SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General form for registration of securities of small business issuers
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
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Commission File Number: 1-1767
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THE GOLD CHAIN MINING COMPANY
(Exact name of small business issuer as specified in its charter)
UTAH 87-0267213
(State or other jurisdiction of (I.R.S Employer Ident. No.)
incorporation or organization)
44 West Broadway, Suite 704-S, Salt Lake City, Utah 84101
(Address of principal executive offices, including zip code)
(801) 355-6044
(Issuer's telephone number, including area code)
Securities to be Registered Pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which each class is to be registered
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NONE NOT APPLICABLE
Securities Registered Pursuant to Section 12(g) of The Act:
Title of class
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COMMON STOCK, $0.01 PAR VALUE
Documents incorporated by reference:
THE INDEX TO EXHIBITS IS LOCATED IN PART IV ON PAGE 26.
1,975,776 shares of common stock were outstanding on August 5, 1999.
Page 1 of 63 Consecutively Numbered Pages.
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TABLE OF CONTENTS
PAGE
ITEM NUMBER AND CAPTION NO.
PART I
Item 1. Description of Business . . . . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis
or Plan of Operation . . . . . . . . . . . . . . . . . . 12
Item 3. Description of Property . . . . . . . . . . . . . . . . . . . 14
Item 4. Security Ownership of Certain Beneficial
Owners And Management . . . . . . . . . . . . . . . . . 16
Item 5. Directors, Executive Officers, Promoters and Control Persons . 18
Item 6. Executive Compensation . . . . . . . . . . . . . . . . . . . . 20
Item 7. Certain Relationships and Related Transactions . . . . . . . . 22
Item 8. Description of Securities . . . . . . . . . . . . . . . . . . 22
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Stockholder Matters . . . . . . 23
Item 2. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 24
Item 3. Changes in and Disagreements with Accountants
On Accounting and Financial Disclosure . . . . . . . . . 24
Item 4. Recent Sales of Unregistered Securities . . . . . . . . . . . 24
Item 5. Indemnification of Directors and Officers . . . . . . . . . . 25
PART F/S
Financial Statements and Supplementary Data . . . . . . . . . . . . . . 25
PART III
Item 1. Index to Exhibits, Financial Schedules
and Reports on Form 8-K . . . . . . . . . . . . . . . . 26
Item 2. Description of Exhibits . . . . . . . . . . . . . . . . . . . 26
POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . . . . . 26
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
AUDITED FINANCIAL STATEMENTS, beginning on page . . . . . . . . . . 27
EXHIBITS, beginning on page . . . . . . . . . . . . . . . . . . . . 38
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REPORTS TO SECURITY HOLDERS
It is Gold Chain's intent, beginning with the filing of this registration
statement, to become a reporting company. It intends to file periodic reports
on Form 10-K, Form 10-Q and Form 8-K, make disclosures of beneficial security
ownership on Forms 3, 4 and 5 and report all other information required to be
filed with the SEC. Although Gold Chain is not required to deliver an annual
report to its stockholders, it intends to do so, voluntarily, and to include
audited financial statements.
You may read and copy any materials that the Company files with the SEC
at the SEC's Public Reference Room at 450 Fifth Street NW, Washington, DC
20549. You may obtain information about the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. Also, Gold Chain is an electronic
filer, and the SEC maintains an Internet site that contains reports, proxy
and information statements, and other information regarding issuers that file
electronically with the SEC. That site's web address is http://www.sec.gov.
Gold Chain does not have a web address as of the date of this filing.
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NOTICE AND DISCLAIMER REGARDING
FORWARD-LOOKING STATEMENTS
Certain matters discussed herein may be forward-looking statements
that involve risks and uncertainties. These could include, for example,
any of the following: the timely development of existing or future
properties, reserves and projects; the impact of metals prices and metal
production volatility; changing market conditions; changes in the regula-
tory environment; and other material risks that are or will be described
from time to time in the Registrant's filings with the Securities and
Exchange Commission ("SEC"). However, actual results may differ materially
from those projected or implied. As a result, forward-looking statements
expressed herein are deemed to represent Gold Chain's judgment as of the
date of this filing. Gold Chain does not express any intent or obligation
to update any forward-looking statement because it is unable to give any
assurances regarding the likelihood that, or extent to which, any event
discussed in any such forward-looking statement contained herein may or
may not occur, or any effect from or outcome of any such forward-looking
event may or may not bear materially upon its future business, development
of plans, or financial condition and results of operations. The reader
is strongly cautioned to review the comprehensive disclosure of "Risk
Factors" presented in detail at pages 6 through 12.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND. THE GOLD CHAIN MINING COMPANY ("Gold Chain," the
"Company,"
or "Registrant") is a U.S. mineral resource company that was organized on
August 19, 1907, as a Utah corporation. It is a subsidiary of Mammoth Mining
Company ("Mammoth"), a Nevada corporation that is authorized to do business in
Utah. Mammoth currently owns approximately 37 percent of the total amount of
issued and outstanding shares of Gold Chain common stock ("Gold Chain Common
Shares"). Neither Gold Chain nor Mammoth is or has been involved in any
bankruptcy, receivership or similar proceeding; and, other than in the
ordinary course of business, there has been no material reclassification,
consolidation, merger, or purchase or sale of a significant amount of assets,
of either company.
SUBSIDIARIES AND RELATED COMPANIES. Gold Chain does not have any
subsidiaries. Related parties are described in Part I, Item 8, entitled
"Certain Relationships and Related Transactions," at page 22.
TRADING AND REPORTING HISTORY. Gold Chain's common stock was listed on
the Intermountain Stock Exchange from 1908 and filed annual reports with that
exchange until it closed in 1985. Following passage of the Securities Act of
1933, as amended (the "1933 Act"), and the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the Company also reported to the SEC. Gold Chain
ceased filing periodic reports with the SEC in 1985, but has continued filing
annual reports with the Utah Department of Commerce, Corporation Division.
JOINT VENTURES. The Company has not entered into, and does not
participate in, any joint venture arrangements.
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RECENT CHANGES IN OWNERSHIP. In February, 1994, the Jefferson-Pacific
Corp., a closely-held Washington corporation ("Jefferson-Pacific"), purchased
a little over 80 percent of Mammoth's then issued and outstanding shares of
common stock from the Samuel McIntyre Investment Company and several persons
with large shareholdings in Mammoth. At the time of that purchase, Mammoth
owned approximately 61 percent of the Gold Chain Common Shares. Thus, by
purchasing 80 percent of Mammoth's common stock, Jefferson-Pacific gained
majority control of Gold Chain Common Shares.
In September, 1994, the Jefferson-Pacific shareholders completed a plan
of reorganization and share exchange with Centurion Mines Corporation, a Utah
corporation ("Centurion", which was reorganized in February 1998, as Grand
Central Silver Mines, Inc., or "Grand Central"; Nasdaq: "GSLMD"). The share
exchange resulted in Centurion/Grand Central owning the 80 percent control
block of Mammoth common shares and majority control of Gold Chain Common
Shares. Mammoth and Gold Chain became subsidiaries of Centurion/Grand Central,
and their financial data was fully consolidated into the financial statements
of Centurion/Grand Central.
In April, 1998, Grand Central filed a lawsuit against Mr. Spenst Hansen
("Hansen"), Keystone Surveys, Inc., a closely-held Utah corporation controlled
by Hansen ("Keystone"), and three other closely-held Utah corporations
controlled by Hansen (Hansen, Keystone and the three corporations are referred
to, collectively, as the "Hansen Parties"). Hansen had been a director and
executive officer of Centurion from its incorporation in June, 1984 until his
retirement in February 1998, and has been a Director of Gold Chain and Mammoth
since April, 1995, and their President and Board Chairman since June, 1997.
Grand Central's causes of action alleged breach of contract, breach of
fiduciary duties and securities violations, which the Hansen Parties denied.
In July, 1998, Grand Central settled the lawsuit before the Hansen
Parties filed their answer and counterclaim. Their counterclaim would have
alleged serious fiduciary and contractual breaches and numerous violations
of federal and state corporate and securities laws against Grand Central
and certain members of its newly reorganized management. The settlement
resulted in the dismissal, with prejudice, of all of Grand Central's causes
of action against the Hansen Parties, without any admission or finding of
wrongdoing by any of them. In settling the lawsuit, Grand Central, as
successor to Centurion, transferred its 80 percent control block of Mammoth
common shares to Hansen, and transferred all of the patented mining claims
it owned in the Tintic Mining district (Juab County, Utah) to Keystone. In
exchange, the Hansen Parties gave cash and transferred shares of Grand Central
common stock owned by the Hansen Parties to Grand Central. Because of the
settlement, Hansen gained control of Mammoth's ownership of the 61 percent
control block of Gold Chain Common Shares.
RECENT PROPERTY PURCHASE. On June 21, 1999, the Company's Board of
Directors authorized the purchase, from Keystone, of nine additional patented
mining claims located in the Tintic Mining district. In exchange for the nine
patented mining claims, the Board approved the issuance of 600,000 shares of
the Company's Common Shares. This transaction was not negotiated at arms-
length. It reduced Mammoth's ownership of Gold Chain stock to 37 percent and
gave Keystone control of almost 34 percent of Gold Chain's Common Shares.
Mammoth and Keystone, which are both controlled by Mr. Hansen, together own
almost 71 percent of the Gold Chain Common Shares. Mr. Hansen continues to
serve as Gold Chain's President and Chairman of its Board of Directors.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES. Gold Chain does not own
any patents, trademarks, licenses, franchises, or concessions, except for
patented mining claims granted by the government and private land owners.
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LONG-TERM GOAL AND OBJECTIVES. Gold Chain's long-term business goal is
focused on advancing the exploration, development and mining potential of the
mining properties it owns. The Company's intermediate objectives for funding
and advancing this goal are two-fold. First, it seeks to re-establish itself
as an active business operation. Second, it will seek to obtain capital funds,
preferably from equity investment sources, but also by participation in joint
business arrangements. At present, the Company is focused on accomplishing the
first of these intermediate objectives. When that objective nears completion,
management will then be able to more specifically determine the necessary
short-term plans and strategies best suited to accomplishing the second of its
intermediate objective. In this way, the Company expects, ultimately, to
achieve its long-term goal of creating an on-going source of positive cash-
flow from mineral development, exploration and mining. See the section
entitled "Plan of Operation," of Part I, Item 2, on page 13.
BUSINESS PLAN. Management is developing a business plan to resume
mineral exploration and development of the Company's mineral properties, if
justified. To finance these activities, the Company seeks to receive income
from property sales, or through a joint venture, or other form of business
arrangement with a larger and better capitalized mining company. Also, if
warranted by future events, Gold Chain may explore and develop its properties
on its own account. However, the Company does not plan to expand its mining
operations outside the United States.
CURRENT DEVELOPMENTS. Gold Chain is a viable development stage company.
It also is an active Utah corporation in good standing with the State of Utah.
It does not presently have a potential merger or acquisition transaction under
discussion with any other entity. Nonetheless, the Board of Directors has
determined that the best interests of the Company and its shareholders will be
served by filing this registration statement with the SEC on a voluntary
basis, and subsequently filing periodic reports and other forms with the SEC,
even if not otherwise required to do so by the 1933 or 1934 Acts.
SEASONABILITY. Gold Chain's business is generally not seasonal in
nature except to the extent that weather conditions at certain times of the
year may affect access to some of its properties at higher elevations.
NUMBER OF EMPLOYEES. At present, Gold Chain does not have any paid
employees. If it is successful in obtaining working capital, the Company
intends to contract for the services of 1 or 2 part-time employees, and may
also enter into contractual arrangements with 1 or more consultants. Also,
Gold Chain may contract with additional employees or consultants from time
to time, depending the circumstances of its operations. Consultants are
treated as independent contractors.
SECURITIES ISSUANCES. The Company's Articles of Incorporation
authorize it to issue up to ten million (10,000,000) shares. To date, there
are 1,975,776 shares issued and outstanding. Stock transfer records do not
show any issuances of the Company's common stock during fiscal years 1998,
1997, or 1996. During fiscal 1999, the Company has issued a total of 750,000
shares to date. See "Recent Sales of Unregistered Securities," Part II, Item
4, at page 24. The Company has not issued any stock options, warrants, other
security derivatives, or stock appreciation rights since its inception.
Nevertheless, its Board of Directors have approved the establishment of a
plan for awarding shares of stock, stock options and stock appreciation
rights, pending the affirmative authorization of its shareholders as to the
amount of shares to be administered under the plan. See the section entitled
"Common Stock and Option Award Plan" in Item 6, "Executive Compensation," of
Part I, at page 20.
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GOVERNMENT REGULATION OF ENVIRONMENTAL CONCERNS. Gold Chain is
committed to complying with the various federal, state and local provisions
that regulate the discharge of materials into the environment and govern the
conduct of mining activities for the protection of the environment. To its
knowledge, the Company was in full compliance with these environmental
regulations during fiscal 1998 and intends to fully comply in fiscal 1999.
To fulfill its environmental compliance obligations, Gold Chain must
attend to the complex requirements of laws encompassing jurisdictional
authority over matters affecting land, mineral rights and/or the surface
under which mining activities are proposed. Such compliance may materially
affect Gold Chain's capital expenditures, earnings and competitive position
in the following general areas: 1) surface impact, 2) water acquisition,
3) site access, 4) reclamation, 5) wildlife preservation, and 6) permit and
license qualification. To date, compliance has not had a material financial
effect on Gold Chain because its activities have not had a material and
significant impact on the environment.
As the Company becomes more active on its properties, however, it is
reasonable to expect that compliance with environmental regulations could
substantially increase in cost. Such future compliance could include
performing feasibility studies on the surface impact of the Company's
proposed operations; minimizing surface impact, water treatment and
protection; reclamation activities including rehabilitation of various
sites; and on-going efforts at alleviating the mining impact on wildlife.
Moreover, governmental agencies may require permits or bonds from year to
year to ensure the Company's compliance with applicable regulations.
During fiscal 1998, Gold Chain did not engage in any activity that would
have required, and no governmental agency required, it to obtain any permits
or bonds, or otherwise expend any funds to comply with any material
environmental regulation. Moreover, the Company does not anticipate that any
reclamation bonding will be required during fiscal 1999, or in the reasonably
foreseeable future. Nor does Gold Chain anticipate any material capital
expenditures for environmental control facilities during the remainder of
fiscal 1999 or during fiscal 2000. The cost of future compliance affecting
the Company's mineral properties may depend upon the extent and type of
exploration and testing required. There is no assurance that Gold Chain will
be able to comply with all requirements imposed on such future development,
nor that it will be able to economically operate or pursue exploration
and development activities under future regulatory provisions.
RISK FACTORS
Investment in Gold Chain's securities is considered highly speculative.
It has no recent operating history and is subject to all of the risks inherent
in developing a business enterprise. The Company needs additional capital and
has no revenues. There are non-arms length transactions with related parties
that at times may involve conflicts of interest. Further, Gold Chain does not
anticipate paying any dividends on its common stock. In brief, the Company's
securities involve a high degree of risk. The reader is cautioned, therefore,
to carefully read this registration statement in its entirety and to seriously
consider all of the factors and financial data that are disclosed here, in
particular, the specific risk factors described below.
1. RECENT STATUS AS A NON-REPORTING, NON-TRADED PUBLIC COMPANY.
Gold
Chain has not been a fully reporting company and its securities have not
traded publicly in any market since 1985. The uncertain likelihood that its
business and a market for its securities will be successful must be considered
in light of the difficulties, complications, problems, expenses and delays
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frequently encountered in connection with a new business in general.
These same factors may be compounded by even greater risks, particularly
those characteristic of a speculative industry like mining exploration and
development, and may be adversely affected by the competition in the industry
and the strict regulatory environment in which Gold Chain will operate.
2. EXPLORATION (DEVELOPMENT STAGE) COMPANY. Mineral exploration,
particularly for gold and silver, is highly speculative in nature, frequently
is nonproductive, and involves many risks, often greater than those involved
in the actual mining of mineralization. Such risks can be considerable and may
add unexpected expenditures or delays in the Company's plans. There can be no
assurance that Gold Chain's mineral exploration activities will be successful
or profitable. Even if mineralization is discovered, it may take a number of
years from the initial phase of drilling until production is possible, during
which time the economic feasibility of production may change. Further, there
is no assurance that a determination of economic feasibility will apply over
time because it is based partly on assumptions and factors that are subject
to fluctuation and uncertainty, such as metal prices, production costs, and
the actual quantity and grade of ore recoverable.
3. AUDITORS' GOING CONCERN OPINION. The auditors discussion on the
Company's liquidity, found in Note 3 of the audited financial statements,
states that the audit "contemplates continuation of the Company as a going
concern." Note 3 goes on to state: "The Company, currently has no established
source of revenue. The continued existence of the Company as a going concern
is dependent on the success of obtaining future capital to meet its working
capital requirements. The Company is presently seeking investors to raise
capital." Gold Chain's management has reactivated the Company and is
voluntarily registering its common stock with the SEC to make Gold Chain more
attractive to potential investors. However, the Company cannot provide any
assurances that it will obtain future capital, or if so, that the amount
raised will be sufficient to establish the Company as a going concern.
4. ACCUMULATED NET LOSS; NOMINAL WORKING CAPITAL. Gold Chain has not
commenced significant business operations as of the date of this filing.
The Company remains in the development stage. At December 31, 1998, Gold
Chain had working capital of $5,595 and an accumulated net loss of $277,104.
