U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: October 31, 1999
-----------------------------------
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from -------------- to --------------
Commission file number: 001-08397
GOLD STANDARD, INC.
------------------------------------------------------
(Name of small business issuer in its charter)
UTAH 87-0302579
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
136 South Main Street, Ste 712, Salt Lake City, Utah 84101
----------------------------------------------------------
(Address of principal executive offices)(Zip Code)
Issuer's telephone number: (801) 328-4452
Securities registered under Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $.001 par value Pacific Exchange, Inc.
Common Stock, $.001 par value NASDAQ Small Cap Market
Securities registered under Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.001 PER SHARE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
<PAGE>
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
YES X NO
------- -------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting and non-voting common equity
of the issuer held by non-affiliates, based upon the closing price of the Common
Stock on December 31, 1999 as reported on The NASDAQ SmallCap Market, was
approximately $1,154,576 (Assumes affiliates include only officers, directors
and shareholders known to the issuer to beneficially own 10% or more of the
Company's Common Stock.)
The number of shares of the issuer's common equity outstanding as of
December 31, 1999 was: 1,168,594 shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement provided to shareholders
in conjunction with its 2000 Annual Meeting of Shareholders to be held February
29, 2000, are incorporated into Part III of this Form 10-K.
Transitional Small Business Disclosure Format (check one):
YES NO X
------ -------
<PAGE>
PART I
ITEM 1: Description of Business.
Gold Standard, Inc. was incorporated pursuant to the laws of the State
of Utah on November 28, 1972, for the purpose of engaging in the exploration
for, and the production and sale of, gold. Gold Standard, Inc. and its
subsidiaries ("Registrant") are primarily engaged in acquiring, leasing and
selling hard mineral properties and, if warranted, developing those properties
which have the most economic potential. Registrant also seeks joint ventures or
other financial arrangements with other companies to develop and/or operate the
properties it controls. Presently, Registrant is an exploration stage company
and there is no assurance that a commercially viable ore body (reserves) exists
in any of Registrant's properties until further exploration work and drilling is
done and a final feasibility report based upon such test results is concluded.
In the 1994-1995 period, Registrant initiated a large land acquisition
(mineral rights) program in the country of Brazil. Offices were established and
staffed in the city of Curitiba in the state of Parana. Operations are carried
on through the wholly-owned Brazilian subsidiary company, Gold Standard Minas,
S.A. Presently this company has approximately twelve employees consisting of
senior and junior geologists, technicians, prospectors, clerical and laborers.
Gold Standard Minas, S.A. is presently involved in active exploration programs
in the Brazilian states of Mato Grasso, Rondonia, Amazonas and Santa Catarina.
During fiscal year 1999, Registrant engaged in mineral exploration in
the United States, Brazil, Uruguay and Paraguay. Exploration activities will
continue in 2000.
Registrant did not engaged in any material business transactions during
the fiscal year ended October 31, 1999. Further, except as otherwise described
herein, no material expenditures have occurred during the Registrant's last
three fiscal years for research and development activities, nor has compliance
with federal, state and local environmental laws and regulations resulted in a
material effect on the capital expenditures, earnings or competitive position of
Registrant. Most of the time of Registrant's president is spent on Registrant's
activities. In addition to the President, Registrant has two part-time employees
located in Salt Lake City.
Item 2. Description of Property.
The Country of Brazil
---------------------
Registrant, through its 100% owned subsidiary company Gold Standard
Minas, S.A., in 1994 and 1995 acquired mineral rights to 1.5 million acres of
<PAGE>
land with priority and another 1 million acres application in the country of
Brazil. These properties were selected by Registrant's geologists and were
considered to be highly prospective for gold. To hold down the maintenance and
carrying costs of this huge land position, priority was given to delineate the
most prospective areas. In addition, the fall in the price of gold drastically
reduced the competition for properties as the majority of mining exploration
companies left the country or went out of business. Management did not feel the
need to retain this large land position, and Registrant reduced its present
holdings to nine parcels in granted or priority status in the aggregate of
47,040 acres. The claims are located in the states of Mato Grosso, Santa
Catarina, Minas Gerais, Sao Paulo and Parana.
The properties are in the initial stages of development. Generalized
reconnaissance, including rock sampling, stream sediment, soil geochemistry,
ground geophysics and geologic mapping are being conducted at this time. Current
project areas undergoing detailed investigation by Registrant's geologists,
technicians and prospectors include Rebeira in Sao Paulo, the state of Parana,
Arcangelo and Resende Costa in the state of Minas Gerais. Registrant maintains
fully staffed computerized offices in Curitiba, Parana. All full time employees
and part time consultants are Brazilian.
The Country of Uruguay
----------------------
During 1999 Registrant decided to curtail operations in Uruguay, closed
its offices there, and relinquished itself of its property holdings. Presently,
Registrant still retains a geologist on a part time basis in Uruguay. Office
fixtures, laboratory equipment and vehicles have been placed in storage.
The Country of Paraguay
-----------------------
Registrant was approached in 1998 by Dr. Patrick Delaney, a professor
of geology residing in Rio de Janeiro, Brazil. Dr. Delaney had been working
several years on the theory that southwestern Paraguay was an overlooked area
and that it was a basin capable of hosting commercial quantities of oil and gas.
Registrant obtained an exclusive hydrocarbon prospecting permit from the
government in the area known as the Pilar Basin. This permit encompassed
3,447,500 acres.
Registrant commenced its exploration program under the direction of Dr.
Delaney in late 1998. In 1999 Dr. Delaney was diagnosed with prostate cancer and
died in the early stages of exploration. Without Dr. Delaney to direct and
spearhead the operation, Registrant decided to abandon the project. In October,
1999 Registrant left the oil and gas exploration business in Paraguay.
Item 3. Legal Proceedings.
There are no material legal proceedings pending against or involving
the Registrant.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
Registrant did not submit any matters to a vote of its security holders
during the fourth quarter of the fiscal year ended October 31, 1999.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The common stock of Registrant is traded on NASDAQ and on the Pacific
Stock Exchange. The principal market makers of Registrant's common stock on the
NASDAQ system are Market Makers, Wilson Davis & Co., Inc., Mayer & Schweitzer,
Inc., Troster Singer Corp., Nash Weiss, and Sherwood Securities Corp. However,
Registrant has made no independent verification of the magnitude of the
transactions of any of the above-mentioned or other firms. Other broker/dealers
may also make a market in Registrant's stock.
Market Prices of Common Stock
-----------------------------
The following table sets forth, for the periods indicated, the prices
of Registrant's common stock from the NASDAQ Small Cap Market.
<PAGE>
Fiscal Quarterly Sales Prices
Year Period High Low
------ ------------- ---- ---
1999:* First Quarter $3.38 $1.00
Second Quarter 2.00 1.25
Third Quarter 2.50 1.19
Fourth Quarter 4.00 1.25
1998:* First Quarter $13.83 $8.66
Second Quarter 8.29 4.50
Third Quarter 6.42 5.09
Fourth Quarter 4.05 1.67
*Restated to reflect two reverse stock splits occurring on April 1, 1998 and
December 1, 1998.
There were approximately 2,013 record holders of the Registrant's
common stock as of October 31,1999. Registrant has not declared or paid any
dividends with respect to its common stock during the past two years. Registrant
has no present intention to pay any such dividends in the foreseeable future due
to its limited financial resources and the desire of Registrant's management to
reinvest most of whatever revenue it might obtain into additional properties and
investments.
Item 6. Selected Financial Data.
The selected financial data is presented on a consolidated basis with the
Company's wholly owned and partially owned subsidiaries. A discussion of the
changes in the results of operations is included in this document at Item 7. A
summary of selected financial data for the five fiscal years ended October 31,
1999, is presented below:
<PAGE>
<TABLE>
<CAPTION>
Fiscal Years Ended October 31,
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA
Operating revenue $ - $ - $ - $ 649,926 $ 485,624
Operating expense 805,976 1,433,648 1,174,684 906,519 928,900
----------- ----------- ----------- ----------- -----------
Operating loss (805,976) (1,433,648) (1,174,684) (256,593) (443,276)
Other income
(expense) 27,638 (254,716) (96,535) (121,926) (195,065)
----------- ----------- ----------- ----------- -----------
Net loss before
income taxes (778,338) (1,688,364) (1,271,219) (378,519) (638,341)
Income tax expense (100) (100) (100) (300) (200)
----------- ----------- ----------- ----------- -----------
Net loss (778,438) (1,688,464) (1,271,319) (378,819) (638,541)
----------- ----------- ----------- ----------- -----------
Basic and diluted
loss per share $(.67) $ (1.44) $ (1.09) $ (.37) $ (.69)
----------- ----------- ----------- ----------- -----------
Weighted average
shares out-
standing 1,168,594 1,168,594 1,168,594 1,031,015 925,552
BALANCE SHEET DATA
Current assets $ 2,485,948 $ 3,211,533 $ 4,408,033 $ 5,692,504 $ 2,604,017
Current
liabilities 13,905 85,927 95,067 128,274 120,162
Total assets 2,846,059 3,696,519 5,400,272 6,677,761 3,281,856
Stockholders'
equity 2,832,154 3,610,592 5,305,205 6,549,487 3,161,694
</TABLE>
In 1997, the Company had a temporary unrealized holding gain of $27,037
on securities held which are classified as available-for-sale. This unrealized
gain was recorded as other comprehensive income in equity.
In 1996, the Company had a temporary unrealized holding loss of $20,888
on securities classified as available-for-sale. This unrealized loss was
recorded as other comprehensive loss in equity.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
INTRODUCTION
The Registrant is principally engaged in the acquisition, exploration,
and if warranted, development of hard mineral properties. Its activities during
1999 were concentrated, for the most part, in Brazil, Uruguay and Paraguay.
RESULTS OF OPERATIONS
No revenue was generated by company operations for the years ended
October 31, 1999, 1998 and 1997.
<PAGE>
The Registrant has focused its exploration activities during the three
years in the reporting period on its mineral holdings in South America.
Exploration costs incurred at these locations are summarized as follows:
<TABLE>
<CAPTION>
Year Ended October 31,
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
South American Properties
Brazil $ 302,157 $ 728,415 $ 847,666
Uruguay 19,064 261,710 (60,908)
Paraguay 84,311 32,994 16,558
---------- ---------- ----------
405,532 1,023,119 803,316
---------- ---------- ----------
Utah Properties - - 4,954
---------- ---------- ----------
$ 405,532 $1,023,119 $ 808,270
========== ========== ==========
</TABLE>
Exploration costs in Brazil declined 58.5% to $302,157 in 1999,
following a decline of 14.19% in exploration costs from 1997 to 1998.
Exploration costs in Uruguay declined to $19,064 during 1999. The
Registrant will discontinue exploration activities in this country in 2000. In
1997, the Registrant identified an over-accrual of $60,908 of expenses relating
to its Uruguay operation. In 1998, the Registrant acquired its former
subsidiary's Uruguay activities. The results of operations of its former
subsidiary, Big Pony Gold (since renamed to Pan American Motorsports, Inc.) were
restated under the equity method for 1997 and earlier periods. As a result of
this restatement, Big Pony Gold's Uruguay operations were removed from the
Registrant's exploration activities. Subsequent to the acquisition of Big Pony
Gold's Uruguay assets, the Registrant increased its exploration activities in
1998 and expended $261,710 during that period.
