As filed with the Securities and Exchange Commission on November 1, 2000
Registration No. ____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------
AMERICAN SOUTHWEST HOLDINGS, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 86-0800964 211110
-------- ---------- ------
(State or other (IRS Employer (Primary Standard Industrial
jurisdiction of Identification Number) Classification Code Number)
incorporation or
organization)
c/o John A. Yellich
13545 Milwaukee Court
Thornton, Colorado 80241
(303) 475-2929
(Address, including zip code, and telephone number,
including area code, registrant's principal executive offices)
--------------------------
The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
(302) 658-7581
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications to:
Gary R. Blume, Esq.
Blume Law Firm, P.C.
11811 North Tatum Boulevard, Suite 1025
Phoenix, Arizona 85028-1699
Approximate date of commencement of proposed public offering: This registration
is for the resale of securities previously sold. The registrant hereby amends
this registration statement on such date or dates as may be necessary to delay
its effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until
the registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine. If any of the
securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. [ X ] If this Form is filed to register additional securities
for an offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
1
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each Proposed
class of Amount Maximum Proposed Amount of
Securities to to be Offering Price Maximum Registration
be registered Registered Per Share (1) Offering Price (1) Fee
------------- ---------- ------------- ------------------ ---
<S> <C> <C> <C> <C>
Common Stock, par value $0.001,
underlying Regulation D Placement
Offering Dated May 8, 2000 2,400,000 $0.10 $240,000 $63.36
Common Stock, par value $0.001,
underlying warrants sold in
reliance on Regulation D on
on May 8, 2000 2,400,000 $0.15 $360,000 $95.04
Common Stock, par value $0.001,
underlying Regulation D Placement
Offering Dated June 30, 1999 900,000 $0.02 $18,000 $4.75
Common Stock, par value $0.001,
issued for services on
July 27, 1999 100,000 $0.02 $2,000 $0.53
Common Stock, par value $0.001,
underlying Regulation D
Placement Offering Dated
October 1, 1999 570,000 $0.10 $57,000 $15.05
Common Stock, par value $0.001,
issued for services on
October 26, 1999 900,000 $0.10 $90,000 $23.76
Common Stock, par value $0.001,
underlying Regulation D Placement
Offering Dated February 25, 2000 1,520,000 $0.10 $152,000 $40.13
Common Stock, par value $0.001,
underlying warrants sold in reliance
on Regulation D, between July 30,
1999 and August 14, 2000 1,600,000 $0.15 $240,000 $63.36
Common Stock, par value $0.001,
issued for services up to and
including August 1, 2000 1,500,000 $0.10 $150,000 $39.60
Common Stock, par value $0.001,
underlying warrants sold in
reliance on Regulation D
Placement Offering dated
September 14, 2000 1,500,000 $0.15 $240,000 $63.36
Common Stock, par value $0.001
underlying warrants sold in
reliance on Regulation D on
August 14, 2000 5,750,000 $0.10 $575,000 $151.80
TOTALS: 19,240,000 $560.74
</TABLE>
<PAGE>
(1) Estimated solely for calculation of the amount of the registration fee
calculated pursuant to Rule 457(c).
The Exhibit Index appears on page 24 of the sequentially numbered pages of
this Registration Statement. This Registration Statement, including exhibits,
contains 69 pages.
3
<PAGE>
AMERICAN SOUTHWEST HOLDINGS, INC.
RESALE OF SECURITIES
In this Form SB-2, references to "we," "us," "our," and the "Company" refer
to American Southwest Holdings, Inc. American Southwest Holdings, Inc. is
registering for the resale of up to 9,490,000 shares of Common Stock (the
"Stock") and 9,750,000 shares of common stock underlying the warrants for Common
Stock (the "Warrants" collectively the "Securities"). Those Securities have been
previously issued and sold in reliance on certain exemptions from registration.
The securities being registered for resale hereunder may be sold by the selling
security holders, under those terms. All selling security holders, whether
holding the Stock or the Warrants, may sell their stock at the then-market price
or at a price greater or less than that of market price, which may affect the
market for the Company's stock. The Selling Security Holders and brokers
involved in the resales may be deemed to be underwriters under the Securities
Act of 1933. The Company will receive payments upon exercise of the Warrants
registered for resale herein, but will not receive any proceeds from the resales
of Common Stock by the Selling Security Holders.
Prior to this offering, the Common Stock of the Company has been traded on
the OTC Bulletin Board under the symbol NCMI. As of June 2000, the Company has
been traded on the OTC Bulletin Board under the symbol ASWT. The Company is
required to file, and has filed, periodic reports with the Securities and
Exchange Commission. The most recent filing has been the Company's Form 10Q-SB,
quarterly report for the quarter ended June 30, 2000.
The summary of the prospectus required by Item 503 of Regulation S-B
regarding material risks in connection with the purchase of the securities may
be found under Item 3 of this Form SB-2. See "Risk Factors" beginning on page 10
for a discussion of certain factors that should be considered by prospective
investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Price to Public Proceeds to Company
--------------- -------------------
<S> <C> <C>
Per Share N/A N/A
Total N/A N/A
</TABLE>
The securities registered pursuant to this SB-2 are for resale only and will be
offered to the public. The underlying sales have been completed and only the
resale of these securities is being registered.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH ANY OFFER
CONTAINED HEREIN, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION NOT
CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. THIS CONSTITUTE AN OFFER OF ANY SECURITIES OR AN
OFFER OF THE SHARES IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
4
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements, and other information filed by the Company with the
Commission can be inspected at Room 1024 of the office of the Commission, 450
Fifth Street N.W., Washington, D.C. 20549, or at its Regional Offices located at
Suite 1300, 7 World Trade Center, New York, New York 10048, and Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60661-2511. Copies of such material can be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Electronic filing made through the Electronic Data
Gathering Analysis and Retrieval System are also publicly available through the
Securities and Exchange Commission's Web site (http://www.sec.gov).
Investors are cautioned that this registration statement contains certain
trend analysis and other forward looking statements that involve risks and
uncertainties. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," variations of such words and similar
expressions are intended to identify such forward looking statements. These
statements are based on current expectations and projections about the oil,
mining, and technology industry and assumptions made by management and are not
guarantees of future performance. Therefore, actual events and results may
differ materially from those expressed or forecasted in the forward looking
statements due to factors such as the effect of changing economic conditions,
material changes in currency exchange rates, conditions in the overall oil,
mining, and technology market, risks associated with product demand and market
acceptance risks, the impact of competitive products and pricing, delays in new
product development and technological risks and other risk factors identified in
the Company's filings with the Securities and Exchange Commission.
5
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus.
THE COMPANY
American Southwest Holdings, Inc. (the "Company," "ASHI") was incorporated
in the state of Delaware on October 20, 1989, under the name of Condon
Corporation. Our name was changed to Namibian Copper Mines, Inc. on July 28,
1995 and was further changed to American Southwest Holdings, Inc. on June 13,
2000. We had been involved in copper mining in the country of Namibia until
1998, when we ceased operations. We are currently exploring oil, mining, and
technology possibilities, primarily in China. We currently have no executive
offices and operate out of a business office and our attorney's office. Our
business office is located at 13545 Milwaukee Court, Thornton, Colorado, 80241.
THE REGISTRATION
Securities to Be Registered
---------------------------
We are registering for the resale of up to 9,490,000 shares of common stock and
9,750,000 warrants for shares of common stock.
Common Stock
------------
The common stock being registered in this Form SB-2 falls into two categories:
shares issued in exchange for services and shares issued in a series of
offerings under Regulation D, Rule 506. We issued a total of 100,000 shares of
common stock at $0.02 per share for services rendered on July 27, 1999, and an
additional 900,000 shares at $0.10 per share on October 26, 1999. We are also
registering 1,500,000 shares of common stock issued August 14, 2000, at a price
of $0.15 per share for services rendered up to and including August 1, 2000.
Shares are also being registered that were sold in six offerings under Rule 506.
We sold 900,000 shares of common stock at $0.02 per share beginning June 30,
1999, and 570,000 shares of common stock at a price of $0.10 per share beginning
October 1, 1999. A total of 1,520,000 shares of common stock were sold beginning
February 25, 2000 at $0.10 per share. An offering was commenced on May 8, 2000
in which 240,000 shares were sold at $0.10 per share. Finally, we are
registering 1,600,000 shares of common stock sold at $0.10 per share on
September 14, 2000. All of these transactions are described in more detail in
the section entitled "Recent Sales of Unregistered Securities."
Common Stock Warrants
---------------------
The warrants being registered in this Form SB-2 are all for shares of our common
stock that are to be issued upon the exercise of the warrants. A total of
9,750,000 warrants have been issued and 9,750,000 shares of common stock
underlying the warrants are being registered. Of the warrants, 5,750,000 are
exercisable at $0.10 per share and 4,000,000 at a price of $0.15 per share.
These warrants all have an expiration date of June 30, 2002.
Offering Price
--------------
All shares were offered under the terms of their individual offerings and
proceeds have been received by the Company. This registration is for the resale
of those Securities.
6
<PAGE>
Shares of Common Stock Outstanding
----------------------------------
As of September 30, 2000, the Company has 18,863,950 shares of common stock
outstanding.
Use of Proceeds
---------------
The Category "Use of Proceeds" is not applicable to this registration, as it is
being conducted for purposes of resale of previously offered and sold
securities.
Risk Factors
------------
Investment in the Company involves certain general business risks and risks
specifically inherent in the mineral exploration industry. As detailed
elsewhere, this is a start-up company subject to federal and state regulation.
This registration involves the resale of up to 9,490,000 shares of common stock
of the Company and 9,750,000 shares of common stock currently represented by
stock warrants Past investors received the protection of the regulations
regarding restricted securities and the inability of the holder to freely trade
those securities. With this registration the securities will be freely tradeable
and may cause a negative impact on the market if exercised and traded. See "Risk
Factors."
7
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following tables set forth the summary financial information and other
equity information of the Company. The summary financial information in the
tables is derived from the financial statements of the Company and should be
read in conjunction with the financial statements, related notes and other
financial information included herein. See "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION" and "FINANCIAL STATEMENTS."
<TABLE>
Statement of Operations Data
<CAPTION>
Audited
-------
Years Ended
December 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Revenues $ - $ - $ -
Expenses
General and Administrative 185,176 112,078 197,722
Total Expenses 185,176 112,078 197,722
Other Income and Expenses
Interest Income 25
Extraordinary Losses (19,753) (1,588,799) (6,089,063)
Net Loss (204,929) (1,700,877) (6,286,760)
Net Loss Available to
Common Stockholders (204,929) (1,700,877) (6,286,760)
Net (Loss) Per Share of
Common Stock $ 0.02 $ 0.19 $ 0.80
</TABLE>
<TABLE>
Balance Sheet Data:
ASSETS
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash $ 212 $ 328
DEFERRED MINERAL EXPLORATION COSTS
PROPERTY AND EQUIPMENT (AT COST)
Mining properties (Haib project)
Roads
Machinery and equipment 31,014
Furniture, fixtures and office equipment 16,788
Total property and equipment 47,802
Less accumulated depreciation (28,050)
Net property and equipment 19,752
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
September 30, September 30,
2000 1999
---- ----
<S> <C> <C>
OTHER ASSETS
Organization Costs, net 14,000 38,000
Deposits and other assets
Net other assets 14,000 38,000
Total Assets $ 14,212 $ 58,080
CURRENT ASSETS
Cash $ 292,116 $ 476
DEFERRED MINERAL EXPLORATION COSTS
OTHER ASSETS
Organization Costs, net 24,000
Deposits and other assets
Net other assets - 24,000
Total Assets $ 252,116 $ 24,476
</TABLE>
<TABLE>
LIABILITIES
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 90,530 $
Notes Payable
Interest Payable
Total Current Liabilities 90,530 -
STOCKHOLDER'S EQUITY
Common stock - authorized 100,000,000 shares at
$.001 par value; issued and outstanding 8,190,960
shares in 1997 and 6,237,960 in 1996 10,944 9,264
Paid in Capital 11,329,802 11,243,482
Common stock subscribed - 1,085,000 shares in 1996
Deficit accumulated during the development stage (11,417,064) (11,194,666)
Total Stockholder's Equity (76,318) 58,080
Total liabilities and stockholder's equity $ 14,212 $ 58,080
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
September 30, September 30,
2000 1999
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 23,530 $ 25,000
Notes Payable
Interest Payable
Total Current Liabilities $ 23,530 $ 25,000
STOCKHOLDER'S EQUITY
Common stock - authorized 100,000,000 shares at
$.001 par value; issued and outstanding 10,943,950
shares in 1999 and 18,863,950 in 2000 18,864 10,944
Paid in Capital 12,188,882 11,329,802
Deficit accumulated during the development stage (11,432,064) (11,194,666)
Total Stockholder's Equity 228,586 (526)
Total liabilities and stockholder's equity $ 252,116 $ 24,474
</TABLE>
RISK FACTORS
The securities being registered involve a substantial risk. If you are
considering the purchase of the Shares, you should give consideration to the
following risk factors:
We currently have no projects in place other than the proposed China project
and, if this fails to materialize, another project must be sought.
