UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999
-------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________________ to _______________________
Commission file number 0-26037
AMERICAN URANIUM, INC.
--------------------------------------------
(Name of small business issuer in its charter)
New Jersey N/A
- - -------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
121 Richmond Street West, 7th Floor Toronto, Ontari, Canada M5H 2K1
- - ----------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (416) 203-0010
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
Check whether the Issuer (1) has filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such fling requirements for the past 90 days.
(1) Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $-0-
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days: The aggregate market value of the voting stock held by
non-affiliates of the Registrant (558,000 shares) cannot be computed because
there is no trading market.
State the number of shares outstanding of each of the Issuer's classes of common
equity as of the latest practicable date: At March 26, 2000, there were
9,058,261 shares of the Registrant's Common Stock outstanding.
Documents Incorporated by Reference: None
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
American Uranium was organized under the laws of the State of New Jersey on
October 22, 1991 under the name PRS Sub III, Inc. and changed its name to
American Uranium Inc. in 1998. American Uranium was originally formed as a
subsidiary of People Ridesharing Systems, Inc., a company which filed for
reorganization under Chapter 11 of the Bankruptcy Act. As a result of an order
of the United States Bankruptcy Court in May 1996 relating to the bankruptcy of
People Ridesharing, the common stock ownership in American Uranium was issued
10% to the creditors and 5% to the stockholders of People Ridesharing and 85% to
an investor.
Prior Operations
From the time of the reorganization on October 22, 1991 until the company
changed its name to American Uranium, American Uranium had no business
operations.
Activities During 1999
During the year ended December 31, 1999, American Uranium conducted no
material business operations.
Proposed Activities
Identify and Acquire Uranium and Vanadium Properties
American Uranium entered into an agreement with a mineral exploration
company, Platoro West LLC that owns a database of geological exploration
information on approximately 1,500 properties, the majority of which are located
in the United States. The database was acquired by Platoro as part of the
liquidation of certain mining subsidiaries of a major multinational chemical
company that was previously engaged in mineral exploration. The database was
compiled during the 1960's and 1970's, and it is believed to contain exploration
results and feasibility studies that still have valuable, useful information.
The agreement provides for Platoro to identify eight to ten advanced stage
properties with proven reserves in the United States for American Uranium to
stake or otherwise acquire if interested. American Uranium views this database
as a substantial competitive advantage in the identification of high quality
mineral properties with significant potential for full development.
American Uranium's initial plans are to acquire claims for five to ten
uranium and vanadium properties. The claims may include those identified by
Platoro West, LLC.
Update of Past Exploration Results and Feasibility Studies on Staked Claims
Once American Uranium identifies properties and acquires ownership of the
claims, it will contract with external geological and environmental consultants
to update the exploration results, feasibility studies and environmental reports
to determine if the properties can be permitted for full-scale mining. Each
property will be studied to determine the production price that will support
positive cash flow and that would be attractive to develop using modern mining
methods or to joint venture develop with a major mineral producer. Claims that
are not feasible to permit will not be renewed with the applicable federal and
state authorities.
<PAGE>
Obtain Permits for Properties Identified as Feasible to Mine
American Uranium will have to undergo an extensive permitting process prior
to extracting minerals from feasible properties. Operating and environmental
permits will be obtained from the applicable regulatory bodies utilizing
technical applications filed by American Uranium. American Uranium has
identified external mining consultants to assist with preparing and filing
permits to all applicable regulatory authorities in the United States. American
Uranium is able to draw upon the significant mining experience of its principal
shareholders, officers and directors to ensure the best resources are allocated
to permitting and proper procedures are followed.
Develop Mining Facilities and Extract Ore from Permitted Properties
American Uranium intents to use three approaches to mine permitted
properties: (i) develop the facilities to extract and partially refine the ore
and contract for later-stage refining with third-party refiners, (ii) enter a
joint venture agreement with a major mineral producer to extract and refine the
ore - American Uranium will receive a percentage of the revenues from the sale
of refined ore, or (iii) sell the permitted property to a major mineral
producer. American Uranium will require significant capital to manage and
operate fully functional mines without the assistance of a major mineral
producer and does not view this as the preferred option.
