-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I9eAm/lMW2iEHVc+fRQzDvDFH8QOrBsh9zwm7D6BB86yCcyAyzwcM4gqG4x4SvZH m2U3FmL+ASix7NMHyDxArQ== 0001079973-99-000080.txt : 19991026 0001079973-99-000080.hdr.sgml : 19991026 ACCESSION NUMBER: 0001079973-99-000080 CONFORMED SUBMISSION TYPE: 10SB12G PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19991025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APOLO GOLD INC CENTRAL INDEX KEY: 0001040721 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10SB12G SEC ACT: SEC FILE NUMBER: 000-27791 FILM NUMBER: 99732839 BUSINESS ADDRESS: STREET 1: 1458-409 GRANVILLE STREET STREET 2: VANCOUVER CITY: B C CAN V6C IT2 STATE: A1 BUSINESS PHONE: 6046874150 10SB12G 1 FORM 10-SB U.S. Securities and Exchange Commission Washington, D.C. 20549 Form 10-SB General form for registration of securities of small business issuers Under Section 12(b) or (g) of the Securities Exchange Act of 1934 Apolo Gold, Inc. (Name of Small Business Issuer in its charter) Nevada (State or other jurisdiction of incorporation or organization) Applied For (I.R.S. Employer Identification No.) Principal Executive Offices 1458 - 409 Granville Street Vancouver, BC V6C 1T2 (Issuer's Telephone No.) (604) 687-4150 Securities to be Registered under Section 12(b) of the Act: None Securities to be Registered under Section 12(g) of the Act: Common Stock (Title of Stock) Total number of pages: 65 Index to Exhibits Appears on Page: 29 Item 1 (a) Business Development ------------------------ Apolo Gold, Inc., (the Company) was incorporated in March, 1997 under the laws of the State of Nevada for the purpose of financing and operating the gold and diamond mining concession in Venezuela which is the subject of an acquisition agreement through the Company's subsidiary, Compania Minera Apologold, C.A., a Venezuela corporation (the Venezuela Subsidiary). The Venezuela Subsidiary is ninety-nine percent owned by Martial Levasseur, the Company's President as trustee for the benefit of the Company. On May 18, 1999, the Venezuela Subsidiary entered into an agreement with Empresa Proyectos Mineros Goldma, C.A., to acquire the alluvial diamond and gold mining concession named Codsa 13, located in the Gran Sabana Autonomous Municipality, State of Bolivar, Venezuela. The purchase price for the concession is $3,500,000 (2,086,000,000 Bolivars). A down payment of $50,000 (29,800,000 Bolivars) was made on or about May 30, 1999. A second payment of $50,000 (29,800,000 Bolivars) is to be made on or before November 15, 1999. The Venezuela Subsidiary agreed to establish at least one mining operation on the concession with a minimum production of 1,000 cubic meters per day, within one year of execution of the agreement and its authentication by the Venezuela government. The agreement was first filed or authenticated with the Venezuela government on May 18, 1999. Once production has commenced, the Venezuela Subsidiary agreed to monthly payments in an amount equal twenty percent of the gross production from the mining operation. Fifty percent of the monthly payment (10% of the gross production) is to be credited as payment on the purchase price and fifty percent is to be applied as rental payment on mining equipment and technical assistance. The Venezuela Subsidiary agreed that within one year from the date of authentication of the purchase agreement with the Venezuelan authorities, the amount of the monthly payment is to be at least $10,000 even if production is insufficient to pay the minimum amount. All payments to the Seller may be paid in US dollars, gold and diamonds as priced in Venezuela and shares in the Company, as selected by the Seller in any combination thereof. The agreement further requires the payment of a royalty to the Seller in the amount of 2.5% of the annual net profits of the concession. This royalty is payable as long as there is production on the property. There is also a royalty payable to the government of Venezuela of 4% of gross production. The agreement also requires that an existing mining operation by the Seller may continue and that until the entire purchase price has been paid, the Seller may continue to conduct exploration and testing. On May 20, 1999, the Company entered into an assignment agreement with its Venezuela Subsidiary, which assigned the rights and obligations under the Concession Agreement to the Company. In addition to the obligations under the Concession Agreement, the Company paid 3,550,000 shares of common stock to AML Diamond and Gold Exp., Inc. and its principal. The Company also agreed to pay AML Diamond and Gold Exp., Inc. a royalty in the amount of 7.5% of net 2 production profits. AML Diamond and Gold Exp is owned by Albert Aleong, a Venezuelan citizen, who works at the property site. He is not related to any officers or directors of the company. (b) Narrative Description of Business ------------------------------------- Location and Title The Company's Codsa 13 mining concession is located in the Gran Sabana Autonomous Municipality, State of Bolivar, in the extreme south east of Venezuela. It is approximately twenty five kilometers north of the Santa Elena, a village of approximately 15,000 people with sufficient facilities and supplies to support the mining operation. Santa Elena has daily flights to Caracas. The mining operation is accessible by gravel road from Santa Elena. Title to the Codsa 13 mining concession is held by Empresa Proyectos Mineros Goldma, C.A. since 1992 and is the above described Seller to the Company's Venezuela Subsidiary. Regional Geology The existing data place the CODSA 13 concession as part of the Magnamatica de Roraima Province, of PROTEROZOICO, between 1,800 and 1,650 million years. This Magnamatica Province is formed by a series of formations, described in the "Proyecto de Inventario de Recursos Naturales de la Region de Guayana de C.V.G. Tecnica Nineria C.A." These formations are as follows: Uairen Formations, Inferior And Superior Part Formed mainly by quartz sandstone and conglomerate of fine and coarse side, sandstone feldespatic, limonite, breccia lens and sandstone of white and pink colors, lens of lutita vitreous. Uaimapue Formations: Lower, Middle And Upper Part Formed mainly by quartz sandstone of fine and medium grain with crossed stratification, "flat and leveled" parallel, pinkish and violet colors, vitreous tufts, volcanoclastic sandstones red in color, with pyrite crystals, fine grained quartz like sandstones, vitreous tufts and green chert. The area is considered as a diamond bearing and placer gold field, however there is no concluding criteria on the primary deposits of the same. Description Of The Codsa 13 Deposit 3 The gold and diamond deposit currently being exploited on the CODSA 13 concession, consist of a series of massive stratum of fine and thick grained quartz sands with white quartz edges and gravel with unconsolidated sand quartz matrix. This sequence graduates toward the ceiling to levels of very fine grain similar to volcanic ash, white in color and at a level of black in color, of quartz grains that make up a good level of stratigraphic reference. In the current pits, the base of the clastic section can not be observed, below the levels of gravel and a lens of breccia cemented with hematite limonite exist. The lowest level observed consists of very homogeneous fine grained sands, with isolated quartz edges. The sequence of sands with evidence of gold contents, outcropping in the pits show an average thickness of 9 meters, although its true thickness and morphology is unknown. The soil that is mainly a sandy area, with little organic contents, is not more than 0.50 meters. The deposit forms a flat area with a slight inclination that reaches a subsurface level at barely 1 meter deep. This will allow the Company to maintain the extraction pit full of water which will be adequate for the planned extraction process. Evacuation Of The Potential In the CODSA 13 concession, the potential zone for the contents of alluvium with gold and diamonds has not been yet properly defined, although there is enough evidence to consider that the undulated flat morphology, which forms a filling at the level of the river, could contain the main potential. In addition, there is evidence that the area has been affected by hydrothermal processes of mineralization, which increased the possibilities of mineralization. Extent of the Deposit It is estimated that the alluvium zone is located at the undulated flat areas, with an approximate elevation of 10 meters above Rio Cuquenan level. The current works in the two pits, as well as some previous informal works and explorations carried out by the current operators, indicate that the deposits are extended in this area and that the same contain gold and diamond. The works carried out at the higher topographical levels, have not given good results, however the same have not been carried out with adequate control of the possible levels of greater interest. The area covered by this undulated flat area, which is considered as the best potential covers nearly 3 square km. This represents a 9,000,000 square meter area. If a minimum thickness of 5 meters is taken into consideration for the sequence alluvium, the existing potential is of 45,000,000 cubic meters, which represent close to 112,500,000 tons of alluvial ore. Past and Planned Operation The Company will be taking over the existing placer mining operation on the concession which is processing approximately 250 cubic yards of alluvial ore per day using inefficient mining technology such as sluice boxes where hand 4 excavated gravel is washed over a ridged board to wash away lighter sediments and allowing gold to collect in the "riffles". The Geological Evaluation commissioned by the Company from Geological & Mining Exploration Services, S.A., of Las Cumbres, Panama, tested to tailings of the current operation and concluded that the present operation does not recover more than forty percent (40%) of existing gold and diamonds. No records of the volume of gravel processed or gold and diamonds produced were maintained. The Company is importing mining equipment including a floating dredge and a "Super Bowl" gold ore processing machine which are anticipated to be at the concession by November 1, 1999. Once this equipment is in place the Company expects production to reach 1,000 cubic yards of alluvial ore processed per day. The mining process is open pit placer mining. A large pit is dug and allowed to fill with groundwater. Alluvial ore is pumped from the bottom of the pit, screened for rough diamonds and then processed through the Super Bowl for removal of the gold ore. The Company anticipates a twenty person operation. Rough diamonds and gold ore will be sold to ore buyers on site or shipped to buyers in Caracas. Employees: The Company has no employees at present other than its officers. The Company's Venezuela Subsidiary intends to employ approximately twenty laborers and two geologists, one mining engineer and other professionals to run the operation. Item 2. Management's Discussion and Analysis or Plan of Operation - ----------------------------------------------------------------- Plan of Operations As a company in its initial stages of development, the company has no revenues from operations. The Company has filed this Form 10SB Registration Statement in order to establish itself as a fully reporting company under the Securities Exchange Act of 1934. On the basis of the public information provided thereby, the Company intends to seek a listing of its common stock on the National Association of Securities Dealers, Inc., OTC Electronic Bulletin Board Market. It is the Company's belief that an independent market for its common stock will be advantageous to the Company by establishing an objective measure of value for the common stock. The Company's business plan is to raise additional capital through private placements or public offerings of its equity securities and use the capital for development of its mining operation. 