U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
File No.: __________________
CIK:
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
SUN RIVER MINING, INC.
COLORADO 84-1384159
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State or other jurisdiction of IRS Employer ID Number
incorporation or organization
4058 HISTEAD WAY, EVERGREEN, COLORADO 80439
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(Address of principal executive offices) (Zip Code)
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Issuer's telephone number: 308-728-3509
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Not Applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
TABLE OF CONTENTS
PART I
Page
Item 1. Business..................................................... 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 17
Item 3. Properties.................................................. 19
Item 4. Security Ownership of Certain Beneficial Owners
and Management........................................ 19
Item 5. Directors and Executive Officers of the Registrant.......... 20
Item 6. Executive Compensation...................................... 23
Item 7. Certain Relationships and Related Transactions.............. 25
Item 8. Description of Securities................................... 27
PART II
Item 1. Market for Registrant's Common Stock and
Security Holder Matters............................... 28
Item 2. Legal Proceedings........................................... 28
Item 3. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure................ 28
Item 4. Recent Sales of Unregistered Securities..................... 29
Item 5. Indemnification of Directors and Officers................... 40
PART F/S
Signature Page................................................................ 41
Financial Statements and Supplementary Data.................................. F-1 - F-19
Index to Exhibits............................................................ 42
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PART I
General
Sun River Mining Inc. ("Sun River", the "Company" or the "issuer") is a Colorado corporation incorporated on February 25, 1997 to assume control of two subsidiaries, Grupo Inversor Rio Del Sol S.A. ("Rio Del Sol"), and North Bolivian Investment S.A. ("NBI"), respectively 99.6% and 99.9924% then owned by Sun River. Rio Del Sol and NBI were both Bolivian corporations. Neither Sun River nor the subsidiaries had any operational history or engaged in significant business operations, and have not generated revenues since inception. Sun River and the Bolivian Subsidiaries are herein referred to collectively as "the Sun River GROUP". The Registered Office of Sun River is 10200 W. 44th Ave., Suite 400, Wheat Ridge, Colorado 80033.
The planned business of Sun River is the acquisition and evaluation of gold prospects, the exploration and development of such prospects, and the production of gold to be sold to international gold wholesalers. No new products or services have been announced to the public. The issuer does not does not currently own any patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts. The issuer has no current sources of raw materials. Governmental approval of principal products or services is not required. Compliance with laws imposed by federal and local governmental authorities may necessitate significant capital outlays, may materially affect the earning power of the Company, or may cause material changes in the any proposed Company activities. The estimate of the amount spent the last two fiscal years on direct costs of searching for mining concessions with merit are approximately $335,000 for the current fiscal year and $599,000 for the prior fiscal year. None of the costs are borne by the customers. No significant cost has been incurred regarding compliance with environmental laws.
Exploration for minerals is highly speculative and involves greater risks than many other businesses. The search for valuable minerals often results in the failure to discover mineralization, or the discovery of mineralization which will not return a profit over the costs incurred. The Company's operations will be subject to all of the operating hazards and risks normally incident to exploring for and developing mineral properties, such as encountering unusual or unexpected formations, environmental pollution, price of fuel, flood or drought conditions, fluctuations in price of gold, uninsured loss or liability, changes in taxes, changes in government policy, lack of diversification, and competition with a number of larger entities which have greater resources and more extensive operating histories than the issuer.
In March 1997, Rio Del Sol entered into a Letter of Understanding whereby Rio Del Sol would acquire an 81% interest in Aluvion S.A., a Bolivian corporation, engaged in the acquisition and exploration of alluvial gold properties in Bolivia, for a total consideration of approximately $9.7 million including the assumption of certain indebtedness. Rio Del Sol's rights and obligation under the Aluvion Agreement have been transferred to NBI. On June 10 and September 11, 1998 NBI received, from Aluvion and its shareholders, an addendum to the original Letter of Understanding agreement amending certain terms including extending the time for payments of the balance due until January 31, 1999. The initial business of Sun River was the acquisition and evaluation of gold properties in Bolivia, the exploration and development of such properties for the production of gold.
Aluvion owned or expected to acquire contractual rights to explore and/or produce gold from several alluvial properties in Bolivia in the Tipuani gold mining district in northwestern Bolivia, which includes the Tipuani and Kaka Rivers and neighboring properties. Following the completion of the Aluvion Acquisition, the Sun River Group was to have interests in several
gold properties, which it intended to bring into production. Those properties may be considered in two categories: dredging properties and dry land properties. Aluvion was to own all of the Sun River Group's rights to dredging properties and be the operator of those properties. The proportionate net interest of Sun River in the dredging properties of Aluvion was to be equivalent to Sun River's indirect equity interest of approximately 81% in Aluvion.
Sun River retained Watts, Griffis and McOuat Limited, an international firm of consulting geologists and engineers, to review Aluvion's estimates of these reserves and of the capital and operating costs of the various projects. With respect to reserves, WGM's estimates agree with those of Aluvion in all material respects except that WGM ascribes a lower grade of 530 mg per cubic meter to the other mineralization of the Upper Tipuani, based on the incomplete nature of the exploration data.
In order to bring the planned projects into commercial production in the preferred time period, Sun River needed to complete a major financing in the estimated minimum amount of $16.4 million. That amount would have allowed Sun River to complete the acquisition of 81% of Aluvion and provide enough capital to put the operating plan into effect. Although Sun River intended to seek a capital commitment of $20 million from a perspective joint venture partner, the amount over $16.4 million was expected to be released back to the joint venture partner at an early stage. As an alternative to the joint venture structure, Sun River had analyzed a corporate financing whereby new investors would contribute the required capital in return for common shares of Sun River.
In May 1998 Sun River entered into a Letter of Intent with Empire Ventures, Inc. ("Empire") to acquire all of the outstanding shares of Empire, which owns mineral properties in Colorado in exchange for 2,300,000 shares of Sun River common stock. Empire was unable to provide to Sun River assurances that there was no material liability regarding environmental issues, and therefore the transaction was not completed.
On January 9, 1999, Rio Del Sol entered into an agreement with Cooperativa Minera Aurifera 26 de Septiembre Poroma Ltda ("Cooperativa") concerning a prospect ("Challana"), which is located along the Challana River in the Tipuani gold mining district of Bolivia.
Sun River Mining, Inc. received a report entitled "Review and Evaluation of the Challana Project, Tipuani Mining District, Bolivia" from Patagonia Capital Corp. ("Patagonia") of Evergreen, Colorado. Patagonia was retained to provide an independent, third party assessment of the Challana Project and recommendations concerning the Sun River Group's financial needs. Discussions contained in the Patagonia report included the belief that "Challana is a low-risk exploration project with significant upside potential, and a property that clearly merits further exploration and development." An exploration/development budget of US$500,000 was proposed and agreed to by the parties. Rio Del Sol was to retain ownership of the capital equipment required for the project (estimated to be approximately one-half of the $500,000 required investment). The Sun River Group did not have the funds to fulfill the contractual terms of the agreements with the Cooperativa and unsuccessfully pursued funding to meet the terms of these agreements.
Sun River had two Bolivian subsidiaries which it has abandoned and they are dissolved. Due to the extremely difficult financial environment now present in the precious metals mining industry, the payment terms of the agreements regarding the Bolivian prospects, the marginal economics indicated in light of recent gold prices, the continuing decline in the price of gold, and the risk of doing business in a foreign country including relying on other people to manage certain aspects of the business or provide necessary professional services, neither the subsidiaries nor the Sun River was able to secure the funds, or a commitment for such funds, necessary to fulfill contractual agreements. Sun River ceased funding to its former Bolivian subsidiaries and has expensed all investment, $923,834 including the initial April 3, 1997 investment of $312,106, in such subsidiaries.
On June 9, 1999, Sun River entered into an agreement with Compania Minera Cerros del Sur S. de R.L. de C.V. to purchase the mineral company and its principal holdings, including a mineral concession, a producing mine and a processing plant at Clavo Rico, near the city of Choluteca, southern Honduras. The companies agreed for Sun River Mining to evaluate the company for a period of up to 90 days, after which time Sun River had the option to acquire 100% of the operating company. The assets included a mining concession of approximately 500 acres and approximately 23 acres of deeded surface. On October 19, 1999, the Agreement was reaffirmed as the parties agreed that Sun River shall have up to an additional 90 days in which to continue to evaluate the property and disburse the first acquisition payment. Total purchase price was $335,000 payable in two installments within 90 days after signing a definitive agreement to purchase. The Company does not presently have adequate funds secured to fulfill any contractual agreements and the option to purchase has expired. The Company does not intend to further pursue any venture in Honduras unless it has available funds with which to pay any venture costs.
The Company has no commercial operations as of date hereof. The Company has two employees, one of which is full-time. The Company owns no real estate.
The Company is a "shell" company and its only current business plan is to seek, investigate, and, if warranted, acquire one or more properties or businesses, and to pursue other related activities intended to enhance shareholder value. The acquisition of a business opportunity may be made by purchase, merger, exchange of stock, or otherwise, and may encompass assets or a business entity, such as a corporation, joint venture, or partnership. The Company has no capital, and it is unlikely that the Company will be able to take advantage of more than one such business opportunity. The Company intends to seek opportunities demonstrating the potential of long-term growth as opposed to short-term earnings.
At the present time the Company has not identified any business opportunity that it plans to pursue, nor has the Company reached any agreement or definitive understanding with any person concerning an acquisition. The Company is filing Form 10-SB on a voluntary basis in order to become a 12(g) registered company under the Securities Exchange Act of 1934. As a "reporting company," the Company may be more attractive to a private acquisition target because it may be listed to trade its shares on the OTCBB.
It is anticipated that the Company's officers and directors will contact broker-dealers and other persons with whom they are acquainted who are involved in corporate finance matters to advise them of the Company's existence and to determine if any companies or businesses they represent have an interest in considering a merger or acquisition with the Company. No assurance can be given that the Company will be successful in finding or acquiring a desirable business opportunity, given that no funds that are available for acquisitions, or that any acquisition that occurs will be on terms that are favorable to the Company or its stockholders.
The Company's search will be directed toward small and medium-sized enterprises which have a desire to become public corporations and which are able to satisfy, or anticipate in the reasonably near future being able to satisfy, the minimum asset requirements in order to qualify shares for trading on NASDAQ or a stock exchange (See "Investigation and Selection of Business Opportunities"). The Company anticipates that the business opportunities presented to it will (i) be recently organized with no operating history, or a history of losses attributable to under-capitalization or other factors; (ii) be experiencing financial or operating difficulties; (iii) be in need of funds to develop a new product or service or to expand into a new market; (iv) be relying upon an untested product or marketing concept; or (v) have a combination of the characteristics mentioned in (i) through (iv). The Company intends to concentrate its acquisition efforts on properties or businesses that it believes to be undervalued. Given the above factors, investors should expect that any acquisition candidate may have a history of losses or low profitability.
The Company does not propose to restrict its search for investment opportunities to any particular geographical area or industry, and may, therefore, engage in essentially any business, to the extent of its limited resources. This includes industries such as service, finance, natural resources, manufacturing, high technology, product development, medical, communications and others. The Company's discretion in the selection of business opportunities is unrestricted, subject to the availability of such opportunities, economic conditions, and other factors.
As a consequence of this registration of its securities, any entity which has an interest in being acquired by, or merging into the Company, is expected to be an entity that desires to become a public company and establish a public trading market for its securities. In connection with such a merger or acquisition, it is highly likely that an amount of stock constituting control of the Company would be issued by the Company or purchased from the current principal shareholders of the Company by the acquiring entity or its affiliates.
If stock is purchased from the current shareholders, the transaction is
very likely to result in substantial gains to them relative to their purchase
price for such stock. In the Company's judgment, none of its officers and
directors would thereby become an "underwriter" within the meaning of the
Section 2(11) of the Securities Act of 1933, as amended. The sale of a
controlling interest by certain principal shareholders of the Company could
occur at a time when the other shareholders of the Company remain subject to
restrictions on the transfer of their shares.
Depending upon the nature of the transaction, the current officers and directors of the Company may resign management positions with the Company in connection with the Company's acquisition of a business opportunity. See "Form of Acquisition," below, and "Risk Factors - The Company - Lack of Continuity in Management." In the event of such a resignation, the Company's current management would not have any control over the conduct of the Company's business following the Company's combination with a business opportunity.
It is anticipated that business opportunities will come to the Company's attention from various sources, including its officers and director, its other stockholders, professional advisors such as attorneys and accountants, securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals. The Company has no plans, understandings, agreements, or commitments with any individual for such person to act as a finder of opportunities for the Company.
The Company does not foresee that it would enter into a merger or acquisition transaction with any business with which its officers or directors are currently affiliated. Should the Company determine in the future, contrary to foregoing expectations, that a transaction with an affiliate would be in the best interests of the Company and its stockholders, the Company is in general permitted by Colorado law to enter into such a transaction if:
1. The material facts as to the relationship or interest of the affiliate and as to the contract or transaction are disclosed or are known to the Board of Directors, and the Board in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors constitute less than a quorum; or
2. The material facts as to the relationship or interest of the affiliate and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or
3. The contract or transaction is fair as to the Company as of the time it is authorized, approved or ratified, by the Board of Directors or the stockholders.
INVESTIGATION AND SELECTION OF BUSINESS OPPORTUNITIES
To a large extent, a decision to participate in a specific business opportunity may be made upon management's analysis of the quality of the other company's management and personnel, the anticipated acceptability of new products or marketing concepts, the merit of technological changes, the perceived benefit the company will derive from becoming a publicly held entity, and numerous other factors which are difficult, if not impossible, to analyze through the application of any objective criteria. In many instances, it is anticipated that the historical operations of a specific business opportunity may not necessarily be indicative of the potential for the future because of the possible need to shift marketing approaches substantially, expand significantly, change product emphasis, change or substantially augment management, or make other changes. The Company will be dependent upon the owners of a business opportunity to identify any such problems which may exist and to implement, or be primarily responsible for the implementation of, required changes. Because the Company may participate in a business opportunity with a newly organized firm or with a firm which is entering a new phase of growth, it should be emphasized that the Company will incur further risks, because management in many instances will not have proved its abilities or effectiveness, the eventual market for such company's products or services will likely not be established, and such company may not be profitable when acquired.
It is anticipated that the Company will not be able to diversify, but will essentially be limited to one such venture because of the Company's limited financing. This lack of diversification will not permit the Company to offset potential losses from one business opportunity against profits from another, and should be considered an adverse factor affecting any decision to purchase the Company's securities.
It is emphasized that management of the Company may effect transactions having a potentially adverse impact upon the Company's shareholders pursuant to the authority and discretion of the Company's management to complete acquisitions without submitting any proposal to the stockholders for their consideration. Holders of the Company's securities should not anticipate that the Company necessarily will furnish such holders, prior to any merger or acquisition, with financial statements, or any other documentation, concerning a target company or its business. In some instances, however, the proposed participation in a business opportunity may be submitted to the stockholders for their consideration, either voluntarily by such directors to seek the stockholders' advice and consent or because state law so requires.
The analysis of business opportunities will be undertaken by or under the supervision of the Company's President, who is not a professional business analyst. See "Management." Although there are no current plans to do so, Company management might hire an outside consultant to assist in the investigation and selection of business opportunities, and might pay a finder's fee. Since Company management has no current plans to use any outside consultants or advisors to assist in the investigation and selection of business opportunities, no policies have been adopted regarding use of such consultants or advisors, the criteria to be used in selecting such consultants or advisors, the services to be provided, the term of service, or regarding the total amount of fees that may be paid. However, because of the limited resources of the Company, it is likely that any such fee the Company agrees to pay would be paid in stock and not in cash. Otherwise, the Company anticipates that it will consider, among other things, the following factors:
1. Potential for growth and profitability, indicated by new technology, anticipated market expansion, or new products;
2. The Company's perception of how any particular business opportunity will be received by the investment community and by the Company's stockholders;
3. Whether, following the business combination, the financial condition of the business opportunity would be, or would have a significant prospect in the foreseeable future of becoming sufficient to enable the securities of the Company to qualify for listing on an exchange or on a national automated securities quotation system, such as NASDAQ, so as to permit the trading of such securities to be exempt from the requirements of Rule 15c2-6 recently adopted by the Securities and Exchange Commission. See "Risk Factors - The Company -Regulation of Penny Stocks."
4. Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities, through joint ventures or similar arrangements, or from other sources;
5. The extent to which the business opportunity can be advanced;
6. Competitive position as compared to other companies of similar size and experience within the industry segment as well as within the industry as a whole;
7. Strength and diversity of existing management, or management prospects that are scheduled for recruitment;
8. The cost of participation by the Company as compared to the perceived tangible and intangible values and potential; and
9. The accessibility of required management expertise, personnel, raw materials, services, professional assistance, and other required items.
In regard to the possibility that the shares of the Company would qualify for listing on NASDAQ, the current standards include the requirements that the issuer of the securities that are sought to be listed have total net tangible assets of at least $4,000,000. Many, and perhaps most, of the business opportunities that might be potential candidates for a combination with the Company would not satisfy the NASDAQ listing criteria.
No one of the factors described above will be controlling in the selection of a business opportunity, and management will attempt to analyze all factors appropriate to each opportunity and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Potential investors must recognize that, because of the Company's limited capital available for investigation and management's limited experience in business analysis, the Company may not discover or adequately evaluate adverse facts about the opportunity to be acquired.
The Company is unable to predict when it may participate in a business opportunity. It expects, however, that the analysis of specific proposals and the selection of a business opportunity may take several months or more. Prior to making a decision to participate in a business opportunity, the Company will generally request that it be provided with written materials regarding the business opportunity containing such items as a description of products, services and company history; management resumes; financial information; available projections, with related assumptions upon which they are based; an explanation of proprietary products and services; evidence of existing patents, trademarks, or services marks, or rights thereto; present and proposed forms of compensation to management; a description of transactions between such company and its affiliates during relevant periods; a description of present and required facilities; an analysis of risks and competitive conditions; a financial plan of operation and estimated capital requirements; audited financial statements, or if they are not available, unaudited financial statements, together with reasonable assurances that audited
financial statements would be able to be produced within a reasonable period of time not to exceed 60 days following completion of a merger transaction; and other information deemed relevant.
