NORTHWEST GOLD, INC.
MINERALS PLAZA, GLEN L. LARSEN BUILDING
877 NORTH 8TH WEST
RIVERTON, WYOMING 82501
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY APRIL 3, 2000
TO THE SHAREHOLDERS OF NORTHWEST GOLD, INC:
PLEASE TAKE NOTICE that the Special Meeting of Shareholders of Northwest Gold,
Inc., a Wyoming corporation (the"Company"), will be held at the Company's
executive offices, 877 North 8th West, Riverton, Wyoming 82501 on Monday April
3, 2000, at 11:00 a.m., local time, or at any adjournments thereof, for the
purpose of acting upon:
1. Electing three directors to serve until the next annual meeting of
shareholders, and until their successors have been duly elected or
appointed and qualified.
2. Approving the reverse split of the common stock on a 1 for 100
basis, which would reduce the number of outstanding shares of
common stock from the current number (50 million) down to 500,000
shares.
3. Amending the articles of incorporation to increase the number of
shares of common stock which the Company may issue from the
current number (50 million shares) to an unlimited number of
shares.
4. Amending the articles of incorporation to eliminate the personal
liability of the directors of the Company under certain
circumstances.
5. Such other business as may properly come before such meeting.
Only shareholders of record at the close of business on Wednesday,
March 8, 2000 will be entitled to notice of and to vote at the Special Meeting
or any adjournment thereof. CUMULATIVE VOTING IN THE ELECTION OF CANDIDATES FOR
DIRECTORS IS AUTHORIZED. The Company's transfer books will not be closed for the
Meeting.
A list of shareholders entitled to vote at the Meeting will be
available for inspection by any record shareholder at the Company's principal
executive offices in Riverton, Wyoming. The inspection period begins two days
after the date this Notice is given and ends at the conclusion of the Meeting.
By Order of the Board of Directors
March 13, 2000 Harold F. Herron, Secretary
Please date, sign and return your Proxy so that your shares may be voted as you
wish, and to assure quorum. The prompt return of your signed Proxy, regardless
of the number of shares you hold, will save the Company money by reducing the
expense of soliciting you to sign your Proxy. If you sign your Proxy, you still
may attend the Special Meeting and vote in person.
YOUR VOTE IS IMPORTANT
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NORTHWEST GOLD, INC.
MINERALS PLAZA, GLEN L. LARSEN BUILDING
877 NORTH 8TH WEST
RIVERTON, WYOMING 82501
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, APRIL 3, 2000
The enclosed Proxy is solicited on behalf of the board of directors of
Northwest Gold, Inc. (the "Company") for use at the Special Meeting of
Shareholders to be held at 11:00 a.m. local time on Monday, April 3, 2000. The
Notice of Meeting, Proxy Statement and Proxy was mailed to record shareholders
on about March 13, 2000.
REVOCABILITY OF PROXY
The Proxy may be revoked at any time, to the extent it has not been
exercised, by: written revocation; or executing a later-dated Proxy and
delivering it to the Company; or requesting (in writing) a return of the Proxy;
or the shareholder voting in person at the Special Meeting.
VOTING OF PROXY
If the enclosed Proxy is executed and returned, it will be voted as
indicated by the shareholder on the proposals. Unless otherwise instructed to
the contrary in the Proxy, the appointees named in the Proxy will:
1. VOTE FOR the election of the three persons nominated by management
to the board of directors to serve until the next annual meeting
of shareholders, and until their successors have been duly elected
or appointed and qualified. Cumulative voting in the election of
directors is authorized.
2. VOTE FOR approval of the reverse split of the common stock on a 1
for 100 basis, which will reduce the number of outstanding shares
of common stock from the current number (50 million) down to
500,000 shares.
3. VOTE FOR amending the articles of incorporation to increase the
number of shares of common stock which the Company may issue from
the current number (50 million shares) to an unlimited number of
shares. The $.001 par value per share for common stock will not be
changed.
4. VOTE FOR amending the articles of incorporation to eliminate the
personal liability of the directors of the Company under certain
circumstances.
5. VOTE in accordance with their best judgement on such other
business as may properly come before the Special Meeting.
As of the date of the Notice of Meeting and Proxy Statement, the
management of the Company has no knowledge of other matters that may be brought
before the Special Meeting.
SOLICITATION
The costs of preparing, assembling and mailing the Notice of Meeting,
Proxy Statement and Proxy (the "Proxy Materials") as well as solicitations of
the Proxies and miscellaneous related costs, will be paid by U.S. Energy Corp.,
the Company's principal shareholder. Solicitation will be done by the U.S. Mail;
the Company may also use the services of its directors, officers and employees
to solicit Proxies, personally or by telephone, but they will not be paid for
such work. It is not expected that the Company will hire special employees or
paid solicitors, although it reserves the right to do so.
The Company will ask banks, brokerage houses and other custodians,
nominees and fiduciaries to forward copies of the Proxy Materials to those
persons for whom they hold shares and request authority for the execution of the
Proxies. The Company will reimburse the nominees for their reasonable
out-of-pocket expenses.
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VOTING SECURITIES
GENERAL. Only holders of record of shares of the Company's $.001 par
value common stock at the close of business on Wednesday March 8, 2000, will be
entitled to vote at the Special Meeting. On the record date, the Company had
50,000,000 shares of common stock outstanding and entitled to vote. The Company
has no other class of voting securities outstanding. Each share of common stock
is entitled to one vote, in person or by proxy, on all matters. Cumulative
voting is allowed in electing directors but not otherwise. A majority of the
issued and outstanding shares of common stock, represented in person or by
Proxy, constitutes a quorum at any shareholders' meeting.
VOTES REQUIRED FOR ELECTION OF DIRECTORS. Shareholders have the right
to multiply the number of votes they are entitled to cast by the number of
directors for whom they are entitled to vote at the meeting, and cast the
product for a single candidate or distribute the product among two or more
candidates. Those candidates receiving a plurality of the votes cast will be
elected to the board of directors. This is known as "cumulative voting."