Mineral Ore Orientation
Recent acquisitions of uranium properties or junior uranium mining and
exploration companies by some major mineral producers has resulted in American
Uranium focusing on these particular minerals.
The selection of a business opportunity in which to participate is complex
and risky. Additionally, as American Uranium has only extremely limited
resources, it may be difficult to find good opportunities. There can be no
assurance that American Uranium will be able to identify and acquire any
business opportunity based on management's business judgement.
Business Risks
The activities of American Uranium are subject to several significant risks
which arise primarily as a result of the fact that American Uranium has no
specific business and may acquire or participate in a business opportunity based
on the decision of management which potentially could act without the consent,
vote, or approval of American Uranium's shareholders. The risks faced by
American Uranium are further increased as a result of its lack of resources and
its inability to provide a prospective business opportunity with significant
capital.
Employees
American Uranium has no employees.
ITEM 2. DESCRIPTION OF PROPERTY
American Uranium rents offices at 121 Richmond St. W., Seventh Floor,
Toronto, Ontario, M5H 2K1
ITEM 3. LEGAL PROCEEDINGS
American Uranium is not a party to any material pending legal proceedings
or government actions, including any material bankruptcy, receivership, or
similar proceedings. Management of American Uranium does not believe that there
are any material proceedings to which any director, officer or affiliate of
American Uranium, any owner of record of beneficially of more than five percent
of the common stock of American Uranium, or any associate of any such director,
officer, affiliate of American Uranium, or security holder is a party adverse to
American Uranium or has a material interest adverse to American Uranium.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of shareholders of American Uranium
during the fourth quarter of the fiscal year ended December 31, 1999.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of American Uranium is not quoted on any quotation medium.
There is currently no established public trading market for the Common Stock.
At December 31, 1999, American Uranium had approximately 696 shareholders
of record as reported by American Uranium's transfer agent. The transfer agent
for American Uranium is Olde Monmouth Stock Transfer, 77 Memorial Parkway,
Atlantic Highlands, NJ 07716.
Since its inception American Uranium has not paid any dividends on its
common stock, and American Uranium does not anticipate that it will pay
dividends in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
American Uranium is a development stage company. It has had no revenues
from operations during the fiscal years ended December 31, 1998 and 1999, or
from October 21, 1991 (the commencement of the development stage) to December
31, 1999. Expenses of American Uranium decreased from $91,321 in 1998 to $40,073
in 1999. The costs were reduced due to no new staking of claims in 1999 and
reduced consulting fees.
Liquidity and Capital Resources
American Uranium has no working capital. It has funded losses from the
proceeds of sale of securities in 1998 and 1999.
American Uranium does not have any capital resources. Before American
Uranium will be able to enter into any business operations, it will have to
raise capital. The capital requirements may be substantial; American Uranium is
unable to estimate its capital requirements at this time because it does not
have any business operations. There can be no assurance that American Uranium
will be able to raise any capital in the future.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of American Uranium are set forth immediately
following the signature page of this annual report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
General
The following table sets forth certain information regarding the current
directors and executive officers of American Uranium:
POSITION(S) WITH
NAME AGE THE COMPANY DIRECTOR SINCE
Glen Akselrod 30 President & CEO 1999
CT Yeh 61 Secretary 1997
Stewart Jackson 60 Director 1997
There are no family relationships among any of the directors or executive
officers of American Uranium.
The following information is furnished for each of the executive officers
and directors of American Uranium:
Glen Akselrod has served as the President and Chief Executive Officer of
American Uranium since August 1999. Since November 1998 he has been employed by
thestockpage.com as Vice President. Thestockpage.com. is an Ontario corporation
in the business of marketing and public relations. Prior to joining
thestockpage.com Glen was an analyst for two property and casualty insurers. Mr.
