-----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, INsYAuUnOw7ZnV+V4caQyjH9xEz4a7gCvvOpG1At+u1CB4/zGmRwSO/4uP8JWYnD M/6rIyyhrX1Wf5aE14N4XQ== 0001021408-00-001360.txt : 20000331 0001021408-00-001360.hdr.sgml : 20000331 ACCESSION NUMBER: 0001021408-00-001360 CONFORMED SUBMISSION TYPE: 10KSB40 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLAS CORP CENTRAL INDEX KEY: 0000008302 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 135503312 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB40 SEC ACT: SEC FILE NUMBER: 001-02714 FILM NUMBER: 589107 BUSINESS ADDRESS: STREET 1: 370 SEVENTEENTH ST STREET 2: STE 3140 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3036292440 MAIL ADDRESS: STREET 1: 370 SEVENTEENTH STREET STREET 2: STE 3150 CITY: DENVER STATE: CO ZIP: 80202 10KSB40 1 FORM 10-KSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal Year Ended December 31, 1999 COMMISSION FILE NO. 1-2714 ATLAS MINERALS INC. ------------------- (Formerly Atlas Corporation) (Exact name of Registrant as specified in its charter)
COLORADO 84-1533604 - --------------- --------------------- (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 370 Seventeenth Street, Suite 3010, Denver, CO 80202 303-629-2440 - ----------------------------------------------------- ------------------------------------ (Address of principal executive offices) (Zip Code) (Registrant's telephone number) (including area code)
Securities registered pursuant to Section 12(b) of the Act: - -------------------------------------------------------------------------------- Name Of Each Exchange Title Of Each Class --------------------- ------------------- On Which Registered - -------------------------------------------------------------------------------- Common Stock, par value $0.01 per NONE share - -------------------------------------------------------------------------------- Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-KSB or any amendment to this Form 10-KSB. [ X ] Issuers revenues for its most recent fiscal year were $3,485,000 Aggregate market value of 2,981,967 shares of Common Stock held by non- affiliates of the Registrant as of March 29, 2000 was $149,098. Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [X] No [ ] As of March 29, 2000 Registrant had outstanding 4,483,878 shares of Common Stock, $0.01 Par Value, its only class of voting stock. Documents Incorporated by Reference - None Transitional Small Business Disclosure Format Yes [ ] No [ X ] 1 PART I Item 1. Description of Business ----------------------- Atlas Minerals Inc. (formerly Atlas Corporation) ("Atlas") filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code on September 22, 1998. Atlas Precious Metals Inc. ("APMI") and Atlas Gold Mining Inc. ("AGMI"), two of the Company's subsidiaries, also filed petitions for relief under Chapter 11 on January 26, 1999. On December 11, 1999, the Bankruptcy Court approved the plans of reorganization of Atlas, APMI and AGMI (collectively the "Reorganization Plan"). Atlas, APMI and AGMI have consummated the Reorganization Plan and emerged from Chapter 11 on January 10, 2000. The case remains open, with the Bankruptcy Court retaining limited jurisdiction, pending the entry of a final decree closing the case. Throughout this document, when we refer to the "Reorganized Company" or the "Company", we are referring to Atlas Minerals Inc. and its subsidiaries from and after December 11, 1999. When we refer to the "Predecessor Entity", we refer to Atlas Minerals Inc. and its subsidiaries prior to December 11, 1999. References to "Atlas", "Arisur", "APMI" and "AGMI" refer to each of the respective companies on a stand-alone basis. All statements other than statements of historical fact made in this Form 10-KSB are forward looking. In particular, statements regarding industry prospects, future results of operations or financial position, and statements preceded by, followed by or that include the words "intends," "estimates," "believes," "expects," "anticipates," "should," "could," or similar expressions, are forward looking statements and reflect our current expectations and are inherently uncertain. Actual results may differ significantly from our expectations. Factors that could cause actual results to differ include, among others: general economic conditions, metal and mineral prices, political events in foreign countries, the risks associated with foreign operations generally, the timing of receipt of necessary governmental permits, climatic conditions, labor relations, availability and cost of material and equipment, the actual configuration of ore bodies, delays in anticipated start-up dates, environmental risks, the results of financing efforts and other risk factors detailed in this Form 10-KSB and Form 8-Ks filed with the Securities and Exchange Commission. Readers are cautioned not to place undo reliance on forward-looking statements. GENERAL - ------- Atlas is principally engaged in the exploration, development and exploitation of mineral properties. The Reorganized Company was incorporated under the laws of the State of Colorado on February 3, 2000. The principal office of Atlas is located at Republic Plaza, 370 Seventeenth Street, Suite 3010, Denver, Colorado, 80202. The Company holds 100% ownership of two- subsidiaries: (i) Arisur Inc. ("Arisur"), a Grand Cayman corporation, which owns and operates mines in Bolivia, South America through a Bolivian Branch and; (ii) Suramco Metals, Inc. ("Suramco"). In addition, Atlas owns approximately 85% of APMI, incorporated under the laws of the State of Nevada, which holds the Grassy Mountain property. APMI also owns approximately 63% of AGMI, incorporated under the laws of the State of Nevada, which holds the mineral reserves and other assets and infrastructure at the Gold Bar mine. Each of the properties are described below. Atlas employs 3 people at its headquarters in Denver, Colorado and 231 employees at its subsidiaries. 2 ARISUR INC. - ----------- Arisur owns and operates the Andacaba Mine and Mill as well as the Don Francisco and Koyamayu development properties. All three properties are underground lead, zinc and silver operations located in southern Bolivia. Arisur processes ore through its Andacaba Mill and in 1997 purchased the Koyamayu property and the Comali Mill for expansion opportunities. In 1998, the operating company in Bolivia, Compania Minera Andacaba S.A., was merged into Arisur Inc., the Bolivian Branch, 100% controlled by Arisur. Employees and Offices Arisur's corporate office is located in La Paz, Bolivia and staffed by five persons. Operations are directed out of Arisur's office in Potosi, which is staffed by seven persons. Additionally, there are 218 miners, mill workers and maintenance persons directly involved in operations. Andacaba Mine - ------------- Location The property is located in the south central altiplano region of Bolivia near the city of Potosi, a historic mining community, at an elevation of approximately 4,500 meters (14,800 feet). The Andacaba property is accessible by traveling south/southeast 37 kilometers (23 miles) by road from Potosi. Property The Andacaba facilities and mine are situated on 18 concessions controlled 100% by Arisur comprising 4,500 hectares (11,120 acres). Operations The Andacaba lead, zinc and silver mine has been in operation since the early 1900s. The mining operations take place year round with an average of 28 days per month for a total of 330 workdays per year. During 1999, the Andacaba mine produced approximately 7,600 tonnes per month with average head grades of 1.82% Pb, 5.91% Zn and 5.50 Troy ounces Ag per ton. The Andacaba Mill processes ore from all three of Arisur's mining properties and presently has excess capacity to perform custom milling. Lead and zinc concentrates are shipped by truck to Potosi, and then by rail to open-air storage at Portezuelo Station, near the Chilean seaport of Antofagasta, prior to shipment to smelters in various markets. Mining Methods The mining method is shrinkage stoping with the mined out area being filled with waste rock or left open. Due to the narrow width of the veins, stopes are worked in panels 40 meters high and 30 meters long. Lateral development follows the vein and box holes are driven up the vein. Access to a stope panel is by entrance at each end and no opening is made to the upper level. All breaking is by up-holes. Cut off grades at the Andacaba Mine are 1.60% Pb, 5.50% Zn and 5.14 ounces Ag per tonne at prices of $500 per tonne Pb, $1,000 per Tonne Zn and $5.00 per ounce Ag. 3 Mill Concentration Two concentrates are produced at the Andacaba Mill, one lead-silver, and one zinc-silver. After the ore is first crushed by a jaw crusher to minus 3/4-inch, grinding through four ball mills further reduces the size to 80% minus 100 mesh. After conditioning, the slurry reports to the lead recovery circuit, and then the zinc circuit. Zinc and lead concentrates are separately thickened prior to the transport. Condition Service facilities at the mine site are basic and require upgrading as part of the mine expansion for which financing efforts are underway. The Andacaba Mill capacity was expanded in 1997 to 550 tonnes per day. A direct power line from the Velarde II substation near Potosi was completed in August 1997. Water for the mill is supplied from underground sources at the mine. The city of Potosi provides a source of supplies and labor. Geology/Mineralogy The mineralized veins at Andacaba are enclosed in Tertiary porphyritic quartz latite or rhyodacite volcanic rocks. The volcanics are part of an igneous complex that includes an elliptical-shaped biotite granodiorite pluton that outcrops south of the mine area. The pluton is believed to be 40 kilometers long and 14 kilometers wide. Volcanic breccias can be observed in the mine area. Paleozoic sediments outcrop west of the mine and lead, zinc and silver veins are known to occur in the sediments beyond the property boundary. The thickness of the volcanic package is not known and at deeper levels in the mine the host volcanics may be underlain by Paleozoic sediments or possibly granodiorite. On the surface the veins are oxidized to a depth of about 20 meters. Minerals in the oxidized zone include limonite, hematite, goethite, quartz and clay. In the sulfide zone the primary minerals are marmatite, galena, jamesonite, boulangerite, sphalerite, tetrahedrite, stephanite, quartz, pyrite, pyrrhotite, chalcopyrite, arsenopyrite, siderite, and others. Wall rocks show very little alteration. There is possibly some silicification of the rhyodacite. Reserves/Resources Three reserve estimates have been performed since October 1996, Mineria Tecnica Consultores Asociados ("MINTEC") in October 1996, Arisur in February 1997 and Jose E. Del Solar ("Del Solar"), an independent consulting engineer, in August 1998. A summary of these estimates is as follows:
Proven/Probable Source Date (metric tonnes) Lead (%) Zinc (%) Ag (oz/t) - ----------------------------------------------------------------------------------------------------------- Mintec October 1996 547,000 2.68 8.26 9.13 Arisur February 1997 561,000 2.68 7.19 6.01 Del Solar August 1998 544,000 2.44 8.78 9.70 - -----------------------------------------------------------------------------------------------------------
Arisur has historically been able to replace mined reserves through continued development of the ore body. Current reserves will provide production for approximately 5 years at current rates. The average grade of lead, zinc and silver reported in the mill head grades for 1999 of 4 1.82% Pb, 5.91% Zn and 5.50 Troy ounces per tonne are below reserve grades. The difference between reserve grades and those reported at the mill is caused by dilution from increased development and a reduced percentage of production from the larger, higher grade San Juan/San Jose veins. During the fall of 1999, the Company began sinking two internal shafts at the Andacaba mine to access two lower levels of its San Juan/San Jose veins, the minus 190 and minus 220 levels. Preliminary assays of ore grades at the minus 190 level have yielded grades consistent with those seen at higher levels of these veins, which are significantly higher than other veins in the mine. With the access to these lower levels, the percentage of ore coming from the San Juan/San Jose veins is expected to increase to approximately 50% by the end of 2000. If the minus 190 and minus 220 levels continue to produce ore with grades consistent with the preliminary assays, then average ore grades would be expected to increase during 2000 back to reserve grade. Don Francisco Project - --------------------- Location The property is accessible by road 77 kilometers (48 miles) in a southerly direction from Potosi or 64 kilometers (40 miles) from the Andacaba mine. The Don Francisco project is at an elevation of 3,000 meters (9,800 feet). Property Arisur owns 100% of five concessions covering 227 hectares (approximately 560 acres). Operations The Don Francisco project produced approximately 3,900 tonnes during 1999. Head grades averaged 12.31% Zn and 2.25 Troy ounces Ag per tonne. Ore is trucked to Andacaba for processing. Limited exploration and development continues at Don Francisco to provide for approximately 7,500 tonnes to be milled during 2000, at similar grades, as a supplement to ore feed from Andacaba. There has been no recent audit of reserves or estimate of resources by an independent third party. Conditions Sufficient water is available to conduct the mining operations. Electrical power is presently supplied by generator but a recently completed power line supplies electrical power to within 2 kilometers of the project. Facilities are situated on the property for the mineworkers and a radio communication system is in place between Don Francisco and Andacaba. Geology The structural setting is similar to Andacaba in that there is one main structure - the Veta Principal located south of the river, which flows across the property and the Veta Cumbre north of the river with secondary splits off the footwall of the main vein. Host rocks are Ordovician calcareous shales, siltstones and sandstones which have been folded into a series of 5 synclines and anticlines. The Veta Principal occupies both flanks and the axial portion (for a short distance) of a major anticline. Koyamayu Project - ---------------- In August 1997 the Predecessor Entity completed the acquisition of the Koyamayu lead, zinc and silver property, located in southern Bolivia, for $100,000. Approximately 1,500 tonnes were mined and processed during 1998 with average head grades of 3.01% Pb, 11.18% Zn, and 4.35 Troy ounces Ag per tonne. During 1999, 4,300 tonnes of ore were mined and processed with average head grades of 1.95% Pb, 13.35% Zn, and 3.28 Troy ounces Ag per tonne. During 2000, the Company expects to mine approximately 10,000 tonnes of ore from Koyamayu, at similar head grades as 1999, to be processed at the Andacaba Mill. Comali Mill - ----------- Arisur executed agreements to acquire the Comali Mill in late 1996 for $250,000 and the acquisition was completed in January 1998. The facility requires additional capital expenditures of an estimated $150,000 to achieve operations of 120 tonnes per day. Its flotation circuits are designed to recover lead, zinc and silver in separate lead and zinc concentrates. The Company intends to make use of Comali as a regional mill for Koyamayu ore and for toll milling ore from third parties. The Comali Mill is situated near the community of Toropalca, 30 kilometers south of Don Francisco. GRASSY MOUNTAIN PROPERTY - ------------------------ Project Status On February 14, 2000, Atlas signed a purchase option agreement for the Grassy Mountain property with Seabridge Resources Inc. ("Seabridge"). Under the terms of the agreement, Seabridge paid to Atlas $150,000 (non-refundable) for the exclusive option to acquire the Grassy Mountain property anytime on or before December 31, 2001. In order to maintain the option for the full term of the agreement, Seabridge must make additional option payments of $50,000 on or before July 31, 2000, $100,000 on or before December 31, 2000 and $50,000 on or before July 31, 2001. Seabridge may exercise its option at any time during the option period to acquire the Grassy Mountain property for $1.7 million. The purchase price will consist of a $250,000 cash payment, $750,000 of Seabridge common shares and a $700,000, 5% promissory note payable in three equal installments of $233,333 every six months from the date of the promissory note. Under the terms of the Reorganization Plan, proceeds from the sale of Grassy Mountain will first be utilized to pay administrative expenses of Atlas (approximately $196,000 at December 31, 1999), then excess proceeds will be distributed amongst APMI creditors, Atlas creditors and Atlas such that Atlas will receive approximately 21% of the excess proceeds. Location The Grassy Mountain project is located in northern Malheur County, Oregon, approximately 22 miles southwest of Vale, Oregon. The property is accessed by traveling four miles west from Vale on U.S. Highway 20, then south on the Twin Springs County Road for 23 miles, or by driving south from Nyssa on U.S. Highway 95 to Owyhee and then west to Rock Springs 6 Canyon and by gravel road for 14 miles. The project elevation ranges from 3,300 to 4,300 feet. Property The Grassy Mountain property encompasses approximately 6 square miles. Atlas owns 138 unpatented lode claims and an additional 46 unpatented lode and placer claims are controlled under two separate mineral lease or lease/option to purchase agreements. Approximately 1,000 acres of fee surface, 240 acres of fee surface and minerals, and 80 acres of fee minerals are held under two lease/option agreements. Geology The rocks exposed at Grassy Mountain are part of a late to middle-Miocene Grassy Mountain Formation, a sequence of volcanic and volcaniclastic rocks made up of primarily olivine-rich basalt and intercalated tufaceous siltstones, sandstones, and conglomerates. The rocks have been dated through mammalian fossils and Potassium-Argon chronology to be approximately 10 million years old. The sediments are primarily flat lying with a slight regional dip to the east. The structural trend of the area is N10W to N30E. Later post mineralization east west faulting probably cut these features. Mineralization is associated with a low-grade gold siliceous hot springs system with enrichment along multi-stage quartz-adularia veins and favorable lithologies. Explosive brecciation and overpressuring of the rock, common in these systems, was minimized due to the un-lithified nature of the sediments. The mineralized rock is highly silicified and locally brecciated in the vicinity of the feeder structures. As silicification decreases so does grade. Away from the feeder zones lithology also plays an important role in gold deposition. The finer grained siltstones contain the bulk of the lower grade material. The higher grades are found in the coarser arkosic sandstones. The feeder or vein zones contain grades as high as 20 ounces of gold/ton ("oz. Au/t"). History There was no significant mining or major mineral occurrence known in the area prior to the Predecessor Entity's acquisition of the Grassy Mountain project in 1986. Detailed mapping and sampling were completed in 1986 and several drill targets were defined. Hole 26-9 is considered the discovery hole with 145 feet of mineralization averaging 0.075 oz. Au/t. The claim block was expanded at this time and exploration work continued through 1991. The Predecessor Entity completed 388 drill holes for a total of approximately 221,500 feet on the property. Newmont Grassy Mountain Corporation ("Newmont"), a wholly owned subsidiary of Newmont Exploration Company leased the property from the Predecessor Entity in September, 1992 and continued property evaluation through August, 1994 completing an additional 13 core and reverse circulation holes. In September 1996 the Predecessor Entity executed an agreement with Newmont, (the "Agreement"), which provided for the reconveyance of the Grassy Mountain property to the Predecessor Entity. Pursuant to the Agreement, Atlas paid an amount of $206,000 to 7 Newmont, issued a $500,000 unsecured, non-interest-bearing promissory note (originally due September 18, 1997, but subsequently extended, then defaulted) and assumed bonding requirements for exploration reclamation of approximately $146,000. On January 9, 1998 the Predecessor Entity signed an option agreement with Tombstone Explorations Company Ltd. ("Tombstone"), granting to Tombstone an exclusive option to purchase 100% of the Grassy Mountain property for $4 million. The payments were to be made over four years approximating $1 million each year. On July 15, 1998, Tombstone terminated its option and returned 100% of the property to Atlas. Exploration work during Tombstone's program at Grassy Mountain included 8,500 feet of reverse circulation and core drilling in ten drillholes. Tombstone completed an extensive review of previous work at the property and commissioned an economic review and scoping study by Pincock Allen & Holt ("PA&H"). The 1997 review indicated the potential for the existing resource to be economically recoverable through underground mining methods. The review also concluded that significant additional exploration potential exists to identify additional high grade and bulk mineable low grade deposits. Reserves As part of a detailed feasibility study conducted by Kilborn SNC-Lavalin, Inc. ("Kilborn") in 1990, PA&H developed an open pit mine model. The feasibility study resulted in the definition of a mineable reserve of 996,000 ounces at a $350 gold price from 16 million tons at grades 0.062 oz. Au/t of mill and heap leach ores. Neither the recovered silver nor low-grade leach ores were considered. The contained silver is approximately 2,467,000 ounces. PA&H completed a feasibility study in 1990. The database utilized for this study consisted of 180 drill holes in the main deposit area. The drilling is predominantly vertical and angle reverse circulation rotary drill holes with some core holes. Using a 0.02 oz. Au/t cutoff, PA&H calculated a geologic resource of 17,217,000 tons at a grade of 0.061 oz. Au/t for a total of 1,051,500 ounces and 2,610,000 ounces of contained silver. Underground Study Two underground feasibility studies were commissioned to evaluate 200 tons per day ("tpd") and 1,000 tpd production options by Kilborn and Dynatec Mining Corporation, respectively. The 200-tpd study indicated diluted mineable reserves of 131,000 tons at a grade of 1.132 oz. Au/t for 149,000 contained ounces. The second, larger scale underground study at 1,000 tpd used an 0.08 oz. Au/t cutoff and identifies diluted mineable reserves as 1.9 million tons at a grade of 0.262 oz. Au/t for 497,000 contained ounces. Exploration An additional resource was drilled out approximately 1 mile west of the main deposit. The Crabgrass target contains a near surface geologic resource at a 0.02 oz. Au/t cutoff of 24,000 ounces contained in 600,000 tons grading 0.038 oz. Au/t. Several drilled and undrilled areas within the Grassy Mountain claim block have potential for additional resources. 