and
dissolution of the corporation.
Section 2.08 Increasing Quorum or Voting Requirements. As specified in
Section 727 of the Act, the articles of incorporation may provide for a
greater quorum or voting requirement for shareholders, or voting groups of
shareholders, than is provided for by the Act. An amendment to the articles
of incorporation that changes or deletes a greater quorum or voting
requirement must meet the same quorum requirement and be adopted by the
same vote and voting groups required to take action under the quorum and
voting requirements then in effect. Pursuant to Section 1021 of the Act, if
authorized by the articles of incorporation, the shareholders may adopt,
amend, or repeal a bylaw that fixes a greater quorum or voting requirement
for shareholders, or voting groups of shareholders, than is required by the
Act. Any such action is subject to the provisions of Part 7 of the Act. A
bylaw that fixes a greater quorum or voting requirement for shareholders as
set forth in the preceding sentence may not be adopted, amended, or
repealed by the board of directors.
Section 2.09 Proxies. At all meetings of shareholders, a shareholder
may vote in person or by proxy. A shareholder may appoint a proxy by
signing an appointment form, either personally or by the shareholder's
attorney-in fact, or by any of the other means set forth in Section 722 of
the Act. A proxy appointment is valid for eleven months unless a longer
period is expressly provided in the appointment form. The effectiveness and
revocability of proxy appointments are governed by Section 722 of the Act.
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Section 2.10 Voting of Shares. Unless otherwise provided in the
articles of incorporation, in Section 721 of the Act, or other applicable
law, each outstanding share, regardless of class, is entitled to one vote,
and each fractional share is entitled to a corresponding fractional vote,
on each matter voted on at a shareholders' meeting. Only shares are
entitled to vote.
Except as otherwise provided by specific court order as contemplated
by Section 721(2) of the Act, shares of this corporation are not entitled
to be voted or to be counted in determining the total number of outstanding
shares eligible to be voted if they are owned, directly or indirectly, by a
second corporation, domestic or foreign, and this corporation owns,
directly or indirectly, a majority of the shares entitled to vote for
directors of the second corporation. The prior sentence shall not limit the
power of the corporation to vote any shares, including its own shares, held
by it in a fiduciary capacity. Redeemable shares are not entitled to be
voted after notice of redemption is mailed to the holders and a sum
sufficient to redeem the shares has been deposited with a bank, trust
company, or other financial institution under an irrevocable obligation to
pay the holders the redemption price on surrender of the shares.
Section 2.11 Corporation's Acceptance of Votes. If the name signed on
a vote, consent, waiver, proxy appointment, or proxy appointment revocation
corresponds to the name of a shareholder, the corporation, if acting in
good faith, is entitled to accept the vote, consent, waiver, proxy
appointment, or proxy appointment revocation and give it effect as the act
of the shareholder, as provided in Section 724 of the Act.
If the name signed on a vote, consent, waiver, proxy appointment, or
proxy appointment revocation does not correspond to the name of a
shareholder, the corporation, if acting in good faith, is nevertheless
entitled to accept the vote, consent, waiver, proxy appointment, or proxy
appointment revocation and give it effect as the act of the shareholder if:
(a) the shareholder is an entity and the name signed purports to be
that of an officer or agent of the entity;
(b) the name signed purports to be that of an administrator, executor,
guardian, or conservator representing the shareholder and, if the
corporation requests, evidence of fiduciary status acceptable to the
corporation has been presented with respect to the vote, consent, waiver,
proxy appointment, or proxy appointment revocation;
(c) the name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the corporation requests, evidence of
this status acceptable to the corporation has been presented with respect
to the vote, consent, waiver, proxy appointment, or proxy appointment
revocation;
(d) the name signed purports to be that of a pledgee, beneficial
owner, or attorney-in-fact of the shareholder and, if the corporation
requests, evidence acceptable to the corporation of the signatory's
authority to sign for the shareholder has been presented with respect to
the vote, consent, waiver, proxy appointment, or proxy appointment
revocation;
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(e) two or more persons are the shareholder as cotenants or
fiduciaries and the name signed purports to be the name of- at least one of
the cotenants or fiduciaries and the person signing appears to be acting on
behalf of all cotenants or fiduciaries; or
(f) the acceptance of the vote, consent, waiver, proxy appointment, or
proxy appointment revocation is otherwise proper under rules established by
the corporation that are not inconsistent with the provisions of Section
724 of the Act.
If shares are registered in the names of two or more persons, whether
fiduciaries, members of a partnership, cotenants, husband and wife as
community property, voting trustees, persons entitled to vote under a
shareholder voting agreement or otherwise, or if two or more persons,
including proxyholders, have the same fiduciary relationship respecting the
same shares, then unless the secretary of the corporation or other officer
or agent entitled to tabulate votes is given written notice to the contrary
and is furnished with a copy of the instrument or order appointing them or
creating the relationship wherein it is so provided, their acts with
respect to voting shall have the effects set forth in Section 724(3) of the
Act.
The corporation is entitled to reject a vote, consent, waiver, proxy
appointment, or proxy appointment revocation if the secretary or other
officer or agent authorized to tabulate votes, acting in good faith, has
reasonable basis for doubt about the validity of the signature on it or
about the signatory's authority to sign for the shareholder.
The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, proxy appointment, or proxy appointment revocation
in good faith and in accordance with the standards of Section 724 of the
Act are not liable in damages to the shareholder for the consequences of
the acceptance or rejection.
Corporate action based on the acceptance or rejection of a vote,
consent, waiver, proxy appointment, or proxy appointment revocation under
this section and Section 724 of the Act is valid unless a court of
competent jurisdiction determines otherwise.
Section 2.12 Action Without a Meeting. Unless otherwise provided in
the articles of incorporation, and subject to the provisions of Section 704
of the Act, any action required or permitted to be taken at a meeting of
the shareholders may be taken without a meeting and without prior notice,
if one or more consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding shares having no less than
the minimum number of votes that would be necessary to authorize or take
the action at a meeting at which all shares entitled to vote thereon were
present and voted. Unless the written consents of all shareholders
entitled to vote have been obtained, notice of any shareholder approval
without a meeting shall be given at least ten days before the consummation
of the action authorized by the approval. Such notice shall meet the
requirements of, and be delivered to all shareholders identified in,
Section 704(2) of the Act.
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Any shareholder giving a written consent, or the shareholder's
proxyholder, personal representative or transferee may revoke a consent by
a signed writing describing the action and stating that the shareholder's
prior consent is revoked, if the writing is received by the corporation
prior to the effectiveness of the action, as provided in Section 704(3) of
the Act.
An action taken by written consent of the shareholders as provided
herein is not effective unless all written consents on which the
corporation relies for the taking of the action are received by the
corporation within a sixty day period. An action so taken is effective as
of the date the last written consent necessary to effect the action is
received by the corporation, unless all of the written consents necessary
to effect the action specify a later date as the effective date of the
action, in which case the later date shall be the effective date of the
action.
Unless otherwise provided in these bylaws, the written consents may be
received by the corporation by electronically transmitted facsimile or
other form of communication providing the corporation with a complete copy
thereof, including a copy of the signature thereto.
Notwithstanding the other provisions of this bylaw, directors may not
be elected by written consent except by unanimous written consent of all
shares entitled to vote for the election of directors.
As set forth in Section 2.05(d) above, if not otherwise determined as
permitted by the Act and these bylaws, the record date for determining
shareholders entitled to take action without a meeting or entitled to be
given notice of any action so taken is the date the first shareholder
delivers to the corporation a writing upon which the action is taken.
An action taken by written consent of the shareholders as provided
herein has the same effect as action taken at a meeting of shareholders,
and may be so described in any document.
Section 2.13 Meetings by Telecommunication. As permitted by Section
708 of the Act, unless otherwise provided in these bylaws, any or all of
the shareholders may participate in an annual or special meeting of
shareholders by, or the meeting may be conducted through the use of, any
means of communication by which all persons participating in the meeting
can hear each other during the meeting. A shareholder participating in a
meeting by this means is considered to be present in person at the meeting.
