<PAGE>2
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10SB/A
AMENDMENT 1
General Form for Registration of Securities of Small
Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
AURIC ENTERPRISES, INC.
(Exact name of Small Business Issuer in its charter)
NEVADA 91-1950699
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
10 Office Park Rd, Suite 222,
Carolina Building, Hilton Head, SC 29928
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (843) 686-5590
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
Forward-Looking Statements and Associated Risk. This Registration
Statement, including the information incorporated herein by reference,
contains forward-looking statements including statements regarding, among
other items, the Company's growth strategies, and anticipated trends in
the Company's business and demographics. These forward-looking
statements are based largely on the Company's expectations and are
subject to a number of risks and uncertainties, certain of which are
beyond the Company's control. Actual results could differ materially
from these forward-looking statements as a result of the factors
described in this section "Risk Factors," including among others,
regulatory or economic influences.
<PAGE>3
ITEM 1. DESCRIPTION OF BUSINESS
A. The incorporation documents were initially filed with the state of
Nevada in October, 1998. The documents were returned to the resident
agent for minor corrections. Due to an error on the part of the
Company's registered agent, the documents were not subsequently refiled
until February 12, 1999, its official incorporation date. The Board of
Directors has subsequently ratified all actions taken during the period
described above. The Company is authorized to issue Fifty Million
(50,000,000) Common Shares, $.001 par value.
Corporate Operations. The Company is in the exploration stage. The
Company shall engage in the further assaying and of its mining claims
located in Trinity County, California in order to establish a Proven
Reserve which can then be developed.
Acquisition of Property. The Company acquired four mining claims on
December 8, 1998 pursuant to a purchase agreement between the Company and
the R.E. Hunt Trust (Hunt). The Company issued to Hunt 200,000 shares
of its restricted common stock in exchange for the claims. The seller
also granted the company an option to repurchase 100,000 shares at $.25
per shares and 50,000 shares at $.50 per share for a period of two years
commencing 12/8/98. In connection with the mining claims acquired, the
Company is obligated to pay an aggregate minimum of $400 per year for
improvements.
The Company's claims consist of four plots located on Wild Mountain
(plots # 1,2,3,4) in Trinity County California. Plots 1,2,4 measure
1800'x1500' and #3 measures 600'x1500'. CAMC numbers for the four
claims are 274737, 274738, 274739, and 274740 respectively. On October
16, 1997, the claims were assayed by J.C. Refining & Assay of Junction
City, Ca. It is noted that effective April 23, 1999, Robert E. Hunt,
trustee of the R.E. Hunt Trust was appointed to the Board of Directors of
the Company. It is further noted that J.C. Refining & Assay of Junction
City, CA was owned and operated by Robert E. Hunt.
The Company intends to mine any marketable noble minerals. Initial
assays of the claims indicate the presence of gold and traces of silver.
The company intends to enter into agreements with a mining company in the
vicinity of the claims for the purpose of conducting further assays in
order to establish the Probable and Proven Reserves for each claim. The
agreement will also contract with this mining company to develop any
mines, which contain commercially mineable reserves of "noble minerals"
from the claims. The term "noble minerals" generally refers to gold,
silver and platinum.
The Company has taken no specific action relative to additional
exploration of the claims. The Company is currently in preliminary
negotiations with several mining companies for the purpose of entering
into an agreement to conduct further, detailed assays on each of the
claims and to arrange for the further development of the viable claims.
The agreements will call for the assay's and further development of the
Company's mining claims, including environmental protection and
reclamation of the property to be at the expense of the contracted mining
company and using the mining company's equipment.
Once extracted, the "noble minerals" will be reduced by the contractor
then transported, at the contractor's expense, to one of several nearby
refiners where the minerals will be separated and refined. The refined
minerals will then be sold by the refiner to the commodity's market on
the Company's behalf and the proceeds will be distributed to the company
less the refining fee. The proceeds will be distributed according to the
terms of the agreement. It is anticipated that the agreement will call
for a reimbursement of actual costs to the contractor followed by an
equitable distribution of the net proceeds between the contractor and the
Company.
The Company currently expects to complete its negotiations and begin the
next set of assays prior to the end of its current fiscal year. Further
development and production will depend upon the results of the assays and
the price of gold and other "noble minerals".
Governmental Regulation. The Company is currently approved for
exploration and extraction using non-mechanical methods. The Company
believes this level of approval is be sufficient to complete the
exploration and assaying of the claims to determine the amount of Proven
Reserves available for commercial extraction. If the results of these
assays justify further development of one or more of the mining claims,
the Company or its operator is required to submit a plan of operation to
<PAGE>4
the US Forest Service. This plan must detail the proposed mining
operation and the company's plan for reclaiming the property once mineral
extraction is completed. The US Forest Service may require additional
environmental reports, which it will prepare, or may request the company
to modify its Plan of Operation based upon their review of the Plan.
The Company intends to make it the responsibility of the contractor, as
the operator, to prepare and submit the plan of operation at its own
expense with company approval.
Depending upon the market price of the ore to be extracted, the possible
requirements for environmental protection and reclamation may make
commercial extraction of ore from these mining claims impractical or
unprofitable. The company knows of no environmental issues that would
prevent extraction of ore from these claims for other than economic
reasons.
The cost of environmental protection and reclamation will be the
responsibility of the contractor and will be considered part of the
reimbursable mining expenses.
An additional governmental regulation requires that the Company either
prove a minimum of $100 worth of improvements to each claim per year or
pay to the US Forest Service to maintain the validity of the claims. The
company must pay this sum if the contractor does not meet the minimum
requirements through its work.
