SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934.
Filed by the Registrant [ x ]
Filed by Party other than the Registrant [ ]
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only [as permitted by Rule
14a-6(e)(2)]
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ROYAL SILVER MINES, INC.
(Exact name of Registrant as specified in its charter.)
Commission File number 0-25170
Payment of Filing Fee (Check the appropriate box):
[ x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-1:
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act
Rule O-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule O-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
1. Amount Previously Paid;
2. Form, Schedule or Registration Statement No.
3. Filing Party:
4. Date Filed:
Dear Shareholders:
On behalf of the Board of Directors, you are cordially invited to attend
the Annual Meeting of Shareholders of ROYAL SILVER MINES, INC. to be held at 200
Professional Building, Suite 200, Hilton Head Island, SC 29926, commencing at
10:30 A.M., local time, on March 30, 2001. We look forward to the opportunity
of personally greeting those of you who are able to attend.
The Board and Management of the Company has determined that the Company, to
remain a viable and going concern, must act now to radically change its business
focus or alternatively, to take steps to wind up its affairs. The continuing
and long depressed state of the mining and metals industry has made it very
difficult to operate a development stage company such as Royal Silver Mines.
However, management believes very significant opportunities exist in the energy
field which, if the Company acts diligently but swiftly, could result in
significant business opportunity and growth.
In the past two years, the Company has attempted to develop a novel
approach to treatment of waste ores and other noxious by-products of smelting
processes. However, due to the depressed state of metal markets in general,
particularly the gold market, investor interest in this process was minimal.
The Company also attempted to acquire Nuvotec, Inc., a technology company based
in Richland, WA. This acquisition was cancelled after the Board of Nuvotec
determined that other means of raising capital and going public were more
attractive.
Therefore, the Company has arrived at a juncture where a complete
re-thinking and adjustment of the market capitalization of the Company is
necessary. Management has chosen to focus on energy because it represents a
very large segment of the nation's economy, and because recently disclosed
shortages of electrical generation capacity represent a long-term growth
opportunity for new and innovative market participants.
At the meeting you are being asked to consider the election of three
directors, increasing the authorized shares of Common Stock of the Company,
authorizing a class of Preferred Stock, authorizing a 1 for 20 reverse split of
the issued and outstanding shares, authorizing a name change of the Company to
"Cadence Resources Corporation", and the appointment of independent auditors.
The complete text of these proposals and the reasons the directors have
proposed their adoption are contained in this proxy statement. I urge you to
carefully study them.
FOR THE REASONS STATED HEREIN, YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE "FOR" THESE PROPOSALS.
During the course of the meeting, management will report on the current
activities of ROYAL SILVER MINES, INC. and comment on its future plans. A
discussion period is also planned so that Shareholders will have an opportunity
to ask questions and present their comments.
Under the provisions of the Bylaws, the Board of Directors has fixed the
close of business on February 28, 2001 as the record date for the determination
of Shareholders entitled to notice of and to vote at the meeting.
Please take a moment to sign, date and mail your proxy in the enclosed
envelope. Should you later decide to join us at the meeting, you may withdraw
your proxy at that time and vote in person.
Thank you for your past support, continuing interest and consideration.
Very truly yours,
HOWARD CROSBY
Chairman of the Board
ROYAL SILVER MINES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Shareholders:
The Annual Meeting of Shareholders of ROYAL SILVER MINES, INC. (the
"Company") will be held at 200 Professional Building, Suite 200, Hilton Head
Island, SC 29926, commencing at 10:30 A.M., local time, on March 30, 2001 for
the following purposes:
1. Election of three directors to succeed those whose terms have expired;
2. To consider and act upon a proposal to amend the Company's Articles of
Incorporation. The proposed amendment would increase the authorized Common
Stock of the Company from 40,000,000 shares, par value $0.01 per share, to
100,000,000 shares of Common Stock, $0.01 par value per share.
3. To consider and vote upon a proposal to amend the Articles of Incorporation
to authorize ten million shares of Preferred Stock, $0.01 par value per share,
for possible issuance from time-to-time and in such series and upon such terms
as shall be determined by the Board of Directors.
4. To consider and vote upon a proposal to conduct a reverse split of the issued
and outstanding common shares of the Company on a 1 for 20 basis. This proposal
will not affect the authorized capital of the Company.
5. To consider and vote upon a proposal to amend the Articles of Incorporation
to change the name of the Company to "Cadence Resources Corporation".