Section 2.14 Voting Trusts and Agreements. Voting trusts and
agreements may be entered into among the shareholders in compliance with
the requirements of Sections 730, 731 and 732 of the Act.
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Section 2.15 Voting for Directors. Unless otherwise provided in the
articles of incorporation or the Act, directors are elected by a plurality
of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present, in accordance with the requirements
and procedures set forth in Section 728 of the Act. Cumulative voting is
permitted only if specifically provided in the articles of incorporation.
Section 2.16 Maintenance of Records and Shareholder Inspection Rights.
(a) Corporate Records. As required by Section 1601 of the Act, the
corporation shall keep as permanent records minutes of all meetings of its
shareholders and board of directors, a record of all actions taken by the
shareholders or board of directors without a meeting, a record of all
actions taken on behalf of the corporation by a committee of the board of
directors in place of the board of directors, and a record of all waivers
of notices of meetings of shareholders, meetings of the board of directors,
or any meetings of committees of the board of directors. The corporation
shall also maintain appropriate accounting and shareholder records as
required by the statute. The corporation shall keep at its principal office
those corporate records and documents identified in Section 1601(5) of the
Act and listed in the following paragraph.
(b) Inspection Rights of Records Required at Principal Office.
Pursuant to Section 1602(1) of the Act, a shareholder or director of the
corporation (or such person's agent or attorney) who gives the corporation
written notice of the demand at least five business days before the
proposed inspection date, has the right to inspect and copy, during regular
business hours, any of the following records, all of which the corporation
is required to keep at its principal office:
(i) its articles of incorporation as then in effect;
(ii) its bylaws as then in effect;
(iii) the minutes of all shareholders' meetings, and records of all
actions taken by shareholders without a meeting, for the past three years;
(iv) all written communications within the past three years to
shareholders as a group or to the holders of any class or series of shares
as a group;
(v) a list of the names and addresses of its current officers and
directors;
(vi) its most recent annual report delivered to the Division; and
(vii) all financial statements prepared for periods ending during the
last three years that a shareholder could request under Section 1605 of the
Act.
(c) Conditional Inspection Rights. In addition to the inspection
rights set forth in paragraph (b) above, as provided in Section 1602(2) of
the Act, a shareholder or director of the corporation (or such person's
agent or attorney) who gives the corporation a written demand in good faith
and for a proper purpose at least five business days before the requested
inspection date, and describes in the demand with reasonable particularity
the records proposed to be inspected and the purpose of the inspection, is
entitled to inspect and copy, during regular business hours at a reasonable
location specified by the corporation, any of the following records of the
corporation:
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(i) excerpts from minutes of meetings of, and from actions taken by,
the shareholders, the board of directors, or any committees of the board of
directors, to the extent not subject to inspection under paragraph (b) of
this Section 2.16;
(ii) accounting records of the corporation; and
(iii) the record of shareholders (compiled no earlier than the date of
the demand for inspection).
For the purposes of paragraph (c), a proper purpose means a purpose
reasonably related to the demanding party's interest as a shareholder or
director. A party may not use any information obtained through the
inspection or copying of records permitted by this paragraph (c) for any
purposes other than those set forth in a proper demand as described above,
and the officers of the corporation are authorized to take appropriate
steps to ensure compliance with this limitation.
Section 2.17 Financial Statements and Share Information. Upon the
written request of any shareholder, the corporation shall mail to the
requesting shareholder:
(i) its most recent annual or quarterly financial statements showing
in reasonable detail its assets and liabilities and the results of its
operations, as required by Section 1605 of the Act; and
(ii) the information specified by Section 625(3) of the Act, regarding
the designations, preferences, limitations, and relative rights applicable
to each class and series of shares of the corporation, and the authority of
the board of directors to determine variations for any existing or future
class or series, as required by Section 1606 of the Act.
Section 2.18 Dissenters' Rights. Each shareholder of the corporation
shall have the right to dissent from, and obtain payment of the fair value
of shares held by such shareholder in the event of, any of the corporate
actions identified in Section 1302 of the Act or otherwise designated in
the articles of incorporation, these bylaws, or in a resolution of the
board of directors.
Section 2.19 Shares Held by Nominees. As provided in Section 723 of
the Act, the Board of Directors is authorized to establish for the
corporation from time to time such procedures as the directors may
determine to be appropriate, by which the beneficial owner of shares that
are registered in a nominee is recognized by the corporation as a
shareholder.
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ARTICLE III
Board of Directors
Section 3.01 General Powers. As provided in Section 801 of the Act,
all corporate powers shall be exercised by or under the authority of, and
the business and affairs of the corporation shall be managed under the
direction of, the board of directors, subject to any limitation set forth
in the articles of incorporation or in a shareholder agreement permitted by
Section 732 of the Act.
Section 3.02 Number, Tenure and Qualifications. Unless otherwise
specifically provided in the articles of incorporation, and subject to the
provisions of Section 803 of the Act, the number of directors of the
corporation shall be as fixed from time to time by resolution of the board
of directors or shareholders, but in no instance shall there be fewer
directors than the minimum number required by Section 803 of the Act. At
the time of adoption of these bylaws, the articles of incorporation do
include provisions relating to the size and composition of the Company's
Board of Directors, and such provisions supersede any inconsistent
provisions in these bylaws. As provided in the articles of incorporation,
and subject to the limitations set forth therein, the corporation's board
of directors currently consists of five (5) members, and may be increased
up to a maximum of up to seven (7) members.
Each director shall hold office until the next annual meeting of
shareholders (unless the articles of incorporation provide for staggering
the terms of directors as permitted by Section 806 of the Act) or until
removed. However, a director whose term expires shall continue to serve
until such director's successor shall have been elected and qualified or
until there is a decrease in the authorized number of directors. No
decrease in the authorized number of directors shall have the effect of
shortening the term of any incumbent director. Unless required by the
articles of incorporation, directors do not need to be residents of Utah or
shareholders of the corporation.
If the articles of incorporation authorize dividing the shares into
classes or series, the articles of incorporation may also authorize the
election of all or a specified number or portion of directors by the
holders of one or more authorized classes or series of shares, as provided
in Section 804 of the Act.
Section 3.03 Resignation. Any director may resign at any time by
giving a written notice of resignation to the corporation. A director's
resignation is effective when the notice is received by the corporation, or
on such later date as may be specified in the notice of resignation.
(Section 807 of the Act).
Section 3.04 Removal. The shareholders may remove one or more
directors at a meeting called for that purpose, as contemplated by Section
808 of the Act, if the meeting notice states that a purpose of the meeting
is such removal. The removal may be with or without cause unless the
articles of incorporation provide that directors may be removed only for
cause. If a director is elected by a voting group of shareholders, only the
shareholders
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of that voting group may participate in the vote to remove the director. If
the articles of incorporation provide for cumulative voting for the
election of directors, a director may not be removed if a number of votes
sufficient to elect the director under such cumulative voting is voted
against removal. If cumulative voting is not in effect, a director may be
removed only if the number of votes cast to remove the director exceeds the
number of votes cast against removal.
Section 3.05 Vacancies. Unless the articles of incorporation provide
otherwise, if a vacancy occurs on the board of directors, including a
vacancy resulting from an increase in the number of directors, the vacancy
may be filled by the shareholders or the board of directors (as provided in
Section 810 of the Act).
If the vacant office was held by a director elected by a voting group
of shareholders, only the holders of the shares of that voting group are
entitled to vote to fill the vacancy if it is filled by the shareholders.
A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date or otherwise) may be filled before
the vacancy occurs, but the new director may not take office until the
vacancy occurs.
The terms of directors elected to fill vacancies generally expire at
the next annual shareholders' meeting. If a new director is elected to fill
a vacancy in a position having a term extending beyond the date of the next
annual meeting of shareholders, the term of such new director is governed
by Section 805(4) of the Act.
Section 3.06 Regular Meetings. Regular meetings of the board of
directors may be held without notice of the date, time, place or purposes
of the meetings, if the times of such meetings are fixed by resolution of
the board of directors. (Section 820 of the Act)
Section 3.07 Special Meetings. Special meetings of the board of
directors may be called by or at the request of the president or any two
directors. The person or persons authorized to call special meetings of the
board of directors may fix the time and place of the meetings so called.
