UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
FORM 10 - SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
(SMALL BUSINESS ISSUERS)
Under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934
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DYNARESOURCE, INC.
(F/K/A: West Coast Mines, Inc.)
(Name of the Small Business Issuer in its charter)
Delaware 94-1589426
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(State of incorporation) (Employer Identification No.)
5215 N. O'Connor Blvd., Suite 200, Irving, Texas 75039
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(Address of principal offices) (Zip Code)
Issuer's contacts: Phone: (800) 510-2283; (972) 868-9066; Fax: (972) 868-9067;
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E-Mail: [email protected]; Web Site: dynaresource.com
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock; $ .01 Par Value
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(Title of Class)
Name of Each Exchange On Which Securities to be Registered:
Nasdaq; Over the Counter
Bulletin Board ("OTCBB")
DATE OF ORIGINAL FILING ( 10 - SB): APRIL 17, 2000
DATE OF AMENDMENT FILING: MAY 25, 2000
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FORM 10-SB (A)
DYNARESOURCE, INC.
Table of Contents
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PAGE
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PART I. .................................................................................... 3
Item 1. Description of Business ................................. 3
Item 2. Management's Discussion and Analysis ................................. 5
Item 3. Properties. ................................. 6
Item 4. Security Ownership; Beneficial Owners and Management ............... 6
Item 5. Directors and Officers ................................. 8
Item 6. Executive Compensation ................................. 10
Item 7. Certain Relationships and Related Transactions ........................ 10
Item 8. Description of Securities ................................. 11
Part II. ............................................................................. 12
Item 1. Market Price of Common Stock ................................. 12
Item 2. Legal Proceedings .......................................... 12
Item 3. Changes in and Disagreements with Accountants ........................ 12
Item 4. Recent Sales of Unregistered Securities ................................. 12
Item 5. Indemnification of Directors and Officers................................. 13
Part F/S. ........................................................................... 13
Item 1. Registrant's Audited Financial Statements ................................. 13
ending December 31, 1998, December 31, 1999) Exhibit "2.1"
Signatures .................................................................... 13
Part III. Exhibits. ........................................................... TAB 1
Index to Exhibits ................................. 14/Tab 1
Sub-Tab 1: Articles of Incorporation, By-Laws, Amendments ............... 1.1 - 1.8.
Sub-Tab 2: Financial Statements .......................................... 2.1.
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PART I:
ITEM 1. DESCRIPTION OF BUSINESS.
REGISTRANT. DynaResource, Inc., the Registrant herein, is a Delaware
corporation, whose office is located at 5215 N O'Connor Blvd., Suite 200,
Irving, Texas 75039. It can be reached by phone at (972) 868-9066 and by Fax at
(972) 868-9067.
HISTORY. The Registrant was incorporated in the State of California on September
28, 1937, under the name West Coast Mines, Inc. The Registrant was formed for
the purpose of engaging in any lawful business not inconsistent with the laws of
the United States and to engage in any type of mining activity with the right to
perform all activities in connection with the extraction of any and all kinds of
minerals, including: exploration, development, leasing, purchasing, producing,
refining, smelting, joint venturing, and investing in the mining industry.
In October 1937, the Registrant acquired approximately 560 acres of mining
claims in Humboldt County, Nevada, ("Pansy Lee"). In connection with the
acquisition and development of the Pansy Lee Property, the Registrant obtained
the approval for the sale of the Registrant's securities from the Commissioner
of the State of California. The Registrant produced precious metals from this
Pansy Lee property until 1942. From 1942 to 1994, the Registrant was involved in
negotiations involving the leasing or sale of the Pansy Lee Property.
In October 1994, the Registrant issued 97,927 shares of its common stock in
exchange for approximately 640 acres of mining claims in Mohave County , Arizona
("Wikiup").
In February 1995, the Registrant issued 1,312,500 shares of its common stock in
exchange for all the outstanding common stock of Resolute Mining Corp., which
was subsequently dissolved.
At December 1995, the Registrant acquired a 1.65 % Net Profits Interest in the
San Jose de Gracia Property in Sinaloa State, Mexico ("San Jose de Gracia").
In April 1996 , the Registrant filed an amendment to its articles of
incorporation to increase the authorized number of common stock from 750,000
shares to 50,000,000 shares and changed the par value of its common stock from
$1.00 per share to $0.01 per share.
At December 31, 1996, the Registrant acquired an additional 23.25 % Net Profits
Interest in San Jose de Gracia. As part of this acquisition, the Registrant
issued 451,750 shares of its common stock.
In January 1997 the Registrant declared a one-for-four reverse stock split of
its common shares. In connection with this reverse stock split, the Registrant
reduced its common shares outstanding from 10,685,586 to 2,641,966. The number
of authorized shares remained at 50,000,000. Any reference to the Registrant
shares, including the number of common shares outstanding, have been adjusted to
reflect the reverse stock split.
In August 1998, the Registrant acquired 25 % of the outstanding stock of Minera
Finesterre S.A. de C.V. (Minera), a private Mexican Corporation. Minera holds
title to mineral concessions comprising, San Jose de Gracia.
In November 1998, the Registrant declared a dividend and distributed its 24.9 %
Net Profits Interest in San Jose de Gracia. Also, t he Registrant merged with
DynaResource, Inc., which merger resulted in changing the Registrant's name to
DynaResource, Inc. and changing the state of incorporation from California to
Delaware and reducing the Registrant's authorized common stock from 50,000,000
to 12,500,000.
At December 31, 1999, the Registrant acquired an additional 1.7 % of the
outstanding stock of Minera for $ 96,270.. At year-end 1999, the Registrant
owned a total of 26.7 % of the outstanding stock of Minera.
3
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OPERATIONS. The Registrant's operations include acquisition, leasing, and sales
of mineral rights. The Registrant is engaged in projects in Mexico, and in the
United States.
MINERAL PROPERTIES.
PANSY LEE:
The Pansy Lee is located in Humboldt County, near Winnemucca, Nevada. The
property covers approximately 560 acres of wholly owned, patented property;
which covers surface rights and mineral rights. The Pansy Lee mine was in
operation from the late 1930's until 1942. From 1944 to 1988, the mine was
leased to various parties, including a 10 year lease to Newmont Mining . From
1989 to 1997 the mine remained available for lease.
In 1998, the mine was leased to Newcrest Resources, Inc., an Australian company
for a term of five years. Newcrest ceased all U.S. activities in 1999; and as a
result, terminated its lease. The registrant recorded $50,000 lease income in
1998. No income has been recorded for 1999.
Geology. The Pansy Lee produced gold, silver, copper, and lead until 1942 when
the mine was closed due to an Executive Order during World War I. In the early
1940's, the mine produced 8,000 ounces of gold. 700,000 ounces of silver,
110,000 pounds of copper, and 2,000,000 pounds of lead.
Year-end Proven and Probable Ore Reserves At year end 1999, there were no proven
and probable ore reserves at the Pansy Lee Property.
WIKIUP:
The Wikiup Claims are located in Mohave County, near Lake Havasu, Arizona. The
property covers approximately 640 acres. No income has been recorded from
Wikiup.
Geology No mineral production to date has been recorded at Wikiup.
Year-end Proven and Probable Ore Reserves. At year end 1999, there were no )
proven and probable ore reserves at Wikiup.
FORWARD LOOKING STATEMENTS.
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Many statements made by the Registrant in this Form 10 - SB/A - contain
forward-looking language and information related to the Registrant. In general,
the Registrant identifies these forward-looking statements and information
through use of terminology such as "shall", "will", "may", "expect", "intend",
"project", "estimate", "believe", or other similar phrases. The Registrant bases
these statements and information on its opinions and assumptions, based upon
current conditions and information currently available to the Registrant.
Because these statements reflect the Registrant's views regarding current and
future events, these statements involve uncertainties and risks. Realized future
performance could differ materially and significantly from these forward-looking
statements. Readers should exercise caution in placing any undue reliance upon
any such forward-looking statements. Taking into account the foregoing, the
following are identified as important factors that could cause actual results to
differ materially from those expressed in any forward looking statement made by
Registrant, or on Registrant's behalf. If any of the following factors occur,
our business, financial condition, or results from operations could be
materially adversely affected.
Body of Commercial Ore / Limited Resources:
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The properties owned by the Registrant, and the company in which the Registrant
is an investor in, contain limited bodies of commercial ore. There is no
assurance that the Registrant will be successful in its continued acquisition,
leasing, and sales activities.
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Title Matters:
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While the Registrant has investigated title to all mineral claims, and, to the
best of its knowledge, title to all properties is in good standing; this should
not be construed as a guarantee of title. The properties may be affected by
undetected defects in title, such as the reduction in size of the mineral claims
and other third party claims affecting the Registrant's priority rights.
Conflicts of Interest:
Directors of the Registrant are or may become directors of other reporting
companies, or, have significant shareholdings in other mineral resource
companies. To the extent that such other companies may participate in ventures
in which the Registrant may participate, the directors of the Registrant may
have a conflict of interest in negotiating and concluding terms respecting the
extent of such participation. The Registrant and its directors attempt to
minimize such conflicts. In the event that such a conflict of interest arises at
a meeting of the directors of the Registrant, a director who has such a conflict
may be requested to abstain from voting for or against the approval of such a
participation. In appropriate cases the Registrant may establish a special
committee of independent directors to review a matter in which several
directors, or management, may have a conflict. In determining whether or not the
Registrant will participate in a particular program and the interest therein to
be acquired by it, the directors will primarily consider the potential benefits
to the Registrant, the degree of risk to which the Registrant may be exposed and
its financial position at that time. Other than as indicated, the Registrant has
no other procedures or mechanisms to deal with conflicts of interest.
Additional Funding Requirements:
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The Registrant's operations, and revenues generated from leasing activities do
not provide sufficient cash flow to cover operating costs. In the past, the
Registrant has relied on private sales of its stock to meet its cash
requirements. Continued operations may depend upon the Registrant's ability to
obtain financing through the joint venturing of projects, private placement
financing, public financing, or other means. There is no assurance that the
Registrant will be successful in obtaining the required financing.
Employees:
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The Registrant has no employees. Management services are provided by Dynacap
Group Ltd., a Texas Limited Liability Company. An officer and director of the
Registrant is also a Manager of Dynacap.
Competition:
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Significant and increasing competition exists for the limited number of mineral
property opportunities available. As a result of this competition, the
Registrant may be unable to acquire additional mining properties on terms it
considers acceptable.
Environmental and other Regulatory Requirements:
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The current or future operations of the Registrant, including acquisition,
leasing, and sales activities; involve mineral properties which require permits
from various federal, state and local governmental authorities. Such future
operations are and will be governed by laws and regulations governing
prospecting, development, mining, production, exports, taxes, labor standards,
occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. Companies engaged in the development
and operation of mines and related facilities generally experience increased
costs, and delays in production and other schedules as a result of the need to
comply with applicable laws, regulations and permits.
Additional permits and studies, which may include environmental impact studies
conducted before permits can be obtained, are necessary prior to operation of
properties in which the Registrant has interests. Required permits could
adversely affect the Registrant's ability to negotiate agreeable acquisition,
lease, or sales terms.
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Price Fluctuations: Share Price Volatility:
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In recent years, the securities markets in the United States have experienced a
high level of price and volume volatility, and the market price of securities of
many companies have experienced wide fluctuations in price, which have not
necessarily been related to the operating performance, underlying asset values
or prospects of such companies. There can be no assurance that continual
fluctuations in price will not occur.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS.
The goal of the Registrant is to maximize shareholder value through the purchase
of mineral properties, resources, reserves, and potential reserves; or, through
investment in companies that possess those assets. Currently, the Registrant
owns no producing properties and consequently, has no current operating income
from production.
The level of the Registrant's activities is subject to fluctuation from year to
year, depending on, among other matters, the readiness of the mineral properties
in which the Registrant holds interest in, to leasing or sales activities, and
the availability of financing to apply to acquisition, leasing, and sales
activities. The availability of financing, in turn, is subject to wide
fluctuations, depending upon the trend of equity markets, commodity prices,
sentiment of investors, sentiment of institutional investors, and recent results
from and general outlook for the activities proposed on the Registrant's
properties and investee. The inter-relation of these factors is complex and
difficult to project.
Registrant's revenue decreased by $ 55,628., from $ 66,972 in fiscal year 1998
to $ 11,344. for fiscal year 1999. This reduction is mainly attributed to the
termination of a lease agreement in fiscal 1998.
Registrant's operating expenses increased by $ 79,042., from $ 214,406. in
fiscal year 1998 to $ 293,448. for fiscal year 1999. This increase is attributed
to a $ 13,393. increase in general and administrative expense, and to a $
65,749. increase in consulting expense.
Registrant's Net Income decreased by $ 855,113., from net income of $ 579,267.
for fiscal year 1998, to Net Loss of $ 275,846. for fiscal year 1999. This
decrease is mainly attributable to one time settlement income recorded in fiscal
year 1998 of $ 733,277., and to the $ 79,042. increase in operating expenses,
and to the $ 55,628. decrease in revenue.
Net Cash used from operating activities increased from $ 193,569. in fiscal
1998, to $ 239,253. in fiscal 1999. Net Cash used from investing activities
decreased from $ 114,460. in fiscal 1998, to $ 96,270. in fiscal 1999. Net Cash
provided from financing activities increased from $ 153,000. in fiscal 1998, to
$ 602,000. in fiscal 1999. This increase in net cash provided by financing
activities was attributable to proceeds from stock issued.
PLAN OF OPERATION:
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During the next twelve months, the Registrant will actively seek out and
investigate mineral properties for purchase, and the leasing or sales of its
properties. Management intends to hold expenses to a minimum and to obtain
services on a contingency basis when possible. The Registrant does not intend to
use any employees, with the possible exception of part-time clerical assistance
on an as-needed basis. Outside advisors or consultants will be used only if they
can be obtained for a minimal cost or on a deferred payment basis.
The Registrant finances its mineral property acquisition, leasing, and sales
costs, and related administration costs, through the issuance of debt, or
private sales of stock. There can be no assurance that the Registrant will be
able to obtain additional funding when and if needed, or that such funding, if
available, can be obtained on terms acceptable to the Registrant.
Management is confident that it will be able to operate in this manner during
the next twelve months.
ITEM 3. PROPERTIES.
The Registrant presently maintains its executive offices at 5215 N. O'Connor
Blvd., Suite 200, Irving, Texas 75039, at a rate of $ 1,250.00 per month, plus
utilized services. The Registrant renewed its lease for 1 year, commencing April
2000.
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MINERAL PROPERTIES: See Item 1 - Description of Business.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the amount and nature of beneficial ownership of
each of the executive officers and directors of the Registrant and each person
known to be a beneficial owner of more than five percent of the issued and
outstanding shares of the Registrant as of December 31, 1999. The following
table sets forth the information based on 3,739,907 common shares issued and
outstanding as of December 31, 1999:
Percent
Beneficial Owner Common Shares Ownership
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Great Sands Mining Group Trust 433,000 11.58 %
(Darryl Butler, Beneficial Owner)
K.D. Diepholz 240,926 6.44 %
K.D. Diepholz
(As Beneficial Owner of
Dynacap Group ltd.) 2,878 .00077
Douglas Metcalf 50,000 1.34 %
Vantage Ltd. Trust 50,000 1.34 %
(Douglas Metcalf, Beneficial Owner)
Wayne C. Henderson 50,000 1.34 %
Melvin E. Tidwell 48,312 1.29 %
Brad J. Saulter 64,675 1.73 %
Dynacap Group Ltd. 115,124 3.08 %
All Officers, Directors
And Beneficial owners
as a Group (6 Persons) 939,791 25.13 %
Consultants:
Charles E. Smith 125,000 3.34 %
(as Beneficial Owner of
the Matrix Group)
Charles Smith
(as Beneficial Owner of
Dynacap Group Ltd.) 2,878 .00077
Curtis Sales 25,000 .67 %
All Officers, Directors, and
Beneficial Owners as a Group,
Including consultants: 1,092,669 29.2 %
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o Viking Gold Ltd., L.P., a Texas Limited Liability Partnership, is the
holder of 42,476 common shares of the Registrant. Dynacap Group Ltd. is
the manager of Viking Gold Ltd.
o 657,000 Options of the Registrant were issued to Great Sands Mining
Group Trust, and 76,000 Options were issued to Vantage Ltd. Trust
(total of 733,000 Options); the purchasers of 433,000 and 50,000 common
shares respectively in 1998 and 1999. These 733,000 Options are
exercisable at a price of $ 2.50, terminating August 15 2001.
o 40,000 "A" Warrants at $ 8.00 per share, and 40,000 "B" Warrants at $
12.00 per share were issued with the conversion of $ 160,000. of
promissory notes into common shares of the Registrant in 1996. The "A"
and "B" Warrants are exercisable within 90 days of the Registrant's
common stock trading on any exchange for the average closing bid price
over 5 days of $ 12.00, and $ 16.00, respectively.