6. Ratification of the appointment of Williams & Webster, Certified Public
Accountants, to audit the financial statements of the Company for the year
ending September 30, 2001; and,
7. To act upon such other matters as may properly come before the meeting and
any adjournment thereof. Only Shareholders of record at the close of business on
February 28, 2001, will be entitled to notice of and to vote at the Annual
Meeting.
By Order of the Board of Directors
John Ryan
Executive Vice President
Hilton Head Island, SC
February 28, 2001
YOUR VOTE IS IMPORTANT
Please complete, date, sign and return the enclosed proxy immediately.
MAIL TO:
ROYAL SILVER MINES, INC.
1519 Main Street, #169
Hilton Head Island, SC 29926
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON March 30, 2001 at 200 Professional Building, Suite 200,
Hilton Head Island, SC at 10:30 A.M. local time
INTRODUCTION
These Proxy materials are furnished in connection with the solicitation by
the Board of Directors of ROYAL SILVER MINES, INC., a Utah corporation (the
"Company"), for use at its Annual Meeting of Shareholders to be held at 200
Professional Building, Suite 200, Hilton Head Island, SC 29926, commencing at
10:30 A.M., local time, on March 30, 2001. Only Shareholders of record, as of
the close of business on February 28, 2001 will be entitled to vote at the
meeting or any adjournment thereof. This Proxy Statement and form of Proxy are
being sent to Shareholders on or about March 15, 2001.
PURPOSES OF ANNUAL MEETING
At the Annual Meeting, Shareholders entitled to vote will be asked to
consider and take action to increase the authorized shares of Common Stock of
the Company; elect three (3) directors to succeed those whose terms have
expired; amend the Articles of Incorporation to increase the authorized Common
Stock of the Company; amend the Articles of Incorporation to create a class of
Preferred Stock; consider a one for twenty reverse split of the issued and
outstanding common stock; amend the Articles of Incorporation to change the name
of the Company to "Cadence Resources Corporation"; and to ratify the appointment
of Williams & Webster, Certified Public Accountants, as independent auditors to
make an examination of financial statements of the Company for the fiscal year
ending September 30, 2001; and, such other business as may come before the
meeting. See "Voting at the Annual Meeting of Shareholders."
SOLICITATION OF PROXIES
These proxy materials are furnished in connection with the solicitation of
proxies by the Board of Directors and management of the Company to be used at
the Annual Meeting of Shareholders and at any adjournment or adjournments
thereof. Properly executed proxies received prior to the meeting will be voted
at the meeting. If a Shareholder specifies how the proxy is to be voted on any
business to come before the meeting, it will be voted in accordance with such
specifications. If no specification is made, it will be voted in accordance
with the recommendations of the Board of Directors and management which are FOR
the election of the directors named in the Proxy Statement; FOR the increase in
authorized shares of Common Stock of the Company; FOR the authorization of a
class of Preferred Stock; FOR the one for twenty reverse split; FOR the name
change to "Cadence Resources Corporation"; and FOR ratification of the
appointment of Williams & Webster as the Company's principal independent public
accountants for 2001. The proxy may be revoked by you at any time before it is
voted at the meeting.
This Proxy Statement and accompanying form of proxy are first being sent or
given to Shareholders on or about March 15, 2001.
Shareholders of record at the close of business on February 28, 2001 are
entitled to notice of and to vote at the meeting. On February 28, 2001 there
were outstanding and entitled to vote 33,759,565 shares of Common Stock (each of
which is entitled to one vote). A majority of the votes cast by the holders of
Common Stock is required to increase the authorized shares of Common Stock of
the Company, for the election of directors, for the reverse split, for the name
change, and a majority of the votes cast by such holders is required for
ratification of the appointment of the principal independent public accountants.
REVOCATION OF PROXIES
Any Shareholder has the power to revoke his or her proxy at any time,
insofar as it has not been exercised, by the written notice of a subsequently
dated proxy, received by the Company prior to or at the Annual Meeting or by
oral revocation given by the Shareholder in person at the Annual Meeting or any
adjournment thereof.
PROXY COMMITTEE
Management of the Company has appointed a Proxy Committee consisting of
Howard Crosby and John Ryan in whose names the proxies are solicited on behalf
of the Company.
VOTING AT THE ANNUAL MEETING OF SHAREHOLDERS
The Board of Directors of the Company has fixed the close of business on
the 28th day of February, 2001, as the record date for determination of the
Shareholders entitled to notice of, and to vote at, the Annual Meeting (the
"Record Date"). As of the Record Date, there were issued and outstanding,
33,759,565 shares of Common Stock are entitled to vote. A majority of such
shares will constitute a quorum for the transactions of business at the Annual
Meeting. The holders of record on the Record Date of the shares entitled to be
voted at the Annual
Meeting are entitled to cast one vote per share on each matter submitted to vote
at the Annual Meeting.