(Section 820 of the Act)
Section 3.08 Place of Meetings -- Meetings by Telephone. The board of
directors may hold regular or special meetings in or out of the State of
Utah. Unless the articles of incorporation or bylaws provide otherwise, the
board of directors may permit any or all directors to participate in a
regular or special meeting by, or conduct the meeting through the use of,
any means of communication by which all directors participating may hear
each other during the meeting (Section 820(2) of the Act).
Section 3.09 Notice of Meetings. Unless the articles of incorporation,
bylaws, or the Act provide otherwise, regular meetings of the board may be
held without notice of the date, time, place, or purposes of the meeting.
Unless the articles of incorporation or bylaws provide for a longer or
shorter period, special meetings of the board of directors must be preceded
by at two days' notice of the of the date, time, and place of the meeting.
The notice need not describe the purpose of the special meeting unless
required by the articles of incorporation, bylaws, or the Act. (Section 822
of the Act)
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The giving of notice of any meeting, shall be governed by the rules
set forth in Section 103 of the Act.
Section 3.10 Waiver of Notice. Any director may waive notice of any
meeting before or after the date of the meeting, as provided in Section 823
of the Act. Except as provided in the next sentence, the waiver must be in
writing, signed by the director entitled to the notice, and delivered to
the corporation for filing with the corporate records (but delivery and
filing are not conditions to its effectiveness). A director's attendance at
or participation in a meeting waives any required notice to the director of
the meeting unless the director at the beginning of the meeting, or
promptly upon the director's arrival, objects to holding the meeting or
transacting business at the meeting because of lack of notice or defective
notice, and does not thereafter vote for or assent to action taken at the
meeting.
Section 3.11 Quorum and Manner of Acting. As set forth in Section 824
of the Act, unless the articles of incorporation or these bylaws establish
a different quorum requirement, a quorum of the board of directors consists
of a majority of the number of directors fixed or prescribed in accordance
with these bylaws, except that if a variable-range board is permitted by
these bylaws and no resolution prescribing the exact number within the
permitted range is in effect, then a quorum consists of a majority of the
number of directors in office immediately before the meeting. The articles
of incorporation or bylaws may authorize a quorum of the board of directors
to consist of no fewer than one-third of the fixed or prescribed number of
directors. Any adjustment of the then applicable quorum requirement is
subject to the provisions of Section 1022 of the Act and Section 3.13 of
these bylaws.
The affirmative vote of a majority of directors present at a meeting
at which a quorum is present when the vote is taken shall be the act of the
board of directors, unless the articles of incorporation, bylaws, or the
Act require the vote of a greater vote of directors. Any action to change
the percentage of directors needed to take action is subject to the
provisions of Section 1022 of the Act and Section 3.13 of these bylaws.
As set forth in Section 824(4) of the Act, a director who is present
at a meeting of the board of directors when corporate action is taken is
considered to have assented to the action taken at the meeting unless:
(i) the director objects at the beginning of the meeting (or promptly
upon arrival) to holding the meeting or transacting business at the meeting
and does not thereafter vote for or assent to any action taken at the
meeting;
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(ii) the director contemporaneously requests that such directors
dissent or abstention as to any specific action be entered into the minutes
of the meeting; or
(iii) the director causes written notice of a dissent or abstention as
to any specific action to be received by the presiding officer of the
meeting before adjournment of the meeting or by the corporation promptly
after adjournment of the meeting. The right of dissent or abstention as to
a specific action is not available to a director who votes in favor of the
action taken.
Section 3.12 Action Without a Meeting. Unless the articles of
incorporation, these bylaws or the Act provide otherwise, any action
required or permitted to be taken by the board of directors at a meeting
may be taken without a meeting if all the directors consent in writing to
the action as permitted by Section 821 of the Act. Action is considered to
have been taken by such written consents when the last director signs a
writing describing the action taken, unless prior to that time any director
has revoked a consent by a writing signed by the director and received by
an authorized officer of the corporation. An action so taken is effective
at the time it is taken, unless the board of directors establishes a
different effective date. An action taken by written consent of the
directors as described in this section has the same effect as action taken
at a meeting of directors and may be described as such in any document.
Section 3.13 Altering Quorum or Voting Requirements. As provided in
Section 1022 of the Act, a bylaw that fixes a greater quorum or voting
requirement for the board of directors than is required by the Act may be
amended or repealed:
(i) if originally adopted by the shareholders, only by the
shareholders, unless the bylaw specifically provided that it could be
amended by a vote of either the shareholders or the board of directors; or
(ii) if originally adopted by the board of directors, by the
shareholders or, unless otherwise provided in the articles of incorporation
or bylaws, by the board of directors.
Action by the board of directors to amend or repeal a bylaw that
changes the quorum or voting requirement for the board of directors must
meet the same quorum requirement and be adopted by the same vote required
to take action under the quorum and voting requirement then in effect or
proposed to be adopted, whichever is greater.
Section 3.14 Compensation. Unless otherwise provided in the articles
of incorporation or these bylaws, the board of directors may fix the
compensation of directors, as permitted by Section 811 of the Act. Pursuant
to this authority, the directors may, by resolution, provide for directors
to be paid their expenses, if any, of attendance at each meeting of the
board of directors, and may be paid a stated salary as director or a fixed
sum for attendance at each meeting of the board of directors or both. No
such payment shall preclude any director from serving the corporation in
any capacity and receiving compensation therefor.
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Section 3.15 Committees.
(a) Creation of Committees. Unless the articles of incorporation or
these bylaws provide otherwise, a board of directors may create one or more
committees and appoint members of the board of directors to serve on them.
Each committee must have one or more members, who serve at the pleasure of
the board of directors (Section 825 of the Act).
(b) Selection of Committee Members. The creation of a committee and
appointment of members to it must be approved by the greater of:
(i) a majority of all the directors in office when the action is
taken; or
(ii) the number of directors required by the articles of incorporation
or bylaws to take action under Section 824 of the Act and Section 3.11
(including paragraph 3.11(b)) of these bylaws.
(c) Required Procedures. Sections 820 and 824 of the Act, and Sections
3.06 through 3.11 of these bylaws (but not the special voting and quorum
requirements established by paragraph 3.11(b) of these bylaws), which
govern meetings, action without meeting, notice, waiver of notice, and
quorum and voting requirements of the board of directors, apply to
committees and their members as well. Any resolutions adopted by the board
of directors in connection with the creation of any committee may establish
additional quorum and voting requirements applicable to such committee,
including provisions to ensure representation of each of the corporation's
investor groups at each meeting of such committee.
(d) Authority. Unless limited by the articles of incorporation or
these bylaws, each committee may exercise those aspects of the authority of
the board of directors (as set forth in Section 801 of the Act and Section
3.01 of these bylaws) which the board of directors confers upon such
committee in the resolution creating the committee.
(e) Impact on Duty of Directors. The creation of, delegation of
authority to, or action by a committee does not alone constitute compliance
by a director with the standards of conduct described in Section 840 of the
Act and referenced in Section 3.16 of these bylaws.
Section 3.16 Standards of Conduct. Each director is to discharge such
director's duties as a director, including duties as a member of a
committee, in compliance with the standards of conduct set forth in Section
840 of the Act and described in Article V of these bylaws.
Section 3.17 Limitation of Liability. If not already so provided in
the articles of incorporation of this corporation, the corporation, as
provided in Section 841 of the Act, may eliminate or limit the liability of
directors to the corporation or to its shareholders for monetary damages
for any action taken or any failure to take action as a director, by an
amendment to its articles of incorporation, or by the adoption of a bylaw
or resolution approved by the same percentage of shareholders as would be
required to approve an amendment to the articles of incorporation to
include such provision. No such provision may eliminate or limit the
liability of a director for:
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(i) the amount of a financial benefit received by a director to which
the director is not entitled;
(ii) an intentional infliction of harm on the corporation or the
shareholders;
(iii) an unlawful distribution in violation of the standards set forth
in Section 824 of the Act as referenced in Section 3.18 of these bylaws;
(iv) an intentional violation of criminal law; or
(v) liability for any act or omission occurring prior to the date such
a provision becomes effective.
