<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
RICH COAST INC.
---------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on the table below per Exchange Act Rules 14a-6 (i) (4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated and state
how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
April 12, 1999
To Our Shareholders:
You are cordially invited to the Special Meeting of Shareholders (the
"Meeting") of Rich Coast Inc. (the "Company") to be held at the offices of the
Company, 10200 Ford Road, Dearborn, Michigan 48126, on Wednesday, May 26, 1999
at 10:00 a.m. local time.
The formal Notice of the Meeting and Proxy Statement describing the matters
to be acted upon at the Meeting are contained in the following pages.
Shareholders also are entitled to vote on any other matters which properly come
before the Meeting.
Enclosed is a proxy which will enable you to vote your shares on the
matters to be considered at the Meeting even if you are unable to attend the
Meeting. Please mark the proxy to indicate your vote, date and sign the proxy
and return it in the enclosed envelope as soon as possible for receipt prior to
the Meeting.
WHETHER YOU OWN FEW OR MANY SHARES OF STOCK, PLEASE BE SURE YOU ARE
REPRESENTED AT THE MEETING EITHER BY ATTENDING IN PERSON OR BY RETURNING YOUR
PROXY AS SOON AS POSSIBLE.
Sincerely,
James P. Fagan, President
<PAGE>
Rich Coast Inc.
10200 Ford Road
Dearborn, Michigan 48126
(313) 582-8866
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 26, 1999
April 12, 1999
To the Shareholders of Rich Coast Inc.:
The Special Meeting of Shareholders (the "Meeting") of Rich Coast Inc. (the
"Company") will be held at the offices of the Company, 10200 Ford Road,
Dearborn, Michigan 48126, on Wednesday, May 26, 1999, at 10:00 a.m. local time,
to consider and act upon the following matter:
1. Approve an amendment to Article II of the Company's Articles of
Incorporation to authorize 10,000,000 shares of $0.001 par value Preferred
Stock. In the event that this proposal is approved by the Company's
shareholders, the Company intends to immediately designate 2,500,000 shares of
the Preferred Stock as Series A Convertible Preferred Stock and intends to make
available for issuance 1,500,000 shares of the Series A Convertible Preferred
Stock to the holders of the Company's $1,500,000 convertible debentures in
exchange for their convertible debentures. Management desires to exchange the
debentures for shares of Preferred Stock because management believes the
exchange of debt for equity will help the Company meet the minimum listing
requirements established by Nasdaq for continued listing on the Nasdaq SmallCap
Market. Although the Company was de-listed from Nasdaq in February 1999, it is
currently appealing that decision. If this proposal is approved, the Company
has no intent to issue any shares of the Preferred Stock to the Company's
management.
The transaction of such other business as may properly come before the
Meeting or any adjournments thereof will be considered and acted upon. The
Board of Directors is not aware of any other business to come before the
Meeting. Pursuant to the Company's Bylaws, the Board of Directors has fixed the
close of business on April 6, 1999, as the record date for determination of the
shareholders entitled to vote at the Meeting and any adjournments thereof.
You are requested to complete and sign the enclosed proxy which is
solicited by the Board of Directors and to return it promptly in the enclosed
envelope. The proxy will not be used if you attend the Meeting and vote in
person.
EACH SHAREHOLDER, WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE MEETING, IS
REQUESTED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD.
ANY PROXY GIVEN BY THE SHAREHOLDER MAY BE REVOKED BY FILING WITH THE SECRETARY
OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
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BEARING A LATER DATE. ANY SHAREHOLDER PRESENT AT THE MEETING MAY REVOKE HIS OR
HER PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE MEETING. HOWEVER,
IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU
WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE IN PERSON AT
THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS,
James P. Fagan, President
2
<PAGE>
Rich Coast Inc.
10200 Ford Road
Dearborn, Michigan 48126
(313) 582-8866
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
MAY 26, 1999
April 12, 1999
To Our Shareholders:
This proxy statement (the "Proxy Statement") is furnished in connection with
the solicitation by the Board of Directors of Rich Coast Inc. (the "Company") of
proxies to be used at the Special Meeting of Shareholders (the "Meeting") to be
held at the offices of the Company, 10200 Ford Road, Dearborn, Michigan 48126,
on Wednesday, May 26, 1999, at 10:00 a.m. local time, and at any adjournments or
postponements thereof. The Meeting is being held for the purpose set forth in
the accompanying Notice of Special Meeting of Shareholders. This Proxy
Statement, the accompanying proxy card and the Notice of Special Meeting of
Shareholders (collectively, the "Proxy Materials") are first being mailed to
shareholders beginning on or about April 12, 1999.