8 GOLD BAR MINE - ------------- Project Status In August 1999, the Predecessor Entity reached an agreement with Vengold, Inc. ("Vengold") giving Vengold the option to acquire 100% of 603 unpatented lode claims and 6 patented lode claims at the Gold Bar property. Vengold is obligated under the agreement to incur $200,000 in exploration costs on the property by December 31, 2001. The Company will retain a 2% net smelter royalty interest in the property if the option is exercised. Of the remaining mining claims at Gold Bar, the Company has retained 53 unpatented claims as well as the remaining patented land at the Gold Bar site for its own use. The remaining claims on the Gold Bar property, comprising approximately 80% of the entire claim block, were dropped on August 31, 1999 in order to avoid paying the annual holding fees on the claims of approximately $260,000. On January 11, 2000, Atlas entered into an exclusive agreement with Machinery and Equipment Company, Inc. ("M&E") to dismantle, salvage and sell the mill and related equipment at the Gold Bar property. M&E will receive a 25% commission on all proceeds received under the agreement. Under the terms of the Reorganization Plan, proceeds from the sale of Gold Bar will first be utilized to pay certain priority claims, including administrative expenses of Atlas (approximately $220,000 at December 31, 2000) and approximately $92,000 to other creditors. Proceeds in excess of these amounts will be distributed amongst AGMI creditors, APMI creditors, Atlas creditors and Atlas such that Atlas will receive approximately 15% of any excess proceeds. Location The Gold Bar property is located in and adjacent to the Roberts Mountains in Eureka County, Nevada, at elevations ranging from 6,400 to 8,800 feet above sea level. The area is reached by traveling 22 miles west of Eureka, Nevada, on U.S. Highway No. 50 and 17 miles northeast along the Three Bars Road. Property The Gold Bar property area encompasses approximately 20 square miles. There are 655 unpatented lode-mining claims 100% owned by Atlas. Atlas also owns 6 patented lode claims and 8 patented millsite claims. Geology All of the mineralization found occurs as sediment-hosted "Carlin-type" deposits. These deposits are hosted in carbonate-rich sedimentary rocks of the Devonian Nevada Formation. Mineralization is characterized by micron-size gold and a distinct hydrothermal alteration suite of the decalcification and silicification. Gold mineralization and alteration are characteristically enriched in the trace elements and minor silver. 9 History Regional reconnaissance exploration led the Predecessor Entity to the Battle Mountain Trend area in the summer of 1983. Focused reconnaissance along the southern Roberts Mountains identified widespread hydrothermal alteration with anomalous gold geochemistry along the western range front. Detailed exploration in the area subsequently led to acquisition of land, target development, and drilling. Since then, the Predecessor Entity has discovered five gold deposits: Gold Bar, Goldstone, Gold Ridge, Gold Pick, and Gold Canyon. From inception through cessation of operations in 1994, 485,200 ounces of gold were recovered from 7,514,600 tons of ore grading .074 ounces of gold per ton milled. Mill construction was completed in 1986 with the first gold poured in January 1987. The mill was originally designed and constructed for 1,500-tpd throughput, later expanded in 1989 to the current 3,200-tpd rate. Mining operations were suspended in February 1994 pending additional drilling and further study of cost cutting measures. The confirmatory drill program included 303 surface and 55 underground holes. In late 1994 the Predecessor Entity decided to accelerate the exploration of the claim block by entering into joint venture agreements with Rayrock Yellowknife Resources Inc. and Homestake Mining Company. Rayrock's work consisted of geological mapping and sampling, geophysical CSAMT lines and 65 reverse circulation drill holes. Homestake completed additional geophysical CSAMT and gravity lines as well as 26 reverse circulation drill holes. In the summer of 1995, exploration by the Predecessor Entity produced encouraging drill results near the Gold Bar Mill. To accelerate the delineation of the newly discovered Millsite deposit the Predecessor Entity entered into an exploration and development agreement with Vista Gold Corp. whose work included 33 reverse circulation drill holes. All of these exploration joint venture agreements were terminated in 1995 and 1996 at which time the Predecessor Entity began a search for a partner for the entire property. On June 6, 1997 Barrick Gold Exploration Inc. ("Barrick") completed the purchase from the Predecessor Entity of more than 90% of the Gold Bar property, with an option to acquire the balance within two years. The Predecessor Entity received $1,000,000 in cash from Barrick, and Barrick purchased one million Atlas Common Shares at $1 per share. Under the terms of the purchase, Barrick was required to spend $3,000,000 on the property prior to June of 1999. In December 1998, the Predecessor Entity negotiated a Mutual Termination Agreement with Barrick, which returned the property to Atlas. Barrick also paid the Predecessor Entity $150,000 in satisfaction of its remaining obligation. Barrick had spent $2.7 million of the required $3.0 million obligation on geologic mapping, geophysics and exploratory drilling, and the results of the work suggested they would not continue to perform under the agreement. The bankruptcy court approved this Mutual Termination Agreement in January 1999. Resources After completion of the drill program noted above in 1994, the mine plan for the Gold Pick and Gold Ridge deposits established proven and probable mineable reserves, which were independently audited by Mine Reserve Associates of Denver, Colorado in December 1994, 10 and confirmed by Pincock, Allen & Holt, Inc. of Denver, Colorado as part of its independent review of the Gold Bar Resource Area, dated December 13, 1995. The reserves were as follows at a gold price of $400: Proven and Probable Reserves December 1996
Contained Ore tons Grade (oz Au/t) Ounces/(1)/ ------------------------------------------------------------- Gold Pick East 1,278,000 0.073 93,939 Gold Pick West 1,009,000 0.069 69,909 Gold Ridge 391,000 0.059 23,077 ------------------------------------------------------------- Total 2,678,000 0.070 186,925 =============================================================
/(1)/ Estimated recoverable ounces of 157,000 based upon an overall 84% recovery rate. Measured & Indicated Mineralized Material *
Tons Contained (000) Grade (oz Au/t) Ounces - ---------------------------------------------------------------------------------------------------- Advanced Prospects** 3,369 0.031 104,000
* "Mineralized Material" is precious metal bearing rock that has been physically delineated by one or more of a number of methods including drilling, underground sampling and surface trenching and sampling. This material has been found to contain a sufficient amount of mineralization of an average grade of metals to have economic potential that warrants further exploration and evaluation. Estimates of tonnage and grade are made on the continuity, size and shape of the mineralization and have taken into account effects of waste mining and dilution. ** Advanced prospects include Cabin Creek, Hunter, Gold Canyon and Pot Canyon. At December 31, 1999 the market price of gold was $288 per ounce. The foregoing reserves and mineralized material are not economic at this price. RISK FACTORS - ------------ Prices - ------ The Company's profitability has and continues to be significantly affected by metal prices. These prices may fluctuate widely and are affected by numerous factors beyond the Company's control, including global and regional demand, production costs, transportation and smelting charges, political and economic conditions, the strength of the United States dollar and exchange rates. Gold, lead, zinc and silver are products that can be easily sold on numerous markets throughout the world. It is not difficult to ascertain the market price for these metals at any particular time, and these metals can be sold to a large number of refiners or metal dealers on a competitive basis. The Company normally sells its metal production through major dealers and in some cases may use hedging programs. 11 Environmental Issues - -------------------- The Company is required to comply with various federal, state and local regulations relating to environmental matters at its properties. The Company is required to obtain permits from various governmental agencies in order to mine and mill metals. The Company has obtained all of the necessary permits relating to its on-going operations. The Company cannot anticipate whether increasing costs of environmental compliance for its properties will have a material adverse impact on planned operations or competitive position. Competition - ----------- The Company competes with substantially larger companies in the acquisition of properties and the production and sale of metals. The Company does not believe that it or any other competitor is a material factor in these markets, and the price it receives for its production depends almost entirely upon market conditions over which it has no control. The Company believes that it can promptly sell at current market prices all of the metals that it can produce. Liquidity - --------- The Company expects that it will continue to incur losses in the near future, and that its return to profitability will depend on, among other things, its ability to refinance its debt with Corporacion Andina de Fomento (CAF) (see "Item 6. Management's Discussion and Analysis or Plan of Operation") and to find additional financing to fund its near term operations. While the Company continues to generate limited cash flow at its Bolivian mines, the amount of cash flow available for acquisitions, investments, exploration and development is very limited. The Company's loan agreement with CAF also limits the use of any excess cash to the Arisur operation. As a result, the Company is carefully monitoring its discretionary spending while it seeks financing alternatives. There is no guarantee that the Company will be able to obtain the necessary financing to enable it to return to profitability. These concerns raise substantial doubt about the Company's ability to continue as a going concern. As a result of these concerns, the independent auditors' report, which accompanies the financial statements included in this report, contains a going concern explanatory paragraph. Mining and Processing - --------------------- The Company's business operations are subject to risks and hazards inherent in the mining industry, including but not limited to unanticipated variations in grade and other geological problems, water conditions, surface or underground conditions, metallurgical and other processing problems, mechanical equipment performance problems, the unavailability of materials and equipment, accidents, labor force and transportation disruptions, unanticipated transportation costs and weather conditions, any of which can materially and adversely affect, among other things, the development of properties, production quantities and rates, costs and expenditures and production commencement dates. Risk of International Operations - -------------------------------- Many of the mineral rights and interests of the Company are subject to governmental approvals, licenses and permits. Such approvals, licenses and permits are, as a practical matter, subject to the discretion of the applicable governments or governmental officials. No assurance can be given that the Company will be successful in obtaining any or all of the 12 various approvals, licenses and permits it seeks, that it will obtain them in a timely fashion, or that it will be able to maintain them in full force and effect without modification or revocation. In certain countries in which the Company has assets and operations, such assets and operations are subject to various political, economic and other uncertainties, including, among other things, the risks of war or civil unrest, expropriation, nationalization, renegotiation or nullification of existing concessions, licenses, permits, approvals, contracts, taxation policies, foreign exchange and repatriation restrictions, changing political conditions, international monetary fluctuations, and currency controls. In addition, in the event of a dispute arising from foreign operations, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in the United States. The Company also may be hindered or prevented from enforcing its rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. It is not possible for the Company to accurately predict such developments or changes in law or policy or to what extent any such developments or changes may have a material adverse effect on the Company's operations. Impact of Year 2000 - ------------------- During 1999, the Company completed a review of the potential impact of the year 2000 on the ability of the Company's and its third party supplier's computer systems to accurately process information that may be date sensitive. Programs that recognize a date using "00" as the year 1900 rather than the year 2000 could result in errors or system failures. Through March 2000, the Company has not experienced any year 2000 problems. The Company has no information that indicates key vendors, service providers, or any other third parties, may be unable to sell or purchase from the Company because of any Year 2000 compliance problems they may have. Item 2. Description of Property ----------------------- The Company's materially important properties consist of the Andacaba Mine and Mill which produce lead, zinc and silver in Bolivia, and the Gold Bar and Grassy Mountain gold properties which contain gold resources, described under "Item 1. Business". - -------- Item 3. Legal Proceedings ----------------- See discussion of the Chapter 11 reorganization in item 1 - "business" and item 6 - "management's discussion and analysis or plan of operation." Atlas is in an adversary proceeding TRW, Inc. ("TRW") and the United States Environmental Protection Agency (the "EPA") pending before the Bankruptcy Court. This action was brought by Atlas seeking a declaratory judgment that Atlas' obligations under a Consent Decree between Atlas, TRW and the EPA (the "Decree") have been discharged under its confirmed Reorganization Plan. TRW and the EPA have asserted that obligations under the Decree are not dischargeable under Federal bankruptcy laws. Management believes that it has arguments that the obligations under the Decree are subject to discharge under Federal bankruptcy laws. However, because this matter is in its very preliminary stages, management is unable to predict the ultimate outcome or any potential damages to the Company. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- No matters were submitted to a vote of the security holders during the quarter ended December 31, 1999. 13 PART II ------- Item 5. Market for Common Equity and Related Stockholder Matters -------------------------------------------------------- Atlas' common stock is traded on the OTC under the symbol ATMR. The high - -------------------------------------------------------------- and low sales prices for the common stock for each quarterly period are as follows:
Year Ended Year Ended December 31, December 31, 1999 1998 ----------------------------------------------------- Quarter Ended High Low High Low - ----------------------------------------------------------------------------- March 31 0.090 $0.040 $0.420 $0.150 June 30 0.059 0.025 0.410 0.170 September 30 0.080 0.025 0.350 0.040 December 31 0.095 0.025 0.090 0.030 - -----------------------------------------------------------------------------
The above quotations reflect inter-dealer prices, without retail mark-up, mark- down or commission and may not represent actual transactions. Since the change of the Company's trading symbol to ATMR, a result of the reorganization, there has been no discernable market for the Company's stock. No dividends were declared in the year ended December 31, 1999. At March 27, 2000, there were approximately 420 holders of record of the Company's common stock. Item 6. Management's Discussion and Analysis or Plan of Operation --------------------------------------------------------- The following discussion and analysis should be read in conjunction with the Company's Consolidated Financial Statements and accompanying notes. GENERAL OVERVIEW - ---------------- As previously noted, on September 22, 1998, Atlas filed a petition for relief under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court for the District of Colorado. On January 26, 1999, APMI and AGMI also filed petitions for relief under Chapter 11. The Company has not, and does not intend to seek protection under any applicable bankruptcy laws for Arisur. On December 11, 1999, the Bankruptcy Court approved the Reorganization Plan of Atlas, APMI and AGMI. Atlas, APMI and AGMI have consummated the Reorganization Plan and emerged from Chapter 11 on January 10, 2000. The case remains open, with the Bankruptcy Court retaining limited jurisdiction, pending the entry of a final decree closing the case. The Predecessor Entity's largest pre-petition liability was its approximately $21 million obligation to decommission and reclaim its uranium millsite (the "Millsite") located near Moab, Utah. On April 28, 1999, the Company, along with the U.S. Nuclear Regulatory Commission ("NRC"), the State of Utah, ACSTAR (surety provider for Atlas) and others, executed the Moab Utah Millsite Transfer Agreement ("MUMTA"), which absolved the Company from all future liability with respect to the Millsite. The agreement, approved by the Bankruptcy Court on June 22, 1999, was reached to avoid lengthy and expensive litigation over the future of the Millsite. As consideration for this release, Atlas contributed certain Millsite related assets to a Reclamation Trust to be controlled by the government. The assets include all current and future Title X receivables (Federal cost reimbursement program for uranium reclamation costs 14 incurred), Atlas' water rights and land at the Millsite and $5,250,000 of restricted cash. Additionally, ACSTAR and the Reclamation Trust each will receive 2.5% of the stock in the Reorganized Company. The Company recognized a gain of $756,000 on the transaction which is included in "Extraordinary item: net gain from extinguishment of debt" in the consolidated statement of operations for the period ended December 11, 1999. The majority of the remaining claims against the Predecessor Entity were treated as unsecured claims (the "Creditors") in the Bankruptcy proceeding. Under the Reorganization Plan, these claims are entitled to receive stock representing 67.5% of the Reorganized Company. In addition, the creditors will receive a percentage distribution upon the sale/realization of certain assets of the Reorganized Company. Those assets include; 1) proceeds from the salvaging of the Company's Gold Bar mill facility and related equipment located near Eureka, Nevada (reorganization value of $940,000, 75% to Creditors); 2) proceeds from the sale of the Company's Grassy Mountain property located in eastern Oregon (reorganization value of $925,000, 75% to Creditors) and 3) proceeds from commercial general liability claims ("CGL Claims") against various insurance carriers for reimbursement of costs incurred at the Millsite (reorganization value of $1.5 million, Creditors receive 10% of the first $1.5 million of proceeds, 50% thereafter). The Reorganization Plan also provided for the distribution of stock representing 12.5% of the Reorganized Company to Management and employees of the Company as recognition for their efforts in the reorganization process. The remaining 15% of the Reorganized Company will remain with the equity holders of the Predecessor Entity. Although the Company has emerged from Chapter 11, recurring operating losses of the Company and the Predecessor Entity, a negative working capital position at December 31, 1999, and difficulty/restrictions on the Company's ability to raise additional debt or equity financing raise substantial doubt about the Company's ability to continue as a going concern. The Company's business plan is to continue to expand/improve operations at its Andacaba mine while at the same time searching for merger partners or an equity infusion into the Company. As a result of the Reorganization Plan, the Predecessor Entity ceased to exist on December 11, 1999 and the Reorganized Company came into existence on the same date. For reporting purposes, the periods from January 1, 1999 to December 11, 1999 and from December 12, 1999 to December 31, 1999 have been shown separately in this Form 10-KSB and the financial statements contained herein (Item 7). However, for purposes of the following discussion, these periods have been combined in order to present a more informative and comparable analysis of the Company's financial condition and results of operations. Accordingly, references to the "Company" in the discussion that follows will refer both to the Predecessor Entity and the Reorganized Company. The Company's results of operations for the period subsequent to December 11, 1999 have not been prepared on a basis of accounting consistent with its results of operations for periods prior to December 11, 1999 due to the implementation of fresh-start reporting upon Atlas' emergence from bankruptcy. The reorganization adjustments primarily affect depreciation and amortization. During the period from December 12, 1999 to December 31, 1999, there were no significant events or operational changes that warrant separate disclosure. Arisur generally sells one lot of each the zinc concentrate and the lead concentrate each month. During December 1999, 15 these sales fell in the second half of the month and accordingly have been recorded in the period from December 12, 1999 to December 31, 1999. Production costs for this period include the usual and customary costs allocated to cost of sales including mine management for the full month of December. All other costs recorded during the period from December 12, 1999 to December 31, 1999 were recorded either on a pro-rata basis for the month of December or on a specific charge basis as appropriate in the circumstances. WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES - ------------------------------------------------ During 1999 working capital decreased by $2.4 million from $.1 million to a deficit of $2.3 million at December 31, 1999. This is largely a result of cash used in operations of $1.7 million during the year and capital expenditures of $718,000. The primary components of the $1.7 