As part of the Company's investigation, the Company's executive officers and directors may meet personally with management and key personnel, may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check references of management and key personnel, and take other reasonable investigative measures, to the extent of the Company's limited financial resources and management expertise.
It is possible that the range of business opportunities that might be available for consideration by the Company could be limited by the impact of Securities and Exchange Commission regulations regarding purchase and sale of "penny stocks." The regulations would affect, and possibly impair, any market that might develop in the Company's securities until such time as they qualify for listing on NASDAQ or on another exchange which would make them exempt from applicability of the "penny stock" regulations. See "Risk Factors -- Regulation of Penny Stocks."
Company management believes that various types of potential merger or acquisition candidates might find a business combination with the Company to be attractive. These include acquisition candidates desiring to create a public market for their shares in order to enhance liquidity for current shareholders, acquisition candidates which have long-term plans for raising capital through the public sale of securities and believe that the possible prior existence of a public market for their securities would be beneficial, and acquisition candidates which plan to acquire additional assets through issuance of securities rather than for cash, and believe that the possibility of development of a public market for their securities will be of assistance in that process. Acquisition candidates which have a need for an immediate cash infusion are not likely to find a potential business combination with the Company to be an attractive alternative.
There are no loan arrangements or arrangements for any financing whatsoever relating to any business opportunities.
FORM OF ACQUISITION
It is impossible to predict the manner in which the Company may participate in a business opportunity. Specific business opportunities will be reviewed as well as the respective needs and desires of the Company and the promoters of the opportunity and, upon the basis of that review and the relative negotiating strength of the Company and such promoters, the legal structure or method deemed by management to be suitable will be selected. Such structure may include, but is not limited to leases, purchase and sale agreements, licenses, joint ventures and other contractual arrangements. The Company may act directly or indirectly through an interest in a partnership, corporation or other form of organization. Implementing such structure may require the merger, consolidation or reorganization of the Company with other corporations or forms of business organization, and although it is likely, there is no assurance that the Company would be the surviving entity. In addition, the present management and stockholders of the Company most likely will not have control of a majority of the voting shares of the Company following a reorganization transaction. As part of such a transaction, the Company's existing directors may resign and new directors may be appointed without any vote by stockholders.
It is likely that the Company will acquire its participation in a business opportunity through the issuance of Common Stock or other securities of the Company. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called "tax free" reorganization under the Internal Revenue Code of 1986, depends upon the issuance to the stockholders of the acquired company of a controlling interest (i.e. 80% or more) of the common stock of the combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions rather than other "tax free" provisions provided under the Internal Revenue Code, the Company's current stockholders would retain in the aggregate 20% or less of the total issued and outstanding shares. This could result in substantial additional dilution in the equity of those who were stockholders of the Company prior to such reorganization. Any such issuance of additional shares might also be done simultaneously with a sale or transfer of shares representing a controlling interest in the Company by the current officers, directors and principal shareholders. (See "Description of Business - General").
It is anticipated that any new securities issued in any reorganization would be issued in reliance upon exemptions, if any are available, from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of the transaction, the Company may agree to register such securities either at the time the transaction is consummated, or under certain conditions or at specified times thereafter. The issuance of substantial additional securities and their potential sale into any trading market that might develop in the Company's securities may have a depressive effect upon such market.
The Company will participate in a business opportunity only after the negotiation and execution of a written agreement. Although the terms of such agreement cannot be predicted, generally such an agreement would require specific representations and warranties by all of the parties thereto, specify certain events of default, detail the terms of closing and the conditions which must be satisfied by each of the parties thereto prior to such closing, outline the manner of bearing costs if the transaction is not closed, set forth remedies upon default, and include miscellaneous other terms.
As a general matter, the Company anticipates that it, and/or its officers and principal shareholders will enter into a letter of intent with the management, principals or owners of a prospective business opportunity prior to signing a binding agreement. Such a letter of intent will set forth the terms of the proposed acquisition but will not bind any of the parties to consummate the transaction. Execution of a letter of intent will by no means indicate that consummation of an acquisition is probable. Neither the Company nor any of the other parties to the letter of intent will be bound to consummate the acquisition unless and until a definitive agreement concerning the acquisition as described in the preceding paragraph is executed. Even after a definitive agreement is executed, it is possible that the acquisition would not be consummated should any party elect to exercise any right provided in the agreement to terminate it on specified grounds.
It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation would not be recoverable. Moreover, because many providers of goods and services require compensation at the time or soon after the goods and services are provided, the inability of the Company to pay until an indeterminate future time may make it impossible to procure goods and services.
In all probability, upon completion of an acquisition or merger, there will be a change in control through issuance of substantially more shares of common stock. Further, in conjunction with an acquisition or merger, it is likely that management may offer to sell a controlling interest at a price not relative to or reflective of any value of the shares sold by management, and at a price which could not be achieved by individual shareholders at the time.
INVESTMENT COMPANY ACT AND OTHER REGULATION
The Company may participate in a business opportunity by purchasing, trading or selling the securities of such business. The Company does not, however, intend to engage primarily in such activities. Specifically, the Company intends to conduct its activities so as to avoid being classified as an "investment company" under the Investment Company Act of 1940 (the "Investment Act"), and therefore to avoid application of the costly and restrictive registration and other provisions of the Investment Act, and the regulations promulgated thereunder.
Section 3(a) of the Investment Act contains the definition of an "investment company," and it excludes any entity that does not engage primarily in the business of investing, reinvesting or trading in securities, or that does not engage in the business of investing, owning, holding or trading "investment securities" (defined as "all securities other than government securities or securities of majority-owned subsidiaries") the value of which exceeds 40% of the value of its total assets (excluding government securities, cash or cash items). The Company intends to implement its business plan in a manner which will result in the availability of this exception from the definition of "investment company." Consequently, the Company's participation in a business or opportunity through the purchase and sale of investment securities will be limited.
The Company's plan of business may involve changes in its capital structure, management, control and business, especially if it consummates a reorganization as discussed above. Each of these areas is regulated by the Investment Act, in order to protect purchasers of investment company securities. Since the Company will not register as an investment company, stockholders will not be afforded these protections.
Any securities which the Company might acquire in exchange for its Common Stock are expected to be "restricted securities" within the meaning of the Securities Act of 1933, as amended (the "Act"). If the Company elects to resell such securities, such sale cannot proceed unless a registration statement has been declared effective by the Securities and Exchange Commission or an exemption from registration is available. Section 4(1) of the Act, which exempts sales of securities not involving a distribution, would in all likelihood be available to permit a private sale. Although the plan of operation does not contemplate resale of securities acquired, if such a sale were to be necessary, the Company would be required to comply with the provisions of the Act to effect such resale.
An acquisition made by the Company may be in an industry which is regulated or licensed by federal, state or local authorities. Compliance with such regulations can be expected to be a time-consuming and expensive process.
COMPETITION
The Company expects to encounter substantial competition in its efforts to locate attractive opportunities, primarily from business development companies, venture capital partnerships and corporations, venture capital affiliates of large industrial and financial companies, small investment companies, and wealthy individuals. Many of these entities will have significantly greater experience, resources and managerial capabilities than the Company and will therefore be in a better position than the Company to obtain access to attractive business opportunities. The Company also will possibly experience competition from other public "blank check" companies, some of which may have more funds available than does the Company.
NO RIGHTS OF DISSENTING SHAREHOLDERS
The Company does not intend to provide Company shareholders with complete disclosure documentation including audited financial statements, concerning a possible target company prior to acquisition, because Colorado Business Corporation Act vests authority in the Board of Directors to decide and approve matters involving acquisitions within certain restrictions. A transaction could be structured as an acquisition, not a merger, with the Registrant being the parent company and the acquiree being merged into a wholly owned subsidiary. Therefore, a shareholder will have no right of dissent under Colorado law.
NO TARGET CANDIDATES FOR ACQUISITION
None of the Company's Officers, Directors, promoters, affiliates, or associates have had any preliminary contact or discussion with any specific candidate for acquisition. There are no present plans, proposals, arrangements, or understandings with any representatives of the owners of any business or company regarding the possibility of an acquisition transaction.
ADMINISTRATIVE OFFICES
The Company currently maintains a mailing address at 4058 Histead Way, Evergreen, Colorado 80439 which is the office address of its President, Steven Davis. Other than this mailing address, the Company does not currently maintain any other office facilities, and does not anticipate the need for maintaining office facilities at any time in the foreseeable future. The Company pays no rent or other fees for the use of this mailing address.
EMPLOYEES
The Company is a development stage company and currently has two employees, one of which is full time. Management of the Company expects to use consultants, attorneys and accountants as necessary, and does not anticipate a need to engage any full-time employees so long as it is seeking and evaluating business opportunities. The need for employees and their availability will be addressed in connection with the decision whether or not to acquire or participate in specific business opportunities. Although there is no current plan with respect to its nature or amount, remuneration may be paid to or accrued for the benefit of, the Company's officers prior to, or in conjunction with, the completion of a business acquisition for services actually rendered, if any. See "Executive Compensation" and under "Certain Relationships and Related Transactions."
RISK FACTORS
1. CONFLICTS OF INTEREST. Certain conflicts of interest may exist between the Company and its officers and directors. They have other business interests to which they devote their attention, and may be expected to continue to do so although management time should be devoted to the business of the Company. As a result, conflicts of interest may arise that can be resolved only through exercise of such judgment as is consistent with fiduciary duties to the Company. See "Management," and "Conflicts of Interest."
It is anticipated that Company's officers and directors may actively negotiate or otherwise consent to the purchase of a portion of his common stock as a condition to, or in connection with, a proposed merger or acquisition transaction. In this process, the Company's officers may consider his own personal pecuniary benefit rather than the best interests of other Company shareholders, and the other Company shareholders are not expected to be afforded the opportunity to approve or consent to any particular stock buy-out transaction. See "Conflicts of Interest."
2. NEED FOR ADDITIONAL FINANCING. The Company has no funds, and such funds are not adequate to take advantage of any available business opportunities. Even if the Company's funds prove to be sufficient to acquire an interest in, or complete a transaction with, a business opportunity, the Company may not have enough capital to exploit the opportunity. The ultimate success of the Company may depend upon its ability to raise additional capital. The Company has not investigated the availability, source, or terms that might govern the acquisition of additional capital and will not do so until it determines a need for additional financing. If additional capital is needed, there is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to the Company. If not available, the Company's operations will be limited to those that can be financed with its modest capital.
3. REGULATION OF PENNY STOCKS. The Company's securities, when available for trading, will be subject to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase "accredited investors" means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell the Company's securities and also may affect the ability of purchasers in this offering to sell their securities in any market that might develop therefore.
In addition, the Securities and Exchange Commission has adopted a number of rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act of 1934, as amended. Because the securities of the Company may constitute "penny stocks" within the meaning of the rules, the rules would apply to the Company and to its securities. The rules may further affect the ability of owners of Shares to sell the securities of the Company in any market that might develop for them.
Shareholders should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker- dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The Company's management is aware of the abuses that have occurred historically in the penny stock market. Although the Company does not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to the Company's securities.
4. LACK OF OPERATING HISTORY. The Company was formed in February 1997 for the purpose of entering the minerals mining business which business plan was unsuccessful. The Company must be regarded as a new or start-up venture with all of the unforeseen costs, expenses, problems, and difficulties to which such ventures are subject.
5. NO ASSURANCE OF SUCCESS OR PROFITABILITY. There is no assurance that the Company will acquire a favorable business opportunity. Even if the Company should become involved in a business opportunity, there is no assurance that it will generate revenues or profits, or that the market price of the Company's Common Stock will be increased thereby.
6. POSSIBLE BUSINESS - NOT IDENTIFIED AND HIGHLY RISKY. The Company has not identified and has no commitments to enter into or acquire a specific business opportunity and therefore can disclose the risks and hazards of a business or opportunity that it may enter into in only a general manner, and cannot disclose the risks and hazards of any specific business or opportunity that it may enter into. An investor can expect a potential business opportunity to be quite risky. The Company's acquisition of or participation in a business opportunity will likely be highly illiquid and could result in a total loss to the Company and its stockholders if the business or opportunity proves to be unsuccessful. See Item 1 "Description of Business."
7. TYPE OF BUSINESS ACQUIRED. The type of business to be acquired may be one that desires to avoid effecting its own public offering and the accompanying expense, delays, uncertainties, and federal and state requirements which purport to protect investors. Because of the Company's limited capital, it is more likely than not that any acquisition by the Company will involve other parties whose primary interest is the acquisition of control of a publicly traded company. Moreover, any business opportunity acquired may be currently unprofitable or present other negative factors.
8. IMPRACTICABILITY OF EXHAUSTIVE INVESTIGATION. The Company's lack of funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a business opportunity before the Company commits its capital or other resources thereto. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if the Company had more funds available to it, would be desirable. The Company will be particularly dependent in making decisions upon information provided by the promoter, owner, sponsor, or others associated with the business opportunity seeking the Company's participation. A significant portion of the Company's available funds may be expended for investigative expenses and other expenses related to preliminary aspects of completing an acquisition transaction, whether or not any business opportunity investigated is eventually acquired.
9. LACK OF DIVERSIFICATION. Because of the limited financial resources that the Company has, it is unlikely that the Company will be able to diversify its acquisitions or operations. The Company's probable inability to diversify its activities into more than one area will subject the Company to economic fluctuations within a particular business or industry and therefore increase the risks associated with the Company's operations.
10. RELIANCE UPON FINANCIAL STATEMENTS. The Company generally will require audited financial statements from companies that it proposes to acquire. Given cases where audited financials are available, the Company will have to rely upon interim period unaudited information received from target companies' management that has not been verified by outside auditors. The lack of the type of independent verification which audited financial statements would provide, increases the risk that the Company, in evaluating an acquisition with such a target company, will not have the benefit of full and accurate information about the financial condition and recent interim operating history of the target company. This risk increases the prospect that the acquisition of such a company might prove to be an unfavorable one for the Company or the holders of the Company's securities.
Moreover, the Company will be subject to the reporting provisions of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and thus will be required to furnish certain information about significant acquisitions, including audited financial statements for any business that it acquires. Consequently, acquisition prospects that do not have, or are unable to provide reasonable assurances that they will be able to obtain, the required audited statements would not be considered by the Company to be appropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable. Should the Company, during the time it remains subject to the reporting provisions of the Exchange Act, complete an acquisition of an entity for which audited financial statements prove to be unobtainable, the Company would be exposed to enforcement actions by the Securities and Exchange Commission (the "Commission") and to corresponding administrative sanctions, including permanent injunctions against the Company and its management. The legal and other costs of defending a Commission enforcement action would have material, adverse consequences for the Company and its business. The imposition of administrative sanctions would subject the Company to further adverse consequences.
In addition, the lack of audited financial statements would prevent the securities of the Company from becoming eligible for listing on NASDAQ, or on any existing stock exchange. Moreover, the lack of such financial statements is likely to discourage broker-dealers from becoming or continuing to serve as market makers in the securities of the Company. Without audited financial statements, the Company would almost certainly be unable to offer securities under a registration statement pursuant to the Securities Act of 1933, and the ability of the Company to raise capital would be significantly limited until such financial statements were to become available.
11. OTHER REGULATION. An acquisition made by the Company may be of a business that is subject to regulation or licensing by federal, state, or local authorities. Compliance with such regulations and licensing can be expected to be a time-consuming, expensive process and may limit other investment opportunities of the Company.
12. DEPENDENCE UPON MANAGEMENT; LIMITED PARTICIPATION OF MANAGEMENT. The Company currently has only two individuals who are serving as its officers and directors on a part time basis. The Company will be heavily dependent upon their skills, talents, and abilities to implement its business plan, and may, from time to time, find that the inability of the officers and directors to devote their full time attention to the business of the Company results in a delay in progress toward implementing its business plan. See "Management." Because investors will not be able to evaluate the merits of possible business acquisitions by the Company, they should critically assess the information concerning the Company's officers and directors.
13. LACK OF CONTINUITY IN MANAGEMENT. After March 15, 2000, the Company does not have an employment agreement with its officers and directors, and as a result, there is no assurance they will continue to manage the Company in the future. In connection with acquisition of a business opportunity, it is likely the current officers and directors of the Company may resign subject to compliance with Section 14f of the Securities Exchange Act of 1934. A decision to resign will be based upon the identity of the business opportunity and the nature of the transaction, and is likely to occur without the vote or consent of the stockholders of the Company.
14. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Colorado Statutes provide for the indemnification of its directors, officers, employees, and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of the Company. The Company will also bear the expenses of such litigation for any of its directors, officers, employees, or agents, upon such person's promise to repay the Company therefor if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by the Company which it will be unable to recoup.
15. DIRECTOR'S LIABILITY LIMITED. Colorado Statutes exclude personal liability of its directors to the Company and its stockholders for monetary damages for breach of fiduciary duty except in certain specified circumstances. Accordingly, the Company will have a much more limited right of action against its directors than otherwise would be the case. This provision does not affect the liability of any director under federal or applicable state securities laws.
16. DEPENDENCE UPON OUTSIDE ADVISORS. To supplement the business experience of its officers and directors, the Company may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors. The selection of any such advisors will be made by the Company's President without any input from stockholders. Furthermore, it is anticipated that such persons may be engaged on an "as needed" basis without a continuing fiduciary or other obligation to the Company. In the event the President of the Company considers it necessary to hire outside advisors, he may elect to hire persons who are affiliates, if they are able to provide the required services.
17. LEVERAGED TRANSACTIONS. There is a possibility that any acquisition of a business opportunity by the Company may be leveraged, i.e., the Company may finance the acquisition of the business opportunity by borrowing against the assets of the business opportunity to be acquired, or against the projected future revenues or profits of the business opportunity. This could increase the Company's exposure to larger losses. A business opportunity acquired through a leveraged transaction is profitable only if it generates enough revenues to cover the related debt and expenses. Failure to make payments on the debt incurred to purchase the business opportunity could result in the loss of a portion or all of the assets acquired. There is no assurance that any business opportunity acquired through a leveraged transaction will generate sufficient revenues to cover the related debt and expenses.