5 Liquidity and Capital Resources. The company is not at present producing revenues and its main source of funds has been the sale of the company's equity securities. The company has shares of common stock for a total consideration of $809,431 through September 30, 1999. All cash is a present being used to fund ongoing general and administrative expenses with the total of such expenses estimated to be approximately $25,000 per month. As a result the Company has enough present cash to meet its needs for ten months. The company will need to raise additional capital to meet its ongoing overhead obligations and the contemplated development program. Such funding may be obtained through the sale of additional securities. The capital resources of the company are limited. At present the company is not producing revenues and is not expected to produce revenues until December, 1999. The main source of funds for working capital at present is the sale of the company's equity securities. Other possible sources of funding are loans from shareholders, or financial institutions, with the company's concession interests as collateral for the institutions. However, the collateral value of such leasehold interests is limited. Result of Operations During the period from the company's inception to June 30, 1999, there were no revenues being realized from sale of assets, production or from any other source. General and administrative expenses incurred for the six months ended June 30, 1999 were $2,214. Effect of Inflation: The Company believes that inflation does not have a material affect on its business. Inflation in Venezuela is nominal and not expected to exceed 4% at most. Inflation concerns are not material. Year 2000 Computer Problems: Many existing computer programs use only two digits to identify a year in the date field. These programs were designed and developed without considering the impact of the upcoming change in the century. If not corrected, many computer applications could fail or create erroneous results by or at the Year 2000. The Year 2000 issue affects virtually all companies and organizations. Although many companies undertake major projects to address the Year 2000 issue, Management does not believe that its operations are highly dependent upon computer programs. However, the Company has undertaken to ensure that its associated computer fields were designed and constructed to receive and manipulate four digit integers instead of only two. The Company's computer system has been evaluated and found to adequately address the Year 2000 Issue. As a result, no additional costs are expected to be incurred. The Company does not anticipate any material risk resulting from Year 2000 issues in that its computer programs are relatively simple word processing and accounting programs which have been certified as Year 2000 ready. In addition, the Company maintains physical files of all essential documents and data. 6 Item 3. Description of Property - ------------------------------- The Company, through its Venezuela Subsidiary has signed an agreement to acquire a mining concession covering more than three square kilometers of the alluvial diamond and gold mining concession named Codsa 13, located in the Gran Sabana Autonomous Municipality, State of Bolivar, in the extreme south east of Venezuela. The acreage covered by the concession has not been sufficiently developed to indicate any proven or probable reserves of recoverable gold or diamonds. There has been limited production on the concession by the Seller. The Company's offices in Vancouver, British Columbia, Canada are approximately 1,800 square feet and are leased from a third party pursuant to a month to month lease at the rate of $1,200US per month. 7 Item 4. Security Ownership of Certain Beneficial Owners and Management - ---------------------------------------------------------------------- (a) Security Ownership of Certain Beneficial Owners holding five percent or greater of the 16,512,250 shares of common stock outstanding as of September 30, 1999. Title of Name and Address Amount and Nature % of Class of Beneficial Owner of Beneficial Owner Class - -------------------------------------------------------------------------------- Common Robert Elliot Lee 2,500,000 15.1% 11 Piper Place Palmerston North, New Zealand AML Diamond & Gold 3,500,000 21.2% Exploration, Inc. Apartado 6-5172, El Dorado Panama Republica De Panama (b) Security Ownership of Management Title of Name and Address(1) Amount and Nature % of Class of Beneficial Owner of Beneficial Owner Class - -------------------------------------------------------------------------------- Common Robert Lee, Jr.(2) 4,150,000 25.1% Martial Levasseur (3) 4,150,000 25.1% All officers and Directors as a Group (2 persons) 8,300,0000 50.2% (1) The Address of the Company is Suite 1458 - 409 Granville Street, Vancouver, B.C. V6C1T2 (2) Includes the 3,200,000 shares held by: Robert Elliot Lee (2,500,000 shares reported above), the father of Mr. Lee; Katrina Lee (350,000 shares), the sister of Mr. Lee; and Shari Lee (350,000 shares), the sister of Mr. Lee which Mr. Lee disclaims beneficial ownership. (3) Includes 1,650,000 shares held by: Peter Levasseur (950,000 shares), the son of Martial Levasseur; John Levasseur (350,000 shares), the son of Martial Levasseur; and Anna Levasseur (350,000 shares), the daughter of Martial Levasseur, which Martial Levasseur disclaims beneficial ownership. Changes in Control: There are no arrangements, which may result in a change in control of the issuer. 8 Item 5. Directors, Executive Officers, Promoters and Control Persons - -------------------------------------------------------------------- (a) Directors and Executive Officers NAME AGE POSITION 1ST YEAR Martial Levasseur 65 President, Secretary, Treasurer, Director 1997 Robert E. Lee 30 Director 1997 Business Experience Martial Levasseur - 65. Mr. Levasseur is a founder of the Company and has served as its President since inception. Mr. Levasseur's business experience is as follows: 1993-1997 Consultant - La Rock Mining Corp of Vancouver BC. Studying various projects for La Rock. 1968-1993 President - Consolidated Silver Tusk Mines Ltd, in the Northwest Territories. Managed and supervised the exploration and development of all properties. One mine went into full production. Became Vice President in 1994 as was busy developing other properties not related to Consolidated Silver Tusk Mines Ltd. 1972-1993 President of Reako Exploration Ltd, in Vancouver B.C. Supervised and managed all exploration and drilling projects for Reako, as well as developing their iron-ore property, and bringing into production a gold property in British Columbia. Robert E. Lee - 30. Mr. Lee has served as a Director of the Company since March 15, 1997. Mr. Lee is the son of Robert Edward Lee, a founder of the Company. Mr. Lee graduated from the Massey University School of Aviation, Palmerson North, New Zealand in 1996. Mr. Lee's business experience is as follows: Present: Ken Borek Air - Male Republic of Maldives - Pilot 1998-June '99 Consolidated Silver Tusk Mines, Ltd., North West Territories. Mr Lee was responsible for Investor Relations and general administration. 1995-1998 Flight Operations Coordinator-Pilot. Massey University School of Aviation, Palmerson North, New Zealand. 1996-1998 Charter Pilot and Flight Instructor. Manawatu Districts Aero Club, Palmerson North, New Zealand. 9 (b) Significant Employees: None Item 6. Executive Compensation - ------------------------------ (a) Summary Compensation Table: The Company has omitted the Summary Compensation Table as it has not paid any cash compensation, non-cash compensation or bonuses and nor has any such compensation been accrued. (b) Option/SAR Grants in Last Fiscal Year (Individual Grants): The Company does not presently have a Stock Option Plan nor have any other options been granted to date. (c) Aggregated Option/SAR Exercises in Last Fiscal Year and FY-end Option/SAR Values : None (d) Long-term Incentive Plans -- Awards in Last Fiscal Year: None The Company has not otherwise awarded any stock options, stock appreciation rights or other form of derivative security or common stock or cash bonuses to its executive officers and directors. (e) Compensation of Directors 1. Standard Arrangements: The members of the Company's Board of Directors are reimbursed for actual expenses incurred in attending Board meetings. 2. Other Arrangements: There are no other arrangements. (f) Employment Contracts And Termination of Employment, And Change-in-control Arrangements 10 The Company's officer and directors do not have employment agreements and do not presently draw a salary. The Company expects that as and when additional funding or revenue is obtained, a salary and other compensation such as stock options will be adopted. Item 7. Certain Relationships and Related Transactions - ------------------------------------------------------ The Company has not entered into any transactions with Management. Item 8. Description of Securities - --------------------------------- The authorized capital stock of Company consists of 200,000,000 shares of common stock. No warrants to acquire common stock have been authorized. There are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any shares of the Company's common stock. The common stock carry no preemptive rights, are not convertible, redeemable, assessable or entitled to the benefits of any sinking fund. The common stock affords the holders no cumulative voting rights, and the holders of a majority of the shares voting for the election of the directors can elect all of the directors if they should choose to do so. PART II Item 1. Market Price of and Dividends on the Company's Common Equity and Other Shareholder Matters (a) Market Information The Company's stock is not listed for sale on any exchange or trading medium. The Company intends to seek the listing of its Common Stock on the OTC Electronic Bulletin Board upon the effectiveness of this Form 10-SB. Until such time, there is no public market for the Company's Common Stock. (b) Holders There are fifty-two holders of the Company's Common Stock as of September 15, 1999. There were six holders of restricted securities as defined by Rule 144, two of which have not held their shares in excess of one year. (c) Dividends The Company has paid no dividends to date on its Common Stock. The Company reserves the right to declare a dividend when operations merit. Item 2. Legal Proceedings 11 There is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending or, to the knowledge of the Company, threatened, against or affecting the Company, or any of its properties, business affairs or business prospects of the Company. Item 3. Changes in and Disagreements with Accountants: None Item 4. Recent Sales of Unregistered Securities During the past three years, the Company sold securities, which were not registered under the Securities Act of 1933, as amended, as set forth below. Date Name # of shares issued Consideration - ---- ---- ------------------ ------------- 4/15/97 Martial H. Levesseur 2,500,000 $ 25,000.00 4/15/97 Robert Elliot Lee 2,500,000 $ 25,000.00 4/15/97 Robert Edward Lee 950,000 $ 9,500.00 4/15/97 Peter Levasseur 950,000 $ 9,500.00 4/15/97 Toni Cross 500,000 $ 5,000.00 4/15/97 Kyrstna Kwiatkowska 500,000 $ 5,000.00 4/15/97 Lisa Martin 350,000 $ 3,500.00 4/15/97 Shari Lee 350,000 $ 3,500.00 4/15/97 Katrina Lee 350,000 $ 3,500.00 4/15/97 John Levasseur 350,000 $ 3,500.00 4/15/97 Mary Creelman 350,000 $ 3,500.00 4/15/97 Anna Levasseur 350,000 $ 3,500.00 6/6/97 Brent Wipp 400,000 $ 100,000.00 6/6/97 World Technical Supply Inc. 600,000 $ 150,000.00 12/1/97 Louis Kish 80,000 $ 20,000.00 12/1/97 Wendy C. Poole 10,000 $ 2,500.00 12/1/97 David Babbitt 10,000 $ 2,500.00 12/1/97 Sam Winrob 10,000 $ 2,500.00 12/2/97 John F. Kish 20,000 $ 5,000.00 12/2/97 Alan M. smith 10,000 $ 2,500.00 12/6/97 Ronald M. Dressler 40,000 $ 10,000.00 12/8/97 Diametric Resources 30,000 $ 7,500.00 12/8/97 Roman Lohyn 30,000 $ 7,500.00 12/9/97 Jerry Meints 10,000 $ 2,500.00 12/10/99 Russ Borneman 40,000 $ 10,000.00 12/12/97 Larry E. La Casse 33,800 $ 8,450.00 12 12/16/97 Don Storie 10,000 $ 2,500.00 12/31/97 Michael Stokel 10,000 $ 2,500.00 1/23/98 Peter Ross St. John 20,000 $ 5,000.00 1/24/98 Ken & Lynn Burrows 20,000 $ 5,000.00 2/10/98 Galante Group 100,000 $ 25,000.00 11/18/98 Jonas Dubas 10,000 $ 2,500.00 1/5/99 Peter Ntokolas 10,000 $ 2,500.00 1/5/99 Demetre Theodosakis 10,000 $ 2,500.00 1/7/99 George Zambas 10,000 $ 2,500.00 1/27/99 Peter Levasseur 96,000 $ 24,000.00 2/15/99 Louis Kish 58,450 $ 14,612.50 11/2/98 Dino Panagiotou 10,000 $ 2,500.00 2/16/98 Stephan Eschmann 40,000 $ 10,000.00 2/16/98 Craigmyle Company, SA 100,000 $ 25,000.00 6/25/99 Mohamad Youssef Merhi 50,000 Concession Acquistion 6/25/99 AML Diamond & Gold Exploration 3,500,000 Concession Acquistion 7/11/99 Deepak Anand & Nandini Anand 10,000 $ 2,500.00 7/11/99 Khial Aheer 10,000 $ 2,500.00 7/11/99 Khial Aheer 8,000 $ 2,000.00 7/11/99 Fred May Kang Chang 8,000 $ 2,000.00 7/11/99 Jamil Younes 10,000 $ 2,500.00 7/11/99 Joana Colettis 10,000 $ 2,500.00 7/11/99 John Constantinidis 10,000 $ 2,500.00 7/11/99 Bill Strimmenos 10,000 $ 2,500.00 7/11/99 Nick Constanti 10,000 $ 2,500.00 7/11/99 Andrew Papapangiotou 10,000 $ 2,500.00 7/11/99 Louis Kish 20,000 $ 5,000.00 7/11/99 Yangui Xie 4,000 $ 1,000.00 7/11/99 Neville Render 1,000,000 $ 250,000.00 7/20/99 Dennis Brovarone 20,000 Services The Company was not a reporting company pursuant to the Securities Exchange Act of 1934 nor was it a development stage company with no business plan. Thus it was eligible to rely upon Rule 504 as a safe harbor exemption from the registration requirements of the Securities Act of 1933. Moreover, Rule 504 was available in that the Company sold less than $1,000,000.00 worth of securities in the previous 12 month period and except for the Company's officers and directors, the purchasers were unaffiliated investors. The Company relied upon the Rule 504 safe harbor exemption for the sales of securities for cash. These sales were entirely private transactions pursuant to which all material information as specified in Rule 502(b)(2) was made available to the purchasers. 