Akselrod has a Bachelor of Science - Actuarial Science and Economics degree from
the University of Toronto.
Mr. C.T. Yeh, has been the Secretary and a director of American Uranium
since 1997. Mr. Yeh has over 25 years of experience with mining companies and
financial services companies. From 1996 to 1997, Mr. Yeh was President of YCN
Group, L.L.C., a joint venture partner with Yang Cheng (Group) Co., Ltd., a
Macau based company wholly owned by the Municipality of Guangzhou, China.
From1992 to 1996, Mr. Yeh was Managing Director of Ridgewood Partners Ltd., an
investment banking company. From 1988 to 1992, Mr. Yeh was a Director of Elders
Resources Finance Inc., a merchant bank providing capital to the junior mining
companies. From 1979 to 1986, Mr. Yeh was Director and Financial Planner of
Inspiration Resources; from 1974 to 1979, was a Senior Process Economics
Engineer at Kennecott Copper; from 1969 to 1974, was a Metallurgist at Foote
Minerals Company; and from 1966 to 1969, Mr. Yeh was a Research Metallurgist at
Calumet & Hecla Company. Mr. Yeh holds a Bachelor of Science degree in
Metallurgical Engineering from Cheung Kung University, and Master of Science
degree in Metallurgical Engineering from Michigan Technological University, and
an M.B.A. with Honors from the University of Delaware. Mr. Yeh holds several
U.S. Patents in Metallurgy and has written several research papers for the
American Institute of Metallurgical Engineers and the American Ceramic Society.
Dr. Stewart A. Jackson, has been the director of American Uranium since
1997. Dr. Jackson is an experienced geologist with 37 years of experience in
exploration and development of both base and precious metal deposits. Dr.
Jackson was responsible for the discovery and development of several major
mineral discoveries, including the Red Dog multi-billion dollar zinc deposit in
northwestern Alaska for Cominco Resources, Inc. Dr. Jackson was responsible for
the raising of over $50 million for several publicly traded companies, including
for Crown Resource Corp. founded by him in 1981. Since 1987 Dr. Jackson has been
an independent consulting geologist for several private and public companies.
Dr. Jackson earned a Bachelors of Science Degree majoring in Geology from the
University of Western Ontario and a Masters of Science majoring in Stratigraphy
and Mineral Deposit and a Doctorate from the University of Toronto.
Each director of American Uranium is elected to hold office until the next
annual meeting of the shareholders and until his or her successor is elected and
duly qualified. The bylaws state that the annual meeting of shareholders shall
be held on the first Tuesday of November each year.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
American Uranium paid Mr. G. Ken Webb, the then president of American
Uranium a salary of $2,500 per month until March 1999. There has been no
compensation awarded to or paid to any executive officers since March 1999.
American Uranium has no written employment contracts with any of its
executive officers. No executive officer has entered into any compensatory plan
or arrangement with American Uranium with respect to any resignation,
retirement, or any other termination of such executive officer's employment with
American Uranium or from a change in control of American Uranium, or a change in
any executive officer's responsibilities following any change of control.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information furnished by current
management concerning the ownership of common stock of American Uranium as of
December 31, 1999, of (i) each person who is known to American Uranium to be the
beneficial owner of more than 5 percent of the Common Stock; (ii) all directors
and executive officers; and (iii) directors and executive officers of American
Uranium as a group:
Percent of
Number of Shares of Ownership of
Common Stock Common Stock
Name of Beneficial Owner Beneficially* Owned Outstanding
- - ---------------------------- --------------------- ------------
Glen Akselrod . . . . . . . . . 2,000,000(1)(2) 22.1%
C.T. Yeh . . . . . . . . . . . - 0 - - 0 -
Stewart A. Jackson . . . . . . 2,000,000(1)(3) 22.1%
Uranium Strategies, Inc. . . . 2,000,000(4) 22.1%
Robert Landau . . . . . . . . . 1,800,000(5) 19.9%
David Roff . . . . . . . . . . 1,800,000(5) 19.9%
Thomas Skimming . . . . . . . . 2,880,000(6) 31.8%
Directors and officers as a
group (3 persons) . . . . . . 2,000,000(7) 22.1%
- - ---------------------------------------------------
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock issuable upon the
exercise of options or warrants currently exercisable, or exercisable or
convertible within 60 days, are deemed outstanding for computing the percentage
ownership of the person holding such options or warrants but are not deemed
outstanding for computing the percentage ownership of any other person.
