UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A No. 2
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Uranium Power Corporation
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(Name of small business issuer in its charter)
Colorado None
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
206-475 Howe Street, Vancouver, B.C., V6C-2B3, CANADA
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(Address of principal executive offices)
Issuer's telephone number: (604) 685-8355
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 Par Value
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(Title of Class)
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This document contains technical and geological terms, which are defined
in the Glossary of Terms, which appears at the end of Part I of this
prospectus.
ITEM 1. DESCRIPTION OF BUSINESS
Business.
Uranium Power Corporation (the "Company") is a Colorado corporation formed
on April 3, 1998. The Company is a Canada-based company engaged in the
exploration of uranium properties. The Company was formed as a result of
management's perception of the upcoming worldwide shortage of uranium. The
Company is in the exploration stage, and there is no assurance that a
commercially viable mineral deposit exists on any of its properties. Further
exploration will be required before a final evaluation as to the economic and
legal feasibility is determined. The Company intends to identify, acquire and
explore uranium properties in the Athabasca Basin in northern Saskatchewan,
Canada. The promoters of the Company were Thornton Donaldson and William
Timmins.
On April 13, 1998, the Company acquired a 100% interest in two uranium
properties located in northern Saskatchewan, Canada, pursuant to an Acquisition
Agreement (the "Acquisition Agreement") with Athabasca Uranium Syndicate, a
syndicate formed in British Columbia, Canada ("Athabasca"). Athabasca was
founded by the promoters of the Company. Under the terms of the Acquisition
Agreement, the Company acquired all of Athabasca's assets, the majority of which
comprised the "Hocking Lake Property" and the "Henday Lake Property." In
exchange, the Company issued 6,000,000 shares of its common stock to Athabasca
(or 300,000 shares per Syndicate Unit of Athabasca). The Hocking Lake Property
consists of five mining claims in two groups totaling 49,924 acres located west
of Black Lake, Saskatchewan. The Henday Lake Property consists of three
contiguous mining claims totaling 28,428 acres in the Henday and Mallen Lakes
area. The Company does not know of any known reserves of uranium on these
properties, but it intends to explore the Hocking Lake and the Henday Lake
Properties to attempt to identify uranium prospects.
The map on the following page reflects the location of each of the
Company's properties.
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MAP APPEARS HERE
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The Company entered into a letter agreement dated July 29, 1998 with J. R.
Billingsley, the registered owner of claim #S-106087 (the "Billingsley Claim")
in Northern Mining District, Saskatchewan, regarding property known as the "Hump
Lake Property." Under the letter agreement, the Company had until October 1,
1998 to notify Mr. Billingsley whether it wanted to proceed with exploring the
Billingsley Claim. The Company's deadline was extended from October 1, 1998 to
December 1, 1999. Under the agreement, if the Company desired to proceed with
exploring the claim, Mr. Billingsley would transfer his 100% ownership of the
Billingsley Claim to the Company upon (i) the issuance of 50,000 shares of the
Company's $0.001 par value common stock to Mr. Murray Swetz; (ii) the payment of
$13,375 Can. (Canadian Dollars) to Mr. Billingsley; (iii) an agreement by the
Company to pay Mr. Billingsley U.S. $0.35 per pound of uranium bearing minerals
mined from the claim when the price is U.S. $18.00 per pound or less, and U.S.
$0.50 per pound when the price is more than U.S. $18.00 per pound, plus 3% of
net smelter returns on other minerals mined from the claim; (iv) an agreement by
the Company to use its best efforts to bring the property to production; and (v)
the execution of a formal agreement based on the terms set forth in the letter
agreement. If the Company decided not to explore the claim, it would be entitled
to file its exploration expenditures on the claim as assessment work and would
provide Mr. Billingsley the results of its exploration activities. The Company
has decided to proceed, and the Company has conducted an aerial geophysical
survey on the property, paid the $13,375 to Mr. Billingsley, and issued the
50,000 shares of stock to Mr. Swetz. The agreement is in good standing.
On December 16, 1998, the Company executed an Exploration Option and
Operating Joint Venture Agreement ("Joint Venture Agreement") with Phelps Dodge
Corporation of Canada, Ltd., a Delaware corporation ("PDC"), under which PDC
granted the Company an option to acquire an interest in six uranium properties
("PDC Properties") in Saskatchewan consisting of a 100% interest in 11 mining
claims and totaling 74,756 acres. In order to exercise its option to acquire a
100% interest in the six PDC Properties under the Joint Venture Agreement, the
Company must incur expenditures of at least U.S. $338,000 ($500,000 Can.
(Canadian dollars)) by May 31, 2000, and an additional U.S. $1,690,000
($2,500,000 Can.) in expenditures by December 31, 2003 from prospecting and
exploring the six properties. PDC will be entitled to a royalty from the uranium
produced from the PDC Properties if the Company exercises its option.
Under the Joint Venture Agreement, if the Company exercises its option to
acquire the PDC Properties, the Company grants PDC an earn back option. The earn
back option gives PDC the option to surrender its right to royalties and obtain
a 35% interest in the PDC Properties if PDC incurs expenditures of at least U.S.
$2,028,000 ($3,000,000 Can.) by December 31, 2006 from prospecting and exploring
the six properties.
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On March 24, 1999, the Company entered into a Property Option Agreement
with Pacific Amber Resources Ltd., a British Columbia corporation ("Pacific
Amber"), under which the Company granted Pacific Amber an option to acquire a
50% interest in the Company's rights to be obtained under the Joint Venture
Agreement with PDC. The Company and Pacific Amber are not affiliated with each
other, although the companies share a common director, James Billingsley.
Pacific Amber will be entitled to exercise its option if it incurs the U.S.
$338,000 ($500,000 Can.) in expenditures by the extended deadline of May 31,
2000 that are required to be expended by the Company under the Joint Venture
Agreement. The Company issued 200,000 of its shares of common stock to Pacific
Amber upon execution of the Property Option Agreement. All decisions to be taken
with respect to the initial program to expend U.S. $338,000 ($500,000 Can.)
under the Joint Venture Agreement are to be handled by a management committee,
with the Company and Pacific Amber each appointing two members to the four
member committee. Pacific Amber has a deciding vote in the event of a split of
votes.
If Pacific Amber satisfies its expenditure obligations by May 31, 2000
under the Property Option Agreement, then subsequent to May 31, 2000, the
Company's and Pacific Amber's interests in the PDC Properties will be
proportionately adjusted based on the amount of expenditures that each company
incurs between January 1, 2000 and the May 31, 2000 deadline to incur an
additional U.S. $1,690,000 ($2,500,000 Can.) under the Joint Venture Agreement
with PDC. In the event that either the Company's or Pacific Amber's
proportionate interests are adjusted based on expenditures to a percentage that
is less than 15%, then that company's interest will be converted to a 5% net
profit interest.
With the ability to explore a total of more than 178,000 acres , the
Company's management believes it is well positioned to identify and explore for
a significant amount of uranium. However, there is no assurance that the Company
will be able to discover, develop and produce sufficient uranium reserves in the
Hocking Lake Property, the Henday Lake Property, the Hump Lake Property or
elsewhere. Further, there can be no assurance that the Company will recover the
expenses incurred when it explores its properties or claims, or that it will
achieve profitability.
The Company's management believes it's key strengths lie in the
acquisition, financing and exploration of uranium properties, and in the
principals' extensive industry contacts worldwide. Together with the experience
in the uranium industry of Thornton Donaldson, the Company's President, the
Company is positioning itself to become a significant player in the field of
uranium exploration .
The Company will require additional funds to support its operations over
the next 12 months, and plans to raise funds by offering its common stock in
private placements. Significant sales of equity capital by Uranium Power to
raise funds could potentially result in significant dilution to shareholders of
the Company.
The Company's future financial performance is dependent, in part, on the
following factors: The price of uranium. The price of uranium may be impacted by
the supply and demand for uranium. Currently, worldwide demand exceeds the
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supply; however, there is no assurance this favorable relationship will
continue. The industry is dominated by a few large companies, and the price is
also impacted by competition from many other companies engaged in similar
activities as the Company. Some of those entities have more experience and
greater resources than the Company. The absence of any operating history. The
Company is a recently-formed entity, which has not yet begun full operations.
The Company's management has extensive experience in acquiring, exploring,
financing and developing mineral properties; but it does not have extensive
experience in operating producing mines. There is no assurance that the
Company's management will be able to manage the Company and its operations
effectively and efficiently. The Company does not yet have any full-time
employees; and there is no assurance that the Company will attract the necessary
employees to maximize its performance. Operating Risks. The uranium exploration
and mining industry is highly speculative, and is subject to the uncertainty of
exploration that is inherent in this industry. Government Regulation. The
Company's planned operations are subject to considerable government regulation.
The Company must obtain both Canadian and provincial governmental approval as it
approaches the production stage of developing its properties. The approval
process can be lengthy, and there is no assurance the Company will obtain the
necessary governmental approvals to conduct its operations as planned or
desired.
If the Company is not successful in finding uranium on its properties, the
Company will have to: (1) acquire other uranium properties; (2) acquire other
types of mineral properties; or (3) find some other business activities. If the
Company is unsuccessful in all of these alternatives, the Company will be unable
to continue operating.
If the Company is not able to get additional equity funding, the Company
may try to do joint ventures with other companies. However, once the Company
locates proven uranium deposits on its properties, the Company may be able to
get debt financing if equity financing is unavailable.
General Statements on Uranium.
Uranium occurs as uranium oxide in various minerals. In Saskatchewan,
uranium deposits occur in the Athabasca Basin , and are contained in
unconformities (breaks in the geological record) between Archean aged basement
rocks (very old rocks) and younger, Proterozoic aged sedimentary layers at
depths of less than 1,640 feet. Major faults near the unconformities are also
important features enhancing the chance for discovery.
Uranium is an unusual metal compared to base and precious metals in that
its value has really only been recognized in the past 60 years. Uranium ore is
the basic resource for the production of electrical energy through nuclear
power. Commercial nuclear power generation is a technology that has become
mature and well-understood. The industry began to see increased commercial
demand for uranium in 1973, partially as a result of the OPEC-induced "energy
crisis" which caused a sharp rise in crude oil prices. In response, many
countries began development of nuclear power programs as an alternative to
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fossil fuels for electricity generation. As of September, 1997, there were
approximately 439 commercial nuclear reactors operating in more than 30
countries, producing about 17% of the world's electricity.
The Nuclear Energy Institute stated at the 1997 Kyoto conference on global
warming that clean air objectives cannot be obtained without maintaining and
expanding the existing number of commercial nuclear generators in the world.
Clearly the key factor in determining demand for uranium is reactor fuel
requirements for meeting the world's growing energy demands. See, World Nuclear
Focus, Number 10, published by the Uranium Institute.
Mineral Properties.