Competition. There are a substantial number of mining companies that
mine, refine and market the same minerals as the company. These
competitive companies are significantly larger and better financed and
can mine large amounts of ore at costs considerably lower than the
company. These companies can therefore significantly affect the supply of
these minerals to the market place thereby affecting the price that the
company can receive for its refined minerals. This also allows the
competition to sell their products profitably at prices, which the
company would be unable to compete with or maintain profitability at. The
company will be selling its refined ore through same commodities market
as its competitors and for approximately the same price as its
competitors.
Consulting Agreements. The Company issued an aggregate of 467,500 units
for financial advisory services, and accounting and management services
including office costs provided and to be provided to the Company by two
independent consultants, Timothy Miles and Joel R. Shine. The units
consist of two shares of Common Stock, one class A warrant exercisable at
$.50 for a period of three years from the close of the offering, one
class B warrant exercisable at $.75 for a period of three years from the
close of the offering, and four class C warrants exercisable at $4.00 for
a period of five years from the close of the offering. All warrants are
callable for $.01 with 30 days notice. The consultant contracts are for
a twelve-month and four-month period respectively and were arranged
during February 1999. The fair value of the units issued for the
services amounted to $.20 per unit and such value is consistent with the
cash amount paid by the Company's initial investors. The shares were
issued pursuant to terms of the consulting agreement allowing the
consultants to convert their cash fees into equity at the same rate as
the initial investors. Both Mr. Miles and Mr. Shine opted to accept
shares in lieu of cash. It is noted that as a result of the issuance of
shares to Mr. Miles, he currently holds controlling ownership of the
Company.
Dependence on One or a Few Major Customers. The Company does not expect
that any single customer will account for more than ten percent of its
business.
Employees. The Company currently employs no full time persons or part
time persons. The Company shall employ individuals as required.
Seasonal Nature of Business Activities. The Company's business
activities are not seasonal.
Item 2. Management's Discussion and Analysis or Plan of Operation
Trends and Uncertainties. Demand for the Company's products will be
dependent on, among other things, market acceptance of the Company's
concept, its proposed operations and general economic conditions that
are cyclical in nature. Inasmuch as a major portion of the Company's
<PAGE>5
activities will be the receipt of revenues from the sales of its
products, the Company's business operations, upon commencement, may be
adversely affected by the Company's inability to obtain the necessary
financing, competitors and prolonged recessionary periods.
Capital and Source of Liquidity. The Company requires substantial
capital in order to meet its ongoing corporate obligations and in order
to continue and expand its current and strategic business plans.
Initial working capital has been obtained by private sale of common
stock.
The Company does not anticipate receipt of any revenues from its four
mining claims in the short term. The Company has taken no specific
action relative to additional exploration of the claims. The Company
is currently in preliminary negotiations with several mining companies
for the purpose of entering into an agreement to conduct further,
detailed assays on each of the claims and to arrange for the further
development of the viable claims. The agreements will call for the
assay's and further development of the Company's mining claims,
including environmental protection and reclamation of the property to
be at the expense of the contracted mining company and using the mining
company's equipment.
The Company received proceeds from the sale of Common Stock of $44,000
resulting in net cash provided by financing activities of $44,000 for the
period from inception to February 28, 1999.
The Company had no investing activities for the period from inception to
February 28, 1999.
Results of Operations. Since inception, the Company has not received
any revenues from operations. The Company issued common stock valued at
$23,405 for services for the period from inception to February 28, 1999.
The Company had an increase in other assets of $572 and had an increase
in accounts payable of $10,572 for the period from inception to February
28, 1999. The Company had net cash of $0.00 provided by operating
activities for the period from inception (October 26, 1998) to February
28, 1999.
General and administrative expenses were $32,336 and consisted primarily
of consulting fee of $10,000, legal fees of $20,000, accounting expense
of $1,665 and miscellaneous expenses of $671 for the period from
inception (October 26, 1998) to February 28, 1999.
Plan of Operation. The Company is not delinquent in any of its
obligations even though the Company has generated no operating revenues.
However, the Company continues its efforts to raise capital. The Company
does not currently have sufficient capital to continue operations for the
next twelve months and will have to raise additional capital to meet its
business objectives as well as 1934 Act reporting requirements. The
Company intends to pursue its business plan and meet its reporting
requirements utilizing cash made available from the private and future
public sale of its securities. The Company's management is of the opinion
that revenues from the proceeds of the sales of its securities will be
sufficient to pay its expenses until its business operations create
revenue.
The Company does not expect to purchase any significant plants or
equipment within the next twelve months.
The Company does not expect significant changes in the number of
employees during the next twelve months.
On a long-term basis, the Company's liquidity is dependent on
commencement operations, revenue generation, additional infusions of
capital and potential debt financing. Company management believes that
additional capital and debt financing in the short term will allow it to
commence its business plan and thereafter result in revenue and greater
liquidity in the long term. However, there can be no assurance that the
Company will be able to obtain the needed additional equity or debt
financing in the future.
Year 2000 Compliance Issues. The Company has established a plan to
address Year 2000 issues. Successful implementation of this plan is
expected to mitigate any extraordinary expenses related to the Year 2000
issue. The Company has a reasonable basis to conclude that the Year 2000
issue will not materially affect future financial results, or cause
reported financial information not to be necessarily indicative of future
operating results or future financial conditions. The plan is that the
<PAGE>6
Company has or is installing all new information technology systems,
including computer hardware and software which are Year 2000 compliant.
