U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED APRIL 30, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD OF TO .
--------- ---------
Commission File Number: 0-27659
Uranium Power Corporation
--------------------------------------------
(Name of small business issuer in its charter)
Colorado None
------------------------------ -----------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
206-475 Howe Street, Vancouver, B.C. V6C-2B3, CANADA
----------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number: (604) 685-8355
Securities registered under Section 12(b) of the Act: None
----
Securities registered under Section 12(g) of the Act:
Common Stock, $.001 Par Value
-----------------------------
(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
Check here if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year: $0.
As of April 30, 2000, there were 6,927,500 shares of the Registrant's $.001 par
value Common Stock ("Common Stock"), the only outstanding class of voting
securities, outstanding. The aggregate market value of Common Stock held by
non-affiliates of the Registrant, computed by reference to the price at which
the stock was sold, is $578,441.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
Uranium Power Corporation
FORM 10-KSB
This document contains technical and geological terms, which are defined in
the Glossary of Terms, which appears at the end of Part II of this Report.
PART I
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 has begun exploring the Hocking Lake and the Henday Lake
Properties to attempt to identify uranium prospects.
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."
Mr. Billingsley, who was a shareholder of the Company, approached the
Company in May or June 1998 to see if the Company would be interested in
acquiring the Billingsley Claim (the "Property"). Mr. Billingsley had been
informed of the availability of the Property by Mr. M. Swetz. An agreement to
acquire the Property was made in July 1998, with the Company paying Mr.
Billingsley the staking costs, doing the required assessment work, giving him a
net smelter return, or royalty, when the Property is placed into production, and
paying a finder's fee of 50,000 shares of the Company to Mr. Swetz. This
agreement was at arms-length, as Mr. Billingsley did not become a director of
the Company until November 1998. Mr. Swetz was known to Mr. Billingsley through
their involvement in the mining industry. They are not related in fact or by
marriage and are not associated as officers or directors of any company.
2
<PAGE>
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 was required to 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.) must be expended by December 31, 2003, from prospecting and
exploring the six properties. The Company has met the May 31, 2000 requirement.
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.
The map on the following page reflects the location of each of the
Company's properties.
3
<PAGE>
[MAP APPEARS HERE]
4
<PAGE>
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. The
Company issued 200,000 of its shares of common stock to Pacific Amber upon
execution of the Property Option Agreement.
Pacific Amber was entitled to exercise its option because it incurred U.S.
$338,000 ($500,000 Can.) in expenditures by the extended deadline of May 31,
2000, as required to be expended by the Company under the Joint Venture
Agreement. However, on May 11, 2000, Pacific Amber notified the Company that it
was withdrawing from the Property Option Agreement.
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 additional shares of
its common stock. 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
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.
5
<PAGE>
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
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.
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
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.
6
<PAGE>
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. See,
Nuclear Issues Briefing Paper 36, 11/97, a publication of Uranium Information
Centre, Ltd. Not all authorities agree that the stockpiles 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.
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. 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.
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
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 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 by early in this 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.
7
<PAGE>
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) at least
U.S. $338,000 ($500,000 Can.) on exploration of its optioned PDC Properties (as
of May 31, 2000), as required under the Joint Venture Agreement with PDC. The
Company has spent U.S. $274,727 as of April 30, 2000 on exploring the Henday
Lake, Hocking Lake and Hump Lake properties.
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.
----------
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.
8
<PAGE>
Employees.
---------
As of April 30, 2000, the Company had no full-time or part-time employees.
Item 2. Description of Property
Mineral Properties
------------------
The Company's mineral 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.
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 the properties have been
explored by various operators, mainly during the 1970's and 1980's, by
prospecting, geophysics and possibly some diamond drilling. Both properties have
been sitting idle since the late 1980's. These properties are largely
undeveloped.
9
<PAGE>
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.
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.
10
<PAGE>
1. The Crawford Property 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 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 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
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.
11
<PAGE>
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.
Corporate Offices.
-----------------
The Company currently maintains its corporate headquarters at 475 Howe
Street, Suite 206, Vancouver, B.C., V6C-2B3, Canada. The telephone number of the
corporate headquarters is (604) 685-8355. The Company holds this office space
under an oral, month-to-month sublease, for rental payments to the sublessor of
$1,000 Can. per month. The Company may sublease additional office space as
required for operations.
Item 3. Legal Proceedings
The Company is not a party to any legal proceedings required to be reported
in this Report.
Item 4. Submission of Matters to a Vote of Security Holders
None.
12
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock 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.
Holders.
-------
As of April 30, 2000, there were 110 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 during the period from inception (April 3, 1998) through April 30, 2000,
its last fiscal year end. The Company has no plans to pay any dividends,
although it may do so if its financial position changes.
