-----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, QZDcMNrE3hXxV1fpMuLopu9U/Q/eJOS3cxYIoP49F9+71dhaq6ROeC+f0Etsxcrx n16tx2lFPm8NfavJ9DDK2Q== 0000762248-99-000002.txt : 19990811 0000762248-99-000002.hdr.sgml : 19990811 ACCESSION NUMBER: 0000762248-99-000002 CONFORMED SUBMISSION TYPE: 10SB12G PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19990803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIKING EXPLORATION INC CENTRAL INDEX KEY: 0000762248 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 860885924 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10SB12G SEC ACT: SEC FILE NUMBER: 000-26921 FILM NUMBER: 99676843 BUSINESS ADDRESS: STREET 1: 45 LAROSE AVENUE STREET 2: #1608 CITY: WESTON ONTARIO BUSINESS PHONE: 4162446373 MAIL ADDRESS: STREET 1: 45 LAROSE AVENUE STREET 2: ROOM 1608 CITY: WESTON ONTARIO 10SB12G 1 FORM 10-SB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-SB GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934 _________ VIKING EXPLORATION, INC. (Name of the Small Business Issuer in its charter) Nevada 86-0885924 (State of incorporation) (Employer Identification No.) 45 La Rose Avenue, Suite #1608, Weston, Ontario, Canada M9P 1A8 (Address of principal offices) (Zip Code) Issuer's telephone number, (416) 244-6373 Securities to be registered pursuant to Section 12(b) of the Act: None Securities to be registered pursuant to Section 12(g) of the Act: Name of Each Exchange On Title of Each Class Which Securities to be Registered Common Stock Over-the-Counter Par Value $0.00001 PART I Item 1. Description of Business General Viking Exploration, Inc. (the "Company"), a Nevada corporation was incorporated in the name of Alpha Diamond Corporation on January 23, 1997. The Company changed the name to African Resources, Inc. on June 18, 1998 and later to Viking Exploration, Inc. on April 09, 1999. The Company is a natural resource, development and production Company which has acquired the mineral and mining rights with a 50% working interest to 30 kilometers of River Property (the "Property") on the Konkoure River in the province of Telimele, Republic of Guinea. The city of Telimele is located within the province of Telimele approximately 240 kilometers northeast of the Capital City of Conakry. This area supports several active diamond recovery operations and numerous diamonds have been recovered from the Region since 1980. In 1999, the Company retained an experienced geological team within the Republic of Guinea to conduct preliminary investigation and prepare an analytical report concerning the Property. Based on the positive prospects for the property cited in the preliminary investigation, the Company has commenced a detailed survey to determine the location of diamonds on the property. The Property The Company acquired sole working interest for mineral and mining rights from its joint venture partner, Gold River of Africa, Guinea, a Company incorporated in the Republic of Guinea, who has secured a permit to 30 kilometers of diamond bearing property (Property) on the Konkoure River in the province of Telimele, Republic of Guinea. These mineral rights are detailed in File No. A99/1348 of the Ministry of Mining. Telimele is located in the Bankou Region 240 kilometers northeast of the capital, Conakry. With a population of 800,000, Telimele is an urban centre which is serviced by highway from the capital. The property follows the river, is curved shaped and extends 30 kilometers. The river is approximately 250 meters above sea level. Its topography ranges from flat to rolling. Some areas on the land are forested. The weather conditions (rainy season) allow for mining to occur for 9-10 months per year. The property can be reached from dirt roads which extend south from the city of Telimele. No electrical, water or sewer utilities exist on or adjacent to the Property. The climate is typical of low-lying tropical forest, humid and hot, with daytime temperatures averaging 35 degrees Celsius. The annual rainfall is about 700 millimeters, to 900 millimeters, with a dry season of about 8 months occurring from October to May. The local topography ranges in elevation from 200-300 meters above sea level, and is characterized by a patchwork of original tropical forests and cleared areas currently used for agriculture. The Region is considered to be very remote. The discovery of alluvial diamonds in the mid-1970's by Russian geologists resulted in many of the creeks and river areas having been mined in an unorganized manner. These areas are dotted with diggings partially filled with water, mounds of gravel tailings and primitive access roads. Most of the Region remains virtually untouched by present mining standards. Diamond Mining in Republic of Guinea Diamonds were discovered in Guinea around 1955 although it is believed that local people had seen diamond crystals much earlier. Since 1955 approximately 100,000 carats were recovered in Guinea mainly from the Bankoro Region in the province of Kerouane (the Aredor mines are located here). Diamond mining activity began in the late 1980's. The majority of activity has only been initiated since 1995 with the introduction of more sophisticated mining equipment and mining methods. Changes in government mining laws and regulations have been primarily responsible for increased activity. Guinea is known for its high quality diamonds both in size and quantity. Estimates indicate the percentage of gem quality diamonds is approximately 80%. This year the average sale price for rough diamonds is over $400 per carat. The Ministry of Mines has reported that the country has in excess of over 30 million carats. Given the fact that only about 100,000 carats have been recovered until now, there is tremendous potential in this industry. Major Historical Diamonds Found in Guinea since 1980 Uncut Price Locality Carats Sold Aredor 70.1 $ 2,765.000 Aredor 255 $10,036,000 Aredor 284 $ 8,105,000 Aredor 181 $ 8,618,177 Nearly all historical diamond recovery has originated from surface or shallow alluvial deposits . Most diamonds continue to be recovered from alluvial gravel deposits. Diamond Mining and Exploration in the Province of Telimele In the mid-1980's, alluvial diamonds were found in the Bankou Region in the Telimele province by American geologist, Dr. Hegarty. Dr. Hegarty determined that the Region has a presence of Kimberlite - A geological formation that is frequently a source of diamond deposits. At that time the area was and remains largely inaccessible due to the absence of roads and airstrips and the heavy vegetation typical of jungle areas within the Region. As a result, only small scale local mining activity has occurred. Geological Investigations of the Property Preliminary exploratory work has been done around the Property by the Company. The exploration conducted in the spring of 1999 by a team of Guinean geologists and engineers utilized standard geological evaluation techniques to determine the diamond bearing characteristics of the property as well as other precious metal characteristics including gold. Samples were taken from 10 pits of the Konkoure River concession. At present, Ledux and Company laboratories, located in Teaneck, New Jersey, are evaluating and analyzing the samples. Reports should be available in August of 1999. A second exploration was initiated in June of 1999 and will continue until the beginning of August, 1999. The purpose is to assess the location of indicator rocks for diamond and gold presence. The resulting reports will give the Company the specific information needed to begin mining operations in the fourth quarter of 1999. The geological team is also responsible for fixing the perimeter of the Property described in the permit issued by the Minister of Mines. Marketing The Company has conducted negotiations with several established diamond buyers and has received expressions of interest and letters of intent for the purchase of all, or a substantial portion of the Company's projected production. Regulation