This is the first generation of equipment and software for the Company
since it has just recently began operations. The cost of complying
with any year 2000 issues is deemed to be immaterial due to the state
of exploration the Company is currently in. Additionally all
contractors will be required to prove compliance to relevant Year 2000
issues prior to commencing work for or with the Company.
The Company plans to contact all material customers, vendors, suppliers
and non-information technology suppliers (if any) regarding their Year
2000 state of readiness. This process will be conducted over the next six
to nine months. No assurance can be given that the Year 2000 compliance
plan will be completed successfully by the Year 2000. The Company's
current contingency plan is simplistic and involves operating on a manual
basis for a short period of time without interruption of service or
quality.
Successful and timely completion of the Year 2000 project is based on
management's best estimates derived from various assumptions of future
events. These events are inherently uncertain, including the progress and
results of vendors, suppliers and customers Year 2000 readiness.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company's executive offices are located at 10 Office Park Rd, Suite
222, Carolina Building, Hilton Head, SC 29928. Telephone number is (843)
686-5590. These offices consist of 500 square feet, which are provided
and paid for as part of the consulting agreement by Timothy Miles, a
principal shareholder of the Company.
The Company's Wild Mountain Claims consist of 4 mining claims covering
approximately 80 acres in Trinity County, northern California. The mining
claims are owned outright by the Company and are held subject to a $100
per claim annual payment to the Federal Government. The claims can be
reached from Junction City, the nearest town, by taking Dutch Creek Road
approximately 3 miles to Soldier Creek Road. Proceeding West on Soldier
Creek Road, which is a county maintained graveled road. Continuing
approximately 3.9 miles then North on Carter Ranch Road 3.7 miles to a
gated Forest Service road to the west. Proceed .4 miles to Forest Service
Marker FS 33N29. Take left 3.1 miles to Marker FS 33N29A. Take down road
.3 miles to Wild Mountain Claims.
To date, the Company has not completed any work on the claims. The
property is without known reserves at this time. Further exploration will
be required to determine the extent of Proven Reserves available on the
property. Prior work performed by the previous owner of the property
consists of the collection of "grab samples" from various locations
throughout the claim area. The assays were performed in 1991, 1995 and
most recently in October 1997. The term "Grab Samples" refers to the
collection of readily available rocks and material from the surface of
the claims. Assays of these samples indicated the presence of "noble
minerals" in quantities ranging between _ ounce and 1 1/2 ounces per ton of
raw material. No improvements have been made to the property to date. The
Company anticipates that initial mine development, should proven reserves
justify development, would be open-pit in design.
The Company acquired the four mining claims on December 8, 1998 pursuant
to a purchase agreement between the Company and the R.E. Hunt Trust
(Hunt). The Company issued to Hunt 200,000 shares of its restricted
common stock in exchange for the claims. The seller also granted the
Company an option to repurchase 100,000 shares at $.25 per shares and
50,000 shares at $.50 per share for a period of two years commencing
12/8/98. In connection with the mining claims acquired, the Company is
obligated to pay an aggregate minimum of $400 per year for improvements.
It is noted that effective April 23, 1999, Robert E. Hunt, trustee of the
R.E. Hunt Trust was appointed to the Board of Directors of the Company.
There is currently no power or water available to the property.
Preliminary exploration indicates the presence of quartz deposits
throughout various areas of the claim area. Assays indicate the presence
of gold with traces of silver. Further exploration will be necessary to
determine the exact nature of the rock formations and the quantity and
quality of known reserves.
<PAGE>7
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There are currently 1,675,000 Common Shares outstanding. The following
tabulates holdings of shares and other securities of the Company by each
person who, subject to the above, at the date of this prospectus, holds
of record or is known by Management to own beneficially more than 5.0% of
the Common Shares and, in addition, by all directors and officers of the
Company individually and as a group. Each named beneficial owner has
sole voting and investment power with respect to the shares set forth
opposite his name.
Shareholdings at Date of
This Prospectus
<TABLE>
<CAPTION>
Percentage of Percentage of
Number & Class(1) Outstanding Outstanding Shares
Name and Address of Shares Common Shares Assuming Warrant Exercise
<S> <C> <C> <C>
Samantha Moody 10,000 .60% .17%
2 Ocean Breeze
Hilton Head, SC 29928
Robert Hinchey 10,000 .60% .17%
22 Woodbine Place
Hilton Head, SC 29928
Robert E. Hunt(2) 200,000 11.94% 3.45%
17-777 Langlois Rd. #38
Desert Hot Springs, Ca 92241
Bus: (760) 329-6650
Timothy Miles 885,000 52.84% 15.26%
1921 South Downing 442,500(3) 7.63%
Denver, CO 80210 442,500(4) 7.63%
1,770,000(5) 30.52%
Joel R. Shine 50,000 2.99% .86%
PO Box 5948
Hilton Head Is, SC 29938
Officers and Directors
As a group (3) 220,000 13.13% 3.79%
(1)Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or
sole or shared investment power (including the power to dispose or
direct the disposition) with respect to a security whether through a
contract, arrangement, understanding, relationship or otherwise.
Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares beneficially
owned, subject to applicable unity property laws.
2The 200,000 Common Shares are owned by R.E. Hunt Trust of which Robert
E. Hunt is the trustee. Robert E. Hunt is the beneficial owner of R.E.
Hunt Trust.
3Represents Common Shares to be issued upon exercise of A Warrants.
There are currently 687,500 A Warrants outstanding.
4Represents Common Shares to be issued upon exercise of B Warrants.
There are currently 687,500 B Warrants outstanding.
5Represents Common Shares to be issued upon exercise of C Warrants.