The Company's properties are located in areas geologically favorable for
the occurrence of uranium deposits. Exploration in the western sector of the
Hocking Lake Property has discovered uraniferous boulders. The Billingsley Claim
is a 3.1 by 2.5 mile area located at Hump Lake, 14.3 miles northwest of Uranium
City.
Exploration has shown that the Athabasca Basin-type arkose and coarse
conglomerate Martin formation extends further into the area than was previously
thought, and underlies the Hump Lake Property. Trigg, Woolett Consulting Ltd.,
performed exploratory work on the property. A drill hole sample from the
property returned 1.42% uranium oxide over 22 feet in the Martin arkose. Trigg,
Woolett Consulting, Ltd. is not affiliated with the Company.
In December of 1998, the Company obtained an option to acquire six
properties totaling 74,756 acres in the Athabasca Basin under the Joint Venture
Agreement with PDC. A diamond drill intersection of 9.02 feet at one property
assayed 0.62% uranium oxide and most of the holes at this location intersected
significant alteration.
Markets.
Canada is the largest producer of uranium in the world. In 1998,
Saskatchewan's mines produced 10,924 tons of uranium, which Saskatchewan Energy
and Mines reported was 100% of Canadian and approximately 32.0% of total world
uranium output, valued at approximately $557 million Can. This production was
attained from three mines in northern Saskatchewan. By the year 2003, four new
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mines are scheduled to be in production in this area for an estimated total
production of 23,828 tons of uranium annually, which will be approximately 55%
of projected world mine production.
In 1997, mines supplied 35,810 tons of uranium and 439 uranium reactors
world wide required approximately 64,250 tons of uranium. In the past the
deficit has been made up from stockpiles, which are now largely depleted. Demand
continues to grow 1% to 2% annually. By the year 2020, the World Energy Council
estimates electricity demand will be at least 50% higher than now, and that
nuclear energy will be required to contribute a large portion of this demand. In
the late 1990's, it was generally considered that only Canada would be in a
position to compete with Australia (which has greater low-cost reserves) and
expand production to meet forecasted increases in the world uranium demand. See,
Nuclear Issues Briefing Paper # 3, 5/98, a publication of Uranium Information
Centre, Ltd.
Uranium oxide prices increased from U.S. $7.00 to $8.00 per pound in the
early 1970's to more than U.S. $40.00 per pound in the late 1970's and
thereafter decreased to the U.S. $8.00 to $10.00 range in the early 1990's. As
stockpiles became depleted, the price increased to over U.S. $16.00 per pound
from January 1995 to mid 1996, and then declined to approximately U.S. $10.00.
On February 14, 2000, the price of uranium was U.S. $11.20 per pound. See, The
Ux Consulting Company, LLC & The Uranium Exchange Company report on Industry
Spot Prices, February 14, 2000, as published in The UX Weekly.
Considering the current shortfall of supply of approximately 30,000 tons
per year, which can only be made up from new mine production, and to a minor
extent by recycling nuclear weapons and reprocessing used reactor fuel, it
appears that the price of uranium oxide will increase, which will encourage more
active exploration for the mineral. Estimates of prices in the range of U.S.
$20.00 to $40.00 per pound over the next two years have been made by A.R. Rule
Investments, a uranium advisory service; and estimates of prices in the low to
mid $20's (U.S.) per pound over the five-year period ending in 2001 have been
made by U.S. Energy Corporation. See, "Doug Casey: Uranium Stocks That Are Going
Higher," A.R. Rule Investments, 2/24/99; and U.S. Energy Corporation Investor
News, October 31, 1996.
Supply and Demand.
Over the past decade, the world has consumed more uranium than it has
produced from mines. The shortfall has been met from four sources: The large
inventories that were accumulated during the period of very high uranium prices
in the 1970's; from decommissioning nuclear weapons in the United States and
countries of the former Soviet Union; from reprocessing spent reactor fuel; and
from reprocessing old mine tailings.
As reported by the Uranium Institute in London, England, world uranium fuel
consumption has increased from 25,401 tons in 1980 to 64,250 tons in 1997, with
production below reactor requirements since 1990. In 1997, worldwide production
of primary source (mined) uranium was 35,810 tons. This resulted in an
approximate 30,000 ton gap between supply and demand. The decreasing surplus
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makes it imperative that new, economically competitive uranium be found and
developed for the future. Industry experts estimate that production from new
mines must be in place in the very near future or shortages will exist.
In 1998, Saskatchewan Energy and Mines reported that Canadian mining
operations produced approximately 32.0%, or 10,924 tons, of the world's uranium
output, making it the global leader, followed by Australia. Since the mid
1980's, a minimal amount of mine development has taken place, except for those
engaged in recovering ore from the very high grade deposits in northern
Saskatchewan. Substantial investments are now being made by uranium production
companies to increase production capacity enormously by early in the next
century. A number of exploration and development projects in northern
Saskatchewan are currently underway, that when in operation are projected by the
Uranium Institute in London, England to increase Canadian production to a total
of 23,828 tons of uranium annually. This amount is approximately 55% of
projected global mine production. But even with this increase in production,
there appears to be a shortfall in the uranium supply.
The price of uranium has fluctuated widely over the years. In the early
1950's, the price was approximately $4.00 (Can.) per pound. The price increased
to over U.S. $40.00 per pound in the late 1970's. The price then dropped down to
U.S. $8.00 per pound in the early 1990's. In February of 2000, the price was
over U.S. $11.00 per pound.
Exploration and Development.
Exploration for the discovery of uranium mineralization uses techniques
similar to that used in other types of mineral exploration. In northern
Saskatchewan, tracing of uranium rich boulders dropped by continental glaciers
and scintillometer surveys may locate deposits near the surface, however deeply
buried deposits require other more sophisticated geophysical and geochemical
methods to delineate favorable anomalous target areas. Diamond drilling then
tests priority zones located through the geophysical and geochemical testing.
Once a deposit is discovered, many drill holes are required to outline the
tonnage and grade for purposes of a feasibility study to a production decision.
Should production occur, the mineralized rock is crushed, ground and processed
to produce yellowcake (U3O8), which is then sent to a refinery for conversion to
UO3,UO2 or UF6, comprising the products used as fuel for nuclear power reactors.
The Company has expended (through Pacific Amber's expenditures)
approximately U.S. $256,000 ($378,000 Can.) on exploration of its optioned PDC
Properties in 1999. The balance of $122,000 Canadian to be spent by December 31,
1999 has been extended to May 31, 2000. The Company spent approximately $330,709
Canadian (U.S. $223,330) as of December 31, 1999 on exploring the Henday Lake,
Hocking Lake and Hump Lake properties.
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Financial Market Overview.
On February 14, 2000, the price of uranium was U.S. $11.20 per pound. See,
The Ux Consulting Company, LLC & The Uranium Exchange Company report on Industry
Spot Prices, February 14, 2000, as published in The UX Weekly. When estimates of
available secondary (non-commercial stockpile) supplies are combined with
estimates of future primary production, the market will likely stay reasonably
well balanced in the short term. However, as the secondary supply declines and
becomes a smaller factor in the marketplace and new and expanded production
comes on-line, the gap between these contrasting forces will be a critical
factor, resulting in a predicted rise in market prices in the next year or two.
Competition.
The process of mineral exploration and prospecting for uranium, and the
process of developing, operating and mining uranium for the purpose of
commercial production is a highly competitive and speculative business. In
seeking available opportunities, the Company will compete with a number of other
companies, including large multi-national companies, that may have more
experience and resources than the Company.
Within northern Saskatchewan, as well as globally, the Company competes
with both major uranium companies and independent producers for, among other
things, rights to develop available uranium properties, procurement of available
materials and resources and hiring qualified international and local personnel.
Regulation.
In order to commence exploration on any of its uranium properties or
claims, the Company must obtain an exploration permit, which can take up to 30
days to obtain. When the Company approaches the production stage of developing
its properties, the Company will be required to obtain both Canadian and
provincial governmental approval of the tailings process, mining methods and
environmental consequences of the mine production, which approval process can
take up to two years. The environmental impact study that must be obtained on
each property in order to obtain governmental approval to mine on the properties
is a part of the overall operating costs of a mining company, and will not by
itself have an adverse effect on the Company.
Employees.
As of February 21, 2000, the Company had no full-time or part-time
employees.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Plan of Operation.
The Company is in the exploration stage and does not currently have any
income from operating activities. The Company intends to engage in the
prospecting, exploration and acquisition of properties in northern Saskatchewan
for the recovery of low-cost, high-grade uranium.
In early 1998, the Company entered into the Acquisition Agreement with the
Athabasca Uranium Syndicate, acquiring a l00% interest in two properties (the
Hocking Lake and Henday Lake Properties) located in the uranium-rich Athabasca
Basin of Saskatchewan and separately acquired an option to explore a third
property (the Hump Lake Property) located close to Uranium City in the Athabasca
Basin. In December 1998, the Company obtained an option to acquire an interest
in six additional properties from PDC in the Athabasca Basin. The area has not
yet been fully explored and many areas previously explored deserve reevaluation
due to greater geological knowledge acquired in the interim, and improved
exploration techniques.
The Company has completed a first phase exploration program consisting of
an airborne deep penetrating state-of-the-art electromagnetic and cesium vapor
magnetometer survey at the Hocking Lake, Henday Lake and Hump Lake Properties,
in order to determine priority target areas for detailed ground geophysics. A
thorough study of all past work in the area is being carried out and data
compiled and correlated with the new surveys as part of the first phase.
Management of the Company estimates the cost of the first phase exploration
program for the Hocking Lake, Henday Lake and Hump Lake Properties was
approximately U.S. $223,330. In October 1999 the Company issued common stock for
$300,000, and had enough liquid assets to fund the first phase of its
exploration program.
The Company experienced a net loss of U.S. $210,736 for the year ended
April 10, 1999. This loss was the result of expenditures for exploration and
other costs, without any revenues.
Until the Company finds uranium deposits on its properties, and can begin
receiving revenues for those deposits - or the Company finds some other source
for revenues - the Company expects to continue to incur operating losses and
will rely on additional equity sales to fund its activities in the future.
The six PDC Properties optioned in December under the Joint Venture
Agreement with PDC have undergone extensive geophysical surveys,
lithogeochemical boulder sampling and diamond drilling within the past three
years and the Company has committed significant resources to further explore the
properties by second stage geophysics and diamond drilling. The Company has
completed an exploration program on the PDC Properties, which consisted of
further ground geophysics at a cost of U.S. $256,000 ($378,000 Can.) to
delineate target areas and diamond drilling of previously delineated and newly
defined target zones. The balance of $122,000 Can. that was to be spent by
December 31, 1999 has been extended to May 31, 2000 by letter from PDC.
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The Company entered into an agreement with Pacific Amber in March of 1999,
which has been extended, under which the Company will grant Pacific Amber a 50%
interest of the Company's interest in the PDC Properties if Pacific Amber incurs
the balance of $122,000 Can. in expenditures by May 31, 2000. Pacific Amber has
expended the above mentioned U.S. $256,000.