Section 3.18 Liability for Unlawful Distributions. A director who
votes for or assents to a distribution made in violation of the
requirements of Section 640 of the Act or the articles of incorporation,
and who does not discharge such duties in compliance with the standards of
conduct set forth in Section 840 of the Act and referenced in Sections 3.16
and 5.01 of these bylaws, is personally liable to the corporation for the
amount by which the distribution exceeds the amount that could have been
properly distributed, as provided in Section 842 of the Act.
Section 3.19 Conflicting Interest Transactions. Transactions in which
a director has a conflicting interest will be handled in accordance with
Sections 850 to 853 of the Act. In accordance with such sections, each
director's conflicting interest transaction as defined therein, which has
not otherwise been established to be fair to the corporation, is to be is
to be presented to the shareholders for approval in accordance with Section
853 of the Act, or approved by the directors in compliance with the
requirements of Section 822 of the Act.
Directors may take action with respect to a director's conflicting
interest transaction by the affirmative vote of a majority of those
"qualified directors" (defined in Section 850 of the Act as essentially
those directors without conflicting interests with respect to the
transaction) on the board of directors or on a duly empowered and
constituted committee of the board who voted on the transaction after
receipt of the required disclosures (as defined in Sections 850 and 852(2)
of the Act). For purposes of such action, a majority of the qualified
directors on the board or on the committee, as the case may be, constitutes
a quorum. Such action is not affected by the presence or vote of a director
who is not a qualified director.
ARTICLE IV
Officers
Section 4.01 Number and Qualifications. The officers of the
corporation shall be a president, a secretary, a treasurer, each of whom
shall be
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appointed by the board of directors. The corporation may also have such
other officers and assistant officers as the board of directors in its
discretion may determine, by resolution, to be appropriate, including a
chairman of the board, one or more vice-presidents, a controller, assistant
secretaries and assistant treasurers. All such officers shall be appointed
by the board of directors, except that if specifically authorized by the
board of directors, an officer may appoint one or more officers or
assistant officers (see Section 830 of the Act). The same individual may
simultaneously hold more than one office in the corporation.
Section 4.02 Appointment and Term of Office. The officers of the
corporation shall be appointed by the board of directors (or, to the extent
permitted by Section 4.01 above, by an officer specifically authorized by
the board to make such appointments), for such terms as may be determined
by the board of directors. Neither the appointment of an officer nor the
designation of a specified term creates or grants to the officer any
contract rights, and the board can remove the officer at any time prior to
the termination of any term for which the officer may have been appointed.
If no other term is specified, officers shall hold office until they
resign, die, or until they are removed or replaced in the manner provided
in Section 4.03 below, or Section 832 of the Act.
Section 4.03 Removal and Resignation of Officers. Any officer or agent
of the corporation may be removed or replaced by the board of directors at
any time with or without cause, as permitted by Section 832 of the Act. The
Chief Financial Officer may also be removed by the Chief Executive Officer,
or Co-Chairmen of the Board of Directors. The election of a replacement
officer shall constitute the removal of the person previously holding such
office. An officer may resign at any time by giving written notice of the
resignation to the corporation. Resignations shall become effective as
provided in Section 832 of the Act. An officer's resignation or removal
does not affect the contract rights of the parties, if any (See Section 833
of the Act).
Section 4.04 Authority and Duties. The officers of the corporation
shall have the authority and perform the duties specified below and as may
be additionally specified by the president, the board of directors or these
bylaws (and in all cases where the duties of any officer are not prescribed
by the bylaws or by the board of directors, such officer shall follow the
orders and instructions of the president), except that in any event each
officer shall exercise such powers and perform such duties as may be
required by law:
(a) President. The president shall, subject to the direction and
supervision of the board of directors,
(i) be the chief executive officer of the corporation and have
general and active control of its affairs and business and general
supervision of its officers, agents and employees; (ii) unless there
is a chairman of the board, preside at all meetings of the
shareholders and the board of directors; (iii) see that all orders and
resolutions of the board of directors are carried into effect; and
(iv) perform all other duties incident to the office of president and
as from time to time may be assigned to the president by the board of
directors. The president may sign, with the secretary or any other
proper officer of the corporation authorized to take such action,
certificates for shares of the corporation. The president may also
sign, subject to such restrictions and limitations as may be imposed
from time to time by the board of directors, deeds, mortgages, bonds,
contracts or other instruments which have been duly approved for
execution.
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(b) Vice-Presidents. The vice-president, if any (or if there is more
than one then each vice-president), shall assist the president and shall
perform such duties as may be assigned by the president or by the board of
directors. The vice-president, if there is one (or if there is more than
one then the vice-president designated by the board of directors, or if
there be no such designation then the vice-presidents in order of their
election), shall, at the request of the president, or in the event of the
president's absence or inability or refusal to act, perform the duties of
the president and when so acting shall have all the powers of and be
subject to all the restrictions upon the president. Any vice-president may
sign, with the secretary or an assistant secretary, certificates for shares
of the corporation the issuance of which have been authorized by resolution
of the board of directors. Vice-presidents shall perform such other duties
as from time to time may be assigned to them by the president or by the
board of directors. Assistant vice-presidents, if any, shall have such
powers and perform such duties as may be assigned to them by the president
or by the board of directors.
(c) Secretary. The secretary shall: (i) have responsibility for the
preparation and maintenance of minutes of the proceedings of the
shareholders and of the board of directors; (ii) have responsibility for
the preparation and maintenance of the other records and information
required to be kept by the corporation under Section 1601 of the Act and
Section 2.17 of these bylaws; (iii) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by the Act or
other applicable law; (iv) be custodian of the corporate records and of any
seal of the corporation; (v) when requested or required, authenticate any
records of the corporation; (vi) keep a register of the post office address
of each shareholder which shall be furnished to the secretary by such
shareholder; (vii) sign with the president, or a vice-president,
certificates for shares of the corporation, the issuance of which shall
have been authorized by resolution of the board of directors; (viii) have
general charge of the stock transfer books of the corporation, unless the
corporation has a transfer agent; and (ix) in general perform all duties
incident to the office of secretary, including those identified in the Act,
and such other duties as from time to time may be assigned to the secretary
by the president or the board of directors. Assistant secretaries, if any,
shall have the same duties and powers, subject to supervision by the
secretary.
(d) Treasurer. The treasurer shall: (i) be the principal financial
officer of the corporation and have responsibility for the care and custody
of all its funds, securities, evidences of indebtedness and other personal
property and deposit and handle the same in accordance with instructions of
the board of directors; (ii) receive and give receipts and acquittances for
moneys paid in on account of the corporation, and pay out of funds on hand
all bills, payrolls and other just debts of the corporation of whatever
nature upon maturity; (iii) unless there is a controller, be the principal
accounting officer of the corporation and as such prescribe and maintain
the methods and systems of accounting to be followed, keep complete books
and records of account, prepare and file all local, state and federal tax
returns, prescribe and maintain an adequate system of internal audit and
prepare and furnish to the president and the board of directors statements
of account showing the financial position of the corporation and the
results of its operations; (iv) upon request of the board, make such
reports to it as may be required at any time; and (v) perform all other
duties incident to the office of treasurer and such other duties as from
time to time may be assigned by the board of directors or the president.
Assistant treasurers, if any, shall have the same powers and duties,
subject to supervision by the treasurer.
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Section 4.05 Surety Bonds. The board of directors may require any
officer or agent of the corporation to provide to the corporation a bond,
in such sums and with such sureties as may be satisfactory to the board,
conditioned upon the faithful performance of such individual's duties and
for the restoration to the corporation of all books, papers, vouchers,
money, securities and other property of whatever kind in such officer's
possession or under such officer's control belonging to the corporation.
Section 4.06 Compensation. Officers shall receive such compensation
for their services as may be authorized or ratified by the board of
directors (by a vote meeting the requirements of paragraph 3.11(b) above)
and no officer shall be prevented from receiving compensation by reason of
the fact that such officer is also a director of the corporation.