There are currently 2,750,000 C Warrants outstanding.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Board of Directors. The following persons listed below have been
retained to provide services as director until the qualification and
election of his successor. All holders of Common Stock will have the
right to vote for Directors of the Company. The Board of Directors has
primary responsibility for adopting and reviewing implementation of the
business plan of the Company, supervising the development business plan,
review of the officers' performance of specific business functions. The
Board is responsible for monitoring management, and from time to time, to
revise the strategic and operational plans of the Company. Directors
<PAGE>8
receive no cash compensation or fees for their services rendered in such
capacity. The directors will serve until the annual meeting scheduled for
August 1, 1999.
The Executive Officers and Directors are:
</TABLE>
<TABLE>
<CAPTION>
Name Position Term(s) of Office
<S> <C> <C>
Samantha Moody, age 31 Secretary/Director From Inception
To Present
Robert Hinchey, age 53 President/Treasurer From Inception
Director To Present
Robert E. Hunt, age 78 Director From April 23, 1999
To Present
</TABLE>
Mr. Hinchey will devote approximately 10% of his time to the business
until circumstances justify additional commitments of time. Ms. Moody
will devote approximately 10% of her time to the business. Mr. Hunt
will devote approximately 20% of his time to the business.
Resumes:
Robert Hinchey. From 1996 to present, Mr. Hinchey has worked as an
independent business consultant. From 1994 to 1996, Mr. Hinchey was the
President and CEO of Knowledge Systems Corporation, a leading provider of
Object Technology consulting/training. From 1991 to 1993, Mr. Hinchey
was President and CEO of Human Capital Corporation. Mr. Hinchey received
his BBA from the University of Notre Dame in 1967, and MBA from the
University of Chicago in 1975.
Samantha Moody - From November of 1998 to present Mrs. Moody has been a
partner with her husband, Colin Moody, in Moody's Financial Relations,
providing financial relations consulting. From October 1997 to November
1998 she was unemployed due to childbirth. From 1995 to October 1997 Mrs.
Moody was the owner of Sacred Valley Organic Produce, a wholesale
distributor of organic produce. From 1991 to 1995, Mrs. Moody was the
owner of Silkworks, a manufacturer and distributor of silk outerwear. She
graduated from Pacific Grove High School in 1985.
Robert E. Hunt - September 1998 to Present - President of Desert AU, Inc.
Mr. Hunt, through Desert AU, Inc. is in the business of buying and
selling Placer gold. From 1994 to 1998 Mr. Hunt was retired. From 1977
to 1994, Mr. Hunt owned J.C. Refining. The company purchased refined and
resold Placer Gold on a commercial and retail basis.
Mr. Hunt graduated from Richmond Union High School, Richmond, CA in 1938
and is a World War II Veteran.
Remuneration.
No salaries have been paid, and there are currently no proposed
employment arrangements.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
ITEM 8. DESCRIPTION OF SECURITIES
Qualification. The following statements constitute brief summaries of
the Company's Certificate of Incorporation and Bylaws, as amended. Such
summaries do not purport to be complete and are qualified in their
entirety by reference to the full text of the Certificate of
Incorporation and Bylaws.
The Company's articles of incorporation authorize it to issue up to
50,000,000 Common Shares, $.001 par value per Common Share and 10,000
Preferred Shares.
Common Stock. The Company's articles of incorporation authorize it to
issue up to 50,000,000 Common Shares, $.001 par value per Common Share.
All outstanding Common Shares are, and the Common Shares offered hereby
will be when legally issued, fully paid and non-assessable.
<PAGE>9
Liquidation Rights. Upon liquidation or dissolution, each outstanding
Common Share will be entitled to share equally in the assets of the
Company legally available for distribution to shareholders after the
payment of all debts and other liabilities.
Dividend Rights. There are no limitations or restrictions upon the
rights of the Board of Directors to declare dividends out of any funds
legally available therefor. The Company has not paid dividends to date
and it is not anticipated that any dividends will be paid in the
foreseeable future. The Board of Directors initially may follow a policy
of retaining earnings, if any, to finance the future growth of the
Company. Accordingly, future dividends, if any, will depend upon, among
other considerations, the Company's need for working capital and its
financial conditions at the time.
Voting Rights. Holders of Common Shares of the Company are entitled to
cast one vote for each share held at all shareholders meetings for all
purposes.
Other Rights. Common Shares are not redeemable, have no conversion
rights and carry no preemptive or other rights to subscribe to or
purchase additional Common Shares in the event of a subsequent offering.
Units. The Units consist of two (2) shares of Common Stock, one class A
warrant exercisable at $.50 for a period of three years from the close of
the offering, one class B warrant exercisable at $.75 for a period of
three years from the close of the offering, and four class C warrants
exercisable at $4.00 for a period of five years from the close of the
offering. . All warrants are callable for $.01 with 30 days notice.
Transfer Agent. Florida Atlantic Stock Transfer shall act as the
Company's transfer agent.
<PAGE>10
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The Company intends to apply for trading in the over-the-counter market
to be listed on the OTC Bulletin Board maintained by the NASD.
The Company has never paid any cash dividends nor does it intend, at this
time, to make any cash distributions to its shareholders as dividends in
the near future.
As of February 28, 1999, the number of holders of Company's common stock
is forty (40).