Total expenditures on all of the Company's properties in 1999 was U.S.
$475,000 ($702,000 Can.).
In addition to current projects, the Company is engaged in the active
examination of other potentially significant properties for the purpose of
optioning or acquiring an interest in them in the future. The Company plans to
continue ground geophysical and geological surveys and diamond drilling on the
PDC Properties over the next 12 months. The Company will require additional
funds to support its operations over the next 12 months, and plans to raise
funds by offering its common stock in private placements. If the Company is not
able to obtain equity financing, it will be necessary to form joint ventures
with other companies to fund further operations. The Company has no employees,
and does not expect to have any for the next 12 months. All operations will be
conducted utilizing consultants.
Aerial geophysical surveys were conducted by the Geoterrex-Dighem
division of Conpagnie Generale de Geophysique ("CGG"). CGG is the largest
geophysical company in Europe, and one of the largest in the world. The
Geoterrex-Dighem division is the largest, most experienced airborne geophysical
service group in the world.
The ground geophysical surveys are being conducted by Patterson Mining
Geophysics Ltd. The company has been in operation since 1980; and is operated by
Bill Patterson, a geophysicist, who has over 24 years of geophysical experience
throughout Canada and the United States. The company also includes Gord
Ostapovitch, a geophysicist, who has been active in the mineral exploration and
mining industry since 1975, and Bob Polischuk, a Geosoft/Auto CAD technologist.
The Company has not received the results of the aerial and ground
geophysical surveys conducted by Geoterrex-Dighem or Patterson Mining Geophysics
Ltd.
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Forward-Looking Statements.
The following cautionary statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 in order for the Company to avail
itself of the "safe harbor" provisions of that Act in the future. Note, however,
that the safe harbor for forward looking statements does not apply to
non-reporting companies, which on the date of the initial filing of this
registration statement, included the Company. Discussions and information in
this document which are not historical facts should be considered
forward-looking statements. With regard to forward-looking statements, including
those regarding the potential revenues from the mining and development of
uranium properties, and the business prospects or any other aspect of the
Company, actual results and business performance may differ materially from that
projected or estimated in such forward-looking statements. The Company has
attempted to identify in this document certain of the factors that it currently
believes may cause actual future experience and results to differ from its
current expectations. In addition to the risks cited above specific to the
exploration and mining of uranium, differences may be caused by a variety of
factors, including but not limited to, adverse economic conditions, entry of new
and stronger competitors, inadequate capital and the inability to obtain funding
from third parties, unexpected costs, inability to obtain or keep qualified
personnel, and the volatility of uranium markets and prices.
ITEM 3. DESCRIPTION OF PROPERTY
The Company's properties are located in the Athabasca Basin of northern
Saskatchewan, Canada.
The Company acquired two properties (the Hocking Lake Property and the
Henday Lake Property) located in the Athabasca Basin of northern Saskatchewan,
as part of the Acquisition Agreement with Athabasca. The Company's ownership of
the properties includes the rights to all minerals or reserves located on and
extracted from the properties.
The Hocking Lake Property is geographically located approximately 600 miles
north of the regional capital city of Regina. The closest city to the Hocking
Lake Property is Uranium City, located 95 miles west of the property. The region
has a dry, continental climate, with 30 inches of snowfall covering the ground
during five months of each year. Mean temperatures range from minus 30 degrees
Fahrenheit in the month of January to plus 75 degrees Fahrenheit in the month of
August. The Hocking Lake Property may be accessed by float or ski equipped
aircraft or helicopter from the village of Stoney Rapids located approximately 7
miles to the north.
The Hocking Lake Property consists of five mining claims in two groups
totaling 20,203 hectares (49,924 acres) west of Black Lake, Saskatchewan. The
claims are located on N.T.S. sheets 74-O-1 and 74-P-4 of northern Saskatchewan.
The claims are designated S106048 through S106052 inclusive.
The Henday Lake Property is geographically located approximately 500 miles
north of the regional capital city of Regina. The closest city to the Henday
Lake Property is La Ronge located 200 miles south of the property. The region
has a dry, continental climate, with 30 inches of snowfall covering the ground
during five months of each year. Mean temperatures range from minus 30 degrees
Fahrenheit in the month of January to plus 75 degrees Fahrenheit in the month of
August. The Henday Lake Property may be accessed by gravel road from the town of
La Ronge or by float or ski equipped aircraft or helicopter from La Ronge or
Stoney Rapids.
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The Henday Lake Property consists of three continuous mining claims
totaling 11,504 hectares (28,428 acres) in the Henday and Mallen Lake area,
N.T.S. 74-I-8 and 74-L-5, northern Saskatchewan. The claims are designated
S106053, S106054 and S106055.
There have been no previous mining operations on either the Henday Lake or
the Hocking Lake Properties. However, portions of properties have been explored
by prospecting, geophysics and possibly some diamond drilling by various
operators mainly during the 1970's and 1980's. Both properties have been sitting
idle since the late 1980's. These properties are largely undeveloped .
Both the Hocking Lake and the Henday Lake Properties are in the exploration
stage where the Company is in the process of locating potential mineral deposits
or reserves. The Company has not yet begun to extract uranium or other mineral
deposits from the properties and therefore has not engaged in the exploitation
of the mineral deposits or reserves from the Hocking Lake or the Henday Lake
Properties.
The area has not been fully explored and many areas previously explored
deserve reevaluation due to geological knowledge acquired over the years and
improved exploration techniques. The Company's ability to realize the carrying
value of its assets is dependent on the Company being able to extract and
transport uranium oxide deposits and finding appropriate markets for their sale.
The Hocking Lake and Henday Lake Properties are located in areas considered
to be geologically favorable for occurrence of uranium deposits having the
following criteria:
1. Located on the unconformity (the highest grade uranium deposits are
known to occur in unconformity type deposits between Archean basement
rocks and Proterozoic sedimentary sequences) between the Athabasca
group and basement rocks, at depths less than 1,640 feet. The
unconformity occurs at the break in the geological record where the
younger sediments overlay the very old basement rocks.
2. Active exploration surrounding both properties.
3. Uraniferous boulders at the nose of a drumlin in the western sector of
the Hocking Lake Property.
As described under Description of Business, the Company owns an option on
the Hump Lake Property from J.R. Billingsley, the registered owner. The Hump
Lake Property is geographically located approximately 650 miles northwest of the
regional capital city of Regina. The closest city to the Hump Lake Property is
Uranium City, located 12 miles southeast of the property. The region has a dry,
continental climate, with 30 inches of snowfall covering the ground during five
months of each year. Mean temperatures range from minus 30 degrees Fahrenheit in
the month of January to plus 75 degrees Fahrenheit in the month of August.
Exploratory radiometric prospecting, trenching and diamond drilling were
conducted on the Hump Lake Property in the late 1960's and 1970's, however, the
property is without known reserves and the proposed programs are exploratory in
nature. The Hump Lake Property is largely undeveloped and may be reached by
float or ski equipped aircraft from Uranium City.
-14-
<PAGE>
On December 16, 1998, the Company executed a Joint Venture Agreement with
PDC under which the Company was granted an option to gain an ownership interest
in six uranium properties totaling 74,756 acres located in the Athabasca Basin.
Approximately $1,900,000 Can. has been spent on these properties between 1995
and 1997 on geophysical surveys, lithogeochemical boulder sampling and diamond
drilling. All six properties are largely undeveloped, with little or no
infrastructure of roads.
1. The Crawford Property, located 15.5 miles northwest of the Key Lake
mine, has been explored by geophysics and reconnaissance and detailed
lithogeochemical boulder sampling. Three sub-parallel electromagnetic conductors
were detected, and one conductor in the area of a large intense kaolin anomaly
was partially drilled. There is also enrichment of chlorite, boron, lead and
uranium in several sectors in proximity to the conductors. Two of the holes did
not adequately test the alteration zone as they did not reach basement. Two
holes were drilled on another conductor which indicated a second stronger
alteration zone. The most westerly hole is anomalous in lead, boron and uranium.
Kaolin is anomalous throughout the sandstone section. Due to the presence of the
favorable alteration minerals and anomalous values mentioned above, further
exploration work is warranted. The property may be reached by bush road (Fox
Lake Road) year-round from Provincial Highway 914 or by float or ski equipped
aircraft.
2. The Perpete Property is located 24.8 miles west-northwest of the Key
Lake mine. This property can be reached by winter road from Provincial Highway
914. Summer access is restricted to all terrain vehicles. The most convenient
access is by float or ski equipped aircraft from La Ronge, approximately 161.5
miles to the south.
The Perpete Property has been explored by geophysics, lithogeochemistry and
drilling. Previous work indicated moderate to strong alteration and erratic
enrichment of lead and uranium. A later electromagnetic survey indicates the
conductor coinciding with the east edge of the previous "conductive zone" is
east of the northern fence of drill holes. Thus, the conductor was not
adequately tested and further diamond drilling is required.
3. The Brown Property, located 12.4 miles northwest of the Key Lake mine,
adjoins the Crawford Property to the south. The property can be reached by 4x4
trucks by bush road (Fox Lake Road) from Provincial Highway 914. The most
convenient access is by float or ski equipped aircraft from La Ronge, which is
approximately 161 miles to the south.
Other than on the east-central edge of the Brown Property, very little work
has been carried out. A total of 68 holes were drilled in this area in two
locations. In one of the locations, a drill intersection of 9.02 feet assayed
0.62% uranium oxide and most of the holes in this area intersected significant
alteration.
A lithogeochemical reconnaissance survey was conducted over the property
subsequent to the drill program. This survey indicates the presence of two
strongly anomalous areas southwest of Colquhoun Lake to the northeast and
southwest of the previously drilled zone. Evidence of hydrothermal alteration is
characterized by chloritization and dravitization, and trace alteration
including uranium, lead, arsenic and yttrium.
The strongest and most consistent clay alteration trends are in the
southern portion of the property, between Brown Lake and MacArthur River Road.
Although it is possible that some of this alteration is derived from the
previously known area of uranium mineralization near Shift Lake, some of the
-15-
<PAGE>
anomalous trends are situated a few miles away, both along and across the ice
direction, suggesting that other sources may exist to the west and the southwest
of Shift Lake. The strongest and most consistent trace element enrichment
anomalous zone occurs in the northeast sector extending south - southwest of the
tip of the Colquhoun Lake. This zone is characterized by weak to moderate
chloritization and dravitization, but relatively strong and consistent
enrichment of uranium, arsenic, lead and yttrium.
Additional geophysical surveys carried out by the Company in 1999 with
limited diamond drilling have outlined a significant anomalous zone with
favorable geology, which the Company intends to further explore by diamond
drilling.