There have been considerable recent changes by the Guinean government in an attempt to attract more foreign capital to the mining sector. Prior to 1995, the government required 49% ownership of all mining Companies. In addition, the government exercised full decision-making power over all the structure and activities of the mining Companies. Since 1995 the government now requires 15% of materials recovered and has given the mining Companies full decision-making power to structure and manage their respective Companies. Competition The Company will be competing with other diamond production companies in the production of diamonds. Many of these companies have significantly greater financial resources than the Company. Competitors with greater financial resources may employ more sophisticated, efficient, and less costly techniques of recovering diamonds, or may be more successful than the Company with respect to acquiring interests in additional properties. New discoveries of diamond reserves in Guinea or elsewhere in the world may dramatically increase the supply of diamonds and depress diamond prices. The diamonds the Company expects to recover will mostly be of industrial grade and will be purchased for industrial functional purposes which improve the abrasive qualities of certain cutting, boring and polishing tools. New technologies may be developed which replace the use of diamonds in such tools and may reduce the demand for industrial diamonds. The sale of any diamonds recovered by the Company will be affected by fluctuating market conditions which are beyond the control of the Company. One competitor, De Beers Consolidated Mining, controls the production and marketing of more than 70% of the world's diamonds and is able independently to influence the diamond markets. Because diamonds are a commodity product, the Company has limited opportunities to improve the prices it receives for its diamonds by employing marketing techniques. There can be no assurance that the Company's revenues will not be adversely affected by competitive factors. Office Facilities The Company presently maintains its executive offices at 45 La Rose Avenue, Suite #1608, Weston, Ontario, Canada. M9P 1A8. Mr. Brodzik is donating office space for the Company without charge. The Company does not plan to increase its office space at present time. The Company leases in Guinea through the Guinean Corporation, Gold River of Africa, at South Cornishe, Conakry at a cost of $700 per month. The office space is approximately 1500 square feet. The Company also leases a 6 bedroom villa located in Conakry at a cost of $2,000 per month. The villa is approximately 3500 square feet. Employees The Company has no employees at present. Seasonality The Company's operations are expected to be materially affected by seasonality. The diamond exploration and production activities of the Company will be slowed down and then stopped by the rainy season which occurs from June until October. Item 2. Management's Discussion and Analysis or Plan of Operation Most of the diamond mining activity in the Bankou Region involves placer and river dredging operations. Diamonds are found on the surface or in shallow gravel and many individual prospectors search for diamonds by hand picking or panning surface materials. Current recovery operations in the area are small scale by small groups or individuals engaged in more recreational type mining. The Company's plan for mining and recovery of diamonds entails surface mining the Property's diamond bearing gravel. Ground surface vegetation and overburden will be removed and diamond bearing gravel will be transported to a processing site. During the first phase of the Company's mining and recovery activity, the gravel will be run over a series of screens and jigs to concentrate the "heavies" which contain diamonds. This product will then be further concentrated manually until nothing but an assortment of diamonds remains. The Company plans to implement a washing plant consisting of a laser sorter and a heavy liquid specific gravity system along with additional material handling equipment during phases one and two of the Company's mining and recovery activities. The quality of recoverable diamonds on the Property ranges from industrial to near gem and gem quality. The Company's mining plans will require $800,000 to $1,000,000 of capital to begin its operations in the fourth quarter of 1999. At this time, a complete geological evaluation by an independent international firm will be conducted to determine projections for amount of material to be moved, number of carat recovered and revenues generated. The Company will need to raise the capital required. Item 3. Properties The Company presently maintains its executive offices at 45 La Rose Ave., Suite 1608, Weston, Ontario, Canada M9P 1A8, pursuant to Mr. Brodzik donating space at no charge. The space covers 750 square feet. The Company does not plan to increase its office space at the present time. Item 4. Security Ownership of Certain Beneficial Owners and Management The following table sets forth the amount and nature of beneficial ownership of each of the executive officers and directors of the Company and each person known to be a beneficial owner of more than five percent of the issued and outstanding shares of the Company as of June 30, 1999. The table sets forth the information based on 17,219,600 common shares issued and outstanding as of June 30, 1999. Amount and Name of Nature of Percent Beneficial Beneficial of Title of Class Owner Ownership Class Common Rick Brodzick 1,611,000 9.35% 45 La Rose Ave Suite 1608 Weston Ontario Canada M9P 1A8 Common A. Joseph Tafoya 500,000 2.90% 6009 S Garland Way Littleton, CO 80213 Common All Directors and 2,111,000 12.26% Officers as a Group Common Transworld International 2,800,000 16.26% Buyers and Traders, Inc. 221 Ashland Place Suite BE Brooklyn, NY 11217-1122 None of the foregoing have any right to acquire other or additional shares of the Company. There is no existing arrangement which may result in a change in control of the Company. However, if an active business is found with which to enter into some form of corporate reorganization, a change in control of the Company will be contemplated as part of such reorganization. Item 5. Directors and Executive Officers of Registrant. The following table lists the names and ages of the executive officers, directors and key consultants of the Company. The directors will continue to serve until the next annual shareholders meeting, scheduled for December, 1999, or until their successors are elected and qualified. All officers serve at the discretion of the Board of Directors. No family relationships exist between or among any of the directors of the Company. Name Age Position Held Since Rick Brodzik 44 President, Director January 1997 45 La Rose Ave Suite 1608 Weston Ontario Canada M9P 1A8 A. Joseph Tafoya 59 Secretary and Treasurer, January 1998 6009 S. Garland Way Director Littleton, CO 80213 Rick Brodzik: President. Mr. Brodzik has fifteen years of international business experience in marketing, sales administration, and distribution. To date he has been primarily responsible for raising venture capital, negotiating the Guinea mining concessions, and positioning the Company for public listing. A. Joseph Tafoya: Vice President and a Director of AFRI. Mr. Tafoya has over fifteen years of experience in the mining industry. He has served as President of several companies and has been involved with acquisitions, leases, financing, evaluating, and managing. None of the officers or directors of the Company are officers, directors or affiliates of any reporting companies. There are no family relationships between any of the directors or executive officers of the Company or any person beneficially owning or controlling more than 5% of its outstanding common shares. To the knowledge of the Company, no present or former director, executive officer or person nominated to become a