GENERAL INFORMATION
Solicitation
The enclosed proxy is being solicited by the Company's Board of Directors.
The costs of the solicitation will be borne by the Company. Proxies may be
solicited personally or by mail, telephone, facsimile or telegraph by directors,
officers and regular employees of the Company, none of whom will receive any
additional compensation for such solicitations. The Company has engaged
Georgeson & Company, Inc. to assist in the distribution of proxy materials and
in proxy solicitations regarding the Meeting. Georgeson & Company will perform
these services at an anticipated cost of approximately $7,500, plus out-of-
pocket expenses. Banks, brokers, nominees and other custodians and fiduciaries
will be requested to forward proxy solicitation materials to their principals
and customers where appropriate, and the Company will reimburse such banks,
brokers, nominees, custodians and fiduciaries for their reasonable out-of-pocket
expenses in sending the proxy materials to beneficial owners of the shares.
1
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Voting Rights and Votes Required
Holders of shares of Rich Coast Inc. common stock, $0.001 par value (the
"Common Stock"), at the close of business on April 6, 1999 (the "Record Date")
are entitled to notice of, and to vote at, the Meeting. On the Record Date,
6,056,318 shares of Common Stock were outstanding. Holders of Common Stock are
entitled to one vote per share.
The presence, in person or by proxy, of holders of one-third of the voting
shares outstanding as of the Record Date constitutes a quorum for the
transaction of business at the Meeting. In the event there are not sufficient
votes for a quorum or to approve any proposals at the time of the Meeting, the
Meeting may be adjourned in order to permit further solicitation of proxies.
Abstentions will count towards quorum requirements.
The affirmative vote of a majority of shares outstanding on the Record Date
is required to approve Proposal One. As to this proposal, a shareholder may:
(i) vote "FOR" the proposal, (ii) vote "AGAINST" the proposal, or (iii)
"ABSTAIN" with respect to the proposal. Proposal One shall be determined
without regard to (a) broker non-votes, or (b) proxies marked "ABSTAIN" as to
that matter.
As to the other matters that may properly come before the Meeting, unless
otherwise required by law, the Articles of Incorporation, or the Bylaws, the
affirmative vote of a majority of the shares represented at the Meeting in
person or by proxy and entitled to vote on the matter shall be sufficient to
approve the matter.
Voting and Revocability of Proxies
Shares of Common Stock represented by all properly executed proxies
received at Georgeson & Company, Inc. by May 24, 1999 will be voted as specified
in the proxy. Unless contrary instructions are indicated on the proxy, the
shares of Common Stock represented by such proxy will be voted "FOR" the
proposal set forth in this Proxy Statement. Management and the Board of
Directors of the Company know of no other matters to be brought before the
Meeting other than as described herein. If any other matters properly are
presented to the shareholders for action at the Meeting and any adjournments or
postponements thereof, the proxy holder named in the enclosed proxy intends to
vote in his discretion on all matters on which the shares of Common Stock
represented by such proxy are entitled to vote.
The giving of the enclosed proxy does not preclude the right to vote in
person should the shareholder giving the proxy so desire. A proxy may be
revoked at any time prior to its exercise by (i) providing notice in writing to
the Company's corporate secretary that the proxy is revoked; (ii) presenting to
the Company a later-dated proxy; or (iii) by attending the Meeting and voting in
person.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables sets forth the beneficial ownership of the Company's
Common Stock as of April 6, 1999 by each Director and each Executive Officer of
the Company, and by all Directors and Executive Officers as a group, at which
date 6,056,318 shares of Common Stock were outstanding:
<TABLE>
<CAPTION>
Name Shares Beneficially Owned Percent of Class
- ---------------------------- ------------------------- ----------------
<S> <C> <C>
Robert W. Truxell 1,026,462(1) 15.2%
Chairman/Director/Secretary
James P. Fagan 633,327(2) 9.6%
President/CEO/Director
Thornton J. Donaldson 70,964(3) 1.2%
Director
Geoffrey Hornby 13,548(4) *
Director
George P. Nassos 98,513(5) 1.6%
Director
All directors and executive officers 1,842,814(6) 24.8%
as a group (five persons)
</TABLE>
- ---------------------------------------
* Less than 1%
(1) Includes: (i) 345,800 shares held jointly with his wife; (ii) currently
exercisable options and warrants to purchase 50,000 shares at $0.72 per
share; (iii) currently exercisable options to purchase 505,662 shares at
$0.80 per share; and (iv) currently exercisable options to purchase 125,000
shares at $1.00 per share.