Our only currently project is the proposed China project, which has not yet
been finalized. If this project fails to materialize, we will have to find a
different project to enter into. There is no guarantee that an alternative
project will be available. Additionally, we may have expended substantial funds
before the China project is finalized and, if it fails, we may have insufficient
funds to pursue a new project. In either case, the business may be forced to
terminate.
A portion of our income on the China project may be generated from sales of oil
that have not yet been discovered and which may not exist.
The Yanchang oil field is a large and not fully defined oil resource that
has been developed utilizing non- western technology. We believe that, over a
period of time, a concerted program of exploration and systematic production and
refurbishing utilizing Western technology may identify new resources and upgrade
the existing production wells of this resource. There is no guarantee, however,
that this field has the oil reserves we anticipate or that upgrading to Western
technology will increase profitability. If either of these contingencies fail,
the venture will be abandoned and we may not be profitable.
Oil exploration is a historically high risk business with great liabilities
associated with it.
The search for oil and gas has historically been marked by unprofitable
efforts resulting not only from the drilling of dry holes, but also from wells
which, though productive, will not produce oil in sufficient quantities to
return a profit. We may incur substantial liabilities in excess of insurance
coverage as a result of a blow-out, fire, personal injury or other casualty.
Pollution which might be caused by our operations could also result in
liabilities and
10
<PAGE>
restrictions on our activities. If properties are proven productive, there is no
assurance such production can be sold at the most favorable rates or in optimum
quantities. The oil and gas industry in China is competitive and includes a
number of large, well-established, government-based companies which possess
substantially greater resources than we possess.
The price of oil has been volatile in the past few years.
In the past few years, the price of oil has been volatile. There is no
assurance that in the future the price for oil will remain stabile at current
prices. If the price of oil decreases profitability will lessen.
We will be competing with other potential purchasers of prospects and producing
properties, most of which will have greater financial resources.
There is competition for prospects and producing properties. We will be
competing with other potential purchasers of prospects and producing properties,
most of which will have greater financial resources. Due to the state of the oil
and gas industry, the bidding for prospects has become particularly intense with
different bidders evaluating potential acquisitions with different technologies
and pricing parameters and other criteria that result in potentially widely
divergent bid prices. The presence in the market of bidders willing to pay
prices higher than are supported by our evaluation criteria could further limit
our ability to acquire prospects. Low or uncertain prices for properties can
cause potential sellers to withhold or withdraw properties from the market. In
this environment, there can be no assurance that there will be a sufficient
number of suitable prospects available for acquisition by us or that we can sell
prospectus or obtain financing for or participants to join in the development of
prospects.
We may encounter operating and environmental hazards that increase our liability
substantially.
We may encounter hazards incident to the operation of oil properties, such
as accidental leakage of petroleum liquids and other unforeseen conditions, if
we participate in developing a well, substantial liabilities to third parties or
governmental entities may be incurred. It is anticipated that customary
insurance coverage will be obtained, but we could be subject to liability for
pollution and other damages or may lose substantial portions of prospects or
producing properties due to hazards which cannot be insured against or which
have not been insured against due to prohibitive premium costs or for other
reasons. Chinese governmental regulations relating to environmental matters
could also increase the cost of doing business or require alteration or
cessation of operations in certain areas.
We may not be insured against all losses or liabilities which may arise from
operations.
We may not be insured against all losses or liabilities which may arise
from operations, either because such insurance is unavailable in China or
because we have elected not to purchase such insurance due to high premium costs
or other reasons. We do not have any insurance in place as of the date of this
registration statement.
US Federal and Chinese Taxation affects and may continue to affect our profits.
US Federal and Chinese income tax laws are of particular significance to
the oil and gas industry. The "windfall profits tax" adopted in 1980 reduces the
profits which we may realize in the production of crude oil. Recent legislation
has eroded previous benefits to oil and gas producers, and any subsequent
legislation may continue this trend. There can be no assurance that the tax laws
will not be changed or interpreted in the future in a manner which adversely
affects us.
Government regulation in both the United States and China may substantially
impact our business.
The oil and gas business is subject to substantial governmental regulation,
including the power to limit the rates at which oil and gas are produced and to
fix the prices at which oil and gas are sold. It cannot be accurately predicted
whether
11
<PAGE>
additional legislation or regulation will be enacted or become effective.
Regulations in both China and the United States will apply to us.
Oil reserve and future net revenues estimates are inexact and subjective and may
not prove to have been correct over time.
Oil reserve estimates are necessarily inexact and involve matters of
subjective engineering judgment. Any estimates of future net revenues and the
present value of such revenues are based on price and cost assumptions we have
provided as our best estimate. These estimates may not prove to have been
correct over time. A further decline in oil prices may require us to write down
the value of our oil reserves.
We will require additional investment in order to commence the China project,
which we may not be able to obtain.
The China project will require substantial initial investment on our part.
As a result, we will require additional investment in the Company to generate
sufficient funds. There is no guarantee that these funds will be obtained. If we
are not successful in raising sufficient capital, we will not be able to follow
through on the project and may have to terminate the business. In this case,
investors would lose their entire investment.
Investors may be unwilling to invest in a project involving the Chinese
government.
While we feel that China is a stable country and that the Chinese
government poses no risk to the China project, potential investors may be
unwilling, for moral or other reasons, to invest in a company involved with
China or, more generally, with a country historically tied to the Communist
party. This may impede our ability to generate sufficient funds as required for
the China project, in which case we may not be able to complete the project and
the business may terminate.
We have not commissioned any market studies.
In formulating our business plan, we have relied on the judgment of our
officers, directors , and consultants. We have not conducted any formal
independent market studies concerning the demand for our proposed services, nor
are any planned. The effect of the registration of the Securities has not been
analyzed for its effect on our operations, our ability to obtain funds or
financing, or the variations in share price due to additional shares being
available for sale.
While we were organized several years ago, we have not been operational for
several years.
We were organized in 1989, but have not operated or generated any income
since 1998. Since we have not proven the essential elements of profitable
operations, you will be furnishing venture capital to us and will bear the risk
of complete loss of your investment in the event our business plan is
unsuccessful. We have only limited experience and are expanding our operations ,
which may or may not provide us with profits. We have not had any revenues in
1999 or 1998. We have also not been profitable at any time, having an
accumulated loss of $204,929 in 1999.
Sale of Securities May Negatively Affect Funding Attempts
The resale of the securities may make it difficult for us to obtain funding
, and therefore negatively impede our operations . As of June 30, 2000, there
are 18,863,950 outstanding shares of common stock. This registration will result
in up to 19,240,000 additional shares of the Company's common stock being
introduced to the market if all warrants are exercised and the underlying shares
of common stock sold.
12
<PAGE>
If all options, warrants and other instruments are exercised as detailed in
this Registration Statement, there will be 28,613,950 shares outstanding. This
will have the effect of causing a dilution of the share price of the Common
Stock. This dilution may cause various potential funders and financiers to not
consider us or to cause us to receive less favorable funding due to the dilution
of our market value.
Our management owns a substantial share of our outstanding common stock.
Our management currently owns 18.02% of the outstanding Common Stock, which
may be sufficient to control voting. Accordingly, new shareholders will lack an
effective vote with respect to the election of directors and other corporate
matters.
We have not offered dividends to shareholders in the past.
Our Board of Directors presently intends to cause us to follow a policy of
retaining earnings, if any, for the purpose of increasing our net worth and
reserves. Therefore, there can be no assurance that you or other shareholders
will receive any cash, stock, or other dividends on your shares of Common Stock.
Future dividends on Common Stock, if any, will depend on future earnings,
financing requirements and other factors. Since the time of inception we have
not paid dividends to shareholders.
We are dependance on our executive officers.
We are highly dependent on the services of our officers. Attracting and
retaining qualified personnel is critical to our business plan. No assurances
can be given that we will be able to retain or attract such qualified personnel
or agents, or to implement its business plan successfully. Should we be unable
to attract and retain the qualified personnel necessary, our ability to
implement our business plan successfully would be limited.
You will experience a dilution in the market value of your common stock when the
shares being registered in this statement become available for trading.
The securities currently held by investors will be subject to dilution in
market value as more securities are available for trading. As detailed elsewhere
in this registration statement (see "DILUTION"), if all of the securities,
including those not subject to this registration statement, were to be
exercised, it would result in 28,613,950 shares outstanding, as opposed to a
total of 18,863,950 shares of common stock outstanding as of September 30, 2000.
Even though not all of these shares will be free trading, all of them may cause
the market price of our common stock to decrease.
We are a development stage company and have had no significant revenues to date.
We are a development stage Company as defined in Financial Accounting
Standards Board Statement No. 7. We are devoting substantially all of our
present efforts in establishing a new business and, although planned principal
operations have commenced, there have been no significant revenues. Management's
plans regarding the matters which raise doubts about our ability to continue as
a going concern are disclosed in Note 1 to the financial statements. These
factors raise substantial doubt about our ability to continue as a going
concern. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
USE OF PROCEEDS
This registration is for purposes of resale of issued shares only. As a
result, there are no use of proceeds to be discussed. The uses of proceeds
obtained from the offerings of which these securities were a part are disclosed
in the section entitled "Description of Business." We will not receive any
proceeds from the sale of the selling security
13
<PAGE>
holders' securities. We will receive proceeds from the exercise of warrants, as
discussed elsewhere in this registration statement. The use of those proceeds
has been detailed in each of their offering memorandums.
DETERMINATION OF OFFERING PRICE
Because this registration is for purposes of resale of issued shares only,
there was no determination of offering price. The manner in which the offering
prices for the offerings and warrants of which these securities are a part have
been previously disclosed under the terms of each of the offerings and warrants.
DILUTION
This registration statement is for the resale of certain securities. As of
September 30, 2000, there are 21,613,950 outstanding shares of common stock.
This registration will result in up to 9,750,000additional shares of the
Company's common stock being introduced to the market if all warrants are
exercised and the underlying shares resold.
If all warrants are exercised and all placement shares sold as detailed in
this Registration Statement, there will be 28,613,950 shares outstanding. If we
assume all additional shares are to be exercised and made available for sale and
that the market value of the Company remains set, the introduction of additional
shares to the market could have a detrimental effect on the price of the shares.
SELLING SECURITY HOLDERS
The following table lists the holders the Common Stock and warrants being
registered for resale:
<TABLE>
<CAPTION>
Common Shares Common Shares Common Shares Percentage
Relation to Owned Prior Offered for Owned After Owned After
Name Registrant to Registration Holder's Account Registration Registration
---- ---------- --------------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Fronden Pty, Ltd None 200,000 200,000 200,000 0.7%
Forrester
Nominees Co. None 500,000 500,000 500,000 1.7%
Blume Law Firm Attorney to Co. 50,000 50,000 50,000 0.17%
Lancer Resources None 150,000 150,000 150,000 0.52%
Sizz Pty Ltd. None 320,000 320,000 320,000 1.1%
Jelk Organization None 700,000 700,000 700,000 2.4%
Bodie Investment
Pty, Ltd. None 450,000* 450,000* 450,000* 1.6%
Garzon Holdings
Pty, Ltd. None 150,000 150,000 150,000 0.52%
Woonda Nominees
Pty, Ltd. None 700,000* 700,000* 700,000* 2.4%
Banque Privee
Edmond de
Rothschild None 900,000 900,000 900,000 3.1%
Billie J. Allred former Officer 100,000 100,000 100,000 0.34%
Fairvista Pty Ltd None 145,000 145,000 145,000 0.5%
Public Image Ltd None 130,000 130,000 130,000 0.45%
Jennifer Riley None 75,000 75,000 75,000 0.26%
Courage Corp. None 220,000 220,000 220,000 0.76%
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Common Shares Common Shares Common Shares Percentage
Relation to Owned Prior Offered for Owned After Owned After
Name Registrant to Registration Holder's Account Registration Registration
---- ---------- --------------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Caldwell
Associates Ltd None 700,000* 700,000* 700,000* 2.4%
New Concept
Marketing None 200,000* 200,000* 200,000* 0.70%
Ross Hannon None 2,000,000* 2,000,000* 2,000,000* 7.0%
Synergie
Communications None 5,350,000* 5,350,000* 5,350,000* 18.6%
Vivienne Freeman None 300,000* 300,000* 300,000* 1.0%
Doyle Resources
Capital Pty Ltd Officer 1,400,000* 1,400,000* 4,400,000* 4.8%
Syntek Resources None 3,000,000* 3,000,000* 3,000,000* 10.4%
Bulle Investments None 750,000 750,000 750,000 2.6%
Simeon J
Investments Officer 750,000 750,000 750,000 2.6%
</TABLE>
* Shares listed include warrants that have not yet been exercised.
