SCHEDULE 14a INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to paragraph
240.14a-11(c) or paragraph 240.14-12
U. S. GOLD CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other
than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and O-11.
1. Title of each class of securities to which
transaction applies:
2. Aggregate number of securities to which
transaction applies:
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange
Act Rule O-11 (Set forth the amount on
which the filing fee is calculated and
state how it was determined):
4. Proposed maximum aggregate value of
transaction:
5. Total fee paid:
[ ] Fee paid with preliminary materials.
[ ] Check box if any part of the fee is offset
as provided by Exchange Act Rule O-11(a)(2)
and identify the filing for which the offsetting
fee was paid previous. Identify the previous
filing by registration statement number, or the
Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
U.S. GOLD CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 10, 1998
To the Shareholders of U.S. Gold Corporation
The Annual Meeting of the Shareholders of U.S. Gold Corporation
(the Company) will be held at the (name of hotel or other) located
at (address), Denver, Colorado, on June 10, 1998 at 10:00 a.m. or
at any adjournment or postponement thereof, for the following
purposes:
(1) To elect four (4) directors of the Company;
(2) To approve an amendment to the Companys Articles of
Incorporation to increase the number of authorized shares from
15,000,000 shares to 25,000,000 shares; and
(3) To transact such other business as may properly come
before the meeting.
Details relating to the above matters are set forth in the
attached Proxy Statement. All Shareholders of record of U.S. Gold
Corporation, as of the close of business on April 3, 1998, will be
entitled to notice of and to vote at such meeting or at any
adjournment thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING.
IF YOU DO NOT PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED POSTAGE-PAID CARD. THE
GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF
YOU ATTEND THE MEETING.
By Order of the Board of Directors
William W. Reid, President
Denver, Colorado
April __, 1998
PROXY STATEMENT
U.S. GOLD CORPORATION
55 Madison, Suite 700
Denver, Colorado 80206
Telephone: (303) 322-8002
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 10, 1998
This Proxy Statement is furnished in connection with the
solicitation of proxies by Management of the Company, to be voted
at the ANNUAL MEETING OF SHAREHOLDERS of the Company to be held on
Wednesday, June 10, 1998, at the (location and address), Denver,
Colorado, or at any adjournment or postponement thereof. The
Company anticipates that this Proxy Statement and accompanying form
of proxy will be first mailed or given to Shareholders of the
Company on or about April 22, 1998. The shares represented by all
proxies that are properly executed and submitted will be voted at
the meeting in accordance with the instructions indicated thereon,
and if no instructions are given then in the discretion of the
proxy holder.
VOTING RIGHTS AND VOTE REQUIRED
The close of business on April 3, 1998 has been fixed by the
Board of Directors of the Company as the record date for
determination of Shareholders entitled to notice of and to vote at
the Annual Meeting. At such date there were 13,927,469 shares of
the Companys $.10 par value common stock outstanding (hereinafter
referred to as the Common Stock), each of which entitles the holder
thereof to one vote on all matters which may come before the
meeting. Abstentions or withholding authority to vote will be
counted as shares represented at the meeting for determining
whether a quorum is present at the meeting. A broker non-vote
occurs when a nominee holding shares for a beneficial holder does
not have discretionary voting power and does not receive voting
instructions from the beneficial owner. Broker non-votes on a
particular proposal will not be treated as shares present and
entitled to vote on the proposal. Cumulative voting in the
election of directors is prohibited.
The Company has no class of voting securities other than Common
Stock. The holders of one-third of the issued and outstanding
shares of the Company entitled to vote, represented at the meeting
in person or by proxy, constitute a quorum at any Shareholder's
meeting. Assuming a quorum is present, the four nominees receiving
the highest number of votes cast will be elected as directors. The
affirmative vote of the holders of two-thirds of the outstanding
shares of Common Stock will be necessary to approve the proposal to
amend the Articles of Incorporation to increase the number of
shares from 15,000,000 shares to 25,000,000 shares.
Unless specified otherwise, each proxy submitted will be voted
FOR the persons nominated by Management for directors of the
Company, being William W. Reid, John W. Goth, David C. Reid, and
Douglas J. Newby, and FOR the proposal to amend the Articles of
Incorporation to increase the authorized shares from 15,000,000
shares to 25,000,000 shares.
Management knows of no other matter or motion to be presented
at the meeting. If any other matter or motion should be presented
at the meeting upon which a vote must be properly taken, it is the
intention of the person named in the accompanying form of proxy to
vote such proxy in accordance with that person's judgement,
including any matter or motion dealing with the conduct of the
meeting.