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
approximately $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:
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
13
<PAGE>
Number
Name of Shares
---- ---------
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. 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.
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:
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
14
<PAGE>
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. 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. The Company estimates that the fair market value
of the stock issued to Mr. Swetz was $0.50 per share, for a total value of
$25,000. 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 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the
Consolidated Financial Statements and the Notes to the Financial Statements,
along with the other information contained elsewhere in this Form 10-KSB.
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.
Detailed ground geophysics has been completed on the Hocking Lake and Henday
Lake Properties. A thorough study of all past work in the area has been carried
out and data compiled and correlated with the new surveys as part of the first
phase. Cost of the first phase exploration program for the Hocking Lake, Henday
Lake and Hump Lake Properties was U.S. $274,727. In October 1999 the Company
issued common stock for $300,000.
15
<PAGE>
The Company experienced a net loss of U.S. $319,714, or $0.05 per share for
the year ended April 30, 2000, compared to a net loss of U.S. $210,736, or $0.03
per share for the year ended April 30, 1999. These losses were 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 1998 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. $339,000 ($498,250 Can.) to
delineate target areas and diamond drilling of previously delineated and newly
defined target zones.
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. Pacific Amber was entitled to exercise its option because it
incurred U.S. $338,000 ($500,000 Can.) in expenditures by the extended deadline
of May 31, 2000, as required to be expended by the Company under the Joint
Venture Agreement. On May 11, 2000, Pacific Amber informed the Company that it
was withdrawing from the Property Option Agreement.
Total expenditures on all of the Company's properties for the year ended
April 30, 2000 was U.S. $613,727.
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
conduct diamond drilling on its 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. 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.
16
<PAGE>
The ground geophysical surveys were 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 aerial and ground geophysical surveys indicated the presence of
anomalous zones on the Henday Lake, Hocking Lake and PDC Properties, which
warrant further exploration by diamond drilling.
Forward-Looking Statements.
--------------------------
Discussions and information in this document that 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 7. Financial Statements and Supplementary Data
See Financial Statements and Supplementary Data following the signature
page of this Form 10-KSB.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
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.
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.
17
<PAGE>
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.
18
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The following table sets forth as of April 30, 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 Office(s) Held and Other Business Experience
--------------------------- -------- --- --------------------------------------------
<S> <C> <C> <C>
Thornton J. Donaldson 1998 70 President of the Company since its inception in
President April 1998. Secretary of the Company from April
1998 through 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.
William G. Timmins 1998 62 Secretary of the Company since July 1998.
Secretary Self-employed as President of WGT Consultants,
Ltd. from 1983 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.
19
<PAGE>
<CAPTION>
Name of Director or Officer Director
and Position in the Company Since Age Office(s) Held and Other Business Experience
--------------------------- -------- --- --------------------------------------------
<S> <C> <C> <C>
James R. Billingsley 1998 77 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 47 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.
The Board of Directors currently serves as the Company's Audit Committee.
The Company may appoint a separate committee before the end of the year.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
--------------------------------------------------------------------
Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's directors and certain of its officers to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission and NASDAQ. Executive officers and directors are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that all reports on Forms 3, 4 or 5 required to
be filed were filed on a timely basis for the fiscal year ended April 30, 2000,
except Forms 3 and Forms 5 were filed late for Thornton Donaldson, James
Billingsley, Ed Mowatt, and William Timmins.
Item 10. 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, 2000, its last fiscal year end.
Stock Option Plan.
The Board of Directors of the Company has cancelled the 1999 Stock Option
Plan, and adopted instead the 2000 Stock Option Plan, effective June 15, 2000.
The stock option plan was adopted in order to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to the Company's employees and to promote the success of
20
<PAGE>
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 of this Report, no options
have been granted under the stock option plan.
Agreements with Management.
--------------------------
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.
Option/Stock Appreciation Rights ("SAR") Grants during the most recently
completed Fiscal Year
--------------------------------------------------------------------------------
No stock options have granted by the Company during the previous fiscal
year to the Named Executive Officers of the Company
Aggregated Option/SAR Exercised in Last Financial Year and Fiscal Year-End
Option/SAR Values.
--------------------------------------------------------------------------------
None.
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.
Benefit Plans.
-------------
The Company currently has no retirement, pension, profit-sharing or
insurance or medical reimbursement plans covering its officers and directors.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of April 30, 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 President and 397,000(1) 5.73%
206 - 475 Howe Street Director
Vancouver, B.C. V6C 2B3
21
<PAGE>
<CAPTION>
Amount and Percent of
Name of Nature of Beneficial Common
Beneficial Owner Position Ownership Stock
---------------- -------- -------------------- ----------
<S> <C> <C> <C>
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>
------------------
(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 - 4.
There are no current arrangements or agreements pledging securities that
could in the future result in a change of control of the Company.