4. The Jasper Property contains a lithogeochemical anomaly east of
Woodstock Lake. This anomaly contains strong illite and weak boron enrichment,
with weak to moderate lead and uranium anomalies. Additional lithogeochemical
surveys are recommended. The Jasper Property can be accessed by float or ski
equipped aircraft.
5. The Morin Lake Property can be reached by winter road from Provincial
Highway 914. Summer access is restricted to all terrain vehicles. The most
convenient access is by float or ski equipped aircraft from La Ronge, which is
approximately 161.4 miles to the south. The property has uranium anomalies
occurring in several portions of the property. Detailed lithogeochemical
sampling is required to further define the anomalous areas.
6. The Marean Property can be reached by winter road from Provincial
Highway 914. Summer access is restricted to all terrain vehicles. The most
convenient access is by float or ski equipped aircraft from La Ronge, which is
approximately 173.9 miles to the south. The property has been explored by
geophysics and boulder sampling, which indicated weak conductors and boulder
anomalies. Subsequent lithogeochemical surveys show the presence of boron, weak
chloritization, and significant illite enrichment, indicating hydrothermal
alteration. Further geophysical and lithogeochemical surveys should be conducted
prior to drilling.
All six of the PDC Properties are without known reserves and the proposed
programs are exploratory in nature. Each of these properties exhibit encouraging
features such as geophysical conductors, faulting, and various types of
alteration indicative of hydrothermal systems favorable for the occurrence of
uranium mineralization. All of the properties merit further exploration
including geophysics, lithogeochemical surveys and diamond drilling.
Exploration Program.
The Company has conducted work on its wholly-owned properties, the Hocking
Lake and Henday Lake Properties, utilizing an exploration program consisting of
an airborne, deep penetrating, state-of-the-art electromagnetic and cesium vapor
magnetometer survey in order to determine priority target areas for detailed
ground geophysics and geology, prior to a diamond drilling program.
-16-
<PAGE>
The first phase of the Company's exploration program ("Phase I") consisted
of an airborne deep penetrating state-of-the-art electromagnetic and Cesium
vapor magnetometer survey in order to determine priority target areas for
detailed ground geophysics and geology, prior to a diamond drilling program. A
thorough study of all past work in the area was carried out and data was
compiled and correlated with the new surveys, as well as limited ground
geophysics, as part of Phase I. The Company completed Phase I in December 1999.
The cost of the Phase I program was approximately U.S. $223,300.
The Company is not aware of any known reserves and its exploration program
is currently exploratory in nature. A Phase II program will consist of diamond
drilling to outline a mineral deposit. The Company plans to finance these
programs by offering its common stock through private placements.
The Company will be required to perform extensive geological and/or
geophysical surveys on all of its wholly-owned and optioned properties. The
Company will be subject to all risks inherent in performing surveys, exploring
and extracting uranium. Any of the risks could result in the Company being
liability for damages from loss of life and property. The Company is not fully
insured against these risks. Many of these risks are not insurable.
Management of the Company believes the risk-to-reward considerations
involved with the exploration of the properties are very positive and may lead
to substantial growth of the Company over the next several years. However, the
Company can provide no assurances that the properties or any of them will
produce uranium oxide in any specific amounts or that the Company will ever
realize a profit as a result of the Company's exploration, extraction,
development or production of the properties.
Exploration Report Summaries
Hocking Lake Property
The 5 claim Hocking Lake property had not been tested by deep penetrating
electromagnetic surveys in the past. Depths to the surface underlying the
sandstone are in the range of 500 m to 600 m, which is beyond the range of prior
Input surveys. Much of this area should be within the range of a low frequency
electromagnetic survey. The western claims straddle a high magnetic block which
probably represents non-prospective granitic surface underlying the sandstone.
The flanks of the high mag block and an interior low mag corridor were included
in the electromagnetic survey.
-17-
<PAGE>
Henday Lake Property
The Henday Lake property has seen two generations of relatively recent
airborne electromagnetic coverage. Almost all of the 3 claim property was
included in a 1977 Input survey, which mapped some 17 km of probable basement
conductors within the current property outline. Some of these targets are
thought to be untested or poorly tested. An electromagnetic survey in 1988
covered approximately 40% of the property, on the west side. Drilling in and
around the property has revealed fairly rugged sub-Athabasca paleotopography
with up to 100 m of relief at the surface underlying the sandstone. It is
feasible that some parts of the property which were not covered by the 1988
electromagnetic survey may have been too deep for the 1977 Input survey. An
electromagnetic survey of the eastern 60% of the property has been completed,
with two flight line orientations to accommodate the arcuate and variable strike
directions which are characteristic of the Mudjatic Domain.
Tazin Property
The Tazin property is a single claim of 2000 ha under option to the
Company. Historical work has identified a fault zone with uranium
mineralization. No conductive strata have been mapped or intersected by drilling
in the area. An electromagnetic survey has been completed.
Morin Lake Property
The 1999 winter exploration program on the Morin Lake project (CBS 7758)
consisted of line cutting (20 km), a geophysical survey (17.4 km of TEM) and one
diamond drill hole of 350 m. From the 1999 drill core, 13 drill core samples
were collected for lithogeochemical analysis.
A fixed loop electromagnetic survey comprising 17.4 km of profile coverage
on six lines was completed in the northeastern part of claim CBS 7758. Four
conductor trends in the rocks underlying the sandstone were outlined.
A segment of the dominant conductor was the site of a diamond drillhole
that intersected background Athabasca Group sandstone and graphitic pelitic
surface below the sandstone. No anomalous radioactivity was encountered.
-18-
<PAGE>
Lithogeochemical sampling results of the core did confirm significant
enrichment of boron within the sandstone column, but failed to detect any
anomalous clay alteration or trace element enrichment indicative of proximity to
a uranium deposit.
Although no indications of an uranium deposit were detected in the drill
hole, the property still holds excellent potential. There are large gaps still
to be filled by detailed geophysical surveys and lithogeochemical boulder
sampling.
Perpete Lake Project
The 1999 winter exploration program on the Perpete Lake Project consisted
of a diamond drilling program. Two drillholes, PL-01 and PL-02, were completed
totaling 688 m. From the 1999 drill core, 32 drillcore samples were collected
for lithogeochemical analysis.
Both drillholes intersected weakly altered sandstone. Weakly anomalous clay
analysis values are confirmed by lithogeochemistry. Anomalous downhole
radioactivity was encountered over two intervals; 281.4 to 283.5 m and 289.2 to
290.4 m. Both intervals are associated with graphitic pelitic gneiss intervals
and the contact with pegmatite. The majority of the sandstone section of hole
PL-01 is anomalous in trace uranium content . The radioactive intersection in
the rocks underlying the sandstone is highly anomalous in uranium, nickel,
cobalt and arsenic, which are usually found in unconformity uranium deposits.
No anomalous radioactivity was recorded in drill hole PL-02. The lower-most
sandstone bench (bottom 20 m of Athabasca sandstone) carries 2 ppm U
(lithogeochemical analysis) which is quite strongly anomalous.
Although no commercial grade uranium mineralization was detected during
this program, the results to date are certainly encouraging and additional work
is warranted.
-19-
<PAGE>
Marean Lake Project
The 1999 winter exploration program on the Marean Lake project (CBS 7752)
consisted of line cutting (25.3 km) and a geophysical survey (25.3 km of TEM
coverage).
The electromagnetic coverage detected 4 weak anomalies within the Marean
Lake area.
Although the results of the winter exploration program are not negative in
a technical sense, the practicability to retain a property with 600 to 700 m
sandstone cover must be evaluated in the context of the owners corporate
objectives.
Brown Lake Property
The 1999 winter exploration program on the Brown Lake property (CBS 7756
and CBS 7757) consisted of linecutting (32.9 km), geophysical surveys (46.25 km
of fixed loop TEM) and two diamond drill holes totaling 506.2 m. From the 1999
drill core, 16 samples were collected for lithogeochemical analysis.
A fixed loop electromagnetic survey on two lines at Shift Lake outlined the
previously known conductor horizon, and located outlying features to the SW and
to the NE . In the Wheeler River area, two sub-parallel, N-S trending
conductors, one of which is quite strongly conductive, are traced almost
continuously for two kilometers. As a follow-up to these results, an additional
electromagnetic survey in the Lucky Lake area indicates a continuous 'S' shaped
conductive trend.
The diamond drilling program consisted of one drillhole on the Shift Lake
grid (ddh SL-01) and one drillhole on the Wheeler grid (WL-01).
Drillhole SL-01, oriented at -60(degree)/210(degree), was targeted at the
down-dip extension of uranium mineralization (1.42 m% U308) discovered at the
unconformity in Union Carbide drillhole 79-17. The drill hole intersected some
clay alteration products, and evidence of faulting.
-20-
<PAGE>
Drillhole WL-1 intersected intervals of weakly to moderately bleached
sandstone overlying pelitic basement. The drillhole was abandoned 7.4 metres
below the unconformity as the drill rods became stuck.
Lithogeochemical sampling did not result in the detection of any
significant alteration zones, or trace element enrichment zones which might
indicate proximity to a uranium deposit. These drillholes did not explain the
consistent anomalous boulder trend of dravite, uranium and arsenic enrichment
down ice from Lucky and Colquhoun Lake.
If proven, the occurrence of an `S' shaped conductive trend is considered
highly favorable.
Additional exploration work is in progress on the Brown Lake property.
Reserves.
The Company's claims have no proven reserves as of February 21, 2000.
-21-
<PAGE>
Corporate Offices.
The Company currently maintains its corporate headquarters at 475 Howe
Street, Suite 206, Vancouver, B.C., Canada. The telephone number of the
corporate headquarters is (604) 685-8355. The Company will sublease office space
as required for operations.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of February 21, 2000, the number of
shares of the Company's outstanding $0.001 par value common stock beneficially
owned by each of the Company's current directors and the Company's executive
officers, the number of shares beneficially owned by all of the Company's
current directors and named executive officers as a group, and the number of
shares owned by each person who owned of record, or was known to own
beneficially, more than 5% of the Company's outstanding shares of common stock:
<TABLE>
<CAPTION>
Amount and Percent of
Name of Nature of Beneficial Common
Beneficial Owner Position Ownership Stock
---------------- -------- -------------------- ----------
<S> <C> <C> <C>
Thornton J. Donaldson
206 - 475 Howe Street President and 397,000(1) 5.73%
Vancouver, B.C. V6C 2B3 Director
William G. Timmins Secretary and 250,000(2) 3.61%
410 - 455 Granville Street Director
Vancouver, B.C. V6C 1T1
James R. Billingsley Director 100,000(3) 1.44%
3157 West 33rd Avenue
Vancouver, B.C. V6N 2G6
E.G. (Ed) Mowatt Director 100,000(4) 1.44%
4217 Coventry Way
N. Vancouver, B.C. V7N 4M9
All directors and executive 847,000(5) 12.23%
officers as a group
(four persons)
Pacific Amber Resources, Ltd. -- 650,000 9.38%
1818 - 701 West Georgia Street
Vancouver, B.C. V7Y 1C6
Pandora Industries Inc. -- 450,000 6.50%
1818 - 701 West Georgia Street
Vancouver, B.C. V6P 4X6
Mark T. Smith -- 600,000 8.66%
5090 Warwick Terrace
Pittsburgh, PA 15213
</TABLE>
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<PAGE>
- -------------------
(1) Includes 22,000 shares owned by Mr. Donaldson's spouse and 275,000 shares
owned by United Corporate Advisors, Ltd., of which Mr. Donaldson is the
President, a Director and shareholder.