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings nor is the Company
aware of any disputes that may result in legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
During the Company's two most recent fiscal years or any later interim
period, there have been no changes in or disagreements with the Company's
principal independent accountant or a significant subsidiary's
independent accountant.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
At inception, the Company issued 30,000 shares of its restricted common
stock (10,000 each) to Samantha Moody, Robert Hinchey, and Margot Knepp,
in exchange for their services in forming the Company. The shares were
valued at par value. The Common Shares were issued to sophisticated
investors who had access to information on the Company necessary to make
an informed investment decision for cash consideration or services
pursuant to an exemption from registration under Section 4(2) of the
Securities Act of 1933
On November 23, 1998, the Company issued 200,000 shares of its common
stock to R.E. Hunt Trust in connection with the acquisition of the mining
claims described in Note 1. The shares were valued at par value. The
purchase agreement provides that Hunt give the Company options to
repurchase up to 150,000 of its shares from Hunt for a two year period.
The option price for 100,000 of the shares is $.25 per share and $.50 per
share for the remaining 50,000 shares. The options are fully
transferable by the Company. The Common Shares were issued to
sophisticated investors who had access to information on the Company
necessary to make an informed investment decision for cash consideration
or services pursuant to an exemption from registration under Section 4(2)
of the Securities Act of 1933
During the first quarter of 1999, the Company issued an aggregate of
689,500 units to a limited group of investors for cash and in lieu of
cash aggregating $137,500 in private sale transactions. The units were
sold at a price of $.20 per unit. The units consist of two shares Common
Stock, one class A warrant exercisable at $.50 for a period of three
years from the close of the offering, one class B warrant exercisable at
$.75 for a period of three years from the close of the offering, and four
class C warrants exercisable at $4.00 for a period of five years from the
close of the offering. All warrants are callable for $.01 with 30 days
notice. Of these units, a total of 467,500 were issued for financial
advisory services, and accounting and management services including
office costs provided and to be provided to the Company by two
independent consultants. The consultant contracts are for a twelve and
four month period and were arranged during February 1999. The fair value
of the shares issued for the services amounted to $.20 per unit and such
value is consistent with the cash amount paid by the Company's initial
investors.
Steve Fry 5,000 $1,000
Mitsuso Tasugawa 5,000 $1,000
Kevin Tatsugawa 5,000 $1,000
Lorie Tasugawa-Spackman 5,000 $1,000
John Wong 5,000 $1,000
Patrick Gundlach 5,000 $1,000
Tom Geise 5,000 $1,000
J. Geise 5,000 $1,000
RE Hunt 5,000 $1,000
<PAGE>11
Margie Seymour 5,000 $1,000
Robert Hinchey 5,000 $1,000
Paul Spiegler 5,000 $1,000
Erich Schmid 5,000 $1,000
Duane Tracy 5,000 $1,000
Gary R See 5,000 $1,000
Jody Walker 5,000 $1,000
Joseph Petrucelli 5,000 $1,000
Robert Gerner 5,000 $1,000
Juanita Gallegos 5,000 $1,000
James Yanai 5,000 $1,000
Fred Quadros 5,000 $1,000
Larry Slayton 5,000 $1,000
Willie Serrano 5,000 $1,000
John Poli 5,000 $1,000
Judith Poli 5,000 $1,000
Elizabeth Gheen 5,000 $1,000
Abigail Miles 5,000 $1,000
Timothy Kasden 5,000 $1,000
Dean Cummings 5,000 $1,000
Mary Ann Lang 5,000 $1,000
James Potter 10,000 $2,000
Brian Murphy 5,000 $1,000
Kazu Fujita 5,000 $1,000
Marylin Post 5,000 $1,000
Dennis Knepp 5,000 $1,000
Shawn Nevitt 5,000 $1,000
Robert Ichikawa 5,000 $1,000
Gary Kihs 5,000 $1,000
Robert Watson 5,000 $1,000
Roger Vosti 5,000 $1,000
Thomas Bass 5,000 $1,000
Kevin Robinson 5,000 $1,000
Subrina Lackman 5,000 $1,000
These issuances were made in compliance with Rule 504, Regulation D of
the Securities Act of 1933 by Company's management, consultants and
selected broker/dealers. No commissions or other remuneration was paid
to anyone. No general solicitation was utilized.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification. The Company shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State
of Nevada, any person made, or threatened to be made, a party to an
action or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he is or was a director or
officer of the Company, or served any other enterprise as director,
officer or employee at the request of the Company. The Board of
Directors, in its discretion, shall have the power on behalf of the
Company to indemnify any person, other than a director or officer, made a
party to any action, suit or proceeding by reason of the fact that he/she
is or was an employee of the Company.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company,
the Company 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 Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of
any action, suit or proceedings) is asserted by such director, officer,
or controlling person in connection with any securities being registered,
the Company 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 issues.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE CORPORATION FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE
AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS
THEREFORE UNENFORCEABLE.
<PAGE>12
PART F/S
The following financial statements required by Item 310 of Regulation S-B
are furnished below:
Independent Auditor's Report dated March 8, 1999
Balance Sheets - February 28, 1999 and May 31, 1999
Statement of Operations for the Period From Inception (October 26, 1998)
to February 28, 1999 and for the Period From Inceptin to May 31, 1999
Statement of Stockholders' Equity for the Period From Inception (October
26, 1998) to February 28, 1999
Statement of Cash Flows for the Period From Inception (October 26, 1998)
to February 28, 1999 and for the Period From Inception to May 31, 1999
Notes to Financial Statements
<PAGE>13
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Shareholders
Auric Enterprises, Inc.
We have audited the balance sheet of Auric Enterprises, Inc. as of
February 28, 1999, and the related statements of operations, changes in
stockholders' equity, and cash flows for the period from inception
(October 26, 1998) to February 28, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our 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 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 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 Auric
Enterprises, Inc. as of February 28, 1999, and the results of its
operations and cash flows for the period from inception (October 26,
1999) to February 28, 1999, in conformity with generally accepted
accounting principles.