18. COMPETITION. The search for potentially profitable business opportunities is intensely competitive. The Company expects to be at a disadvantage when competing with many firms that have substantially greater financial and management resources and capabilities than the Company. These competitive conditions will exist in any industry in which the Company may become interested.
19. NO FORESEEABLE DIVIDENDS. The Company has not paid dividends on its Common Stock and does not anticipate paying such dividends in the foreseeable future.
20. LOSS OF CONTROL BY PRESENT MANAGEMENT AND STOCKHOLDERS. The Company may consider an acquisition in which the Company would issue as consideration for the business opportunity to be acquired, an amount of the Company's authorized but unissued Common Stock that would, upon issuance, represent the great majority of the voting power and equity of the Company. The result of such an acquisition would be that the acquired company's stockholders and management would control the Company, and the Company's management could be replaced by persons unknown at this time. Such a merger would result in a greatly reduced percentage of ownership of the Company by its current shareholders. In addition, the Company's major shareholders could sell control blocks of stock at a premium price to the acquired company's stockholders.
21. RULE 144 SALES. All of the outstanding shares of Common Stock held by present officers, directors, and stockholders are "restricted securities" within the meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Act and as required under applicable state securities laws. Rule 144 provides in essence that a person who has held restricted securities for one year may, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed the greater of 1.0% of a company's outstanding common stock or the average weekly trading volume during the four calendar weeks prior to the sale. There is no limit on the amount of restricted securities that may be sold by a nonaffiliate after the restricted securities have been held by the owner for a period of two years. Nonaffiliate shareholders holding common shares of the Company have held their shares for two years and under Rule 144(K) are eligible to have freely tradable shares. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to subsequent registration of shares of Common Stock of present stockholders, may have a depressive effect upon the price of the Common Stock in any market that may develop. Of the total shares outstanding, shares become available for resale (subject to volume limitations for affiliates) under Rule 144 when the Company's 12(g) Registration Statement becomes effective subject to other applicable requirements under the Rule.
22. BLUE SKY CONSIDERATIONS. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue-sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. Accordingly, investors should consider the secondary market for the Company's securities to be a limited one.
23. BLUE SKY RESTRICTIONS. Many states have enacted statutes or rules which restrict or prohibit the sale of securities of "blank check" companies to residents so long as they remain without specific business companies. To the extent any current shareholders or subsequent purchaser from a shareholder may reside in a state which restricts or prohibits resale of shares in a "blank check" company, warning is hereby given that the shares may be "restricted" from resale as long as the company is a shell company.
At the date of this registration statement, the Company has no intention of offering further shares in a private offering to anyone except that its President has an option to purchase 300,000 shares of common stock at $.10 per share. Further, the policy of the Board of Directors is that any future offering of shares will only be made after an acquisition has been made and can be disclosed in appropriate 8-K filings.
In the event of a violation of state laws regarding resale of "blank check" shares the Company could be liable for civil and criminal penalties which would be a substantial impairment to the Company. At date of this registration statement, all shareholders' shares bear a "restrictive legend," and the Company will examine each shareholders' resident state laws at the time of any proposed resale of shares now outstanding to attempt to avoid any inadvertent breach of state laws.
LIQUIDITY AND CAPITAL RESOURCES
The Company remains in the development stage and, since inception, has experienced significant liquidity problems and has no significant capital resources now and has stockholder's deficit of ($673,403) at December 31, 1999. The Company has nominal current assets in the form of cash of $81 and total assets of $3,697 at December 31, 1999.
The Company is unable to carry out any plan of business without funding. The Company cannot predict to what extent its lack of liquidity and capital resources will impair the consummation of a business combination or whether it will incur further operating losses through any business entity which the Company may eventually acquire.
RESULTS OF OPERATIONS FOR YEAR ENDED SEPTEMBER 30, 1999
COMPARED TO SEPTEMBER 30, 1998
During the period from February 25, 1997 (inception) through date of this registration statement the Company has engaged attempts at commencing mineral exploration operations and organizational activities, acquisition of capital and preparation for registration of its securities under the Securities Exchange Act of 1934, as amended. No revenues were ever received by the Company. The company incurred operating expenses in year ended September 30, 1999 of ($837,082). The net loss on operations was $(837,082) compared to operating expenses of $770,858 in year ended September 30, 1998 which resulted in a net loss of ($770,858). Such losses will continue unless revenues and business can be acquired by the company. There is no assurance that revenues or profitability will ever be achieved by the company.
RESULTS OF OPERATIONS FOR QUARTER ENDED DECEMBER 31, 1999
The Company had no revenues in the period ended December 31, 1999 or 1998. The Company incurred $107,381 in expenses for the period in 1999.
The net operating loss in the quarter ended December 31, 1999 was $(107,381). The losses were as a result of salaries and out-of-pocket expenses. The net loss per share was less than ($.01) per share. Losses will continue unless a profitable business opportunity can be acquired.
For the current fiscal year, the Company anticipates incurring a loss as a result of legal and accounting expenses, expenses associated with registration under the Securities Exchange Act of 1934, and expenses associated with locating and evaluating acquisition candidates. The Company anticipates that until a business combination is completed with an acquisition candidate, it will not generate revenues other than interest income, and may continue to operate at a loss after completing a business combination, depending upon the performance of the acquired business.
NEED FOR ADDITIONAL FINANCING
The Company does not have capital sufficient to meet the Company's cash needs, including the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934. The Company will have to seek loans or equity placements to cover such cash needs. In the event the Company is able to complete a business combination during this period, lack of its existing capital may be a sufficient impediment to prevent it from accomplishing the goal of completing a business combination. There is no assurance, however, that without funds it will ultimately allow registrant to complete a business combination. Once a business combination is completed, the Company's needs for additional financing are likely to increase substantially.
No commitments to provide additional funds have been made by management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to the Company to allow it to cover its expenses as they may be incurred.
Irrespective of whether the Company's cash assets prove to be inadequate to meet the Company's operational needs, the Company might seek to compensate providers of services by issuances of stock in lieu of cash.
YEAR 2000 ISSUES
Year 2000 problems result primarily from the inability of some computer software to properly store, recall, or use data after December 31, 1999. These problems may affect many computers and other devices that contain embedded computer chips. The Company's operations, however, do not rely on information technology (IT) systems. Accordingly, the Company does not believe it will be material affected by Year 2000 problems.
The Company could be improved by non-IT systems that may suffer from Year 2000 problems, including telephone systems and facsimile and other office machines. Moreover, third-parties suppliers may suffer from Year 2000 problems that could affect the Company's operations, including banks, oil field operators, and utilities. In light of the Company's minimal operations, the Company does not believe that such non-IT systems or third-party Year 2000 problems will affect the Company in a manner that is different or more substantial than such problems affect other similarly situated companies or industry generally. Consequently, the Company does not currently intend to conduct a readiness assessment of Year 2000 problems or to develop a detailed contingency plan with respect to Year 2000 problems that may affect the Company.
The Company has no property. The Company does not currently maintain an office or any other facilities. It does currently maintain a mailing address at 4058 Histead Way, Evergreen, CO 80439, which is the office address of its President, Steven R. Davis. The Company pays no rent for the use of this mailing address. The Company does not believe that it will need to maintain an office at any time in the foreseeable future in order to carry out its plan of operations described herein.
The following table sets forth, as of the date of this Registration Statement, the number of shares of Common Stock owned of record and beneficially by executive officers, directors and persons who hold 5.0% or more of the outstanding Common Stock of the Company. Also included are the shares held by all executive officers and directors as a group.
SHAREHOLDERS/ NUMBER OF SHARES OWNERSHIP BENEFICIAL OWNERS PERCENTAGE ----------------------------------------------------------------------------- Steven R. Davis President and Director 4058 Histead Way Evergreen, CO 80439 0 (1) 0% Randy McCall Secretary, Treasurer and Director 1909 "P" Street Ord, NE 68862 1,580,000 9.66% Paul Enright 7391 Grant Ranch Rd., #1312 Littleton, CO 80123 1,900,000 11.61% K. Mark Skow P.O. Box 3614 Carefree, AZ 85377 1,843,000 11.27% All directors and executive officers as a group (2 persons) 1,580,000 9.66% |
(1) Steven R. Davis has the right to purchase, under an Option Agreement, 25,000 shares of common stock per month and has the right to purchase 300,000 shares of common stock.
Each principal shareholder has sole investment power and sole voting power over the shares.
The directors and executive officers currently serving the Company are as follows:
NAME POSITION HELD TENURE Steven R. Davis President, CEO & Director Annual since 1999 Randy A. McCall Secretary, Treasurer, Chairman Annual since 1997 |
The directors named above will serve until the next annual meeting of the Company's stockholders. Thereafter, directors will be elected for one-year terms at the annual stockholders' meeting. Officers will hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently exists or is contemplated. There is no arrangement or understanding between the directors and officers of the Company and any other person pursuant to which any director or officer was or is to be selected as a director or officer.
The directors and officers of the Company will devote such time to the Company's affairs on an "as needed" basis, but less than 20 hours per month. As a result, the actual amount of time which they will devote to the Company's affairs is unknown and is likely to vary substantially from month to month.
BIOGRAPHICAL INFORMATION
STEVEN R. DAVIS, age 57, the Company President, Chief Executive Officer and a Director joined the Company in March 1999. Mr. Davis is a minerals geologist with an extensive career in the mining industries of the United States, Canada, and Latin America. His career includes over 32 years of exploration, development and production activities, including a total of 20 years with ASARCO, Inc. and Homestake Mining Company, two of the nations premier precious- and base-metals mining companies with extensive domestic and international operations. Mr. Davis has held numerous management positions in his career, including Regional Geologist, Manager of Exploration Projects and Manager of Central Great Basin Exploration for Homestake Mining Company; Vice President of Exploration for Mallon Resources (Costa Rica); and Director of Exploration/Vice President of Operations for Zamora Gold Corp./Comcumay, S.A. (Ecuador). While in these positions, he has been responsible for the discovery and development of several mineral deposits, including substantial deposits of both precious and base metals. Prior to Joining Sun River Mining, Mr. Davis was an independent consulting geologist providing geological services with focus on exploration, acquisition and development of precious- and base-metals properties in the Western United States and Latin America since 1996. From 1994 to 1996 he was Vice President of Operations with Zamora Gold Corporation. From 1993 into 1994 Mr. Davis held the position of Resource Evaluation Geologist with the U.S. Bureau of Mines in Denver Colorado.
RANDY A. MCCALL, age 49, has been Chairman of the Board of Directors of Sun River Mining, Inc. since the inception of the company and was appointed President in March 1997. He held the office of President until the appointment of Steven R. Davis in March 1999. In May 1999, Mr. McCall assumed the positions of CFO, Corporate Secretary, and Treasurer. Mr. McCall is a Certified Public Accountant with over 25 years of senior financial management experience. Prior to joining the Company, Mr. McCall was an independent consultant providing tax, accounting, and managerial services. From 1972 to 1993 he has held positions as the president of a public accounting firm and as the Chief Executive Officer, Chief Financial Officer and/or Chairman of the Board of telecommunications and marketing companies including Com- net, Inc., American Buyers Network, Inc., and Voice Interactive Processing, Inc.
Management will devote minimal time to the operations of the Company, and any time spent will be devoted to screening and assessing and, if warranted, negotiating to acquire business opportunities.
None of the Company's officers and/or directors receives any compensation for their respective services rendered to the Company, nor have they received such compensation in the past. They all have agreed to act without compensation until authorized by the Board of Directors, which is not expected to occur until the Company has generated revenues from operations after consummation of a merger or acquisition. As of the date of filing this report, the Company has no funds available to pay officers or directors. Further, none of the officers or directors is accruing any compensation pursuant to any agreement with the Company. No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.
It is possible that, after the Company successfully consummates a merger or acquisition with an unaffiliated entity, that entity may desire to employ or retain one or a number of members of the Company's management for the purposes of providing services to the surviving entity, or otherwise provide other compensation to such persons. However, the Company has adopted a policy whereby the offer of any post-transaction remuneration to members of management will not be a consideration in the Company's decision to undertake any proposed transaction. Each member of management has agreed to disclose to the Company's Board of Directors any discussions concerning possible compensation to be paid to them by any entity which proposes to undertake a transaction with the Company and further, to abstain from voting on such transaction. Therefore, as a practical matter, if each member of the Company's Board of Directors were offered compensation in any form from any prospective merger or acquisition candidate, the proposed transaction would not be approved by the Company's Board of Directors as a result of the inability of the Board to affirmatively approve such a transaction.
It is possible that persons associated with management may refer a prospective merger or acquisition candidate to the Company. In the event the Company consummates a transaction with any entity referred by associates of management, it is possible that such an associate will be compensated for their referral in the form of a finder's fee. It is anticipated that this fee will be either in the form of restricted Common Stock issued by the Company as part of the terms of the proposed transaction, or will be in the form of cash consideration. However, if such compensation is in the form of cash, such payment will be tendered by the acquisition or merger candidate, because the Company has insufficient cash available. The amount of such finder's fee cannot be determined as of the date of filing this report, but is expected to be comparable to consideration normally paid in like transactions. No member of management of the Company will receive any finders fee, either directly or indirectly, as a result of their respective efforts to implement the Company's business plan outlined herein.
The Company has adopted a policy that its affiliates and management shall not be issued further common shares of the Company, except in the event discussed in the preceding paragraphs.
PREVIOUS "BLANK CHECK" COMPANY INVOLVEMENT
Management and principals of the Company have not been involved in prior "blank check" companies.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
As permitted by Colorado Statutes, the Company may indemnify its directors and officers against expenses and liabilities they incur to defend, settle, or satisfy any civil or criminal action brought against them on account of their being or having been Company directors or officers unless, in any such
action, they are adjudged to have acted with gross negligence or willful misconduct. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in that Act and is, therefore, unenforceable.
EXCLUSION OF LIABILITY
The Colorado Business Corporation Act excludes personal liability for its directors for monetary damages based upon any violation of their fiduciary duties as directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, acts in violation of the Colorado Business Corporation Act, or any transaction from which a director receives an improper personal benefit. This exclusion of liability does not limit any right which a director may have to be indemnified and does not affect any director's liability under federal or applicable state securities laws.
CONFLICTS OF INTEREST
The officers and directors of the Company will not devote more than a portion of their time to the affairs of the Company. There will be occasions when the time requirements of the Company's business conflict with the demands of their other business and investment activities. Such conflicts may require that the Company attempt to employ additional personnel. There is no assurance that the services of such persons will be available or that they can be obtained upon terms favorable to the Company.
Conflicts of Interest - General. Certain of the officers and directors of the Company may be directors and/or principal shareholders of other companies and, therefore, could face conflicts of interest with respect to potential acquisitions. In addition, officers and directors of the Company may in the future participate in business ventures which could be deemed to compete directly with the Company. Additional conflicts of interest and non-arms length transactions may also arise in the future in the event the Company's officers or directors are involved in the management of any firm with which the Company transacts business. The Company's Board of Directors has adopted a policy that the Company will not seek a merger with, or acquisition of, any entity in which management serve as officers or directors, or in which they or their family members own or hold a controlling ownership interest. Although the Board of Directors could elect to change this policy, the Board of Directors has no present intention to do so. In addition, if the Company and other companies with which the Company's officers and directors are affiliated both desire to take advantage of a potential business opportunity, then the Board of Directors has agreed that said opportunity should be available to each such company in the order in which such companies registered or became current in the filing of annual reports under the Exchange Act subsequent to January 1, 1997.
The Company's officers and directors may actively negotiate or otherwise consent to the purchase of a portion of their common stock as a condition to, or in connection with, a proposed merger or acquisition transaction. It is anticipated that a substantial premium over the initial cost of such shares may be paid by the purchaser in conjunction with any sale of shares by the Company's officers and directors which is made as a condition to, or in connection with, a proposed merger or acquisition transaction. The fact that a substantial premium may be paid to the Company's officers and directors to acquire their shares creates a potential conflict of interest for them in satisfying their fiduciary duties to the Company and its other shareholders. Even though such a sale could result in a substantial profit to them, they would be legally required to make the decision based upon the best interests of the Company and the Company's other shareholders, rather than their own personal pecuniary benefit.
ITEM 6. EXECUTIVE COMPENSATION.
------------------------------
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
Name & Principal Year Salary Bonus Other Annual Restricted Securities
Position ($) ($) Compensation Stock Underlying
($) Award(s) Options/
($) SARS (#)
--------------------------------------------------------------------------------------------------------------------------
Steven R. Davis, 1998 0 0 0 0 0
President 1999 $69,875 0 0 0 300,000
shares
Randy A. McCall, 1998 $60,000* 0 0 0 0
Secretary/Treasurer 1999 $60,000* 0 0 0 0
--------------------------- --------- -------------- ----------- --------------------- --------------- ----------------
*accrued, but not paid
|
Directors' Compensation
Name Annual Meeting Consulting Number Number of
Retainer Fees ($) Fees/Other of Securities
Fee($) Fees ($) Shares Underlying
(#) Options
SARS (#)
--------------------------------------------------------------------------------------------------------------------------
A. Director, Steven R. Davis $1,000 $100 0 0 0
B. Director, Randy A. McCall $1,000 $100 0 0 0
--------------------------------------- -------------- ------------- ---------------- ------------- --------------------
|
Option/SAR Grants Table
Name Number of Securities % of Total Exercise Expiration
Underlying Options/SARs or Price Date
Options/SARs Granted to Employees ($/Sh)
Granted (#) in Fiscal Year
-------------------------------------------------------------------------------------------------------------------
Steven R. Davis 300,000 100% $.10/Sh Apr - Sept.
2004
|
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR value
Name Shares Value Number of Securities Value of Unexercised
Acquired Realized Underlying In the Money
on ($) Unexercised Options/SARs at FY-
Exercise Options/SARs at FY- End ($) Exercisable/
(#) End (#) Exercisable/ Unexercisable
Unexercisable
---------------------------------------------------------------------------------------------------------------------
Steven R. Davis 0 0 300,000 Exercisable 0
Randy A. McCall 400,000 $24,000 0 0
Sam Del Cielo(1) 400,000 $24,000 0 0
--------------------------- ----------------- -------------- ---------------------------- ----------------------------
(1) Former officer and director, now resigned.