(2) Includes 150,000 shares owned by Mr. Timmins' spouse.
(3) Includes 50,000 shares owned by Mr. Billingsley's spouse.
(4) Includes 30,000 shares owned Mr. Mowatt's spouse and 30,000 shares owned
Mr. Mowatt's daughter.
(5) Includes securities reflected in footnotes 1 - 5.
There are no current arrangements or agreements pledging securities which
could in the future result in a change of control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
The following table sets forth as of February 21, 2000, the names and ages
of the current directors and executive officers of the Company, and the
principal offices and positions with the Company held by each person and the
date such person became a director or executive officer of the Company. The
executive officers of the Company are elected annually by the board of
directors. Executive officers serve terms of one year or until their death,
resignation or removal by the board of directors. The present term of office of
each director will expire at the next annual meeting of shareholders. Each
executive officer will hold office until his successor duly is elected and
qualified, until his resignation or until he is removed in the manner provided
by the Company's bylaws.
<TABLE>
<CAPTION>
Name of Director or Officer Director
and Position in the Company Since Age Principal Occupation
- --------------------------- -------- --- --------------------
<S> <C> <C> <C>
Thornton J. Donaldson 1998 70 President of the Company since its inception in April
President 1998. Secretary of the Company from April 1998
July 1998. President of Rich Coast, Inc., an
industrial waste treatment company located in
Dearborn, Michigan from 1984 to 1993, and a Director
of Rich Coast, Inc. from 1993 to 1999. Director of
Lorex Resources, Ltd., a mineral exploration company
located in Vancouver, British Columbia since July
1999. President and sole director of United Corporate
Advisers Ltd., a geological and financial consulting
business founded by Mr. Donaldson in 1970.
Self-employed as a consulting geologist and financial
advisor from 1978 through the present.
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<PAGE>
<CAPTION>
Name of Director or Officer Director
and Position in the Company Since Age Principal Occupation
- --------------------------- -------- --- --------------------
<S> <C> <C> <C>
William G. Timmins 1998 62 Secretary of the Company since July 1998. Self-
Secretary employed as President of WGT Consultants, Ltd. from
to present as a geological consultant for numerous
mining companies in Canada, the United States, Central
and South America, Australia and New Zealand. Director
of Monalta Resources Ltd., a mineral exploration
company located in West Vancouver, British Columbia
from April 1998 to present.
James R. Billingsley 1998 76 Chairman and Director of Pacific Amber Resources, from
December 1998 to present. President and Chief
Executive Officer of Glamis Gold, a public company
engaged in gold mining, from August 1988 through
December 1998. Vice President-Administration of Glamis
Gold from August 1993 through August 1998.
E.G. (Ed) Mowatt 1998 46 Self-employed financial consultant, from January 1999
to present. Chief Financial Officer and a Director of
Tracer Petroleum Corporation, a British Columbia based
international oil and gas company with interests in
Indonesia and Canada, from 1994 through January 1999.
Secretary of Tracer Petroleum Corporation from 1996
through January 1999. Chartered accountant since 1989.
</TABLE>
Except as indicated in the above table, no director of the Company is a
director of an entity that has its securities registered pursuant to Section 12
of the Securities Exchange Act of 1934.
There are no other arrangements or understandings between any executive
officer and any director or other person pursuant to which any person was
selected as a director or an executive officer.
ITEM 6. EXECUTIVE COMPENSATION
Compensation and Other Benefits of Executive Officers.
The Company's President and other executive officers did not receive any
compensation or other benefits between the inception of the Company (April 3,
1998) and April 30, 1999, its last fiscal year end.
Stock Option Plan.
The Board of Directors of the Company has adopted a stock option plan
effective August 31, 1999, subject to shareholder approval by August 31, 2000.
The stock option plan was adopted in order to attract and retain the best
available personnel for positions of substantial responsibility, to provide
-24-
<PAGE>
additional incentive to the Company's employees and to promote the success of
the Company's business. The Company has reserved 1,200,000 shares of its Common
Stock under the stock option plan. As of the date hereof, no options have been
granted under the stock option plan.
Compensation of Directors.
No pension or retirement benefit plan has been instituted by the Company
and none is proposed at this time and there is no arrangement for compensation
with respect to termination of the directors in the event of change of control
of the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
James R. Billingsley, a director of the Company, is the registered owner of
the entire Billingsley Claim, and therefor has an interest in the Company's
option to acquire rights to explore and develop the Billingsley Claim. In
addition, Mr. Billingsley is a Director of Pacific Amber Resources Ltd., and
therefore has an interest in the Company's Property Option Agreement with
Pacific Amber Resources Ltd. with respect to the PDC Properties. The Board of
Directors of the Company is aware of Mr. Billingsley's interests in the
Billingsley Claim and in Pacific Amber Resources Ltd. The terms of the option
agreement were negotiated by Thornton Donaldson and Mr. Billingsley before Mr.
Billingsley became a Director of the Company. The agreement involving the
Company and Mr. Billingsley's claim was handled as an arms-length transaction.
Other than the transactions stated above, none of the directors or
executive officers of the Company, nor any person who owned of record or was
known to own beneficially more than 5% of the Company's outstanding shares of
its Common Stock, nor any associate or affiliate of such persons or companies,
has any material interest, direct or indirect, in any transaction that has
occurred since its inception on April 3, 1998, or in any proposed transaction,
which has materially affected or will affect the Company.
ITEM 8. DESCRIPTION OF SECURITIES
The Company has two classes of equity securities, namely, its $0.001 par
value common stock ("Common Stock") and its $0.001 par value preferred stock
("Preferred Stock"). As of February 21, 2000, the Company has authorized
40,000,000 shares of its Common Stock, of which 6,927,500 are issued and
outstanding. The holders of the Company's Common Stock have and possess all
rights as shareholders of a corporation, except as may be limited by the
preferences, privileges and voting powers, and the restrictions and limitations
of the Company's Preferred Stock. As of February 21, 2000, the Company has
authorized 10,000,000 shares of its Preferred Stock, but no shares of its
Preferred Stock are issued or outstanding.
-25-
<PAGE>
Common Stock.
Each holder of record of shares of the Company's Common Stock is entitled
to one vote for each share held on all matters properly submitted to the
shareholders for their vote. Cumulative voting in the election of directors is
not authorized by the Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to those
dividends declared by the Board of Directors out of legally available funds,
and, in the event of liquidation, dissolution or winding up of the affairs of
the Company, holders are entitled to receive ratably the net assets of the
Company available to the shareholders. Holders of outstanding Common Stock have
no preemptive, conversion or redemption rights. To the extent that additional
shares of Common Stock of the Company may be issued in the future, the relative
interests of the then existing shareholders may be diluted.
Preferred Stock.
The Company's Board of Directors is authorized to issue from time to time.
without shareholder authorization, in one or more designated series, any or all
of the authorized but unissued shares of Preferred Stock with such dividend,
redemption, conversion and exchange provisions as may be provided by the Board
of Directors with regard to such particular series. Any series of Preferred
Stock may possess voting, dividend, liquidation and redemption rights superior
to those of the Common Stock. The rights of the holders of Common Stock will be
subject to and may be adversely affected by the rights of the holders of any
Preferred Stock that may be issued in the future. Issuance of a new series of
Preferred Stock, or providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could make it more difficult for a
third party to acquire, or discourage a third party from acquiring the
outstanding shares of Common Stock of the Company and make removal of the Board
of Directors more difficult. No shares of Preferred Stock are currently issued
and outstanding, and the Company has no present plans to issue any Shares of
Preferred Stock.
Anti-Takeover Provisions.
The Company's Articles of Incorporation and Bylaws (the "Incorporation
Documents") contain provisions that may make it more difficult for a third party
to acquire. or may discourage acquisition bids for, the Company. The Board of
Directors of the Company is authorized, without action of its shareholders, to
issue authorized but unissued Common Stock and Preferred Stock. The existence of
undesignated Preferred Stock and authorized but unissued Common Stock enables
the Company to discourage or to make it more difficult to obtain control of the
Company by means of a merger, tender offer, proxy contest or otherwise.
Glossary of Terms.
Alteration Zone A change in the mineral composition of the rock brought about by
physical or chemical means especially by the action of hydrothermal solutions.
Anomaly: A deviation from uniformity or regularity in geophysical or geochemical
quantities.
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<PAGE>
Diamond Drilling: A variety of rotary drilling in which diamond bits are used as
the rock cutting tool. It is a common method of prospecting for mineral deposits
especially in development work where core samples are desired.
Drumlin: A low, smoothly rounded, elongated and oval hill, mound or ridge of
compact glacial till, built under the margin of the ice and shaped by its flow;
its longer axis is parallel to the direction of the movement of the ice. It
usually has a blunt nose pointing in the direction from which the ice approached
and a gentler slope tapering in the other direction.
Electromagnetic and Cesium Vapor Magnetometer Survey: An Electromagnetic Survey
uses instruments to measure conductivity. Certain minerals are highly conductive
such as graphite or sulfides. In the Athabasca area graphite is commonly
associated with the occurrence of uranium deposits.
The Cesium Vapor Magnetometer Survey is a sophisticated instrument that
measures magnetic intensities of sub-surface rocks which is an aid in
interpretation of sub-surface geological structure.
A combination of these surveys aids in the search for uranium deposits.
Fault: A zone of rock fracture along which there has been displacement.
Glacial Action: All processes due to the agency of glacier ice, such as erosion,
transportation, and deposition.
Hydrothermal Alteration: Alteration of rocks or minerals by the reaction of such
surface heated waters of magmatic origin.
Kaolin Anomaly; Illite Enrichment; Chloritization and Dravitization: These are
alteration products derived from the decomposition of other rock forming
minerals such as mica, and may be indicative of uranium or other mineralization
in proximity.
Lithogeochemical Boulder Sampling: A method of collecting boulder chips on a
grid basis, then laboratory analysis for detection of alteration products. The
various alteration products are plotted on maps to indicate the presence of
anomalous zones.
N.T.S. Sheets: These refer to map quadrangles in Northern Saskatchewan under the
National Topographic System. Mineral claims are plotted on these sheets by the
Energy and Mines Department of Saskatchewan so that mineral claim locations are
easily determined.