James E. Scheifley & Associates, P.C.
Certified Public Accountants
Denver, Colorado
March 8, 1999
<PAGE>14
Auric Enterprises, Inc.
Balance Sheets
February 28, 1999 and May 31, 1999
<TABLE>
<CAPTION>
ASSETS February 28, May 31,
Current assets: 1999 1999
(Unaudited)
<S> <C> <C> <C>
Cash $ 44,000 $ 11,557
------------ ------------
Total current assets 44,000 11,557
Property 200 200
Organization costs 572 562
------------ ------------
$ 44,772 $ 12,319
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,572 $ -
------------ ------------
Total current liabilities 10,572 -
Commitments and contingencies
Stockholders' equity:
Common stock, $.001 par value,
50,000,000 shares authorized,
1,605,000 shares issued
and outstanding 1,605 1,605
Additional paid in capital 136,125 136,125
Unpaid stock subscriptions (70,125) (46,750)
Accumulated deficit (33,405) (78,661)
------------ ------------
34,200 12,319
------------ ------------
$ 44,772 $ 12,319
</TABLE>
See accompanying notes to financial statements.
<PAGE>15
Auric Enterprises, Inc.
Statement of Operations
For the Period From Inception (October 26, 1998) to February 28, 1999
and for the Period From Inception to May 31, 1999
<TABLE>
<CAPTION>
Period From Period From
Inception To Inception To
February 28, May 31,
1999 1999
(Unaudited)
<S> <C> <C>
Operating expenses $ 33,405 $ 45,256
------------ ------------
(Loss from operations) and net (loss) $ (33,405) $ (45,256)
Per share information:
Basic and diluted (loss) per common share $ (0.05) $ (0.03)
Weighted average shares outstanding 688,333 1,605,000
</TABLE>
See accompanying notes to financial statements.
<PAGE>16
Auric Enterprises, Inc.
Statement of Changes in Stockholders' Equity
For the Period From Inception (October 26, 1998) to February 28, 1999
<TABLE>
<CAPTION>
Deficit
Additional Unpaid Accumulated
Common Stock Paid-in Stock During Develop-
ACTIVITY Shares Amount Capital Subscriptions ment Stage Total
<S> <C> <C> <C> <C> <C> <C>
Shares issued to directors at inception 30,000 $ 30 $ - $ - $ - $ 30
Shares issued for property
acquired, November 1998 200,000 20 2
Shares issued for cash
February 1999 @ $.10 440,000 440 43,560 44,000
Shares issued for services
February 1999 @ $.10 935,000 935 92,565 (70,125) 23,375
Net (loss) for the period
ended February 28, 1999 - - (33,405) (33,405)
---------- -------- --------- --------- --------- ---------
Balance, February 28, 1999 1,605,000 $ 1,605 $ 136,125 $ (70,125) $ (33,405) $ 34,200
</TABLE>
See accompanying notes to financial statements.
<PAGE>17
Auric Enterprises, Inc.
Statement of Cash Flows
For the Period From Inception (October 26, 1998) to February 28, 1999
and for the Period From Inception to May 31, 1999
<TABLE>
<CAPTION>
Period >From Period From
Inception To Inception To
February 28, May 31,
1999 1999
(Unaudited)
<S> <C> <C>
Net income (loss) $ (33,405) $ (45,256)
Adjustments to reconcile net income to net
cash provided by operating activities:
Services provided for common stock 23,405 23,375
Amortization - 10
Changes in assets and liabilities
(Increase) in other assets (572) -
------------ -------------
Increase (decrease) in accounts payable 10,572 (10,572)
------------ -------------
Total adjustments 33,405 12,813
Net cash provided by (used in)
operating activities - (32,443)
Cash flows from financing activities:
Common stock sold for cash 44,000 -
------------ -------------
Net cash provided by (used in)
financing activities 44,000 -
Increase (decrease) in cash 44,000 (32,443)
Cash and cash equivalents,
beginning of period - 44,000
Cash and cash equivalents,
end of period $ 44,000 $ 11,557
</TABLE>
See accompanying notes to financial statements.
<PAGE>18
Auric Enterprises, Inc.
Statement of Cash Flows
For the Period From Inception (October 26, 1998) to February 28, 1999
and for the Period From Inception to May 31, 1999
<TABLE>
<CAPTION>
Period From Period From
Inception To Inception To
February 28, May 31,
1999 1999
(Unaudited)
<S> <C> <C>
Supplemental cash flow information:
Cash paid for interest $ - $ -
Cash paid for income taxes $ - $ -
Non-cash investing and financing activities:
Property acquired for common stock $ 200 $ -
</TABLE>
See accompanying notes to financial statements.
<PAGE>19
Auric Enterprises, Inc.
Notes to Financial Statements
February 28, 1999
Note 1. Organization and Summary of Significant Accounting Policies.
The Company was incorporated in Nevada on October 26, 1998. The Company's
activities to date have been limited to organization and capital formation.
The Company plans to engage in the exploration, assaying and development of
its four Wild Mountain mining claims located in Trinity County, California.
The claims are located approximately 15 miles from Junction City CA and
consist of four undeveloped contiguous parcels located on approximately 90
acres of U.S. Forest Service owned land. Activities associated with the
claims have been limited to assaying test samples taken from the claims by
the previous owners. No engineering studies have been made and the Company
therefore has no estimates of gold reserves associated with the claims.