This accumulated deficit and the potential for deficits in working capital
are losses that are expected to continue into the foreseeable future because
the Company's operations are subject to numerous risks that are associated
with a development stage company in the mining industry.
5. LACK OF REVENUE. Gold Chain needs additional capital but currently
has no revenues. Substantial expenditures are required to establish ore
reserves through drilling, to determine metallurgical processes to extract
the mineralization from the ore and, in the case of new properties, to
construct mining and processing facilities. The Company lacks a constant and
continual flow of revenue. Currently, Gold Chain does not have royalty
interests in any mining production or properties. There is no assurance that
the Company will obtain any such royalty interests, or that if so, it will
receive any royalty payments, or that it will otherwise receive adequate
funding to be able to finance its exploration and development activities.
Further, Gold Chain intends to seek revenue sources on an on-going basis,
but there can be no assurance that such sources can be found, or that if
available, the terms of such financing will be commercially acceptable.
This lack of consistent revenue detrimentally affects the Company's progress
because it needs additional capital to fund business development and
exploration and development operations, and to acquire additional mineral
properties, if warranted.
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6. REGULATORY CONCERNS. Environmental and other government regulations
at the federal, state and local level pertaining to the Company's business
and properties may include: (a) surface impact; (b) water acquisition; (c)
site access; (d) reclamation; (e) wildlife preservation; (f) licenses and per-
mits; and, (e) maintaining the fees for unpatented mining claims. See "Govern-
ment Regulation of Environmental Concerns," above at page 6.
7. RETENTION AND ATTRACTION OF KEY PERSONNEL. Gold Chain's success
will depend, in large part, on its ability to retain and attract highly
qualified personnel, and to provide them with competitive compensation
arrangements, equity participation and other benefits. There is no assurance
that the Company will be successful in retaining or attracting highly
qualified individuals in key management positions.
8. RELIANCE UPON DIRECTORS AND OFFICERS. At present, Gold Chain is
wholly dependent upon the personal efforts and abilities of its officers and
directors, who exercise control over its day to day affairs. There can be no
assurance as to the volume of business, if any, that the Company may succeed
in obtaining, nor that its proposed operations will prove to be profitable.
9. OFFICERS AND DIRECTORS INDEMNIFICATION FOR SECURITIES LIABILITIES.
Gold Chain's Articles of Incorporation and Bylaws provide that it may
indemnify any Director, Officer, agent and/or employee against certain
liabilities as specified in the Revised Utah Business Corporation Act. Also,
the Company may purchase and maintain insurance on behalf of any such person
whether or not it would have the power to indemnify that person against the
liability insured against. The foregoing indemnification could result in
substantial expenditures by the Company and prevent any monetary recovery
from such Officers, Directors, agents and employees for losses incurred by
the Company as a result of their actions. It is the Company's understanding
that, in the opinion of the SEC, indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable with respect to
any claim, issue, question, or matter of liability touched upon by the
federal securities laws and regulations.
10. NO DIVIDENDS. Holders of the Company's common stock are entitled to
receive dividends when, as and if declared by the Board of Directors out of
funds legally available for that purpose. To date, Gold Chain has not paid
any cash dividends. The Board does not intend to declare any dividends in the
foreseeable future, but instead intends to retain all earnings, if any, for
use in the Company's business operations. Even if the Board desired to declare
any dividends, the Company's ability to do so would very likely be restricted
because the Company is seeking outside financing and most financing covenants
prohibit such declarations. See Part I, Item 8, "Description of Securities",
at page 22.
11. PREEMPTIVE RIGHTS, CUMULATIVE VOTING AND CONTROL. In accordance
with the Company's Articles of Incorporation and Bylaws and the laws of Utah,
there are no preemptive rights in connection with Gold Chain's Common Stock.
There can be no assurance that Gold Chain shareholders might not be further
diluted in their percentage ownership of the Company's stock in the event
additional shares were to be issued by Gold Chain in the future. Moreover,
cumulative voting in electing Directors is not provided for. Accordingly, the
holder(s) of a majority of the Company's outstanding shares, present in
person or by proxy, will be able to elect all of its Directors. See the
section entitled "Description of Securities," at page 22.
12. VOTING CONTROL OWNED BY ENTITIES THAT ARE CONTROLLED BY ONE
PERSON.
As of the date of this filing, Mammoth Mining Company owns approximately 37
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percent of the Company's outstanding common stock, and Keystone Surveys, Inc.,
owns approximately 34 percent. Mr. Spenst Hansen, an executive officer and
director of the Company, owns the closely-held Keystone, and holds greater
than 80 percent of Mammoth's outstanding common stock. This control gives Mr.
Hansen the ability to elect all of Gold Chain's directors, who in turn elect
all executive officers, potentially without regard to the votes of all other
stockholders. See Part I, Item 4, "Security Ownership of Certain Beneficial
Owners and Management," at page 16.
13. NO MARKET FOR COMMON STOCK; NO MARKET FOR SHARES. Although the
Company intends to submit its common stock for listing on the OTC Bulletin
Board or the "pink sheets", administered by the National Association of
Securities Dealers, Inc. ("NASD"), there currently is no market for its
shares. There can be no assurance as of the date of this filing, that any
such market will ever develop or be maintained. Even if so, the market and
price for shares of the Company's common stock is likely to be very volatile.
Numerous other factors beyond the Company's control may have significant
impact from time to time on its common stock, with adverse consequences.
For example, stock markets generally experience extreme price and volume
fluctuations that can and do greatly affect the stock trading of "small
capital" companies such as Gold Chain. These often are unrelated to the
operating performance of those companies. Further, in conjunction with
changes in other economic and political conditions, all such factors and
uncertainties may adversely affect the market for and price of the Company's
common stock. See also, Risk Factor No. 17, below, "Potential Future Sales
Pursuant to Rule 144".
14. RISKS OF PENNY STOCK. The Company's common stock is considered to
be a "penny stock" because it meets one or more of the definitions in SEC Rule
3a51-1: (i) it has a price less than five dollars per share; (ii) it is not
traded on a recognized" national exchange; (iii) it is not quoted on the
NASD's automated quotation system (NASDAQ), or even if so, has a price less
than five dollars per share; OR (iv) is issued by a company with net tangible
assets less than $2,000,000, if in business more than three years continuous-
ly, or $5,000,000, if in business less than continuous three years, or with
average revenues of less than $6,000,000 for the past three years. For more
than 15 years there has been no established published market for Gold Chain's
common stock. The Company has begun the process of qualifying for trading
in the over-the-counter market in the "pink sheets" or the OTC Bulletin Board
of the NASD. At such time as the Company meets the relevant requirements, it
may attempt to qualify for listing on either NASDAQ or a national securities
exchange, but there can be no assurance of this.
15. BROKER-DEALER REQUIREMENTS MAY AFFECT TRADING. Section 15(g) of
the Securities Exchange Act of 1934, as amended, and Rule 15g-2 of the
Securities and Exchange Commission require broker-dealers dealing in penny
stocks to provide potential investors with a document disclosing the risks of
penny stocks and to obtain a manually signed and dated written receipt of the
document before effecting any transaction in a penny stock for the investor's
account. Potential investors in the Company's common stock are urged to
obtain and read such disclosure carefully before purchasing any shares that
are deemed to be "penny stock." Moreover, Rule 15g-9 of the Securities and
Exchange Commission requires broker-dealers in penny stocks to approve the
account of any investor for transactions in such stocks before selling any
penny stock to that investor. This procedure requires the broker-dealer to
(i) obtain from the investor information concerning his or her financial
situation, investment experience and investment objectives; (ii) reasonably
determine, based on that information, that transactions in penny stocks are
suitable for the investor and that the investor has sufficient knowledge and
experience as to be reasonably capable of evaluating the risks of penny stock
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transactions; (iii) provide the investor with a written statement setting
forth the basis on which the broker-dealer made the determination in (ii)
above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for investors in the Company's
common stock to resell their shares to third parties or to otherwise dispose
of them.
16. PUBLIC, NON-AFFILIATE SHAREHOLDERS WILL SUFFER THE GREATEST
LOSSES
IF THE COMPANY IS UNSUCCESSFUL. If Gold Chain's future operations are
successful, the present shareholders who are not affiliates of the Company
will realize substantial benefits from Gold Chain's growth. However, if
the Company's future operations are unsuccessful, persons who purchase
its securities by means of a subsequent registration to sell securities,
or other type of public or private offering, likely will sustain the
principal loss of their cash investment.
17. POTENTIAL FUTURE SALES PURSUANT TO RULE 144. At August 5, 1999,
there were issued and outstanding approximately 1,975,776 shares of the
Company's common stock, of which about 75.3 percent are "restricted
securities," as that term is defined in Rule 144 promulgated under the 1933
Act. In general under Rule 144 a person (or persons whose shares are
aggregated) who has satisfied a one (1) year holding period, may sell within
any three month period, an amount of shares which does not exceed the greater
of 1% of the then outstanding shares of common stock, or the average weekly
trading volume during the four calendar weeks prior to such sale. Rule 144
also permits the sale of shares, under certain circumstances, without any
quantity limitation, by persons who are not affiliates of Registrant and who
have beneficially owned the shares for a minimum period of two (2) years.
Hence, the possible sale of those restricted shares may, in the future,
dilute the percentage of free-trading shares held by a shareholder or
subsequent purchaser of these securities, and may have a depressive effect
on the price of the Registrant's securities. Further, such sales, if
substantial, might also adversely effect Registrant's ability to raise
additional equity capital.
RISK FACTORS RELATED TO COMPANY'S PROPERTY
18. REALIZATION OF INVESTMENTS IN MINERAL PROPERTIES AND
ADDITIONAL
CAPITAL NEEDS. The ultimate realization of Gold Chain's investment in
mineral properties is dependent upon, among other factors, the success of
future property sales, the existence of economically recoverable reserves,
the ability of the Company to obtain financing or make other arrangements
for development, and upon the profitability of prospective production. There
presently exists uncertainty and no assurances regarding the Company's
expectation of acquiring sufficient funds to finance its operations for
fiscal 1999 and beyond. Gold Chain does not have sufficient capital of its
own to implement a full-fledged business development plan or finance its
intended operations, let alone to explore and develop its mineral properties.
There can be no assurance that the Company will be successful in obtaining
the required funds to finance its long-term capital needs.
19. ABSENCE OF RECENT MINING ACTIVITY. There has been no significant
mining activities on these properties recently, except for limited exploration
and development work. After Centurion, no other mining company or entity has
made any offer to purchase, lease, or engage in any other transaction, such as
a joint venture, with respect to Gold Chain's property. Although the Company
incurs only nominal expense to preserve its ownership and maintain its
property, it receives from them no revenue or other income for that purpose.
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20. UNCERTAINTY OF DEMAND FOR TINTIC-TYPE, OXIDIZED ORE. Due to the
development of modern hydrometallurgical processes, the absence of suitable
smelters, and the availability of more cost-effective techniques, it is
uncertain what the future level of demand will be for the type of oxidized
mineralization present on the Company's properties. Also, the amount it could
cost to reopen and finance a mining operation is likely to be dependent upon
several factors. These include: acceptable price levels of the relevant
metals; milling and smelting availability; fluctuations in market demand over
time; extent of competition with other companies; availability of acceptable
construction costs; availability of acceptable labor costs; feasibility
of obtaining economical housing facilities; manageable equipment costs;
realistic capital costs; and the acceptability of other price and cost
variables.
21. RELIANCE UPON ESTIMATES AND ASSUMPTIONS. Exploration stage mining
companies use the evaluation work of professional geologists, geophysicists,
and engineers to make estimates in determining whether to acquire an interest
in property, or to commence exploration and development work. These estimates
generally rely on scientific and economic assumptions, and in some instances
may not be correct. The economic viability of a property cannot be determined
until extensive exploration and development work has been conducted and a
comprehensive feasibility study performed. That could result in the
expenditure of substantial amounts of money on a property before it even can
be determined whether or not the property contains economically recoverable
mineralization. No feasibility studies have been performed on Gold Chain's
properties because they yet require considerable exploration and development
work. Moreover, market prices of minerals produced are subject to fluctuation,
which may adversely affect the economic viability of properties on which
expenditures have been made. The Company is not able to presently determine
whether or not, or the extent to which, such risks may adversely affect its
strategy and business plan.
22. UNCERTAINTY OF TOPOGRAPHICAL EFFECT ON EXPLORATION. The
Company's
properties are located in mountainous terrain. Because the surface of the
land has a topographic relief of over 800 feet, any ruggedness in the
overlying area could affect the location of drilling sites and shafts, as
well as the construction of industrial facilities. It also could require
that additional development or drilling on the property be accessed below
ground. These outcomes are uncertain at present, and the Company cannot
provide assurances that they will not have a materially adverse effect on the
ability of the Company or a business partner to conduct mining activities.
There may be areas that eventually could pose environmental or safety
concerns. See "Government Regulation of Environmental Concerns" in Part I,
Item 1, at page 6.
23. UNCERTAIN CONDITION OF MINE WORKINGS. There are no surface mine
shafts or usable headframes on the Company's property. Moreover, the
underground workings have been inactive for many years due to the absence of
significant exploration, development and production activities on Gold
Chain's properties since the 1930's. There are tunnels with portals, however,
that could be reconditioned for later use to gain underground access to the
workings for renewed development and exploration on the Company's property.
Considerable cost would be incurred to recondition shafts, drifts, tunnels,
winzes and other workings, as well as to re-equip hoisting bases and
framework. It is uncertain whether and to what extent the workings themselves,
as well as any rehabilitation of them, could expose the Company to
environmental and safety concerns. If so, remediating these concerns
could require expending an uncertain amount of funds to render the workings
safe, acceptable, and environmentally sound.
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OTHER BUSINESS RISK FACTORS
24. YEAR 2000 ("Y2K Problem"). The Company contracted with a computer
consultant during the first quarter of fiscal 1999 to determine whether any of
the Company's computer-related equipment and software could present problems
associated with the change to the year 2000, commonly called the Y2K problem
or the Millenium Bug. The Company uses Microsoft Windows-based software and PC
computers for general office applications such as word-processing, databasing,
spreadsheets, internet connections, email and similar programs. Based on the
consultant's review and assurances, management does not believe that the Y2K
problem will have any material effect on its operations. The Company is not
presently engaged in any type of business activity that requires using other
types of computers, operating systems or software. However, it is conceivable
that the Company could engage in future business activities, or may align
itself with another business that is or might be negatively affected by the
Y2K problem. The Company cannot predict with any accuracy the likelihood that
these events might or might not occur, nor the effect, if any, they might
induce, nor the materiality of any such effect.
25. COMPETITIVE CONDITIONS IN THE INDUSTRY. The mining industry is very
competitive. Mining companies compete to obtain favorable mining properties
and to evaluate exploration prospects for drilling, exploration, development,
and mining. Gold Chain faces competition from a handful of other similarly
situated junior mining companies in connection with the acquisition of
properties capable of profitably producing gold, silver, copper and other
mineralization. However, the Company is unable to ascertain the exact number
of competitor companies, or whether or when its competitive position could
improve. Thus, Gold Chain may be unable to acquire or develop attractive
mining properties on terms it considers acceptable. Accordingly, there can
be no assurance that such competition, although customary in the mining
industry, will not result in delays, increased costs, or other types of
negative consequences affecting Gold Chain, nor that its programs will
yield commercially mineable reserves.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Please read this discussion of the Company's plan of operation together
with the audited financial statements that accompany this registration
statement. Management is providing the following plan of operation, in
accordance with SEC regulations for small business registrants, because Gold
Chain has not had revenues from operations in each of the last two fiscal
years, 1997 and 1998, audited in the financial statements.
Management discusses here its present business plans and then projects
those plans into the remainder of this 1999 fiscal year and into the next.
The Company's present plan of operation is based on certain reasonable
expectations about the mining industry, the demand for metals, and the
sources and potential for obtaining financial capital. It does not intend to
forecast what will, or predict that any particular event may, occur in the
future. Instead, you will read some statements below that discuss future
events and plans involving risks and uncertainties that could result in
outcomes that are materially different from those projected by these plans.
Management emphasizes that it cannot control or predict many of these risks
and uncertainties. Still, management has tried to encompass these risks and
uncertainties within its plan of operation. The reader is cautioned, however,
to not overly rely on any of the forward-looking statements made in this
plan of operation, or found elsewhere in this registration statement. See
"Notice and Disclaimer Regarding Forward-Looking Statements" at page 3.
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<PAGE>
PLAN OF OPERATION
PURPOSE. The Company's purpose is to generate recurring cash flow by
establishing long-term business opportunities. The uncertainty of future
events, however, presently limits Gold Chain's ability to provide any
assurances regarding its ability to implement such a plan, raise financial
resources, or undertake such business activities. The reader is strongly
cautioned to review the comprehensive disclosure of "Risk Factors" presented
on pages 6 to 12.
STRATEGY. The Company's business plan will be directed primarily
toward the exploration and development of its 28 patented mining claims.
The mineral interests and rights with respect to these claims represents
durable value for exploration, development and mining because Gold Chain owns
the real property in fee simple. It is possible, although not planned at this
time, that Gold Chain may purchase additional patented mining claims prior to
the end of fiscal 1999. Nevertheless, management has decided that it will not
purchase any unpatented mining claims because the real property underlying
them is not owned outright and the uncertain possession and value of their
mineral rights is too dependent upon compliance with costly and time-consuming
federal regulations, which are always subject to unpredictable changes. See
the section entitled "The Effect of Regulatory Changes on Holding Unpatented
Mining Claims" in Part I, Item 3, at page 15. Management does not expect to
make any significant changes in the number of its employees, other personnel,
or consultants.