IMPORTANT
Whether or not you plan to attend the Annual Meeting of Shareholders,
please complete, sign and date the accompanying proxy and mail it at once in the
enclosed envelope. Your proxy will be revocable, either in writing or by voting
in person at the Annual Meeting, at any time prior to its exercise.
INFORMATION CONCERNING VOTING
As of the close of business on February 28, 2001 the Company has authorized
Forty Million (40,000,000) shares of one class of Common Stock and it has issued
and outstanding 33,759,565 shares of one class of Common Stock. Only holders of
record of the Company's Common Stock at the close of business on February 28,
2001 are entitled to notice and to vote on matters which come before the Annual
Meeting or any adjournment thereof. On all matters requiring a shareholder
vote, each shareholder is entitled to one vote in person or by proxy at the
Annual Meeting for each share of Common Stock of the Company recorded in his/her
name. Proposals Nos. 1 and 6 will be decided by a majority vote of those shares
voting and Proposals 2, 3, 4 and 5 will decided upon by a majority vote of the
total outstanding shares eligible to vote.
PROPOSAL 1
ELECTION OF DIRECTORS
Three directors are to be elected to hold office until the next Annual
Meeting of Shareholders and until their successors have been duly elected and
qualified. If the proxy is executed in such manner as not to withhold authority
for the election of any or all of the nominees for directors, then the persons
named in the proxy will vote the shares represented by the proxy for the
election of the following six nominees. If the proxy indicates that the
stockholder wishes to withhold a vote from one or more nominees for directors,
such instructions will be followed by the persons named in the proxy. The three
nominees are now members of the Board of Directors and were elected by the
Shareholders at the last annual shareholders meeting. Management has no reason
to believe that any of the nominees will not serve. In the event that any
nominee should not be available, and if the Board has designated a substitute
nominee, the persons named in the proxy will vote for the substitute nominee
designated by the Board of Directors.
Meetings and Committees of the Board
During the year ended September 30, 2000, the Board unanimously adopted
resolutions on three occasions, pursuant to applicable Utah law. On one of
these occasions, action was taken without a meeting. Currently, the Company
does not have any Committees of the Board of Directors.
NOMINEES
Set forth below is certain biographical information regarding each
Director-nominee:
HOWARD M. CROSBY - President, Treasurer and a member of the Board of Directors.
Since February 1994, Mr. Crosby is the President and a member of the Board
of Directors and since January 1998, Mr. Crosby has been the Treasurer of
Company. Since 1989, Mr. Crosby has been president of Crosby Enterprises, Inc.,
a family-owned business advisory and public relations firm. From September 1992
to May 1993, Mr. Crosby was employed by Digitran Systems, Inc., of Logan, Utah,
in the marketing department. Mr. Crosby currently serves as an Officer and
Director of several other development-stage resource companies. Mr. Crosby
received a B.A. degree from the University of Idaho in 1974.
JOHN RYAN - Executive Vice President, Secretary and a member of the Board of
Directors.
Mr. Ryan has been a member of the Board of Directors since April1997, has
been a Vice President since September 1996 and has been Secretary since October
1998. Mr. Ryan is a professional mining engineer. From June 1996 until October
1999, Mr. Ryan Vice-President and member of the Board of Directors of Metalline
Mining Company. From September 1993 to August 1994, Mr. Ryan was a registered
representative with Shearson Lehman Brothers, Inc. From August 1994 to April
1995, Mr. Ryan served as a consultant to the Company in mine engineering
services. From April 1995 to April 1996, Mr. Ryan was a registered
representative with Pennaluna & Co., a SEC/NASD registered broker/dealer. In
addition to his professional degree in Mining Engineering, which he received
from the University of Idaho, Mr. Ryan also holds a juris doctorate (J.D.)
degree from Boston College Law School. Mr. Ryan currently serves as an Officer
and Director of several other junior development-stage resource companies.
KEVIN STULP - Member of the Board of Directors
Mr. Stulp was appointed to the Board of Directors of the Company in 1996.