Any Shareholder who completes a proxy may revoke it at any
time before it is exercised by delivering written notice of such
revocation to the Company (c/o William F. Pass, Secretary) 55
Madison, Suite 700, Denver, Colorado 80206), by submitting a new
proxy executed at a later date, or by requesting, in person, at the
Annual Meeting that the proxy be returned.
All of the expenses involved in preparation, assembling and
mailing this Proxy Statement, the materials enclosed herewith, and
all costs of soliciting proxies will be paid be the Company. In
addition to the solicitation by mail, proxies may be solicited by
officers and regular employees of the Company by telephone,
telegraph or personal interview. Such persons will receive no
compensation for their services other than their normal salaries.
The Company has retained Morrow & Co., professional proxy
solicitors, at an estimated fee of $4,500 plus reasonable out-of-
pocket expenses, to assist in the solicitation process.
Approximatley 35 persons will be utilized by such firm in its
solicitation efforts. The Company will reimburse brokerage houses,
banks, custodians and other nominees and fiduciaries for out-of-
pocket expenses incurred in forwarding the Companys proxy materials
to, and obtaining instructions relating to such materials from,
beneficial owners of shares of the Companys Common Stock.
ELECTION OF DIRECTORS
At the Annual Meeting, the Shareholders will elect four
directors of the Company. Each director will hold office until the
next Annual Meeting of Shareholders and thereafter until a
successor is elected and has qualified. Pursuant to Article IV,
Section 1 of the Companys Bylaws, the Board of Directors has
increased the number of directors to four effective October 16,
1997. Cumulative voting is not permitted in the election of
directors. IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, THE
PERSON NAMED IN THE ACCOMPANYING PROXY WILL VOTE IN FAVOR OF THE
ELECTION OF THE FOLLOWING PERSONS NAMED AS THE COMPANYS NOMINEES
FOR DIRECTORS OF THE COMPANY: WILLIAM W. REID, JOHN W. GOTH, DAVID
C. REID, AND DOUGLAS J. NEWBY. All of the nominees are presently
members of the Board of Directors. Each of the nominees has
consented to be named herein and to serve if elected. It is not
anticipated that any nominee will become unable or unwilling to
accept nomination or election, but if such should occur, the person
named in the proxy intends to vote for the election in his stead of
such other person as the Management of the Company may recommend.
The affirmative vote of a majority of shareholders present in
person or by proxy at the meeting is necessary for the election of
a director.
The following table sets forth certain information as to each
officer and director of the Company:
Board
Positions With Position Term
Name Age the Company Held Since Expires
William W. Reid 49 President, Chief 1979 Upon Successors
Executive Officer Election
and Director
John W. Goth 70 Director 1987 Upon Successors
Election
David C. Reid 47 Vice President 1993 Upon Successors
and Director Election
Douglas J. Newby 40 Director 1997 Upon Successors
Election
William F. Pass 51 Vice President, n/a n/a
Chief Financial
Officer, Secretary
WILLIAM W. REID-PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
Mr. Reid, a founder of the Company, has served as a Director
and the President of the Company since its inception in 1979. Mr.
Reid devotes substantially all of his time to the business and
affairs of the Company. Effective January 1, 1994, Mr. Reid and
the Company entered into an employment contract as discussed below.
Mr. Reid also served on the board of directors of Gold Capital
Corporation, a publicly traded company, until August 29, 1997 as
provided by the Gold Capital Series A Preferred Stock Agreement
between Tonkin Springs Venture Limited Partnership (a partnership
owned by wholly-owned subsidiaries of the Company, hereinafter
TSVLP) and Gold Capital.
JOHN W. GOTH-DIRECTOR
Mr. Goth has been a director of the Company since 1987. Mr.
Goth also serves on the board of directors of Royal Gold, Inc., and
Banro Resource Corporation, both publicly traded companies. For
the past nine years, Mr. Goth has been a self-employed mining
consultant.
DAVID C. REID-VICE PRESIDENT EXPLORATION AND DIRECTOR
Effective October 19, 1993, Mr. David Reid was appointed a
member of the Board of Directors of the Company. On January 1,
1994, Mr. Reid became an employee and officer of the Company with
the title Vice President Exploration and entered into an employment
contract with the Company as discussed below. Mr. Reid devotes
substantially all of his time to the business and affairs of the
Company. From January 1, 1993 through December 31, 1993, Mr. Reid
was an employee of TSVLP and sole director and president of U.S.
Environmental Corporation, a wholly-owned subsidiary of the Company
and 0.5 percent owner and limited partner in TSVLP. From September
1, 1991 through December 31, 1992, Mr. Reid was a consultant to the
Company. Prior to September, 1991, Mr. Reid was an employee and
officer (secretary) of the Company and served as a director.