The claims were acquired from a trust on November 23, 1998 in exchange for
200,000 shares of the Company's restricted common stock.
Property, Plant and Equipment:
Property, plant and equipment are recorded at cost and are depreciated
based upon estimated useful lives using the straight-line method. Estimated
useful lives range from 3 to 5 years for furniture and fixtures and from 5
to 10 years for equipment.
Loss per share:
Basic Earnings per Share ("EPS") is computed by dividing net income
available to common stockholders by the weighted average number of
common stock shares outstanding during the year. Diluted EPS is
computed by dividing net income available to common stockholders by
the weighted-average number of common stock shares outstanding during
the year plus potential dilutive instruments such as stock options
and warrants. The effect of stock options on diluted EPS is
determined through the application of the treasury stock method,
whereby proceeds received by the Company based on assumed exercises
are hypothetically used to repurchase the Company's common stock at
the average market price during the period. Loss per share is
unchanged on a diluted basis since the assumed exercise of common stock
equivalents would have an anti-dilutive effect.
Intangible Assets:
Intangible assets consist of organization costs related to the formation of
the Company. Such costs will be amortized using the straight line method
over a period of 5 years beginning in March 1999.
The Company makes reviews for the impairment of long-lived assets and
certain identifiable intangibles whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Under SFAS No. 121, an impairment loss would be recognized
when estimated future cash flows expected to result from the use of the
asset and its eventual disposition is less than its carrying amount. No
such impairment losses have been identified by the Company to date.
Cash:
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
Estimates:
The preparation of the Company's financial statements requires management
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from these estimates
Fair value of financial instruments
The Company's short-term financial instruments consist of cash and cash
equivalents and accounts payable. The carrying amounts of these financial
instruments approximates fair value because of their short-term maturities.
Financial instruments that potentially subject the Company to a
concentration of credit risk consist principally of cash. During the year
the Company did not maintain cash deposits at financial institutions in
excess of the $100,000 limit covered by the Federal Deposit Insurance
Corporation. The Company does not hold or issue financial instruments for
trading purposes nor does it hold or issue interest rate or leveraged
derivative financial instruments
<PAGE>20
Stock-based Compensation
The Company adopted Statement of Financial Accounting Standard No. 123 (FAS
123), Accounting for Stock-Based Compensation beginning with the Company's
first quarter of 1996. Upon adoption of FAS 123, the Company continued to
measure compensation expense for its stock-based employee compensation
plans using the intrinsic value method prescribed by APB No. 25, Accounting
for Stock Issued to Employees. Stock based compensation paid by the
Company during the period ended February 28, 1999 is disclosed in Note 4.
New Accounting Pronouncements
SFAS No. 130, "Reporting Comprehensive Income", establishes guidelines
for all items that are to be recognized under accounting standards as
components of comprehensive income to be reported in the financial
statements. The statement is effective for all periods beginning after
December 15, 1997 and reclassification financial statements for earlier
periods will be required for comparative purposes. To date, the
Company has not engaged in transactions which would result in any
significant difference between its reported net loss and comprehensive
net loss as defined in the statement.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use ("SOP 98-
1"). SOP 98-1 provides authoritative guidance on when internal-use
software costs should be capitalized and when these costs should be
expensed as incurred.
Effective in 1998, the Company adopted SOP 98-1, however the Company
has not incurred costs to date which would require evaluation in
accordance with the SOP.
Effective December 31, 1998, the Company adopted SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information
("SFAS 131"). SFAS 131 superseded SFAS No. 14, Financial Reporting
for Segments of a Business Enterprise. SFAS 131 establishes standards
for the way that public business enterprises report information about
operating segments in annual financial statements and requires that
those enterprises report selected information about operating
segments in interim financial reports. SFAS 131 also establishes
standards for related disclosures about products and services,
geographic areas, and major customers. The adoption of SFAS 131 did
not affect results of operations or financial position. To date, the
Company has not operated in its one planned business activity.
Effective December 31, 1998, the Company adopted the provisions of
SFAS No. 132, Employers' Disclosures about Pensions and Other Post-
retirement Benefits ("SFAS 132"). SFAS 132 supersedes the disclosure
requirements in SFAS No. 87, Employers' Accounting for Pensions, and
SFAS No. 106, Employers' Accounting for Post-retirement Benefits
Other Than Pensions. The overall objective of SFAS 132 is to improve
and standardize disclosures about pensions and other post-retirement
benefits and to make the required information more understandable.
The adoption of SFAS 132 did not affect results of operations or
financial position.
The Company has not initiated benefit plans to date which would
require disclosure under the statement.
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities
("SFAS 133"), which is required to be adopted in years beginning
after June 15, 1999. SFAS 133 will require the Company to recognize
all derivatives on the balance sheet at fair value. Derivatives that
are not hedges must be adjusted to fair value through income. If the
derivative is a hedge, depending on the nature of the hedge, changes
in the fair value of derivatives will either be offset against the
change in fair value of hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive
income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings. The Company has not yet
determined what the effect of SFAS 133 will be on earnings and the
financial position of the Company, however it believes that it has
not to date engaged in significant transactions encompassed by the
statement.
<PAGE>21
Note 2. Property.
Property at February 28, 1999 consists of the four mining claims
described in Note 1. The claims were acquired on November 23, 1998
pursuant to a purchase agreement between the Company and the R.E.
Hunt Trust (Hunt). The Company issued to Hunt 200,000 shares of its
restricted common stock in exchange for the claims. The claims were
valued at the fair value of the stock issued since the fair value of
the mining claims was not clearly determinable.