None of the foregoing have any right to acquire additional shares of the
Registrant. There is no existing arrangement, which may result in a change in
control of the Registrant.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.
The following table lists the names and ages of the executive officers,
directors and key consultants of the Registrant. The directors will continue to
serve until the next annual shareholders meeting, or until their successors are
elected and qualified. All officers serve at the discretion of the President,
Chairman of the Board of Directors, and members of the Board of Directors.
Name Age Position Held Since
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K.D. Diepholz 42 Chairman May 1997
1140 Hidden Ridge President, Treasurer May 1997
Irving, Texas 75038 Director May 1995
Douglas Metcalf 36 Secretary May 1997
46 Lakeshore Drive North Director May 1995
Westford, Ma. 01886
Wayne C. Henderson 60 Director May 1995
5502 Lafayette Lane Vice-President /
Frisco, Texas 75035 Mineral Properties May 1997
Melvin E. Tidwell 55 Director May 1994
4804 Picadilly Place
Tyler, Texas 75703
Brad J. Saulter 39 Vice President - Investor May 1998
922 Signal Ridge Relations
Rockwall, Texas 75087
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K.D. Diepholz - Graduated Lake Land College, Southern Illinois University;
Communications and Business Emphasis; Regional Director - Fidelity Union
Insurance and Investment, Dallas, Texas (1980 -1983); President - KWD Properties
Corporation, Mattoon, Illinois (1983 - 1989); a privately-held Oil & Gas
Exploration and Development Company involved in all phases of The Oil & Gas
Business, and Various Types of Partnerships; Vice President - American
Investment Retirement Corporation, Phoenix, Arizona (1990 - 1991), Involved in
Program Structuring for Pension Accounts; Vice President - Ideal Securities,
Inc., Dallas, Texas (1992); Program Structuring and Marketing Management;
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President - DP Phoenix, a Real Estate Investment Company, Phoenix, Arizona (1991
- -1992); Investment Program Structuring, Real Estate Acquisitions, General
Management; Director: Farm Partners, Inc., Dallas, Texas (1992 - Present);
General Management of this General Partner to Precious Metals Limited
Partnership; DP Group Ltd., Dallas, Texas (1993 - Present); President of this
independent Marketing firm; Dynacap Group Ltd., Dallas, Texas (1992 - Present);
President of this Consulting and Management firm, directing the management of
certain Limited Liability Investment Companies; DynaResource, Inc. (f/k/a: West
Coast Mines, Inc.), Dallas, Texas (1994 - Present); Chairman, President,
Treasurer, and Director. Special skills in the areas of Business Development,
Project Planning, Corporate Financing, Acquisition Analysis, Investment Program
Interpretation and Structuring.
Douglas E. Metcalf - Graduated Cornell University, B.S. degree 1986; Executive
Vice President - OHMS International, an International Import / Export Consulting
Company (1987 - 1991); President - Quantum Ventures Corporation, a holding
Company involved in the development of new business enterprises (1992 -
Present); Secretary and Director - DynaResource, Inc. (f/k/a: West Coast Mines,
Inc.), 1995 - Present. Mr. Metcalf has worked extensively with junior mining
companies over the past 10 years; with direct involvement in the areas of:
recruiting technical personnel; acquisition of milling and refining equipment;
financing; and, acquisition.
Wayne C. Henderson - Research Engineer - Bethlehem Steel Corporation, Homer
Research Laboratories - Bethlehem, Pa.; development of new steel making
processes; Ph.D. Candidate - Lehigh University, Department of Chemical
Engineering, Bethlehem, Pa., developed mathematical modeling procedures which
used real-time data to develop dynamic process models for simulation control;
awarded a National Science Foundation Fellowship; Senior Research Engineer -
Inland Steel Company, East Chicago, Indiana; developed process simulation models
and process control strategies for a number of steel making processes and
operations; developed forecasting control models for blast furnace, basic oxygen
furnace, continuous casting, and hot and cold rolling mills; responsible for
testing and design confirmation of then novel fluid-bed kiln design for
producing high-reactivity metallurgical lime, resulting in a number of process
and equipment patents; Project Leader - Kennecott Copper Corporation, Lexington,
Massachusetts; led development and operation of 5 TPD Pilot Plant for the
"Cuprion" hydrometallurgical process for extraction and recovery of metals from
deep sea manganese nodules; Staff Process Engineer - Mobile Oil Corporation,
Denver, Colorado; responsible for conventional heap leach and leach uranium
process plant design, process engineering, and metallurgical development; Chief
Process Engineer, Project Manager, Process Engineering Supervisor - Kennecott
Minerals Company, Salt Lake City, Utah; Vice President Operations - Calmet
Corporation, Colorado Springs, Colorado; responsible for day to day operations
of custom toll processing plant (15 TPD) for recovery of gold and silver from
high grade gold and silver ore concentrates using unique pressure cyanidation
technology; Metallurgical Manager - Tonkin Springs Gold Mining Company, Elko,
Nevada; responsible for bio-oxidation refractory gold process development;
designed, constructed, and operated bio-oxidation testing facilities; Project
Manager / Process Manager / Lead Process Engineer - Brown & Root, Inc., Houston,
Texas, 1989 to 1996; provided project consulting for Atec Inc., U.S. Energy,
Sutter Gold Venture, Atlas Goldbar, Inland Gold and Silver, Newmont Mining
Corp., Homestake Mining, Santa Fe Mining, Dynacap Group Ltd.; Senior Project
Engineer - Lockwood Greene Engineers, Inc., Dallas Texas; 1996 - Current;
Vice-President of Mineral Properties and Director- DynaResource, Inc. (f/k/a:
West Coast Mines, Inc.), Dallas, Texas, 1996 -present; provide overall technical
analysis of precious metals properties.
Melvin E. Tidwell, P.E. - Professional Engineer, registered in California in
1977; Control Systems Engineer; Instrument Engineer on over 80 Projects
Worldwide; Instrument Startup Engineer on over 50 Projects Worldwide; Affiliated
/ Associated with following Companies over the past 25 years: Weyerhaeuser
Company, Howe-Baker Engineers, LaGloria Oil & Gas Co., IWATANI Electronics
(Japan), EQM (Mexico), Kyodo Oxygen Co., Ltd. (Japan), Chin Yang Fine Chemical
Co. (South Korea), Hankuk Glass Mfg. Co. (South Korea), Hunt Oil Co., Liquid
Carbonics Co., Celanese Mexicana (Mexico), Grain Power Tucumcari Ltd., Jetco
Chemical Inc., Claiborne Gasoline Co., Conoco, Chevron, Metano Gas (now Exxon),
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Union Oil, Texaco Angola, Petrofac, Alfurat (Syrian Oil Co.), Arco, Chevron /
Placer Cego, Tidwell & Associates; with Engineering / Management Experience in
the following Project Areas: Startup & Engineering - $ 160 Million Linerboard
Paper Mill; Chief Instrument Engineer - chemical division; DEA Gas Treating &
Sulfur Recovery Plant; One Part / million H2 Plant; Startup Hydrogen Plants; H2
/ CO Cosorb Plant; Startup H2 / CO synthesis Gas Plant & Cold Box; Startup
Ethanol Plant; Specialities Chemicals Expansion - Foxboro 200 instruments;
Startup & Calibration 75,000 BPD Crude Distillation Facility; Instrument
Engineer - 1st Oxygen Enrichment Cope Unit; Instrument Engineer, Startup &
checkout - 30 TPD Selectox SRU; Instrument Engineer - Offshore Oil & Gas
Production Facility; Lead Instrument Engineer - 60,000 BPD Oil Production
Facility; Instrument Checkout, Calibration, and Inspection prior to startup -
Selectox Sulfur Units (Honeywell TDC 3000 DCS) (Foxboro 760 Electronics
Controllers); Startup Amine Plant and Sulfur Plant, and System Engineering
(Foxboro and Westinghouse PLC); Instrument Engineer, Field Startup and Checkout
- - CCR, HDS, MTBE, Hydrogen and Cryogenic Plants. Founder, President - Tidwell &
Associates, an private engineering consulting Firm (1993 to Present); Director -
DynaResource, Inc. (f/k/a: West Coast Mines, Inc.), Dallas, (1994 to present).
Brad J. Saulter - Attended University of Texas, Austin, Texas; Marketing
Department of Metagram, Inc., a Dallas National Marketing Company; Regional
Manager for Lugar, Lynch, & Associates, A Dallas Financial Services Company,
Involved in Sales & Marketing of Various Investment Products; Independent
Marketing Consultant; Series 22 & 63 Securities License; Vice President /
Marketing - Dynacap Group Ltd. (1992 - Present); Director: Farm Partners, Inc.
(1992 - Present), Vice President - Investor Relations - DynaResource, Inc.,
Dallas, Texas (1995 to present).
CONSULTANTS:
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Charles Smith. Mr. Smith graduated from Boston University, Boston, Massachusetts
in 1979 and since that time has been a Certified Public Accountant involved in
all phases of business including audit and tax matters. He is a consultant to
various companies. Mr. Smith's business affiliations the past five years follow:
Chairman - Dynacap Group, Ltd. - a consulting and management firm - 1992 to the
present. Sole proprietor as a Certified Public Accountant - 1983 to the present.
Sole officer and Director - MC Cambridge, Inc. - a financial consulting firm -
1997 to present. Sole officer and director - Asset Servicing Corporation - a
leasing Company - 1998 to present. Chief Financial Officer - Electrical
Generation Technology Corporation - April 2000 to present. President and Chief
Financial Officer - Stein's Holdings, Inc. - April 2000 to present.
Curtis Sales - Assistant to Mr. Natvar Patel; West Coast Mines, Inc. -Lake
Havasu, Arizona (1994 - Present); Director of Lab Operations for DynaResource,
Inc. (f/k/a: West Coast Mines, Inc.), Involved in all laboratory phases of
analysis and extraction of precious metals.
To the knowledge of the Registrant, no present or former director, executive
officer, or person nominated to become a director or executive of the
Registrant, or consultants to the Registrant has ever:
1.) Filed a bankruptcy petition by or against any business of which such
person was a general partner or executive officer whether at the time
of the bankruptcy or with two years prior to that time;
2.) Had any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and other
minor offenses);
3.) Been subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; and
4.) Been found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed suspended or vacated.
ITEM 6. EXECUTIVE COMPENSATION.
The Registrant currently is not paying, and has not paid during the past three
years, except for those disclosures as described under Item 7. any cash
compensation to officers, directors or executives. The Registrant does not
currently have any pension, profit sharing, stock bonus, or other benefit plans.
Such plans may be adopted in the future at the discretion of the Board of
Directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
1n 1996 the Registrant issued shares of its common stock for the acquisition of
the 24.9 % Net Profits Interest in the San Jose de Gracia property. These shares
were issued to Dynacap / Mexico Resource Group LLC., a private Nevada Company.
10
<PAGE>
The Manager of the Dynacap / Mexico Resource Group LLC was Dynacap Group Ltd., a
Texas Limited Liability Company. At the time of this share issuance, the Manager
of Dynacap Group Ltd. was also a director of DynaResource.
The Registrant has paid management consulting fees to Dynacap Group, Ltd. The
Chairman and Chief Executive Officer of the Registrant is the Manager of Dynacap
Group Ltd.
During 1996 and through May 1997 the Registrant rented office space from Dynacap
Group Ltd.
The Registrant is the current owner of 26.7 % of the outstanding stock in Minera
Finesterre S.A. de C.V., ("Minera") a Mexican corporation, the holder of 100 %
of the rights and claims to the San Jose Property. Golden Hemlock Explorations,
Ltd., Vancouver, B.C. Canada, ("Hemlock"), is the owner of 73.3 % of Minera.
The Registrant is not currently aware of any other material relationships or
related transactions between the Registrant and any officers, directors or
holders of more than five percent of any class of outstanding securities of the
issuer.
STOCK ISSUED TO RELATED PARTIES. COMPENSATION PAID TO OFFICERS AND DIRECTORS:
- ------------------------------------------------------------------------------
The Registrant has issued shares of its common stock for services to Dynacap
Group Ltd., a private consulting firm. Mr. Charles E. Smith, consultant to the
Registrant, and Mr. K.D. Diepholz - Chairman and CEO of the Registrant, are the
Managers of Dynacap Group.
The Registrant has issued shares for services, and cash compensation as follows,
to related parties or officers during the period 1997 - December 31, 1999:
o In 1997, the Registrant issued 118,727 shares of its common stock for
services rendered to Dynacap Group Ltd., recorded at $ 29,682.
o In 1997, the Registrant issued 7,500 shares of its common stock for
services rendered to Wayne C. Henderson, a director of the
RegistrantCompany, recorded at $ 1,875.
o In 1997, the Registrant paid $ 122,260. cash for services rendered to
Dynacap Group Ltd.
o In 1997, the Registrant paid $ 21,399. cash to K.D. Diepholz, Chairman,
CEO, and Treasurer of the Registrant for services rendered; and $
18,675. to Brad J. Saulter, Vice-President of the Registrant for
services rendered.
o In 1998, the Registrant issued 34,714 shares of its common stock for
services rendered to Dynacap Group Ltd., recorded at $ 8,679. o In
1998, the Registrant paid $ 117,350. cash for services rendered to
Dynacap Group Ltd.
o In 1999, the Registrant issued 73,000 shares of its common stock for
services rendered to Dynacap Group Ltd., recorded at $18,250. o In
1999, the Registrant paid $ 172,303. cash for services rendered to
Dynacap Group Ltd. o In 1999, the Registrant paid $ 1,225. cash to Brad
J. Saulter Vice-president of the RegistrantCompany, for services
rendered.
ITEM 8. DESCRIPTION OF REGISTRANTS'S SECURITIES TO BE REGISTERED.
COMMON STOCK:
- -------------
The Registrant is authorized to issue 12,500,000 shares of common stock, par
value of $0.01, of which 3,739,907 shares are issued and outstanding as of
December 31, 1999. Holders of Common Stock are entitled to dividends when, as
and if declared by the Board of Directors out of funds available therefore,
subject to any priority as to dividends for Preferred Stock that may be
outstanding. Holders of Common Stock are entitled to cast one vote for each
share held at all stockholder meetings for all purposes, including the election
of directors. The holders of more than 50% of the Common Stock issued and
outstanding and entitled to vote, present in person or by proxy, constitute a
11
<PAGE>
quorum at all meetings of stockholders. The vote of the holders of a majority of
Common Stock present at such a meeting will decide any question brought before
such meeting, except for certain actions such as amendments to the Registrant's
Certificate of Incorporation, mergers or dissolutions which require the vote of
the holders of a majority of the outstanding Common Stock. Upon liquidation or
dissolution, the holder of each outstanding share of Common Stock will be
entitled to share equally in the assets of the Registrant legally available for
distribution to such stockholder after payment of all liabilities and after
distributions to preferred stockholders legally entitled to such distributions.
Holders of Common Stock do not have any preemptive, subscription or redemption
rights. They are entitled to cumulative voting rights under the Delaware
Corporations Code. Under cumulative voting, minority shareholders may have the
right to vote one or more members onto the Registrant's Board of Directors. All
outstanding shares of Common Stock are fully paid and non-assessable. The
holders of the Common Stock do not have any registration rights with respect to
the stock.
TRANSFER AGENT AND REGISTRAR:
- -----------------------------
The Registrant's Transfer Agent is Signature Transfer, Inc., 14675 Midway Road,
Suite 221, Addison, Texas 75001, (972) 788-4193.
12
<PAGE>
PART II:
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED MATTERS.
The Registrant is organized under the laws of Delaware, and its common stock is
traded on the NASDAQ Over The Counter Bulletin Board Exchange ("OTCBB") under
the symbol " DYNR". On June 27, 1996 the Registrant shares were approved for
trading on the Over the Counter Market. The following table sets forth, for the
periods indicated, the high and low bid quotations (as reported by Nasdaq). The
bid quotations set forth reflect inter-dealer prices, without retail mark-up or
mark-down and without commissions; and may not reflect actual transactions. No
dividends on the Registrant common stock have been declared or paid since the
Registrant's inception and no dividends are anticipated in the future. The
Registrant's retained earnings in the foreseeable future are expected to be
reinvested by the Registrant into the expansion of its acquisition, leasing, and
sales of mineral properties. The Registrant had 474 registered shareholders at
December 31, 1999.
Calendar Quarter Ending High Low
----------------------- ---- ----
March 31, 1998 5.00 0.25
June 30, 1998 5.00 0.25
September 30, 1998 5.00 0.25
December 31, 1998 5.00 0.25
March 31, 1999 5.00 0.25
June 30, 1999 5.00 0.25
September 30, 1999 5.00 0.25
December 31, 1999 5.00 0.25
ITEM 2. LEGAL PROCEEDINGS.