(1) The address for each of Messrs. Akselrod and Jackson is care-of American
Uranium at 121 Richmond Street, West, Seventh Floor, Toronto, Ontario,
Canada M5H 2K1.
(2) Mr. Akselrod is the chief executive officer and a director of Uranium
Strategies, Inc., and consequently has beneficial ownership of the shares
of common stock of American Uranium owned by Uranium Strategies.
Mr. Akselrod disclaims beneficial ownership as to all shares of common
stock of American Uranium held by Uranium Strategies.
(3) Mr. Jackson is the Secretary and a director of Uranium Strategies and
consequently has beneficial ownership of the shares of common stock of
American Uranium owned by Uranium Strategies. Mr. Jackson disclaims
beneficial ownership as to all the shares of common stock of American
Uranium held by Uranium Strategies.
<PAGE>
(4) The address for Uranium Strategies, Inc. is 3550 Skyline View Drive, Reno,
Nevada 89509.
(5) The address for each of Messrs. Landau and Roff is 133 Richmond Street,
West, Suite # 401, Toronto, Ontario, Canada M5H 2L3.
(6) The address for Thomas Skimming is 11 Camelot Court, Toronto, Ontario,
Canada M3B 2N4.
(7) See Notes 2 and 3 above.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no related party transactions during 1999.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a)(1) Financial Statements. The following financial statements are included in
this report:
Report of Samuel Klien and Partners, Certified Public Accountants
Balance Sheet at December 31, 1999 and 1998
Statements of Operations for the years ended December 31, 1999 and 1998.
Statement of Changes in Stockholders' Equity from January 1, 1994, through
December 31, 1999
Statements of Cash Flows for the fiscal years ended December 31, 1999 and
1998.
Notes to Financial Statements
(a)(2) Exhibits. The following exhibits are included as part of this report:
Exhibit No. Description of Exhibit
3.1. Certificate of Incorporation of the Registrant**
3.2 Bylaws of the Resitrant**
4.1 Form of Common Stock Certificate of Registrant**
10.1 Consulting Agreement between Registrant and
Platoro West, LLC.**
27.1 Financial Data Sheet
** Previously filed - Incorporated by reference from Form 10-SB dated May 4,
1999.
<PAGE>
SIGNATURES
In accordance with Section 13 of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN URANIUM, INC.
Date: March 30, 2000 By: /s/ Glen Akselrod
-----------------------------
Glen Akselrod, President
Principal Accounting Officer
and Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacitates and on the
dates indicated.
By: /s/ Glen Akselrod, Director March 30, 2000
By: /s/ CT Yeh, Director March 30, 2000
By: /s/ Stewart Jackson, Director March 30, 2000
<PAGE>
AMERICAN URANIUM, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of American Uranium, Inc.
We have audited the accompanying balance sheets of American Uranium, Inc.
(formerly Zencrest Holdings Corp., Inc.) as of December 31, 1999 and 1998, and
the related statements of operations, stockholders' equity and cash flows for
the years 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Uranium, Inc. as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ Samuel Klein and Company
-----------------------------
SAMUEL KLEIN AND COMPANY
Newark, New Jersey
March 10, 2000
F-2
<PAGE>
AMERICAN URANIUM, INC.
