UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ATLAS MINING COMPANY
--------------------
(Name of small business issuer in its charter)
IDAHO 1044 82-0096527
- ------------------------------- ---------------------------- ----------------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Number) * Identification
Number)
1221 W. Yellowstone Avenue
--------------------------
Osburn, Idaho 83849
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(208) 556 - 1181
----------------
(Address and telephone number of principal executive offices)
1221 W. Yellowstone Avenue, Osburn, Idaho 83849
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(Address of principal place of business or intended principal place of business)
Ben Simpson
-----------
416 River
---------
Wallace, Idaho 83873
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(208) 752 - 1154
----------------
(Name, address and telephone number of agent for service)
Copies to:
Lee Walthall
Schroeder Walthall Neville, L.L.P.
1100 Louisiana, Suite 4850
Houston, Texas 77002
(713) 654-9100
---------------------
(Approximate date of proposed sale to the public)
<PAGE>
If this Form is filed to register additional securities for an offering pursuant
to Rule 463(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Dollar Maximum Maximum
Title of Each Amount Offering Aggregate Amount
Class of Securities To Be Price per Offering of
To Be Registered Registered Unit Price Fee
- ------------------- ----------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Common Stock $ 7,500,000 $ 1.00 $7,500,000 $2,212.50
</TABLE>
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
* The equivalent North American Industry Classification System code is 212222.
<PAGE>
Initial Public Offering Prospectus
ATLAS MINING COMPANY
7,500,000 SHARES OF COMMON STOCK
$1.00 PER SHARE
Proposed Trading Symbols:
Over the Counter Bulletin Board - ALSN
<TABLE>
<CAPTION>
The Offering
Per Share Total
---------- --------------------
<S> <C> <C>
Public Price $ 1.00 $ 7,500,000
Underwriting Discounts .00 0
Brokerage Fees .03-.09 $ 225,000-675,000
Proceeds to Atlas .97-.91 $7,275,000-6,875,000
</TABLE>
This is our initial public offering, and no public market currently exists
for our shares. Our stock is not currently trading on the Over the Counter
Bulletin Board or on any other national exchange. The offering price may not
reflect the market price of our shares after the offering.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL
DILUTION. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS.
SEE "RISK FACTORS" ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This is a best efforts offering. We are not required to sell a minimum or
maximum number of shares are required to the sold. It is possible that we may
hire broker/dealers to sell the shares in this offering, but we have no such
agreements at this time. If we do hire broker/dealers, we will have to pay them
a commission of 3% to 9% of the proceeding of the shares they sell.
This offering terminates in 30 days at 5:00 p.m. Pacific Standard Time,
________________. The Company may elect to extend the expiration date of this
offering for one or two additional thirty-day periods.
1
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Summary Information. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Determination of Offering Price. . . . . . . . . . . . . . . . . . . . 5
Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . . 7
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 7
Directors, Executive Officers, Promoters and Control Persons . . . . . 8
Security Ownership of Certain Beneficial Owners and Management . . . . 9
Description of Securities. . . . . . . . . . . . . . . . . . . . . . . 10
Interest of Named Expert and Counsel . . . . . . . . . . . . . . . . . 11
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities. . . . . . . . . . . . . . . . . . . . 11
Description of Business. . . . . . . . . . . . . . . . . . . . . . . . 12
Management's Discussion and Analysis or Plan of Operation. . . . . . . 18
Description of Property. . . . . . . . . . . . . . . . . . . . . . . . 23
Market for Common Equity and Related Stockholder Matters . . . . . . . 28
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . 29
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
2
<PAGE>
SUMMARY INFORMATION
Current and Anticipated Future Revenue Earning Operations
- ---------------------------------------------------------------
Atlas is a mining company with properties located in Idaho and Mexico.
Currently its primary revenue sources are providing production services for
other mining companies and selling timber located on its properties. The
purpose of this offering is, in part to raise capital to develop the mines
located on the Atlas properties. In the future, Atlas primarily intends to
generate revenues and earnings through the operation of its own mines.
Atlas' executive corporate offices are located at 1221 W. Yellowstone
Avenue, Osburn, Idaho 83873, telephone number (208) 752-1154.
Results of the Offering
- --------------------------
Number of shares offered
- - 7,500,000 of common stock
Upon the Conclusion of this Offering
- - 12,825,448 shares outstanding
- - 314,852 shares of treasury stock
Atlas plans to use the proceeds of the offering in the following priority:
<TABLE>
<CAPTION>
<S> <C>
Broker's Commissions $225,000-675,000
Expenses from this Offering $ 100,000
Completion of San Acacio Feasibility Study $ 350,000
San Acacio Mill Capital Costs $ 1,500,000
Debt Retirement $ 800,000
General Working Capital $ 525,000-75,000
San Acacio Level I Development $ 3,000,000
San Acacio Level II Development (Purisima) $ 1,000,000
</TABLE>
RISK FACTORS
There is a limited OTCBB market and the security will be thinly traded.
- --------------------------------------------------------------------------------
Atlas Management expects to become fully reporting with the SEC through the
filing of this offering and become a listed company on the OTC. The stock last
traded on the OTCBB during the third quarter of 1999 with a $.25 high and a $.04
low.
The stock will not have an established trading market and an active market
may not develop. If a trading market does not develop, you may experience
difficulty in reselling stock and may be unable to sell it at all.
3
<PAGE>
The Company may hire promoters or market makers to help generate investor
interest. The Company may hire underwriters, general promoters or registered
broker/dealers to advertise or sell the stock. Nevertheless, it is unlikely
that this would create and maintain a trading market for the stock.
Penny stock rules may prevent the resale of the shares in many jurisdictions.
- --------------------------------------------------------------------------------
The sale of stock is subject to the penny stock rules under the Exchange
Act, which imposes additional sales requirements on broker/dealers selling penny
stock securities. Additional disclosures are required as well as determinations
of buyer suitability.
The Company has no employment agreements or keyman insurance on key personnel.
- --------------------------------------------------------------------------------
Atlas' future depends wholly upon the efforts and abilities of the Board of
Directors and the officers of the Company, particularly William T. Jacobson, the
President and Chief Executive Officer. Mr. Jacobson has eleven years experience
in the mining industry and fifteen years experience in the banking industry.
Atlas lacks keyman insurance to protect itself in the event that William
Jacobson leaves.
If Mr. Jacobson were to leave Atlas there may be difficulty in hiring
additional management. Managing a mining company requires unique skills,
knowledge and experience and, as a result, Atlas may be unable to locate
qualified replacement candidates.
Atlas will need additional financing if the current offering is not fully
- --------------------------------------------------------------------------------
subscribed.
- -----------
The Company needs $7,500,000 to develop the San Acacio Mine project. If
the offering is not fully subscribed, Management may pursue development of the
San Acacio Mines using a combination of equity and debt financingThe Company
may be able to pursue lender financing, although the Company has no commitments
from lenders at this point.
Management estimates that raising at least $3,000,000 from this offering
would place the Company in a position to obtain favorable credit terms. The
Company may then be able to obtain third party lender financing to not only
complete its goals, but also to pursue acquisitions of additional equipment and
properties.
Atlas has incurred operating losses during the past two years and expects the
- --------------------------------------------------------------------------------
losses will continue in the foreseeable future.
- -----------------------------------------------------
Atlas has operating income of $182,387 in 1997, and operating losses in
1998 and 1999 (through the third quarter) of ($66,200) and $(605,993),
respectively. Through the third quarter of 1999, the Company has generated
$119,843 of revenues resulting in a net loss of $(652,952). Atlas expects
operating expenses to remain relatively consistent over the next twelve months
consequently, without increases in current revenue sources or revenues derived
from its own mining operations, Atlas expects losses during the next twelve
months.
4
<PAGE>
Atlas does not have insurance on its timber reserves.
- ------------------------------------------------------------
Atlas lacks insurance for fire or disease on its the timber reserves,
consequently such a loss could deem the reserves worthless. In addition, the
timber industry is effected by lumber price movements and adjustments, downturns
in the housing industry, and interest rate movements. These factors can reduce
the price of timber and lumber on the open market. A significant decrease in the
price of timber may reduce income and therefore reduce the value of the
Company's stock.
Shares you purchase will have a book value less than the price you paid for the
- --------------------------------------------------------------------------------
stock.
- ------
If the offering is fully subscribed, the stock you purchase will have a
book value of $0.61 per share. If the offering is not fully subscribed, a lower
book value per share will result. The book value will be less than the
consideration paid for the shares.
Atlas is an exploration stage company.
- -------------------------------------------
The Company is an exploration stage company. There is no assurance that a
commercially viable mineral deposit, "a reserve," exists in any of Atlas' mining
properties. Therefore, determination of the existence of a reserve will depend
on appropriate and sufficient exploration work and the evaluation of legal and
economic factors.
USE OF PROCEEDS
The uses listed in this section are placed in priority order. The amounts
are estimates.
Net Proceeds
- -------------
Atlas may use broker/dealers to sell the shares in this offering although
presently, there are no sales agreements. If Atlas obtains broker/dealer
agreements, the Company estimates paying brokers' commissions of 3%-9% of the
sales proceeds. Assuming brokers sell all shares available in this
offering, the Company estimates paying $225,000-$675,000 in commissions.
Atlas plans to use the proceeds of the offering in the following priority:
Broker's Commissions $225,000-675,000
Expenses from this Offering $100,000
Completion of San Acacio Feasibility $350,000
- - Site Surveys, Baseline Studies, Permitting: $85,000
- - Engineering, Studies, Metallurgical Testing,
Ore Reserve Calculations: $65,000
- - Mill Site Purchase & Permitting: $160,000
- - Contingencies: $40,000
5
<PAGE>
San Acacio Mill Capital Costs $1,500,000
- - Mill Construction: $750,000
- - Water Wells, road upgrade: $150,000
- - Office & Vehicles: $50,000
- - Salaries (4 months): $280,000
- - Contingencies: $270,000
Debt Retirement $800,000
- - Loan payable to Fausett International, Inc., interest
rate of 8.75%, matures 2001
General Working Capital $525,000-75,000
San Acacio Level I Development $3,000,000
- - Portal & Mine Preps, Rehab: $970,000
- - Equipment Acquisitions (Trucks, loaders, drills,
compressors, diamond drill): $1,290,000
- - Contingencies: $740,000
San Acacio Level II Development (Purisima) $1,000,000
- - Portal & Mine Preps: $370,000
- - Equipment Acquisitions (Trains, loaders, compressor,
Drill): $450,000
- - Contingencies: $180,000
DETERMINATION OF OFFERING PRICE
The Company's stock is not registered on the Over-the-Counter Bulletin
Board System ("OTC BB"). Once reporting, the Company plans to trade on the
OTCBB under the stock symbol "ALSM." Management is unable to determine the
price at which the stock will trade on the OTCBB.
The Company determined the Offering price based on several factors: (1)
Potential investor interest, (2) The Company's current capital needs, and (3)
The Company's ability to pay future dividends, although no dividends are
contemplated at this time.
6
<PAGE>
DILUTION
Consideration Paid and Percentages Owned
- --------------------------------------------
During the last five years, officers, directors, promoters and affiliated
persons have purchased stock at prices less than the offering price. The
following chart documents those purchases and compares them to the purchase
price to be paid by the investors in this offering:
<TABLE>
<CAPTION>
PURCHASE PURCHASE TOTAL TOTAL
AMOUNT PRICE PER PURCHASE PERCENTAGE
INVESTOR RELATIONSHIP TO COMPANY DATE OF PURCHASE (SHARES) SHARE PRICE OWNED
- ------------------------------------ --------------------------- ---------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
William and Mary Ann Jacobson William Jacobson, President 12/16/97 25,000 $ 0.20 $ 5,000 7.2
Tom Groce Director 12/16/97 25,000 $ 0.20 $ 5,000 2.4
William and Mary Ann Jacobson William Jacobson, President 1/13/98 25,000 $ 0.20 $ 5,000 7.2
Tom Groce Director 3/4/98 75,000 $ 0.20 $ 15,000 2.4
Jack Harvey, Vice President
Jack Harvey Trust and Director 3/4/98 50,000 $ 0.20 $ 10,000 1.1
William and Mary Ann Jacobson William Jacobson, President 3/6/98 50,000 $ 0.20 $ 10,000 7.2
Optimum Source Stock Brokers Society Promoter 4/6/99 125,000 $ 0.20 $ 25,000 2.3
</TABLE>
DILUTION TABLE
If you invest in our common stock, your interest will be immediately
diluted to the extent of the difference between the public offering price per
share of our common stock and the book value per share of the common stock after
this offering. Our book value as of September 30, 1999 was $377,162, or $.08
per share of common stock. After giving effect to the receipt of the estimated
net proceeds from the sale of 7,500,000 shares of common stock contemplated by
this offering at an offering price of $1.00 per share, which does not give
effect to the potential brokers' commissions paid, our book value as of
September 30, 1999 would have been $7,877,162 or approximately $.63 per share.
This represents an immediate increase in the book value of $.55 per share to
existing shareholders and an immediate dilution in book value of $.37 per share
to new investors purchasing common stock in this offering. The following table
illustrates this dilution on a per share basis:
Assumed initial public offering price $1.00
Net tangible book value per share as of 9/30/99 $ .08
Increase per share attributable to new investors .55
------
Net tangible book value per share after the offering .63
Dilution per share to new investors $ .37
======
Dilution as a percentage of the offering price 37%
======
7
<PAGE>
The following table summarizes as of September 30, 1999 the differences
between the total consideration paid and the average price per share paid by
existing stockholders and by investors purchasing shares of common stock in this
offering, before deducting the underwriting discounts and commissions, at the
public offering price of $1.00 per share:
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
------------------- ------------------
Number Percent Amount Percent Average Price
---------- ------- --------- ------- --------------
<S> <C> <C> <C> <C> <C>
Existing Shareholders 5,000,129 40.00 1,896,307 20.18 $ .38
New Shareholders 7,500,000 60.00 7,500,000 79.82 $ 1.00
Total 12,500,129 100.00 9,396,307 100.00
</TABLE>
These calculations exclude all shares of common stock issuable upon the
exercise of our outstanding stock options to purchase common stock and all
shares of common stock available for future grants under our stock option plans.
To the extent any of these options are exercised, there will be further dilution
to new public investors.
SELLING SECURITY HOLDERS
------------------------
No security holder is selling the Company's stock pursuant to this
Offering. No director, officer or beneficial owner of more than 5% of the
Company's shares will participate in this Offering.
PLAN OF DISTRIBUTION
This offering involves the offer and sale of 7,500,000 shares of common
stock at $1 per share.
During the offering, purchasers' funds will be deposited into an escrow
account at Idaho Independent Bank, Haydon Lake, Idaho 83835. See Exhibit
"99.2." Once the offering closes, all funds in the escrow account will be
transferred to the accounts of the Company. The escrow account will not accrue
interest and we will not pay you interest on purchase money placed in escrow.
If the Company accepts your subscription, the Company will send you
certificates for the common stock purchased. The Company will send the
securities to you as the funds are released from the escrow account. Within five
(5) business days after the release of the escrowed funds, the Company will
issue the stock for the number of shares purchased.
The Company reserves the right to accept or reject your subscription
agreement, in whole or in part, for any reason, in the sole discretion of its
Management.
Any subscriptions received by the Company without full payment or after the
expiration date will be rejected. This prospectus will terminate with respect
to the unsubscribed shares. There will be no revocation, cancellation and/or
cash buyback for any shares bought in the open market.
8
<PAGE>
The Company intends to offer and sell common stock directly to investors
without the assistance of a broker/dealer. Management intends to use a small
number of preliminary prospectuses to inform certain dealers about the stock.
The Company has blue sky registered the offering in each state where an
identified purchaser resides. Therefore, the entire offering may be purchased
by a limited number of investors.
The Company will send each investor a written statement of final
capitalization promptly following the completion of the offering.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The names, ages and positions of the Company's Directors and executive
officers as of December 31, 1999, are listed below:
<TABLE>
<CAPTION>
Name Age Position with the Company First Elected
<S> <C> <C> <C>
William T. Jacobson 53 President, C.E.O, Director 1993
Jack Harvey 77 Vice President, Director 1970
Kurt Hoffman 33 Secretary, Treasurer, and Director 1997
Thomas E. Groce 78 Director 1970
Lovon Fausett 62 Director 1974
</TABLE>
Some of the individuals above serve on other Boards of Directors. No person
listed serves on the Board of a listed or publicly held company other than Atlas
or its subsidiaries.
WILLIAM T. JACOBSON has been President of Atlas Mining Company since August
1997. From 1994 to 1997, he served as Secretary of Atlas and Treasurer of
Fausett International, Inc. Mr. Jacobson also serves on the Board of Directors
of Trend Mining Company. He has an eleven-year career in the mining industry
and spent fifteen years in the banking industry. He holds a business degree
from the University of Idaho.
JOHN "JACK" HARVEY has been Vice President of Atlas for 15 years. He received
his mining engineering degree from Montana Tech, and is retired after a 41-year
career with Anaconda and Arco.
THOMAS E. GROCE received a metallurgical engineering degree from Montana Tech
and is retired after a 30- year career at Kaiser Aluminum. Mr. Groce held the
position of Secretary and Treasurer for 16 years.
LOVON FAUSETT has served as a past President of Atlas and is the one hundred
percent (100%) owner of Fausett International, Inc. Mr. Fausett also is a
Director of Hagby USA, a diamond drill manufacturer.
KURT HOFFMAN is the Secretary and Treasurer of Atlas Mining Company. Mr. Hoffman
has been the Company's Secretary and Treasurer, since 1997. Mr. Hoffman
currently is the president of Trend Mining Company. Mr. Hoffman owns and has
operated Hoffman Mining and Land Services for the past five years. Trend Mining
Company and Hoffman Mining and Land Services are not competitors of Atlas.
9
<PAGE>
SECURITY OWNERSHIPS OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership as of December 31, 1999, of the Company's shares by (i) each current
Director and each nominee for Director (ii) each officer of the Company, (iii)
all persons known by the Company to beneficially own more than 5% of the
outstanding shares of the Company's shares, and (iv) all officers and Directors
of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIALLY OWNED
-------------------
BENEFICIAL OWNER(1) NUMBER OF SHARES PERCENT OF TOTAL(2)
- ------------------------------ ----------------- -------------------
<S> <C> <C>
Cede & Co.(3) 1,005,688 18.9%
Fausett International, Inc.(4) 500,000 9.3%
William T. Jacobson(5) 383,688 7.2%
John F. Harvey(6) 60,767 1.1%
Thomas E. Groce(7) 126,340 2.4%
Lovon Fausett(8) 39,610 .74%
All officers and directors 610,405(9) 11.5%
as a group
<FN>
* less than one percent
- ---------------------------
(1) The Company believes that all persons named in the table, or their
family members, have sole voting and investment power for all shares
owned by them.
(2) As of the date of this prospectus, the Company has granted no options,
warrants or rights to acquire shares.
(3) The address for Cede & Co. is P.O. Box 20, Bowling Green Station, New
York, New York 10274.
(4) The address for Fausett International, Inc. is Attn: Robert Seitz, P.O.
Box 968, Osburn, Idaho 83849-0968. Fausett International, Inc. is one
hundred percent (100%) owned by Lovon Fausett, a member of the Board of
Directors.
(5) Mr. Jacobson's address is Box 631, Mullan, Idaho 83846. Mr. Jacobson
holds 283,688 shares individually, 50,000 shares with Mary Ann Jacobson,
and 50,000 shares with Mary Ann Jacobson as joint tenants. Mr. Jacobson
is on the Board of Directors.
(6) Mr. Harvey's address is Bayview Rt, Box 31, 895 Bayview Dr., Poulson,
Montana 59860. Mr. Harvey holds 9,767 shares individually, 1,000
shares with Ruth C. Harvey as joint tenants with right of survivorship,
and 50,000 shares as trustee of the John F. Harvey Trust. Mr. Harvey
is on the Board of Directors.
(7) Mr. Groce's address is E. 10413 Desmet, Spokane, Washington 99206. Mr.
Groce holds 14,120 shares individually and 112,220 shares with Maryrose
Groce.
(8) Mr. Fausett's address is P.O. Box 968, Osburn, Idaho 83849-0968. Mr.
Fausett holds 17,003 individually and 22,607 with Nona Fausett as joint
tenants. Mr. Fausett owns one hundred percent (100%) of Fausett
International, Inc.
(9) This number does not include the 500,000 shares held by Fausett
International, Inc., owned 100% by Lovon Fausett, a director of
Atlas.
</TABLE>
Management is unaware of any voting trust or agreement among any of the
shareholders.
10
<PAGE>
DESCRIPTION OF SECURITIES
In this Offering, the Company will offer 7,500,000 shares of common stock
for sale to the public. These shares have no par value. Dividend and voting
rights are detailed below.
On November 19, 1998, the Company amended their Articles of Incorporation.
Under the amended Articles, the Company changed the authorized capital stock
from $0.10 par to no par. Also the number of shares authorized increased from
6,000,000 to 60,000,000. Further amendments included the authorization of
10,000,000 shares of $1.00 par value noncumulative, nonvoting, nonconvertible
preferred stock.
The authorized capital stock of the Company at the closing of this offering
consists of 60,000,000 shares of common stock, no par value per share. At
September 30, 1999, a total of 5,324,981 shares of common stock are issued and
outstanding and held by 1,735 shareholders. Of the shares outstanding, 324,852
are treasury stock. None are being registered by principal shareholders for
sale under this prospectus.
The shareholders ratified a stock option plan and an incentive plan in
November 1998. Both plans authorize the Board of Directors to form a Stock
Option Committee. The Committee has full authority to administer the provisions
of each plan.
The plans dictate that the combined total maximum option shares for the
existing and all future option plans of the Company shall not exceed 10% of the
then issued and outstanding shares of the Company's stock. The plans provide
that the aggregate number of option shares assignable to one person shall not
exceed 5% of the then issued and outstanding shares of the Company's stock. The
shares of common stock to be issued upon the exercise of the plans may be: (1)
authorized but unissued shares, (2) shares issued and reacquired by the Company
or (3) shares bought on the market for the purposes of the plan. In the event
any option plan shall terminate, expire or be surrendered without having been
exercised in full, the shares subject to such plan but not purchased thereunder
shall again be available for future options.
On April 16, 1999, the Stock Option Committee authorized the issue of
options to directors and employees on 500,000 shares of common stock. Of these
500,000 shares, the Committee designated 375,000 shares to directors and 125,000
to employees.
Each director will receive 75,000 shares of stock options. Presently,
there are no grants of any of the authorized stock options. The Committee will
set the price of the stock option shares at the time of the grant. The length
of the options to be granted is three years. The option stock will carry a
mandatory holding period of two years before exercisable.
11
<PAGE>
The Board of Directors has the authority to declare dividends.
Shareholders are entitled to one vote for each share on all matters submitted to
a shareholder vote. Most shareholder votes, except for the election of
Directors and other routine matters, require the affirmative vote of 51% of the
shares present in person or by proxy at a meeting of the shareholders.
Shareholders have no rights to a cumulative voting for the election of
Directors. Each share participates equally in assets available for distribution
upon liquidation or dissolution. The holders of common stock have no preemptive
or preference rights. Shares of common stock are not subject to any redemption
provisions or convertible rights into any other securities of the Company. All
of the outstanding shares are fully paid and non-assessable. The shares to be
offered in this offering will also be fully paid and non-assessable when they
are issued and paid for.
The foregoing description concerning the common stock of the Company does
not purport to be complete. Reference is made to the Company's Articles of
Incorporation and Bylaws as well as to the applicable statutes of the State of
Idaho for a more complete description concerning the rights and liabilities of
shareholders.
The Company intends to furnish shareholders annual reports containing
audited financial statements of the Company. The Company also intends to
distribute quarterly reports containing unaudited financial information.
After the offering, if fully subscribed, there will be 12,824,981 shares of
common stock outstanding. The Company retains the right to later issue
47,175,019 shares of common stock.
Subsequent to the completion of the offering, current stockholders of the
Company will own approximately 40% of the outstanding common stock.
STOCK TRANSFER AGENT
The Transfer Agent and Registrar for the shares of common stock is Idaho
Stock Transfer Company, 421 Couer d'Alene Ave., Couer d'Alene, Idaho 83814.
INTEREST OF NAMED EXPERT AND COUNSEL
No expert or counsel will be receiving compensation in excess of $50,000 in
connection with this offering.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
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In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Fausett International, Inc., sold operating equipment and mining supplies
to the Company, in 1997, for a purchase price totaling $1,416,094. The purchase
price was paid in cash, capital stock (875,000 shares of common stock valued at
$350,000), and a note payable for the remainder. Subsequent to this transaction,
William Jacobson, Chief Executive Officer of the Company, received 265,000
shares of Atlas stock from Fausett International, Inc., for payment of past
services.
Atlas has entered into a contract for consulting service with Lovon
Fausett. Mr. Fausett will provide consulting services for three (3) years and
will receive a consulting fee of $1,500 per month. Consulting fees recognized
under this agreement during 1998 and 1997 were $18,000 and $4,500, respectively.
Mr. Fausett will also receive $18,000 under this agreement in 1999. The
agreement terminates in October 2000.
The Company leases office space on a month-to-month basis from Fausett
International, Inc. Rental payments under this lease are $1,100 per month.
Total rental expense recognized under this lease during 1998 and 1997 was
$13,200 and $3,200, respectively.
DESCRIPTION OF BUSINESS
This Registration Statement contains certain forward-looking statements,
which involve risks and uncertainties. The actual results of the Company could
differ materially from those anticipated in these forward-looking statements as
a result of factors including those set forth in "Risk Factors" and elsewhere in
this Registration Statement.
ATLAS: MINING
Atlas was originally incorporated on March 4, 1924, in Idaho, and is also
authorized to operate as a foreign corporation in the states of Montana and
Washington. Since 1924, Atlas has mined the various mineral resources in Idaho,
Montana and Washington. Over the years, it has developed as a natural resource
company engaged in the acquisition, exploration, and development of its
resource properties in the state of Idaho and, recently, Mexico. The Company is
an exploration stage company. There is no assurance that a commercially viable
mineral deposit, "a reserve," exists in any of Atlas' mining properties.
Therefore, determination of the existence of a reserve will depend on
appropriate and sufficient exploration work and the evaluation of legal and
economic factors.
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From 1980 to 1997, the mining activities of the Company ceased, largely due
to a downturn in the market price and the high costs of development and
production. The Company continued to hold its mining properties and wait for a
better market economy. In 1997, Bill Jacobson, then a member of the Board,
became CEO.
Management is contemplating the revitalization of several mineral mines
previously developed and to develop the resources of newly acquired silver
mines. Management hopes in the future to acquire additional mining properties.
Atlas has two employees. In addition, the Company utilized the services of
various individuals on a consulting basis. None of the Company's employees are
covered by a collective bargaining agreement, the Company has never experienced
a work stoppage, and the Company considers its labor relations to be excellent.