DOUGLAS J. NEWBY-DIRECTOR
Mr. Newby has been a director of the Company since October 16,
1997. Mr. Newby also serves on the board of directors of Trans
Atlantic Enterprises Inc., a British Columbia, Canada company with
shares listed on the Vancouver Stock Exchange. Since 1991, Mr.
Newby has been Managing Partner of Moyes Newby & Co., Inc., a firm
that provides strategic corporate finance advice to the
international natural resource industries.
WILLIAM F. PASS-VICE PRESIDENT, CHIEF FINANCIAL OFFICER, SECRETARY
Mr. Pass joined the Company in June, 1988 and was appointed
Corporate Secretary on September 1, 1991 and effective January 1,
1994, was made Vice President Administration. Effective February
1, 1996, Mr. Pass was appointed Vice President, Chief Financial
Officer and Corporate Secretary. Mr. Pass devotes substantially
all of his time to the business and affairs of the Company.
Effective January 1, 1994, Mr. Pass and the Company entered into an
employment contract as discussed below.
There are no family relationships between officers and
directors of the Company except that David C. Reid, an officer and
director of the Company, is brother to William W. Reid, president
of the Company and director.
Directors Meetings and Committees
The Board of Directors met 3 times during the fiscal year
ended December 31, 1997. All of the directors were present for all
of the meetings of Board of Directors held during their individual
incumbencies.
The Audit Committee was composed of Mr. Jack W. Goth until
January 12, 1998 when Mr. Douglas J. Newby was added to the
Committee. The Audit Committee met once during 1997. The Audit
Committee recommends the selection and reappointment of the
Companys independent certified public accountants to the Board of
Directors and reviews the proposed scope, content and results of
the audit performed by the accountants and any reports and
recommendations made by them. The Company has no standing
nominating committee.
The Compensation Committee was composed of Mr. Jack W. Goth
until January 12, 1998 when Mr. Douglas J. Newby was added to the
Committee. The Compensation Committee met once during 1997. The
Compensation Committee reviews and makes recommendations to the
Companys Board of Directors concerning the salaries paid to the
Companys officers.
PROPOSAL FOR AMENDMENT TO THE ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED SHARES
On January 12, 1998, the Companys Board of Directors
unanimously approved a resolution to place before the Shareholders
a proposal to amend the Articles of Incorporation to increase the
number of authorized shares from 15,000,000 to 25,000,000 shares.
The Board of Directors recommends that the Shareholders approve the
amendment to the Articles of Incorporation to increase the
authorized shares from 15,000,000 shares to 25,000,000 shares. For
the reasons described below, the Companys Board of Directors
believes adoption of the proposed amendment is essential for the
Company to have the ability to structure financings for possible
future acquisitions and to meet the Company's other financial
needs.
The Board of Directors believes that if the proposal to
increase the authorized shares to 25,000,000 shares is not
approved, the Companys ability to enhance growth opportunities
through additional acquisitions and financing transactions or
participation in other types of future transactions will be
severely hampered and the ability of the Company to protect its
assets would be significantly reduced.
There are currently 15,000,000 authorized shares of Common
Stock and 13,927,469 shares outstanding. In addition, there are
outstanding exercisable stock options to officers, directors and
employees to purchase an aggregate 1,072,531 shares of Common Stock
of the Company. Thus, the Company presently has no discretionary
authorized shares of Common Stock available for issuance for
business purposes. In order to provide capital which may be
required for purchase of additional interests in mineral
properties, equity financings, mergers, and acquisitions and
provide capital to protect the Company's assets if the need arises,
which capital would not be available if there were an insufficient
number of authorized shares of Common Stock of the Company, the
Board of Directors deems that it is appropriate to increase the
number of authorized shares.
The Board of Directors believes that a substantial degree of
flexibility should be available to the Company in structuring
financing transactions for funding property development as well as
for possible future acquisitions using stock or cash. The Board of
Directors believes it is prudent that the Company have authorized
but unissued shares of Common Stock for issuance from time to time
as may be required for various purposes, including issuance for
equity financings, acquisitions, employee stock options and other
proper business purposes.
If the Company wished to issue Common Stock for any
purpose, the Board would be able to authorize the issuance of the Companys
shares without the necessity, and related costs and delays, of
either calling a special Shareholders meeting or waiting for the
next regularly scheduled meeting of Shareholders in order to
increase the authorized capital. If, in a particular instance,
shareholder approval were required by law, rules of stock exchanges
where the Companys shares are listed, or otherwise deemed advisable
by the Board of Directors, then the matter would be referred to the
Shareholders for their approval regardless of whether a sufficient
number of shares previously had been authorized. Shareholders of
the Company are not entitled to preemptive rights with respect to
the issuance of any authorized but unissued shares.