million were shutdown, general and administrative payments of $900,000, interest paid of $443,000 and reorganization costs of approximately $400,000. Also attributing to the decrease was the reclassification of debt of $1.2 million to Corporacion Andina de Fomento ("CAF") (see below) from long-term debt at December 31, 1998 to short- term debt at December 31, 1999. These amounts were offset by fresh-start and early extinguishment of debt adjustments recorded to revalue the Reorganized Company, which increased working capital by $1,046,000. (see "Item 8. Financial Statements and Supplementary Data, Note 2"). During the year ended December 31, 1999, the Company had capital expenditures of $718,000 consisting primarily of development expenditures at its Andacaba mine in Bolivia. This amount includes capital expenditures for the sinking of the mine shaft described below. In 1998, capital expenditures were $479,000 substantially all of which related to mine development at Andacaba. On May 9, 1999, Arisur defaulted on a payment of $478,000 due under the loan agreement with CAF. Subsequently, by letter dated July 28, 1999 and revised on October 26, 1999, CAF agreed to restructure the remaining balance of the debt under the condition that the Company, by June 30, 2000, demonstrate that it has a minimum of four years of proven reserves at a production rate of 400 tonnes per day at the Andacaba mine. In the event that the above condition is met, CAF has stated it is willing to restructure the existing debt, the terms of which are subject to negotiation. Also, Atlas has agreed to subordinate its interest in Arisur to CAF such that no funds may be repatriated from Arisur to Atlas during the term of the loan agreement with CAF. Also during 1999, Arisur increased its outstanding advances from Glencore International AG ("Glencore") from $1,089,000 at December 31, 1998 to $1,778,000 at December 31, 1999. Glencore has expressed its concern with the large increase during the year and has requested that Arisur take actions to reduce this amount in 2000. The Company intends to use all excess cash flow from operations to reduce the Glencore debt and is also in discussions with CAF for CAF to finance the Glencore debt. In the event that Glencore were to discontinue future advances under the agreement, Arisur would not have sufficient funding to continue the operation. During the fall of 1999, the Company began sinking two internal shafts at the Andacaba mine to access two lower levels of its San Juan/San Jose veins, the minus 190 and minus 220 levels. The purpose of the program was to add additional, higher-grade reserves to the mine in order to refinance Arisur's debt with CAF as described above and to increase the amount of ore 16 coming from the higher grade San Juan/San Jose veins. Preliminary assays of ore grades at the minus 190 level have yielded grades consistent with those seen at higher levels of these veins, which are significantly higher than from other veins in the mine. With the access to these lower levels, the percentage of ore coming from the San Juan/San Jose veins is expected to increase to approximately 50% by the end of 2000. If the minus 190 and minus 220 levels continue to produce ores consistent with the preliminary assays, then average ore grades would be expected to increase during 2000 back to reserve grade. The mining operations in Bolivia have consistently generated positive cash flow before debt and capital expenditures. With the expected increase in ore grades discussed above, operating cash flow is expected to improve in 2000 with greater increases expected in 2001. However, as all excess cash flow from operations will be utilized to service the Company's debt to Glencore and CAF, there will be no excess funds available to satisfy corporate overhead expenses of Atlas. The Company expects to generate cash to cover general and administrative expenses through the sale/realization of its North American assets. These assets include the salvaging of the Gold Bar mill (see "Item 1. Business, Gold Bar Mine"), sale of the Grassy Mountain property (see "Item 1. Business, Grassy Mountain Property") and the pursuit of insurance claims against various insurance carriers for costs incurred to reclaim the Moab uranium tailings pile. While the Company is confident in the ultimate realization of these assets, it cannot be certain as to the timing or the exact amount of proceeds that will be received. Accordingly, the Company will need to seek other means of financing until cash flow from operations is sufficient to cover operating expenses. The Company is actively pursuing alternative sources of financing to satisfy its working capital requirements including loans against the assets noted above, equity financing as well as pursuing acceptable merger opportunities. In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This statement, as amended by SFAS No. 137, is effective for fiscal years beginning after June 15, 2000. Currently, the Company does not have any derivative financial instruments and does not participate in hedging activities; therefore, management believes that SFAS No. 133 will not impact the Company's financial statements. As discussed above, recurring operating losses of the Company and the Predecessor Entity, a negative working capital position at December 31, 1999, and difficulty/restrictions on the Company's ability to raise additional debt or equity financing raise substantial doubt about the Company's ability to continue as a going concern. As a result, the independent auditors' report, which accompanies the financial statements included in this report, contains a going concern explanatory paragraph. Management's plan to resolve the Company's immediate financial difficulties and improve its financial position is described above. RESULTS OF OPERATIONS - --------------------- The following table summarizes production statistics at the Andacaba Mill, which includes feed from Andacaba, Don Francisco, Koyamayu and mill tailings, for the 1999 and 1998 years: 17
Period from Period from January 1, December 12, Year ended Year ended 1999 to 1999 to December December December 11, December 31, 31, 31, 1999 1999 1999 1998 ------------ ------------ ------------ ---------- Tonnes milled 117,290 6,772 124,062 119,535 Tonnes of lead concentrate produced 1,775 112 1,887 2,258 Tonnes of lead concentrate sold 1,810 144 1,955 2,256 Grade of lead concentrate produced: Lead 63.64% 63.06% 63.61% 64.57% Silver (ounces per ton) 118.4 109.2 117.81 135.0 Tonnes of zinc concentrate produced 11,797 681 12,478 12,346 Tonnes of zinc concentrate sold 11,090 1,056 12,146 13,219 Grade of zinc concentrate produced: Zinc 45.75% 46.00% 45.76% 46.32% Silver (ounces per ton) 21.87 20.77 21.81 23.64 Average price received: Lead (per tonne) $ 506 $ 500 $ 505 $ 555 Zinc (per tonne) $ 994 $ 1,090 $ 1,002 $ 1,053 Silver (per ounce) $ 5.16 $ 5.13 $ 5.15 $ 5.69
The increased mill production in 1999 was a result of increased ore feed from lower grade veins at the Andacaba mine and the processing of tailings located at the mill site to produce a zinc concentrate. This is also the reason for the overall decline in the grade of lead and zinc concentrates as shown above. With the increased access to the San Juan/San Jose veins described above, the Company anticipates that ore grades, and the resulting concentrate grades should improve during 2000. Year Ended December 31, 1999 Compared to the Year Ended December 31, 1998 - ------------------------------------------------------------------------- Revenues During the year ended December 31, 1999, the Company had mining revenue of $3,485,000 compared to $5,109,000 in the year ended December 31, 1998. Average prices received were significantly lower in 1999 than 1998 (see above). This fact, combined with the lower tonnes of zinc and lead concentrate sold as well as the lower grade of concentrate in 1999 resulted in the lower revenue for the year. Production Costs and Depreciation, Depletion and Amortization Cash production costs during the year ended December 31, 1999 were $3,657,000, or $259 per tonne of concentrate sold. This compares to $4,267,000, or $276 per tonne of concentrate sold for the same period in 1998. The lower per tonne costs are a result of operating cost reductions and efficiencies implemented at the end of 1998 and early 1999. 18 Depreciation, depletion and amortization increased to $1,009,000 in the year ended December 31, 1999, from $999,000 in 1998 as a result of the increase in tonnes milled during the year. Shutdown and standby costs Shutdown and standby costs at Gold Bar were $346,000 in 1999 compared to $355,000 in 1998. Cost cutting measures during 1999 were offset by costs incurred for the marketing of the Gold Bar property during the year of $36,000. Geological costs Geological costs for the year ended December 31, 1999 were $106,000 compared to $78,000 in the year ended December 31, 1998. In 1998, certain costs were charged to Barrick including land holding costs of $8,000, labor costs of approximately $14,000 and other miscellaneous costs of approximately $5,000, resulting in a lower overall cost in that year. General and administrative expenses General and administrative expenses for the year ended December 31, 1999 were $720,000, which compares to $1,230,000 for the year ended December 31, 1998. The Company has successfully continued its efforts to reduce such expenses. Legal fees were reduced from $234,000 in 1998 to $38,000 in 1999 as several legal actions have been resolved or settled. As a result of staff reductions at the Company's headquarters, salaries and benefits have been reduced over this same period from $345,000 to $254,000. Shareholder services and public relations were reduced from $127,000 in 1998 to $48,000 in 1999. Other areas of reduction included taxes and licenses, insurance, accounting and auditing fees and directors fees. Other Interest expense incurred during the year ended December 31, 1999 was $352,000 compared to $593,000 for the same period in 1998. Interest accruals on all outstanding loans of Atlas and APMI ceased as a result of filing for Chapter 11, resulting in a decrease of $154,000 during the year. The remainder of the difference is due to a lower loan balance on the CAF debt during 1999 and lower average interest rates during 1999 than in 1998. Other income/expense in 1998 of $491,000 included a charge of $639,000 relating to the settlement of a lawsuit with the former owners of Arisur. Other amounts in both years were primarily from asset sales. Reorganization costs during 1999 were $834,000 compared to $148,000 for the year ended December 31, 1998. The 1999 amount includes a charge of $383,000 for stock issued to management and employees of the Company as compensation for their efforts during the reorganization. Additionally, 1999 includes a full year of reorganization expenses whereas 1998 includes expenses incurred from September 22, 1998 to December 31, 1998 only. During the period ended December 11, 1999, the Predecessor Entity recorded a charge for "fresh-start revaluation" of $3,349,000, determined as a result of a revaluation of the Reorganized Company's assets/liabilities which is required under generally accepted accounting principals. This amount consists of $4.1 million write down in the carrying value of Arisur, a $1.3 million write down of the Gold Bar assets, a gain recorded on the adjustment to fair value of 19 Grassy Mountain of $255,000, a gain from the recording of the CGL claim of $1.5 million and other miscellaneous gains totaling $259,000 (see "Item 7. Financial Statements, Note 2"). The $4.1 million write down in the carrying value of Arisur and $1.3 million write down of the Gold Bar assets relates primarily to decisions made in connection with the Reorganization Plan. With regard to Gold Bar, The Company did not have sufficient funding in 1999 to renew approximately 80% of the claim block. Under the Reorganization Plan, the Reorganized Company will salvage the mill and related infrastructure rather than attempt to sell or develop the property as a continuing mining operation. Therefore, the reorganization value of Gold Bar was less than the Company anticipated earlier in 1999. With regard to Arisur, with the combination of lower than expected metal prices, lower than expected ore grades, and a deteriorating working capital position in 1999, management reassessed the recoverability of the carrying value of the Arisur assets at the end of 1999 and concluded that a write down was appropriate. The Predecessor Entity also recorded an extraordinary gain from extinguishment of debt of $9,199,000 for the period ended December 11, 1999 as a result of the discharge of debt resulting from the Reorganization Plan (see "Item 7. Financial Statements, Note 2") ENVIRONMENTAL MATTERS - --------------------- The Company is subject to extensive federal, state and local environmental laws and regulations. These laws, which are constantly changing, regulate the discharge of materials into the environment and may require the Company to mitigate any environmental effects caused by its past and present operations. The Company believes that it has taken reasonable steps to be in substantial compliance with all federal, state and local environmental regulations applicable to its current and discontinued operations. 20 Item 7. Financial Statements --------------------
Index to Financial Statements Page Consolidated Statements of Operations for the Period from December 12, 1999 to December 31, 1999, the Period from January 1, 1999 to December 11, 1999 and the Year Ended December 31, 1998 22 Consolidated Balance Sheets as of December 31, 1999 and December 11, 1999 23 Consolidated Statements of Stockholders' Equity (Deficit) for the Period from December 12, 1999 to December 31, 1999, the Period from January 1, 1999 to December 11, 1999 and the Year Ended December 31, 1998 24 Consolidated Statements of Cash Flows for the Period from December 12, 1999 to December 31, 1999, the Period from January 1, 1999 to December 11, 1999 and the Year Ended December 31, 1998 25 Notes to Consolidated Financial Statements 26 - 41 Report of Independent Auditors 42
21 Atlas Minerals Inc. (Formerly Atlas Corporation) Consolidated Statements of Operations (in thousands, except earnings per share)
Reorganized Predecessor Entity Company ----------------- Period from Period from December 12, January 1, 1999 to 1999 Year ended December 31, to December 11, December 31, 1999 1999 1998 ===================================================================================================================== Mining revenue $ 338 $ 3,147 $ 5,109 - ------------------------------------------------------------------------------------------------------------------- Costs and expenses: Production costs 321 3,336 4,267 Depreciation, depletion and amortization 54 955 999 Impairment of mineral property - - 34 Shutdown and standby costs 9 337 355 General and administrative expenses 21 699 1,230 Geological and land holding costs 4 102 78 - ------------------------------------------------------------------------------------------------------------------- Gross operating loss (71) (2,282) (1,854) - ------------------------------------------------------------------------------------------------------------------- Other (income) and expense: Loss on asset held for sale (Note 8) - - 1,165 Income from joint venture agreement (Note 5) - - (1,213) Interest expense 22 330 593 Interest income (1) (126) (308) Other (income) expense, net - (58) 491 - ------------------------------------------------------------------------------------------------------------------- Loss before reorganization items, fresh-start revaluation, income taxes and extraordinary item (92) (2,428) (2,582) Reorganization items: Professional fees - (377) (141) Other (Note 2) - (457) (7) Fresh-start revaluation (Note 2) - (3,349) - - ------------------------------------------------------------------------------------------------------------------- Loss before income taxes and extraordinary item (92) (6,611) (2,730) Provision for income taxes (Note 14) - - - - ------------------------------------------------------------------------------------------------------------------- Loss before extraordinary item (92) (6,611) (2,730) Extraordinary item: net gain from extinguishment of debt (Note 2) - 9,199 - - ------------------------------------------------------------------------------------------------------------------- Net income (loss) $ (92) $ 2,588 $(2,730) =================================================================================================================== Basic and diluted earnings per share of common stock (Note 13) Loss before extraordinary item $ (0.02) $ (7.16) $ (2.99) Extraordinary item - 9.96 - - ------------------------------------------------------------------------------------------------------------------- Net income (loss) $ (0.02) $ 2.80 $ (2.99) =================================================================================================================== Weighted average common shares outstanding 6,064 924 914 ===================================================================================================================
See accompanying notes 22 Atlas Minerals Inc. Consolidated Balance Sheets (Formerly Atlas Corporation) (In thousands)
Reorganized Predecessor Company Entity December 31, December 11, 1999 1999 ================================================================================================================= Assets Current assets: Cash and cash equivalents $ 202 $ 205 Accounts receivable - trade 583 512 Accounts receivable - other 183 166 Assets held for sale (Notes 2 and 10) 735 735 Inventories (Note 3) 1,036 1,037 Prepaid expenses and other current assets (Notes 2 and 10) 425 428 - ----------------------------------------------------------------------------------------------------------------- Total current assets 3,164 3,083 - ----------------------------------------------------------------------------------------------------------------- Property, plant and equipment (Note 5) 4,732 4,702 Less: Accumulated depreciation, depletion and amortization (54) - - ----------------------------------------------------------------------------------------------------------------- 4,678 4,702 Assets held for sale (Notes 2 and 10) 1,130 1,130 Other assets (Notes 2 and 10) 1,122 1,122 - ----------------------------------------------------------------------------------------------------------------- $ 10,094 $ 10,037 ================================================================================================================= liabilities Current liabilities: Trade accounts payable $ 549 $ 510 Accrued liabilities 767 851 Short-term debt (Note 9) 3,849 3,655 Estimated reorganization liabilities (Note 2) 304 304 - ----------------------------------------------------------------------------------------------------------------- Total current liabilities 5,469 5,320 - ----------------------------------------------------------------------------------------------------------------- Estimated reorganization liabilities (Note 2) 1,029 1,029 Other liabilities, long-term 627 628 - ----------------------------------------------------------------------------------------------------------------- Total long-term liabilities 1,656 1,657 - ----------------------------------------------------------------------------------------------------------------- Total liabilities 7,125 6,977 - ----------------------------------------------------------------------------------------------------------------- Commitments and contingencies (Note 12) Stockholders' equity (Notes 2, 5, 6, and 7) Preferred stock, par value $1 per share; authorized 1,000,000; issued and outstanding, 0 at December 31, 1999 and December 11, 1999 Common stock to be issued (5,154,000 shares) 2,601 2,601 Common stock, par value $0.01 per share; authorized 100,000,000; issued and outstanding, 909,548 at December 31, 1999 and December 11, 1999 9 9 Capital in excess of par value 450 450 Deficit (92) - - ----------------------------------------------------------------------------------------------------------------- Total stockholders' equity 2,968 3,060 - ----------------------------------------------------------------------------------------------------------------- $ 10,094 $ 10,037 =================================================================================================================
See accompanying notes 23 Atlas Minerals Inc. (Formerly Atlas Corporation) Consolidated Statements of Stockholders' Equity (Deficit) (In thousands)
Common Capital in Common stock to Common Excess of shares be issued stock par value Deficit Total - --------------------------------------------------------------------------------------------------------------------- Predecessor Entity: Balance at December 31, 1997 909 $ - $ 909 $ 93,108 $(93,486) $ 531 Shares issued to 401(k) plan 4 - 4 19 - 23 Interest on debenture 4 - 4 19 - 23 Transfer of capital - - (908) 908 - - Current year loss - - - - (2,730) (2,730) - --------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1998 917 - 9 94,054 (96,216) (2,153) Shares issued to 401(k) plan 22 - - 24 - 24 Shares voided in reorganization (29) - - - - - Common shares to be issued in Reorganization (Note 2) - 2,601 - - - 2,601 Restatement of accumulated deficit (Note 2) - - - (93,628) 93,628 - Current period income - - - - 2,588 2,588 - --------------------------------------------------------------------------------------------------------------------- Balance at December 11, 1999 910 2,601 9 450 - 3,060 Reorganized Company: Current period loss - - - - (92) (92) - --------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1999 910 $2,601 $ 9 $ 450 $ (92) $ 2,968 =====================================================================================================================
See accompanying notes 24 Atlas Minerals Inc. (Formerly Atlas Corporation) Consolidated Statements of Cash Flows (In thousands)
Reorganized Company Period from Predecessor Entity --------------------------------- December 12, Period from 1999 to January 1, Year ended December 31, 1999 to December 31, 1999 December 11, 1998 1999 ===================================================================================================================== Operating activities: Net income (loss) $ (92) $ 2,588 $ (2,730) Adjustments to reconcile net income (loss) to net cash used in operations (Note 11) 54 (4,514) 1,002 Changes in operating assets and liabilities (Note 11) (129) 871 502 - --------------------------------------------------------------------------------------------------------------------- (167) (1,055) (1,226) Discontinued operations: Net increase (decrease) in estimated reclamation costs - (478) 256 - --------------------------------------------------------------------------------------------------------------------- Net cash used in Operations (167) (1,533) (970) - --------------------------------------------------------------------------------------------------------------------- Investing activities: Additions to property, plant and equipment (30) (688) (479) Investment in asset held for sale - - (808) Sale proceeds from asset held for sale - 2,643 - Proceeds from sale of equipment and reduction in other assets - 71 1,663 - --------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities (30) 2,026 376 - --------------------------------------------------------------------------------------------------------------------- Financing activities: Proceeds from borrowings on short-term debt 194 712 871 Repayment of short-term debt - (1,006) (856) - --------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 194 (294) 15 - --------------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (3) 201 (579) Cash and cash equivalents at beginning of period 205 4 583 - --------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 202 $ 205 $ 4 =====================================================================================================================