During the period ended October 31, 1997, the Registrant conducted a
preliminary geologic evaluation in the country of Paraguay. The Registrant's
geologists believe that a portion of the country's regional geology has been
misinterpreted. Exploration costs in 1999 increased 155% to $84,311 as a result
of the Registrant's heightened interest in this area. However, due to the death
of a key employee in Paraguay, exploration in that country has been discontinued
for the foreseeable future.
The Registrant has funded its operations with settlement proceeds from
a suit prior to 1996 and through equity financing during the most recent three
years. This equity financing is described more fully under the Liquidity and
Capital Resources section of this discussion. The Registrant does not anticipate
receiving a material amount of operating revenue within the foreseeable future,
and as such, the current trend in losses from operations is expected to
continue. The Registrant's current business plans call for the continued
exploration of potential mineral and oil and gas deposits. Future operating
losses will be funded through the cash, cash equivalents and certificates of
deposit currently on hand or through obtaining additional equity capital.
<PAGE>
The most significant component of expenses which has contributed to
the Registrant's net operating losses for the past three fiscal years is
exploration (shown above). The Registrant's other general and administrative
expenses have remained fairly constant for the past three years. The two most
significant expense categories included in general and administrative expenses
are (a) professional fees, and (b) wages and salaries. These two combined
categories of expenses represented 64%, 70%, and 73% of the total general and
administrative expenses during the years ended October 31, 1997 and 1998, and
1999, respectively. These two expense categories are further discussed as
follows:
a. The majority of professional fees included in general and
administrative expense are those of attorneys, consultants,
auditors and accountants. During each of the three years in the
period ended October 31, 1999, legal fees included in general and
administrative expenses totaled $10,149 in 1997, $28,515 in 1998,
and $29,550 in 1999. Audit, accounting and outside consultants
fees for the periods totaled $57,555 in 1997, $74,183 in 1998, and
$70,634 in 1999.
b. Wages, exclusive of payroll taxes, were $137,000 in 1997, $146,000
in 1998, and $156,000 in 1999.
The balance of general and administrative expenses is an aggregation
of many expense accounts, none of them being individually significant. These
accounts include auto expense, travel, postage, printing, office rent, office
supplies, etc. In general, management has been conscientious in striving to
reduce and control general and administrative expenses. The stability of general
and administrative costs during the past three years is a positive reflection on
management's cost control efforts.
General and administrative expenses are expected to remain the same as
in 1999. Exploration expense in South America is expected to continue to
decrease in 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Registrant relied solely on equity financing to provide needed
working capital. Operations during 1997, 1998 and 1999 were funded from the
following sources:
a. In 1996 the Registrant exchanged rights to mineral properties
located in Brazil for stock in a company. Subsequent sales of this
stock generated approximately $300,000 in cash to fund operations.
b. Working capital at October 31, 1997, 1998 and 1999 was $4,312,966,
$3,125,606, and $2,832,154, respectively. The Registrant's working
capital at October 31, 1999 is sufficient to fund its projected
exploration activities in Brazil and to maintain a level of
corporate operations consistent with the past several years.
The Registrant has no immediate plans to seek significant funding
during 2000 either through equity offerings or debt financing. The Registrant
<PAGE>
has no material capital commitments or agreements which would require
significant outlays of capital during 2000. The Registrant's anticipated capital
require ments for the next three fiscal years are as follows:
<TABLE>
<CAPTION>
2000 2001 2002
--------- --------- ---------
<S> <C> <C> <C>
Leasehold exploration and
carrying costs $ 400,000 $ 375,000 $ 350,000
Legal expenses 30,000 25,000 25,000
Other general and
administrative expenses 300,000 300,000 300,000
</TABLE>
Expenses should remain close to the 1999 level. At this rate, the
Registrant has cash and cash equivalents to meet its expenses for the next three
fiscal years. The Registrant has no term debt and is expected to meet all of its
obligations as they come due.
In the short term, the Registrant has sufficient cash reserves to fund
operations. In the long term, there can be no assurance that the cash on hand
will be sufficient to defray all operating costs that will be incurred. In the
event additional long-term cash funds are needed, the Registrant intends to
obtain those funds through the issuance of additional equity capital. Based upon
its twenty-three years of experience in generating equity capital, the
Registrant believes it has the ability to generate additional funds when needed.
INFLATION
The impact of inflation on the Registrant's operations will vary. The
future price of gold, oil and gas, and the level of future interest rates could
directly affect the Registrant's share of any future operating revenue. Lower
interest rates and higher gold prices enhance the value of the Registrant's
investments. The Registrant's future results of operations, to a significant
degree, depend on its success in locating, acquiring and producing commercial
gold or oil and gas deposits. With exploration currently proceeding on several
properties whose commercial production potential is not presently determinable,
and considering the difficulty of projecting future prices, which tend to be
volatile, it is, at best, difficult to accurately project future results of
operations.
Because the Registrant does not have a steady, dependable source of
revenue, serious increases in inflation could increase the Registrant's general
and administrative expenses and make it difficult to remain within its budget.
However, the inflation rate has remained relatively low, with only a minor
impact on the Registrant during 1997, 1998 and 1999. Management does not
anticipate material increases in the inflation rate during the immediate future.
ENVIRONMENTAL RULES AND REGULATIONS
The Registrant is not aware of any noncompliance with environmental
rules and regulations, nor has the Registrant been cited by any local, state or
national agency either in the United States or South America for noncompliance
with environmental rules and regulations.
<PAGE>
As of October 31, 1999, the Registrant has obtained a standby letter
of credit in the amount of $100,000 pledged as security for operations in
Paraguay. Furthermore, the Registrant is not aware of any potential reclamation
costs in any of the areas in which it is conducting exploration. Except for the
above, the Registrant has no actual or potential involvement in environmental
remediation activities.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the Act)
provides a safe harbor for forward-looking statements made by or on behalf of
the Company. The Company and its representatives may from time to time make
written or oral statements that are "forward-looking," including statements
contained in this report and other filings with the Securities and Exchange
Commission and in reports to the Company's stockholders. Management believes
that all statements that express expectations and projections with respect to
future matters, as well as from developments beyond the Company's control
including changes in global economic conditions, are forward-looking statements
within the meaning of the Act. These statements are made on the basis of
management's views and assumptions, as of the time the statements are made,
regarding future events and business performance. There can be no assurance,
however, that management's expectations will necessarily come to pass. Factors
that may affect forward-looking statements a wide range of factors could
materially affect future developments and performance, including the following:
Changes in Company-wide strategies, which may result in changes in the
types or mix of businesses in which the Company is involved or chooses to
invest; changes in U.S., global or regional economic conditions, changes in U.S.
and global financial and equity markets, including significant interest rate
fluctuations, which may impede the Company's access to, or increase the cost of,
external financing for its operations and investments; increased competitive
pressures, both domestically and internationally; legal and regulatory
developments, such as regulatory actions affecting environmental activities, the
imposition by foreign countries of trade restrictions and changes in
international tax laws or currency controls; adverse weather conditions or
natural disasters, such as hurricanes and earthquakes, labor disputes, which may
lead to increased costs or disruption of operations.
This list of factors that may affect future performance and the
accuracy of forward-looking statements is illustrative, but by no means
exhaustive. Accordingly, all forward-looking statements should be evaluated with
the understanding of their inherent uncertainty.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable pursuant to Regulation S-K, Item 305, Instruction (e).
Item 8. Financial Statements and Supplementary Data.
The following Consolidated Financial Statements of the Company and its
subsidiaries for the year ended October 31, 1999, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
<PAGE>
years in the period ended October 31, 1999, are filed as part of this report:
Report of Foote, Passey, Griffin & Company, Independent Auditors
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Consolidated Statements of Stockholders' Equity
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors and Stockholders
Gold Standard, Inc.
We have audited the accompanying consolidated balance sheets of Gold Standard,
Inc. and Subsidiaries as of October 31, 1999 and 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended October 31, 1999, 1998 and 1997. 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 audit 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Gold
Standard, Inc. and Subsidiaries as of October 31, 1999 and 1998, and the
consolidated results of their operations and their consolidated cash flows for
the years ended October 31, 1999, 1998, and 1997 in conformity with generally
accepted accounting principles.