Mr. Stulp is currently a partner with Forte Group, a consulting group based in
Houston, Texas which focuses on rendering consulting advice to venture and
development stage companies. Mr. Stulp also serves as an independent consultant
in the fields of volume electronics and manufacturing, general business
consulting, business strategy, business use of the Internet, automation and
integration through computers, and financial analysis. From July 1994 to July
1995, Mr. Stulp was Director of Manufacturing Reengineering for Compaq Computer
Corporation, Houston, Texas. From September 1992 to June 1994, Mr. Stulp was
Director of Manufacturing for Compaq Computer Corporation. From September 1986
to September 1992, Mr. Stulp was PCA Operations Manager for Compaq Computer
Corporation. From December 1983 to September 1986, Mr. Stulp held various
positions with Compaq Computer Corporation, including industrial engineer, new
products planner and manufacturing manager. From July 1980 to December 1983,
Mr. Stulp was a financial planner with Texas Instruments, Houston, Texas. Mr.
Stulp holds the degree of Masters in Business Administration and the degree of
Bachelor of Science Mechanical Engineering, both from the University of
Michigan, and the degree of Bachelor of Science from Calvin College, Grand
Rapids, Michigan.
EXECUTIVE COMPENSATION
It is the Board's responsibility to review and set compensation levels of
the executive officers of the Company, evaluate the performance of management
and consider management appointments and related matters. All decisions are
decisions of the full Board. The Board considers the performance of the Company
and how compensation paid by the Company compares to compensation generally in
the mining industry and among similar companies. In establishing executive
compensation, the Board bases its decisions, in part, on achievement and
performance regarding broad-based objectives and targets as well as the
Company's financial performance. Due to the depressed state of the mining
exploration business, the Board has ceased evaluating its Officers on how well
mining exploration projects are proceeding, but instead has viewed survival of
the Company as a primary objective. The Board believes that due to the continued
resourceful actions of its Officers the Company continues to survive as a viable
entity.
For Fiscal 2000, the Company's executive compensation policy consisted of
two elements: base salary and stock awards. The policy factors which determine
the setting of these compensation elements are largely aimed at attracting and
retaining executives considered essential to the Company's long-term success.
The granting of stock is designed as an incentive for executives to keep
management's interests in close alignment with the interests of shareholders.
The Company's executive compensation policy seeks to engender committed
leadership to favorably posture the Company for continued growth, stability and
strength of shareholder equity.
The table below sets forth all cash and cash equivalent remuneration paid
by the Company and its subsidiaries during the year ended December 31, 2000 to
each of the Company's executive officers and to all executive officers of the
Company as a group:
Name and Title Cash or Cash Equivalent Compensation
Howard Crosby, President $48,000 yearly
John Ryan, Executive $48,000 yearly
Vice President and Treasurer
In addition to the foregoing, each officer received 15,000 shares per
quarter.
The Company anticipates paying the same cash and cash equivalent
remuneration to the foregoing executive officers in the year 2001. No other
officers received any renumeration during Fiscal 2000. The Board believes that
executive compensation during Fiscal 2000 substantially reflects the Company's
compensation policy.
Compensation of Directors
Directors of the Company are reimbursed for travel expenses incurred in
serving on the Board of Directors. Directors who are not executive officers of
the Company receive 15,000 shares of common stock per quarter for their
services. Members of the Board of Directors who are Officers also receive 5,000
shares of common stock for serving as such.
STOCK OPTION PLANS
The Company's Employee Incentive Stock Option Plan (the"Plan") was adopted
by the Board of Directors on January 10, 1992. The purpose of the Plan is to
attract and retain qualified personnel. The Plan provides that the aggregate
fair market value of the shares of Common Stock for which any participant may be
granted incentive stock options in any calendar year shall not exceed $100,000
plus any "unused limited carryover" as determined under Section 422A(c) of the
Internal Revenue Code of 1954, as amended.
On January 8, 1997, the Company filed a Form S-8 Registration Statement
with the Commission registering 831,775 shares of Common Stock for resale by
certain shareholders of the Company. Since that time, no further registrations
have been undertaken. In fiscal year 2000, no shares were issued pursuant to
this registration.
The Plan is administered by the Board of Directors of the Company who
determine, subject to the provisions of the Plan, to whom options are granted
and the number of shares of the Common Stock subject to option. The exercise
price of such options granted under the Plan must at least equal 100% of the
fair market value of the Common Stock on the date the option is granted.
The Plan also provides that no option shall be exercisable more than three
months after termination of an optionee's employment with the Company unless
such termination of employment occurs by reason of death or permanent and total
disability. In the event of the death or disability of a recipient of options
while an employee of the Company, the options which were otherwise exercisable
by the optionee or his legal representative or beneficiary of his estate at any
time prior to the expiration of one year from the date of his death or
disability. In no event, however, shall an option be exercisable after 10 years
from the date it was granted.