DEMAND FOR SILVER
Based upon reports made by the Silver Institute, Management believes that
silver has the most potential for increased value in the future. Economists
expect that the greatest demand, and the greatest price, in the next decade will
be for base metals. Silver brokers are expected to purchase more silver as
third world countries modernize and the demand for plumbing and electricity
becomes more widespread. It is expected that silver will be the first to see an
increase in price.
According to a report of "CPM Group's Silver Survey for 1999," the world
silver supply in 1998 was estimated at 630 million ounces. The world demand for
this same period was 822 million ounces, or a 192 million ounce shortfall.
Their projections for 1999 show another shortfall of 177 million ounces. This
indicates the continued trend in demand over supply, which may result in
increased silver prices. This is good news for primary silver producers and
silver exploration companies like Atlas. Management hopes that it can take
advantage of this potential for silver through its mines in Idaho and the mines
it has options on in Mexico.
ZACATECAS, MEXICO PROPERTY
SAN ACACIO MINE
In the second quarter of 1999, Atlas acquired all of the outstanding
capital stock of Olympic Silver Resources, Inc., a Nevada corporation. Through
the acquisition, Atlas acquired control of the mining assets held by Minera
Argentum, S.A. de C.V., a Mexican subsidiary of Olympic and resulted in the
opportunity to exercise an option to purchase the San Acacio mine. The Company
exercised its option through the payment of $100,000 with an additional option
payment of $100,000 due July 2000. In July 2001, Atlas must decide whether or
not to purchase the property for $3,200,000, of which $500,000 may be paid in
shares of common stock.
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The San Acacio Mine is located approximately five kilometers north of the
city of Zacatecas, in central Mexico. According to the pre-feasibility study
developed by the Company, it is a historic mining area with good infrastructure
and a trained labor pool. The Company currently plans to complete feasibility
studies on the San Acacio Mine. If the studies are favorable, as Management
expects, then the Company will begin developing and actively mining the San
Acacio Mine.
GOVERNMENTAL APPROVAL
The Company has not applied for the necessary governmental approvals for
development of its properties in Mexico. However, Management intends to apply
for all necessary government approvals as funds are supplied through this
offering. If additional approvals are necessary for future developments, the
Company intends to provide all the necessary information to regulatory
authorities. The Company may have to adjust its development plans in order to
obtain any requisite approvals. In the event the Company is not able to obtain
the necessary approvals, the Company's development plans and operations could be
negatively impacted.
No environmental obstacles have been noted for the mining of the San Acacio
mines. The project is in a 451-year-old mining camp, and most areas have been
contaminated to some degree with mine dumps, tailings piles and other mining
pollutants and equipment. Meetings with Manuel de Jesus Macias Patino of the
SEMARNAP (Mexican government division) office in Zacatecas, and meetings with
CONAGUA (Mexican government division) officials have been very productive. The
Company has been assured that it will only be required to produce a baseline
study. Within one month of providing the baseline study, according to SEMARNAP
officials in Zacatecas, the Company should receive its construction and
operating permits. The present Governor of the State, Ricardo Monreal, has also
pledged his personal support in helping to get the project on line as quickly as
possible.
The Company has not made a comprehensive evaluation of San Acacio's
existing permits to determine if the existing operation is in full compliance.
The biggest obstacle will be obtaining an explosives permit. Jose Casta eda,
the regional director of Explosivos de Norteamerica in Zacatecas, a federal
agency, has offered his support in obtaining an explosives permit, if necessary.
The Company anticipates budgeting three months for the baseline study, plus
two months for permitting.
For safety purposes, Atlas has a policy of storing explosives only when the
Company is conducting blasting activities. To the extent that explosives are
used, the activity is regulated by the ATF.
In 1997, the Company adopted a policy that limited the Company to exploring
only those properties that are both economically and environmentally sound. It
is an objective of Management to use environmentally sound mining techniques.
In Mexico, an environmental permit is issued by the government after first
completing a base line study of the existing property to find out the existing
metal content of the property to be mined. Once a base line is established, the
permit is issued and the Company must furnish an operating plan and impact
statement disclosing the future effects of the property to be disturbed.
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COMPETITION
The main silver mining companies in North America include Pan American,
Sunshine Mining Company, Hecla Mining Company and Apex Silver. Each of these
corporations is much larger than Atlas and, in most cases, have significantly
greater resources. However, the Company is in a unique position due to its
machinery, manpower and know-how. Most companies of Atlas' size do not enjoy
the large amount of silver resources Management believes it has available to
mine.
IDAHO PROPERTIES
Management hopes to revitalize each of the Idaho mining properties at some
time in the future. The Company, however, does not intend to actively mine its
own properties in Idaho until doing so is financially feasible. Expansion of
current mining of the Idaho properties is therefore not anticipated in the near
future.
ATLAS: AFC DIVISION
On August 10, 1997, the Company's Board met and approved a plan to
revitalize the Company for the purpose of increasing shareholder value. The
first step in this process was to form a contract mining service. To accomplish
this, on September 1, 1997 the Company purchased $1.4 million in underground
mining equipment from Fausett International, Inc., ("Fausett"), a privately held
mining contracting firm with over 30 years experience in the mining services
business. The Company also hired Lovon Fausett as a consultant. Lovon Fausett,
already on the Board of Atlas, has extensive knowledge and expertise in all
aspects of underground mining.
The Company operates its contract mining services under the trade name of
Atlas Fausett Contracting ("AFC") and currently has three employees.
AFC began contracting work on August 15, 1997. AFC performs site
evaluation, feasibility studies, trouble-shooting and consultation prior to the
undertaking of exploration, core sampling and mine development. AFC also
performs other pre-development services. AFC's projects include the following:
all types of underground mine development, rehabilitation and specialized
civil construction.
construction of shafts,
blast hole drilling,
construction of tunnels (track and trackless),
specialized blasting,
ramp construction,
controlled and slice production blasting,
raise construction (conventional and alimak),
long hole sampling,
rehabilitation of mine closures, and
mine restoration and development
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Services are contracted for either individually or as joint ventures. AFC
tailors its services to the requirements of a particular project or the specific
needs of an individual client. AFC is also capable of handling a small amount
of work under contract from government agencies but has none at the present
time.
AFC personnel, through Atlas Fausett Contracting or Fausett Mine Services,
have worked on projects in Idaho, Montana, Oregon, Washington, Nevada, Colorado,
Arizona, New Mexico, and British Columbia. AFC has the required licenses to
work in most of the western United States. AFC operates under a permit from the
Mine Safety and Health Administration and also possesses a permit from the
Bureau of Alcohol, Tobacco and Firearms to handle explosives.
AFC personnel have been responsible for the completion of several
underground mining projects since 1997. They have completed the Caladay Project
near Wallace, Idaho, consisting of a 5100-foot, three compartment shaft,
stations, skip pockets, drifting and extensive core drilling. Another completed
project is the Ropes Project near Ishpeming, Michigan. AFC is also the main
contractor at the Mayflower Mine, a Brimstone Gold Corp. project, outside of
Whitehall, Montana.
Besides normal underground mining activities, AFC pursues projects in civil
construction which require its expertise in ground stabilization. AFC also
works with government agencies and other mining companies to help with industry
efforts to alleviate potential hazards from abandoned mines.
Since AFC mainly concentrates on underground mining activities where there
is very little surface disturbance, which is the main environmental problem
faced by mining companies whose activities are centered on surface mining.
Atlas' policy of engaging in underground mining activities therefore shelters it
from exposure to some of the environmental risk experienced by mining companies
in general.
AFC is a source of operating revenue for Atlas. It is also visible in the
mining community. Management intends to demonstrate to the financial community
that it has the knowledge and ability to carry out profitable mining operations.
Most companies of Atlas' size often appear years away from being able to
generate cash flow and begin production. In addition, most of these companies
lack the operational mining expertise of AFC. As a result, positioning the
Company both financially and in technical expertise, Management intends to
increase the revenues available from contracting services, and command a larger
portion of the market.
COMPETITION
AFC must also compete with other smaller companies that provide contract
services related to underground mining. However, AFC has had experience in a
number of different mining techniques. AFC has provided tunnel construction
expertise for hydroelectric work. AFC has also acquired and completed mine
closure projects under the jurisdiction of the Forest Service and State and
Federal Environmental Agencies.
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A review of Dun and Bradstreet industry reports indicates the main
competitors of AFC in the contract mining business are American Mine Services,
Inc., Dynatec Mining Corporation, J.S. Redpath and Small Mine Development.
Except for Small Mine Development, each of these companies is larger than Atlas.
These larger companies have the depth to take on larger projects that require
large capital investments.
Of the underground contracts entered on a yearly basis in the western
United States, it is estimated that the total dollar amount averages between
$100 and $125 million. The dollar size of these projects range from smaller,
less than $5 million, to larger, up to $60 million. The larger contractors
normally get the larger projects due to their financial ability to fund major
projects. In a normal year, the larger projects account for approximately 80%
to 90% of the total dollars contracted. This leaves the remaining projects for
Small Mine Development, AFC and a few others.
AFC has the ability to compete on larger projects because of its expertise.
However, to do so, Atlas must be willing to devote the necessary capital,
bonding, and other resources to the larger projects. These resources might be
better used in the development of Atlas' own properties.
The goal of Atlas Management at this time is to show continued growth and
profitability in AFC. This is necessary to support the total corporate
organization of Atlas. Management also intends to use the talents and resources
of AFC for Atlas' own mining projects when AFC is not committed to an outside
contract.
AFC has worked for companies such as ASARCO, Echo Bay Minerals, Hecla
Mining Company and Sunshine Mining Company, among others.
ATLAS: TIMBER
The Company's properties also possess significant timber resources. Atlas
contracts independent logging companies to harvest its timber. After
harvesting, the timber is sold for Atlas' account. The Company intends to
further explore expansion into the timber industry and better cultivate the
timber properties it currently owns. Unlike the mining industry, timber is a
renewable resource. Long after the metals have been extracted, a managed
property can still produce timber. It is Management's intent to acquire a
sufficient number of properties in north Idaho suitable for continuous
production of marketable timber. This should produce a continuous source of
revenue for the Company.
In the past two fiscal years, Atlas has spent approximately $50,000 on
timber acquisition and development activities. The Company has financed these
activities itself. In addition, the Company has paid and will pay in the future
reclamation bonds on road access and stumpage fees which are withheld until the
slash is piled and burned.
One of the Company's goals is to be able to maintain a timber harvest
program generating approximately $100,000 in annual revenue. The mountains of
North Idaho host an abundant amount of evergreen forest, predominantly pines,
fir, larch and cedar. The property held by Atlas is mostly mountainous, varying
from steep to gentle slopes. The snow and rainfall in the region promotes good
growth allowing most species of trees to mature in 20 to 30 years.
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Management feels that by acquiring additional timberland in north Idaho
that it will be able to selectively harvest mature trees on a continual basis
and allow time for growth in areas already harvested. Management believes that
a ten to twelve year cycle is necessary between timber harvests on selected
parcels. For instance, while harvesting timber on a selected parcel, the mature
trees (age 20+ years) are cut. The new and mid growth trees (age one to fifteen
years) are left. By cutting the older trees more room is made for the younger
trees to grow, thus promoting faster growth in that age group. In all areas
harvested, a few healthy mature trees are left to reseed and help perpetuate the
forest. Management estimates that a properly managed 100-acre parcel can
produce between $100,000 and $150,000 every ten years. The result, however, can
be affected by the typography of the terrain and lumber prices.
The Company works with the US Forest Service, and the Idaho Department of
Lands to insure that the Company is following guidelines set down for harvesting
practices, road building and reforestation.
REPORTS TO SHAREHOLDERS
Atlas will become a reporting company by registering this Offering.
Historically, however, the Company has not delivered annual reports to security
holders.
The public may read and copy any materials the Company files with the
Securities and Exchange Commission ("SEC") at the SEC's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC.
The Company also maintains a Web site at http://www.atlasmining.com.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company has not had significant revenues from its mining operations
since the 1980s. Only since 1997 has the Company seen revenues from the
operations of AFC. Consequently, much of the following information centers upon
the Company's plan of operation.
Given a fully subscribed offering, the Company should be able to satisfy
its cash requirements for the next twelve months and pursue its plans for
expansion. However, the Company may occasionally borrow money in order to
finance a specific project or to fund ongoing operations. Further, the Company
may determine that the objectives described in "Use of Proceeds" should be met
using third party financing regardless of the amount raised in the offering. In
this event, the Company may set aside a portion of the funds raised in the
offering to create a "war chest." This might make the Company more attractive to
one of the lenders who specializes in financing mining activities.
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If the Company should obtain third party financing it may be able to
pursue the objectives described in this Prospectus without raising the full
amount, or issuing the entire number of shares offered. The Company has
identified $3,000,000 to $4,000,000 as a significant range. If funds raised by
this offering reach this range, Management believes that financing all or part
of the remaining amounts needed may be advantageous to the Company. The
Company's financial advisers have suggested that using financing at this stage
may accomplish the Company's goals, without issuing the full number of shares
offered. This may create greater value per share than would be realized by
issuing the entire number of shares offered.
If funds greater than those identified in the "range" are raised, the
Company may choose to set aside a portion of the proceeds and use lender
financing to complete the objectives described in "Use of Proceeds." The amount
in excess of the range may be used to position the Company to acquire other
properties, primarily in Mexico. In addition, the Company may pursue feasibility
studies on recently acquired properties in Idaho.
Three or four major lenders in the United States and Canada specialize in
financing the mining industry. The Company has received an indication from one
such lender that the lender would like to discuss financing the Company.
Management intends to pursue this positive indication.
No further stock offerings are planned within the next twelve months. The
Company may consider another offering, however, if the full number of shares is
not issued as a result of this offering. If the Company is successful in
combining debt and equity financing, the Company's stock may become more robust
in the market. Should this occur, Management may decide to pursue raising
sufficient funds to pursue further acquisitions beyond the objectives described
in this prospectus.
PROPERTY EXPLORATION AND DEVELOPMENT
The Company is currently considered an exploration stage company.
Management realizes that additional expertise will be needed to provide the
proper steps to move from the exploration stage to development and production
stages. This will include additional exploration and engineering expenditures.
The feasibility study to be conducted on the San Acacio Mine will include
environmental baseline studies, site surveys, and permitting requirements. The
engineering portion of the feasibility study will include some mine planning,
processing plant plans, water needs and waste disposal plans. Once these items
have been addressed, then Management can make the decision to move into the
development process. Any one problem in any of these items mentioned could
cause a delay or possibly prevent the further development of the San Acacio
Mine.
Mine planning and development will include the sampling and assaying of
existing underground workings and the opening of new areas. The existing
underground structure of the San Acacio Mine is in good condition, however some
areas will need rehabilitation and enlargement to handle modern equipment. Part
of the mine planning will require exploration drilling to delineate veins.
Since the company has looked at less than 10% of the total vein structure,
continued exploration will be a part of the Company's ongoing process.
Management also believes that other veins exist on the property that have not
been explored.
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If the San Acacio feasibility study does not show reserves, which are
economically and legally extractable, the Company will search for other mining
locations. Amounts listed in the "Use of Proceeds" section may change if a
feasibility study on a different location must be performed.
The Company has not mined at the Atlas mine, located in Mullan, Idaho, for
over 20 years. The Sierra mine has not been mined for over 40 years and the
Aulbach claims have not been mined for over 60 years. More exploration is
needed by the Company in the Atlas mine, the Sierra mine and the Aulbach mine.
At this time, Management would prefer to conduct a feasibility study and, if
economically sound, begin mining the San Acacio mine. Atlas may possibly use
revenues generated by the San Acacio Mine to fund feasibility studies on its
Idaho properties.
EQUIPMENT PURCHASES
The Company plans on purchasing the following equipment, if the feasibility
study on the San Acacio Mine is favorable: 1) Six 2yd Loaders at
approximately $450,000; 2) Six 16 ton Trucks for approximately $480,000; 3)
Compressors with an estimate value of $75,000; 4) Production Drills with an
estimated value of $660,000; 5) Miscellaneous equipment budgeted at
approximately $300,000 and 6) Track equipment in the approximate amount of
$160,000. Management believes this is an accurate estimate of the amount of
equipment needed, but you should consider it solely as a guide. The cost of the
equipment described is included in "Use of Proceeds - San Acacio Level I
Development (Refugio)" and "Use of Proceeds - San Acacio Level II Development
(Purisma)."
PERSONNEL REQUIREMENTS
If the Company is successful in its attempt to raise capital to complete a
feasibility study of the San Acacio Mine and that study shows reserves, Atlas it
will need to hire additional personnel. In the alternative, Management intends
to subcontract the production work to a separate entity, or enter into a joint
venture with another entity which is able to perform the production work. The
method the Company uses to move its properties into the production stage will
depend upon the ability of the Company to finance operations. The Company
intends to consider the need for hiring additional personnel in its
determination of how it can best move its properties into production.
The mining industry in the United States, and in Mexico, is limited to a
fairly small group of professionals. As a result, these professionals interact
with each other frequently. Currently, Company employs few people, but it has
access to substantial talent available in the industry. This talent should be
available when the Company begins production in both the Idaho, and Mexican,
mines. Management may hire personnel, to contract for their services or to enter
into a joint venture with other companies.
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In addition, it is customary in Mexico to hire mining professionals for
short-term employment only. Management expects to utilize local professionals in
Mexico, especially in the first stages of production. Thus, personnel may be
hired short term. To the extent that Mexican personnel are unavailable,
Management will consider sending U.S. professionals to Mexico to the San Acacio
mine. This practice will be subject to NAFTA and other regulations. This would
probably be more expensive. Management expects to hire approximately 132 people
to mine the San Acacio property. Management has only estimated its labor costs.
No one knows at this time what those costs will be.
RESULTS OF OPERATIONS
The Company's financial performance depends on many external factors.
World prices and markets for metals and minerals are cyclical and difficult to
predict. They are volatile, subject to government fixing, pegging and/or
controls. Further, they respond to changes in domestic and international
political, social and economic environments. Additionally, the availability and
costs of funds for production and other costs are increasingly difficult to
project.
The Company remained relatively stagnant before 1997. During 1997 and 1999,
the Company made several acquisitions requiring the use of cash and cash
equivalents on hand. Nevertheless, the Company's total assets remained stable
over this period. Management anticipates increased revenues as these acquired
assets become productive.
Management's discussion and analysis includes a review of some of 1996
balances, to highlight the changes the Company has experienced in operations.
For example, current assets increased to $592,025 at December 31, 1998, and
$592,719 at December 31, 1997, from $181,825 as of December 31, 1996. Although
Cash positions changed from $136,182 as of December 31, 1996, to $32,235 as of
December 31, 1997, and $47,618 as of December 31, 1998, investments in other
current assets increased by $410,893 from December31, 1996 to December 31, 1997,
and $410,199 from December 31, 1996 to December 31, 1998. The results of these
changes were the direct result of the acquisition of Fausett Mine Services , and
the increase in receivables and prepaids due to the operations of AFC. In
1998, current assets changed little from $592,719 as of December 31, 1997, to
$592,025 as of December 31, 1998. As of September 30, 1999 current assets are
$371,394 a reduction from year-end 1997 and 1998, mainly due to the lack of
accounts receivable in the contracting business.
In 1998, the Company acquired Sierra Silver Lead Mining Company ("Sierra
Silver") for an allocated value of $276,157. In the first quarter of 1999, the
Company purchased approximately 100 acres of timber on 5-patented mining claims.
The transaction was for 100,000 shares of Atlas stock, with a value of $35,455.
Also in 1999, the Company acquired the stock of Olympic Silver, a Nevada
corporation, for Atlas Common Stock. This transactions involved the issuance of
741,816 shares of Atlas Common Stock. In the third quarter, 1999, the company
purchasedan additional 281,800 shares (20%) of Park Copper and Gold Mining
Company ("Park") for $37,410. This purchase increased Atlas' holdings in Park
to 726,776 shares (53%). Park holds 6 patented and 2 unpatented claims
(approximately 160 acres) near the Atlas mine. The total investment was valued
by management at $72,530. With these transactions the Company incurred
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additional acquisition and organizational expenses that reduced cash and cash
equivalents of $47,618 as of December 31, 1998, to $28,029 as of September 30,
1999. Management anticipates continued growth for the Company. Total assets at
December 31, 1997, are $1,828,375; December 31, 1998, $1,951,386, and September
30,1999, $1,886,852. Management anticipates continued growth in assets.
Liabilities have remained fairly constant, with current liabilities at
December 31, 1997, at $236,118 and December 31, 1998, at $221,147. However, at
September 30, 1999, current liabilities are $546,716 and at September 30, 1998,
$273,603. The greater amount indicated at September 30, 1999, reflects a
$201,000 working capital line of credit discussed elsewhere in this Prospectus
and an increase in accounts payable. Management intends to pay the line of
credit from proceeds of timber sales. This should reduce the amount of current
liabilities.
Revenues are expected to increase, but current losses include the expenses
of the acquisitions and the lack of revenues from mining contracting.
Revenues for the year ended December 31, 1997, were $793,852 and for the year
ended December 31, 1998, $1,748,371. The main difference was the AFC
contracting revenue began in September 1997, however in 1998 the contracting
revenue was for a full year. Revenues year to date as of September 30, 1999
were $119,848, compared to year to date September 30, 1998 of $1,408,236.
Again, this is the result of contracting revenues, however in 1999 the company
experienced a downturn in mining activities in the AFC market, whereas in 1998,
the company was able to work on a steadier basis.
Expenses for the year end December 31, 1997, were $611,465, and for the
year ended December 31, 1998, $1,814,571. The difference is the 1997 figure
reflects three months of contracting costs with AFC, whereas 1998 is a full
year. The company also increased its General and Administrative expenses by
$256,007 from 1997 to 1998. For the nine month period as of September 30, 1999,
expenses totaled $730,836, and as of September 30, 1998 $1,474,699. Contracting
costs in 1999 will lower than those incurred in 1998. Revenues, however, were
also lower. This revenue, was not enough to cover fixed costs as of September
30, 1999. General and administrative costs increased as of September 30, 1999,
by $264,085 over the same period in 1998, due to additional costs related to
acquisitions.
Net income at December 31, 1997, is $162,461 and at December 31, 1998, is
$(135,963). At September 30, 1999, however, net income is ($652,952), and at
September 30, 1998, ($119,636). The September 30 figures are unaudited.
Shareholders' equity has diminished due to the acquisitions and
revitalization of the Company. Shareholders' equity is $307,352 at December 31,
1996 (unaudited); increased to $841,200 at December 31, 1997, then to $846,924
at December 31, 1998. Shareholders' equity has reduced to $377,162 as of
September 30, 1999, as compared to $888,950 as of September 30, 1998. The
decrease in shareholders' equity as of September 30, 1999, is the result of
losses incurred in the first three quarters of 1999. Once the Company is
operating with a steady revenue base from mining, logging and contracting,
Management believes that this trend will be reversed.
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The Company has certain external sources of liquidity to compensate for
recent operating losses. They are sales of investment securities, timber and
properties. Although Management has no desire to liquidate all of these assets,
they are available if liquidation becomes necessary.
OVERALL BUSINESS GOALS
Overall, the Company's business plan is to accomplish a number of
objectives to enhance shareholder value. The are to:
* Become a fully reporting company by registering this Offering.
* Increase market capitalization and asset base to meet NASDAQ (or other
exchange) small cap listing requirements. Management will attempt to
accomplish this through acquisition of other mining companies and
properties with good economic value which are environmentally clean.
* Reach gross annual contracting sales of $2.5 million, and annual timber
sales of $100,000.
* Establish a minimum 40 million ounce reserve potential through exploration
and acquisition of additional properties.
DESCRIPTION OF PROPERTY
The Company has assets of real property, mining equipment and mineral
leases and options. These assets are approximately valued at $1,255,734, in the
1998 year-end audited financial statements. The following section describes the
Company's right, title, or claim to its properties and each property's location.
This section also states the Company's present plans for exploration and
development of the properties, a description of the reserves data and an
inventory of equipment and natural resources located on each property.
SHOSHONE COUNTY, IDAHO
- ------------------------
MINING
The Company owns approximately 800 acres of fee simple property and
patented mining claims and 260 acres of mineral rights and unpatented claims.
These are located in the Coeur d' Alene mining district in Shoshone County,
Idaho, commonly referred to as the Silver Valley of North Idaho. The Silver
Valley is the largest silver producing area of the United States. Atlas was
originally incorporated to pursue mining activities on the Atlas mine property
near Mullan, Idaho. This property has some past production of silver, lead,
zinc and copper. However, the ore reserves of this property cannot be determined
without extensive exploration.
24
<PAGE>
The Company may fund the exploration and development of the Coeur d' Alene
mines if the Company has surplus money from this Offering after the stated
Company objectives are achieved. If all the shares of stock are sold, the
Company plans to develop the San Acacio mine in Zacatecas, Mexico. Upon the
completion of that project, if the Company produces revenue from the San Acacio
Mine, it may use the revenues to further develop the Shoshone County mines.
Alternatively, if the Company produces revenue from the San Acacio Mine, it may
use those revenues to acquire new properties wholly unrelated to its Coeur d'
Alene mines. See, "Use of Proceeds."
The Coeur d' Alene mining district is divided into five separate tracts.
These sections are named for the mines located in that specific section. The
section location and estimated square miles are as follows:
<TABLE>
<CAPTION>
<S> <C>
SECTION OF THE COEUR D' ALENE MINING DISTRICT ESTIMATED ACRES
Atlas 540 acres fee simple and patented, 180 unpatented
Sierra Trapper Creek 80 acres patented
Aulbach, Section 6 & 7 100 acres patented
Sierra Silver, Woodland Park and 9 Mile 60 acres patented, 80 acres mineral rights
Sierra Hardscrabble 20 acres patented
</TABLE>
The largest section is the Atlas Mine. The underground Atlas Mine, idle
since the early 1980's due to exploration budget restraints, is located directly
adjacent and south of the Lucky Friday Mine, owned and operated by Hecla. The
Lucky Friday Mine currently produces over five million ounces of silver
annually. The property is accessible by interstate freeway and a county
maintained road. Geologically, the property lies just south of the Osburn Fault
in the Wallace and St. Regis formations. The Mine has over 7,000 feet of
tunnels with a rail system and a 2,000 foot internal shaft which can be accessed
for future exploration.
TIMBER
Management estimates that the aforementioned properties contain
approximately 2.5 million board feet of harvestable timber. Atlas contracts
independent loggers to harvest the timber and deliver it to the mill. The
current return to Atlas is $150 per thousand board feet. The Company implements
reforestation techniques to replenish its timber supply.
The Company acquired its Sierra section property through the purchase of
Sierra Silver Lead Mining Company. Through this purchase the Company acquired
approximately 329 acres of mineral rights which includes approximately 250 acres
of surface and timber. Although there was a small amount of zinc mined on the
Sierra Silver property, there has been no mining activity for over forty years.