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Long Term Incentive Plans - Awards in Last Fiscal Year - NONE
No officer or director has received any other remuneration in the two year period prior to the filing of this registration statement. There is no current plan in existence, to pay or accrue compensation to its officers and directors for services related to seeking business opportunities and completing a merger or acquisition transaction. See "Certain Relationships and Related Transactions." The Company has no stock option, retirement, pension, or profit-sharing programs for the benefit of directors, officers or other employees, but the Board of Directors may recommend adoption of one or more such programs in the future.
In 1997, the Company issued to its founding Director, Randy McCall, a total of 100,000 shares of Common Stock for a total of $100. In April 1997, Randy McCall and seven other persons exchanged shares of two Bolivian companies for 8,900,000 shares. Mr. McCall received 1,500,000 shares. Paul Enright, K. Mark Skow and Ronald Sparkman each received 2,000,000 shares. Certificates evidencing the Common Stock issued by the Company to these persons have all been stamped with a restrictive legend, and are subject to stop transfer orders by the Company.
Sam Del Cielo, formerly an Officer and Director, received 30,000 shares for services in April 1997.
Sam Del Cielo, an Officer and Director, purchased 25,000 shares for $8,750 on December 31, 1998. Mr. Del Cielo exercised a 400,000 share option at $.01 per shares for $4,000 on January 7, 1999.
Randy McCall, an officer and Director, purchased 50,000 shares for $17,500 on December 31, 1998 and exercised a 400,000 share option on January 7, 1999 for $4,000.
No officer, director, or affiliate of the Company has or proposes to have any direct or indirect material interest in any asset proposed to be acquired by the Company through security holdings, contracts, options, or otherwise.
The Company has adopted a policy under which any consulting or finder's fee that may be paid to a third party for consulting services to assist management in evaluating a prospective business opportunity would be paid in stock or in cash. Any such issuance of stock would be made on an ad hoc basis. Accordingly, the Company is unable to predict whether or in what amount such a stock issuance might be made.
Although management has no current plans to cause the Company to do so, it is possible that the Company may enter into an agreement with an acquisition candidate requiring the sale of all or a portion of the Common Stock held by the Company's current stockholders to the acquisition candidate or principals thereof, or to other individuals or business entities, or requiring some other form of payment to the Company's current stockholders, or requiring the future employment of specified officers and payment of salaries to them. It is more likely than not that any sale of securities by the Company's current stockholders to an acquisition candidate would be at a price substantially higher than that originally paid by such stockholders. Any payment to current stockholders in the context of an acquisition involving the Company would be determined entirely by the largely unforeseeable terms of a future agreement with an unidentified business entity.
Summary of Employment Related Contracts and Options
(a) (1) Director or executive officer in the past two years, (i) Stephen R.
Davis, President and CEO - employment contract term March 16, 1999 to March 15,
2000, $90,000 per year and option to purchase 300,000 shares of common stock,
(ii) Joseph R. Wojcik, Vice President - Expired employment contract term January
16, 1999 to January 15, 2000, $60,000, (iii) Randy A. McCall, Secretary,
Treasurer, CFO and past CEO - Expired employment contract term - April 1, 1998
to March 31, 1999, annual compensation of $60,000 with option to purchase
400,000 shares of common stock, and (iv) Sam Del Cielo, employment contract
company Secretary and Treasurer April 1, 1998 to March 31, 1999, annual
compensation of $30,000 plus option to purchase 400,000 shares of common stock.
Transactions with promoters:
Nature and amount of
Nature & amount of value consideration received
NAME OF PROMOTER received by Promoter by registrant
------------------------------ -------------------- -----------------------------
(i) Scott Wilding 25,000 common shares Assistance in newsletter
valued at $8,750 and press release preparation
September - December 1998
(ii) Larry McNabb 500,000 common shares Investor and broker/dealer
valued at $75,000 relations
January - February 1999
(iii) Capital Investment Resources 450,000 common shares Consulting - financing and
broker/dealer relations
February - June 1999
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COMMON STOCK
The Company's Articles of Incorporation authorize the issuance of 500,000,000 shares of Common Stock with no par value. Each record holder of Common Stock is entitled to one vote for each share held on all matters properly submitted to the stockholders for their vote. Cumulative voting for the election of directors is not permitted by the Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to such dividends as may be declared from time to time by the Board of Directors out of legally available funds; and, in the event of liquidation, dissolution or winding up of the affairs of the Company, holders are entitled to receive, ratably, the net assets of the Company available to stockholders after distribution is made to the preferred stockholders, if any, who are given preferred rights upon liquidation. Holders of outstanding shares of Common Stock have no preemptive, conversion or redemptive rights. All of the issued and outstanding shares of Common Stock are, and all unissued shares when offered and sold will be, duly authorized, validly issued, fully paid, and nonassessable. To the extent that additional shares of the Company's Common Stock are issued, the relative interests of then existing stockholders may be diluted.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of 50,000,000 shares of Preferred Stock with a par value of $.01. The Board of Directors of the Company is authorized to issue the Preferred Stock from time to time in classes and series and is further authorized to establish such classes and series to fix and determine the variations in the relative rights and preferences as between series, to fix voting rights, if any, for each class or series, and to allow for the conversion of Preferred Stock into Common Stock. No Preferred Stock has been issued by the Company. Preferred Stock may be utilized in making acquisitions.
SHAREHOLDERS
Each shareholder has sole investment power and sole voting power over the shares owned by such shareholder.
No shareholder has entered into or delivered any lock up agreement or letter agreement regarding their shares or options thereon. Under Colorado laws, no lock up agreement is required regarding the Company's shares as it might relate to an acquisition.
TRANSFER AGENT
The Company has engaged United Stock Transfer, Inc., 3615 So. Huron, Suite #104, Englewood, Colorado 80110 as its transfer agent.
REPORTS TO STOCKHOLDERS
The Company plans to furnish its stockholders with an annual report for each fiscal year containing financial statements audited by its independent certified public accountants. In the event the Company enters into a business combination with another company, it is the present intention of management to continue furnishing annual reports to stockholders. The Company intends to comply with the periodic reporting requirements of the Securities Exchange Act of 1934 for so long as it is subject to those requirements, and to file unaudited quarterly reports and annual reports with audited financial statements as required by the Securities Exchange Act of 1934.
PART II
HIGH BID LOW BID
---------- --------
1998
Fourth Quarter $.75 $.375
1999
First Quarter $.75 $.1562
Second Quarter $.2969 $.0469
Third Quarter $.1562 $.0469
Fourth Quarter $.0938 $.0312
2000
First Quarter $.0625 $.0312
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A public trading market exists for the Company's securities on the OTCBB There were fifty-seven (57) holders of record of the Company's common stock on February 15, 2000. No dividends have been paid to date and the Company's Board of Directors does not anticipate paying dividends in the foreseeable future.
The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.
No director, officer or affiliate of the Company, and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to any litigation.
Not applicable.
Since February 25, 1997 (the date of the Company's formation), the
Company has sold its Common Stock to the persons listed in the table below in
transactions summarized as follows:
Price per Number Total Date of
NAME ADDRESS SHARE ($) OF SHARES CONSIDERATION PURCHASE
---- ------- --------- --------- ------------- --------
($)
Randy McCall(1) 1909 P St $.001 100,000 100 3-31-97
Ord, NE 68862
Randy McCall(2) 1909 P St 0.000 1,500,000 * 4-3-97
Ord, NE 68862
Paul Enright(2) P.O Box 553 0.000 2,000,000 * 4-3-97
Morrison, CO 80465
K. Mark Skow(2) 7620 E. Balao 0.000 2,000,000 * 4-3-97
Scottsdale, AZ 85262
Ronald Sparkman(2) 11215 Chase Ct. 0.000 2,000,000 * 4-3-97
Broomfield, CO 80020
William Petty(2) 2016 Main St. 0.00 400,000 * 4-3-97
Houston, TX 77002
Grupo Inversor Rio Piso 19 C, Ave. Arce 0.00 788,000 * 4-3-97
Del Sol, S.A.(2) La Paz, Bolivia
Mery Villarreal Avenida Equador 2277 0.00 12,000 * 4-3-97
Filipovich(2) La Paz, Bolivia
Oscar Morales(2) AV ORMACHEA & 12TH St 0.00 200,000 * 4-3-97
La Paz, Bolivia
J. Farrel & Therese 1345 42ND St 1.00 2,500 2,500 7-22-97
Adams (3) Boulder, CO 80303
Therese Adams(3) 1345 42ND St 1.00 2,500 2,500 7-22-97
Boulder, CO 80303
Arden Anderson(3) RR1 Box 112D 1.00 5,000 5,000 4-3-97
Blooming Prairie, MN
Thomas Bader(3) 833 N Tejon 1.00 75,000 75,000 4-3-97
Colorado Springs, CO
James Bennett,Cust.(3) P.O. Box 191 1.00 1,500 1,500 7-10-97
For Alexis M. Bennett Ward, CO 80481
James Bennett,Cust.(3) P.O. Box 191 1.00 1,500 1,500 7-10-97
For Clifford J. Bennett Ward, CO 80481
Charles E. Blaha(3) 1740 M St 1.00 21,000 21,000 4-3-97
Ord, NE 68862
29
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Donald Blaha(3) P.O. Box 248 1.00 18,000 18,000 4-3-97
Ord, NE 68862
Michael A. Butler, Cust. 1910 Orchard Ave. 1.00 2,500 2,500 7-14-97
For Daniel S. Butler(3) Boulder, CO 80304
Michael A. Butler, Cust. 1910 Orchard Ave. 1.00 2,500 2,500 7-14-97
For Ryan P. Butler(3) Boulder, CO 80304
Ray & Olga Chase(3) P.O. Box 1378 1.00 2,000 2,000 8-14-97
Nederland, CO 80466
Errol A. Coslor(3) P.O. Box 759 1.00 13,000 13,000 7-21-97
Kearney, NE 68848
William R. Dodd(3) P.O. Box 324 1.00 10,000 10,000 4-3-97
Ord, NE 68862
Daniel Enright(3) 5161 5TH Ave. N.W. 1.00 10,000 10,000 4-3-97
Naples, FL 34119
James Enright(3) 29402 Gadsden Dr. 1.00 1,800 1,800 7-22-97
Brighton, CO 80601
Jerome M. & Dorothy 4123 S. Rosemary Way 1.00 5,000 5,000 7-11-97
A. Gotlieb(3) Denver, CO 80237
Cynthia Harpst(3) 5161 5TH Ave. N.W. 1.00 7,000 7,000 4-3-97
Naples, FL 34119
Kevin Hruza(3) 219 N. 23RD St. 1.00 5,500 5,500 4-3-97
Ord, NE 68862
Dennis Hulinsky(3) P.O. Box 67 1.00 5,000 5,000 4-3-97
Ord, NE 68862
Willaim P. Jancosko(3) 3344 Wright Court 1.00 2,500 2,500 7-11-97
Boulder, CO 80301
Scott Johnson(3) 5114 Balconies Woods 1.00 62,500 62,500 4-3-97
Austin, TX
Brad Keech(3) 1422 Delgany St. #1 1.00 20,000 20,000 4-3-97
Denver, CO 80202
Clemens J. Klimek(3) 419 S. 23RD St 1.00 2,000 2,000 4-3-97
Oprd, NE 68862
Renate Kuhar(3) P.O. Box 691 1.00 20,000 20,000 7-22-97
Pine, CO 80470
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Bruce A. Lammers(3) 1920 P St. 1.00 29,200 29,200 4-3-97
Ord, NE 68862
Jill Trundle Lopez(3) 4539 Lee Hill Rd 1.00 3,000 3,000 7-16-97
Boulder, CO 80302
Robert McBride(3) RR1 Box 115 1.00 500 500 4-3-97
Ord, NE 68862
Allana E. Novotny(3) 813 N. 8TH St 1.00 1,000 1,000 4-3-97
Beatrice, NE 68310
Thomas P & Mary Ann 6334 S. Lamar Ct. 1.00 2,500 2,500 7-11-97
O'Neill(3) Littleton, CO 80123
Mel & Jenine Ortner(3) 7710 Ute Highway 1.00 2,500 2,500 7-3-97
Longmont, CO 80501
Terry J. Peltz(3) 2817 Laramie Dr. 1.00 2,000 2,000 4-3-97
Alliance, NE 69301
Charles E. Peterson(3) P.O. Box 2366 1.00 5,000 5,000 7-14-97
Boulder, CO 80306
Lisa J. Petska(3) 1812 N Street 1.00 1,000 1,000 4-3-97
Ord, NE 68862
Vernaon J. & Mercedes RR1 Box 9 1.00 1,500 1,500 4-3-97
A. Potrzeba JTWORS(3) Elyria, NE 68837
Richard Severson(3) 12516 Williams St 1.00 20,000 20,000 4-3-97
Omaha, NE 68144
Sandra Shipman(3) P.O. Box 2008 1.00 5,000 5,000 4-3-97
Littleton, CO 80161
Daniel J. Seifert, Jr(3). 1135 Pearl St 1.00 2,500 2,500 6-24-97
Boulder, CO 80302
Joel A. Thompson(3) 4770 Baseline Rd #200 1.00 2,500 2,500 7-10-97
Boulder, CO 80303
Jeff A. Tschida(3) 5114 Balconies Woods 1.00 62,500 62,500 4-3-97
Aistin, TX 78759
Brian Wicklein(3) 405 Central Ave. S 1.00 5,000 5,000 4-3-97
Dodge Center, MN
James Wiecking(3) 92671 Newa St 1.00 500 500 4-3-97
Kapolei, HI
31
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William R. Williams(3) 7367 S. Chapparal Cr 1.00 5,000 5,000 7-11-97
Aurora, CO 80016
Allen Kent Wilson(3) 1414 Longs Peak Ave. 1.00 2,500 2,500 7-14-97
Longmont, CO 80501
Roberta Wolta(3) 5446 W. 100TH Pl. 1.00 47,800 47,800 7-20-97
Westminster, CO 80020
Sam Del Cielo(6) 4269 Sumac Ct 0.00 30,000 30,000 4-16-97
Boulder, CO 80303
Randall Downey(4) 9351 S Autumn Ash Ct 0.20 25,000 5,000 8-12-98
Highlands Ranch, CO
Fashion West (4) 1234 W Cedar Ave. 0.20 25,000 5,.000 8-12-98
Accessories, Inc Denver, CO 80223
Sharon Hilb(4) 5278 S. Kenton Way 0.20 125,000 25,000 8-12-98
Englewood, CO
Gordon M. Deblasio(4) 1016 Cassils Rd. W 0.20 50,000 100,000 8-12-98
Brooks, Alberta
Willaim C. Birge(4) 139 Mandra Dr N E 0.20 50,000 100,000 8-12-98
Calgary, Alberta
Terry J. Morishita(4) P.O. Box 236 0.20 25,000 5,000 8-12-98
Rosemary, Alberta
Norman J. Torre(4) 1845 Zinnia St. 0.20 25,000 5,000 8-18-98
Golden, CO 80401
Harold Smith(4) 1803 S. Weld Cr. 0.20 5,000 1,000 8-18-98
Lakewood, CO 80226
Jack Moore(4) 9952 Tiburon Cr. 0.20 5,000 1,000 8-18-98
Littleton, CO 80124
Victor Abbo(4) 250 Arapahoe Rd 0.20 25,000 5,000 8-18-98
Boulder, CO 80301
Patrick Bloom(4) 6454 S Present St. 0.20 10,000 2,000 8-18-98
Littleton, CO 80120
Carl S. Koch(4) 36 Lynn Ct 0.20 125,000 25,000 8-21-98
North Brunswick, NJ
Thomas A. Anderson(4) 1020 21ST St 0.20 63,500 12,700 8-21-98
Golden, CO
32
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Stephen W. Weathers(4) 1926 S. Xenon St 0.20 50,000 10,000 8-21-98
Lakewood, CO 80228
Daniel Enright(4) 405 Roworth 0.20 25,000 5,000 8-15-98
Central City, CO 80427
Sanford Shwartz(4) 1010 Orange Pl. 0.20 10,000 2,000 8-25-98
Boulder, CO 80304
David Lilja(4) 4998 W. 103RD Cr. 0.20 10,000 2,000 8-25-98
Westminster, CO 80030
Michael Osebold(4) 911 16TH ST # 5 0.20 10,000 2,000 8-25-98
Boulder, CO 80302
Brian Wicklein(4) 405 Central Ave. S 0.20 17,500 3,500 8-27-98
Dodge Center, MN
Stephen W. Weathers(4) 1926 S. Xenon St 0.20 12,500 2,500 8-27-98
Lakewood, CO 80228
Tajinder Madan (4) 222 Hamptons Gardens 0.20 10,000 2,000 8-28-98
Calgary, Alberta
William D. Pate (4) 323 Martin Grove Rd. 0.20 20,000 4,000 8-28-98
Etobicoke, Ontario
Andrew Janiec(4) 1202 Harwood St. 0.20 10,000 2,000 8-28-98
Vancouver, B.C.