See accompanying notes 25 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ 1. ACCOUNTING POLICIES Principles of Consolidation - The accompanying consolidated financial statements include the accounts of Atlas Minerals Inc. ("Atlas") (formerly Atlas Corporation) and its wholly-owned subsidiary, Arisur Inc. ("Arisur") and its approximately 85% ownership of Atlas Precious Metals Inc. ("APMI"), which in turn owns approximately 63% of Atlas Gold Mining Inc. ("AGMI") (collectively the "Company" or "Reorganized Company"). Prior to December 11, 1999, the date of confirmation of its plan of reorganization under the U.S. Bankruptcy Code (Note 2), APMI was wholly-owned by Atlas which in turn owned 100% of AGMI (the "Predecessor Entity"). References to the Predecessor Entity throughout the financial statements refer to Atlas and its subsidiaries to December 11, 1999 and references to the Reorganized Company refer to Atlas and its subsidiaries from and after December 12, 1999. A vertical black line is shown in the consolidated financial statements to separate the Reorganized Company and the Predecessor Entity since they have not been prepared on a consistent basis of accounting. In connection with the reorganization, the Company completed a 1 for 30 reverse stock split. All share and per share amounts in the accompanying financial statements have been restated to reflect the reverse split. Fresh-Start Reporting - Financial accounting during a Chapter 11 proceeding is prescribed in the American Institute of Certified Public Accountants' Statement of Position ("SOP") 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code." The emergence from the Chapter 11 proceeding resulted in the creation of a new reporting entity without any accumulated deficit and with the Company's assets restated to their estimated values (Note 2). Due to the application of fresh-start reporting, the financial statements for periods after the reorganization are not comparable in all respects to the financial statements for periods prior to the reorganization, primarily with respect to depreciation, depletion and amortization. Basis of Presentation - The Company is principally engaged in the exploration, development and exploitation of mineral properties. The accompanying financial statements have been prepared assuming that Atlas and its subsidiaries will continue as a going concern. The Company has incurred operating losses of $92,000, $6,611,000, and $2,730,000 for the periods ended December 31, 1999, December 11, 1999 and the year ended December 31, 1998 respectively. At December 31, 1999 the Company has a working capital deficit of $2,305,000. These considerations raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. The Company's business plan is to continue to expand/improve operations at its Andacaba mine while at the same time searching for merger partners or an equity infusion into the Company. Inventories - Inventories are recorded at the lower of average cost or net realizable value. Property, Plant and Equipment - Property, plant and equipment are stated at the lower of cost, or estimated net realizable value, as of December 10, 1999, and at fair market value at December 11, 1999. Subsequent additions are recorded at cost. Property, plant and equipment was revalued at December 11, 1999 in connection with the adoption of fresh-start reporting. Depreciation of milling facilities and depletion of mining properties is determined by the units of production method. The Company regularly assesses its ability to recover the carrying value of its assets and recognizes an impairment when it is determined that unamortized costs cannot be recovered from undiscounted cash flows over the remaining project life. Leasehold improvements are amortized on a straight-line basis over the terms of related leases or, if shorter, estimated useful life. 26 Expenditures for maintenance and repairs are charged to operations as incurred. Expenditures for additions and major renewals are added to the property, plant and equipment accounts. Interest expense allocable to the acquisition or construction of capital assets and deferred mine development is capitalized until operations commence. Foreign Currencies - The functional currency of all foreign subsidiaries is the U. S. Dollar. Gains and losses on foreign currency transactions are included in determining consolidated earnings/losses. Development Properties - All properties identified as having the potential to add to proven and probable reserves, the direct costs of acquisition, exploration and development are capitalized as they are incurred. Determination as to reserve potential is based on results of feasibility studies, which indicate whether a property is economically feasible. After drilling has confirmed the shape and continuity of mineralization, initial feasibility studies are optimized. If production commences, these costs are transferred to deferred exploration and development costs and amortized against earnings using the units of production method. If a project is determined not to be commercially feasible, unrecovered costs are expensed in the year in which the determination is made. Exploration Costs - The costs of exploration programs not anticipated to result in additions to reserves and other mineralization in the current year are expensed as incurred. Mining Revenue - Revenues on base metals are recorded at the time of shipment. Reclamation - Estimated reclamation, site restoration and closure costs for each mine are charged to operations over the expected life of the mine using the units of production method. Income Taxes - The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, SFAS 109 generally considers all expected future events other than enactments of changes in the tax law or rates. Income tax information is disclosed in Note 14 to the consolidated financial statements. Cash Equivalents - The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Earnings per Share - Basic income (loss) per share is computed by dividing income (loss) applicable to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect is to reduce a loss or increase earnings per share. The Company had no potential common stock instruments, which would result in diluted income (loss) per share in 1999 or 1998. Environmental Remediation Liabilities - The Company accounts for environmental remediation liabilities under Statement of Position 96-1 "Environmental Remediation Liabilities", 27 which requires the accrual of environmental remediation liabilities when the criteria for SFAS No. 5 "Accounting for Contingencies" are met. Comprehensive Income - SFAS No. 130, "Reporting Comprehensive Income", requires companies to classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. During 1999, and 1998 the Company had no items of comprehensive income. Derivative Instruments - In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". This statement as amended by SFAS No. 137 is effective for fiscal years beginning after June 15, 2000. Currently, the Company does not have any derivative financial instruments and does not participate in hedging activities. Therefore, management believes that SFAS No. 133 will not have an impact on its financial position or results of operations. Accounting Estimates in the Preparation of Financial Statements - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount 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. 2. REORGANIZATION In September 1998, the Predecessor Entity filed a petition for relief under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court of the District of Colorado (the "Court"). On January 26, 1999, APMI and AGMI also filed for relief under Chapter 11. The Company's other subsidiary, Arisur did not file for Chapter 11 protection. Under a plan of reorganization approved by the Court on December 11, 1999 (the "Reorganization Plan"), primarily all of Atlas', APMI, and AGMI's liabilities were discharged for consideration of stock in the Reorganized Company and contingent cash distributions to be made upon the sale/realization of certain assets of the Reorganized Company. Arisur's liabilities were not affected by the reorganization. The Company recorded the transactions related to the reorganization effective December 11, 1999, the confirmation date of the Reorganization Plan, in accordance with SOP 90-7. Adjustments to pre-petition liabilities are treated as an extraordinary item - gain from early extinguishment of debt, and adjustments to assets and liabilities in the revaluation of the Reorganized Company are recorded as fresh-start adjustments in the accompanying consolidated statement of operations of the Predecessor Entity for the period ended December 11, 1999. Approximately 5,154,000 shares of common stock will be issued in connection with the Reorganization Plan resulting in 6,064,000 shares outstanding. These shares will be issued subsequent to December 31, 1999 and are recorded as "common stock to be issued" in the accompanying consolidated balance sheets as of December 31, 1999 and December 11, 1999. Following is a summary of the major Reorganization Plan transactions. The Predecessor Entity's largest pre-petition liability was its approximately $21 million obligation to decommission and reclaim its uranium millsite (the "Millsite") located near Moab, Utah. On April 28, 1999, the Company, along with the U.S. Nuclear Regulatory Commission ("NRC"), the State of Utah, ACSTAR (surety provider for Atlas) and others, executed the Moab Utah Millsite Transfer Agreement ("MUMTA"), which absolved the Company from all future liability with respect to the Millsite. The agreement was reached to avoid lengthy and expensive litigation over the future of the Millsite. As consideration for this release, Atlas contributed certain Millsite related assets to a Reclamation Trust to be controlled by the government. The assets include all current and future Title X receivables (Federal cost reimbursement program for uranium reclamation costs), Atlas' water rights and land at the Millsite and $5,250,000 of restricted cash. Additionally, ACSTAR and the Reclamation Trust will each receive 2.5% of the stock in the Reorganized Company. 28 The majority of the remaining claims against the Predecessor Entity were treated as unsecured claims (the "Creditors") in the Bankruptcy proceeding. Under the Reorganization Plan, these claims are entitled to receive stock representing 67.5% of the Reorganized Company. In addition, the creditors will receive a percentage distribution upon the sale/realization of certain assets of the Reorganized Company. Those assets include; 1) proceeds from the salvaging of the Company's Gold Bar mill facility located near Eureka, Nevada (reorganization value of $940,000, 75% to Creditors); 2) proceeds from the sale of the Company's Grassy Mountain property located in eastern Oregon (reorganization value of $925,000, 75% to Creditors) and 3) proceeds from commercial general liability claims ("CGL Claims") against various insurance carriers for reimbursement of costs incurred at the Millsite (reorganization value of $1.5 million, Creditors receive 10% of the first $1.5 million of proceeds, 50% thereafter). The Reorganization Plan also provided for the distribution of stock representing 12.5% of the Reorganized Company to Management and employees of the Company as recognition for their efforts in the reorganization process. The Predecessor Entity recorded reorganization expense of $383,000 related to the transaction. The remaining 15% of the Reorganized Company will remain with the equity holders of the Predecessor Entity. In determining the value of the Reorganized Company under fresh-start reporting, the Company utilized several valuation techniques, depending upon the nature of the asset being valued. Arisur was valued using a discounted cash flow model, representing the discounted value of projected cash flows over the remaining reserve life, adjusted for liabilities of Arisur and expected liquidation values at the end of the mine life. Other assets were valued based upon estimates of liquidation values from the most reliable source available including appraisals and professional estimates of value and recent or proposed transactions of a similar nature. Estimated reorganization liabilities, representing estimated payments to be made to the Creditors upon liquidation of the assets discussed above, were recorded at the calculated amount under the Reorganization Plan given the estimated realizable value of the underlying asset. Based upon the above analysis, the post-confirmation going concern value of the Reorganized Company was estimated to be $3.1 million. The effects of the aforementioned adjustments on the Consolidated Balance Sheet as of December 11, 1999 are as follows: 29
Predecessor Early Reorganized Entity Extinguish- Fresh- Company December ment of start December 11, 1999 Debt adjustments 11, 1999 ------------ ----------- ------------- ------------ Assets: Current assets: Cash & cash equivalents $ 205 $ - $ - $ 205 Accounts receivable - trade 512 - - 512 Title X receivable 123 (123) - - Accounts receivable - other 171 - (5) 166 Asset held for sale - - 735 735 Inventories 816 - 221 1,037 Other current assets 41 - 387 428 ----------- ---------- ------------ ----------- Total current assets 1,868 (123) 1,338 3,083 ----------- ---------- ------------ ----------- Property, plant & equipment 59,502 - (54,800) 4,702 Accumulated depreciation, depletion and amortization (47,625) - 47,625 - ----------- ---------- ------------ ----------- 11,877 - (7,175) 4,702 Restricted cash 6,241 (6,241) - - Assets held for sale - - 1,130 1,130 Title X receivable 14,109 (14,109) - - Other assets 72 - 1,050 1,122 ----------- ---------- ------------ ----------- $ 34,167 $ (20,473) $ (3,657) $ 10,037 =========== ========== ============ =========== Liabilities: Current Liabilities Accounts payable $ 510 $ - $ - $ 510 Accrued liabilities 986 (134) (1) 851 Short-term debt 3,655 - - 3,655 Estimated reorganization liabilities - 304 - 304 ----------- ---------- ------------ ----------- Total current liabilities 5,151 170 (1) 5,320 ----------- ---------- ------------ ----------- Estimated reorganization liabilities - 1,029 - 1,029 Other long-term liabilities 459 - 169 628 Liabilities subject to compromise: Accounts payable 1,724 (1,724) - - Accrued liabilities 1,653 (1,653) - - Convertible debenture 3,500 (3,500) - - Estimated uranium reclamation costs 20,632 (20,632) - - Mine reclamation accruals 3,264 (3,264) - - Other 2,792 (2,316) (476) - ----------- ---------- ------------ ----------- Total liabilities 39,175 (31,885) (308) 6,977 ----------- ---------- ------------ ----------- Stockholders' equity (deficit): Common stock to be issued - 2,218 383 2,601 Common stock 9 - 9 Capital in excess of par 94,078 - (93,628) 450 Retained earnings (deficit) (99,095) 9,199 89,896 - ----------- ---------- ------------ ----------- Total stockholders' equity (deficit) (5,008) 11,417 (3,349) 3,060 ----------- ---------- ------------ ----------- $ 34,167 $ (20,473) $ (3,657) $ 10,037 =========== ========== ============ ===========
30 3. INVENTORIES Inventories consisted of the following: Reorganized Predecessor Company Entity December 31, December 11, (In thousands) 1999 1999 - -------------------------------------------------------------- ------------- Zinc and lead concentrates $ 157 $ 128 Stockpiled ore 620 648 Materials and supplies 259 261 ------------- ------------- $ 1,036 $ 1,037 ============= ============= 4. FINANCIAL INSTRUMENTS Financial instruments consist of the following: Reorganized Company Predecessor Entity December 31, 1999 December 11, 1999 --------------------- --------------------- Carrying Carrying (In thousands) Value Fair Value Value Fair Value --------------------- --------------------- Assets Short-term assets $1,703 $1,703 $1,618 $1,618 Liabilities Short-term liabilities 5,469 5,469 5,320 5,320 Short-Term Assets and Liabilities: The fair value of cash and cash equivalents, marketable equity securities, accounts receivable, assets held for sale, accounts payable, other accrued liabilities and short-term debt approximates their carrying value due to the short-term nature of these instruments. 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following: Accumulated Depreciation, Reorganized Company Acquisition Depletion & Net Book December 31, 1999 (In thousands) Costs Amortization Value - -------------------------------------------------------------------------------- Property and leaseholds $ 472 $ - $ 472 Deferred exploration and development costs 312 1 311 Buildings and equipment 3,882 53 3,829 Other 66 - 66 ----------------------------------- Total $ 4,732 $ 54 $ 4,678 =================================== 31 Accumulated Depreciation, Predecessor Entity Acquisition Depletion & Net Book December 11, 1999 (In thousands) Costs Amortization Value - -------------------------------------------------------------------------------- Property and leaseholds $ 472 $ - $ 472 Deferred exploration and development costs 308 - 308 Buildings and equipment 3,857 - 3,857 Other 65 - 65 ---------------------------------- Total $4,702 $ - $4,702 ================================== On June 6, 1997, Barrick Gold Exploration Inc. ("Barrick") completed the purchase from the Predecessor Entity of more than 90% of the Gold Bar claim block with an option to acquire the balance within two years. The Predecessor Entity received $1,000,000 in cash from Barrick and Barrick purchased one million Predecessor Entity common shares at $1 per share. Under the terms of the agreement, Barrick agreed to spend $3,000,000 on the property prior to June of 1999. In December 1998, the Predecessor Entity and Barrick mutually agreed to terminate the purchase agreement thereby returning the Gold Bar property to Atlas. Barrick agreed to pay the Predecessor Entity $150,000 in satisfaction of its remaining exploration obligations of approximately $300,000. The Predecessor Entity recorded the $150,000 along with the remaining unamortized gain on the original sale of $1,063,000 as income from joint venture agreement in the year ended December 31, 1998 in the accompanying Consolidated Statements of Operations. 6. STOCKHOLDERS' EQUITY The Reorganized Company is authorized to issue 1,000,000 shares of preferred stock, par value $1 per share. The preferred stock is issuable in series, with designations, rights and preferences to be fixed by the Board of Directors. At December 31, 1998 there were 875,000 shares of common stock reserved for the conversion of an outstanding Convertible Debenture and 6,577,566 shares of common stock reserved for Option Warrants. All of the above option warrants and conversion rights were voided in the Reorganization Plan. 7. EMPLOYEE INCENTIVE PLANS The Predecessor Entity's Long Term Incentive Plan (the "LTIP") provided that key employees may be granted options to purchase common stock at the fair value of the shares on the date of grant. During 1999, the Board of Directors voted to terminate the LTIP effective immediately. 32 Predecessor Entity: Balance outstanding as of December 31, 1997 1,140,300 Canceled (287,800) ---------- Balance outstanding as of December 31, 1998 852,500 Canceled (852,500) ---------- Reorganized Company: Balance outstanding as of December 11, 1999 and December 31, 1999 - ========== No options were granted in 1999 or 1998. However certain options granted prior to January 1, 1998 were for services performed in 1999 and 1998. The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related Interpretations in accounting for its employee stock options. Under APB 25, because the exercise price of the Company's employee stock options were equal to the market price of the underlying stock on the date of grant, no compensation expense is recognized. Pro forma information regarding net income and earnings per share as required by Statement No. 123 has been determined as if the Company had accounted for its employee stock options under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using the Black- Scholes option pricing model with the following weighted-average assumptions for 1998 and 1999: risk-free interest rate of 5.09% and 5.71% respectively; dividend yields of 0.0%; volatility factor of the expected market price of the Company's common stock of 0.462; and a weighted-average expected life of the options of 4 years. The Black-Scholes option valuation model was developed for the use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option pricing models require the input of highly subjective assumptions, including expected stock price volatility. Because the Company's employee stock options had characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of pro forma disclosures, the estimated fair value of the options has been amortized to expense over the option's vesting period. The Company's pro forma information for the periods ended December 31, 1999 and December 11, 1999 and for the year ended December 31 1998, is as follows (in thousands except for earnings per share) Reorganized Company Predecessor Entity ------------------ Period from Period from December 12, January 1, Year ended 1999 to 1999 to December December 31, December 11, 31, 1999 1999 1998 ------------------------------------------ Pro forma net income (loss) $ (92) $2,588 $(2,734) Pro forma earnings (loss) per share: Basic $(0.02) $ 2.80 $ (2.99) Diluted $(0.02) $ 2.80 $ (2.99) 33 A summary of the Company's stock option activity, and related information is as follows:
Reorganized Company Predecessor Entity ------------------ Period from December Period from January 12, 1999 to 1, 1999 to Year ended December 31, 1999 December 11, 1999 December 31, 1998 ------------------------------------------------------------------- Weighted- Weighted- Weighted- average average average exercise exercise exercise (In thousands) Options price Options price Options price - ------------------------------------------------------------------------------------------- Outstanding - beginning of period - $ - 852 $ 1.35 1,140 $ 1.27 Granted - - - - - - Exercised - - - - - - Forfeited/canceled - - (852) 1.35 (288) 1.04 ------------------------------------------------------------------- Outstanding-end of period - $ - - $ - 852 1.35 =================================================================== Exercisable at end of period - $ - - $ - 852 $ 1.35 ===================================================================