At the time of this filing, the RegistrantCompany is involved in no legal
proceedings, and does not anticipate any immediate legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
The Registrant has not had any disagreements with its accountants regarding
accounting and financial disclosure. Since 1998, The Registrant has engaged Mark
L. Cleland, independent Certified Public Accountant, to conduct the audits of
the Registrant.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
o In 1997, the Registrant issued 259,500 shares of common stock for
exercise of 259,500 Options at $ 1.00.
o In 1997, the Registrant issued 81,000 shares of common stock for the
exercise of 81,000 Options at $ 1.50.
o In 1997, the Registrant issued 40,394 shares of common stock for the
conversion of $ 160,000. of promissory notes, and $ 1,516. of related
interest.
o In 1997, the Registrant issued 126,227 shares of common stock for
services recorded at $ 31,557.
o In 1998, the Registrant issued 34,714 shares of common stock for
services recorded at $ 8,679.
o In 1999, the Registrant issued 483,000 common shares and 733,000
options exercisable at $ 2.50 for a period of two years terminating at
August 15, 2001; in exchange for $ 733,000. Cash.
o In 1999, the Registrant issued 73,000 shares of common stock for
services recorded at $18,250.
The Registrant was the Seller/Issuer of the above securities, and no
underwriters were used. No underwriting discounts, commissions or selling
commissions were paid in connection with any of the prior sales of the
13
<PAGE>
Registrant securities. All Registrant securities issued were issued pursuant to
an exemption from registration provided by Section 4(2) of the Securities Act of
1933 (the "Act"); in that the transactions did not involve a public offering,
and in that all purchasers or recipients were sophisticated investors who
represented their intention to acquire the Registrant's securities for
investment purposes only and not with the intent to re-sell or distribute.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the laws of Delaware and the Registrant's Articles of Incorporation, the
Registrant's directors will have no personal liability to the Registrant or its
stockholders for monetary damages incurred as the result of the breach or
alleged breach by a director of his duty of care. This provision does not apply
to the directors (i) breach of their duty of loyalty, (ii) acts or omissions not
in good faith or involving intentional violations of law, (iii) illegal payment
of dividends, stock repurchases, or stock redemption, and (iv) approval of any
transaction from which a director derives an improper personal benefit.
Directors may be responsible to the RegistrantCompany's shareholders for damages
suffered by the Registrant or its shareholders as a result of a breach of their
fiduciary duty.
In so far as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted for directors, officers or person controlling
the Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission each
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
PART F/S. FINANCIAL STATEMENTS.
Incorporated into and forming an integral part of this Form 10 - SB/A are the
audited financial statements for the Registrant for the years ended December 31,
1998 and December 31, 1999.. These financial statements are incorporated herein
as Exhibit "2.1.". All financial information for the Registrant contained in
this Form 10 - SB/A is prepared in accordance with accounting principles
generally accepted in the United States.
ITEM 1. REGISTRANT'S AUDITED FINANCIAL STATEMENT FOR YEAR END DECEMBER 31,
1999; and for YEAR END DECEMBER 31, 1998.
(Attached as Part III, Section 2, Exhibit "2.1.")
SIGNATURES
Pursuant to the requirements of Section 12(g) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, on May 23, 2000.
DYNARESOURCE, INC.
By: /s/ K.D. Diepholz
-----------------------------------
Mr. K.D. Diepholz; Chairman / CEO
On Behalf of the Board of Directors
14
<PAGE>
PART III. EXHIBITS.
The following documents are attached as Exhibits to this Form 10 - SB/A, and
filed as an integral part of this document:
TAB 1:
EXHIBIT 1.1. Articles of Incorporation; West Coast Mines, Inc.
EXHIBIT 1.2. By - Laws
EXHIBIT 1.3. Articles of Amendment 1940
EXHIBIT 1.4. Articles of Amendment 1943
EXHIBIT 1.5. Articles of Amendment 1996
EXHIBIT 1.6. Certificate of Merger 1998; Agreement of Merger into
DynaResource, Inc.
EXHIBIT 1.7. Articles of Incorporation; DynaResource, Inc.
EXHIBIT 1.8. Amendment of Articles 1998
TAB 2:
EXHIBIT 2.1. Registrant's Audited Financial Statement for year
ending December 31, 1998, and for year ending
December 31, 1999.
SIGNATURES
- ----------
Pursuant to the requirements of Section 12(g) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on May 23 , 2000.
DYNARESOURCE, INC.
By: /s/ K.D. Diepholz
------------------------------
Mr. K.D. Diepholz; Chairman / CEO
On behalf of the Board of Directors
15
MARK L. CLELAND
CERTIFIED PUBLIC ACCOUNTANT
17430 CAMPBELL ROAD, SUITE 114
DALLAS, TEXAS 75252
972-735-8840 FAX 972-735-0035
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of DynaResource, Inc.
Irving, Texas
I have audited the accompanying balance sheet of DynaResource, Inc. as of
December 31, 1999 and 1998 and the related statements of operations and
accumulated deficit, and cash flows for each of the two years ended December 31,
1999. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, based on my audits, the financial statements referred to above
present fairly, in all material respects, the financial position of
DynaResource, Inc. as of December 31, 1999, and 1998, and the results of their
operations and their cash flows for each of the two years in the period ended
December 31, 1999 in conformity with generally accepted accounting principles.
/S/ Mark L. Cleland
- --------------------
Mark L. Cleland
Dallas, Texas
February 17, 2000
* Except for Note G, which is dated as of May 2, 2000
<PAGE>
<TABLE>
<CAPTION>
DYNARESOURCE, INC.
BALANCE SHEETS
December 31, 1999 and 1998
ASSETS
CURRENT ASSETS: 1999 1998
---------- ----------
<S> <C> <C>
Cash $ 416,140 $ 149,663
Accounts receivable - related party 109,946 98,446
Marketable securities - related party 50 1,500
Other current assets - 5,000
---------- ----------
Total Current Assets 526,136 254,609
PROPERTY:
Equipment (net) 27,590 34,636
Mining Properties (net) 175,798 175,798
---------- ----------
Total Property 203,388 210,434
OTHER ASSETS:
Investment 944,007 847,737
Deposits 2,900 2,900
---------- ----------
Total Other Assets 946,907 850,637
---------- ----------
TOTAL ASSETS $1,676,431 $1,315,680
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value; 12,500,00
shares authorized; 3,739,907 and 3,183,907
shares issued and outstanding at December 31,
1999 and 1998 respectively $ 37,399 $ 31,839
Additional paid-in capital 3,380,535 2,793,261
Accumulated deficit (1,704,761) (1,428,915)
Treasury stock - at cost (36,742) (80,505)
---------- ----------
Total Stockholders' Equity 1,676,431 1,315,680
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,676,431 $1,315,680
========== ==========
</TABLE>
See accompanying notes.
2
<PAGE>
DYNARESOURCE, INC.
STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1999 and 1998
1999 1998
---------- ----------
REVENUE:
Income $ - $ 50,000
Interest income 10,895 16,972
Dividend income 449 -
---------- ----------
Total Revenue 11,344 66,972
OPERATING EXPENSE:
Consulting 191,778 126,029
Depreciation 7,046 7,046
General and Administrative 94,624 81,331
---------- ----------
Total Operating Expense 293,448 214,406
---------- ----------
OTHER (INCOME) EXPENSE
Settlement Income - (733,277)
Gain on sale of securities (7,708) -
Write down marketable securities 1,450 6,576
---------- ----------
Total Other Expense (6,258) (726,701)
---------- ----------
NET INCOME (LOSS): $(275,846) $579,267
========== ==========
Weighted average shares outstanding 3,482,657 3,158,039
========== ==========
INCOME (LOSS) PER SHARE ($0.08) $0.18
========== ==========
See accompanying notes.
3
<PAGE>
<TABLE>
<CAPTION>
DYNARESOURCE, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
December 31, 1999 and 1998
Common Treasury Paid in Accumulated
Shares Amount Shares Amount Capital Deficit
--------- ------- ------ -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 3,149,193 $31,492 48,186 $102,505 $2,653,929 ($1,508,182)
--------- ------- ------ -------- ---------- -------------
Shares issued for services 34,714 347 8,332
Unissued shares 131,000
Transfer treasury shares (7,400) (37,000)
Acquire treasury shares 10,000 15,000
Nonmonetary dividend (500,000)
Net income 579,267
--------- ------- ------ -------- ---------- -------------
Balance, December 31, 1998 3,183,907 31,839 50,786 80,505 2,793,261 (1,428,915)
--------- ------- ------ -------- ---------- -------------
Issuance of previously
unissued shares 131,000 1,310 (1,310)
Shares issued 352,000 3,520 607,925
Transfer treasury shares for services (27,611) (43,763) (36,861)
Issue shares for services 73,000 730 17,520
Net income (275,846)
--------- ------- ------ -------- ---------- -------------
Balance, December 31, 1999 3,739,907 $37,399 23,175 $ 36,742 $3,380,535 $(1,704,761)
</TABLE>
See accompanying notes.
4
<PAGE>
<TABLE>
<CAPTION>
DYNARESOURCE, INC.
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1999 and 1998
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(275,846) $579,267
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Depreciation 7,046 7,046
Write-down of marketable securities - related party 1,450 6,576
Settlement income - (733,277)
Issuance of common stock for services 25,153 8,679
Adjust for prior year treasury stock issuance 9,444 -
Changes in working capital:
(Increase) decrease in
Accounts receivable - related party (11,500) (68,860)
Other current assets 5,000 7,000
Increase (decrease) in
Interest payable - -
--------- ---------
NET CASH USED BY
OPERATING ACTIVITIES: (239,253) (193,569)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in mining company (96,270) (114,460)
Investment in marketable securities - related party - -
Deposit - -
--------- ---------
NET CASH USED BY
INVESTING ACTIVITIES: (96,270) (114,460)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock issued 602,000 -
Unissued stock - 131,000
Treasury stock purchased - (15,000)
Treasury stock issued - 37,000
Exercise of options and warrants - -
--------- ---------
NET CASH PROVIDED
BY FINANCING ACTIVITIES: 602,000 153,000
--------- ---------
NET INCREASE IN CASH: 266,477 (155,029)
CASH AT BEGINNING OF YEAR: 149,663 304,692
--------- ---------
CASH AT END OF YEAR: $ 416,140 $149,663
========= =========
</TABLE>
See accompanying notes.
5
<PAGE>
DYNARESOURCE, INC.
STATEMENT OF CASH FLOWS
For the Years Ended December 31, 1999 and 1998
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW AND NON-CASH ACTIVITIES
1999
- -----
The Company issued 73,000 shares of its common stock to related parties for
consulting fees in the amount of $18,250.
The Company transferred 27,611 shares from its treasury to a related party for
services valued at $6,903.
1998
- -----
The Company distributed as a dividend its 24.9% net profits interest in the San
Jose de Gracia mining property in Sinaloa, Mexico. This transaction was recorded
at book value in the amount of $500,000.
The Company acquired 25% of the outstanding common stock of Minera Finesterre
S.A. de CV., the owner of 100% interest (subject to the 24.9% net profits
interest) of the San Jose de Gracia mining property. $733,277 of this
acquisition is recorded as settlement income of which $641,617 is noncash.
The Company issued 34,714 shares of its common stock to related parties for
consulting fees in the amount of $8,679.
See accompanying notes.
6
<PAGE>
DYNARESOURE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note A - Nature of Business and Summary of Significant Accounting Policies:
History:
The Company was organized September 28, 1937, as a California corporation under
the name West Coast Mines, Inc. The Company was organized for the purpose of
seeking, investigating, and, if such investigation warrants, acquiring assets,
properties, and businesses and to engage in any substantial business
opportunities.
The Company merged with Resolute Mining Corp., a Nevada corporation, on February
28, 1995. This business combination was accounted for as a purchase.
In 1994 the Company filed an amendment to its articles of incorporation to
increase the authorized number of common stock from 750,000 shares to 50,000,000
shares and changed the par value of its common stock from $1.00 to $0.01 per
share.
On November 1, 1998, the Company merged with DynaResource, Inc, a newly formed
corporation, domiciled in the state of Delaware. This merger resulted in
changing the Company's name to DynaResource, Inc., changing the state of
incorporation from California to Delaware and reducing the Company's authorized
common stock from 50,000,000 shares authorized to 12,500,000 shares authorized.
This business combination was accounted for as a purchase.
Basis of Accounting:
It is the Company's policy to prepare its financial statements on the accrual
basis of accounting in accordance with generally accepted accounting principles.
Revenue is recorded as income in the period in which it is earned and expenses
are recognized in the period in which the related liability is incurred.
Cash and Cash Equivalents:
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with a maturity of three months or less to be cash
equivalents. The Company places its cash investments in high quality financial
institutions. At times, cash balances may be in excess of the FDIC insurance
limit.
Property:
Property is carried at cost. Upon retirement or disposal, the asset cost and
related accumulated depletion are removed from the accounts and any resulting
gain or loss is included in the determination of net income.
Expenditures for geological and engineering studies, maintenance and claim
renewals are charged to expense when incurred. Additions and significant
improvements are capitalized and depleted.
7
<PAGE>
DYNARESOURCE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note A - Nature of Business and Summary of Significant Accounting Policies
(continued):
Long-Lived Assets
The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from these estimates
Generally accepted accounting principals require recognition of impairment of
long-lived assets in the event of net book value of such assets exceed the
future undiscounted cash flows attributable to such assets. Consequently, the
Company assesses its assets annually for impairment and writes down any amounts
necessary as a result of the assessment.
Earnings (Loss) per Common Share:
Earnings (loss) applicable to common stock is based on the weighted average
number of shares of common stock and common stock equivalents outstanding during
the year. The inclusion of common stock equivalents in the loss per share
computation has not been included because they would be anti-dilutive under the
treasury stock method.
Note B - Accounts receivable - related party:
Included in accounts receivable - related party are amounts paid by the Company
for the benefit of that same party and also for funds advanced. This related
party owns a percentage of Minera Finesterre S.A. de CV, a private Mexican
corporation and owner of 100% interest of the San Jose de Gracia mining property
located in Sinoloa, Mexico, as described in Note G to these financial
statements. The Company has negotiated interest receivable at various rates for
different periods of time. The balance of the amount advanced and spent on the
related party's behalf and the related interest amounted to $108,446 and $98,446
at the end of 1999 and 1998 respectively. Also included in this account is an
amount receivable from another related party in the amount of $1,500.
Note C - Marketable securities:
The Company purchased shares of a related party during 1997. These shares are
considered trading securities. In accordance with the Company's policy of
impairment of long-lived assets these securities were written down in amounts of
$1,450 and $6,576 in 1999 and 1998 respectively.
8
<PAGE>
DYNARESOURCE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note D - Other current assets:
Prepaid expenses:
The Company recorded prepaid legal expenses in the amounts of $5,000 for 1998.
Note E - Furniture and Equipment:
Furniture and equipment is stated at cost and consists of the following:
1999 1998
------- -------
Office furniture $22,376 $22,376
Lab equipment 14,306 14,306
Computer and peripherals 6,289 6,289
Office equipment 3,448 3,448
------- -------
46,419 46,419
Less accumulated depreciation (18,829) (11,783)
------- -------
$27,590 $34,636
======= =======
Depreciation has been provided for using the straight-line method over estimated
useful lives of three to seven years.
Note F - Mining Properties:
1999 1998
-------- --------
Pansey Lee mine (560 acres) $631,737 $631,737
Impairment allowance (501,915) (501,915)
-------- --------
Subtotal 129,822 129,822
Wikiup Claim (640 acres) 45,976 45,976
-------- --------
Total $175,798 $175,798
======== ========
9
<PAGE>
DYNARESOURCE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note F - Mining Properties (continued):
Mining interest/note receivable:
The Company owned a 24.9% net profits interest in the San Jose de Gracia mining
property in Sinaloa, Mexico. The property includes all mining concessions now
held or subsequently obtained within a 10-mile radius from the core of the
property.
As stated within the mine operating agreement on the San Jose de Gracia
property:
The Company has no obligation to make additional advances to any party
in connection with this mining interest.
"Available cash" is defined as: "cash flows", less operating expenses,
adjusted for increases or decreases in cash reserves.
"Cash flows" is defined as : any consideration, including gross cash
receipts from operation of the mine.
"Operation of the mine" is defined as all income generating activity,
which is derived from, or in any way related to, the San Jose property;
including without limitation, the sale of minerals extracted from the
property, the sale or licensing of any rights to derive minerals or
income from the property; the sale of any rights in the concessions:
and the sale, transfer, or assignment of any rights whatsoever to
develop, operate, or produce the San Jose property.
"Operating expenses" is defined as: the costs, charges, expenses and
disbursements incurred in connection with development, maintenance,
operation, management and production of the mine. Expressly excluded
from such costs are exploration costs and property acquisition &
maintenance costs.
"Cash reserves" is defined as amounts of cash, derived from production
of the mine, held in trust for contingent or unforeseen liabilities or
obligations arising out of operation of the mine.