Because the Company could issue a significant number of shares
in connection with future financings or acquisitions, it is
possible that a change of control of the Company could occur.
However, management believes that most of the shares sold in any
financing would be sold to a number of different purchasers which
would mean that such purchasers would have to act in concert in
order to effect a change in control. There are at present no
specific understandings, arrangements or agreements with respect to
any future acquisitions or other transactions which would require
the Company to issue any new shares of its Common Stock that are
proposed to be authorized by amendment of the Companys Articles of
Incorporation.
This proposal is not intended to have any anti-takeover effect
and is not part of any series of anti-takeover measures in any
Articles of Incorporation, as amended, or the Bylaws of the Company
in effect on the date of this Proxy Statement. However,
Shareholders should note that the availability of authorized but
unissued shares of Common Stock could make any attempt to gain
control of the Company or the Board of Directors more difficult or
time consuming and that the availability of authorized but unissued
shares might make it more difficult or time consuming to remove
Management. Although the Board of Directors currently has no
intention of doing so, shares of Common Stock could be issued by
the Board to dilute the percentage of Common Stock owned by a
significant stockholder and increase the cost of, or the number of,
voting shares necessary to acquire control of the Board of
Directors or to meet the voting requirements imposed by Colorado
law with respect to a merger or other business combinations
involving the Company. The Company is not aware of any proposed
attempt to take over the Company. The Company has no present
intention to use the authorized Common Stock for anti-takeover
purposes.
The Company currently has certain outstanding stock option
agreements with officers and directors of the Company for which
shares of common stock are not available under the current
authorized share number of 15,000,000. This proposal, if approved
by the Shareholders, will have the effect of providing available
authorized but unissued shares which would then be available for
the exercise of such existing outstanding stock option agreements
to officers and directors in the aggregate amount of 1,105,764
shares at various option prices of $.28 to $.97 per share therefore
leaving 8,894,236 shares available for other purposes. The
following table sets forth information as of December 31, 1997 with
respect to such stock options to Executive Officers and Directors
not presently covered by the 15 million authorized shares of the
Company:
Number of Securities Underlying
Unexercised Options at Per Share
Name December 31, 1997 Exercise Price
William W. Reid 500,000 $.50
5,764 $.28
William F. Pass 100,000 $.50
David C. Reid 300,000 $.50
John W. Goth 100,000 $.50
Douglas J. Newby 100,000 $.97
1,105,764
The Board of Directors recommends that the Shareholders of the
Company vote FOR this proposal to approve an amendment to the
Articles of Incorporation to increase the authorized shares from
15,000,000 shares to 25,000,000 shares. The affirmative vote of
the holders of two-thirds of the outstanding shares of Common Stock
will be necessary to approve the proposal to amend the Articles of
Incorporation to increase the number of shares from 15,000,000
shares to 25,000,000 shares.
THE SHARES OF COMMON STOCK REPRESENTED BY PROXIES IN
THE ACCOMPANYING FORM WILL BE VOTED FOR THE ADOPTION
OF THE AMENDMENT TO THE COMPANYS ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED SHARES FROM
15,000,000 SHARES TO 25,000,000 SHARES.
PRINCIPAL SHAREHOLDERS
The following table sets forth the number of shares of the Companys
common stock owned beneficially as of February 25, 1998, by each
person known by the Company to have owned beneficially more than
five percent of such shares then outstanding, by each person
serving as a director of the Company, the Executive Officers, and
all of the Company's officers and directors as a group.
Percentage
of Class
Name and Address of Type of Number Beneficially
Beneficial Owner Ownership of Shares (7) Owned
William W. Reid Record and 446,528(1) 3.1%
338 Clayton #1 Beneficial
Denver, CO 80206
David C. Reid Record and 384,970(2) 2.7%
9070 E. Beneficial
Jewell Circle
Denver, CO 80231
William F. Pass Record and 200,000(3) 1.4%
14820 W. 58th Pl Beneficial
Golden, CO 80403
John W. Goth Record and 100,000(4) 0.7%
15140 Foothill Road Beneficial
Golden, CO 80401
Douglas J. Newby Record and 0 0%
1285 Avenue of Beneficial
the Americas
Suite 3500
New York, New York 10019
Placer Dome U.S.