For the following reasons, management believes that further exploration
and development on the Company's patented mining claims may be warranted,
even though they cover a relatively small number of acres. First, there is a
history of profitable production from proven ore on the property. See the
section above entitled "Mining And Production History " in Part I, Item 1,
at page 15. Second, there has been almost no comprehensive exploration to
date of the property's mineralization beyond a depth of 300 to 400 ft.
Third, worldwide and in the U.S., major ore bodies have been found on
property encompassing less owned acreage than Gold Chain's, such as the El
Indio deposit in Peru and the Orphan Mine in Arizona, each approximately
20 acres.
FUNDING. Management believes the Company can satisfy its minimal cash
requirements from accounts receivable to continue nominal business operations
as at present. However, the Company does not have sufficient other funds of
its own to finance exploration and development costs, or make capital
improvements to its properties and operating facilities. Thus, if the Company
is unable to raise a significant amount of additional working capital in the
next twelve months, it will not have sufficient funds for further exploration
or development work. Thus, Gold Chain's plan of operation depends largely on
its ability to cultivate financial resources and business arrangements with
investors and larger and better capitalized companies. The Company's primary
contributions to its planned exploration and development efforts consist of
non-cash resources such as the extensive library of technical information that
it has compiled concerning its properties. This technical library contains
geological reports, historical data, maps and other geological information.
These represent an invaluable asset that management believes will be essential
to feasibly develop and explore the Company's properties. The value of this
tangible asset, the extensive technical material, is greatly enhanced by the
value of the intangible knowledge that current management possesses concerning
the Tintic Mining district and management's years of work experience exploring
and developing mining properties in the district, using modern geologic
science and technology.
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<PAGE>
ITEM 3. DESCRIPTION OF PROPERTY
For many years, Gold Chain's property consisted of nineteen patented
mining claims that it owned in the Tintic Mining district, Juab County, Utah,
about 1-1/2 miles south of the small town of Eureka, Utah. On June 21, 1999,
the Company purchased nine additional patented mining claims adjacent to the
original nineteen. See the section entitled "Current Developments", on page 5.
The twenty-eight patented mining claims that Gold Chain currently owns,
comprise a total of 151.462 acres. Table 3.1, below, gives information about
each claim:
<TABLE>
<CAPTION>
TABLE 3.1 -- DESCRIPTION OF PATENTED MINING CLAIMS
U.S. LOT NO. OR
NAME OF PATENTED CLAIM MINERAL SURVEY NO. ACRES
- ---------------------- ------------------ ------
<S> <C> <C>
Desert View________________ 6135 __________________ 1.675
Oneida_____________________ 2950 (Oneida group)____ 10.532
Sideview___________________ 2946 (Oneida group)____ ** <F1>
Fairview___________________ 2951 (Oneida group)____ ** <F1>
Copperopolis No. 2_________ 160 __________________ 10.170
Belcher____________________ 3750 __________________ 5.653
California_________________ 114 __________________ 6.880
Fraction Lode______________ 3233 __________________ 1.675
Gold Chain Fraction________ 6191 __________________ 1.846
Golden Chain_______________ 339 __________________ 11.100
Champlain No. 2____________ 174 __________________ 2.916
Mammoth Mine_______________ 37 __________________ 4.590
West Mammoth Lode__________ 173 __________________ 1.536
American Eagle Lode________ 4679 __________________ 0.915
Mammoth 2 & 3 North________ 65 __________________ 1.830
Napoleon___________________ 3442 __________________ 5.220
Dom Pedro 2nd (1/2)________ 172 __________________ 7.815
Hungarian (North 1/2)______ 164 __________________ 3.270
Silver Chain (3/4)_________ 5880 __________________ 6.515
Leo________________________ 290 __________________ 8.990
Lisbon_____________________ 290 __________________ 3.920
Silver Star________________ 290 __________________ 5.160
Silver Spar________________ 290 __________________ 4.710
Argenta____________________ 290 __________________ 16.860
West Star__________________ 82 __________________ 5.729
North Star_________________ 62 __________________ 5.509
Ardath_____________________ 3332 __________________ 2.648
Elgin Amended______________ 4019 __________________ 13.798
=======
TOTAL ACRES = 151.462
<FN>
<F1> 1. Oneida, Sideview, and Fairview, the three patented mining claims in
the Oneida Group, together constitute an undivided 10.532 acres.
</FN>
</TABLE>
FORM OF OWNERSHIP. Gold Chain does not hold "unpatented" mining claims.
An unpatented mining claim is a parcel of property located on federal lands
that the U.S. government continues to own, though it has granted the private-
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party claimholder the right to explore and mine the claim. Instead, the
Company owns mining claims that are patented. A "patented" mining claim is
land originally held as unpatented, to which the private-party claimholder
has been conveyed fee simple title by the U.S. government, after meeting
the federal patenting requirements. The important difference in the type of
mineral interest it represents is that the patent gives the claimholder full
and complete ownership, outright, of the land on which the claim is located.
THE EFFECT OF REGULATORY CHANGES ON HOLDING UNPATENTED MINING
CLAIMS.
The U.S. Bureau of Land Management (BLM) promulgated new regulations in 1997
regarding hardrock unpatented mining claims (see 43 CFR 3809). Compliance with
the 1997 regulations is both time-consuming and costly. Therefore, Gold Chain
does not intend to purchase or locate any unpatented claims, but instead, to
concentrate its exploration and development activities primarily on its own
privately-held land and perhaps on land that, at some point in the future, it
may decide to acquire a leasehold under, through Utah State Mineral Leases.
Management believes that these BLM regulations will have little or no effect
on the Company's activities.
TYPE OF PROPERTY. The Company's twenty-eight patented mining claims are
lode claims, meaning they contain deposits of minerals, in this case, gold,
silver, copper and lead, in solid rock. (A placer claim, on the other hand,
is a deposit of sand and gravel containing valuable minerals.) They are
located on the slopes of nearby Mammoth Mountain. The surface has a
topographic relief of over 800 feet. The mining claims lie between two
favorable ore trends: the Mammoth ore trend on the west, and the Godiva-Sioux
Mountain ore trend on the east. Ore bodies have been developed in this region
that have been and are particularly rich. For this reason, a number of senior
mining companies, such as Kennecott, Exxon Minerals, and Asarco, have carried
out some limited underground exploration efforts since the 1970's. To date,
these efforts have not been sufficiently developed to achieve a promising
discovery of a new ore body. The intrinsic economic worth of these properties,
therefore, lies in continuing this exploration and development work to achieve
the recognizable potential of these properties in containing discoverable,
profitable ore.
MINING AND PRODUCTION HISTORY. Ore was discovered in 1870 on the Gold
Chain mineral properties and production began the following year. The Gold
Chain properties included the Gold Chain and Ajax Mines, two of the first
mines in production in the Tintic Mining district. The Company's original
nineteen patented claims yielded a total output of 193,000 tons of ore. Table
3.2, below, is from data compiled by the U.S. Bureau of Mines. It shows the
total amounts and average grades of the principal metals recovered by metal-
lurgical treatment. Note that these figures are considerably less than the
gross amounts and average grades of the total metal actually contained in the
ore, due to the inefficient smelter and recovery processes of the pre-1930's.
<TABLE>
<CAPTION>
TABLE 3.2 -- AMOUNTS AND GRADES OF METALS RECOVERED
FROM GOLD CHAIN MINING CLAIMS
METAL TOTAL AMOUNT RECOVERED AVERAGE GRADE
------ ----------------------- --------------
<S> <C> <C>
Gold 89,800 ounces .47 OPT <F1>
Silver 1,600,000 ounces 8.29 OPT
Copper 17,300,000 pounds 4.48% <F2>
Lead 1,500,000 pounds .39%
</FN>
</TABLE>
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<PAGE>
[FN]
<F1> 1. "OPT" signifies the average number of OUNCES of metal that were
recovered PER each TON of ore mined.
<F2> 2. "%" is derived from the ratio of total metal recovered to total
ore mined.
</FN>
For comparative purposes only, using average present metal prices as of
August 5, 1999 (gold, $256.00 per oz., silver, $5.47 per oz., copper, $.76 per
lb., and lead $.45 per lb.), the metal recovered from the mine on Gold Chain's
patented claims would have a total present value of $45,359,000, which is
equivalent to $235 per ton of ore mined.
EXPLORATION, DEVELOPMENT AND REHABILITATION WORK. There has been no
mining or other production activity on Gold Chain's properties since the
1930's, except briefly during World War II which consisted of production of
small tonnages of high grade copper ore. Also, only a very limited amount of
exploration or development work has been conducted on the Company's properties
since the 1930's. Exploration is the work involved in searching for ore.
Development is the construction work carried out for the purpose of extracting
ore from the deposit or mine.
In 1976, Kennecott Copper Corporation negotiated a ten-year lease to
operate all of the properties that were owned by Mammoth Mining Company and
its subsidiary companies, which included Gold Chain's nineteen patented mining
claims. The properties were "unitized", in that Gold Chain was to receive
royalties based on metals production from any of the leased properties. Gold
Chain received some income under this lease agreement from ores produced by
Kennecott from the nearby Mammoth Mine owned by Mammoth Mining Company.
Kennecott carried out some limited mineral exploration and development
work on the Gold Chain properties, but terminated this lease in 1982, after
six years. No ore production came from the Company's properties. Gold
Chain's properties were inactive from 1982 until 1994, when Centurion carried
out limited exploration consisting mainly of geologic mapping and sampling.
Centurion also performed some much needed maintenance and rehabilitation work
on the Gold Chain underground workings. Centurion continued its activities
until 1996. No additional work has been done on the properties since then.
FUTURE PLANS FOR EXPLORATION AND DEVELOPMENT WORK. To date, Gold
Chain
management has not applied for exploration permits for work on any of its
patented mining claims. However, during 1999 the Company expects to conduct
geological mapping, geochemical sampling, and geophysical surveys, and to file
applications for permits that would permit exploratory drilling to be carried
out during 1999 and 2000. Gold Chain's management has not yet determined
whether the company will actually carry out drilling operations. This will
depend on the availability of funds.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of August 5, 1999, the beneficial
ownership of the Company's common stock by the following 4 groups: (1) all
persons known to the Company to be the beneficial owners of more than five
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percent of the outstanding shares of its common stock (the "Principal
Shareholders"); (2) each Gold Chain director; (3) each Named Executive
Officer, as that term is defined below on page 21 in the section entitled
"Compensation of Executive Officers," in Part I, Item 6 ("Executive
Compensation"), who is listed in the "Summary Compensation Table" also on
page 21; and (4) All directors and executive officers as a group.
<TABLE>
<CAPTION>
TABLE 4.1 -- COMMON STOCK BENEFICIALLY OWNED <F1>
NAME AND ADDRESS NO. SHARES HOW HELD PERCENT OF CLASS
- ----------------------------- ---------- ---------- ----------------
<S> <C> <C> <C>
1. PRINCIPAL SHAREHOLDER(S)
Mammoth Mining Company 735,534 DIRECTLY 37.04%
Mammoth, Utah
Keystone Surveys, Inc. 670,000 DIRECTLY 33.74% <F2>
Salt Lake City, Utah
Spenst Hansen [1,405,534 indirectly 70.78%]<F3>
Naples, Florida 30,000 DIRECTLY 1.51% <F4>
2. DIRECTORS
Spenst Hansen 1,435,534 indirectly 72.29% <F5>
Naples, Florida & DIRECTLY
Elizabeth Knowlton 30,000 DIRECTLY 1.51% <F6>
Eureka, Utah
Carlos M. Chavez 30,000 DIRECTLY 1.51% <F7>
Murray, Utah
3. "NAMED EXECUTIVE OFFICERS"
(NOT DIRECTORS) None n/a n/a n/a
4. ALL DIRECTORS & OFFICERS
AS A GROUP 4 Persons 1,495,534 Both 75.31% <F8>
<FN>
<F1> 1. For purposes of this table only, in determining beneficial
ownership the amount reported for each individual, entity, or group
listed above includes all shares that such person or group has the
right to acquire within 60 days after July 18, 1999, including all
share awards that will vest, and all shares from options, warrants,
or rights exercisable during that 60-day period. All shares are owned
directly, beneficially and of record, unless otherwise noted.
<F2> 2. As of the date of this filing, Keystone is the owner of
record of 660,000 shares. During the next 60 days, Keystone will be
entitled to receive 5,000 shares on August 1, and 5,000 shares on
September 1, in lieu of cash as payment from the Company for the
use of office space owned and managed by Keystone.
<F3> 3. Mr. Hansen does not directly own these 1,405,534 shares.
They are owned of record by Mammoth and Keystone in the amounts
separately listed above. Mr. Hansen, however, has majority share
ownership and control of both Mammoth and Keystone. That indirect
control gives him beneficial ownership of these 1,405,534 shares,
according to SEC regulations.
<F4> 4. As of the date of this filing, Mr. Hansen has received
30,000 shares for his service as director. That is the total number
of shares Mr. Hansen owns, directly and of record. Mr. Hansen is not
entitled to receive any additional shares during the next 60 days.
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<PAGE>
<F5> 5. For purposes of this table only, the 1,405,534 shares
owned by Mammoth and Keystone are indirectly controlled by Mr.
Hansen and, therefore, are added to the 30,000 shares he owns of
record to calculate his total beneficial share ownership, as that
concept is defined by the SEC.
<F6> 6. As of the date of this filing, Ms. Knowlton has received
30,000 shares for her service as director. That is the total number
of shares Ms. Knowlton beneficially owns of record, indirectly and
directly. She is not entitled to receive any additional shares during
the next 60 days.
<F7> 7. As of the date of this filing, Mr. Chavez has received
30,000 shares for his service as director. That is the total number
of shares Mr. Chavez beneficially owns of record, indirectly and
directly. He is not entitled to receive any additional shares during
the next 60 days.
<F8> 8. In addition to the 30,000 shares that Messrs. Hansen and
Chavez and Ms. Knowlton each own directly, the figure given above
includes the 1,405,534 shares that Mr. Hansen owns indirectly. See
footnotes 4 and 5.
</FN>
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
DIRECTORS. Under Gold Chain's Bylaws, the Company must have not
fewer than one nor more than twelve directors, notwithstanding resignations,
vacancies or terminations from office. The directors are elected to serve un-
til the next annual shareholders' meeting or until their respective successors
are elected and qualify. Interim replacements for vacancies on the Board of
Directors are appointed by the remaining incumbent directors. The Gold Chain
Board of Directors is currently composed of three members. No director that
was appointed or elected during any of the past five fiscal years has declined
to serve, and none has been found unable or unfit to serve.
EXECUTIVE OFFICERS. The Company's officers hold office until the
meeting of the Board of Directors immediately following the next annual
shareholders' meeting or until removal by the Board of Directors. Gold Chain's
Bylaws specify that its officers shall be a president, one or more vice
presidents, a secretary and a treasurer. Interim replacements for officers
that have resigned or been terminated are appointed by the Board of Directors.
The following sets forth pertinent information about each of Gold Chain's
directors and executive officers:
SPENST HANSEN has been a Director since 1995, and has served as President
and Chairman of the Company's Board of Directors since 1997. From 1979 until
1998, he was a director, executive officer and employee of Centurion and its
predecessor companies. Mr. Hansen has worked on mining projects in the western
United States for more than 30 years, and has been directly involved in all
phases of mining exploration, development and production on various mining
properties in the State of Utah during that period. Mr. Hansen has a Ph.D.
degree in geology from the University of Missouri, Columbia, Missouri, a
Masters degree in mining engineering from the Missouri School of Mines, Rolla,
Missouri, and a B.S. degree in geological engineering from the University of
Utah, Salt Lake City, Utah. He is a registered professional geologist in
California (#2067) and Idaho (#38). Mr. Hansen presently serves as a director
and executive officer of Mammoth Mining Company.
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<PAGE>
ELIZABETH KNOWLTON has been a Director and Vice President of the Company
since 1997. She has been principally employed as a licensed attorney in the
private practice of law from 1986 until the present. Ms. Knowlton has
represented a diverse group of clients before numerous state, federal and
tribal courts on a variety of civil, criminal, tribal and other legal matters.
Ms. Knowlton received a B.S. degree in 1980 from the University of Utah, Salt
Lake City, Utah and a J.D. degree in 1984 from Western State University, San
Diego, California. She was employed by the San Diego Attorney General's Office
in 1982 and was licensed by the California Bar and the U.S. District Court for
the Southern District of California in 1986; by the Utah Bar and the U.S.
District Court for the District of Utah in 1991; and by the U.S. District
Court for the District of Arizona in 1997. Ms. Knowlton presently serves
as a director and executive officer of Mammoth Mining Company.
CARLOS CHAVEZ has been a Director and the Secretary of the Company since
July 1995. From 1994 until mid-1998, he was principally employed as corporate
counsel for Centurion and its successor company, and has continued to date in
the private practice of law in the State of Utah. Mr. Chavez received a J.D.
degree in 1980 from Stanford Law School, Palo Alto, California, and a B.A.
degree in 1977 from Chicago State University, Chicago, Illinois. He has been
admitted to the Bar of the District of Columbia and the Utah State Bar. From
1991 until his employment with Centurion, Mr. Chavez was employed by two law
firms in Salt Lake City, Utah. During 1989 and 1990, he was a visiting
assistant professor of law at Whittier College School of Law in Los Angeles,
California. Prior to that, he was an assistant attorney general for the State
of Utah, and served as associate legal counsel for the University of Utah,
where he also taught as an adjunct professor of law. Mr. Chavez presently
serves as a director and executive officer of Mammoth Mining Company.