PLAN OF DISTRIBUTION
This registration is for the resale of securities only. After the shares
have been registered, the holders will have the option, at the individual
shareholder's discretion, to offer their securities for sale. The shares
underlying the common stock warrants may be offered for sale by the holders
after the warrants have been exercised. All sales of securities will be either
in private transactions between individuals or sold through broker-dealer
transactions. There would be no consideration paid in private sales, but
broker-dealers may be paid a commission at their customary rates.
LEGAL PROCEEDINGS
The Company has had no legal proceedings during the past three years.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
<TABLE>
Directors and Executive Officers
<CAPTION>
Name/Age Title
-------- -----
<S> <C>
Alan Doyle President, Secretary, Treasurer, Director
Peter Holsworth Director
John Yellich Vice President
Steven Liu Vice President
</TABLE>
Alan Doyle was elected to the board of directors in 1995.
ALAN DOYLE (Age 46). Mr. Doyle is an Economic Geology graduate with a
post-Graduate diploma in Mineral Economics. He worked for and held senior
positions with several large international resource companies prior to entering
the financial services industries in the early 1980s. Mr. Doyle then worked as a
mining analyst and in the corporate division for two international stockbrokers
before setting up his own corporate advisory firm in 1990. He later set up the
investment banking firm of Turnbull Doyle Resources Pty Ltd, which invested in
various international
15
<PAGE>
mining projects. Subsequently, Mr. Doyle set up Doyle Capital Partners Pty Ltd
as an investment banking firm. Mr. Doyle has been the President and a Director
of the Company since July 1995. He is also the Chairman of International
Precious Metals, Inc., a Canadian corporation.
JOHN A. YELLICH (Age 56). Mr. Yellich is a Certified Professional Geologist with
a degree in Geology. From 1986 to 1994, Mr. Yellich was Manager and Director of
Environmental Consulting Services for Union Pacific Company, US Pollution
Control, Inc. in Boulder, Colorado. Many of the projects were derived from
natural resource functions. He was Manager and Director of Environmental
Consulting Services for Laidlaw Environmental Services in Boulder, Colorado,
from 1994 to 1997. (Laidlaw purchased the company from Union Pacific.) Many of
the projects he was involved with at this company derived from inappropriate
natural resource functions. From 1997 to 1999, Mr. Yellich was Vice President
and Chief Executive Officer of International Precious Metals, Inc. in Phoenix,
Arizona. This company focused on precious metals exploration. From 1998 to the
present he has been a independent consulting geologist for various clients
regarding mining-related activities and an OSHA and DOT consultant on special
projects. He has also conducted training classes in OSHA and DOT regulations
associated with hazardous materials. Mr. Yellich has been the Company's Vice
President since June 2000.
PETER HOLSWORTH (Age 57). Mr. Holsworth is a director of numerous private
companies involved in commodity development, commodity trading, marketing, and
international finance. During his business career, he has owned and managed
successful businesses both domestically and internationally. He brings to the
Company a wealth of experience and business contacts through his local and
international associations. Mr. Holsworth has a great deal of experience doing
business in China and is a member of the Institute of Chartered Accountants in
Australia. Mr. Holsworth was elected to the Board of Directors in August 2000.
STEVEN LIU (Age 48). Mr. Liu, originally from Beijing, China, has been based in
Sydney, Australia, for the last ten years. In China, he worked for the Central
Government's Department of Foreign Economics and Trade. He has consulted for a
wide range of businesses, including chemical, machinery, telecommunications, and
oil.
Mr. Doyle and Mr. Yellich were officers of International Precious Metals,
Inc. when it filed for Bankruptcy under Chapter 11 of the Bankruptcy Code in
Phoenix, Arizona. Case # 98-07721-PHX-SSC was filed on June 19, 1998 and the
filing was converted into a Chapter 7 on November 8, 1999.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 30, 2000, the beneficial
ownership of the Company's Common Stock by each person known by the Company to
beneficially own more than 5% of the Company's Common Stock outstanding as of
such date and by the officers and directors of the Company as a group. Except as
otherwise indicated, all shares are owned directly.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name and address of Amount and Nature Percent of
Title of Class beneficial owner Of Beneficial Ownership (1) Class (1)
-------------- ---------------- --------------------------- ---------
<S> <C> <C> <C>
Common Stock Cede & Co.** Nominee for
P.O. Box 222 3,431,109 shares of
New York, New York Common Stock 18.19%
Common Stock Springbok Investments 2,000,000 shares of
P.O. Box 11978 Common Stock
Windhoek, Namibia 10.60%
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Common Stock Alan Doyle 3,398,000 shares of
President, Secretary, common stock 18.01%
Treasurer, Director
Common Stock John Yellich 1,000 shares of
Vice President common stock 0.01%
Common Stock Peter Holsworth 3,000,000 shares of
Director common stock 15.90%
Common Stock Ross Hannon 1,000,000 shares of
4 The Grove common stock
Sydney, NSW, Australia 5.30%
Common Stock Jelk Organization** Nominee for 1,400,000
Grande Rue shares of common stock
Chateau d'Oex, Switzerland 7.42%
Common stock Directors and Officers 6,399,000 shares 33.92%
as a group (3 persons)
</TABLE>
** Note the above registered shareholders are nominees of the beneficial owners
of the common shares of the Corporation.
DESCRIPTION OF SECURITIES
Common Stock
------------
Holders of the Common Stock are entitled to one vote for each share held by
them of record on the books of the Company in all matters to be voted on by the
stockholders. Holders of Common Stock are entitled to receive such dividends as
may be declared from time to time by the Board of Directors out of funds legally
available, and in the event of liquidation, dissolution or winding up of the
Company, to share ratably in all assets remaining after payment of liabilities.
Declaration of dividends on Common Stock is subject to the discretion of the
Board of Directors and will depend upon a number of factors, including the
future earnings, capital requirements and financial condition of the Company.
The Company has not declared dividends on its Common Stock in the past and the
management currently anticipates that retained earnings, if any, in the future
will be applied to the expansion and development of the Company rather than the
payment of dividends.
The holders of Common Stock have no preemptive or conversion rights and are
not subject to further calls or assessments by the Company. There are no
redemption or sinking fund provisions applicable to the Common Stock. The Common
Stock currently outstanding is, and the Common Stock offered by the Company
hereby will, when issued, be validly issued, fully paid and nonassessable.
Voting Requirements
-------------------
The Articles of Incorporation require the approval of the holders of a
majority of the Company's voting securities for the election of directors and
for certain fundamental corporate actions, such as mergers and sales of
substantial assets, or for an amendment to the Articles of Incorporation.
There exists no provision in the Articles of Incorporation or Bylaws that
would delay, defer or prevent a change in control of the Company.
17
<PAGE>
Transfer Agent
--------------
The transfer agent and registrar for the Company's Common Stock is Holladay
Stock Transfer, Inc., 2939 North 67th Place, Scottsdale, Arizona 85251. Its
telephone number is 480-481-3940.
Shares Eligible for Future Sale
-------------------------------
As of September 30, 2000, the Company had 18,863,950 shares of Common Stock
outstanding. Of the 18,863,950 shares of Common Stock outstanding, 6,399,000
shares of Common Stock are beneficially held by "affiliates" of the Company. All
shares of Common Stock registered pursuant to this Registration Statement will
be freely transferable without restriction or registration under the Securities
Act, except to the extent purchased or owned by "affiliates" of the Company as
defined for purposes of the Securities Act.
In general, under Rule 144 as currently in effect, a person who has
beneficially owned "restricted" securities for at least two years, including
persons who may be deemed to be "affiliates" of the Company, may sell publicly
without registration under the Securities Act, within any three-month period,
assuming compliance with other provisions of the Rule, a number of shares that
do not exceed the greater of (i) one percent of the Common Stock then
outstanding or, (ii) the average weekly trading volume in the Common Stock
during the four calendar weeks preceding such sale. A person who is not deemed
an "affiliate" of the Company and who has beneficially owned shares for at least
three years would be entitled to sell such shares under Rule 144 without regard
to the volume and other limitations described above.
Prior to this registration, the Common Stock has traded on the OTC Pink
Sheets under the symbol "NCMI." No prediction can be made of the effect, if any,
of future public sales of "restricted" shares or the availability of
"restricted" shares for sale in the public market at the market price prevailing
from time to time. Nevertheless, sales of substantial amounts of the Company's
"restricted" shares in any public market that may develop could adversely affect
prevailing market prices.
INTEREST OF NAMED EXPERTS AND COUNSEL
Blume Law Firm, P.C., the Company's corporate and securities counsel, is
the holder of 50,000 shares of common stock being registered in this Form SB-2
Registration Statement.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
The Company has indemnified all officers, directors and controlling persons
of the Company against all liabilities from the sale of securities which might
arise under the Securities Act of 1933 other than as stated under Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to such persons pursuant to the foregoing provisions, the
Company has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is therefore unenforceable.
18
<PAGE>
DESCRIPTION OF BUSINESS
American Southwest Holdings, Inc. was incorporated in the state of Delaware
on October 20, 1989, under the name of Condon Corporation. On December 15, 1989,
we merged with Cordon Corporation, a Nevada Corporation, with the Delaware
entity being the surviving corporation. We filed for bankruptcy under Chapter 11
and on April 19, 1994, the U.S. Bankruptcy Court, Northern District of Texas,
issued an order closing and finalizing the bankruptcy proceedings. Under the
terms of the bankruptcy, we were forced to liquidate all of our assets. The
proceeds were then distributed among the creditors, thereby satisfying all of
our outstanding debts. We halted operations and ceased to do business at the
conclusion of the bankruptcy proceedings. We utilized a "fresh-start" accounting
method in our re-organization.
On July 14, 1995, we effected a reverse split of our $0.001 par value
common stock at a ratio of one new share for every fifty old shares. This
reduced the total number of shares issued and outstanding to 152,207. At this
time, Alan Doyle, Peter Prentice, and Willo Stear were appointed to the Board of
Directors and Paul Adams and Dave Wilson resigned as officers and directors of
the Company.
At a Special Shareholders' Meeting held on July 28, 1995, the Shareholders
ratified a name change of the Company to Namibian Copper Mines, Inc.
A total of 2,000,000 post-split shares and 1,000,000 warrants exercisable
at US $5.00 on or before August 31, 1998, were issued to investors outside of
the U.S. in reliance upon Regulation S in order to fund the earning of up to 70%
of the Haib Copper Project, a copper mine located in the country of Namibia. An
offering was commenced on August 21, 1995, in reliance upon Regulation S of the
Securities Act of 1933, as amended, offering 3,000,000 shares of our common
stock to raise additional funds for the purchase of the Haib Copper Project. A
supplementary offering, also under Regulation S, was made at $3.50 per share
plus one warrant for every three shares purchased. These warrants were
exercisable at $3.50. All sales of the offering and supplement were to non-US
residents in non-U.S. transactions. Of these shares offered, 1,325,000 were
sold. In 1997, we failed to meet our commitment to fund our right to earn a
seventy (70%) interest in the Haib Copper Project. As a result, the joint
venture partner, Great Fitzroy Mines, N.L., gave notice to forfeit part of the
interest in the project and our interest was reduced to forty-five percent
(45%). In 1998, we received a further notice of forfeiture from Great Fitzroy
Mines, N.L., due to our inability to meet our additional commitments. We lost
our interest in the project at that time.
Will Stear resigned from the Board of Directors on December 15, 1995, and
Peter Prentice resigned from the Company's Board of Directors in 1997. Billie J.
Allred was then appointed to the Board. At this time, the Board was reduced to
two members, Alan Doyle and Billie J. Allred.