FOOTE, PASSEY, GRIFFIN & CO., LC
Salt Lake City, Utah
January 11, 2000
<PAGE>
FINANCIAL STATEMENTS
<PAGE>
Gold Standard, Inc., and Subsidiaries
CONSOLIDATED BALANCE SHEETS
October 31,
ASSETS
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,173,257 $ 1,940,615
Certificates of deposit ($100,000
restricted in 1999) 1,284,425 1,252,723
Accounts receivable 6,992 4,312
Accrued interest 9,192 9,789
Prepaid expenses 12,082 4,094
----------- -----------
Total current assets 2,485,948 3,211,533
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Furniture and equipment 114,443 119,850
Transportation equipment 164,341 195,390
Leasehold improvements 3,200 3,200
----------- -----------
281,984 318,440
Less accumulated depreciation and amortization (202,521) (186,484)
----------- -----------
79,463 131,956
----------- -----------
OTHER ASSETS
Investment in affiliate 279,958 351,943
Deposits 690 1,087
----------- -----------
280,648 353,030
----------- -----------
$ 2,846,059 $ 3,696,519
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 9,630 $ 67,309
Accrued liabilities 4,175 18,518
Income taxes payable 100 100
----------- -----------
Total current liabilities 13,905 85,927
----------- -----------
STOCKHOLDERS' EQUITY
Common stock - authorized 100,000,000
shares of .001 par value; issued,
and outstanding 1,168,594 shares
in 1999 and 1998 1,169 1,169
Additional paid-in capital 13,197,456 13,197,456
Accumulated deficit (10,366,471) (9,588,033)
----------- -----------
2,832,154 3,610,592
----------- -----------
$ 2,846,059 $ 3,696,519
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
Gold Standard, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended October 31,
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
REVENUE $ - $ - $ -
------------ ----------- -----------
EXPENSES
General and administrative
Legal 29,550 28,515 10,149
Other 322,854 327,329 310,587
Leasehold exploration and
carrying costs 405,532 1,023,119 808,270
Depreciation and amortization 48,040 54,685 45,678
------------ ------------ -----------
805,976 1,433,648 1,174,684
------------ ------------ -----------
Net loss from operations (805,976) (1,433,648) (1,174,684)
------------ ------------ -----------
OTHER INCOME (EXPENSE)
Interest income 105,060 151,225 223,569
Loss from equity investment (71,985) (198,139) (291,352)
Loss on securities available-for-
sale - (101,409) (18,783)
Loss on exchange of stock for
rights - (90,569) -
Loss on disposal of equipment (5,437) (15,824) (9,969)
------------ ------------ -----------
27,638 (254,716) (96,535)
------------ ------------ -----------
Net loss before income taxes (778,338) (1,688,364) (1,271,219)
INCOME TAX EXPENSE 100 100 100
------------ ------------ -----------
NET LOSS (778,438) (1,688,464) (1,271,319)
OTHER COMPREHENSIVE INCOME
Unrealized holding gain - - 6,149
------------ ------------ -----------
COMPREHENSIVE LOSS $ (778,438) $ (1,688,464) $(1,265,170)
============ ============ ===========
Basic and diluted earnings
per share
Net loss per share $(.67) $(1.44) $(1.09)
===== ====== ======
Weighted average number of
shares outstanding 1,168,594 1,168,594 1,168,594
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
Gold Standard, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended October 31,
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
Common stock
Balance at beginning and end
of period $ 1,169 $ 1,169 $ 1,169
------------ ------------ -----------
Additional paid-in capital
Balance at beginning and end
of period 13,197,456 13,197,456 13,197,456
------------ ------------ -----------
Other comprehensive income (loss)
Balance at beginning of period - - (20,888)
Net unrealized holding gain on
securities available-for-sale - - 27,037
------------ ------------ -----------
Balance end of period - - 6,149
------------ ------------ -----------
Accumulated deficit
Balance at beginning of period (9,588,033) (7,899,569) (6,628,250)
Net loss (778,438) (1,688,464) (1,271,319)
------------ ------------ -----------
Balance end of period (10,366,471) (9,588,033) (7,899,569)
------------ ------------ -----------
$ 2,832,154 $ 3,610,592 $ 5,305,205
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
Gold Standard, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended October 31,
1999 1998 1997
------------ ----------- -----------
<S> <C> <C> <C>
Increase (decrease) in cash
and cash equivalents
Cash flows from operating activities:
Net loss $ (778,438) $(1,688,464) $(1,271,319)
Adjustments to reconcile net
loss to net cash and cash
equivalents used in operating
activities:
Depreciation and amortization 48,040 54,685 45,678
Loss from equity investment 71,985 198,139 291,352
Loss on disposal of equipment 5,437 15,824 9,969
Loss from available-for-sale
securities - 101,409 18,783
Loss on exchange of stock for
rights - 90,569 -
Write-off of deferred liability - - (61,000)
Decrease (increase) in assets:
Accounts Receivable (2,680) (4,312) -
Accrued interest 597 (750) (3,343)
Prepaid expenses (7,988) 2,750 (6,844)
Deposits 397 (397) -
Increase (decrease) in liabilities:
Trade accounts payable (57,679) (7,524) (538)
Accrued liabilities (14,343) (11,016) 28,331
------------ ----------- -----------
Net cash used in
operating activities (734,672) (1,249,087) (948,931)
------------ ----------- -----------
Cash flows from investing activities:
Proceeds from exchange of stock - 23,551 -
Proceeds from disposal of equipment 18,401 20,525 17,500
Investment in affiliate - (123,964) (271,082)
Proceeds from available-for-sale
securities - 145,440 -
Purchase of certificate of deposit (31,702) (55,501) (1,197,222)
Property and equipment purchased (19,385) (15,277) (91,485)
------------ ----------- -----------
Net cash used in investing
activities (32,686) (5,226) (1,542,289)
------------ ----------- -----------
</TABLE>
(Continued)
<PAGE>
<TABLE>
<CAPTION>
Gold Standard, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Years ended October 31,
1999 1998 1997
------------ ----------- -----------
<S> <C> <C> <C>
Net cash provided by
financing activities - - -
------------ ----------- -----------
Net decrease in cash and
cash equivalents (767,358) (1,254,313) (2,491,220)
Cash and cash equivalents
at beginning of year 1,940,615 3,194,928 5,686,148
------------ ----------- -----------
Cash and cash equivalents
at end of year $ 1,173,257 $ 1,940,615 $ 3,194,928
============ =========== ===========
Supplemental disclosures of cash flows information
Cash paid during the year for:
Interest $ - $ - $ -
Income taxes $ 100 $ 100 $ 100
</TABLE>
Non-cash transactions:
In 1998, the Company exchanged 750,000 shares of stock in a former subsidiary
for 100% of the outstanding stock of a corporation which held mineral
exploration rights and certain assets located in Uruguay. The following assets
and liabilities were received:
Cash $23,551
Furniture and Fixtures 34,290
Accounts payable 9,400
In 1998, the Company converted $689,092 in debt of a former subsidiary to equity
giving the Company a 20% equity investment in the former subsidiary.
In 1998, the Company sold all of its available-for-sale securities resulting in
the recognition of an unrealized holding loss of $6,149
In 1997, the Company had a temporary unrealized holding gain of $27,037 on
securities held which are classified as available-for-sale. This unrealized gain
was recorded in equity.
The accompanying notes are an integral part of these statements.
<PAGE>
Gold Standard, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied
in the preparation of the accompanying consolidated financial
statements follows.
1. Principles of Consolidation
---------------------------
The accompanying consolidated financial statements include the
accounts of Gold Standard, Inc. (the Company), its subsidiaries,
Gold Standard South, Gold Standard Minas, S.A. and Tormin, S.A. As
used herein, references to Gold Standard, Inc., the Registrant, or
the Company refer to Gold Standard, Inc. and its consolidated
subsidiaries. All significant inter-company balances and
transactions are eliminated.
Gold Standard South, a Utah Corporation, was organized for the
purpose of carrying on a property acquisition and gold exploration
program in the country of Uruguay. Gold Standard Minas S.A. was
organized for the purpose of carrying on a gold exploration program
in the country of Brazil. Tormin S.A. holds certain mineral
exploration concessions in Uruguay and conducted exploration work
on those properties.
2. Recently Adopted Accounting Standards
-------------------------------------
In 1998 the Company adopted Statement of Financial Accounting
Standards No. 128 Earnings Per Share (SFAS No. 128), which requires
the calculation of basic and diluted loss per share. There was no
material effect on the presentation of loss per share.
In 1998 the Company adopted Statement of Financial Accounting
Standards No. 130 Reporting Comprehensive Income (SFAS No. 130).
Comprehensive income is defined as the change in equity of a
business enterprise during a period from transactions and other
events and circumstances from nonowner sources. It includes all
changes in equity during a period except those resulting from
investments by owners and distributions to owners.
In 1998 the Company adopted Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an Enterprise and
Related Information (SFAS No. 131). This standard establishes
standards for reporting information about operating segments in
annual financial statements, selected information about operating
segments in interim financial reports and disclosures about
products and services, geographic areas and major customers. This
new standard requires the Company to report financial information
on the basis that is used internally for evaluating segment
performance and deciding how to allocate resources to segments.
Previously reported information in 1997 has been restated to
conform to the new information requirements (Note J).
(Continued)
<PAGE>
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
In 1997, the Company adopted SFAS No. 123, Accounting For
Stock-Based Compensation, (SFAS 123), which requires disclosure of
the fair value and other characteristics of stock options. The
Company has chosen under the provisions of SFAS 123 to continue
using the intrinsic-value method of accounting for employee
stock-based compensation in accordance with Accounting Principles
Board Option No. 25, Accounting for Stock Issued to Employees, (APB
25).
3. Property and Equipment
----------------------
Property and equipment are stated at cost. Maintenance and repairs
which neither materially adds to the value of the property nor
appreciably prolongs its life are charged to expense as incurred.
Gains or losses on dispositions of property, equipment, and
leasehold improvements are included in operations. Depreciation and
amortization of property and equipment are provided on the
straight-line method using the estimated lives as shown below:
Years
-----
Furniture and equipment 5-7
Transportation equipment 5
Leasehold improvements Lease term
4. Investment in Mining Properties
-------------------------------
Prospecting and exploration costs incurred in the search for new
mining properties are charged to expense as incurred. Direct costs
associated with the development of identified reserves are
capitalized until the related geologic areas are either put into
production, sold or abandoned. As of October 31, 1999 there were no
geologic areas under production.
5. Loss Per Share
--------------
Basic loss per share of common stock is computed based on the
weighted-average number of common shares outstanding during the
period. The Company had common stock equivalents outstanding at
October 31, 1999, 1998, and 1997 in the form of stock warrants
(Notes G and H). These warrants were excluded in the calculations
of diluted loss per share during the years ended October 31, 1999,
1998, and 1997 because their inclusion in those calculations would
have been anti-dilutive.
Loss per share amounts have been adjusted for all years presented
to reflect the 1:4 reverse stock splits on the effective dates of
April 1, 1998 and December 1, 1998.
6. Cash Equivalents
----------------
For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments and investments readily
convertible into cash, or purchased with a maturity of three months
or less, to be cash equivalents.
(Continued)
<PAGE>
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
7. Estimates
---------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported amounts
and disclosures. Accordingly, actual results could differ from
those estimates.
8. Fair Values of Financial Instruments
------------------------------------
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash, cash equivalents and certificates of deposit: The
carrying amounts reported in the statement of financial
position approximate fair values because of the short
maturities of those instruments.
9. Reclassifications
-----------------
Certain amounts in the 1998 and 1997 financial statements have been
reclassified to conform to current year presentation.
NOTE B - INVESTMENT IN AFFILIATE
During 1998 the Company changed its method of accounting for and
reporting on its investment in PAMS from the consolidated to the
equity method due to the decline in their ownership interest from
64.4% to 20%.
The Company's investment in PAMS is as follows at October 31:
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Investment in PAMS at beginning of year -
equity method $ 351,943 $ 550,082
Recognition of Company's share of losses
for the year (71,985) (198,139)
----------- -----------
Investment in PAMS at end of year -
equity method $ 279,958 $ 351,943
=========== ===========
</TABLE>
The following is summarized financial information for the Company's
equity investment as of October 31:
<TABLE>
<CAPTION>
1999 1998 1997
--------------------- --------------------- --------------------
Gold Gold Gold
Standard Standard Standard
Total Amount Total Amount Total Amount
----- -------- ----- -------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Current assets $ 232,043 $ 46,312 $ 114,000 $ 22,800 $ 36,500 $ 23,500
Other assets 48,506 9,681 105,000 21,000 35,800 23,000
Current liabilities (414,863) (82,800) (65,000) (13,000) (586,000) (569,000)
--------- --------- --------- --------- --------- ---------
Net assets $(204,314) $ (26,870) $ 154,000 $ 30,800 $(513,700) $(522,500)
========= ========= ========= ========= ========= =========
</TABLE>
(Continued)
<PAGE>
NOTE B - INVESTMENT IN AFFILIATE - CONTINUED
<TABLE>
<CAPTION>
1999 1998 1997
--------------------- --------------------- --------------------
Gold Gold Gold
Standard Standard Standard
Total Amount Total Amount Total Amount
----- -------- ----- -------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Total revenue $ 103,614 $ 20,680 $ 5,800 $ 1,000 $ - $ -
Loss before income
taxes $(360,673) $ (71,985) $(511,000) $(198,139) $(717,700) $(461,588)
Net loss $(360,673) $ (71,985) $(511,000) $(198,139) $(717,900) $(461,588)
</TABLE>
For the year ended October 31, 1997, the Company had receivables from
their affiliate of $565,000. Certain officers and directors of the
Company were given compensatory stock bonuses from Pan American
Motorsports, Inc. in March of 1998, which PAMS valued at $200,000.