13 The Company relied upon the exemption from registration set forth in section 4(2) of the Securities Act of 1933 for its sale of shares to its officers, directors and legal counsel. The purchasers in the sale whereby the Company acquired its concession rights were sophisticated investors who were provided all material information regarding the Company. In addition, the Company placed a restrictive legend upon the certificates issued to the purchasers denoting the securities are "restricted securities" or held by a control person of the Company and may only be sold in compliance with Rule 144. Thus the exemptions from registration afforded by Rule 4(2) and Rule 3(b) were available to the issuer. Item 5. Indemnification of Directors and Officers Article 11 of the Company's By-laws provides that every person who was or is a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or a person for whom he is the legal representative is or was a director or officer of the corporation or is or was serving at the request of the corporation or for its benefit as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the General Corporation Law of the State of Nevada against all expenses, liability and loss (including attorney's fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection therewith. 14 APOLO GOLD, INC. (A Development Stage Company) Financial Statements June 30, 1999 APOLO GOLD, INC. (A Development Stage Company) C O N T E N T S Independent Auditor's Report...........................................1 Balance Sheets..........................................................2 Statements of Operations................................................3 Statement of Shareholders' Equity.......................................4 Statements of Cash Flows................................................6 Notes to the Financial Statements.......................................8 -15- The Board of Directors Apolo Gold, Inc. (A Development Stage Company) Vancouver, B.C. CANADA INDEPENDENT AUDITOR'S REPORT We have audited the accompanying balance sheets of Apolo Gold, Inc. (a development stage company) as of June 30, 1999, December 31, 1998 and 1997, and the related statements of operations, shareholders' equity (deficit), and cash flows for the six months and years then ended, and from inception on March 18, 1997 through June 30, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Apolo Gold, Inc. as of June 30, 1999, December 31, 1998 and 1997, and the results of its operations and its cash flows for the six months and years then ended and from inception on March 18, 1997 through June 30, 1999 in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 9 to the financial statements, the Company's significant operating losses raise substantial doubt about its ability to continue as a going concern. Mangement's plans for the resolution of this situation are also discussed in Note 9. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Williams & Webster, P.S. Certified Public Accountants Spokane, Washington September 10, 1999 -16- APOLO GOLD, INC. (A Development Stage Company) Balance Sheets
June 30, December 31, 1999 1998 1997 A S S E T S CURRENT ASSETS Cash $ 10,143 $ 2,194 $ 100,185 Deposit 50,000 - - ------ ----- ------- 60,143 2,194 100,185 ------ ----- ------- FIXED ASSETS Equipment 4,100 - - Less accumulated depreciation (34) - - Total Fixed Assets 4,066 - - ----- ----- ------- TOTAL ASSETS $ 64,209 $ 2,194 $ 100,185 =========== ========= ==========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Loans payable $ 5,000 $ 992 $ - Shareholder advance 50,000 - - Officer payable 189,859 161,917 30,016 ------- ------- ------ Total current liabilities 244,859 162,909 30,016 ------- ------- ------ TOTAL LIABILITIES 244,859 162,909 30,016 ------- ------- ------ COMMITMENTS AND CONTINGENCIES - - - ------- ------- ------ STOCKHOLDERS' EQUITY (DEFICIT) Common stock, 200,000,000 shares authorized, $0.001 par value; 12,942,250, 12,517,800 and 11,377,800 shares issued and outstanding, respectively 12,942 12,518 11,378 Additional paid-in-capital 796,489 716,681 433,073 Stock subscriptions receivable (250,000) (250,000) (54,000) Accumulated deficit during developmental stage (740,081) (639,914) (320,282) -------- -------- -------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (180,650) (160,715) 70,169 ======== ======== ====== TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 64,209 $ 2,194 $ 100,185 ========== ========= ==========
The accompanying notes are an intergral part of these financial statements. -2- -17- APOLO GOLD, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS
From Six March 18, 1997 Months Ended Years Ended (Inception) to June 30, December 31, June 30, 1999 1998 1997 1999 ---- ---- ---- ---- REVENUES $ - $ 38,021 $ - $ 38,021 COST OF REVENUES - - - - ------- ------- ------ ------ GROSS PROFIT - 38,021 - 38,021 ------- ------- ------ ------ E X P E N S E S Mineral property exploration expenses 70,919 292,921 265,943 629,783 Consulting and professional fees 27,000 62,000 46,000 135,000 General and administrative expenses 2,214 2,732 8,339 13,285 Depreciation 34 - - 34 ------- ------- ------- ------- TOTAL EXPENSES 100,167 357,653 320,282 778,102 ------- ------- ------- ------- NET LOSS $ (100,167) $ (319,632) $ (320,282) $ (740,081) =========== =========== ========== =========== NET LOSS PER COMMON SHARE $ (0.0085) $ (0.0279) $ (0.0401) $ (0.0716) =========== =========== ========== =========== WEIGHTED AVERAGE NUMBER OF COMMON STOCK SHARES OUTSTANDING 11,823,591 11,458,129 7,996,833 10,342,176 ========== ========== ========= ==========
The accompanying notes are an intergral part of these financial statements. -3- -18- APOLO GOLD, INC. (A Development Stage Company) STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Accumulated Common Stock Additional Stock Deficit during Total Number Paid-In Subscriptions Development Stockholders' of Shares Amount Capital Receivable Stage Equity --------- ------ ------- ---------- ----- ------ Balance March 18, 1997 - $ - $ - $ - $ - $ - Issuance of shares at $0.01 per share for services 4,600,000 4,600 41,400 - - 46,000 Issuance of shares at $0.01 per share for note 5,400,000 5,400 48,600 (54,000) - - Issuance of shares at $0.25 per share for cash 1,377,800 1,378 343,073 - - 344,451 Net loss - - - - (320,282) (320,282) -------- -------- -------- -------- --------- --------- Balance, December 31, 1997 11,377,800 11,378 433,073 (54,000) (320,282) 70,169 Issuance of shares at approximately $0.25 per share for cash 140,000 140 34,608 - - 34,748 Payment of stock subscription in exchange for services - - - 54,000 - 54,000 -------- -------- -------- -------- -------- -------- Balance forward 11,517,800 $ 11,518 $ 467,681 $ - $ (320,282) $ 158,917 ========== ========== =========== ============= ============ ============
The accompanying notes are an intergral part of these financial statements. -4- -19- APOLO GOLD, INC. (A Development Stage Company) STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Accumulated Common Stock Additional Stock Deficit during Total Number Paid-In Subscriptions Development Stockholders' of Shares Amount Capital Receivable Stage Equity --------- ------ ------- ---------- ----- ------ Balance brought forward 11,517,800 $ 11,518 $ 467,681 $ - $ (320,282) $ 158,917 Issuance of shares at $0.25 per share for note 1,000,000 1,000 249,000 (250,000) - - Net loss - - - - (319,632) (319,632) --------- --------- --------- --------- --------- --------- Balance, December 31, 1998 12,517,800 12,518 716,681 (250,000) (639,914) (160,715) Issuance of shares at $0.12 to $0.25 per share for cash 324,450 324 78,908 - - 79,232 Issuance of shares at $0.01 per share for equipment 100,000 100 900 - - 1,000 Net loss - - - - (100,167) (100,167) --------- --------- --------- --------- --------- --------- Balance, June 30, 1999 12,942,250 $ 12,942 $ 796,489 $ (250,000) $ (740,081) $ (180,650) ========== ========== =========== ============= ========== ============
The accompanying notes are an intergral part of these financial statements. -5- -20- APOLO GOLD, INC. (A Development Stage Company) STATEMENT OF CASH FLOWS
From Six March 18, 1997 Months Ended Years Ended (Inception) to June 30, December 31, June 30, 1999 1998 1997 1999 ------------- ------------------------ ----------------- Cash flows from operating activities: Net loss $ (100,167) $ (319,632) $ (320,282) $ (740,081) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation 34 - - 34 Consulting and professional fees paid by issuance of stock 1,000 4,000 46,000 101,000 Decrease (increase) in: Deposits (50,000) - - (50,000) Increase (decrease) in: Short term notes payable 5,000 992 - 5,992 Shareholder advance 50,000 - - 50,000 Officer payable 27,942 131,901 30,016 189,859 ------ ------- ------ ------- Net cash (used) in operating activities (66,191) (132,739) (244,266) (443,196) ------- -------- -------- -------- Cash flows from investing activities: Purchase of equipment (4,100) - - (4,100) -------- ------- -------- -------- Cash flows from financing activities: Proceeds from sale of common stock 78,240 34,748 344,451 457,439 ------ ------ ------- ------- Increase (Decrease) in Cash $ 7,949 $ (97,991) $ 100,185 $ 10,143 ---------- --------- ---------- ------------
The accompanying notes are an intergral part of these financial statements. -6- -21- APOLO GOLD, INC. (A Development Stage Company) STATEMENT OF CASH FLOWS
From Six March 18, 1997 Months Ended Years Ended (Inception) to June 30, December 31, June 30, 1999 1998 1997 1999 ------------- --------------------- ---------------- Increase (decrease) in cash - brought forward $ 7,949 $ (97,991) $ 100,185 $ 10,143 Cash, beginning of period 2,194 100,185 - - --------- --------- -------- ------- Cash, end of period $ 10,143 $ 2,194 $ 100,185 $ 10,143 ========== =========== =========== ========== Supplemental disclosures: Interest paid $ - $ - $ - $ - ========== =========== =========== ========== Income taxes paid $ - $ - $ - $ - ========== =========== =========== ========== Non-cash investing and financing activities: Common stock issued for services $ 1,000 $ - $ 46,000 $ 47,000 Common stock subscriptions paid for by services $ - $ 54,000 $ - $ 54,000 Common stock issued for equipment $ 25,000 $ - $ - $ 25,000 Common stock issued for debt $ 992 $ - $ - $ 992