The Board pursuant to the Plan had granted options to certain employees,
officers, and directors in the fiscal years 1995, 1996, 1997, and 1998. It is
the determination of the Board at this time that all of these options have
either expired unexercised or have such limited value that they are unlikely to
be exercised in the future. The Board has not recently granted any new stock
options pursuant to the Plan, but may consider doing so if the current proposals
are approved by the Shareholders.
For the directors to be elected, Proposal No. 1, requires that a majority
of the votes be cast in favor of the each director. The Board of Directors
recommends the vote FOR Proposal No.1, the election of Howard M. Crosby, John
Ryan and Kevin Stulp.
PROPOSAL 2
PROPOSED AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK OF THE COMPANY FROM 40,000,000 SHARES $0.01 PAR VALUE
PER SHARE TO 100,000,000 SHARES, $0.01 PAR VALUE PER SHARE
The Board of Directors of the Company, unanimously approved and recommends to
the shareholders that they consider and approve a proposed amendment to Article
IV of the Company's Articles of Incorporation which would increase the Company's
authorized shares from 40,000,000 shares of Common Stock, par value $0.01 per
share to 100,000,000 shares of Common Stock, par value $0.01 per share. The
proposed amendment would revise the Company's Certificate of Incorporation to
read as follows:
"The total number of shares of Common Stock which the Corporation shall
have authority to issue is One Hundred Million (100,000,000) shares of Common
Stock, par value $0.01 per share."
The Board of Directors recommends a vote "FOR" this proposal.
The Board of Directors believes that the increase in the number of
authorized shares will benefit the Company by improving its flexibility to
consider and respond to future business opportunities and needs. The additional
authorized shares will be available for issuance from time to time in connection
with possible financings, the acquisitions of other assets, or the Company's
incentive stock option plan. Authorized shares may be issued from time to time
without action by the Company's stockholders to such persons and for such
consideration and on such terms as the Board of Directors determines. The
Company has no current plans to issue shares for any purpose.
An affirmative vote by the holders of a majority of the outstanding shares
of Common Stock entitled to vote at the meeting is required for the adoption of
this proposal to amend the Certificate of Incorporation. The Board of Directors
recommends a vote "FOR" the amendment to the Articles of Incorporation to
increase the authorized Common Stock.
PROPOSAL 3
PROPOSED AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO AUTHORIZE A
CLASS OF PREFERRED STOCK
The Board of Directors of the Company has voted to propose and recommends
that shareholders vote to amend Article IV of the Articles of Incorporation.
This amendment would authorize for issuance a new class of capital stock
consisting of 20,000,000 shares of Preferred Stock, $0.01 par value, (the
"Preferred Stock") which would have such voting powers, designations,
preferences, and relative participating, optional, conversion or other special
rights, and such qualifications, limitations or restrictions as the Board of
Directors may designate for each series thereof issued from time to time.
There are no shares of Preferred Stock of the Company currently authorized.
The proposed amendment would authorize the Board of Directors to issue Preferred
Stock, from time to time, in one or more series, with such designation, voting
powers, preferences, and relative, participating, optional, conversion or other
special rights, and such qualifications, limitations and restrictions, as the
Board of Directors may determine. These would include, but not be limited to,
(a) the distinctive designation of each series and the number of shares that
will constitute such series; (b) the dividend rate for such series; (c) the
price at which, and the terms and conditions on which, the shares of such series
may be redeemed, if such shares are redeemable; (d) the purchase or sinking fund
provisions, if any, for the purchase or redemption of shares of such series; (e)
any preferential amount payable upon each share of such series in the event of
the liquidation, dissolution or winding up of the Company; (f) the voting
rights, if any, of shares of such series; (g) the terms and conditions, if any,
upon which shares of such series may be converted into shares of other classes
or series of shares of the Company's Capital Stock, or securities issued by
other issuers; and, (h) the relative rights of priority of each series as to
dividends and assets.
For the reasons discussed below, the Board of Directors recommends a vote
"FOR this proposal. The Board of Directors believes that the proposed
authorization of Preferred Stock is desirable to enhance the Company's
flexibility in connection with possible future actions, such as stock splits,
stock dividends, financings, corporate mergers, acquisitions or properties or
businesses, use in employee benefit plans or other corporate purposes. Having
such authorized shares available for issuance in the future would allow shares
of either Preferred Stock to be issued without the expense and delay of a
special shareholders' meeting. The shares of Preferred Stock would be available
for issuance without further action by the shareholders.