Tim Kohn(4) 7224-21 A St. SE 0.20 10,000 2,000 8-28-98
Calgary, Alberta
Joel Rheinbolt(4) 7608 Thornlee Dr. 0.20 30,000 6,000 8-28-98
Lake Worth, Florida
Genevieve Gray (4) 5508 Temple Rd. NE 0.20 10,000 2,000 8-28-98
Calgary, Alberta
Jason R. Kells(4) 158ResearchWarrndyte 0.20 20,000 4,000 8-28-98
Victoria, Australia
Paola Levet(4) 139 Manora Dr. NE 0.20 55,000 11,000 8-28-98
Calgary, Alberta
Manuel Galan(4) 723 15TH St. NW 0.20 10,000 2,000 8-28-98
Calgary, Alberta
Betty Mah(4) 6455 MacLeod Tr. S 0.20 10,000 2,000 8-28-98
Calgary, Alberta
33
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Geoffrey A. Mussellam 1823 E. Georgia St. 0.20 10,000 2,000 8-28-98
(4) Vancouver, BC
William Dodd(4) P.O. Box 324 0.20 10,000 2,000 8-31-98
Ord, NE 68862
John Felton(4) 3014 Birch 0.20 10,000 2,000 8-31-98
Ord, NE 68862
Allana Novotny(4) 813 N. 8TH St 0.20 15,000 3,000 8-31-98
Beatrice, NE 68310
James Enright(4) 29402 Gadsden Dr. 0.20 7,500 1,500 8-31-98
Brighton, CO 80601
Steve Janiszewski(4) 9409 Grandview Ave. 0.20 6,500 1,300 8-31-98
Arvada, CO 80002
Brad Keech(4) 1422 Delgany St. #1 0.20 25,000 5,000 8-31-98
Denver, CO 80202
Stephen Weathers(4) 1926 S. Xenon St 0.20 15,000 3,000 8-31-98
Lakewood, CO 80228
Thomas A. Anderson(4) 1020 21ST St 0.20 22,500 4,500 8-31-98
Golden, CO
Dennis Hulinsky(7) P.O. Box 67 1.00 4,000 4,000 8-31-98
Ord, NE 68862 Warrant exercise
Stephen Weathers(5) 1926 S. Xenon St 0.35 5,000 1,750 10-9-98
Lakewood, CO 80228
Scot A. Donnato(5) 554 Emerson St 0.35 15,000 5,250 10-9-98
Denver, CO 80209
Thomas A. Anderson(5) 1020 21ST St 0.35 4,500 1,575 11-12-98
Golden, CO
John J. Bolders(5) 4330 E. 18TH Ave. 0.35 2,000 700 11-12-98
Denver, CO, 80220
David Parker(5) 1720 S. Upham St. 0.35 4,000 1,400 11-12-98
Lakewood, CO 80232
John Rinker(5) 9496 Brook Lane 0.35 2,000 700 11-19-98
Lone Tree, CO 80124
William H. Snowden(5) 3818 N. 26TH St. 0.35 10,000 3,500 11-25-98
Boulder, CO 80304
34
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James W. Attwood(5) 19485 E. Garden Dr. 0.35 5,000 1,750 11-27-98
Aurora, CO 80015
Keith MacPhail(5) 4799 D. Whiterock Cr. 0.35 6,000 2,100 11-27-98
Boulder, CO 80301
Cory Peterson(5) 2016 W. 83RD 0.35 4,500 1,575 12-1-98
Bloominton, MN 55431
Colleen Marshall(5) 8046 Solotare Ct 0.35 7,400 2,590 12-2-98
Orlando, FL 32836
Jon C. Jelosek(5) 3686 Barbados Pl. 0.35 6,000 2,100 12-1-98
Boulder, CO 80301
Scott Wilding(6) 688 NW 156TH Ave. 0.35 25,000 8,750 12-15-98
Pembroke Pines, FL Services
Cecil E. & Gladys M. 1205 Q St 0.35 7,000 2,450 11-12-98
McCall(5) Ord, NE 68862
Gene & Nancy Dorsey Rt 1 Box 173 0.35 15,000 5,250 11-12-98
(5) Arcadia, NE 68815
Allana Novotny(5) 813 N. 8TH St 0.35 15,000 5,250 12-24-98
Beatrice, NE 68310
Charles L. Abel (5) P.O. Box 294 0.35 15,000 5,250 11-12-98
North Loup, NE 68859
Harry J. & Susan K. 105 SOUTH 21ST St. 0.35 3,000 1,050 12-1-98
Zulkoski(5) Ord, NE 68862
David Kaslon(5) 104 NORTH 14TH St 0.35 9,500 3,325 12-18-98
Ord, NE 68862
Timothy G. Todsen(5) P.O. Box 111 0.35 4,000 1,400 12-1-98
Ord, NE 68862
TITANIUM ENTERTAINMENT 767 106TH Ave. North 0.35 35,000 12,250 12-15-98
Inc.(6) Naples, FL 34108 Services
Thomas M. Osentowski 2002 O St 0.35 2,000 700 12-1-98
(5) Ord, NE 68862
Don Bryant(5) 8531 E. Chaparral Rd. 0.35 20,000 7,000 11-12-98
Scottsdale, AZ 85250
Monte R. McMechen(5) 15300 Great Rock Rd. 0.35 2,800 980 12-31-98
Brighton, CO 80601
35
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RAY C. & LINDA K. 334 N. 25TH Street 0.35 12,000 4,200 12-24-98
McCall (5) Beatrice, NE 68310
Kevin J. Hruza(5) 219 N. 23RD St. 0.35 3,000 1,050 12-24-98
Ord, NE 68862
Stephen B. Doppler(5) 9084 Armadillo Trail 0.35 14,000 4,900 12-15-98
Evergreen, CO 80439
Marilyn Hogue(5) 12373 W. Tufts Ave. 0.35 3,000 1,050 12-19-98
Morrison, CO 80465
Dennis Hulinsky(5) P.O. Box 67 0.35 1,400 490 12-15-98
Ord, NE 68862
David McMechen(5) 4658 S. Coors Ct. 0.35 1,300 455 11-19-98
Morrison, CO 80465
Sean F. Plumb(5) 1517 S. Pagosa St. 0.35 2,000 700 12-10-98
Aurora, CO 80017
Daniel J. Seifert (5) 1135 Pearl St #1 0.35 7,500 2,625 12-18-98
Boulder, CO 80302
Joel A. Thompson(5) 4770 Baseline Rd #200 0.35 7,500 2,625 12-18-98
Boulder, CO 80303
Scot Abeyta(5) 419 S. Jay St. 0.35 5,700 1,995 12-24-98
Lakewood, CO 80226
Randall Downey(5) 9351 S. Autumn Ash Ct 0.35 15,000 5,250 12-23-98
Highlands, Ranch, CO
Leslie Peats(5) 530 Vance St. 0.35 28,570 9,999.50 12-23-98
Lakewod, CO 80227
John R. & Janie 10975 Cty Rd # 331 0.35 2,500 875 12-31-98
Enright (5) Silt, CO 81652
Kurt Tribelhorn(5) 9469 S. Adelaide Cr. 0.35 3,000 1,050 12-31-98
Highlands Ranch, CO
Scott W. Johnson(5) 320 Ashwood Ln 0.35 9,250 3,237.5 12-28-98
Georgetown, TX 78628
Jeffrey Tschida(5) 13106 Tilder Dr. 0.35 9,250 3,237.5 12-28-98
Austin, TX 78729
Samuel Del Cielo(5) 4269 Sumac Ct. 0.35 25,000 8,750 12-31-98
Boulder, CO 80301
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Randy A. McCall(5) 1909 P St. 0.35 50,000 17,500 12-31-98
Ord, NE 68862
Randy A. McCall(7) 1909 P St. 0.01 400,000 4,000 1-7-99
Ord, NE 68862 ex. options
Samuel Del Cielo(7) 4269 Sumac Ct. 0.01 400,000 4,000 1-7-99
Boulder, CO 80303 ex. Options
Oriential New Rue Des Baines 35 0.075 750,000 52,500 1-15-99
Investments(6) Geneva, Switzerland
Larry D. McNabb(6) 213 E. Highlan Ave 0.15 500,000 75,000 1-21-99
Atlantic Highlands, NJ Services
David Kaslon(5) 104 NORTH 14TH St. 0.35 4,500 1,575 2-1-99
Ord, NE 68862
Kevin J. Hruza(5) 219 N. 23RD St. 0.35 2,000 700 2-1-99
Ord, NE 68862
Randall Downey(5) 9351 S Autumn Ash Ct 0.35 8,500 2,975 1-25-99
Highlands Ranch, CO
Gary A. & Bonnie L. 2339 West Betty Elyse 0.35 34,000 11,900 1-31-99
Williams(5) Phoenix, AZ 85223
Theodore M. 4149 West Gelding Dr. 0.35 22,000 7,700 1-31-99
Williams II(5) Phoenix, AZ 85053
Sanford L. Schwartz(5) 1010 Orange Pl. 0.35 7,500 2,625 1-27-99
Boulder, CO 80304
David Lilja, JR.(5) 4998 W. 103RD Circle 0.35 7,500 2,625 1-27-99
Westminster, CO 80030
Charles S. Swanson(5) 1895 Alpine Ave. # 4 0.35 10,000 3,500 1-27-99
Boulder, CO 80304
William R. Dodd(5) 807 S. 12TH St 0.35 4,000 1,400 1-29-99
Ord, NE 68862
Brian Welniak(5) Rt. 1 Box 5 0.35 2,000 700 1.29-99
Elyria, NE 68837
Harry J. & Susan K. 105 SOUTH 21ST St 0.35 2,000 700 1-28-99
Zulkoski(5) Ord, NE 68862
Thomas M. Osentowski 2002 O St. 0.35 2,000 700 1-31-99
(5) Ord, NE 68862
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Marcia Brando Viana R. Abilio Soares #121 0.35 44,000 15,400 1-31-99
(5) Sao Paulo - SP Brazil
Kurt Tribelhorn(8) 9649 S Adelaide Cr. 0.10 49,500 4,950 4-2-99
Highlands Ranch, CO
Carl S. Koch(8) 36 Lynn Ct. 0.10 31,500 3,150 4-5-99
North Brunswick, NJ
David R. Lilja(8) 4998 W. 103RD 0.10 20,000 2,000 4-5-99
Westminster, CO 80030
Sanford L. Schwartz(8) 1010 Orange Pl 0.10 20,000 2,000 4-5-99
Boulder, CO80304
Christopher M. Koch(8) 42 S. Tamadge St. 0.10 10,500 1,050 4-5-99
New Bruswick, NJ 08901
Lizbeth Koch Pajunas(8)465 Route 513 0.10 10,500 1,050 4-5-99
Califon, NJ 07830
Capital Investment 14995 Horseshoe Trace 0.10 450,000 45,000 4-5-99
Resources LLC (6) Services
Long H. Nguyen(8) 6776 SW Freeway #180 0.10 62,500 6,250 4-4-99
Houston, TX 77074
Sam Del Cielo(8) 4269 Sumac Ct. 0.10 100,000 10,000 4-5-99
Boulder, CO 80303
Randy A. McCall(8) 1909 P Street 0.10 150,000 15,000 4-5-99
Ord, NE 68862
John & Carmen Exkert 729 Lilac Lane 0.05 700,000 35,000 6-9-99
(9) Glendora, CA 91740
Reid Johnson(9) 11803 E. Beryl 0.05 700,000 35,000 6-7-99
Scottsdale, AZ 85259
Mary Ann Kelley(9) 55 Mingus Mtn. Rd. 0.05 400,000 20,000 7-7-99
Sedona, AZ 86336
Hangen Family Trust(9) 9429 E Conquistadore 0.05 400,000 20,000 7-12-99
Donald Hangen, Trustee Scottsdale, AZ 85255
David A. Jacobs(9) 2751 Mill Ave. 0.05 300,000 15,000 10-1-99
Brooklyn, NY 11234
|
Key to Footnotes:
* Share exchange for subsidiaries
(1) Founders shares - issued pursuant to exemption under Section 4(2) to sophisticated purshasers.
(2) Exchange shares to acquire Bolivian subsidiaries - issued to sophisticated investors pursuant to exemption under Section 4(2)
(3) Shares issued pursuant to offering under Regulation D, Rule 504.
(4) Shares issued pursuant to offering under Regulation D, Rule 504.
(5) Shares issued pursuant to offering under Regulation D, Rule 504.
(6) Shares issued for services rendered under Regulation D, Rule 504.
(7) Shares issued for exercise of options.
(8) Shares issued pursuant to private offering under Regulation D, Rule 504
(9) Shares issued pursuant to private placement under Regulation D, Rule 504
Each of the sales listed above was made for the Consideration as listed. All of the listed sales were made in reliance upon the exemption from registration offered by Section 4(2) of the Securities Act of 1933, as amended including Reg. D, Rule 504 where applicable. Based upon Subscription Agreements completed by each of the subscribers, the Company had reasonable grounds to believe immediately prior to making an offer to the private investors, and did in fact believe, when such subscriptions were accepted, that such purchasers (1) were purchasing for investment and not with a view to distribution, and (2) had such knowledge and experience in financial and business matters that they were capable of evaluating the merits and risks of their investment and were able to bear those risks. The purchasers had access to pertinent information enabling them to ask informed questions. The shares were issued without the benefit of registration. An appropriate restrictive legend is imprinted upon each of the certificates representing such shares, and stop-transfer instructions have been entered in the Company's transfer records. All such sales were effected without the aid of underwriters, and no sales commissions were paid.
The Colorado Statutes provide that the Company may indemnify its officers and directors for costs and expenses incurred in connection with the defense of actions, suits, or proceedings where the officer or director acted in good faith and in a manner he reasonably believed to be in the Company's best interest and is a party by reason of his status as an officer or director, absent a finding of negligence or misconduct in the performance of duty.
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DATED: February 18, 2000
SUN RIVER MINING, INC.
BY:/S/STEVEN R. DAVIS Steven R. Davis, President Directors: /S/STEVEN R. DAVIS ------------------ Steven R. Davis, President & Director /S/RANDY A. MCCALL ------------------ Randy A. McCall, Secretary, Treasurer & Director |
SUN RIVER MINING, INC.
INDEX TO FINANCIAL STATEMENTS
Cover Page F-1 Auditors Report for years ended September 30, 1999 and 1998 F-2 Balance Sheet F-3 Statement of Operations F-4 Statement of Cash Flows F-5 Statement of Stockholders' Equity F-6 Notes to Financial Statements F-7 - F-10 |
Unaudited Interim Financial Statements for December 31, 1999
Cover Page F-11 Balance Sheet F-12 Statement of Operations F-13 Statement of Cash Flows F-14 Statement of Stockholders' Equity F-15 Notes to Financial Statements F-16 -F-19 |
SUN RIVER MINING, INC.
FINANCIAL STATEMENTS
September 30, 1999
Michael Johnson & Co., LLC Certified Public Accountants 9175 East Kenyon Ave., Suite 100
Denver, Colorado 80237
Michael B. Johnson, C.P.A. Telephone: (303) 796-0099
Member: A.I.C.P.A. Fax: (303) 796-0137
Colorado Society of C.P.A.s
Board of Directors
Sun River Mining, Inc.
|
We have audited the accompanying balance sheet of Sun River Mining, Inc. as of September 30, 1999, and the related statements of operations, cash flows, and stockholders' equity for the periods then ended. 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. These 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.
As shown in the financial statements, the company incurred a net loss of $837,082 for 1999 and a net loss of $770,858 for 1998. These factors indicate that the company has substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset, or the amount and classification of liabilities that might be necessary in the event the company cannot continue in existence.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sun River Mining, Inc., as of September 30, 1999, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles.
/S/MICHAEL JOHNSON & CO., LLC Michael Johnson & Co., LLC Denver, Colorado February 15, 2000 |
Sun River Mining, Inc.
Balance Sheet
For The Year Ended September 30, 1999
With Comparative Totals for September 30, 1998
1999 1998
---- ----
ASSETS:
Current assets:
Cash $ 1,026 $ 23,323
Accounts Receivable 1,884 0
Prepaid Expenses 200 3,726
------------------- ----------------
Total current assets 3,110 27,049
Noncurrent assets
Office Equipment (Net $995 Depreciation) 1,924 3,156
------------------- ----------------
Total noncurrent assets 1,924 3,156
------------------- ----------------
TOTAL ASSETS $ 5,034 $ 30,205
=================== ================
LIABILITIES AND STOCKHOLDERS' EQUITY:
-------------------------------------
Current liabilities:
Accounts Payable $ 52,894 $ 9,010
Accrued Expenses 256,163 136,565
Directors' Fee Payable 6,683 6,100
Loans Payable 223,013
Notes Payable 47,303 159,555
------------------- ----------------
Total current liabilities 586,056 311,230
------------------- ----------------
Stockholders' equity:
Preferred Stock, par value $0.01 per share; 50,000,000
SHARES AUTHORIZED; NO SHARES ISSUED AND OUTSTANDING 0 0
Common Stock, no par value; 500,000,000 shares
authorized;
15,062,090 shares issued and outstanding in 1999 and 1,220,891 683,806
9,333,800 shares issued and outstanding in 1998
Net Loss (Accumulated) (1,801,913) (964,831)
------------------- ----------------
TOTAL STOCKHOLDERS' EQUITY (581,022) (281,025)
------------------- ----------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 5,034 $ 30,205
=================== ================
The accompanying notes are an integral part of these financial statements.
F-3
|
SUN RIVER MINING, INC.
Statement of Operations
For The Year Ended September 30, 1999
With Comparative Totals for September 30, 1998
1999 1998
------------------- -------------------
Revenue $ 0 $ 0
Expenses:
Advertising 18,500 0
Bank Charges 572 518
Consulting 92,682 14,940
Depreciation 1,232 511
Directors' Fees 3,883 3,500
Due Diligence 40,454 0
Equipment Rental 0 400
Interest 22,007 12,042
Legal and Accounting 20,805 15,952
Licenses & Fees 0 5,050
Meals & Entertainment 773 171
Office Expenses 4,415 7,062
Officer's Salaries 162,884 87,000
Postage 565 1,835
Printing 4,517 0
Public Relations 85,080 0
Rent 4,460 2,868
Subsidiary - Acquisition Loss 324,850 598,984
Taxes 4,604 0
Telephone 12,374 10,730
Transfer Agent Expense 3,701 1,550
Travel 28,724 7,745
------------------- -------------------
Total Expenses 837,082 770,858
Net Loss $ (837,082) $ (770,858)
=================== ===================
Per Share Information:
Weighted average number of
common shares outstanding 11,741,855 9,328,800
------------------- -------------------
Net Loss per Common Share $ (0.07) $ (0.08)
=================== ===================
The accompanying notes are an integral part of these financial statements.
F-4
|
Sun River Mining, Inc.
Statement of Cash Flows
For the Year Ended September 30, 1999
With Comparative Totals For the Year Ended September 30, 1998
1999 1998
---- ----
Cash Flows from Operating Activities:
Net Loss $ (837,082) $ (770,858)
Depreciation 995 0
Increase (Decrease) in Accounts Payable 43,884 (19,118)
Increase (Decrease) in Accrued Liabilities 119,598 96,748
Increase (Decrease) in Directors' Fees Payable 583 3,500
Decrease (Increase) in Prepaid Expenses 3,526 2,274
Decrease (Increase) in Loans from
Subsidiary 0 534,137
----------------- ----------------
Net Cash Flows Used by Operations (668,496) (153,317)
Cash Flows from Investing Activities:
Acquisition of Fixed Assets 0 (1,878)
----------------- ----------------
Net Cash Flows Provided by Investing
Activities 0 (1,878)
Cash Flows from Financing Activities:
Proceeds from Loans 109,114 24,363
Issuance of Common Stock 537,085 154,000
----------------- ----------------
Net Cash Flows Provided by Financing Activities 646,199 178,363
Net Increase (Decrease) in Cash (22,297) 23,168
----------------- ----------------
Cash at Beginning of Period 23,323 155
------ ---
Cash at End of Period $ 1,026 $ 23,323
================= ================
The accompanying notes are an integral part of these financial statements.