VOTES REQUIRED FOR THE OTHER PROPOSALS. Each of proposals 2 , 3 and 4
will be passed if the votes cast in favor of each proposal exceed the votes cast
opposing the matter.
THE RESTRUCTURING OF THE COMPANY
The Company was incorporated under Wyoming law in 1977, and was engaged
in the general minerals business in different states, at different times, until
the early 1990s. Activities included the acquisition, exploration and
development and/or sale or lease of mineral properties, and the purchase and
lease of mineral exploration and mining equipment. Business was conducted
directly for its own account, and indirectly through various joint ventures with
both affiliated (U.S. Energy Corp. and Crested Corp.) and non-affiliated
entities. The Company and Crested Corp. are majority- owned subsidiaries of U.S.
Energy Corp. ("USE"). Presently, the Company is not active in business, has few
assets ($21,000 at May 31, 1999), $79,600 in liabilities (at May 31, 1999) and
consistently loses money every year as general and administrative expenses
(basic corporate administration costs and SEC filing expenses and annual audit
fees) exceed income earned on cash deposits (the loss for fiscal 1999 was
$11,900). All of the $79,600 in liabilities is owed to affiliates.
The board of directors has decided that even though the Company has no
operations and no significant assets, the Company may have value for its
shareholders in the marketplace as a "shell" corporation because of its long
history of being registered under section 12(g) of the Securities Exchange Act
of 1934, the number of shareholders of record (more than 1,270) and its
relatively small amount of liabilities ($79,600).
The Company is not listed on any electronic trading medium (either
Nasdaq Small Cap or the Over-the-Counter- Bulletin Board "OTCBB"). There is no
bid or ask quotation for the shares.
To realize any value for its shareholders from its status as a "shell"
corporation, the Company would have to acquire another corporation (or other
form of entity) with a business plan or an operating business which would be of
significant interest to new investors in the marketplace. Such an acquisition
probably would be based on an "after closing" stock ownership ratio of 90+% (by
the owners of the acquired company)/10-% by the current shareholders. The
current shareholders other than USE would be free to sell their shares after
closing such an acquisition (i.e., the current shareholders would continue to
have "free trading" shares). Assuming none of the USE directors stayed on after
the acquisition as directors of the Company, USE would be free to sell those
shares it acquired more than two years ago, starting with the 91st day after
closing, and the rest (i.e., the shares acquired in 2000) would have to be held
for at least one year before USE could sell into the market under SEC rule 144.
You should note that any actual transaction could involve percentages greater or
less than the 90%/10% example given.
The Company must first restructure its capital stock to be prepared for
a possible acquisition transaction: The issued and outstanding shares of common
stock must be reduced through a "reverse stock split" on a 1 for 100 basis (for
example, 2,500 shares would become 25 shares), which will reduce the total
issued and outstanding shares to 500,000 shares. 242,000 of these shares will be
unrestricted "free trading" shares, which would be available for sale if and to
the extent a market for the stock develops after an acquisition is closed. In
addition, the authorized number of shares which the Company is authorized to
issue must be increased to provide enough shares for the Company to issue in an
acquisition and thereafter as needed in other transactions by new management.
Under Wyoming law a corporation may change its articles of incorporation to
permit an unlimited number of shares to be issued.
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At the same time as the Company's capital stock is to be restructured,
the board of directors is soliciting your approval of another change (see
proposal 4), the overall purpose of which is to liberalize the articles of
incorporation as permitted under current Wyoming law.
The officers and directors of the Company have not actively sought any
business acquisition opportunities, and the Company has no agreement in
principle or any formal contract to acquire or enter into any business
opportunity as of the date of this Proxy Statement. It is possible that the
Company will not be successful in attracting a suitable business acquisition
candidate unless the Company has cash resources on hand. There is no assurance
that the Company will obtain any additional capitalization.
As a "shell" or "blank check" company" the Company will compete with
numerous companies and firms, a few of which are larger, better established,
have greater financial and other resources, more employees, and more extensive
facilities than the Company. The Company is at a competitive disadvantage to
these other entities.
The Investment Company Act of 1940 defines an "investment company" as
an issuer which is or holds itself out as being engaged primarily in the
business of investing, reinvesting or trading in securities. While the Company
does not intend to engage in such activities, the Company could become subject
to regulation under the Investment Company Act of 1940 in the event the Company
obtains or continues to hold a minority interest in a number of enterprises. The
Company could be expected to incur significant registration and compliance cost
if required to register under the Investment Company Act of 1940.
The Company intends to structure any merger or acquisition in such a
manner as to minimize federal and state tax consequences to the Company and any
target company.
The Company presently is a "shell" or "blank check" company, because it
has no specific business plan or purpose. Instead of starting its own business,
the Company intends to locate and consummate a merger or acquisition with a
company or companies, or other entities or persons.
The board of directors does not presently expect the Company will seek
to raise money in a public offering in connection with the search for a merger
or acquisition of an existing business or operating assets. However, if the
Company were to raise money in a public offering, under section 7(b) of the
Securities Act of 1933 (the "1933 Act"), and rule 419 adopted by the SEC, the
ability of the Company (as a shell or blank check company) to raise capital
through a public offering of its securities by a registration statement filed
with the SEC is subject to certain limitations. These limitations, which would
apply to the Company if it were to conduct a registered public offering as a
blank check or shell company, generally are as follows: All securities issued by
the Company in connection with such an offering and the gross proceeds from the
offering must be deposited promptly into an escrow account with an insured
depository institution (usually a commercial bank) covered by insurance
maintained by the Federal Deposit Insurance Corporation ("FDIC"). The funds are
held in escrow for the benefit of the investors in the offering. Initial
payments out of the escrow account are permitted only to pay underwriting
commissions, underwriting expenses and dealer allowances; an additional amount
of up to 10 percent of the amount remaining after payment of commissions,
expenses and dealer allowances may be paid to the Company; and the balance must
remain in escrow. The securities issued in connection with the offering also
must be deposited into the escrow account, for the benefit of the purchasers
thereof, with the purchasers retaining any voting rights with respect to the
securities which they otherwise would have.