RANDY SUTHERLAND has served as Gold Chain's Treasurer and has performed
the function of Controller for the Company since 1997. He is principally
employed as a professional accountant in Salt Lake City, Utah. From 1995 until
1998, Mr. Sutherland was employed as Centurion's treasurer and controller. In
1991, he received a degree in management accounting from Park College, Park-
ville, Missouri. From the time of his graduation until his employment with
Centurion, Mr. Sutherland held various accounting and supervisory positions in
the hotel industry, including employment from 1993 to 1995 as the controller
for a resort hotel located in Alta, Utah. In addition to his schooling and
employment, Mr. Sutherland also served eight years in the U.S. Air Force. He
presently serves as an executive officer of Mammoth Mining Company.
No arrangement or understanding exists between or among any of the
directors or executive officers and any other person pursuant to which any
director was elected, or any executive officer was appointed. None of the
Company's directors are currently directors of other companies registered
under the Securities Exchange Act of 1934. Each director and executive officer
intends to devote such amount of time as that person's responsibilities
require, but none of them work full time for the Company. Also, no family
relationship exists among any of the named directors and executive officers.
As of the date of this registration statement, none of the Company's
directors or nominees, executive officers, or principal shareholders has been
involved in any legal proceeding during the past five years arising from any
of the following events that would be material in evaluating the ability or
integrity of any such person: (1) any bankruptcy petition filed by or against
any business of which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior to that time;
(2) any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
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(3) being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting that person's involvement in any type of business, securities or
banking activities; and (4) being found by a court of competent jurisdiction
(in a civil action), the SEC, or the Commodity Futures Trading Commission to
have violated a federal or state securities, or commodities law and the
judgment has not been reversed, suspended, or vacated.
BOARD MEETINGS. The Board of Directors did not hold any formal meetings
during fiscal 1998. All Board business and corporate actions were undertaken
and approved by unanimous consent without a meeting, pursuant to Utah law.
STANDING AUDIT, NOMINATING, COMPENSATION, AND SIMILAR
COMMITTEES. At the
beginning of fiscal 1999, the Board of Directors established Compensation and
Audit Committees. At present, the Board does not have a nominating committee.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF
1934.
Section 16(a) of the Securities and Exchange Act of 1934 requires officers,
directors, and persons who own more than ten percent of Registrant's Common
Stock to file initial reports of beneficial ownership and to report changes in
such ownership with the Commission and the National Association of Securities
Dealers. These persons are also required to furnish the Company with copies of
all Section 16(a) forms they file. These requirements will commence upon the
effective date of this registration statement. Therefore, as of the date of
this filing, these persons have not been subject to the requirements of
Section 16(a). Nevertheless, Gold Chain has informed these persons of
their imminent obligations under Section 16(a). Further, the Company has set
up a procedure whereby periodically it will (i) notify these persons of their
Section 16(a) obligations; (ii) review the copies of Forms 3, 4, and 5 that
these persons furnish to the Company; (iii) request written representations
from them that no other transactions were required; and (iv) make a
determination that the pertinent officers, directors and principal
shareholders have complied with all applicable Section 16(a) requirements
during fiscal year 1999.
DIRECTOR LIABILITY LIMITATION. In fiscal 1995, shareholders approved by
written consent an amendment to the Registrant's Articles of Incorporation
limiting the personal liability of directors to the Registrant and its
shareholders to the extent allowed by Utah law. In effect, the shareholders
approved the adoption of statutory provisions which permit a Utah corporation
to eliminate the personal liability of directors for monetary damages for
breach of fiduciary duty.
ITEM 6. EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS. No contractual arrangements for compensation
exist with any member of the Board of Directors. Nor do Directors receive for
their services any monetary or other form of direct compensation or fees.
As of July 1, 1999, directors are authorized to receive a grant of 5,000
shares of restricted common stock for each quarter of completed service. This
authorization covers the five-year period from January 1, 1998, to December
31, 2002. At present, Directors do not receive any award of options, warrants,
or stock appreciation rights for their service.
COMMON STOCK AND OPTION AWARD PLAN. At the Annual Board of Directors
Meeting held June 17, 1995, the Company's Directors approved a plan for the
granting of stock, stock options and stock appreciation rights pursuant to
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<PAGE>
registration on Form S-8 with the SEC. The plan was approved to enable the
Company to attract and retain experienced and able directors, officers,
employees and similar individuals who provide significant service to the
Company and who are eligible under the plan to receive qualified plan awards.
As of the date of this filing, the shareholders have not authorized a specific
amount of shares of common stock to be administered under this plan and to
date the Company has not issued any non-restricted stock, options, or stock
appreciation rights awardable under the plan.
COMPENSATION OF EXECUTIVE OFFICERS. The following table sets forth the
compensation paid by Gold Chain during each of the last three fiscal years to
its chief executive officer and to the other four most highly compensated
officers and executive officers, whose individual total annual salary and
bonus exceeded $100,000 for Fiscal 1998 (the "Named Executive Officers"). This
information includes the dollar value of base salaries and bonus awards, the
number of stock options granted, and certain other compensation, if any.
<TABLE>
<CAPTION>
TABLE 6.1 -- SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------- -------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ------- ---- ------- ----- ------- -------- ---------- ------- -------
Name Securities
and Other Re- Underlying All
Princi- Annual stricted Options/ LTIP Other
pal Po- Compen- Stock SAR's Pay- Compen-
sition Year Salary Bonus sation Award(s) (#) outs($) sation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------- ---- ------- ----- ------- -------- ---------- ------- -------
PRES.
Spenst 1998 $0 $0 $0 $0 0 $0 $0
Hansen 1997 0 0 0 0 0 0 0
1996 0 0 0 0 0 0 0
</TABLE>
There are no retirement, pension, or profit sharing plans for the benefit
of officers, directors or key employees as of the date of this filing.
OPTION/SAR GRANTS TABLE. This table has been omitted because there has
been no compensation in the form of options or SARs awarded to, earned by, or
paid to the Company's chief executive officer or any of its Named Executive
Officers during any pertinent fiscal year covered by this table.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR
VALUE
TABLE. This table has been omitted because there has been no compensation in
the form of options or SARs awarded or paid to, or earned, exercised, or
retained by, the Company's chief executive officer or any of its Named
Executive Officers during any pertinent fiscal year covered by this table.
LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS TABLE. This table has been omitted
because there has been no compensation in the form of long-term incentive
awards that have been granted or paid to, or earned, exercised, or retained
by, the Company's chief executive officer or any of its Named Executive
Officers during any pertinent fiscal year covered by this table.
21 of 63
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain of the officers and directors of the Company are engaged in other
businesses, either individually or through business entities in which they may
have an interest, hold an office or serve on the boards of directors. Some of
the directors of the Company also have other business interests to which they
devote a major or significant portion of their time. Certain conflicts of
interest, therefore, may arise between the Company and its directors. Company
management believes, however, that these conflicts can be resolved through the
exercise by these individuals of reasonable judgment consistent with their
respective fiduciary duties to the Company. The officers and directors of the
Company intend to resolve such conflicts in the best interests of the Company.
Moreover, the officers and directors will devote their time to the affairs of
the Company as they deem necessary.
Other than as described below, the Company has not been a party to any
transaction, or proposed transaction, during the last two years in which any
director, executive officer, or principal shareholder had or will have a
direct or indirect material interest, where: (1) the amount involved in the
transaction or series of similar transactions exceeds $60,000; or (2) the
person's interest arises solely from the ownership of the Company's
securities, and the person receives no extra or special benefit not shared
equally (pro rata) by all holders of the same class of securities.
The Company has made non-interest bearing advances to shareholders and
companies whose shareholders and officers also are shareholders and officers
of the Company. As of December 31, 1998, and 1997, $5,595 and $5,695,
respectively, was due to the Company as a result of these advances.
A majority of the Gold Chain common stock is owned by its parent company,
Mammoth Mining Company and by Keystone Surveys, Inc., a company that is owned
and operated by Spenst Hansen. Both Mammoth and Keystone are controlled by Mr.
Hansen, an officer and director of the Company who is also an officer,
director and majority shareholder of Mammoth and Keystone. The Company leases
certain office space located at the Main Tintic project mine in buildings and
offices owned and operated by Keystone. Gold Chain leases the office space
from Keystone for $500 per month on a month-to-month basis. The lease was not
negotiated at arms-length, but management believes that this arrangement is on
terms as fair as those that would have been obtainable from independent third
parties.
Subsequent to the end of fiscal 1998, the Company entered a business
transaction to purchase additional mineral properties. On June 21, 1999, the
Company's Board of Directors authorized the purchase of nine patented mining
claims in the Tintic Mining district, Juab County, Utah, from Keystone, a
company that is a principal shareholder of the Company, and that is controlled
and operated by Mr. Hansen. The Board approved the issuance of 600,000 shares
of Gold Chain's common stock in exchange for the nine patented mining claims.
The purchase transaction was not negotiated at arms-length, but management
believes that this purchase is on terms and for consideration that is as fair
as what would have been obtainable from independent third parties.
The Board of Directors of the Company has not adopted or approved any
policy regarding future transactions with related third parties.
ITEM 8. DESCRIPTION OF SECURITIES.
COMMON STOCK AND DIVIDENDS. The authorized capital stock of the Company
consists of 10,000,000 shares of common stock, $.01 par value, of which
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<PAGE>
1,975,776 have been issued and are outstanding as of August 5, 1999. The
holders of common stock are entitled to receive such lawful dividends as
may be declared by the Board of Directors. There are no redemption or
sinking fund provisions applicable to any shares of common stock. All
outstanding shares of common stock are fully paid and non-assessable.
VOTING RIGHTS. Stockholders are entitled to one vote, on all matters to
be voted upon, for each share of common stock held. The shares do not have
the right to cumulative voting for directors, meaning that holders of more
than 50 percent of the shares voting for the election of directors can elect
all of the directors if they choose to do so.
LIQUIDATION RIGHTS. In the event of liquidation, dissolution or winding up of
the Company, holders of common stock shall be entitled to receive pro rata all
of the remaining assets of the Company that are available and distributable to
the shareholders.
PREEMPTIVE RIGHTS. Stockholders do not have a preemptive right, by statute
or under the Company's Articles of Incorporation or Bylaws, to acquire the
Company's unissued shares of common stock.
TRANSFER AGENT. OTC Stock Transfer, Inc., is transfer agent for the Company's
common stock. The transfer agent's address is P.O. Box 15600, 231 East 2100
South, Salt Lake City, Utah 84115, and its telephone number is (801) 485-5555.
PART II
Item 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
Gold Chain's common shares have not traded on a public stock exchange for
approximately 14 years. The Company is registering its common stock for re-
porting purposes by way of this filing in order to place its common shares for
trading on the OTC Bulletin Board or the "pink sheets", which are over-the-
counter markets administered by the National Association of Securities
Dealers. The initial trading price of the Registrant's common shares will be
determined by market forces and other trading variables at the time of first
trading, and will be set by its market makers. After that time, quoted trading
prices will reflect inter-dealer prices, without retail markup, markdown, or
commission. It is likely that such quotations will not necessarily represent
actual transactions.
If, on the date of this registration statement, Gold Chain's shares were
listed for public trading, then approximately 490,240 shares or 25 percent of
the issued and outstanding common stock could be sold pursuant to Rule 144
under the 1933 Act. However, the Company has not agreed to register any
securities under the 1933 Act for sale by stockholders. Further, the Company
is not making or proposing to make any public or private offering (unless
pursuant to an employee benefit plan) that could have a material effect on the
market price of its common stock. Finally no shares of the Company's common
stock are subject to outstanding options or warrants to purchase, or
securities convertible into, its common stock.
As of August 5, 1999, there were approximately 450 shareholders of record
of Gold Chain's common shares. The Registrant has not paid any dividends on
its common shares since its inception and does not anticipate that dividends
will be paid at any time in the immediate future.
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<PAGE>
ITEM 2. LEGAL PROCEEDINGS
Gold Chain is not aware of any pending legal proceeding contemplated by
a governmental authority, or concerning the Company's business or properties,
that involves primarily a claim for damages in excess of ten percent of
current assets excluding interest and costs. As of the date of this filing,
Gold Chain is not a party to any legal proceeding, either as plaintiff or
defendant, other than routine litigation incidental to its business. Thus,
the financial statements have not been adjusted to reflect any material
uncertainty regarding exposure to liability in legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS. On November 3, 1994,
the Board of Directors of Centurion, which was the parent company of Gold
Chain at that time, recommended and approved as Centurion's independent
auditor, the selection of the accounting firm of Jones, Jensen & Company,
certified public accountants ("Jones, Jensen"), which subsequently audited
the consolidated balance sheets of Centurion, including its subsidiaries,
as of September 30, 1993, 1994, 1995, 1996 and 1997, and its consolidated
statements of operations, statements of stockholders' equity and statements
of cash flows for the years ended September 30, from 1992 through 1997.
Gold Chain's Board of Directors independently ratified the selection of
Jones, Jensen. Gold Chain operates on a calendar fiscal year-end. Therefore,
Jones, Jensen prepared the accompanying independent audit of the Company's
balance sheets as of December 31, 1996 and 1997, and statements of operations,
statements of stockholders' equity and statements of cash flows for the years
ended December 31, 1996, 1997, and 1998, and for the period from inception
on August 19, 1907, through December 31, 1998.
NO CHANGES OR DISAGREEMENTS. Jones, Jensen & Company, has continued
as Gold Chain's independent public accountants to the present date, without
any changes in or disagreements with that engagement or their audits. In
particular, the Company has made no changes, nor has it had any disagreements
with Jones, Jensen, that have affected its independent, professional relation-
ship with Jones, Jensen in any way during Gold Chain's two most recent fiscal
years, 1997 and 1998, or any subsequent interim period.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The Company has not sold any shares of unregistered common stock in any
private placement offerings, or issued any unregistered stock in exchange for
Company debts in the past five years, and it is not aware of any recent sales
or issuances of restricted shares of common stock, other than the following:
(1) On June 21, 1999, the Company authorized the issuance of 600,000
shares of unregistered stock, with a basis of $0.10 per share, to Keystone
Surveys, Inc., for the purchase of nine patented mining claims.
(2) On June 28, 1999, the Company authorized the issuance of 60,000
shares of unregistered stock, with a basis of $0.10 per share, to Keystone
Surveys, Inc., for the payment of office rental costs of $500/month incurred
from August 1, 1998, to July 1, 1999.
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<PAGE>
(3) On July 1, 1999, the Company authorized the issuance of 30,000
shares of unregistered stock to each of its three directors: Spenst Hansen,
Elizabeth Knowlton and Carlos Chavez as compensation for director fees.
All of the share issuances described above are restricted because they
were made in reliance upon the exemption from registration provided by Section
4(2) of the 1933 Act. After the shares have been held for one year, the
recipient may sell, within any three month period, an amount of shares no
greater than 1% of the number of then-outstanding shares of the Company, in
compliance with the provisions of Rule 144. A restrictive legend is imprinted
on the stock certificates and "stop transfer" instructions against their sale
or transfer are in place.
ITEM 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Gold Chain's Bylaws authorize it to indemnify, at its election, any
director, officer, agent and/or employee as to those liabilities and on
those terms and conditions as are specified in the Revised Utah Business
Corporation Act. Further, the Company may purchase and maintain insurance
on behalf of any such persons whether or not it would have the power to
indemnify such person against the liability insured against. Indemnifying
and/or insuring its officers and directors from the increasing liabilities
and risks their corporate acts and omissions expose them to, could result in
substantial expenditures by the Registrant, while preventing any recovery
from them for losses incurred by the Registrant as a result of their actions.
For that reason, the Securities and Exchange Commission has issued an advisory
opinion concluding that indemnification of this type is against public policy
as expressed in the 1933 Act, as amended, and, therefore, is unenforceable
with respect to any claim, issue, question, or matter of liability touched
upon by anything within the purview of the federal securities laws and
regulations.
PART F/S
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Financial Statements and Report of Independent Public
Accountants are filed as a part of this Registration Statement on Form 10-SB:
ITEM PAGE NO.
-------------------------------------------------------- ---------
1. Independent Auditors' Report. . . . . . . . . . . . . . . 30 (F-3)
2. Financial Statements of The Gold Chain Mining Company
(A) Balance Sheets. . . . . . . . . . . . . . . . . . . 31 (F-4)
(B) Statements of Operations. . . . . . . . . . . . . . 32 (F-5)
(C) Statements of Stockholders' Equity. . . . . . . . . 33 (F-6)
(D) Statements of Cash Flows. . . . . . . . . . . . . . 34 (F-7)
3. Notes to Financial Statements . . . . . . . . . . . . . . 35 (F-8)
25 of 63
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS, FINANCIAL SCHEDULES AND REPORTS ON FORM 8-K
and
ITEM 2. DESCRIPTION OF EXHIBITS
A. Index to and Description of Supplemental Schedules: NONE.
B. Reports on Form 8-K: NONE.
C. Index to and Description of Exhibits:
The following documents are on file with the SEC under Commission
File No. 1-1767, and are incorporated here by reference.
EXHIBIT NO. SEC. NO. DOCUMENT PAGE NO.
- ----------- -------- ------------------------------------------- --------
3.1 3 Articles of Incorporation --
3.2 3(i) Articles of Amendment --
3.3 3(i) Articles of Amendment --
3.4 3(ii) Bylaws --
10.1 10 (material agreements) --
The following documents are filed as exhibits to this Form 10-SB.