director or executive of the Company has ever: 1) Filed a bankruptcy petition by or against any business of which such person was a general partner or executive officer wither at the time of the bankruptcy or with two years prior to that time; 2) Had any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); 3) Been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and 4) Been found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed suspended or vacated. Item 6. Executive Compensation The Company currently is not now paying, and has not during the past three years, paid any compensation to officers, directors or executives. It does not have any pension, profit-sharing, stock bonus, or other benefit plans. Such plans may be adopted in the future at the discretion of the Board of Directors Item 7. Certain Relationships and Related Transactions With one exception, the only transactions between the Company and any officers, directors or holders of more than five percent of any class of outstanding securities of the issuer involve the issuance of common shares as compensation for services. On September 8, 1997 the Board of Directors approved the issuance of 600,000 common shares to the President and Chairman of the Board, and an additional 200,000 shares to the Secretary of the corporation who was also a director. The shares were valued at $.07, the Board's evaluation of the value of the services received in exchange therefor. In November of 1997, and May 1998, the Board authorized the issuance of an additional 1,503,904 common shares to officers and directors in exchange for services valued by the Board at $105,005. As a result of these transactions, the following present and former officers and directors own common shares of the Company as follows: Larry O'Brien 333,333 common shares Steve Radford (former director and officer) 150,000 common shares Rick Brodzik 1,611,000 common shares 2,094,333 common shares In fiscal 1999 the Board of Directors authorized the issuance of 2,050,000 common shares in exchange for investor relation services valued at $135,004. A. Joseph Tafoya, who is presently a director and officer of the Company, is the owner of 500,000 common shares issued in January of 1998 in connection with the Company's acquisition of a Joint Venture Agreement with Gold Rivers of Africa, Inc. in which Mr. Tafoya owned an equity interest. He became an officer and director of the Company after the completion of this transaction. Item 8. Description of Registrant's Securities to be Common Stock The Company is authorized to issue 100,000,000 shares of common stock, par value of $0.00001, of which 17,219,600 shares are issued and outstanding as of June 30, 1999. Holders of Common Stock are entitled to dividends when, as and if declared by the Board of Directors out of funds available therefor, subject to any priority as to dividends for Preferred Stock that may be outstanding. Holders of Common Stock are entitled to cast one vote for each share held at all stockholder meetings for all purposes, including the election of directors. The holders of more than 50% of the Common Stock issued and outstanding and entitled to vote, present in person or by proxy, constitute a quorum at all meetings of stockholders. The vote of the holders of a majority of Common Stock present at such a meeting will decide any question brought before such meeting, except for certain actions such as amendments to the Company's Certificate of Incorporation, mergers or dissolutions which require the vote of the holders of a majority of the outstanding Common Stock. Upon liquidation or dissolution, the holder of each outstanding share of Common Stock will be entitled to share equally in the assets of the Company legally available for distribution to such stockholder after payment of all liabilities and after distributions to preferred stockholders legally entitled to such distributions. Holders of Common Stock do not have any preemptive, subscription or redemption rights. They are entitled to cumulative voting rights under the California Corporations Code. Under cumulative voting, minority shareholders may have the right to vote one or more members onto the Company's Board of Directors. All outstanding shares of Common Stock are fully paid and nonassessable. The holders of the Common Stock do not have any registration rights with respect to the stock. Preferred Stock The Company is authorized to issue 10,000,000 shares of Preferred Stock with such rights, preferences and privileges as are determined by the Company's Board of Directors. No Preferred Stock is outstanding. Transfer Agent and Registrar The transfer agent for the Company's Shares is American Securities Transfer in Trust, Inc. (AST) located at 12039 W. Alameda Parkway, Suite Z-2, Lakewood, Colorado 80228, Telephone (303) 986-5400. Reports to Stockholders The Company will furnish to holders of record its common stock annual reports which will contain financial statements examined and reported upon by an independent certified public accountant, and quarterly reports with unaudited financial statements. PART II Item 1. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholders Matters. The Company is organized under the laws of Nevada, and its common stock has been traded on the OTC Bulletin Board since August 1997 under the symbols of VIKE and VIKEE. No dividends on the Company's common stock have been declared or paid since the Company's inception and none are anticipated in the near future, since retained earnings in the foreseeable future are expected to be reinvested by the Company into the expansion of its marketing programs and the development of new products. The Company had approximately 800 listed shareholders as of June 1, 1999 Calendar Quarter Ending High (1) Low (1) September 30, 1997 0 0 December 31, 1997 5 1/8 3/4 March 31, 1998 .91 1/2 June 30, 1998 .34 7/32 September 30, 1998 .61 7/32 December 31, 1998 .36 5/32 March 31, 1999 .22 .16 June 30, 1999 .23 .035 The above chart reflects the trading range during each quarter. Item 2. Legal Proceedings At the present time the only legal proceeding in which the Company, its officers or directors are named as parties defendant is Intercorp International, Ltd., Plaintiff v. P. Campbell and Does 1 through 100, Defendants: Patrick Campbell, Cross-complainant v. Steven Sanford, Intercorp International, Ltd. and Does 101 through 200, Cross-defendants, Case No. LC 046472 in the Superior Court for the State of California, County of Los Angeles, Northwest District - Van Nuys., in which Viking and its president Rick Brodzik are named as John Doe defendants. The complaint in this matter charges fraud, breach of contract, complaints for accounting and constructive trust, claims for injunctive relief and charges of violations of RICO. There is a pending motion for dismissal based on lack of jurisdiction which is scheduled to be heard on August 9, 1999. Jay S. Bulmash, the Company's litigation counsel in this matter is of the opinion that this case is utterly groundless, that it has been brought by Steven Sanford, a well-known "greenmailer" who has previously been sanctioned by California Courts for bringing groundless complaints, and that if the Motion to Dismiss is not granted, Viking will strenuously defend the case. Counsel expects the case to be dismissed and that substantial sanctions will be imposed upon Mr. Sanford. The Company places the likelihood that Plaintiff will prevail against it or Mr. Brodzik in this matter at nil. Item 3. Changes in and Disagreements with Accountants. The Company has not had any disagreements with its accountants regarding accounting and financial disclosure. The Company has utilized Alex N. Chaplan & Associates, independent Certified Public Accountants, since 1996 to conduct the audits of the entity. The Company intends to use Alex N. Chaplan & Associates, Certified Public Accountants, as its independent accounting firm in the foreseeable future. Item 4. Recent Sales of Unregistered