The securities and offering proceeds are required to remain in the
escrow account until such time as the Company were to execute an agreement to
acquire a business or assets that will constitute the business (or a line of
business) of the Company and for which the fair value of the business or net
assets to be acquired represents at least 80 percent of the net public offering
proceeds (including any proceeds received or to be received from exercise of
securities such as warrants which were purchased in the public offering). Upon
execution of such an agreement, the Company would be required to file with the
SEC a post-effective amendment to the original registration statement, which
amendment would disclose detailed information about the business or assets to be
acquired.
Within five business days after the post-effective amendment to the
registration statement is declared effective by the SEC, the Company would be
required to send the prospectus (which would be part of the amendment) to each
of the purchasers of securities in the public offering. Each purchaser would
have not less than 20 and no more than 45 business days to decide, based on the
information in the prospectus as so amended, whether to remain an investor or
get
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his or her money back out of escrow. If by the end of the 45th business day, the
Company had not received the affirmative written election by a purchaser to
remain an investor, the Company would have to return that purchaser's funds
(plus interest) to that purchaser. If enough purchasers elected to remain
investors so that their invested funds equal at least 80 percent of the net
public offering proceeds, then the acquisition could be consummated by the
Company and the investors would receive certificates for the securities of the
Company which they had paid for in the public offering.
If there is no acquisition consummated within 18 months of the
effective date of the original registration statement for the public offering,
all of the funds in the escrow account would have to be returned to investors by
the Company, and the securities would be retired to authorized and unissued
status by the Company.
If an acquisition were to be consummated by the Company under rule 419,
all security holders of the Company would be entitled to receive audited
financial statements for the first full fiscal year of operations following such
consummation, and other information, no later than 90 days after the end of the
Company's fiscal year. It should be noted that if the Company raised funds in a
public registered offering as a shell or blank check company, any business or
assets acquired would have to have financial statements which either had been
audited or were capable of audit, in order for the Company to be able to acquire
such business or assets.
The Company files periodic reports with the SEC under the Securities
Exchange Act of 1934; these reports are the annual reports on Form 10-K,
quarterly reports on Form 10-Q, and interim reports on Form 8-K Current Report.
If an acquisition were to be made by the Company without funds from a registered
public offering, the Company nonetheless would acquire only a business or assets
which had been or could be audited, because the Company would be required to
file a Form 8-K Current Report to report the acquisition, including audited
financial statements for the business or assets acquired. Only under very
limited circumstances will the SEC allow a reporting company to acquire a
significant (in relative size) business or assets which have not been audited or
are not capable of audit. Even if the circumstances might justify a waiver from
the usual SEC audit standard applied to reporting acquisitions, the Company
would not acquire a business or assets which had not been audited or are not
capable of audit.
The Company will not use public notices or general advertisements in
its search for business opportunities. Instead, the Company intends to rely
primarily upon the business contacts of its officers and directors in locating
possible acquisition candidates.
The Company has had no discussions with any particular consultants
regarding the business of the Company or possible acquisition candidates for the
Company. The Company has no agreements or understandings with any consultant.
None of the Company's officers, directors or principal shareholders in the past
have used particular consultants or advisers on a regular basis.
Any independent consultants which the Company may hire would be
retained on the basis of their experience in evaluating business opportunities.
Any such hires probably would be on a per project as needed basis. If the
Company had cash funds, such consultants would be paid cash fees, and possibly
also be issued small amounts of restricted shares of common stock.
The Company presently does not have any significant amount of funds to
loan to prospective business acquisition candidates in advance of consummation
of an acquisition transaction. Such loans would not be made even if the Company
were to obtain cash funds in the future, which funds would be used for general
and administrative expenses and to pay the costs of evaluating prospective
acquisition candidates.
As an alternative to the raising of capital through registered public
offerings under rule 419, it is possible that the Company may seek to raise cash
funds through the private placement of its securities under rule 506 of
Regulation D.
It is likely that the Company will undergo a change in its control in
the event an acquisition transaction is consummated, because the Company most
likely will issue a significant amount of restricted shares of common stock as
the main component of the consideration in such a transaction. For example, a
business could be acquired by the issuance of sufficient shares of common stock
so that the acquired business or its shareholders owned more than 90 percent, on
a pro forma basis, of the shares of common stock outstanding after the
transaction.
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The Company will not borrow funds and use the proceeds therefrom to
make any payments to promoters of the Company, or officers or directors of the
Company or any of their affiliates or associates. It is possible that the
Company will enter into an agreement to acquire an entity or assets in which an
officer, director or principal shareholder of the Company has a direct or
indirect interest of some kind (often referred to as a "related party
transaction"). Such a transaction would be subject to potential conflict of
interest, because the directors and/or principal shareholder of the Company
would have dual duties: to obtain as good a deal as possible for the Company, or
even not enter into a deal with a related party for various reasons (under
performing assets, untested business model, etc.), but also obtain as favorable
terms as possible for themselves or the other entities they represent. The
directors of the Company who are not directly interested in such a transaction
will endeavor to negotiate as fair a deal as possible for all of the
shareholders of the Company. However, there is no formal procedure in place or
contemplated to be adopted which would provide a mechanism to resolve a
potential conflict of interest. It is possible (under Wyoming corporate law)
that such a related party transaction may have to be submitted to the
shareholders of the Company for their approval. However, under certain
circumstances, shareholder approval of such a transaction is not required. As of
the date of this proxy statement, there are no plans, arrangements or agreements
or agreements in principle for the Company to enter into such a related party
transaction.
The officers and directors of the Company will not seek any different
or additional consideration for their shares of common stock, or otherwise, in
connection with an acquisition transaction. For example, if the Company acquires
an entity by issuing additional shares of common stock to the shareholders of
the entity, all of the shareholders of the Company (including its officers and
directors and principal shareholders) will be diluted equally with respect to
the percentage of outstanding shares such persons own after consummation of the
transaction. Further, any proposed purchase of the outstanding stock of the
Company would be effected pro rata among all shareholders; the officers and
directors, and USE, would not receive any different terms for the stock in the
Company which they own.