Inc. Record and 975,000 7.0%
Suite 600 Beneficial
1055 Dunsmuir St.
Vancouver,
British Columbia,
Canada V7X 1L3 (5)
The Travelers Record and 3,162,374 22.7%
Corporation Beneficial
One Tower Square
Hartford, CT
06183 (6)
French American Record and 2,142,171 15.4%
Banking Corporation Beneficial
499 Park Avenue
New York, NY 10022
All officers and 1,131,498 7.6%
directors as a group
(5 persons)
(1) This number includes an option to purchase 382,531 shares at
$.28125 per share.
(2) This number includes an option to purchase 365,000 shares at
$.28125 per share.
(3) This number includes an option to purchase 195,000 shares at
$.28125 per share.
(4) This number consists of an option to purchase 100,000 shares
at $.28125 per share.
(5) Placer Dome U.S. Inc. is a wholly owned subsidiary of Placer
Dome Inc., a Canadian public company.
(6) The securities are owned by The Travelers Corporation and its
subsidiaries, The Travelers Insurance Co., and The Prospect
Company.
(7) Does not include options which will become exercisable if
Shareholders approve the amendment to the Company's Articles of
Incorporation to increase the number of authorized shares from
15,000,000 to 25,000,000 shares.
EXECUTIVE COMPENSATION
Compensation of Officers
The following table summarizes the total compensation of the
Executive Officers of the Company for the Companys last three
fiscal years. Except as set forth below under Stock Option Plan
and Pension Plan, there were no compensation plans for which cash
or non-cash distributions, other than salaries, were made during
the last fiscal year:
Summary Compensation Table
Annual Compensation All
Name and Principal other
Position Year Salary Bonus Compensation
William W. Reid, 1997 $243,719 $150,000 $22,500(1)(2)
President and CEO 1996 $205,048 $80,000 $-
1995 $200,000 $53,750 $22,500(1)(2)
William F. Pass, 1997 $111,054 $67,500 $19,495(1)(2)
Vice President, 1996 $93,966 $36,000 $-
Chief Financial 1995 $90,000 $23,000 $13,307(1)(2)
Officer and
Secretary
David C. Reid, 1997 $122,531 $75,000 $21,530(1)(2)
Vice President 1996 $103,534 $40,000 $-
1995 $100,000 $23,000 $13,050(1)(2)
(1) On December 10, 1985, the Companys Board of Directors adopted
a Simplified Employee Pension Plan (SEP). The Company intends to
make a determination of contributions under the SEP on an annual
basis, based upon review by the Board of Directors of the
performance of the Company. The Company has not yet determined any
contributions to the SEP for the year ended December 31, 1997. The
Company made a contribution of 15% during year 1997 for calendar
year 1996. No contribution was made for the calendar year 1995.
The Company made a contribution of 15% during year 1995 for
calendar year 1994. Under the SEP, the Company has the option of
contributing a certain amount directly to its employees Individual
Retirement Accounts. The Plan covers all employees of the Company
with certain participation requirements, however the Company is not
required to make any contributions in a given year. If
contributions are made, they must be made to all eligible
employees. Contributions made under the SEP in any one calendar
year for any one employee may not be more than the smaller of
$24,000 for calendar year 1997 or 15% of that employee's total
compensation.
(2) Effective June 1, 1995, the Company granted to its executive
officers and outside director options to purchase an aggregate
450,000 shares of common stock of Gold Capital Corporation from
TSVLP or the Company at an exercise price of $1.25 per share (the
market price of the shares as of the date of the grant).
Subsequent to the August 29, 1997 merger of Gold Capital with
Globex and effective September 30, 1997, those option agreements
were terminated and replaced with option agreements for an
aggregate of 124,380 shares of common stock of Globex at an
exercise price of $3.15 per share (market price of the shares as of
the date of the grant which was $2.83 per share). Mr. William Reid
received options to purchase 55,280 shares of Globex common stock,
and Mr. Pass and Mr. David Reid each received options to purchase
27,640 shares. These option agreements expire October 1, 2002.
The options were not in the money at December 31, 1997 based upon
the average of the reported price of Globex common stock of $1.75
per share and therefor had no reportable value.
Option Grants in Last Fiscal Year
There were no grants of stock options made pursuant to the
Non-Qualified Stock Option and Stock Grant Plan during 1997 to
Executive Officers.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Table Value
Shown below is information at December 31, 1997 with respect
to the exercised and unexercised options to purchase the Companys
common stock to Executive Officers under the Non-Qualified Stock
Option and Stock Grant Plan.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options Held at at December 31,
Name December 31, 1997 1997 (4)
William W. Reid 382,531(1) $202,282
500,000(3) $0
William F. Pass 195,000(2) $103,584
100,000(3) $0
David C. Reid 365,000(2) $193,888
300,000(3) $0
(1) These options were exercisable at December 31, 1997. The
number excludes options for 5,764 shares at $.28 per share which
are not presently exercisable because sufficient authorized but
unissued shares are not available. Such options will become
exercisable at such time as additional authorized and unissued
shares of the Companys common stock become available. If they had
been exercisable their value would be $3,055 based upon the price
noted in (4) below.