In April 1999, we commenced discussions with two Cypress firms regarding
acquiring their rights to various interests and agreements with a Russian
government corporation involved with diamond cutting and marketing. We proposed
to enter into identical agreements with two entities formed in and operating out
of Cyprus. These entities were Mosquito Mining Limited ("Mosquito") and Select
Mining Limited ("Select"). Both entities are controlled by the same parties. The
agreements provided options to purchase rights to strategic interests and
agreements developed by Mosquito and Select with a Russian governmental company
JVSC Alrosazoloto Co. Ltd. Each set of interests and agreements was to be
purchased in exchange for US $3,250,000 or, at the option of each of Mosquito
and Select, common shares in the Company. After a further period of due
diligence, we decided not to proceed with the transaction as had been presented
at the 1999 annual meeting.
John A. Yellich was appointed Vice President of the Company on June 8,
2000.
The 2000 annual meeting was held on June 9, 2000. At that meeting, the
shareholders approved changing the Company's name from Namibian Copper Mines,
Inc. to American Southwest Holdings, Inc. Articles of Amendment to effect this
name change were filed with the Delaware Secretary of State on June 12, 2000 and
became effective on June 13, 2000. Due diligence is currently ongoing with this
project and we are currently studying its feasibility. At the
19
<PAGE>
2000 annual meeting, the shareholders also approved the 2000 incentive stock
plan. Under this plan, 1,000,000 shares of our common stock has been reserved
for issuance to our officers, directors, and employees.
On August 15, 2000, Peter Holsworth was appointed a Director of the Company
and Steven Liu was named Vice President.
We are currently investigating a possible project in the People's Republic
of China. A letter of intent was signed by the parties on May 8, 2000. The
project is located approximately 800 kilometers west-southwest of Beijing in the
Shaanxi Province. There are currently only 10 producing wells in the proposed
project area. We propose to drill a further 40 production wells. The
investigation has been experiencing delays and the Company is unsure as to when
this will be concluded. We will be joint venturing on this project with Wuhan
Pengling Group Company Limited, a Chinese company.
The Yanchang oil field is a large and not fully defined oil reserve that
has been developed utilizing non-western technology. We believe that, over a
period of time, a concerted program of exploration and systematic production and
refurbishing that utilizes the latest Western technology will identify new
resources and upgrade the existing production wells. This development is also in
keeping with the recently stated policy of the Chinese Central Government in
support of modernization of industry and resources in western China. We intend
to undertake a further period of investigation utilizing American-based oil
consultants and contractors.
We currently have no executive offices and operate out of a business office
at the offices of Vice President John Yellich in Thorton Colorado. The telephone
number is (303) 475-2929. No compensation is paid for the use of this office.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
When used in this discussion, the words "believes," "anticipates,"
"expects" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially from those projected.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to republish revised forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. Readers are also urged to carefully review and consider
the various disclosures made by the Company which attempt to advise interested
parties of the factors which affect the Company's business, in this report, as
well as the Company's periodic reports on Forms 10-KSB, 10QSB and 8-K which will
be filed with the Securities and Exchange Commission.
Overview
--------
We are non-operational and have been since 1997. We are searching for an
acquisition or business combination and will have no activity until that time.
All operations have been funded by the sale of equity in the company under the
terms of various exempt transactions.
Results of Operations
---------------------
Revenues. We generated $0 in revenues for the three months ended September
30, 2000, versus $0 revenues for the same period in 1999. To date, we have not
relied on revenues for funding. We expect to derive the majority of our funding
from private sources.
20
<PAGE>
General and Administrative Expenses. During the three months ended
September 30, 2000, we incurred $378,045 in general and administrative expenses.
The total cumulative expense during the development stage is $4,326,220.
Income. There has been no income in 1999 or 2000 and only $76,794 from July
28, 1995 to the present.
Provision for Income Taxes. As of September 30, 2000, our accumulated
deficit was $11,977,160, and as a result, there has been no provision for income
taxes.
Net Income. For the three months ended September 30, 2000, we recorded a
net loss of $380,045, or $0.05 per share. The loss of $380,045 for 2000 was
primarily from costs of investigation in China with pending business projects.
Liquidity and Capital Resources
-------------------------------
As at September 30, 2000, we had a cash balance of $202,116, compared to
$476 as of September 30, 1999. The amounts expended were used to bring us
current and came from private funds.
As at September 30, 2000, we had $0 in accounts receivable, compared to $0
as at September 30, 1999. We have been nonfunctioning during this time frame.
As at September 30, 2000, we had $23,530 in accounts payable and $25,000
for the period ended September 30, 1999.
Our future funding requirements will depend on numerous factors. These
factors include our ability to receive additional funding to meet our reporting
obligations and find some form of acquisition or business combination.
We may raise additional funds through private or public equity investment
in order to expand the range and scope of its business operations. We may seek
access to the private or public equity but there is no assurance that such
additional funds will be available for us to finance its operations on
acceptable terms, if at all.
DESCRIPTION OF PROPERTY
We once had offices in Namibia, Australia, and Mesa, Arizona. These offices
were all closed when we became inactive in 1997. We currently operate out of the
office of John Yellich in Thornton, Colorado. We do not pay rent for the use of
the premises.
We do not own any investments or interests in real property. There are no
plans in place for us to make any investments.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past two years, none of our officers or directors have been an
interested party to any contract or other transaction between us and a third
party.
MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
21
<PAGE>
Market Information
------------------
Our common stock trades on the NASD Electronic Bulletin Board under the
symbol ASWT. The following table sets forth the high and low sale price
information for the periods indicated:
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
July-September 2000 $0.375 $0.070
April-June 2000 $0.625 $0.100
January-March 2000 $0.040 $0.070
October-December 1999 $0.110 $0.070
July-September 1999 $0.300 $0.130
April-June 1999 $0.562 $0.040
January-March 1999 $0.093 $0.030
October-December 1998 $0.093 $0.025
July-September 1998 $0.218 $0.093
April-June 1998 $0.312 $0.125
January-March 1998 $0.312 $0.187
October-December 1997 $0.500 $0.125
July-September 1997 $0.437 $0.187
April-June 1997 $2.125 $0.875
January-March 1997 $3.00 $1.125
</TABLE>
Holders
-------
As of October 10, 2000 there were approximately 274 stockholders of record
of our Common Stock, although this figure does not include shareholders using
Cede & Co. as a nominee.
Dividend Policy
---------------
We have never paid a dividend and do not anticipate paying any dividends in
the foreseeable future. It is the present policy of the Board of Directors to
retain our earnings, if any, for the development of our business.
EXECUTIVE COMPENSATION
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term Compensation Awards
-----------------------------
Annual Compensation Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus Compensation Options Compensation
-------- ---- ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Alan Doyle 2000 -0- -0- 3,398,000 -0- -0-
President, Secretary, 1999 -0- -0- -0- -0- -0-
Treasurer, Director 1998 -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0-
John Yellich, Vice President 2000 -0- -0- 1,000 -0- -0-
Steven Liu, Vice President 2000 -0- -0- -0- -0- -0-
Peter Holsworth, Director 2000 -0- -0- 3,000,000 -0- -0-
</TABLE>
22
<PAGE>
<TABLE>
Option/SAR Grants to Officers and Directors in Last Fiscal Year
<CAPTION>
Percent of total options/
Options/SARs SARs granted to employees Exercise or
Name Granted (#) in fiscal year base price ($/Sh) Expiration Date
---- ----------- -------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Alan Doyle 1,400,000 shares 100% $0.15 June 30, 2002
and warrants
</TABLE>
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
<CAPTION>
Shares Acquired Number of unexercised
on exercise (#) options/SARs at Value of unexercised
exercisable/ Value FY-end (#) exercisable/in-the-money options/SARs
Name unexercisable realized ($) unexercisable at FY-end ($)
---- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
NONE
</TABLE>
Directors' Compensation
Director received no compensation for each meeting attended except for
out-of-pocket expenses.
FINANCIAL STATEMENTS
COMPILATION REPORT
AMERICAN SOUTHWEST HOLDINGS, INC.
SEPTEMBER 30, 2000
<PAGE>
AMERICAN SOUTHWEST HOLDINGS, INC.
(A Development Stage Company)
TABLE OF CONTENTS
June 30, 2000
<TABLE>
<CAPTION>
DOCUMENT PAGE NO.
<S> <C>
Table of Contents 2
Compilation Sheet 3
Balance Sheet -- Assets 4
Balance Sheet -- Liabilities 5
Statement of Operations 6
Statement of Stockholder's Equity 7-9
Statement of Cash Flows 10
Notes to Financial Statements 11-15
</TABLE>
<PAGE>
ASHWORTH, MITCHELL, BRAZELTON, PLLC
4225 N. BROWN AVE.
SCOTTSDALE, AZ 85251
To the Board of Directors and Stockholders
American Southwest Holdings, Inc.
We have compiled the accompanying balance sheet of American Southwest Holdings,
Inc. as of September 30, 2000, and the related statements of income and retained
earnings and cash flows for the period then ended, in accordance with standards
established by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and accordingly do not express an
opinion or any other form of assurance on them.
/s/ Ashworth, Mitchell, Brazelton, PLLC
Scottsdale, AZ
October 16, 2000
<PAGE>
AMERICAN SOUTHWEST HOLDINGS, INC.
(A Development Stage Company)
BALANCE SHEET
September 30, 2000 and September 30, 1999
ASSETS
<TABLE>
<CAPTION>
September 30, September 30,
2000 1999
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash $ 202,116 $ 476
Funds in Escrow 50,000
------ ---------
Total Current Assets 252,116 476
DEFERRED MINERAL EXPLORATION COSTS
OTHER ASSETS
Organization Costs, net 24,000
Deposits and other assets
------ ---------
Net other assets - 24,000
------ ---------
Total Assets $ 252,116 $ 24,476
=============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
AMERICAN SOUTHWEST HOLDINGS, INC.