The officers and directors of the Company will negotiate the terms and
conditions of any acquisition transaction. Approval by the shareholders will not
be required under Wyoming law to consummate any proposed acquisition
transaction, and the board of directors will not seek to obtain such approval.
There are no arrangements, agreements or understandings between
non-management shareholders and manage- ment under which non-management
shareholders may directly or indirectly participate in or influence the
management of the Company's affairs. However, non-management shareholders will
continue to have voting rights to elect directors to the Company's board of
directors pursuant to Wyoming law, and depending on the outcome of cumulative
voting results in any particular election, could elect a director to the board.
Finder's fees (whether in the form of cash or debt or equity) may be
paid to third parties, or even to officers or directors, in connection with the
business of the Company. Payment of such amounts would be subject to the
approval of the disinterested directors of the Company. The amounts of such fees
would be reasonable in relation to the size of the transaction. It is possible
that payment of such fees would not be submitted to the shareholders for
approval, but rather could be effected by decision of the disinterested
directors.
Because the Company does not have cash funds to acquire a business or
assets of another company, the Company would effect a consummation of such a
business or assets by the issuance of a large number of shares of common stock.
As a result of such a transaction, the control of the Company would be shifted
away from the current shareholders over to the new shareholders, who would then
be in position to replace current directors with persons of their own choosing.
The officers and directors of the Company are expected to devote from a
few hours per week, up to their full time on the business of the Company,
depending on the level of activities at the time. For example, relatively little
time may be required when acquisition candidates have been identified but
further evaluation would required delivery of documents and background
information on the candidates. However, a great deal of time would be required
to evaluate the lead candidate once documents are available, and to negotiate
and finalize the terms of an acquisition transaction
It is not anticipated that additional securities of the Company will be
issued to management or promoters of the Company, or to the associates or
affiliates of such persons, but securities could be issued to officers or
directors as finder's fees in connection with an acquisition transaction.
5
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The officers and directors of the Company presently have interests in
Ruby Mining Company. Ruby is a shell company which was restructured in January
2000 in the same manner proposed for the Company, although the number of shares
outstanding in each corporation are substantially different. The interests
consist of 770,000 shares (70%) of Ruby's common stock which is owned by USE;
John L. Larsen and Harold F. Herron are officers and directors of USE. Mr.
Larsen and Mr. Herron may be faced with conflicts of interest in resolving how
they would choose between Northwest Gold, Inc. and Ruby, i.e. which company
would be selected to participate in different acquisition or merger
opportunities which became available. The Company presently does not have a
policy for dealing with such an eventuality. If such a conflict of interest
should be presented, the officers and directors would have to use their best
judgment to decide which company would participate.
The Company anticipates that additional securities of the Company might
be offered for sale in a private placement of securities under rule 506 of
Regulation D, to raise cash to cover future general and administrative expenses,
and the costs of evaluating and negotiating with prospective acquisition
candidates. However, there is no assurance such an offering would be successful,
and no such private placement is presently contemplated to be undertaken in the
immediate future.
Officers and directors of the Company intend to communicate with their
existing business contracts, to determine if such contacts include persons and
companies which may be interested in an acquisition transaction with the
Company. The communications will be made personally by letter or private
telecommunications. No advertising campaign will be initiated by the Company.
In the future, the Company intends to initiate discussions with
brokerage firms regarding market making activities for the Company's securities.
To date the Company has not initiated any such discussions, but the officers and
directors of the Company may begin such discussions with one or more firms in
2000. No consultants will be used in connection with such discussions.
The shares of common stock of the Company are defined as "penny stock"
under rule 3a51-1 adopted by the SEC under the Securities Exchange Act of 1934.
In general, "penny stock" includes securities which (i) are not listed on
principal stock exchanges or the National Association of Securities Dealers
Automated Quotation System (" Nasdaq" Small Cap); (ii) securities which are not
so listed and which have a bid price in the market of less than $5.00; or (iii)
securities of an issuer with net tangible assets of less than $2 million ($5
million if the issuer has been in continuous operation for less than three
years), or which has had average revenue of less than $6 million for the last
three years.
As "penny stock," the Company's securities are subject to rule 15g-9
adopted by the SEC under the 1934 Act. Rule 15g-9 imposes additional sales
practice requirements on broker-dealers which sell such securities to persons
other than established customers and "accredited investors" (generally,
individuals with net worth in excess of $1 million or annual incomes exceeding
$200,000, or $300,000 together with their spouses, or individuals who are the
officers or directors of the issuer of the securities). For transactions covered
by this rule, a broker-dealer must make a special suitability determination for
the purchaser and have received the purchaser's written consent to the
transaction prior to sale. Consequently, the rule may adversely affect the
ability of broker-dealers to sell the Company's securities, and therefore may
adversely affect the ability of owners of the Company's securities, whenever
purchased, to resell any of the securities of the Company in the public market.
The Company will provide to all of its shareholders complete
documentation of any acquisition candidate with which the Company has signed a
definitive acquisition agreement, including audited financial information for
such candidate if available, at such time as the Company files a Current Report
on Form 8-K with the SEC regarding the execution of such acquisition agreement
and the terms and conditions thereof.
As of the date of this Proxy Statement, none of the officers,
directors, or promoters of the Company, or any of their affiliates or
associates, have had any preliminary contact or discussions with and there are
no present plans, proposals, arrangements or understandings with any
representatives of the owners of any business or company regarding the
possibility of an acquisition or merger transaction.
There are no agreements or understandings for any officer or director
to resign at the request of another person. None of the officers or directors of
the Company are acting on behalf of or will act at the direction of any other
person.
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The securities laws, rules and/or regulations of numerous states
prohibit or limit both the initial sale of securities of blank check or shell
companies to investors in such states, as well as the resale of such securities
by any person or brokerage firm to investors in such states. The Company has an
obligation not to violate such laws with respect to sales of its securities
effected by the Company through its officers and directors. The Company does not
presently intend to conduct any offering, public or private, of its securities.