The Board of Directors also believes that the authorization of a class of
Preferred Stock will benefit the Company by improving its flexibility to
consider and respond to future business opportunities and needs. The Preferred
Stock will be available for issuance from time-to-time in connection with
possible financings or the acquisitions of other assets. The Preferred Stock
may be issued from time-to-time without action by the Company's stockholders to
such persons and for such consideration and on such terms as the Board of
Directors determines. The Company has no current plans to issue shares for any
purpose.
In the event that both PROPOSAL 3 and PROPOSAL 4 are approved by the
shareholders, Article IV of the Articles of Incorporation of the Company would
be changed to read as follows:
"The total number of shares of Common Stock which the Corporation shall
have authority to issue is One Hundred Million (100,000,000) shares of Common
Stock, par value $0.01 per share. The total number of shares of Preferred Stock
which the Corporation shall have authority to issue is Twenty Million
(20,000,000) shares of Preferred Stock which may be designated from time to time
by the Board of Directors as to class, voting powers, preferences, conversion or
special rights, participating rights, or other designations as the Board may see
fit to impose."
An affirmative vote by the holders of a majority of the outstanding shares
of Common Stock entitled to vote at the meeting is required for the adoption of
this proposal to amend the Articles of Incorporation. The Board of Directors
recommends a vote "FOR" the amendment to the Articles of Incorporation to create
a class of Preferred Stock.
PROPOSAL 4
RATIFICATION OF A 1 FOR 20 REVERSE SPLIT OF THE ISSUED AND OUTSTANDING SHARES OF
THE COMPANY
REASONS FOR THE PROPOSED REVERSE STOCK SPLIT
On February 21, 2001, the closing bid price of the Company's Common Stock
was approximately $0.02 per share as reported by the OTC Bulletin Board system
managed by the NASD. The foregoing quotation reflects inter-dealer prices,
without retail mark-up, mark-down, or commission and may not represent actual
transactions. Members of the brokerage and banking industries have advised the
Company that brokerage firms might be more willing to evaluate the Company's
securities as a possible investment opportunity for their clients and may be
more willing to act as a market maker in the Company's securities if the price
range for the Company's Common Stock were higher. Management believes that
additional interest by the investment community in the Company's stock, of which
there can be no assurance, is desirable.
Management of the Company also believes that if low trading prices of the
Company's Common Stock persist, it may have a continuing adverse impact upon the
market for trading the Company's shares. In particular, brokerage firms often
charge higher commissions for trades of low-priced stocks than for trades of
higher priced stock at the same dollar amount. Moreover, some brokerage firms
will not recommend investments in companies with low-priced stocks or make a
market in such stock. As a result, the liquidity for current shareholders and
the Company's ability to obtain additional equity financing could be adversely
affected.
Management also believes that a continuing low stock price threatens the
existence of the Company as it makes it more difficult to raise equity or debt
financing, and almost impossible to utilize the trading value of the Company's
shares to undertake acquisitions of other companies or assets which may be
necessary as the Company seeks new business opportunities in the energy
industry.
POTENTIAL EFFECTS OF A REVERSE STOCK SPLIT
Shareholders should note that the effects of the reverse stock split upon
the market price for the Company's Common Stock cannot be accurately predicted.
The market price of the Company's Common Stock immediately prior to the
implementation of the reverse stock split theoretically should increase
immediately following the reverse stock split in direct proportion,
approximately, to the exchange ratio of the share consolidation. However, there
can be no assurance that post-split shares will trade at an increased price
level above the price of pre-split shares. Nor can there be an assurance that an
increased price level can be maintained, or for what length of time.
Further, management believes that if a greater market price results from
the reverse split, that brokerage and banking firms may develop a greater
interest in the Company, be more willing to recommend that their clients invest
in the Company, and perhaps work to restore market confidence in the Company.
Because the reverse stock split affects all Shareholders uniformly, it will
not cause a dilution of the percentage of aggregate equity ownership, voting
rights, earnings or net book value of Shareholders, except for those
Shareholders who hold a number of Common Shares not divisible by ten, and such
Shareholders will have their pro-rata ownership rounded up to the next whole
share. The per share earnings and net book value of the Company's Common Shares
will be increased because there will be fewer Common Shares outstanding. The
Company believes that the increase in net book value should result in a greater
market price for the Common Shares.
Also, management believes that market interest in the Common Shares should
be stimulated as much by an increase in market price levels as by increases in
net book value. A reverse stock split will decrease the number of Common Shares
which can be issued upon exercise of outstanding options, warrants or similar
rights to 1/20th of the pre-stock split amount.