F-5
|
Sun River Mining, Inc.
Stockholders' Equity
For The Year Ended September 30, 1999
Deficit
Accum. During
ISSUANCE OF Common the Development
COMMON STOCK: # of Shares Stock Stage Totals
------------------ ----------- ----- ----- ------
February 25, 1997 0 $ 0 $ 0 $ 0
March 15, 1997 (Cash) 100,000 100 0 100
March 31, 1997 (Subscribed) 111,800 111,800 0 111,800
March 31, 1997 - Trans to Founders 282,200 0 0 0
April 3, 1997 - Consolidated 8,900,000 312,106 0 312,106
August 15, 1997 (Subscribed) 58,000 58,000 0 58,000
September 30, 1997 (Subscribed) 47,800 47,800 47,800
Net Loss as of 9/30/98 0 0 (193,973) (193,973)
-------------------------------------- ------------------------------------
Balance - September 30, 1997 9,499,800 529,806 (193,973) 335,833
====================================== ====================================
November 30, 1997 (Compensation) 30,000 0 0 0
September 15, 1998 (For Cash) 1,000,000 200,000 0 200,000
September 15, 1998 (Cancelled) (1,200,000) (50,000) 0 (50,000)
September 30, 1998 (For Cash) 4,000 4,000 0 4,000
Net Loss as of 9/30/98 0 0 (770,858) (770,858)
-------------------------------------- ------------------------------------
Balance - September 30, 1998 9,333,800 683,806 (964,831) (281,025)
====================================== ====================================
November 9, 1998 (For Cash) 215,900 148,635 0 148,635
January 5, 1999 (For Cash) 208,770 8,000 0 8,000
January 7, 1999 (For Compensation) 800,000 0 0 0
January 15, 1999 (For Cash) 750,000 139,225 0 139,225
January 21, 1999 (For Compensation) 500,000 0 0 0
February 2, 1999 (For Cash) 150,000 40,775 0 40,775
April 6, 1999 (For Cash) 904,500 200,450 0 200,450
June 30, 1999 (For Compensation 1,400,000 0 0 0
September 30, 1999 (Subscription) 800,000 0 0 0
Net Loss as of 9/30/99 0 0 (837,082) (837,082)
-------------------------------------- ------------------------------------
Balance - September 30, 1999 15,062,970 $ 1,220,891 $ (1,801,913) $ (581,022)
====================================== ====================================
The accompanying notes are an integral part of these financial statements.
F-6
|
SUN RIVER MINING, INC.
Notes to Financial Statements
September 30, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION:
On February 25, 1997, Sun River Mining, Inc. (the Company) was incorporated under the laws of Colorado. In May 1999 management decided to write-off the Sun River Bolivian subsidiaries and to take the subsequent loss, of all investments associated with the subsidiaries. These financial statements recorded the subsequent loss in the current fiscal period. There is also a provision to pay the balance of what was the debt of Rio Del Sol S.A. (a Bolivian subsidiary) in the amount of $246,465, the only contingent liability that the Company believes it will incur regarding the deacquisition of these subsidiaries.
BASIS OF PRESENTATION:
The Company is in the mining business and is primarily engaged in raising capital for exploration and acquisition of mining property. The authorized capital stock of the corporation is 500,000,000 shares of common stock no par value and 50,000,000 shares of preferred stock, $.01 par value.
CASH AND CASH EQUIVALENTS:
For purposes of the statements of cash flows, cash and cash equivalents include cash in banks and money markets with an original maturity of three months or less.
FIXED ASSETS AND DEPRECIATION:
The purchased equipment is recorded at cost. Depreciation is computed on purchased property using the straight-line method over the following estimated useful lives of the assets:
Equipment 5 years
NOTES PAYABLE:
Notes payable as of September 30, 1999 consist of the following:
Note payable to Commercial First National Bank incurring 8% interest, due upon demand. $ 40,397
Note payable to Glen Pahnke for unpaid company expenses, incurring interest at 8%, due upon demand. 10,000
Note payable to Randy McCall for unpaid company expenses, incurring interest at 8%, due upon demand. 47,303
SUN RIVER MINING, INC
Notes to Financial Statements
September 30, 1999
NOTES PAYABLE(CONT)
Note payable to Dakota Partners dated January 25, 1999,
INCURRING INTEREST AT 12%, DUE UPON COMPLETION OF PAYMENT 172,616
----------
TOTAL NOTES PAYABLE $ 270,316
=========
|
All notes payable are due within one year; therefore, are classified as current liabilities.
ACCOUNTING FOR IMPAIRMENTS IN LONG-LIVED ASSETS:
Long-lived assets and identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. Management periodically evaluates the carry value and the economic useful life of its long-lived assets based on the Company's operating performance and the expected future undiscounted cash flows and will adjust the carry amount of assets, which may not be recoverable. On September 30, 1999 the Company recorded a charge against operations of $324,850 related to the write-off of their subsidiaries, comprised of a write-off of an investment of $324,850. Management believes that remaining long-lived assets in the balance sheet are appropriately valued.
REVENUE RECOGNITION:
Revenue is recognized when earned and expenses are recognized when they occur.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
The Company's financial instruments include cash, cash equivalents and notes payable. Estimates of fair value of these instruments are as follows:
Cash & Cash Equivalents - The carrying amount of cash and cash equivalents approximates fair value due to relatively short maturity of these instruments.
Notes payable - The carrying amount of the Company's notes payable approximate fair value based on borrowing rates currently available to the Company for borrowing with comparable terms and conditions.
SUN RIVER MINING, INC
Notes to Financial Statements
September 30, 1999
FEDERAL INCOME TAX:
The Company accounts for income taxes under SFAS No. 109, which requires the asset and liability approach to accounting for income taxes. Under this approach, deferred income taxes are determined based upon differences between the financial statement and tax bases of the Company's assets and liabilities and operating loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized if it is more likely than not that the future tax benefit will be realized.
NOTE 2 - INCOME TAXES:
Significant components of the Company's deferred tax liabilities and
assets are as follows:
SEPTEMBER 30
1999 1998
---- ----
DEFERRED TAX LIABILITY $ 0 $ 0
================ =============
Deferred Tax Assets
Net Operating Loss Carryforwards 837,082 770,858
Book/Tax Differences in Bases of Assets 11,000 9,000
LESS VALUATION ALLOWANCE (848,082) (779,858)
----------- ---------
TOTAL DEFERRED TAX ASSETS $ 0 $ 0
================= ==============
NET DEFERRED TAX LIABILITY $ 0 $ 0
================ ==============
|
As of September 30, 1999, the Company had a net operating loss carryforward for federal tax purposes approximately equal to the accumulated deficit recognized for book purposes, which will be available to reduce future taxable income. The full realization of the tax benefit associated with the carryforward depends predominantly upon the Company's ability to generate taxable income during the carryforward period. Because the current uncertainty of realizing such tax assets in the future, a valuation allowance has been recorded equal to the amount of the net deferred tax asset, which caused the Company's effective tax rate to differ from the statutory income tax rate. The net operating loss carryforward, if not utilized, will begin to expire in the year 2010.
NOTE 3 - NET (LOSS) PER COMMON SHARE:
The net (loss) per common share of the Common Stock is computed based on the weighted average number of shares outstanding.
SUN RIVER MINING, INC
Notes to Financial Statements
September 30, 1999
NOTE 4 - PURCHASE AGREEMENT
Sun River Mining, Inc. delivered 8,900,000 newly issued common shares to NBI and RIO shareholders pro rata and warrants to purchase 500,000 shares at $1.00 per share and Debentures for $200,000 bearing interest at 8% convertible into common stock of SRM within one year at $1.00 per share in exchange for 99.8% of the issued and outstanding shares each of RIO and NBI. This purchase agreement has been cancelled per board minutes of November 9, 1998
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplates continuation of the Company as a going concern. However, the Company has sustained a substantial operations loss this year. As shown in the financial statements, the Company incurred a net loss of $837,082 for 1999 and $770,858 for 1998. At September 30, 1999, current liabilities exceed current assets by $582,946. These factors indicate that the Company has substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financial requirements, and the success of its future operations. Management believes that actions being taken to revise the Company's operating and financial requirements provide the opportunity for the Company to continue as a going concern.
SUN RIVER MINING, INC.
INTERIM FINANCIAL STATEMENTS
December 31, 1999
(Unaudited)
Sun River Mining, Inc.
Balance Sheet
For The Period Ended December 31, 1999
With Comparative Totals for September 30, 1998
(Unaudited)
Three Months Audited Fiscal
Ended Year Ended
Dec. 31, 1999 Sept. 30, 1999
------------- --------------
ASSETS:
Current assets:
Cash $ 81 $ 1,026
Accounts Receivable 0 200
Prepaid Expenses 1,884 1,884
------------------- -----------------
Total current assets 1,965 3,110
Noncurrent assets
Office Equipment (Net $995 Depreciation) 1,732 1,924
------------------- -----------------
Total noncurrent assets 1,732 1,924
------------------- -----------------
TOTAL ASSETS $ 3,697 $ 5,034
=================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY:
-------------------------------------
Current liabilities:
Accounts Payable $ 53,891 $ 52,894
Accrued Expenses 394,260 256,163
Directors' Fee Payable 6,683 6,683
Loans Payable 222,266 223,013
Notes Payable 0 47,303
------------------- -----------------
Total current liabilities 677,100 586,056
------------------- -----------------
Stockholders' equity:
Preferred Stock, par value $0.01 per share; 50,000,000
SHARES AUTHORIZED; NO SHARES ISSUED AND OUTSTANDING 0 0
Common Stock, no par value; 500,000,000 shares authorized;
15,062,090 shares issued and outstanding in 1999 and 1,235,891 1,220,891
9,333,800 shares issued and outstanding in 1998
Net Loss (Accumulated) (1,909,294) (1,801,913)
------------------- -----------------
TOTAL STOCKHOLDERS' EQUITY (673,403) (581,022)
------------------- -----------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,697 $ 5,034
=================== =================
The accompanying notes are an integral part of these financial statements.
F-12
|
SUN RIVER MINING, INC.
Statement of Operations
For The Period Ended December 31, 1999
With Comparative Totals for September 30, 1999
(Unaudited)
Three Months Audited Fiscal
Ended Year Ended
Dec. 31, 1999 Sept. 30, 1999
------------------- -------------------
Revenue $ 0 $ 0
Expenses:
Advertising 18,500
Bank Charges 136 572
Consulting 6,000 92,682
Depreciation 192 1,232
Directors' Fees 5,378 3,883
Due Diligence 0 40,454
Equipment Rental 0 0
Forgiveness of Debt 40,397 0
Interest 0 22,007
Legal and Accounting 0 20,805
Licenses & Fees 0 0
Meals & Entertainment 0 773
Office Expenses 328 4,415
Officer's Salaries 52,500 162,884
Postage 565
Printing 4,517
Public Relations 425 85,080
Rent 730 4,460
Subsidiary - Acquisition Loss 324,850
Taxes 53 4,604
Telephone 557 12,374
Transfer Agent Expense 500 3,701
Travel 185 28,724
------------------- -------------------
Total Expenses 107,381 837,082
Net Loss $ (107,381) $ (837,082)
=================== ===================
Per Share Information:
Weighted average number of
common shares outstanding 10,855,685 11,741,855
------------------- -------------------
Net Loss per Common Share $ (0.01) $ (0.07)
=================== ===================
The accompanying notes are an integral part of these financial statements.
F-13
|
Sun River Mining, Inc.
Statement of Cash Flows
For the Period Ended December 31, 1999
With Comparative Totals For the Year Ended September 30, 1999
(Unaudited)
1999 1998
---- ----
Cash Flows from Operating Activities:
Net Loss $ (107,381) $ (837,082)
Depreciation 192 995
Increase (Decrease) in Accounts Payable 997 43,884
Increase (Decrease) in Accrued Liabilities 89,300 119,598
Increase (Decrease) in Directors' Fees Payable 0 583
Decrease (Increase) in Prepaid Expenses 200 3,526
----------------- ----------------
Net Cash Flows Used by Operations (16,692) (668,496)
Cash Flows from Financing Activities:
Proceeds from Loans 747 109,114
Issuance of Common Stock 15,000 537,085
----------------- ----------------
Net Cash Flows Provided by Financing Activities 15,747 646,199
Net Increase (Decrease) in Cash (945) (22,297)
----------------- ----------------
Cash at Beginning of Period 1,026 23,323
----------------- ----------------
Cash at End of Period $ 81 $ 1,026
================= ================
The accompanying notes are an integral part of these financial statements.
F-14
|
Sun River Mining, Inc.
Stockholders' Equity
For The Period Ended December 31, 1999
(Unaudited)
Deficit
Accum. During
ISSUANCE OF Common the Development
COMMON STOCK: # of Shares Stock Stage Totals
------------------ ----------- ----- ----- ------
February 25, 1997 0 $ 0 $ 0 $ 0
March 15, 1997 (Cash) 100,000 100 0 100
March 31, 1997 (Subscribed) 111,800 111,800 0 111,800
March 31, 1997 - Trans to Founders 282,200 0 0 0
April 3, 1997 - Consolidated 8,900,000 312,106 0 312,106
August 15, 1997 (Subscribed) 58,000 58,000 0 58,000
September 30, 1997 (Subscribed) 47,800 47,800 47,800
Net Loss as of 9/30/97 0 0 (193,973) (193,973)
-------------------------------------- ------------------------------------
Balance - September 30, 1997 9,499,800 529,806 (193,973) 335,833
====================================== ====================================
November 30, 1997 (Compensation) 30,000 0 0 0
September 15, 1998 (For Cash) 1,000,000 200,000 0 200,000
September 15, 1998 (Cancelled) (1,200,000) (50,000) 0 (50,000)
September 30, 1998 (For Cash) 4,000 4,000 0 4,000
Net Loss as of 9/30/98 0 0 (770,858) (770,858)
-------------------------------------- ------------------------------------
Balance - September 30, 1998 9,333,800 683,806 (964,831) (281,025)
====================================== ====================================
November 9, 1998 (For Cash) 215,900 148,635 0 148,635
January 5, 1999 (For Cash) 208,770 8,000 0 8,000
January 7, 1999 (For Compensation) 800,000 0 0 0
January 15, 1999 (For Cash) 750,000 139,225 0 139,225
January 21, 1999 (For Compensation) 500,000 0 0 0
February 2, 1999 (For Cash) 150,000 40,775 0 40,775
April 6, 1999 (For Cash) 904,500 200,450 0 200,450
June 30, 1999 (For Compensation) 1,400,000 0 0 0
September 30, 1999 (Subscription) 800,000 0 0 0
Net Loss as of 9/30/99 0 0 (837,082) (837,082)
-------------------------------------- ------------------------------------
Balance - September 30, 1999 15,062,970 $ 1,220,891 $ (1,801,913) $ (581,022)
====================================== ====================================
October 1, 1999 (For Cash) 300,000 $ 15,000 $ 0 $ 15,000
Net Loss as of Dec. 31, 1999 0 $ 0 $ (107,381) $ (107,381)
-------------------------------------- ------------------------------------
Balance - December 31, 1999 15,362,970 $ 1,235,891 $ (1,909,294) $ (673,403)
====================================== ====================================
The accompanying notes are an integral part of these financial statements.
F-15
|
SUN RIVER MINING, INC.
Notes to Financial Statements
December 31, 1999
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION:
On February 25, 1997, Sun River Mining, Inc. (the Company) was incorporated under the laws of Colorado. In May 1999 management decided to write-off the Sun River Bolivian subsidiaries and to take the subsequent loss, of all investments associated with the subsidiaries. These financial statements recorded the subsequent loss in the current fiscal period. There is also a provision to pay the balance of what was the debt of Rio Del Sol S.A. (a Bolivian subsidiary) in the amount of $246,465, the only contingent liability that the Company believes it will incur regarding the deacquisition of these subsidiaries.
BASIS OF PRESENTATION:
The Company is in the mining business and is primarily engaged in raising capital for exploration and acquisition of mining property. The authorized capital stock of the corporation is 500,000,000 shares of common stock no par value and 50,000,000 shares of preferred stock, $.01 par value.
CASH AND CASH EQUIVALENTS:
For purposes of the statements of cash flows, cash and cash equivalents include cash in banks and money markets with an original maturity of three months or less.
FIXED ASSETS AND DEPRECIATION:
The purchased equipment is recorded at cost. Depreciation is computed on purchased property using the straight-line method over the following estimated useful lives of the assets:
Equipment 5 years
NOTES PAYABLE:
Notes payable as of December 31, 1999 consist of the following:
Note payable to Glen Pahnke for unpaid company expenses, incurring interest at 8%, due upon demand. 10,000
Note payable to Randy McCall for unpaid company expenses, incurring interest at 8%, due upon demand. 47,266
SUN RIVER MINING, INC
Notes to Financial Statements
December 31, 1999
(Unaudited)
NOTES PAYABLE(CONT)
Note payable to Dakota Partners dated January 25, 1999,
INCURRING INTEREST AT 12%, DUE UPON COMPLETION OF PAYMENT 165,000
----------
TOTAL NOTES PAYABLE $ 222,266
=========
|
All notes payable are due within one year; therefore, are classified as current liabilities.
REVENUE RECOGNITION:
Revenue is recognized when earned and expenses are recognized when they occur.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
The Company's financial instruments include cash, cash equivalents and notes payable. Estimates of fair value of these instruments are as follows:
Cash & Cash Equivalents - The carrying amount of cash and cash equivalents approximates fair value due to relatively short maturity of these instruments.
Notes payable - The carrying amount of the Company's notes payable approximate fair value based on borrowing rates currently available to the Company for borrowing with comparable terms and conditions.