Appointment as an officer shall not of itself create a contract or other
right to compensation for services performed as such officer.
ARTICLE V
Standards of Conduct for Officers and Directors
Section 5.01 Standards of Conduct. As provided in Section 840 of the
Act, each director is required to discharge his or her duties as a
director, including duties as a member of a committee, and each officer
with discretionary authority is required to discharge his or her duties
under that authority, in a manner consistent with the following standards
of conduct:
(i) in good faith;
(ii) with the care an ordinarily prudent person in a like position
would exercise under similar circumstances; and
(iii) in a manner the director or officer reasonably believes is in
the best interests of the corporation.
Section 5.02 Reliance on Information and Reports. In discharging his
or her duties, a director or officer is entitled to rely on information,
opinions, reports, or statements, including financial statements and other
financial data, if prepared or presented by:
(i) one or more officers or employees of the corporation whom the
director or officer reasonably believes to be reliable and competent in the
matters presented;
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(ii) legal counsel, public accountants, or other persons as to matters
the director or officer reasonably believes are within the person's
professional or expert competence; or
(iii) in the case of a director, a committee of the board of directors
of which such director is not a member, if the director reasonably believes
the committee merits confidence.
A director or officer is not acting in good faith in relying on any
such information, opinions, reports or statements if such director or
officer has knowledge concerning the matter in question that makes reliance
otherwise permitted as set forth above unwarranted.
Section 5.03 Limitation on Liability. A director or officer is not
liable for any action taken, or any failure to take any action as an
officer or director, as the case may be, if the duties of the office have
been performed in compliance with the provisions of this Article 5, and
Section 840 of the Act.
ARTICLE VI
Indemnification
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;
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(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.
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;
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(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.
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.
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ARTICLE VII
Stock
Section 7.01 Issuance of Shares. Except to the extent any such powers
may be reserved to the shareholders by the articles of incorporation, as
provided in section 621 of the Act the board of directors may authorize the
issuance of shares for consideration consisting of any tangible or
intangible property or benefit to the corporation, including cash,
promissory notes, services performed, contracts or arrangements for
services to be performed, or other securities of the corporation. The terms
and conditions of any tangible or intangible property or benefit to be
provided in the future to the corporation, including contracts or
arrangements for services to be performed, are to be set forth in writing.
Before the corporation issues shares, the board of directors must
determine that the consideration received or to be received for the shares
to be issued is adequate.
The board of directors may authorize a committee of the board of
directors, or an officer of the corporation, to authorize or approve the
issuance or sale, or contract for sale of shares, within limits
specifically prescribed by the board of directors.
Section 7.02 Certificates for Shares; Shares Without Certificates.
(a) Use of Certificates. As provided in Section 625 of the Act, shares
of the corporation may, but need not be, represented by certificates.
Unless the Act or another applicable statute expressly provides otherwise,
the rights and obligations of shareholders are not affected by whether or
not their shares are represented by certificates.
(b) Content of Certificates. Certificates representing shares of the
corporation must, at a minimum, state on their face:
(i) the name of the corporation, and that it is organized under the
laws of Utah;
(ii) the name of the person to whom the certificate is issued; and
(iii) the number and class of shares and the designation of the
series, if any, the certificate represents.
If the corporation is authorized to issue different classes of shares
or different series within a class, the designations, preferences,
limitations, and relative rights applicable to each class, the variations
in preferences, limitations, and relative rights determined for each
series, and the authority of the board of directors to determine variations
for any existing or future class or series, must be summarized on the front
or back of each certificate. Alternatively, each certificate may state
conspicuously on its front or back that the corporation will furnish the
shareholder such information on request in writing and without charge.
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Each share certificate must be signed (either manually or by
facsimile) by the president or a vice-president and by the secretary or an
assistant secretary, or by any two other officers as may be designated in
these bylaws or by the board of directors. Each certificate for shares is
to be consecutively numbered or otherwise identified.
(c) Shares Without Certificates. As provided in Section 626 of the
Act, unless the articles of incorporation or these bylaws provide
otherwise, the board of directors may authorize the issuance of some or all
of the shares of any or all of its classes or series without certificates.
Such an authorization will not affect shares already represented by
certificates until they are surrendered to the corporation.
Within a reasonable time after the issuance or transfer of shares
without certificates, the corporation shall send the shareholder a written
statement of the information required on certificates by Subsections 625(2)
and (3) of the Act, as summarized in Section 7.02(b) above.
(d) Shareholder List. The corporation shall maintain a record of the
names and addresses of the persons to whom shares are issued, in a form
meeting the requirements of Section 1601(3) of the Act.
(e) Transferring Certificate Shares. All certificates surrendered to
the corporation for transfer shall be canceled and no new certificate shall
be issued until the former certificate for a like number of shares shall
have been surrendered and canceled, except that in case of a lost,
destroyed, or mutilated certificate a new one may be issued therefor upon
such terms and indemnity to the corporation as the board of directors may
prescribe.
(f) Registration of the Transfer of Shares. Registration of the
transfer of shares of the corporation shall be made only on the stock
transfer books of the corporation. In order to register a transfer, the
record owner shall surrender the shares to the corporation for
cancellation, properly endorsed by the appropriate person or persons with
reasonable assurances that the endorsements are genuine and effective.
Unless the corporation has established a procedure by which a beneficial
owner of shares held by a nominee is to be recognized by the corporation as
the owner, the person in whose name shares stand on the books of the
corporation shall be deemed by the corporation to be the owner thereof for
all purposes.
Section 7.03 Restrictions on Transfer of Shares Permitted. As
contemplated by Section 627 of the Act, the articles of incorporation,
these bylaws, an agreement among shareholders, or and agreement between one
or more shareholders and the corporation may impose restrictions on the
transfer or registration of transfer of shares of the corporation. A
restriction does not affect shares issued before the restriction was
adopted unless the holders of the shares are parties to the restriction
agreement or voted in favor of the restriction or otherwise consented to
the restriction.
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A restriction on the transfer or registration of transfer of shares
may be authorized for any of the purposes set forth in Section 627(3) of
the Act. A restriction on the transfer or registration of transfer of
shares is valid and enforceable against the holder or a transferee of the
holder if the restriction is authorized by this section and its existence
is noted conspicuously on the front or back of the certificate, or is
contained in the information statement required by Section 7.02(c) of these
bylaws with regard to shares issued without certificates. Unless so noted,
a restriction is not enforceable against a person without knowledge of the
restriction.
Section 7.04 Acquisition of Shares by the Corporation. Subject to the
limitations on distributions set forth in Section 640 of the Act and any
other restrictions imposed by applicable law, the corporation may acquire
its own shares, as authorized by Section 631 of the Act, and shares so
acquired constitute authorized but unissued shares.
If the articles of incorporation prohibit the reissuance of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired by the corporation, effective upon amendment of the articles of
incorporation, which amendment may be adopted by the board of directors
without shareholder action, as provided in Sections 632(b) and 1002 of the
Act. Articles of amendment affecting such an amendment must meet the
requirements of Section 631(3) of the Act.
ARTICLE VIII
Amendments to Bylaws
Section 8.01 Authority to Amend. As provided in Section 1020 of the
Act, and subject to the provisions of Sections 2.08 and 3.11(b) of these
bylaws, the corporation's board of directors may amend these bylaws at any
time, except to the extent that the articles of incorporation, these
bylaws, or the Act reserve such power exclusively to the shareholders, in
whole or part. The directors may not adopt, amend or repeal a bylaw that
fixes a greater quorum or voting requirement for shareholders. Any such
bylaw may be adopted, amended or repealed only by the shareholders as
provided in Section 8.02 below.
The corporation's shareholders may amend these bylaws at any time,
subject to any limitations set forth in the Act, the Articles of
Incorporation or these bylaws.
Section 8.02 Bylaw Changing Quorum or Voting Requirement for
Shareholders. If and to the extent authorized by the articles of
incorporation, the shareholders may adopt, amend, or repeal a bylaw that
fixes a greater quorum or voting requirement for shareholders, or voting
groups of shareholders, than is required by the Act. Such action is subject
to the provisions of Part 7 of the Act and Section 2.08 of these bylaws.