This proposal to implement a reverse stock split does not represent an
effort by management to take the company private, nor is it intended or
anticipated that this reverse split will eliminate, close out, or decrease the
number of shareholders of the Company because of holding less than one share
after the reverse split. As disclosed herein, the Company will round up to the
nearest whole share if the number of shares a shareholder owns is not evenly
divisible. The reverse stock split will not result in the ownership of
fractional shares.
PROCEDURES FOR IMPLEMENTING THE PROPOSED REVERSE STOCK SPLIT
It is anticipated that the reverse split will become effective and be
implemented within ten business days following shareholder approval, at which
time twenty shares of pre-split Common Stock will be given a value equivalent to
one share of post-split Common Stock. The effective date on which this occurs
will become the "Record Date". The number of shares of post-split shares held by
any record holder will be determined from the total number of shares represented
by all of the certificates issued in the name of that record holder as are held
in each account set forth on the records of the Company's transfer agent, OTC
Stock Transfer, Inc. (the "Transfer Agent") on the Record Date. If the above
calculation results in a quotient containing a fraction, the Company will round
up to the nearest whole share instead of issuing a fractional share.
Approval of the reverse split will require a change in the "CUSIP" number
assigned to the Company's Common Stock (used to identify, transfer and trade
publicly registered securities). It is important to note that Shareholders are
not necessarily required to exchange their pre-split share certificates for
post-split share certificates. However, Shareholders who desire to do so may
request that new certificate(s) be issued to them in the amount(s) that
represent their post-split shareholdings, by surrendering their certificates to
the Transfer Agent at P.O. Box 15600, 231 East 2100 South, Salt Lake City, Utah
84115 (1-801-485-5554), and paying the applicable transfer fee.
FEDERAL INCOME TAX EFFECTS OF THE PLAN
Holders of Common Stock will not be required to recognize any gain or loss
if the reverse stock split becomes effective. The tax basis of the aggregate
shares of post-split Common Stock received by present shareholders will be equal
to the basis of the aggregate shares of the pre-split Common Stock exchanged
therefore. However, the Company does not warrant or wish to undertake the
rendering of tax advice to any Shareholder. Therefore, if a Shareholder has any
further tax-related questions related to this reverse split, they are encouraged
to consult with their own tax specialist.
The holding period for shares of post-split Common Stock will include the
holding period of the pre-split Common Stock when calculated for purposes of
taxation or sales under Rule 144 of the Rules and Regulations promulgated under
the Securities Act of 1933, as amended (the "Securities Act"). In accordance
with recent amendments to Rule 144, "restricted securities," as defined therein
must be held at least one year before routine sales can be made pursuant to the
provisions of the Rule. Rule 144 provides that shares issued in a reverse stock
split are deemed to have been held from the date of acquisition of the pre-split
shares involved in the reverse stock split.
INTEREST OF CERTAIN PERSONS IN THIS PROPOSAL
To the Company's best knowledge and belief, there are no persons or
entities that have a substantial interest in this proposal, since all
shareholders will be affected equally and there are no transactions or other
corporate action that is dependent upon or affected by the approval of the
reverse split.
RECOMMENDATION AND VOTE REQUIRED
The Board recommends that the shareholders vote "FOR" this proposal to
approve the reverse stock split. The affirmative vote of a majority of the
shares represented at the Meeting and entitled to vote is required for approval.
PROPOSAL 5
RATIFICATION OF A NAME CHANGE OF THE COMPANY TO "CADENCE RESOURCES CORPORATION".
The Board of Directors proposes that the Shareholders consider and vote
upon an amendment to the Company's Articles of Incorporation to change the name
of the Company. The Board recommends a name change to "Cadence Resources
Corporation". Management believes that this change in the Company's name will
more closely identify the Company with its new focus on energy development and
production. Although the Company will continue to hold its mining property
assets, the new business focus of the Company will be on energy.
Consistent with this name change, the Company proposes to change its OTC
Bulletin Board trading symbol to "CDNC", subject to NASD approval, for the
purpose of making it easier for new investors to remember the symbol and to
access the Company's share price. Management believes that this change will not
hurt or diminish the Company's already established presence in the market under
the symbol of "RSMI". It is believed that market makers, brokers, and investors
will easily transition to the new symbol.
This change in name will result in a change in the "CUSIP" number even if
the reverse split, described above, is not approved. Upon this change in the
Company's name and CUSIP number, Shareholders may, but are not required to,
exchange their Common Stock certificates for new certificates bearing the new
name and CUSIP number. New certificates may be obtained by following the same
procedure described in Proposal Four above.
RECOMMENDATION AND VOTE REQUIRED
The Board recommends that the shareholders vote "FOR" this proposal to
approve an amendment to the Company's Articles of Incorporation to change the
name of the Company. The affirmative vote of a majority of the shares
represented at the Meeting and entitled to vote is required for approval.