If the Company or its affiliates were to conduct sales of the Company's
securities (for the Company or for their own accounts) in states wherein such
activities were prohibited, the Company and such affiliates could be subjected
to injunctive proceedings initiated by state securities administrators in state
courts and to fines or penalties for violations of law. In addition, the
purchasers of such securities could initiate proceedings for rescission of their
investments. The initiation of any of these proceedings would be costly for the
Company to defend, and the imposition of fines or penalties and/or the
adjudication of civil liability for illegal sales of securities would impair the
Company's ability to continue in business.
If a brokerage firm initiates market making and other activities with
respect to the Company's securities, the compliance officers of such brokerage
firm must supervise the brokerage firm personnel to prevent sales to residents
of states where such transactions are illegal.
Numerous states (including the following states) do not allow resale of
securities of shell or blank check companies; certain of the states do not allow
resale of companies which are not listed on the principal stock exchanges or
Nasdaq, other states require companies to meet minimum operating revenues or net
worth tests, and other states prohibit resales of securities of blank check or
shell companies. In any of these jurisdictions, the result is the same i.e., no
trading could commence in such states until an acquisition is consummated, and
until such time, shareholders in the restrictive states may not be able to
resell their shares. Those states which do not allow such resales include:
Arkansas, Connecticut, Massachusetts, California, Delaware, Idaho, Illinois,
Indiana, Kentucky, Louisiana, Michigan, Minnesota, Oklahoma, Pennsylvania,
Tennessee, Texas and Utah. The foregoing list could be expanded in the future.
The Company has never paid a dividend. Its ability to pay a dividend on
its common stock in the future will depend on whether a viable and profitable
business can be acquired, and whether the board of directors then determines
that profits can be divided among the shareholders. It is possible that no
dividends would be declared even if the Company is profitable, because of the
need to keep money in the Company to pay for internal growth.
The Company's ability to pay dividends is restricted by provisions of
the Wyoming Business Corporation Act which provides that a Wyoming corporation
may only pay dividends if, after giving effect to the dividend, the corporation
would be able to pay its debts as they become due in the usual course of
business, or the corporation's total assets would be less than its total
liabilities plus the amount that would be needed, if the corporation were to be
dissolved at the time the dividend, to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior to those
receiving the dividend.
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OWNERSHIP OF COMMON STOCK BY MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following is a list of all record holders who, as of March 8, 2000
beneficially owned more than five percent of the outstanding shares of common
stock, as reported in filings with the Securities Exchange Commission (the
"SEC") or as otherwise known to the Company, and a list of the ownership of
shares of common stock by each officer and director of the Company, and by all
officers and directors as a group. Except as otherwise noted, each holder
exercises the sole voting and dispositive powers over the shares listed opposite
the holder's name. The voting and dispositive powers over the shares owned by
U.S. Energy Corp. ("USE") are shared by John L. Larsen and Harold F. Herron,
directors of USE, therefore, beneficial ownership of the shares owned by USE is
shared by such persons under SEC rules. See "Certain Relationships and Related
Transactions".
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
U.S. Energy Corp. 25,242,500 shares 50.5%
877 N. 8th West
Riverton, WY 82501
John L. Larsen* 25,242,500 shares 50.5%
201 Hill Street
Riverton, WY 82501
Harold F. Herron* 25,800,000 shares** 51.6%
3425 Riverside Drive
Riverton, WY 82501
Robert A. Nicholas* -0- -0-
103 Grandview Lane
Riverton, WY 82501
All officers and 25,800,000 shares*** 51.6%***
directors as a group
(three persons)
* Director and officer of Northwest Gold, Inc.
** Mr. Herron owns an additional 557,500 shares in his own or his family's
name, in addition to his beneficial ownership of the shares held by
USE.
*** If proposal 2 (the reverse stock split) is approved, USE will own
5,892,175 shares or 96% of the issued and outstanding shares of the
Company, because 5,639,750 more shares will be issued to USE after the
Special Meeting to convert $56,397.50 of the remaining debt owed to
USECC. See "Certain Relationships and Related Transactions."
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PROPOSAL ONE
ELECTION OF DIRECTORS
Presently, the Company's directors are Harold F. Herron, John L. Larsen
and Robert A. Nicholas. All have been nominated for election as directors at the
Special Meeting.
NAME AGE POSITION
John L. Larsen 68 A director since February 2000.
Chairman of the board of directors
and CEO of U.S. Energy Corp.
Harold F. Herron 46 Chief Executive Officer since 1996,
and Secretary, Treasurer and
director since September 1980.
Robert A. Nicholas 42 Director
As noted under "Voting Securities," cumulative voting is allowed in the
election of directors.
Management recommends that the shareholders vote for the election of
Mr. Larsen, Mr. Herron and Mr. Nicholas to the board of directors.
Executive officers of the Company are elected by the board of directors
at annual directors' meetings, which follow each Annual Shareholders' Meeting.
Officers serve until the successor has been duly elected and qualified, or until
death, resignation or removal by the board of directors.
FAMILY RELATIONSHIPS.
HAROLD F. HERRON, Chief Executive Officer, Secretary, Treasurer and a
director, is the son-in-law of John L. Larsen, a director. Mr. Herron and Mr.
Larsen also are officers and directors of U.S. Energy Corp. and Mr. Larsen is
Chairman of the Board of Directors of U.S. Energy Corp.
BUSINESS EXPERIENCE OF THE NOMINEES.
JOHN L. LARSEN has been principally employed as an officer and director
of U.S. Energy Corp. ("USE") for more than 25 years. USE is a Nasdaq/NMS listed
company which owns mineral properties in Colorado, Wyoming, Utah and California.
For more than 20 years, Mr. Larsen also has served as an officer and director of
Crested Corp. ("Crested"), a majority-owned subsidiary of U.S. Energy Corp.
Crested's common stock is registered with the SEC under section 12(g) of the
Securities Exchange Act of 1934, and is listed on the "Over-the-Counter
Electronic Bulletin Board" which is an electronic trading facility maintained by
NASD Regulation, Inc. Mr. Larsen also is a director and/or officer of Plateau
Resources Limited and Sutter Gold Mining Company, which are private subsidiaries
of USE, and of Ruby Mining Company, a shell company which is registered under
section 12(g) of the 1934 Act and also is a subsidiary of USE.