SUN RIVER MINING, INC
Notes to Financial Statements
December 31, 1999
(Unaudited)
FEDERAL INCOME TAX:
The Company accounts for income taxes under SFAS No. 109, which requires the asset and liability approach to accounting for income taxes. Under this approach, deferred income taxes are determined based upon differences between the financial statement and tax bases of the Company's assets and liabilities and operating loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized if it is more likely than not that the future tax benefit will be realized.
NOTE 2 - INCOME TAXES:
Significant components of the Company's deferred tax liabilities and
assets are as follows:
SEPTEMBER 30
1999 1998
---- ----
DEFERRED TAX LIABILITY $ 0 $ 0
================ ===============
Deferred Tax Assets
Net Operating Loss Carryforwards 837,082 770,858
Book/Tax Differences in Bases of Assets 11,000 9,000
LESS VALUATION ALLOWANCE (848,082) (779,858)
----------------- ---------------
TOTAL DEFERRED TAX ASSETS $ 0 $ 0
================= ===============
NET DEFERRED TAX LIABILITY $ 0 $ 0
================= ===============
|
As of December 31, 1999, the Company had a net operating loss carryforward for federal tax purposes approximately equal to the accumulated deficit recognized for book purposes, which will be available to reduce future taxable income. The full realization of the tax benefit associated with the carryforward depends predominantly upon the Company's ability to generate taxable income during the carryforward period. Because the current uncertainty of realizing such tax assets in the future, a valuation allowance has been recorded equal to the amount of the net deferred tax asset, which caused the Company's effective tax rate to differ from the statutory income tax rate. The net operating loss carryforward, if not utilized, will begin to expire in the year 2010.
SUN RIVER MINING, INC
Notes to Financial Statements
December 31, 1999
(Unaudited)
NOTE 3 - NET (LOSS) PER COMMON SHARE:
The net (loss) per common share of the Common Stock is computed based on the weighted average number of shares outstanding.
NOTE 4 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplates continuation of the Company as a going concern. However, the Company has sustained a substantial operations loss this year. As shown in the financial statements, the Company incurred a net loss of $944,463 for 1999 and $770,858 for 1998. At December 31, 1999, current liabilities exceed current assets by $675,135. These factors indicate that the Company has substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financial requirements, and the success of its future operations. Management believes that actions being taken to revise the Company's operating and financial requirements provide the opportunity for the Company to continue as a going concern.
INDEX TO EXHIBITS
SK# 3.1 Articles of Incorporation
3.2 Bylaws of Sun River Mining, Inc.
27.1 Financial Data Schedule
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EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
SUN RIVER MINING, INC.
ARTICLES OF INCORPORATION
OF
SUN RIVER MINING, INC.
The undersigned hereby states as Articles of Incorporation pursuant to Colorado Revised Statutes as follows:
ARTICLE I
The name of the corporation is: SUN RIVER MINING, INC., and its initial principal place of business shall be: 10200 W. 44th Ave., #400, Wheat Ridge, CO 80033.
ARTICLE II
DURATION. The corporation shall have perpetual existence.
ARTICLE III
PURPOSE. The purposes for which the corporation is organized are: shall be to transact all lawful business for which corporations may be organized pursuant to the Colorado Corporation Code.
ARTICLE IV
CAPITAL STOCK
AUTHORIZED SHARES
SECTION 1. CLASSES AND SHARES AUTHORIZED. The authorized capital stock of the corporation shall be 500,000,000 shares of Common Stock no par value and 50,000,000 shares of Preferred Stock, $.01 par value.
SECTION 2. PREFERRED STOCK. Shares of Preferred Stock may be divided into such classes and series as may be established, from time to time, by the Board of Directors. The Board of Directors, from time to time, may fix and determine the relative rights and preferences of the shares of any series or class so established. The Board of Directors may fix the preferred shares of any series or class established as either voting, or non-voting, in the sole discretion of the Board, and may determine dividends, cumulative or not, in the sole discretion of the Board.
SECTION 3. COMMON STOCK DIVIDENDS.
(a) After the requirements with respect to preferential dividends on the classes or series of Preferred Stock, if any, shall have been met and after the corporation shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts, and subject further to any other conditions which may be fixed in accordance with the provisions of Section 2 of this Article IV, then, and not otherwise, the holders of the Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors of the corporation paid out of funds legally available therefor.
(b) After distribution in full of the preferential amount, if any, to be distributed to the holders of the Preferred Stock of the various classes or series in the event of voluntary or involuntary liquidation and distribution or sale of assets, dissolution, or winding-up of the corporation, the holders of the Common Stock shall be entitled to receive all of the remaining assets of the corporation, tangible and intangible, of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of the Common Stock held by them respectively.
(c) Except as may otherwise be required by law, each holder of the Common Stock shall have one vote in respect of each share of the Common Stock held by him on all matters voted upon by the stockholders.
SECTION 4. GENERAL PROVISIONS. The capital stock of the Corporation may be issued for money, property, services rendered, labor done, cash advanced for the corporation, or for any other assets of value in accordance with the action of the Board of Directors, whose judgment as to the value of the assets received in return for said stock shall be conclusive, and said stock, when issued, shall be fully paid and nonassessable.
ARTICLE V
CUMULATIVE VOTING. Cumulative voting by holders of the Common Stock or the Preferred Stock is not authorized.
ARTICLE VI
PRE-EMPTIVE RIGHTS. SHAREHOLDERS OF THE CORPORATION SHALL NOT have preemptive rights to acquire unissued or treasury shares of the corporation or securities convertible into such shares or carrying a right to subscribe to or acquire such shares.
ARTICLE VII
The address of the initial registered office of the corporation is 10200 W. 44th Ave., #400, Wheat Ridge, CO 80033, and the name of the initial registered agent shall be M. A. Littman.
Accepted:/s/M.A. Littman |
ARTICLE VIII
PLACE OF BUSINESS. Part or all of the business of the corporation may be conducted in any place in the State of Colorado or outside of the State of Colorado, in other states or territories of the United States, and in foreign countries.
ARTICLE IX
BOARD OF DIRECTORS
SECTION 1. BOARD OF DIRECTORS; NUMBER. The governing board of the corporation shall be known as the Board of Directors, and the number of directors may from time to time be increased or decreased in such manner as shall be provided in the By-laws of the corporation, provided that the number of directors shall not be reduced to less than three except that there need be only as many directors as there are shareholders in the event that the outstanding shares are held of record by fewer than three shareholders.
SECTION 2. CLASSIFICATION OF DIRECTORS. The Board of Directors shall be divided into three classes, Class 1, Class 2, and Class 3, each class to be as nearly equal in number as possible, the term of office of Class 1 directors to expire at the first annual meeting of shareholders after their election, that of Class 2 directors to expire at the second annual meeting after their election, and that of Class 3 directors to expire at the third annual meeting after their election. At each annual meeting after such classification, the number of directors equal to the number of the class whose term expires at the time of such meeting shall be elected to hold office until the third succeeding annual meeting. No classification of directors shall be effective prior to the first annual meeting of shareholders or at any time when the Board of Directors consists of less than six members. Notwithstanding the foregoing, and except as otherwise required by law, whenever the holders of any one or more series of Preferred Stock shall have the right, voting separately as a class, to elect one or more directors of the company, the terms of the directors or directors elected by such holders shall expire at the next succeeding annual meeting of stockholders.
SECTION 3. DIRECTORS. The names and addresses of the persons who are to serve as directors until the next annual meeting of shareholders or until their successors shall be elected and shall qualify are as follows:
Randy McCall c/o 10200 W. 44th Ave. #400
Wheat Ridge, CO 80033
Frank Barnes c/o 10200 W. 44th Ave. #400
Wheat Ridge, CO 80033
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SECTION 4. NOMINATION OF DIRECTORS.
a. Nominations for the election of directors may be made by the board of Directors, by a committee of the Board of Directors, or by any shareholder entitled to vote for the election of directors. Nominations by shareholders shall be made by notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the corporation not less than 14 days nor more than 50 days prior to any meeting of the shareholders called for the election of directors; provided, however, that if less than 21 days notice of the meeting is given to shareholders, such written notice of
the meeting is given to shareholders, such written notice shall be delivered or mailed, as prescribed, to the Secretary of the corporation not later than the close of the seventh day following the day on which notice of the meeting was mailed to shareholders.
b. Each notice under subsection (a) shall set forth (i) the name, age, business address and, if known residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee, and (iii) the number of shares of stock of the corporation which are beneficially owned by each such nominees.
c. The chairman of the shareholders' meeting may, if the facts warrant, determine, and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.
SECTION 5. CERTAIN POWERS OF THE BOARD OF DIRECTORS. In furtherance and not in limitation of the powers conferred by statute, the Board is expressly authorized:
a. to manage and govern the corporation by majority vote of members present at any regular or special meeting at which a quorum shall be present, to make, alter, or amend the By-laws of the corporation at any regular or special meeting, to fix the amount to be reserved as working capital over and above its capital stock paid in, to authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation, and to designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in the resolution or in the By-laws of the corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation (such committee or committees shall have such name or names as may be stated in the By-laws of the corporation or as may be determined from time to time by resolution adopted by the Board of Directors);
b. to sell, lease, exchange or otherwise dispose of all or substantially all of the property and assets of the corporation in the ordinary course of its business upon such terms and conditions as the Board of Directors may determine without vote or consent of the shareholders.
c. to sell, pledge, lease, exchange, liquidate or otherwise dispose of all or substantially all the property or assets of the corporation, including its goodwill, if not in the ordinary course of its business, upon such terms and conditions as the Board of Directors may determine; provided, however, that such transaction shall be authorized or ratified by the affirmative vote of the holders of at least a majority of the shares entitled to vote thereon at a shareholders' meeting duly called for such purpose, or is authorized or ratified by the written consent of the holders of all of the shares entitled to vote thereon; and provided, further, that any such transaction with any substantial shareholder or affiliate of the corporation shall be authorized or ratified by the affirmative vote of the holders of at least 51% of the shares entitled to vote thereon at a shareholders' meeting duly called for that purpose, unless such transaction is with any subsidiary of the corporation, or is approved by the affirmative vote of a majority of the continuing disinterested directors of the corporation, in which case no vote of the shareholders is necessary.
d. to merge, consolidate, or exchange all of the issued or outstanding shares of one or more classes of the corporation upon such terms and conditions as the Board of Directors may authorize; provide, however, that such merger, consolidation, or exchange is approved or ratified by the affirmative vote of the holders of at least a majority of the shares entitled to vote thereon at a shareholders' meeting duly called for that purpose, or is authorized or ratified by the written consent of the holders of all of the shares entitled to vote thereon; and, provided, further, that any such merger, consolidation, or exchange with any substantial shareholder or affiliate of the corporation shall be authorized or ratified by the affirmative vote of the holders of at least 51% of the shares entitled to vote thereon at a shareholders' meeting duly called for that purpose, unless such merger, consolidation, or exchange is with any subsidiary of the corporation or is approved by the affirmative vote of a majority of the continuing disinterested directors of the corporation, in which case no vote of shareholders is necessary.
e. to distribute to the shareholders of the corporation, without the approval of the shareholders, in partial liquidation, out of stated capital or capital surplus of the corporation, a portion of its assets, in cash or in property, so long as the partial liquidation is in compliance with the Colorado Corporation Code.
f. as used in this Section 5, the following terms shall have the following meanings:
(i) an "affiliate" shall mean any person or entity which is an affiliation within the meaning of Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended;
(ii) a "continuing disinterested
director" shall mean: a director who
was elected before the proposed
transaction comes before the Board
for approval within the scope of
subsections (c) and (d) of this
Section 5, and who has no interest
in the proposed transaction except
as it benefits the corporation, in
their judgment.
(iii) a "subsidiary" shall mean any corporation in which the corporation owns the majority of each class of equity security; and
(iv) a "substantial shareholder" shall mean any person or entity which is the beneficial owner, within the meaning of Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, of 10% or more of the outstanding capital stock of the corporation.
g. The Board of Directors shall have the power to approve acquisitions of assets, business, or corporations by the company in exchange for stock and debt, so long ass any such proposed transaction would not result in issuance of more than the equivalent of 51% of the outstanding stock to any one shareholder.
ARTICLE X
CONFLICTS OF INTEREST
SECTION 1. RELATED PARTY TRANSACTION. No contract or other transaction of the corporation with any other person, firm or corporation, or in which this corporation is interested, shall be affected or invalidated by (a) the fact that any one or more of the directors or officers of this corporation is interested in or is a director or officer of such other firm or corporation; or (b) the fact that any director or officer of this corporation,, individually or jointly with others, may be party to or may be interested in any such contract or transaction, so long as the contract or transaction is authorized, approved or ratified at a meeting of a Board of Directors by sufficient vote thereon by directors not interested therein, to which such fact of relationship or interest has been disclosed, or the contract or transaction has been approved or ratified by vote or written consent of the shareholders entitled to vote, to whom such fact of relationship or interest has been disclosed, or so long as the contract or transaction is fair and reasonable to the corporation. Each person who may become a director or officer of the corporation is hereby relieved from any liability that might otherwise arise by reason of his contracting with the corporation for the benefit of himself or any firm or corporation in which he may be in any way interested.
SECTION 2. CORPORATE OPPORTUNITIES. The officers, directors and other members of management of this corporation shall be subject to the doctrine of corporate opportunities only insofar as it applies to business opportunities in which this corporation has expressed and interest as determined from time to time by resolution of the Board of Directors. When such areas of interest are delineated, all such business opportunities within such areas of interest which come to the attention of the officers, directors and other members of management of this corporation shall be disclosed promptly to this corporation and made available to it. The Board of Directors may reject any business opportunity presented to it, and thereafter any officer, director or other member of management may avail himself of such opportunity. Until such time as this corporation, through its Board of Directors, has designated an area of interest, the officers, directors and other members of management of this corporation shall be free to engaged in such areas of interest on their own and the provisions hereof shall not limit the rights of any officer, director or other member of management of this corporation to continue a business existing prior to the time that such area of interest is designated by this corporation. This provision shall not be construed to release any employee of the corporation (other than officer, directors or member of management) from any duties which such employee may have to the corporation.
ARTICLE XI
INDEMNIFICATION
SECTION 1. DIRECT ACTIONS. The Corporation shall indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that such person is or was a director, officer, employee, fiduciary, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary, or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including Attorney fees), judgements, fines and amounts paid in settlement, actually and reasonably incurred by such person in
connection with such action, suit or proceeding, if such person acted in good faith and in a manner such person reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgement, order, settlement, conviction or upon a plea of NOLO CONTENDERE or its equivalent, shall not of itself create a presumption that such person did not act in good faith and in a manner such person reasonably believed to be in, or not opposed to, the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that such persons' conduct was unlawful.
SECTION 2. DERIVATIVE ACTIONS. The Corporation shall indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgement in its favor by reason of the fact that such person is or was a director, officer, employee, fiduciary, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary, or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorney fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, if such person believed it to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of such person's duty to the Corporation, unless, and only to the extent that, the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses which such court deems proper.
SECTION 3. EXPENSES. To the extent that a director, officer, employee, fiduciary, or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article XI, or in defense of any claims, issue or matter therein, such person shall be indemnified against expenses (including attorney fees) actually and reasonably incurred by him in connection therewith.
SECTION 4. DETERMINATION. Any indemnification under Sections 1 or 2 of this
Article XI (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
officer, director and employee, fiduciary, or agent is proper in the
circumstances, because such person has met the applicable standard of conduct
set forth in Sections 1 or 2 of this Article XI. Such determination shall be
made (i) by the Board of Directors by a majority vote of a quorum, consisting of
directors who were not parties to such action, suit or proceeding, or (ii) if a
quorum is not obtainable or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(iii) by the affirmative vote of the holders of a majority of the shares of
stock entitled to vote and represented at a meeting called for such purpose.
SECTION 5. ADVANCE OF EXPENSES. Expenses (including attorney fees) incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized in Section 4 of this Article XI, upon receipt of an undertaking by or on behalf of the director, officer, employee, fiduciary, or agent to repay such amount unless it shall be ultimately determined that such person is entitled to be indemnified by the Corporation as authorized in this Article XI.
SECTION 6. INSURANCE. The Board of Directors may exercise the Corporation's power to purchase and maintain insurance on behalf of any person who is or was a director, office, employee, fiduciary, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary, or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under this Article XI.
SECTION 7. MISCELLANEOUS. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under these Articles of Incorporation, the By-Laws, agreements, vote of the shareholders of disinterested directors, or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, fiduciary, of agent and shall insure to the benefit of the heirs and personal representatives of such person.
ARTICLE XII
ARRANGEMENTS WITH CREDITORS
Whenever a compromise or arrangement is proposed by the Corporation between it and its creditors or any class of them, and/or between said Corporation and its shareholders or any class of them, any court of equitable jurisdiction may, on summary application by the Corporation, or by a majority of its shareholders, or on the application of any receiver or receivers appointed for the Corporation, or on the application of trustees in dissolution, order a meeting of the creditors or class of creditors and/or of the shareholders or class of shareholders of the Corporation, as the case may be, to be notified in such manner as the court decides. If a majority in number representing at least three-fourths in amount of the creditors or class of creditors, and/or the holders of the majority of the stock or class of stock of the Corporation, as the case may be, agree to any compromise or arrangement and/or to any reorganization of the Corporation, as a consequence of such compromise or arrangement , then said compromise or arrangement and/or said reorganization shall, if sanctioned by the court to which the application has been made, be binding upon all the creditors or class of creditors, and/or on all the shareholders of class of shareholders of the Corporation, as the case may be, and also on the Corporation.
ARTICLE XIII
SHAREHOLDERS' MEETINGS
Shareholders' meetings may be held at such time and place as may be stated or fixed in accordance with the By-Laws. At all shareholders' meetings one-third of all shares entitled to vote shall constitute a quorum.
ARTICLE XIV
SHAREHOLDER VOTE
Whenever the laws of the State of Colorado require the vote or concurrence of the holders of two-thirds of the outstanding shares entitled to vote thereon, with respect to any action to be taken by the shareholders of the Corporation, such action may be taken by vote or concurrence of the holders of at least a majority of the shares entitled to vote. These Articles of Incorporation may be amended by the affirmative vote of the holders of at least a majority of the shares entitled to vote thereon at a meeting duly called for that purpose, or, when authorized, when such action is ratified by the written consent of all the shareholders entitled to vote thereon.