The accompanying notes are an intergral part of these financial statements. -7- -22- APOLO GOLD, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS June 30, 1999 NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS Apolo Gold, Inc. (the Company) was incorporated in March of 1997 under the laws of the state of Nevada primarily for the purpose of acquiring and developing mineral properties. The Company has been in the development stage since its inception. The Company conducts operations primarily from its offices in Vancouver, British Columbia, Canada. The Company has formed a subsidiary corporation in Venezuela. Although this entity has had no financial transactions, the Company expects to use this subsidiary later in 1999 to acquire a Venezuelan mining property. On May 20, 1999, the Company entered into an agreement to purchase Apologold C.A. (a Venezuelan company). Under the agreement, Apolo expects to acquire all of the outstanding common stock minus one share of Apologold. Apolo will account for the acquisition as a purchase of Apologold because the shareholders of Apolo controlled operations after the acquisition. (Note 6.) The Company is actively seeking additional capital and management believes that properties can ultimately be developed to enable the Company to continue its operations. However, there are inherent uncertainties in mining operations and management cannot provide assurances that it will be successful in its endeavors. Furthermore, the Company is in the development state, as it has not realized any significant revenues from its planned operations. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of Apolo Gold, Inc. is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. Accounting Method - ----------------- The Company's financial statements are prepared using the accrual method of accounting. Loss per Share - -------------- Loss per share is computed by dividing the net loss by the weighted average number of shares outstanding during the period. The weighted average number of shares is calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. -8- -23- APOLO GOLD, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS June 30, 1999 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Estimates - --------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Mineral Properties - ------------------ Costs of acquiring, exploring and developing mineral properties are capitalized by project area. Costs to maintain the mineral rights and leases are expensed as incurred. When a property reaches the production stage, the related capitalized costs will be amortized, using the units of production method on the basis of periodic estimated ore reserves. Mineral properties are periodically assessed for impairment of value and any losses are charged to operations at the time of impairment. Should a property be abandoned, its capitalized costs are charged to operations. The Company charges to operations the allocable portion of capitalized costs attributable to properties sold. Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area. Cash and Cash Equivalents - ------------------------- For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. Impaired Asset Policy - --------------------- The Company reviews its long-lived assets quarterly to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable. At June 30, 1999, the Company has written off amounts expended for its Panama operations. (Notes 4 and 6.) Provision for Taxes - ------------------- At June 30, 1999, the Company has a net operating loss of approximately $740,000, which may be offset against future taxable income through 2013. No provisions for taxes or tax benefit from net operating loss carryforwards has been reported in the financial statements as the Company will probable continue to experience operating losses during its development stage and it is currently unknown if the carryforwards will expire unused. -9- -24- APOLO GOLD, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS June 30, 1999 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair Value of Financial Instruments - ----------------------------------- The carrying amounts for cash, marketable securities, accounts receivable, accounts payable, notes payable and accrued liabilities approximate their fair value. Concentration of Risk - --------------------- The Company maintains its cash accounts in primarily one commercial bank in Vancouver, British Columbia, Canada. The Company's cash account is a business checking account maintained in United States dollars, which totaled $10,143, $2,194 and $100,185 as of June 30, 1999, December 31, 1998 and 1997, respectively. NOTE 3 - MINERAL PROPERTIES Venezuela - --------- In May 1999, the Company entered into an agreement to purchase a 100% minus 1 share interest in Apologold C.A. (a Venezuelan Company). The agreement was finalized subsequent to the date of these financial statements. (Note 6.) Under the terms of the agreement, the Company will acquire control over all rights for the exploitation of alluvial diamonds and gold in a mining concession called Codsa 13 located in the jurisdiction of Gran Sabana Autonomous Municipality, State of Bolivar, Venezuela. Panama - ------ In October 1997, the Company entered into an agreement to purchase a 99% interest in Golden Cycle of Panama, Inc. (a Panamanian company). Under terms of the agreement, the Company would assume all profits and expenses for operating Golden Cycle's mine located at the Conception River basin, Calovebora township, District of Santa Fe, Province of Veraguas, Republic of Panama. Although expenditures have been made on the property through June 30, 1999 and core samples have been promising, operations have been abandoned due to nondelivery of the shares of Golden's stock. The Company is attempting to restore the agreement to its original terms (Note 6) and all amounts expended for the venture have been charged to operations as incurred. NOTE 4 - PROPERTY AND EQUIPMENT Property and equipment are recorded at cost. Major additions and improvements are capitalized. Minor replacements, maintenance and repairs that do not increase the useful life of the assets are expensed as incurred. Depreciation of property and equipment is determined using the straight-line method over the expected useful lives of the assets of ten years. Depreciation expense for the six months ended June 30, 1999 and the years ended December 31, 1998 and 1997 was $34, $-0-, and $-0-, respectively. -10- -25- APOLO GOLD, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS June 30, 1999 NOTE 5 - COMMON STOCK During the year ended December 31, 1997, the Company issued 10,000,000 shares of common stock to directors for services rendered and stock subscriptions receivable. The shares were valued at $0.01 per share, which was the deemed fair market value of the shares on the date of issuance. During the year ended December 31, 1998, services were performed by directors in payment of stock subscriptions receivable incurred during the year ended December 31, 1997. These services were valued at $54,000. The Company also issued 1,000,000 shares of common stock for stock subscriptions receivable, valued at $0.25 per share, which is the fair market value of the shares on the date of issuance. This amount was fully paid in September 1999. During the six months ended June 30, 1999, the Company issued 100,000 shares of common stock in exchange for services. The shares were valued at $0.01 per share, which is the fair market value of the shares on the date of issuance. As part of a purchase agreement, the Company has agreed to issue 50,000 shares of common stock to Mohammed Youssef Merhi, and 3,500,000 shares of common stock as a finder's fee to AML Diamond and Gold Exp., Inc. The stock is to be issued at $0.01 per share. (Note 6.) NOTE 6 - COMMITMENTS AND CONTINGENCIES Apologold C.A. (a Venezuelan Company) - ------------------------------------- In May 1999, the Company entered into an agreement to purchase a 100% minus one share interest in Apologold, C.A. (a Venezuelan Company) for $3,500,000 plus royalties and common stock. As of June 30, 1999, the Company has paid a $50,000 cash deposit towards finalization of this agreement. The deposit will be applied towards the total purchase price with an additional $50,000 to be paid by November 15, 1999. The remaining balance of the purchase price will be paid as follows: 1. A 10% royalty from net production and an additional 2.5% of net production profit will be applied towards the total purchase price until full payment of the purchase price is achieved. 2. An additional 10% royalty from net production will be paid to Goldma C.A. (a Venezuelan Company) as payment for rent and operational and technical assistance. 3. 50,000 shares of the Company's common stock will be issued at a $0.01 per share to Mohammed Youssef Merhi of Goldma C.A. (a Venezuelan Company). -11- -26- APOLO GOLD, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS June 30, 1999 NOTE 6 - COMMITMENTS AND CONTINGENCIES (Continued) Apologold C.A. (a Venezuelan Company) (Continued) - ------------------------------------------------- 4. The Company will also issue 3,500,000 shares of its common stock at $0.01 per share to AML Diamond and Gold Exp., Inc. in full payment of a finder's fee. (Note 5.) Upon completion of the agreement, the Company will acquire all the rights and control of Apologold C.A., (a Venezuelan Company) which includes mineral properties as described in Note 4. The agreement is expected to be completed in late 1999. Golden Cycle of Panama, Inc. (a Panamanian Company) - --------------------------------------------------- In October 1997, the Company entered into an agreement to purchase a 99% interest in Golden Cycle of Panama, Inc. (a Panamanian Company). The agreement called for a 6% royalty from gold production or minimum payments of $15,000 until May 1998, at which time the minimum payment increased to $20,000 until a total of $5,000,000 had been paid. In addition, the Company was to make a payment of approximately $97,000 for payment of Golden's outstanding debts. The Company made payments as agreed, however, the shares of common stock of Golden were never delivered. Further development of the mineral properties has been suspended pending restoration of this agreement to its original standing. Management does not expect to receive Golden's stock and has charged all expenditures to operations as incurred. See Note 3. NOTE 7 - RELATED PARTY As of June 30, 1999, the Company has received a $50,000 cash advance from a director. The advance, which is noninterest-bearing and uncollateralized, is expected to be repaid once production commences. The officer payable liability includes $189,859, $161,917 and $30,016 at June 30, 1999, December 31, 1998 and 1997, respectively. These amounts arise from monies expended by officers in Panama and Venezuela for development and operations. The Company leases office facilities in Vancouver, British Columbia, Canada from an officer. The lease is classified as a month to month tenancy and provides for quarterly payments of $500. NOTE 8 - SUBSEQUENT EVENTS As described in Note 6, the Company is completing a purchase agreement for a 100% minus one share interest in Apologold C.A. (a Venezuelan Company). Management expects the agreement to be completed in late 1999. (Note 6.) -12- -27- APOLO GOLD, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS June 30, 1999 NOTE 8 - SUBSEQUENT EVENTS (Continued) The Company is continuing efforts to restore a purchase agreement for a 99% interest in Golden Cycle of Panama, Inc. to its original standing. Management does not expect to receive Golden's common stock as originally agreed. (Note 6.) NOTE 9 - GOING CONCERN As shown in the financial statements, the Company incurred a net loss of $100,167 for the six months ended June 30, 1999 and has an accumulated deficit of $740,081 since inception. These factors indicate that the Company may be unable to continue in existence. The financial statements do not include any adjustments related 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 existence. The Company's management expects to attract additional investment capital and believes that significant and imminent private placements will generate sufficient cash for the Company to operate for the next few years. NOTE 10 - YEAR 2000 ISSUES The Company has modified its business technologies to be ready for the year 2000. Critical data processing systems have been reviewed and the Company does not expect a significant effect on internal operations. However, like other companies, Apolo Gold, Inc. could be adversely affected if the computer systems its suppliers or customers use do not properly process and calculate date-related information and data for the period surrounding and including January 1, 2000. This is commonly known as the "Year 2000" issue. Additionally, this issue could impact non-computer systems and devices such as production equipment, elevators, etc. At this time, because of the complexities involved in the issue, management cannot provide assurances that the Year 2000 issue will not have an impact on the Company's operations. The costs related to year 2000 compliance are expensed as incurred. -13- -28- PART III Item 1. Index to Exhibits 3.1 Articles of Incorporation 3.2 By-laws 10.1 Concession Purchase Agreement dated November 17, 1999 10.2 Assignment Agreement Apologold, C.A. and Apolo Gold, Inc. dated May 20, 1999 27 Financial Data Schedule -29- Signatures In accordance with Section 12 of the Securities Exchange Act of 1934, the Company caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. APOLO