8. INVESTMENTS In December 1997, the Predecessor Entity made the decision to sell its 61% interest in Cornerstone Industrial Minerals Corporation ("Cornerstone") and reclassified its investment to assets held for sale. The Predecessor Entity's loss related to Cornerstone of $1,165,000 for the year ended December 31, 1998 is included in loss on assets held for sale in the accompanying consolidated statements of operations. In February 1999, the Predecessor Entity completed the sale of Cornerstone to Seven Peaks Mining Inc. for proceeds of approximately $2.9 million, less selling and holding costs of approximately $250,000. 9. SHORT-TERM DEBT Reorganized Predecessor Company Entity (In thousands) December 31, December 11, 1999 1999 ------------- ------------ Advances on sales of concentrates /(1)/ $ 1,778 $ 1,606 Corporacion Andina de Fomento /(2)/ 1,917 1,917 Other 154 132 ------------- ------------ Total short-term debt $ 3,849 $ 3,655 ============= ============ 34 (1) Under the terms of its agreement with Glencore International AG for the sale of zinc/silver and lead/silver concentrates, the Company may take advances of up to 80% of the estimated value of the concentrates available for shipment via rail from the Company's warehouse in Potosi, Bolivia, and an additional 10% of this amount may be advanced once the concentrate is ready for shipment from port in Chile. Interest is payable on the advances at the "New York" prime rate plus 1.5% (10.0% at December 31, 1999). (2) The loan from Corporacion Andina de Fomento ("CAF") was repayable in equal semi-annual principal installments (May and November) plus outstanding interest. The loan bears interest at the six month LIBOR rate plus 4.5% (10.63% at December 31, 1999). The loan is collateralized by certain property, plant and equipment of Arisur with a carrying value of approximately $4,500,000. On May 9, 1999, Arisur defaulted on a payment of $478,000 due under the loan agreement with CAF. Subsequently, by letter dated July 28, 1999 and revised on October 26, 1999, CAF has agreed to restructure the remaining balance of the debt under the condition that the Company, by June 30, 2000, can demonstrate that it has a minimum of four years of proven reserves at a production rate of 400 tonnes per day at the Andacaba mine. In the event that the above condition is met, CAF has stated it is willing to restructure the existing debt, the terms of which are subject to negotiation. 10. DETAILS OF CERTAIN BALANCE SHEET CAPTIONS A summary of assets held for sale is as follows: Reorganized Predecessor Company Entity December 31, December 11, (In thousands) 1999 1999 - ------------------------------------------------------------------------------- Gold Bar mill facility $ 940 $ 940 Grassy Mountain property 925 925 --------------------------------- $1,865 $1,865 ================================= Current portion $ 735 $ 735 Long-term portion 1,130 1,130 --------------------------------- $1,865 $1,865 ================================= A summary of other assets is as follows: Reorganized Predecessor Company Entity December 31, December 11, (In thousands) 1999 1999 - ------------------------------------------------------------------------------- CGL receivable $ 1,500 $ 1,500 Other 47 50 ------------------------------------ 1,547 1,550 Less current portion (425) (428) ------------------------------------ $ 1,122 $ 1,122 ==================================== 35 11. DETAILS OF CERTAIN STATEMENTS OF CASH FLOW CAPTIONS The components of the adjustment to reconcile loss to net cash used in operations as reflected in the Consolidated Statements of Cash Flows are as follows:
Reorganized Company Predecessor Entity ------------------ Period from Period from December 12, January 1, Year ended 1999 to 1999 to December December 31, December 11, 31, (In thousands) 1999 1999 1998 - --------------------------------------------------------------------------------------------------- Depreciation, depletion and amortization $ 54 $ 954 $ 1,016 Loss from assets held for sale - - 1,165 Impairment of mineral property - - 34 Income from joint venture agreement - - (1,213) Reorganization expenses - 382 - Fresh-start revaluation - 3,349 - Extraoardinary gain - early extinguishment of debt - (9,199) - ------------------------------------------- $ 54 $(4,514) $ 1,002 =========================================== Decrease (increase) in trade/other accounts receivable $ (88) $ 1,114 $ (11) Decrease in inventories 1 98 51 Decrease (increase) in prepaid expense and other current assets 3 (29) 24 Decrease (increase) in other assets and restricted cash and securities - (91) 113 Increase (decrease) in trade accounts payable 40 (230) 256 Increase (decrease) in accrued liabilities (84) (1) 689 Increase (decrease) in other liabilities, long-term (1) 10 (620) ------------------------------------------- $(129) $ 871 $ 502 ===========================================
Net cash required for operating activities reflects cash payments for interest and income taxes as follows:
Reorganized Company Predecessor Entity ------------------ Period from Period from December 12, January 1, Year Ended 1999 to 1999 to December December 31, December 11, 31, (In thousands) 1999 1999 1998 - ------------------------------------------------------------------------------------------------ Interest $ 5 $ 438 $ 511 Income taxes - - -
36 12. COMMITMENTS AND CONTINGENCIES Legal Proceedings On June 20, 1997 the Predecessor Entity was served with a Complaint in the matter of Curt Goldschmidt and Ana Maria Goldschmidt (the "Goldschmidts) vs. Atlas Corporation; Suramco Metals, Inc.; Arisur Inc.; and Harold R. Shipes and Eileen A. Shipes in the Superior Court of the State of Arizona. In December 1994 Suramco and Arisur purchased all of the shares of Cia Minera Andacaba S.A., which held mining properties in Bolivia. Subsequently, the Predecessor Entity acquired both Suramco and Arisur. The Goldschmidts, the former owners of Cia Minera Andacaba S.A., asserted that the consideration under the purchase agreement was not paid in full and they were seeking damages in the amount of $800,000 plus expenses. Subsequent to the Arizona Complaint, in La Paz, Bolivia, the Goldschmidts initiated action to seek satisfaction of the purported damages. On June 25, 1998, the Predecessor Entity entered into a settlement agreement and mutual release of all claims (the "Settlement Agreement") with the Goldschmidts. The Settlement Agreement provided for the payment by the Predecessor Entity of $80,000 to the Goldschmidts on the date of signing of the Settlement Agreement. In addition, at the election of the Goldschmidts, the Predecessor Entity agreed to purchase from the Goldschmidts 2,000,000 shares of the Predecessor Entity's stock for $400,000 on September 11, 1998 and 250,000 shares of the Predecessor Entity's stock for $50,000 on December 11, 1998. In return the Goldschmidts released all claims against the Predecessor Entity, its subsidiaries and affiliates. The Predecessor Entity defaulted on payment of the $400,000 due on September 11, 1998. On September 19, 1997 the Predecessor Entity filed a Complaint in U. S. Federal District Court in Colorado for breach of contract and for indemnity against H. Roy Shipes, et. al. ("Shipes Parties"). The Predecessor Entity claimed that the Shipes Parties are duty bound to defend and indemnify the Predecessor Entity as a result of the Goldschmidt claims against the Predecessor Entity (see above). The duty arose out of the contract with the Shipes Parties to sell Suramco to the Predecessor Entity. On October 1, 1997 the Shipes Parties filed a claim against the Predecessor Entity. The Complaint sought damages for alleged misrepresentations in connection with the purchase of 50% of Arisur from the Shipes Parties. On January 25, 1999, the Predecessor Entity, the Goldschmidts and the Shipes Parties executed a Settlement Agreement, which was approved by the Bankruptcy Court and closed in April 1999. Under the terms of the agreement, the Predecessor Entity agreed to allow a general unsecured claim in its bankruptcy proceeding of $580,000 to the Shipes Parties and $450,000 to the Goldschmidts. In addition, the Shipes Parties were allowed a subordinated unsecured debt claim of $2,250,000. Atlas is in an adversary proceeding against TRW, Inc. ("TRW") and the United States Environmental Protection Agency (the "EPA") that is pending before the Bankruptcy Court. This action was brought by Atlas seeking a declaratory judgment that Atlas' obligations under a Consent Decree between Atlas, TRW and the EPA (the "Decree") have been discharged under its confirmed Reorganization Plan. TRW and the EPA have asserted that obligations under the Decree are not dischargeable under Federal bankruptcy laws. Management believes that is has arguments that the obligations under the Decree are subject to discharge under Federal bankruptcy laws. However, because this matter is in its very preliminary stages, management is unable to predict the ultimate outcome or any potential damages to the Company. 37 The Predecessor Entity had a trusteed and insured retirement plan (the "Retirement Plan") covering substantially all salaried employees. Effective October 27, 1999, the Predecessor Entity and the Pension Benefit Guaranty Corporation ("PBGC") reached agreement for the termination of the Retirement Plan and appointment of PBGC as statutory trustee of the Retirement Plan. Under the terms of the agreement, the PBGC received an allowed, unsecured claim of $3 million in the Reorganization Plan. Also, under certain "events of default", the PBGC has the right to require Atlas to purchase all of PBGC's rights, title, and interest in the shares of Atlas that will be received by PBGC in settlement of its unsecured claim (the "Put Option"). The purchase price of the shares would be the fair market value of the shares during the 60 business days immediately before or after the "event of default" triggering the Put Option, but in no event would it be less than $500,000. The reorganized Company has no future liability with respect to the Retirement Plan. Other Commitments The Reorganized Company had no non-cancelable operating leases having a remaining term in excess of one year at December 31, 1999. Amounts charged to rent expense for the periods ended December 31, 1999 (Reorganized Company), December 11, 1999 and the year ended December 31, 1998 (Predecessor Entity) were $2,000, $78,000 and $113,000 respectively. 13. EARNINGS PER SHARE The following sets forth the computation of basic and diluted earnings per share:
Reorganized Company Predecessor Entity ------------------ Period from Period from December 12, January 1, 1999 Year Ended 1999 to December 31, to December 11, December 31, (In thousands) 1999 1999 1998 - ------------------------------------------------------------------------------------------------------------ Numerator: Income (loss) from continuing operations $ (92) $ 2,588 $ (2,730) ------------------------------------------------------------- Denominator: Weighted average shares outstanding (1), (2) 6,064 924 914 ------------------------------------------------------------- Basic and diluted earnings (loss) per share $ (0.02) $ 2.80 $ (2.99) =============================================================
(1) Amounts for all years have been adjusted for a 1 for 30 reverse stock split effective on January 10, 2000. (2) Weighted average shares outstanding assumes the issuance of all "common shares committed to be issued" in accordance with the Reorganization Plan since all accounting adjustments necessary to reflect the issuance of the shares have been made effective December 11, 1999. 38 14. INCOME TAXES The Company's provision for income tax from continuing operations consists of the following:
Reorganized Company Predecessor Entity ------------------ Period from Period from December 12, January 1, 1999 Year Ended 1999 to to December 11, December 31, December 31, (In thousands) 1999 1999 1998 - --------------------------------------------------------------------------------------------------- Deferred $ - $ - $ - Current - - - Operating loss and credit carryovers - - - ---------------------------------------------------- Income tax expense $ - $ - $ - ====================================================
Deferred income taxes result from temporary differences in the timing of income and expenses for financial and income tax reporting purposes. The primary components of deferred income taxes result from exploration and development costs; depreciation, depletion and amortization expenses; impairments; and reclamation accruals. The net deferred tax balances in the accompanying December 31, 1999 and December 11, 1999 balance sheets include the following components:
Reorganized Predecessor Company Entity December 31, December 11, (In thousands) 1999 1999 - -------------------------------------------------------------------------------------------------- Deferred tax assets: Net operating loss ("NOL") carryovers $ 8,072 $ 8,056 Capital loss ("CL") carryovers 4,284 4,284 Impairment of mineral properties 1,287 1,287 Post retirement benefit accrual 59 59 Depreciation, depletion and amortization 5,197 5,197 ------------------------------------ Total deferred tax assets 18,899 18,883 Deferred tax asset valuation allowance (18,899) (18,883) ------------------------------------ Net deferred tax assets - - Deferred tax liabilities - - ------------------------------------ Net deferred tax balances $ - $ - ====================================
39 The change in the Company's valuation allowance is summarized as follows:
Reorganized Company Predecessor Entity ----------------------------------- Period from Period from December 12, January 1, 1999 Year Ended 1999 to December 31, to December 11, December 31, (In thousands) 1999 1999 1998 - ------------------------------------------------------------------------------------------------------------ Valuation allowance, beginning of period $ 18,883 $ 20,945 $ 21,446 Continuing operations 35 2,296 956 Extraordinary gain - (3,205) - Restriction of carryforwards - (836) (1,365) Other (19) (317) (92) -------------------------------------------------------------- $ 18,899 $ 18,883 $ 20,945 ==============================================================
A reconciliation of expected federal income taxes on income from continuing operations at statutory rates with the expense for income taxes is as follows:
Reorganized Company Predecessor Entity ----------------------------------- Period from Period from December 12, January 1, 1999 Year Ended 1999 to December 31, to December 11, December 31, (In thousands) 1999 1999 1998 - ------------------------------------------------------------------------------------------------------------ Income tax at statutory rates $ (35) $ (2,296) $ (956) Increase in deferred tax asset valuation allowance 35 2,296 956 ------------------------------------------------------------- Income tax expense $ - $ - $ - =============================================================
At December 31, 1999 the Company has unused U.S. NOL carryovers of $100,070,000 which commence expiring in 2000, CL carryovers of $29,506,000 which commence expiring in 2001 and investment tax credit (ITC) carryovers of $44,000 which commence expiring in 2000. The Company also has U.S. alternative minimum tax credit (AMT) carryovers of $127,000, which can be carried forward indefinitely, and Bolivian NOL carryovers of $3,685,000, which commence expiring in 2000. The U.S. carryovers are subject to restriction due to a change of ownership, as defined by U.S. tax laws, occurring on October 8, 1996 when the Company issued stock for the acquisition of Arisur. Due to the change of ownership, utilization of the Company's NOL, ITC, CL and AMT credit carryovers existing as of October 8, 1996 is limited to offset approximately $858,000 of taxable income per year. At December 31, 1999 the Company has unrestricted U.S. NOL and CL carryovers of $9,605,000 and $12,240,000, respectively, which are available to offset future taxable income. 40 15. GEOGRAPHIC SEGMENTS Financial information regarding geographic segments is set out below:
Reorganized Company Predecessor Entity ----------------------------------- Period from Period from December 12, January 1, 1999 Year Ended 1999 to December 31, to December 11, December 31, (In thousands) 1999 1999 1998 - -------------------------------------------------------------------------------------------------------------- Revenue United States $ - $ - $ - Bolivia 338 3,147 5,109 Loss before income taxes United States (38) (5,342) (2,365) Bolivia (54) (1,269) (365) Provision for income tax - - - ------------------------------------------------------ Loss before extraordinary gain (92) (6,611) (2,730) Extraordinary gain - 9,199 - ------------------------------------------------------ Net income (loss) $ (92) $ 2,588 $ (2,730) ======================================================
Reorganized Predecessor Company Entity December 31, December 11, Balance Sheet 1999 1999 - --------------------------------------------------------------------------------------------------- Assets: United States $ 3,601 $ 3,641 Bolivia 6,493 6,396 ------------------------------------ $ 10,094 $ 10,037 ====================================
16. SIGNIFICANT CONCENTRATIONS Arisur sells all of its lead and zinc concentrates to Glencore International AG ("Glencore"), an international metal trader. Glencore sells the concentrates to various metal smelters throughout the world. Due to the liquid nature of the metals markets, the Company believes that it would be able to replace Glencore, if necessary, with minimal disruption to its operations. 41 INDEPENDENT AUDITORS' REPORT The Board of Directors and Stockholders Atlas Minerals Inc. We have audited the accompanying consolidated balance sheets of Atlas Minerals Inc. (formerly Atlas Corporation) and subsidiaries as of December 31, 1999 (Reorganized Company) and December 11, 1999 (Predecessor Entity) and the related consolidated statements of operations, Stockholders' equity (deficit) and cash flows for the period December 12, 1999 to December 31, 1999 (Reorganized Company period) and for the period January 1, 1999 to December 11, 1999 (Predecessor Entity period). These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the aforementioned consolidated financial statements present fairly, in all material respects, the financial position of Atlas Minerals Inc. and subsidiaries as of December 31, 1999 (Reorganized Company) and December 11, 1999, (Predecessor Entity) and the results of their operations and their cash flows for the Reorganized Company period and the Predecessor Entity period in conformity with generally accepted accounting principles. As discussed in Notes 1 and 2 to the consolidated financial statements, on December 11, 1999, Atlas Minerals Inc. and two of its subsidiaries emerged from bankruptcy. The consolidated financial statements of the Reorganized Company reflect the impact of adjustments to reflect the fair value of assets and liabilities under fresh start reporting. As a result, the consolidated financial statements of the Reorganized Company are presented on a different basis than those of the Predecessor Entity and, therefore, are not comparable in all respects. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company's recurring losses from operations and working capital deficit raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Horwath Gelfond Hochstadt Pangburn, P.C. Denver, Colorado March 16, 2000 42 Item 8. Changes in and Disagreements with Accountants on Accounting and --------------------------------------------------------------- Financial Disclosure -------------------- Not Applicable. 43 PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; ------------------------------------------------------------- Compliance with Section 16(a) of the Exchange Act ------------------------------------------------- DIRECTORS The Board of Directors are elected at the annual meeting of the shareholders. Each Director is elected to hold office until the next annual meeting of shareholders and until the director's successor is elected and qualified. There are currently seven directors. Information Concerning Directors The following table sets forth certain information concerning each director.
Principal Occupation, Past Five Year's Business Director Experience Name Since and Other Directorships Held Age - ------------------------------------------------------------------------------------------------------------------ Guillermo A. Blacker 2000 Currently a consultant to industry worldwide. 52 Previously Director, Business Development for Jacobs Engineering Group Inc. and prior to 1997, was founding Director and Executive Vice President of MinCorp Ltd. and Chief Executive of MinCorp Engineers and Constructors. Richard E. Blubaugh 1998 Executive Vice President of the Company since 1998 52 and prior to that served as Vice President of Environmental and Governmental Affairs. Mario Caron 1996 Presently an independent management consultant. 46 Formerly President, Chief Executive Officer and director of Eden Roc Mineral Corp. from February 1997 to March 31, 1999. Chief Executive Officer of Atlas Corporation from September 1996 to January 1997. From 1993 to 1996, President and Chief Executive Officer of MSV Resources Inc. Mr. Caron also is director of three junior Canadian exploration companies. David J. Carroll 2000 Stockbroker and registered principal with Mericka & Co., 58 a NASD member firm. Also owner and operator of Carroll Resources, an oil and gas producer.
44
Principal Occupation, Past Five Year's Business Director Experience Name Since And Other Directorships Held Age - -------------------------------------------------------------------------------------------------------------- Douglas R. Cook 1988 President of Cook Ventures, Inc., a geological 74 consulting firm. C. Thomas Ogryzlo 1993 Currently President and CEO of Canatec Development 60 Corporation. Prior to 2000, President and CEO of Black Hawk Mining Inc., formerly Triton Mining Corporation before the merger of the two companies in May 1998. Prior to August 1997 Chairman of Kilborn SNC-Lavalin, a world class engineering firm; Director of Franco Nevada Gold Corporation, Tiomin Resources and Vista Gold Corp. Dr. Henry J. Sandri 2000 Currently is a Senior Associate and Principal with 47 Behre Dolbear & Company, Inc., a mining industry consulting firm. Previously Mr. Sandri held the positions of assistant Vice President - Planning and Business Development for Inco Ltd., and Senior Corporate Planner for Burlington Northern Inc. Director of U.S. Cobalt Inc. and Bravo Resource Partners Inc.