25
<PAGE>
The majority of the Sierra property lies south of the Osburn Fault in
the Wallace formation, and has no reserves. The property does have
approximately 500,000 board feet of timber, which management values at
approximately $75,000, which is included in the total timber value estimate in
the paragraph above.
The Company acquired its Aulbach claims in March 1999 from Trail Gulch Gold
Mining Company. Through this purchase the Company acquired approximately 100
acres of mineral rights which includes approximately surface rights and timber.
Management estimates that 500,000 board feet of timber are on the property with
an approximate value at $75,000.
PRINCIPAL OFFICE
Atlas Mining Company rents property and office space from Fausett
International, Inc., in Osburn, Shoshone County, Idaho. The address of the
property is 1221 W. Yellowstone Avenue, Osburn, Idaho 83849. The property
includes approximately 3.5 acres of ground for equipment storage, two shops and
two storage buildings and an office building. The office building is 1600
square foot. The rent is $1,100 per month paid to Fausett, with no cancellation
penalty. Fausett is wholly owned by Lovon Fausett, a director and shareholder
of the Company.
SAN ACACIO MINE, ZACATECAS, MEXICO
- --------------------------------------
Management intends to use the majority of the funds of this Offering to
fund the development of the San Acacio Mine, near Zacatecas, Mexico. The Company
controls mining assets held under its Mexican subsidiary Minera Argentum, S.A.
de C.V. ("Minera"). Minera controls silver properties in the Zacatecas District
of Mexico.
LOCATION
The state of Zacatecas is located approximately 600 miles north of Mexico
City. The San Acacio Mine is approximately 5 miles north of the city of
Zacatecas, the capital city of Zacatecas. The mine is located in the Veta
Grande sub-district of the famous Zacatecas silver camp. Zacatecas has a
population of about 150,000 people and is served by railroad, an international
airport and paved highways.
The city lies within the Mesa Central province, a high plateau interrupted
by clusters of hills and mountain ranges lying between the two Sierra Madre
mountain belts in Mexico. Atlas' Zacatecas property is 1179.13 hectares,
approximately 2900 acres. The highest ridge is approximately 2900 meters above
sea level, while the area of the project is between the 2500 and 2600 meter
elevations. The deepest access to the mine, the Purisima adit, is approximately
2380 meters above sea level. The property is accessible by paved road and has
secondary roads into the property.
26
<PAGE>
OWNERSHIP OF THE PROPERTY
The San Acacio Mine and the Zacatecas district have a production history
dating back to the early Spanish Colonial era. The San Acacio property is under
an exploration agreement with an option to purchase to Minera Argentum, S.A. de
C.V., a subsidiary of Atlas Mining Company. The grantor of the option is Minera
San Acacio, S.A. and the principal owner of Minera San Acacio, Amado Mesta
Howard. The Company has paid $200,000 in option payments to date. A $100,000
option payment remains, due July 2000. In July 2001, the Company must decide
whether to purchase the property for $3,200,000, of which $500,000 may be paid
in shares of common stock. There are no other conditions precedent on the
purchase of the property. The above amounts do not include the 15% I.V.A.
(valued added) tax. This tax is returned after tax returns are filed.
FEASIBILITY STUDIES CONDUCTED ON THE LAND
The manager of Atlas' New Business Development Team, Richard J. Tschauder,
conducted a pre-feasibility study on the San Acacio Mine in April 1999. The
Company is analyzing data from 30 to 50 rock density samples. A number of
estimates on the in-situ minerals have been made for the San Acacio Mine,
however none of these estimates are yet at the stage where a proven and probable
reserve can be published. The company is currently in the process of acquiring
the critical information that will be necessary to make a proven or probable
reserve report.
Previous Operations:
- --------------------
Previous studies have been made on the San Acacio mine. These studies,
although producing positive information do not meet the modern industry
standards. The previous operations, operators and reports made regarding the
San Acacio Mine are as follows:
1. In 1935, a Spanish language report was made by T. Skewes Saunders
of Mexico City.
2. In 1935, an English language report was made by James Berry of
Compania Minera San Bartolo, S.A. This work was based on underground
sampling, following rehabilitation of the Refugio level and
sampling of 120 meters.
3. In 1986, a Spanish language report was made by IMMSA, a Mexican
mining company.
4. In 1995, a report was made by Silver Standard, Inc., using a
database derived solely from assays of core.
5. Using the same cutoff, density and area of influence assumptions,
Minera Argentum has checked the Silver Standard reserve by building
a polygon reserve in longitudinal section.
27
<PAGE>
In 1997, faced with a large final payment, Silver Standard attempted to
negotiate an extension of the option period it held on the San Acacio mine.
However, since the company had performed no work in two years, the owner
refused, and Silver Standard lost the project. The owner immediately contacted
the Company. The Company entered into a three-year option to buy the property,
with no underlying royalties.
WORK ACCOMPLISHED TO DATE: The Company is currently collecting 30 to 50
rock density samples. Also, the maps the Company uses for the topography of land
are enlargements of government maps made for the area. The Company believes
that detailed topographical maps were made by the previous operators of the
mine, Silver Standard, and is attempting to locate those maps. The Company is
currently checking the locations of previous underground workings as marked by
blueprints of the location.
In March 1999, Atlas developed a metallurgical testing program to design a
process to recover silver from the San Acacio ores. Initial work will be
focused on the upper levels of the vein system. Company geologists collected
four samples; these were shipped to American Assay Labs in Sparks, Nevada, for
preliminary analysis.
ROCK FORMATIONS AND MINERALIZATION
The Veta Grande is a vein structure that is approximately 7 kilometers in
length and two to thirty meters wide. It is underlain by early Cretaceous
Chulitos Formation, a series of submarine andesite flows and intercalated
sedimentary rocks. The andesite flows are altered adjacent to the major vein
structures encountered. The contact zones of the vein systems are clay gouge
zones in places, while in other places the walls are silicified. The veins are
silica-carbonate fissure fillings containing pyrite, anglesite, cerussite,
native silver, argentite, freibergite, proustite, galena, sphalerite,
cerargyrite and rare chalcopyrite in a gangue of chalcedony, quartz, amethyst
and calcite. The Veta Grande pinches and swells, splays into sigmoid loops and
is accessible from the surface to a depth of at least 380 meters.
SUBSURFACE IMPROVEMENTS AND EQUIPMENT
The mine has over 10,000 feet of tunnels accessible via two separate adits
and a small rail system. There are also three shafts on the property, but these
are not easily accessible at this time. The property is close to electrical and
other supplies and there appears to be a suitable source of water in the area.
28
<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors, and persons who own more than 10% of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC") and
any stock exchange on which the Company's securities are listed. These
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. The Company believes that it has had no
filing obligation to the time of this filing and, therefore, the filing
requirements applicable to its officers, directors, and greater than 10%
beneficial owners were complied with.
MARKET INFORMATION
The Company's stock has historically traded on the Over-the Counter
Bulletin Board Market ("OTC BB"). The stock has not traded with the advent of
recent Securities and Exchange Commission ("SEC") rules, and similar National
Association of Securities Dealers ("NASD") rules, requiring that companies enter
the SEC disclosure system and become fully reporting in order to trade OTC BB.
As a result, there is no way to determine at what price the Company's stock
would trade immediately preceding the Offering.
The following table lists the high and low bid information for the
Company's stock for the past two fiscal years plus the interim period for which
financial statements are required and furnished. The bid information is listed
by quarter and is provided by Pennaluna & Company. These quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.
<TABLE>
<CAPTION>
Quarter Ended High Low
- --------------- ---- ---
<S> <C> <C>
December, 1999 - -
September, 1999 .25 .04
June, 1999 .25 .18
March, 1999 .25 .18
December, 1998 .35 .25
September, 1998 .50 .25
June, 1998 .50 .44
March, 1998 .81 .50
December, 1997 .69 .53
September, 1997 .60 .35
June, 1997 .35 .13
March, 1997 .13 .13
</TABLE>
As of September 30, 1999, the approximate number of record holders of the
Company's Common Stock was approximately 1,735.
29
<PAGE>
The Company has not paid any cash dividends on its Common Stock since its
incorporation and anticipates that for the foreseeable future, earnings, if any,
will continue to be retained for use in its business.
EXECUTIVE COMPENSATION
The Company currently has one executive officer, William T. Jacobson, the
Company's President and Chief Executive Officer. The Company is currently
compensating Mr. Jacobson at the rate of $72,000 per year. In addition, the
Company pays medical insurance premiums for Mr. Jacobson in the amount of
$3230.40 per year. Mr. Jacobson is also covered under a life insurance policy in
the amount of $100,000; the Company pays the premiums on this policy.
Mr. Jacobson is entitled to use one of the Company's vehicles. The Company
leases the vehicle for $7,937 annually.
The following table summarizes the compensation paid to the Company's
executive officers. Information is provided only for 1998 since the Company is
not a reporting company under the Securities Exchange Act of 1934.
SUMMARY COMPENSATION TABLE
Name and Principal Position Year Salary
William Jacobson, President and CEO 1998 $ 72,000
The Board of Directors has authorized the issuance of certain stock options
to Directors and Officers. See "Description of Securities."
FINANCIAL STATEMENTS
Refer to page F-1 for the index of financial statements contained in this
prospectus.
Dealer Prospectus Delivery Obligation
Until _________________________, all dealers that affect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscription.
30
<PAGE>
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
PAGE
<S> <C>
UNAUDITED FINANCIAL INFORMATION
UNAUDITED BALANCE SHEET - SEPTEMBER 30, 1999 F-2
UNAUDITED STATEMENTS OF INCOME - SEPTEMBER 30, 1999 AND 1998 F-4
UNAUDITED STATEMENTS OF CASH FLOWS - SEPTEMBER 30, 1999 AND 1998 F-5
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - SEPTEMBER 30, 1999 AND 1998 F-8
INDEPENDENT AUDITOR'S REPORT F-9
BALANCE SHEET - DECEMBER 31, 1998 F-10
STATEMENTS OF INCOME - DECEMBER 31, 1998 AND 1997 F-12
STATEMENT OF STOCKHOLDERS' EQUITY - DECEMBER 31, 1998 F-13
STATEMENT OF CASH FLOWS - DECEMBER 31, 1998 AND 1997 F-14
NOTES TO THE FINANCIAL STATEMENTS - DECEMBER 31, 1998 AND 1997 F-17
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
ATLAS MINING COMPANY
UNAUDITED BALANCE SHEET
SEPTEMBER 30, 1999
================================================================================
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 28,029
Certificate of deposit
Investment securities available for sale 30,099
Investment in silver and gold bullion 2,014
Trade accounts receivable 4,000
Note receivable, current 30,871
Other current receivables 15,131
Mining supplies 213,289
Deposits and prepaids 47,961
-----------
TOTAL CURRENT ASSETS 371,394
-----------
PROPERTY AND EQUIPMENT
Land and tunnels 366,612
Capitalized exploration and development costs 277,139
Buildings and equipment 77,680
Mining equipment 1,080,750
Office equipment 10,000
Vehicles 83,972
-----------
1,896,153
Accumulated depreciation (428,999)
-----------
1,467,154
-----------
DEFERRED TAXES 16,953
-----------
INVESTMENTS AND OTHER ASSETS
Notes receivable, noncurrent 31,351
Other investments -
-----------
31,351
-----------
$1,886,852
===========
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
ATLAS MINING COMPANY
UNAUDITED BALANCE SHEET (CONTINUED)
SEPTEMBER 30, 1999
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 157,029
Income taxes payable 80
Line of credit 47,001
Current maturities of long-term debt 342,606
------------
TOTAL CURRENT LIABILITIES 546,716
------------
LONG-TERM DEBT 679,981
------------
ESTIMATED STOCK REDEMPTION 195,383
------------
DEFERRED TAXES -
------------
COMMITMENTS
MINORITY INTEREST IN SUBSIDIARY 87,610
------------
STOCKHOLDERS' EQUITY
Common stock, no par value; 60,000,000 shares authorized;
5,324,981 issued and outstanding 2,057,468
Retained earnings (deficit) (1,451,334)
Accumulated comprehensive income (loss), net of deferred (benefit)
taxes of 1999 $(16,953); 1998 $428 (67,811)
------------
538,323
Less cost of treasury stock (1999, 324,852 shares) (161,161)
------------
377,162
------------
$ 1,886,852
============
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
ATLAS MINING COMPANY
UNAUDITED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
================================================================================
1999 1998
---------- -----------
<S> <C> <C>
Operating revenue:
Contracting revenue $ 46,565 $1,400,676
Timber sales 73,278 6,600
Consulting - 960
---------- -----------
119,843 1,408,236
---------- -----------
Operating expenses:
Contract costs 151,586 1,160,320
Timber costs 2,682 6,896
General and administrative 571,568 307,483
---------- -----------
725,836 1,474,699
---------- -----------
OPERATING LOSS (605,993) (66,463)
---------- -----------
Financial income (expense)
Interest expense (84,914) (50,428)
Investment income 68,053 (895)
---------- -----------
(16,861) (51,323)
---------- -----------
LOSS BEFORE INCOME TAXES AND
MINORITY INTEREST IN NET INCOME OF
SUBSIDIARY (622,854) (117,786)
Provision for income taxes 80 1,850
---------- -----------
LOSS BEFORE MINORITY INTEREST IN NET
INCOME OF SUBSIDIARY (622,934) (119,636)
Minority interest in net income of subsidiary 30,018 -
---------- -----------
NET LOSS $(652,952) $ (119,636)
========== ===========
Basic earnings (loss) per share $ (0.141) $ (0.032)
========== ===========
Diluted earnings (loss) per share $ (0.141) $ (0.032)
========== ===========
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
ATLAS MINING COMPANY
UNAUDITED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
================================================================================
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(652,952) $(119,636)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Minority interest in consolidated subsidiary 30,018 -
Depreciation 133,154 131,364
Stock issued for services 30,250 -
Gain on available for sale investments (66,380) -
Appreciation in gold and silver bullion - (938)
(Increase) decrease in:
Trade accounts receivable 80,887 (55,990)
Mining supplies - 563
Deposits and prepaids (10,250) 14,514
Other current receivables (15,131) -
Increase (decrease) in:
Accounts payable and accrued expenses 95,668 15,897
---------- ----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (374,736) (14,226)
---------- ----------
CASH FLOWS FORM INVESTING ACTIVITIES
Purchases of available for sale investments - (4,024)
Proceeds from available for sale investments 111,697 -
Purchases of other investments (37,410) (9,108)
Purchases of property and equipment (16,053) (2,436)
Payments on notes receivable 31,649 -
Advances on notes receivable - (45,912)
Certificates of deposits, net 41,050 -
Cash acquired through acquisitions 4,397 32,467
---------- ----------
NET CASH PROVIDED BY
INVESTING ACTIVITIES 135,330 (29,013)
---------- ----------
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
ATLAS MINING COMPANY
UNAUDITED STATEMENTS OF CASH FLOWS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
================================================================================
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of capital stock $ 527 $ 8,708
Proceeds from sale of treasury stock - 8,324
Proceeds from stock subscriptions - 618
Proceeds from exercise of stock options - 40,000
Net change in estimated stock redemption (526) 10,565
Purchase of treasury stock (2,660) (3,066)
Payments on long-term debt (7,425) (95,772)
Short-term borrowings 229,901 48,000
--------- ---------
NET CASH PROVIDED (USED) IN
FINANCING ACTIVITIES 219,817 17,377
--------- ---------
NET INCREASE (DECREASE) IN CASH (19,589) (25,862)
Cash, beginning of period 47,618 32,235
--------- ---------
Cash, end of period $ 28,029 $ 6,373
========= =========
SUPPLEMENTAL CASH FLOWS INFORMATION
Cash paid during the period for:
Interest $ 54,423 $ 50,428
========= =========
Income Taxes $ 80 $ 1,850
========= =========
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
ATLAS MINING COMPANY
UNAUDITED STATEMENTS OF CASH FLOWS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
================================================================================
1999 1998
--------- --------
<S> <C> <C>
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Change in net unrealized loss on investment securities $ 31,297 $ -
========= ========
available for sale, net of deferred taxes
Issuance of common stock in connection with acquisition of
Olympic Silver, Inc. $177,294 $ -
========= ========
Transfer of receivable in connection with acquisition of
Olympic Silver, Inc. $ 35,364 $ -
========= ========
Transfer of investment in connection with acquisition of
Trail Gulch Gold Mining Co., Inc. property $ 26,379 $ -
========= ========
Investments in equity securities acquired with issuance of
capital stock $ - $ 39,672
========= ========
Property acquired through issuance of long term debt $ - $ 25,987
========= ========
Issuance of common stock in connection with
acquisition of property $ 9,076 $ -
========= ========
Issuance of common stock for payment of services $ 30,250 $ -
========= ========
Assets and liabilities recognized upon acquisition of
Park Copper and Gold, Inc.
Investment securities available for sale $ 45,317 $ -
========= ========
Property $ 31,314 $ -
========= ========
Capitalized exploration and development costs $ 49,094
=========
Minority interest in subsidiary $(57,592)
=========
Issuance of common stock in connection with acquisition of
Sierra Lead Mines, Inc. $ - $226,331
========= ========
Assets and liabilities recognized upon acquisition of
Sierra Lead Mines, Inc.
Certificate of Deposit $ - $ 41,062
========= ========
Property $ - $195,510
========= ========
Estimated stock redemption $ - $195,909
========= ========
Treasury stock $ - $153,201
========= ========
</TABLE>
F-7
<PAGE>
ATLAS MINING COMPANY
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
================================================================================
The interim financial statements for the nine months ended September 30, 1999
and 1998, are unaudited and certain information and footnote disclosures
normally in the financial statements prepared in accordance with generally
accepted accounting principles have been omitted. In the opinion of management
all adjustments, consisting only of normal recurring adjustments, necessary to
fairly present the financial position, results of operations and cash flows with
respect to the interim financial statements, have been included. The results of
operations for the interim periods are not necessarily indicative of the results
for the entire year.
In the third quarter of 1999, Atlas acquired 281600 shares (20%) of Park Copper
and Gold Mining Company (Park) for $37,320. This purchase increased Atlas
holdings in Park to 726,776 shares (53%). The total investment was valued by
management at $72,530.
Included in current maturities of long term debt is a $16,000 loan from William
Jacobson, the president and a shareholder of Atlas.
Earlier this year, the company conducted a review of its computer systems and a
program which included site and corporate personnel as well as communications
with customers, suppliers and financial institutions to address Year 2000
compliance issues. Management has corrected its computer systems and believes
that the company has taken the necessary steps internally and with customers,
suppliers, and financial institutions to insure Year 2000 compliance.
Subsequent to September 30, 1999, Management filed a SB-2 registration with the
Securities Exchange Commission (SEC) in order to comply with NASDAQ filing
requirements and to offer for sale $7.5 million of the Company's common stock.
F-8
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Board of Directors
Atlas Mining Company
Osburn, Idaho
We have audited the accompanying balance sheet of Atlas Mining Company as of
December 31, 1998, and the related statements of income, changes in
stockholders' equity, and cash flows for the years ended December 31, 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 financial statements referred to above present fairly, in
all material respects, the financial position of Atlas Mining Company as of
December 31, 1998, and the results of its operations and its cash flows for the
years ended December 31, 1998 and 1997 in conformity with generally accepted
accounting principles.
Subsequent to year end, the Company purchased a controlling interest in Olympic
Silver Resources, Inc. as described in Note 13.
Spokane, Washington
January 22, 1999, except for Note 13
which is dated February 5, 1999
F-9
<PAGE>
<TABLE>
<CAPTION>
ATLAS MINING COMPANY
BALANCE SHEET
DECEMBER 31, 1998
================================================================================
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 47,618
Certificate of deposit 41,050
Investment securities available for sale 69,221
Investment in silver and gold bullion 2,014
Trade accounts receivable 84,887
Note receivable, current 60,871
Other current receivables 35,364
Mining supplies 213,289
Deposits and prepaids 37,711
-----------
TOTAL CURRENT ASSETS 592,025
-----------
PROPERTY AND EQUIPMENT
Land and tunnels 299,177
Buildings and equipment 77,680
Mining equipment 1,080,750
Office equipment 10,000
Vehicles 83,972
-----------
1,551,579
Accumulated depreciation (295,845)
-----------
1,255,734
-----------
DEFERRED TAXES 9,128
-----------
INVESTMENTS AND OTHER ASSETS
Notes receivable, noncurrent 33,000
Other investments 61,499
94,499
-----------
$1,951,386
===========
</TABLE>
F-10
<PAGE>
<TABLE>
<CAPTION>
ATLAS MINING COMPANY
BALANCE SHEET (CONTINUED)
DECEMBER 31, 1998
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 61,361
Income taxes payable 80
Line of credit 34,100
Current maturities of long-term debt 125,606
-----------
TOTAL CURRENT LIABILITIES 221,147
-----------
LONG-TERM DEBT 687,406
-----------
ESTIMATED STOCK REDEMPTION 195,909
-----------
DEFERRED TAXES -
-----------
COMMITMENTS AND CONTINGENCIES (Notes 8 and 10)
STOCKHOLDERSEQUITY
Common stock, no par value; 60,000,000 shares authorized;
4,390,069 issued and outstanding 1,840,321
Retained earnings (deficit) (798,382)
Accumulated comprehensive income (loss), net of deferred
(benefit) taxes of 1998 $(9,128) (36,514)
-----------
1,005,425
Less cost of 314,852 shares of treasury stock (158,501)
-----------
846,924
-----------
$1,951,386
===========
</TABLE>
F-11
<PAGE>
<TABLE>
<CAPTION>
ATLAS MINING COMPANY
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1998 AND 1997
================================================================================
1998 1997
----------- ---------
<S> <C> <C>
Operating revenue:
Contracting revenue $1,624,859 $586,011
Timber sales 27,039 196,051
Equipment rental income - 5,825
----------- ---------
1,651,898 787,887
----------- ---------
Other operating revenue:
Loss on sale of available for sale investments (1,698) (11,720)
Gain on sale of property and equipment 100,849 22,480
Other, net (2,678) (4,795)
----------- ---------
96,473 5,965
----------- ---------
Operating expenses:
Contract costs 1,396,138 437,558
Timber costs 6,346 17,827
General and administrative 412,087 156,080
----------- ---------
1,814,571 611,465
----------- ---------
OPERATING INCOME (LOSS) (66,200) 182,387
----------- ---------
Financial income (expense):
Interest expense (71,251) (20,408)
Investment income 987 2,923
----------- ---------
(70,264) (17,485)
----------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (136,464) 164,902
Provision (benefit) for income taxes (501) 2,441
----------- ---------
NET INCOME (LOSS) $ (135,963) $162,461
=========== =========
Basic earnings (loss) per share $ (0.036) $ 0.056
=========== =========
Diluted earnings (loss) per share $ (0.036) $ 0.053
=========== =========
</TABLE>
F-12
<PAGE>
<TABLE>
<CAPTION>
ATLAS MINING COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
================================================================================
Accumulated Compre- Compre-
Total Additional Retained Accumulated hensive hensive
Stockholders' Common Paid-In Earnings Treasury Income Income
Equity Stock Capital (Deficit) Stock (Loss) (Loss)
---------- ---------- ------------ ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 307,352 $ 267,792 $ 883,845 $(824,880) $ - $(19,405)
Net income 162,461 - - 162,461 - - $ 162,461
Net change in unrealized gains (losses) on
available for sale securities, net of taxes 20,690 - - - - 20,690 20,690
Issuance of 50 shares of common stock 5 5 - - - - -
Issuance of 875,000 shares of stock for the
Purchase of equipment 350,000 87,500 262,500 - - - -
Issuance of 50,000 shares of common stock
upon the exercise of stock options 10,000 5,000 5,000 - - - -
Purchase of 15,000 shares of stock for the
treasury (9,308) - - - (9,308) - -
Comprehensive income - - - - - - -
---------- ---------- ------------ ---------- ---------- --------- ----------
Balance, December 31, 1997 841,200 360,297 1,151,345 (662,419) (9,308) 1,285 183,151
Net loss (135,963) - - (135,963) - - (135,963)
Net change in unrealized gains (losses) on
available for sale securities, net of taxes (37,799) - - - - (37,799) (37,799)
Issuance of 16,180 shares of common stock 8,708 1,618 7,090 - - - -
Issuance of 48,500 shares of stock in
connection with acquisition of equity
securities 21,340 4,850 16,490 - - - -
Issuance of 451,850 shares of stock in
connection with acquisition of equity
securities 226,331 45,184 181,147 - - - -
Issuance of 70,571 shares of stock in
connection with acquisition of equity
securities 31,050 7,056 23,994 - - - -
Issuance of 200,000 shares of common
stock upon the exercise of stock options 40,000 20,000 20,000 - - - -
Purchase of 5,400 shares of stock for the
treasury (3,066) - - - (3,066) - -
Treasury shares acquired in connection with
acquisition of Sierra Silver Lead Mines (153,201) - - - (153,201) - -
Sales of 11,400 share from the treasury 8,324 - 1,250 - 7,074 - -
Change in capitalization of common stock - 1,401,316 (1,401,316) - - - -
Comprehensive income - - - - - - -
---------- ---------- ------------ ---------- ---------- --------- ----------
Balance, December 31, 1998 $ 846,924 $1,840,321 $ - $(798,382) $(158,501) $(36,514) $(173,762)
========== ========== ============ ========== ========== ========= ==========
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
ATLAS MINING COMPANY
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997
--------------------------------------
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(135,963) $ 162,461
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 176,001 43,661
Gain on sale of property and equipment (100,849) (22,480)
Loss on available for sale investments 1,698 11,720
Appreciation in gold and silver bullion (938) -
(Increase) decrease in:
Trade accounts receivable 169,904 (254,791)
Mining supplies 563 29,908
Deposits and prepaids (2,890) (34,821)
Other current receivables (35,364) -
Increase (decrease) in:
Accounts payable and accrued expenses (20,308) 80,402
Income taxes payable (2,351) 2,431
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 49,503 18,491
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available for sale investments (20,174) (53,031)
Sale of available for sale investments 42,586 40,707
Sale of gold and silver bullion - 10,346
Purchases of other investments (9,108) -
Purchases of property and equipment (8,618) (60,000)
Proceeds from sale of property and equipment 2,000 79,980
Issuance of notes receivable (49,603) -
Certificates of deposits, net 12 -
Cash acquired through acquisitions 32,467 -
---------- ----------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES (10,438) 18,002
---------- ----------
</TABLE>
F-14
<PAGE>
<TABLE>
<CAPTION>
ATLAS MINING COMPANY
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
--------------------------------------
1998 1997
-------- -----------
<S> <C> <C>
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Change in net unrealized loss on investment
securities available for sale, net of deferred taxes $ 37,799 $ (20,690)
======== ===========
Mining supplies and property and equipment
acquired with issuance of long-term debt $ - $1,043,164
======== ===========
Mining supplies and property and equipment
acquired with issuance of capital stock $ - $ 350,000
======== ===========
Investments in equity securities acquired with issuance
of capital stock $ 52,390 $ -
======== ===========
Refinance of long-term debt $ 3,874 $ -
======== ===========
Issuance of common stock in connection with acquisition
of Sierra Lead Mines, Inc. $226,331 $ -
======== ===========
Assets and liabilities recognized upon acquisition
of Sierra Lead Mines, Inc. through issuance of stock:
Certificate of deposit $ 41,062 $ -
======== ===========
Property $195,510 $ -
======== ===========
Estimated stock redemption $195,909 $ -
======== ===========
Treasury stock $153,201 $ -
======== ===========
Property acquired through issuance of long-term debt $ 25,987 $ -
======== ===========
Book value of property traded-in $ 3,874 $ -
======== ===========
Stock issued for other investments $ 52,391 $ -
======== ===========
Note received on sale of investments $ 6,268 $ -
======== ===========
Investments acquired on sale of property $ 91,010 $ -
======== ===========
Note received on sale of property $ 38,000 $ -
======== ===========
</TABLE>
F-15
<PAGE>
ATLAS MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
================================================================================
NOTE 1. NATURE OF ORGANIZATION
The Company was incorporated under the laws for the state of Idaho on March 4,
1924, and was an exploratory stage mining company engaged in the business of
exploring for nonferrous and precious metals, principally silver, lead, gold,
and zinc. The properties of the Company are located in Mullan, Shoshone County,
Idaho. The Company commenced contracting operations through a trade name, Atlas
Fausett Contracting, and became an operating company during the year ended
December 31, 1997.