Scintillometer Surveys: A scintillometer is a sophisticated geiger counter,
which measures radioactivity; however, it can discriminate between uranium,
thorium and potassium.
Unconformity: A substantial break or gap in the geologic record where a rock
unit is overlain by another that is not next in stratigraphic succession, such
as an interruption in the continuity of a depositional sequence of sedimentary
rocks, or a break between eroded igneous rocks and younger sedimentary strata.
Yttrium: An element whose symbol is YT and has an atomic weight of 88.9, and is
a decay element derived from uraniferous minerals.
-27-
<PAGE>
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information.
The Company's Common Stock is not currently traded in the over-the-counter
market or any other market. Therefore, since the inception of the Company in
April 1998, there has been no established trading market for the Company's
Common Stock, and the Company has been unable to obtain reliable information as
to quoted prices with respect to the Common Stock.
Holders.
As of February 21, 2000, there were approximately 109 holders of the
Company's Common Stock, who collectively held 6,927,500 issued and outstanding
shares.
Dividends.
The Company did not declare or pay cash or other dividends on its Common
Stock between the inception of the Company (April 3, 1998) and April 30, 1999,
its last fiscal year end. The Company does not expect to pay any dividends in
the near future.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings required to be reported
hereunder.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On April 13, 1998, the Company acquired all of the assets of Athabasca
Uranium Syndicate, a syndicate formed in British Columbia, Canada, worth
$100,000, in exchange for issuing 6,000,000 shares of the Company's Common Stock
to the following Athabasca Uranium Syndicate ownership interest holders:
-28-
<PAGE>
Number
Name of Shares
---- ---------
AGT Financial Corporation 300,000
United Corporate Advisers, Ltd. 300,000
E.G. (Ed) Mowatt 150,000
G.W. Hornby 150,000
Rockford Resources, Inc. 300,000
Mark A. Donaldson 300,000
G.R.W. Financial Corporation 300,000
Hiro Ogata 300,000
Pacific Amber Resources, Ltd. 900,000
J.R. Billingsley 300,000
Harold M. Jones 300,000
W.L. McCullagh 300,000
3415 Investments, Ltd. 300,000
David Parfitt 150,000
Andy Crookbain 150,000
James G. Allison 150,000
Penelope Allison 150,000
Tom S.T. Heah 300,000
Derek Van Laare 300,000
William G. Timmins 300,000
Thornton J. Donaldson 300,000
---------
Total 6,000,000
These securities were offered to the limited class of offerees, as listed
above, pursuant to the exemption from registration contained in Section 3(b) of
the Securities Act of 1933, as amended, and Rule 504 promulgated thereunder. No
underwriter was involved in the transaction.
On March 24, 1999, the Company issued 200,000 shares of its Common Stock to
Pacific Amber upon execution of the Property Option Agreement, and in
consideration of Pacific Amber's agreement to incur U.S. $338,000 ($500,000
Can.) in expenditures on the property under the Property Option Agreement. These
securities were offered pursuant to the exemption from registration contained in
Section 3(b) of the Securities Act of 1933, as amended, and Rule 504 promulgated
thereunder.
Between January 15, 1999 and February 25, 1999, the Company sold 77,500
shares of its Common Stock to the following accredited investors at $0.65 per
share, for a total capital contribution of $50,375:
-29-
<PAGE>
Number
Name of Shares
---- ---------
Morris Ergas 20,000
Roger Dean Terhune 5,000
Marilyn E. Grandy 5,000
Double M Productions 5,000
Georgina Bresolin 5,000
S. Rodgers 5,000
Columbia Meat Market 5,000
Jure Uremovic 4,000
Douglas Yen 3,000
Stephen D. Granger 2,500
Trish Hodgson 2,000
Mark Bradley 2,000
Cindy Schoenhaar 1,000
Jessmar Investments Ltd. 13,000
-------
Total 77,500
These securities were offered to a limited number of accredited investors
pursuant to the exemption from registration contained in Section 3(b) of the
Securities Act of 1933, as amended, and Rule 504 promulgated thereunder. No
underwriter was involved in the transaction.
On October 7, 1999, the Company issued 600,000 shares of its Common Stock
to Mark T. Smith, an accredited investor, at $0.50 per share, for a total
capital contribution of $300,000. Mr. Smith also received warrants to purchase
an additional 600,000 shares, at $0.50 per share, exercisable until October 7,
2001. These securities were offered pursuant to the exemption from registration
contained in Section 4(2) of the Securities Act of 1933, as amended. No
underwriter was involved in the transaction.
On December 8, 1999, the Company issued 50,000 shares of its Common Stock
to Murray Swetz, pursuant to the J.R. Billingsley Letter Agreement and as a
finder's fee on the property. These securities were transferred pursuant to the
exemption from registration contained in Section 4(2) of the Securities Act of
1933, as amended. No underwriter was involved in the transaction.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation and the Colorado Business
Corporation Act provide that the Company will indemnify, to the fullest extent
permitted by law, any person, and the estate and personal representative of any
such person, against all liability and expense (including attorneys' fees)
incurred by reason of the fact that he or she is or was a director or officer of
the Company or, while serving at the request of the Company as a director,
-30-
<PAGE>
officer, partner, trustee, employee, fiduciary, or agent of, or in any similar
managerial or fiduciary position of, another domestic or foreign corporation or
other individual or entity or of an employee benefit plan. Further, the Articles
of Incorporation provide that the Company also shall indemnify any person who is
serving or has served the Company as director, officer, employee, fiduciary, or
agent, and that person's estate and personal representative, to the extent and
in the manner provided in any bylaw, resolution of the shareholders or
directors, contract or otherwise, so long as such provision is legally
permissible.
The Company's Articles of Incorporation also provide that a director of the
Company shall not be personally liable to the Company or its shareholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
to its shareholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) for acts
specified under Section 7-108-403 of the Colorado Business Corporation Act or
any amended or successor provision thereof, or (iv) for any transaction from
which the director derived an improper personal benefit. If the Colorado
Business Corporation Act is amended after the provisions in the Company's
Articles of Incorporation are adopted to authorize corporate action further
eliminating or limiting the personal liability of directors, then the Articles
of Incorporation provide that the liability of a director of the Company will be
eliminated or limited to the fullest extent permitted by the Colorado Business
Corporation Act, as so amended.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, 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 1933 Act and is,
therefore, unenforceable.
PART F/S
Financial Statements.
The Company's balance sheets as of April 30, 1999 and 1998 and the
statements of operations and statements of cash flows for the years then ended
are attached following the signature page of this Form 10-SB, together with the
audit report by the Company's independent chartered accountants. The Company's
unaudited balance sheet as of October 31, 1999 and unaudited statement of
operations for the three months ended October 31, 1999, are also attached
following the signature page of this Form 10-SB.
-31-
<PAGE>
PART III
ITEM 1. EXHIBITS
3.1 Articles of Incorporation.*
3.2 Bylaws.*
4.1 Stock Option Plan.*
10.1 Letter Agreement with J.R. Billingsley dated July 29, 1998.*
10.2 Extensions to Letter Agreement with J.R. Billingsley.*
10.3 Joint Venture Agreement with Phelps Dodge Corporation of Canada, Ltd.,
dated December 16, 1998.*
10.4 Property Option Agreement with Pacific Amber Resources Ltd. dated
March 24, 1999.*
10.5. Amendment to Property Option Agreement with Pacific Amber Resources
Ltd. dated October 7, 1999.*
10.6 Asset Purchase Agreement from Athabasca dated April 13, 1998.*
10.7 Letter from Phelps Dodge Corporation extending deadline to May 31,
2000.*
27.1 Financial Data Schedule. Filed herewith.
- -----------------------
*Filed previously.
-32-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, as amended, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
URANIUM POWER CORPORATION
Date: February 21, 2000 By: /s/ Thornton J. Donaldson
------------------------------------
Thornton J. Donaldson, President and
Director
Date: February 21, 2000 By: /s/ William G. Timmins
------------------------------------
William G. Timmins, Secretary and
Director
-33-
<PAGE>
URANIUM POWER CORPORATION
Financial Statements
April 30, 1999
(U.S. Dollars)
INDEX Page
----- ----
Report of Independent Chartered Accountants F-1
Financial Statement
Balance Sheets F-2
Statements of Operations F-3
Statements of Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6-F-8
-34-
<PAGE>
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS
TO THE DIRECTORS
OF URANIUM POWER CORPORATION
We have audited the accompanying balance sheets of Uranium Power Corporation (an
exploration stage company) as at April 30, 1999 and 1998 and the related
statements of operations, stockholders' equity and statements of cash flows for
the years ended April 30, 1999, the period April 3, 1998 (date of incorporation)
to April 30, 1998 and the cumulative amounts during exploration stage April 3,
1998 to April 30, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance 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.
In our opinion, these financial statements presents fairly, in all material
respects, the financial position of the Company as at April 30, 1999 and 1998
and the results of its operations and the cash flows for the year ended April
30, 1999, the period April 3, 1998 (date of incorporation) to April 30, 1998 and
the cumulative amounts during exploration stage April 3, 1998 to April 30, 1999
in conformity with generally accepted accounting principles in the United
States.