(2) Includes currently exercisable options and warrants to purchase: (i)
70,386 shares at $0.80 per share; (ii) 125,000 common shares at $0.88 per
share; and (iii) 360,841 shares at $1.00 per share.
(3) Includes currently exercisable options to purchase 52,500 shares at $1.00
per share and 12,500 shares at $0.72 per share.
(4) Includes currently exercisable options to purchase 12,500 shares at $0.72
per share.
(5) Includes currently exercisable options to purchase 50,000 shares at $0.72
per share.
(6) Includes securities reflected in footnotes 1-5.
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<PAGE>
To the knowledge of the Management of the Company, the following table sets
forth, as of April 6, 1999, the number of voting shares represented by the
securities beneficially owned by any person (including any "group") who is known
to the Company to be the beneficial owner of more than five percent of any class
of the Company's voting securities outstanding on that date.
Name and Address of Amount and Nature of
of Beneficial Owner Beneficial Ownership Percent of Class
- ------------------- -------------------- ----------------
Robert W. and Linda C. Truxell 1,026,462(1) 15.2%
10200 Ford Road
Dearborn, MI 48126
Alan Moore 925,000(2) 13.3%
9441 LBJ Freeway
Suite 500
Dallas, TX 75243
James P. Fagan 633,327(3) 9.6%
10200 Ford Road
Dearborn, MI 48126
(1) Includes: (i) 345,800 shares held jointly; (ii) currently exercisable
options and warrants to purchase 50,000 shares at $0.72 per share; (iii)
currently exercisable options to purchase 505,662 shares at $0.80 per
share; and (iv) currently exercisable options to purchase 125,000 shares at
$1.00 per share.
(2) Consists of currently exercisable warrants to purchase 900,000 common
shares at $1.20 per share on or before January 10, 2006.
(3) Includes currently exercisable options and warrants to purchase: (i)
70,386 shares at $0.80 per share; (ii) 125,000 common shares at $0.88 per
share; and (iii) 360,841 shares at $1.00 per share.
All percentages in this section were calculated on the basis of outstanding
securities plus securities deemed outstanding pursuant to Rule 13d-3(d)(1) under
the Securities Exchange Act of 1934.
Management is not aware of any arrangements or agreements pledging
securities which could in the future result in a change of control of the
Company.
4
<PAGE>
PROPOSAL ONE
AMENDMENT TO THE ARTICLES OF INCORPORATION
TO AUTHORIZE 10,000,000 SHARES OF
PREFERRED STOCK
Background and Discussion of Proposed Amendment
The Company's presently authorized capital stock consists of 100,000,000
shares of Common Stock, $0.001 par value per share. It is proposed that the
Articles of Incorporation of the Company be amended to authorize a total of
10,000,000 shares of preferred stock with a par value of $0.001 per share
("Preferred Stock"). The Preferred Stock could have preference over the Common
Stock with respect to the payment of dividends and other possible preferences as
would be determined by the Board of Directors of the Company at the time of
establishment of a series of Preferred Stock. The holders of the Company's
Common Stock do not have preemptive rights under the Articles of Incorporation
to acquire any additional securities of any class or type of the Company.