EXHIBIT NO. SEC. NO. DOCUMENT PAGE NO.
- ----------- -------- ------------------------------------------- --------
3.5 3(i) Articles of Restatement of the
Articles of Incorporation 39
3.6 3(i) Articles of Incorporation, restated 45
3.7 3(ii) Bylaws, amended and restated 47
10.2 10 Deed - properties, Juan County, Utah 64
27.1 27 Financial Data Schedule to Form 10-SB 65
POWER OF ATTORNEY
The Registrant and each person whose signature appears below has
designated and appointed Carlos M. Chavez as its/his true attorney-in-fact
("Attorney-in-Fact") with full power to act alone and authority to execute
in the name of each of them, and to file with the SEC, together with any
exhibits thereto and other documents therewith, any and all amendments to
this Form 10-SB that may be necessary or advisable to enable Registrant to
comply with the 1934 Act, and all rules, regulations and requirements
pertaining thereto, and fully empowering the aforesaid Attorney-in-Fact to
make all amendments and such other changes in the Form 10-SB as he deems
appropriate, with authority thereby to ratify and execute the same.
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act
of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
THE GOLD CHAIN MINING COMPANY, Registrant
/s/ Spenst Hansen
_________________________________
By: Spenst Hansen, President
Its: CHIEF EXECUTIVE OFFICER
Dated: August 5, 1999
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<PAGE>
THE GOLD CHAIN MINING COMPANY
(A Development Stage Company)
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(F-1)
27 of 63
<PAGE>
C O N T E N T S
Independent Auditors' Report. . . . . . . . . . . . . . . . . . . F-3
Balance Sheets. . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Statements of Operations. . . . . . . . . . . . . . . . . . . . . F-5
Statements of Stockholders' Equity. . . . . . . . . . . . . . . . F-6
Statements of Cash Flows. . . . . . . . . . . . . . . . . . . . . F-7
Notes to Financial Statements . . . . . . . . . . . . . . . . . . F-8
(F-2)
28 of 63
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
The Gold Chain Mining Company
(A Development Stage Company)
Salt Lake City, Utah
We have audited the accompanying balance sheets of The Gold Chain Mining
Company (a development stage company) as of December 31, 1998 and 1997 and
the related statements of operations, stockholders' equity (deficit), and cash
flows for the years ended December 31, 1998, 1997 and 1996 and from inception
on August 19, 1907 through December 31, 1998. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Gold Chain Mining
Company (a development stage company) as of December 31, 1998 and 1997 and
the results of its operations and its cash flows for the years ended December
31, 1998, 1997 and 1996 and from inception on August 19, 1907 through December
31, 1998, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company is a development stage company with no
significant operating results to date which raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 3. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
JONES, JENSEN & COMPANY
/s/ Jones, Jensen & Company
Salt Lake City, Utah
July 20, 1999
(F-3)
29 of 63
<PAGE>
THE GOLD CHAIN MINING COMPANY
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
------
December 31,
----------------------------
1998 1997
------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash $ - $ -
_____________ _____________
Total Current Assets - -
_____________ _____________
MINING CLAIMS (Note 5) - -
_____________ _____________
TOTAL ASSETS $ - -
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable-related parties (Note 4) $ 8,500 $ -
_____________ _____________
Total Current Liabilities 8,500 -
_____________ _____________
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.01 par value; 10,000,000
shares authorized, 1,225,776 shares
issued and outstanding 12,258 12,258
Capital in excess of par value 270,647 270,547
Deficit accumulated during development stage (291,405) (282,805)
_____________ _____________
Total Stockholders' Equity (Deficit) (8,500) -
_____________ _____________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ - -
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
(F-4)
30 of 63
<PAGE>
THE GOLD CHAIN MINING COMPANY
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From
Inception
on August
For the Years Ended 19, 1907,
December 31, through
------------------------------- December
1998 1997 1996 31, 1998
--------- --------- --------- ----------
<S> <C> <C> <C>
REVENUES $ - $ - $ - $ -
EXPENSES
General and administrative 8,600 106 7,413 249,984
_________ _________ _________ __________
Total Expenses 8,600 106 7,413 249,984
_________ _________ _________ __________
LOSS FROM OPERATIONS (8,600) (106) (7,413) (249,984)
_________ _________ _________ __________
OTHER INCOME (EXPENSE)
Loss on valuation
of asset (Note 5) - - (41,421) (41,421)
_________ _________ _________ __________
Total Other
Income (Expense) - - (41,421) (41,421)
_________ _________ _________ __________
NET LOSS $ (8,600) $ (106) $(48,834) $(291,405)
========= ========= ========= ==========
BASIC LOSS PER SHARE $ (0.01) $ (0.00) $ (0.04)
========= ========= =========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 1,225,776 1,225,776 1,225,776
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
(F-5)
31 of 63
<PAGE>
THE GOLD CHAIN MINING COMPANY
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital in During the
----------------------- Excess of Development
Shares Amount Par Value Stage
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Balance at inception
on August 19, 1907 - $ - $ - $ -
Common stock issued
for approximately
$0.23 per share 1,225,776 12,258 270,441 -
Net loss from
inception through
December 31, 1995 - - - (233,865)
___________ __________ __________ ___________
Balance,
December 31, 1995 1,225,776 12,258 270,441 (233,865)
Net loss for
the year ended
December 31, 1996 - - - (48,834)
___________ __________ __________ ___________
Balance,
December 31, 1996 1,225,776 12,258 270,441 (282,699)
Additional capital
contributed - - 106 -
Net loss for
the year ended
December 31, 1997 - - - (106)
___________ __________ __________ ___________
Balance,
December 31, 1997 1,225,776 12,258 270,547 (282,805)
Additional capital
contributed - - 100 -
Net loss for
the year ended
December 31, 1998 - - - (8,600)
___________ __________ __________ ___________
Balance,
December 31, 1998 1,225,776 $ 12,258 $ 270,647 $ (291,405)
=========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
(F-6)
32 of 63
<PAGE>
THE GOLD CHAIN MINING COMPANY
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From
Inception
on August
For the Years Ended 19, 1907,
December 31, through
------------------------------ December
1998 1997 1996 31, 1998
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(8,600) $ (106) $ (48,834) $(291,405)
Loss on valuation of asset - - 41,421 41,421
Changes in assets and liabilities:
(Increase) decrease in
accounts receivable - - 29,564 -
Increase (decrease) in
accounts payable 8,500 - (20,533) (8,500)
________ ________ __________ __________
Net Cash Provided (Used) (100) (106) 1,618 (241,484)
by Operating Activities ________ ________ __________ __________
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in mining claims - - (1,618) (41,421)
________ ________ __________ __________
Net Cash Used in - - (1,618) (41,421)
Investing Activities ________ ________ __________ __________
CASH FLOWS FROM FINANCING ACTIVITIES
Additional capital contributed 100 106 - 206
Issuance of common stock - - - 282,699
________ ________ __________ __________
Net Cash Provided by 100 106 - 282,905
Financing Activities ________ ________ __________ __________
NET INCREASE IN CASH - - - -
CASH AND CASH EQUIVALENTS - - - -
AT BEGINNING OF YEAR ________ ________ __________ __________
CASH AND CASH EQUIVALENTS $ - $ - $ - $ -
AT END OF YEAR ======== ======== ========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
CASH PAID FOR:
Interest $ - $ - $ - $ -
Income Taxes $ - $ - $ - $ -
The accompanying notes are an integral part of these financial statements.
(F-7)
33 of 63
<PAGE>
THE GOLD CHAIN MINING COMPANY
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
a. Organization
The Gold Chain Mining Company (the Company) was incorporated in the
State of Utah on August 19, 1907. The Company was organized to explore
and develop mining properties through the sale, leasing or joint
venture of such properties.
b. Description of Business
The Company is a subsidiary of Mammoth Mining Company, a Nevada
corporation doing business in Utah.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basic Loss Per Share Calculations
Computations of basic loss per share of common stock are based on
the weighted average number of shares outstanding at the date of the
financial statements.
b. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has adopted a December 31 year end.
c. Cash Equivalents
The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.
d. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
(F-8)
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<PAGE>
THE GOLD CHAIN MINING COMPANY
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. The Company, currently
has no established source of revenue. The continued existence of the
Company as a going concern is dependent on the success of obtaining
future capital to meet its working capital requirements. The Company
is presently seeking investors to raise capital.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company shares office space provided by the Company's parent
company, Mammoth Mining Company. The office space is located in certain
buildings and offices situated at the Main Tintic Project Mine. Mammoth
Mining Company leases its office space, on an intermittent basis, from
a company that is owned and operated by an officer and director of the
Company who is also a principal shareholder of Mammoth Mining Company.
The monthly rent expense is $500.00 beginning August 1, 1998. At
December 31, 1998, the Company owed $2,500.00 under the rental
agreement.
In accordance with the stock option plan adopted by the Company on June
17, 1995 (Note 6), the Board of Directors authorized 5,000 shares to
each director of the Company per quarter of service. At December 31,
1998, the Company owed the directors $6,000.00 under the compensation
agreement, although no shares were issued at December 31, 1998.
In aggregate at December 31, 1998, the Company owed $8,500.00 to
related parties.
NOTE 5 - MINING CLAIMS
The Company holds an interest in 19 patented mining claims, totaling
approximately 84 acres and located in the Tintic Mining District, Juab
County, Utah.
During the year ended December 31, 1996, the Company determined a loss
on the valuation of the mining claims should be taken in accordance
with their policy of valuing the mining claims at the lower of cost or
net realizable value. The ultimate realization of the Company's invest-
ment in exploration properties is dependent upon a number of factors,
including success of mineralization, the ability of the Company to
obtain financing or to make other arrangements to further explore and
develop the properties, and the profitability of future production or
royalties from production, if any. The ultimate realization of the
Company's investment cannot be ensured or determined at this time and,
accordingly, it was determined the cost of the mineral properties of
$41,421 should be charged to operations.
(F-9)
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<PAGE>
THE GOLD CHAIN MINING COMPANY
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 6 - COMMON STOCK AND OPTION AWARD PLAN
At an annual Board of Directors Meeting, held June 17, 1995, the
Company's Directors approved a plan for the granting of stock, stock
options and stock appreciation rights that would be registered with the
Securities and Exchange Commission. The plan was approved to enable the
Company to attract and retain experienced and able directors, officers,
employees and similar individuals who provide significant service to
the Company and are eligible under the Plan to receive qualified plan
awards. As of Decembr 31, 1998, the shareholders have not authorized
any amount of shares of common stock to be administered under the
plan and no shares, options, or stock appreciation rights have been
awarded under the plan.
NOTE 7 - SUBSEQUENT EVENTS
Subsequent to December 31,1998, the Company entered into a business
transaction to purchase certain mineral properties. On June 21, 1999,
the Company's Board of Directors authorized the purchase of nine
patented mining claims located in the Tintic Mining District in Juab
County, Utah, from a company that is owned and operated by an officer
and director of the Company who is also a principal shareholder of
Mammoth Mining Company. The Board approved the issuance of 600,000
shares of the Company's common stock in exchange for the nine patented
mining claims. The Board also approved the issuance of 60,000 shares of
the Company's common stock in payment of office rental costs and 90,000
shares of the Company's common stock in payment of directors fees.
(F-10)
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(End of Financial Statements)
<PAGE>
</TABLE>
ARTICLES OF RESTATEMENT
OF THE ARTICLES OF INCORPORATION
of
THE GOLD CHAIN MINING COMPANY
Pursuant to the provisions of the Utah Revised Business Corporation
Act (Sections 16-10a-1001 through 16-10a-1022, Utah Code Annotated, 1953 as
amended), the undersigned, Spenst Hansen and Carlos M. Chavez, the duly
elected, qualified, and acting Vice President and Secretary, respectively,
of the below-named corporation hereby certify that said corporation adopts
the following Articles of Restatement of its Articles of Incorporation.
ARTICLE I
The name of the corporation is The Gold Chain Mining Company (the
"Corporation").
ARTICLE II
The restated Articles of Incorporation are attached hereto as Exhibit
A. The text of the restated Articles of Incorporation as set forth on
Exhibit A is incorporated herein by reference.
ARTICLE III
The Restatement contains four amendments to the Articles of
Incorporation, which were approved and adopted by the Corporation's
shareholders at the June 16, 1995 annual shareholders meeting. Notice of
said meeting was given by the President of The Gold Chain Mining Company in
the manner provided by law, accompanied by an information statement that
stated the text and nature of the four proposed amendments to the
Corporation's Articles of Incorporation.
A. Amendment to Article V of the Articles of Incorporation
Article V is hereby amended to read:
The aggregate number of shares which the Corporation shall have
the authority to issue is 10,000,000 shares of Common Stock,
which together have unlimited voting rights and are entitled to
receive the net assets of the Corporation upon dissolution.
The foregoing amendment to Article V of the Articles of Incorporation
was adopted and ratified at the annual meeting of the shareholders held
June 16, 1995. On the record date for the meeting, May 5, 1995, 1,227,975
common shares, being all outstanding common shares of the Corporation, were
entitled to vote on the matters considered at that meeting. 744,784
shares, being a majority of the outstanding common shares of the
Corporation entitled to vote, voted in favor of this amendment, which was
sufficient for approval of such amendment. Zero shares voted against or
abstained from voting on the amendment. The remaining shares were not
present at the meeting. No other class of shares was entitled to vote
thereon.
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<PAGE>
B. Addition of Article XX to the Articles of Incorporation
Article XX is hereby added:
The Corporation does not elect to have shareholders' preemptive
rights. The shareholders of the Corporation do not have
preemptive rights, and any predecessor or successor corporation
with respect to the Corporation shall be treated for all purposes
as if its articles of incorporation expressly deny preemptive
rights by including the statement "the corporation does not elect
to have preemptive rights."
The foregoing addition of Article XX to the Articles of Incorporation
was adopted and ratified at the annual meeting of the shareholders held
June 16, 1995. On the record date for the meeting, May 5, 1995, 1,227,975
common shares, being all outstanding common shares of the Corporation, were
entitled to vote on the matters considered at that meeting. 744,784
shares, being a majority of the outstanding common shares of the
Corporation entitled to vote, voted in favor of this amendment, which was
sufficient for approval of such amendment. Zero shares voted against or
abstained from voting on the amendment. The remaining shares were not
present at the meeting. No other class of shares was entitled to vote
thereon.
C. Addition of Article XXI to the Articles of Incorporation
Article XXI is hereby added:
To the extent permitted by law, a director of the Corporation
whether past, present, or future, shall not personally be liable
to the Corporation or to its shareholders for monetary damages
for any action taken or any failure to take any action as a
director, except liability for: (a) the amount of a financial
benefit received by a director to which he is not entitled; (b)
an intentional infliction of harm on the corporation or the
shareholders; (c) a violation for an unlawful distribution; or
(d) an intentional violation of criminal law. To the extent
permitted by law, the Corporation shall indemnify any of its
officers and directors, past, present, and future, for or on
account of any act or omission alleged to have been committed
while acting within the scope of their duties as officers or
directors of the Corporation.
The foregoing addition of Article XXI to the Articles of Incorporation
was adopted and ratified at the annual meeting of the shareholders held
June 16, 1995. On the record date for the meeting, May 5, 1995, 1,227,975
common shares, being all outstanding common shares of the Corporation, were
entitled to vote on the matters considered at that meeting. 744,784
shares, being a majority of the outstanding common shares of the
Corporation entitled to vote, voted in favor of this amendment, which was
sufficient for approval of such amendment. Zero shares voted against or
abstained from voting on the amendment. The remaining shares were not
present at the meeting. No other class of shares was entitled to vote
thereon.
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<PAGE>
D. Addition of Article XXII to the Articles of Incorporation
Article XXII is hereby added:
Any action which may be taken at a shareholders meeting may be
taken without meeting and without prior notice, if one or more
consents in writing, setting forth the action so taken, shall be
signed by the holders of outstanding shares having not less than
a majority, or in any event, not less than the minimum number of
votes that would be necessary to authorize or take the action at
a meeting at which all shares entitled to vote thereon were
present and voted.
The foregoing addition of Article XXII to the Articles of
Incorporation was adopted and ratified at the annual meeting of the
shareholders held June 16, 1995. On the record date for the meeting, May
5, 1995, 1,227,975 common shares, being all outstanding common shares of
the Corporation, were entitled to vote on the matters considered at that
meeting. 744,784 shares, being a majority of the outstanding common shares
of the Corporation entitled to vote, voted in favor of this amendment,
which was sufficient for approval of such amendment. Zero shares voted
against or abstained from voting on the amendment. The remaining shares
were not present at the meeting. No other class of shares was entitled to
vote thereon.
ARTICLE IV
The foregoing Articles of Restatement were authorized and adopted by
unanimous vote of the Board of Directors at the June 17, 1995 Board of
Directors annual meeting. These Articles of Restatement do not require
shareholder approval and are made without shareholder action due to the
fact that all substantive changes to the Articles of Incorporation, as
stated within these Articles of Restatement, have been approved by
shareholder vote.
IN WITNESS WHEREOF, the undersigned have executed these Articles of
Restatement of the Articles of Incorporation on the 25th day of April, 1996.