NOTE C - MINING PROPERTIES
The Company holds directly or through its subsidiaries, mineral and
exploration rights to property located in the Dugway region of western
Utah, southern Uruguay and Brazil. All exploration costs associated
with these activities during the three years ended October 31, 1999
have been charged to operations as incurred. No development costs have
been capitalized on these properties through October 31, 1999.
NOTE D - RELATED PARTY TRANSACTIONS
The Company has made unsecured, non-interest bearing, long-term cash
advances to its subsidiaries to fund exploration projects. Amounts due
from the Company's subsidiaries as of October 31, are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ------------ -----------
<S> <C> <C> <C>
Gold Standard South $ 513,936 $ 513,936 $ 513,832
Gold Standard Minas, S.A. 1,776,408 1,425,721 661,594
Tormin S.A. 232,615 207,640 -
</TABLE>
During 1997 the Company converted cash advances to Gold Standard
Minas, S.A., to equity in the amount of $817,652.
NOTE E - NON-COMPENSATORY STOCK WARRANTS
In connection with issuance of its common stock, the Company has
issued warrants to outside parties for the purchase of additional
shares at specified prices in the future. Unexercised non-compensatory
warrants to these parties aggregate 46,875 shares at October 31, 1999.
They carry a weighted average price of $12 per share and have a
weighted average remaining life of 3.42 years.
In 1999, the Company issued to the president a non-compensatory option
to purchase 100,000 shares of common stock at a price of $.25 above
the published market price on the date of exercise. According to the
agreement, the stock will be purchased with cash or a non-interest
bearing promissory note to be repaid within four years. The option
expires in August 2004.
NOTE F - WARRANTS ISSUED AS COMPENSATION
The Company has issued compensatory stock warrants to officers,
employees and consultants during the course of business. No
compensation expense has been recorded for these warrants.
Reported and proforma net loss and loss per share for the years ended
October 31, are as follows:
<PAGE>
<TABLE>
<CAPTION>
1999 1998 1997
----------- ------------ -----------
<S> <C> <C> <C>
Net loss
As reported $ (778,438) $(1,688,464) $(1,271,319)
Pro forma (1,090,938) (1,651,929) (1,271,319)
Loss per share
As reported $ (.67) $ (1.44) $ (1.09)
Pro forma (.93) (1.41) (1.09)
</TABLE>
The pro forma effect on net loss for 1999, 1998, and 1997 may not be
representative of the pro forma effect on net income or loss for
future years because the SFAS No. 123 method of accounting for pro
forma compensation expense has not been applied to warrants granted
prior to January 1, 1995.
The weighted-average fair values at date of grant for compensatory
warrants granted in 1999 were estimated using the Black-Scholes
option-pricing model, based on the following assumptions: (i) no
expected dividend yields; (ii) expected volatility rates of 110%;
(iii) expected weighted average lives of 3.67 years and (iv) a
weighted-average risk-free interest rate of 5.78%. No compensatory
warrants were granted in 1998 and 1997.
Stock warrant activity is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------------- ----------------- ----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Warrants outstanding
beginning of period 50,000 $20.50 56,250 $20.00 56,250 $20.00
Granted 200,000 1.75 - - - -
Canceled or expired (50,000) 20.50 (6,250) 16.00 - -
------- ------- -------
Warrants outstanding
and exercisable,
end of period 200,000 $ 1.75 50,000 $20.50 56,250 $20.00
======= ======= =======
</TABLE>
All 200,000 outstanding warrants at October 31, 1999 were exercisable at
$1.75 per share and carried a weighted average remaining contractual life
of 3.67 years.
NOTE G - INCOME TAXES
The Company has significant net operating loss and net capital loss
carry-forwards which could give rise to a deferred tax asset. Because
the Company has no assurance that the tax benefit from the net
operating loss and net capital loss will ever be realized, a valuation
allowance has been provided equal to the deferred tax asset.
There are no other significant timing differences which arise from
recognizing income and expense in different periods for financial and
tax reporting purposes. The Company's gross deferred tax asset
attributable to the net operating loss and net capital loss
carryforwards and the associated valuation allowance is summarized as
follows at October 31,:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
Total deferred tax asset (based
on net operating loss and
capital loss carryforwards) $ 2,109,660 $ 1,999,907 $ 2,609,812
Less valuation allowance (2,109,960) (1,999,907) (2,609,812)
----------- ----------- -----------
Net deferred tax asset $ - $ - $ -
=========== =========== ===========
</TABLE>
<PAGE>
The amounts and expiration dates of net operating loss and capital
loss carryforwards at October 31, 1999, are detailed in the following
summary:
<TABLE>
<CAPTION>
Federal State Net
Net Operating Net Operating Net Operating Capital
Expiration Date Loss Loss Loss
--------------- ------------- ------------- -------
<S> <C> <C> <C>
October 31, 2000 $ - $ - $ 150,056
October 31, 2002 - - 74,928
October 31, 2003 1,441,272 - 191,978
October 31, 2004 675,277 - -
October 31, 2005 1,106,261 - -
October 31, 2006 545,495 - -
October 31, 2007 478,137 - -
October 31, 2009 613,656 - -
October 31, 2010 124,338 124,138 -
October 31, 2012 63,410 63,210 -
October 31, 2013 - 245,865 -
October 31, 2014 - 321,411 -
October 31, 2018 246,157 - -
October 31, 2019 321,611 - -
----------- ----------- ----------
$ 5,615,614 $ 754,624 $ 416,962
=========== =========== ==========
</TABLE>
NOTE H - COMMITMENTS
To guarantee future reclamation commitments in Paraguay, the Company has
obtained a standby letter of credit in the amount of $100,000. This letter
of credit is secured with a $100,000 certificate of deposit.
NOTE I - CONCENTRATIONS OF CREDIT RISK
The Company maintains substantially all cash balances with various financial
institutions located in the State of Utah. Accounts at the financial
institutions are insured by the Federal Deposit Insurance Corporation up to
$100,000 per institution. Uninsured balances totaled $1,067,615 at October
31, 1999.
NOTE J - SEGMENT INFORMATION
The Company's only activity and, therefore, dominant business segment is
gold exploration and development.
The Company has had no revenues during the three years ended October
31, 1999. The following table presents property and equipment, net of
accumulated depreciation and amortization, based upon the location of
the asset:
1999 1998
---------- ----------
United States $ 27,934 $ 42,008
South America 51,529 89,948
---------- ----------
$ 79,463 $ 131,956
========== ==========
Item 9. Change in and Disagreements with Accountants on Accounting and Financial
Disclosure.
Not Applicable
<PAGE>
PART III
TO THE EXTENT IDENTIFIED BELOW, CERTAIN INFORMATION CALLED FOR IN PART III IS
INCORPORATED BY REFERENCE FROM THE REGISTRANT'S PROXY STATEMENT, TO BE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE REGISTRANT'S
2000 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD FEBRUARY 29, 2000.
Item 10. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act; see Proxy
Statement sections entitled "Directors and Executive Officers of
the Company" and "Section 16(a) Beneficial Ownership Reporting
Compliance".
Item 11. Executive Compensation; see Proxy Statement sections entitled
"Compensation of Directors and Executive Officers".
Item 12. Security Ownership of Certain Beneficial Owners and Management;
see Proxy Statement sections entitled "Security Ownership of
Certain Beneficial Owners and Management".
Item 13. Certain Relationships and Related Transactions; see Proxy
Statement section entitled "Certain Relationships and Related
Transactions".
Item 14. Exhibits and Reports on Form 8-K
(a) The following Exhibits are attached hereto or incorporated herein
by reference as indicated in the table below:
Exhibit
No. Description
- ------- ------------------
3.01 Articles of Incorporation
3.02 Bylaws
10.1 *Employment Agreement - Scott L. Smith
10.2 *Form of Warrant Grant Used With Non-employee Directors
11 Computation of Net Loss Per Common Share
21 Subsidiaries of the Registrant
27 Financial Data Schedule
--------
* Identifies a "management contract or compensatory plan or arrangement".
(b) There were no current reports on Form 8-K filed by Registrant
during the last quarter of the period covered by this report.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GOLD STANDARD, INC.
Date January 31, 2000 /s/ Scott L. Smith
------------------------
Scott L. Smith
President
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Scott L. Smith his true and lawful attorney in
fact and agent, with full power of substitution for him and in his name, place
and stead, in any and all capacities, to sign any or all amendments to this
report on Form 10-K and to file the same, with all exhibits thereto and other
documents in connection therewith with the Securities and Exchange Commission,
hereby ratifying and confirming all that each said attorney in fact or his
substitute(s) may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
Registrant and in the capacities and on the dates indicated.
Date: January 28, 2000 /s/ Bret C. Decker
---------------------------
Bret C. Decker, Director
Date: January 31, 2000 /s/ Charles W. Shannon
---------------------------
Charles W. Shannon, Director
Date: January __, 2000
---------------------------
Gerald L. Sneddon, Director
Date: January 31, 2000 /s/ Scott L. Smith
---------------------------
Scott L. Smith, Director
<PAGE>
Exhibit 3.01
Articles of Incorporation
ARTICLES OF INCORPORATION
OF
GOLD STANDARD, INC.
* * * * *
We, the undersigned natural persons of the age of twenty-one years or
more, acting as incorporators of a corporation pursuant to the Utah Business
Corporation Act, adopt the following Articles of Incorporation for such
corporation:
ARTICLE I.
----------
The name of this corporation is - - Gold Standard, Inc.
ARTICLE II.
-----------
The duration of this corporation is perpetual.
ARTICLE III.
------------
Section 1. To generally engage in the mining, oil and gas business for
profit; to engage in, conduct ventures in, perform contracts and have dealings
in any and all mineral operations, explorations, geologic and engineering
activities, drilling, mineral recovery, smelting, refining and marketing; to
conduct business and dealings in mineral properties, interests, investments,
rights and royalties of all kinds and description; including the rendering of
such or related services and performances to other business entities by contract
or other arrangement.
Section 2. To engage in any other and all lawful business ventures,
purposes, acts, or activity in various fields of endeavor, for which a business
corporation may be organized under the Utah Business Corporation Act.
ARTICLE IV.
-----------
Without being limited or restricted thereto, the general powers of this
corporation shall include:
Section 1. To purchase, take, receive, lease, or otherwise acquire, own,
hold, improve, use and otherwise deal in and with, real and personal property,
or any interest therein, wherever situated.
Section 2. To sell, convey, mortgage, pledge, lease, exchange, transfer
and otherwise dispose of all or any part of its property or assets.
Section 3. To make contracts and guarantees, and incur liabilities,
borrow money, issue obligations and secure obligations by mortgage or pledge of
all or any property, franchises and income.
<PAGE>
Section 4. To acquire, hold, use, sell, assign, lease, grant licenses in
respect of, mortgage or otherwise dispose of letters patent, patent rights,
licenses and privileges, inventions, improvement and processes, copyrights,
trademarks and trade names, relating to, or useful or profitable for the
corporate business and purposes.
Section 5. All powers necessary or convenient to effect any or all of the
purposes for which the corporation is organized.