This net profits interest was distributed as a dividend to the then existing
shareholders in 1998.
10
<PAGE>
DYNARESOURCE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note G - Investment:
In 1998 the Company acquired 25% of the outstanding common stock of Minera
Finesterre S.A. de CV, ("Minera") a private Mexican corporation and the owner of
100% interest of the San Jose de Gracia mining property, by way of a litigation
settlement. Pursuant to this settlement the Company forgave future consideration
including a $500,000 note and related interest, plus accelerated payback
provisions on cash flows, and elected to retain the 24.9% net profits interest.
Subsequent to this settlement the Company distributed as a dividend the 24.9%
net profits interest. In 1999 the Company acquired an additional 1.7% in Minera
for $96,270 bringing the total ownership interest to 26.7%.
The Company is a minority owner of Minera and does not have significant
influence over this investee. The Company records this investment at cost
instead of the equity method of accounting. This investment is characterized as
available for sale.
Note H - Related party transactions:
The Company paid $191,778 and $126,029 in stock and cash to related parties for
consulting and other fees during 1999 and 1998 respectively.
Note I - Stockholders' Equity:
On November 1, 1998 the Company authorized a dividend of the mining
interest/note receivable referred to in Note F. This dividend was paid to
DynaResource Properties, Inc., a private Delaware corporation. At the Record
Date, the shareholders of DynaResource Properties, Inc. were identical to
DynaResource, Inc. This nonmonetary transaction is charged against retained
earnings at book value.
During 1998 the Company received $131,000 for 131,000 shares of its common
stock. These shares were issued during 1999 and did not participate in the
nonmonetary dividend. During 1999 the Company received $602,000 for 352,000
shares of its common stock. In conjunction with the Company's receipt of the
$733,000 received in 1998 and 1999 the Company issued 733,000 common stock
options exercisable at a price of $2.50 per share. These common stock options
expire August 15, 2001.
Treasury Stock:
The Company may from time to time purchase and resell its own common stock in
order to raise additional capital. These transactions are recorded as treasury
stock and any resulting gain or loss is recorded as additional paid in capital.
11
<PAGE>
DYNARESOURCE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note I - Stockholders' Equity (continued):
Treasury Stock (continued):
During 1998 the company sold 7,400 shares from treasury and acquired 10,000
shares.
There were 23,175 and 50,786 common shares held in treasury at the end of 1999
and 1998 respectively.
There are 733,000 options outstanding at December 31, 1999. Each option is
exercisable for one share common stock at a price of $2.50 per share and expires
August 15, 2001.
There are 40,000 "A" warrants outstanding at December 31, 1999. Each of these
warrants entitles the holder to purchase one share of the Company's common stock
at a price of $8.00 per share within 90 days of the stock reaching a market
price of $12.00 per share.
There are 40,000 "B" warrants outstanding at December 31, 1999. Each of these
warrants entitles the holder to purchase one share of the Company's common stock
at a price of $12.00 per share within 90 days of the stock reaching a market
price of $16.00 per share.
Note J - Revenue:
In 1998 the Company received $50,000 from a five-year lease/sale agreement on
its Humboldt County, Nevada (Pansey Lee) 560 acre mining property. The lessor
did not pay the second year's lease payment and the lease was subsequently
terminated.
Settlement income:
In 1998 the company recorded $733,277 as income in the settlement for 25% of the
stock of Minera Finesterre S.A. de CV referred to in Note G of these financial
statements.
Note K - Income Taxes:
The Company has net operating loss carryforwards of approximately $900,000 at
December 31, 1999 thatis available to offset its future income tax liability.
No deferred tax asset has been recognized for the operating loss carryforward as
it is more likely than not that all or a portion of the net operating loss will
not be realized and any valuation allowance would reduce the benefit to zero.
12
EXHIBIT "1.1
WEST COAST MINES, INC.
"ARTICLES OF INCORPORATION"
Department of State Corporation Number 173041
FILED in the office of the Secretary of State
OF THE STATE OF CALIFORNIA Sep 28 1937
FRANK C. JORDAN SECRETARY OF STATE
By /S/ DEPUTY SECRETARY OF STATE
ARTICLES OF INCORPORATION OF WEST COAST MINES, INC.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, a majority of whom are citizens and residents of the
State of California, have this day voluntarily associated ourselves together for
the purpose of forming a corporation under the laws of the State of California.
AND WE HEREBY CERTIFY:
FIRST: That the name of said Corporation shall be "WEST COAST MINES,
INC."
SECOND: That the purposes for which it is formed are:
1. To investigate, explore, develop, purchase, lease, option, locate, or
otherwise acquire, own, exchange, sell, or otherwise dispose of, pledge,
mortgage, hypothecate and deal in mines, mining claims, mineral lands, coal
lands, timber lands, real property, water, water rights, and to work, explore,
operate and develop the same, and to extract any and all minerals, or other
products therefrom, and deal in the products and by-products thereof.
2. To purchase, lease, or otherwise acquire, erect, own, operate or sell
quartz and other mills of any and every kind, smelting and ore reduction works,
and saw mills.
3. To search for, prospect, examine, refine, smelt, product, crush,
concentrate, manipulate, and treat gold, silver, lead, and other minerals of
every class and description.
4. To purchase, lease, or otherwise acquire, own, sell, handle, control,
sell of dispose of in any way, letters patent and inventions.
5. To manufacture, buy, sell, import, export, hire, and lease and
generally deal in machinery, pumps, drills, implements, and conveniences
suitable for use in connection with the mining business.
6. To purchase, lease, or otherwise acquire, own, sell, handle, control,
sell or dispose of in any way, bonds and shares of its own capital stock and
that of other companies, and to vote any stock owned by it the same as a natural
person might do.
7. To issue bonds, notes, debentures and other evidences of indebtedness
and secure the payment of the same by mortgage, pledge, deed of trust or
otherwise as the circumstances may justify.
<PAGE>
8. To buy, acquire, and obtain by grant, gift, lease or otherwise, and
to own, possess, use, lease, exchange, sell or mortgage any and all improvements
of whatever character or kind upon real estate, including houses, mills and
buildings of all kinds, fences, walls, manufacturing works, machinery, dams,
flumes, canals, ditches, and pipe lines for water and for other purposes
incident to the conduct of the business of mining and milling, but not for
public purposes, artificial structures and erections of all kinds, trees, vines,
nursery stock and all kinds of plants.
9. To buy, acquire and obtain by grant, gift, lease, or otherwise, and
to own, use, sell, lease, exchange, sell or mortgage any and all water, water
rights, water properties, and any and all rights, titles, and interests in and
to the water rights, water and water properties, and any and all sources of
water supply, rights of way for water, water ditches, canals, pipe lines and
other conduits incidental to the conduct of the business of mining or milling
but not for public purposes.
10. To cultivate, improve and use in any and all ways lands and all and
any kinds of real property, to plant, grow, raise, deal in and harvest any and
all kinds of plants, vines, fruits, nuts, trees, vegetables, grasses and grains.
11. To buy, receive by gift, bequest, or otherwise, hold, sell,
transfer, hypothecate and generally deal in personal property of every kind and
nature.
12. To purchase, receive by grant, gift, or otherwise, to erect,
construct, operate and maintain boarding and lodging houses and to collect and
receive rents, tolls and pay for the same, and to conduct in a general boarding
and lodging business.
13. To act as fully for any other corporation, firm or individual as any
individual could do.
14. To do any and all things incident or necessary to the dong or
performing of any of the aforesaid things, or the concluding of the aforesaid
operations or kinds of business, or any other lawful business not inconsistent
with the laws of the United States, or the State of California, and to have all
rights in connection therewith as though a natural person.
15. To engage generally in all types of mining of every kind and nature
with the right to do everything in connection with the extraction of any and all
kinds of mineral, refining, and reducing the same to a merchantable property
with all the rights of an individual in connection therewith.
16. To purchase, sell, lease, hypothecate, acquire, transfer bonds,
stocks, securities of this and any other corporation individually or
copartnership.
<PAGE>
17. To buy, acquire, and obtain by grant, gift, lease, quitclaim, or
otherwise, and to own, sue, sell, lease, exchange, sell or mortgage, real estate
or any interest therein.
18. To buy, acquire and own, to sell, hypothecate, or to loan money on
any securities issued by this corporation.
The foregoing clauses shall be construed both as objects and powers, but
no recitation, expression or declaration of specific or special powers or
purposes herein enumerated shall be deemed to be exclusive; but it is hereby
expressly declared that all other lawful powers not inconsistent therewith, are
hereby included.
THIRD: The county in this State where the principal office for the
transaction of the business of the corporation is to be located is the County of
Sacramento, State of California.
FOURTH: The amount of the capital stock of the said corporation is Three
Hundred Fifty Thousand Dollars ($350,000.000) divided into three hundred fifty
thousand (350,000) shares of the par value of One Dollar ($1.00) per each share.
FIFTH: The total number of shares actually subscribed is five (5), and
names of the subscribers to the number of shares respectively, for which they
have subscribed, and the amount to be paid by them for such shares is as
follows, to-wit:
Name No. of Shares Amount
W.J. KAMENZIND 1 $1.00
GILBERT BALL 1 $1.00
WAYNE MILLER 1 $1.00
E.D. PALM 1 $1.00
WALTER LEITCH 1 $1.00
<PAGE>
SIXTH: That the number of directors of this corporation shall be five
(5), and that the directors and succeeding directors need not be shareholders of
the corporation; and that the names of the directors who are appointed to serve
and act as such for the first year and until their successors are elected and
qualified, together with their residences, are as follows:
Name Residence
W.J. KAMENZIND 2716 - 6th Avenue, Sacramento, Cal.
GILBERT BALL 2750 Riverside Blvd., Sacramento, Cal.
WAYNE MILLER 2100 - 22nd Street, Sacramento, Cal.
E.D. PALM Fair Oaks, California.
WALTER LEITCH 3949 Folsom Boulevard, Sacramento, Cal.
IN WITNESS WHEREOF, we have hereunto set our hands and seals this 27th day of
September, 1937.
/S/ W.J. Kamenzind
/S/ E.D. Palm
/S/ Wayne Miller
/S/ Gilbert Ball
/S/ Walter Leitch
STATE OF CALIFORNIA )
( ss
COUNTY OF SACRAMENTO)
On this 27th day of September, in the year one thousand nine hundred and
thirty-seven, before me, LUDA N. GROSS, A Notary Public in and for the County of
Sacramento, personally appeared W.J. KAMENZIND, GILBERT BALL, WAYNE MILLER, E.D.
PALM, WALTER LEITCH, known to me to be the persons whose names are subscribed to
the within instrument, and they duly acknowledged to me that they executed the
same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in the certificate first above written.
/S/ Luda N. Gross
Notary Public in and for the County of Sacramento, State of California.
My commission expires Nov. 8, 1938.
EXHIBIT "1.2"
DYNARESOURCE, INC.
"BY - LAWS"
BY-LAWS OF
WEST COAST MINES, INC.
A California Corporation
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE.
The principal executive office of the corporation is hereby fixed and
located at 1220 Perkins Way, Sacramento, California. The Board of Directors is
hereby granted full power and authority to change said principal office from one
location to another.
Section 2. OTHER OFFICES.
Branch or subordinate offices may at any time be established by the Board
of Directors at any place or places where the corporation is qualified to do
business.
ARTICLE II
SHAREHOLDERS' MEETING
Section 1. PLACE OF MEETINGS.
All meetings of the shareholders shall be held at the place designated by
the President or a majority of Directors in the State of California, or at such
other place as may be designated for that purpose from time to time by the Board
of Directors.
Section 2. ANNUAL MEETINGS.
The annual meetings of the shareholders shall be held on the first Monday
in October in each year at the hour of ten O'clock A.M. but if such day is a
legal holiday then the meeting shall be held at toe same time on the next
business day. At the annual meeting, the shareholders shall elect by plurality
vote a Board of Directors, consider reports of the affairs of the corporation,
and transact such other business as may properly be brought before the meeting.
<PAGE>
Section 3. SPECIAL MEETINGS.
Special meetings of the shareholders, for any purpose or purposes
whatsoever, may be called at any time by the president, or by the Board of
Directors, or by any two or more members thereof, or by one or more shareholders
holding not less than one-tenth (1-10) of the voting power of the corporation.
Section 4. NOTICE OF MEETINGS.
Notices of meetings, annual or special shall be given in writing to
shareholders entitled to Vote by the secretary or assistant secretary, or if
there be no such officer, or in case of his neglect or refusal, by any director
or shareholder.
Such notices shall be sent to the shareholders' address appearing on the
hooks of the corporation or supplied by him to the corporation for toe purpose
of notice, not less than ten (10) days before such meeting.
Notice of any meeting of shareholders shall specify the place, the day and
the hour of meeting, and in case of special meetings, as provided by the
Corporations Code of California, the general nature of the business to be
transacted.
When a meeting is adjourned for forty-five (45) days or more, notice of
the adjourned meeting shall be given as in the case of an original meeting.
Save, as aforesaid, it shall not be necessary to give any notice of the
adjournment or of the business to be transacted at an adjourned meeting other
than by announcement at the meeting at which such adjournment is taken.
Section 5. CONSENT TO SHAREHOLDERS' MEETINGS.
The transactions of any meeting of shareholders, however called and
noticed, shall be valid as though had at a meeting duly held after regular call
and notice, if a quorum be present Either in person or by proxy, and if, either
before or after the meeting, each of the shareholders entitled to vote, not
present in person or by proxy, sign a written waiver of notice or a consent to
the holding of such meeting, or an approval of the minutes thereof. All such
waiver, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Any action which may be taken at a meeting of the shareholders, may be taken
without a meeting if authorized by a writing signed by all of the holders of
shares who would be entitled to vote at a meeting for such purposes, and filed
with the secretary of the corporation.
Section 6. QUORUM.
The holders of a majority of the shares entitled to vote thereat, present
in person, or represented by proxy shall constitute a quorum at all meetings of
the shareholders, for the transaction of business except as otherwise provided
by law, by the Articles of Incorporation, or by these By-laws. If, however, such
majority shall not be present or represented at any meeting of the shareholders,
the shareholders entitled to vote thereat, present in person, or by proxy, shall
have power to adjourn the meeting from time to time, until the requisite amount
of voting shares shall be present. At such adjourned meeting at which the
requisite amount of voting shares shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
<PAGE>
Section 7. VOTING RIGHTS: CUMULATIVE VOTING.
Only persons in whose names shares entitled to vote stand on the stock
records of the corporation on the Jay of any meeting of shareholders, unless
some other day be fixed by the Bach of Directors for the determination of
shareholders of record, then on such other day, shall be entitled to vote at
such meeting.
Every shareholder entitled to vote shall be entitled to one vote for each
or said shares and shall have the right to accumulate his votes as provided in
Section 708, Corporations Code of California.
Section 8. PROXIES.
Every shareholder entitled to vote, or to execute consents, may do so, either in
person or by written proxy, executed in accordance with the provisions of
Section 705, of the Corporations Code of California and filed with the secretary
of the corporation.
ARTICLE III
DIRECTORS: MANAGEMENT
Section 1. POWERS.
Subject to the limitation of the Articles of Incorporation, of the By-laws
and of the laws of the State of California as to action to be authorized or
approved by the shareholders , all corporate powers shall be exercised by or
under authority of, and the business and affairs of this corporation shall be
controlled by a Board of Directors.
Section 2. NUMBER AND QUALIFICATION.
The authorized number of directors of the corporation shall
be until changed by an amendment of this Section 2, Article III of these
By-laws, approved by the vote or written consent of shareholders entitled to
exercise the majority of the voting power of the corporation; further subject to
amendment of the Articles of Incorporation, if required.
Section 3. ELECTION AND TENURE OF OFFICE.
The directors shall be elected by ballot at the annual meet-inc of the
shareholders, to serve for one year and until their successor are elected and
have qualified. Their term of office shall begin immediately after election.
<PAGE>
Section 4. VACANCIES.
Subject to the provisions of Section 305 of the Corporations Code,
vacancies in the Board of Directors may be filled by a majority of the remaining
directors, though less than a quorum, or by a sole remaining director, and each
director so elected shall hold office until his successor is elected at an
annual meeting of shareholders or at a special meeting called for that purpose.
The shareholders may at any time elect a director to fill any vacancy not
filled b the directors, and may elect the additional directors at the meeting at
which an amendment of the By-laws is voted authorizing an increase in the number
of directors.
A vacancy or vacancies shall be deemed to exist in case of the death,
resignation or removal of any director, or if the shareholders shall increase
the authorized number of directors, but shall fail at the meeting which such
increase is authorized, or at an adjournment thereof, to elect the additional
director so provided for, or in case the shareholders fail at any time to elect
the full number of authorized directors.
If the Board of Directors accepts the resignation of a director tendered
to take effect at a future date, the Board, or the shareholders, shall have
power to elect a successor to take office when the resignation shall become
effective.