As permitted by the Nevada Revised Statutes ("Nevada Statutes"), the Board of
Directors would be empowered to designate and issue the Preferred Stock in
series, at any time or from time to time, and to determine the price or prices,
the number of shares designated for a particular series, and the relative voting
powers, preferences, limitations, restrictions and rights of each class or
series of Preferred Stock. Among the determinations to be made by the Board of
Directors for each issuance of a series of Preferred Stock are:
a. the stated value of shares constituting a series, if different from the
par value;
b. the rate of dividend, the time of payment of dividends, whether dividends
are cumulative, and the date from which any dividend shall accrue;
c. whether shares may be redeemed and, if so, the redemption price and the
terms and conditions of redemption;
d. the amount payable upon shares in event of involuntary liquidation;
e. the amount payable upon shares in event of voluntary liquidation;
f. sinking fund or other provisions, if any, for the redemption or purchase
of shares;
g. the terms and conditions on which shares may be converted, if the shares
of any series are issued with the right of conversion; and
h. voting powers, if any.
Such determination would take into account the circumstances pertinent at that
time and would be made by resolution of the Board of Directors and by filing a
certificate of designation with the
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<PAGE>
Nevada Secretary of State setting forth the resolution prior to issuing the
particular shares of Preferred Stock comprising the series.
Reasons for Requesting Authorization of Preferred Stock
If approved, the authorization of Preferred Stock will provide for such
stock to be available for issuance from time to time for such purposes and
consideration as the Board of Directors may approve and no further vote of
shareholders of the Company will be required, except as provided under the
Nevada Statutes or the rules of any national securities exchange on which shares
of the Company are at the time listed. The availability of additional shares
for issuance, without the delay and expense of obtaining the approval of
shareholders at a special meeting, will afford the Company greater flexibility
in acting upon proposed transactions. If Proposal One is approved, the Company
has no intent to issue any shares of the Preferred Stock to the Company's
management.
In the event that Proposal One above is approved by the Company's
shareholders, the Company intends to immediately designate 2,500,000 shares as
Series A Convertible Preferred Stock ("Series A"). See "Proposed Rights,
Designations and Preferences of the Series A Convertible Preferred Stock" below.
Upon designation of Series A, the Company intends to make available for issuance
1,500,000 shares of Series A to the holders of the Company's $1,500,000
convertible debentures in exchange for their convertible debentures. The
Company's management desires to convert the debentures to shares of Series A
because the conversion of debt to equity will strengthen the Company's financial
position in an effort to meet the minimum maintenance requirements and regain
its listing of the Company's Common Stock on the Nasdaq SmallCap Market. The
holders of the debentures will have the option of exchanging their debentures
for the Series A shares. Although the Company was de-listed from Nasdaq in
February 1999, it is currently appealing that decision.
The Common Stock of the Company is currently traded on the Over-the-Counter
Bulletin Board under the trading symbol "KRHC". If the Company is successful in
its appeal for a review of the decision to de-list the Company and is able to
regain its listing, there are a number of continuing requirements that must be
met in order for the Common Stock to remain eligible for quotation on Nasdaq.
In order to continue to be quoted on Nasdaq, a company must maintain, among
other things, net tangible assets of at least $2,000,000, a market
capitalization of at least $35,000,000 or net income in two of the last three
fiscal years of at least $500,000.
Of the Nasdaq criteria listed above, the Company's management hopes to
achieve and maintain net tangible assets of at least $2,000,000. Net tangible
assets equals the Company's total assets less total liabilities and goodwill.
The conversion of the debentures to Preferred Stock would decrease the Company's
liabilities (by reducing debentures payable by $1,500,000) without decreasing
assets (the corresponding accounting entry will increase equity by $1,500,000).
The conversion of the debentures to Series A will increase the Company's net
tangible assets for purposes of regaining its listing on the Nasdaq SmallCap
Market; however, there can be no assurance that all, or any, of the debenture
holders will exchange their debentures for Series A shares, nor can there be any
assurance that the Company will be able to regain its listing even if it meets
the minimum maintenance requirements.
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<PAGE>
In addition to converting the debentures to shares of Series A, the Company
may be able to strengthen its financial position by obtaining additional equity
investors, in that investors may be willing to invest in the Company's Preferred
Stock when they would not otherwise be willing to invest in the Company's Common
Stock. If the Company issues Preferred Stock to new investors, this would also
increase the Company's net tangible assets due to an increase in assets for the
consideration received for the stock without increasing liabilities.