BALANCE SHEETS
<TABLE>
December 31,
ASSETS 1999 1998
---- ----
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 29 $ 24,446
Prepaid expenses 1,856 5,208
------------ ----------
Total Current Assets 1,885 29,654
------------ ----------
Mineral Resource Assets 64,393 61,819
----------- ----------
Fixed Assets:
Furniture and fixtures 661 -
Less: Accumulated depreciation 121 -
------------- ----------
540 -
------------- ----------
Total Assets $ 66,818 $ 91,473
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 5,485 $ 12,794
Stockholder loans 5,428
------------
Total Current Liabilities 10,913 12,794
----------- ------------
Total Liabilities 10,913 12,794
----------- ------------
Stockholders' Equity:
Common stock, $.001 par value, 100,000,000
shares authorized, 9,058,261 and 9,040,261
shares issued and outstanding at December
31, 1999 and 1998 9,058 9,040
Additional paid-in-capital 188,942 170,960
Accumulated deficit (142,095) (101,321)
---------- ----------
Total Stockholders' Equity 55,905 78,679
----------- -----------
Total Liabilities and Stockholders' Equity $ 66,818 $ 91,473
========== ==========
</TABLE>
- - --------------------
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
AMERICAN URANIUM, INC.
STATEMENTS OF OPERATIONS
<TABLE>
For the Years Ended
December 31,
1999 1998
---- ----
<S> <C> <C>
Revenues $ - $ -
Cost of Revenues - -
------------ ----------
Gross Profit - -
------------ ----------
Other Costs:
General and administrative expenses 40,774 91,937
------------ ----------
Total Other Costs 40,774 91,937
Other Income and Expense:
Interest income - 616
------------ ----------
Net Loss before Benefit from Income Taxes (40,774) (91,321)
Benefit from Income Taxes - -
------------ ----------
Net Loss $ (40,774) $ (91,321)
============= =========
</TABLE>
- - --------------------
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
AMERICAN URANIUM, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
Common Stock
$.001 Par Value
---------------
Common Additional Total
Number Stock Paid-In- Accumulated Stockholders'
of Shares Amount Capital Deficit Equity
---------- ------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Balances, January 1, 1998 2,500,261 $2,500 $ 7,500 $(10,000) $ -
Issuance of Common Shares 6,540,000 6,540 163,460 - 170,000
Net Loss for the Year Ended
December 31, 1998 - - - (91,321) (91,321)
---------- ------- ----------- --------- --------
Balances, December 31, 1998 9,040,261 9,040 170,960 (101,321) 78,679
Issuance of Common Shares 18,000 18 17,982 - 18,000
Net Loss for the Year Ended
December 31, 1999 - - - (40,774) (40,774)
---------- ------- ----------- --------- --------
Balances December 31, 1999 9,058,261 $9,058 $188,942 $(142,095) $ 55,905
========== ======== =========== ========= =========
</TABLE>
- - --------------------
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
AMERICAN URANIUM, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
For the Years Ended
December 31,
1999 1998
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $(40,774) $(91,321)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 121 -
(Increase) decrease in prepaid expenses 3,352 (5,208)
Increase (decrease) in accounts payable and
accrued expenses (7,309) 12,794
---------- ---------
Net Cash Used in Operating Activities (44,610) (83,735)
--------- ----------
Cash Flows from Investing Activities:
Purchase of fixed assets (661) -
Increase in Mineral Resource Assets (2,574) (61,819)
----------- -----------
Net cash used in investing activities (3,235) (61,819)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from the issuance of common stock 18,000 170,000
Proceeds of stockholder loans 5,428 -
------------ ----------
Net cash provided by financing activities 23,428 170,000
------------ ----------
Net Increase (Decrease) in Cash and Cash Equivalents (24,417) 24,446
Cash and Cash Equivalents, beginning of year 24,446 -
----------- ----------
Cash and Cash Equivalents, end of year $ 29 $ 24,446
============= ==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest $ - $ -
============= =========
Taxes $ - $ -
============= =========
</TABLE>
- - --------------------
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
AMERICAN URANIUM, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
American Uranium, Inc. (formerly Zencrest Holdings Corp., Inc.) (the "Company")
was formed in 1991 as a subsidiary of People Ridesharing Systems, Inc. ("PRS") a
company that filed for reorganization under Chapter 11 of the Bankruptcy Act. As
a result of an arrangement with the Bankruptcy Court and PRS, ownership in the
Company was to be provided to the creditors and stockholders of PRS who received
ten percent and five percent, respectively, of the outstanding stock of the
Company upon the sale of the Company and in contemplation of a merger. In
addition, the Company sold eighty-five percent of the Company's stock to
nonaffiliated parties.