No reduction of the number of directors shall have the effect of removing
any director prior to the expiration or his term of office.
Section 5. REMOVAL OF DIRECTORS
The entire Board of Directors or any individual director may be removed
from office as provided by Section 303 of the Corporations Code of the State of
California.
Section 6. PLACE OF MEETINGS.
Meetings of the Board of Directors shall be held at any place within or
without the State designated in the notice of the meeting, or if not designated
in the notice, the place designated from time to time by resolution of the Board
or by written consent of all members of the Board. In the absence of such
designation, meetings shall be held at the principal office of the corporation.
Section 7. ORGANIZATION MEETINGS.
The Board shall hold a regular meeting to be known as the "Organization
Meeting". The organization meetings of the Board of Directors shall be held
immediately following the adjournment of the annual meetings of the shareholders
at the same place as the shareholders' meeting; and notice of said meeting shall
not he required.
Section 8. OTHER REGULAR MEETINGS.
Regular meetings of the Board of Directors shall be held at the times and
places specified in an annual schedule adopted by the Board. No notice need be
given of the holding of such regular meetings.
<PAGE>
Section 9. SPECIAL MEETINGS -- NOTICES.
Special meetings of the Board of Directors for any purpose or purposes
shall be called at any time by the president or if he is absent or unable or
refuses to act, by any vice-president or by any two (2) directors.
Written notice of the time and place of special meetings shall be
delivered personally to the directors or sent to each director by mail, or by
telephone, charges prepaid, addressed to him at his address as it is shown upon
the records of the corporation or as it appears in the telephone records, or if
it is not so shown upon the records or is not readily ascertainable, at the
place in which the meetings of the directors are regularly held. In case such
notice is mailed, it shall be deposited in the United States mail at least four
(4) days prior to the time of the holding of the meeting. In case such notice is
delivered personally or telephoned as above pro-vided, it shall be so delivered
or telephoned at least forty eight (48) hours prior to the time of the holding
of the meeting. Such mailing, telephoning or delivery as above provided shall be
due, legal and personal notice to such director.
Section 10. WAIVER OF NOTICE.
When all the directors are present at any directors' meeting, however
called or noticed, and sign a written waiver thereto on the records of such
meeting, or, if a majority of the directors are present, and if those not
present sign in writing a waiver of notice of such meeting, whether prior to or
after the holding of such meeting, which said waiver shall be filed with the
secretary of the corporation, the transactions thereof are as valid as if had at
a meeting regularly called and noticed.
Section 11. ADJOURNMENT AND NOTICE.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting to another time arid place. If the meeting is adjourned
for more than twenty-four (24) hours, notice of any adjournment to another time
or place shall be given prior to the time of the adjourned meeting to the
directors ~~no were not pre-sent at the time of the adjournment.
Section 12. QUORUM.
A majority of the number of directors as fixed by the Articles or By-laws
shall be necessary to constitute a quorum for the transaction of business, and
the action of a majority of the directors present at any meeting at which there
is a quorum. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for such
meeting.
Section 13. ACTION WITHOUT A MEETING.
Any action required or permitted to be taken by the Board of Directors of
the corporation under any provision of the General Corporation Law may be taken
without a meeting, if all members of the Board shall individually or
collectively consent in Writing to such action. Such written consent or consents
shall be filed with the minutes of the proceedings of the Board. Such action by
written consent shall have the same force and effect as a unanimous vote of such
directors.
<PAGE>
ARTICLE IV
OFFICES
Section 1. OFFICES.
The officers of the corporation shall be a president, a secretary and a
chief financial officer. The corporation may also have, in the discretion of the
Board of Directors, a chairman of the board, one or more vice-presidents, one or
more assistant secretaries, one or more assistant chief financial officers, and
such other officers as may be appointed in accordance with the provisions of
Section 3. of this Article. Any number of offices may be held by the same person
unless the Articles provide otherwise.
Section 2. ELECTION.
Except as otherwise provided by the articles or bylaws, officers shall be
chosen by the board and serve at the pleasure of the board, subject to the
rights, if any, of an officer under any contract of employment, until he shall
resign or shall be removed or otherwise disqualified to serve, or his successor
shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC.
The Board of Directors may appoint such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the By-laws or as
the Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION.
Any officer may be removed, either with or without cause, by a majority of
the directors at the time in office, at any regular or special meeting of the
board, or, except in case of an officer chosen by the Board of Directors, by any
officer upon whom such power of removal may be conferred by the Board of
Directors.
Any officer may resign at any time upon written notice to the corporation
without prejudice to the rights, if any, of the corporation under any contract
to which the officer is a party. Any such resignation snail take effect at the
date of the receipt of such notice or at any later time specified herein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5. VACANCIES.
A vacancy in any office because of the death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
the by-laws for regular appointments to such office.
<PAGE>
Section 6. CHAIRMAN OF THE BOARD.
The chairman of the board, if there shall be such an officer, shall, if
present, preside at all meetings of the Board of Directors, and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the By-laws. If the corporation has
no president, the chairman of the board is the general manager and chief
executive officer of the corporation.
Section 7. PRESIDENT
Subject to such supervisory powers, if any, as may be given by the board
of Directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the chairman
of the board, or if there be none, at all meetings of the Board of Directors. He
shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of
management usually vested in the office of president of a corporation, and shall
have such other powers and duties as may be prescribed by the Board of Directors
or the By-laws.
Section 8. VICE-PRESIDENT.
In the absence or disability of the president, the vice- presidents, in
order of their rank as fixed by the Board of Directors, or if not ranked, the
vice-presidents designated by the Board of Directors, shall perform all 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. The vice-presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board of Directors or the By-laws.
Section 9. SECRETARY
The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special, and if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
<PAGE>
The Secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; and the number and
date of certificates issued for the same; and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the By-laws or by
the law to be given, and he shall keep the seal of the corporation in safe
custody, and shall have such other powers and perform such other duties as may
be prescribed by the Board of Directors or the By-laws.
Section 10. CHIEF FINANCIAL OFFICER.
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements , gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in-surplus and surplus arising from a
reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all reasonable times be
open to inspection by any director.
The chief financial officer shall deposit moneys and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors; shall render to the
president and directors, whenever they request it, an account of all his
transactions as chief financial officer and of the financial condition or the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the By-laws.
ARTICLE V
EXECUTIVE AND OTHER COMMITTEES
The Board of Directors may appoint an executive committee, and such other
committees as may be necessary from time to time, consisting of such number of
its members and with such powers as it may designate, consistent with the
Articles of Incorporation and By-laws and the General Corporation Laws of the
State of California. Such committees shall hold office at the pleasure of the
board.
<PAGE>
ARTICLE VI
CORPORATE RECORDS AND REPORTS - INSPECTION
Section 1. RECORDS
The corporation shall maintain adequate and correct accounts, books and
records of its business and properties. All of such books, records and accounts
shall be kept at its principal place of business in the State of California, as
fixed by the Board of Directors from time to time.
Section 2. INSPECTION OF BOOKS AND RECORDS
All books and records provided for in Section 1500 of the Corporations
Code of California shall be open to inspection of the directors and shareholders
from time to time and in the manner pro-vided in Sections 1601 and 1602.
Section 3. CERTIFICATION AND INSPECTION OF BY-LAWS
The original or a copy of these By-laws, as amended or otherwise altered
to date, certified by the secretary, shall be open to inspection by the
shareholders of the company, as provided in Section 213 of the Corporations Code
of California.
Section 4. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation,
shall be signed or endorsed by such person or persons and in such manner as
shall be determined from time to time by resolution of the Board of Directors.
Section 5. CONTRACTS, ETC. -- HOW EXECUTED.
The Board of Directors, except as in the By-laws otherwise provided, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation. Such
authority may be general or confined to specific instances. Unless so authorized
by the Board of Directors, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement, or to pledge
its credit, or to render it liable for any purpose or to any amount.
Section 6. ANNUAL REPORT.
The annual report of shareholders referred to in Section 1501 of the
California Corporations Code is expressly dispensed with, but the Board of
Directors of the corporation may cause to be sent to the shareholders, not later
than one hundred twenty (120) days after the close of the fiscal or calendar
year, an annual report in such form as may be deemed appropriate by the Board of
Directors.
<PAGE>
ARTICLE VII
CERTIFICATES AND TRANSFER OF SHARES
Section 1. CERTIFICATES FOR SHARES.
Certificates for shares shall be of such form and device as the Board of
Directors may designate and shall state the name of the record holder of the
snares represented thereby; its number, a statement of the right, privileges,
preferences and restrictions of each class of stock and a statement of the
liens, restrictions, obligations or liability of holders as set forth in Section
418 of the Corporations Code. Statements of assessability and restrictions on
transfer shall appear on the face of the certificate and SHALL BE CONSPICUOUS.
Every certificate for shares must be signed by the president or a
vice-president or a vice-president and the secretary or an assistant secretary
or must be authenticated by facsimiles of the signatures of the president and
secretary or by a facsimile of the signature of its president and the written
signature of its secretary or an assistant secretary. Before it becomes
effective, every certificate for shares authenticated by a facsimile of a
signature must be countersigned by a transfer clerk or transfer agent and must
be registered by an incorporated bank or trust company, either domestic or
foreign, as registrar of transfers.
Section 2. TRANSFER ON THE BOOKS.
Upon surrender to the secretary or transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
Section 3. LOST, STOLEN OR DESTROYED CERTIFICATES.
The corporation may issue a new share certificate or a new certificate for
any other security in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroy-ed, and the corporation may require
the owner of the lost, stolen or destroyed certificate or the owner's legal
representative to give the corporation a bond (or other adequate security)
sufficient to indemnify it against any claim that may be made against it
(including any expense or liability) on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate.
Section 4. TRANSFER AGENTS AND REGISTRARS.
The Board of Directors may appoint one or more transfer agents or transfer
clerks, and one or more registrars, which shall be an incorporated bank or trust
company--either domestic or foreign, who shall be appointed at such times and
places as the requirements of the corporation may necessitate and the Board of
Directors may designate.
<PAGE>
ARTICLE VIII
CORPORATE SEAL
The corporation adopts a seal. The corporate seal shall be circular in
form, and shall have inscribed thereon the name of the corporation, the date of
its incorporation, and the word "California"
ARTICLE IX
AMENDMENTS TO BY-LAWS
Section 1. BY SHAREHOLDERS.
New By-laws may be adopted or these By-laws may be repealed or amended at
their annual meeting, or at any other meeting of the shareholders called for
that purpose, by a vote of shareholders en-titled to exercise a majority of the
voting power of the corporation, or by the written assent of such shareholders.
Section 2. POWERS OF DIRECTORS.
Subject to the right of shareholders to adopt, amend or repeal By-laws, as
provided in Section 1 of this Article IX, the Board of Directors may adopt,
amend or repeal any of these By-laws; but a By-law or amendment thereof fixing
or changing the authorized number of directors must be approved by the vote or
written consent of shareholders entitled to exercise the majority of the voting
power of the corporation.
Section 3. RECORDS OF AMENDMENTS.
Whenever an amendment or new By-law is adopted, it shall be copies in the
book of By-laws with the original By-laws, in the appropriate place. If any
By-laws or By-law is repealed, the fact of repeal with the date of the meeting
at which the repeal was enacted or written assent was filed shall be stated in
said book.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, being all of the persons appointed to act as the
first Board of Directors of hereby assent to the foregoing By-laws, and adopt
the same as the By-laws of said corporation.
IN WITNESS WHEREOF, we have hereunto set our hands this
CERTIFICATE OF SECRETARY
(Graphic Omitted)
I, the undersigned, do hereby certify:
(1) That I am the duly elected and acting Secretary of
(2) That the foregoing By-laws comprising 12 pages, constitute the
original By-laws of said corporation as duly adopted at the first meeting of the
Board of Directors thereof duly held on
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of said corporation.
----------------------------------------
<PAGE>
WEST COAST MINES, INC.
RESOLUTION OF THE BOARD OF DIRECTORS
A Special Meeting of the Board of Directors of WEST COAST MINES. INC.
was held on FEBRUARY 22ND, 1996 at the Company's Dallas Office at 5430 LBS
Freeway, Suite 1600. Dallas, Texas 73240. Attending the meeting in person, or by
Telephone Conference Call, were: Douglas E. Metcalf, Melvin E. Tidwell, and K.
D. Diepholz, being a quorum of the Directors of the Company, each of whom waived
notice of the meeting.
The President, Mr. Metcalf called the meeting to order. The minutes of
the prior meeting were read and unanimously approved. The President's report was
given. The President then opened the floor to new business whereupon the
following resolutions, after discussion, was properly moved, seconded and
thereafter unanimously approved and adopted:
RESOLVED, that the Corporation approve the original By Laws for the
Company; specifically those By Laws set forth by the Company in 1937,
and since re-typed and accepted by the Company in 1980; such By Laws to
remain now in force until such time as they may be amended by the
current Board of Directors;
RESOLVED, That the Corporation approve all prior actions taken by the
Board of Directors and the President.
There being no further business before the meeting, on motion duly
made, seconded and carried, the meeting was adjourned.
DATED THIS TWENTY - SECOND (22ND) DAY FEBRUARY, 1996.
/S/ Douglas Metcalf /S/ Melvin E. Tidwell
DOUGLAS METCALF, PRESIDENT, DIRECTOR MELVIN E. TIDWELL, DIRECTOR
/S/ K.D. Diepholz
KOY W. (K.D.) DIEPHOLZ, SECRETARY, DIRECTOR
EXHIBIT "1.3"
"ARTICLES OF AMENDMENT 1940"
FILED in the office of the Secretary of State of the State of California MAY 2
1940 PAUL PEEK, Secretary of State By /S/ Deputy Secretary of State
Capital stock chgd. fr. $350,000 to $750,000.
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF WEST COAST MINES, INC.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, the president and secretary respectively of
the WEST COAST MINES, INC., do hereby certify as follows:
That a special meeting of the board of directors of said WEST COAST MINES,
INC., was duly held on the 8th day of April, 1940, at the hour of 5 o'clock
P.M., at the office and principal place of business of said corporation, to-wit,
215 Capital National Bank Building, Sacramento, California, at which said
meeting a resolution was regularly proposed, voted upon and adopted by the
unanimous vote of all of said directors, amending the articles of incorporation
of said corporation; that the following is a full, true and correct copy of the
resolution of said board of directors amending the articles on incorporation:
"RESOLVED: That the articles of incorporation of WEST COAST MINES,
INC., amended, by amending Article FOURTH so that it shall, as amended,
read as follows, to-wit:
"FOURTH: The amount of the capital stock of said corporation is Seven
Hundred Fifty Thousand Dollars ($750,000.00), divided into seven
hundred fifty thousand (750,000) shares of the par value of One Dollar
($1.00) per each share."
That said resolution of the Board of Directors was approved on the 1st day
of May, 1940, by the written consent of shareholders holding more that 60% of
the voting power of said corporation, that is to say, holding 195,147 shares of
stock of said corporation out of 324,892 shares entitled to vote at the time
said consent was given; that the following is a full, true and correct copy of
said consent of said shareholders to the amendment of the articles of
incorporation:
"We, the undersigned, shareholders of WEST COAST MINES, INC., holding more
than 60% of the voting power of said corporation, that is to say, holding
195,147 shares of stock of said corporation out of 324,892 shares entitled to
vote, hereby, and by these presents do, consent to, confirm and ratify the
amendment of Article "FOURTH" of the Articles of Incorporation, made by the
Board of directors of WEST COAST MINES, INC., at a special meeting held on the
8th day of April, 1940, at 5 o'clock P.M. by which amendment said Article shall
read as follows:
'FOURTH: The amount of the capital stock of the said corporation is
Seven Hundred Fifty Thousand Dollars ($750,000.00) divided into seven
hundred fifty thousand (750,000) shares of the par value of One Dollar
($1.00) per each share.'
DATED: May 1, 1940
William N. Enos, holding 2,250 shares
Chas. A. Palm, holding 13,000 shares
Clovis T. LaGrave, holding 3,000 shares
<PAGE>
J.W. Peacock, holding 2,650 shares
E.D. Palm, holding 801 shares
D. Schuyler Pulford, holding 6,000 shares
W.E. Truesdale & M.A. Truesdale, holding 5,000 shares
W.J. Kamenzind, holding 162,446 shares"
IN WITNESS WHEREOF, we, the said president and said secretary, have hereunto set
our hands this 2nd day of May, 1940.
WEST COAST MINES, INC.,
By/S/W.J. Kamenzind, President
And/S/Walter Leitch, Secretary
STATE OF CALIFORNIA )
( ss
COUNTY OF SACRAMENTO)
W.J. KAMENZIND and WALTER LEITCH, being by me duly sworn, depose and
say: That they are the President and Secretary respectively of WEST COAST MINES,
INC., that they have read the foregoing certificate and know the contents
thereof and that the same is true of their own knowledge.