Section 6. All other powers enumerated, granted or implied under the
provisions of the Utah Business Corporation Act (Section 16-10-4 of the Utah
Code Annotated, 1953, as amended to date).
Section 7. The powers and purposes of this corporation as specified
hereinbefore shall not restrict or limit by reference or inference, except as
otherwise specifically expressed as so doing, the terms of any other clause of
these articles.
ARTICLE V.
----------
The aggregate number of shares which this corporation shall have
authority to issue shall be One Hundred Million (100,000,000); and the par value
of such shares is One Mill ($0.001) each, with the total authorized capital of
the corporation being One Hundred Thousand Dollars ($100,000.00).
There shall be but one class of stock of equal rights and preferences,
known as common stock.
All shares shall be non-assessable.
Pre-emptive rights of a shareholder to acquire unissued shares of the
corporation are denied, and no such right shall exist. Any unissued shares or
other securities of the corporation may be issued and disposed of by the Board
of Directors to such person, on such terms, at such prices, and in such manner,
as the Board of Directors may in its sole discretion and judgment determine.
ARTICLE VI.
-----------
This corporation will not commence business until consideration of the
value of at least one thousand dollars has been received for the issuance of
shares.
ARTICLE VII.
------------
Provisions for Regulation of Internal Affairs of Corporation
------------------------------------------------------------
Section 1. The Board of Directors shall have the power to adopt ByLaws
for the corporation and to amend the same from time to time at any regular or
special meeting of the Board of Directors. The affairs of the Corporation shall
be governed by these Articles of Incorporation until ByLaws are adopted, and
thereafter shall be governed by the Articles of Incorporation and the By-Laws.
<PAGE>
Section 2. The Board of Directors shall have the power to fix the fiscal
period of the corporation, and until change the fiscal period shall commence
July 1st and end the following June 30th.
Section 3. Meetings of shareholders may be held at such place either
within or without this state, as may be provided further in the By-Laws. An
annual meeting of the shareholders shall be held at such time as may be provided
in the By-Laws. Failure to hold the annual meeting at the designated time shall
not work a forfeiture or dissolution of the corporation.
Special meetings of the shareholders may be called by the Chairman of
the Board, the President, the Board of Directors, the holders of not less than
one-tenth of all shares entitled to vote at the meeting, or, by such other
officers or persons as may be provided in the articles or the ByLaws.
A majority of the shares of the common stock of the Corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at all meetings of the shareholders.
Section 4. Vacancies in the Board of Directors may be filled by an
affirmative vote of a majority of the remaining Directors. Any directorship to
be filled by reason of an increase in the number of Directors shall also be
filled by the Board of Directors, such appointment to be until the next annual
meeting or special meeting called for the purpose of such election.
A majority of the then established number of directors shall
constitute a quorum for the transaction of business, until or unless a greater
number is required by the By-Laws.
Meetings of the board of directors, regular or special, may be held
either within or without this state, upon notice as prescribed in the ByLaws or
compatible with law. Unless required by the By-Laws, neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
need be specified in the notice of meeting or waiver.
ARTICLE VIII.
-------------
The initial registered agent and registered office are:
Registered Agent: Scott L. Smith
Registered Office: 725 Kearns Building
Salt Lake City, Utah 84101
ARTICLE IX.
-----------
The number of directors of this corporation may be fixed by the Board of
Directors and By-Laws, but in no case to be less than three nor more than seven.
Directors terms shall be until a stockholders' meeting is called and successors
<PAGE>
are elected and qualify. A director must be a shareholder. The initial Board of
Directors shall consist of three members and their respective names and
addresses are:
Name: Address:
----- --------
Scott L. Smith 4931 Marilyn Drive
Salt Lake City, Utah 84117
Paul C. O'Leary 2571 Solar Drive
Salt Lake City, Utah 84117
John Simpson 242 West Third North
Salt Lake City, Utah 84103
Officers of the corporation shall be elected by the Board of Directors,
and may or may not also serve as directors. The officers shall include a
President, a Vice-President, a Secretary and a Treasurer. The offices of
Secretary and Treasurer may be combined. Additional offices may be established
by the Board of Directors through the By-Laws.
Until successors are elected and qualify, the initial officers of the
corporation shall be:
Scott L. Smith - President
Paul C. O'Leary - Vice-President
John Simpson - Secretary and Treasurer
The duties of the officers shall be those usually incumbent upon the
holders of such office, and in conformity with By-Laws and the policy set by the
Board of Directors. Such duties shall include the preparation and keeping of
proper and necessary books, records and accounts, of such nature and at such
place as may be designated by the Board, or as stated in the By-Laws.
ARTICLE X.
----------
The name and address of each incorporator is as follows:
Scott L. Smith 4931 Marilyn Drive
Salt Lake City, Utah 84117
Paul C. O'Leary 2571 Solar Drive
Salt Lake City, Utah 84117
John Simpson 242 West Third North
Salt Lake City, Utah 84103
ARICLE XI.
----------
No contract or other transaction between this corporation and any other
corporation shall be affected or invalidated solely by the fact that any
director or officer of this corporation is interested in, or is a director or
<PAGE>
officer of such other corporation, and any director or directors, officer or
officers, individually or jointly, may be a party or parties to or may be
interested in any contract or transaction of this corporation or in which this
corporation may be interested; and no contract or transaction of this
corporation with any person, firm or corporation, shall be affected or
invalidated solely by the fact that any director or officer of this corporation
is a party or interested n such contract, act or transaction; provided that the
full extent of the interest and connection of such director or officer shall
have been fully disclosed to the board of directors, and the board shall not
have disapproved of such contract or transaction under the circumstances
disclosed.
<PAGE>
EXECUTED on this 28th day of November, 1972 at Salt Lake City, Utah.
INCORPORATORS:
/s/ Scott L. Smith
------------------
Scott L. Smith
/s/ Paul C. O'Leary
------------------
Paul C. O'Leary
and, /s/ John Simpson
------------------
John Simpson
* * * * *
Exhibit 3.02
Bylaws
BY-LAWS
OF
GOLD STANDARD, INC.
ARTICLE XII.
OFFICES
-------
Section 1. The principal office of the corporation shall be 1019 Kearns
Building, Salt Lake City, County of Salt Lake, State of Utah 84101.
Section 2. The corporation may also have offices at such other places
as the board of directors may from time to time determine or the business of the
corporation may require.
ARTICLE II.
Section 1. All annual meetings of the stockholders shall be held at
such place as the board of directors shall determine. Special meetings of the
stockholders may be held at such place as shall be stated in the notice of the
meeting, or in a duly executed waiver of notice thereof.
Section 2. An annual meeting of stockholders, commencing with the year
1981, shall be held on the second Monday in February in each year, if not a
legal holiday, and if a legal holiday, then on the next secular day following,
when they shall elect by a majority vote a board of directors and transact such
other business as may properly be brought before the meeting.
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the President and shall be called by the
President or Secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 4. Written notice of the annual meeting and of all special
meetings of the stockholders, signed by the President or a Vice-President, or
the Secretary or an Assistant Secretary, stating the purpose or purposes for
which the meeting is called, and the time when and the place where it is to be
held, shall be either delivered personally or shall be mailed to each
stockholder of record entitled to vote thereat, not less than ten nor more than
fifty days prior to the meeting, and if mailed, it shall be directed to any such
stockholder at his address as it appears on the records of the corporation.
<PAGE>
Section 5. Business transacted at all special meetings shall be
confined to the objects stated in the call.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except as otherwise provided by
statute, by the articles of incorporation or by these by-laws. If, however, such
quorum shall not be present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be presented or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 7. When a quorum is present or represented at any meeting, the
vote of the holders of a majority of the stock having voting power, present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the articles of incorporation or of these by-laws, a different
vote is required in which case such express provision shall govern and control
the decision of such question.
Section 8. At each meeting of the stockholders every stockholder having
the right to vote shall be entitled to vote in person, or by proxy. Each
stockholder shall have one vote for each share of stock having voting power,
registered in his name on the books of the corporation on the date of closing
the books of the corporation against transfers of stock or on the record date
fixed for the determination of stockholders entitled to vote at such meeting,
or, if the books be not closed or a record date fixed, then on the date of such
meeting. Upon the demand of any stockholder, the vote upon any question before
the meeting shall be by ballot.
Section 9. Every proxy must be appointed by an instrument in writing.
No proxy shall be valid after the expiration of 6 months from the date of its
execution, unless coupled with an interest, or unless the person executing it
specifies therein its duration, which in no case shall exceed seven years from
the date of its execution.
Subject to the above, any proxy duly executed is not revoked and
continues in full force until an instrument revoking it, or duly executed proxy
bearing a later date is filed with the Secretary of the corporation.
ARTICLE III.
Section 1. The number of directors which shall constitute the board
shall be three. The number of directors may from time to time be increased from
three to not more than seven (7) as is provided for in the Articles of
Incorporation. Directors need not be stockholders, and each director shall be
elected to serve until his successor shall be elected and shall qualify.
<PAGE>
Section 2. The directors may hold their meetings at such times and such
places as they may from time to time determine within or without the State of
Utah.
Section 3. Vacancies in the board of directors may be filled by a
majority of the remaining directors, though less than a quorum, and each
director so elected shall hold office for the unexpired term in respect to which
such vacancy occurred or until the next annual election of directors.
Section 4. The property and business of the corporation shall be
managed by its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the articles of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
COMMITTEES OF DIRECTORS
-----------------------
Section 5. The board of directors may, by resolution or resolutions
passed by a majority of the whole board, designate one or more committees, each
committee to consist of two or more of the directors of the corporation, which,
to the extent provided in said resolution or resolutions shall have and may
exercise the powers of the board of directors in the management of the business
and affairs of the corporation and may have power to authorize the seal of the
corporation to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the board of directors.
Section 6. The committees shall keep regular minutes of its proceedings
and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
-------------------------
Section 7. Directors as such, shall not receive any stated salary for
their services, but by resolution of the board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the board; provided, that nothing herein contained shall be construed
to preclude any directors from serving the corporation in any other capacity and
receiving compensation therefor.
Section 8. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
Section 9. Any director may be removed from office by the vote or
written consent of stockholders representing not less than two-thirds of the
issued and outstanding capital stock having voting power, and his successor may
be elected at the same meeting.
ARTICLE IV.
NOTICES
-------
Section 1. Whenever under the provisions of the statutes or of the
articles of incorporation or of these by-laws, notice is required to be given to
<PAGE>
any director or stockholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
stockholder at such address as appears on the books of the corporation, and such
notice shall be deemed to be given at the time when the same shall be thus
mailed.
Section 2. Whenever all parties entitled to vote at any meeting,
whether of directors or stockholders, consent, either by a writing on the
records of the meeting or filed with the Secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking part in the
deliberations at such meeting without objection, the actions taken at such
meeting shall be as valid as if had at a meeting regularly called and noticed,
and at such meeting any business may be transacted which is not excepted from
the written consent or to the consideration of which no objection for want of
notice is made at the time, and if any meeting be irregular for want of notice
or of such consent, provided a quorum was present at such meeting, the
proceedings of such meeting may be ratified and approved and rendered valid and
the irregularity or defect therein waived by a writing signed by all parties
having the right to vote thereat. Such consent or approval, if given by
stockholders, may be by proxy or attorney, but all such proxies and powers of
attorney must be in writing.