(A Development Stage Company)
BALANCE SHEET
September 30, 2000 and September 30, 1999
LIABILITIES
<TABLE>
<CAPTION>
September 30, September 30,
2000 1999
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 23,530 $ 25,000
Notes Payable
Interest Payable
Total Current Liabilities 23,530 25,000
STOCKHOLDER'S EQUITY
Common stock-authorized, 100,000,000 shares at
$.001 par value; issued and outstanding, 10,943,950
shares in 1999 and 18,863,950 in 2000 18,864 10,944
Paid in Capital 12,188,882 11,329,802
Deficit accumulated during the development stage (11,432,064) (11,194,666)
Current Income (Loss) (547,096) (146,606)
Total Stockholder's Equity 228,586 (526)
Total liabilities and stockholder's equity $ 252,116 $ 24,474
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
AMERICAN SOUTHWEST HOLDINGS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Sept. 30, 2000, and Sept. 30, 1999 and cumulative
<TABLE>
<CAPTION>
Period from
Cumulative July 28, 1995
during Quarter Ending Quarter Ending through
development September 30, September 30, December 31,
stage 2000 1999 1998
----- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue
Miscellaneous Income $ 76,794 $ - $ 76,794
Expenses
General and Administrative 4,326,220 378,045 112,853 3,457,277
Organizational Costs 90,000 2,000 14,000 82,000
Loss on Disposition of Misc Assets 19,753 19,753
Depreciation 61,465 61,465
------ ------ ------- ------
Total expenses 4,497,438 380,045 146,606 3,600,742
Loss from development stage operations (4,420,644) (380,045) (146,606) (3,523,948)
Interest Income 7,144 7,144
----- --------- --------- -----
Net operating (loss) (4,413,500) (380,045) (3,516,804)
Extraordinary income (expenses)
Restatement of prior year expenses
resulting from write-off of
liabilities on the Hiab Project 266,135 266,135
Write-down of Hiab mining
properties, net (3,477,840) (3,477,840)
Loss of Disposal of Equipment (19,753)
Write-off of exploration and
development costs
on the Hiab Project (4,466,157) (4,466,157)
---------- --------- -------- ----------
Net (loss) $ (12,111,115) $ (380,045) $ (11,194,666)
============= ============== ======= ==============
Net (loss) per share $ (1.39) $ (0.05) $ (1.16)
============= ============== ======= ==============
Weighted average shares 8,726,701 8,726,701 6,194,988
========= ========= ======= =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
AMERICAN SOUTHWEST HOLDINGS, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDER'S EQUITY
September 30, 2000 and September 30, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional Common During The
Common Stock Paid-in Stock Development
Shares Amount Capital Subscribed Stage Total
------ ------ ------- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at July 28, 1995 30,367 $ 30 $ $ $ $ 30
Shares issued at $.015 for services rendered 2,000,000 2,000 74,202 76,202
Shares issued at $0.15 for cash 2,967,493 2,967 441,747 444,714
Shares subscribed - 145,000 shares @ $3.50 507,500 507,500
Net Loss (879,868) (879,868)
-------- -------- -------- -------- -------- --------
Balance at December 31, 1995 4,997,860 $ 4,997 $ 515,949 $ 507,500 $ (879,868) $ 148,578
Issuance of subscribed shares 145,000 145 507,355 (507,500)
Shares issued for cash
604,900 shares @ $3.50 604,900 605 2,116,545 2,117,150
490,200 shares @ $5.00 490,200 491 2,450,509 2,451,000
Shares subscribed at $3.50
For cash - 85,000 shares 297,500 297,500
For mining properties
1,000,000 shares 3,500,000 3,500,000
Net Loss (2,327,161) (2,327,161)
Balance at December 31, 1996 6,237,960 $ 6,238 $ 5,590,358 $ 3,797,500 $ (3,207,029) $ 6,187,067
--------- -------- ------------ ------------- ------------- -----------
Issuance of subscribed shares 1,085,000 1,085 3,796,415 (3,797,500)
Shares issued for cash
370,000 shares at $2.50 370,000 370 924,630 925,000
Shares issued for services
498,000 shares at $.93 498,000 498 463,183 463,681
Net (loss) (6,286,760) (6,286,760)
-------- -------- -------- -------- -------- --------
Balance at December 31, 1997 8,190,960 $ 8,191 $ 10,774,586 $ - $ (9,493,789) $ 1,288,988
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
AMERICAN SOUTHWEST HOLDINGS, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDER'S EQUITY-CONTINUED
September 30, 2000 and September 30, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional Common During The
Common Stock Paid-in Stock Development
Shares Amount Capital Subscribed Stage Total
------ ------ ------- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 8,190,960 $ 8,191 $ 10,774,586 $ - $ (9,493,789) $ 1,288,988
Issuance of shares for conversion
of debt at $.44 1,072,990 1,073 468,897 469,970
Net (loss) (1,700,877) (1,700,877)
Balance at December 31, 1998 9,263,950 $ 9,264 $ 11,243,483 - $ (11,194,666) $ 58,081
Shares issued for cash
900,000 at $.02 900,000 900 17,100 18,000
Shares issued for services
100,000 shares at $.02 100,000 100 1,900 2,000
Shares issued for cash
680,000 shares at $.10 680,000 680 67,320 68,000
Net Loss (237,399) (146,604)
--------- -------- ------------ ------------- --------- ---------
Balance at December 31, 1999 10,943,950 10,944 11,329,803 - (11,432,065) (523)
Shares issued for services
900,000 shares at $.10 900,000 900 89,100 90,000
Shares issued for cash
1,520,000 shares at $.10 1,520,000 1,520 150,480 152,000
Net Loss (129,423) (129,423)
--------- -------- ------------ ------------- --------- ---------
Balance at March 31, 2000 13,363,950 13,364 11,569,383 - (11,561,488) 112,054
========== ====== ========== ============ =========== =======
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
AMERICAN SOUTHWEST HOLDINGS, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDER'S EQUITY-CONTINUED
September 30, 2000 and September 30, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional Common During The
Common Stock Paid-in Stock Development
Shares Amount Capital Subscribed Stage Total
------ ------ ------- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Net Loss $ (37,628) $ (37,628)
Balance at June 30, 2000 13,363,950 13,364 11,569,383 (11,599,116) 74,426
Shares issued for services
1,500,000 at $0.15 per share 1,500,000 $ 1,500 $ 223,500 $ 225,000
Shares issued for cash
4,000,000 at $0.10 4,000,000 $ 4,000 $ 396,000 $ 400,000
Net Loss $ (380,045) $ (380,045)
Balance at September 30,2000 18,863,950 $ 18,864 $ 12,188,883 $(11,979,161) $ 319,381
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
AMERICAN SOUTHWEST HOLDINGS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
September 30, 2000 and September 30, 1999 and cumulative
<TABLE>
<CAPTION>
Cumulative
during Quarter Ending Quarter Ending
development September 30, September 30,
stage 2000 1999
----- ---- ----
<S> <C> <C> <C>
Net (loss) $ (11,943,689) $ (380,045) $ (122,604)
Adjustments to reconcile net loss to net
used in operating activities:
Depreciation 136,004
Decrease in accounts receivable 2,422
Amortization of organizational 120,000 2,000 14,000
Loss or (gain) on Asset Sales (19,753)
Decrease (increase) in deposits and other assets (60,760) (50,000)
Increase (decrease) in accounts payable (917,373)
Increase (decrease) in notes payable (1,696,722)
Increase (decrease) in interest payable 7,113
----- -------- --------
Net cash (used) by operating activit (14,372,758) (428,000) (108,604)
----------- -------- --------
Write-off of exploration costs 4,466,157
Write-off of machinery & office eqpt 28,049
Purchase of property and equipment (931,920) 19,752
Expenditures on mineral exploration costs (3,283,917)
Write down of mining properties 5,654,010
--------- ------- ------
Net cash (used) by investing activities 5,932,379 - 19,752
--------- ------- ------
Sales of common stock 7,837,496 625,000 88,000
Common stock subscriptions received 805,000
------- ------- ------
Net cash provided by financing activities 8,642,496 625,000 88,000
--------- ------- ------
Net increase (decrease) in cash 202,117 196,955 (852)
Cash at the beginning of period - 5,162 328
----- ---
Cash at end of period $ 202,117 $ 202,117 (524)
=============== ============ ====
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
AMERICAN SOUTHWEST HOLDINGS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
Namibian Copper Mines, Inc. (the "Company") is a mineral exploration and
development company whose sole purpose is to explore and develop the Haib Copper
Project in Namibia, Africa.
The Company was incorporated in the state of Delaware on October 20, 1989, under
the name of Cordon Corporation and subsequently changed its name to Ameriserv
Financial Corporation ("Ameriserv"). On April 19, 1994, bankruptcy proceedings
for Ameriserv were finalized in the US Bankruptcy Court, Northern District of
Texas. Under the terms of the reorganization plan, Ameriserv was forced to
liquidate all of its assets and the proceeds were distributed amount the
creditors, thereby satisfying all of Ameriserv's outstanding debts. Ameriserv
ceased operations at the conclusion of the bankruptcy proceedings.
At a special shareholders meeting held on July 28, 1995, shareholders ratified
the name change of the company from Ameriserv to Namibian copper Mines, Inc. The
shareholders also approved the Company entering into a Farm-In Agreement with
Great Fitzroy Mines NL of Australia in order to earn a 70% equity in the Haib
Agreements, the Company undertook a reverse split on the basis of 50:1 which
reduced the shares held by the pre-bankruptcy shareholders to 30,367.
In July 1995, a private placement of the Company's common stock was undertaken
in order to fund preliminary work on the Haib Copper Project, provide working
capital to the Company, and to enable the company to undertake more substantial
capital raising in the future. Seed capital was raised which resulted in
2,967,493 fully paid shares being issued. As compensation for services rendered
in conjunction with the private placement, the Company issued 1,502,000 shares
to two entities; such shares were recorded at their par value.
The Company issued Peter Prentice and Alan Doyle, directors of the Company,
249,000 fully paid shares each as compensation for services rendered; such
shares were recorded at the private placement price of $0.15 per share, with a
corresponding charge to expenses.
The Company is party to an agreement (the "Swanson Agreement") to acquire the
mining claims owned by Mr. Swanson's company, Haib Copper Co. (Pty) Limited. The
total purchase consideration is $3,780,000 subject to CPI indexation.
Installments totaling
<PAGE>
American Southwest Holdings, Inc..
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2000
$427,000 has been paid to Mr. Swanson. The Swanson Agreement entitled the
Company to explore the claims and carry out mining to obtain bulk samples. When
the Company defaulted on their Farm-in Agreement, their interests in the Swanson
Agreement transferred to Great Fitzroy Mines, their joint-venture partner.
At the Annual Stockholder's Meeting, held June 9, 2000, in Phoenix, Arizona, the
stockholders agreed to change the name of the Corporation to American Southwest
Holdings, Inc., and gave the Board of Directors authority to pursue negotiations
and discussions for a joint venture in Zichang County of Shaanxi Province and
other areas in the Republic of China regarding oil and gas exploration in their
country.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Method
-----------------
The Company's financial statements are prepared using United States
generally accepted accounting principles with a fiscal year ending
December 31.
2. Deferred Mineral Exploration Costs and Mineral Properties
---------------------------------------------------------
Costs of acquisition and development relating to the Haib Project are
capitalized on an area of interest basis.
3. Depreciation
------------
Depreciation is computed on a straight-line basis over an estimated
service life of five years.
4. Income Taxes
------------
The Company has a net operating loss of approximately $11,000,000,
which may be carried forward to reduce taxable income in future years
through 2011. Because of the loss, no current provision for income
taxes has been recorded for the year ended December 31, 1999.
5. Foreign Currency Transactions
-----------------------------
Monetary assets and liabilities in foreign exchange currencies have
been translated into United States dollars at the exchange rates
prevailing at the balance sheet date. Other assets and liabilities,
revenue and expenses arising from foreign currency transactions have
been translated at the exchange rate prevailing at the date of the
transaction. Gains and losses arising from these translation policies
are included in income.
<PAGE>
American Southwest Holdings, Inc..
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2000
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (continued)
6. Use of Estimates
----------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions
that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
7. Estimated Fair Value Information
--------------------------------
Statement of Financial Accounting Standards ("SFAS") No. 107,
"Disclosure about Fair Value of Financial Instruments" requires
disclosure of the estimated fair value of an entity's financial
instrument assets and liabilities, as defined, regardless of whether
recognized in the financial statements of the reporting entity. The
fair value information does not purport to represent the aggregate net
fair value of the Company.
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is
practicable to estimate that value:
Cash
----
The carrying value amount approximates fair value.
Notes Payable
-------------
Fair value can not be determined due to the Company's lack of credit
history.
<PAGE>
American Southwest Holdings, Inc..
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2000
NOTE C- DEVELOPMENT STAGE AND GOING CONCERN
Since July 28, 1995, the Company has been in the development stage and
its principal activities have consisted of raising capital, obtaining
property or exploration rights and conducting exploratory operations in
anticipation of completing a feasibility study on the Haib Copper
Project.
The accompanying financial statements have been prepared on the basis
of a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. The
Company is not yet generating revenue from mining operations and, at
December 31, 1997, has accumulated a deficit from its operating
activities and has incurred substantial obligations. Continuation of
the Company as a going concern is dependent upon, among other things,
obtaining additional capital, and achieving satisfactory levels of
profitable operations. The financial statements include adjustments
resulting from the default on the Farm-In Agreement with Great Fitzroy
Mines NL and the write-down of assets relating to the Haib Project. It
is unlikely the Company will continue in the mining industry.
In April 1999, the Company commenced discussions with two Cypress firms
regarding acquiring their rights to various interests and agreements
with a Russian government corporation involved with diamond cutting and
marketing. The Company proposed to enter into identical agreements with
two entities formed in and operating out of the island nation of
Cyprus. These entities were Mosquito Mining Limited ("Mosquito") and
Select Mining Limited ("Select"). Both entities are controlled by the
same parties.
The agreements were options to purchase rights to strategic interests
and agreements developed by Mosquito and Select with the Russian
governmental company JVSC Alrosazoloto Co. Ltd. Each set of interests
and agreements was to be purchased in exchange for US $3,250,000 or, at
the option of each of Mosquito and Select, common shares in the
Company. The Company was to be able to exercise its right to the
interests and agreements at any time within 120 days of signing each
agreement at its discretion if certain conditions were met.
A shareholder's meeting was held on August 2, 1999. At this meeting,
the shareholders approved the proposed agreements. Members authorized
a corporate name change, and an 8:1 rollback of the Company's common
stock subject to a 120 due diligence period.
After a further period of due diligence, the company decided not to
proceed with The transaction as had been presented at the annual
meeting.
<PAGE>
American Southwest Holdings, Inc..
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2000
NOTE C - DEVELOPMENT STAGE AND GOING CONCERN (CONTINUED)
Discussions have been held with various firms during the first quarter
of 2000, in regards to selling the shares of the company. These
discussions have not been advantageous to the Company, and no
discussions are currently in process.