GOLD, INC. By: /s/ MARTIAL H. LEVASSEUR - ------------------------ Martial H. Levasseur, President, Secretary-Treasurer Director October 22, 1999 /s/ ROBERT ELLIOT LEE, JR. - -------------------------- Robert E. Lee, Jr., Director October 22, 1999 -30- EX-3.1 2 ARTICES OF INCORPORATION FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF NEVEDA MAR 19 1997 C557697 DEAN HELLER SECRETARY OF STATE No. /s/ Dean Heller ARTICLES OF INCORPORATION OF APOLO GOLD INC. KNOW ALL MEN BY THESE PRESENTS: That we the undersigned, have this day voluntarily associated ourselves together for the purpose of forming a corporation under the laws of the State of Nevada and do hereby certify: ONE The name of this corporation is APOLO GOLD INC. TWO The resident agent of said corporation shall be Pacific Corporate Services Company, 7631 Bermuda Road, Las Vegas, NV., 89123 and such other offices as may be determined by the By-Laws in and outside the State of Nevada. THREE The objects to be transacted, business and pursuit and nature of the business, promoted or carried on by this corporation are and shall continue to be engaged in any lawful activity. FOUR The members of the governing board shall be styled Directors and the first Board of Directors shall consist of one (1). The number of stockholders of said corporation shall consist of one (1). The number of directors and shareholders of this corporation may, from time to time, be increased or decreased by an amendment to the By-Laws of this corporation in that regard, and without the necessity of amending these Articles of Incorporation. The name and address of the first Board of Directors and of the Incorporator signing these Articles as follows: ROBERT E. LEE 62 Deerfield Drive Delta, B.C., Canada, V4M - 2W9 -31- FIVE The Corporation is to have perpetual existence. SIX The total authorized capitalization of this Corporation shall be and is the sum of 200,000,000 shares of Common Stock at $0.001 par value, said stock to carry full voting power and the said shares shall be issued fully paid at such time as the Board of Directors may designate in exchange for cash, property, or services, the stock of other corporations or other values, rights, or things, and the judgement of the Board of Directors as to the value thereof shall be conclusive. SEVEN The capital stock shall be and remain non-assessable. The private property of the stockholders shall not be liable for the debts or liabilities of the Corporation. IN WITNESS WHEREOF, I have set my hand this 13th day of March, 1997. /s/ Robert E. Lee Robert E. Lee Province of British Columbia ) Canada ) On this 13th day of March, 1997 before me, a Notary Public in and for said, Province of British Columbia, Canada. Personally appeared, Robert E. Lee known to me to be the person whose name is subscribed to the foregoing instrument, and he duly acknowledged to me that he executed the same for the purpose therein mentioned. IN WITNESS WHEREOF, I have set my hand and offered by official seal in, The City of Vancouver, Province of British Columbia, Canada, the day and year in this Certificate first above written. Notary Public /s/ (Signature Notary Public) -32- EX-3.2 3 BYLAWS BYLAWS OF APOLO GOLD INC. A Nevada Corporation ARTICLE 1 --------- Offices SECTION 1. The registered office of this corporation shall be in the County of Clark, State of Nevada. SECTION 2. The corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE 2 --------- Meetings of Stockholders SECTION 1. All annual meetings of the stockholders shall be held at the registered office of the corporation or at such other place within or without the State of Nevada as the Directors shall determine. Special meetings of the stockholders may be held at such time and place within or without the State of Nevada as shall be stated in the notice of the meeting, or in a duly executed waiver of notice thereof. SECTION 2. Annual meetings of the stockholders, shall be held at such time as may be set by the Board of Directors from time to time, at which the stockholders shall elect by vote a Board of Directors and transact such other business as may properly be brought before the meeting. SECTION 3. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Articles of Incorporation, may be called by the President or the Secretary by resolution of the Board of Directors or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose of the proposed meeting. SECTION 4. Notices of meetings shall be in writing and signed by the President or Vice-President or the Secretary or an Assistant Secretary or by such other person or persons as the Directors shall designate. Such notice shall state the purpose or purposes for which the meeting is called and the time and the place, which may be within or without this State, where it is to be held. A copy of such notice shall be either delivered personally to or shall be mailed, postage prepaid, to each stockholder of record entitled to vote at such meeting not less than ten nor more than sixty days before such meeting. If mailed, it shall be directed to a stockholder at his address as it appears upon the records of the corporation and upon such mailing of any such notice, the service thereof shall be complete and the time of the notice shall begin to run from the date upon which such notice is deposited in the mail for transmission to such stockholder. Personal delivery of any such notice to any officer of a corporation or association, or to any member of a partnership shall constitute delivery of such notice to such corporation, association or partnership. In the event of the transfer of stock after delivery of such notice of and prior to the holding of the meeting it shall not be necessary to deliver or mail notice of the meeting to the transferee. 1 -33- SECTION 5. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. SECTION 6. The holders of a 10% of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Articles of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote there at, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The Company may have more than one shareholder. SECTION 7. When a quorum is present or represented at any meeting, the vote of the holders of a 10% of the stock having voting power present in person or represented by proxy shall be sufficient to elect directors or to decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Articles of Incorporation, a different vote shall govern and control the decision of such question. SECTION 8. Each stockholder of record of the corporation shall be entitled at each meeting of stockholders to one vote for each share of stock standing in his name of the books of the corporation. Upon the demand of any stockholder, the vote for Directors and the vote upon any question before the meeting shall be by ballot. SECTION 9. At any meeting of the stockholders any stockholder may be represented and vote by a proxy or proxies appointed by an instrument in writing. In the event that any such instrument in writing shall designate two or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one shall be present, then that one shall have and may exercise all of the powers conferred by such written instrument upon all of the persons so designated unless the instrument shall otherwise provide. No proxy or power of attorney to vote shall be used to vote at a meeting of the stockholders unless it shall have been filed with the secretary of the meeting when required by the inspectors of election. All questions regarding the qualifications of voters, the validity of proxies and the acceptance of or rejection of votes shall be decided by the inspectors of election who shall be appointed by the Board of Directors, or if not so appointed, then by the presiding officer of the meeting. SECTION 10. Any action which may be taken by the vote of the stockholders at a meeting may be taken without a meeting if authorised by the written consent of stockholders holding at least a majority of the voting power, unless the provisions of the statutes or of the Articles of Incorporation require a greater proportion of voting power to authorise such action in which case such greater proportion of written consents shall be required. ARTICLE 3 --------- Directors SECTION 1. The business of the corporation shall be managed by it's Board of Directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders. SECTION 2. The number of Directors which shall constitute the whole board shall be One. The number of Directors may from time to time be increased or decreased to not less than one nor more than fifteen by action of the Board of Directors. 2 -34 The Directors shall be elected at the annual meeting of the stockholders and except as provided in Section 2 of this Article, each Director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. SECTION 3. Vacancies in the Board of Directors including those caused by an increase in the number of directors, may be filled by a majority of the remaining Directors, though less than a quorum, or by a sole remaining Director, and each Director so elected shall hold office until his successor is elected at an annual or a special meeting of the stockholders. The holders of a two-thirds of the outstanding shares of stock entitled to vote may at any time peremptorily terminate the term of office of all or any of the Directors by vote at a meeting called for such purpose or by a written statement filed with the secretary or , in his absence, with any other officer. Such removal shall be effective immediately, even if successors are not elected simultaneously and the vacancies on the Board of Directors resulting therefrom shall only be filled from the stockholders. A vacancy or vacancies in the Board of Directors shall be deemed to exist in case of the death, resignation or removal of any Directors, or if the authorised number of Directors be increased, or if the stockholders fail at any annual or special meeting of stockholders at which any Director or Directors are elected to elect the full authorised number of Directors to be voted for at that meeting. The stockholders may elect a Director or Directors at any time to fill any vacancy or vacancies not filled by the Directors. If the Board of Directors accepts the resignation of a Director tendered to take effect at a future time, the Board or the stockholders shall have power to elect a successor to take office when the resignation is to become effective. No reduction of the authorised number of Directors shall have the effect of removing any Director prior to the expiration of his term of office. ARTICLE 4 --------- Meetings of the Board of Directors SECTION 1. Regular meetings of the Board of Directors shall be held at any place within or without the State which has been designated from time to time by resolution of the Board or by written consent of all members of the Board. In the absence of such designation regular meeting shall be held at the registered office of the corporation. Special meetings of the Board may be held either at a place so designated or at the registered office. SECTION 2. The first meeting of each newly elected Board of Directors shall be held immediately following the adjournment of the meeting of stockholders and at the place thereof. No notice of such meeting shall be necessary to the directors in order legally to constitute the meeting, provided a quorum be present. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given hereinafter provided for special meetings of the Board of Directors. SECTION 3. Regular meetings of the Board of Directors may be held without call or notice at such time and at such place as shall from time to time be fixed and determined by the Board of Directors. SECTION 4. Special meetings of the Board of Directors may be called by the Chairman or the President or by the Vice-President or by any two directors. Written notice of the time and place of special meetings shall be delivered personally to each director, or sent to each director by mail or by other form of written communication, charges prepaid, addressed to him at his address as it is shown upon the records or if not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the United States mail or delivered to 3 -35- the telegraph company at least forty-eight (48) hours prior to the time of the holding of the meeting. In case such notice is delivered as above provided, it shall be so delivered at least twenty-four (24) hours prior to the time of the holding of the meeting. Such mailing, telegraphing or delivery as above provided shall be due, legal and personal notice to such director. SECTION 5. Notice of the time and place of holding an adjourned meeting need not be given to the absent directors if the time and place be fixed at the meeting adjourned. SECTION 6. The transaction of any meeting of the Board of Directors, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present, and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, or a consent to holding such meeting, or approvals of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. SECTION 7. A majority of the authorised number of directors shall be necessary to constitute a quorum for the transaction of business, except to adjourn as hereinafter provided. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater number be required by law or by the Articles of Incorporation. Any action of a majority, although not at a regularly called meeting, and the record thereof, if assented to in writing by all of the other members of the Board shall be as valid and effective in all respects as if passed by the Board in regular meeting. SECTION 8. A quorum of the directors may adjourn any directors meeting to meet again at stated day and hour; provided, however, that in the absence of a quorum, a majority of the directors present at any directors meeting, either regular or special, may adjourn from time to time until the time fixed for the next regular meeting of the Board. ARTICLE 5 --------- Committees of Directors SECTION 1. The Board of Directors may, by resolution adopted by a majority of the whole Board, designate one or more committees of the Board of Directors, each committee to consist of two or more of the directors of the corporation which, to the extent provided in the resolution, shall and may exercise the power of the Board of Directors in the management of the business and affairs of the corporation and may have power to authorise 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 the Board of Directors. The members of any such committee present at any meeting and not disqualified from voting may, whether or not they constitute a quorum, unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. At meetings of such committees, a majority of the members or alternate members at any meeting at which there is a quorum shall be the act of the committee. SECTION 2. The committee shall keep regular minutes of their proceedings and report the same to the Board of Directors. SECTION 3. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. 4 -36- ARTICLE 6 --------- Compensation of Directors SECTION 1. The directors may be paid their expenses of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like reimbursement and compensation for attending committee meetings. ARTICLE 7 --------- Notices SECTION 1. Notices to directors and stockholders shall be in writing and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of the corporation. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Notice to directors may also be given by telegram. SECTION 2. Whenever all parties entitled to vote at any meeting, whether of directors or stockholders, consent, either by a writing on the records of the meeting or filed with the secretary, or by presence at such meeting and oral consent entered on the minutes, or by taking part in the deliberations at such meeting without objection, the doings of such meeting shall be as valid as if had at a meeting regularly called and noticed, and at such meeting any business may be transacted which is not excepted from the written consent to the consideration of which no object for want of notice is made at the time, and if any meeting be irregular for want of notice or of such consent, provided a quorum was present at such meeting, the proceedings of said meeting may be ratified and approved and rendered likewise valid and the irregularity or defect therein waived by a writing signed by all parties having the right to vote at such meeting; and such consent or approval of stockholders may be by proxy or attorney, but all such proxies and powers of attorney must be in writing. SECTION 3. Whenever any notice whatever is required to be given under the provisions of the statutes, of the Articles of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE 8 --------- Officers SECTION 1. The officers of the corporation shall be chosen by the Board of Directors and shall be a President, a Secretary and a Treasurer. Any person may hold two or more officers. SECTION 2. The Board of Directors at it's first meeting after each annual meeting of stockholders shall choose a Chairman of the Board who shall be a director, and shall choose a President, a Secretary and a Treasurer, none of whom need be directors. SECTION 3. The Board of Directors may appoint a Vice-Chairman of the Board, Vice-Presidents and one or more Assistant Secretaries and Assistant Treasurers and such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. SECTION 4. The salaries and compensation of all officers of the corporation shall be fixed by the Board of Directors. 5 -37- SECTION 5. The officers of the corporation shall hold office at the pleasure of the Board of Directors. Any officer elected or appointed by the Board of Directors may be removed any time by the Board of Directors. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise shall be filled by the Board of Directors. SECTION 6. The CHAIRMAN OF THE BOARD shall, preside at meetings of the stockholders and the Board of Directors, and shall see that all orders and resolutions of the Board of Directors are carried into effect. SECTION 7. The VICE-CHAIRMAN shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board and shall perform other such duties as the Board of Directors may from time to time prescribe. SECTION 8. The PRESIDENT shall be the chief executive officer of the corporation and shall have active management of the business of the corporation. He shall execute on behalf of the corporation all instruments requiring such execution except to the extent the signing and execution thereof shall be expressly designated by the Board of Directors to some other officer or agent of the corporation. SECTION 9. The VICE-PRESIDENT shall act under the direction of the President and in the absence or disability of the President shall perform the duties and exercise the powers of the President. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. The Board of Directors may designate one or more Executive Vice-Presidents or may otherwise specify the order of seniority of the Vice Presidents. The duties and powers of the President shall descend to the Vice-Presidents in such specified order of seniority. SECTION 10. The SECRETARY shall act under the direction of the President. Subject to the direction of the President he shall attend all meetings of the Board of Directors and all meetings of the stockholders and record the proceedings. He shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and will perform other such duties as may be prescribed by the President or the Board of Directors. SECTION 11. The ASSISTANT SECRETARIES shall act under the direction of the President. In order of their seniority, unless otherwise determined by the President or the Board of Directors, they shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary. They shall perform other such duties and have such other powers as the President or the Board of Directors may from time to time prescribe. SECTION 12. The TREASURER shall act under the direction of the President. Subject to the direction of the President he shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the President or the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at it's regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the corporation. SECTION 13. If required by the Board of Directors, he shall give the corporation a bond in such sum and with such surety as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. 6 -38- SECTION 14. The ASSISTANT TREASURER in the order of their seniority, unless other wise determined by the President or the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. ARTICLE 9 --------- Certificates of Stock SECTION 1. Every stockholder shall be entitled to have a certificate signed by the President or a Vice-President and 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. If the corporation shall be authorised to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of the various classes of stock or series thereof and the qualifications, limitations or restrictions of such rights, shall be set forth in full or summarised on the face or back of the certificate which the corporation shall issue to represent such stock. SECTION 2. If a certificate is signed (a) by a transfer agent other than the corporation or it's employees or (b) by a registrar other than the corporation or it's employees, the signatures of the officers of the corporation may be facsimiles. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall cease to be such officer before such certificate is issued, such certificate may be issued with the same effect as though the person had not ceased to be such officer. The seal of the corporation, or a facsimile thereof, may, but need not be, affixed to certificates of stock. SECTION 3. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorising such issue of a new certificate or certificates, the Board of Directors may, in it's discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. SECTION 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation, if it is satisfied that all provisions of the laws and regulations applicable to the corporation regarding transfer and ownership of shares have been complied with, to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon it's books. SECTION 5. The Board of Directors may fix in advance a date not exceeding sixty (60) days nor less than ten (10) 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 the consent of stockholders for any purpose, as a record date for the termination 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 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 notice of and to vote at such meeting, or any adjournment thereof, or to receive such payment of 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. 7 -39- SECTION 6. The corporation shall be entitled to recognise the person registered on it's books as the owner of shares to be the exclusive owner for all purposes including voting and dividends, and the corporation shall not be bound to recognise any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Nevada. ARTICLE 10 ---------- General Provisions SECTION 1. Dividends upon the capital stock of the corporation, subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of the capital stock, subject to the provisions of the Articles of Incorporation. SECTION 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalising dividends or for repairing or maintaining any property of the corporation or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. SECTION 3. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. SECTION 4. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors. SECTION 5. The corporation may or may not have a corporate seal, as may be from time to time be determined by resolution of the Board of Directors. If a corporate seal is adopted, it shall have inscribed thereon the name of the corporation and the words "Corporate Seal" and "Nevada". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced. ARTICLE 11 ---------- Indemnification Every person who was or is a party or is a threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or a person of whom he is the legal representative is or was a director or officer of the corporation or is or was serving at the request of the corporation or for it's benefit as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under General Corporation Law of the State of Nevada time to time against all expenses, liability and loss (including attorney's fees, judgements, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection therewith. The expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the 8 -40- corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the corporation. Such right of indemnification shall be a contract right which may be enforced in any manner desired by such person. Such right of indemnification shall not be exclusive of any other right which such directors, officers or representatives may have or hereafter acquire and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of stockholders, provision of law or otherwise, as well as their rights under this Article. The Board of Directors may cause the corporation to purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, or as it's representative in a partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the corporation would have the power to indemnify such person. The Board of Directors may from time to time adopt further Bylaws with respect to indemnification and amend these and such Bylaws to provide at all times the fullest indemnification permitted by the General Corporation Law of the State of Nevada. ARTICLE 12 ---------- Amendments SECTION 1. The Bylaws may be amended by a majority vote of all the stock issued and outstanding and entitled to vote at any annual or special meeting of the stockholders, provided notice of intention to amend shall have been contained in the notice of the meeting. SECTION 2. The Board of Directors by a majority vote of the whole Board at any meeting may amend these Bylaws, including Bylaws adopted by the stockholders, but the stockholders may from time to time specify particular provisions of the Bylaws which shall not be amended by the Board of Directors. APPROVED AND ADOPTED this March 25th, 1997. 9 -41- CERTIFICATE OF SECRETARY I, Robert E. Lee, hereby certify that I am the Secretary of Apolo Gold Inc., and the foregoing Bylaws, consisting of 9 pages, constitute the code of Bylaws of Apolo Gold Inc., as duly adoped at a regular meeting of the Board of Directors of the corporation held March 25th, 1997. IN WITNESS WHEREOF, I have hereunto subscribed my name this March 25th, 1997. /s/ Robert E. Lee Secretary 10 -42- EX-10.1 4 CONCESSION AGREEMENT [[ Stamp of GUSTAVO VILLALOBOS, INTERPRETE PUBLICO, Caracos, Venezuela ]] The undersigned, Gustavo H. Villalobos, a Public Interpreter for the Republic of Venezuela, as evidenced by an Official License issued unto him and published in Official Gazette No. 34,300, dated September 1989, registered with the Main Public Registry Office for the Federal District, Caracos, on August 23, 1989, under #36, follo 140, letter "V", does hereby certify that the attached document has been submitted to him for translation, and that the following is a true English language version thereof: Between "PROYECTOS MINEROS GOLDMA C.A.", a trading corporation, of this domicile, duly registered before the Mercantile Register, Judicial District of the Federal District and the State of Miranda, dated December 14, 1989, under No. 6, Volume 80-A, First, herein represented by MOHAMAD YOUSSEF MERHI, a Venezuelan, of legal age, of this domicile, bearer of identity card No. 11,735,431, on the one hand, and on the other, "COMPANIA MINERA APOLOGOLD C.A.", of this domicile, duly registered before the Mercantile Register, Judicial District of the Federal District and the State of Miranda, dated November 14, 1997, under No. 51, Volume 296-A-First, herein represented by its President, MARTIAL H. LEVASSEUR, of Canadian Nationality, of legal age, of this domicile, holder of Passport No. BC 046369, have decided to enter into, as we formally do, a purchase- sale contract, upon condition, which shall be governed by the regulations contained in these clauses. FIRST: To better understand the terms contained in this contract, it has been agreed between the parties that when "the Seller" is mentioned in this contract, it shall be understood that we are meaning the trading corporation called Proyectos Mineros Goldma C.A., the identification data of which have been sufficiently stated; whenever -43- [[ Stamp of GUSTAVO VILLALOBOS, INTERPRETE PUBLICO, Caracos, Venezuela ]] "The Representative of the Seller" is mentioned, it shall mean MOHAMAD YOUSSEF MERHI, , already identified, whenever "The Purchaser" is mentioned, it shall mean the trading corporation called COMPANIA MINERA APOLOGOLD C.A., the identification data of which were already mentioned in detail; whenever "The Representative of the Purchaser" is mentioned, this shall mean MARTIAL H. LEVASSEUR, already identified; whenever "The Property" is mentioned, this shall mean the alluvial diamond and gold mining concession called Codsa 13, the subject to this contract, which shall be fully identified hereinafter, with all the equipment, heavy machinery and camp pertaining to the concession; whenever "The Company" is mentioned, this shall mean the trading corporation called APOLOGOLD INC., registered before the Secretary of State of Nevada, United States of America, dated March 18, 1997, also represented by Martial H. Levasseur, in his capacity as President; whenever "the parties" are mentioned, this shall mean "The Purchaser", "The Seller", "The Representative of the Seller", "The Representative of the Purchaser" and "The Company", jointly, or, two or more of them jointly, and whenever Dollar or Dollars are mentioned, this shall mean the currency of legal tender of the United States of America. SECOND: The purpose of this contract is to describe the conditions which must be complied by "The Contracting Parties" to guarantee the final sale and transfer of the ownership of "The Property", and to describe some basic operational procedures. THIRD: The Seller is the legitimate seller of all rights over a mining concession for the exploitation of alluvial diamond and gold, called Codsa 13, whose ownership, granted by the Ministry of Energy and Mines, dated August 27, 1992, was published in Official Gazette of the Republic of Venezuela No. 1159, Special Edition, dated August 31, 1992, and authenticated before the Subordinate Registry Office, Roscio District of the State of Bolivar, dated September 15, 1992, under No. 66, pages 37 to 44, overleaf of the First Protocol. The above mentioned concession is located in the jurisdiction of Gran Sabana Autonomous Municipality, State of Bolivar, and is comprised by five (5) lots of land called: Codsa No 13-A to Codsa No. 13-E, which are sufficiently identified in the referred title of the concession, its boundaries and measurements being deemed as reproduced as an integral part of this document. FOURTH: "The Representative of the Seller" guarantees to "The Purchaser" that it has been sufficiently informed of all previous agreements and contracts which might affect "The Property" and that "The Purchaser" knows the outstanding agreements and/or contacts which might interfere with the culmination of this contract. FIFTH: The sales price agreed by the contracting parties to be received by "The Seller" in order to complete the sale of "The Property", is three million five hundred thousand dollars of the United States of America (US$ 3,500,000), which sum, to the sole effects of fulfilling the provisions set forth in the Law of the Central Bank of Venezuela, at the current exchange rate of five hundred ninety six bolivars per dollar, reaches a total of tow billion eighty six million Bolivars (Bs. 2,086,000,000). SIXTH: The agreed sales prices shall be paid entirely by "The Purchaser" to "The Representative of the Seller", within a period of not more than three years, which term shall begin from the date of the signing of this contract before a Notary Public. SEVENTH: On the 30th day of May, 1999, or the latest within the term of 15 working days following the date of authentication of this contract, "The Purchaser" shall deliver to the Seller a down payment of fifty thousand dollars (US$ 50,000), which amount shall, to the sole effects of complying with the Law of the Central Bank of Venezuela, at the current exchange rate of five hundred ninety six bolivars per 1 US dollar (Bs. 29,800,000). This payment shall be part of the total purchase price of The Property. -44- [[ Stamp of GUSTAVO VILLALOBOS, INTERPRETE PUBLICO, Caracos, Venezuela ]] EIGHTH: On November 15, 1999, "The Purchaser" shall pay to "the Seller", a second amount of money, of at least fifty thousand dollars (US$ 50,000), which amount shall, to the sole effects of complying with the Law of the Central Bank of Venezuela, at the current exchange rate of five hundred ninety six bolivars per each dollar (Bs. 596 x US$), reaches the amount of twenty none millions eight hundred thousand bolivars (Bs. 29,800,000). This payment shall be part of the total purchase price of the Property. NINTH: The Purchaser undertakes to establish at least one new mining operations in The Property, with a minimum production average of 1,000 cubic meters per day. Except for the occurrence of any unpredictable natural circumstances, this minimum production must be reached within a term of eight (8) months following the date of authentication of this contract, but under any circumstance, the referred average must be reached within the year following the date of authentication of this contract. TENTH: After beginning the mining operations referred to in the ninth clause to this contract, The Purchaser shall begin to pay to The Seller a monthly installment equivalent to an estimate of thirty percent (30%) of the net profit which might be obtained by The Purchaser in the referred mining operations. The Purchaser guarantees that such estimate shall not in any case be less than twenty percent (20%) of the monthly gross profit obtained by the Purchaser in the mining operations performed in The Property. ELEVENTH: Out of the monthly payments to be made and referred to in the above clause, fifty percent (50%) shall be credited to the total price agreed by The Property, and the remaining fifty percent (50%) shall be received by The Seller as rental payment, operational and technical assistance, use and wear of equipment. The last payment shall be carried out until total payment of The Property is made. TWELFTH: The Purchaser guarantees that after one year of the date of authentication of this contract, the minimum amount to be received by -45- [[ Stamp of GUSTAVO VILLALOBOS, INTERPRETE PUBLICO, Caracos, Venezuela ]] The Seller as payment for rent, technical and operational assistance, use and wear of equipment and deposit to the account of the Loral price of The Property, shall be at least ten thousand dollars (US$ 10,000) per month, which amount, to the sole effects of complying with the law of Central Bank of Venezuela, at the current exchange rate of five hundred ninety six bolivars per 1 US dollar (Bs.596/US$), reaches the amount of five million nine hundred sixty thousand bolivars (Bs. 5,960,000), which amount shall be paid by The Purchaser to The Seller until the amount to be paid by The Purchaser to The Seller by virtue of the mining production referred to in the ninth clause of this contract reaches the minimum amount of ten thousand dollars (US$ 10,000) per month. This amount shall be applied as provided for in the tenth and eleventh clause of this contract. THIRTEENTH: Except for any other agreement between the parties, the currency to be used to the effects of calculation in this contract, shall be the Dollar of the United States of America. The Seller reserves the right to receive payments from The Purchaser under any of the following forms or combinations thereof: gold, diamond, calculated at the market price used in the area, dollars in cash and shares of the public company, always at its choice. FOURTEENTH: Currently, mining operations in The Property are made by the representative of The Seller, Dominic Aleong, or for any replacement that The Seller shall appoint, these operations shall be permitted to continue in an independent fashion, in the current place where it works, under the same operational conditions and payment obligations to The Seller existing as of the date of authentication of this contract. The amounts received by The Seller by virtue of this operations shall in no respect be considered as a partial payment of the obligations assumed in this contract by The Purchaser. FIFTEENTH: The Representative of The Purchaser shall be entitled to negotiate additional terms with The Seller and Dominic Aleong, or any replacement appointed by The Seller to update the equipment used in -46- [[ Stamp of GUSTAVO VILLALOBOS, INTERPRETE PUBLICO, Caracos, Venezuela ]] the operations stated in the above clause, and to modify the operation and payment terms between the Seller, Dominic Aleong or any replacement appointed by The Seller, and to share the use of any equipment currently used in The Property, repaired or its repair being paid by The Purchaser. SIXTEENTH: Until the total transfer of the ownership of the Property is carried out, or until established otherwise in this contract, both parties shall be entitled to remove and collect any types and quantities of samples within the are of the Property, at any time, without this