THE GOLD CHAIN MINING COMPANY
/s/ Spenst Hansen
______________________________
By: Spenst Hansen
Its: Vice President
/s/ Carlos M. Chavez
______________________________
By: Carlos M. Chavez
Its: Corporate Secretary
The Corporation hereby files with the Division of Corporations and
Commercial Code of the State of Utah these Articles of Restatement of the
Articles of Incorporation, which contain the text of the Articles of
Incorporation (Restated) as an exhibit. The Articles of Incorporation
(Restated) are effective immediately upon the filing of these Articles
with the Division.
39 of 63
<PAGE>
ACKNOWLEDGMENT BY CORPORATE OFFICERS
STATE OF UTAH }
} ss.
COUNTY OF SALT LAKE }
On this 25th day of April, 1996, before me personally
appeared Spenst Hansen and Carlos M. Chavez, to me personally known or
properly identified as the same, and who being by me duly sworn (or
affirmed), did each state that he is the Vice President and Secretary,
respectively, of The Gold Chain Mining Company, a Utah corporation, and
that said instrument was signed and sealed on behalf of said corporation
by authority of its board of directors, and did each acknowledge said
instrument to be the free act and deed of said corporation.
/s/ Theresa M. Rogers
______________________________ [ SEAL ]
NOTARY PUBLIC
Residing at: Salt Lake City, Utah
My commission expires: 1-9-00
EXHIBIT "A"
ARTICLES OF INCORPORATION
OF
THE GOLD CHAIN MINING COMPANY
(RESTATED)
{The text and numbering of the Articles of Incorporation have been
amended and restated, as set forth below, pursuant to the adoption
of Articles of Restatement of the Articles of Incorporation, and
effective immediately upon filing the same with the State of Utah.}
ARTICLE I - NAME
The name of the corporation is "THE GOLD CHAIN MINING COMPANY"
(hereinafter called the "Corporation").
ARTICLE II - PURPOSE
The Corporation is organized for the purpose of transacting any lawful
act or activity for which corporations may be organized under the Utah
Revised Business Corporation Act.
ARTICLE III - CAPITAL STOCK
The aggregate number of shares which the Corporation shall have the
authority to issue is 10,000,000 shares of Common Stock, which together
have unlimited voting rights and are entitled to receive the net assets of
the Corporation upon dissolution.
ARTICLE IV - REGISTERED OFFICE AND AGENT
The street address of the registered office of the Corporation and its
mailing address is 331 South Rio Grande Street, Suite 208, Salt Lake City,
Utah 84101; and the name of the registered agent of the Corporation at
that address is Carlos M. Chavez.
40 of 63
<PAGE>
ARTICLE V - OFFICERS AND DIRECTORS LIABILITY
To the extent permitted by law, a director of the Corporation whether
past, present, or future, shall not personally be liable to the Corporation
or to its shareholders for monetary damages for any action taken or any
failure to take any action as a director, except liability for: (a) the
amount of a financial benefit received by a director to which he is not
entitled; (b) an intentional infliction of harm on the corporation or the
shareholders; (c) a violation for an unlawful distribution; or (d) an
intentional violation of criminal law. To the extent permitted by law, the
Corporation shall indemnify any of its officers and directors, past,
present, and future, for or on account of any act or omission alleged to
have been committed while acting within the scope of their duties as
officers or directors of the Corporation.
ARTICLE VI - INTERNAL AFFAIRS
The Directors shall adopt Bylaws which are not inconsistent with law
or these Restated Articles for the regulation and management of the affairs
of the Corporation. The Directors may adopt provisions in such Bylaws which
provide for staggering the terms of directors by dividing the total number
of directors into two or three groups, with each group containing 1/2 or
1/3 of the total, as near as may be. These Bylaws may be amended from
time to time or repealed pursuant to law.
ARTICLE VII - PREEMPTIVE RIGHTS
The Corporation does not elect to have shareholders' preemptive
rights. The shareholders of the Corporation do not have preemptive rights,
and any predecessor or successor corporation with respect to the
Corporation shall be treated for all purposes as if its articles of
incorporation expressly deny preemptive rights by including the statement
"the corporation does not elect to have preemptive rights."
ARTICLE VIII - ACTIONS TAKEN OR AUTHORIZED
UPON CONSENT OF FEWER THAN ALL SHAREHOLDERS
Any action which may be taken at a shareholders meeting may be taken
without meeting and without prior notice, if one or more consents in
writing, setting forth the action so taken, shall be signed by the holders
of outstanding shares having not less than a majority, or in any event, not
less than the minimum number of votes that would be necessary to authorize
or take the action at a meeting at which all shares entitled to vote
thereon were present and voted.
IN WITNESS WHEREOF, the undersigned have executed these Restated
Articles of Incorporation on the _____ day of _____________, 199__.
THE GOLD CHAIN MINING COMPANY
______________________________
By: Spenst Hansen
Its: Vice President
______________________________
By: Carlos M. Chavez
Its: Corporate Secretary
41 of 63
<PAGE>
ACKNOWLEDGMENT BY CORPORATE OFFICERS
STATE of _________________}
) ss.
COUNTY of ________________}
On this ______ day of ____________, 199___, before me personally
appeared Spenst Hansen and Carlos M. Chavez, to me personally known or
properly identified as the same, and who being by me duly sworn (or
affirmed), did each state that he is the Vice President and Secretary,
respectively, of The Gold Chain Mining Company, a Utah corporation, and
that said instrument was signed and sealed on behalf of said corporation
by authority of its board of directors, and did each acknowledge said
instrument to be the free act and deed of said corporation.
_________________________________
NOTARY PUBLIC
Residing at: ____________________
My commission expires: __________
42 of 63
<PAGE>
ARTICLES OF INCORPORATION
OF
THE GOLD CHAIN MINING COMPANY
(RESTATED)
ARTICLE I - NAME
The name of the corporation is "THE GOLD CHAIN MINING COMPANY"
(hereinafter called the "Corporation").
ARTICLE II - PURPOSE
The Corporation is organized for the purpose of transacting any lawful
act or activity for which corporations may be organized under the Utah
Revised Business Corporation Act.
ARTICLE III - CAPITAL STOCK
The aggregate number of shares which the Corporation shall have the
authority to issue is 10,000,000 shares of Common Stock, which together
have unlimited voting rights and are entitled to receive the net assets of
the Corporation upon dissolution.
ARTICLE IV - REGISTERED OFFICE AND AGENT
The street address of the registered office of the Corporation and its
mailing address is 331 South Rio Grande Street, Suite 208, Salt Lake City,
Utah 84101; and the name of the registered agent of the Corporation at
that address is Carlos M. Chavez.
ARTICLE V - OFFICERS AND DIRECTORS LIABILITY
To the extent permitted by law, a director of the Corporation whether
past, present, or future, shall not personally be liable to the Corporation
or to its shareholders for monetary damages for any action taken or any
failure to take any action as a director, except liability for: (a) the
amount of a financial benefit received by a director to which he is not
entitled; (b) an intentional infliction of harm on the corporation or the
shareholders; (c) a violation for an unlawful distribution; or (d) an
intentional violation of criminal law. To the extent permitted by law, the
Corporation shall indemnify any of its officers and directors, past,
present, and future, for or on account of any act or omission alleged to
have been committed while acting within the scope of their duties as
officers or directors of the Corporation.
ARTICLE VI - INTERNAL AFFAIRS
The Directors shall adopt Bylaws which are not inconsistent with law
or these Restated Articles for the regulation and management of the affairs
of the Corporation. The Directors may adopt provisions in such Bylaws which
provide for staggering the terms of directors by dividing the total number
of directors into two or three groups, with each group containing 1/2 or
1/3 of the total, as near as may be. These Bylaws may be amended from
time to time or repealed pursuant to law.
43 of 63
<PAGE>
ARTICLE VII - PREEMPTIVE RIGHTS
The Corporation does not elect to have shareholders' preemptive
rights. The shareholders of the Corporation do not have preemptive rights,
and any predecessor or successor corporation with respect to the
Corporation shall be treated for all purposes as if its articles of
incorporation expressly deny preemptive rights by including the statement
"the corporation does not elect to have preemptive rights."
ARTICLE VIII - ACTIONS TAKEN OR AUTHORIZED
UPON CONSENT OF FEWER THAN ALL SHAREHOLDERS
Any action which may be taken at a shareholders meeting may be taken
without meeting and without prior notice, if one or more consents in
writing, setting forth the action so taken, shall be signed by the holders
of outstanding shares having not less than a majority, or in any event, not
less than the minimum number of votes that would be necessary to authorize
or take the action at a meeting at which all shares entitled to vote
thereon were present and voted.
IN WITNESS WHEREOF, the undersigned have executed these Articles of
Incorporation (Restated) on the 25th day of April, 1996.
THE GOLD CHAIN MINING COMPANY
/s/ Spenst Hansen
Its: Vice President
/s/ Carlos M. Chavez
Its: Corporate Secretary
{The text and numbering of the Articles of Incorporation have been
amended and restated, as set forth below, pursuant to the adoption
of Articles of Restatement of the Articles of Incorporation, and
effective immediately upon filing the same with the State of Utah.}
ACKNOWLEDGMENT BY CORPORATE OFFICERS
STATE OF UTAH }
COUNTY OF SALT LAKE } ss.
On this 25th day of April, 1996, before me personally
appeared Spenst Hansen and Carlos M. Chavez, to me personally known or
properly identified as the same, and who being by me duly sworn (or
affirmed), did each state that he is the Vice President and Secretary,
respectively, of The Gold Chain Mining Company, a Utah corporation, and
that said instrument was signed and sealed on behalf of said corporation
by authority of its board of directors, and did each acknowledge said
instrument to be the free act and deed of said corporation.
/s/ Theresa M. Rogers
NOTARY PUBLIC
Residing at: Salt Lake City, Utah [ SEAL ]
My commission expires: 1-9-00
44 of 63
<PAGE>
BYLAWS
OF
THE GOLD CHAIN MINING COMPANY
(Adopted Effective June 17, 1995)
and Ratified July 28, 1998
45 of 63
<PAGE>
BYLAWS
OF
THE GOLD CHAIN MINING COMPANY
TABLE OF CONTENTS
ARTICLE I
OFFICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.1 Office . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II
SHAREHOLDERS' MEETING . . . . . . . . . . . . . . . . . . . . . . . .1
Section 2.1 Annual Meetings. . . . . . . . . . . . . . . . . . . .1
Section 2.2 Special Meetings . . . . . . . . . . . . . . . . . . 1
Section 2.3 Notice of Shareholders' Meetings . . . . . . . . . . 1
Section 2.4 Waiver of Notice . . . . . . . . . . . . . . . . . . 1
Section 2.5 Place of Meeting . . . . . . . . . . . . . . . . . . 2
Section 2.6 Record Date. . . . . . . . . . . . . . . . . . . . . 2
Section 2.7 Quorum . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.8 Voting . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.9 Proxies. . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.10 Informal Action by Shareholders. . . . . . . . . . . 3
Section 2.11 Adjournment of Meeting . . . . . . . . . . . . . . . 3
ARTICLE III
BOARD OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.1 General Powers . . . . . . . . . . . . . . . . . . . 3
Section 3.2 Number, Tenure, and Qualifications . . . . . . . . . 3
Section 3.3 Regular Meetings; Notice . . . . . . . . . . . . . . 3
Section 3.4 Special Meetings; Notice . . . . . . . . . . . . . . 3
Section 3.5 Waiver of Notice . . . . . . . . . . . . . . . . . . 4
Section 3.6 Quorum of Directors. . . . . . . . . . . . . . . . . 4
Section 3.7 Adjournment of Directors Meeting . . . . . . . . . . 4
Section 3.8 Manner of Acting . . . . . . . . . . . . . . . . . . 4
Section 3.9 Vacancies. . . . . . . . . . . . . . . . . . . . . . 4
Section 3.10 Resignations of Directors. . . . . . . . . . . . . . 4
Section 3.11 Removal of Director from Office. . . . . . . . . . . 5
Section 3.12 Presumption of Assent. . . . . . . . . . . . . . . . 5
Section 3.13 Compensation . . . . . . . . . . . . . . . . . . . . 5
Section 3.14 Emergency Power. . . . . . . . . . . . . . . . . . . 5
Section 3.15 Chairman of the Board. . . . . . . . . . . . . . . . 5
Section 3.16 Board Committees . . . . . . . . . . . . . . . . . . 6
Section 3.17 Other Board Committees . . . . . . . . . . . . . . . 6
ARTICLE IV
OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.1 Positions. . . . . . . . . . . . . . . . . . . . . . 6
Section 4.2 Election and Term of Office. . . . . . . . . . . . . 6
Section 4.3 Resignation. . . . . . . . . . . . . . . . . . . . . 7
Section 4.4 Removal. . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.5 Vacancies. . . . . . . . . . . . . . . . . . . . . . 7
Section 4.6 President. . . . . . . . . . . . . . . . . . . . . . 7
Section 4.7 Vice Presidents. . . . . . . . . . . . . . . . . . . 7
Section 4.8 Secretary. . . . . . . . . . . . . . . . . . . . . . 7
Section 4.9 Treasurer. . . . . . . . . . . . . . . . . . . . . . 8
Section 4.10 General Manager. . . . . . . . . . . . . . . . . . . 8
Section 4.11 Other Officers . . . . . . . . . . . . . . . . . . . 8
Section 4.12 Salaries and Contract Rights . . . . . . . . . . . . 8
Section 4.13 Surety Bonds . . . . . . . . . . . . . . . . . . . . 9
Section 4.14 Executive Management Committee . . . . . . . . . . . 9
Section 4.15 Other Management Committees. . . . . . . . . . . . . 9
46 of 63
<PAGE>
ARTICLE V
WAIVER OF NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VI
CONTRACTS, LOANS, CHECKS, AND DEPOSITS. . . . . . . . . . . . . . . 9
Section 6.1 Contracts. . . . . . . . . . . . . . . . . . . . . . 9
Section 6.2 Officers and Directors Contracts . . . . . . . . . . 9
Section 6.3 Loans. . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.4 Deposits . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.5 Checks and Drafts. . . . . . . . . . . . . . . . . . 10
Section 6.6 Bonds and Debentures . . . . . . . . . . . . . . . . 10
ARTICLE VII
CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7.1 Issuance of Stock. . . . . . . . . . . . . . . . . . 10
Section 7.2 Certificates . . . . . . . . . . . . . . . . . . . . 10
Section 7.3 Bond for Lost or Destroyed Certificates. . . . . . . 11
Section 7.4 Consideration for Shares . . . . . . . . . . . . . . 11
Section 7.5 Transfer of Shares . . . . . . . . . . . . . . . . . 11
Section 7.6 Transfer Agent and Registration. . . . . . . . . . . 11
Section 7.7 Record Date and Transfer Books . . . . . . . . . . . 11
Section 7.8 Voting Record. . . . . . . . . . . . . . . . . . . . 12
Section 7.9 Registered Shareholders. . . . . . . . . . . . . . . 12
Section 7.10 Corporation as Shareholder . . . . . . . . . . . . . 12
ARTICLE VIII
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8.1 Indemnification. . . . . . . . . . . . . . . . . . . 12
Section 8.2 Other Indemnification. . . . . . . . . . . . . . . . 12
Section 8.3 Insurance. . . . . . . . . . . . . . . . . . . . . . 13
Section 8.4 Settlement by Corporation. . . . . . . . . . . . . . 13
ARTICLE IX
AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE X
FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE XI
DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE XII
CORPORATE SEAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
47 of 63
<PAGE>
BYLAWS OF
THE GOLD CHAIN MINING COMPANY
ARTICLE I
OFFICE
Section 1.1 Office. The Corporation shall maintain such offices,
within or without the State of Utah, as the Board of Directors may from time
to time designate. The location of the principal office may be changed by
the Board of Directors.
ARTICLE II
SHAREHOLDERS' MEETING
Section 2.1 Annual Meetings. The annual meeting of the shareholders
of the Corporation shall be held at such place within or without the State of
Utah and on such date and at such time, being the same from year to year, as
shall be set forth or as may be modified in compliance with these Bylaws. If
the meeting date falls on a legal holiday, the meeting shall be scheduled for
the next business day. This meeting shall be for the election of directors
and for the transaction of such other business as may properly come before
it. The failure to hold an annual meeting does and shall not affect the
validity of any corporate action.
Section 2.2 Special Meetings. Special shareholders meetings, other
than those regulated by statute, may be called at any time by the President
or any other executive officer under the President's discretion, or by a
majority of the directors, and shall be called by the President upon delivery
to the Corporation's Secretary of written demand(s) and stated purposes for
calling a special meeting by the holders of shares representing not less than
10% of all votes entitled to be cast at such special meeting. Written notice
shall be given of such meeting that states the place, the date and hour of
the meeting, the purpose or purposes for which it is called, and the name of
the person or persons by whom or at whose direction the meeting is called.
The notice shall be given to each shareholder of record in the same manner as
notice of the annual meeting. No business other than that specified in the
notice of special meeting shall be transacted at any such special meeting.
Section 2.3 Notice of Shareholders' Meetings. The Secretary shall
give written notice stating the place, date, and hour of the meeting, and in
the case of a special meeting, the purpose or purposes for which the meeting
is called, which shall be delivered not less than ten nor more than sixty
days before the day of the meeting, either personally or by mail to each
shareholder of record entitled to vote at such meeting, or as otherwise may
be permitted by law. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail addressed to the shareholder at such
shareholder's address as it appears on the books of the Corporation, with
postage thereon prepaid.