</Page>
<PAGE>
Section 8.03 Bylaw Changing Quorum or Voting Requirement for
Directors.
(a) Amendment. A bylaw that fixes a greater quorum or voting
requirements for the board of directors than is required by the Act may be
amended or repealed as permitted by Section 1022 of the Act and Section
3.13 of these bylaws:
(i) if originally adopted by the shareholders, only by the
shareholders, unless otherwise permitted as contemplated by Subsection (b)
below; or
(ii) if originally adopted by the board of directors, by the
shareholders or unless otherwise provided in the articles of incorporation
or these bylaws, by the board of directors.
(b) Restriction on Amendment. A bylaw adopted or amended by the
shareholders that fixes a greater quorum or voting requirement for the
board of directors may provide that it may be amended or repealed only by a
specified vote of either the shareholders or the board of directors.
(c) Required Vote to Amend. Action by the board of directors under
Subsection (a)(ii) above to amend or repeal a bylaw that changes the quorum
or voting requirement for the board of directors must meet the same quorum
requirement and be adopted by the same vote required to take action under
the quorum and voting requirement then in effect or proposed to be adopted,
whichever is greater.
ARTICLE IX
Miscellaneous
Section 9.01 Corporate Seal. The board of directors may provide for a
corporate seal, to be in such a form as the directors may determine to be
appropriate, and any officer of the corporation may, when and as required
or as determined to be appropriate, affix or impress the seal, or a
facsimile thereof, to or on any instrument or document of the corporation.
Section 9.02 Fiscal Year. The fiscal year of the corporation shall be
March 31.
26
</Page>
<PAGE>
CERTIFICATE OF ADOPTION OF BYLAWS
OF
THE NEW ANACONDA COMPANY
The undersigned hereby certifies that he is the duly appointed and
acting Secretary of The New Anaconda Company and that the foregoing bylaws,
comprising twenty-six (26) pages, were approved and adopted by a vote of
the shareholders of the corporation on September 27, 1999, with the bylaws
becoming effective as of September 27, 1999, and a record of such action is
maintained in the minute book of the corporation.
Executed effective as of the 27th day of September, 1999.
/s/Harriette E. Blum
- ------------------------------
Secretary
</Page>
<PAGE>
EXHIBIT 10.01
MATERIAL CONTRACTS
</Page>
<PAGE>
ORE MATERIAL JOINT VENTURE REFINING CONTRACT
THE NEW ANACONDA COMPANY and/or assigns whose registered office is located
at 136 E. South Temple Suite 1700-A, Slat Lake City, Utah 84111, United
States, hereinafter referred to as "New Anaconda" and,
ANGLO AMERICAN METALS, INC. and/or assigns whose registered office is
located at 3701 E. Rio Grande, Victoria, Texas 77901 United States,
hereinafter referred to as "Anglo American"
CAMERON MILLER and/or assigns whose contact address is located at 8455 West
Sahara, #253, Las Vegas, Nevada, 89117 United States, and GOLD SCOUT, LLC.
whose registered office is located at 4440 S. Arville Street, Suite 20, Las
Vegas Nevada 89103 hereinafter jointly referred to as "Owner"
RECITALS
WHEREAS, Owner under contract and/or owns mining and mineral rights to
certain ore properties located in California and Arizona, said ore
properties bearing significant amounts of unrefined alluvial ore bearing
gold metal (Aurium Utalium), and other base and precious metals capable of
being refined from the ore material thereto, and,
WHEREAS, Owner is desirous to provide such ore material to New Anaconda in
unrefined alluvial ore, screened to a size of + 400 mesh size, or
commercial ore concentrates, or metal powder or semi-refined dore bar
format for processing by New Anaconda into base and/or precious metals,
and,
WHEREAS, New Anaconda and Anglo American has technology capable of
processing said ore material and removing base and precious metals in a
commercial format, and is desirous of using said technology to process said
ore material to the mutual benefit of New Anaconda and Owner, and,
WHEREAS, New Anaconda and Anglo American are desirous of processing on a
joint venture basis with Owner said unrefined alluvial ore, screened to a
size of + 400 mesh size, or commercial ore concentrates, or metal powder or
semi-refined dore bar format for processing by Anglo into base and/or
precious metals, and,
WHEREAS, Owner and New Anaconda are desirous of the precious metals derived
from the aforementioned ore materials being credited to the individual
metal accounts of both Owner and New Anaconda under the following basis:-
a) All processing costs including but not limited to mining,
screening, transportation, grinding, smelting, casting and subsequent
transport costs relative to the ore material and all refining,
separation, assay, delivery, insurance, transport sales and marketing
costs shall be at the sole expense of New Anaconda, and,
1
</Page>
<PAGE>
b) All Silver (Ag) and Gold (Au) metal and/or compounds derived from
the ore material shall be credited to the sole account of New
Anaconda, providing that a royalty payment equal to 5% of the value of
Silver (Ag) produced and a royalty of 3% of the refined metal value of
Gold (Au) for the first 75 troy ounces per ton, 4% for the next 25
troy ounces per ton over the original 75 troy ounces, 5% for the next
50 troy ounces over the first 100 troy ounces, 6% for the next 50 troy
ounces over the first 150 troy ounces, 7.5% for the next 50 troy
ounces over the first 200 troy ounces and 10% for all additional troy
ounces over the first 250 troy ounces. All royalty payments are
calculated as at the date of assay and/or sale by a recognised
independent internationally acceptable bullion dealer, and,
c) All Platinum (Pt), Palladium (Pd), Rhodium (Rh) and other such
commercial Platinum Group Metals (PGM's) in metal or compound form
derived from the ore material shall be credited to the sole account of
Owner.
NOW THEREFORE INTENDING TO BE BOUND IN LAW, THE PARTIES HERETO AGREE UPON
THE TERMS AND COVENANTS AS SET FORTH BELOW:
1.0 DEFINITIONS: For the purposes of agreement the following definitions
shall be construed and agreed as follows:
Fine Gold: The term "fine gold" as used in this Contract means refined
gold metal (Aurium Utalium) whose periodic symbol is accepted as Au
with a purity of not less than .9999 fineness bearing documentation
and stamp(s) of an internationally accepted hallmark/stamp of a "Good
London Delivery" bullion house or such other world class bullion
dealer/smelter/assayer indicating purity and fineness.
Good London Delivery: The term "Good London Delivery" as used in this
Contract means precious metal in a form and substance acceptable to
the London Bullion Market and as set out in their published
documentation as to acceptable quality, purity, size and related
matters.
In-Quart: The term "in-quart" as used in this Contract means the
amount of precious metals added by New Anaconda/Anglo American and/or
Owner as part of the refining process as a catalyst and therefore such
amount(s) must be deducted from the precious metals derived from the
ore material to determine the values of such derived precious metals.
Lift Payment: The term "lift payment" as used in this Contract means
the agreed cash advance payment to be made by New Anaconda to Owner to
cover the costs of mining, trucking, grinding, smelting (including
chemical flux costs), casting and delivery costs to deliver the semi-
efined ore bar metal to Anglo American's processing plant in Victoria
Texas. The amount of the lift payment shall be $2,675 per ton of ore
material removed from site, with an agreed adjustment basis subject to
audited accounts to allow the lift payment to be increased or
decreased if the actual costs are + 10% more or less than the original
projections prepared by New Anaconda and Owner.
2
</Page>
<PAGE>
Ore Material: The term "ore material" as used in this Contract means
unrefined alluvial ore, screened to a size of + 400 mesh size, or
commercial ore concentrates, or metal powder or semi-refined dore bar
format for processing by New Anaconda/Anglo American into base and/or
precious metals.
Platinum Group Metals (PGM's): The term "Platinum Group Metals" or
"PGM's" as used in this Contract means the precious metals which are
primarily Platinum (Pt), Palladium (Pd), Rhodium (Rh) and such other
precious and rare earth metals as can be extracted commercially and
refined into acceptable forms such as metal, sponge, powder and
compounds.