PROPOSAL 6
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors is required to periodically examine the consolidated
financial statements of the Company for the current year ending December 31,
2001 and to perform other appropriate accounting services. Williams and
Webster, P.S. have performed auditing and accounting services for the Company
since 1996. A proposal will be presented at the meeting to ratify the
appointment of Williams & Webster, P.S., as the Company's independent public
accountants. If stockholders do not ratify this appointment by the affirmative
vote of the shares present in person or represented by proxy at the meeting,
other independent public accountants will be considered by the Board of
Directors.
Proposal 6, the ratification of the appointment of independent auditors,
requires that a majority of the votes cast must be in favor of the proposal. The
Board of Directors recommends a vote "FOR" ratification of the appointment of
Williams & Webster, P.S., as the Company's independent public accountants.
PROPOSAL 7
OTHER MATTERS
Management knows of no other matters to be brought before the Annual
Meeting, but if other matters come before the meeting, it is the intention of
the persons named in the accompanying proxy to take such action as in their
judgment is in the best interest of the Company and Shareholders.
The Annual Report (Form 10-K) of the Company for the fiscal year ended
September 30, 2000, including financial statements, and the 10-Q report for the
period ended December 31, 2001 are to any shareholder providing written request
to the Company.
Regardless of the number of shares you hold, it is important that your
stock be represented at the meeting in order that the presence of a quorum can
be secured. If you are unable to attend the meeting, you are urged to date and
sign your proxy and return it without delay in the enclosed addressed envelope.
The shares represented by each proxy so signed and returned will be voted in
accordance with the Shareholder's directions.
By Order of the Board of Directors
John P. Ryan
Vice President
Date:
P R O X Y
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
ROYAL SILVER MINES, INC.
KNOW ALL MEN BY THESE PRESENTS, That the undersigned hereby constitutes and
appoints Howard Crosby and John Ryan with the power of substitution, attorneys
and proxies to appear and vote at the Annual Meeting of Shareholders of Royal
Silver Mines, Inc. to be held at 200 Professional Building, Suite 200, Hilton
Head Island, SC 29926, commencing at 10:30 A.M., local time, on March 30, 2001,
and at any adjournments thereof, with all the powers the undersigned would
possess if personally present, including authority to vote on the matters shown
below in the manner directed and upon any other matter which may properly come
before the meeting.
This proxy is solicited on behalf of the Board of Directors of Royal Silver
Mines, Inc. Except as specified to the contrary below, the shares represented
by this proxy will be voted for Proposals 1, 2, 3, 4, 5, and 6. Proposal 7
gives the proxy holder authority to vote at his discretion for any other matters
which are properly brought before the meeting for a vote. The undersigned hereby
revokes any proxy previously given to vote such shares at the meeting or at any
adjournment.
PLEASE MARK THE FOLLOWING WITH AN "X."
1. [ ] ELECTION OF NOMINEE DIRECTORS
(FOR all nominees listed except those marked to the contrary below)
[ ] WITHHOLD ALL NOMINEES
[ ] WITHHOLD AUTHORITY
(STRIKE a line through those nominees listed below to withhold authority to
vote for that nominee)
Howard M. Crosby
John Ryan
Kevin Stulp
2. Amend the Company's Articles of Incorporation. The amendment will increase
the authorized Common Stock of the Company from 40,000,000 shares, $0.01 par
value per share, to 100,000,000 shares, $0.01 par value per share.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Amend the Company's Articles of Incorporation. The amendment will create a
class of Preferred Stock of 20,000,000 shares of par value $0.01.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to undertake a 1 for 20 reverse split of the total issued and
outstanding shares of the Company. This proposal will not effect the authorized
capital of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Proposal to Amend the Articles of Incorporation to change the name of the
Company to "Cadence Resources Corporation".
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Ratification of the appointment of Williams & Webster, P.S., as the Company's
independent public accountants for the calendar year ending December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To grant authority to the proxy holders to vote on any other matters which
may properly come before the meeting for action.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE VOTE, DATE AND SIGN YOUR NAME(S) EXACTLY AS PRINTED ON THIS PROXY,
indicating, where applicable, official position or representative capacity.
-----------------------------------------
Signature
-----------------------------------------
(Additional signature(s) if held jointly)
DATE: ______________________
PLEASE RETURN THIS PROXY TO THE FOLLOWING ADDRESS:
ROYAL SILVER MINES, INC.
1519 Main Street, #169
Hilton Head Island, SC 29926
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