(2) These options were exercisable at December 31, 1997.
(3) All of the $.50 per share options are currently unexercisable
but will become exercisable at such time as additional authorized
and unissued shares of the Company's common stock become available.
If they had been exercisable, their value would be $156,250 for
William W. Reid, $31,250 for William F. Pass, and $93,750 for David
C. Reid, based upon the price as noted in (4) below.
(4) Based upon the close price as reported by Nasdaq as of
December 31, 1997 ($0.81 per share).
Compensation of Directors
The Company reimburses its outside directors for reasonable
expenses incurred by them in attending meetings of the Board of
Directors or of Committees of the Board. No such expenses were
incurred nor paid for 1997. Additionally, outside directors are
normally paid $3,000 per quarter increased to $4,500 per quarter
for the third quarter of 1997, for services. During 1997, Mr. Goth
received total compensation of $13,500 for his service as outside
director for 1997 plus $6,000 for his service as director for 1996;
and Mr. Newby received $4,500 for his services as outside director.
Moyes Newby & Co., a company in which Mr. Newby is a principal,
received an aggregate of $34,027 for financial consulting services
and out of pocket expenses from the Company during 1997 (see
Certain Relationships and Related Transactions, Relationship with
Moyes Newby & Co., Inc., below in this proxy). Directors who are
also officers or employees of the Company or its affiliates do not
receive compensation for their director responsibilities over their
normal compensation as employees.
Employment Contracts
The Company entered into Employment Agreements effective
January 1, 1994, as amended June 1, 1995 with William W. Reid,
William F. Pass, and David C. Reid (the Employment Contracts) each
of which is for a five year term commencing January 1, 1994. The
Employment Contracts shall be extended automatically by one year
upon each anniversary date unless either the Company or employee
provides the other party written notice prior to 120 days before
such anniversary, that the Employment Contract will not be so
extended. William W. Reids Employment Contract provides for a base
salary of $157,500 per year for the first year, $200,000 per year
for the second year, and annual upward adjustments thereafter based
upon increases in the Consumer Price Index (All Items-Urban) (the
CPI-U). William F. Pass Employment Contract provides for a base
salary of $75,000 per year for the first year, $90,000 per year for
the second year, and annual upward adjustments thereafter based
upon increases in the CPI-U. David C. Reids Employment Contract
provides for a base salary of $75,000 per year for the first year,
$100,000 per year for the second year, and annual upward
adjustments thereafter based upon increases in the CPI-U.
Each of the Employment Agreements provides that the employee
would be entitled to receive a termination payment from the Company
in a lump sum equal to 2.9 times the employees average annual
compensation for the five taxable years immediately preceding the
date of termination by the employee under certain circumstances,
summarized as follows: i) the sale by the Company of substantially
all of its assets to a single purchaser or to a group of affiliated
purchasers; ii) the sale, exchange or other disposition, in one
transaction or a series of related transactions, of at least 30
percent of the outstanding voting shares of the Company; iii) a
decision by the Company to terminate its business and liquidate its
assets; iv) the merger or consolidation of the Company with
another entity or an agreement to such a merger or consolidation or
any other type of reorganization; v) the Company makes a general
assignment for the benefit of its creditors, files a voluntary
bankruptcy, or certain similar events or circumstances, vi) there
is a material change in employees authority, duties or
responsibilities; or, vi) the Company acquires any stock or other
investment in any business enterprise which acquisition or
investment exceeds 40 percent of the net book value of the Company.
Upon the death of an employee, the Company shall pay the employees
estate an amount equal to one years salary; and upon termination by
the Company following permanent disability of the employee, the
Company shall pay the employee an amount equal to two years salary.
Certain Relationships and Related Transactions
Relationship with Moyes Newby & Co., Inc.