Securities Since March of 1997 the Company has engaged in the following sales of unregistered securities. a. In March of 1997 110,000 common shares were issued to founders in at a subscription price of two cents ($.02) per share in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 (the "Act"). No underwriter was involved in the transactions and no commissions or selling commissions were paid. b. In April, 1997 3,611 common shares were issued at $20 per share in reliance on the exemption from registration provided by Section 4(2) of the Act. Commissions and offering expenses of $28,972 were paid in connection with the transaction. c. During 1997, 571,429 shares were issued to officers and directors in exchange for services in reliance on the exemption from registration provided by Section 4(2) of the Act d. In September, 1997 5,500,000 common shares were issued in exchange for mining contract rights valued by the Board of Directors at a sum of $.07 for each share issued. The shares were issued in reliance on Section 4(2) of the Act. e. In November of 1997 173,000 common shares were issued in exchange for legal services valued by the Board of Directors at a sum equal to $.07 for each share issued in reliance on Section 4(2) of the Act. f. In December 1997 and May 1998 1,461,942 common shares were issued in private placements at offering prices ranging from $.12 to $.75, without the payment of commissions or selling concessions, in reliance on the exemption from registration provided by Section 4(2) of the Act. g. One Million common shares were relinquished without consideration in connection with an unsuccessful financing arrangement in which the shares were improperly released from an escrow account without payment of the required consideration. h. During the balance of 1998, an additional 1,503,904 common shares were issued to officers and directors for services valued by the Board of Directors at between $.05 and $.09 for each share issued. i. On 10,323,868 preferred shares were issued as a dividend paid pro rata to all holders of the Company's common stock without consideration. j. Between July and October of 1998, 775,000 Class B common shares and 775,000 Preferred Shares were issued for cash at prices ranging from $.10 to $.16 in reliance on Section 3(b) of the Act and Rule 504 thereunder, without the payment of selling commissions or concessions. k. In March, 1998 936,000 Class B common shares and 936,000 Preferred shares were issued for cash at an offering price of $.05 per share without the payment of selling commissions or concessions in reliance on Section 3(b) of the Act and Rule 504 thereunder. l. Finally, in 1998, 2,050,000 common shares and 2,050,000 Preferred shares were issued to consultants in exchange for investor relations services in reliance on Section 4(2) of the Act. As a result of the foregoing, there are presently 14,085,266 common shares and 14,085,266 Preferred shares of the Company outstanding. Item 5. Indemnification of Directors and Officers Under the laws of Nevada and the Company's Articles of Incorporation, the Company's directors will have no personal liability to the Company or its stockholders for monetary damages incurred as the result of the breach or alleged breach by a director of his duty of care. This provision does not apply to the directors (i) breach of their duty of loyalty, (ii) acts or omissions not in good faith or involving intentional violations of law, (iii) illegal payment of dividends, stock repurchases, or stock redemption, and (iv) approval of any transaction from which a director derives an improper personal benefit. Directors may be responsible to the Company's shareholders for damages suffered by the Company or its shareholders as a result of a breach of their fiduciary duty. In so far as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted for directors, officers or person controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission each indemnification is against public policy as expressed in the Act and is therefore unenforceable. PART F/S REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS' July 29, 1999 To the Board of Directors Viking Exploration Totronto, Ontario We have audited the accompanying balance sheet of Viking Exploration, Inc. (a development stage company, the "Company," formerly Alpha Diamond Corporation and African Resources, Inc.) as of June 30, 1999, and the related statements of operations, cash flows and changes in stockholders' equity (deficit) for the years ended June 30, 1999 and 1998, and the related amounts included in the cumulative amounts for the period from January 22, 1997 (inception) to June 30, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Viking Exploration, Inc. at June 30, 1999, and the results of its operations and its cash flows for the years ended June 30, 1999 and 1998, and the related amounts included in the cumulative amounts for the period from January 22, 1997 (inception) to June 30, 1999, in conformity with generally accepted accounting principles. The accompanying financial statements have been presented assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As more fully discussed in Note A to the financial statements, as of June 30, 1999, the Company has no assets, has significant working capital and stockholders' deficits and since its inception has incurred substantial losses. The Company presently has no product or producing properties and requires significant additional financing to satisfy its outstanding obligations and commence operations. Unless the Company successfully obtains suitable significant additional financing as discussed in Note A, there is substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note A. The financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Oatley Bystrom & Hansen VIKING EXPLORATION, INC. (A Development Stage Company) BALANCE SHEET June 30, 1999 ASSETS $ - LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Bank Overdraft $ 583 Advances to President 273,284 Other related party advances 6,309 Accured interest on advances 38,053 Total current liabilities 315,529 STOCKHOLDERS' EQUITY (DEFICIT) Prefered stock, par value $.00001 per share; 100 million shares Authorized; 14, 085,266 shares issued and outstanding 141 Common stock, par value $.00001 per share; 100 million shares Authoirized; 14, 085,266 shares issued and outstanding 141 Additional paid-in capital 990,959 Deficit accumulated in the development stage (1,306,770) Total stockholders' (deficit) (315,529) Total liabilities and stockholders' equity (deficit) $ - See accompanying notes VIKING EXPLORATION, INC. (A Development Stage Company) STATEMENT OF OPERATIONS January 22, 1997 Year Ended June 30, (Inception) to 1999 1998 June 30, 1999 EXPLORATION $( 173,781) $( 583,770) $( 757,551) ADMINISTRATION AND GENERAL ( 237,159) ( 196,007) ( 511,065) Operating Expenses ( 410,940) ( 779,777) (1,268,616) INTEREST EXPENSE ( 26,099) ( 12,055) ( 38,154) NET(LOSS) $( 437,039) $( 791,832) $(1,306,770) BASIC AND DILUTIVE NET (LOSS) PER SHARE $( .04) $( .12) $( .16) WEIGHTED AVERAGE SHARES OUTSTANDING 11,945,465 6,870,404 8,076,500 See acompanying notes. VIKING EXPLORATION, INC. (A Development Stage Company) STATEMENT OF CASH FLOWS January 22, 1997 Year Ended June 30, (Inception) to 1999 1998 June 30, 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net Income (Loss) $(437,039) $(791,873) $(1,306,770) Adjustments to reconcile net (loss) to net cash provided by operating activities Stock issued ofr services 134,025 117,125 291,150 Stock issued for interest in joint venture - 385,000 385,000 Changes in operating liabilities: accured interest on advances 26,099 11,954 38,053 Net cash flows from (used for) operating activities (276,915) (277,753) (592,567) CASH FLOWS FROM FIANANCING ACTIVITIES Bank overdrafts 582 - 582 Advanced from President and other related party 115,195 134,982 276,893 Issuance of stock for cash 159,918 145,846 344,064 Stock issuance costs - ( 2,500) ( 28,972) Net cash