HAROLD F. HERRON has been principally employed as USE's Vice-President
since January 1989. He also is a director of USE. From 1976, Mr. Herron has been
an employee of Brunton, a manufacturer and/or marketer of compasses, binoculars
and knives. Brunton was a wholly owned USE subsidiary until Brunton was sold in
February 1996. Initially, he was Brunton's sales manager, and since 1987 he has
been its President. Mr. Herron is an officer and director of Ruby Mining
Company, a shell company which is registered under section 12(g) of the 1934 Act
and also is a subsidiary of USE. Mr. Herron received an MBA degree from the
University of Wyoming after receiving a BS degree in Business Administration
from the University of Nebraska at Omaha.
ROBERT A. NICHOLAS has been a director since February 2000. He is an
attorney admitted to practice in Wyoming. He was with the Wyoming Attorney
General's Office from 1986 to 1990 and has been in private practice since then.
Mr. Nicholas owned a cattle ranch in Wyoming from 1991 to 1999. Since 1995 he
has been a member of the board of the Love for Children Foundation of Wyoming.
Mr. Nicholas is active in the Rotary Club.
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The Company has reviewed Forms 3, 4 and 5 reports concerning ownership
of common stock in the Company, which have been filed with the SEC under Section
16(a) of the Securities Exchange Act of 1934, and received written
representations from the filing persons. Based solely upon review of the reports
and representations, USE and each of the officers and directors of the Company
filed their reports on a timely basis during the fiscal year ended May 31, 1999.
INFORMATION CONCERNING AN EXECUTIVE OFFICER WHO IS NOT A DIRECTOR.
ROBERT SCOTT LORIMER, age 48, has been Controller and Chief Accounting
Officer for USE and its affiliated companies (including Ruby Mining Company and
Northwest Gold, Inc.) for more than 20 years. Mr. Lorimer also has been Chief
Financial Officer for USE and Crested since May 25, 1991, their Treasurer since
December 14, 1990, and their Vice President Finance since April 1998. Mr.
Lorimer also is an officer and director of Sutter Gold Mining Company. He serves
at the will of the boards of directors. There are no understandings between Mr.
Lorimer and any other person by which he was named an officer, and he has no
family relationship with any of the other executive officers or directors of
Northwest Gold, Inc. or USE or affiliates of USE. Mr. Lorimer is paid by USECC
for his services to the Company.
EXECUTIVE COMPENSATION
Under a Management Agreement dated August 1, 1981, USE and Crested
share certain general and adminis- trative expenses, including compensation of
the officers and directors of the companies (but excluding directors' fees);
these expenses are paid through the USECC Joint Venture. Substantially all the
work efforts of the officers of USE and Crested are devoted to the business of
both USE and Crested.
The USECC Joint Venture ("USECC") provides management and
administrative services to the Company for a monthly fee of $500.
All USECC personnel are USE employees, in order to utilize USE's ESOP
as an employee benefit mechanism. USES charges USECC for the direct and indirect
costs of USE employees for time spent on USECC matters, and USECC charges
one-half of that amount to each of USE and Crested.
No executive officer of the Company has been paid anything for services
to the Company for more than the three fiscal years ended May 31, 1999. There
are no employment agreements between such persons and the Company. The board of
directors does not intend to pay its current officers for services on behalf of
the Company, however, at such time (if ever) as the Company is engaged in an
operating business, its then current officers would be paid for their services.
The number of such future employees and their pay rates is not now known.
The following table contains information with respect to the aggregate
compensation accrued by the Company for the last three fiscal years ended May
31, 1999 for its chief executive officer. See "Certain Relationships and Related
Transactions." No directors' fees will be accrued in the future by the current
board of directors (although this policy could change if there is a change in
the control of the Company as a result of an acquisition transaction, see
above), and finder's fees in reasonable amounts could be paid to officers or
directors in connection with an acquisition transaction (see above).
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Position Year Salary Bonus
----------------- ---- ------ -----
Harold F. Herron, CEO 1999 -0- -0-
1998 -0- -0-
1997 -0- -0-
The Company does not have an incentive stock option plan or similar
equity compensation arrangement, and there are no outstanding options to buy any
securities of the Company.
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PROPOSAL 2
REVERSE STOCK SPLIT
To approve the reverse split of the issued and outstanding shares of
common stock on a 1 for 100 basis, which will reduce the number of outstanding
shares of common stock from the current number (50 million) down to 500,000
shares. No fractional shares will be issued; fractional interests will be
rounded up to the next full share.
If this proposal and the companion proposals 3, 4 and 5 are approved at
the Special Meeting, the reverse split and amendments to the articles of
incorporation will take effect when articles of amendment to the articles of
incorporation of the Company are filed with the Wyoming Secretary of State. From
and after that date, each stock certificate representing shares of common stock
on the filing date will be deemed to represent and will be treated as
representing 1/100th as many shares. Shareholders will not be required to send
in their stock certificates. Approval of the reverse split will not affect the
free trading status of the shares held by shareholders other than USE, because
under SEC rule 144(d)(3)(I), those shareholders will be entitled to "tack on"
the time they have held their old shares to the ownership of the new shares. The
shares owned by USE will be subject to restrictions, as explained under "Certain
Relationships and Related Transactions."
Shareholders will not have "dissenters' rights" with respect to this
proposal (i.e., the right to demand payment under Wyoming law for their shares
if they don't want to approve this proposal). Management recommends that the
shareholders vote in favor of proposal 2.
PROPOSAL 3
INCREASE AUTHORIZED SHARES
To approve amending the articles of incorporation to increase the
number of shares which the Company may issue from the current number (50 million
shares) to an unlimited number of shares.
If this proposal is approved at the Special Meeting, articles of
amendment to the articles of incorporation of the Company will be filed with the
Wyoming Secretary of State, and the increase in authorized shares will take
effect at that time.