Atlas Mining Company pursues property acquisitions that will increase the
natural resource potential for the Company.
Through Atlas Fausett Contracting, the Company provides shaft sinking,
underground mine development, and contracting to a customer base consisting
primarily of companies in the mining and civil industries. The contract mining
industry in which Atlas operates is highly competitive and subject to business
downturns.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant change in
the near-term relate to the provision for accumulated depreciation, valuation of
deferred taxes, and the valuation of the mining properties.
AVAILABLE FOR SALE SECURITIES:
Management determines the appropriate classification of marketable equity
security investments at the time of purchase and reevaluates such designation as
of each balance sheet date. Unrestricted marketable equity securities have been
classified as available for sale. Available for sale securities are carried at
fair value, with the unrealized gains and losses, net of tax, reported as a net
amount in accumulated comprehensive income. Realized gains and losses and
declines in value judged to be other-than-temporary on available for sale
securities are included in investment income. The cost of securities sold is
based on the specific identification method. Interest and dividends on
securities classified as available for sale are included in investment income.
F-16
<PAGE>
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
GOLD AND SILVER INVESTMENTS:
The cost of silver and gold bullion is determined by specific identification.
Unrealized losses on gold and silver bullion are charged to operations.
MINING SUPPLIES:
Mining supplies, consisting primarily of bits, steel, and other mining related
equipment, are stated at the lower of cost (first-in, first-out) or market. In
addition, equipment repair parts and maintenance items are also included at
cost.
PROPERTY AND EQUIPMENT:
Property and equipment are carried at cost. Depreciation and amortization is
computed principally on the straight-line method over the estimated useful lives
of the assets as follows:
<TABLE>
<CAPTION>
Estimated
Useful Life
-----------
<S> <C>
Building 39 years
Mining equipment 2-8 years
Office and shop furniture and equipment 5-8 years
Vehicles 5 years
</TABLE>
The Company has a recorded cost of $278,492 in its exploratory stage mining
properties at December 31, 1998. The ultimate realization of the Company's
carrying cost in these assets is dependent upon the discovery and the ability of
the Company to finance successful exploration and development of commercial ore
deposits, if any, in the mining properties in sufficient quantity for the
Company to recover its recorded cost or to sell such assets for more than their
recorded values. The ultimate realization of the carrying cost in the mineral
properties at December 31, 1998, cannot presently be determined. No provisions
for any possible revaluation of these assets has been made in the financial
statements.
VALUATION OF LONG-LIVED ASSETS:
In accordance with Financial Accounting Standards Board Statement No. 121, the
Company records impairment of long-lived assets to be held and used or to be
disposed of when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the carrying
amount. At December 31, 1998 and 1997, no impairments were recognized.
REVENUE AND COST RECOGNITION:
Revenues from unit price contracts are recognized on the units produced method
which management considers to be the best available measure of progress on
contracts.
F-17
<PAGE>
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE AND COST RECOGNITION (CONTINUED):
Contract costs include all direct material and labor costs and those indirect
costs related to contract performance, such as indirect labor, supplies, tools,
repairs, and depreciation costs. Costs associated with the start-up of
contracts are capitalized as deferred contract costs and amortized to expense
over the life of the contract. General and administrative costs are charged to
expense as incurred. Provisions for estimated losses on uncompleted contracts
are made in the period in which such losses are determined. Changes in job
performance, job conditions, and estimated profitability, including those
arising from contract penalty provisions, and final contract settlements may
result in revisions to costs and income and are recognized in the period in
which revisions are determined.
Contract claims are included in revenue when realization is probable and can be
reliably estimated.
BAD DEBTS:
Bad debts on receivables are charged to expense in the year the receivable is
determined uncollectible, therefore, no allowance for doubtful accounts is
included in the financial statements. Amounts determined as uncollectible are
not significant to the overall presentation of the financial statements.
INCOME TAXES:
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss, tax
credit carryforwards, and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax will not
be realized. Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of enactment.
FINANCIAL INSTRUMENTS:
The recorded amounts of financial instruments, including cash equivalents,
receivables, investments, accounts payable and accrued expenses, and long-term
debt approximate their market values as of December 31, 1998 and 1997. The
Company has no investments in derivative financial instruments.
EARNINGS PER SHARE:
Earnings per share were computed by dividing net income by the total weighted
average common shares outstanding and the additional dilutive effect of stock
warrants and stock options during the respective periods. The dilutive effect
of stock warrants and stock options are considered using the treasury stock
method.
F-18
<PAGE>
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING CHANGE:
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 130,
Reporting Comprehensive Income, for the year ended December 31, 1998. This
statement establishes standards for reporting and display of comprehensive
income and its components in the financial statements. The December 31, 1997,
financial statements have been reclassified to reflect the application of the
provisions of this statement for comparative purposes. The adoption of SFAS No.
130 has no impact on the Company's statements of financial condition, income, or
cash flows. Management has elected to display its components of comprehensive
income in the statements of stockholders' equity.
NOTE 3. BASIS OF PRESENTATION
FAUSETT MINING COMPANY:
During 1997, Atlas Mining Company purchased substantially all the operating
equipment and mining supplies of Fausett International, Inc., a related party.
The purchase price was $1,416,094 which consisted of $50,000 cash, 875,000
shares of capital stock valued at $350,000, and a note payable totaling
$1,016,094 (Note 5).
SIERRA SILVER LEAD MINES, INC.:
During 1998, the Company entered into an agreement and plan of merger with
Sierra Silver Lead Mines, Inc., an Idaho corporation.
The acquisition was accounted for as a purchase. The purchase price was
allocated to the assets acquired and liabilities assumed based on their
estimated fair values. All assets of Sierra were subsequently transferred to
Atlas and Sierra ceased operations.
In the merger, all outstanding shares of common stock of Sierra were to be
converted into 842,964 shares of Atlas common stock. At December 31, 1998,
391,114 shares of Atlas stock had not been issued as the owners of the
corresponding Sierra stock could not be located. Under the plan of merger, any
dissenters to the acquisition have the right to exchange their shares for cash
in lieu of common stock. As a result, $195,909 is included in long-term debt
due to this contingent liability. Under Idaho State law, these shares will be
converted and held with the state of Idaho in the Unclaimed Property Division
for an indefinite period of time.
The purchase price was allocated as follows.
<TABLE>
<CAPTION>
<S> <C>
Cash $ 32,467
Certificates of deposit 41,062
Property 202,628
--------
$276,157
--------
</TABLE>
F-19
<PAGE>
NOTE 3. BASIS OF PRESENTATION (CONTINUED)
CHANGE IN CAPITALIZATION:
On November 19, 1998, the Company amended their Articles of Incorporation.
Under the amended Articles, the Company changed the authorized capital stock
from $0.10 par to no par. Also the number of shares authorized increased from
6,000,000 to 60,000,000. Further amendments included the authorization of
10,000,000 shares of $1.00 par value noncumulative, nonvoting, nonconvertible
preferred stock.
NOTE 4. INVESTMENT SECURITIES AVAILABLE FOR SALE
Following is a summary of available for sale equity securities which are
concentrated in companies in the mining industry:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
-------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1998 $114,863 $ - $ (45,642) $ 69,221
--------
December 31, 1997 $ 54,229 $ 3,434 $ (1,719) $ 55,944
--------
</TABLE>
<TABLE>
<CAPTION>
NOTE 5. NOTES RECEIVABLE
1998 1997
------- ------
<S> <C> <C>
Note receivable from Lookout Recreation, Inc., noninterest bearing
and unsecured. $49,603 $ -
Note receivable bearing interest of 10% per annum. Due in annual
installments of $5,000 plus accrued interest. Secured by property. 38,000 -
Note receivable, noninterest bearing, secured by stocks. 6,268 -
------- ------
93,871 -
Less current portion 60,871 -
------- ------
$33,000 $ -
------- ------
</TABLE>
F-20
<PAGE>
NOTE 6. LONG-TERM DEBT
Long-term debt is comprised as follows at December 31:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Note payable to a Fausett International Inc., due in monthly payments
of $15,000, including interest at 8.75% and is collateralized by all
equipment and mining supplies. This note matures August 22, 2001. $782,741 $880,730
Two notes payable to a lending facility. The notes are due in total
combined monthly payments of $813, including interest at 7.90% and
10.90%. The notes are due in June 1999 and September 1999. These
notes are collateralized by vehicles. 5,343 21,917
Note payable to a lending facility. The note is due in monthly
installments of $578, including interest at 11.99% per annum. This note
is due September 2003 and is secured by a vehicle. 24,928 -
-------- --------
813,012 902,647
Less current portion 125,606 152,018
-------- --------
$687,406 $750,629
-------- --------
</TABLE>
<TABLE>
<CAPTION>
Future maturities of long-term debt at December 31, 1998, are as follows:
<S> <C>
Period ending December 31:
1999 $125,606
2000 131,367
2001 545,275
2002 5,966
2003 4,798
--------
$813,012
========
</TABLE>
NOTE 7. INCOME TAXES
Temporary differences in the recognition of taxable income for financial
reporting and income tax purposes relate primarily to the use of accelerated
depreciation methods for tax purposes and the carryforward of net operating
losses for tax purposes.
F-21
<PAGE>
NOTE 7. INCOME TAXES (CONTINUED)
The components of the net deferred tax asset (liability) recorded in the
accompanying consolidated balance sheets are:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 66,960 $ 32,168
Contribution carryforwards 340 105
Unrealized loss on available for sale securities 9,128 -
--------- ---------
TOTAL DEFERRED TAX ASSETS 76,428 32,273
Valuation allowance for deferred tax assets (55,822) (21,463)
--------- ---------
20,606 10,810
--------- ---------
Deferred tax liabilities:
Tax over book depreciation 11,478 10,810
Unrealized gain on available for sale equity securities - 428
--------- ---------
TOTAL DEFERRED TAX LIABILITIES 11,478 11,238
--------- ---------
$ 9,128 $ (428)
========= =========
</TABLE>
At December 31, 1998 and 1997, Atlas has established a valuation allowance for
deferred tax assets related to net operating loss and contribution carryforwards
which may not be realized. Net operating loss carryforwards total $267,841 at
December 31, 1998, and expire from 2001 through 2018 if not utilized sooner.
The income tax provision (benefit) differs from the amount of income tax
determined by applying the federal income tax rate to pretax income from
continuing operations due to the following for the years ended December 31:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Computed expected tax expense (benefit) $(34,579) $ 43,773
Increase (decrease) in income taxes resulting from:
Nondeductible expenses 704 139
State taxes 80 -
Overaccrual of prior year taxes (1,065) -
Change in valuation allowance 34,359 (41,471)
--------- ---------
$ (501) $ 2,441
========= =========
</TABLE>
NOTE 8. RELATED PARTY TRANSACTIONS
The following transactions occurred in 1998 and 1997 with Fausett International
Inc., a minority stockholder of Atlas Mining Company. Mr. Fausett is also on
the Board of Directors of Atlas Mining Company.
F-22
<PAGE>
NOTE 8. RELATED PARTY TRANSACTIONS (CONTINUED)
ASSET PURCHASES:
As explained in Note 3 of Notes to Financial Statements, Fausett International,
Inc. sold operating equipment and mining supplies to the Company in 1997 for a
purchase price totaling $1,416,094. The purchase price was paid in cash,
capital stock, and a note payable.
NOTE PAYABLE:
Included in long-term debt is a note payable in the amount of $782,741 and
$880,730 for the years ended December 31, 1998 and 1997, respectively. Interest
paid in 1998 and 1997 on this note was $67,087 and $20,371, respectively.
OFFICE RENTAL:
The Company has a month-to-month lease for office space. Rental payments under
this lease are $1,100 per month. Total rental expense recognized under this
lease during 1998 and 1997 was $13,200 and $3,200, respectively.
CONSULTING FEES:
As part of the purchase of Fausett International Inc.'s assets, a three-year
agreement was signed with Lovon Fausett, the majority stockholder of Fausett
International, Inc., to provide consulting services for a three-year period
payable at $1,500 per month. Consulting fees recognized under this agreement
during 1998 and 1997 were $18,000 and $4,500, respectively.
NOTE 9. STOCK OPTIONS
The Company has a qualified stock option plan authorizing the granting to
officers and directors, of options to purchase 100,000 shares of common stock
each at exercise prices equal to the fair market value on the common stock at
the date of grant. Options became exercisable immediately and expire two years
after the date of the grant. As permitted under generally accepted accounting
principles, grants under the plan are accounted for under the provisions of APB
No. 25 and its related interpretations. Accordingly, no compensation cost has
been recognized for grants made to date.
A summary of the status of the Company's stock option plans and changes during
the years ending on those dates is presented below:
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
WEIGHTED- Weighted-
AVERAGE Average
SHARES EXERCISE Shares Exercise
ACTUAL PRICE Actual Price
------- ----- ------- -----
<S> <C> <C> <C> <C>
Outstanding options at beginning of year 350,000 .20 400,000 .20
Granted - - - -
Exercised 200,000 .20 50,000 .20
Terminated 150,000 .20 - -
------- -------
Outstanding at end of year - - 350,000 .20
------- -------
Options exercisable at year end - 350,000
------- -------
</TABLE>
F-23
<PAGE>
NOTE 9. STOCK OPTIONS (CONTINUED)
The pro forma effect on net income as reported, if the fair value of accounting
for stock options had been adopted by the Company, is not significantly
different than net income as reported on the statement of income. The fair
value assumptions are based on a risk-free interest rate over the expected lives
for the options granted in 1996 and assumes no annual cash dividends.
STOCK OPTION PLAN 1998:
In 1998, the Company adopted a nonqualified stock option plan authorizing the
granting to officers, directors, or employees options to purchase common stock.
Options are granted by the Administrative Committee, which is elected by the
Board of Directors. The number of options granted under this plan and any other
plans active may not exceed 10% of the currently issued and outstanding shares
of the Company's common stock. The term of each option granted is determined by
the Committee, but cannot be for more than five years from the date the option
is granted. The option priced per share with each option granted will be fixed
by the Administrative Committee on the date of grant. The period for which an
option is exercisable is at the discretion of the Administrative Committee. As
permitted under generally accepted accounting principles, grants under the Plan
are accounted for under the provisions of APB No. 25 and its related
interpretations.
At December 31, 1998, no options had been granted under this plan.
INCENTIVE STOCK OPTION PLAN 1998:
The Company adopted an incentive stock option plan in 1998. The stock option
plan permits the Company to grant to key employees options to purchase shares of
stock in the Company. Options granted under this plan and any other stock
option plan adopted by the Company shall not exceed 10% of the then issued and
outstanding shares of the Company's common stock. Options are granted by the
Administrative Committee, which is elected by the Board of Directors. The term
of each option granted is determined by the Committee, but cannot be for more
than five years from the date the option is granted. Once granted, options may
be fully vested or may vest over a period of time. The price of shares
purchased must be equal to or greater than fair market value of the common stock
at the date the option is granted, and payment terms are determined by the
Incentive Stock Option Committee. As permitted under generally accepted
accounting principles, grants under the plan are accounted for under the
provisions of APB No. 25 and its related interpretations.
At December 31, 1998, no options had been granted under this plan.
NOTE 10. COMMITMENTS AND CONTINGENCIES
PARK COPPER AND GOLD MINING, LTD.:
The Company has tendered an offer to the shareholders of Park Copper and Gold
Mining, Ltd. to exchange all the outstanding stock for 221,415 shares of common
stock. At December 31, 1998, the Company had exchanged 70,571 shares of Atlas
stock. This acquisition will be accounted for as a purchase.
F-24
<PAGE>
NOTE 10. COMMITMENTS AND CONTINGENCIES (CONTINUED)
YEAR 2000:
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the Year 2000 Issue and is
implementing a plan to resolve any issues. The Company presently believes that,
with modifications to existing software and converting to new software, the Year
2000 problem will not pose significant operational problems for the Company's
computer systems as so modified and converted. However, if such modifications
and conversions are not completed timely, the Year 2000 may have a material
impact on the operations of the Company.
NOTE 11. EARNINGS PER SHARE
The calculation of earnings per share and earnings per share assuming full
dilution is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER31, 1998
---------------------------------------------------------------
INCOME (NUMERATOR) SHARES (DENOMINATOR) PER SHARE AMOUNT
--------------------- -------------------- ------------------
<S> <C> <C> <C>
BASIC EPS
Loss available to common stockholders ($135,963) 3,812,925 ($0.036)
EFFECT OF DILUTIVE SECURITIES
Stock options - - -
--------------------- -------------------- ------------------
DILUTED EPS
Loss available to common stockholders plus assumed conversions - - -
--------------------- -------------------- ------------------
plus assumed conversions ($135,963) 3,812,925 ($0.036)
===================== ==================== ==================
YEAR ENDED DECEMBER31, 1997
---------------------------------------------------------------
INCOME (NUMERATOR) SHARES (DENOMINATOR) PER SHARE AMOUNT
--------------------- -------------------- ------------------
BASIC EPS
Loss available to common stockholders $ 162,461 2,910,160 $ 0.056
EFFECT OF DILUTIVE SECURITIES
Stock options - 179,268 -
--------------------- -------------------- ------------------
DILUTED EPS
Loss available to common stockholders plus assumed conversions - - -
--------------------- -------------------- ------------------
plus assumed conversions $ 162,461 3,089,428 $ 0.053
===================== ==================== ==================
</TABLE>
NOTE 12. LINE OF CREDIT
The Company obtained an unsecured line of credit with Suntrust Credit for
$50,000 in 1998. Interest accrues at the lender's prime lending rate plus 6%.
At December 31, 1998, borrowings under this agreement were $34,100.
NOTE 13. SUBSEQUENT EVENT
Subsequent to the end of fieldwork, the Company purchased the majority of the
outstanding shares of Olympic Silver Resources, Inc., a Nevada corporation.
Under the agreement reached, Atlas has committed 750,000 shares of stock to the
stockholders of Olympic in exchange for 4,000,000 shares.
F-25
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Idaho Revised Statutes and certain provisions of the Company's Articles
of Incorporation and Bylaws under certain circumstances provide for
indemnification of the Company's Officers, Directors and controlling persons
against liabilities that they may incur in such capacities. A summary of the
circumstances in which such indemnification is provided for is contained herein,
but this description is qualified in its entirety by reference to the Company's
Articles and Bylaws and to the statutory provisions.
In general, any Officer, Director, employee or agent may be indemnified
against expenses, fines, settlements or judgments arising in connection with a
legal proceeding to which such person is a party, if that person's actions were
in good faith, were believed to be in the Company's best interest, and were not
unlawful. Unless such person is successful upon the merits in such an action,
indemnification may be awarded only after a determination by independent
decision of the Board of Directors, by legal counsel, or by a vote of the
stockholders, that the applicable standard of conduct was met by the person to
be indemnified.
The circumstances under which indemnification is granted in connection with
an action brought on behalf of the Company is generally the same as those set
forth above; however, with respect to such actions, indemnification is granted
only with respect to expenses actually incurred in connection with the defense
or settlement of the action. In such actions, the person to be indemnified must
have acted in good faith and in a manner believed to have been in the Company's
best interest, and must not have been adjudged liable for negligence or
misconduct.
Indemnification may also be granted pursuant to the terms of agreements
that may be entered in the future or pursuant to a vote of stockholders or
Directors. The statutory provision cited above also grants the power to the
Company to purchase and maintain insurance which protects its Officers and
Directors against any liabilities incurred in connection with their service in
such a position, and such a policy may be obtained by the Company.
Article VII of the Company's Restated Articles of Incorporation state: "A
director shall not be held liable to the company or its shareholders for
monetary damages for any action taken or any failure to take any action as a
director except to the minimum degree required under Idaho law as it now exists
or hereafter may be amended. Further, the Company is authorized to indemnify,
agree to indemnify, or obligate itself or advance or reimburse expenses incurred
by its directors, officers, employees, or agents to the full extent of the laws
of the state of Idaho as may now or hereafter exist; excepting incidents
involving intentional violation of criminal law."
<PAGE>
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses of this Offering are as follows. Estimates are marked "e".
Registration fees: $2,212.50
State taxes and fees: $13,500
Trustees' and transfer agents' fees: $22,393.75e
Costs of printing and engraving: $22,393.75e
Legal fees: $25,000
Accounting fees: $15,000
RECENT SALES OF UNREGISTERED SECURITIES
In September 1997, the Company issued 875,000 shares of common stock
(valued at $350,000) to Fausett International, Inc. for the purchase of mining
equipment and tools, valued at $1,416,094. Lovon Fausett, director of Atlas,
owns 100% of Fausett International, Inc. There are 1,735 shareholders in
Fausett International, Inc.
In October 1998, Atlas issued 842,964 shares of common stock (valued at
$276,157) in order to acquire Sierra Silver Lead Mining Company, an Idaho
corporation. Atlas issued 1 share of the company's common stock for every 3.76
shares of Sierra Silver. Sierra Silver was owned by 156 shareholders, all of
whom are unrelated parties to Atlas. In the transaction, Atlas acquired Sierra
Silver's interest, through a merger agreement, in 329 acres of mineral rights,
including 250 acres of surface rights, worth approximately $276,157.
In February 1999, the Company issued 741,816 shares of common stock (valued
at $380,772) to the shareholders of Olympic Silver Resources, Inc., a Nevada
corporation, in order to purchase the majority outstanding shares of Olympic
Silver, or 5,000,000 shares. Olympic Silver was owned by eight shareholders,
all are unrelated parties to Atlas. In the transaction, Atlas acquired Olympic
Silver's interest in the San Acacio Mine in Zacatecas, Mexico, worth
approximately $380,772.
In March 1999, the Company issued 100,000 shares of Common Stock valued at
$27,082 to Trail Gulch Gold Mining Company for 100 acres of land, including five
patented mining claims, worth approximately $100,000. The majority stockholders
of Trail Gulch are William Boyd and John Peacock, unrelated parties.
In July 1999, Atlas acquired an additional 281,800 shares, or 20% interest,
of Park Copper and Gold Mining Company for $37,320 cash. This purchase
increased Atlas' holdings in Park to 726,776 shares, or 53%. Atlas' total
investment in Park is $72,530. Park has 75 shareholders, none are related
parties to Atlas. Park owns 6 patented claims and 2 unpatented claims in 120
acres of surface and mineral rights and 40 acres of mineral rights in Shoshone
County, Idaho.
All of these transactions were private placements exempted under Section
4(2) of the Securities Act of 1933.
<PAGE>
EXHIBITS
INDEX TO EXHIBITS
(a) The following documents are filed as part of this Registration Statement
on Form SB-2:
<TABLE>
<CAPTION>
EXHIBITS
INDEX TO EXHIBITS
(a) The following documents are filed as part of this Registration Statement
on Form SB-2:
<C> <S>
- ----- --------------------------------------------------
3.1 (i) Articles of Incorporation, as amended
- ----- --------------------------------------------------
3.2 (ii) Bylaws
- ----- --------------------------------------------------
5 Opinion of counsel regarding the legality of the
securities to be issued
- ----- --------------------------------------------------
10.1 Trail Gulch Mining Co., Inc., Minutes of
Shareholders' Meeting
- ----- --------------------------------------------------
10.2 Trial Gulch Mining Co., Inc., Corporate
Resolution
- ----- --------------------------------------------------
10.3 Minutes of Directors Meeting of Park Copper
and Gold Mining, Ltd.
- ----- --------------------------------------------------
10.4 Letter from Park Copper and Gold Mining
Company to its Shareholders
- ----- --------------------------------------------------
10.5 Sales Agreement between Olympic Silver and
Atlas Mining Company
- ----- --------------------------------------------------
10.6 Articles of Merger of Sierra Silver-Lead
Mining Company and Atlas Mining Company
- ----- --------------------------------------------------
10.7 Equipment Purchase Agreement between Atlas
Mining Company and Fausett International, Inc.
- ----- --------------------------------------------------
10.8 Exhibits to the Equipment Purchase Agreement
between Atlas Mining Company and Fausett
International, Inc.
- ----- --------------------------------------------------
10.9 Addendum to the Purchase Agreement Dated
August 22, 1997
- ----- --------------------------------------------------
23.1 Accountants Consent
- ----- --------------------------------------------------
27 Financial Data Schedule
- ----- --------------------------------------------------
99.1 Employment Agreement with William T.
Jacobson
- ----- --------------------------------------------------
99.2 Escrow Agreement
Corporate Resolution authorizing the offer and
- ----- --------------------------------------------------
99.3 issue of shares
- ----- --------------------------------------------------
</TABLE>
<PAGE>
UNDERTAKINGS
The undersigned small business issuer hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(iv) To treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering for
purposes of determining liability under the securities act.
(v) To file a post effective amendment to remove the registration on
any of the securities that remain unsold at the end of the
offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Osburn, State of Idaho, on , 1999.