/s/ Smythe Ratcliffe
"Smythe Ratcliffe"
Chartered Accountants
Vancouver, British Columbia
June 25, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Balance Sheets
April 30
(U.S. Dollars)
1999 1998
---- ----
<S> <C> <C>
Assets
Current
Cash .................................................................... $ 3,149 $ 37,675
Properties (note 3) ...................................................... 59,459 59,459
--------- ---------
$ 62,608 $ 97,134
========= =========
Liabilities
Accounts Payable and Accrued Liabilities ................................. $ 3,082 $ 0
--------- ---------
Stockholders' Equity
Capital Stock
Authorized
40,000,000 Common stock with a par value of $0.001 each
10,000,000 Preferred stock with a par value of $0.001 each
Issued
Common stock 6,277,500 shares (1998 - 6,000,000 shares) .............. 6,278 6,000
Additional Paid-In Capital ............................................... 264,684 91,834
Deficit Accumulated During Exploration Stage ............................. (211,436) (700)
--------- ---------
Total Stockholders' Equity ............................................... 59,526 97,134
--------- ---------
$ 62,608 $ 97,134
========= =========
</TABLE>
See notes to financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Statements of Operations
(U.S. Dollars)
Period Cumulative
April 3, 1998 Amounts
(Date of During
Year Ended Incorporation) Exploration
April 30, to April 30, Stage to April
1999 1998 30, 1999
----------- ------------- --------------
<S> <C> <C> <C>
Expenditures
Exploration costs (note 3) ............ $ 136,796 $ 0 $ 136,796
Advertising and promotion ............. 29,900 0 29,900
Professional fees ..................... 18,732 0 18,732
Travel ................................ 17,909 0 17,909
Office ................................ 5,873 0 5,873
Rent .................................. 875 0 875
Incorporation cost written off ........ 0 700 700
Transfer agent fee .................... 651 0 651
----------- ----------- -----------
Net Loss for Year ....................... $ (210,736) $ (700) $ (211,436)
=========== =========== ===========
Loss Per Share .......................... $ (0.03) $ (0.00)
=========== ===========
Weighted Average Number of
Shares Outstanding .................... 6,026,541 279,452
=========== ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Statements of Stockholders' Equity
Years Ended April 30, 1999 and Period Ended April 30, 1998
(U.S. Dollars)
Deficit
Accumulated
Common Stock Additional During the Total
------------------------ Paid-Up Exploration Stockholders'
Shares Par Value Capital Stage Equity
------ --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Common stock issued
For assets of Syndicate (note 3(a)) .............. 6,000,000 $ 6,000 $ 91,834 $ 0 $ 97,834
Net loss ........................................... 0 0 0 (700) (700)
--------- ---------- ---------- ---------- ----------
Balance, April 30, 1998 ............................ 6,000,000 6,000 91,834 (700) 97,134
Common stock issued
For subscriptions (note 4) ....................... 1,000,000 1,000 606,005 0 607,005
For resource properties (note 3(b) ............... 200,000 200 137,131 0 137,331
Share issue costs .................................. 0 0 (15,586) 0 (15,586)
Net loss ........................................... 0 0 0 (210,736) (210,736)
Common stock returned to
treasury for cancellation
subsequent to April 30, 1999 (note 4) ............ (922,500) (922) (554,700) 0 (555,622)
--------- ---------- ---------- ---------- ----------
Balance April 30, 1999 ............................. 6,277,500 $ 6,278 $ 264,684 $ (211,436) $ 59,526
========= ========== ========== ========== ==========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
URANIUM POWER CORPORATION
(Exploration Stage Company)
Statements of Cash Flows
Years Ended April 30
(U.S. Dollars)
Cumulative
Period Amount During
April 3, 1998 Exploration
(Date of Stage April 3,
Year Ended Incorporation) 1998 to
April 30, to April 30, April 30,
1999 1998 1999
---------- -------------- --------------
<S> <C> <C> <C>
Operating Activities
Net loss .................................................... $(210,736) $ (700) $(211,436)
Adjustments to reconcile net
loss to net cash used in operating activities
Exploration costs acquired for shares ................... 137,268 0 137,268
Change in Operating Assets and Liabilities
Accounts payable ............................................ 3,082 0 3,082
--------- --------- ---------
Net Cash Used in Operating Activities ......................... (70,386) (700) (71,086)
--------- --------- ---------
Financing Activities
Issuance of shares for cash ................................. 51,446 38,375 89,821
Share issue costs ........................................... (15,586) 0 (15,586)
--------- --------- ---------
35,860 38,375 74,235
--------- --------- ---------
Inflow (Outflow) of Cash ...................................... (34,526) 37,675 3,149
Cash, Beginning of Year ....................................... 37,675 0 0
--------- --------- ---------
Cash, End of Year ............................................. $ 3,149 $ 37,675 $ 18,735
========= ========= =========
</TABLE>
See notes to financial statements.
F-5
<PAGE>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
Year Ended April 30
(U.S. Dollars)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND NATURE OF BUSINESS
The Company was incorporated on April 3, 1998 under the laws of the State
of Colorado. The principal business activity is the exploration and
development of natural resource properties principally in Canada.
By agreement dated April 13, 1998 the Company acquired all the assets of
Athabasca Uranium Syndicate (a British Columbia, Canada syndicate) which
consisted primarily of a parcel of property in Northern Saskatchewan,
Canada (note 3(a)) and a bank account. Consideration given to the owners of
the syndicate was 6,000,000 common shares of the Company at a par value of
$0.001 each and a stated amount of $97.834, being the cost of the assets
acquired.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Exploration stage expenditures
The Company expenses all expenditures for exploration of properties as
they are incurred.
(b) Foreign currency translation
The Company's operations and activities are conducted principally in
Canada, hence the Canadian dollar is the functional currency which is
translated into U.S. dollars for reporting purposes as follows:
(i) Monetary assets and liabilities at the rate of exchange in effect
as at the balance sheet date;
(ii) Non-monetary assets and liabilities at the exchange rates
prevailing at the time of the acquisition of the assets or
assumption of the liabilities; and,
(iii)Revenues and expenditures at the average rate of exchange for
the year.
Gains and losses arising from this translation of foreign currency are
not significant and are included in the determination of net loss.
(c) Comprehensive income (loss)
The Company has no other comprehensive income or loss. Accordingly,
comprehensive loss is the same as net loss.
(d) Loss per share
Loss per share calculations are based on the weighted average number
of shares outstanding during the period.
F-6
<PAGE>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
Year Ended April 30
(U.S. Dollars)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(e) Financial instruments
The Company's financial instruments consist of cash and accounts
payable and accrued liabilities. It is management's opinion that the
Company is not exposed to significant interest, currency, or credit
risks arising from these financial instruments. The fair value of
these financial instruments approximates their carrying value.
3. PROPERTIES
(a) Hocking Lake Property and Henday Lake Property
By agreement dated April 13, 1998, the Company acquired all the assets
of Athabasca Uranium Syndicate (a British Columbia, Canada syndicate)
which consisted of cash and the Hocking Lake Property and Henday Lake
Property. These properties were acquired in 1997 by the syndicate for
$59,459 ($82,270 Cdn) and are reflected in the financial statements at
the sellers' historical cost as the sellers are the controlling
shareholders.
Consideration given to the members of the syndicate was 6,000,000
common shares of the Company at a par value of $0.001 each and a
stated value of $97,834, being the cost of the assets acquired.
(b) Saskatchewan Uranium Properties
By agreement dated December 16, 1998, the Company has options to
acquire a 100% interest in 11 mining claims in Saskatchewan, Canada,
upon incurring cumulative expenditures of $338,000 (Cdn. $500,000) by
December 31, 1999 and an additional $1,690,000 (Cdn. $2,500,000) by
December 31, 2002. The optioner can earn back a 35% interest by
incurring cumulative expenditures of not less than $2,028,000 (Cdn.
$3,000,000) before December 31, 2006. A royalty is payable at 2% of
gross value (as defined) of production if the optioner does not earn
back the 35% interest.
By an agreement dated March 24, 1999, between the Company and Pacific
Amber Resources Ltd. ("Pacific") (a minority shareholder), the latter
will earn a 50% interest in the Saskatchewan Uranium Properties and
all of the Company's rights, licences and permits pertinent thereto
held for the specific use and enjoyment thereof by completing the
initial program and incurring $338,000 (Cdn. $500,000) in expenditures
on or before December 31, 1999. $129,355 (Cdn. $191,354) was incurred
as at April 30, 1999 and another $99,658 (Cdn. $147,123) was incurred
to June 25, 1999). In return, the Company issued the optionee 200,000
common shares at a deemed value of $0.65 each.
All exploration costs incurred on these properties have been expensed
as incurred resulting in no recognition of an asset on the balance
sheet. As a result of this policy the transfer of a 50% interest to
Pacific resulted in no gain or loss as there were no proceeds from the
disposition. Additionally the Company's issuance of 200,000 shares to
Pacific was expensed as exploration costs when incurred.
F-7
<PAGE>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
Year Ended April 30
(U.S. Dollars)
- --------------------------------------------------------------------------------
3. PROPERTIES (Continued)
(c) Northern mining property
By agreement dated July 29, 1998 (subsequently extended to July 1,
1999) the Company has an option to acquire from a shareholder a 100%
interest in a mining claim in Northern Mining District, Saskatchewan
by issuing 50,000 free trading shares and paying $13,375 to the owner
of the property. This is contingent upon completion of certain
specified exploration work. The owner has the right to receive $0.35
per pound of the product from the claim if the price of the product is
$18.00 per pound or less and $0.50 per pound where the price of the
product is $18.00 per pound or more.
This transaction will be accounted for when the shares are issued. The
recorded cost amount will be determined taking into consideration the
seller's historical cost and the fair value of the stock at the time
of issuance.
4. COMMON STOCK SUBSCRIPTIONS
In April 1999 the Company received subscriptions and issued a Treasury
Order for the issue of 922,500 common shares. These shares were unpaid at
April 30, 1999 and were held by the Company pending receipt of the proceeds
of issue. As the funds were not received the shares were returned to
treasury for cancellation subsequent to the year-end.
5. RELATED PARTY TRANSACTIONS
The following transactions occurred with parties who are related by way of
minority share ownership in the capital stock of the Company and being a
director of the Company and corporate shareholders.
(a) Acquisition of assets of Athabasca Uranium Syndicate (note 1) in
exchange for 6,000,000 common shares.
(b) Agreement with Pacific Amber Resources Ltd. (note 3(b)) and issuance
of 200,000 common shares under the agreement.
(c) Option to acquire an interest in a mining claim from a minority
shareholder who is an officer and director (note 3(c)).
F-8
<PAGE>
Interim Consolidated Financial Statements
October 31, 1999
(Unaudited - Prepared by Management)
(U.S. Dollars)
INDEX Page
----- ----
Financial Statement
Balance Sheet F-10
Statements of Operations F-11
Statement of Stockholders' Equity F-12
Statement of Cash Flows F-13
Notes to Financial Statements F-14-F-15
F-9
<PAGE>
<TABLE>
<CAPTION>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Balance Sheets
October 31, 1999 (Unaudited) and April 30, 1999
(U.S. Dollars)
October 31, April 30,
1999 1999
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
Assets
Current
Cash ..................................................................... $ 83,182 $ 3,149
Restricted Cash ............................................................ 122,410 0
Properties (note 3) ........................................................ 59,459 59,459
--------- --------
$ 265,051 $ 62,608
========= ========
Liabilities
Accounts Payable and Accrued Liabilities ................................... $ 2,719 $ 3,082
--------- --------
Stockholders' Equity
Capital Stock
Authorized
40,000,000 shares common stock with a par value of $0.001 each
10,000,000 shares preferred stock with a par value of $0.001 each
Issued
6,862,500 shares common stock ........................................ 6,875 6,278
Treasury Stock
23,000 shares common stock ............................................. 23 0
Additional Paid-In Capital ................................................. 523,898 264,684
Deficit Accumulated During Exploration Stage ............................... (268,418) (211,436)
--------- --------
Total Stockholders' Equity ................................................. 262,332 59,526
--------- --------
$ 265,051 $ 62,608
========= ========
</TABLE>
See notes to financial statements.