Item 12. Certain Relationships and Related Transactions
James R. Billingsley, a director of the Company, is the registered owner of
the entire Billingsley Claim, and thus, 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
22
<PAGE>
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.
PART IV
Item 13. Financial Statements, Schedules and Exhibits and Reports on Form 8-K
(a) Financial Statements, Schedules and Exhibits:
(1) Financial Statements - Fiscal years ended April 30, 2000 and 1999
(2) Schedules
(3) Exhibits
(b) Reports on Form 8-K No reports on Form 8-K were filed during the last
quarter of the fiscal year covered by this report.
(c) Exhibits
3.1 Articles of Incorporation. (1)
3.2 Bylaws. (1)
4.1 Stock Option Plan. (1)
10.1 Letter Agreement with J.R. Billingsley dated July 29, 1998. (1)
10.2 Extensions to Letter Agreement with J.R. Billingsley. (1)
10.3 Joint Venture Agreement with Phelps Dodge Corporation of Canada,
Ltd., dated December 16, 1998. (1)
10.4 Property Option Agreement with Pacific Amber Resources Ltd. dated
March 24, 1999. (1)
23
<PAGE>
10.5.Amendment to Property Option Agreement with Pacific Amber
Resources Ltd. dated October 7, 1999. (1)
10.6 Asset Purchase Agreement from Athabasca dated April 13, 1998. (2)
10.7 Letter from Phelps Dodge Corporation extending deadline to May
31, 2000. (2)
10.8 Letter from Pacific Amber Terminating its Option. Filed Herewith.
27.1 Financial Data Schedule. Filed herewith.
------------------
(1) Incorporated by reference from the Company's Form 10-SB, filed October 14,
1999, File # 0-27659.
(2) Incorporated by reference from the Company's Form 10-SB/A No. 1, filed
January 20, 2000, File # 0-27659.
(d) Schedules. Schedules are omitted as the information is not required or not
applicable, or the required information is shown in the financial statements or
notes to those statements.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-KSB to be
signed on its behalf by the undersigned, thereunto duly authorized.
URANIUM POWER CORPORATION
Date: July 25, 2000 By: /s/ Thornton J. Donaldson
------------------------------------
Thornton J. Donaldson, President and
Director
Date: July 25, 2000 By: /s/ William G. Timmins
-------------------------------------
William G. Timmins, Secretary and
Director
25
<PAGE>
URANIUM POWER CORPORATION
Financial Statements
April 30, 2000 and 1999
(U.S. Dollars)
INDEX Page
----- ----
Report of Independent Chartered Accountants F-1
Financial Statements
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-10
26
<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, 2000 and 1999 and the related
statements of operations, stockholders' equity and statements of cash flows for
the years ended April 30, 2000 and 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, 2000 and 1999 in
conformity with generally accepted accounting principles in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 2 to the
financial statements, the Company has no revenues and limited capital which
together raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to this matter are also described in note
2. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Chartered Accountants
Chartered Accountants
Vancouver, Canada
May 26, 2000
F-1
<PAGE>
<TABLE>
<CAPTION>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Balance Sheets
April 30
(U.S. Dollars)
--------------------------------------------------------------------------------------------------------------
2000 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current
Cash ................................................................... $ 5,706 $ 3,149
Accounts receivable .................................................... 4,866 0
--------- ---------
10,572 3,149
Properties (note 5) ...................................................... 93,600 59,459
--------- ---------
Total Assets ............................................................. $ 104,172 $ 62,608
========= =========
Liabilities
Accounts Payable and Accrued Liabilities ................................. $ 79,572 $ 3,082
--------- ---------
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
6,927,500 Common stock (1999 - 6,277,500) ........................... 6,928 6,278
Treasury Stock
23,000 Common stock (1999 - Nil) ..................................... (23) 0
Additional Paid-In Capital ............................................... 548,845 264,684
Deficit Accumulated During Exploration Stage ............................. (531,150) (211,436)
--------- ---------
Total Stockholders' Equity ............................................... 24,600 59,526
--------- ---------
Total Liabilities and Stockholders' Equity ............................... $ 104,172 $ 62,608
========= =========
</TABLE>
F-2
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Statements of Operations
(U.S. Dollars)
-----------------------------------------------------------------------------------------------------------------------
From
Inception on
April 3, 1998
April 3 to Through
Year Ended April 30, April 30, April 30,
2000 1999 1998 2000
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Expenditures
Exploration costs (note 3) ................ $ 274,727 $ 136,796 $ 0 $ 411,523
Professional fees ......................... 34,256 18,732 0 52,988
Rent ...................................... 6,513 875 0 7,388
Advertising and promotion ................. 5,237 29,900 0 35,137
Transfer agent fee ........................ 1,532 651 0 2,183