The fair value of the stock at the transaction date was considered to
be the par value of the stock
Additionally, since Hunt became the Company's major shareholder at
the transaction date and the transaction did not constitute a
substantial change in ownership of the claims, the Company believes
that no adjustment to the carrying value of the claims in excess of
the nominal value of the stock issued would be appropriate. Hunt's
basis in the claims could not be otherwise reasonably established.
Hunt's annual costs of maintaining the claims amounted to an annual
minimum of $100 per year per claim and no commercial activity
associated with the claims was carried on by Hunt in any prior
period.
Note 3. Organization costs.
The costs of the Company's corporate organization were paid by an
individual and amounted to $572. This amount was reimbursed to the
individual subsequent to February 28, 1999 and the amount has been
included in accounts payable at that date. The Company will amortize
such costs over a five year period.
Note 4. Stockholders' Equity.
During the periods covered by these financial statements the Company
issued certain of its securities in reliance upon an exemption from
registration with the Securities and Exchange Commission. Although
the Company believes that the sales did not involve a public offering
and that it did comply with the exemptions from registration, it
could be liable for rescission of said sales if such exemption was
found not to apply. The Company has not received a request for
rescission of shares nor does it believe that it is probable that its
shareholders would pursue rescission nor prevail if such action were
undertaken
At inception, the Company issued 30,000 shares of it's restricted
common stock to three individuals who became its directors in
exchange for their services in forming the Company. The shares were
valued at par value.
On November 23, 1998, the Company issued 200,000 shares of its common
stock to Hunt in connection with the acquisition of the mining claims
described in Note 1. The shares were valued at par value. The
purchase agreement provides that Hunt give the Company options to
repurchase up to 150,000 of its shares from Hunt for a two year
period. The option price for 100,000 of the shares is $.25 per share
and $.50 per share for the remaining 50,000 shares. The options are
fully transferable by the Company.
The Company issued an aggregate of 935,000 shares of its common stock
for financial advisory services, and accounting and management
services including office costs provided and to be provided to the
Company by two independent consultants. The consultant contracts are
for a four month period and were arranged during February 1999. The
fair value of the shares issued for the services amounted to $.10 per
share and such value is consistent with the cash amount paid by the
Company's initial investors.
During the February 1999, the Company issued an aggregate of 440,000
shares of its common stock to a limited group of investors for cash
aggregating $44,000 in private sale transactions. The shares were
sold at a price of $.10 per share in a unit offering. Subsequent to
February 28, 1999, the Company sold an additional 70,000 shares under
identical terms. The units consist of two shares Common Stock, one
class A warrant exercisable at $.50 for a period of three years from
<PAGE>22
the close of the offering, one class B warrant exercisable at $.75
for a period of three years from the close of the offering, and four
class C warrants exercisable at $4.00 for a period of five years from
the close of the offering. All warrants are callable for $.01 with
30 days notice.
Note 5. Commitments and contingencies
In connection with the mining claims acquired, the Company is obligated
to pay an aggregate minimum of $400 per year for improvements.
The Company neither owns nor leases any real or personal property other
than as described in Note 2. Office services are provided by an outside
consultant and the costs thereof are included in administrative
expenses.
The officers and directors of the Company are involved in other business
activities and may become involved in other business activities in the
future. Such business activities may conflict with the activities of
the Company. The Company has not formulated a policy for the resolution
of any such conflicts that may arise.
Note 6. Interim Financial Statements
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions incorporated in Regulation
10-SB of the Securities and Exchange Commission. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments and
accruals) considered necessary for a fair presentation have been included.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. The
accompanying financial statements should be read in conjunction with the
Company's financial statements for the period ended February 28, 1999.
Basic loss per share was computed using the weighted average number of
common shares outstanding.
During the quarter ended May 31, 1999 the Company recorded amortization
of unpaid stock subscriptions for shares issued to consultants as
described in Note 4. The amount of the amortization charged to
operating expenses was $23,375.
<PAGE>23
PART III
ITEM 1. INDEX TO EXHIBITS
(3) Charter and By-Laws
(4) Instruments defining the rights of security holders
(10) Material Contracts
(27) Financial Data Schedule
ITEM 2. DESCRIPTION OF EXHIBITS
(3.1) Articles of Incorporation incorporated by reference to Form 10SB
filed April 9, 1999, File No. 0-25743
(3.2) Bylaws incorporated by reference to Form 10SB filed April 9,
1999, File No. 0-25743
(4.1) Common Stock Certificate incorporated by reference to Form 10SB
filed April 9, 1999, File No. 0-25743
[10.1] Agreement by and between the Company and the
RE Hunt Trust incorporated by reference to Form 10SB filed April 9,
1999, File No. 0-25743
[10.2] Consulting Agreement by and between the Company
and Joel R. Shine dated December, 1998 incorporated by
reference to Form 10SB filed April 9, 1999, File No. 0-25743
[10.3] Consulting Agreement by and between the Company
and Timothy Miles dated December, 1998 incorporated by
reference to Form 10SB filed April 9, 1999, File No. 0-25743
[27] Financial Data Schedule
<PAGE>24
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
AURIC ENTERPRISES, INC.
Date: June 22, 1999 /s/ Robert Hinchey
-------------------------
By: Robert Hinchey, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-END> MAY-31-1999
<CASH> 11,557
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,557
<PP&E> 200
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,319
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 1,605
0
0
<OTHER-SE> 10,714
<TOTAL-LIABILITY-AND-EQUITY> 12,319
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (45,256)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (45,256)
<INCOME-TAX> 0
<INCOME-CONTINUING> (45,256)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (45,256)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