flows(used for) from fianancing activities 275,695 278,328 592,567 NET INCREASE (DECEASE) IN CASH ( 1,220) 575 - CASH AT BEGINNING OF YEAR 1,220 645 645 CASH AT BEGINNING OF YEAR - 1,220 645 See Accompanying notes. VIKING EXPLORATION, INC. (A Development Stage Company) STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY(DEFICIT) Additional Preferred Stock Common Stock Paid In Accumulated Shares Amount Share Amount Capital Deficit Balances, January 22, 1997 (Inception) - $ - - $ - $ - $- Issued to founders in March 1977 ($.02/share) - - 110,000 2 2,198 - Issued to investors in April 1997 ($20/share) - - 3,611 - 7,127 - Issued to offciers and directors for services - - 571,429 6 39,994 - Net (loss) - - - - - (77,899) Balances at June 30, 1997 - - 685,040 8 48,319 (77,899) Issued for mining contract rights in September ($.07/share) - - 5,500,000 55 384,945 - Issued for legal services in November ($.07/share) - - 173,000 1 12,109 Issued in private placement in December and May ($.12 to $.75 per share) - - 1,461,942 14 159,850 - Shares relinquished in unsuccessful financing arrangements - - 1,000,000 10 - - Issued to officers and directors forservices ($.05 to $.09 per share) - - 1,503,904 15 104,990 - Issuance of preferred stock June 17, 1998 for each share of common stock issued and outstanding 10,323,886 103 - (103) - Net (loss) - - - - - (791,832) Balances at June 30, 1998 10,323,886 103 10,323,886 103 711,110 (869,731) Issued for cash in July and October ($.10 to $.16/share) 775,380 8 775,380 8 99,009 - Issued for cash in March ($.05/share) 938,000 9 936,000 9 46,857 - Issued to consultants for investor relations services ($.05 to $.12/share) 2,050,000 21 2,050,000 21 133,983 - Net (loss) - - - - - (437,039) Balances at June 30, 1999 14,086,266 414 14,085,266 141 990,959 (1,306,770) See accompanying notes VIKING EXPLORATION, INC. (A Development Stage Company) Notes Financial Statements Note A - Organization and Business Organization and Nature of Business Viking Exploration, Inc. (a development stage company, the "Company," formerly Alpha Diamond Corporation and African Resources, Inc.) incorporated in Nevada January 22, 1997. The Company is engaged in precious mineral exploration and has entered into a Joint Venture Agreement for that purpose with Gold Rivers of Africa, Inc, a corporation organized in the Republic of Guinea, Africa (see Note F). Activities since inception have been devoted primarily to exploration, organization and financing. The Company presently has no salaried employees or dedicated facilities. Going Concern Considerations The accompanying financial statements have been presented assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of June 30, 1999, the Company has no assets, has significant working capital and stockholders' deficits and since its inception has incurred substantial losses. The Company presently has no product or producing properties and requires significant additional financing to satisfy its outstanding obligations and commence operations. Unless the Company successfully obtains suitable significant additional financing, there is substantial doubt about the Company's ability to continue as a going concern. Management's plans to address these matters include proposed private placements of stock, obtaining short-term loans, and the acquisition of operating properties that will provide cash flow. The financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Earnings (Loss) Per Share Basic earnings per share are computed using the weighted average number of common shares outstanding during each period. Concentrations Concentrations include: reliance on a single area mining prospect in an isolated region of a foreign country; limited financial capacity of related parties and/or others to continue funding operations; and, reliance on the future stability, capacity and cooperation of a joint venture partner, Gold Rivers of Africa, Inc. If the Company is successful in commencing sustained commercial levels of production in Guinea, it will need significant quantities of mining equipment and supplies that are presently in short supply or unavailable. Also, equipment may either be very expensive or of restricted availability; and transportation of heavy equipment in the region poses practical difficulties and is weather dependent. Note B - Summary of Significant Accounting Policies Use of Estimates Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. Income Taxes The Company has adopted the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which incorporates the use of the asset and liability approach of accounting for income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and tax basis of assets and liabilities (see Note C). Statement of Cash Flows Information and Supplemental Non-Cash Financing Activities Cash and cash equivalents include cash and short-term investments with original maturities of three months or less. There were no payments of interest or income taxes in the periods presented. Note C - Income Taxes As of June 30, 1999, the Company had net operating loss carryforward totaling approximately $1.61 million that may be offset against future taxable income, if any. The loss carryforward begins to expire in 2017 and is limited by certain changes in the Company's ownership. A tax benefit has not been reported in the accompanying financial statements for the operating loss carryforward because the Company is uncertain as to the likelihood of utilization. Accordingly, the approximate tax benefit of $170,000 of the loss carryforward has been offset by a valuation allowance of the same amount (an increase of $60,000 for the year ended June 30, 1999). Note D - Capital Stock Stock Issued for Cash During March 1997, the Company issued a total of 110,000 shares of common stock to its founders at $.02 per share. In April 1997, the Company received a total of $36,100 for 3,611 shares of common stock from investors ($10 per share) in an offering of stock pursuant to Regulation 504 of the Securities Act of 1993. In December 1997 and May 1998, the Company issued a total of 1,461,942 shares of common stock to four investors pursuant to a Regulation 504 private placement of stock for a total of $159,864 (ranging from $.07 to $.25 per share). In fiscal 1998, the Company issued a total of 1,711,380 shares of common stock to investors for a total of $145,883 (ranging from $.05 to $.16 per share). Stock Issued for Services On September 8, 1997 the board of directors approved a resolution to issue for services rendered through August 31, 1997, 600,000 shares of common stock to the President and Chairman of the Board of Directors and 200,000 shares to the corporate secretary and board member (a total of 800,000 shares). The issuable were recorded at $.07 per shares, the estimated fair value of the services. In November 1997, the Company issued 173,000 shares for legal services at an estimated value of $12,110 ($.07 per share). In addition, the Company issued and additional 1,503,904 shares in November 1997 and May 1998 to officers and directors for services with an estimated value of $105,005 ($.05 to $.09 per share). In fiscal 1999, the Company issued a total of 2.05 million shares of both common and preferred shares to consultants for investor relation services with an estimated value of $134,004 ($.05 to $.12 per share). Stock Issued For Joint Venture Interest And Other In January 1998, the Company agreed to issue 5.5 million shares of common stock for partial payment of an interest in a Joint Venture Agreement (see Note F). The estimated value of the common stock has been classified as exploration expense in the accompanying statement of operations ($.07 per share). In fiscal 1998, the Company deposited 1 million shares of unissued common stock as security for payment of prospective financing arrangements. The trustee, without the Company's authorization subsequently sold the stock. The financing was not arranged and proceeds from the sale of stock kept by the