Currently the Company is engaged in the due diligence process regarding
a possible project in the People's Republic of China. A letter of
intent has been signed between the parties. The project is located
approximately 800 KM west-southwest of Beijing in the Shaanxi Province.
This project entails drilling 40 production wells in the oil fields,
where reserves are estimated at 90 million tons of oil. The Company
will be joint venturing with Wuhan Pengling Group Company, Limited, and
would be entering into a contract with the county government of Zichang
in the Shaanxi Province. The Company would have the right to drill 300
well in the onshore Yanchang field in the Zichang County, which has
estimated reserves approximating 560 million barrels of oil and
unspecified amounts of gas. The company will receive 80% equity in
these 300 wells for the full expenditure which will be recouped out of
production. The Company will also have the right to refurbish up to
2,000 of the existing government wells, with a right of equity
participation in these wells. There will also be exploration rights
over certain areas not previously explored in the Zichang County, which
encompasses part of the Yanchang oil field.
NOTE D - DEFAULT ON FARM-IN AGREEMENT
During 1997, the Company was unable to raise sufficient funds for the
continued development of the Haib Project. As a result, the Company has
defaulted on its Farm-In Agreement with Great Fitzroy Mines NL to earn
an 80% interest in the Haib project. At December 31, 1997, the
following adjustments and write-downs were made to reduce assets to
their expected net realizable value.
Deferred Mineral Exploration costs in the amount of $4,887,852
were written off.
In 1997, total capitalized costs of the Haib mining property in
the amount of $5,740,262 were reduced by $4,151,463 to $1,588,799
representing a 20% interest in the Haib project.
Liabilities in the amount of $2,684,118 relating to the Haib
project have been written off.
Prior year expenses resulting from the write-off liabilities in
the amount of $266,136 have been restated (reduced).
<PAGE>
American Southwest Holdings, Inc..
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2000
Effective December 31, 1998, additional write-offs of $1,588,788 were
made resulting in the Company owning no residual interest in the Haib
Project.
In 1999, the Company determined that it needed to write off all its
remaining fixed assets, as they we no longer owned by the Company. All
machinery and office equipment were removed from the balance sheet and
the loss on the disposition of these assets were noted. Expenses were
recorded for the purpose of getting the Company ready to re-register
its stock on the NASD Bulletin Board. The Company has successfully
completed the filing of its financial information with the SEC.
Accordingly, the Company is in compliance with the new NASD OTC
Bulletin Board eligibility rules for continued quotation as a fully
reporting company.
NOTE E - WARRANTS
At December 31, 1999, the Company had no outstanding warrants to be
redeemed.
NOTE F - STOCK OPTION PLAN
At the Stockholders meeting held in June, 2000, the Company authorized
an employee stock option plan to benefit employees, and reward them for
their performance. Currently options have been issued to two employees:
Wangshu Liu for 100,000 shares and John Yellich for 50,000 shares.
<PAGE>
ASHWORTH, FRANCIS, MITCHELL, BRAZELTON, PLLC
4225 N. BROWN AVE.
SCOTTSDALE, AZ 85251
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
Board of Directors
Namibian Copper Mines, Inc.
We have audited the accompanying balance sheet of Namibian Copper Mines, Inc.,
as of December 31, 1999, 1998,and December 31, 1997, and the related statements
of income, retained earnings, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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 included
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 Namibian Copper Mines, Inc., as
of December 31, 1999, 1998, and December 31, 1997, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
As discussed in Note C of the financial statements this company is still in its
development stage, and the statements are prepared based upon the assumption
that the company will continue as a going concern. The company is still in the
exploration/feasibility stage of its development and is not yet generating
revenue, and as shown in the financial statements, has incurred losses in its
development stage. The financial statements do not include any adjustments
relating to the outcome of this situation.
Scottsdale, Arizona
March 13, 2000
F-1
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage
Company)
BALANCE SHEET
December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
ASSETS
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ 212 $ 328 $ 328
DEFERRED MINERAL EXPLORATION COSTS
PROPERTY AND EQUIPMENT (AT COST)
Mining properties (Haib Project) 1,588,799
Roads
Machinery and equipment 31,014 31,014
Furniture, fixtures and office equipment 16,788 129,311
----- ------ -------
Total property and equipment 47,802 1,749,124
Less accumulated depreciation (28,050) (52,494)
------- -------
Net property and equipment 19,752 1,696,630
OTHER ASSETS
Organization Costs, net 14,000 38,000 62,000
Deposits and other assets
------ ------ ------
Net other assets 14,000 38,000 62,000
------ ------ ------
Total Assets $ 14,212 $ 58,080 $ 1,758,958
========= ========= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
BALANCE SHEET
December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
LIABILITIES
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 73,060 $ $
Notes Payable 469,970
Interest Payable
Total Current Liabilities 73,060 - 469,970
STOCKHOLDER'S EQUITY
Common stock-authorized, 100,000,000 shares at
$.001 par value; issued and outstanding,
10,643,950 shares in 1999, 9,263,950 in
1998, and 8,190,960 shares in 1997 10,944 9,264 8,191
Paid in Capital 11,329,802 11,243,482 10,774,586
Common stock subscribed - 1,085,000 shares
in 1996
Deficit accumulated during the
development stage (11,399,594) (11,194,666) (9,493,789)
Total Stockholder's Equity (58,848) 58,080 1,288,988
Total liabilities and stockholder's equity $ 14,212 $ 58,080 $ 1,758,958
============ ============ ============
</TABLE>
F-3
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Period from
Cumulative July 28, 1995
during Year ended Year ended through
development December 31, December 31, December 31,
stage 1999 1998 1997
----- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue
Miscellaneous Income $ 76,794 $ - $ - $ 76,794
Expenses
General and Administrative 3,618,453 161,176 79,109 3,378,168
Organizational Costs 106,000 24,000 24,000 58,000
Depreciation 61,465 8,969 52,496
------ ------ ----- ------
Total expenses 3,785,918 185,176 112,078 3,488,664
Loss from development stage operations (3,709,124) (185,176) (112,078) (3,411,870)
Interest Income 7,144 7,144
----- -------- -------- -----
Net operating (loss) (3,701,980) (185,176) (112,078) (3,404,726)
Extraordinary income (expenses)
Restatement of prior year expenses
resulting from write-off of
liabilities on the Hiab Project 266,135 266,135
Write-down of Hiab mining
properties, net (3,477,840) (1,588,799) (1,889,041)
Loss of Disposal of Equipment (19,753) (19,753)
Write-off of exploration and development
costs on the Hiab Project (4,466,157) (4,466,157)
---------- ----------
Net (loss) $ (11,399,595) $ (204,929) $ (1,700,877) $ (9,493,789)
============= ============= ============= =============
Net (loss) per share $ (1.21) $ (0.02) $ (0.19) $ (1.16)
============= ============= ============= =============
Weighted average shares 9,443,508 10,103,950 9,085,118 6,194,988
========= ========== ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDER'S EQUITY
December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional Common During The
Common Stock Paid-in Stock Development
Shares Amount Capital Subscribed Stage Total
------ ------ ------- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at July 28, 1995 30,367 $ 30 $ $ $ $ 30
Shares issued at $.015 for
services rendered 2,000,000 2,000 74,202 76,202
Shares issued at $0.15 for cash 2,967,493 2,967 441,747 444,714
Shares subscribed -
145,000 shares @ $3.50 507,500 507,500
Net Loss (879,868) (879,868)
--------- -------- ------------ -------- ---------- ----------
Balance at December 31, 1995 4,997,860 $ 4,997 $ 515,949 $ 507,500 $ (879,868) $ 148,578
Issuance of subscribed shares 145,000 145 507,355 (507,500)
Shares issued for cash
604,900 shares @ $3.50 604,900 605 2,116,545 2,117,150
490,200 shares @ $5.00 490,200 491 2,450,509 2,451,000
Shares subscribed at $3.50
For cash - 85,000 shares 297,500 297,500
For mining properties
1,000,000 shares 3,500,000 3,500,000
Net Loss (2,327,161) (2,327,161)
--------- -------- ------------ -------- ---------- ----------
Balance at December 31, 1996 6,237,960 $ 6,238 $ 5,590,358 $ 3,797,500 $ (3,207,029) $ 6,187,067
Issuance of subscribed shares 1,085,000 1,085 3,796,415 (3,797,500)
Shares issued for cash
370,000 shares at $2.50 370,000 370 924,630 925,000
Shares issued for services
498,000 shares at $.93 498,000 498 463,183 463,681
Net (loss) (6,286,760) (6,286,760)
--------- -------- ------------ -------- ---------- ----------
Balance at December 31, 1997 8,190,960 $ 8,191 $ 10,774,586 $ - $ (9,493,789) $ 1,288,988
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDER'S EQUITY (CON'T)
December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional Common During The
Common Stock Paid-in Stock Development
Shares Amount Capital Subscribed Stage Total
------ ------ ------- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 8,190,960 $ 8,191 $ 10,774,586 $ - $ (9,493,789) $ 1,288,988
Issuance of shares for
conversion of debt at $.44 1,072,990 1,073 468,897 469,970
Net (loss) (1,700,877) (1,700,877)
--------- -------- ------------ -------- ---------- ----------
Balance at December 31, 1998 9,263,950 $ 9,264 $ 11,243,483 - $(11,194,666) $ 58,081
Shares issued for cash
900,000 at $.02 900,000 900 17,100 18,000
Shares issued for services
100,000 shares at $.02 100,000 100 1,900 2,000
Shares issued for cash
680,000 shares at $.10 680,000 680 67,320 68,000
Net Loss (146,604) (146,604)
--------- -------- ------------ -------- ---------- ----------
Balance at December 31, 1999 10,943,950 10,944 11,329,803 - (11,194,666) (523)
========== ====== ========== =========== ====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Period from
Cumulative July 28, 1995
during Year ended Year ended through
development December 31, December 31, December 31,
stage 1999 1998 1997
----- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net (loss) $ (11,194,664) $ (204,929) $ (1,700,877) $ (9,493,787)
Adjustments to reconcile net loss to
net used in operating activities:
Depreciation 136,004 8,969 127,035
Decrease in accounts receivable 2,422 2,422
Amortization of organizational costs 82,000 24,000 24,000 58,000
Loss or (gain) on Asset Sales (19,753)
Decrease (increase) in deposits and (760) (760)
other assets
Increase (decrease) in accounts (915,911) 73,538 (915,911)
payable
Increase (decrease) in notes payable (1,696,722) (469,970) (1,226,752)
Increase (decrease) in interest
payable 7,113 7,113
--------- ------ --------- ---------
Net cash (used) by operating activities (13,580,518) (127,144) (2,137,878) (11,442,640)
Cash flows from investing activities
Write-off of exploration costs 4,466,157 4,466,157
Write-off of machinery & office eqpt 28,049
Purchase of property and equipment (931,920) 79,109 (1,011,029)
Expenditures on mineral exploration (3,283,917) (3,283,917)
costs
Write down of mining properties 5,654,010 1,588,799 4,065,211
--------- ------ --------- ---------
Net cash (used) by investing activities 5,904,330 28,049 1,667,908 4,236,422
--------- ------ --------- ---------
Cash flows from financing activities
Sales of common stock 6,871,516 98,980 469,970 6,401,546
Common stock subscriptions received 805,000 805,000
Net cash provided by financing activities 7,676,516 98,980 469,970 7,206,546
--- --- --- ---
Net increase (decrease) in cash 328 (116) - 328
Cash at the beginning of period 328 328
--- --- --- ---
Cash at end of period $ 212 212 $ 328 328
============= === ============ ===
</TABLE>
The accompanying notes are an integral part of these financial statements
F-7
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Namibian Copper Mines, Inc. (the "Company") is a mineral exploration and
development company whose sole purpose is to explore and develop the Haib Copper
Project in Namibia, Africa.
The Company was incorporated in the state of Delaware on October 20, 1989, under
the name of Cordon Corporation and subsequently changed its name to Ameriserv
Financial Corporation ("Ameriserv"). On April 19, 1994, bankruptcy proceedings
for Ameriserv were finalized in the US Bankruptcy Court, Northern District of
Texas. Under the terms of the reorganization plan, Ameriserv was forced to
liquidate all of its assets and the proceeds were distributed amount the
creditors, thereby satisfying all of Ameriserv's outstanding debts. Ameriserv
ceased operations at the conclusion of the bankruptcy proceedings.