/S/ W.J. Kamenzind
- --------------------
/S/ Walter Leitch
- --------------------
Subscribed and sworn to before me this 2nd day of May, 1940.
/S/ Luda N. Gross
- -----------------
Notary Public in and for the County of Sacramento, State of California.
I, the undersigned, secretary of WEST COAST MINES, INC., do hereby
certify that the following is a true and correct copy of a resolution of the
board of directors, duly adopted the special meeting of the board of directors
of said corporation, held on the 8th day of April, 1940, at the hour of 5
o'clock P.M. in the office of said company at 215 Capital National Bank
Building, Sacramento, California; that the same has been duly recorded in the
minutes of said corporation; said resolution is as follows, to-wit:
RESOLVED: that the articles of incorporation of WEST COAST MINES, INC.,
be amended, by amending Article FOURTH so that it shall, as amended, read as
follows, to-wit:
"FOURTH: The amount of the capital tock of said corporation is Seven
Hundred Fifty Thousand Dollars ($750,000.00), divided into seven hundred fifty
thousand (750,000) shares of the par value of One Dollar ($1.00) per each
share."
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said
corporation at Sacramento, in the State of California, this 8th day of April,
1940.
/S/ Walter Leitch, Secretary
- ----------------------------
EXHIBIT "1.4"
"ARTICLES OF AMENDMENT 1943"
FILED in the Office of the Secretary of State of the State of California
Jun 3 1943
FRANK M. JORDAN, Secretary of State
By /S/ Assistant Secretary of State
CERTIFICATE OF AMENDMENT OF ARTICLES OF
INCORPORATION OF
WEST COAST MINES, INC.
The undersigned, GEO. A. BRIGGS and A. I. DIEPENBROCK, do hereby certify that
they are, respectively, and have been at all times herein mentioned, the duly
elected and acting president and secretary of WEST COAST MINES, INC., a
California corporation, and further that:
One: At a special meeting of the board of directors of said corporation
duly held at its principal office for the transaction of business at Sacramento,
California, at 7:30 o'clock P.M. on the 27th day of May, 1943, at which meeting
there was at all times present and acting a quorum of the members of said board,
the following resolutions were duly adopted:
RESOLVED, by the Board of Directors of WEST COAST MINES, INC., that its
articles of incorporation be amended by the addition thereto of Article Seventh,
and that Article Seventh read as follows:
"SEVENTH: The directors of this corporation are hereby granted power and
authority to levy and collect from time to time, as in their discretion
they my deem advisable, assessments upon all of the shares of stock of
this corporation at any time issued and outstanding, and shall have and
enjoy all of the rights and privileges with reference to such assessments
as are fixed, provided and established by law in respect to corporations
the directors of which have such power of assessment; provided, however,
neither any assessment nor the levy thereof shall create any personal
liability whatsoever of any shareholder of this corporation; and provided
further that said power of assessment shall be limited in its aggregate
to five cents ($0.05) per share."
RESOLVED FURTHER, that the president or a vice president and the secretary
or an assistant secretary of this corporation be and they hereby are authorized
and directed to procure the adoption and approval of the foregoing amendment by
the vote or written consent of shareholders of this corporation holding at least
two-thirds of the voting power, and thereafter to sign and verify by their oaths
and to file a certificate in the form and manner required by Section 362b of the
California Civil Code, and in general to do any and all things necessary to
effect said amendment in accordance with said Section 362b.
Two: The number of shares of said corporation consenting to such amendment
of its articles of incorporation is 454084, and the following is a copy of the
form of written consent executed by the holders of said shares:
CONSENT OF SHAREHOLDERS TO AMENDMENT OF ARTICLES
OF INCORPORATION OF WEST COAST MINES, INC.
We, the undersigned shareholders owing and having issued to us in our
names at least two-thirds (2/3) of all of the outstanding shares of the West
Coast Mines, Inc., do hereby consent to the hereinafter amendment to the
articles of incorporation and request and direct that the Board of Directors of
said corporation take such action as may be necessary in connection with the
hereinafter set forth amendment, and that said articles of incorporation be
amended by the addition thereto of Article Seventh, and that Article Seventh
read as follows:
<PAGE>
"SEVENTH: The directors of this corporation are hereby granted power and
authority to levy and collect from time to time, as in their discretion they may
deem advisable, assessments upon all of the shares of stock of this corporation
at any time issued and outstanding, and shall have and enjoy all of the rights
and privileges with reference to such assessments as are fixed, provided and
established by law in respect to corporations the directors of which have such
power of assessment; provided, however, neither any assessment nor the levy
thereof shall create any personal liability whatsoever of any shareholder of
this corporation; and provided further that said power of assessment shall be
limited in its aggregate to five cents ($0.05) per share."
This consent may be given by signature on one or more counterparts hereof.
IN WITNESS WHEREOF, we have hereunto set our hands and seals and set forth the
number of shares held by each opposite our signatures:
SIGNATURE NUMBER OF SHARES
Three: The total number of shares of said corporation entitled to vote
on or consent to the adoption of such amendment is 661400.
IN WITNESS WHEREOF, the undersigned have executed this certificate of amendment
this 29th day of May, 1943.
/S/ Geo A. Briggs, President of West Coast Mines, Inc.
- ---------------------------------------------------------
/S/ A.I. Diepenbrock, Secretary of West Coast Mines, Inc.
- ---------------------------------------------------------
STATE OF CALIFORNIA )
) ss.
County of Sacramento)
GEO. A. BRIGGS and A.I. DIEPENBROCK, being first duly sworn, each for himself
deposes and says:
That GEO. A. BRIGGS is, and was at all of the times mentioned in the
foregoing Certificate of Amendment, the president of WEST COAST MINES, INC., The
California corporation therein mentioned, and A.I. DIEPENBROCK is, and was at
all of said times, the secretary of said corporation; and each has read said
Certificate and that the statements therein made are true of his own knowledge,
and that the signatures purporting to be the signatures of said president and
secretary thereto are the genuine signatures of said president and secretary,
respectively.
/S/ Geo A. Briggs
- ------------------
/S/ A.I. Diepenbrock
- --------------------
Subscribed and sworn
to before me this 29th day of May, 1943.
/S/ Marion Fritz
- -----------------
Notary Public in and for the County
of Sacramento, State of California.
EXHIBIT "1.5"
"ARTICLES OF AMENDMENT 1996"
ENDORSED FILED in the office of the Secretary of State of the State of
California APR 24 1996 /S/ Bill Jones, Secretary of State
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
The Undersigned certify that:
1. They are the President and Secretary, respectively, of:
WEST COAST MINES, INC.
DALLAS, TEXAS OFFICE
III LINCOLN CENTRE
5430 LBJ FREEWAY / SUITE 1600
DALLAS, TEXAS 75240
(214) 369-4005
Fax: (214)369-2807
A California Corporation.
2. Article FOURTH of the Articles of Incorporation of this corporation is
hereby amended to read as follows:
"The amount of Common Stock the Corporation is authorized to issue is:
50,000,000."
"The Par Value of such Common Stock is: $ .01"
3. The foregoing Amendment of Articles of Incorporation has been duly
approved by the Board of Directors of West Coast Mines, Inc.
4. The foregoing Amendment of Articles of Incorporation has been duly
approved by the required vote of the Shareholders of West Coast Mines,
Inc., in accordance with Section 902 of the California Corporations
Code. The total number of outstanding shares of the corporation as of
FEBRUARY 16, 1995, was: 750,000. The number of shares voting in favor
of the Amendment equaled or exceeded the vote required for approval.
The percentage vote required for approval was more than 50 %.
5. We further declare under penalty of perjury under the Laws of the State
of California that the matters set forth in this Certificate of
Amendment are true and correct of our own knowledge.
DATED THIS EIGHTEENTH DAY OF APRIL, 1996.
/S/ Douglas E. Metcalf /S/ K.D. Diepholz
----------------------- -----------------
President Secretary
<PAGE>
A475162
State of California
[graphic omitted]
SECRETARY OF STATE
CORPORATION DIVISION
I, BILL JONES, Secretary of State of the State of California, hereby
certify:
That the annexed transcript has been compared with the corporate record
on file in this office, of which it purports to be a copy, and that same is
full, true and correct.
IN WITNESS WHEREOF, I execute
this certificate and affix the Great Seal of
the State of California this
APR 25 1996
/S/ Bill Jones
-----------------
Secretary of State
[graphic omitted]
The Great Seal of the State of California
EXHIBIT "1.6"
DYNARESOURCE, INC.
"CERTIFICATE OF MERGER"
ENDORSED - FILED
In the office of the Secretary of State
of the State of California
NOV 6 1998
AGREEMENT OF MERGER
also referred to herein as
"PLAN AND AGREEMENT OF MERGER"
West Coast Mines. Inc.
(a California corporation)
Into
DynaResource, Inc.
(a Delaware corporation)
THIS PLAN AND AGREEMENT OF MERGER (the "Agreement"), is dated as of
January 15,1998, and is by and between DynaResource, Inc., a Delaware
corporation (sometimes referred to herein as, the "Acquiring Corporation") and
West Coast Mines, Inc., a California corporation (sometimes referred to herein
as, the "Non-Acquiring Corporation"). Said corporations are hereinafter
sometimes collectively referred to as the "Constituent Corporations".
WITNESETH:
WHEREAS. DynaResource, Inc. desires to acquire West Coast Mines, Inc.
through merger of West Coast Mines, Inc. with and into DynaResource, Inc.; and,
WHEREAS, DynaResource, Inc. desires to issue its Common Stock (the
"Merger Stock") to the shareholders of West Coast Mines. Inc. in consideration
of the merger of West Coast Mines, Inc. into DynaResource, Inc.; and,
WHEREAS, the Boards of Directors of the Constituent Corporations deem it
advisable for the general welfare and advantage of the Constituent Corporations
and their respective shareholders that West Coast Mines, Inc. merge into
DynaResource, Inc. and said corporation desires to so merge;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereby agree, in accordance with the
applicable provisions of the laws of the States of California and Delaware; that
West Coast Mines, Inc. shall be merged into DynaResource, Inc., which shall
continue its corporate existence and be the corporation surviving the merger,
and that the terms and conditions of the merger hereby agreed upon (hereafter
called the "Merger) which the parties covenant to observe, keep, and perform,
and the mode of carrying the same into effect, are and shall be as hereafter set
forth:
ARTICLE I
EFFECTIVE DATE OF MERGER
1.1 Effective Date. Consummation of this Agreement shall be effected on
the date on which this Agreement of Merger (~Plan and Agreement of Merger") is
filed in the offices of the Secretary of State of the State of Delaware; and,
upon satisfaction of the requirements of the applicable laws of the State of
California prerequisite to such consummation.
1
<PAGE>
ARTICLE 2
GOVERNING LAW, INSTRUMENTS, AND BODIES
2.1 Governing Law. The laws which are to govern the Acquiring
Corporation are the laws of the State of Delaware.
2.2 Articles of Incorporation. The Articles of Incorporation of the
Acquiring Corporation shall be the Articles of Incorporation of the Acquiring
Corporation as the same shall be in effect at the effective time of the Merger.
2.3 Bylaws. The Bylaws of the Acquiring Corporation at the effective
time of the Merger shall be the Bylaws of the Acquiring Corporation until the
same shall be altered or amended in accordance with the provisions thereof.
2.4 Directors. The Directors of the Acquiring Corporation at the
effective time of the Merger shall remain the directors of the Acquiring
Corporation until their respective successors are duly elected and qualified, or
their earlier death or resignation.
2.5 Officers. Subject to the authority of the Board of Directors as
provided by law and the Bylaws of the Acquiring Corporation, the officers of The
Acquiring Corporation at the effective time of the Merger shall remain the
officers of the Acquiring Corporation.
ARTICLE 3
CONVERSION OF SHARES
3.1 Conversion Plan. The mode of carrying into effect the Merger
provided in this Agreement, and the manner and basis of converting the shares of
West Coast Mines, Inc. into shares of DynaResource, Inc. are as follows:
(a) The Acquiring Corporation's Common Stock. All of the shares
of Common Stock, par value $.0001 per share, of the Acquiring
Corporation issued and outstanding at the effective time of the Merger
shall be tendered and canceled concurrent with giving effect to the
Merger.
(b) The Non-Aquiring Corporation's Common Stock. At the
effective time of the Merger, each of the issued and outstanding shares
of the $.O1 par value Common Stock of the Non-Acquiring Corporation (or
fraction thereof) shall be converted into and become one (1) share (or
the applicable fraction thereof) of the $.0001 par value Common Stock
of the Acquiring Corporation, and each holder of outstanding shares of
the Common Stock of the Non-Acquiring Corporation, upon surrender to
the Acquiring Corporation of one or more stock certificates for Common
Stock of the Non-Acquiring Corporation for cancellation, shall be
entitled to receive one or more stock certificates for the full number
of shares of the Common Stock of the Acquiring Corporation into which
the Common Stock of the Non-Acquiring Corporation so surrendered shall
have been converted as aforesaid. Each issued share of the
Non-Acquiring Corporation's Common Stock, if any, held in its treasury
at the effective time of the merger shall be canceled and shall not be
converted.
3.2 Surrender of the Non-Acquiring Corporation Certificates. As soon as
practicable after the Merger becomes effective, the stock certificates
representing the Common Stock of the Non-Acquiring Corporation issued and
2
<PAGE>
outstanding at the time the Merger becomes effective shall be surrendered for
exchange to the Acquiring Corporation as above provided. Until so surrendered
for exchange, each such stock certificate nominally representing Common Stock of
the Non-Acquiring Corporation shall be deemed for all corporate purposes (except
for the payment of dividends, which shall be subject to the exchange of stock
certificates as above provided) to evidence the ownership of the number of
shares of the Common Stock of the Acquiring Corporation which the holder thereof
would be entitled to receive upon its surrender to the Acquiring Corporation.
3.3 Status of The Acquiring Corporation Shares. All shares of Common
Stock of the Acquiring Corporation into which shares of Common Stock of the
Non-Acquiring Corporation are converted as herein provided shall be fully paid
and non-assessable and shall be issued in full satisfaction of all rights
pertaining to such shares of common Stock of the Non-Acquiring Corporation.
3.4 Restriction on Transfer. The shares of the Acquiring Corporation
are to be issued without being registered under the Securities Act of 1933, as
amended (the "Act"), in reliance upon the exemption from registration afforded
by Section 3(a)(9) of the Act. Notwithstanding, such shares shall be restricted
to the extent that the shares surrender in exchange therefore were restricted
and shall be affixed with the same legend(s), if any, as shall have been affixed
upon the certificates surrendered in exchange therefore and, if so restricted,
such shares may be sold or otherwise transferred only pursuant to a registration
statement or in compliance with another exemption from registration.
ARTICLE 4
EFFECT OF MERGER
4.1 The Non-Acquiring Corporation Ceases to Exist. At such time as the
Merger shall become effective, the separate existence of The Non-Acquiring
Corporation shall cease and The Non-Acquiring Corporation shall be merged into
the Acquiring Corporation.
4.2 Acquiring Corporation Succeeds to Rights. etc.. At such time as the
Merger becomes effective, the Acquiring Corporation shall succeed to, without
other transfer, and shall possess and enjoy, all the rights, privileges,
immunities, powers and franchises both of a public and a private nature, and be
subject to all the restrictions, disabilities and duties of the Non-Acquiring
Corporation, and all the rights, privileges, immunities, powers and franchises
of the Non-Acquiring Corporation and all property, real, personal and mixed, and
all debts due to either the Non-Acquiring Corporation or the Acquiring
Corporation on whatever account, for stock subscriptions as well as for all
other things in action or belonging to each of said corporations, shall be
vested in the Acquiring Corporation; and all property, rights, privileges,
immunities, powers and franchises, and all and every other interest previously
held by the Non-Acquiring Corporation shall be thereafter as effectually the
property of the Acquiring Corporation as they were of the Non-Acquiring
Corporation and the title to any real estate vested by deed or otherwise in the
Non-Acquiring Corporation shall not revert or be in any way impaired by reason
of the Merger; provided, however, that all rights of creditors and all liens
upon any property of the Non-Acquiring Corporation shall be preserved
unimpaired, limited in lien to the property affected by such liens at the
effective time of the Merger, and all debts, liabilities and duties of said
corporations, respectively, shall thenceforth attach to the Acquiring
Corporation and may be enforced against it to the same extent as if said debts,
liabilities and duties had been incurred or contracted by the Acquiring
Corporation.
3
<PAGE>
ARTICLE 5
ACCOUNTING MATTERS
5.1 Assets and Liabilities. The assets and liabilities of the
Non-Acquiring Corporation as at the effective time of the Merger, shall be taken
up on the books of the Acquiring Corporation at the amounts at which they shall
have been carried at that time on the books of the Non-Acquiring Corporation.