ATLAS MINING COMPANY
By: /S/ William T. Jacobson,
----------------------------------
William T. Jacobson,
Chief Executive Officer, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
/S/ William T. Jacobson, February 11, 2000
- ----------------------------- ----------------------------
William T. Jacobson Date
Principal Executive Officer
/S/ Kurt Hoffman February 11, 2000
- ----------------------------- ----------------------------
Kurt Hoffman Date
Principal Executive Officer
BOARD OF DIRECTORS:
/S/ William T. Jacobson February 11, 2000
- ----------------------------- ----------------------------
William T. Jacobson Date
Director
/S/ Kurt Hoffman February 11, 2000
- ----------------------------- ----------------------------
Kurt Hoffman Date
/S/ C. Lovon Fausett February 11, 2000
- ----------------------------- ----------------------------
C. Lovon Fausett Date
Director
/S/ Jack Harvey February 11, 2000
- ----------------------------- ----------------------------
Jack Harvey Date
Director
/S/ Thomas E. Groce February 11, 2000
- ----------------------------- ----------------------------
Thomas E. Groce Date
Director
<PAGE>
Exhibit 3(i)
ARTICLES OF INCORPORATION
-------------------------
OF
ATLAS MINING COMPANY.
---------------------
KNOW ALL MEN BY THESE PRESENTS: That we, Donald A. Callahan and Helen A.
McAllister, residents of the County of Shoshone and State of Idaho, and W. Earl
Greenough, a resident of the County of Spokan, State of Washington, do hereby
associate ourselves together for the purpose of forming a corporation under the
laws of the State of Idaho, and we hereby certify:
I.
The name of this corporation is: ATLAS MINING COMPANY.
II.
The purposes for which said corporation is formed are to locate, acquire,
buy, hold, sell, lease, bond and otherwise deal in and dispose of mines and
mining claims; also to hold, work, develop and mine such mines and mining
claims, including the mining, extracting, milling, concentrating and reducing
all ores and minerals so extracted and mined and the selling and disposing of
the same; also to locate, buy, acquire, hold, sell, lease, bond and otherwise
dispose of millsites, and erect mills, concentrating plants and reduction works
and buy and sell the same, and buy and sell real estate and otherwise deal in
real estate, including leasing and mortgaging the same; also to locate, buy,
acquire, appropriate, water and lay out water rights, ditches, canals, flumes,
and other conduits for carrying water; also to locate, build, hold, sell, lease
and otherwise acquire, hold and sell roads, railroads, tramways and other means
of and for travel and the transportation of people and property, and the said
corporation shall have full power to do a general mining and milling business
and everything usually done in connection with such business and that may be
necessary, profitable or convenient in furthering the interests of said
<PAGE>
corporation in carrying out the purpose for which it is formed or organized;
also power and authority to maintain stores, deal in, buy and sell merchandise
and do a general merchandise business in connection with its said mining
business and deal in ores, mines and minerals and real estate, and in short do a
general mining, real estate and merchandise business. Said corporation shall
also have the right and power to buy stock and bonds in other mining
corporations and deal in stocks, bonds and other securities, and to mortgage any
property which it may acquire or hold, and take mortgages and bonds upon all
kinds of property, both real and personal, as security for money which it may
loan to other corporations or persons or for any indebtedness or obligation of
any other corporation or person to it.
III.
The place where its principal business is to be transacted is Wallace,
Shoshone County, Idaho.
IV.
The corporation shall exist for Fifty Years.
V.
The number of directors shall be five.
VI.
The amount of its capital stock shall be Two Million Dollars divided into
Two Million shares of the par value of One Dollar each.
VII.
The amount of the capital stock which has been actually subscribed is
Thirty Dollars and the following are the names of the persons who have
subscribed for said stock and the amount and number of shares subscribed for by
each of the said subscribers, to wit:
Name Number of Shares Amount.
Donald A. Callahan 10 $10.00
Helen A. McAllister 10 10.00
W. Earl Greenough 10 10.00
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands and seals this 1st day
of March, A. D. 1924.
/s/ Donald A. Callahan (SEAL)
-------------------------
/s/ Helen A. McAllister (SEAL)
--------------------------
/s/ W. Earl Greenough (SEAL)
--------------------------
STATE OF IDAHO )
) ss.
COUNTY OF SHOSHONE )
On this 1st day of March, A. D., 1924, before me, ________________________,
a Notary Public in and for the County of Shoshone, State of Idaho, personally
appeared DONALD A. CALLAHAN, HELEN A. McALLISTER, and W. EARL GREENOUGH, known
to me to be the persons whose names are subscribed to the within instrument and
so acknowledged to me that they executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate written.
/s/
--------------------------
Notary Public.
STATE OF IDAHO )
) ss.
COUNTY OF SHOSHONE )
DONALD A. CALLAHAN and HELEN A. McALLISTER, the persons whose names are
signed to the foregoing ARTICLES OF INCORPORATION, each disposes and says that
he is and for more than one year last past has been a bona fide resident of the
County of Shoshone, State of Idaho.
/s/
-------------------------
/s/
-------------------------
Subscribed and sworn to before me This last day of March, A. D. 1924.
/s/
- ------------------------------------------
Notary Public for the State of Idaho,
Residing at Wallace, Idaho.
<PAGE>
Exhibit 3(ii)
Atlas Mining Company
--------------------
BY-LAWS.
--------
Article I.
----------
Stockholders and Their Meetings.
Section 1. The annual meeting of the stockholders of this company shall be
held at its principal office in the city of Wallace, County of Shoshone, State
of Idaho, at ten o'clock in the forenoon on the third Saturday in February of
each year, or at such other place in the United State as may from time to time
be designated by the Board of Directors, in accordance with and if permitted by
the laws of the state of Idaho, for the purpose of electing directors and the
transacting of such other business as may be brought before the meeting.
At least ten days' written or printed notice, specifying the time and place
of the annual meeting shall be mailed to each of the stockholders of record at
his or her or its address as it appears on the books of the company.
Section 2. Special meetings of the stockholders may be held at the
principal office of the Corporation in the City of Wallace, County of Shoshone,
in the State of Idaho, or elsewhere in said State (or at any other place in the
United States as may from time to time be designated by the Board of Directors
in accordance with and if permitted by the laws of the state of Idaho), whenever
and wherever called in writing or a vote of a majority of the Board of
Directors, or by the President, or by the holders of at least one-fourth in
amount of the issued shares of the capital stock of the Corporation. In either
case, at least ten days' written or printed notice of such meeting, specifying
the day and hour and place and purposes of the meeting shall be mailed to each
of the stockholders of record at his or her or its address as it appears on the
books of the corporation.
The lawful holders of a majority in amount of the stock of the Corporation
may call a meeting of the stockholders any time, irrespective of any other
provisions in these By-Laws, at the principal office of the Corporation in said
City of Wallace, upon giving the notice thereof to record shareholders
hereinbefore specified for special meeting and giving thirty days' notice by
publication in a newspaper printed and published in said City of Wallace.
If all the stockholders shall waive notice of a special meeting, no notice
of such meeting shall be required; and whenever all of the stockholders shall
meet in person or by proxy, such meetings shall be valid for all purposes
without prior notice, and at such meeting any corporate action may be taken.
The written certificates of the officer or officers calling any special
meeting, setting forth the substance of the notice and time and place of the
mailing of the same t???e several stockholders and the respective addresses to
which the same were mailed, shall be evidence of the manner g????act of the
calling and giving of a notice.
Section 3. All business ever lawful to be transacted by the stockholders
may be done, at any annual meeting or any adjournment thereof. Only such
business shall be acted upon at the special meetings of the stockholders as
shall have been referred to in the notice of such meetings, but any
stockholders' meeting at which all the outstanding stock of the Corporation is
represented shall be a valid meeting for all purposes.
<PAGE>
Section 4. At all stockholders' meetings, a majority of the outstanding
capital stock of the Corporation shall constitute a quorum for all purposes of
any meeting.
If the holders of the amount of stock necessary to constitute a quorum
shall fail to attend in person or by proxy at the time and place fixed by these
By-Laws for an annual meeting, or fixed by notice as above provided for a
special meeting, a majority in interest of the stockholders present in person or
by proxy may adjourn, from time to time, without notice other than by
announcement at the meeting, until holders of the amount of stock requisite to
constitute a quorum shall attend. At any such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 5. At each meeting of the stockholders every stockholder shall be
entitled to vote in person or by proxy (granted not more than thirty days before
the meeting named therein and delivered to the inspectors at the meeting.) He
shall have one vote for each share of the stock standing registered in his name
on the books of the Corporation (for) thirty days next preceding the date of
such meeting, and, in voting for directors, but no otherwise he may cumulate his
votes in the manner and to the extent as provided by the laws of the State of
Idaho. The vote for directors, and, upon demand by any stockholders, the votes
upon any question before the meeting shall be by ballot.
At each meeting of the stockholders a full, true and complete list, in
alphabetical order, of all the stockholders entitled to vote at such meeting and
indicating the number of shares held by each, certified by the Secretary or
Transfer Agent, shall be furnished, which list shall be open to the inspection
of the stockholders.
Prior to any meeting, any proxy-holder may submit his powers of attorney or
proxies to the Secretary for examination. The certificate of the Secretary as
to the regularity of such powers of attorney or proxies and as to the number of
shared held by the person severally and respectively executed such powers of
attorney or proxies shall be received as prima facie evidence of the number of
shares held by the holders of such powers of attorney or proxies for the purpose
of establishing the presence of a quorum at such meeting and for organizing the
same, and for all other purposes.
Section 6. At each meeting of the stockholders the polls shall be opened
and closed, the proxies and ballots shall be received and counted and be taken
in charge for the purposes of the meeting, and all questions touching the
qualifications of voters, the validity of proxies, the right to vote and the
acceptance or rejection of votes shall be adjudged and decided by three
inspectors. Such inspectors shall be appointed by the Board of Directors before
or at the meeting, or if no such appointment shall have been made, then by the
presiding officer of the meeting. If, for any reason, any of the inspectors
previously appointed shall fail to attend or refuse or be unable to serve, an
inspector in place of the one so failing to attend or refusing or unable to
serve shall be appointed in like manner.
Section 7. At stockholders' meeting the regular order of business shall be
as follows:
1. Reading and approval of the minutes of the previous meeting or
meetings;
2. Report of the Board of Directors, the President, the Treasurer and the
Secretary of the Corporation, in the order named;
3. Reports of committees;
4. The election of Directors.
5. Unfinished business;
6. New business;
7. Adjournment.
<PAGE>
ARTICLE II
----------
Directors and Their Meetings.
----------------------------
Section 1. The Board of Directors of the Corporation shall consist of five
persons, who shall be chosen by the stockholders from their own number at annual
meetings or adjournments thereof, and who shall hold office for a term of one
year, or until their successors are elected and qualified.
Section 2. When any vacancy occurs among the Directors by death;
resignation, or otherwise, the Board of Directors may elect a successor to hold
office for the unexpired portion of the term of the Director whose place shall
be vacant, and until the election and qualification of his successor.
Section 3. Meetings of the Directors may be held at the principal office
of the Corporation in the City of Wallace, Shoshone County, Idaho, or elsewhere,
at such place or places in the United State of America as the Board of Directors
from time to time, may determine.
Section 4. Without notice or call, the Board of Directors shall hold its
annual meeting immediately after the adjournment or each annual stockholders'
meeting at the place where such stockholders' meeting shall have been held.
Special Directors' meetings may be held on the call of the President or
Secretary on at least two days' notice by mail to the Directors resident in the
State of Idaho, and on at least ten days' notice by mail to Directors not
resident in said Idaho. No notice of any adjourned meeting shall be necessary.
Any meeting of the Board, no matter where held, at which all of the members
shall be present, even though without notice, or of which notice shall be waived
at any time by all absentees, provided a quorum shall be present, shall be valid
for all purposes. Unless otherwise indicated in the notice thereof, any and all
business may be transacted at a special meeting.
Section 5. A majority of the Board of Directors shall constitute a quorum
for the transaction of business but if at any meeting of the Board there be less
than a quorum present a majority of those present may adjourn from time to time.
The Board of Directors may prescribe rules not in conflict with these By-Laws
for the conduct of its business.
<PAGE>
Section 6. All of the Directors must be stockholders of the Corporation,
each of whom must own, in his own right, at least one share of the capital stock
of the Corporation.
Section 7. The Board of Directors shall make a report to the stockholders
at annual meetings of the condition of the Corporation and shall, on request,
furnish each stockholder with a true copy thereof.
The Board of Directors in its discretion, may submit any contract or act
for approval or ratification at any annual stockholders' meeting, or at any
meeting of the stockholders called for the purpose of considering any such
contract or act; and any contract or act which shall be approved or be ratified
by the vote of the holders of a majority of the capital stock of the Corporation
which is represented in person or by proxy at such meeting, provided that a
lawful quorum of stockholders be there represented in person or by proxy, shall
be as valid and binding upon the Corporation and upon all its stockholders as if
it had been approved or ratified by every stockholder of the Corporation,
whether or not the contract or act would otherwise be open to legal attack
because of directors' interest, or for any other reason.
Section 8. The Board of Directors shall determine to what extend and at
what times and places and under what conditions and regulations the books and
records of Corporation, or any of them, shall be opened to the inspection of the
stockholders, and no stockholder shall have any right to inspect any books or
records of the Corporation except as conferred by the laws of Idaho or
authorized by the Board of Directors or by resolution of the stockholders.
Section 9. The Board of Directors is invested with complete and
unrestricted authority in the management of all the affairs of the Corporation,
and is authorized to exercise for such purpose all such powers of the
Corporation as are not by law or by these By-Laws required to be otherwise
exercised, including, without restricting the generality of the foregoing, the
power to fix, from time to time, the compensation of all officers, agents, and
employees of the Corporation, including the compensation or allowances to be
paid to officers, agents, employees, Directors, or members of committees for
attendance at meetings of the Board of Directors or of committees.
Section 10. The Board of Directors shall have full power, from time to
time, to fix and determine and to vary the amount of working capital of the
Corporation to determine whether any, and if any, what part of any surplus or
accumulated profits shall be declared in dividends and paid to the stockholders;
to determine the time or times for the declaration and payment of dividends; and
to direct and to determine the use and disposition of any surplus or net profits
over and above the capital stock paid in.
Section 11. Subject always to the By-Laws made by the stockholders, the
Board of Directors may make by-laws and , from time to time, may alter, amend or
repeal any by-law or by-laws; but any by-laws made by the Board of Directors may
be altered, amended or repealed by the stockholders at any annual meeting of the
Corporation, or at any special meeting of the Corporation, provided notice of
such proposed alteration, amendment or repeal at any special meeting be included
in the notice of such meeting.
Section 12. The regular order of business at meetings of the Board of
Directors shall be as follows:
1. Reading and approval of the minutes of any previous meeting or
meetings;
2. Reports of officers and committees;
3. Election of officers;
4. Unfinished business;
5. New Business;
6. Adjournment.
<PAGE>
ARTICLE III.
------------
Officers and Their Duties
-------------------------
Section 1. The Board of Directors, at its first meeting after the annual
stockholders' meeting, or any adjournment thereof, shall elect from its own
number, a President, may elect from its own members, a Vice-President, and shall
also elect a Treasurer and a Secretary, who need not be members of the Board,
and may elect an Assistant Treasurer and an Assistant Secretary, who also need
not be members of the Board, to hold office for one year next ensuing and until
their successors are elected and qualified. The offices of President and
Treasurer, or of Vice-President and Treasurer, or of Secretary and Treasurer, or
of Assistant Secretary and Assistant Treasurer, may be held by the same person.
Any vacancy in any of the said offices may be filled by the Board of
Directors.
The Board of Directors may from time to time, by resolution, appoint a
General Manager and an Auditor and such additional Vice-presidents, such
additional Assistant Secretaries, and such additional Vice-Presidents, such
additional Assistant Secretaries, and such additional Assistant Treasurers of
the Corporation as it may deem advisable, and prescribe their duties, unless and
except as the same are herinafter specified and fix their compensation, and all
such appointed officers shall be subject to removal at any time by the Board of
Directors. All other officers agents and factors of the Corporation shall be
chosen and appointed in such manner and shall hold their office for such terms
and upon such conditions as the Board of Directors may, from time to time, by
resolution, prescribe.
Section 2. The President shall be the chief executive officer of the
Corporation and shall have the supervision and, subject to the control of the
Board of Directors, the direction of the Corporation's affairs, with full power
to execute all resolutions and orders of the Board of Directors not especially
entrusted to some other officer of the Corporation. He shall preside at all
meetings of the Board of Directors and at all meetings of the stockholders, and
shall sign all certificates of stock issued by the Corporation, and shall
perform such other duties as shall be prescribed by the Board of Directors.
Section 3. The Vice-President shall be vested with all the powers and
perform all of the duties of the President in his absence or inability to act,
and he shall also perform such other duties as shall be prescribed by the Board
of Directors.
Section 4. The Treasurer shall have the custody of all funds and
securities of the Corporation. When necessary or proper, he shall endorse on
behalf of the Corporation for collection, checks, notes and other obligations;
he shall deposit all moneys to the credit of the Corporation in such bank or
banks or depository as the Board of Directors may designate; he shall also sign
all receipts and vouchers for payment made by the Corporation; except as herein
provided he shall jointly, with such other officer as shall be designated by
<PAGE>
these By-Laws, sign all checks made by the Corporation, and shall issue and
dispose of the same under the direction of the Board of Directors; he shall also
have the care and custody of all the stocks, bonds, certificates, vouchers,
evidence of debt, securities, and such other property belonging to the
Corporation as the Board of Directors shall designate; either he or the
Secretary or an Assistant Secretary or an Assistant Treasurer shall sign all
certificates of stock issued by the Corporation; he shall sign all papers
required by law or by these By-Laws, or by the Board of Directors to be signed
by the Treasurer; whenever required by the Board of Directors, he shall render a
statement of his cash account; he shall enter regularly in the books of the
Corporation to be kept by him for the purpose, full and accurate account of all
moneys received and paid by him on account of the Corporation; he shall at all
reasonable times exhibit the books and accounts to any Director of the
Corporation upon application at the office of the Corporation during business
hours; and he shall perform all act incident to the position of Treasurer,
subject to the control of the Board of Directors.
The Board of Directors may require the Treasurer to give a bond to the
Corporation in such sum and with such surety as shall be approved by the Board
of Directors, and conditioned for the faithful performance of all his duties as
Treasurer.
Section 5. All Assistant Treasurers, and all officers, agents and factors
of the Corporation, if required by the Board of Directors, shall give bonds
payable to the Corporation in such penalties and with such conditions and
sureties as the board of Directors may approve.
Section 6. The Secretary shall keep the minutes of all meetings of the
Board of Directors and the minutes of all meetings of the stockholders, in books
provided for that purpose; he shall attend to the giving and serving of notices
of meetings of the Stockholders, Board of Directors of the Corporation, and all
notices of the Corporation; he shall sign with the President all bills of
exchange and all promissory notes of the Corporation; me may sign with the
President or Vice-President in the name of the Corporation all contracts
authorized by the Board of Directors; he shall affix the corporate seal of the
Corporation thereto; he shall have the custody of the corporate seal of the
corporation either he or an Assistant Secretary or the Treasurer or an Assistant
Treasurer shall sign all certificates of stock issued by the Corporation; he
shall affix the corporate seal to all certificates of stock duly issued by the
Corporation; he shall have charge of such books and papers as the Board of
Directors may from time to time direct all of which shall, at all reasonable
times, be open to the examination of any Director upon application to the office
of the Corporation during business hours; and he shall in general perform all
the duties incident to the office of Secretary, subject to the control of the
Board of Directors.
Section 7. If and whenever an Auditor shall be appointed , he shall have
supervision over all the accounts and account books of the Corporation and shall
see that the system of keeping the same is enforced and maintained. He shall
direct as to forms and blanks relating to books and account in all departments
and no change shall be made without his consent, or the consent of the President
or of the Board of Directors. He shall see that there is kept in the
bookkeeping department a set of books containing a complete record of all
earnings, expenses, expenditures and all business transactions of the
Corporation pertaining to accounts. He shall see that the records are kept of
all recommendations made by officers or committees, of all plans adopted, all
<PAGE>
bids received and all contracts entered into for construction work and the state
of the same from time to time. He shall verify the assets reported by the
Treasurer or Assistant Treasurer, and cause all books and accounts of officers
and agents of the Corporation charged with the receipt and disbursement of money
to be examined from time to time and as often as practicable, he shall, when
requested furnish the President and the Board of Directors, a statement covering
all or any part of the matters in his charge.
The Auditor shall have such additional powers and perform such further and
other duties, as may from time to time be conferred upon or be prescribed for
him by the President or by the Board of Directors.
Section 8. Unless otherwise ordered by the Board of Directors, the
President or Vice-President shall have full power and authority in behalf of the
Corporation to attend to act and to vote at any meeting of stockholders of any
corporation in which the Corporation may hold stock, and at any such meetings
shall possess and may exercise any and all rights and powers incident to the
ownership of such stock, and which, as the owner thereof, the Corporation might
have possessed and exercised if present. The Board of Directors by resolution
from time to time, may confer like powers upon any person or person or appoint
another person or person in place of the Presidents or Vice-President to
represent the Corporation for the purposes in this Section mentioned.
ARTICLE IV.
-----------
Capital stock.
--------------
Section 1. Ownership of stock in the Corporation shall be evidenced by
certificates of stock in such form as shall be prescribed by the Board of
Directors and shall be under the seal of the Corporation, and signed by the
president or Vice-president and either the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary.
All certificates shall be consecutively numbered. The name of the person
owning the shares thereby represented with the number of shares and the date of
issue, shall be entered on the Corporation's books.
No certificate shall be valid unless it be signed by President or
Vice-President and either the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary.
All certificates surrendered to the Corporation shall be cancelled and no
new certificate shall be issued until the former certificate for the same number
of shares shall have been surrendered and cancelled.
Section 2. No transfer of stock shall be valid as against the Corporation
except on surrender and cancellation of the certificate therefor, accompanied by
an assignment or transfer by the owner thereof made either in person or under
power of attorney, and upon such surrender, cancellation or assignment, a new
certificate shall be issued therefor.
The Corporation shall not be bound to take notice of or recognize any
trust, charge or equity affecting any of the shares of its capital stock, or
recognize any person as having any interest therein except the person or persons
whose name or names appear or appears on the books of the Corporation as the
legal owner or owners thereof.
<PAGE>
Whenever any transfer shall be expressed as made for collateral security
and not absolutely, the same shall be so expressed in the entry of said transfer
on the books of the corporation.
Section 3. The Board of Directors shall have power and authority to make
all such rules and regulations, not inconsistent herewith, as it may deem
expedient, concerning the issue, transfer and registration of certificates for
shares of the capital stock of the corporation.
Section 4. The Board of Directors may appoint a transfer agent or agents
and a registrar or registrars of transfers within or without the State of Idaho,
and may require all stock certificates to bear the signature of a transfer agent
and of a registrar.
Each Transfer Agent shall keep a stock ledger and transfer book for the
transfer of the shares of the capital stock. A list of stockholders with the
number of shares of stock held by each set opposite the respective names of the
stockholders, certified by the President or Vice-President and the Treasurer or
an Assistant Treasurer, shall be sufficient authority to any Transfer Agent to
credit upon the stock ledger to each stockholder the number of shares of stock
and the number of the certificates of stock representing the same to which each
stockholder is entitled, and, if certificates of stock have not been issued
therefor, to issue the same. Except in the case of an original issue of stock
no new certificates of stock shall be issued by the Transfer Agent except upon
the transfer, surrender and cancellation of old certificates for an equal number
of shares of said stock.
Upon such transfer, surrender and cancellation, the former stockholder
shall be debited on the stock ledger with stock transferred and surrendered by
him and cancelled and the new stockholder credited upon the stock ledger with
the amount of stock transferred to him.
Each Registrar of the capital stock shall keep a register book of the stock
in which shall be registered by it the names of the stockholders and the number
of shares held by each, and the number of the certificates representing such
shares.
A list of stockholders with the shares of stock held by each set opposite
his name and the number of the certificate representing such shares, certified
by the President or Vice-President and the Treasurer or an Assistant Treasurer,
shall be sufficient authority to each such Registrar to register the same upon
its said register book. After such original registration by any Registrar, no
new certificates for shares of stock shall be registered by any Registrar except
upon cancellation of certificates for an amount of shares of said stock at the
time of such new registration equal to those then registered.
Section 5. The stock transfer books may be closed for any meeting of the
stockholders, and may be closed for the payment of dividends, during such
periods as from time to time may be fixed by the Board of Directors, and during
such periods no stock shall be transferable.
Section 6. Any person or persons applying for a certificate of stock in
lieu of one alleged to have been lost or destroyed, shall make affidavit or
affirmation of the fact, shall advertise the same with a description of the
certificate in a newspaper published in the City of Wallace, State of Idaho,
once a week for four consecutive weeks and shall deposit with the Corporation
said affidavit and evidence of said advertisement and shall give a bond of
indemnity to the Corporation, with surety, to be approved by the Board of
Directors, in double the current value of the stock, against any damages, loss
or inconvenience to the Corporation which may or can arise in consequence of a
new or duplicate certificate being issued in lieu of the one lost or missing;
whereupon, at the end of thirty days after the deposit of said affidavit,
advertisement and bonds, the Board of Directors may cause to be issued to such
person or persons, a new certificate or a duplicate of the certificate so lost
or destroyed.
<PAGE>
ARTICLE V.
----------
Miscellaneous.
--------------
Section 1. No agreement, contract or obligation (other than checks in
payment of indebtedness or incurred by authority of the Board of Directors)
involving the payment of moneys or the credit of the Corporation for more than
Ten Thousand Dollars shall be made without the order of the Board of Directors.
Section 2. Unless otherwise prescribed by law or ordered by the Board of
Directors, all agreements and contracts shall be signed by the President and the
Secretary in the name and on behalf of the Corporation and shall have the
corporate seal thereto attached.
Section 3. All moneys of the Corporation shall be deposited when and as
received by the Treasurer in such bank or banks or depository as may from time
to time be designated by th4e Board of Directors and such deposits shall be made
in the name of the Corporation.
Section 4. No note, draft, acceptance, endorsements or other evidence of
indebtedness shall be valid as against the Corporation unless the same shall be
signed by the Secretary or an Assistant Secretary and countersigned by the
President or Vice-President, or by such other person as may be authorized by
resolution of the Board of Directors, except that the Secretary or Assistant
Secretary or General Manager may, without countersignature, sign pay-roll checks
and checks for all authorized disbursements, represented by properly approved
vouchers, and make endorsements for deposit to the credit of the Corporation in
its duly authorized depository or depositories. No check or order for money
shall be signed in blank by more than one officer of the Corporation.
Section 5. No loan or advance in money shall be made by the Corporation to
any stockholder or officer therein.
Section 6. No Director or Executive Officer of the Corporation shall be
entitled to any salary or compensation for any services performed for the
Corporation unless such salary or compensation shall be fixed by resolution of
the Board of Directors or by the Stockholders.
Section 7. The corporate seal of the Corporation shall be a metallic
stamp, circular in form, with the name of the Corporation engraved thereon
around the word "Seal" and the impression of such seal upon any instrument
requiring its use shall be sufficient authentication of the same as an
instrument under seal.