On August 26, 1998 the Company commenced operations by entering into an
agreement with Platoro West, LLC ("Platoro") concerning mineral exploration
activities. The Company's operations will be in the identification, acquisition,
exploration, development and extraction of minerals, primarily focusing on
uranium and vanadium claims located in the United States. This agreement was
terminated on May 31, 1999 (see Note 4, "Commitments and Contingencies").
Inventory
Inventory will be valued at cost as computed under the last-in, first-out (LIFO)
method which normally is lower than market. For the type of inventory the
Company intends to maintain, no segregation among raw materials, work in process
and finished goods will be practicable.
Mineral Resource Assets
Mineral resource assets include costs associated with mineral interests in
properties and related equipment and facilities and other facilities required
for purposes of extraction.
Property, Plant and Equipment
Property, plant and equipment will include support equipment and will be
depreciated or amortized over the estimated useful life of the assets.
Revenue Recognition
Revenue will be recognized upon shipment of the mined minerals.
Use of Management's Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-7
<PAGE>
AMERICAN URANIUM, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company follows Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109). SFAS 109 requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred tax liabilities and assets are determined based on the
difference between the financial statement carrying amounts and tax bases of
assets and liabilities using enacted tax rates in effect in the years in which
the differences are expected to reverse. Valuation allowances are established
when necessary to reduce deferred tax assets to the amount expected to be
realized.
Impairment of Long-Lived Assets
The Company adopted Statement of Financial Accounting Standards No. 121 (SFAS
121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of". SFAS 121 requires that if facts and circumstances
indicate that the cost of fixed assets or other assets may be impaired, an
evaluation of recoverability would be performed by comparing the estimated
future undiscounted pre-tax cash flows associated with the asset to the asset's
carrying value to determine if a write-down to market value or discounted
pre-tax cash flow value would be required.
Comprehensive Income
For the year ended December 31, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income" (SFAS 130). This statement establishes rules
for the reporting of comprehensive income and its components which require that
certain items such as foreign currency translation adjustments, unrealized gains
and losses on certain investments in debt and equity securities, minimum pension
liability adjustments and unearned compensation expense related to stock
issuances to employees be presented as separate components of stockholders'
equity. The adoption of SFAS 130 had no impact on total stockholders' equity for
either of the years presented in these financial statements.
2. STOCKHOLDER LOANS
The Company was indebted to a principle stockholder in the amount of $5,428 as
of December 31, 1999. This loan is noninterest bearing and is payable on demand.
F-8
<PAGE>
AMERICAN URANIUM, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
3. COMMON STOCK
The Company was incorporated on October 22, 1991 in the State of New Jersey and
has authority to issue, pursuant to an amendment to the Company's certificate of
incorporation on July 25, 1997, 100,000,000 $.001 par value shares of Common
Stock. As a result of an arrangement with the Bankruptcy Court and PRS, entered
into on April 30, 1996, ownership in the Company was to be provided to the
creditors and stockholders of PRS who received 10 percent and 5 percent,
respectively, of the outstanding common stock of the Company upon the sale of
the Company and in contemplation of a merger, resulting in 10,000,000 shares of
common stock outstanding.