trustee. Return of the stock is subject to a favorable outcome of arbitration proceedings presently underway among the parties. Subject to outcome of the arbitration, the Company has recorded the issuance of the stock for the unsuccessful financing at par value. Issuance of Preferred Stock On June 17, 1998, the Board of Directors adopted a resolution to amend its articles of incorporation to establish capital stock consisting of common stock and preferred stock as one undetachable unit. Pursuant to the resolution, the Company reissued the unit certificates upon cancellation of previously issued outstanding common stock certificates. Preferred stock rights entitle holders to a non-cumulative 3% dividend in the event of available net profits from production. Preferred stock is non-voting. Note E - Related Party Transactions Through June 30, 1999, the Company's President has advanced the Company a total f $273,284 as operating capital. The advances bear interest at 12% per annum. In addition to the foregoing, a relative of the President has advances the Company $3,609. The obligation is unsecured and due on demand. Note F - Joint Venture Agreement On January 5, 1998 the Company entered into a Joint Venture Agreement with Gold Rivers of Africa, Inc. ("GRA") to explore for and mine precious minerals on a concession GRA has on the Konkoure River, located in Guinea. The Agreement was amended October 1, 1998 to delay certain effective dates originally set forth in the Agreement. GRA agreed to contribute 50% of its concession to the Joint Venture. The Company's obligation was to issue 5.5 million shares of common stock (see Note D above), followed by 1 million shares in November 1999, provided the gross mining and trade income equals or exceeds $2 million; and 1 million shares the third year of production if the total gross mining and trade income equals or exceeds $8 million for the first three years of production. In addition, the Company agreed to contribute funding to GRA for its mining operation a total of $4 million as follows: June 1, 1999 - $500,000, June 1, 2000 - $1.5 million, and June 1, 2001 - $2 million. In the event that the Company does not provide the funding as set forth above, its percentage interest in the Joint Venture shall be decreased to its proportionate capital contribution. Through June 30, 1999, the Company funded approximately $372,500 of the obligation to GRA. These payments have been classified as exploration expenses in the accompanying financial statements. The Joint Venture Agreement provides that the parties divide equally all net profits derived from mining and trading from the Konkoure River concession, as long as the production and funding targets are met. If the funding requirements are not met the Company's net profits percentage is to be determined by its capital contribution. As of July 29, 1999, production on the concession has not commenced and quantifiable reserves have not been identified. Note G - Events Subsequent to June 30, 1999 (Unaudited) During July 1999, the Company's President advanced $10,000 to the Company (see Note E). PART III The following documents are filed as part of this report: Exhibits EX-3.(i) Articles of Incorporation EX-3.(ii) By-laws EX-3.(iii) Articles of Amendment EX-10.(i) Arrete No A99/134P EX-10.(ii) Property Rights Assignment Agreement along with Cancellation of Property Assignment EX-10.(iii) Joint Venture Agreement Dated January 1, 1998 EX-10.(iv) Joint Venture Agreement dated October 5, 1998 SIGNATURES Pursuant to the requirements of Section 12(g) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on July 25, 1999. VIKING EXPLORATION, INC. By:__________________________________________ Mr. Richard Brodzik, President 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 Registrant and in the capacities indicated on July 25, 1999. EX-3.(I) 2 ARTICLES OF INCORPORATION ARTICLES OF INCORPORATION OF ALPHA DIAMOND CORPORATION FIRST The name of the corporation is ALPHA DIAMOND CORPORATION. SECOND Its principal office in the state of Nevada is located at 1 East First Street, Reno, Nevada 89501. The name and address of its resident agent is The Corporation Trust Company of Nevada, 1 East First Street, Reno, Nevada 89501. THIRD The purpose or purposes for which the corporation is organized: To engage in the business of exploration, development and production of diamonds and to engage in and carry on any lawful business activity or trade, and to manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares, merchandise, securities and personal property of every class and description. FOURTH The amount of the total authorized capital stock of the corporation is One Thousand Dollars ($1,000.00) consisting of One Hundred Million (100,000,000) shares of common stock of the par value of $0.00001 each. FIFTH The governing board of this corporation shall be known as directors, and the number of directors may from time to time be increased or decreased in such manner as shall be provided by the bylaws oi this corporation. The names and addresses of the first board of directors are: NAME POST OFFICE ADDRESS Rick Brodzik 25 Rugby Road Buffalo, NY 14216 Carey O'Brien 45 LaRose Avenue Suite 1608 Weston, Ontario Canada M9P 1A8 Kurt Wruck 16 Parkway Avenue Toronto, Ontario Canada M6R 1T5 The number of members of the Board of Directors shal1 not be less than three or more than thirteen. SIXTH The capital stock, after the amount of the subscription price, or par value, has been paid in shall not be subject to assessment to pay the debts of the corporation. SEVENTH The name and addresses of each of the incorporators signing the Articles of Incorporation are as follows: NAME POST OFFICE ADDRESS Conrad C. Lysiak 601 West First Avenue Suite 503 Spokane, Washington 99204 EIGHTH The corporation is to have perpetual existence. NINTH In furtherance, and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: Subject to the bylaws, if any, adopted by the stockholders, to make, alter or amend the bylaws of the corporation. To fix the amount to be reserved as working capital over and above its capital stock paid in, to authorize and cause to be executed mortgages and liens upon the real and personal property of this corporation. By resolution passed by a majority of the whole board, to designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the corporation, which, to the extent provided in the resolution or in the bylaws of the corporation, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in the bylaws of the corporation or as may be determined from time to time by resolution adopted by the board of directors. When and as authorized by the affirmative vote of stockholders holding stock entitling them to exercise at least a majority of the voting power given at a stockholders' meeting called for that purpose, or when authorized by the written consent of the holders of at least a majority of the voting stock issued and outstanding, the board of directors shall have power and authority at any meeting to sell, lease or exchange all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions as its board of directors deem expedient and for the best interests of the corporation. TENTH Meeting of stockholders may be held outside the State of Nevada, if the bylaws so provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Nevada at such place or places as may be designated from time to time by the board of directors or in the bylaws of the corporation. ELEVENTH This corporation reserves the right to amend alter, change or repeal any provision contained in the Articles of Incorporation, in the manner now or hereafter prescribed by statute, or by the Articles of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation. TWELFTH The corporation shall indemnify its officers, directors, employees and agents to the full extent permitted by the laws of the State of Nevada. I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Nevada, do make and file these Articles of Incorporation, hereby declaring and certifying that the facts herein stated are true, and accordingly have hereunto set my hand this 21st day of January, 1997. /s/ Conrad Lysiak CONRAD C. LYSIAK STATE OF WASHINGTON ) ) COUNTY OF SPOKANE ) On this 21st day of January, 1997, before me, a Notary Public, personally appeared CONRAD C. LYSIAK, who acknowledged that he executed the above instrument. /s/ Judy Terese Lysiak Notary public residing in the State of Washington, Residing in Spokane My Commission Expires: October 8, 1998 EX-3.