BOARD AND COMMITTEE MEETINGS The Company has an Audit Committee and a Compensation Committee of which the Board of Directors appoints all members. The Compensation Committee consists of Messrs. Ogryzlo and Cook. The Audit Committee consists of Messrs. Caron, Carroll and Sandri. The principal functions of the Audit Committee are to recommend the selection of the Company's auditors, review with the auditors the scope and anticipated cost of their audit and receive and consider a report from the auditors concerning their conduct of the audit. The principal functions of the Compensation Committee are to recommend changes in compensation plans and the adoption of new compensation plans and to recommend compensation for senior officers of the Company. COMPENSATION OF DIRECTORS Fees paid to non-employee directors consist of a $1,000 fee for each Board of Directors meeting attended in person, a $500 fee for each Board of Directors meeting attended by telephone and a $500 fee for each committee meeting attended. Employee directors receive no fees for their services as a director. EXECUTIVE OFFICERS Set forth below is the age and certain other information regarding each person currently serving as an executive officer of the Company. 45 Richard E. Blubaugh, age 52, currently serves as Executive Vice President since September 1998 and has served as Vice President of Environmental and Governmental Affairs since October 1, 1990, and has been with Atlas for 18 years. He has been involved in the environmental, health and safety field for over 24 years, has managed environmental and regulatory functions for mining firms in seven western states, and also has experience as a regulator and a consultant. James R. Jensen, age 40, currently serves as Chief Financial Officer since September 1998 and has served as Treasurer and Secretary since February 1997. Mr. Jensen joined the Company in August of 1989, as Accounting Manager and was promoted to Controller in September 1993. Prior to his employment with the Company, Mr. Jensen was a manager with the accounting firm of KPMG Peat Marwick. COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT Under Section 16 of the Exchange Act, the Company's directors and executive officers and persons holding more than 10% of the Company's common stock are required to report their initial ownership of common stock and subsequent changes to that ownership to the Securities and Exchange Commission by specified due dates. To the Company's knowledge all of these filing requirements were satisfied with respect to transactions during the year ended December 31, 1999. Item 10. Executive Compensation The following table sets forth all compensation paid by the Company, for the years ended December 31, 1999 and 1998 to Messrs. Gregg B. Shafter and Richard E. Blubaugh. Except for Messrs. Shafter and Blubaugh, no person who was serving as an executive officer of the Company during the year ended December 31, 1999 had total cash and cash-equivalent remuneration, which exceeded $100,000 during the year.
SUMMARY COMPENSATION TABLE Annual Compensation ------------------- Other Annual All Other Year or Period Compen- Compen- Name and Principal Position Ended Salary sation sation - ----------------------------------------------------------------------------- ------------------------ Gregg B. Shafter, President (1) Dec. 31, 1999 $ 115,337 $ - $ 3,498 (3) Dec. 31, 1998 108,505 1,546 (2) 6,510 (3) Dec. 31, 1997 86,395 7,445 (2) 5,100 (3) Richard E. Blubaugh, Dec. 31, 1999 100,695 - 6,042 (3) Executive VP Dec. 31, 1998 99,194 2,372 (2) 5,951 (3) Dec. 31, 1997 91,690 9,768 (2) 5,501 (3)
(1) Mr. Shafter resigned as President and a Director on February 10, 2000 (2) Includes certain perquisites, such as car allowances and life insurance premiums paid by the Company. (3) Includes contributions by the Company to the Investment Savings Plan for Employees of Atlas. 46 Investment and Savings Plan. The Atlas Investment and Savings Plan (the "Plan") benefits employees of the Company and its subsidiaries who have completed six months of service. Each participant under the Plan must be at least 21 years of age. Under the Plan, an employee may elect to contribute, pursuant to a salary reduction election, not less than 1% and not more than 10% of the employee's annual compensation. The Company makes a matching contribution of 100% of the amount contributed by the employee, but not more than 6% of the employee's annual compensation. In addition, the Company may make special contributions to the Plan, but these special contributions may not exceed the maximum amount deductible under Section 404(a)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). Employee contributions may be invested in a number of investment options, but not common stock of the Company. All matching and special contributions to the Plan are invested in shares of common stock of the Company. OFFICER CONTRACTS All officer contracts in place at December 31, 1998 were cancelled as part of the Reorganization Plan. Under the terms of the Reorganization Plan, Richard E. Blubaugh, Vice President of Environmental and Governmental Affairs, will receive a two year consulting contract with a retainer of $30,000 per year payable in six equal monthly installments due on the 15th day of the month after termination of his regular employment. The payments to Mr. Blubaugh under the consulting contract for the second year shall be made only if he fulfills his consulting contract for the first year. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Compensation Committee during 1999 are identified above under the heading Board and Committee Meetings. No member of the Compensation Committee is or has been at any time an officer of the Company or any of its subsidiaries (except for Mr. Cook who served as a non-executive Chairman of the Company during 1998). During 1999 no executive officer of the Company served as a director or as member of the Compensation Committee of another entity whose executive officers served as a director or as a member of the Compensation Committee of the Company. 47 Item 11. Security Ownership of Certain Beneficial Owners and Management SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information as of March 15, 2000 regarding the beneficial ownership, including shares of Atlas common stock which may be acquired upon the exercise of stock options or warrants, or the conversion of any securities, within 60 days of March 15, 2000, of the Company's common stock by (i) persons known to the Company to own more than 5% of the Company's common stock, (ii) each director of the Company, (iii) each executive officer named in the Summary Compensation Table set forth above, and (iv) all directors and executive officers as a group: Security Ownership Table
Number of Shares and Nature of Name Beneficial Ownership(1) Percent of Class - ------------------------------------------------------------------------------------------- Lindner Dividend Fund, Inc. 960,755 /(2)/ 15.83% 7711 Carondelet Avenue, Suite 700 St. Louis, MO 63105 Pension Benefit Guaranty Corporation 823,504 /(2)/ 13.57% 1200 K. Street N.W., Suite 870 Washington, D.C. 20005 H. R. Shipes 790,564 /(2)/ 13.03% 11251 E. Camino del Sahuaro Tucson, AZ 85711 Guillermo A. Blacker Nil * Richard E. Blubaugh 193,605 /(3)/ 3.19% Mario Caron 83,960 /(2)/ 1.38% David J. Carroll 22,099 (4) * Douglas R. Cook 25,595 /(5)/ * C. Thomas Ogryzlo 3,294 /(2)/ * Dr. Henry J. Sandri Nil * All current executive officers and directors as a group (8 persons) 506,861 /(6)/ 8.35%
* Represents less than 1% ownership interest. 48 (1) For purposes of this security ownership table, shares allocated under the Reorganization Plan are assumed to be issued only to claims currently approved by the Bankruptcy Court. There are currently bankruptcy claims against the Predecessor Entity totaling $7.2 million (the "Claims") which, if allowed, would significantly affect the amount of shares allocated to individual creditors. The Company has objected to the Claims on the grounds that the Claims were filed after the bar date for such claims and that the claimants have not established "excusable neglect" for its failure to timely file claims. The Company believes that its objections to the Claims will be upheld by the Court. In the event that the Court approves the Claims, the ownership percentages in the above table would be as follows: Lindner Dividend Fund, Inc. - 10.66%, Pension Benefit Guaranty Corporation -9.13%, H. R. Shipes - 8.77%, Richard E. Blubaugh - 3.08% and all current executive officers and directors as a group - 8.03%. All other percentages would remain the same as detailed above. Additionally, Hartford Specialty Company, P.O. Box 2073, Hartford, Connecticut 06145-2073 would own 20.23% of the Reorganized Company. (2) Shares were, or will be issued in accordance with the Reorganization Plan of Atlas. (3) Includes (i) 185,134 issuable in accordance with the Reorganization Plan of Atlas and (ii) 8,471 shares held in Mr. Blubaugh's account under the Company's 401(k) Plan. (4) Includes 19,166 shares directly owned by Mr. Carroll, 1,600 shares held beneficially in Mr. Carroll's retirement account, and 1,333 shares held as custodian for Mr. Carroll's minor child. (5) Includes 66 shares of common stock directly owned and 25,529 shares issued or issuable in accordance with the Reorganization Plan of Atlas. (6) Includes (i) 19,625 shares of common stock directly owned, (ii) 471,941 shares issued or issuable in accordance with the Reorganization Plan of Atlas and (iii) 14,322 shares held beneficially under retirement accounts and (iv) 1,333 shares held as a custodian for a minor child. Item 12. Certain Relationships and Related Transactions None. Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K --------------------------------------------------------------- (a) Exhibits: Exhibit Number Exhibits ---------------------------------------------------------------- 2.1 Atlas Corporation's second amended plan of reorganization (filed as Exhibit 2.1 to the Company's report on Form 8-K filed on February 4, 2000 and incorporated herein by reference). 2.2 Atlas Precious Metals Inc.'s second amended plan of reorganization (filed as Exhibit 2.2 to the Company's report on Form 8-K filed on February 4, 2000 and incorporated herein by reference). 2.3 Atlas Gold Mining Inc.'s revised second amended plan of reorganization (filed as Exhibit 2.3 to the Company's report on Form 8-K filed on February 4, 2000 and incorporated herein by reference). 49 2.4 Stock Purchase Agreement between the Company and Arimetco International Inc. dated October 7, 1996. (filed as Exhibit 2.2 to the Company's annual report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference). 2.5 Asset Purchase Agreement between the Company, Atlas Gold Mining Inc. and Atlas Precious Metals Inc. and Barrick Gold Exploration Inc. dated June 3, 1997 regarding the Company's Gold Bar property. (Filed as exhibit 2.4 to the Company's annual report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference.) 3.1 Articles of Incorporation of Atlas Minerals Inc. dated February 3, 2000 (filed as Exhibit 3.1 to the Company's report on Form 8-K dated February 4, 2000 and incorporated herein by reference). 3.2 Bylaws of Atlas Minerals Inc. dated February 10, 2000. 10.1 Moab Utah Millsite Transfer Agreement dated April 28, 1999 between Atlas Corporation, the Official Unsecured Creditors Committee, the NRC, the State of Utah and ACSTAR Insurance Companies (filed as Exhibit 10.1 to the Company's quarterly report on Form 10-QSB filed on August 13, 1999 and incorporated herein by reference). 10.2 Revised second amended joint disclosure statement of Atlas Corporation, Atlas Gold Mining Inc. and Atlas Precious Metals Inc. (filed as Exhibit 10.1 to the Company's quarterly report on Form 10-QSB filed on November 12, 1999 and incorporated herein by reference). 10.3 Deposit Agreement between Seven Peaks Mining, Inc. and Atlas Corporation dated October 2, 1998 (filed as Exhibit 10.13 to the Company's annual report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference). 10.5 Mutual Termination Agreement dated December 16, 1998 between Barrick Gold Exploration Inc. and Atlas Corporation, Atlas Gold Mining Inc. and Atlas Precious Metals Inc. (filed as Exhibit 10.14 to the Company's annual report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference). 21 Subsidiaries of the Company. 27 Financial Data Schedule (b) The Registrant did not file any reports on Form 8-K during the fourth quarter of 1999. 50 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ATLAS MINERALS INC. By: /s/ Richard E. Blubaugh ----------------------- Name: Richard E. Blubaugh Title: Executive Vice President (Principal Executive Officer) Date: March 29, 2000 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.
/s/ James R. Jensen Chief Financial Officer March 29, 2000 - ------------------------------- James R. Jensen (Principal Financial Officer & Principal Accounting Officer) /s/ Guillermo A. Blacker Director March 29, 2000 - ------------------------------- Guillermo A. Blacker /s/ Richard E. Blubaugh Director March 29, 2000 - ------------------------------- Richard E. Blubaugh /s/ David J. Carroll Director March 29, 2000 - ------------------------------- David J. Carroll /s/ Mario Caron Director March 29, 2000 - ------------------------------- Mario Caron /s/ Douglas R. Cook Director March 29, 2000 - ------------------------------- Douglas R. Cook /s/ C. Thomas Ogryzlo Director March 29, 2000 - ------------------------------- C. Thomas Ogryzlo /s/ Henry J. Sandri Director March 29, 2000 - ------------------------------- Henry J. Sandri
51 EX-3.2 2 BYLAWS OF ATLAS MINERALS EXHIBIT 3.2 BYLAWS OF ATLAS MINERALS INC. ARTICLE I OFFICES 1. Offices. 1.1 The principal office of the Corporation shall be designated from time to time by the Corporation and may be within or outside of Colorado or the United States. 1.2 The Corporation may have such other offices, either within or outside Colorado, as the Board of Directors may designate or as the business of the Corporation may require from time to time. 1.3 The registered office of the Corporation required by the Colorado Business Corporation Act to be maintained in Colorado may be, but need not be, identical with the principal office, and the address of the registered office may be changed from time to time by the Board of Directors. ARTICLE II SHAREHOLDERS 1. Annual Meeting. 1.1 The annual meeting of the shareholders shall be held each year on a date and at a time fixed by the Board of Directors of the Corporation (or by the Chief Executive Officer or President in the absence of action by the Board of Directors), beginning with the year 2000, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the election of directors is not held on the day fixed as provided herein for any annual meeting of the shareholders, or any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as it may conveniently be held. 1.2 A shareholder may apply to the district court in the county in Colorado where the Corporation's principal office is located or, if the Corporation has no principal office in Colorado, to the district court of the county in which the Corporation's registered office is located to seek an order that a shareholder meeting be held (i) if an annual meeting was not held within six (6) months after the close of the Corporation's most recently ended fiscal year or fifteen (15) months after its last annual meeting, whichever is earlier, or (ii) if the shareholder participated in a proper call of or proper demand for a special meeting and notice of the special meeting was not given within thirty (30) days after the date of the call or the date the last of the demands necessary to require calling of the meeting was received by the Corporation pursuant to Section 7-107-102(1)(b) of the Colorado Business Corporation Act, or the special meeting was not held in accordance with the notice. 2. Special Meetings. Unless otherwise prescribed by statute, special meetings of the shareholders may be called for any purpose by the Chairman of the Board of Directors, the Chief Executive Officer, the President or by the Board of Directors. The Chief Executive Officer or the President shall call a special meeting of the shareholders if the Corporation receives one or more written demands for the meeting, stating the purpose or purposes for which it is to be held, signed and dated by holders of shares representing at least ten percent (10%) of all the votes entitled to be cast on any issue proposed to be considered at the meeting. 3. Place of Meeting. The Board of Directors may designate any place, either within or outside Colorado, as the place for any annual meeting or any special meeting called by the Board of Directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place, either within or outside Colorado, as the place for such meeting. If no designation is made, or if a special meeting is called other than by the Board of Directors, the place of meeting shall be the principal office of the Corporation. 4. Notice of Meeting. 4.1 Written notice stating the place, date, and hour of the meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, except (i) if the number of authorized shares is to be increased, at least thirty (30) days' notice shall be given, or (ii) if any other longer notice period is required by the Colorado Business Corporation Act. Notice of a special meeting shall include a description of the purpose or purposes of the meeting. Notice of an annual meeting need not include a description of the purpose or purposes of the meeting except the purpose or purposes shall be stated with respect to (i) an amendment to the Articles of Incorporation of the Corporation, (ii) a merger or share exchange in which the Corporation is a party and, with respect to a share exchange, in which the Corporation's shares will be acquired, (iii) a sale, lease, exchange or other disposition, other than in the usual and regular course of business, of all or substantially all of the property of the Corporation or of another entity which this Corporation controls (if a shareholder vote is required), in each case with or without the goodwill, (iv) a dissolution of the Corporation, or (v) any other purpose for which a statement of purpose is required by the Colorado Business Corporation Act. Notice shall be given personally or by mail, private carrier, telegraph, teletype, electronically transmitted facsimile or other form of wire or wireless communication by or at the direction of the Chief Executive Officer, the President, the Secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If notice is given by mail, such notice shall be deemed to be given and effective when deposited in the United States mail, addressed to the shareholder at his address as it appears in the Corporation's current record of shareholders, with postage prepaid. If notice is given other than by mail, the notice is given and effective on the date received by the shareholder. 4.2 If requested by the person or persons lawfully calling such meeting, the Secretary shall give notice thereof at the Corporation's expense. No notice need be sent to any shareholder if three successive notices mailed to the last known address of such shareholder have been returned as undeliverable until such time as another address for such shareholder is made known to the Corporation by such shareholder. In order to be entitled to receive notice of any meeting, a shareholder shall advise the Corporation in writing of any change in such shareholder's mailing address as shown on the Corporation's books and records. 2 4.3 When a meeting is adjourned to another date, time or place, notice need not be given of the new date, time or place if the new date, time or place of such meeting is announced before adjournment at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which may have been transacted at the original meeting. If the adjournment is for more than one hundred twenty (120) days, or if a new record date is fixed for the adjourned meeting, a new notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting as of the new record date. 4.4 A shareholder may waive notice of a meeting before or after the time and date of the meeting by a writing signed by such shareholder. Such waiver shall be delivered to the Corporation for filing with the corporate records. Further, by attending a meeting either in person or by proxy, a shareholder waives objection to lack of notice or defective notice of the meeting unless the shareholder objects at the beginning of the meeting to the holding of the meeting or the transaction of business at the meeting because of lack of notice or defective notice. By attending the meeting, the shareholder also waives any objection to consideration at the meeting of a particular matter not within the purpose or purposes described in the meeting notice unless the shareholder objects to considering the matter when it is presented. 5. Fixing of Record Date. 5.1 For the purpose of determining shareholders entitled to (i) notice of or vote at any meeting of shareholders or any adjournment thereof, (ii) receive distributions or share dividends, or (iii) demand a special meeting, or to make a determination of shareholders for any other proper purpose, the Board of Directors may fix a future date as the record date for any such determination of shareholders, such date in any case to be not more than seventy (70) days, and, in case of a meeting of shareholders, not less than ten (10) days, prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed by the directors, the record date shall be the date on which notice of the meeting is mailed to shareholders, or the date on which the resolution of the Board of Directors providing for a distribution is adopted, as the case may be. When a determination of shareholders entitled to vote at any meeting of shareholders is made as provided in this Section, such determination shall apply to any adjournment thereof unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned to a date more than one hundred twenty (120) days after the date fixed for the original meeting. 5.2 Notwithstanding the above, the record date for determining the shareholders entitled to take action without a meeting or entitled to be given notice of action so taken shall be the date a writing upon which the action is taken is first received by the Corporation. The record date for determining shareholders entitled to demand a special meeting shall be the date of the earliest of any of the demands pursuant to which the meeting is called. 6. Voting Lists. 6.1 The Secretary shall make, at the earlier of ten (10) days before each meeting of shareholders or two (2) business days after notice of the meeting has been given, a complete list of the shareholders entitled to be given notice of such meeting or any adjournment thereof. The list shall be arranged by voting groups and within each voting group by class or series of shares, shall be in alphabetical order within each class or series, and shall show the address of and the number of shares of each class or series held by each shareholder. For the period beginning the earlier of ten (10) days prior to the meeting or two (2) business days after notice of the meeting is given and 3 continuing through the meeting and any adjournment thereof, this list shall be kept on file at the principal office of the Corporation, or at a place (which shall be identified in the notice) in the city where the meeting will be held. Such list shall be available for inspection on written demand by any shareholder (including for the purpose of this Section 6 any holder of voting trust certificates) or his agent or attorney during regular business hours and during the period available for inspection. The original stock transfer books shall be prima facie evidence as to the shareholders entitled to examine such list or to vote at any meeting of shareholders. 6.2 Any shareholder, his agent or attorney may copy the list during regular business hours during the period it is available for inspection, provided (i) the shareholder has been a shareholder for at least three (3) months immediately preceding the demand or holds at least five percent (5%) of all outstanding shares of any class of shares as of the date of the demand, (ii) the demand is made in good faith and for a purpose reasonably related to the demanding shareholder's interest as a shareholder, (iii) the shareholder describes with reasonable particularity the purpose and the records the shareholder desires to inspect, (iv) the records are directly connected with the described purpose, and (v) the shareholder pays a reasonable charge covering the costs of labor and material for such copies, not to exceed the estimated cost of production and reproduction. 7. Recognition Procedure for Beneficial Owners. The Board of Directors may adopt by resolution a procedure whereby a shareholder of the Corporation may certify in writing to the Corporation that all or a portion of the shares registered in the name of such shareholder are held for the account of a specified person or persons. The resolution may set forth (i) the types of nominees to which it applies, (ii) the rights or privileges that the Corporation will recognize in a beneficial owner, which may include rights and privileges other than voting, (iii) the form of certification and the information to be contained therein, (iv) if the certification is with respect to a record date, the time within which the certification must be received by the Corporation, (v) the period for which the nominee's use of the procedure is effective, and (vi) such other provisions with respect to the procedure as the Board deems necessary or desirable. Upon receipt by the Corporation of a certificate complying with the procedure established by the Board of Directors, the persons specified in the certification shall be deemed, for the purpose or purposes set forth in the certification, to be the registered holders of the number of shares specified in place of the shareholder making the certification. 