Effective September 13, 1996, the Company retained the firm of
Moyes Newby & Co., Inc. (Moyes Newby) as its financial advisor to
develop potential financial options available to the Company and
identify possible mining investment opportunities. Effective
January 16, 1997, the relationship with Moyes Newby was suspended
to allow the Company to focus its attention on the merger of its
partner at Tonkin Springs, Gold Capital Corporation, with Globex
Mining Enterprises, Inc. which merger was consummated August 29,
1997. The Company paid Moyes Newby an aggregate of $17,330 and
$20,402 for services and expenses for 1996 and through January 16,
1997, respectively, under that arrangement. Effective November 15,
1997, the Company and Moyes Newby entered into a month-to-month
arrangement whereby Moyes Newby provides the Company general
corporate and financial advisory services for a retainer of
$5,000/month plus reimbursement of reasonable out of pocket
expenses, for a total of $13,625 through December 31, 1997.
Douglas J. Newby is managing partner of Moyes Newby & Co., Inc. and
effective October 16, 1997, Mr. Newby became a director of the
Company.
Transaction with Gold Capital
On December 31, 1993, Tonkin Springs Venture Limited
Partnership (TSVLP), a partnership owned by subsidiaries of the
Company, sold a 60 percent undivided interest in the Tonkin Springs
properties and obligations (the Properties) to Gold Capital
Corporation (Gold Capital). TSVLP retained a 40 percent undivided
interest in the Properties. TSVLP and Gold Capital then made their
respective interest in Tonkin Springs subject to the Tonkin Springs
Project Joint Venture (Project Joint Venture) with Gold Capital
designated manager. Gold Capital is responsible for funding of all
costs related to Tonkin Springs until defined commercial
production, if any, is achieved. Gold Capital purchased its 60
percent undivided interest in the Properties from TSVLP for a
purchase price and other consideration of approximately $7,830,000
representing the estimated fair market value of the assets
purchased. The purchase price included, among other things, a 7.5
percent mortgage note in the amount of $3.8 million (the Promissory
Note) and 300,000 shares of Gold Capitals Series A Convertible
Preferred Stock (the Preferred Stock) having an assigned value of
$3 million. Effective December 31, 1996, the Company converted its
Preferred Stock into 1,750,000 shares of Gold Capital common stock.
In addition, Gold Capital paid mandatory dividends on the
Preferred Stock through November 30, 1996 with an aggregate of
275,518 common shares and satisfied a liability to the Company with
262,029 additional shares, resulting in the Company owning a total
of 2,287,547 common shares of Gold Capital.
Effective August 29, 1997, Gold Capital became a wholly-owned
subsidiary of Globex Mining Enterprises, Inc. (Globex), a Canadian
corporation with shares traded on the Toronto and Montreal stock
exchanges (symbol: GMX) pursuant to the merger of Gold Capital with
a subsidiary of Globex (the Gold Capital Merger). With this
merger, Globex through its wholly-owned subsidiary Gold Capital,
assumed responsibilities and obligations for the Project Joint
Venture under the various Gold Capital agreements with the Company
and TSVLP. With the Gold Capital Merger the Company received an
aggregate of 631,905 shares of Globex common stock in exchange for
its 2,287,547 shares of Gold Capital which as of December 31, 1997
represents approximately 5.6 percent of the outstanding common
shares of Globex.
Effective August 29, 1997, the remaining balance of the
Promissory Note was repaid, and also related to the Gold Capital
Merger, the Company agreed for a period of 2 years to vote its
Globex shares as directed by Globex and to give Globex a first
right of refusual on sales of Globex stock to third parties. In
addition, the Company has amended the Joint Venture Agreement with
Gold Capital effective with the Gold Capital Merger. Under the
terms of the amendment Gold Capital i) paid off the balance of the
Promissory Note to TSVLP in the amount of $1,206,449 including
$66,804 of accrued interest, ii) agreed to finance any capital
requirements of TSVLP after Commencement of Commercial Production,
and iii) agreed to pay TSVLP $60,000 per month in minimum cash
distributions during a 36 month period commencing September 1,
1998. TSVLP will not be obligated to refund such payments if its
share of cash flow is insufficient to recoup same, except upon
liquidation of the Project Joint Venture, in which event any
balance could be recouped from liquidation distributions due TSVLP,
if any. The amendment also i) gives Gold Capital the right to
borrow up to 100% of TSVLPs cash flow from the Project Joint
Venture (after the $60,000 per month minimum payments noted above)
if required to support Gold Capitals debt service for future third
party project financing, if any, with any net borrowings from
TSVLPs share of cash flow due and payable within 30 days of payoff
of any third party project financing, ii) increases the maximum
Recoupment Amount from $6 million to $11.25 million and further
provides for limited increases to the Recoupment Amount for
additional exploration costs in excess of $750,000 but not more
than $1,500,000 prior to Commencement of Commercial Production (for
a maximum Recoupment Amount of $12 million), and iii) provides
expanded definitions of Commencement of Commercial Production. As
of December 31, 1997, the Company recorded a $2,160,000 receivable
due from the Project Joint Venture of which $240,000 was classified
as current. There is also a $2,160,000 deferred credit, so in
effect the entire receivable is offset by a deferred credit.