2.0 TOTAL CONTRACTED AMOUNT OF ORE MATERIAL: It is agreed that Owner shall
be capable of delivering to New Anaconda in excess of 800,000 short
tons of original ore material and/or such lesser amounts of processed
ore material to enable New Anaconda/Anglo American to process and
extract not less than 48,000,000 troy ounces of fine gold based on the
minimum yield of 60 troy ounces per ton as evidenced by the controlled
due diligence test conducted by Miami Testing, Wolf Analytical, Wolff
Technology, Investigative Specialist, Inc., Garvin Surveying Sciences
and Sassoon Metals. Inc. It is further agreed that subject to
requirements of New Anaconda/Anglo American as notified to Owner, and
subject to availability of ore material from Owner, that Owner shall
deliver to New Anaconda/Anglo American any amount of ore material in
addition to the above amount will be delivered under the same terms
and conditions.
2.1 PROVEN RESERVES: Owner hereby declares and evidences by way of a
copy of the independent geologist/engineer's report issued by Garvin
Surveying Sciences Inc., attached hereto and made a part hereof, that
the volume of ore material available on a site located near Barstow,
California for delivery under this Contract is quantified at a minimum
of 800,000 tons and/or 2,323,200 cubic yards containing not less than
60 troy ounces of fine gold per ton, as evidenced in the due diligence
reports referenced above, a copy of said reports are available for
review at the offices of New Anaconda/Anglo American.
It is declared by Owner and acknowledged by New Anaconda/Anglo
American that in addition to the ore material site referenced above
that Owner has additional sites in other locations which have
comparable ore materials available from such other sites and that
Owner reserves the right to deliver ore material from any site which
Owner determines is suitable and from which suitable ore material is
capable of being delivered. New Anaconda/Anglo American reserves the
right to test and approve such ore material prior to making any lift
payment thereto.
It is agreed by the parties hereto that based on the independent
review of the parties and/or their qualified experts/agents that the
depth of surface ore material available on the Barstow site is between
3 and 15 feet in depth and that there exists significantly more
comparable ore material on site and available from that and/or other
sites owned or controlled by Owner.
3
</Page>
<PAGE>
Therefore Owner is able to contract for the amount of ore material
contained in this Contract, such amount being in excess of any other
ore material previously contracted to third parties, and not under any
obligation to third parties.
This Contract specifically superceding and replacing the contract
issued on the 9th October 1995 between Owner, Anglo American and Round
Tower Holdings Limited. Such Contract being assigned as agreed by
Owner from Round Tower Holdings Limited via its owners Granleigh
Holdings Limited to Anglo American, and subsequently acquired by New
Anaconda under the terms of the reorganisation dated 7th June 1999.
2.2 PRIMARY PRECIOUS METALS: New Anaconda/Anglo American and Owner
agree that the ore material contains both Gold (Au) and Silver (Ag) as
primary precious metals and that these shall form the basis for the
commercial extraction and refining of the ore material.
It is further agreed that as per the proprietary technology
procedures, a certain amount of both gold and silver is added as a
catalyst and that such additions shall be recorded and shall be
deducted from all primary precious metals recovered and refined by New
Anaconda. Only the amount(s) of Gold (Au) and Silver (Ag) derived in
addition to the precious metal in-quart added will form the basis for
yield calculations.
2.3 SECONDARY PRECIOUS METALS: New Anaconda/Anglo American and Owner
agree that the ore material contains Platinum Group Metals (PGM's) and
that these shall form the basis for the secondary commercial
extraction and refining of the ore material. All PGM's produced by
New Anaconda/Anglo American from the ore materials shall be held to
the sole benefit of Owner in either finished metal/product format or
in a residual waste format pending further refining by New
Anaconda/Anglo American and/or Owner.
2.4 TRANSFER OF TITLE: Owner hereby declares that the ore material
represented by this Contract is owned or controlled by Owner as
evidenced by the attached documents and that by the execution of this
Contract all rights, title and other benefits, save those expressly
provisioned for herein are available for transfer to New
Anaconda/Anglo American.
Owner does hereby deliver, remise, release and transfer all valuable
mineral rights to the Gold (Au) and Silver (Ag) to New Anaconda/Anglo
American subject to the terms and conditions of this Contract. Such
transfer however being subject to a lien being recorded and agreed in
respect to the agreed lift payment and the subsequent royalty payment
to Owner by New Anaconda of 5% of the value of Gold (Au) and Silver
(Ag) derived by New Anaconda from the processing of the ore material.
No transfer of title to the PGM's is agreed and New Anaconda/Anglo
American agrees that they will hold or deliver such PGM's to Owner as
requested by Owner following the refining of said PGM's or extraction
of same.
It is a strict condition of the title transfer that all parties hereto
acknowledge such liens and agree that such liens are to be
incorporated in any documentation which represents title to such ore
material.
Owner shall execute a series of Quit Claim Deeds to New Anaconda/Anglo
American in order that title can be transferred in relation to the ore
</Page>
<PAGE>
materials removed from site, the details of which are agreed by the
Parties to be on the basis of this Contract and shall form a separate
series of agreements of which this Contract is to be made a part of by
reference thereto.
3.0 PROCEDURES: It is agreed that the following terms and conditions
shall apply to this Contract:
3.1 DELIVERY OF ORE MATERIAL/DORE BARS: The ore material to be
delivered by the Owner to New Anaconda for onward trans-shipment to
the plant facility of Anglo American in Victoria Texas shall be in the
form of unrefined alluvial gold ore, commercial concentrates or powder
with a mesh size of not greater than 400 mesh size.
The initial volume of ore material to be processed is + 5 tons per day
with an average yield of Gold (Au) of not less than 60 troy ounces per
ton. The maximum lift amount to be processed per day is agreed at +
150 tons per day with an equal average yield. Such maximum lift
amount being subject to Owner being able to obtain increased smelting
capacity for the screened ore material.
The Owner shall confirm to New Anaconda/Anglo American that the ore
material is available for delivery and that the Owner is capable of
lifting said ore material, screening same to a mesh size of not
greater than + 400 mesh and delivering the screened material to a
contracted smelting site for processing.
New Anaconda shall make the lift payment to Owner and Owner shall
deliver the screened ore material to the contracted smelter for
processing.
New Anaconda/Anglo American shall deliver to Owner at the contracted
smelter site sufficient in-quart precious metals as are required to be
added to the smelt run.
Owner shall ensure that the screened ore material is mixed with flux
chemicals and in-quart precious metals according to the proprietary
formulate and will ensure that the contracted smelter processes the
screened ore material and casts a series of dore bars which shall
conform to a specific size shape and format.
Owner shall deliver the processed dore bars to Anglo American's plant
in Victoria Texas for secondary processing to separate the precious
metals using proprietary methods. Owner shall deliver with the ore
bars such documentary records as are required to show the amount of
in-quart precious metals as are contained within the dore bars and to
allow the correct calculations for the yield of precious metals to be
determined.
Owner and Anglo American shall take samples of the dore bars at random
intervals for comparison relative to the yields to be derived from the
processing of same. It is agreed that the yields shall at all times be
within + 10% of the original test samples.
5
</Page>
<PAGE>
Anglo American shall separate the dore bars into Gold (Au), Silver
(Ag) and PGM's (Pt,Pd and Rh) with any base metals being removed to
provide refined precious metals and/or compounds. The assays and
weights of the refined precious metals being recorded with the in-
quarted precious metals being deducted for re-cycling into the future
smelts.
New Anaconda/Anglo American shall deliver the Gold (Au) and Silver
(Ag) to market and shall pay to Owner the agreed royalty payments
based on the amount of primary precious metals value as derived from
the sales thereto within 48 hours of receipt of proceeds from such
sale(s). In the event that New Anaconda/Anglo American does not
deliver said Gold (Au) and Silver (Ag) to market within 72 hours of
the final refining of such metals thereto, it is agreed that New
Anaconda/Anglo American shall deliver to Owner the same percentage of
the refined Gold (Au) and Silver (Ag) in physical form as represented
by the royalty payments with a certified assay of purity attached.