8. Quorum and Manner of Acting. 8.1 A majority of the votes entitled to be cast on a matter by a voting group shall constitute a quorum of that voting group for action on the matter. If less than a majority of such votes are represented at a meeting, a majority of the votes so represented may adjourn the meeting from time to time without further notice, for a period not to exceed one hundred twenty (120) days for any one adjournment. If a quorum is present at such adjourned meeting, any business may be transacted which might have been transacted at the meeting as originally noticed. The shareholders present at a duly organized meeting may continue to transact business for the remainder of the meeting and for any adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, unless a new record date is or shall be set for the adjourned meeting. 8.2 If a quorum exists, action on a matter other than the election of directors by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast within the voting group opposing the action, unless the vote of a greater number or voting by classes is required by law or the Articles of Incorporation. 4 9. Proxies. 9.1 At all meetings of shareholders, a shareholder may vote by proxy by signing an appointment form or similar writing, either personally or by his duly authorized attorney-in-fact. A shareholder may also appoint a proxy by transmitting or authorizing the transmission of a telegram, teletype, or other electronic transmission providing a written statement of the appointment to the proxy, a proxy solicitor, proxy support service organization, or other person duly authorized by the proxy to receive appointments as agent for the proxy, or to the Corporation. The transmitted appointment shall set forth or be transmitted with written evidence from which it can be determined that the shareholder transmitted or authorized the transmission of the appointment. The proxy appointment form or similar writing shall be filed with the Secretary of the Corporation before or at the time of the meeting. The appointment of a proxy is effective when received by the Corporation and is valid for eleven (11) months unless a different period is expressly provided in the appointment form or similar writing. 9.2 Any complete copy, including an electronically transmitted facsimile, of an appointment of a proxy may be substituted for or used in lieu of the original appointment for any purpose for which the original appointment could be used. 9.3 Revocation of a proxy does not affect the right of the Corporation to accept the proxy's authority unless (i) the Corporation had notice that the appointment was coupled with an interest and notice that such interest is extinguished is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy exercises his authority under the appointment, or (ii) other notice of the revocation of the appointment is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy exercises his authority under the appointment. Other notice of revocation may, in the discretion of the Corporation, be deemed to include the appearance at a shareholders' meeting of the shareholder who granted the proxy and his voting in person on any matter subject to a vote at such meeting. 9.4 The death or incapacity of the shareholder appointing a revocable proxy does not affect the right of the Corporation to accept such proxy's authority unless notice of the death or incapacity is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy exercises his authority under the appointment. 9.5 The Corporation shall not be required to recognize an appointment made irrevocable if it has received a writing revoking the appointment signed by the shareholder (including a shareholder who is a successor to the shareholder who granted the proxy) either personally or by his attorney-in-fact, notwithstanding that the revocation may be a breach of an obligation of the shareholder to another person not to revoke the appointment. 9.6 Subject to Article II, Section 11 and any express limitation the proxy's authority appearing on the appointment form, the Corporation is entitled to accept the proxy's vote or other action as that of the shareholder making the appointment. 10. Voting of Shares. 10.1 Each outstanding share, regardless of class, shall be entitled to one vote, except in the election of directors, and each fractional share shall be entitled to a corresponding 5 fractional vote on each matter submitted to a vote at a meeting o f shareholders, except to the extent that the voting rights of the shares of any class or classes or series are otherwise different as expressly set forth in the Articles of Incorporation. Cumulative voting shall not be permitted in the election of directors or for any other purpose. Each record holder of stock shall be entitled to vote in the election of directors and shall have as many votes for each of the shares owned by him as there are directors to be elected and for whose election he has the right to vote. 10.2 At each election of directors, that number of candidates equaling the number of directors to be elected, having the highest number of votes cast in favor of their election, shall be elected to the Board of Directors. 10.3 Except as otherwise ordered by a court of competent jurisdiction upon a finding that the purpose of this Section would not be violated in the circumstances presented to the court, the shares of this Corporation are not entitled to be voted if they are owned, directly or indirectly, by a second corporation, domestic or foreign, and this Corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors of the second corporation, except to the extent the second corporation holds the shares in a fiduciary capacity. 10.4 Redeemable shares are not entitled to be voted after notice of redemption is mailed to the holders and a sum sufficient to redeem the shares has been deposited with a bank, trust company or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares or such payment has been made directly to the holders of the Corporation. 11. Corporation's Acceptance of Votes. 11.1 If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation corresponds to the name of a shareholder, the Corporation, if acting in good faith, is entitled to accept the vote, consent, waiver, proxy appointment or proxy appointment revocation and give it effect as the act of the shareholder. If the name signed on a vote, consent, waiver, proxy appointment or proxy appointment revocation does not correspond to the name of a shareholder, the Corporation, if acting in good faith, is nevertheless entitled to accept the vote, consent, waiver, proxy appointment or proxy appointment revocation and to give it effect as the act of the shareholder if: (i) the shareholder is an entity and the name signed purports to be that of an officer or agent of the entity; (ii) the name signed purports to be that of an administrator, executor, guardian or conservator representing the shareholder and, if the Corporation requests, evidence of fiduciary status acceptable to the Corporation has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation; (iii) the name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the Corporation requests, evidence of this status acceptable to the Corporation has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation; 6 (iv) the name signed purports to be that of a pledgee, beneficial owner or attorney-in-fact of the shareholder and, if the Corporation requests, evidence acceptable to the Corporation of the signatory's authority to sign for the shareholder has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation; (v) two or more persons are the shareholder as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-tenants or fiduciaries, and the person signing appears to be acting on behalf of all the co-tenants or fiduciaries; or (vi) the acceptance of the vote, consent, waiver, proxy appointment or proxy appointment revocation is otherwise proper under rules established by the Corporation that are not inconsistent with this Section 11. 11.2 The Corporation is entitled to reject a vote, consent, waiver, proxy appointment or proxy appointment revocation if the Secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis to doubt the validity of the signature on it or about the signatory's authority to sign for the shareholder. 11.3 Neither the Corporation nor its officers nor any agent who accepts or rejects a vote, consent, waiver, proxy appointment or proxy appointment revocation in good faith and in accordance with the standards of this Section is liable in damages for the consequences of the acceptance or rejection. 12. Informal Action by Shareholders. 12.1 Any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting if a written consent (or counterparts thereof) that sets forth the action so taken is signed by all of the shareholders entitled to vote with respect to the subject matter thereof and received by the Corporation. Such consent shall have the same force and effect as a unanimous vote of the shareholders and may be stated as such in any document. Action taken under this Section is effective as of the date the last writing necessary to effect the action is received by the Corporation, unless all of the writings specify a different effective date, in which case such specified date shall be the effective date for such action. If any shareholder revokes his consent as provided for herein prior to what would otherwise be the effective date, the action proposed in the consent shall be invalid. The record date for determining shareholders entitled to take action without a meeting is the date the Corporation first receives a writing upon which the action is taken. 12.2 Any shareholder who has signed a writing describing and consenting to action taken pursuant to this Section may revoke such consent by a writing signed by the shareholder describing the action and stating that the shareholder's prior consent thereto is revoked, if such writing is received by the Corporation before the effectiveness of the action. 12.3 Notwithstanding the foregoing, if the rules of any securities exchange, market or quotation system on which the Corporation's shares or securities are traded shall not permit the taking of action without a meeting, then, for so long as such rules shall apply to the Corporation, the provisions of this Section 12 shall be of no force or effect. 7 13. Organization. Meetings of shareholders shall be presided over by the Chairman of the Board if any, or in his absence by the Vice Chairman of the Board of Directors, if any, or in his absence by the Chief Executive Officer, or in his absence by the President, or in his absence by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting. 14. Meetings by Telecommunication. Any or all of the shareholders may participate in an annual or special shareholders' meeting by, or the meeting may be conducted through the use of, any means of communication by which all persons participating in the meeting may hear each other during the meeting. A shareholder participating in a meeting by this means is deemed to be present in person at the meeting. ARTICLE III BOARD OF DIRECTORS 1. General Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of its Board of Directors, except as otherwise provided in the Colorado Business Corporation Act or the Articles of Incorporation. 2. Number, Qualification and Tenure. The number of directors of the Corporation shall be fixed from time to time by the Board of Directors, within a range of not less than four (4) nor more than eight (8). A director shall be a natural person who is eighteen (18) years of age or older. A director need not be a resident of Colorado or the United States or a shareholder of the Corporation. The board of directors shall be elected at the annual meeting of the shareholders or at a special meeting called for that purpose. Each director shall be elected to hold office until the next annual meeting of shareholders and until the director's successor is elected and qualified. 3. Vacancies. Any director may resign at any time by giving written notice to the Corporation. Such resignation shall take effect at the time the notice is received by the Corporation unless the notice specifies a later effective date. Unless otherwise specified in the notice of resignation, the Corporation's acceptance of such resignation shall not be necessary to make it effective. Subject to applicable law and provisions of the Articles of Incorporation relating to the rights of holders of any class or series of stock having a preference over the common stock as to dividends or upon liquidation or to elect directors under specified circumstances, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the term of the director who was replaced and until such director's successor shall have been elected and qualified. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. 4. Removal. A director may be removed from office only for cause and only by (a) the affirmative vote of the holders of not less than a majority of the number of shares of common stock then outstanding or (b) the affirmative vote of a majority of the entire Board of Directors then in office. Except as otherwise provided by law or fixed by, or pursuant to, the provisions of the Articles 8 of Incorporation relating to the rights of holders of any class or series of stock having a preference over the common stock as to voting dividends or upon liquidation or to elect directors under specified circumstances, this Section 4 shall not apply with respect to any director elected by the holders of any such class or series having a preference. 5. Regular Meetings. A regular meeting of the Board of Directors shall be held without notice immediately after and at the same place as the annual meeting of shareholders. The Board of Directors may provide by resolution the time and place, either within or outside Colorado, for the holding of additional regular meetings without other notice. 6. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chief Executive Officer, the President or any two directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or outside Colorado, as the place for holding any special meeting of the Board of Directors called by them, provided that no meeting shall be called outside the State of Colorado unless a majority of the Board of Directors has so authorized. 7. Notice. 7.1 Notice of any special meeting shall be given at least two (2) days (provided that such notice must also be given at least one (1) business day) prior to the meeting by written notice either personally delivered or mailed to each director at his business address, or by notice transmitted by telegraph, telex, electronically transmitted facsimile or other form of wire or wireless communication. If mailed, such notice shall be deemed to be given and to be effective on the earlier of (i) three (3) business days after such notice is deposited in the United States mail, properly addressed, with postage prepaid, or (ii) the date shown on the return receipt, if mailed by registered or certified mail return receipt requested. If notice is given by telex, electronically transmitted facsimile or other similar form of wire or wireless communication, such notice shall be deemed to be given and to be effective when sent, and with respect to a telegram, such notice shall be deemed to be given and to be effective when the telegram is delivered to the telegraph company. If a director has designated in writing one or more reasonable addresses or facsimile numbers for delivery of notice to him, notice sent by mail, telegraph, telex, electronically transmitted facsimile or other form of wire or wireless communication shall not be deemed to have been given or to be effective unless sent to such addresses or facsimile numbers, as the case may be. 7.2 A director may waive notice of a meeting before or after the time and date of the meeting by a writing signed by such director. Such waiver shall be delivered to the Corporation for filing with the corporate records. Further, a director's attendance at or participation in a meeting waives any required notice to him of the meeting unless at the beginning of the meeting, or promptly upon his later arrival, the director objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice and does not thereafter vote for or assent to action taken at the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. 9 8. Quorum. 8.1 A majority of the number of directors fixed by the Board of Directors or, if no number is fixed, a majority of the number in office immediately before the meeting begins, shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. 8.2 If less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, for a period not to exceed sixty (60) days at any one adjournment. 9. Manner of Acting. Except as otherwise provided in these Bylaws, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. The directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum. 10. Compensation. By resolution of the Board of Directors, any director may be paid any one or more of the following: his expenses, if any, of attendance at meetings, a fixed sum for attendance at each meeting, a stated salary as director, or such other compensation as the Corporation and the director may reasonably agree upon. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. 11. Presumption of Assent. A director of the Corporation who is present at a meeting of the Board of Directors or committee of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless (i) the director objects at the beginning of the meeting, or promptly upon his arrival, to the holding of the meeting or the transaction of business at the meeting and does not thereafter vote for or assent to any action taken at the meeting, (ii) the director contemporaneously requests that his dissent or abstention as to any specific action taken be entered in the minutes of the meeting, or (iii) the director causes written notice of his dissent or abstention as to any specific action to be received by the presiding officer of the meeting before its adjournment or by the Corporation promptly after the adjournment of the meeting. A director may dissent to a specific action at a meeting, while assenting to others. The right to dissent to a specific action taken at a meeting of the Board of Directors or a committee of the Board shall not be available to a director who voted in favor of such action. 12. Committees. 12.1 By resolution adopted by a majority of all the directors in office when the action is taken, the Board of Directors may designate from among its members an executive committee and one or more other committees, and appoint one or more members of the Board of Directors to serve on them. To the extent provided in the resolution, each committee shall have all the authority of the Board of Directors, except that no such committee shall have the authority to (i) authorize distributions, (ii) approve or propose to shareholders actions or proposals required by the Colorado Business Corporation Act to be approved by shareholders, (iii) fill vacancies on the Board of Directors or any committee thereof, (iv) amend the Articles of Incorporation, (v) adopt, amend or repeal the Bylaws, (vi) approve a plan of merger not requiring shareholder approval, (vii) authorize or approve the reacquisition of shares unless pursuant to a formula or method prescribed by the Board of Directors, or (viii) authorize or approve the issuance or sale of shares, or contract for the sale of shares or determine the designations and relative rights, preferences and limitations of a class 10 or series of shares, except that the Board of Directors may authorize a committee or officer to do so within limits specifically prescribed by the Board of Directors. If so authorized, the committee shall then have full power within the limits set by the Board of Directors to adopt any final resolution setting forth all preferences, limitations and relative rights of such class or series and to authorize an amendment of the Articles of Incorporation stating the preferences, limitations and relative rights of a class or series for filing with the Secretary of State under the Colorado Business Corporation Act. 12.2 Sections 5, 6, 7, 8, 9, 13 and 14 of Article III, which govern meetings, notice, waiver of notice, quorum, voting requirements, action without a meeting of the Board of Directors and telephonic meetings, shall apply to committees and their members appointed under this Section 12. 12.3 Neither the designation of any such committee, the delegation of authority to such committee, nor any action by such committee pursuant to its authority shall alone constitute compliance by any member of the Board of Directors or a member of the committee in question with his responsibility to conform to the standard of care set forth in Article III, Section 15 of these Bylaws. 13. Information Action by Directors. Any action required or permitted to be taken at a meeting of the directors or any committee designated by the Board of Directors may be taken without a meeting if a written consent (or counterparts thereof) that sets forth the action so taken is signed by all of the directors entitled to vote with respect to the action taken. Such consent shall have the same force and effect as a unanimous vote of the directors or committee members and may be stated as such in any document. Unless the consent specifies a different effective date, action taken under this Section 13 is effective at the time the last director signs a writing describing the action taken, unless, before such time, any director has revoked his consent by a writing signed by the director and received by the Chief Executive Officer, the President or the Secretary of the Corporation. 14. Telephonic Meetings. The Board of Directors may permit any director (or any member of a committee designated by the Board) to participate in a regular or special meeting of the Board of Directors or a committee thereof through the use of any means of communication by which all directors participating in the meeting can hear each other during the meeting. A director participating in a meeting in this manner is deemed to be present in person at the meeting. 15. Standard of Care. 15.1 A director shall perform his duties as a director, including without limitation his duties as a member of any committee of the Board of Directors, in good faith, in a manner he reasonably believes to be in the best interests of the Corporation, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances. In performing his duties, a director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by the persons herein designated. However, he shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause such reliance to be unwarranted. A director shall not be liable to the Corporation or its shareholders for any action he takes or omits to take as a director if, in connection with such action or omission, he performs his duties in compliance with this Section 15. 11 15.2 The designated persons on whom a director is entitled to rely are (i) one or more officers or employees of the Corporation whom the director reasonably believes to be reliable and competent in the matters presented, (ii) legal counsel, public accountant, or another person as to matters which the director reasonably believes to be within such person's professional or expert competence, or (iii) a committee of the Board of Directors on which the director does not serve if the director reasonably believes the committee merits confidence. ARTICLE IV OFFICERS AND AGENTS 1. General. The officers of the Corporation shall be a President and a Secretary, each of whom shall be a natural person eighteen (18) years of age or older. The Board of Directors or an officer or officers authorized by the Board may appoint such other officers, assistant officers, committees and agents, including a Chairman of the Board of Directors, Vice Chairman of the Board of Directors, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Vice Presidents, Treasurer, Controller, Assistant Secretaries and Assistant Treasurers, as they may consider necessary. The Board of Directors or the officer or officers authorized by the Board shall from time to time determine the procedure for the appointment of officers, their term of office, their authority and duties and their compensation. One person may hold more than one office. In all cases where the duties of any officer, agent or employee are not prescribed by the Bylaws or by the Board of Directors, such officer, agent or employee shall follow the orders and instructions of the Chief Executive Officer or the President of the Corporation. 2. Appointment and Term of Office. The officers of the Corporation shall be appointed by the Board of Directors at each annual meeting of the Board held after each annual meeting of the shareholders. If the appointment of officers is not made at such meeting or if an officer or officers are to be appointed by another officer or officers of the Corporation, such appointments shall be made as soon thereafter as conveniently may be. Each officer shall hold office until the first of the following occurs: his successor shall have been duly appointed and qualified, his death, his resignation, or his removal in the manner provided in Section 3. 3. Resignation and Removal. 3.1 An officer may resign at any time by giving written notice of resignation to the Corporation. The resignation is effective when the notice is received by the Corporation unless the notice specifies a later effective date. 3.2 Any officer or agent may be removed at any time with or without cause by the Board of Directors or an officer or officers authorized by the Board. Such removal does not affect the contract rights, if any, of the Corporation or of the person so removed. The appointment of an officer or agent shall not in itself create contract rights. 