William W.
Reid, president of the Company, was appointed a member of the board
of directors of Gold Capital subsequent to the December 31, 1993
transaction pursuant to the Gold Capital Preferred Stock covenants,
and served in that capacity until August 29, 1997.
For 1996 and a portion of 1997 the Company provided Gold
Capital staff support and administrative services under a month to
month arrangement. The Company has received an aggregate of
$72,590 and $177,744 pursuant to this arrangement in years 1997 and
1996, respectively.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
the Companys officers and directors, and persons who own more than
ten percent of a registered class of the Companys equity
securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission (the SEC). Officers
and directors and greater than ten percent shareholders are
required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on its review of the copies of such forms
received by it, or written representations from certain reporting
persons, the Company believes that, during the fiscal year ended
December 31, 1997, all filing required applicable to its officers,
directors and greater than ten percent beneficial owners were
complied with except that Mr. Newby's Initial Report on Form 3 was
not timely filed.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of the Company anticipates engaging BDO
Siedman, LLP as the independent auditors for the fiscal year ending
December 31, 1998 subject to determination of the terms of that
engagement towards the end of 1998. The Company anticipates that
a representative of BDO Seidman, LLP, who conducted the audit for
the year ended December 31, 1997, will be present at the Annual
Meeting of Shareholders. There have been no disagreements on
matters of accounting principles or practices, financial statement
disclosures nor of audit scope or procedures between the Company
and BDP Seidman, LLP during the two most recent fiscal years nor
any subsequent interim periods. The representative of BDO Seidman,
LLP will be available to respond to Shareholder questions and will
have the opportunity to make a statement at that time if the
representative desires to do so.
PROPOSALS OF SHAREHOLDERS FOR PRESENTATION
AT THE NEXT ANNUAL MEETING OF SHAREHOLDERS
The Company anticipates that the next Annual Meeting of
Shareholders will be held in June of 1999. Any Shareholder of
record of the Company who desires to submit a proper proposal for
inclusion in the proxy material related to the next Annual Meeting
of Shareholders must do so in writing and it must be received at
the Companys principal executive officers on or before December 31,
1998. The proponent must be a record or beneficial owner entitled
to vote on such proposal at the next Annual Meeting and must
continue to own such security entitling such right to vote through
the date on which the meeting is held.
ANNUAL REPORT ON FORM 10-KSB
The Annual Report on Form 10-KSB concerning the operation of
the Company during the calendar year ended December 31, 1997,
including audited financial statements for the year then ended, is
available upon request to shareholders of the Company.
OTHER MATTERS
The Board knows of no other business to be presented at the
Meeting of Shareholders. If other matters properly come before the
Meeting the persons named in the accompanying form of Proxy intend
to vote on such other matters in accordance with their best
judgement.
By Order of the Board
April __, 1998 William W. Reid,
President and Chairman of the Board
<PAGE>
U. S. GOLD CORPORATION
55 Madison, Suite 700, Denver, Colorado 80206
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William F. Pass and William W.
Reid as Proxies, each with the power to appoint his substitute, and
hereby authorizes them, to represent and vote, as designated on the
reverse, all shares of Common Stock of U.S. Gold Corporation (the
Company) held of record by the undersigned on April 3, 1998, at the
Annual Meeting of Shareholders to be held on June 10, 1998 or any
adjournment thereof.
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
U.S. Gold Corporation
June 10, 1998
Please Detach and Mail in the Envelope Provided
Please mark your
A [X] vote as in this
example
1. Election
of FOR WITHHELD Nominees:
Directors [ ] [ ] William W. Reid
John W. Goth
David C. Reid
Douglas J. Newby
[ ] For all nominees, except the following:
______________________________________
2. To approve the proposed amendment FOR AGAINST ABSTAIN
to the Companys Articles of
Incorporation to increase the [ ] [ ] [ ]
number of authorized shares
from 15,000,000 to 25,000,000.
IF NO SPECIFICATION IS MADE, SHARES WILL BE VOTED FOR THE
ELECTION OF THE ABOVE DIRECTORS AND FOR APPROVAL TO
AMEND THE ARTICLES OF INCORPORATION.
SHAREHOLDER NAME AND ADDRESS
DO NOT PRINT IN THIS AREA
Signature(s)________________________________ Date_______1998
Note: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator or guardian, please give full title as such.