At a special shareholders meeting held on July 28, 1995, shareholders ratified
the name change of the company from Ameriserv to Namibian Copper Mines, Inc. The
shareholders also approved the Company entering into a Farm-In Agreement with
Great Fitzroy Mines NL of Australia. In order to earn a 70% equity in the Haib
Agreements the Company undertook a reverse split on the basis of 50:1, which
reduced the shares held by the pre- bankruptcy shareholders to 30,367.
In July 1995, a private placement of the Company's common stock was undertaken
in order to fund preliminary work on the Haib Copper Project, provide working
capital to the Company, and to enable the company to undertake more substantial
capital raising in the future. Seed capital was raised which resulted in
2,967,493 fully paid shares being issued. As compensation for services rendered
in conjunction with the private placement, the Company issued 1,502,000 shares
to two entities; such shares were recorded at their par value.
The Company issued Peter Prentice and Alan Doyle, directors of the Company,
249,000 fully paid shares each as compensation for services rendered; such
shares were recorded at the private placement price of $0.15 per share, with a
corresponding charge to expenses.
The Company is party to an agreement (the "Swanson Agreement") to acquire the
mining claims owned by Mr. Swanson's company, Haib Copper Co. (Pty) Limited. The
total purchase consideration is $3,780,000 subject to CPI indexation.
Installments totaling
$427,000 has been paid to Mr. Swanson. The Swanson Agreement entitled the
Company to explore the claims and carry out mining to obtain bulk samples. When
the Company defaulted on their Farm-in Agreement, their interests in the Swanson
Agreement transferred to Great Fitzroy Mines, their joint-venture partner.
F-8
<PAGE>
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Method
---------------------
The Company's financial statements are prepared using United States
generally accepted accounting principles with a fiscal year ending
December 31.
2. Deferred Mineral Exploration Costs and Mineral Properties
-------------------------------------------------------------
Costs of acquisition and development relating to the Haib Project are
capitalized on an area of interest basis.
3. Depreciation
----------------
Depreciation is computed on a straight-line basis over an estimated
service life of five years.
4. Income Taxes
----------------
The Company has a net operating loss of approximately $11,000,000,
which may be carried forward to reduce taxable income in future years
through 2011. Because of the loss, no current provision for income
taxes has been recorded for the year ended December 31, 1998.
5. Foreign Currency Transactions
---------------------------------
Monetary assets and liabilities in foreign exchange currencies have
been translated into United States dollars at the exchange rates
prevailing at the balance sheet date. Other assets and liabilities,
revenue and expenses arising from foreign currency transactions have
been translated at the exchange rate prevailing at the date of the
transaction. Gains and losses arising from these translation policies
are included in income.
6. Use of Estimates
--------------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions
F-9
<PAGE>
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
7. Estimated Fair Value Information
------------------------------------
Statement of Financial Accounting Standards ("SFAS") No. 107,
"Disclosure about Fair Value of Financial Instruments" requires
disclosure of the estimated fair value of an entity's financial
instrument assets and liabilities, as defined, regardless of whether
recognized in the financial statements of the reporting entity. The
fair value information does not purport to represent the aggregate net
fair value of the Company.
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is
practicable to estimate that value:
Cash
----
The carrying value amount approximates fair value.
Notes Payable
-------------
Fair value can not be determined due to the Company's lack of credit
history.
NOTE C- DEVELOPMENT STAGE AND GOING CONCERN
Since July 28, 1995, the Company has been in the development stage and
its principal activities have consisted of raising capital, obtaining
property or exploration rights and conducting exploratory operations in
anticipation of completing a feasibility study on the Haib Copper
Project.
The accompanying financial statements have been prepared on the basis
of a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. The
Company is not yet generating revenue from mining operations and, at
December 31, 1997, has accumulated a deficit from its operating
activities and has incurred substantial obligations. Continuation of
the Company as a going concern is dependent upon, among other
F-10
<PAGE>
NOTE C - DEVELOPMENT STAGE AND GOING CONCERN - CONTINUED
things, obtaining additional capital, and achieving satisfactory levels
of profitable operations. The financial statements include adjustments
resulting from the default on the Farm-In Agreement with Great Fitzroy
Mines NL and the write-down of assets relating to the Haib Project. It
is unlikely the Company will continue in the mining industry.
In April 1999, the Company commenced discussions with two Cypress firms
regarding acquiring their rights to various interests and agreements
with a Russian government corporation involved with diamond cutting and
marketing. The Company proposed to enter into identical agreements with
two entities formed in and operating out of the island nation of
Cyprus. These entities were Mosquito Mining Limited ("Mosquito") and
Select Mining Limited ("Select"). Both entities are controlled by the
same parties.
The agreements were options to purchase rights to strategic interests
and agreements developed by Mosquito and Select with the Russian
governmental company JVSC Alrosazoloto Co. Ltd. Each set of interests
and agreements was to be purchased in exchange for US $3,250,000 or, at
the option of each of Mosquito and Select, common shares in the
Company. The Company was to be able to exercise its right to the
interests and agreements at any time within 120 days of signing each
agreement at its discretion if certain conditions were met.
A shareholder's meeting was held on August 2, 1999. At this meeting,
the shareholders approved the proposed agreements. Members authorized a
corporate name change, and an 8:1 rollback of the Company's common
stock subject to a 120 due diligence period.
After a further period of due diligence, the company decided not to
proceed with the transaction as had been presented at the annual
meeting.
NOTE D - DEFAULT ON FARM-IN AGREEMENT
During 1997, the Company was unable to raise sufficient funds for the
continued development of the Haib Project. As a result, the Company has
defaulted on its Farm-In Agreement with Great Fitzroy Mines NL to earn
an 80% interest in the Haib project. At December 31, 1997, the
following adjustments and write-downs were made to reduce assets to
their expected net realizable value.
Deferred Mineral Exploration costs in the amount of $4,887,852 were
written off.
F-11
<PAGE>
NOTE D - DEFAULT ON FARM-IN AGREEMENT CONTINUED
In 1997, total capitalized costs of the Haib mining property in the
amount of $5,740,262 were reduced by $4,151,463 to $1,588,799
representing a 20% interest in the Haib project.
Liabilities in the amount of $2,684,118 relating to the Haib project
have been written off.
Prior year expenses resulting from the write-off liabilities in the
amount of $266,136 have been restated (reduced).
Effective December 31, 1998, additional write-offs of $1,588,788 were
made resulting in the Company owning no residual interest in the Haib
Project.
In 1999, the Company determined that it needed to write off all its
remaining fixed assets, as they we no longer owned by the Company. All
machinery and office equipment were removed from the balance sheet and
the loss on the disposition of these assets were noted. Expenses were
recorded for the purpose of getting the Company ready to re-register
its stock on the NASD Bulletin Board. The Company has successfully
completed the filing of its financial information with the SEC.
Accordingly, the Company is in compliance with the new NASD OTC
Bulletin Board eligibility rules for continued quotation as a fully
reporting company.
NOTE E - WARRANTS
At December 31, 1999, the Company had no outstanding warrants to be
redeemed.
F-12
<PAGE>
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
NAMIBIAN COPPER MINES, INC.
December 31, 1998 and 1997
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
TABLE OF CONTENTS
December 31, 1998 and 1997
<TABLE>
<CAPTION>
DOCUMENT PAGE NO.
<S> <C>
Table of Contents 2
Auditor's Opinion 3
Balance Sheet - Assets 4
Balance Sheet - Liabilities 5
Statement of Operations 6
Statement of Stockholder's Equity 7-8
Statement of Cash Flows 9
Notes to Financial Statements 10-14
</TABLE>
<PAGE>
ASHWORTH, MITCHELL, BRAZELTON, PLLC
4225 N. BROWN AVE.
SCOTTSDALE, AZ 85257
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
-------------------------------------------------
Board of Directors
Namibian Copper Mines, Inc.
We have audited the accompanying balance sheet of Namibian Copper Mines, Inc.,
as of December 31, 1998 and December 31, 1997, and the related statements of
income, retained earnings, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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. Ain audit also included
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 Namibian Copper Mines, Inc., as
of December 31, 1998 and December 31, 1997, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
As discussed in Note D of the financial statements this company has defaulted on
its Farm-In Agreement with Great Fitzroy Mines NL to develop the Haib project.
These financial statements reflect this default and adjustments to accounts have
been made to recognize this position.
/s/ Ashworth, Mitchell, Brazelton, PLLC
---------------------------------------
Scottsdale, Arizona
July 28, 1999
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
BALANCE SHEET
December 31, 1998 and 1997
<TABLE>
ASSETS
<CAPTION>
1998 1997
-------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 328 $ 328
DEFERRED MINERAL EXPLORATION COSTS
PROPERTY AND EQUIPMENT (AT COST)
Mining properties (Haib Project) 1,588,799
Roads
Machinery and equipment 31,014 31,014
Furniture, fixtures and office equipment 16,788 129,311
Total property and equipment 47,802 1,749,124
Less accumulated depreciation (28,050) (52,494)
Net property and equipment 19,752 1,696,630
OTHER ASSETS
Organization Costs, net 38,000 62,000
Deposits and other assets
Net other assets 38,000 62,000
Total Assets $ 58,080 $ 1,758,958
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
BALANCE SHEET
December 31, 1998 and 1997
<TABLE>
LIABILITIES
<CAPTION>
1998 1997
------------------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ $
Notes Payable 469,970
Interest Payable -------------- ------------
Total Current Liabilities 469,970
STOCKHOLDER'S EQUITY
Common stock-authorized, 100, 000, 000 shares at
$.001 par value; issued and outstanding, 8,190,960
shares in 1997 and 6,237,960 in 1996 9,264 8,191
Paid in Capital 11,243,482 10,774,586
Common stock subscribed - 1,085,000 shares in 1996
Deficit accumulated during the development stage (11,194,666) (9,493,789)
------------ -----------
Total Stockholder's Equity 58,080 1,288,988
------ ---------
Total liabilities and stockholder's equity $ 58,080 $ 1,758,958
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Period from
Cumulative July 28, 1995
during Year ended through
development December 31, December 31,
stage 1998 1997
----- ---- ----
<S> <C> <C> <C>
Revenue
Miscellaneous Income $ 76,794 $ $ 76,794
Expenses
General and Administrative 3,457,277 79,109 3,378,168
Organizational Costs 82,000 2,400 58,000
Depreciation 61,465 8,969 52,496
------ ----- ------
Total expenses 3,600,742 90,478 3,488,664
Loss from development stage operations (3,523,948) (112,078) (3,411,870)
Interest Income 7,144 7,144
Net operating (loss) (3,516,804) (112,078) (3,404,726)
----------- --------- -----------
Extraordinary income (expenses)
Restatement of prior year expenses resulting
from write-off of liabilities on the Hiab Project 266,135 266,135
Write-down of Hiab mining properties, net (3,477,840) (1,588,799) (1,889,041)
Write-off of exploration and development costs
on the Hiab Project (4,466,157) (4,466,157)
----------- -----------
Net (loss) (11,194,666) (1,700,877) (9,493,789)
=========== ========== ==========
Net (loss) per share $ (1.62) $ (0.19) $ (1.53)
Weighted average shares 6,917,520 9,085,118 6,194,988
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS EQUITY
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional Common During The
Common Stock Paid-in Stock Development
Shares Amount Capital Subscribed Stage Total
------ ------ ------- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at July 28, 1995 30,367 $ 30 $ $ $ $ 30
Shares issued at $.015 for services rendered 2,000,000 2,000 74,202 76,202
Shares issued at $0.15 for cash 2,967,493 2,967 441,747 444,714
Shares subscribed - 145,000 shares @ $3.50 507,500 507,500
Net Loss (879,868) (879,868)
Balance at December 31, 1995 4,997,860 $ 4,997 $ 515,949 $ 507,500 $ (879,868)$ 148,578
Issuance of subscribed shares 145,000 145 507,355 (507,500)
Shares issued for cash
604,900 shares @ $3.50 604,900 605 2,116,545 2,117,150
490,200 shares @ $5.00 490,200 491 2,450,509 2,451,000
Shares subscribed at $3.50
For cash - 85,000 shares 297,500 297,500
For mining properties
1,000,000 shares 3,500,000 3,500,000
Net Loss (2,327,161) (2,327,161)
Balance at December 31, 1996 6,237,960 $ 6,238 $5,590,358 $ 3,797,500 $(3,207,029)$6,187,067
Issuance of subscribed shares 1,085,000 1,085 3,796,415 (3,797,500)
Shares issued for cash
370,000 shares at $2.50 370,000 370 924,630 925,000
Shares issued for service
498,000 shares at $.93 498,000 498 463,183 463,681
Net (loss) (6,286,760)(6,286,760)
Balance at December 31, 1997 8,190,960 $ 8,191 10,774,586 $ - (9,493,789) 1,288,988
Issuance of shares for conversion
of debt at $.44 1,072,990 1,073 468,897 469,970
Net (loss) (1,700,877)(1,700,877)
Balance at December 31, 1998 9,253,950 $ 9,264 11,243,483 $ - (11,194,666) $ 58,081
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Period from
Cumulative July 28, 1995
during Year ended through
development December 31 December 31
stage 1998 1997
----- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities
Net (loss) $ (11,194,664) $ (1,700,877) $ (9,493,787)
Adjustments to reconcile net loss to net
used in operating activities:
Depreciation 136,004 8,969 127,035
Decrease in accounts receivable 2,422 2,422
Amortization of organizational costs 82,000 24,000 58,000
Decrease (increase) in deposits and other assets (760) (760)
Increase (decrease) in accounts payable (915,911) (915,911)
Increase (decrease) in notes payable (1,696,722) (469,970) (1,226,752)
Increase (decrease) in interest payable 7,113 7,113
Net cash (used) by operating activities (13,580,518) (2,137,878) (11,442,640)
Cash flows from investing activities
Write-off of exploration costs 4,466,157 4,466,157
Purchase of property and equipment (931,920) 79,109 (1,011,029)
Expenditures on mineral exploration costs (3,283,917) (3,283,917)
Write down of mining properties 5,654,010 1,588,799 4,065,211
Net cash (used) by investing activities 5,904,330 1,667,908 4,236,422
Cash flows from financing activities
Sales of common stock 6,871,516 469,970 6,401,546
Common stock subscriptions received 805,000 805,000
Net cash provided by financing activities 7,676,516 469,970 7,206,546
Net increase (decrease) in cash 328 - 328
Cash at the beginring of period 328
Cash at end of period 328 $ 328 $ 328
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE A - COMPANY BACKGROUND AND BUSINESS
----------------------------------------
Namibian Copper Mines, Inc., (the "Company") is a mineral exploraiton and
development company whose sole purpose is to explore and develop the Haib Copper
Project in Namibia, Africa.