New Anaconda/Anglo American shall deliver the PGM's derived and
refined from the ore materials to either a COMEX, or LME bonded
warehouse in the name of the Owner and/or their nominees, or if so
instructed by Owner shall hold said PGM's in safe care and custody as
semi-refined precious metal concentrates pending further processing.
3.2 QUALIFICATION: It is agreed that the minimum number of troy ounces
of gold recoverable from the dore bars produced from each ton of ore
material shall be not less than 60 troy ounces. In the event that the
recoverable number of troy ounces of gold is less than this agreed
minimum New Anaconda/Anglo American shall deduct such costs and
comparable losses created by the shortfall before any royalty payments
are due and payable to Owner. Any PGM's derived from the processing
of sub-standard ore material shall be held as additional security
pending settlement of the costs and comparable losses resulting from
the processing by New Anaconda/Anglo American.
In order that a mean weighted average can be used as the basis for
calculation, it is agreed that an allowance of + 10% will be agreed
and calculated on a monthly basis prior to any adjustments being made.
4.0 PERIOD OF CONTRACT: This Contract shall be for a period of Ten (10)
years from the date of signing with a further period of Fifteen (15)
years thereafter subject to mutual agreement in writing by the parties
hereto.
5.0 ARBITRATION: Any controversy or claim arising out of or related to
this Contract, or the breach thereof, shall be settled by arbitration
administered by the American Arbitration Association under its
Commercial Arbitration Rules, and judgement on the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction
thereof. The locale for arbitration shall be Salt Lake City, Utah,
unless otherwise agreed by the parties.
6.0 FORCE MAJEURE: The internationally accepted "force majeure" clause is
to be applied to this Contract.
There shall be no damages arising from the failure to deliver if such
failure is caused by fire, strikes, riots, war, earthquake, flood,
insurrection, governmental action and/or interference, civil
commotion, labour dispute, or mill and plant failure, Acts of God, or
any circumstances or accidents beyond the control of the parties
hereto.
6
</Page>
<PAGE>
Any War Clause issued by railroads, airlines, or any other
transportation and/or shipping company is included in this contract.
Also in the event that the London Free Market or the Zurich Free
Market are not operating, or if only nominal quotations are being
placed through those gold markets this agreement and/or contract shall
be suspended until gold markets resume normal and full activity.
7.0 RESTRICTIVE COVENANT: This agreement is subject to the
internationally recognised non-disclosure and non-circumvention
clauses and additionally covers any and all add-on extensions,
renewals, roll-overs, re-negotiated contracts, 2nd or 3rd party
assignments, substitution of primary or secondary contracts and/or any
parallel agreements or contracts.
7.1 SUCCESSORS: This Contract shall be binding on and shall endure
for the benefit of the successors and assigns and personal
representatives and assigns (as the case may be), their heirs and
beneficiaries or any other party who receives the benefits from each
of the parties hereto.
7.2 ASSIGNMENT: No party to this Contract may assign its rights or
obligations hereunder in whole or in part without the express
prior written consent of the other parties. The written consent
not to be unreasonably withheld by the other parties.
8.0 TERMINATION: This Contract shall be terminated at the end of the
period of Contract set forth in paragraph 4.0 or when all of the terms
and conditions have been fulfilled and the parties hereto agree that
no further business shall endure.
8.1 EARLY TERMINATION: It is agreed by the parties hereto that by
mutual written consent of all parties this Contract may be terminated
prior to its expiry date if so agreed.
8.2 TERMINATION BY BREACH: It is agreed by the parties hereto that
if any party should be considered to be in breach by any other party
the damaged party shall request in writing that the party causing such
breach shall remedy said breach within Thirty (30) days of receipt of
notice of breach.
If after such notice period has expired the breach has not been
remedied it is agreed that the matter shall be placed to arbitration
and if the findings of the arbitrator as identified in 5.0 herein deem
that this Contract should be terminated the parties hereto agree to
such findings.
9.0 SOLE CONTRACT: This Contract constitutes the sole terms and
conditions of the agreement between the parties hereto, and supersedes
any and all previous oral and written agreements or intents, including
that specific contract as entered into by and between Owner and Round
Tower Holdings Limited on 9th October 1995. Any changes or additions
to this Contract must be in writing and subscribed to by all the
parties hereto.
7
</Page>
<PAGE>
9.1 REPRESENTATIONS: Each of the parties hereto hereby acknowledges
that in entering into this Contract it has not relied on any
representation or warranty save as expressly set out herein or in any
documents referred to herein.
9.2 VARIATIONS: No variation of this Contract shall be valid or
effective unless made by one or more instruments in writing signed by
such of the parties hereto as would be affected by such variations.
10.0 COSTS: Each party shall bear its own costs an expenses incurred in
relation to the negotiation, preparation and execution of this
Contract.
11.0 NOTICES: All notices which are required to be given hereunder shall
be in writing and shall be sent to the address of the recipient set
out in this Contract, or such other address as the recipient may
designate by notice given in accordance with the provisions of this
clause. Any such notice may be delivered personally or by first class
pre-paid letter, telex or facsimile transmission and shall be deemed
to have been served if by personal delivery when delivered if by first
class post Forty Eight (48) hours after posting and if by telex or
facsimile transmission when dispatched.
12.0 BEST EFFORTS: The parties hereto shall, and shall use their
respective reasonable endeavours to procure that any necessary third
parties shall, do, execute and perform all such further deeds,
documents, assurances, acts and things as any of the parties hereto
may reasonably require by notice in writing one to the other to carry
out the provisions of this Contract in full force and effect.
Each of the parties hereto undertakes with each of the others to do
all things reasonably within his/their power which are necessary or
desirable to give effect to the spirit and intent of this Contract.
==========================================================================
8
</Page>
<PAGE>
IN WITNESS THEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT ON THE
DATES INDICATED BELOW:-
/s/ Paul de Rome this 25th day of January, 2000
- --------------------------------
pp: THE NEW ANACONDA COMPANY
/s/ Paul de Rome this 25th day of January, 2000
- ---------------------------------
pp: ANGLO AMERICAN METALS, INC.
/s/ Cameron Miller this 24th day of January, 2000
- ----------------------------------
pp: CAMERON MILLER
/s/ Cameron Miller this 24th day of January, 2000
- ----------------------------------
pp: GOLD SCOUT, LLC.
9
</Page>
<PAGE>
EXHIBIT 16.01
LETTER REGARDING CHANGE IN
CERTIFYING ACCOUNTANT
</Page>
<PAGE>
[Letterhead]
February 11, 2000
Securities & Exchange Commission
450 Fifth Street, N.W.
Washington D.C. 20549
Gentlemen:
We have read Item 14 of Part 1 of Form 10-SK of The New Anaconda Company
and are in agreement with the statements contained therein so far as they
related to our firm. We have no basis to agree or disagree with other
statements of the registrant contained therein.
Very truly yours,
/s/ Jones, Jensen & Company
- ----------------------------------
Jones, Jensen & Company
</Page>
<PAGE>
EXHIBIT 21.01
SUBSIDIARIES
</Page>
<PAGE>
The New Anaconda Company (the "Company") is a Utah Corporation and has
the following subsidiary:
Anglo American Metals, Inc., a Texas Corporation, which does business
under the same name as it is incorporated. Anglo American Metals, Inc,
has the following subsidiary:
Ventura Corporation, a Nieu Corporation, which does business under the
same name as it is incorporated. Ventrua Corporation has the following
subsidiary:
Ferry Lane Limited, a British Virgin Island Corporation, which does
business under the same name as it is incorporated.
</Page>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001106250
<NAME> THE NEW ANACONDA COMPANY
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 50,016
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 13,250
<CURRENT-ASSETS> 73,266
<PP&E> 30,123,013
<DEPRECIATION> 86,384
<TOTAL-ASSETS> 30,109,895
<CURRENT-LIABILITIES> 462,629
<BONDS> 0
0
0
<COMMON> 95,000
<OTHER-SE> 67,997,583
<TOTAL-LIABILITY-AND-EQUITY> 30,109,895
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,907,729
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,494
<INCOME-PRETAX> (6,992,374)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,992,374)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,992,374)
<EPS-BASIC> (.10)
<EPS-DILUTED> (.10)
</TABLE>