A duplicate of the corporate seal may be kept and used by the Treasurer or
by any Assistant Secretary or any Assistant Treasurer.
<PAGE>
ARTICLE VI.
-----------
Amendment.
----------
Section 1. These By-Laws from time to time, may be altered, amended or
repealed, in whole or in part, and new ones adopted and substituted therefor, by
a vote of a majority of the full Board of Directors; but the stockholders may
alter or amend or repeal those or any existing By-Laws of the Corporation, in
whole or in part, and adopt and substitute new ones therefor, at any annual
meeting of the Corporation, or at any special meeting of the Corporation,
provided notice of such proposed alteration, amendment or repeal at any special
meeting be included in the notice of such special meeting.
The foregoing By-Laws were adopted as the code of By-Laws of ATLAS MINING
COMPANY by the holders of more than two-thirds of the subscribed capital stock
of said corporation on, to-wit: the 5th day of March, A. D. 1924.
STATE OF IDAHO )
) ss.
COUNTY OF SHOSHONE )
We, Donald A. Callahan, Helen A. McAllister and W. Earl Greenough,
Directors of ATLAS MINING COMPANY, do certify the above and foregoing to be a
true and correct copy of the By-Laws of said Corporation, adopted by the holders
of more than two-thirds of the capital stock of the said Corporation on, to-wit:
the 5th day of March, A. D. 1924.
WITNESS our hands and seals this 5th day of March, A. D. 1924.
/s/ Donald A. Callahan (SEAL)
-----------------------
/s/ Helen A. McAllister (SEAL)
-----------------------
/s/ W. Earl Greenough (SEAL)
-----------------------
<PAGE>
EXHIBIT 5
OPINION OF COUNSEL
HULL & BRANSTETTER
CHARTERED
ATTORNEY AT LAW
416 River Street
P.O. Box 709
Wallace, ID 83873-0709
JANUARY 28, 2000
BILL JACOBSON, PRESIDENT
Atlas Mining Company
1121 W. Yellowstone Avenue
Osburn, ID 83849
Gentlemen:
You have requested our opinion in connection with the issuance and
registration of 7,500,000 shares of common stock of Atlas Mining Company (the
"Company"), with respect to whether the securities in question, when sold, will
be validly issued, fully paid and non-assessable.
The Company is incorporated in the State of Idaho. We have undertaken the
rendering of this opinion solely in satisfaction of the Securities and Exchange
Commission ("SEC") requirements for the filing of a registration statement in
accordance with the Securities Act of 1933.
For the purposes of this opinion, we have not made any independent
investigation of the information you have provided us. We have consequently
relied on your representation that the information presented to us, in such
documents or otherwise furnished to us by you, accurately and completely
describes all material facts relevant to our opinion.
This opinion, as well as the preparation of the registration, is based upon
many representations by the officers of the Company, particularly Bill Jacobson,
the President, Chief Executive Officer and Director of the Company. These
representations include, but are not limited to:
1. The Corporation is in good standing under the laws of the State of
Idaho.
2. All companies represented by the officers of the Company as
subsidiary corporations are duly incorporated, validly existing and
in good standing under the laws in which each was incorporated.
3. The Company has the corporate power and authority to execute, deliver
and perform the goals and objectives stated in the registration on
its own behalf and on the behalf of its subsidiaries. Any documents
that are necessary to create such power or authority have been
duly executed and delivered to the Company.
4. The execution of the plans stated in the registration do not (I)
breach or result in default under any existing obligation of the
Company pursuant to any contract or obligation that the Company
may have to any party, or (ii) breach or otherwise violate any
existing obligation of the Company under a Court Order.
5. Execution of the purposes and objectives of the Company set forth by
the registration statement do not violate applicable provisions of
statutory law or regulation.
<PAGE>
6. No consent, approval, waiver, license or authorization or other
action by or filing with any governmental authority is required under
state or federal statutes or regulations in connection with the
execution of the purposes and objectives of the Company set forth by
the registration statement, except for those already obtained or
completed or those which the Company intends to obtain or complete at
the appropriate time, as disclosed by the registration statement.
7. There are no other legal actions or proceedings against the Company
pending or overtly threatened in writing before any court,
governmental agency or arbitrator other than those specifically
disclosed in the registration statement.
8. All outstanding shares are validly issued and non-assessable.
All previously issued assessable shares have been redeemed.
The opinion set forth below is based, among other things, on examination of
the following:
1. Copy of the Company's Restated Articles of Incorporation, certified
by the Idaho Secretary of State.
2. Copies of the Company's By-Laws and all amendments thereto.
3. Corporate resolution authorizing the issuance of the Company's common
stock and recognition that the consideration to be received is
fair and adequate.
Section 30-1-603, Idaho Code, state that "a corporation may issue the
number of shares of each class or series authorized by the articles of
incorporation". Article VI of the Company's Restated Articles of Incorporation
states that "the authorized capital stock of this corporation shall be sixty
million (60,000,000) no par, common shares, and ten million preferred shares".
In the public offering that the Company is planning to undertake a total of
7,500,000 shares of common stock are offered. This is in addition to the
5,213,965 shares of common stock already outstanding.
On August 20, 1999, the Company's Board of Directors passed a Resolution
authorizing the issuance and registration of 7,500,000 shares of the Company's
common stock (the "Resolution") at $1.00 per share, no par value. A copy of the
Resolution has been provided by you for our review, accompanied by a certificate
from the Board's secretary attesting to its validity.
Therefore, it is our opinion that the shares are duly authorized.
We express no opinion as to the already outstanding shares of the Company,
nor any shares to be issued subsequent to this offering.
Section 30-1-621, Idaho Code, allows the Board of Directors of an Idaho
corporation to issue shares for consideration. Paragraph (3) of Section
30-1-621 states that "before the corporation issues shares, the Board of
Directors must determine that the consideration received or to be received for
shares to be issued is adequate. That determination by the Board of Directors
is conclusive insofar as the adequacy of consideration for the issuance of
shares relates to whether the shares are validly assessed, fully paid and
non-assessable". Paragraph (4) of Section 30-1-621 states that "when the
corporation receives the consideration for which the Board of Directors
authorized the issuance of shares, the shares issued therefor are fully paid and
non-assessable."
The Board, in the Resolution, deemed $1.00 per share to be adequate and
fair consideration.
Therefore, based on Section 30-1-621, Idaho Code, and the Resolution, it is
our opinion that when the corporation receives the consideration authorized by
the Board for the sale of these securities, the shares will be legally issued,
fully paid and non-assessable under Idaho law.
<PAGE>
Section 30-1-622, Idaho Code, addresses the liability of a corporation's
shareholders. Paragraph (1) of Section 30-1-622 states that a shareholder "is
not liable to the corporation or its creditors with respect to the shares except
to pay the consideration for which the shares were authorized to be issued "
To the best of our knowledge and belief, the Company currently complies
with Section 30-1-622, Idaho Code, in that the corporation's responsibilities
are its own and no shareholder is liable for the Company's obligations.
To the best of our knowledge and belief the shares to be issued in the
instant registration statement will be fully paid and non-assessable when
issued, purchased and the offering price received by the Company.
There can be no assurance that any of the laws discussed above will not
changes, with or without retroactive effect, nor can there by any assurance that
any such changes will not have adverse effect on this opinion.
Other than as expressly stated above, this opinion does not, and should not
be viewed, as addressing compliance with outer laws, state or federal. Further,
we express no opinion on any other issue relating to the proxy or other
solicitation used in connection with a change in the authorized capital of the
Company.
We undertake no responsibility or obligation to update this opinion at any
time during the future, regardless of any changes in circumstances of fact or
law which may occur.
Very truly yours,
HULL & BRANSTETTER CHARTERED
By: /s/
--------------------------------
Michael K. Branstetter
<PAGE>
EXHIBIT 10.1
TRAIL GULCH GOLD
MINGING CO., INC.
MINUTES OF SHAREHOLDERS MEETING
MARCH 17, 1999
On the date above mentioned, at 9:00 AM, in Osburn, Idaho, shareholders meeting
was scheduled. Shares represented by proxy and in person were 1,511,500
representing 50.38% of the total outstanding shares of the corporation. The
only persons present were William T. Jacobson, representing Atlas Mining Company
and other proxies. No directors or officers were present.
Due to the lack of officers or directors to conduct the meeting, the meeting was
postponed until which time a quorum of directors could be present to conduct the
meeting.
Meeting was reconvened on March 25, 1999, at 3:00 PM. Shareholders present were
Atlas Mining Company, Mike Bencich, Mike Pierce and Shirley McClain, the three
later shareholders also being a majority of the board of directors. Mike
Bencich reconvened the meeting.
Since the offer of Atlas Mining Company made last year to purchase the Aulbach
claims owned by Trail Gulch Gold Mining Co., Ltd., Atlas has acquired 1,508,500
shares of Trail Gulch for a costs of 48,500 Atlas Mining Company shares. This
leaves 41,500 shares to be disbursed to the remaining shareholders of Trail
Gulch Mining Company. Mr. Jacobson, representative of Atlas Mining Company,
explained that the transaction was under a Type C reorganization and that the
shares disbursed for the sale should be disbursed to the shareholders of Trail
Gulch Gold Mining Co., Ltd. Mr. Pierce made the motion that the shareholders
approve the sale of the Aulbach claims to Atlas Mining Company. Mr. Bencich
asked for a second . Mrs. McClain seconded. The vote was unanimous.
The question came up about the remaining assets and liabilities of Trail Gulch
Gold Mining Co., Inc. Mr. Jacobson explained to the members present that to his
knowledge there were no records kept for the company due to the nonactivity of
the company over the past ten plus years. He went on to state that he is aware
of a $280 trust account for the company at the office of Evans Keane, and a bill
outstanding from the law office of Michael Peacock. The secretary treasurer
confirmed this. The motion was made by Shirley McClain that the funds be
disbursed as follows: $250 to Michael Peacock, and the balance to Atlas Mining
Company for the costs of copying and mailing the proxy statements. Motion
carried unanimously.
Mr. Jacobson asked that due to the dedication of the board and officers that
they be compensated in stock, and then the remaining shares be disbursed to the
remaining shares be disbursed to the remaining shareholders less those already
surrendered to Atlas. The following motion was present.
For services the following officers and directors be paid 974 shares of Atlas
Mining Company stock each: Michael Bencich, Michael Pierce and Shirley McClain.
Mr. Bencich then explained to the shareholders that unless for some other reason
the company should remain intact that he would recommend that the company
dissolved and that the remaining assets be divided among the remaining
shareholders. The remaining shareholders would receive the following Atlas
Mining Company shares:
Mike Bencich: 26 shares
Mike Pierce: 26 shares
Shirley McClain: 26 shares
John Peacock: 38,500 shares
<PAGE>
This statement was made into a motion by Mr. Pierce, seconded by Mr. Jacobson,
and passed unanimously.
Next Mr. Pierce made the following motion.
RESOLVED. Due to nonactivity, no asset or liabilities of Trail Gulch Gold
Mining Co., Inc. the company should be dissolved.
Motion was seconded by Mr. Jacobson and passed unanimously.
Being no further business the meeting was adjourned.
____________________________________
President
____________________________________
Secretary
<PAGE>
EXHIBIT 10.2
CORPORATE RESOLUTION
TRAIL GULCH GOLD MINING CO., INC.
On the 7th day of June, 1998, a meeting of the board of director of Trail Gulch
Gold Mining Co., Inc. was called to order. Board members present were: Mike
Bencich, president, Michael Pierce, Vice President, Shirley McClain,
Secretary-Treasurer.
Presented to the board was an offer by Atlas Mining Company to purchase the real
property of the company, for stock in Atlas Mining Company. After discussion,
and the consensus of the major shareholders, the following resolution was
passed.
RESOLVED: "That Trail Gulch Gold Mining Co., Inc. sell and convey the property
know as the Alulbach Group and further described in the attachment herein for
100,000 shares of Atlas Mining Company stock. This property is sold free and
clear of any encumbrances or contingent liabilities and the seller is accepting
the property in this condition, excepting any liabilities that are disclosed on
that certain Alliance Title & Escrow Co. title insurance report under file
#20500053, dated June 3, 1998. It was further resolved that the sale of the
above described property is substantially all of the assets of Trail Gulch Gold
Mining Co., Inc. and this transaction will fall under the guidelines of a Type C
reorganization."
This resolution passed unanimously this 7th day of June, 1998.
____________________________________
Shirley McClain, Secretary for
TRAIL GULCH GOLD MINING CO., INC.
____________________________________
Michael Bencich, President
<PAGE>
EXHIBIT 10.3
MINUTES OF DIRECTORS MEETING
OF
PARK COPPER AND GOLD MINING LTD.
A meeting was called to order by Don Ferguson, president, on the 1st day of
July, 1999. Members present were Don Ferguson. Also present was Bill Jacobson,
representing Atlas Mining Company.
President Ferguson stated that he had received word of the resignations of Mr.
H.F. Magnuson, Mel MacPhee and Dennis O'Brien. At this point Mr. Ferguson
appointed Mr. Jacobson to the board and instructed him to take minutes of the
meeting. It was noted that Atlas Mining Company currently holds 53% of the
outstanding stock of Park Copper and Gold and that their representation on the
board was not only welcome but important for the direction of the company. Mr.
Jacobson thanked the president for his appointment and hoped he could help Park
Copper continue a promising future.
After Mr. Jacobson's appointment, he asked the president that the board pass a
resolution as follows:
RESOLVED: That the past directors and officers of Park Copper and Gold have
contributed their time and effort on behalf of the company in a professional
manner, and that the current board hold all past officers and directors harmless
of any actions during their terms with the company.
Mr. Ferguson seconded the motion and it was passed unanimously.
Mr. Ferguson then submitted his resignation indicating that since Atlas Mining
Company was the major shareholder that they should be able to appoint their own
representative to the board. Mr. Jacobson thanked Mr. Ferguson for his
dedication to the company, after which he stated that he would appoint Marqueta
Martinez as secretary, treasurer, and Randy Mattson as an additional board
member.
There being no further business, the meeting was adjourned.
Signed this 15th day of July, 1999.
_____________________________________
Don Ferguson
_____________________________________
Bill Jacobson
<PAGE>
EXHIBIT 10.4
June 22, 1998
To the shareholders of PARK COPPER AND GOLD MINING COMPANY, LTD.
Atlas Mining Company has made an offer to purchase the stock of Park Copper and
Gold. It is the feeling of the undersigned that the addition of Park Copper and
Gold to Atlas would increase the benefits of the shareholders of both companies.
Park Copper and Gold maintains mining claims in the immediate vicinity of Atlas
Mining Company. The joining of the land holdings of Atlas and Park Copper and
Gold will increase the companys' potential.
Park Copper and Gold stock is not readily sellable on any exchange. With
the exchange of stock ownership to Atlas Mining Company, the Park Copper and
Gold shareholders will realize a tradeable stock with an appreciating value.
Since January 1, 1998, Atlas Mining Company stock has sold between .47 and 1.00.
We feel the value of outstanding shares of Park Copper and Gold stock is .095
per share. We herein offer to exchange your shares of Park Copper and Gold at
the rate of one share of Atlas Mining Company for every 7.5 shares of Park
Copper and Gold. Fractional shares will not be issued, however, fractions of
one-half or more will be counted as one shares.
As president of Park Copper & Gold, you should be aware that I have agreed
to this exchange for my personal stock, and that I will be stepping down as
president and resigning from the board upon completion of this transaction. The
undersigned encourage you to send you stock to Transecurities International,
Inc. for an exchange, along with signed copy of this letter agreeing to this
transaction. We are enclosing a stamped envelope for that purpose.
____________________________________ ____________________________________
William T. Jacobson, President Donald Ferguson, President
ATLAS MINING COMPANY PARK COPPER & GOLD MINING
COMPANY, LTD.
The undersigned agrees to sell Park Copper and Gold Mining Company, Ltd stock to
Atlas Mining Company as stated above.
____________________________________
____________________________________
Signature(s) Guaranteed: ____________________________________
<PAGE>
EXHIBIT 10.5
SALES AGREEMENT
Based on miscellaneous negotiations with shareholders of Olympic Silver
Resources, Inc. the following sale of stock is agreed to by and between Atlas
Mining Company and Olympic Silver Resources, Inc.
<TABLE>
<CAPTION>
Shareholder Olympic Shares Atlas Shares Other Considerations
- --------------- ------------------ -------------- ------------------------
<S> <C> <C> <C>
R. Tschauder 1,390,000 338,750 $10,000 cash
Shephard Group 2,910,000 120,000 $2,009.50 Girling,
49,516 $3,410.50 Shephard
$350.00 Gibson
D. Meiser 100,000 26,250
M. Adams 150,000 82,500
W. Moorehead 100,000 55,000
W. Warren 50,000 27,500
M. Sutti 225,000 31,725
G. Arredondo 75,000 10,575
</TABLE>
Signed this 1st day of April, 1999.
______________________________________
For Olympic Silver Resources, Inc.
______________________________________
For Atlas Mining Company
<PAGE>
CORPORATE RESOLUTION
At a shareholders meeting of Olympic Silver Resources, Inc. held on January 29,
1999, at the corporate offices at 732 Sunrise Street, Rathdrum, ID, and
represented in person or by proxy were 4,350,000 shares (87%) of the 5,000,000
shares outstanding of the corporation, a motion from the shareholders was
presented as follows:
Resolved that Olympic Silver Resources, Inc. consents to the acquisition of
Olympic Silver Resources, Inc. common shares by Atlas Mining Company, an Idaho
corporation.
The motion was seconded and passed unanimously by all shares represented.
Signed: __________________________
President
Attested: _________________________
Secretary
<PAGE>
BILL OF SALE AND RESIGNATION
The undersigned sells conveys and transfers all rights title and ownership to
Olympic Silver Resources, Inc. a Nevada corporation, to Atlas Mining Company, an
Idaho corporation. Said sale includes all Olympic Silver Resources, Inc. shares
owned or otherwise assigned to the undersigned, which is no less than 1,730,250
shares. Payment for said ownership is 149,516 shares of Atlas Mining Company
common stock and other considerations.
Further the undersigned herein resigns as an officer and director of Olympic
Silver Resources, Inc. and Minera Argentum, S.A.
Dated: ________________________
Signed: ________________________
Name: Chris Shephard
Address:_______________________
_______________________
________________________
SS#:___________________________
<PAGE>
EXHIBIT 10.6
ARTICLE OF MERGER
OF
SIERRA SILVER-LEAD MINING COMPANY
AND
ATLAS MINING COMPANY
Pursuant to the provisions of the Idaho Business Corporation Act, Part
30-1-1105, the undersigned corporations hereby submit the following Articles of
Merger for filing for the purpose of merging Sierra Silver-Lead Mining Company,
an Idaho corporation ("Sierra"), into Atlas Mining Company, an Idaho corporation
("Atlas").
ARTICLE I
The Plan of Merger of Sierra into Atlas is attached as Exhibit A.
ARTICLE II
The merger was duly approved by the shareholders of Sierra. There is only one
class of Sierra stock outstanding.
Designation Outstanding Shares Shares Voted for Merger Percent
- ----------------------- ------------------ ----------------------- -------
Common Stock 2,594,540 1,304,962 50.45%
ARTICLE III
Approval of the Atlas shareholders was not required to approve the merger.
Dated the 14th day of October, 1998.
ATLAS MINING COMPANY ATLAS MINING COMPANY
By:_____________________________ By:_____________________________
William T. Jacobson, President Kurt Hoffman, Secretary
SIERRA SILVER-LEAD MINING COMPANY SIERRA SILVER-LEAD MINING
COMPANY
By:____________________________ By:_____________________________
Donald C. Springer, President R. M. MacPhee, Secretary
<PAGE>
PLAN OF MERGER
This Plan of Merger is made and entered into this 20th day of August, 1998,
by and between Sierra Silver-Lead Mining Company (Sierra), and Atlas Mining
Company (Atlas), both Idaho corporations.
Sierra Silver-Lead Mining Company is a corporation organized and existing under
the laws of the State of Idaho and has authorized capital stock consisting
of 6,000,000 shares of fully paid, nonassessable stock with .10 par value, of
which 2,594,540 shares are issued and outstanding, and held by 157
shareholders.
Atlas Mining Company is a corporation organized and existing under the laws of
the State of Idaho and has authorized capital stock consisting of 6,000,000
shares of fully outstanding, and held by 157 shareholders.
The Board of Directors of Sierra and Atlas, respectively, deem it advisable for
Sierra to merge into and with Atlas.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Sierra and Atlas hereby agree to the following Plan of Merger.
1. NAMES OF CONSTITUENT CORPORATIONS. Sierra will merge with and into
Atlas. Atlas Mining Company will be the Surviving Corporation.
2. TERMS AND CONDITIONS OF MERGER. The effective date of merger shall
be the date upon which the Articles of Merger are filed with the
Secretary of State. Upon the effective date of the merger: the
separate corporate existence of Sierra shall cease; title to all
real estate and other property owned by Sierra shall be vested in
Atlas without reversion or impairment; and the Surviving Corporation
(Atlas) shall have all liabilities of Sierra. Any proceedings
pending by or against Sierra or Atlas may be continued as if such
merger did not occur, or the surviving Corporation may be
substituted in the proceeding for Sierra.
3. GOVERNING LAW. The laws of the State of Idaho shall govern the
Surviving Corporation.
4. NAME. The name of the Surviving Corporation shall be Atlas Mining
Company.
5. REGISTERED OFFICE. The address of the Registered office of the
Surviving Corporation shall be 416 River Street, Wallace, Idaho
83873.
6. ACCOUNTING. The assets and liabilities of Sierra as of the effective
date of the merger shall be taken up on the books of the Surviving
Corporation at the amounts at which they are carried at that time
Or at the valuation as determined by the directors of each
corporation.
7. ARTICLES OF INCORPORATION AND BYLAWS. The Articles of Incorporation
and Bylaws including any amendments of Atlas will remain the same
except that an Article of Merger will be filed upon acceptance of the
shareholders of Sierra.
<PAGE>
8. DIRECTORS. The directors of Atlas as of the effective date of the
merger shall be the directors of the surviving Corporation until
their respective successors are duly elected and qualified.
9. MANNER AND BASIS OF CONVERTING SHARES. As of the effective date of
the Merger:
Each 3.76 shares of Sierra common stock, with a par value of .10 per share,
Issued and outstanding shall continue to be one share of Atlas common
stock with a par value of .10 per share.
The Surviving Corporation shall convert or exchange each 3.76 shares of Sierra
common stock for one share of the common stock of the Surviving
Corporation; PROVIDED, however, that no fractional shares of the
Surviving Corporation stock shall be issued. In the case of fractional
shares, all fractions of one-half (.50) or more will be issued one
share.
Any shares of stock of Sierra in the Treasury of Sierra on the effective date of
the merger shall be surrendered to the surviving Corporation for
cancellation, and no shares of the Surviving Corporation shall be issued
in respect thereof.
On the effective date of the merger, holders of certificates of common stock in
Sierra shall surrender them to the Surviving Corporation, or its
Appointed agent, in such manner as legally required. Upon receipt of
such certificate, the Surviving Corporation shall issue in exchange
therefor a certificate of shares of common stock in the Surviving
Corporation representing the number of shares of stock to which such
holder shall be entitled as set forth above.
In addition, such shareholder shall be entitled to receive any dividends on such
shares of common stock of the surviving Corporation which may have been
declared and paid between the effective date of the merger and the
issuance to such shareholder of the certificate of such common stock.
10. SHAREHOLDER APPROVAL. This Plan of Merger shall be submitted to the
shareholders of Sierra for their approval in the manner provided
under Idaho Code 30-1-1103, on or before September 30, 1998, or at
such time as the Board of Directors of Sierra shall agree. After
approval by a vote of the holders of the majority of the shares
entitled to vote thereon, the Articles of Merger shall be filed as
required by the laws of the State of Idaho.
<PAGE>
11. RIGHTS OF DISSENTING SHAREHOLDERS. Any shareholder of Sierra who
has the right to dissent from this merger as provided in Idaho Code
30-1-1302, and who so dissents in accordance with the requirements
of such part, shall be entitled, upon surrender of the certificate
or certificates representing certificated shares or upon imposition
of restrictions of transfer of uncertificated shares, to receive
payment of the fair value of such shares as provided therein.
12. COUNTERPARTS. This Plan of Merger may be executed in any number of
counterparts, and all such counterparts and copies shall be and
constitute an original instrument. IN WITNESS WHEREOF, this Plan of
Merger has been adopted by the undersigned as of this 20th day of
August, 1998.
SIERRA SILVER-LEAD MINING COMPANY SIERRA SILVER-LEAD MINING
COMPANY
By:_____________________________ By:_____________________________
Donald C. Springer, its President R. M. MacPhee,
Secretary
ATLAS MINING COMPANY ATLAS MINING COMPANY
By:_____________________________ By:_____________________________
William T. Jacobson, its President Kurt Hoffman, its Secretary
<PAGE>
EXHIBIT 10.7
EQUIPMENT PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into this 22nd day of August, 1997, by and
between FAUSETT INTERNATIONAL, INC., an Idaho corporation, ("FII") and ATLAS
MINING COMPANY, an Idaho corporation ("Buyer");
WHEREAS, FII owns equipment used in providing underground mining and
related civil construction contract services in the state of Idaho and
throughout the western United States; and
WHEREAS, Seller desires to sell and Buyer desires to purchase from Seller
all of the mining equipment, drills, loaders, trucks, tools, vehicles and
supplies upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for the other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties do hereby mutually
agree as follows:
Agreement to Sell and to Buy. Seller, for itself and its respective
successors, legal representatives and assigns, hereby agrees to sell
to Buyer and Buyer, for itself and its successors, legal
representatives and assigns, hereby agrees to purchase from Seller,
for the consideration set forth in Section 2 hereof, all of Seller's
rights, title and interests in and to the property listed in Exhibit
B, attached hereto. Seller warrants that the specified assets are
free from all liabilities and encumbrances, except for the secured
interests of Washington Trust Bank and Orix Credit Alliance as
described in Exhibit A, attached hereto. Buyer is not assuming any
underlying debts in a timely and orderly manner.
Purchase Price and Method of Payment. Subject to the adjustments
Hereinafter specified, the total purchase price is One Million Four
Hundred Sixteen Thousand Ninety-Four Dollars ($1,416,094.00) and is
payable by the Buyer as follows:
Twenty-five Thousand Dollars ($25,000) upon signing of this
agreement, the receipt of which is hereby acknowleged as earnest
money in partial payment of the purchase price for said assets;
and
The additional sum of Twenty-five Thousand Dollars ($25,000), plus
Three Hundred Fifty Thousand Dollars ($350,000) of Atlas Mining
Company Stock issued at the bid price as of the date of this
agreement to FII, on or before the closing date of this
agreement; and
<PAGE>
The balance of the purchase price shall be evidenced by a promissory
Note payable to Seller which provides for payment principal in
the amount of One Million Sixteen Thousand Ninety-Four Dollars
($1,016,094) payable according to the following schedule.