The Company would also be able to offer Preferred Stock to the Company's other
lenders and debt holders in exchange for the extinguishment of outstanding debt.
Debt holders that agree to convert their outstanding debt to equity often
require that companies issue preferred stock rather than common stock in
exchange for relinquishing their debt. When debt holders convert their debt to
equity, they often forego a security interest in assets of the company which
have been pledged as security for the debt. With preferred stock, the debt
holders can retain some preferential rights resembling their former security
interest, in that preferred shareholders often have a higher preference than
common shareholders for payment upon liquidation of a company. In addition,
preferred shareholders are sometimes entitled to dividends in preference to the
common shareholders, which debt holders sometime require in lieu of the interest
they were collecting on the debt.
Since the Company's Common Stock is not quoted on the Over-the-Counter
Bulletin Board, an investor may find it more difficult to dispose of, or to
obtain accurate quotations as to the market value of, the Common Stock. In
addition, the Company's Common Stock is defined as a "penny stock" by rules
adopted by the U.S. Securities and Exchange Commission ("Commission"). Brokers
and dealers effecting transactions in the Common Stock with or for the account
of a customer must obtain the written consent of a customer prior to purchasing
the Common Stock, must obtain certain information from the customer and must
provide certain disclosures to such customer. These requirements may have the
effect of reducing the level of trading in the secondary market, if any, of the
Common Stock and reducing the liquidity of the Common Stock. For these reasons
the Company hopes to regain its Nasdaq listing through the appeal process.
If Proposal One is approved, the Preferred Stock could be issued at the
discretion of the Board of Directors for any lawful corporate purpose without
further action by the shareholders. The flexibility afforded by the authority of
the Board of Directors to issue shares of Preferred Stock, and to vary features
such as dividend rates and conversion rights thereof to meet the exigencies of a
particular transaction, will allow the Company advantages in negotiations and
flexibility in being able to structure transactions involving the issuance of
such stock.
Proposed Amendment
The Board of Directors of the Company recommends that the Company's Articles
of Incorporation be amended by deleting the first paragraph of Article II in its
entirety and replacing it as follows:
The aggregate number of shares of capital stock which the corporation shall
have authority to issue is 100,000,000 shares of $0.001 par value common stock
and
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<PAGE>
10,000,000 shares of $0.001 par value preferred stock. The preferred stock
may be issued in any number of series, as determined by the Board of
Directors. The Board of Directors may by resolution fix the designation and
number of shares of any such series, and may determine, alter or revoke the
rights, including voting powers, designations, preferences, limitations and
restrictions, pertaining to each class or series of preferred stock or any
wholly unissued preferred shares. The Board of Directors may thereafter in
the same manner increase or decrease the number of shares of any such
series (but not below the number of shares of that series then
outstanding).
Proposed Rights, Designations and Preferences of the Series A Convertible
Preferred Stock
If Proposal One is approved by the Company's shareholders, the Board of
Directors intends to designate 2,500,000 of the preferred shares as "Series A
Convertible Preferred Stock." A summary of the intended rights, preferences,
privileges and restrictions imposed upon Series A as currently anticipated by
the Board of Directors are set forth below. The Board of Directors may change
some of these provisions if necessary to encourage holders of the debentures to
exchange for Series A shares.
Dividends: Series A will receive 8% cumulative dividends when and as declared
- ----------
by the Board.
Liquidation and Dissolution: Upon the voluntary or involuntary liquidation,
- ----------------------------
winding up or dissolution of the Company, out of the assets available for
distribution, holders of shares of Series A will be entitled to receive, in
preference to any payments on the Common Stock only, an amount equal to One
Dollar and Twenty Cents ($1.20) per share, plus cumulative dividends that are
accrued and unpaid to the date payment is made available to the Series A. After
the full preferential liquidation amount has been paid to, or determined and set
apart for, Series A, the remaining assets shall be payable to the holders of the
Common Stock. In the event the assets of the Company are insufficient to pay
the full preferential liquidation amount required to be paid to the Series A,
the Series A shall receive such funds pro rata on a share for share basis.
Voting: A holder of a share of Series A shall not be entitled to vote on any
- -------
matters.