4. Vacancies. A vacancy in any office, however occurring, may be filled by the Board of Directors, or by the officer or officers authorized by the Board of Directors, for the unexpired portion of the officer's term. If an officer resigns and his resignation is made effective at a later date, the Board of Directors, or officer or officers authorized by the Board of Directors, may permit the officer to remain in office until the effective date and may fill the pending vacancy before the effective date if the Board of Directors or officer or officers authorized by the Board of Directors provide that the successor shall not take office until the effective date. In the alternative, the Board 12 of Directors, or officer or officers authorized by the Board of Directors, may remove the officer at any time before the effective date and may fill the resulting vacancy. 5. Chairman and Vice Chairman of the Board. The Chairman of the Board of Directors, if there be one, or in the absence of the Chairman, the Vice Chairman of the Board of Directors, if there be one, shall preside at all meetings of the shareholders and of the Board of Directors, and shall perform such other duties as may from time to time be assigned to them by the Board of Directors. To be eligible to serve, the Chairman of the Board and the Vice Chairman must be directors of the Corporation. 6. Chief Executive Officer. The Chief Executive Officer shall have the responsibility for implementation of the policies of the Corporation, as determined and directed by the Board of Directors and for the administration of the business affairs of the Corporation. All powers of the President (described in Section 9 below) shall be conferred on the Chief Executive Officer if one shall be appointed. 7. Chief Operating Officer. The Chief Operating Officer shall have the responsibilities and duties in respect of the operation of the business of the Corporation as set forth by the Board of Directors or the Chief Executive Officer. 8. Chief Financial Officer. The Chief Financial Officer shall have responsibility for the financial affairs of the Corporation, including the financing of the Corporation's business, accounting for its assets, liabilities and operations, and the implementation and maintenance of internal accounting controls, subject to direction and control by the Chief Executive Officer and the Board of Directors (including any audit committee). 9. President. Subject to the direction and supervision of the Board of Directors and unless a Chief Executive Officer has been appointed, the President shall be the Chief Executive Officer of the Corporation, and shall have general and active control of its affairs and business and general supervision of its officers, agents and employees. Unless otherwise directed by the Board of Directors, the President shall attend in person or by substitute appointed by him, or shall execute on behalf of the Corporation written instruments appointing a proxy or proxies to represent the Corporation, at all meetings of the shareholders of any other corporation in which the Corporation holds any stock. On behalf of the Corporation, the President may in person or by substitute or by proxy execute written waivers of notice and consents with respect to any such meetings. At all such meetings and otherwise, the President, in person or by substitute or proxy, may vote the stock held by the Corporation, execute written consents and other instruments with respect to such stock, and exercise any and all rights and powers incident to the ownership of said stock, subject to the instructions, if any, of the Board of Directors. The President shall have custody of the Treasurer's bond, if any. 10. Vice Presidents. When and if appointed, the Vice Presidents shall assist the President and shall perform such duties as may be assigned to them by the President or by the Board of Directors. In the absence of the President, the Vice President, if any (or, if more than one, the Vice Presidents in the order designated by the Board of Directors, or if the Board makes no such designation, then the Vice President designated by the President, or if neither the Board nor the President makes any such designation, the Senior Vice President as determined by first election to that office), shall have the powers and perform the duties of the President. 13 11. Secretary. 11.1 The Secretary shall (i) prepare and maintain as permanent records the minutes of the proceedings of the shareholders and the Board of Directors, a record of all actions taken by the shareholders or Board of Directors without a meeting, a record of all actions taken by a committee of the Board of Directors in place of the Board of Directors on behalf of the Corporation, and a record of all waivers of notice of meetings of shareholders and of the Board of Directors or any committee thereof, (ii) see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law, (iii) serve as custodian of the corporate records and of the seal of the Corporation and affix the seal to all documents when authorized by the Board of Directors, (iv) keep at the Corporation's registered office or principal place of business a record containing the names and addresses of all shareholders in a form that permits preparation of a list of shareholders arranged by voting group and by class or series of shares within each voting group, that is alphabetical within each class or series and that shows the address of, and the number of shares of each class or series held by, each shareholder, unless such a record shall be kept at the office of the Corporation's transfer agent or registrar, (v) maintain at the Corporation's principal office the originals or copies of the Corporation's Articles of Incorporation, Bylaws, minutes of all shareholders' meetings and records of all action taken by shareholders without a meeting for the past three (3) years, all written communications within the past three (3) years to shareholders as a group or to the holders of any class or series of shares as a group, a list of the names and business addresses of the current directors and officers, a copy of the Corporation's most recent corporate report filed with the Secretary of State, and financial statements showing in reasonable detail the Corporation's assets and liabilities and results of operations for the last three (3) years, (vi) have general charge of the stock transfer books of the Corporation, unless the Corporation has a transfer agent, (vii) authenticate records of the Corporation, and (viii) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the President or by the Board of Directors. Assistant secretaries, if any, shall have the same duties and powers, subject to supervision by the Secretary. The directors and/or shareholders may however respectively designate a person other than the Secretary or Assistant Secretary to keep the minutes of their respective meetings. 11.2 Any books, records, or minutes of the Corporation may be in written form or in any form capable of being converted into written form within a reasonable time. 12. Treasurer. 12.1 When and if appointed, the Treasurer shall be the principal financial officer of the Corporation, shall have the care and custody of all funds, securities, evidences of indebtedness and other personal property of the Corporation and shall deposit the same in accordance with the instructions of the Board of Directors. He shall receive and give receipts and acquittances for money paid in on account of the Corporation, and shall pay out of the Corporation's funds on hand all bills, payrolls and other just debts of the Corporation of whatever nature upon maturity. He shall perform all other duties incident to the office of the Treasurer and, upon request of the Board of Directors, shall make such reports to it as may be required at any time. He shall, if required by the Board of Directors, give the Corporation a bond in such sums and with such sureties as shall be satisfactory to the Board of Directors, conditioned upon the faithful performance of his duties and for the restoration to the Corporation of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. He shall have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors or the 14 President. The Assistant Treasurers, if any, shall have the same powers and duties, subject to the supervision of the Treasurer. 12.2 The Treasurer shall also be the principal accounting officer of the Corporation. He shall prescribe and maintain the methods and systems of accounting to be followed, keep complete books and records of account as required by the Colorado Business Corporation Act, prepare and file all local, state and federal tax returns, prescribe and maintain an adequate system of internal audit and prepare and furnish to the President and the Board of Directors statements of account showing the financial position of the Corporation and the results of its operations. ARTICLE V STOCK 1. Certificates. The Board of Directors shall be authorized to issue any of its classes of shares with or without certificates. The fact that the shares are not represented by certificates shall have no effect on the rights and obligations of shareholders. If the shares are represented by certificates, such shares shall be represented by consecutively numbered certificates signed, either manually or by facsimile, in the name of the Corporation by one or more persons designated by the Board of Directors. In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, such certificate may nonetheless be issued by the Corporation with the same effect as if he were such officer at the date of its issue. Certificates of stock shall be in such form and shall contain such information consistent with law as shall be prescribed by the Board of Directors. If shares are not represented by certificates, within a reasonable time following the issue or transfer of such shares, the Corporation shall send the shareholder a complete written statement of all of the information required to be provided to holders of uncertificated shares by the Colorado Business Corporation Act. 2. Consideration for Shares. Certificated or uncertificated shares shall not be issued until the shares represented thereby are fully paid. The Board of Directors may authorize the issuance of shares for consideration consisting of any tangible or intangible property or benefit to the Corporation, including cash, promissory notes, services performed or other securities of the Corporation. Future services shall not constitute payment or partial payment for shares of the Corporation. The promissory note of a subscriber or an affiliate of a subscriber shall not constitute payment or partial payment for shares of the Corporation unless the note is negotiable and is secured by collateral, other than the shares being purchased, having a fair market value at least equal to the principal amount of the note. For purposes of this Section 2, "promissory note" means a negotiable instrument on which there is an obligation to pay independent of collateral and does not include a non-recourse note. 3. Lost Certificates. In case of the alleged loss, destruction or mutilation of a certificate of stock, the Board of Directors may direct the issuance of a new certificate in lieu thereof upon such terms and conditions in conformity with law as the Board may prescribe. The Board of Directors may in its discretion require an affidavit of lost certificate and/or a bond in such form and amount and with such surety as it may determine before issuing a new certificate. 4. Transfer of Shares. 4.1 Upon surrender to the Corporation or to a transfer agent of the Corporation of a certificate of stock duly endorsed or accompanied by proper evidence of succession, assignment or 15 authority to transfer, and receipt of such documentary stamps as may be required by law and evidence of compliance with all applicable securities laws and other restrictions, the Corporation shall issue a new certificate to the person entitled thereto, and cancel the old certificate. Every such transfer of stock shall be entered on the stock books of the Corporation which shall be kept at its principal office or by the person and the place designated by the Board of Directors. 4.2 Except as otherwise expressly provided herein, and except for the assertion of dissenters' rights to the extent provided in Article 113 of the Colorado Business Corporation Act, the Corporation shall be entitled to treat the registered holder of any shares of the Corporation as the owner thereof for all purposes, and the Corporation shall not be bound to recognize any equitable or other claim to, or interest in, such shares or rights deriving from such shares on the part of any person other than the registered holder, including without limitation any purchaser, assignee or transferee of such shares or rights deriving from such shares, unless and until such other person becomes the registered holder of such shares, whether or not the Corporation shall have either actual or constructive notice of the claimed interest of such other person. 5. Transfer Agent, Registrars, and Paying Agents. The Board may at its discretion appoint one or more transfer agents, registrars and agents for making payment upon any class of stock, bond, debenture or other security of the Corporation. Such agents and registrars may be located either within or outside Colorado. They shall have such rights and duties and shall be entitled to such compensation as may be agreed. ARTICLE VI INDEMNIFICATION OF CERTAIN PERSONS 1. Indemnification of Directors and Officers. 1.1 For purposes of Article VI, a "Proper Person" means any director or officer of the Corporation who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether formal or informal, by reason of the fact that he is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary or agent of any foreign or domestic profit or nonprofit corporation or of any partnership, joint venture, trust, profit or nonprofit unincorporated association, limited liability company, or other enterprise or employee benefit plan. The Corporation shall indemnify any Proper Person against reasonably incurred expenses (including attorneys' fees), judgments, penalties, fines (including any excise tax assessed with respect to an employee benefit plan) and amounts paid in settlement reasonably incurred by him in connection with such action, suit or proceeding if it is determined by the groups set forth in Section 4 of this Article that he conducted himself in good faith and that he reasonably believed (i) in the case of conduct in his official capacity with the Corporation, that his conduct was in the Corporation's best interests, or (ii) in all other cases (except criminal cases), that his conduct was at least not opposed to the Corporation's best interests, or (iii) in the case of any criminal proceeding, that he had no reasonable cause to believe his conduct was unlawful. A Proper Person will be deemed to be acting in his official capacity while acting as a director, officer, employee or agent on behalf of this Corporation and not while acting on this Corporation's behalf for some other entity. 1.2 No indemnification shall be made under this Article VI to a Proper Person with respect to any claim, issue or matter in connection with a proceeding by or in the right of a corporation in which the Proper Person was adjudged liable to the Corporation or in connection with 16 any proceeding charging that the Proper Person derived an improper personal benefit, whether or not involving action in an official capacity, in which he was adjudged liable on the basis that he derived an improper personal benefit. Further, indemnification under this Section in connection with a proceeding brought by or in the right of the Corporation shall be limited to reasonable expenses, including attorneys' fees, incurred in connection with the proceeding. 2. Right to Indemnification. The Corporation shall indemnify any Proper Person who was wholly successful, on the merits or otherwise, in defense of any action, suit, or proceeding as to which he was entitled to indemnification under Section l of this Article VI against expenses (including attorneys' fees) reasonably incurred by him in connection with the proceeding without the necessity of any action by the Corporation other than the determination in good faith that the defense has been wholly successful. 3. Effect of Termination of Action. The termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the person seeking indemnification did not meet the standards of conduct described in Section l of this Article VI. Entry of a judgment by consent as part of a settlement shall not be deemed an adjudication of liability, as described in Section 2 of this Article VI. 4. Groups Authorized to Make Indemnification Determination. Except where there is a right to indemnification as set forth in Sections 1 or 2 of this Article or where indemnification is ordered by a court in Section 5, any indemnification shall be made by the Corporation only as authorized in the specific case upon a determination by a proper group that indemnification of the Proper Person is permissible under the circumstances because he has met the applicable standards of conduct set forth in Section l of this Article. This determination shall be made by the Board of Directors by a majority vote of those present at a meeting at which a quorum is present, which quorum shall consist of directors not parties to the proceeding ("Quorum"). If a Quorum cannot be obtained, the determination shall be made by a majority vote of a committee of the Board of Directors designated by the Board of Directors, which committee shall consist of two or more directors not parties to the proceeding, except that directors who are parties to the proceeding may participate in the designation of directors for the committee. If a Quorum of the Board of Directors cannot be obtained and the committee cannot be established, or even if a Quorum is obtained or the committee is designated and a majority of the directors constituting such Quorum or committee so directs, the determination shall be made by (i) independent legal counsel selected by a vote of the Board of Directors or the committee in the manner specified in this Section 4 or, if a Quorum of the full Board of Directors cannot be obtained and a committee cannot be established, by independent legal counsel selected by a majority vote of the full Board (including directors who are parties to the action) or (ii) a vote of the shareholders. 5. Court Ordered Indemnification. Any Proper Person may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction for mandatory indemnification under Section 2 of this Article, including indemnification for reasonable expenses incurred to obtain court-ordered indemnification. If the court determines that such Proper Person is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not he met the standards of conduct set forth in Section l of this Article or was adjudged liable in the proceeding, the court may order such indemnification as the court deems proper except that if the Proper Person has been adjudged liable, indemnification shall be limited to reasonable expenses 17 incurred in connection with the proceeding and reasonable expenses incurred to obtain court-ordered indemnification. 6. Advance of Expenses. Reasonable expenses (including attorneys' fees) incurred in defending an action, suit or proceeding as described in Section 1 may be paid by the Corporation to any Proper Person in advance of the final disposition of such action, suit or proceeding upon receipt of (i) a written affirmation of such Proper Person's good faith belief that he has met the standards of conduct prescribed by Section l of this Article VI, (ii) a written undertaking, executed personally or on the Proper Person's behalf, to repay such advances if it is ultimately determined that he did not meet the prescribed standards of conduct, (iii) a determination is made by the proper group (as described in Section 4 of this Article VI) that the facts as then known to the group would not preclude indemnification. Determination and authorization of payments shall be made in the same manner specified in Section 4 of this Article VI, and (iv) appropriate security or bond if and as determined by the proper group (as described in Section 4 of this Article VI). 7. Witness Expenses. The sections of this Article VI do not limit the Corporation's authority to pay or reimburse expenses incurred by a director in connection with an appearance as a witness in a proceeding at a time when he has not been made a named defendant or respondent in the proceeding. 8. Indemnification of Employees, Fiduciaries and Agents. The Corporation may indemnify and advance expenses to any employee, fiduciary, or agent (who is not a director or officer of the Corporation) who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether formal or informal, by reason of the fact that he is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary or agent of any foreign or domestic profit or nonprofit corporation or of any partnership, joint venture, trust, profit or nonprofit unincorporated association, limited liability company, or other enterprise or employee benefit plan, to the same extent as a Proper Person. 9. Report to Shareholders. Any indemnification of or advance of expenses to a director in accordance with this Article VI, if arising out of a proceeding by or on behalf of the Corporation, shall be reported in writing to the shareholders with or before the notice of the next shareholders' meeting. If the next shareholder action is taken without a meeting at the instigation of the Board of Directors, such notice shall be given to the shareholders at or before the time the first shareholder signs a writing consenting to such action. ARTICLE VII PROVISION OF INSURANCE By action of the Board of Directors, notwithstanding any interest of the directors in the action, the Corporation may purchase and maintain insurance, in such scope and amounts as the Board of Directors deems appropriate, on behalf of any person who is or was a director, officer, employee, fiduciary or agent of the Corporation, or who, while a director, officer, employee, fiduciary or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary or agent of any other foreign or domestic corporation or of any partnership, joint venture, trust, profit or nonprofit unincorporated association, limited liability company or other enterprise or employee benefit plan, against any liability asserted against, or incurred by, him in that capacity or arising out of his status as such, whether or not the Corporation 18 would have the power to indemnify him against such liability under the provisions of Article VI or applicable law. Any such insurance may be procured from any insurance company designated by the Board of Directors of the Corporation, whether such insurance company is formed under the laws of Colorado or any other jurisdiction of the United States or elsewhere, including any insurance company in which the Corporation has an equity interest or any other interest, through stock ownership or otherwise. ARTICLE VIII MISCELLANEOUS 1. Dividends. Subject to the restrictions contained in the Colorado Business Corporation Act and any restrictions contained in the Articles of Incorporation, the Board of Directors may declare and pay dividends upon the shares of capital stock of the Corporation. 2. Corporate Seal. The corporate seal of the Corporation shall be circular in form and shall contain the name of the Corporation and the words, "Seal, Colorado." 3. Deposits. All funds of the Corporation shall be deposited from time to time to the credit of the Corporation in such banks, trust companies, or other depositories as the Board of Directors may approve or designate, and all such funds shall be withdrawn only upon checks signed by such one or more officers or employees as the Board of Directors shall from time to time determine. 4. Fiscal Year. The fiscal year of the Corporation shall be as established by the Board of Directors. 5. Amendments to Bylaws. In furtherance of and not in limitation of the powers conferred by statute, the Board of Directors of the Corporation is expressly authorized from time to time to make, alter, amend, supplement or repeal the Bylaws of the Corporation in any respect, subject to the right of the shareholders entitled to vote with respect thereto to adopt, alter, amend and repeal bylaws made by the Board of Directors. The shareholders also shall have the power to make, amend or repeal the Bylaws of the Corporation at any annual meeting or at any special meeting called for that purpose. 6. Gender. The masculine gender is used in these Bylaws as a matter of convenience only and shall be interpreted to include the feminine and neuter genders as the circumstances indicate. 7. Conflicts. In the event of any irreconcilable conflict between these Bylaws and either the Corporation's Articles of Incorporation or applicable law, the latter shall control. 8. Definitions. Except as otherwise specifically provided in these Bylaws, all terms used in these Bylaws shall have the same definition as in the Colorado Business Corporation Act. 9. Rules of Order. At any meeting of shareholders or directors of the Corporation at which a question of procedure arises, the person presiding at the meeting may rely upon the Robert's Rules of Order, Newly Revised as then in effect to resolve any such question. 19 DATED this _____ day of ________________, 2000. ________________________ _______________________ Director Director ________________________ _______________________ Director Director 20 EX-21 3 LIST OF SUBSIDIARIES EXHIBIT 21 ATLAS CORPORATION LIST OF SUBSIDIARIES OF THE REGISTRANT Atlas Precious Metals Inc. (incorporated in Nevada) Atlas Gold Mining Inc. (incorporated in Nevada), a subsidiary of Atlas Precious Metals, Inc. Arisur Inc. (organized under the laws of Grand Cayman). Suramco Metals, Inc. (incorporated in Nevada). EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 202 0 1,023 0 1,036 3,421 4,518 (54) 10,137 5,513 0 0 0 9 2,959 10,137 3,698 3,825 4,666 5,838 4,338 0 382 (6,703) 0 (6,703) 0 9,199 0 2,496 2.78 2.78
-----END PRIVACY-ENHANCED MESSAGE-----