As has been the case since inception of the Company, under Wyoming law
and the articles of incorporation of the Company, shares of common stock may be
issued by authority of the board of directors without shareholder approval.
Except for shares which will be issued to USE (see "Certain Relationships and
Related Transactions") the board of directors presently has no plans to issue
shares of common stock to any person or entity.
Shareholders will not have "dissenters' rights" with respect to this
proposal (i.e., the right to demand payment under Wyoming law for their shares
if they don't want to approve this proposal). Management recommends that the
shareholders vote in favor of proposal 3.
PROPOSAL 4
ELIMINATE PERSONAL LIABILITY OF DIRECTORS
To approve amending the articles of incorporation to add a provision
eliminating the personal liability of the directors of the Company under certain
circumstances.
Wyoming law now allows a corporation to add a provision in the articles
of incorporation to eliminate the personal liability of a director to the
corporation, or its shareholders, for breach of fiduciary duty as a director.
This law is intended to allow application of the "business judgement" rule which
allows directors to make decisions for the corporation based on their judgement
of the facts at hand, even if the directors neglected to consider certain facts,
so long as the actions or omissions by the directors were made in good faith,
and did not involve intentional misconduct or a knowing violation of law, or an
illegal distribution of assets, or an act which improperly benefitted a
director.
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The Wyoming law generally is applicable in corporate transactions like
the sale of the corporation or its assets, or its merger with another entity.
The effect of the law (if there is provision for its application in the articles
of incorporation) is to make directors not liable for using their good faith
judgement in corporate transactions which end up in the courts as "breach of
duty of care" cases.
The text of the amendment to the articles of incorporation of the
Company to be voted on as proposal 4 is as follows:
"No director of the corporation shall be personally liable to the
corporation or to the shareholders of the corporation for monetary
damages for any action, or any failure to take any action, as a
director, except liability for :
(A) the amount of financial benefit received by a director
to which he is not entitled;
(B) An intentional infliction of harm on the corporation or
its shareholders;
(C) A violation of WBCA 17-16-833 (voting for or assenting
to an unlawful distribution; or
(D) An intentional violation of criminal law."
Shareholders will not have "dissenters' rights" with respect to this
proposal (i.e., the right to demand payment under Wyoming law for their shares
if they don't want to approve this proposal).
Management recommends that the shareholders vote in favor of proposal
4, which will conform the Articles of Incorporation more closely to similar
provisions now found in most publicly-held companies.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH U.S. ENERGY CORP. ("USE"). As of May 31, 1999 the
Company owed the USECC Joint Venture a total of $79,600 for various payments
going back more than 10 years which USECC made on behalf of the Company. These
payments included stock transfer agent fees, audit fees and expenses, and SEC
filing fees for the Annual Reports on Form 10-K. These payments were made by
USECC because USE is the largest shareholder in the Company, and because the
board of directors of the Company desired to keep the small amount of cash
($11,300 at May 31, 1999) on hand for contingencies.
On September 7, 1999, the Executive Committees of USE and Crested
agreed to convert $23,202.50 of the Company's debt to USECC into 23, 202,500
restricted shares of the Company's common stock (at $.001 per share), so that as
of the date of this proxy statement USE owns a total of 25,242 500 shares
(50.4%) of the Company. If the reverse stock split is approved, these shares
will turn into 252,425 shares.
In addition, the Company and the Executive Committees agreed that if
proposals 2 and 3 are approved at the Special Meeting, the $56,397.50 balance of
the Company's debt to USECC will be converted into an additional 5,639,750
shares of common stock in the Company (at $.01 per share). These shares would be
issued post-reverse stock split, and would result in USE's ownership in the
Company increasing to 5,892,175 shares (96%). Crested agreed that all of these
shares in the Company would be issued to and owned by USE, and USE would reduce
Crested's debt to USE by an amount equal to Crested's share of the $79,600 debt.
USE will continue to pay for all of the legal and accounting, and
shareholder communication fees and expenses in connection with this proxy
statement, and all of the subsequent legal and accounting costs and SEC
reporting expenses, which the Company has incurred in connection with this proxy
statement and will incur in the future as it seeks an acquisition opportunity.
In return for USE paying these costs, the Company has assigned to USE a piece of
fully depreciated used mining equipment (without ascertainable value), and 1,581
restricted shares of common stock of USE and 3,885 restricted shares of common
stock in Crested which the Company had held. These shares could not be sold in
the public market for USE stock by the Company or by USE or Crested except by
means of a registration statement filed
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with the Commission. If the Company continues to incur costs past the year 2000
or 2001, then it may issue more stock to USE to reimburse USE for paying for
these additional costs.
John L. Larsen is the President and a director of the Company, and
Harold F. Herron is an officer and director of the Company, and both individuals
are officers and directors of USE and are members of USE's Executive Committee.
Mr. Larsen also is an officer and director and a member of the Executive
Committee of Crested. The foregoing transactions between USE and Crested
involving the Company were approved by the disinterested directors who comprise
a majority of the Executive Committee members of USE, and of Crested. Because
USE is a principal shareholder in the Company, transactions cannot be deemed to
have been negotiated at arms' length, however, none of the disinterested
directors of USE who are Executive Committee members own any stock in the
Company or serve the Company as officers or directors or employees.
The directors of the Company took into account the following factors in
pricing the stock issued to USE: The absence of any trading market with any
quoted prices, the absence of any significant value in the Company, and its
current lack of operations. The Executive Committees of USE and Crested took
into account the following factors in negotiating the prices of the Company's
stock: The restricted status of the shares to be issued to USE, and the
possibility that even if an acquisition were closed in the future, there might
never develop the amount of trading interest and market volume which would be
required to create the liquidity in the stock necessary for USE to be able to
sell its shares.