Conversion: The holders of shares of Series A will be entitled, at their
- -----------
option, to convert their shares of Series A at any time prior to June 11, 2003
into shares of Common Stock of the Company at a conversion price ("Conversion
Price") for each share of Common Stock equal to the lesser of (i) $2.50 or (ii)
75% of the five day average closing bid price of the Common Stock, as reported
by Bloomberg, LP for the five trading days immediately preceding the applicable
conversion date.
On June 11, 2003 ("Mandatory Conversion Date"), all shares of Series A that
have not been converted into shares of Common Stock shall be converted into
shares of Common Stock at the Conversion Price. Other than on the Mandatory
Conversion Date, in no event will the holders of shares of Series A be entitled
to convert that amount of shares of Series A into Common Stock when upon
conversion the sum of (1) the number of shares of Common Stock beneficially
owned by that holder and its affiliates prior to the conversion, plus (2) the
number of
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<PAGE>
shares of Common Stock issuable upon the conversion, would result in beneficial
ownership by that holder and its affiliates of more than 4.9% of the outstanding
shares of Common Stock of the Company. No fractional shares or scrip
representing fractions will be issued on conversion.
Adjustments to Conversion Price: In the event that the Company shall at any
- --------------------------------
time after the issuance of the Series A (i) declare a dividend on the
outstanding Common Stock payable in shares of its capital stock (other than
payment of dividends on the Series A), (ii) subdivide the outstanding Common
Stock, (iii) combine the Common Stock into a smaller number of shares, or (iv)
issue any shares of its capital stock by reclassification the Common Stock
(including in connection with a consolidation or merger where the Company
remains as the surviving entity), then the Conversion Price shall be adjusted to
reflect a price that is as if the holders of shares of Series A had converted
shares into Common Stock prior to the event triggering the adjustment.
Redemption: The Company may redeem, in cash, the shares of Series A at any time
- -----------
upon giving a redemption notice to the holders of the Series A at a redemption
price equal to 133% of the total of $1 per share plus the amount of accrued and
unpaid dividends per share on the Series A. Other than the redemption by the
Company as stated in the previous sentence, the Series A is not redeemable.
Effects of Adoption of Amendment on Shareholders
Anti-Takeover Effects. The authorized but unissued shares of Preferred Stock
---------------------
for which approval is sought could be used by incumbent management to make more
difficult a change in control of the Company. Under certain circumstances such
shares could be used to create voting impediments or to frustrate persons
seeking to effect a takeover or otherwise gain control of the Company. For
example, such shares could be privately placed with purchasers who might side
with the Board of Directors in opposing a hostile takeover bid. In addition,
the Board of Directors could authorize holders of a series of Preferred Stock to
vote as a class, either separately or with the holders of Common Stock, upon any
proposed merger, sale or exchange of assets by the Company or any other
extraordinary corporate transaction. For information with respect to the
ownership of shares of the Company's voting stock by directors and officers, see
"Security Ownership of Certain Beneficial Owners and Management" above.
The authorization of Preferred Stock might be considered as having the effect
of discouraging an attempt by another person or entity, through the acquisition
of a substantial number of shares of the Common Stock, to acquire control of the
Company with a view to imposing a merger, sale of all or any part of the
Company's assets or a similar transaction that may not be in the best interest
of all of the shareholders, since the issuance of new shares of Preferred Stock
could be used to dilute the stock ownership of a person or entity seeking to
obtain control of the Company. Additionally, Common Stock could be issued
diluting the ownership interest of a potential acquirer. Despite such anti-
takeover implications, this Proposal is not the result of management's knowledge
of any effort to accumulate the Company's securities or to obtain control of the
Company by means of a merger, tender offer, solicitation in opposition to
management or otherwise.
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Dilutive Effect. The issuance of shares of Preferred Stock having conversion
---------------
rights might have the effect of diluting the interests of other shareholders.
In addition, it should be anticipated that any shares of Preferred Stock which
may be issued would have dividend and liquidation preferences which would be
superior to those of the Common Stock. Holders of Common Stock do not have
preemptive rights to subscribe to additional securities which may be issued by
the Company.