(II) 3 BY-LAWS EX-3.(III) 4 CERTIFICATES OF AMENDMENTS EX-10.(I) 5 ARRETE NO A99/134P EX-10.(II) 6 PROPERTY RIGHTS ASSIGNMENT AGREEMENT September 7, 1997 By facsimile: (416) 244-9616 To: Alpha Diamond Corporation Attention: Rick Brodzik PROPERTY RIGHTS ASSIGNMENT AGREEMENT SUPERA INTERNATIONAL GHANA Ltd. ("Supera") has the exclusive rights to mine concessions in Ghana Africa, Akim Oda District, located at the juncture Bempong and Adim Rivers including this juncture and extending 3 miles up Bempong river and down from the juncture of these rives 700 meters (this includes a minimum of 6 pools which will be high yielding of both gold and diamonds). The minimum estimated values in reserve are in Excess of $150,000,000.oo USD. Supera has the expertise to mine these properties and the necessary licenses to do business in Ghana and the ability, resources, to market the raw materials. Supera will assign 100% of its net profits and 100% of its mining rights to Alpha Diamond Corporation ("Alpha") for valuable consideration which will be in form of financing for all mining equipment and the operational costs of mining, and 5,500,000 in stock, and salaries of $20,000 USD for the 3 officers and agents of Supera. Alpha will provide the following financing: 1. 150,000 USD on or before September 22, 1997. 2. 300,000 USD on or before October 30, 1997. 3. 350,000 USD on or before December 31, 1997. Please assign the 5,500,000 share of stock to designees on the following page. Agreed and accepted by: Agreed and accepted by: /s/Patrick Campbell Date: /s/Rick Brodzik Date: Patrick Campbell Rick Brodzik Senior Vice President President SUPERA INTERNATIONAL LTD. Alpha Diamond Corporation SENT VIA FAX TO: (416) 244-9616 October 15, 1997 TO: Rick Brodzik Alpha Diamond RE: Cancellation of Property Assignment Dear Rick: Effective immediately, the agreement on the property rights assignment of the property in Ghana, Africa located in the Akim-Oda Distict at the junction of Bempong and Adim River, consisting as approximately 218 acres, extending 3 miles up the Bempong River, wherein detailed and contractually defined in the agreement dated September 7, 1997, is hereby canceled in it entirety, due to the fact that commitments were unable to be kept in the timeline scheduled in the same agreement. A new agreement will be finalized and submitted to you in the coming week. Sincerely, Louis Supera CEO/President Supera International Ghana Ltd. EX-10.(III) 7 JOINT VENTURE AGREEMENT (1/1/98) JOINT VENTURE AGREEMENT THIS JOINT VENTURE AGREEMENT is made and entered into on this the 5th day of January 1998, by and between, Gold Rivers of Africa, Inc. Republic of Guinea, Africa and Alpha Diamond (hereinafter "Alpha"), a Corporation duly licensed pursuant to the laws of the State of Nevada, (hereinafter referred to collectively as the "Parties"): WITNESSETH WHEREAS, Gold Rivers of Africa has special abilities and expertise in the area of mining available for contribution to a business enterprise and; WHEREAS, Alpha Diamond has special abilities, experience and capital available for contribution to a business enterprise; and WHEREAS, The Parties have heretofore agreed to joint venture abilities, experience and capital for the purposes of investing in a mining program and the sale of precious stones and precious metals derived from that mining program; and WHEREAS, it is the desire of the Parties to define and set out their relationship in writing and the circumstances under which they are operating, as of the date of this agreement; NOW THEREFORE, in consideration of the mutual convents hereinafter contained, the Parties agree as follows: 1. PRIOR AGREEMENT. It is the intent of the Parties that his agreement supersede all other Agreements, understandings ventures or relationships between the Parties, previously, or otherwise, existing between the Parties; 2. FORMATION, The Parties hereby from a joint venture pursuant to the laws of the State of Nevada, the joint venture business of which shall be the mining of Precious Stones and Precious Metals, shall be referred to hereinafter as the "Business" 3. PURPOSE. The purpose of the Business is the mining of precious stones and precious metals, and to carry on legitimate activities relating to mining as may be necessary to the business of the joint venture; 4.PRINCIPAL OFFICE. The principal office of the business shall be 981 Whitney Ranch #925 Las Vegas, Nevada, USA 89014 or such other place as the Parties may from time to time designate; 5. TERM. The term of the Business shall commence as of the 5th day of January, 1998, and shall continue until terminated by written agreement of the Parties or the termination of the concession; 6. SALE OR ASSIGNMENT. The Parties agree that their respective joint venture interest in this agreement may be freely sold or assigned to any third party, however, the parties agree that the non selling Party must be given first right of purchase, provided that the on selling Party matches or supersedes the verified offer received by the selling Party; 7. CONTRIBUTION OF CAPITAL. Gold Rivers agrees to contribute fifty (50%) of the concession that it owns on the Konkoure River, located in the Republic of Guinea, Africa, said total concession being thirty (30) kilometers with Gold Rivers being the exclusive operator of the Joint Venture mining operation as to the above concession. Alpha agrees to issue seven million five hundred thousand restricted shares of Alpha stock of Gold Rivers in consideration for said concessions and said stock to be issued as follow: (a) five million five hundred thousand (5,500,000), issued; (b) one million first year of production, November 1998 - November 1999, provided that gross mining and trade income equals or exceeds two million U.S. dollars ($2,000,000); (c) one million (1,000,000), the third year of production, if the total gross mining and trade income equals or exceeds eight million dollars ($8,000,000) for the first three (3) years of production; Alpha, further, agrees to contribute funding to Gold Rivers for its mining operation the cash sum of four million dollars ($4,000,000), said funds to be paid as follows; (d) Minimum five hundred thousand first year ($500,000.); (e) one million five hundred thousand second year ($1,500,000.); (f) two million third year ($2,000,000.); First payment due on or before August 1, 1998. If Gold Rivers should fail to meet income targets as projected the stock due to be issued as set forth above shall be decreased proportionate to the gross income earned. If Alpha should fail to meet its funding requirements, its percentage of its interest in the above Gold Rivers concession shall be decreased proportionate to its capital contribution. 8. PROFITS. Gold Rivers and Alpha shall divide equally all net profits derived from the mining and trading of gold and precious stones, derived from the Konkoure River concession, as long as the above production and funding targets are reached. If the above funding projections are not reached, Alpha shall receive net profits equal to its ownership percentage which shall be determined by its capital contribution. 9. PRIOR AGREEMENTS. This Agreement supersedes any prior agreements, if any, and shall be deemed legally binding on the parties on execution. 10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement (including licenses, permits, and other documents) between the Parties and there are no other agreements written or otherwise hereto. 