The Company was incorporated in the state of Deleware on October 20, 1989, under
the name of Cordon Corporation and subseqauently changed its name to Ameriserv
Financial Corporation ("Ameriserv"). On April 19, 1994, bankruptcy proceedings
for Ameriserv were finalized in the US Bankruptcy court, Northern District of
Texas. Under the terms of the reorganization plan, Ameriserv was forced to
liquidate all of its assets and the proceeds were distributed among the
creditors, thereby satisfying all of Ameriserv's outstanding debts. Ameriserv
ceased operations at the conclusion of the bankruptcy proceedings.
At a special shareholders meeting held on July 28, 1995, shareholders ratified
the name change of the company from Ameriserv to Namibian Copper Mines, Inc. The
shareholders also approved the Company entering into a Farm-In Agreement with
Great Fitzroy Mines NL of Australia in order to earn a 70% equity in the Haib
Agreements, the Company undertook a reverse split on the basis of 50:1 which
reduced the shares held by the pre-bankruptcy shareholders to 30,367.
In July 1995, a private placement of the Company's common stock was undertaken
in order to fund preliminary work on the Haib Copper Project, provide working
capital to the Company, and to enable the Company to undertake more substantial
capital raising in the future. Seed capital; was raised which resulted in
2,967,493 fully paid shares being issued. As compensation for services rendered
in conjunction with the private placement, the Company issued 1,502,000 shares
to two entities; such shares were recorded at their par value.
The Company issued Peter Prentice and Alan Doyle, directors of the Company,
249,000 full paid shares each as compensation for services rendered; such shares
were recorded at the private placement price of $0.15 per share, with a
corresponding charge to expenses.
The Company is party to an agreement (the "Swanson Agreement") to acquire the
mining claims owned by Mr. Swanson's company, Haib Copper Co., (Pty)
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1998 AND 1997
NOTE A - COMPANY BACKGROUND AND BUSINESS - CONTINUED
----------------------------------------------------
indexation. Installments totaling $427,000 have been paid to Mr. Swanson. The
Swanson Agreement entitled the Company to explore the claims and carry out
mining to obtain bulk samples.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------
Accounting Method
-----------------
The Company's financial statements are prepared using United States generally
accepted accounting principles with a fiscal year ending December 31.
Deferred Mineral Eploration Costs and Mineral Properties
--------------------------------------------------------
Cost of acquisition and development relating to the Haib Project are capitalized
on an area of interest basis.
Depreciation
------------
Depreciation is computed on a straight-line basis over an estimated life of five
years.
Income Taxes
------------
The Company has a net operating loss of approximately $6,000,000 which may be
carried forward to reduce taxable income in future years through 2011. Because
of the loss, no current provision for income taxes has been recorded for the
year ended December 31, 1998.
Foreign Currency Transactions
-----------------------------
Monetary assets and liabilities in foreign exchange currencies have been
translated into United States dollars at the exchange rates prevailing at the
balance sheet date. Other assets and liabilities, revenue and expenses arising
from foreign currency transactions have been translated at the exchange rate
prevailing at the date of the transaction. Gains and losses arising from these
translation policies are included in income.
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development State Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1998 AND 1997
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES CONTINUED
---------------------------------------------------------------
Use of Estimates
----------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from the estimates.
Estimated Fair Value Information
--------------------------------
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosure about
Fair Value of Financial Instruments" reqauires disclosure of the estimated fair
value of an entity's financial, instrument assets and liabilities, as defined,
regardless of whether recognized in the financial statements of the reporting
entity. The fair value information does not purport to represent the aggregate
net fair value of the Company.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
Cash
----
The carrying value amount approximates fair value.
Notes Payable
-------------
Fair value cannot be determined due to the Company's lack of credit history.
NOTE C - DEVELOPMENT STAGE AND GOING CONCERN
--------------------------------------------
Since July 28, 1995, the Company has been in the development stage and its
principal activiies have consisted of raising capital, obtaining property or
exploration rights and conducting exploratory operations in anticipation of
completing a feasibility study on the Haib Copper Project.
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development State Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1998 AND 1997
NOTE C - DEVELOPMENT STAGE AND GOING CONCERN - CONTINUED
--------------------------------------------------------
The accompanying financial statements have been prepared on the basis of a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company is not yet generating
revenue from mining operations and, at December 1998, has accumulated a deficit
from its operating activities and has incurred substantial obligations.
Continuation of the Company as a going concern is dependent upon, among other
things, obtaining additional capital, and achieving satisfactory levels of
profitable operations. The financial statements including adjustments resulting
from the default on the Farm-In Agreement with Great Fitzroy Mines NL and the
writedown of assets relating to the Haib Project. It is unlikely that the
Company will continue operating in the mining industry.
NOTE D - DEFAULT ON FARM-IN AGREEMENT
-------------------------------------
During 1997, the Company was unable to raise sufficient funds for the continued
development of the Haib Project. As a result, the Company has defaulted on its
Farm-In Agreement with Great Fitzroy Mines NL to earn an 80% interest in the
Hiab Project. At December 31, 1997, the following adjustments and write-downs
have been made to reduce assets to their expected net realizable value:
Deferred Mineral Exploration costs in the amount of $4,887,852 have been
written off.
In 1997, total capitalized costs of the Haib mining property in the amount
of $5,740,262 were reduced by $4,151,463 to $1,588,799 representing a 20%
interest in the Haib Project.
Liabilities in the amount of $2,684,118 relating to the Haib Project have
been written off.
Prior year's expenses resulting from the write off liabilities in the
amount of $266,136 have been restated (reduced).
Effective December 31, 1998, additional write-offs of $1,588,788 were made
resulting in the Company owning no residual interest in the Haib Project.
<PAGE>
NAMIBIAN COPPER MINES, INC.
(A Development State Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31,1998 AND 1997
NOTE E - WARRANTS
-----------------
At December 31, 1998, the Company has no outstanding warrents to be redeemed.
NOTE F - SUBSEQUENT EVENTS
--------------------------
On April 2, 1999, 900,000 common shares (Restricted under Regulation s) were
issued for cash at $.02 per share. 100,000 shares (Restricted under Rule 144)
were issued to Billie J. Allred, Chief Financial Officer, for services at $.02
per share. On July 16, 1999, the Company issued 680,000 shares (Restricted under
Regulation S) at $. 10 per share.
EXPERTS AND LEGAL MATTERS
Legal matters pertaining to this registration statement will be passed upon
for the Company by Gary R. Blume, Esq., Blume Law Firm , P.C., 11811 North Tatum
Boulevard, Suite 1025, Phoenix, Arizona 85028.
The financial statements of the Company for the years ended December 31,
1999 and 1998 appearing in this Form SB-2 Registration Statement have been
audited by Ashworth, Mitchell, Brazelton, PLLC, independent auditors. The
interim period ending September 30, 2000, was compiled by them from information
furnished by the Company. These financial statements are set forth in their
report thereon appearing elsewhere herein and are included in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has had no change of Accountants or disagreements with its
Accountants since 1996.
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has no policies in place regarding indemnification of its
officers and directors. The Delaware Code Annotated provides corporations with
the power to indemnify its officers, directors, employees and agents against
threatened, pending or completed lawsuits involving company matters and against
expenses and attorneys' fees incurred in connection with such action.
23
<PAGE>
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses of the Registration Statement are as follows:
<TABLE>
<CAPTION>
<S> <C>
Transfer Agent: $3,000
Legal and Accounting: $35,000
TOTAL $38,000
</TABLE>
RECENT SALES OF UNREGISTERED SECURITIES
Beginning June 30, 1999, we sold a total of 900,000 shares of our common
stock pursuant to a Regulation S offering to one individual accredited investor
residing off-shore. The total offering price was $18,000, or $0.02 per share.
The funds from this offering were used for working capital. The offering was
closed on July 10, 1999 with all shares sold.
On July 27, 1999, we issued 100,000 shares of common stock to a single
individual in exchange for accounting services rendered. The issuance price was
$0.02 per share for a total of $2,000.
From October 1, 1999 to October 22, 1999,we sold a further 580,000 shares
of our common stock pursuant to a Regulation S offering to four (4) individual
accredited investors residing off-shore. The total offering price was $57,000,
or $0.10 per share. The funds from this offering were used for working capital.
On October 26, 1999, we issued 900,000 shares of common stock to four (4)
individuals in exchange for services and payables rendered. The issuance price
was $0.01 per share for a total of $90,000.
We sold 1,520,000 shares of our common stock for operating capital
beginning on February 25, 2000. These shares were issued to five (5) accredited
investors residing off-shore and were issued under a Regulation S offering. The
offering price was $0.01 per share for a total offering of $15,200. The offering
was closed on March 18, 2000.
An offering was commenced on May 8, 2000 for a total of 4,000,000 shares
and 4,000,00 warrants for shares of common stock. The shares were sold at $0.10
per share for a total offering of $400,000 and the proceeds were used for
working capital. The warrants are exercisable at $0.15 each and expire on June
30, 2002. This offering closed on September 14, 2000.
On August 1, 2000, 1,500,000 shares of common stock were issued to two (2)
individuals in exchange for services rendered at an issuance price of $0.15 per
share for a total of $225,000.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit Description
3. Articles of Incorporation and Bylaws
3a. Articles of Incorporation and Amendments
23. Consent of Experts and Counsel
23a. Consent of Independent Auditor
23b. Consent of Counsel
27. Financial Data Schedule
24
<PAGE>
UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The issuer will file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to include
any prospectus required by section 10(a)(3) of the Securities Act, to reflect in
the prospectus any facts or events which represent a fundamental change in the
information in the registration statement and to include any additional or
changed material information on the plan of distribution.
For determining liability under the Securities Act, the issuer will treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
The issuer will file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Phoenix, State of Arizona.
AMERICAN SOUTHWEST HOLDINGS, INC.
/s/ Alan Doyle
--------------
Alan Doyle, President and CEO
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Gary R. Blume, Esq. as true and lawful
attorneys-in-fact with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereon.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
/s/ Alan Doyle October 31, 2000
-------------- ----------------
Alan Doyle President, Secretary, Treasurer, Director Date
/s/ Peter Holsworth October 31, 2000
------------------- ----------------
Peter Holsworth Director Date
/s/ John Yellich October 31, 2000
---------------- ----------------
John Yellich Vice President Date
/s/ Steven Liu October 31, 2000
-------------- ----------------
Steven Liu Vice President Date
25