ARTICLE XV
DISSOLUTION
SECTION 1. PROCEDURE. The Corporation shall be dissolved upon the affirmative vote of the holders of at least a majority of the shares entitled to vote thereon at a meeting duly called for that purpose, or when authorized or ratified by the written consent of the holders of all of the shares entitled to vote thereon.
SECTION 2. REVOCATION. The Corporation shall revoke voluntary dissolution proceedings upon the affirmative vote of the holders of at least a majority of the shares entitled to vote at a meeting duly called for that purpose, or when authorized or ratified by the written consent of the holders of all of the shares entitled to vote thereon.
ARTICLE XVI
The name and address of the Incorporator of the Corporation is as follows:
NAME ADDRESS
---- -------
Michael A. Littman 10200 W. 44th Avenue, #400
Wheat Ridge, Colorado 80033
|
IN WITNESS WHEREOF, the undersigned, has executed said Articles of Incorporation as of this 24th day of February, 1997.
/s/Michael A. Littman Incorporator |
STATE OF COLORADO )
) SS.
COUNTY OF JEFFERSON )
|
Before me, Candi M. Cole, a Notary Public, in and for said County and State, personally appeared Michael A. Littman and that he signed the foregoing instrument as his free and voluntary act for the uses and purposes therein set forth, and that the facts contained therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 24th day of February, 1997.
My Commission expires: 2/24/98
/s/Candi M. Cole Notary Public 10200 W. 44th Ave. #400 Wheat Ridge, CO 80033 |
EXHIBIT 3.2
BY-LAWS
OF
SUN RIVER MINING, INC.
BY-LAWS
of
SUN RIVER MINING, INC.
a Colorado Corporation
ARTICLE I
The initial principal office of the Corporation shall be in Wheat Ridge, Colorado. The Corporation may have offices at such other places within or without the State of Colorado as the Board of Directors may from time to time establish.
ARTICLE II
CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with corporate action, by any provisions of the statutes of the Certificate of Incorporation, the meeting and vote of stockholders may be dispensed with, if all the stockholders who should have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken.
ARTICLE III
Board of Directors
Section 1. GENERAL POWERS. The business of the Corporation shall be managed by the Board of Directors, except as otherwise provided by statute or by the Certificate of Incorporation.
Section 2. NUMBER AND QUALIFICATIONS. The Board of Directors shall consist of up to three (3) members. Except as provided in the Certificate of Incorporation, this number can be increased only by the vote or written consent of the holders of ninety (90) percent of the stock of the Corporation outstanding and entitled to vote. The current number of Directors shall be determined by the Board of Directors at its annual meeting. No Director need be a stockholder.
Section 3. ELECTION AND TERM OF OFFICE. The Directors shall be elected annually by the stockholders, and shall hold office until their successors are respectively elected and qualified.
Election of Directors need not be by ballot.
Section 4. COMPENSATION. The members of the Board of Directors shall be paid a fee of $10.00 for attendance at all annual, regular, special and adjourned meetings of the Board. No such fee shall be paid any director if absent. Any director of the Corporation may also serve the Corporation in any other capacity, and receive compensation therefor in any form. Members of special or standing committees may be allowed like compensation for attending committee meetings.
Section 5. REMOVAL AND RESIGNATIONS. The stockholders may, at any meeting called for the purpose, by vote of two-thirds of the capital stock issued and outstanding, remove any directors from office, with or without cause; provided however, that no director shall be removed in case the vote of a sufficient number of shares are cast against his removal, which if cumulatively voted at any election of directors would be sufficient to elect him, if cumulative voting is allowed by the Articles of Incorporation.
The stockholders may, at any meeting, by vote of a majority of such stock represented at such meeting accept the resignation of any director.
Section 6. VACANCIES. Any vacancy occurring in the office of director may be filled by a majority of the directors then in office, though less than a quorum, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified, unless sooner displaced.
When one or more directors resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have powers to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations become effective.
ARTICLE IV
Meetings of Board of Directors
Section 1. REGULAR MEETINGS. A regular meeting of the Board of Directors may be held without call or formal notice immediately after and at the same place as the annual meeting of the stockholders or any special meeting of the stockholders at such places within or without the State of Colorado and at such times as the Board may by vote from time to time determine.
Section 2. SPECIAL MEETINGS. Special meetings of the Board of Directors may be held at any place whether within or without the State of Colorado at any time when called by the President, Treasurer, Secretary or two or more directors. Notice of the time and place thereof shall be given to each director at least three (3) days before the meeting if by mail or at least twenty-four hours if in person or by telephone or telegraph. A waiver of such notice in writing, signed by the person or persons entitled to said notice, either before or after the time stated therein, shall be deemed equivalent to such notice. Notice of any adjourned meeting of the Board of Directors need not be given.
Section 3. QUORUM. The presence, at any meeting, of one-third of the total number of directors, but in no case less than two (2) directors, shall be necessary and sufficient to constitute a quorum for the transaction of business except as otherwise required by statute or by the Certificate of Incorporation, the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present at the time and place of any meeting may adjourn such meeting from time to time until a quorum be present.
Section 4. a. CONSENT OF DIRECTORS IN LIEU OF MEETING. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the Board or committee, and such written consent is filed within the minutes of the Corporation.
b. The Board of Directors may hold regular or special meetings by telephone conference call, provided that any resolutions adopted shall be recorded in writing within 3 days of such telephone conference, and written ratification of such resolutions by the directors shall be provided within 10 days thereafter.
ARTICLE V
Committees of Board of Directors
The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more of the directors of the Corporation, which, to the extent provided in the resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.
The committees of the Board of Directors shall keep regular minutes of their proceedings and report the same to the Board of Directors when required.
ARTICLE VI
Officers
Section 1. NUMBER. The Corporation shall have a President, one or more Vice Presidents, a Secretary and a Treasurer, and such other officers, agents and factors as may be deemed necessary. One person may hold any two offices except the offices of President and Vice President and the offices of President and Secretary.
Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATION. The officers specifically designated in Section 1 of this Article VI shall be chosen annually by the Board of Directors and shall hold office until their successors are chosen and qualified. No officer need be a director.
Section 3. SUBORDINATE OFFICERS. The Board of Directors from time to time may appoint other officers and agents, including one or more Assistant Secretaries and one or more Assistant Treasurers, each of whom shall hold office for such period, have such authority and perform such duties as are provided in these By-Laws or as the Board of Directors from time to time may determine. The Board of Directors may delegate to any office the power to appoint any such subordinate officers, agents and factors and to prescribe their respective authorities and duties.
Section 4. REMOVALS AND RESIGNATIONS. The Board of Directors may at any meeting called for the purpose, by vote of a majority of their entire number, remove from office any officer or agent of the Corporation, or any member of any committee appointed by the Board of Directors.
The Board of Directors may at any meeting, by vote of a majority of the directors present at such meeting, accept the resignation of any officer of the Corporation.
Section 5. VACANCIES. Any vacancy occurring in the office of President, Vice President, Secretary, Treasurer or any other office by death, resignation, removal or otherwise shall be filled for the expired portion of the term in the manner prescribed by these By-Laws for the regular election or appointment to such office.
Section 6. THE PRESIDENT. The President shall be the chief executive officer of the Corporation and, subject to the direction and under the supervision of the Board of Directors, shall have general charge of the business, affairs and property of the Corporation, and control over its officers, agents and employees. The President shall preside at all meetings of the stockholders and of the Board of Directors at which he is present. The President shall do and perform such other duties and may exercise such other powers as from time to time may be assigned to him by these By-Laws or by the Board of Directors.
Section 7. THE VICE PRESIDENT. At the request of the President or in the event of his absence or disability, the Vice President, or in case there shall be more than one Vice President, the Vice President designated by the President, or in the absence of such designation, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President. Any Vice President shall perform such other duties and may exercise such other powers as from time to time may be assigned to him by these By-Laws or by the Board of Directors, or the President.
Section 8. THE SECRETARY. The Secretary shall:
a. Record all the proceedings of the meetings of the Corporation and directors in a book to be kept for that purpose;
b. Have charge of the stock ledger (which may, however, be kept by any transfer agent or agents of the Corporation under the direction of the Secretary), an original or duplicate of which shall be kept at the principal office or place of business of the Corporation in the State of Colorado;
c. Prepare and make, at least ten (10) days before every election of directors, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order;
d. See that all notices are duly given in accordance with the provisions of these By-Laws or as required by statute;
e. Be custodian of the records of the Corporation and the Board of Directors, and of the seal of the Corporation, and see that the seal is affixed to all stock certificates prior to their issuance and to all documents, the execution of which on behalf of the Corporation under its seal have been duly authorized;
f. See that all books, reports, statements, certificates and the other documents and records required by law to be kept or filed are properly kept or filed; and
g. In general, perform all duties and have all powers incident to the office of Secretary and perform such other duties and have such powers as from time to time may be assigned to him by these By-Laws or by the Board of Directors or the President.
Section 9. THE TREASURER. The Treasurer shall:
a. Have supervision over the funds, securities, receipts, and disbursements of the Corporation;
b. Cause all monies and other valuable effects of the Corporation to be deposited in its name and to its credit, in such depositories as shall be selected by the Board of Directors or pursuant to authority conferred by the Board of Directors.
c. Cause the funds of the Corporation to be disbursed by checks or drafts upon the authorized depositories of the Corporation, when such disbursements shall have been duly authorized;
d. Cause to be taken and preserved proper vouchers for all monies disbursed;
e. Cause to be kept at the principal office of the Corporation correct books of account of all its business and transactions;
f. Render to the President or the Board of Directors, whenever requested, an account of the financial condition of the Corporation and of his transactions as Treasurer;
g. Be empowered to require from the officers or agents of the Corporation reports or statements giving such information as he may desire with respect to any and all financial transactions of the Corporation; and
h. In general, perform all duties and have all powers incident to the office of Treasurer and perform such other duties and have such power as from time to time may be assigned to him by these By-Laws or by the Board of Directors or President.
Section 10. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant Secretaries and Assistant Treasurers shall have such duties as from time to time may be assigned to them by the Board of Directors or the President.
Section 11. SALARIES. The salaries of the officers of the Corporation shall be fixed from time to time by the Board of Directors, except that the Board of Directors may delegate to any person the power to fix the salaries or other compensation of any officers or agents appointed in accordance with the provisions of Section 3 of this Article VI. No officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation.
Section 12. SURETY BOND. The Board of Directors may secure the fidelity of any or all of the officers of the Corporation by bond or otherwise.
ARTICLE VII
Execution of Instruments
Section 1. EXECUTION OF INSTRUMENTS GENERALLY. All documents or writings of any nature shall be signed, executed, verified, acknowledged and delivered by such officer or officers or such agent of the Corporation and in such manner as the Board of Directors from time to time may determine.
Section 2. CHECKS, DRAFTS, ETC. All notes, drafts, acceptances, checks, endorsements, and all evidence of indebtedness of the corporation whatsoever, shall be signed by such officer or officers or such agent or agents of the Corporation and in such manner as the Board of Directors from time to time may determine. Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositories shall be made in such manner as the Board of Directors from time to time may determine.
Section 3. PROXIES. Proxies to vote with respect to shares of stock of other corporations owned by or standing in the name of the Corporation may be executed and delivered from time to time on behalf of the Corporation by the President or Vice President and the Secretary or Assistant Secretary of the Corporation or by any other person or persons duly authorized by the Board of Directors.
ARTICLE VIII
Section 1. CERTIFICATES OF STOCK. Every holder of stock in the Corporation shall be entitled to have a certificate, signed in the name of the Corporation by the Chairman or Vice President of the Board of Directors, the President or a Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation; provided, however, that where such certificate is signed by a transfer agent or an assistant transfer agent or by a transfer clerk acting on behalf of the Corporation and a registrar, the signature of any such Chairman of the Board of Directors, President, Vice President, Treasurer, Assistant Treasurer, Secretary, or Assistant Secretary may be facsimile. In case any officer or officers who shall have signed, or whole facsimile signature or signatures shall have been used thereon, any such certificate or certificates shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed such certificate or certificates, or whose facsimile signature or signatures shall have been used thereon, had not ceased to be such officer or officers of the Corporation, and any such delivery shall be regarded as an adoption by the Corporation of such certificate or certificates.
Certificates of stock shall be in such form as shall, in conformity to law, be prescribed from time to time by the Board of Directors.
Section 2. TRANSFER OF STOCK. Shares of stock of the Corporation shall only be transferred on the books of the Corporation by the holder of record thereof or by his attorney duly authorized in writing, upon surrender to the Corporation of the certificates for such shares endorsed by the appropriate person or persons, with such evidence of the authenticity of such endorsement, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer tax stamps. In that event, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction on its books.
Section 3. RIGHTS OF CORPORATION WITH RESPECT TO REGISTERED OWNERS. Prior to the surrender to the Corporation of the certificates for shares of stock with a request to record the transfer of such shares, the Corporation may treat the registered owner as the person entitled to receive dividends, to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner.
Section 4. CLOSING STOCK TRANSFER BOOK. The Board of Directors may close the Stock Transfer Book of the Corporation for a period not exceeding fifty (50) days preceding the date of any meeting of the stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect or for a period of not exceeding (50) days in connection with obtaining the consent of stockholders for any purpose. However, in lieu of closing the Stock Transfer Book, the Board of Directors may fix in advance a date, not exceeding fifty (50) days preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, and in such case such stockholders, and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid.
Section 5. LOST, DESTROYED AND STOLEN CERTIFICATES. Where the owner of a Certificate for shares claims that such certificate has been lost, destroyed or wrongfully taken, the Corporation shall issue a new certificate in place of the original certificate if the owner (a) so requests before the Corporation has notice that the shares have been acquired by a bona fide purchaser; (b) files with the Corporation a sufficient indemnity bond; and (c) satisfies such other reasonable requirements, including evidence of such loss, destruction, or wrongful taking, as may be imposed by the Corporation.
ARTICLE IX
Dividends
Section 1. SOURCES OF DIVIDENDS. The directors of the Corporation, subject to any restrictions contained in the statutes and Certificate of Incorporation, may declare and pay dividends upon the shares of the capital stock of the Corporation either (a) out of its new assets in excess of its capital, or (b) in case there shall be no such excess, out of its net profits for the fiscal year then current or the current and preceding fiscal year.
Section 2. RESERVES. Before the payment of any dividend, the directors of the Corporation may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose, and the directors may abolish any such reserve in the manner in which it was created.
Section 3. RELIANCE ON CORPORATE RECORDS. A director shall be fully protected in relying in good faith upon the books of account of the Corporation or statements prepared by any of its officials as to the value and amount of the assets, liabilities and net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid.
Section 4. MANNER OF PAYMENT. Dividends may be paid in cash, in property, or in shares of the capital stock of the Corporation at par.
ARTICLE X
Seal
The Corporate seal, subject to alteration by the Board of Directors, shall be in the form of a circle and shall bear the name of the Corporation and shall indicate its formation under the laws of the State of Colorado. Such seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE XI
Fiscal Year
Except as from time to time otherwise provided by the Board of Directors, the fiscal year of the Corporation shall be the calendar year.
ARTICLE XII
Amendments
Section 1. BY THE STOCKHOLDERS. Except as otherwise provided in the Certificate of Incorporation or in these By-Laws, these By-Laws may be amended or repealed, or new By-Laws may be made and adopted by a majority vote of all the stock of the Corporation issued and outstanding and entitled to vote at any annual or special meeting of the stockholders, provided that notice of intention to amend shall have been contained in the notice of meeting.
Section 2. BY THE DIRECTORS. Except as otherwise provided in the Certificate of Incorporation or in these By-Laws, these By-Laws, including amendments adopted by the stockholders, may be amended or repealed by a majority vote of the whole Board of Directors at any regular or special meeting of the Board, provided that the stockholders may from time to time specify particular provisions of the By-Laws which shall not be amended by the Board of Directors.
ARTICLE XIII
Indemnification
The Board of Directors hereby adopt the provision of C.R.S. 7-3-101 S (as it may be amended from time to time) relating to Indemnification and in corporate such provisions by this reference as fully as if set forth herein.
| ARTICLE 5 |
| PERIOD TYPE | 12 MOS | 3 MOS |
| FISCAL YEAR END | SEP 30 1999 | SEP 30 1999 |
| PERIOD END | SEP 30 1999 | DEC 31 1999 |
| CASH | 1,026 | 81 |
| SECURITIES | 0 | 0 |
| RECEIVABLES | 1,884 | 1,884 |
| ALLOWANCES | 0 | 0 |
| INVENTORY | 0 | 0 |
| CURRENT ASSETS | 3,110 | 1,965 |
| PP&E | 1,924 | 1,732 |
| DEPRECIATION | 0 | 0 |
| TOTAL ASSETS | 5,034 | 3,697 |
| CURRENT LIABILITIES | 586,056 | 677,100 |
| BONDS | 0 | 0 |
| PREFERRED MANDATORY | 0 | 0 |
| PREFERRED | 0 | 0 |
| COMMON | 1,220,891 | 1,235,891 |
| OTHER SE | (1,801,913) | (1,909,294) |
| TOTAL LIABILITY AND EQUITY | 5,034 | 3,697 |
| SALES | 0 | 0 |
| TOTAL REVENUES | 0 | 0 |
| CGS | 0 | 0 |
| TOTAL COSTS | 0 | 0 |
| OTHER EXPENSES | 837,082 | 107,381 |
| LOSS PROVISION | 0 | 0 |
| INTEREST EXPENSE | 0 | 0 |
| INCOME PRETAX | (837,082) | (107,381) |
| INCOME TAX | 0 | 0 |
| INCOME CONTINUING | 0 | 0 |
| DISCONTINUED | (837,082) | (107,381) |
| EXTRAORDINARY | 0 | 0 |
| CHANGES | 0 | 0 |
| NET INCOME | (837,082) | (107,381) |
| EPS BASIC | (.07) | (.01) |
| EPS DILUTED | (.07) | (.01) |