11. COUNTERPARTS/FACSIMILE SIGNATURES. This Agreement may be executed in one or more counterparts and may be executed by facsimile signature, each of which shall be deemed an original and all of which together will constitute one and the same instrument. 12. NOTICES. All Notices, request, demands, claims and other communication hereunder, including notices, request, demand, claim or other communication will be in writing. Amy notice, request, demand, claim or other communication hereunder shall be deemed duly given three business days after it is sent by registered or certified mail, return receipt request, postage prepaid, and addressed to the intended recipient as set forth below: Gold Rivers of Utah Alpha Diamond Corporation 981 Whitney Ranch Suite 925 5 La Rose Ave. Henderson, Nevada Suite 1608 89204 Weston, Ont. Canada M9P1A8 13. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada. 14. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interest, or violations hereunder without the prior written approval of the other Party. 15. AMENDMENTS AND WAIVERS. Any amendments to this Agreement shall be in writing and forwarded to the Parties pursuant to the notice provision. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement or cause this Agreement to be executed as of January 5, 1998. Gold Rivers of Africa Corporation Alpha Diamond Corporation By:/s/ Lou Supera By:/s/ Richard Brodzik Lou Supera Richard Brodzik President President EX-10.(IV) 8 JOINT VENTURE AGREEMENT (10/5/98) JOINT VENTURE AGREEMENT THIS JOINT VENTURE AGREEMENT is made and entered into on this the 1st day of October 1998, by and between, Gold Rivers of Africa, Inc. Republic of Guinea, Africa and Alpha Diamond (hereinafter "Alpha"), a Corporation duly licensed pursuant to the laws of the State of Nevada, (hereinafter referred to collectively as the "Parties"): WITNESSETH WHEREAS, Gold Rivers of Africa has special abilities and expertise in the area of mining available for contribution to a business enterprise and; WHEREAS, Alpha Diamond has special abilities, experience and capital available for contribution to a business enterprise; and WHEREAS, The Parties have heretofore agreed to joint venture abilities, experience and capital for the purposes of investing in a mining program and the sale of precious stones and precious metals derived from that mining program; and WHEREAS, it is the desire of the Parties to define and set out their relationship in writing and the circumstances under which they are operating, as of the date of this agreement; NOW THEREFORE, in consideration of the mutual convents hereinafter contained, the Parties agree as follows: 1. PRIOR AGREEMENT. It is the intent of the Parties that his agreement supersede all other Agreements, understandings ventures or relationships between the Parties, previously, or otherwise, existing between the Parties; 2. FORMATION, The Parties hereby from a joint venture pursuant to the laws of the State of Nevada, the joint venture business of which shall be the mining of Precious Stones and Precious Metals, shall be referred to hereinafter as the "Business" 3. PURPOSE. The purpose of the Business is the mining of precious stones and precious metals, and to carry on legitimate activities relating to mining as may be necessary to the business of the joint venture; 4.PRINCIPAL OFFICE. The principal office of the business shall be 981 Whitney Ranch #925 Las Vegas, Nevada, USA 89014 or such other place as the Parties may from time to time designate; 5. TERM. The term of the Business shall commence as of the 1st day of October, 1998, and shall continue until terminated by written agreement of the Parties or the termination of the concession; 6. SALE OR ASSIGNMENT. The Parties agree that their respective joint venture interest in this agreement may be freely sold or assigned to any third party, however, the parties agree that the non selling Party must be given first right of purchase, provided that the on selling Party matches or supersedes the verified offer received by the selling Party; 7. CONTRIBUTION OF CAPITAL. Gold Rivers agrees to contribute fifty (50%) of the concession that it owns on the Konkoure River, located in the Republic of Guinea, Africa, said total concession being thirty (30) kilometers with Gold Rivers being the exclusive operator of the Joint Venture mining operation as to the above concession. Alpha agrees to issue seven million five hundred thousand restricted shares of Alpha stock of Gold Rivers in consideration for said concessions and said stock to be issued as follow: (a) five million five hundred thousand (5,500,000), issued; (b) one million first year of production, November 1998 - November 1999, provided that gross mining and trade income equals or exceeds two million U.S. dollars ($2,000,000); (c) one million (1,000,000), the third year of production, if the total gross mining and trade income equals or exceeds eight million dollars ($8,000,000) for the first three (3) years of production; Alpha, further, agrees to contribute funding to Gold Rivers for its mining operation the cash sum of four million dollars ($4,000,000), said funds to be paid as follows; (d) minimum five hundred thousand first year ($500,000.); (e) one million five hundred thousand second year ($1,500,000.); (f) two million third year ($2,000,000.); First payment due on or before January 1, 1999. If Gold Rivers should fail to meet income targets as projected the stock due to be issued as set forth above shall be decreased proportionate to the gross income earned. If Alpha should fail to meet its funding requirements, its percentage of its interest in the above Gold Rivers concession shall be decreased proportionate to its capital contribution. 8. PROFITS. Gold Rivers and Alpha shall divide equally all net profits derived from the mining and trading of gold and precious stones, derived from the Konkoure River concession, as long as the above production and funding targets are reached. If the above funding projections are not reached, Alpha shall receive net profits equal to its ownership percentage which shall be determined by its capital contribution. 9. PRIOR AGREEMENTS. This Agreement supersedes any prior agreements, if any, and shall be deemed legally binding on the parties on execution. 10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement (including licenses, permits, and other documents) between the Parties and there are no other agreements written or otherwise hereto. 11. COUNTERPARTS/FACSIMILE SIGNATURES. This Agreement may be executed in one or more counterparts and may be executed by facsimile signature, each of which shall be deemed an original and all of which together will constitute one and the same instrument. 12. NOTICES. All Notices, request, demands, claims and other communication hereunder, including notices, request, demand, claim or other communication will be in writing. Amy notice, request, demand, claim or other communication hereunder shall be deemed duly given three business days after it is sent by registered or certified mail, return receipt request, postage prepaid, and addressed to the intended recipient as set forth below: Gold Rivers of Utah Alpha Diamond Corporation/African Resources Inc. 981 Whitney Ranch Suite 925 5 La Rose Ave. Henderson, Nevada Suite 1608 89204 Weston, Ont. Canada M9P1A8 13. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada. 14. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interest, or violations hereunder without the prior written approval of the other Party. 15. AMENDMENTS AND WAIVERS. Any amendments to this Agreement shall be in writing and forwarded to the Parties pursuant to the notice provision. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement or cause this Agreement to be executed as of October 1, 1998. Gold Rivers of Africa Corporation Alpha Diamond Corporation/African Ressources Inc. By:/s/ Daniel Joseph By:/Richard Brodzik Daniel Joseph Richard Brodzik President President -----END PRIVACY-ENHANCED MESSAGE-----