During the first 12 months of the term of the note, payments
will be $15,000, payable monthly beginning thirty days
after Closing Date. Interest will accrue at the rate of
eight and three quarters percent (8.75%) per annum.
Should Buyer sell or refinance equipment on Exhibit A
(now financed by Washington Trust or Orix Credit), then
Buyer will pay the additional principal payment of the sale
or refinance proceeds directly to the Creditor herein and
Seller will reduce balance of the promissory note in the
amount equal to that paid by the Buyer directly to the
creditor.
At the end of One Year after Closing Date the Buyer shall:
Pay the outstanding principal and accrued interest in one lump payment; or
Refinance the outstanding balance of principal and accrued interest with another
lender; or If after pursuing both SBA and commercial financing for the
purpose of refinancing the outstanding balance of principal and accrued interest
the Buyer is unable to obtain financing the Buyer shall have the option of
refinancing with the Seller the outstanding balance for additional periods of 30
month or 42 month periods, and for periods of one year thereafter. The terms
of the notes shall be of a maximum 7 year amortization and annual percentage
rate no more than the Washington Trust Bank prime rate + .75%.
The Buyer has the right to prepay the note without penalty.
The Buyer agrees that all of the equipment listed on Exhibit
B shall be subject to uniform commercial code security
interests and/or motor vehicle title liens in favor of the
Seller to secure payment of the amount due under the
promissory note. All security interests shall be released
by the Seller when the note is satisfied.
Buyer agrees the duty of Seller to consummate this sale is
expressly contingent upon the approval of the terms hereof
by Washington Trust Bank and Orix Credit Alliance on or
prior to the Closing Date.
Liabilities Not Assumed. This agreement is intended by the parties to
be for the sale of equipment only. It is expressly understood and
agreed that Buyer shall not assume any liability or obligations of
any nature, financial or otherwise, pertaining to the conduct of the
business by Seller prior to the date of closing or the ownership by
Seller of the assets sold to Buyer hereunder.
Closing. It is hereby agreed that this matter shall be closed at the
office of HULL, BRANSTETTER & SIMPSON, Wallace, Idaho. All funds
and instruments necessary to complete the sale and create the
contemplated security interests will be deposited with them. The
Closing Date shall be ______________, 1997, unless an earlier date is
mutually agreed upon.
<PAGE>
Documents to be Delivered by Seller at Closing. At Closing, Seller
Shall deliver to Buyer, in form and substance satisfactory to Buyer
in each case:
Certified copies of resolutions duly adopted by the Board of Directors
and ratification of shareholders of FII approving the
transactions referred to herein and authorizing and directing
the execution of this Agreement and the performance of all
obligations hereunder;
Fully executed Bills of Sale and Assignment with full warranties
of title (except as otherwise shown on Exhibit A hereto)
transferring to Buyer all of Seller's interests of every kind and
nature in and to all equipment and supplies as listed in Exhibit
B;
All other documents or instruments which Buyer may reasonably require
to assure full and effective transfer to Buyer of all of Seller's
property transferred to Buyer pursuant to the terms of this
agreement.
Seller agrees to give the Board of Directors of Atlas Mining Company
voting rights to the stock issued by Atlas as partial payment
herein, said proxy to be nonrevocable for the term of this
agreement or extensions thereof.
Documents to be Delivered by Buyer at Closing. At Closing, Buyer shall
deliver to Seller, in form and substance satisfactory to Seller
in each case;
Payment in full of that portion of the consideration payable on the
Date of Closing as specified in Section 2;
Duly executed promissory note purchase money security agreement and
uniform commercial code filing instrument covering assets
purchased in the amount and payable in the manner specified in
Section 2;
Certified copies of resolutions duly adopted by Buyer's Board of
Directors approving the transactions referred to herein and
authorizing and directing the execution of this Agreement and the
performance of all obligations hereunder;
Such other documents as may be reasonably requested by Seller in order
to complete the transaction contemplated hereby.
Possession. Seller shall deliver to Buyer, and Buyer shall take delivery
of, property to Seller being purchased and sold hereunder on the Date
of Closing.
Seller's Covenant, Representations, and Warranties. As an inducement to
Buyer to enter into this Agreement, Seller for itself and its
respective representatives, successors and assigns, jointly and
severally covenant, represent and warrant to Buyer as follows:
The Seller is now, and on the Date of Closing will be, a corporation duly
organized and in good standing under the laws of the State of Idaho, with the
power to own, sell and transfer its assets, inventory and properties pursuant
to this Agreement;
<PAGE>
The execution, delivery and performance by the Seller of this Agreement, and
each other instrument or agreement contemplated by this agreement, are within
the corporate powers of the Seller, have been duly authorized by all
necessary corporate action on the part of the Seller (including shareholder
approval of transactions or documents contemplated by this Agreement with
respect to which shareholder approval is required by law or each of the
Seller's governing instruments), and will not violate or constitute a default
under any provision of law or of the Articles of Incorporation, By-Laws,
or other contractual obligation of the Seller. This Agreement, together with
all other instruments or agreements contemplated hereunder, when duly
executed and delivered, will be the legal, valid and binding obligation of
the Seller and its heirs or assigns, and is enforceable against the Seller in
accordance with their respective terms;
Except as specified in Exhibit A, Seller has good and marketable title to their
respective assets sold hereunder. On the Date of Closing all tangible
personal property purchased hereunder shall be in as good order and condition
as on the date of this Agreement, ordinary wear and tear excepted;
The Seller is not a party to or by any agreement or instrument or subject to any
charter or corporate resolution or any order, injunction or decree of any
court or governmental agency affecting the properties being purchased by
Buyer hereunder;
Except to the extent otherwise specifically agreed upon under the terms of this
Agreement, the risk of loss of the properties purchased by the Buyer
Hereunder shall remain with Seller until the Closing, at which time such risk
shall become that of the Buyer.
Buyer's Covenants, Representations and Warranties. As an inducement to
Seller to enter into this Agreement, Buyer covenants, represents and
warrants to Seller that:
Buyer is now, and on the Date of Closing will be, a corporation duly organized,
Validly existing and in good standing under the laws of the State of Idaho,
with power to own, purchase and acquire Seller's assets pursuant to this
Agreement; The execution, delivery and performance by Buyer of this
Agreement, and each other instrument or agreement contemplated by the
Agreement, are within the corporate powers of Buyer, have been duly
authorized by all necessary corporate action on the part of Buyer and will
not violate or constitute default under any provision of the Articles of
Incorporation, Bylaws or any other contractual obligation of Buyer. This
Agreement, together with all other instruments or agreements contemplated
hereunder, when duly executed and delivered, will be the legal, valid and
binding obligation of Buyer, and will be enforceable against Buyer in
accordance with their respective terms.
From and after the time of closing Buyer agrees to continually insure the
equipment subject to this agreement in the amount equal to the amount owed
FII from time to time. Buyer further agrees to name FII as an additional
Insured on such theft and casualty policy and with indemnification paying
all proceeds of claims directly to FII or its assigns.
10. Conditions to Obligation of Buyer. The obligations of Buyer under
this Agreement are expressly conditioned upon satisfaction of the
following conditions as of the Date of Closing:
All the terms, covenants and conditions of this Agreement to be compiled with
and performed by the Seller on or before the Date of Closing shall have been
fully complied with and performed in all material respects;
<PAGE>
Seller shall have afforded to the officers and authorized representatives of
Buyer free and full access to the equipment and supplies of Seller prior to the
Date of Closing in order that Buyer shall have full opportunity to make such
inspections of the assets being purchased hereunder and such other
investigations as it shall desire, including the right of Buyer to have an
independent outside appraisal of the assets in Exhibit B, and Seller shall have
furnished Buyer with such additional financial and operating data and other
information as to the maintenance operation of Seller's assets which Buyer shall
from time to time have reasonably requested prior to the Date of Closing.
11. Brokerage. Seller and Buyer warrant and represent to each other
that there is no brokerage or finder's fee payable to any party in
connection with the sale o the assets, inventory, and properties
provided for in this Agreement.
12. Assignment. Prior to the Date of Closing, Buyer may at its option
assign its interests under this Agreement to a third party without
the prior consent of Seller. Seller may at its option assign its
interests under this agreement to a third party without the prior
written consent of Buyer.
13. Miscellaneous.
All covenants, agreements, representations and warranties contained herein
Shall survive the execution of this Agreement and the Date of
Closing hereunder;
The parties shall execute and deliver such other and further documents as
may be necessary to implement and consummate this Agreement;
This Agreement shall be binding upon and inure to the benefit and be
enforceable against the parties hereto and their
respective successors and assigns, and shall in all
respects be governed, enforced and interpreted in
accordance with the laws of the State of Idaho;
Attorney for the Seller is Ben Simpson, Hull Branstetter & Simpson, 416
River Street, Wallace, Idaho 83873. Each party acknowledges the
right of the other to have any and all documents reviewed by their
respective representative.
All notices, demands and requests required or permitted to be given
hereunder shall be deemed duly given if and when mailed by certified
or registered mail, postage prepaid, and, pending the designation
in writing of another address, addressed to Seller as follows:
Fausett International, Inc.
1221 W. Yellowstone Avenue
Osburn, Idaho 83849
and addressed as follows:
Atlas Mining Company
P.O. Box 631
Mullan, ID 83846
(f) This Agreement and the Exhibits attached hereto contain the
entire agreement between the parties, superseding in all respects
any and all prior oral or written agreements or understandings,
between the parties hereto pertaining to the sale of Seller's
equipment purchased and sold hereunder, and shall be amended or
modified only by written instrument signed by both parties
hereto. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and
all of which, taken together, shall constitute one agreement.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto executed this Agreement on
the day and year first above written.
SELLER: Fausett International, Inc.
By: _________________________
Its: ________________________
Date: _______________________
BUYER: Atlas Mining Company
By: _________________________
Its: ________________________
Date: _______________________
<PAGE>
EXHIBIT 10.8
SCHEDULE "A"
<TABLE>
<CAPTION>
QUANTITY DESCRIPTION OF PROPERTY Year & Model Serial No.
<S> <C> <C> <C>
(Indicate whether "NEW" OR "USED"
1 Used Wagner 6-Yard Loaders ST-6C DA14P0344CR005-562
Complete with all related attachments and accessories thereto.
</TABLE>
THE SECURITY INTEREST CREATED BY THIS SECURITY AGREEMENT INSOFAR AS IT RELATES
TO THE ABOVE DESCRIBED PROPERTY IS A PURCHASE MONEY SECURITY INTEREST WITH THE
PROCEEDS HEREOF BEING USED BY MORTGAGOR TO ACQUIRE THE ABOVE DESCRIBED PROPERTY.
<TABLE>
<CAPTION>
QUANTITY DESCRIPTION OF PROPERTY Year & Model Serial No.
<S> <C> <C> <C>
Indicate whether "NEW" OR "USED"
1 New Gardner Denver Jumbo Drill MK35-HE IJ87K36
Complete with all related attachments and accessories thereto.
</TABLE>
THE SECURITY INTEREST CREATED BY THIS SECURITY AGREEMENT INSOFAR AS IT RELATES
TO THE ABOVE DESCRIBED PROPERTY IS A PURCHASE MONEY SECURITY INTEREST WITH THE
PROCEEDS HEREOF BEING USED BY MORTGAGOR TO ACQUIRE THE ABOVE DESCRIBED PROPERTY.
<TABLE>
<CAPTION>
QUANTITY DESCRIPTION OF PROPERTY Year & Model Serial No.
<S> <C> <C> <C>
(Indicate whether "NEW" OR "USED"
1 Wagner Scooptram ST-6C DA14P0434
Complete with all related attachments and accessories thereto.
</TABLE>
THE SECURITY INTEREST CREATED BY THIS SECURITY AGREEMENT INSOFAR AS IT RELATES
TO THE ABOVE DESCRIBED PROPERTY IS A PURCHASE MONEY SECURITY INTEREST WITH THE
PROCEEDS HEREOF BEING USED BY MORTGAGOR TO ACQUIRE THE ABOVE DESCRIBED PROPERTY.
<PAGE>
<TABLE>
<CAPTION>
QUANTITY DESCRIPTION OF PROPERTY Year & Model Serial No.
<S> <C> <C> <C>
(Indicate whether "NEW" OR "USED"
2 EJC 4-Wheel Drive Dump Truck JDT-415 1664, 1793
Complete with all related attachments and accessories thereto.
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT B
PARTS INVENTORY
<S> <C>
- -------------------------------------------------------- -------
2 Brake Valves 1600 (trucks & __________) $ 2,500
- -------------------------------------------------------- -------
Throttle converters & Orbital Steering valves $ 4,000
- -------------------------------------------------------- -------
Hydraulic Pumps $ 5,000
- -------------------------------------------------------- -------
Misc. starters $ 2,000
- -------------------------------------------------------- -------
5yd Differential loader $ 2,000
- -------------------------------------------------------- -------
5yd Torque converter $ 3,800
- -------------------------------------------------------- -------
16 Var. sizes drive lines & yokes $ 2,000
- -------------------------------------------------------- -------
28 Universal Joints Var. sz. $ 8,000
- -------------------------------------------------------- -------
8 New Duetx heads 532@ $ 4,256
- -------------------------------------------------------- -------
24 912W heads 125@ $ 3,000
- -------------------------------------------------------- -------
9 413 Heads 125@ $1,1125
- -------------------------------------------------------- -------
Hydr pump 2 stack for 206 boomer $ 7,000
- -------------------------------------------------------- -------
5 Racks misc. pins & bushings $ 5,000
- -------------------------------------------------------- -------
- -------------------------------------------------------- -------
Injector Pumps:
- -------------------------------------------------------- -------
2 3 Cycl 912w 1000@ $ 1,000
- -------------------------------------------------------- -------
2 4 Cycl 912w 1000@ $ 1,000
- -------------------------------------------------------- -------
3 6 Cycl 912w 1000@ $ 4,000
- -------------------------------------------------------- -------
2 8L413 1000@ $ 1,000
- -------------------------------------------------------- -------
Misc Duetz parts $ 7,000
- -------------------------------------------------------- -------
One van full Filters new 30,000 complete disarray $ 3,000
- -------------------------------------------------------- -------
8 Brake kits 1200@ $ 9,600
- -------------------------------------------------------- -------
Misc. Wagner/Clark components $ 3,500
- -------------------------------------------------------- -------
4 Turbo's altitude Comps. 800@ $ 3,200
- -------------------------------------------------------- -------
Various hydr. Cyclinders, piston rods, repair kits $15,000
- -------------------------------------------------------- -------
3 Hydr. Coolers 1200 & radiators $ 3,000
- -------------------------------------------------------- =======
TOTAL $91,481
- -------------------------------------------------------- =======
</TABLE>
<TABLE>
<CAPTION>
QTY YR MFG EQ# MODEL ENGINE S/N PRICE
- -------- ----- --------- ----- --------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
LOADERS:
- -------- ----- --------- ----- --------- ---------- --------- --------
1 EARLY WAGNER ST-2B $ 20,000
- -------- ----- --------- ----- --------- ---------- --------- --------
70'S
- -------- ----- --------- ----- --------- ---------- --------- --------
1 EARLY WAGNER ST-2B $ 20,000
- -------- ----- --------- ----- --------- ---------- --------- --------
70'S
- -------- ----- --------- ----- --------- ---------- --------- --------
1 1981 WAGNER 301 3 YD F-8L #413 DA04C489 $ 45,000
- -------- ----- --------- ----- --------- ---------- --------- --------
LHD
- -------- ----- --------- ----- --------- ---------- --------- --------
1 1984 WAGNER 302 3 YD F-8L #413 DA04P449 $ 20,000
- -------- ----- --------- ----- --------- ---------- --------- --------
LHD
- -------- ----- --------- ----- --------- ---------- --------- --------
1 1981 WAGNER 501 ST-SH LHD F-12L #413 421-81 $ 25,000
- -------- ----- --------- ----- --------- ---------- --------- --------
1 1991 WAGNER 601 ST-6C LHD F-10L #413 DA1490434 $ 95,000
- -------- ----- --------- ----- --------- ---------- --------- --------
1 1989 WAGNER 602 ST-6C LHD F-10L #413 DA14P034 $ 85,000
- -------- ----- --------- ----- --------- ---------- --------- --------
(eod) 4
- -------- ----- --------- ----- --------- ---------- --------- --------
TRUCKS:
- -------- ----- --------- ----- --------- ---------- --------- --------
1 1990 WAGNER HTO3 MT-416 F-8L #413 DBO6P026 $ 45,000
- -------- ----- --------- ----- --------- ---------- --------- --------
0
- -------- ----- --------- ----- --------- ---------- --------- --------
1 1989 EIMCO HTO2 JD 415-B F-8L #413 1793 $ 35,000
- -------- ----- --------- ----- --------- ---------- --------- --------
1 1988 EIMCO HTO1 JD 415-B F-8L #413 1664 $ 35,000
- -------- ----- --------- ----- --------- ---------- --------- --------
1 1987 DUX DT-15 3306-CAT 661 $ 10,000
- -------- ----- --------- ----- --------- ---------- --------- --------
DRILLS:
- -------- ----- --------- ----- --------- ---------- --------- --------
1 1995 GARDNER MK-35 2 BOOM IJ87K36 $225,000
- -------- ----- --------- ----- --------- ---------- --------- --------
DENVER JUMBO
- -------- ----- --------- ----- --------- ---------- --------- --------
1 1987 MERC 14 SINGLE JUMBO ID#2331 $ 70,000
- -------- ----- --------- ----- --------- ---------- --------- --------
BOOM
- -------- ----- --------- ----- --------- ---------- --------- --------
3 GARDNER DENVER 3100 W/PR123 $ 36,000
- -------- ----- --------- ----- --------- ---------- --------- --------
AIR TRACKS DRILLS
- -------- ----- --------- ----- --------- ---------- --------- --------
1 GARDNER DENVER MINI BOOM LONG HOLE DRILL $ 20,000
- -------- ----- --------- ----- --------- ---------- --------- --------
21 & JACKLEG & STOPERS $ 31,000
- -------- ----- --------- ----- --------- ---------- --------- --------
11 $1,000 @
- -------- ----- --------- ----- --------- ---------- --------- --------
2 SINKING HAMMERS, 5 CHIPPING HAMMERS, 4 SPLITTERS $ 11,000
- -------- ----- --------- ----- --------- ---------- --------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MISCELLANEOUS:
QTY YR MFG EQ# MODEL ENGINE S/N PRICE
- --- ------- ----------- -------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 CYDERMAN-HERMAN W/SPARE BOOM $12,500
- --- ------- ----------- -------- ---------- ------- ------- -------
1 1979 ADSPACE 12X63 DRYHOUSE ID#3034 $15,000
8 Showers, 4 Sinks, 2
Toilets, 2 Urinals,
Electr. Heat & A/C
- --- ------- ----------- -------- ---------- ------- ------- -------
1 CATERPILLAR GEN. SET ON SKIDS 365 K.W. $30,000
3 Phase 480 Volts 3408 B CAT Powered
- --- ------- ----------- -------- ---------- ------- ------- -------
1 INGERSOLL RAND SR2000 SERIES ELECTRIC $14,000
- --- ------- ----------- -------- ---------- ------- ------- -------
6 5 40' & 1 30' STORAGE VAN $2,500 @ $15,000
- --- ------- ----------- -------- ---------- ------- ------- -------
1 20' Shipping Container $ 2,000
- --- ------- ----------- -------- ---------- ------- ------- -------
1 30' OFFICE/DRY TRAILER $ 6,000
- --- ------- ----------- -------- ---------- ------- ------- -------
1 14' Flat Trailer w/Tilt $ 500
- --- ------- ----------- -------- ---------- ------- ------- -------
1 8' X 12' Tool Trailer $ 500
- --- ------- ----------- -------- ---------- ------- ------- -------
2 1978-79 GARDNER DENVER FLEXAIR COMPRESSORS 750CFM 11,000 $22,000
@
- --- ------- ----------- -------- ---------- ------- ------- -------
2 1980s ATLAS COPCO COMPRESSORS 175CFM 5,000@ $10,000
- --- ------- ----------- -------- ---------- ------- ------- -------
1 GARDNER DENVER 300 COMPRESSOR 300CFM $ 7,500
- --- ------- ----------- -------- ---------- ------- ------- -------
1 JARVIS CLARK SIZZORLIFT $30,000
- --- ------- ----------- -------- ---------- ------- ------- -------
1 GETMAN LUBE TRUCK $15,000
- --- ------- ----------- -------- ---------- ------- ------- -------
1 GETMAN PERSONNEL CARRIER $15,000
- --- ------- ----------- -------- ---------- ------- ------- -------
3 WELDERS, 1 HOBART, 2 LINCOLN 4,000@ $12,000
- --- ------- ----------- -------- ---------- ------- ------- -------
1 SHOTCRETE MACHINE $20,000
- --- ------- ----------- -------- ---------- ------- ------- -------
1 FIAT ALLIS FD5 $25,000
DOZER
- --- ------- ----------- -------- ---------- ------- ------- -------
1 MANCHE 24' Gauge $ 7,500
MOTOR
- --- ------- ----------- -------- ---------- ------- ------- -------
1 PLYMOUTH LOCOMOTIVE #5903 $15,000
- --- ------- ----------- -------- ---------- ------- ------- -------
4 2 @ 20 CELL LOCO & BATTERY CHARGERS $ 8,250
- --- ------- ----------- -------- ---------- ------- ------- -------
1 12 B MUCKER 24' Gauge $ 6,000
- --- ------- ----------- -------- ---------- ------- ------- -------
4 ORE & TIMBER CARS FOR RAIL $2,500 @ $10,000
- --- ------- ----------- -------- ---------- ------- ------- -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
VEHICLES:
- ----------------------------------------------------------------------------------------------
QTY YR MFG EQ# MODEL ENGINE S/N PRICE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
1 1994 FORD TON 4X4 P.U. 12,000-11,116.9 $883
- ----------------------------------------------------------------------------------------------
2 1994 FORD TON 4X4 P.U. 24,000-17,677.8 $6,322
- ----------------------------------------------------------------------------------------------
1 1994 CHEV. TON P.U. $12,000
- ----------------------------------------------------------------------------------------------
1 1983 DODGE FLATBED 1 TON
- ----------------------------------------------------------------------------------------------
1 1981 GMC V-7 FLATBED 2 TON $7,000
- ----------------------------------------------------------------------------------------------
1 1984 FORD TON 4X4 P.U. $5,000
- ----------------------------------------------------------------------------------------------
1 1994 FORD VAN 10,000-10,621.28 <$621>
- ----------------------------------------------------------------------------------------------
1 1982 CHEV. 4X4 DIESEL $2,000
- ----------------------------------------------------------------------------------------------
OFFICE EQUIPMENT:
- ----------------------------------------------------------------------------------------------
1 1996 MSD IBM PENTIUM W/MONITOR, PRINTER & SOFTWARE $3,000
- ----------------------------------------------------------------------------------------------
1 IBM COMPACT 488 W/MONITOR, PRINTER & SOFTWARE $1,000
- ----------------------------------------------------------------------------------------------
1 1995 MINOLTA EP1081 COPIER $3,000
- ----------------------------------------------------------------------------------------------
4 DESKS & CHAIRS, 9 3 DRAWER FILE CABINETS $3,000
- ----------------------------------------------------------------------------------------------
VICTRAULIC SUPPLIES value based on '95 inventory. See attached sheets pg. B3 & B4 $16,000
- ----------------------------------------------------------------------------------------------
PUMPS, FANS, LAMPS & CHARGERS See attached. Pg. B5 $77,934
- ----------------------------------------------------------------------------------------------
MISC PARTS IN GREEN BUILDING See attached. Pg. B6 & B7 $58,345
- ----------------------------------------------------------------------------------------------
MISC PARTS IN SHOP AND SHED FOR EQUIP. ABOVE. See attached. Pg. B8 $91,481
- ----------------------------------------------------------------------------------------------
Write-down Inventory "97" -21,000
- ----------------------------------------------------------------------------------------------
TOTAL: $1,416,094
- ----------------------------------------------------------------------------------------------
Equipment Disposal -150,000
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION QUANTITY PRICE TOTAL
- ----------- --------------------- -------- ----- ---------
<S> <C> <C> <C> <C>
2X2X1 N025 VIC TEE 9 21.76 $ 195.84
- ----------- --------------------- -------- ----- ---------
2X2X1 N029 VIC TEE NPT 1 23.04 $ 23.04
- ----------- --------------------- -------- ----- ---------
2X2X2 N020 VIC TEE 35 10.06 $ 352.10
- ----------- --------------------- -------- ----- ---------
2X1 N050 VIC REDUCER 4 7.71 $ 30.84
- ----------- --------------------- -------- ----- ---------
4X2 N050 VIC REDUCER 6 9.00 $ 54.00
- ----------- --------------------- -------- ----- ---------
2X1 N051 VIC REDUCER NPT 3 9.03 $ 27.09
- ----------- --------------------- -------- ----- ---------
4X2 N051 VIC REDUCER NPT 1 12.04 $ 12.04
- ----------- --------------------- -------- ----- ---------
2' N010 90 DEGREE 54 6.53 $ 352.62
- ----------- --------------------- -------- ----- ---------
2' N011 45 DEGREE 45 6.53 $ 293.85
- ----------- --------------------- -------- ----- ---------
2' N012 22 DEGREE 67 6.97 $ 466.99
- ----------- --------------------- -------- ----- ---------
2' N013 11 DEGREE 12 16.67 $ 200.04
- ----------- --------------------- -------- ----- ---------
2' N077 VIC COUPLING 177 10.30 $1,823.10
- ----------- --------------------- -------- ----- ---------
2X1 N072 VIC DROP NPT 11 13.81 $ 151.91
- ----------- --------------------- -------- ----- ---------
1' N077 VIC COUPLING 32 3.53 $ 112.96
- ----------- --------------------- -------- ----- ---------
3' N077 VIC COUPLING 20 6.16 $ 123.80
- ----------- --------------------- -------- ----- ---------
21/2 ' N012 22 DEGREE 4 7.31 $ 29.24
- ----------- --------------------- -------- ----- ---------
3' N013 11 DEGREE 3 10.25 $ 30.75
- ----------- --------------------- -------- ----- ---------
3' N012 22 DEGREE 8 10.25 $ 88.00
- ----------- --------------------- -------- ----- ---------
3X2 N050 VIC REDUCER 8 7.66 $ 61.28
- ----------- --------------------- -------- ----- ---------
3' N011 45 DEGREE 12 11.61 $ 139.32
- ----------- --------------------- -------- ----- ---------
3' N010 90 DEGREE 13 11.61 $ 150.93
- ----------- --------------------- -------- ----- ---------
3' N078 SNAP JOINT 12 16.23 $ 194.76
- ----------- --------------------- -------- ----- ---------
4' N077 VIC COUPLING 150 10.40 $1,560.00
- ----------- --------------------- -------- ----- ---------
4' N010 90 DEGREE 13 19.32 $ 251.60
- ----------- --------------------- -------- ----- ---------
4' N012 22 DEGREE 28 13.75 $ 385.00
- ----------- --------------------- -------- ----- ---------
N011 45 DEGREE 37 19.32 $ 714.84
- ----------- --------------------- -------- ----- ---------
4 N013 11 DEGREE 8 13.75 $ 110.00
- ----------- --------------------- -------- ----- ---------
4X1 N085 TEE 9 26.06 $ 234.54
- ----------- --------------------- -------- ----- ---------
4X2 N029 TEE 1 28.94 $ 28.94
- ----------- --------------------- -------- ----- ---------
4X1 N072 DROP NPT 2 14.57 $ 29.14
- ----------- --------------------- -------- ----- ---------
6X11/2 N072 DROP 7 22.47 $ 157.29
- ----------- --------------------- -------- ----- ---------
6' N077 VIC COUPLINGS 30 18.67 $ 560.10
- ----------- --------------------- -------- ----- ---------
6' N010 90 DEGREE 11 36.10 $ 397.10
- ----------- --------------------- -------- ----- ---------
6' N012 22 DEGREE 14 39.01 $ 546.14
- ----------- --------------------- -------- ----- ---------
6' N020 TEE 4 58.76 $ 235.04
- ----------- --------------------- -------- ----- ---------
6' N0715 CHECK VALVE 4 212.46 $ 849.84
- ----------- --------------------- -------- ----- ---------
4' N0715 CHECK VALVE 2 111.64 $ 223.88
- ----------- --------------------- -------- ----- ---------
8 N0715 CHECK VALVE 2 81.40 $ 162.80
- ----------- --------------------- -------- ----- ---------
DESCRIPTION QUANTITY PRICE TOTAL
- ----------- --------------------- -------- ----- ---------
8' N077 VIC COUPLINGS 37 38.12 $1,188.44
- ----------- --------------------- -------- ----- ---------
12' N077 VIC COUPLINGS 6 54.94 $ 329.64
- ----------- --------------------- -------- ----- ---------
8' N010 90 DEGREE 3 75.76 $ 287.28
- ----------- --------------------- -------- ----- ---------
8' N011 45 DEGREE 3 100.88 $ 302.64
- ----------- --------------------- -------- ----- ---------
8X6 N050 REDUCER 1 47.84 $ 47.84
- ----------- --------------------- -------- ----- ---------
6' BUTTERFLY VALVE 3 223.94 $ 671.82
- ----------- --------------------- -------- ----- ---------
4' BUTTERFLY VALVE 5 100.68 $ 503.40
- ----------- --------------------- -------- ----- ---------
3' BUTTERFLY VALVE 7 74.89 $ 524.23
- ----------- --------------------- -------- ----- ---------
2' BUTTERFLY VALVE 6 45.40 $ 272.40
- ----------- --------------------- -------- ----- ---------
2' BALL VALVE 2 54.28 $ 108.56
- ----------- --------------------- -------- ----- ---------
2' BALL VALVE 6 24.01 $ 144.06
- ----------- --------------------- -------- ----- ---------
6' N0995 VIC COUPLER 2 93.98 $ 187.96
- ----------- --------------------- -------- ----- ---------
4' N060 CAP ENDS 3 5.91 $ 17.73
- ----------- --------------------- -------- ----- ---------
4X3 N050 REDUCER 8 11.29 $ 22.58
- ----------- --------------------- -------- ----- ---------
4X2 N051 REDUCER NPT 5 12.04 $ 60.20
- ----------- --------------------- -------- ----- ---------
6' WHY 1 107.41 $ 107.41
- ----------- --------------------- -------- ----- ---------
6X4 N051 REDUCER NPT 1 87.60 $ 87.60
- ----------- --------------------- -------- ----- ---------
4' WHY 2 60.54 $ 121.08
- ----------- --------------------- -------- ----- ---------
4' N078 SNAP JOINTS 9 20.90 $ 188.10
- ----------- --------------------- -------- ----- ---------
2' N078 SNAP JOINTS 3 10.30 $ 30.90
- ----------- --------------------- -------- ----- ---------
1' N078 SNAP JOINTS 4 7.87 $ 31.48
- ----------- --------------------- -------- ----- ---------
</TABLE>
<PAGE>
EXHIBIT "A"
EQUIPMENT: All equipment of Debtor now owned or hereafter acquired
including, but not limited to mining equipment and machinery, together with all
parts, fittings, and accessions at anytime acquired, wherever located.