F-10
<PAGE>
<TABLE>
<CAPTION>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Statements of Operations
Three Months and Six Months Ended October 31, 1999 (Unaudited)
(U.S. Dollars)
Cumulative
Amounts During
Exploration
Three Months Ended Six Months Ended Stage to
October 31, October 31, October 31,
1999 1998 1999 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Expenditures
Exploration costs
(note 3) ............................... $ 40,506 $ 0 $ 42,166 $ 0 $ 178,962
Professional fees ........................ 5,508 1,919 12,919 4,800 31,651
Advertising and
promotion .............................. 1,363 0 1,363 0 31,963
Rent ..................................... 1,347 0 2,355 0 3,230
Office ................................... 987 31 (2,297) 0 3,576
Transfer agent fee ....................... 325 0 476 49 1,127
Travel ................................... 0 0 0 0 17,909
---------- --------- ---------- --------- -----------
Net Loss for Period ........................ $ (50,036) $ (1,950) $ (56,982) $ (4,849) $ (268,418)
========== ========= ========== ========= ===========
Loss Per Share ............................. $ (0.01) $ (0.00) $ (0.01) $ (0.00)
========== ========= ========== ========= ===========
Weighted Average
Number of Shares
Outstanding .............................. 6,422,945 6,354,723
========== =========
</TABLE>
See notes to financial statements.
F-11
<PAGE>
<TABLE>
<CAPTION>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Statements of Stockholders' Equity (Deficiency)
Six Months Ended October 31, 1999 (Unaudited) and Year Ended April 30, 1999
(U.S. Dollars)
Deficit
Accumulated Total
Additional During the Stockholders'
Common Stock Treasury Stock Paid-In Exploration Equity
Shares Par Value Shares Par Value Capital Stage (Deficiency)
------ --------- ------ --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, April 30, 1998 ........ 6,000,000 $ 6,000 0 $ 0 $ 91,834 $ (700) $ 97,134
Common stock issued
For subscriptions ............ 1,000,000 1,000 0 0 606,005 0 607,005
For resource properties ...... 200,000 200 0 0 137,131 0 137,331
Share issue costs .............. 0 0 0 0 (15,586) 0 (15,586)
Net loss ....................... 0 0 0 0 0 (210,736) (210,736)
--------- ---------- --------- ---------- ---------- ---------- ----------
Balance April 30, 1999 ......... 7,200,000 7,200 0 0 819,384 (211,436) 615,148
--------- ---------- --------- ---------- ---------- ---------- ----------
Common stock issued for cash ... 600,000 600 0 0 299,595 0 300,195
Common stock returned to
treasury for cancellation
(note 6) ..................... (922,500) (925) 0 0 (555,154) 0 (556,079)
Treasury stock (note 6) ........ 0 0 (23,000) (23) (14,927) 0 (14,950)
Share issue costs .............. 0 0 0 0 (25,000) 0 (25,000)
Net loss for six months ........ 0 0 0 0 0 (56,982) (56,982)
--------- ---------- --------- ---------- ---------- ---------- ----------
Change for six months .......... (322,500) (325) (23,000) (23) (295,486) (56,982) (352,816)
--------- ---------- --------- ---------- ---------- ---------- ----------
Balance, October 31, 1999 ...... 6,877,500 $ 6,875 (23,000) $ (23) $ 523,898 $ (268,418) $ 262,332
========= ========== ========= ========== ========== ========== ==========
</TABLE>
See notes to financial statements.
F-12
<PAGE>
<TABLE>
<CAPTION>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Statements of Cash Flow
Three Months and Six Months Ended October 31, 1999 (Unaudited)
(U.S. Dollars)
Three Months Six Months
Ended Ended
October 31, October 31,
1999 1999
------------ -----------
(unaudited) (unaudited)
<S> <C> <C>
Operating Activities
Net loss ........................................................ $ (50,038) $ (56,982)
Adjustments to reconcile net
loss to net cash used in operating activities
Exploration costs acquired for shares ....................... 0 0
Change in Operating Assets and Liabilities
Accounts payable ................................................ 61 (363)
--------- ---------
Net Cash Used in Operating Activities ............................. (49,975) (57,345)
--------- ---------
Financing Activities
Issuance of shares for cash ..................................... 300,195 300,195
Common stock returned to treasury ............................... 0 (7,306)
Cancellation of common stock .................................... (8,101) (8,101)
Repayment of loan payable ....................................... (19,916) 0
Share issue costs ............................................... (25,000) (25,000)
Restricted cash ................................................. (122,410) (122,410)
--------- ---------
Net Cash Provided By Financing Activities ......................... 124,768 137,378
--------- ---------
Inflow (Outflow) of Cash .......................................... 74,793 80,033
Cash, Beginning of Period ......................................... 8,389 3,149
--------- ---------
Cash, End of Period ............................................... $ 83,182 $ 83,182
========= =========
</TABLE>
See notes to financial statements.
F-13
<PAGE>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
Six Months Ended October 31, 1999 (Unaudited)
(U.S. Dollars)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
These unaudited financial statements have been prepared in accordance with
generally accepted accounting principles in the United States for interim
financial information. These financial statements are condensed and do not
include all disclosures required for annual financial statements. The
organization and business of the Company, accounting policies followed by
the Company and other information are contained in the notes to the
Company's audited financial statements for the year ended April 30, 1999.
In the opinion of the Company's management, these financial statements
reflect all adjustments necessary to present fairly the Company's financial
position at October 31, 1999 and April 30, 1999 and the consolidated
results of operations and the statement of cash flows for the three months
and six months ended October 31, 1999. The results of operations for the
three months and six months ended October 31, 1999 are not necessarily
indicative of the results to be expected for the entire fiscal year.
2. LOSS PER SHARE
Net loss per share computations are based on the weighted average number of
shares outstanding during the period.
3. PROPERTIES
(a) Hocking Lake Property and Henday Lake Property
By agreement dated April 13, 1998, the Company acquired all assets of
Athabasca Uranium Syndicate (a British Columbia, Canada syndicate)
which consisted of cash and the Hocking Lake Property and Henday Lake
Property. These properties were acquired in 1997 by the syndicate for
$59,549 ($82,270 Cdn.) and are reflected in the financial statements
at the sellers' historical cost as the sellers are the controlling
shareholders.
Consideration given to the members of the syndicate was 6,000,000
common shares of the Company at a par value of $0.001 each (issued)
and a stated value of $97,834 being the cost of the assets acquired.
(b) Saskatchewan Uranium Properties
By agreement dated December 16, 1998, the Company has options to
acquire a 100% interest in 11 mining claims in Saskatchewan, Canada,
upon incurring cumulative expenditures of $338,000 (Cdn. $500,000) by
December 31, 1999 and $1,690,000 (Cdn. $2,500,000) by December 31,
2002. The optioner can earn back a 35% interest by incurring
cumulative expenditures of not less than $2,028,000 (Cdn. $3,000,000)
before December 31, 2006. A royalty is payable at 2% of gross value
(as defined) of production if the optioner does not earn back the 35%
interest.
F-14
<PAGE>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
Six Months Ended October 31, 1999 (Unaudited)
(U.S. Dollars)
- --------------------------------------------------------------------------------
3. PROPERTIES (Continued)
By an agreement dated March 24, 1999, between the Company and Pacific
Amber Resources Ltd., the latter will earn a 50% interest in the
Saskatchewan Uranium Properties and all of the Company's rights,
licences and permits pertinent thereto held for the specific use and
enjoyment thereof by completing the initial program and incurring
$338,000 (Cdn. $500,000) in expenditures on or before December 31,
1999. A total of ($229,013 (Cdn. $338,777) was incurred as at October
31, 1999). In return, the Company issued the optionee 200,000 common
shares at a deemed value of $0.65 each.
All expenditures by the Company on these properties have been expensed
as incurred.
(c) Northern mining property
By agreement dated October 29, 1998 (subsequently extended to December
1, 1999) the Company has an option to acquire 100% interest in a
mining claim in Northern Mining District, Saskatchewan by issuing
50,000 free trading shares and paying $13,375 to the owner of the
property. This is contingent upon completion of certain specified
exploration work. The owner has the right to receive $0.35 per pound
of the product from the claim if the price of the product is $18 per
pound or less and $0.50 per pound where the price of the product is
$18 per pound or more.
This transaction will be accounted for when the shares are issued. The
recorded cost amount will be determined taking into consideration the
seller's historical cost and the fair value of the stock at the time
of issuance.
4. STOCK OPTION PLAN
The Company has adopted an incentive and a nonstatutory stock option plan
effective August 31, 1999 ("the 1999 plan") whereby up to 1,200,000 shares
of common stock may be optioned and sold up to August 31, 2009 or until
sooner terminated. Options granted will have an exercise price of not less
than 100% of fair market value (as defined) per share on the date of grant.
Options are granted for a term of ten years except incentive options
granted to persons owning more than 10% of the combined voting stock of all
classes, in which case the term is five years.
5. WARRANTS
During the three months and six months ended October 31, 1999, the Company
issued 600,000 warrants each exercisable into one share of common stock at
$0.50 per share. The warrants expire in 2 years.
F-15
<PAGE>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
Six Months Ended October 31, 1999 (Unaudited)
(U.S. Dollars)
- --------------------------------------------------------------------------------
6. COMMON STOCK
(a) Subscriptions not paid
In April 1999 the Company received subscriptions and issued a Treasury
Order for the issue of 922,500 common shares. These shares were unpaid
at April 30, 1999 and were held by the Company pending receipt of the
proceeds of issue. As the funds were not received the shares were
returned to treasury for cancellation in June 1999.
(b) Treasury stock
During the six months ended October 31, 1999 the Company purchased
23,000 shares of its capital stock from the original owners who had
acquired the shares prior to April 30, 1999 in a private placement.
The stock was purchased for the same amount as the proceeds from
original issue.
7. RELATED PARTY TRANSACTIONS
The following transactions occurred with parties who are related by way of
minority share ownership in the capital stock of the Company and being
a director of the Company and corporate shareholders.
(a) Acquisition of assets of Athabasca Uranium Syndicate (note 1) in
exchange for 6,000,000 common shares.
(b) Agreement with Pacific Amber Resources Ltd. (note 3(b)) and issuance
of 200,000 common shares under the agreement.
(c) Option to acquire an interest in a mining claim from a minority
shareholder who is an officer and director (note 3(c)).
F-16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> APR-30-1999 APR-30-2000
<PERIOD-START> MAY-01-1998 AUG-01-1999
<PERIOD-END> APR-30-1999 OCT-31-1999
<CASH> 3,149 83,182
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 3,149 83,182
<PP&E> 59,459 181,869<F1>
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 62,608 265,051
<CURRENT-LIABILITIES> (3,082) 2,719
<BONDS> 0 0
0 0
0 0
<COMMON> (6,278) 6,852
<OTHER-SE> (53,248) 255,480
<TOTAL-LIABILITY-AND-EQUITY> (62,508) 265,051
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 210,736 (50,036)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (210,736) (50,036)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (210,736) (50,036)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (210,736) (50,036)
<EPS-BASIC> (0.03) (0.01)
<EPS-DILUTED> (0.03) (0.01)
<FN>
<F1>5-02(B) includes $122,410 restricted cash.
</FN>
</TABLE>