Section 3. Whenever any notice whatever is required to be given under
the provisions of the statutes, of the articles of incorporation or of these
by-laws, a waiver thereof in writing signed by the person entitled to said
notice either before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V.
OFFICERS
--------
Section 1. The officers of the corporation shall be chosen by the
directors, and there shall be a President, one or more Vice-Presidents, a
Secretary and a Treasurer. The offices of Secretary and Treasurer may be held by
the same person.
Section 2. The board of directors, at its first meeting, after each
annual meeting of stockholders, shall choose a President from its members and
shall choose a Vice-President, a Secretary and a Treasurer, none of whom need be
a member of the board.
Section 3. The board may appoint additional vice-presidents, assistant
secretaries, assistant treasurers and such other officers and agents as it shall
deem necessary, who shall hold their offices for such terms and shall exercise
such powers and perform such duties as shall be determined from time to time by
the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify in their stead. Any officer elected or
<PAGE>
appointed by the board of directors may be removed at any time by the
affirmative vote of a majority of the whole board of directors. If the office of
any officer becomes vacant for any reason, the vacancy shall be filled by the
board of directors.
THE PRESIDENT
-------------
Section 6. The President shall be the chief executive officer of the
corporation; he shall preside at all meetings of the stockholders and directors,
shall be ex officio a member of all standing committees, shall have general and
active management of the business of the corporation and shall see that all
orders and resolutions of the board are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
VICE PRESIDENT
--------------
Section 8. The Vice-Presidents shall, in the absence or disability of
the President, perform the duties and exercise the powers of the President and
shall perform such other duties as the board of directors shall prescribe.
THE SECRETARY
-------------
Section 9. The Secretary shall attend all sessions of the board and all
meetings of the stockholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose and shall perform like duties
for the standing committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the board of
directors and shall perform such other duties as may be prescribed by the board
of directors or President, under whose supervision he shall be. He shall keep in
safe custody the seal of the corporation, and when authorized by the board of
directors, affix the same to any instrument requiring a seal, and when so
affixed, it shall be attested by his signature or by the signature of the
treasurer or an assistant secretary.
THE TREASURER
-------------
Section 10. The Treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the board, taking proper vouchers for such disbursements and shall
<PAGE>
render to the President and directors, at the regular meeting of the board, or
whenever they may require it, an account of all transactions as Treasurer and of
the financial condition of the corporation.
Section 12. If required by the board of directors, he shall give the
corporation a bond in such sum, and with such surety or sureties as shall be
satisfactory to the board, for the faithful performance of the duties of his
office, and for the restoration to the corporation in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and the property of whatever kind in his possession or under his control
belonging to the corporation.
ARTICLE VI.
CERTIFICATES OF STOCK
---------------------
Section 1. Certificates of stock of the corporation shall be in such
form not inconsistent with the articles of incorporation as shall be approved by
the board of directors, shall be issued under the seal of the corporation and
shall be numbered and shall be entered in the books of the corporation as they
are issued. They shall exhibit the holder's name and the number of shares owned
by him and shall be signed by the President or Vice-President and the Secretary
or an assistant secretary or the Treasurer or an assistant treasurer. If any
stock certificate is counter-signed or otherwise authenticated by a transfer
agent or transfer clerk and a registrar, a facsimile of the signatures of the
said officers may be printed or lithographed upon such certificate in lieu of
the actual signature.
TRANSFER OF STOCK
-----------------
Section 2. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate of stock duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
-------------------------
Section 3. The directors may prescribe a period not exceeding forty
days prior to any meeting of the stockholders or prior to the day appointed for
the payment of dividends during which no transfer of stock on the books of the
corporation may be made, or may fix a day not more than forty days prior to the
holding of any such meeting or the date for the payment of any such dividend as
the day as of which stockholders entitled to notice of and to vote at such
meeting and entitled to receive payment of such dividend shall be determined;
and only stockholders of record on such day shall be entitled to notice or to
vote at such meeting or to receive payment of such dividend.
REGISTERED STOCKHOLDERS
-----------------------
<PAGE>
Section 4. The corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof, and
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person, whether or not it shall
have express or other notice thereof, except as expressly provided by the laws
of Utah.
LOST CERTIFICATES
-----------------
Section 5. The board of directors may direct a new certificate or
certificates of stock to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the board of directors may, in its discretion,
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
ARTICLE VII.
GENERAL PROVISIONS
------------------
DIVIDENDS
---------
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the articles of incorporation, if any relate thereto, may
be declared by the board of directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the articles of incorporation.
Section 2. Before payment of any dividend or making any distribution of
profits, there may be set aside out of any funds of the corporation available
for dividends such sum or sums as the directors from time to time, in their
absolute discretion, think proper as a reserve fund to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the directors shall think conducive to
the interests of the corporation, and the directors may modify or abolish any
such reserve in the manner in which it is created.
CHECKS
------
Section 3. All checks or demand for money and notes of the corporation
shall be signed by such officer or officers as the board of directors may from
time to time designate.
FISCAL YEAR
-----------
<PAGE>
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
----
Section 5. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its incorporation and the words "Corporate Seal,
Utah."
ARTICLE VIII.
AMENDMENTS
----------
Section 1. These by-laws may be altered or amended at any regular
meeting of the stockholders or at any special meeting of the stockholders at
which a quorum is present or represented, if notice of the proposed alteration
or amendment be contained in the notice of such special meeting, by the
affirmative vote of a majority of the stock issued and outstanding and entitled
to vote at such meeting and present and represented thereat, or by the
affirmative vote, of a majority of the board of directors at any regular meeting
of the board or at any special meeting of the board if notice of the proposed
alteration or amendment be contained in the notice of such special meeting.
I, THE UNDERSIGNED, being the Secretary of GOLD STANDARD, INC., do
hereby certify the foregoing to be the by-laws of said corporation, as adopted
at a meeting of the directors held on the 15th day of February, 1980.
----------------------------
Secretary
Exhibit 10.1
Scott L. Smith Employment Agreement
GOLD STANDARD, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of August 15, 1999
by and between Gold Standard, Inc., a Utah corporation, (the "Company") and
Scott L. Smith (the "Employee").
In consideration of the promises and mutual covenants contained
herein, the parties hereto agree as follows:
1. Employment; Location
--------------------
The Company hereby employs Employee and Employee hereby accepts
such employment in Salt Lake County in the State of Utah or in such other
location as may be mutually agreed between the parties.
2. Term
----
The Company agrees to employ Employee and Employee agrees to
accept employment with the Company for the 5-year period beginning as of the
date hereof through the fifth anniversary date hereof, unless this Agreement is
sooner terminated pursuant to Section 6 below.
3. Duties
------
Employee shall be the President and Chief Executive Officer of
the Company. Employee shall diligently execute such duties and shall devote his
full time, skills, and efforts to such duties during ordinary working hours.
Employee shall perform such duties subject to the general supervision and
control of the Company's Board of Directors.
4. Compensation and Benefits
-------------------------
The Company shall pay Employee, and Employee accepts as full
compensation for all services to be rendered to the Company, the following
compensation and benefits:
4.1 Salary. The Company shall pay Employee an annual salary of
Eighty Five Thousand Dollars ($85,000) per year, payable in equal installments
at least monthly on the last day of each month or at more frequent intervals in
accordance with the Company's customary pay schedule, subject to such increases
as the Board of Directors may determine from time to time in its sole
discretion. At a minimum unless Employee decines, Employee's annual salary will
<PAGE>
be increased as follows: (i) on the second anniversary of this Agreement, by
$1,000 per month; and (ii) on the fourth anniversary of this Agreement, by
$1,000 per month.
4.2 Right to Purchase Shares. As partial consideration for
Employee's employment, Employee is hereby granted the right to purchase 100,000
restricted shares of the Employer's common stock (the "Shares"), exercisable on
a single occasion during the period that this Agreement remains in force. The
purchase price per share shall be $0.25 greater than the trading price of the
Shares on the date of exercise. The Employee may purchase the Shares using a
promissory note ("Note") having the following terms: (i) the Note shall be
non-recourse to the Employee; (ii) the Note shall be interest-free; (iii) the
principal amount of the Note shall be due in a single installment on the fourth
anniversary of the date of issuance of the Note; and (iv) the Note shall be
secured by a pledge of the Shares.
4.3 Company Automobile. The Employee shall have the right to use
of an automobile furnished by the Employer, the costs of which shall not exceed
those customary for an employee holding the position of the Employee in a
comparable organization.
4.4 Additional Benefits. Employee shall be eligible to
participate in the Company's employee benefit plans for employees, if and when
any such plans may be adopted, including, without limitation, bonus plans,
pension or profit sharing plans, incentive stock plans, and those plans covering
life, disability, health, and dental insurance in accordance with the rules
established in the discretion of the Board of Directors for individual
participation in any such plans as may be in effect from time to time.
4.5 Vacation, Sick Leave, and Holidays. Employee shall be
entitled to an aggregate of up to four (4) weeks leave for vacation each
calendar year at full pay or such increased leave as may be allowed by the
Company's Board of Directors for members of management generally. In addition,
Employee shall be entitled to sick leave and holidays at full pay in accordance
with the Company's policy.
4.6 Deductions. The Company shall have the right to deduct from
the compensation due to Employee hereunder any and all sums required for social
security and withholding taxes and for any other federal, state, or local tax or
charge which may be hereafter enacted or required by law as a charge on the
compensation of Employee.
5. Business Expenses
-----------------
The Company shall promptly reimburse Employee for all reasonable
out-of-pocket business expenses he incurs in fulfilling his duties hereunder, in
accordance with the general policy of the Company in effect from time to time,
provided that Employee furnishes to the Company adequate records and other
documentary evidence required by all federal and state statutes and regulations
issued by the appropriate taxing authorities for the substantiation of each such
business expense as a deduction on the federal or state income tax returns of
the Company.
<PAGE>
6. Termination
-----------
6.1 Termination for Cause. This Agreement and Employee's
employment hereunder shall terminate upon Employee's death and is otherwise
immediately terminable for "cause" (as defined below) upon written notice from
the Company to Employee. As used in this Agreement, "cause" shall include (i)
habitual neglect of or deliberate or intentional refusal to perform his duties
and obligations under this Agreement, (ii) fraudulent or criminal activities,
(iii) any grossly negligent or unethical activity, or (iv) any activity that
causes substantial harm to the Company, its reputation, or to its directors or
employees. A determination of whether Employee's actions justify termination for
cause and the date on which such termination is effective shall be made by the
Company's Board of Directors in its sole discretion.
6.2 Termination for Disability. The Company's Board of Directors
may terminate this Agreement for the "disability" (as defined below) of Employee
at the expiration of a consecutive two-month period of disability if the Board
of Directors determines in its sole discretion that Employee's disability will
prevent him from substantially performing his duties hereunder. As used in this
Agreement, "disability" shall be defined as (i) Employee's inability, by reason
of physical or mental illness or other cause, substantially to perform his
duties hereunder, or (ii) in the discretion of the Board of Directors, as it is
defined in any disability insurance policy in effect at the Company during the
time in question. Employee shall receive full compensation, benefits, and
reimbursement of expenses pursuant to Sections 4 and 5 above from the date the
disability begins until the scheduled termination of this Agreement, or until he
begins to receive disability benefits pursuant to a Company disability insurance
policy, whichever occurs first.