INVENTORY: All inventory of debtor now owned or hereafter acquired,
including, but not limited to, raw materials, work in process, finished goods
and materials and supplies used or consumed in debtor's business including, but
not limited to drill bits, drill shafts and other consumable mining inventory
whether in the possession of the debtor, warehouseman, bailee, or any other
person or wherever located, and all proceeds and products of debtor's inventory
in any form.
CASH AND DEPOSIT ACCOUNTS: All cash and deposit accounts in any form excluding
payroll and tax reserve accounts.
DATED this 11th day of October, 1989.
Fausett International, Inc.
By:________________________________
President
By:________________________________
Treasurer
Washington Trust Bank
By:_________________________________
Vice President
<PAGE>
FAUSETT INTERNATIONAL, INC.
FAUSETT MINE SERVICES, INC.
Exhibit A
ACCOUNTS: All accounts, chattel paper, contracts and contract receivables,
instruments, documents or other writing evidencing a monetary obligation, all
other rights to payments, including, but not limited to, all general intangibles
evidencing or comprising a right to receive payment, including all city, county,
state and federal tax refunds or other receivables due from such sources now or
at anytime hereafter existing whether or not earned by performance arising out
of the conduct of the Debtor's business together with all rights, titles,
security and guaranties of each account including any right to stop in transit
and all security interest, claims and pledges whether voluntary or involuntary
which are pertinent to or affect such accounts and all returned or repossessed
goods sold in inventory. All accounts, chattel paper, instruments general
intangibles, and rights to payment of every kind, now or hereafter owing to
Debtor including but not limited to that certain contract between Debtor and
Pegasus Gold Corporation dated 24th day of June, 1994.
CASH AND DEPOSIT ACCOUNTS: All cash deposit accounts in any form excluding
payroll and tax reserve accounts.
GENERAL INTANGIBLES: All general intangibles (as defined in Article 9 of the
Uniform Commercial Code) now owned or hereafter acquired, together with all
renewals, replacements and/or substitutions therefore or additions thereto, all
rights accruing therefrom and all proceeds thereof.
FAUSETT INTERNATIONAL, INC.
By:_______________________________
By:_______________________________
FAUSETT MINE SERVICES, INC.
By:_______________________________
By:_______________________________
<PAGE>
EXHIBIT "A"
EQUIPMENT: All equipment of Debtor now owned or hereafter acquired
including, but not limited to mining equipment and machinery, together with all
parts, fittings, and accessions at anytime acquired, wherever located.
INVENTORY: All inventory of debtor now owned or hereafter acquired,
including, but not limited to, raw materials, work in process, finished goods
and materials and supplies used or consumed in debtor's business including, but
not limited to drill bits, drill shafts and other consumable mining inventory
whether in the possession of the debtor, warehouseman, bailee, or any other
person or wherever located, and all proceeds and products of debtor's inventory
in any form.
CASH AND DEPOSIT ACCOUNTS: All cash and deposit accounts in any form excluding
payroll and tax reserve accounts.
DATED this 11th day of October, 1989.
Fausett International, Inc.
By:________________________________
President
By:________________________________
Treasurer
Washington Trust Bank
By:_________________________________
Vice President
<PAGE>
FAUSETT INTERNATIONAL, INC.
FAUSETT MINE SERVICES, INC.
Exhibit A
ACCOUNTS: All accounts, chattel paper, contracts and contract receivables,
instruments, documents or other writing evidencing a monetary obligation, all
other rights to payments, including, but not limited to, all general intangibles
evidencing or comprising a right to receive payment, including all city, county,
state and federal tax refunds or other receivables due from such sources now or
at anytime hereafter existing whether or not earned by performance arising out
of the conduct of the Debtor's business together with all rights, titles,
security and guaranties of each account including any right to stop in transit
and all security interest, claims and pledges whether voluntary or involuntary
which are pertinent to or affect such accounts and all returned or repossessed
goods sold in inventory. All accounts, chattel paper, instruments general
intangibles, and rights to payment of every kind, now or hereafter owing to
Debtor including but not limited to that certain contract between Debtor and
Pegasus Gold Corporation dated 24th day of June, 1994.
CASH AND DEPOSIT ACCOUNTS: All cash deposit accounts in any form excluding
payroll and tax reserve accounts.
GENERAL INTANGIBLES: All general intangibles (as defined in Article 9 of the
Uniform Commercial Code) now owned or hereafter acquired, together with all
renewals, replacements and/or substitutions therefore or additions thereto, all
rights accruing therefrom and all proceeds thereof.
FAUSETT INTERNATIONAL, INC.
By:_______________________________
By:_______________________________
FAUSETT MINE SERVICES, INC.
By:_______________________________
By:_______________________________
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT B
GREEN BUILDING:
<C> <S> <C>
- --- --------------------------------------------------------------- --------
1 Air powered welder $ 2,000
- --- --------------------------------------------------------------- --------
3 Piston pumps $ 3,300
- --- --------------------------------------------------------------- --------
1 Grout pump-hand oper. $ 800
- --- --------------------------------------------------------------- --------
Alimak climber motor $ 1,800
- --- --------------------------------------------------------------- --------
G.D. feed motor & gear box $ 2,000
- --- --------------------------------------------------------------- --------
1000 feet vent bag var. size 2.25@ $ 2,250
- --- --------------------------------------------------------------- --------
3 Air saws 5 @300, 2@ 1200, 1@ 1500 $ 2,400
- --- --------------------------------------------------------------- --------
7 Shelves misc. G.D. parts $ 6,000
- --- --------------------------------------------------------------- --------
3 Chest Valves 700 @ $ 2,100
- --- --------------------------------------------------------------- --------
10 Chest valves 350 @ $ 3,500
- --- --------------------------------------------------------------- --------
4 Cyderman air valves 150 @ $ 600
- --- --------------------------------------------------------------- --------
5 Shelves, misc Wagner & mantrip parts, bushings, bearings, pins,
hydr. & water pump parts $ 8,000
- --- --------------------------------------------------------------- --------
Hilti concrete drill electric $ 2,000
- --- --------------------------------------------------------------- --------
2 DH 123 drifter drills 2800 @ 1 dismantled $ 5,600
- --- --------------------------------------------------------------- --------
Misc 310 Cavo parts $ 4,000
- --- --------------------------------------------------------------- --------
3 Air tuggers 7000 winch. $ 2,100
- --- --------------------------------------------------------------- --------
12 6' & 8' cheave blocks 150@ $ 1,800
- --- --------------------------------------------------------------- --------
Misc. Weldon air pump parts $ 2,500
- --- --------------------------------------------------------------- --------
Misc. leg parts - jacklegs & Drill steel $ 1,000
- --- --------------------------------------------------------------- --------
Safety equip. respirators $ 500
- --- --------------------------------------------------------------- --------
12 50' 1' air hoses 160@ $ 1,920
- --- --------------------------------------------------------------- --------
11 50' 2' air hoses 175@ $ 1,925
- --- --------------------------------------------------------------- --------
Misc. caterpillar parts $ 500
- --- --------------------------------------------------------------- ========
Total Green Building $ 82,059
- --- --------------------------------------------------------------- ========
Bits left are odd balls -22,464
- --- --------------------------------------------------------------- --------
50 @ new bits @ 25 +1,250
- --- --------------------------------------------------------------- ========
Total Green Building $ 58,345
- --- --------------------------------------------------------------- ========
</TABLE>
<PAGE>
EXHIBIT 10.9
ADDENDUM TO PURCHASE AGREEMENT
DATED AUGUST 22, 1997
This is to modify the maturity date of the Equipment Purchase Agreement of
August 22, 1998, between Fausett International, Inc. and Atlas Mining Company.
It is mutually agreed that the date of maturity of this agreement be extended to
August 22, 2001. It is mutually agreed that the maturity of the Promissory Note
dated September 30, 1997, negotiated in conjunction with the Equipment Purchase
Agreement also be extended to August 22, 2001.
Signed this ___ day of December, 1998.
___/s/______________________________
For Fausett International, Inc.
__/s/____________________________
For Atlas Mining Company
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement, on Form SB-2 (SEC File No. 333-90895) of our report
dated January 22, 1999 except for Note 13 which is dated February 5, 1999 on the
balance sheet of Atlas Mining Company as of December 31, 1998, and the related
statements of income, changes in stockholders' equity and cash flows for each of
the years in the two-year period ended December 31, 1998, which appear in the
Prospectus.
/s/ Moss Adams LLP
Seattle, Washington
February 9, 2000
<PAGE>
EMPLOYMENT AGREEMENT
Atlas Mining Company has herein agreed to hire William T. Jacobson, as president
and chief executive officer of Atlas Mining Company for a yearly compensation of
$72,000.00.
Signed this 19th day of January, 1999.
/s/ Kurt J. Hoffman
- --------------------------
For Atlas Mining Company
<PAGE>
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into as to the day of
1999, by and between Atlas Mining Company ("Issuer"), 1221 West Yellowstone
Avenue, Osburn, Idaho 83849 and Idaho Independent Bank ("Escrow Agent"), 8882
North Government Way, Hayden, Idaho 83835.
RECITALS:
A. Issuer proposes to offer for sale to subscribers 7,500,000 shares
("Shares") of the common capital stock of Atlas Mining Company. Each
share is offered at a price of One Dollar ($1.00) per Share, payable
at the time of subscription, and such payments, will be paid into the
escrow created by this Agreement.
B. The Offering is registered with the United States Securities and
Exchange Commission ("SEC") in accordance with the Securities Act of
1933 and the rules and regulations promulgated thereunder. Each
subscriber will be provided a prospectus ("Prospectus") and a
subscription agreement, which will be completed and submitted with
payment by cashiers check or wire transfer to the Escrow Agent.
C. Issuer desires to establish an escrow account in which funds received
from subscribers will be deposited pending completion of the Escrow
Period (as defined below). Idaho Independent Bank agrees to serve as
Escrow Agent in accordance with the terms and conditions set forth
herein.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereby agree as follows:
1. Issuer hereby appoints Idaho Independent Bank as Escrow Agent and
Escrow Agent shall establish an escrow account (the "Escrow Account")
on its books styled "Atlas Mining Company Escrow Account." Commencing
upon the execution of this Agreement, Escrow Agent shall act as Escrow
Agent and hereby agrees to receive and disburse the proceeds from the
Offering of the Shares in accordance with the terms herewith. Issuer
agrees to notify the Escrow Agent promptly of the closing of the
Offering ("Closing") and sale of the Shares.
Wiring instructions for wire transfers into the escrow account are:
Idaho Independent Bank, Hayden, Idaho
ABA 123103732
Account Number 0200025575
Checks must be payable to "Atlas Mining Company Escrow Account."
2. Upon receipt of a wire transfer or check from a subscriber, Escrow
Agent will provide notice to Issuer of such. Escrow Agent will provide
the subscription agreement and the confirmed amount of consideration
for the Shares subscribed. Prior to Closing, the Issuer is aware and
understands that it is not entitled to any proceeds from subscriptions
deposited into the Escrow Account and no amounts deposited in the
Escrow Account during the Escrow Period (as defined below) shall
become the property of the Issuer or any other entity, or be subject
to the debts of the Issuer or any other entity.
<PAGE>
3. The Escrow Period shall commence on the date hereof and shall
terminate upon the earlier to occur of the following dates:
(a) Ten (10) business days following the "Closing," which for the
purposes of this Agreement shall be 30 days after the effective
date of Issuer's registration statement with the SEC unless (i)
Issuer elects to continue to offer the Shares for sale until some
later date, as permitted by the Prospectus, and (ii) Issuer
notifies Escrow Agent in writing no later than ten (10) days of
such extension specifying the extended Closing Date;
(b) Ten (10) business days following the date upon which a
determination is made by the Issuer to terminate the Offering, as
communicated to Escrow Agent in writing; or
(c) Ten (10) business days after all shares offered are sold.
Not withstanding anything to the contrary contained herein, the
Closing date is intended to signify the date of the cessation of the
Offering as provided in the Prospectus, and not the termination of the
Escrow Period of this Agreement, and upon the occurrence of any of the
events described above, the Escrow Period shall continue for such ten
(10) business day period solely for the limited purposes of collecting
subscribers' checks which have been deposited prior to such event and
disbursing funds from the Escrow Account as provided herein. Escrow
Agent will not accept deposits of subscribers' checks after notice
that any of the events described above has occurred.
In no event will the Escrow Period last longer than 100 days. However,
failure to comply with this provision shall not entitle either party
to damages, compensatory or punitive, nor injunctive relief.
4. The Escrow Agent will deposit the subscribers' checks for collection
and credit the proceeds to the Escrow Account to be held by it under
the terms of this Agreement. Notwithstanding anything to the contrary
contained herein, Escrow Agent is under no duty or responsibility to
enforce collection of any checks delivered to Escrow Agent hereunder.
The Escrow Agent hereby is authorized to forward each check for
collection and deposit the proceeds in the Escrow Account. As an
alternative, the Escrow Agent may telephone the bank on which the
check is drawn to confirm that the check has been paid. Any item
returned to the Escrow Agent on its first presentation for payment
shall be returned to Issuer and need not be again presented by the
Escrow Agent for collection. For purposes of this Agreement, the term
"collected funds" or the term "collected" when referring to the
proceeds of subscribers' checks shall mean all funds received by
Escrow Agent that have cleared normal banking channels and are in the
form of cash.
5. If Issuer notifies the Escrow Agent in writing that Issuer elects to
terminate the Offering as provided in paragraph 3 (b) above, the
Escrow Agent shall then issue and mail its bank checks to the
subscribers in the amount of the subscribers' respective checks,
without deduction, penalty or expense to the subscriber, and shall,
for this purpose, be authorized to rely upon the names and addresses
of the subscribers furnished to it as contemplated above. The purchase
money returned to each subscriber shall be free and clear of any and
all claims of the Issuer and any of its creditors. For each
subscription for which the Escrow Agent has not collected funds but
has submitted the subscriber's check for collection, the Escrow Agent
shall promptly issue a check to such subscriber in the amount of the
collected funds from such subscriber's check after the Escrow Agent
has collected such funds. If Escrow Agent has not yet submitted such
subscriber's check for collection, the Escrow Agent shall promptly
remit the subscriber's check directly to such subscriber.
<PAGE>
At such time as Escrow Agent shall have made the payments and
remittances provided in the Agreement, the Escrow Agent shall be
completely discharged and released of any and all further liabilities
and responsibilities hereunder.
6. As consideration for its agreement to act as Escrow Agent as herein
described, Issuer agrees to pay the Escrow Agent an administration fee
of $7,500.00 upon execution of this Agreement, plus the fees described
on the attached fee schedule. Further, Issuer agrees to pay all
disbursements and advances incurred or made by the Escrow Agent in
performance of its duties hereunder, including reasonable fees,
expenses and disbursements of its counsel, all in accordance with the
attached fee schedule or the other provisions of this Agreement.
If the Issuer rejects any subscription for which Escrow Agent has
already collected funds, the Escrow Agent shall promptly issue a
refund check to the rejected subscriber in the amount of the
subscriber's check. If the Issuer rejects any subscription for which
the Escrow Agent has not yet collected funds but has submitted the
subscriber's check for collection, the Escrow Agent shall promptly
issue a check in the amount of the collected funds from the
subscriber's check to the rejected subscriber after the Escrow Agent
has cleared such funds. If Escrow Agent has not yet submitted a
rejected subscriber's check for collection, the Escrow Agent shall
promptly remit the subscriber's check directly to the subscriber.
7. This Agreement shall automatically terminate upon the earlier of (i)
twenty (20) days after the Closing or (ii) twenty (20) days after the
date upon which the Escrow Agent has delivered the final portion of
Escrow Account funds pursuant to the terms of this Agreement.
8. Escrow Agent reserves the right to resign hereunder, upon ten (30)
days prior written notice to Issuer, except that Escrow Agent will not
resign while the Offering is open. In the event of said resignation,
and prior to the effective date thereof, Issuer, by written notice to
Escrow Agent shall designate a successor escrow agent to assume the
responsibilities of Escrow Agent under this Agreement, and Escrow
Agent immediately shall deliver any undisbursed Escrow Account funds
to such successor escrow agent. If Issuer shall fail to designate such
a successor escrow agent within such time period, the Escrow Agent may
deliver any undisbursed funds into the registry of any court having
jurisdiction.
<PAGE>
9. The Escrow Agent shall have no responsibility except for the
investment, safekeeping and delivery of the amounts deposited in the
Escrow Account in accordance with this Agreement. The Escrow Agent
shall not be liable for any act done or omitted to be done under this
Agreement or in connection with the amounts deposited in the Escrow
Account, except as a result of the Escrow Agent's gross negligence or
willful misconduct. The Escrow Agent is not a party to nor is it bound
by, nor need it give consideration to the terms or provisions of, even
though it may have knowledge of (i) any agreement or undertaking by,
between or among the Issuer and any other party, except this
Agreement, (ii) any agreement or undertaking that may be evidenced by
this Agreement, (iii) any other agreements that may now or in the
future be deposited with the Escrow Agent in connection with this
Agreement. The Escrow Agent is not a party to, is not responsible for,
and makes no representations with respect to the offer, sale or
distribution of the Shares including, but not limited to, matters set
forth in any offering documents prepared and distributed in connection
with the offer, sale and distribution of the Shares.
<PAGE>
10. The Escrow Agent has no duty to determine or inquire into any
happening or occurrence of or of any performance or failure of
performance of the Issuer or of any other party with respect to
agreements or arrangements with any other party. If any question,
dispute or disagreement arises among the parties hereto and/or any
other party with respect to the funds deposited in the Escrow Account
of the proper interpretation of this Agreement, the Escrow Agent shall
not be required to act and shall not be held liable for refusal to act
until the question or dispute is settled, and the Escrow Agent has the
absolute right at its discretion to do either or both of the
following:
(i) withhold and/or stop all further performance under this
Agreement until the Escrow Agent is satisfied, by receipt of
a written document in form and substance satisfactory to the
Escrow Agent and executed and binding upon all interested
parties hereto (who may include the subscribers), that the
question, dispute, or disagreement had been resolved; or
(ii) file a suit in interpleader and obtain by final judgment,
rendered by a court of competent jurisdiction, an order
binding all parties interested in the matter.
The Escrow Agent may consult with counsel of its own choice and shall have full
and complete authorization and protection for and shall not be liable for any
action taken or suffered by it hereunder in good faith and believed by it to be
authorized hereby under this agreement or applicable laws.
11. The Escrow Agent shall be obligated only for the performance of such
duties as are specifically set forth in this Agreement and may rely
and shall be protected in acting or refraining from acting upon any
written notice, instruction or request furnished to it hereunder and
believed by it to be genuine and to have been signed or presented by
the proper party or parties and to take statements made therein as
authorized and correct without any affirmative duty of investigation.
12. The Escrow Agent shall not be liable to any person for anything which
it may do or refrain from doing in connection with this agreement,
including the Escrow Agent's own negligence, but excluding the Escrow
Agent's own gross negligence or willful malfeasance. In no event shall
the Escrow Agent be liable to any third party for special, indirect,
or consequential damages, or loss profits or loss of business, arising
under or in connection with this agreement.
13. The Escrow Agent shall not be bound by any modification, amendment,
termination, cancellation, rescission or supersession of this
Agreement unless the same shall be in writing and signed by all of the
other parties hereto and , if its duties as Escrow Agent hereunder are
affected thereby, unless it shall have given prior written consent
thereto.
The following are miscellaneous provisions applying to all parties:
14. Notices required to be sent hereunder shall be delivered by hand, sent
by an express mail service or sent via United States mail, postage
prepaid, certified, return receipt requested, to the following
addresses:
If to Issuer:
Atlas Mining Company
1221 W. Yellowstone Avenue
Osburn, Idaho 83849
<PAGE>
If to Escrow Agent:
Idaho Independent Bank
8882 North Government Way
Hayden, Idaho 83835
From time to time any party hereto may designate an address other than the
address listed above by giving the other parties hereto not less than five
(5) days advance notice of such change in address in accordance with the
provisions hereof.
15. This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Idaho and the laws of the United States applicable to
transactions in Idaho.
16. No right or remedy in this Agreement is intended to be exclusive of any
right or remedy. Neither this Agreement nor the exercise by either party of
(or the failure to so exercise) any rights, power or remedy conferred
herein or by law shall be construed as relieving any person liable from
full liability.
17. No delay or omission by either party to exercise any right or remedy shall
impair such right or remedy or any other right or remedy or shall be
construed to be a waiver of any default or an acquiescence therein.
18. The invalidity or unenforceability of any of the rights or remedies herein
provided in any jurisdiction shall not in any way affect the right to the
endorsement in such jurisdiction or elsewhere of any of the other rights or
remedies herein provided.
19. This Agreement shall be binding upon and inure to the benefit of the
respective heirs, successors, representatives and authorized assigns of the
parties.
20. This Agreement embodies the entire agreement and understanding between the
parties hereto and supersedes all prior agreements and understandings
relating to the subject matter hereof.
21. The headings in this Agreement are for the purpose of reference only, and
shall not limit or otherwise affect any of the terms hereof.
EXECUTED on the date first written above.
ISSUER:
Atlas Mining Company
By: /s/ William T. Jacobson
----------------------------
William T. Jacobson, President
By: /s/
----------------------------
, Chairman of the Board
ESCROW AGENT:
Idaho Independent Bank
By: /s/ Craig Buckhart
----------------------------
Printed Name: Craig Buckhart
---------------
Title: Manager
---------
<PAGE>
CORPORATE RESOLUTION
ATLAS MINING COMPANY
Pursuant to Idaho statutes, Title 30, Corporations, the Board of Directors
of Atlas Mining Company ("Corporation") do hercby adopt and authorize the
following resolutions:
RESOLVED, that the Corporation register with the S.E.C., offer and issue
7,500,000 shares of common stock of the corporation at a purchase price of $1.00
per share, deemed adequate and fair consideration by this Board, and
RESOLVED FURTHER, that the officers and appropriate employees and agents of
the Corporation are hereby authorized and directed to take any actions necessary
to fulfill the objectives stated in these resolutions; further, any action taken
before the date hereof with the intent to bring about the objectives adopted and
approved herein are hereby ratified.
Passed this 20th day of August, 1999
/s/ William Jacobson
- ---------------------------
President
/s/ Kurt Hoffman
- ---------------------------
Secretary
<PAGE>
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