On March 23, 1998, the Company effected a 1 for 4 reverse split of the
outstanding common stock resulting in a reduction of the issued and outstanding
shares from 10,000,000 to 2,500,261 which included the issuance of 261
fractional shares. All outstanding share information has been retroactively
restated to give effect to the 1 for 4 reverse stock split.
During September 1998, the Company issued private placement offerings to three
individuals who were instrumental in identifying worthy business opportunities.
The private placement offering resulted in the issuance of a total of 6,500,000
shares of the Company's common stock at a price of $.02 per share. Total
proceeds of the private placement offerings were $130,000.
On December 18, 1998, the Company completed the sale of two other private
placement offerings and received $40,000 for which the Company issued 40,000
shares of its common stock during January 1999. For financial statement
presentation, the 40,000 shares have been treated as issued and outstanding at
December 31, 1998.
On January 14, 1999 the Company completed the sale of one additional private
placement offering and issued 18,000 shares of its common stock, which resulted
in total proceeds to the Company of $18,000.
4. COMMITMENTS AND CONTINGENCIES
As previously discussed in Note 1, on August 26, 1998 the Company commenced
operations by entering into an agreement with Platoro concerning mineral
exploration activities. The Company's operations will be in the identification,
acquisition, exploration, development and extraction of minerals, primarily
focusing on uranium and vanadium claims located in the United States. The
agreement with Platoro called for Platoro to identify and stake eight (8) to ten
(10) good, marketable, mineral properties on behalf of the Company. These
properties were to be advanced stage properties with proven resources located in
the United States. The Company in return agreed to pay the sum of $5,000 per
month for an initial agreement period of twenty-four (24) months plus out of
pocket expenses, including wages, travel and field expenses. The Company was
also responsible for all filing fees for the claims acquired by Platoro. In
addition, the Company was to issue four hundred thousand (400,000) shares of
common stock to Platoro upon the commencement of the trading of the Company's
common stock. During 1998 the Company successfully acquired through staking one
property which was identified by Platoro pursuant to the agreement and this
remains the only property staked to date.
F-9
<PAGE>
AMERICAN URANIUM, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
4. COMMITMENTS AND CONTINGENCIES (Continued)
The agreement between the Company and Platoro was terminated on May 31, 1999 and
each of the parties was relieved of any future obligation under the agreement
for consideration of $2 and other good and valuable consideration paid by each
of the parties to the other. As part of this termination agreement, the Company
agreed that it would transfer title and claims of the staked site described in
Note 5 to Platoro if the Company elects not to make the required payments to
maintain the claims. Should the Company place the site into production, the
Company has agreed to pay Platoro a Net Smelter Royalty within 10 business days
following the receipt of any sale proceeds. Net Smelter Royalty is 2% of cash
sale proceeds after deducting the cost of smelting and refining charges.
5. MINING PROPERTIES
Graysill Property, San Juan and Dolores Counties, Colorado
The Company acquired through staking a total of 24 unpatented lode mining claims
in Sections 19, 20, 29 and 30 in Township 40 North, Range 9 West in San Juan and
Dolores Counties, Colorado immediately southeast of Bolam Pass. The claims were
located on September 29, 1998 and the Company is required to make a payment of
$1 per claim by August 11th of each year on an ongoing basis in order to
preserve title to the property. The claims are located at an elevation of 11,000
feet above mean sea level and are accessible by a dirt road that is maintained
during the summer months by the United States Forest Service. The property,
which is referred to as the Graysill Property, encompasses the historic Graysill
Mine, a past producer of vanadium and uranium ore. The production history of the
Graysill Mine is poorly documented but it is known to have produced vanadium and
byproduct uranium during an approximate twenty year period after World War II.