5.2 Capital Surplus. The amount of Capital of the Acquiring
Corporation after the Merger, shall be equal to the sum of the aggregate book
value prior to the Merger as shown on the books of the Non-Acquiring
Corporation; which shall be reflected as additional Paid-in Capital, and of the
aggregate Par Value of the Common Stock that will remain issued upon the Merger.
The surplus of the Acquiring Corporation after the Merger, including any surplus
arising in the Merger, shall be available to be used for any legal purposes for
which surplus may be used.
ARTICLE 6
APPROVALS AND FILING
6.1 Approval. This Agreement shall be submitted to the Shareholders of
each Constituent Corporation, as provided by Law and by each respective Articles
of Incorporation, at meetings or otherwise; which shall be accomplished on or
before February 1, 1998, or such later date as the Board of Directors of the
Constituent Corporations shall mutually approve. After such adoption and
approval, and subject to the conditions contained in this Agreement, A
"Certificate of Approval", and A "Certificate of Merger", in substantially the
form annexed and attached hereto as Exhibit A-1. and Exhibit A-2 respectively:
shall be signed, verified, and delivered to the Secretary of the State of
California and the Secretary of the State of Delaware, for filing as provided by
the corporations laws of such states.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE NON-ACQUIRING CORPORATION
The Non-Acquiring Corporation represents and warrants to the Acquiring
Corporation as follows:
7.1 Organization. The Non-Acquiring Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. The Non-Acquiring Corporation has the corporate power required to
carry on its business; as it is now being conducted, and is qualified to do
business in every jurisdiction in which the character and location of the assets
owned by it, or the nature of the business transacted by it, require
qualification.
7.2 Capitalization. The Non-Acquiring Corporation's capitalization
consists of 50,000,000 authorized shares of $.0001 par value Common Stock. Each
issued share is validly issued, fully paid, non- assessable and each outstanding
share is entitled to one vote. There is no treasury stock held by the Non-
Acquiring Corporation.
7.3 Subsidiaries. The Non-Acquiring Corporation has no subsidiary
corporations.
4
<PAGE>
7.4 Governmental Authorizations. The Non-Acquiring Corporation has all
licenses, franchises, permits and other governmental authorizations required and
which are valid and sufficient for all business presently carried on by The
Non-Acquiring Corporation.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES The Acquiring Corporation
The Acquiring Corporation represents and warrants to The Non-Acquiring
Corporation as follows:
8.1 Organization. The Acquiring Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Acquiring Corporation has corporate power to carry on its business
as it is now being conducted and is qualified to do business in every
jurisdiction in which the character and location of the assets owned by it or
the nature of the business transacted by it require qualification.
8.2 Capitalization. The Acquiring Corporations capitalization consists
of 50,000,000 authorized shares of Common Stock, par value $.0001 per share, of
which, as of the date hereof, 1,000 shares are issued and outstanding (which
shares will be redeemed and canceled upon the effective date of the merger); and
there are no treasury shares outstanding. Each such share when issued will be
validly issued, fully paid, non-assessable and is entitled to one vote. There
are no Common Stock purchase options outstanding as of the date hereof as to any
of the Acquiring Corporation's Common Stock.
ARTICLE 9
CONDUCT OF BUSINESS PENDING, THE MERGE
9.1 Conduct. From and after the date of this Agreement and prior to the
effective time of the Merger, neither of the Constituent Corporations will,
without the prior written consent of the other:
(a) amend its Articles of Incorporation or Bylaws;
(b) engage in any material activity or transaction or incur
any material obligation (by contract or otherwise) except in the
ordinary course of business;
(c) issue rights or options to purchase or subscribe to any
shares of its capital stock or subdivide or otherwise change any such
shares;
(d) issue or sell any shares of its capital stock or
securities convertible into shares of its capital stock; or
(e) declare or pay any dividends on or make any distributions
whether of cash, stock or other property in respect of any shares of
its capital stock.
9.2 Preservation. >From and after the date of this Agreement and prior
to the effective time of the Merger, the Non-Acquiring Corporation will use its
best efforts to preserve its business organizations intact; to keep available to
the Acquiring Corporation the services of the Non-Acquiring Corporation's
present officers and employees; and to preserve for the Acquiring Corporation
the goodwill of the Non-Acquiring Corporation's suppliers, customers and others
having business relations with it.
5
<PAGE>
ARTICLE 10
ADDITIONAL AGREEMENTS
The Acquiring Corporation and the Non-Acquiring Corporation further
agree as follows:
10.1 Access and Information. The Acquiring Corporation and the
Non-Acquiring Corporation hereby agree that each will give to the other and to
the other's accountants, counsel and other representatives full access during
normal business hours throughout the period prior to the Merger to all of its
properties, books, contracts, commitments and records, and that each will
furnish the other during such period with all such information concerning its
affairs as such other party may reasonably request. In the event of the
termination of this Agreement each party will deliver to the other all
documents, work papers and other material obtained from the other relating to
the transactions contemplated hereby, whether so obtained before or after the
execution hereof, and will use its best efforts to have any information so
obtained and not heretofore made public kept confidential.
10.2 Expenses. Upon a termination of this Agreement as provided below,
each party will pay all costs and expenses of its performance of and compliance
with all agreements and conditions contained herein on its part to be performed
or complied with, including fees, expenses and disbursements of each party's
accountants and counsel.
10.3 Further Assurances. If at any time the Acquiring Corporation shall
consider or be advised that any further assignment or assurance in law or other
action is necessary or desirable to vest, perfect, or confirm, of record or
otherwise, in the Acquiring Corporation, the title to any property or rights of
the Non-Acquiring Corporation acquired or to be acquired by or as a result of
the Merger, the proper officers and directors of the Non-Acquiring Corporation,
and the Acquiring Corporation, respectively, shall be and they hereby are
severally and fully authorized to execute and deliver such proper deeds,
assignments and assurances in law and take such other action as may be necessary
or proper in the name of the Non-Acquiring Corporation or the Acquiring
Corporation to vest, perfect or confirm title to such property or rights in the
Acquiring Corporation and otherwise carry out the purposes of this Agreement.
ARTICLE 11
CONDITIONS PRECEDENT: TERMINATION: GENERAL PROVISIONS
11.1 Conditions Precedent to the Obligations of The Acquiring
Corporation and The Acquiring Corporation. The obligation of the Acquiring
Corporation to effect the Merger and The Acquiring Corporation's obligation to
issue stock on conversion of the stock of the Non-Acquiring Corporation shall be
subject to the following conditions (which may be waived in writing by the
Acquiring Corporation):
(a) The representations and warranties of The Non-Acquiring
Corporation herein contained shall be true as of and at the effective
time of the Merger with the same effect as though made at such time;
the Non-Acquiring Corporation shall have performed all obligations and
complied with all covenants required by this Agreement to be performed
or complied with by it prior to the effective time of the Merger; and
the Non-Acquiring Corporation shall have delivered to the Acquiring
Corporation a certificate, dated the effective date of the Merger and
signed by its President and its Secretary, to both such effects.
(b) No material change in the corporate status, business,
operations or financial condition of the Non-Acquiring Corporation
shall have occurred since the date hereof, (whether or not covered by
insurance), other than changes in the ordinary course of business, none
of which has been materially adverse in relation to the Non-Acquiring
Corporation, taken as a whole, and no other event or condition of any
character shall have occurred or arisen since that date which shall
6
<PAGE>
have materially and adversely affected the corporate status, business,
operations or financial condition of the Non-Acquiring Corporation
taken as a whole. Operating costs shall not be considered as other than
a change in the ordinary course of business.
11.2 Conditions Precedent to The Non-Acquiring Corporation's
Obligations. The obligation of The Non-Acquiring Corporation to effect the
Merger shall be subject to the following conditions (which may be waived in
writing by The Non-Acquiring Corporation):
(a) The representations and warranties of the Acquiring
Corporation and the Acquiring Corporation herein contained shall be
true as of and at the effective time of the Merger with the same
effect as though made at such time; the Acquiring Corporation shall
have performed all obligations and complied with all covenants
required by this Agreement to be performed or complied with by it
prior to the effective time of the Merger.
(b) No material change in the corporate status, business,
operations or financial condition of The Acquiring Corporation or The
Acquiring Corporation shall have occurred since the date hereof
(whether or not covered by insurance), other than changes in the
ordinary course of business, none of which has been materially adverse
in relation to the Acquiring Corporation taken as a whole, and no
other event or condition of any character shall have occurred or
arisen since that date which shall have materially and adversely
affected the corporate status, business, operations or financial
condition of the Acquiring Corporation, taken as a whole.
11.3 Termination and Abandonment Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and abandoned at any
time before the effective time of the Merger, whether before or after adoption
or approval of this Agreement by the shareholders of the Merging Corporations
under any one or more of the following circumstances:
(a) By the mutual consent of the Boards of Directors of the
Constituent Corporations;
(b) By either of the Constituent Corporations if any action or
proceeding before any court or other governmental body or agency shall
have been instituted or threatened to restrain or prohibit the Merger
and such Constituent Corporation deems it inadvisable to proceed with
the Merger; or
(c) By either of the Constituent Corporations if the requisite
approval of the shareholders of both Constituent Corporations shall
not have been obtained on or before February 1, 1998, or if the
Articles of Merger and Certificate of Merger shall not have been filed
as provided in Article I hereof on or before February 15, 1998.
11.4 Amendments. Any of the terms or conditions of this Agreement may be
modified or waived at any time before the effective time of the Merger by the
party which is, or the shareholders of which are, entitled to the benefit
thereof upon the authority of the Board of Directors of such party, provided
that any such modification or waiver shall in the judgment of the party making
it not affect substantially or materially and adversely the benefits to such
party or its shareholders intended under this Agreement.
[SIGNATURE PAGES FOLLOW]
7
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by a majority of the
directors of each of the Constituent Corporations and each of the Constituent
Corporations has caused its corporate seal to be hereunto affixed and attested
by the signature of its Secretary, all as of the day and year first above
written.
A MAJORITY OF THE A MAJORITY OF THE DIRECTORS OF
DIRECTORS OF DYNARESOURCE, INC.: WEST COAST MINES, INC.:
/S/ K.D. Diepholz /S/ K.D. Diepholz
- ---------------------------- ---------------------------
Name: Koy W.(K.D.) Diepholz Name: Koy W.(K.D.) Diepholz
Chairman / President Chairman / President
/S/ Mel E Tidwell /S/ Mel E Tidwell
- ---------------------------- ---------------------------
Name: Mel E Tidwell Name: Mel E Tidwell
/S/ Douglas Metcalf /S/ Douglas Metcalf
- ---------------------------- ---------------------------
Name: Douglas Metcalf Name: Douglas Metcalf
Secretary Secretary
/S/ Wayne C. Henderson /S/ Wayne C. Henderson
- ---------------------------- ---------------------------
Name: Wayne C. Henderson Name: Wayne C. Henderson
<PAGE>
EXHIBIT A-1
CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER
The undersigned do hereby state and certify as follows:
1. They are the President and Secretary respectively of West Coast Mines,
Inc., (the "Disappearing Corporation"); a California Corporation.
2. The Agreement of Merger to be executed by and between the Disappearing
Corporation and DynaResource, Inc., a Delaware Corporation (the
"Acquiring Corporation"), in the form attached hereto; was duly
approved by the Board of Directors and Shareholders of West Coast
Mines, Inc., the Disappearing Corporation, as of January 15, 1998.
3. Pursuant to Section 1201 of the California General Corporation Laws, no
vote of the Shareholders of West Coast Mines, Inc. the Disappearing
Corporation, is required; as the Shareholders of the Disappearing
Corporation immediately prior to the Merger, will possess all (more
than five-sixths) of the Voting Power of DynaResource, Inc., the
Acquiring Corporation, immediately subsequent to the Merger.
Each of the undersigned do hereby declare under the Penalty of Perjury under the
Laws of the State of California, that he signed the foregoing Certificate in the
Official Capacity set forth under his Signature below; and that the statements
set forth in this Certificate are true of his own knowledge.
Signed as of January 15, 1998.
/S/ K.D. Diepholz
- -----------------------
Koy (K.D.) Diepholz
President
/S/ Douglas Metcalf
- -----------------------
Douglas Metcalf
Secretary
<PAGE>
EXHIBIT A-2
CERTIFICATE OF MERGER
The undersigned do hereby state and certify as follows:
1. The Constituent Corporations are: DynaResource, Inc., (the "Acquiring
Corporation"); a Delaware Corporation; and West Coast Mines, Inc., (the
"Disappearing Corporation"), a California Corporation.
2. An Agreement of Merger between the Acquiring Corporation and the
Disappearing Corporation above, has been as of January 15, 1998,
approved, executed, certified, and acknowledged; in accordance with
Section 252 of the General Corporation Laws with the State of Delaware.
3. The Acquiring Corporation is the surviving Corporation and its name
shall be DYNARESOURCE, INC.
4. No Amendments to the Certificate of Incorporation of the Acquiring
Corporation are required by the Agreement of Merger, and subsequent to
the Merger, the Certificate of Incorporation of the Acquiring
Corporation shall be its Certificate of Incorporation.
5. The executed Agreement of Merger is on file at the principle place of
business of the Acquiring Corporation, which is: The Towers at Williams
Square, 5215 N. O'Connor Blvd., Suite 200, Irving, Texas 75039.
6. A copy of the executed Agreement of Merger will be furnished by the
Acquiring Corporation on request and without cost, to any Shareholder
of the Disappearing Corporation or to any Shareholder of the Acquiring
Corporation.
Each of the undersigned do hereby declare under the Penalty of Perjury under the
Laws of the State of California, that he signed the foregoing Certificate in the
Official Capacity set forth under his Signature below; and that the statements
set forth in this Certificate are true of his own knowledge.
Signed as of January 15, 1998.
/S/ K.D. Diepholz
- -------------------------------
Koy (K.D.) Diepholz, President
/S/ Douglas Metcalf
- -------------------------------
Douglas Metcalf, Secretary
<PAGE>
CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER
The undersigned do hereby state and certify that:
1. They are the President and Secretary, respectively of DynaResource,
Inc., a Delaware corporation (the "Acquiring Corporation"
2. The Agreement of Merger to be executed by and between the Acquiring
Corporation and West Coast Mines, Inc. (the "Disappearing
Corporation"), in the form attached hereto was duly approved by the
Board of Directors and shareholders of the Disappearing Corporation, as
of the date of this Certificate.
3. There is only one class of shares and the total number of outstanding
shares is 1,000.
4. The terms of the merger agreement in the form attached were approved by
the unanimous vote of all (100%) of the shares of the Acquiring
Corporation.
As of the date set forth below, in Dallas, Texas, each of the
undersigned does hereby declare under the penalty of perjury under the laws of
the State of California that he signed the foregoing certificate in the official
capacity set forth beneath his signature, and that the statements set forth in
said certificate are true of his own knowledge.
SIGNED as of January 15, 1998
/S/ K.D. Diepholz
- -------------------------------
Koy (K.D.) Diepholz, President
/S/ Douglas Metcalf
- -------------------------------
Douglas Metcalf, Secretary
<PAGE>
CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER
The undersigned do hereby state and certify as follows:
1. They are the President and Secretary respectively of West Coast Mines,
Inc., (the "Disappearing Corporation"); a California Corporation.
2. The Agreement of Merger to be executed by and between the Disappearing
Corporation and DynaResource, Inc., a Delaware Corporation (the
"Acquiring Corporation"), in the form attached hereto; was duly
approved by the Board of Directors and Shareholders of West Coast
Mines, Inc., the Disappearing Corporation, as of the date of this
Certificate.
3. Pursuant to Section 1201 of the California General Corporation Laws, no
vote of the Shareholders of West Coast Mines, Inc. the Disappearing
Corporation, is required; as the Shareholders of the Disappearing
Corporation immediately prior to the Merger, will possess all (more
than five-sixths) of the Voting Power of DynaResource, Inc., the
Acquiring Corporation, immediately subsequent to the Merger.
Each of the undersigned do hereby declare under the Penalty of Perjury under the
Laws of the State of California, that he signed the foregoing Certificate in the
Official Capacity set forth under his Signature below; and that the statements
set forth in this Certificate are true of his own knowledge.
Signed as of January 15, 1998
/S/ K.D. Diepholz
- ---------------------
Koy (K.D.) Diepholz
President
/S/ Douglas Metcalf
- ---------------------
Douglas Metcalf
Secretary
<PAGE>
Great Seal of the STATE OF CALIFORNIA
(Graphic Omitted)
SECRETARY OF STATE
I, BILL JONES, Secretary of State of the State of California, hereby
certify:
That the attached transcript has been compared with the record on file in
this office, of which it purports to be a copy, and that it is full, true and
correct.
IN WITNESS WHEREOF, I execute this certificate and affix
the Great Seal of the State of California this
NOV 12 1998
/S/ Bill Jones
------------------
Bill Jones, Secretary of State
<PAGE>
State of Delaware
Office of the Secretary of State PAGE 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
MERGER, WHICH MERGES:
"WEST COAST MINES, Inc. A CALIFORNIA CORPORATION,
WITH AND INTO "DYNARESOURCE, INC." UNDER THE NAME OF "DYNARESOURCE,
INC.", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE 0F
DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE SECOND DAY OF NOVEMBER, A.D.