6.2 Effect of Termination. In the event Employee's employment is
terminated hereunder, all obligations of the Company and all obligations of
Employee shall cease except as provided in Sections 7 through 16 below. Upon
such termination, Employee or his representative or estate shall be entitled to
receive only the compensation, benefits, and reimbursement earned or accrued by
him under Sections 4 and 5 above, but shall not be entitled to any further
compensation, benefits, or reimbursement from such date.
6.4 Option to Retain as Consultant Upon termination of
Employee's employment, other than for reason of Employee's death, the Company
shall have an option to retain the services of Employee as a consultant for a
period of two years from the date of termination. The Company shall exercise
such option by giving written notice thereof to Employee on the date of
termination or within five (5) days thereafter, and the obligations of Employee
as a consultant upon such exercise shall be effective from the date of
termination. If the Company elects to exercise such option, then the Company
shall be obligated to utilize the services of employee for a minimum of ten
hours per calendar month during the consultancy period, and Employee shall make
<PAGE>
himself available to the Company for no less than 10 hours per calendar month.
The parties agree that as consideration for his services as a consultant the
Employee shall receive the greater of: (i) an hourly fee to be mutually agreed
by the parties, or (ii) an amount to be no less than an hourly equivalent to
Employee's salary as a full time employee of the Company. In addition, the
Company shall reimburse Employee for any reasonable expenses paid or incurred by
employee in connection with the performance of his duties as a consultant of the
Company. Employee shall be entitled to no compensation as a consultant other
than the above fees and expenses. Employee acknowledges and agrees that he shall
be bound by the covenant not to compete with the Company as set forth in Section
7 below, as well as by the obligations concerning confidential information as
set forth in Section 8, below, during the period for which he is a consultant
for the Company.
7. Covenant Not to Compete
-----------------------
7.1 Covenant. Employee hereby agrees that, while he is employed
by the Company as either an employee or as a consultant pursuant to this
Agreement, and, in any event, during the one-year period following the
termination of his employment hereunder, he will not directly or indirectly
compete (as defined in Section 7.2 below) with the Company in any geographic
area in which the Company does or has done business.
7.2 Direct and Indirect Competition. As used herein, the phrase
"directly or indirectly compete" shall include owning, managing, operating or
controlling, or participating in the ownership, management, operation or control
of, or being connected with or having any interest in, as a stockholder,
director, officer, employee, agent, consultant, assistant, advisor, sole
proprietor, partner or otherwise, any business (other than the Company's) which
is the same as, or similar to, or competitive with any business conducted or to
be conducted by the Company or any of the Company's subsidiaries; provided,
however, that this prohibition shall not apply to ownership of less than one
percent (1%) of the voting stock in companies whose stock is traded on a
national securities exchange or in the over-the-counter market.
7.3 Enforceability. If any of the provisions of this Section 7
is held unenforceable, the remaining provisions shall nevertheless remain
enforceable, and the court making such determination shall modify, among other
things, the scope, duration, or geographic area of this Section to preserve the
enforceability hereof to the maximum extent then permitted by law. In addition,
the enforceability of this Section is also subject to the injunctive and other
equitable powers of a court as described in Section 10 below.
8. Confidential Information
------------------------
Employee acknowledges that during his employment or consultancy
with the Company he will develop, discover, have access to, and become
acquainted with technical, financial, marketing, personnel, and other
information relating to the present or contemplated products or the conduct of
<PAGE>
business of the Company which is of a confidential and proprietary nature
("Confidential Information"). Employee agrees that all files, records,
documents, and the like relating to such Confidential Information, whether
prepared by him or otherwise coming into his possession, shall remain the
exclusive property of the Company, and Employee hereby agrees to promptly
disclose such Confidential Information to the Company upon request and hereby
assigns to the Company any rights which he may acquire in any Confidential
Information. Employee further agrees not to disclose or use any Confidential
Information and to use his best efforts to prevent the disclosure or use of any
Confidential Information either during the term of his employment or consultancy
or at any time thereafter, except as may be necessary in the ordinary course of
performing his duties under this Agreement. Upon termination of Employee's
employment or consultancy with the Company for any reason, Employee shall
promptly deliver to the Company all materials, documents, data, equipment, and
other physical property of any nature containing or pertaining to any
Confidential Information, and Employee shall not take from the Company's
premises any such material or equipment or any reproduction thereof.
9. No Conflicts
------------
Employee hereby represents that, to the best of his knowledge,
his performance of all the terms of this Agreement and his work as an employee
or consultant of the Company does not breach any oral or written agreement which
he has made prior to his employment with the Company.
10. Equitable Remedies
------------------
Employee acknowledges and agrees that the breach or threatened
breach by him of certain provisions of this Agreement, including without
limitation, Sections 7and 8, above, would cause irreparable harm to the Company
for which damages at law would be an inadequate remedy. Accordingly, Employee
hereby agrees that in any such instance the Company shall be entitled to seek
injunctive or other equitable relief in addition to any other remedy to which it
may be entitled.
11. Assignment
----------
This Agreement is for the unique personal services of Employee
and is not assignable or delegable in whole or in part by Employee without the
consent of the Board of Directors of the Company. This Agreement may not be
assigned by Employer without the prior written consent of Employee. The terms of
this Agreement shall inure to the benefit of, be binding upon, assumed by, and
be binding upon, the successors and permitted assigns of the parties.
12. Waiver or Modification
----------------------
Any waiver, modification, or amendment of any provision of this
Agreement shall be effective only if in writing in a document that specifically
refers to this Agreement and such document is signed by the parties hereto.
<PAGE>
13. Entire Agreement
----------------
This Agreement constitutes the full and complete understanding
and agreement of the parties hereto with respect to the subject matter covered
herein and supersedes all prior oral or written understandings and agreements
with respect thereto.
14. Severability
------------
If any provision of this Agreement is found to be unenforceable
by a court of competent jurisdiction, the remaining provisions shall
nevertheless remain in full force and effect.
15. Notices
-------
Any notice required hereunder to be given by either party shall
be in writing and shall be delivered personally or sent by certified or
registered mail, postage prepaid, or by private courier, with written
verification of delivery, or by facsimile or other electronic transmission to
the other party to the address or telephone number set forth below or to such
other address or telephone number as either party may designate from time to
time according to this provision. A notice delivered personally or by facsimile
or electronic transmission shall be effective upon receipt. A notice delivered
by mail or by private courier shall be effective on the third day after the day
of mailing.
(a) To Employee at: 4931 Marilyn Dr.
Salt Lake City, UT 84117
(b) To the Company at: Suite 710, Kearns Building
136 South Main Street
Salt Lake City, UT 84101
16. Governing Law
-------------
This Agreement shall be governed by and construed in accordance
with the laws of the State of Utah.
IN WITNESS WHEREOF, Employee has signed this Agreement
personally and the Company has caused this Agreement to be executed by its duly
authorized representative.
GOLD STANDARD, INC. EMPLOYEE
By:/s/ Bret Decker /s/ Scott L. Smith
--------------- ------------------
Scott L. Smith
Its: Secretary
------------
Exhibit 10.2
Form of Warrant for Non-employee Directors
WARRANTS TO PURCHASE UP TO _____
SHARES OF COMMON STOCK OF
GOLD STANDARD, INC.
(Incorporated under the laws
of the State of Utah)
By this certificate and for value received, Gold Standard, Inc.,
a Utah corporation (hereinafter called the "Company") subject to the conditions
herein contained and upon the surrender of this Warrant Certificate to the
Company at its principal offices, currently located at 712 Kearns Building, Salt
Lake City, Utah 84101, will sell and deliver or cause to be sold and delivered
to _______________________, at _____________________, on or before ___________,
a certificate for fully paid and non-assessable shares of the Company's common
stock, par value $0.001 upon payment of the purchase price for the number of
shares in respect of which this Warrant Certificate is exercised, but in no
event in excess of the number of shares set forth above; provided, however, that
under certain conditions hereinafter set forth, the number of shares of the
Company's common stock purchasable upon the exercise of this Warrant Certificate
may be increased or reduced as provided in Section 2 hereof and the purchase
price may be adjusted as provided in said Section 2. This Warrant Certificate
shall not be transferable without the express prior written consent of the
Company. The shares issuable upon exercise of this Warrant Certificate are
referred to as the "Warrant Shares". Subject to adjustment as aforesaid, the
purchase price per share, herein called the "Purchase Price" shall be U.S.
$_______ per share.
1. Exercise of Warrants.
---------------------
(a) The warrants evidenced by this Warrant Certificate
may be exercised on or before _______.
(b) This Warrant Certificate shall terminate
automatically upon the earlier to occur of (i) ___________, or
(ii) the date that the holder of this Warrant Certificate
ceases, whether voluntarily or involuntarily, to be a member of
the Board of Directors of the Company. Until the date of
termination of this Warrant Certificate, the holder hereof may
purchase all or any part of the number of shares of the
Company's common stock purchasable upon the exercise of this
Warrant Certificate, and such shares shall be the sole and
complete property of the Warrant holder irrespective of whether
the Warrant holder thereafter continues to serve as a member of
the Board of Directors of the Company.
<PAGE>
(c) Subject to the conditions of this warrant, the
warrants represented hereby may be exercised by the holder
hereof by the surrender of this Warrant Certificate (with the
Notice of Exercise annexed hereto properly completed and
executed) at the principal office of the Company or at the
principal office of the transfer agent, if any, for the
Company's common stock (or at such other place as the Company
and the holder hereof shall agree upon in writing), together
with payment in the form of a certified or bank cashier's check
drawn on cleared, U.S. funds to the Company of the aggregate of
the purchase price for the number of Warrant Shares in respect
of which the warrants represented hereby are then exercised.
(d) Upon surrender of this Warrant Certificate and
payment of the Purchase Price as aforesaid, the Company shall
issue and cause to be delivered with all reasonable dispatch to
or upon the written order of the holder of this Warrant
Certificate and in the name of the Warrant holder, a certificate
or certificates for the number of Warrant Shares so purchased
upon the exercise of the warrants represented by this Warrant
Certificate. Upon surrender of this Warrant Certificate and
payment of the Purchase Price, as aforesaid, the Company may
issue and cause to be delivered to or upon the written order of
the holder of this Warrant Certificate in the name or names of
persons other than the Warrant holder, a certificate or
certificates for the number of Warrant Shares so purchased upon
the exercise of the Warrant represented by this certificate, but
only upon the written request of the Warrant holder and only
with the unanimous approval of the Board of Directors of the
Company. In the event the shares are to be registered in the
name of a person other than the registered holder of the Warrant
Certificate, the Purchase Price shall be accompanied by payment
of any federal, state and local transfer taxes applicable to the
transaction. The certificate or certificates representing the
Warrant Shares shall be deemed to have been issued and any
person named therein shall be deemed, for all purposes, to have
become a holder of record of such Warrant Shares as of the close
of business on the date of surrender of this Warrant Certificate
and payment of the Purchase Price and transfer taxes, if any, as
aforesaid.