Section 2.4 Waiver of Notice. A shareholder may waive any notice
required to be given by these Bylaws, or the Articles of Incorporation of
this Corporation, or any of the corporation laws of the State of Utah, before
or after the meeting or action that is the subject of such notice. A valid
waiver is created by any of the following three methods: (a) in writing,
signed by the shareholder entitled to the notice and delivered to the
Corporation for inclusion in its corporate records; (b) attendance at the
meeting, unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting; or failure to
object at the time of presentation of a matter not within the purpose or
purposes described in the meeting notice.
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Section 2.5 Place of Meeting. The Board of Directors may designate
any place, either within or without the State of Utah, as the place of
meeting for any annual meeting or for any special meeting called by the Board
of Directors. Shareholders may by waiver or consent designate any place,
either within or without the State of Utah, as the place for the holding of
any such meeting. If no designation is made, the place of the meeting shall
be the principal office of the Corporation.
Section 2.6 Record Date. The Board of Directors may fix a date not
less than ten nor more than seventy days prior to any meeting or any action
requiring a determination of shareholders as the record date for the purpose
of determining shareholders entitled to notice of and to vote at such meeting
of the shareholders, or as otherwise may be authorized or required by law.
Section 2.7 Quorum. A majority in interest of all the outstanding
shares of the Corporation entitled to vote on a matter, represented by
shareholders of record in person or by proxy, shall constitute a quorum of
that voting group for action on that matter. Once a share is represented at
a meeting, other than to object to holding the meeting or transacting
business, it is deemed to be present for quorum purposes for the remainder of
the meeting and for any adjournment of that meeting unless a new record date
is or must be set for the adjourned meeting. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
At a meeting resumed after any such adjournment at which a quorum shall be
present or represented, any business may be transacted that might have been
transacted at the meeting as originally noticed. The shareholders present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of shareholders in such number that less than
a quorum remains. If a quorum exists, action on a matter is approved by a
voting group if the votes cast within the voting group favoring the action
exceed the votes cast within the voting group opposing the action, unless the
question is one for which, a different vote is required, by express provision
of law or of the Articles of Incorporation or of these Bylaws.
Section 2.8 Voting. A holder of an outstanding share entitled to
vote at a meeting may vote at such meeting in person or by proxy. Except as
may otherwise be provided in the Articles of Incorporation, and subject to
the provisions of the Corporation laws of the State of Utah, every
shareholder shall be entitled to one vote for each share, regardless of class
of stock, standing in such shareholder's name on the official record of
shareholders. Except as otherwise provided herein, or in the Articles of
Incorporation, or any express provision of law, all corporate action shall be
determined by a majority of the votes cast on each matter at a meeting or by
written consent of shareholders by the holders of shares entitled to vote
thereon.
Section 2.9 Proxies. At all meetings of shareholders, a shareholder
may vote in person or by proxy executed in writing by the shareholder or by
such shareholder's duly authorized attorney-in-fact. Such proxy shall be
filed with the Secretary of the Corporation before or at the time of the
meeting and shall be effective when received by the person authorized to
tabulate votes for the Corporation. No proxy shall be valid after eleven
months from the date of its execution, unless a longer period is otherwise
expressly provided for in the proxy.
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Section 2.10 Informal Action by Shareholders. Any action required to
be taken at a meeting of the shareholders, except for the election of
directors, or any action which may be taken at a meeting of the shareholders,
may be taken without a meeting and without prior notice, if one or more
consents in writing, setting forth the action so taken, shall be signed by
the holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take the action at a meeting at
which all shares entitled to vote thereon were present and voted with respect
to the subject matter thereof.
Section 2.11 Adjournment of Meeting. A majority of the shares
represented at the meeting, even if less than a quorum, may adjourn the
meeting from time to time. At such reconvened meeting at which a quorum is
present, any business may be transacted which might have been transacted at
the meeting as originally presented by notice. If a meeting is adjourned to
a different date, time, or place, notice need not be given of the
adjournment, if a new date, time, and place is announced at the meeting
before adjournment. However, if a new record date for the adjourned meeting
is or must be fixed in accordance with the corporate laws of the State of
Utah, notice of the adjourned meeting must be given to persons who are
shareholders as of the new record date.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 General Powers. All corporate powers shall be exercised
by or under the authority of, and the business and affairs of the Corporation
shall be managed under the direction of, the Board of Directors, except as
otherwise provided by the Articles of Incorporation. The Board of Directors
may adopt such rules and regulations for the conduct of its meetings and the
management of the Corporation as it deems proper.
Section 3.2 Number, Tenure, and Qualifications. The business,
affairs, and assets of the Corporation shall be managed by a Board whose
number of directors shall not be less than one nor more than twelve. Each
director shall hold office until the next annual meeting of shareholders or
until a successor shall have been elected and qualified. Directors need not
be residents of the State of Utah, or be shareholders of the Corporation,
but must have reached at least the age of majority. The number of directors
may at any time be changed by a resolution adopted by the Board of Directors
or by consent of a majority of the shareholders at any regular or special
shareholders meeting.
Section 3.3 Regular Meetings; Notice. A regular meeting of the Board
of Directors shall be held without other notice than by this Bylaw,
immediately following and at the same place as the annual meeting of
shareholders. The Board of Directors may provide, by resolution, consent, or
waiver, the date, time and place for the holding of additional meetings
without other notice or authority than by this Bylaw.
Section 3.4 Special Meetings; Notice. Special meetings of the Board of
Directors may be called by order of the Chairman of the Board, the President,
or by the written request of at least one-third of the directors. The
Secretary shall give notice of the date, time, and place, and may give notice
of the purpose or purposes, of each special meeting, by mailing the same at
least two days before the meeting or by telephoning or telefaxing the same at
least one day before the meeting to each director.
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Section 3.5 Waiver of Notice. A director may waive notice of a special
meeting of the Board either before or after the meeting, and such waiver
shall be deemed to be the equivalent of having given notice to such director.
The waiver must be in writing, signed by the director who is waiving notice,
and delivered to the Corporation for inclusion in its corporate records.
Attendance of a director at a meeting shall constitute waiver of notice of
that meeting unless said director attends solely for the express and limited
purpose of objecting to the transaction of business because the meeting has
not been lawfully called or convened.
Section 3.6 Quorum of Directors. A majority of the members of the
Board of Directors shall constitute a quorum for the transaction of business,
but less than a quorum may adjourn any meeting from time to time until a
quorum shall be present, whereupon the meeting may be held, as adjourned,
without further notice. When a quorum is present at any meeting, a vote,
consent, or decision by a majority of such quorum shall resolve any matter
brought before such meeting, except as otherwise provided by the Articles of
Incorporation or by these Bylaws. At any meeting at which every director
shall be present, even though without notice, any business may be transacted.
Section 3.7 Adjournment of Directors Meeting. A majority of the
directors present, even if less than a quorum, may adjourn a meeting and
continue it to a later time. Notice of the adjourned meeting or of the
business to be transacted there shall not be necessary, other than by
announcement at the meeting of which the adjournment is taken. At an
adjourned meeting at which a quorum is present, any business may be
transacted which could have been transacted at the meeting as originally
called.
Section 3.8 Manner of Acting. At all meetings of the Board of
Directors, each director shall have one vote. The act of a majority present
at a meeting shall be the act of the Board of Directors, provided a quorum is
present. Any action required to be taken or which may be taken at a meeting
of the directors may be taken without a meeting if a consent in writing
setting forth the action so taken shall be signed by a majority of the
members of the Board of Directors. The directors may conduct a meeting by
means of a telephone conference or any similar communications equipment by
which every director participating in the meeting is able to satisfactorily
communicate with each other director.
Section 3.9 Vacancies. A vacancy in the Board of Directors shall be
deemed to exist in case of death, resignation, or removal of any director, or
if the authorized number of directors be increased, or if the shareholders
fail at any meeting of shareholders at which any director is to be elected,
to elect the then currently authorized number of directors to be elected at
that meeting. Unless otherwise provided by law, in case of any vacancy in
the Board of Directors, including a vacancy resulting from an increase in the
number of directors, the remaining directors, whether constituting a quorum
or not, or the shareholders may fill the vacancy.
Section 3.10 Resignations of Directors. A director may resign at any
time by giving the Board of Directors written notification thereof and
delivering it to the Board of Directors, its Chairman, the President, or
Secretary of the Corporation. Such resignation shall become effective upon
its acceptance by the Board of Directors, unless the notice specifies a
later effective date, or the Board informs the resigning director in writing
of a differently deemed effective date; provided, however, that if the Board
of Directors has not acted thereon within ten days from the date the written
resignation is delivered, the resignation shall be deemed accepted on the
eleventh day.
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Section 3.11 Removals of Director from Office. Directors may be
removed from office with cause at any time at a special meeting called
expressly for that purpose by unanimous vote of all other members of the
Board of Directors, or with or without cause by vote of the shareholders
holding a majority of the shares issued and outstanding and entitled to vote
on the record date of that meeting. A director may be removed only if the
number of votes cast for removal exceeds the number of votes cast against
removal. The vacancy created by such removal shall be filled by the
directors then in office, even if less than a quorum remains. The newly
appointed director shall hold office until the next annual meeting or until
a successor is duly elected and qualified, except that any directorship to be
filled by reason of removal by the shareholders may be filled by election, by
the shareholders, at the meeting at which the director is removed. No
reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of that director's term of
office.
Section 3.12 Presumption of Assent. A director of the Corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless:
(a) (1) The director objects, at the beginning of the meeting or
promptly upon the director's arrival, to holding the meeting or
transacting business at the meeting; or
(2) The director shall file written dissent or abstention
with the presiding officer of the meeting before its adjournment or to
the Corporation within a reasonable time after adjournment of the
meeting; and
(b) The director's dissent or abstention from the action taken is
entered in the minutes of the meeting.
The right of dissent or abstention is not available to a director who votes
in favor of the action taken.
Section 3.13 Compensation. By resolution of the Board of Directors,
a director may be paid expenses, if any, of attendance at each meeting of the
Board of Directors, and may be paid by cash, stock, or other similar
consideration, a fixed sum of compensation for attendance at each meeting of
the Board of Directors, or a stated salary as director, or both. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 3.14 Emergency Power. When a director is incapacitated or
otherwise unable to attend corporate meetings and function as a director, due
to a death or national disaster, natural catastrophe, or similar force
majeure, a majority of the remaining members of the Board of Directors shall
have all the powers necessary to function as a complete Board and, for the
purpose of doing business and filling vacancies, shall constitute a quorum
until such time as all directors are again able to attend, or vacancies are
filled pursuant to these Bylaws.
Section 3.15 Chairman of the Board. The Board of Directors in its
discretion may elect from its own members a Chairman of the Board, who shall
preside at all meetings of the Board of Directors, and shall have such other
powers and shall perform such other duties as may be prescribed from time to
time by the Board of Directors.
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Section 3.16 Board Committees. The Board of Directors, by special
resolution adopted by a majority of the full Board of Directors, may
designate from among its members an Executive Board Committee of not fewer
than two members, one of whom shall be the Chairman of the Board, and which
shall be governed by the same rules regarding meeting, action without
meetings, notice, and waiver of notice, and quorum and voting requirements as
applied to the board of directors generally. To the extent provided in such
special resolution, The Executive Board Committee shall have and may
exercise, in general, all power and authority of the Board of Directors,
except for the following specific acts. The Executive Board Committee may not:
(i) Authorize or approve a distribution, unless done in accordance with a
general formula or method prescribed by the Board of Directors;
(ii) Approve or propose to shareholders any action which by law requires the
approval, proposal, or recommendation of the full Board of Directors for
subsequent vote and approval by the shareholders;
(iii) Fill vacancies on the Board of Directors or on any of its committees;
(iv) amend Articles of Incorporation;
(v) Adopt, amend, or repeal Bylaws;
(vi) Approve a plan or merger not requiring shareholder approval; OR
(vii) Authorize or approve the issuance, sale, or contract for sale of
shares, or determine the designation and relative rights, preferences, and
limitations on a class or series of shares, except that the Board of
Directors may authorize a committee, or a senior executive officer of the
Corporation, to do so within limits specifically prescribed in such special
resolution, and under the special direction of and review by the Board of
Directors.
Section 3.17 Other Board Committees. The Board of Directors may also
appoint from among its own members such other committees as the Board may
determine, which shall in each case consist of not fewer than two directors,
and which shall have such powers and duties as shall from time to time be
prescribed by the Board. The Chairman of the Board shall be a member ex
officio of each committee appointed by the Board of Directors. A majority of
the members of any such board committee may fix its rules and procedures.
ARTICLE IV
OFFICERS
Section 4.1 Positions. The officers of the Corporation shall be a
President, and a Secretary each of whom shall be elected by a majority of the
Board of Directors. The Board of Directors may also elect or appoint one or
more Vice presidents, and a Treasurer. Such other officers and assistant
officers as may be deemed necessary may be elected or appointed by the Board
of Directors or by an officer duly authorized by Board resolution. In its
discretion, the Board of Directors may leave unfilled, for any period as it
determines necessary and proper, any office except that of the President and
the Secretary. Any two or more offices may be held by the same person,
except the offices of President and Secretary. Officers may, but are not
required to, be directors or shareholders of the Corporation. Election or
appointment of an officer or agent shall not of itself create contract
rights.
Section 4.2 Election and Term of Office. The officers of the
Corporation are to be elected by the Board of Directors at the first meeting
of the Board of Directors held after each annual meeting of the shareholders.
If the election or appointment of officers is not being conducted at such
meeting, such election shall be held as soon thereafter as convenient. Each
officer shall hold office until his successor shall have been duly elected or
appointed and qualified, or upon the earlier occurrence of such officer's
death, resignation or removal from office as hereinafter provided.
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Section 4.3 Resignation. Any officer may resign at any time by
delivering a written notice of resignation either to the Board of Directors,
Chairman of the Board or President. Unless otherwise specified therein, such
resignation shall take effect immediately upon delivery, and shall in and of
itself be without prejudice to the contract rights, if any, of such officer.
Section 4.4 Removal. Any officer or agent may be removed, with or
without cause, by a majority vote of the Board of Directors whenever, in its
judgment, the best interests of the Corporation will be served thereby, but
such removal shall not be deemed an automatic termination of the contract
rights, if any, of the person so removed. Any such removal shall require a
majority vote of the Board of Directors, exclusive of the officer in
question, if such officer is also a director.
Section 4.5 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, or if a new office is
created, may be filled by the Board of Directors for the unexpired portion of
the term in the manner determined by the Board in its discretion to be
warranted under the particular circumstances of any such vacancy.
Section 4.6 President. The President shall be the chief executive
and administrative officer of the Corporation. The President shall preside
at all meetings of the shareholders and, in the absence of the Chairman of
the Board, if that position is occupied by a different individual, al all
meetings of the Board of Directors. The President shall exercise such duties
as customarily pertain to the office of President and shall have general and
active supervision over the property, business, and affairs of the
Corporation, and over its several officers subject to the direction and
control of the Board of Directors. The President may appoint officers,
agents, or employees in addition to those appointed by the Board of Directors
and may sign, execute, and deliver in the name of the Corporation powers of
attorney, contracts, bonds, deeds, mortgages and other obligations or
agreements, and shall have such other powers and shall perform such other
duties as may be prescribed from time to time by the Board of Directors or by
the Bylaws.
Section 4.7 Vice Presidents. The Vice Presidents each shall have
such powers and perform such duties as may be assigned to them by the Board
of Directors or the President. In the absence or disability of the
President, the Vice President or Vice Presidents, in the order designated by
the Board or the President, shall perform the duties and exercise the powers
of the President. In the event there is more than one Vice President and the
Board of Directors has not designated the order in which Vice Presidents are
to act as or in place of the President, then the Vice President who was
elected first shall act as President. A Vice President may sign and execute
contracts and other obligations pertaining to the regular course of his
duties.
Section 4.8 Secretary. The Secretary shall prepare and keep the
minutes of all meetings of the shareholders and of the Board of Directors and
to the extent ordered by the Board of Directors or the President, the
minutes of meetings of all committees. The Secretary shall cause notice to
be given of meetings of shareholders, of the Board of Directors, and of
committees appointed by the Board. The Secretary shall have custody of the
corporate seal and general charge of the books, records, documents, and
papers of the Corporation not pertaining to the performance of the duties
vested in other officers, all of which shall at all reasonable times be open
to the examination of any director. The Secretary, with the President or a
Vice President thereunto authorized in the name of the Corporation may sign
or execute contracts and affix the seal of the Corporation thereto.
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The Secretary shall authenticate records of the Corporation and perform such
other duties as may be prescribed from time to time by the Board of Directors
or by the Bylaws. The Secretary shall be sworn to the faithful discharge of
theses and other proper duties. Assistant Secretaries shall assist the
Secretary and shall keep and record such minutes of meetings as shall be
directed by the President, Secretary or the Board of Directors.
Section 4.9 Treasurer. The Treasurer shall have the care and general
custody of the collection and disbursement of the money, funds and securities
of the Corporation. The Treasurer shall endorse on behalf of the Corporation
for collection, all checks, notes, and other obligations, and shall deposit
the same to the credit of the Corporation in such bank or banks or
depositories as the President or Board of Directors may designate. The
Treasurer may sign, with the President, or such other persons as the Board of
Directors may be designated for that purpose all bills of exchange or
promissory notes of the Corporation. The Treasurer shall enter or cause to
be entered regularly in the books of the Corporation full and accurate
accounts of all monies received and paid by on account of the Corporation;
shall at all reasonable times exhibit the books and accounts to any director
of the Corporation upon application at the office of the Corporation during
business hours; and, whenever required by the Board of Directors or the
President, shall render a statement of the Corporation's accounts. The
Treasurer shall perform such other duties as may be prescribed from time to
time by the President, the Chairman of the Board, the Board of Directors, or
the Bylaws.