1998, AT 9 O'CLOCK A.M.
A FILED COPY 0F THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER 0F DEEDS
/S/ Edward J. Freel
- ------------------------
Edward I. Freel, Secretary of State
AUTHENTICATION. 9392765
DATE: 11-06-98
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED O9:00 AM 12/02/1998
981422213 - 2826546
CERTIFICATE OF MERGER
The undersigned do hereby state and certify as follows:
1. The Constituent Corporations are: DynaResource, Inc. (the "Acquiring
Corporation"); a Delaware Corporation; and West Coast Mines, Inc., (the
"Disappearing Corporation"), a California Corporation.
2. An Agreement of Merger between the Acquiring Corporation and the Disappearing
Corporation above, has been as of January 15, 1998, approved, adopted, excuted,
certified, and acknowledged; in accordance with Section 252 of the General
Corporation Laws of the State of Delaware.
3. The Acquiring Corporation is the surviving Corporation and its name shall be
DYNARESOURCE, INC.
4. No Amendments to the Certificate of Incorporation of the Acquiring
Corporation are required by the Agreement of Merger, and subsequent to the
Merger, the Certificate of Incorporation of the Acquiring Corporation shall be
its Certificate of Incorporation.
5. The executed Agreement of Merger is on file at the principle place of
business of the Acquiring Corporation, which is: The Towers at Williams Square,
5215 N. O'Conner Blvd., Suite 200, Irving, Texas 75039.
6. A copy of the executed Agreement of Merger will be furnished by the Acquiring
Corporation on request and without cost, to any Shareholder of the Disappearing
Corporation or to any Shareholder of the Acquiring Corporation.
7. The Disappearing Corporation's Capitalization consists of 50,000,000
Authorized Shares of $.0001 Par Value Common Stock.
Each of the undersigned do hereby declare under the Penalty of Perjury, that he
signed the foregoing Certificate in the Official Capacity set forth under his
Signature below; and that the statements set forth in this Certificate are true
and accurate of his own knowledge.
Signed as of February 3, 1998. DYNARESOURCE, INC.
/S/ K.D. Diepholz
------------------
President
EXHIBIT "1.7"
DYNARESOURCE, INC.
"ARTICLES OF INCORPORATION"
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE
ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF
"DYNARESOURCE, INC.", FILED IN THIS OFFICE ON THE EIGHTH DAY OF DECEMBER, A.D.
1997, AT 9 O'CLOCK A.M.
GREAT SEAL OF THE STATE OF DELAWARE
(Graphic Omitted)
SEAL OF DELAWARE SECRETARY'S OFFICE
(Graphic Omitted)
/S/ Edward J. Freel
- ----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8795882
DATE: 12-08-97
<PAGE>
CERTIFICATE OF INCORPORATION
OF
DYNARESOURCE, INC.
The undersigned, a natural person of the age of eighteen years or more,
acting as the Incorporator of a corporation under the Delaware Corporation Laws,
hereby adopts the following Articles of incorporation for such corporation:
ARTICLE I
The name of the corporation Is Dynaresource, Inc.
ARTICLE II
The address of the corporation's initial registered office is 1013
Centre Road, Wilmington, Delaware, and the name of the corporation's
Initial registered agent at such address is Corporation Service
Company, in New Castle County.
ARTICLE III
The purpose or purposes for which the corporation is organized shall be
and include the transaction of any or all lawful business for which
coporations may be incorporated under the General Corporation Law of
the State of Delaware.
ARTICLE IV
The corporation shall have authority to issue fifty million
(50,000.000) shares of its common stock each having a par value of
$.0001. Fully paid common shares of the corporation shall not be
liable for further call or assessment. The authorized common shares of
the corporation shall be Issued at the discretion of the Board of
Directors of the corporation.
Page 1
<PAGE>
ARTICLE V
The name and address of the incorporator of the corporation is James J.
Panipinto, 10440 N. Central Expressway, Ste. 1440, Dallas, Texas 75231.
The powers of the incorporator are to terminate upon the filing of this
Certificate of Incorporation.
ARTICLE VI
The names and mailing addresses of the persons who are to serve as
directors until the first annual meeting of stockholders or until (a)
his successors have been elected and qualified, as provided In the
Bylaws of the corporation, or (b) his earlier death or resignation is
as follows:
Name Mailing Address
Douglas Metcalf 46 Lake Shore Drive North
Westford, Massachusetts 01886
Koy W. (K.D.) Diepholz 5215 Williams Square Ste. 200
Irving, Texas 75039
Melvin E. Tidwell 4804 Pickadilly Place
Tyler, Texas 75703
Wayne C. Henderson 5506 Lafayette Lane
Frisco, Texas 75035
ARTICLE VII
The period of the corporations duration is perpetual.
ARTICLE VIII
The right to accumulate votes in the Election of directors, and/or
cumulative voting by any shareholder of the corporation, is hereby
expressly denied.
Page 2
<PAGE>
ARTICLE IX
The right to preemptive rights to acquire additional, unissued, or
treasury shares of the corporation, or securities of the corporation
convertible into or carrying a right to subscribe to or acquire
additional shares of the corporation is hereby expressly denied.
ARTICLE X
All of the corporation's directors and officers and former directors
and officers and all persons who may have served at the corporation's
request as a director or officer of another corporation in which the
corporation is a creditor or substantial shareholder, shall be
indemnified against expenses actually and necessarily incurred by them
in connection with the defense of any action, suit or proceeding, in
which they, or any of them, are made parties, or a party by reason of
being or having been directors or officers or a director or officer of
the corporation, or of such other corporation, except in relation to
matters as to which any such director or officer or former director or
officer shall be adjudged in such action, suit or proceeding to be
liable for negligence or misconduct. The foregoing right to indemnity
shall include reimbursement of the amounts and expenses paid or
incurred in settlement thereof or a plea of nolo contendere (or other
plea of substantially the same import and effect) which, in the opinion
of counsel for the corporation, appears to be in the interest of the
corporation. Such indemnification shall not be deemed exclusive of any
other rights to which those indemnified may be entitled by law or under
any bylaws, agreement, vote of stockholders or otherwise.
ARTICLE XI
No contract or other transaction between the corporation and any
person, firm; association or corporation and no act of the
corporation shall, in the absence of fraud, be invalidated or in any
way affected by the fact that any of the directors of the corporation
are pecuniarily or otherwise interested, directly or indirectly, in
such contract, transaction or act, or are related to or interested in
such person, firm, association or corporation as a director,
shareholder, officer, employee, member or otherwise any director so
interested or related who is present at any meeting of the Board of
Directors or committee of directors at which action on any such
contract, transaction or act is taken may be counted in determining
the presence of a quorum at such meeting and may vote at such meeting
with respect to such contract, transaction or act with like force and
effect as if he or she were not so interested or related. No director
so interested or related shall, because of such interest or
relationship, be disqualified from holding his or her offiee or be
liable to the corporation or to any shareholder or creditor thereof
for any loss incurred by the corporation under or by reason of such
contract, transaction or act, or be accountable for any gains or
profits he may have realized therein.
Page 3
<PAGE>
THESE ARTICLES OF INCORPORATION OF DYNARESOURCE, INC. ARE HEREBY EXECUTED this
December 5, 1997.
/S/ James Panipinto
- -------------------
James J. Panipinto
Incorporator
STATE OF TEXAS
COUNTY OF DALLAS
THIS INSTRUMENT WAS ACKNOWLEDGED before me J. PANIPINTO, on this December 5,
1997
/S/ M.L. Hilberth
- -----------------
Notary Public, State of Texas
(Notary Stamp)
================================================================================
ORGANIZATIONAL RESOLUTIONS
OF THE BOARD OF DIRECTORS OF
DYNARESOURCE, INC.
The undersigned, being each of the duly and validly constituted
directors listed in the Certificate of Incorporation of DynaResource, Inc., a
Delaware corporation (hereinafter referred to as the "Corporation"), acting
pursuant to authority granted by the Delaware General Corporation Act, hereby
consents that, when the undersigned has executed this consent or an exact
counterpart thereof, the resolutions hereinafter set forth shall be deemed to
have been adopted to the same extent and with the same force and effect as if
adopted at a formal meeting of the Board of Directors of the Corporation, duly
called, noticed and held for the purpose of acting upon proposals to adopt such
resolutions:
Articles of Incorporation
RESOLVED, that the duplicate original of the Certificate of
Incorporation as filed with the Secretary of State of Delaware on
December 7,1997, and the evidence of such filing be inserted in the
minute book of this Corporation; and
Minute Book; Bylaws; Stock Certificate; Corporate Seal
RESOLVED, that the Bylaws submitted to the Board of Directors of this
Corporation on this date are hereby adopted as and for the Bylaws of
this Corporation, and that the Secretary of this Corporation is hereby
instwcted to cause the same to be inserted in the minute book of the
Corporation; the Secretary is further ordered to certify a copy of
those Bylaws and maintain them in the principal office of the
Corporation for the transaction of its business, open for inspection by
the shareholders at all reasonable time during office hours;
and
Page 1
<PAGE>
RESOLVED, FURTHER, that the Corporation shall maintain, as part of
its corporate record, a minute book which shall include, but not
limited to, a record of the Corporation's Articles of Incorporation and
amendments thereto, its Bylaws and amendments thereto, minutes of all
meetings of its directors, and minutes of all meetings of its
shareholders; the time and place of such meetings, whether a meeting
was regular or special, and if special, how the meeting was authorized,
the notice given, the names of those present at directors' meetings,
the number of shares present or represented at shareholders' meetings,
and the proceedings at the meetings; and
RESOLVED, FURTHER, that the form of stock certificates of the
Corporation shall be in substantially the form as those previously
issued by West Coast Mines, Inc., together with such changes as shall
be reasonably required to reflect the name of the Corporation, its
state of incorporation and the par value of the stock, all as shall be
acceptable to the President of the Corporation with the advice of
counsel; and
RESOLVED, FURTHER, that the stock certificates shall be consecutively
numbered beginning with Number 1; that the certificates shall be issued
only when the signatures of the President and Secretary, or a facsimile
thereof, and the corporate seal or a facsimile, are affixed thereto or
impnnted thereon; that each certificate shall state on its face the
name of the person to whom the shares representing the certificate are
issued, the number and class of shares and the designation of the
series, if any, that the certificate represents, the par value of each
share represented by the certificate or the fact that the shares are
without par value, that the corporation is organized under the laws of
Texas; and that the certificates shall set forth in full or in summary
form, or shall incorporate by reference, such statements as are
required by the Articles of Incorporation or the Delaware General
Corporation Laws.
RESOLVED, FURTHER, that the seal affixed at this place is hereby
adopted as the official seal of the Corporation; and
Page 2
<PAGE>
Election of Officers
RESOLVED, that the following persons are hereby elected to be officers
of the Corporation, to hold the office set opposite their respective
names for a period of one year from the date hereof and for so long
thereafter until their respective successors are chosen and qualified,
or until their earlier death, resignation or removal:
Chairman, President & CEO Koy W. (K. D.) Diepholz
Vice President - Mineral Properties Wayne Henderson
Vice President - Investor Relations Brad J. Saulter
Secretary Douglas W. Metcalf
Treasurer Koy W. (K. D.) Diepholz
Issuance of Stock
RESOLVED, that the offers of the following person(s) (hereinafter
called the "Purchaser(s)") to purchase the number of shares of the
authorized and unissued $0.0001 par value common capital stock of the
Corporation set opposite the name(s) of such Purchaser(s), for the
amount set opposite the name(s) of such Purchaser(s):
PURCHASER NO. SHARES AMOUNT
West Coast Mines 1000 $1.00 dollar per share
is/are hereby accepted, such offer(s) being, in the judgment of the
Board of Directors of the Corporation, fair and adequate consideration;
RESOLVED, FURTHER, that the President and Secretary of the Corporation
are hereby instructed, upon receipt of payment from the aforesaid
Purchaser(s), to prepare, execute and deliver to such Purchaser(s)
certificates for the number of shares of the Corporation's $0.01 par
value common capital stock set forth opposite such Purchaser(s)'
name(s) above; and
Fiscal Year
RESOLVED, that the fiscal year of the Corporation shall be the twelve
month period ending December 31 of each calendar year; and
Page 3
<PAGE>
Bank Account
RESOLVED, that the officers of the Corporation are hereby authorized to
select such bank or banks, hereinafter collectively referred to as the
"Bank," as depository of the funds of the Corporation and to establish
and maintain, in the name of and on behalf of the Corporation, such
demand deposit accounts with the Bank as may be necessary to conduct
the business of the Corporation, subject to such terms and conditions
that the officers may from time to time agree to with the Bank; that in
connection with the establishment of such accounts, the officers may
execute the Bank's regular corporate resolution forms which are
incorporated by reference in and made a part of this resolution; and
the Secretary is hereby directed to attach a copy of each executed
corporate resolution form to these resolutions; and
RESOLVED, FURTHER, that the Secretary of the Corporation is hereby
authorized and directed to certify to the Bank that such resolutions
have been duly adopted and are in conformity with the Articles of
Incorporation and Bylaws of the Corporation, to verify to the Bank the
names and specimen signatures of the present officers of the
Corporation authorized to sign on such accounts, and if and when any
new officer is elected or appointed, to verify the fact of that change
and the name and specimen signature of each new officer duly authorized
by the Board of Directors to sign on such accounts; and
Corporate Office
RESOLVED, that offices of the Corporation be established and maintained
at Towers at Williams Square, 5215 N. O'Connor Blvd., Ste 200, Irving,
TX 75039.
Transaction of Business
RESOLVED, that the officers of the Corporation are hereby directed to
obtain, in the name of the Corporation, such licenses and tax permits
as may be required for the conduct of the business of the Corporation
by any federal, state, county or municipal governmental statute,
ordinance or regulation, and to do all things necessary or convenient
to qualify the Corporation to transact its business in compliance with
the laws and regulations of any appropriate federal, state, or
municipal governmental authority; and
RESOLVED, that the Treasurer of the Corporation is hereby authorized to
pay all charges and expenses incident to or arising out of the
organization of the Corporation and to reimburse any person who has
made any disbursement therefor; and
RESOLVED, that the Corporation recognizes that James J. Panipinto has
acted as incorporator of the Corporation solely for the purpose of
incorporating the Corporation, and as an accommodation to the
Corporation and that the Corporation, for such consideration and
action, hereby agrees to indemnify and hold harmless James J. Panipinto
from and against any and all claims and liabilities of any kind which
may be brought against him by reason of his acting on behalf of the
Corporation in such capacities; and such indemnification is provided
for pursuant to the provisions of the Texas Business Corporation Act.
DATED as of January 15, 1998.
/S/ Douglas Metcalf
/S/ Koy W. (K. D.) Diepholz
/S/ Melvin E. Tidwell
/S/ Wayne C. Henderson
Page 5
EXHIBIT "1.8"
DYNARESOURCE, INC.
"ARTICLES OF AMENDMENT"
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "DYNARESOURCE, INC.", FILED IN THIS OFFICE ON THE THIRTENNTH DAY OF
FEBRUARY, A.D. 1998, AT 9 O'CLOCK A.M.
Great Seal of the State of Delaware
[graphic omitted]
/S/ Edward J. Freel, Secretary of State
- ---------------------------------------
AUTHENTICATION: 8928486
DATE: 02-19-98
<PAGE>
FIRST AMENDMENT TO CERTIFICATE OF INCORPORATION
OF
DYNARESOURCE, INC.
(PURSUANT TO SECTION 241)
1. Article IV of the Certificate of Incorporation of DynaResource, Inc.,
filed pursuant to the Delaware Corporation Laws on December 8, 1997.
has been amended in its entirety, as follows:
The corporation shall have authority to issue twelve million
five hundred thousand (12,500,000) shares of its common stock
each having a par value of $.O1. Fully paid common shares of
the corporation shall not be liable for further call or
assessment The authorized common shares of the corporation
shall be issued at the discretion of the Board of Directors of
the corporation.
2. DynaResource, Inc. has not received any payment for any of its stock.
3. The amendment to the Certificate of Incorporation was adopted by a
majority of the Directors named in the Certificate of Incorporation.
EXECUTED this 02-06-98
/S/ K.D. Diepholz
------------------
President
STATE OF TEXAS ss.
ss.
COUNTY OF DALLAS ss.
THIS INSTRUMENT WAS ACKNOWLEDGED before me by K.D. Diepholz, on this
February 6, 1998, who being known to me stated that he was President of
DynaResource, Inc., that this instrument was the act and said of said
corporation, and that the facts set forth above are true.
/S/ Janice E. Haley
---------------------------------
Notary Public, State of Texas
Comm. Exp. 05-16-99
Notary Stamp