impairing in any manner the work that is being carried out in the Property. SEVENTEENTH: The Purchaser shall freely permit the Seller to be present in all operations of recovery, weighing and measurement of diamonds or gold, conducted by The Purchaser, and shall mutually agree a method to ensure any of the recovered materials. Likewise, The Seller and the Purchaser shall jointly develop an acceptable method to evaluate the diamonds and gold recovered in any of the mining operations conducted The Purchaser in The Property. EIGHTEENTH: The Purchaser accepts all risks and obligations that the development of the mining activity entails, and shall be responsible for all costs, expenses and any taxes related to the mining production, which at the same time are related to any of the operations conducted and controlled by The Purchaser in The Property, from the date of authentication of this contract. NINETEENTH: The Purchaser shall provide from time to time to The Seller all information necessary for the making of reports that are required, shall comply with obligations accepted by the Seller in the mining title of The Property, and shall respect and cause to be respected by its employees and representatives, the entirely of the legal provisions towards the conservation and preservation of the environment, established in any Venezuelan laws, all this in order to protect the rights of the Property. -47- [[ Stamp of GUSTAVO VILLALOBOS, INTERPRETE PUBLICO, Caracos, Venezuela ]] TWENTIETH: The Seller shall be responsible for the prompt presentation of each and all of the reports that may be needed to make, of the settlement of surface taxes incidental to the Property, and to make all necessary to keep effective the rights over the Property, as well as to supply immediately to the Purchaser all copies of the documents made by The Seller in order to maintain the Property. In the event The Seller fails to comply with the obligations to promptly fill out any official reports or to promptly pay any of the fees or taxes needed to maintain the Property in force, the purchaser is authorized to comply with these obligations, being able to resort to any professionals specialized in Venezuela, if necessary, to comply with this object. In the event of any conflict between the Parties on the prompt compliance with the obligations assumed by The Seller, professionals may be contracted to decide on such situation, and the Parties must accept the information that these professionals furnish them, which solution shall be final. TWENTY FIRST: In the event the seller fails to promptly submit the official reports, or to pay taxes, both referred and necessary to keep in order the Property, this clause authorizes the Purchaser to do so, and to discount all expenses incurred in from the total price of the Property. Likewise, if the Seller fails to make any actions to keep in order The Property, this clause shall permit and authorize the Purchaser to represent the Seller before any proper Government Offices, in respect to the Property, operations in the property or similar affairs. TWENTY SECOND: The failure by the Purchaser to promptly comply with any of the obligations assumed in this Contract, shall void the same. It has been agreed between the parties that the Purchaser may use a maximum term of sixty (60) continuous days to get up to date as to its possible delay in the fulfillment, except in the event of the fulfillment of obligations which, if not executed, might jeopardy the ownership of the property. In the event the Contract is fulfilled, the -48- [[ Stamp of GUSTAVO VILLALOBOS, INTERPRETE PUBLICO, Caracos, Venezuela ]] Purchaser shall loose, for the benefit of the Seller, all payments made pursuant to this contract, not being entitled to demand compensation for any improvements made in the Property. TWENTY THIRD: In the event this contract is declared void, the Purchaser may, with the approval by the Seller, enter into an option or arrangement to remove from the Property any recovery or mining equipment used by the Purchaser in the Property in mining tasks performed by it. TWENTY FOURTH: In the event the Purchaser fails to comply with the obligations imposed by this contract, and therefore is declared void, the Purchaser shall be bound to be liable for any cost of environmental recovery or debts related to its operations in the Property, as ordered by any Office of the Venezuelan Government, during the following three (3) years after the date of termination thereof. This obligation shall not include specifically any of the costs related tot he mining operations or others performed in the present or previously in the Property. TWENTY FIFTH: The Purchaser may assign all the rights and obligations acquired by it in this contract, to the Company. The Company shall become a warrantor of the obligations assumed by the Purchaser in this contract. TWENTY SIXTH: Until the Purchaser completes the purchaser the Property established in this contract, the Seller reserves the right to propose the justified removal of any employees of the Purchaser who are inconvenient for the success of the operations and effectiveness of the Property. TWENTY SEVENTH: The Seller, through he persons designated by it, shall have free and unrestricted access at any time, to any area of the Property, and to any operations performed thereat. The Seller shall also be entitled to notify the Purchaser in wiring of any infringements or procedures deemed as not permitted by the Venezuelan Laws. In any case, the Seller shall express in writing which Law or -49- [[ Stamp of GUSTAVO VILLALOBOS, INTERPRETE PUBLICO, Caracos, Venezuela ]] Laws are though as being breached and/or which procedures and practices of the Purchaser are questionable. TWENTY EIGHTH: The seller shall guarantee to the Purchaser the preferred right to exercise the same within the sixty (60) days following its notice, to equal or improve any offer made to The Seller to any third party, in respect to the mining rights held in the other mining concessions that the seller has or that the Seller may have in the future in Venezuela. TWENTY NINTH: In the event of a disagreement between the Seller and the Purchaser,. And that such disagreement is not settles by agreement between the Parties or referred to any of the terms and clauses to this Contract, or in respect to any of the operations in the Property, the Parties agree to take the issue first in an arbitration procedure in order to achieve the suitable solutions, as provided for and described in this contract. If any of the Parties begins any legal procedure thought the Courts without resorting first to the Arbitration procedure, it shall be responsible for the legal costs of both parties ain any of these procedures. THIRTIETH: The Purchaser accepts to pay to The Representative of the Seller, two and a half percent (2.5%) of the net annual profit obtained by The Purchaser, while related to the Property. THIRTY FIRST: The Representative of the Purchaser undertakes to sell to the Representative of the Seller, fifty thousand (50,000) shares of the capital stock of the Company at a price of one cent of a Dollar (US$ 0.01), that is, five hundred dollars (US$ 500) as a whole. The sale of such shares shall be carried out withing the three (3) months following the date of the signing of this contract. THIRTY SECOND: the Seller shall grant authority to the Purchaser to represent it before any government entities in order to see for the Property to be in perfect order. This authority shall finish at the time the contract finishes for any reason or is void. -50- [[ Stamp of GUSTAVO VILLALOBOS, INTERPRETE PUBLICO, Caracos, Venezuela ]] THIRTY THIRD: Neither the Purchaser nor the Seller may assign or dispose in any manner of the rights granted to them herein; likewise, they may not sublease or contract with third parties for any type of operations in The Property, without the express consent by the other party. THIRTY FOURTH: The city of Caracas, Federal District is hereby chosen as special domicile, to all effects of this contract, its causes and consequences, and the Parties declare to submit to the jurisdiction of the Courts thereof. THIRTY FIFTH: This contract contains all provisions agreed by the contracting Parties; therefore, any others that amend, repeal or extend the same, must be agreed by the same parties in writing. All not expressly provided for in this document shall be governed by the provisions contained in the Law of Mines and its Regulation, Civil Code or Special Laws regulating such matter. In Caracas, on the date of execution thereof. The foregoing translation is hereby certified correct, IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seal, in the city of Caracas, Republic of Venezuela, on this sixteenth (16th) day of the month of May of the year nineteen hundred ninety nine (1999). /s/ Gustavo H. Villalobos - ------------------------- Gustavo H. Villalobos Lic. Public Interpreter [[ Stamp of GUSTAVO VILLALOBOS, INTERPRETE PUBLICO, Caracos, Venezuela ]] -60- EX-10.2 5 ASSIGNMENT AGREEMENT APOLOGOLD CA & APOLO GOLD INC AGREEMENT BETWEEN APOLOGOLD CA. (a Venezuelan Company) AND APOLO GOLD INC. (a Nevada Corporation) With reference to the registered agreement (Document #1) between APOLOGOLD C.A. and GOLDMA C.A., dated November 14, 1997, and the acquisition of the Venezuelan concessions known as CODSA 13(5 lots registered as CODSA 13A, 13B, 13C, 13D, and 13E) and persuant to the Articles and Clauses contained therein and duly signed by the parties to that Agreement. Also, persuant to the Agreement dated November 17, 1997, (Document #2) the share interest in and the control of APOLOGOLD C.A. is held in trust by MARTIAL M. LEVASSEUR for the benefit of APOLO GOLD INC. The Agreement between APOLOGOLD C.A. and GOLDMA C.A. (Document #1) covers the following points which will be undertaken by APOLO GOLD INC. as the holding Company: Duration of Purchase: 3 years from date of signing Purchase Price: US $3,500,000 Terms: (a) US $50,000 paid by June 9, 1999 (b) US $50,000 to be paid by November 15, 1999 -61- (c) A 20% Royalty from net production (i) 10% to be paid toward paying down the US$3,500,000 total purchase price. (ii) 10% paid to GOLDMA C.A., Mohammed Youseff Merhi the Seller, as rental payment, operational and technical assistance. (d) 2.5% of net production profit until full payment of the Purchase price of US$3,500,000 is achieved (e) 50,000 shares of the common stock of APOLO GOLD INC. to be issued at a cost of US$O.01 to Mohammed Youssef Merhi of GOLDMA C.A. APOLO GOLD INC. will be the Operator of the project and any other projects related to or as a result of opportunities in the parties area of influence in Venezuela and the Americas, and will have all the rights and control of APOLOGOLD C.A. as stated previously above. A FINDERS FEE is payable of 3,500,000 shares of APOLO GOLD INC, issued at the price of US$0.01 and also 7.5% net production profit from the project to: AML DIAMOND AND GOLD EXP.INC. This Agreement is subject to all the provisions agreed to by the original contracting parties and they, the Seller and the Purchaser, have agreed to the assignment of all the rights and control of APOLOGOLD C.A. to APOLO GOLD INC. In Vancouver, B.C., Canada, signed on behalf of APOLOGOLD C.A. and APOLO GOLD INC. by MARIIAL H. LEVASSEEUR, President. Dated this 20th day of May, 1999 -62- /s/ Martial M. Levasseur /s/ Robert E. Lee APOLOGOLD C.A. WITNESS PRESIDENT /s/ Martial M. Levasseur /s/ Robert E. Lee APOLO GOLD INC. WITNESS PRESIDENT -63- November 30, 1997 MARITAL H. LEVASSEUR, President and holder of 999 shares (99.9%) of the 1,000 shares of APOLOGOLD C.A., a Venezuelan incorporated Company, hereby confirms that the shares are held in trust only. The beneficial owner and therefore holding full control of APOLOGOLD C.A. is APOLO GOLD INC., a Company incorporated in the State Of Nevada, U.S.A., and located at 1458 - 409 Granville Street, Vancouver, B.C., Canada, V6C 1T2. /s/ Martial H. Levasseur /s/ Robert E. Lee PRESIDENT WITNESS APOLOGOLD C.A. /s/ Martial H. Levasseur /s/ Robert E. Lee PRESIDENT WITNESS APOLO GOLD INC. -64- EX-27 6 FINANCIAL DATE SCHEDULE
5 9-MOS 12-MOS DEC-31-1998 DEC-31-1998 JUN-30-1999 DEC-31-1998 10,143 2,194 0 0 0 0 0 0 0 0 60,143 2,194 4,100 0 (34) 0 64,209 2,194 244,859 162,909 0 0 0 0 0 0 12,942 12,518 796,489 716,681 64,209 2,194 0 0 0 38,021 0 0 0 0 100,167 357,653 0 0 0 0 (100,167) (319,632) 0 0 (100,167) (319,632) 0 0 0 0 0 0 (100,167) (319,632) (.001) (.001) (.001) (.001)
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