Vote Required and Recommendation of Board
Approval of Proposal One requires the affirmative vote of a majority of the
Company's outstanding shares of Common Stock. The Board of Directors recommends
the shareholders vote "for" the proposed amendment to the Company's Articles of
Incorporation to authorize 10,000,000 shares of $0.001 par value Preferred
Stock.
OTHER MATTERS
Management and the Board of Directors of the Company know of no matters to
be brought before the Meeting other than as set forth herein. However, if any
such other matters properly are presented to the shareholders for action at the
Meeting and any adjournments or postponements thereof, it is the intention of
the proxy holder named in the enclosed proxy to vote in his discretion on all
matters on which the shares represented by such proxy are entitled to vote.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of Smythe Ratcliffe, our independent public accounts, are
not expected to be present at the Meeting. Representatives of Smythe Ratcliffe
will, however, have the opportunity to make a statement to be read at the
Meeting if they desire to do so and will be available to respond to appropriate
questions submitted to them.
SHAREHOLDER PROPOSALS
Any proposal which a shareholder may have desired to present at the 1999
Annual Meeting of Shareholders had to be received in writing by the Secretary of
the Company no later than October 26, 1998.
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INCORPORATION BY REFERENCE
This Proxy Statement hereby incorporates by reference the following
documents filed by the Company with the Commission pursuant to the requirements
of the Securities Exchange Act of 1934, as amended ("Exchange Act"), as if set
forth herein: (a) the Company's annual report on Form 10-KSB (as amended) for
the fiscal year ended April 30, 1998, and (b) the Company's quarterly report on
Forms 10-QSB (each as amended) for the quarterly periods ended July 31, 1998,
October 31, 1998 and January 31, 1999.
This Proxy Statement shall be automatically updated by the Company's filing
of reports under the Exchange Act (including annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB, current reports on Form 8-K, and annual
reports to shareholders) with the Commission, and all such reports will be
automatically incorporated by reference in this Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS,
James P. Fagan, President
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PROXY
RICH COAST INC.
10200 Ford Road
Dearborn, Michigan 48126
(313) 582-8866
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
RECEIPT OF PROXY STATEMENT HEREBY IS ACKNOWLEDGED
The undersigned hereby constitutes and appoints James P. Fagan with full
power of substitution, as proxy to vote on behalf of the undersigned all shares
which the undersigned may be entitled to vote at the Special Meeting of
Shareholders to be held at the offices of the Company, located at 10200 Ford
Road, Dearborn, Michigan 48126, on Wednesday, May 26, 1999, at 10:00 a.m. local
time, and at any adjournment or adjournments thereof, upon the following:
Proposal One - Approval of an amendment to Article II of the Company's
Articles of Incorporation to authorize 10,000,000 shares of $0.001 par value
Preferred Stock:
For / / Against / / Abstain / /
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED HEREON WITH
RESPECT TO THE ABOVE PROPOSAL, BUT IF NO SPECIFICATION IS MADE THEY WILL BE
VOTED FOR APPROVAL OF THE PROPOSAL LISTED ABOVE. UNLESS OTHERWISE SPECIFIED,
---
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE DISCRETION OF THE PROXY ON ANY
OTHER BUSINESS.
Please mark, date and sign exactly as your name appears hereon, including
designation as executor, Trustee, etc., if applicable. A corporation must sign
in its name by the President or other authorized officer. All co-owners and
each joint owner must sign.
Date: _______________________
_____________________________________
Signature(s)
Address if different from that on envelope:
_____________________________________
Street Address
_____________________________________
City, State and Zip Code
Please check if you intend to be present at the meeting: _____
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EXHIBIT 23.1
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
OF RICH COAST, INC.
We have audited the accompanying consolidated balance sheets of Rich Coast, Inc.
(formerly Rich Coast Resources Ltd.) as of April 30, 1998 and 1997 and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended April 30, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance 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, these consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Company as at
April 30, 1998 and 1997 and the consolidated results of its operations and cash
flows for each of the three years in the period ended April 30, 1998 in
conformity with generally accepted accounting principles in the United States.
"Smythe Ratcliffe"
Chartered Accountants
Vancouver, Canada
July 27, 1998, except for notes 2(k), (l) and 9, which are as of January 19,
1999, and notes 1 and 2(f), which are as of March 17, 1999.
See notes to consolidated financial statements.