Section 4.10 General Manager. The Board of Directors may employ and
appoint a General Manager, who may be one of the officers or directors of the
Corporation. If so employed by the Board of Directors, the General Manager
shall be the chief operating officer ("COO") of the Corporation and, subject
to the directions and supervision of the Board of Directors, shall have
general charge of the business operations of the Corporation and general
supervision over its employees and agents. The General Manager shall have
exclusive priority over management of the business of the Corporation and of
all of its dealings, subject at all times to the control of the Board of
Directors. Upon the express authority and direction from the Board of
Directors or the executive committee, the General Manager shall supervise the
hiring and employment of all employees of the Corporation, or delegate such
employment to subordinate officers, or such division officers, or such
division chiefs, and shall have authority to discharge any person so
employed. The General Manager shall make a report to the President and
directors quarterly, or more often if required to do so, setting forth the
results of the Corporation's operations, together with recommendations for
improving operations and increasing efficiency and productivity of the
Corporation, and to perform such other duties as the Board of Directors may
require, assign, or recommend.
Section 4.11 Other Officers. Other officers shall perform such duties
and have such powers as may be assigned to them by the Board of Directors.
Section 4.12 Salaries and Contract Rights. The salaries or other
compensation, in the form of cash, stock, or similar consideration, if any,
of the officers of the Corporation shall be fixed from time to time by the
Board of Directors except that the Board of Directors may delegate to any
person, or group of persons or committee, the power to fix the salaries or
other compensation of any subordinate officers or agents. No officer shall
be prevented from receiving any such salary or compensation by reason of the
fact that he is also a director of the Corporation. The act of appointment
of an officer shall not of itself create any contract right.
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Section 4.13 Surety Bonds. The Board of Directors may require any
officer or agent of the Corporation to, and the same shall, execute to the
Corporation a bond in such sums and with such surety or sureties as the Board
of Directors may direct, conditioned upon the person's faithful performance
of his duties to the Corporation, including responsibility for negligence,
and for the accounting for all property, monies, securities, or other assets
and liabilities of the Corporation which extend to such person's care or
custody.
Section 4.14 Executive Management Committee. The Board of Directors
may appoint an Executive Management Committee from among the officers
comprising management of the corporation made up of not fewer than two
members, one of whom shall be the President, and may designate one or more
other officers, to serve as members of the Executive Management Committee in
the absence of a regular member or members. The Board of Directors reserves
to itself alone the power to declare dividends, issue stock, recommend to
shareholders any action requiring their approval, change the membership of
any committee at any time, fill vacancies therein, and discharge any
committee either with or without cause at any time. Subject to the foregoing
limitations, the Executive Management Committee may possess and exercise such
other powers as may be granted to it by the Board of Directors.
Section 4.15 Other Management Committees. The Board of Directors may
also appoint from among the officers comprising management of the corporation
such other committee(s) as the Board may determine, which in each case shall
consist of not fewer than two members and which shall have such powers and
duties as may be prescribed from time to time by the Board, The President
shall be a member ex-officio of each such committee appointed by the Board of
Directors. A majority . Of the members of any such management committee may
fix its rules of procedure subject to review by the Board of Directors.
ARTICLE V
WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or
director of the Corporation under the provisions of these Bylaws or under the
provisions of the Articles of Incorporation or under the provisions of the
Revised Utah Business Corporation Act, a waiver thereof in writing signed by
the person or persons entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.
Attendance at any meeting shall constitute a waiver of notice of such
meetings, except where attendance is for the express purpose of objecting to
the legality of that meeting.
ARTICLE VI
CONTRACTS, LOANS, CHECKS, AND DEPOSITS
Section 6.1 Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the Corporation,
and such authority may be general or confined to specific instances.
Section 6.2 Officers and Directors Contracts. No contract, act, or
other transaction between this Corporation and any other person, firm, or
corporation shall be affected by the fact that a director or officer of this
Corporation is a party to or is interested in such contract, act, or
transaction, or in any way connected with such person, firm, or corporation,
or is a director or officer of such other corporation. Any director or
officer of this Corporation, individually or jointly, may be a party to or
may be interested in any contract, act, or other transaction of this
Corporation or in which this Corporation is interested.
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Section 6.3 Loans. No loan or advances shall be contracted on behalf
of the Corporation, no negotiable paper or other evidence of its obligation
under any loan or advance shall be issued in its name, and no property of the
Corporation shall be mortgaged, pledged, hypothecated, or transferred as
security for the payment of any loan, advance, indebtedness, or liability of
the Corporation unless and except as expressly authorized by the Board of
Directors. Any such authorization may be general or confined to specific
instances.
Section 6.4 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies, or other depositories as the
Board of Directors may select, or as may be selected by any officer or agent
authorized to do so by the Board of Directors.
Section 6.5 Checks and Drafts. All notes, drafts, acceptances,
checks, endorsements, and evidences of indebtedness of the Corporation shall
be signed by such officer or officers or such agent or agents of the
Corporation and in such manner as the Board of Directors from time to time
may determine. Endorsements for deposit to the credit of the Corporation in
any of its duly authorized depositories shall be made in such manner as the
Board of Directors from time to time may determine.
Section 6.6 Bonds and Debentures. Every bond or debenture issued by
the Corporation shall be evidenced by an appropriate instrument which shall
be signed by the President or a Vice President and by the Treasurer or by the
Secretary, and may be sealed with the seal of the Corporation. The seal may
be facsimile, engraved, or printed. Where such bond or debenture is
authenticated with the manual signature of an authorized officer of the
Corporation or other trustee designated by the indenture of trust or other
agreement under which such security is issued, the signature of any of the
Corporation's officers named thereon may be facsimile. In case any officer
who signed, or whose facsimile signature has been used on any such bond or
debenture, shall cease to be an officer of the Corporation for any reason
before the same has been delivered by the Corporation, such bond or debenture
may nevertheless be adopted by the Corporation and issued and delivered as
though the person who signed it or whose facsimile signature has been used
thereon had not ceased to be such officer.
ARTICLE VII
CAPITAL STOCK
Section 7.1 Issuance of Stock. No shares of this Corporation shall
be issued unless authorized by the Board. Such authorization shall include
the maximum number of shares to be issued, the consideration to be received,
and a statement that the Board considers the consideration to be adequate.
Certificates for shares of the Corporation shall be in such form as is
consistent with the provisions of the Utah Revised Business Corporation Act
and shall state the following: the name of the corporation and that the
Corporation is organized under laws of the State of Utah; the name of the
person to whom issued; and the number and class of shares and the designation
of the series, if any which such certificate represents.
Section 7.2 Certificates. The certificate shall be signed by or
contain the original or facsimile signature of two officers of the
Corporation, and the countersignature of the transfer agent and stock
registrar and the seal of the Corporation may be affixed thereto. All
certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the Corporation.
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<PAGE>
All certificates surrendered to the Corporation for transfer shall be
canceled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in the case of a lost, destroyed, or mutilated certificate, a new one
may be issued therefor upon such terms and indemnity to the Corporation as
the Board of Directors shall prescribe.
Section 7.3 Bond for Lost or Destroyed Certificates. The Corporation
may issue a new certificate to replace any certificate theretofore issued by
it, but alleged to have been lost or destroyed. The Board of Directors may
require the owner of such a certificate or such person's legal representative
to give the Corporation a bond in such sum and with such sureties as the
Board of Directors may direct to indemnify the Corporation and its transfer
agents and registrars, if any, against claims that may be made on account of
the issuance of any such replacement certificate. The Board is authorized to
issue a replacement certificate without requiring any bond.
Section 7.4 Consideration for Shares. The capital stock of the
Corporation shall be issued for such consideration, but not less than the par
value thereof, as shall be fixed from time to time by the Board of Directors.
In the absence of fraud, the determination of the Board of Directors as to
the value of any property or services received in full or partial payment of
shares shall be conclusive.
Section 7.5 Transfer of Shares. Transfer of shares of the
Corporation shall be made only on the stock transfer books of the Corporation
by the holder of record thereof, or the record holder's legal representative,
if any; transfers shall require proper, written evidence or special power of
attorney granting authority to assign and transfer the same, duly executed
and filed with the Secretary of the Corporation; and transfers shall take
effect only after the physical surrender for cancellation of the certificate
for such shares. The person, persons, or entity in whose name(s) shares are
recorded on the books of the Corporation and who sign(s) as record holder(s),
shall be deemed by the Corporation to be the beneficial owner(s) of record
thereof for all purposes.
Section 7.6 Transfer Agent and Registrar. The Board of Directors
shall have power to appoint one or more transfer agents and registrars for
the transfer and registration of certificates of stock of any class, and may
require that stock certificates be countersigned and registered by one or
more of such transfer agents and registrars.
Section 7.7 Record Date and Transfer Books. (a) For the purpose of
determining the identity and number of shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a record date for any such determination of
shareholders. Such date may not be more than seventy (70) days and, in case
of a meeting of shareholders, not fewer than (10) days prior to the date on
which the particular action, requiring such determination of share holders,
is to be taken.
(b) If no record date is fixed for such purposes, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders.
(c) When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date, which it must do if the meeting is
adjourned to a date more than one hundred twenty (120) days after the date
that was fixed for the original meeting.
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<PAGE>
Section 7.8 Voting Record. The officer or agent having charge of the
stock transfer books for shares of this Corporation shall make, at least ten
(10) days before each meeting of shareholders, a complete record of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each. Such record shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting for the purposes thereof.
Section 7.9 Registered Shareholders. The Corporation shall be
entitled to treat the holder of record of any shares of stock as the holder
thereof in fact, and shall not be bound to recognize any equitable or other
claim to, or on behalf of, the Corporation. The record shareholder is
entitled to exercise any and all of the rights and powers incident to the
ownership of such stock for any lawful purpose related to the Corporation's
stock.
Section 7.10 Corporation as Shareholder. The Board of Directors shall
have power and authority to execute and deliver proxies and consents on
behalf of, and in connection with the exercise by, the Corporation of the
rights and powers incident to the ownership of stock, in the Corporation.
The Board of directors, from time to time, may confer like powers upon any
other person or persons by special resolution.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnification. No officer or director shall be
personally liable for any obligations arising out of any acts or conduct of
said officer or director performed for or on behalf of the Corporation. To
the fullest extent permitted by law, the Corporation shall and does hereby
indemnify and hold harmless each current and former, and any such director's
or officer's heirs and administrators, current and former director and
officer of the Corporation, each person who has served at the Corporation's
request as a director or officer of another corporation in or of which the
Corporation owns shares or is a creditor, and from and against any and all
claims, judgments, and liabilities to which any such individual may become
subject by reason of service as a director or officer of the Corporation, or
by reason of any alleged act or omission by such director or officer, and
shall reimburse each such individual for all legal and other expenses
reasonably and actually incurred in connection with any such claim, judgment
or liability. However, no one may be indemnified against, or be reimbursed
for, any expense incurred in connection with any claim, judgment or liability
arising out of that persons's own negligence or willful misconduct. The
rights accruing to any person under the foregoing provisions of this section
shall not exclude any other right to which such person may lawfully be
entitled, nor shall anything herein contained restrict the right of the
Corporation to indemnify or reimburse such person in any proper case, even
though not specifically herein provided for. The Corporation, its directors,
officers, employees, and agents shall be fully protected in taking any
action, making any payment, or in refusing to do so in reliance upon the
advice of counsel.
Section 8.2 Other Indemnification. The indemnification herein
provided shall not be deemed exclusive of any other rights to which those
seeking or entitled to indemnification may be authorized under any Bylaw,
agreement, vote of shareholders or disinterested directors, or otherwise,
with respect to any action in such person's official or other nonlawful
capacity, and entitlement to reimbursement shall continue as to any person
who has ceased to be a director or officer, and shall inure to the benefit of
the heirs, executors, and administrators of any such person.
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<PAGE>
Section 8.3 Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee, agency or other representative of the Corporation, or is or was
serving the Corporation at the request of another corporation, partnership,
joint venture, trust, or other enterprise, against any claim, judgment, or
liability asserted against, and reasonably and actually incurred by, such
person in any capacity, or arising out of such person's status as such,
whether or not the Corporation would have the power to indemnify such person
against liability under these Bylaws, the Utah Revised Business Corporation
Act.
Section 8.4 Settlement by Corporation. The right of any person to be
indemnified shall be subject always to the right of the Corporation by its
Board of Directors, in lieu of such indemnity, to settle any such claim,
action, suit, or proceeding at the expense of the Corporation by the payment
of the amount of such settlement and the costs and expenses incurred in
connection therewith.
ARTICLE IX
AMENDMENTS
Any one, several or all of the Bylaws may be altered, amended, repealed,
or new Bylaws may be adopted or restated, by a majority of the entire Board
of Directors at any regular or special meeting. Any Bylaws adopted by the
Board may be altered, amended, or repealed by a majority of the shareholders
entitled to vote. These Bylaws also may be altered, amended, added to,
repealed, or restated by the affirmative vote of a majority of the Board of
Directors at an annual meeting or at a special meeting called for that
purpose, provided that a written notice shall have been sent to each
shareholder of record entitled to vote at such meetings at least ten days
before the date of such annual or special meeting, which notice shall explain
the reasons for and describe the proposed changes to such Bylaws. Only
changes that have been specified in the notice shall be made.
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall be fixed and may be varied by
resolution of the Board of Directors.
ARTICLE XI
DIVIDENDS
The Board of Directors at any regular or special meeting, as it deems
advisable, may declare dividends payable out of the surplus of the
Corporation.
ARTICLE XII
CORPORATE SEAL
The Board of Directors may, in its sole discretion, determine whether or
not to procure a corporate seal. If a seal is procured, it may be in the
form of a circle, and bearing the name of the Corporation, the word "Utah",
signifying the state of incorporation, and the year of incorporation.
60 of 63
<PAGE>
THESE BYLAWS WERE ADOPTED BY RESOLUTION OF THE BOARD OF DIRECTORS OF
THE GOLD CHAIN MINING COMPANY AT THE 1995 ANNUAL MEETING OF THE BOARD OF
DIRECTORS, HELD THE 17th DAY OF JUNE, 1995, EFFECTIVE AS OF THE DATE OF
THEIR ADOPTION.
THE ADOPTION OF THESE BY-LAWS IS HEREBY RATIFIED AND THESE BY-LAWS ARE
HEREBY ACCEPTED BY THE UNANIMOUS CONSENT OF THE UNDERSIGNED MEMBERS OF
THE BOARD OF DIRECTORS OF THE COMPANY, THIS 28th DAY OF JULY, 1998.
/s/ Spenst Hansen
____________________________________
Spenst Hansen, Director
Chairman of the Board of Directors
/s/ Elizabeth Knowlton /s/ C M Chavez
_________________________________ _________________________________
Elizabeth Knowlton, Director Carlos Chavez, Director
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<PAGE>
When Recorded, Please Return To:
- --------------------------------
GOLD CHAIN MINING COMPANY
P.O. Box 190
Eureka, Utah 84628
QUIT-CLAIM DEED
THIS QUIT-CLAIM DEED, with effective date of the 21st day of June, 1999,
by and between KEYSTONE SURVEYS, INC., a Utah corporation, as GRANTOR, and
Gold Chain Mining Company, a Utah corporation, as GRANTEE. In consideration
of the sum of Ten Dollars and no/100 ($10.00), and other good and valuable
consideration, the receipt and sufficiency of such consideration is hereby
acknowledged, GRANTOR hereby quit-claims all GRANTOR's rights, title and
interest, unto GRANTEE, the following described patented mining claims
located in Juab County, Utah.
Township 10 South Range 2 West, Sections
Leo (290) North Star (62)
Lisbon (290) Silver Spar (290)
Silver Star (290) Elgin Amended (4019)
Argenta (290) Ardath (3332).
West Star (82)
IN WITNESS WHEREOF, GRANTOR executed this document on the 21st day of
June, 1999.
GRANTOR:
/S/ Spenst Hansen
-----------------------------------
Spenst Hansen, As President of
Keystone Surveys, Inc.
ACKNOWLEDGMENT
STATE OF UTAH )
COUNTY OF JUAB ) ss.
On the 21st day of June, 1999, before me a Notary Public in and for said
County and State, personally appeared SPENST HANSEN who acknowledged he is the
duly authorized President of Keystone Surveys, Inc., and executed the within
instrument on behalf of Keystone Surveys, Inc. Given under my hand and seal
the day and year first above written.
My commission expires: 9/21/2000 /s/ Laurie E. Cummings
-----------------------------------
[ SEAL ] NOTARY PUBLIC
62 of 63
[PAGE 63 OF 63 IS THE "FINANCIAL DATA SCHEDULE" SUBMITTED WITH THIS FILING.]
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
financial statements included in Registrant's Form 10-SB for the fiscal
year ended December 31, 1998, and is qualified in its entirety by ref-
erence to those financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
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<SECURITIES> 0 0
<RECEIVABLES> 5,595 5,695
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 5,595 5,695
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 5,595 5,695
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
0 0
<COMMON> 12,258 12,258
<OTHER-SE> (6,663) (6,563)
<TOTAL-LIABILITY-AND-EQUITY> 5,595 5,695
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 100 106
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (100) (100)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (100) (100)
<EPS-BASIC> (.00) (.00)
<EPS-DILUTED> (.00) (.00)
</TABLE>