Before the mine ceased production, approximately 32,000 tons of ore were mined
with a reported grade of 2.41% vanadium pentoxide and 0.09% uranium oxide. In
1989, representatives of the United States, Department of the Interior, Bureau
of Mines Division, examined a number of abandoned mines in the San Juan National
Forest, one of which was the Graysill Mine. Subsequently, in 1992 the Bureau of
Mines produced a Mineral Land Assessment Open File Report titled "Mineral
Appraisal of San Juan National Forest, Colorado". Most of the information
relating to the Graysill Mine and the geology and mineralization of the general
area within which the Graysill Property is located was obtained from this Open
File Report unless stated otherwise.
The Graysill Property of American Uranium, Inc. is underlain by a gently dipping
assemblage of Paleozoic and Mesozoic sedimentary rocks within which vanadium and
uranium occurs in many of the rock units in a stratabound manner exhibiting
little or no apparent relationship to regional structural trends. Although
vanadium and uranium occurrences are ubiquitous and are known to exist in over
20 distinctly different sedimentary units, the Uranium line property, the
Pennsylvanian Permian Rico Formation and the Upper Jurassic Entrada Sandstone
are the only formations which have been mined previously for vanadium and
uranium. Most of the past production has come from the Entrada Sandstone.
Historically, there have been a number of uraniferous vanadium deposits
developed in the Entrada Sandstone along a sinuous trend extending in a
north-south direction for over 100 miles. This trend coincides with a major
structural feature representing a transitional zone between the Colorado Plateau
and the Southern Rocky Mountain physiographic provinces.
F-10
<PAGE>
AMERICAN URANIUM, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
5. MINING PROPERTIES (Continued)
During the past 50 years, the general region within which the Company's property
is located has been subjected to several periods of extensive exploration. The
major programs were carried out by Vanadium Corporation of America during the
late 1940's and early 1950's and by Atlas Corporation in the late 1970's.
Although the collective efforts of these companies resulted in the discovery and
definition of significant, high grade vanadium reserves containing a high
incidence of uranium, a major decline in the market for these commodities in the
early 1980's eliminated all interest in the area.
Concurrent with the height of exploration, uranium mining in the project area
was initiated on a small scale in the 1940's and peaked in the late 1950's.
Sporadic production of vanadium and uranium continued into the 1970's. Based on
reported grades, the total production from the 32,000 tons of ore extracted from
the Graysill Mine amounted to approximately 52,000 pounds of uranium oxide and
in excess of 1,500,000 pounds of vanadium pentoxide before the mine ceased
operations presumably because of low vanadium and uranium prices. Recently,
Platoro West, LLC of Durango, Colorado acquired a map which was prepared by
Vanadium Corporation of America in 1950 at a scale of 1 inch to 500 feet. The
map outlines the location of a large number of exploration holes that were
drilled by Vanadium Corporation of America and details the average grade and
thickness of vanadium mineralization that was encountered in each hole. Based on
this information and assuming continuity of the mineralization between drill
holes and a reasonable distance beyond drill holes, Platoro West, LLC calculated
a geological resource of 400,000 tons averaging 2.5% vanadium pentoxide.
Although the uranium content is not shown on the map, it is the assumption of
Platoro West, LLC that a large resource of absorbed uranium is associated with
the vanadium mineralization since the drilling appears to have been designed to
extend the zone of vanadium and uranium mineralization at the Graysill Mine.
This equates to an inground resource of 20,000,000 pounds of Vanadium Pentoxide
and possibly 6,400,000 pounds of uranium oxide, providing the uranium grades at
the Graysill Mine accurately reflect the uranium content in the Graysill
vanadium deposit.
American Uranium, Inc., through Platoro West, LLC is in the process of
negotiating with Atlas Corporation to acquire all of the data relating to the
exploration they carried out in the Graysill area during the 1970's. This
information would enable American Uranium to recalculate the vanadium and
uranium reserves and would be invaluable in designing further exploration work
on the Graysill Property.
Based on the results of the previous exploration on the property, coupled with
the widespread distribution of vanadium and uranium within the Entrada Sandstone
in the Graysill area, management believes that it is highly likely that a
significant increase in the vanadium and uranium reserves can be attained with
further exploration on the property.
F-11
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