RULE 144 AS APPLIED TO USE'S SHARES IN THE COMPANY. The shares of the
Company owned and to be issued in the future to USE are and will be "restricted
securities"; the future sale of these shares will be restricted under the SEC's
rule 144 under the Securities Act of 1933. Under rule 144, shares which are
"acquired directly or indirectly from the issuer, or from an affiliate of the
issuer, in a transaction or chain of transactions not involving any public
offering" cannot be sold into the public markets unless certain conditions are
satisfied at the time of sale, including the filing with the SEC of a notice of
sale on Form 144, having held the shares for at least the minimum one year
holding period, there being available adequate current public information about
the issuer, staying within the volume of sale limitations (the holder can sell,
in any three month period, shares equal to not more than 1% of the total
outstanding shares of the issuer), and selling in ordinary brokerage
transactions.
In applying rule 144 to USE's current total of 25,242,500 shares
(252,425 after the reverse split) in the Company, 2,040,000 shares (20,400 after
the reverse split) could be sold under rule 144 at any time because USE has
owned these shares for many years. The reverse split will not result in a reset
of the rule's one year minimum holding period. The additional 23,202,500 shares
(232,025 after the reverse split) and the added shares to be issued to USE if
the proposals are approved in the Special Meeting, cannot be sold under rule 144
for at least one year after issuance. Starting 90 days after the time when USE
is not an affiliate of the Company (because after an acquisition all of USE's
shares represent less than 10% of the total outstanding shares of the Company,
and the directors of the Company who are affiliates of USE resign from the board
of directors of the Company), then USE may be entitled to sell its shares
outside of the limitations of rule 144, pursuant to rule 144(k), provided that
the shares then to be sold have been held for at least two years.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board has selected Arthur Andersen LLP as independent certified
public accountants for the year ending May 31, 2000. Such firm has audited the
Company's financial statements since 1990. Shareholders are not asked to ratify
the reappointment of the firm for 2000. It is not expected that a representative
of Arthur Andersen LP will be present at the Special Meeting.
ANNUAL REPORT TO SHAREHOLDERS
A copy of the 1999 Annual Report to Shareholders on Form 10-KSB,
including financial statements, has been forwarded to all record shareholders
entitled to vote at the Meeting. If you have received this Proxy Statement but
not a copy of that Annual Report, please notify Harold F. Herron, 877 North 8th
West, Riverton, WY 82501, telephone 307.856.9271, and the Company will send a
copy to you.
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SHAREHOLDERS' PROPOSALS
The next Annual Meeting of Shareholders is expected to be held in
November or December of 2000. Shareholder proposals to be presented at the next
Annual Meeting of Shareholders must be received in writing by the Company at its
offices in Riverton, Wyoming, addressed to the President, no later than June 20,
2000.
OTHER MATTERS
The Board does not know of any other matters which may properly come
before the Special Meeting. However, if any other matters properly come before
the Special Meeting, it is the intention of the appointees named in the enclosed
form of Proxy to vote said Proxy in accordance with their best judgment on such
matters.
Your cooperation in giving these matters your immediate attention, and
in returning your Proxy promptly, will be appreciated.
By Order of the Board of Directors
Northwest Gold, Inc.
Harold F. Herron, Secretary
Dated: March 13, 2000
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NORTHWEST GOLD, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THE SHARES
REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED HEREON WITH RESPECT TO THE ABOVE
PROPOSALS.
KNOW ALL MEN BY THESE PRESENTS: That the undersigned shareholder of
Ruby Mining Company (the "Company") in the amount noted below, hereby
constitutes and appoints Messrs. John L. Larsen and Harold F. Herron , or either
of them with full power of substitution, as attorneys and proxies, to appear,
attend and vote all of the shares of stock standing in the name of the
undersigned at the Special Meeting of the Company's shareholders to be held at
the Company's executive offices, 877 North 8th West, Riverton, Wyoming 82501, on
Monday, April 3, 2000 at 11:00 a.m., local time, or at any adjournments thereof,
upon the following:
WHERE NO VOTE IS SPECIFIED, THE PROXYHOLDER WILL CAST VOTES FOR THE ELECTION OF
MANAGEMENT'S NOMINEES AND, IN THEIR DISCRETION, ON ANY OTHER MATTERS THAT MAY
COME BEFORE THE MEETING. TO VOTE, CHECK THE BOX; TO ABSTAIN, DON'T CHECK EITHER
BOX OPPOSITE THE PROPOSAL .
Sign your name exactly as it appears on the mailing label below. It is
important to return this Proxy properly signed in order to exercise your right
to vote, if you do not attend in person. When signing as an attorney, executor,
administrator, trustee, guardian, corporate officer, etc., indicate your full
title as such.
PROPOSAL 1 FOR ___ AGAINST ___ 1. To elect the following persons to serve
ELECTION OF as directors of the Company. If you wish
DIRECTORS to vote for or against ALL nominees,
check the appropriate box to the left.
If you wish to vote against SOME of the
nominees, draw a line through those
nominees, and check the box "For" to
vote for the election of the OTHERS.
You may cast your votes for each nominee
(you have as many votes as you have
shares multiplied by the number of
nominees). However, you may not cast
different numbers of votes for (or
against) different nominees.
John L. Larsen Harold F. Herron
Robert A. Nicholas
PROPOSAL 2 FOR ___ AGAINST ___ 2. Approve the reverse split of the common
REVERSE stock on a 1 for 100 basis by amending
STOCK SPLIT the Articles of incorporation.
PROPOSAL 3 FOR ___ AGAINST ___ 3. Approve amending the articles of incorp-
INCREASE oration to increase the number of shares
AUTHORIZED of common stock which the corporation is
STOCK authorized to issue, from the current
number (50 million) to an unlimited
number.
PROPOSAL 4 FOR ___ AGAINST ___ 4. Approve amending the articles of incorp-
ELIMINATE oration to eliminate the personal lia-
PERSONAL bility of the directors to the Company
LIABILITY OF and its shareholders under certain
DIRECTORS circumstances.
X_______________________________________
(Sign on this line - joint holders may
sign appropriately)
_______________ ____________________
(Date) (Number of Shares)
PLEASE NOTE: Please sign, date and place
this Proxy in the enclosed self-
addressed, postage prepaid envelope and
deposit it in the mail as soon as
possible. Please check if you are
planning to attend the meeting __
If the address on the mailing label is
not correct, please provide the correct
address in the following space.
________________________________________
________________________________________
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