(e) The warrants represented by this Warrant
Certificate shall be exercisable, at the election of the holder
hereof, and, in the event that fewer than all of the warrants
represented by this Warrant Certificate are exercised prior to
the expiration of the warrants, a new warrant certificate or
certificates will be issued for the number of warrants
represented by the surrendered certificate which were not so
exercised. All warrant certificates surrendered upon the
exercise of the warrants evidenced thereby shall be cancelled.
(f) The Company shall not be required to issue
fractions of Warrant Shares on the exercise of warrants. If any
<PAGE>
fraction of a Warrant Share would, except for the provisions of
this paragraph, be issuable upon the exercise of any warrant,
the warrant so exercised shall be deemed to confer to the right
to purchase the next smaller number of full Warrant Shares. If
more than one warrant shall be exercisable at one time by the
same holder, the number of Warrant Shares which shall be
issuable upon the exercise thereof shall be computed on the
basis of the aggregate number of warrants exercised.
2. Adjustment to Purchase Price and Number of Shares of Common
Stock. The Purchase Price and the number of shares of common stock purchasable
upon the exercise of a warrant evidenced by any warrant certificate shall be
subject to adjustment from time to time as follows:
(a) In case the Company shall (i) pay a dividend or
make a distribution to all holders of its common stock in shares
of its common stock, (ii) subdivide its outstanding shares of
common stock into a larger number of shares, or (iii) combine
its outstanding shares of common stock into a smaller number of
shares, then the Purchase Price in effect immediately prior to
such action shall be adjusted to an amount that bears the same
relationship to the Purchase Price in effect immediately prior
to such action as the total number of shares of the common stock
of the Company outstanding immediately prior to such action
bears to the total number of shares of common stock of the
Company outstanding immediately after such action. An adjustment
made pursuant to this subsection (A) shall become effective, and
any such action shall be deemed to have been taken, immediately
after the record date in the case of a dividend or distribution
and immediately after the effective date in the case of a
subdivision or of a combination.
(b) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least three percent (3%) in such price; provided,
however, that any adjustment which by reason of this subsection
(B) is not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this section shall be made to the nearest
cent.
(c) In case of any capital reorganization or of any
reclassification of the common stock of the Company or in the
case of the consolidation of the Company with, or the merger of
the Company with or into, any other corporation or of the sale
of all of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation, each
warrant shall, after such capital reorganization,
reclassification of common stock, consolidation, merger or sale
be exercisable, upon the terms and conditions specified in this
agreement and upon payment of the Purchase Price in effect
immediately prior to such action, for the number of shares of
common stock or other securities or property which he would have
<PAGE>
owned or have been entitled to receive after the happening of
such capital reorganization, reclassification of common stock,
consolidation, merger or sale had such warrant been exercised
immediately prior to such action, and in any case, if necessary,
the provisions set forth in this section with respect to the
rights and interests thereafter of the holders of the warrants
shall be appropriately adjusted so as to be applicable, as
nearly as may reasonably be, to any shares of stock or other
securities or property thereafter deliverable upon the exercise
of the warrants. The subdivision or combination of shares of
common stock at any time outstanding into a greater or lesser
number of shares of common stock shall not be deemed to be a
reclassification of the common stock of the Company for the
purpose of this subsection (c).
(d) Upon each adjustment of the Purchase Price as a
result of (i) a dividend or distribution in shares of common
stock, or (ii) a subdivision of the outstanding shares of common
stock, the number of Warrant Shares purchasable upon the
exercise of any warrant certificate shall be increased to the
number of shares of common stock obtained by multiplying the
number of shares of common stock purchasable immediately prior
to such adjustment upon exercise of warrants evidenced by the
warrant certificate held by such holder, by the Purchase Price
in effect immediately prior to such adjustment and dividing the
product so obtained by the Purchase Price in effect after such
adjustment.
(e) Upon each adjustment of the Purchase Price as a
result of a combination of the common stock, each warrant
certificate shall thereupon evidence the right to purchase that
number of shares of common stock obtained by multiplying the
number of shares of common stock purchasable immediately prior
to such adjustment upon exercise of the warrants evidenced by
the warrant certificate held by such holder by the Purchase
Price in effect immediately prior to such adjustment and
dividing the product so obtained by the Purchase Price in effect
after such adjustment.
(f) Whenever there is an adjustment in the Purchase
Price, as provided herein, the Company shall promptly cause a
notice stating that such adjustment has been effected and
stating the Purchase Price then in effect and the number of
shares of common stock purchasable upon exercise of any warrant
certificate to be sent by first class mail, postage prepaid, to
each registered holder of a warrant certificate at his address
appearing on the warrant register. The Company shall keep a copy
of the notice on file and available for inspection by holders of
warrant certificates during reasonable business hours.
(g) Irrespective of any adjustments in the Purchase
Price or the number of shares purchasable upon the exercise of a
warrant, warrant certificates theretofore or thereafter issued
may continue to express the same prices and number of shares as
<PAGE>
are stated in the similar warrant certificates issuable
initially, or at some subsequent time, and the Purchase Price
and such number of shares specified therein shall be deemed to
have been so adjusted.
3. Notices to Warrant Holders. Nothing contained in any of the
warrant certificates shall be construed as conferring upon the holders thereof
the right to vote or to consent or to receive notice as stockholders in respect
of the meeting of stockholders for the election of directors of the Company or
any other matters.
4. Registration Under the Securities Act of 1933. The holder of
this warrant, by acceptance hereof, agrees that the warrants represented by this
Warrant Certificate and the Warrant Shares have been and will be acquired for
investment and not with a view to distribution or resale, and that neither these
warrants, nor any such shares, will be transferred or disposed of except in
accordance with the Securities Act of 1933, as amended (the "Securities Act"),
and the then existing rules and regulations promulgated thereunder. The warrants
and the Warrant Shares shall not be transferred except upon the conditions
specified in these warrants and compliance with the provisions of the Securities
Act in respect of the transfer of any warrant or of any Warrant Shares.
5. Notices. Any notice pursuant to this Warrant Certificate to
be given by the Company or the holder of this Warrant Certificate shall be
sufficiently given if sent by first class mail, postage prepaid, addressed, if
to the Company at its principal office, or if to the warrant holder, to the
registered holder's address as it last appears on the warrant registry
maintained by the Company or, if appointed, to the warrant agent.
6. Governing Law. This Warrant Certificate and each warrant
evidenced hereby shall be deemed to be a contract made under, and shall be
construed in accordance with and governed by, the laws of the State of Utah.
IN WITNESS WHEREOF, Gold Standard, Inc., has caused this Warrant
Certificate to be duly executed under its corporate seal.
DATED: ________________
GOLD STANDARD, INC.
By ----------------------------
President
(SEAL)
ATTEST:
By ------------------
Secretary
<PAGE>
"The securities represented hereby have not been registered under the Securities
Act of 1933, and no transfer, pledge, hypothecation or other disposition of it
may be effected unless registered under the Securities Act of 1933, or in the
opinion of counsel of Gold Standard, Inc., such disposition is exempt from the
registration provisions of the Act."
<PAGE>
NOTICE OF EXERCISE
------------------
The undersigned hereby elects to purchase ----- shares of Common
Stock, par value $0.001 per share, of Gold Standard, Inc., pursuant to the
attached Warrant Certificate ("Warrant") and tenders herewith payment of the
Purchase Price in full, together with all applicable transfer taxes, if any.
Subject to compliance with the applicable provisions of the U.S.
Securities Act of 1933 and the production of evidence satisfactory to Gold
Standard, Inc. of such compliance, please issue a certificate or certificates
representing said shares of Common Stock in the name of the undersigned, or,
also subject to payment of the applicable transfer taxes, in such other name as
may be specified below:
------------------------------
Name
------------------------------
------------------------------
Address
------------------------------
Signature
FOR VALUE RECEIVED, hereby
------------------------------------
sells, assigns and transfers unto
Name----------------------------------------------------------------------------
(Please typewrite or print in block letters)
Address-------------------------------------------------------------------------
the right to purchase Common Stock represented by this Warrant to the extent of
- -------------- shares as to which right is exercisable and does hereby
irrevocably constitute and appoint ------------------------- , attorney, to
transfer the same on the books of the Company with full power of substitution in
the premises.
------------------------------
Signature
Dated:
<TABLE>
<CAPTION>
Exhibit 11
Gold Standard, Inc. and Subsidiaries
COMPUTATION OF NET LOSS PER COMMON SHARE
Years Ended October 31,
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
Numerator:
Net loss attributable to common
shares $ (778,438) $(1,688,464) $(1,271,319)
Denominator:
Weighted average common share
outstanding 1,168,594 1,168,594 1,168,594
Basic and diluted loss per share:
Net loss attributable to
common shares $ (.67) $ (1.44) $ (1.09)
</TABLE>
NOTE 1 - Warrants to purchase shares of common stock were outstanding
during 1999 but were not included in the computation of
diluted loss per share because the warrants' exercise price
was greater than the average market price of the common
shares.
NOTE 2 - On March 2, 1998, the board of directors of the Company
approved a one for four reverse stock split, effective April
1, 1998, affecting all of the Company's common stock. On
November 9, 1998, the board of directors of the company
approved another one for four reverse stock split, effective
December 1, 1998, affecting all of the Company's common stock.
The financial statements have been adjusted retroactively to
reflect these reverse stock splits.
Exhibit 21
Subsidiaries of the Registrant
Name Jurisdiction of Organization
- ----- ----------------------------
Gold Standard South Utah
Tormin, S.A. Uruguay
Gold Standard Minas, S.A. Brazil
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
GOLD STANDARD, INC. FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C> <C>
<PERIOD-TYPE> year year year
<FISCAL-YEAR-END> OCT-31-1999 OCT-31-1998 OCT-31-1997
<PERIOD-END> OCT-31-1999 OCT-31-1998 OCT-31-1997
<CASH> 2,457,682 3,193,338 4,428,663
<SECURITIES> 0 0 0
<RECEIVABLES> 6,992 4,312 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 2,485,948 3,211,533 4,444,546
<PP&E> 281,984 318,440 378,987
<DEPRECIATION> 202,521 186,484 172,522
<TOTAL-ASSETS> 2,846,059 3,696,519 4,907,413
<CURRENT-LIABILITIES> 13,905 85,927 115,624
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 1,169 1,169 18,698
<OTHER-SE> 2,830,985 3,609,423 4,773,091
<TOTAL-LIABILITY-AND-EQUITY> 2,846,059 3,696,519 4,907,413
<SALES> 0 0 0
<TOTAL-REVENUES> 0 0 0
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 811,413 1,449,472 1,905,770
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> (778,338) (1,688,364) (1,595,658)
<INCOME-TAX> 100 100 210
<INCOME-CONTINUING> (778,438) (1,688,464) (1,595,868)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (778,438) (1,688,464) (1,595,868)
<EPS-BASIC> (0.67) (1.44) (0.09)
<EPS-DILUTED> (0.67) (1.44) (0.09)
</TABLE>