Travel .................................... 236 17,909 0 18,145
Incorporation cost written off ............ 0 0 700 700
Office .................................... (2,787) 5,873 0 3,086
----------- ----------- ----------- -----------
Net Loss for Year ........................... $ (319,714) $ (210,736) $ (700) $ (531,150)
----------- ----------- ----------- -----------
Net Loss Per Share .......................... $ (0.05) $ (0.03) $ (0.00)
----------- ----------- -----------
Weighted Average Number of
Shares Outstanding ........................ 6,467,149 6,026,541 279,542
----------- ----------- -----------
</TABLE>
F-3
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Statements of Stockholders' Equity
Year Ended April 30, 2000
(U.S. Dollars)
----------------------------------------------------------------------------------------------------------------------------------
Deficit
Accumulated
Additional During the Total
Common Stock Treasury Stock Paid-In Exploration Stockholders'
Shares Par Value Shares Par Value Capital Stage Equity
----------------------------------------------------------------------------------------------------------------------------------
<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)
Common stock returned to
treasury for cancellation
(note 8(b)) .................. (922,500) (922) 0 0 (554,700) 0 (555,622)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance April 30, 1999 ......... 6,277,500 6,278 0 0 264,684 (211,436) 59,526
Common stock issued for cash ... 600,000 600 0 0 299,400 0 300,000
Common stock issued for
finder's fee ................. 50,000 50 0 0 24,950 0 25,000
Treasury stock (note 8(b)) ..... 0 0 (23,000) (23) (15,189) 0 (15,212)
Share issue costs .............. 0 0 0 0 (25,000) 0 (25,000)
Net loss for year ended
April 30, 2000 ............... 0 0 0 0 0 (319,714) (319,714)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, April 30, 2000 ........ 6,927,500 $ 6,928 (23,000) $ (23) $ 548,845 $ (531,150) $ 24,600
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
F-4
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
URANIUM POWER CORPORATION
(Exploration Stage Company)
Statements of Cash Flows
(U.S. Dollars)
---------------------------------------------------------------------------------------------------------------------------
From
Inception on
April 3, 1998
April 3, 1998 Through
Year Ended April 30, to April 30, April 30,
2000 1999 1998 2000
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Activities
Net loss ............................................. $(319,714) $(210,736) $ (700) $(531,150)
Adjustments to reconcile net
loss to net cash used in operating activities
Exploration costs acquired for shares ............ 0 137,268 0 137,268
Changes In Non-Cash Working Capital
Accounts receivable .................................. (4,866) 0 0 (4,866)
Accounts payable ..................................... 76,490 3,082 0 79,572
--------- --------- --------- ---------
Net Cash Used By Operating Activities .................. (248,090) (70,386) (700) (319,176)
--------- --------- --------- ---------
Cash Flows Used By Investing Activity
Property acquisition ................................. (9,141) 0 0 (9,141)
--------- --------- --------- ---------
Cash Flows From Financing Activities
Issuance of shares for cash .......................... 300,000 51,446 38,375 389,821
Common stock returned to treasury .................... (15,212) 0 0 (15,212)
Share issue costs .................................... (25,000) (15,586) 0 (40,586)
--------- --------- --------- ---------
259,788 35,860 38,375 334,023
--------- --------- --------- ---------
Inflow (Outflow) of Cash ............................... 2,557 (34,526) 37,675 5,706
Cash, Beginning of Period .............................. 3,149 37,675 0 0
--------- --------- --------- ---------
Cash, End of Period .................................... $ 5,706 $ 3,149 $ 37,675 $ 5,706
--------- --------- --------- ---------
Non-Cash Financing Activities
Common stock issued for
resource properties ................................ $ 0 $ 137,331 $ 97,834 $ 235,165
Common stock issued for
finder's fee ....................................... 25,000 0 0 25,000
--------- --------- --------- ---------
</TABLE>
F-5
See notes to financial statements.
<PAGE>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended April 30, 2000 and 1999 and Period From April 3, 1998 (Inception)
Through April 30, 2000
(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 Company is in the exploration stage as defined in
statement No. 7 of the Financial Accounting Standards Board. The principal
business activity is the exploration and development of natural resource
properties principally in Canada.
2. GOING CONCERN
These financial statements have been prepared in accordance with generally
accepted accounting principles on a going-concern basis. This presumes
funds will be available to finance on-going development, operations and
capital expenditures and the realization of assets and the payment of
liabilities in the normal course of operations for the foreseeable future.
Management intends to raise additional capital through share issuances to
finance operations.
The Company has minimal capital resources presently available to meet
obligations which normally can be expected to be incurred by similar
companies and has an accumulated deficit of $531,150. These factors raise
substantial doubt about the Company's ability to continue as a
going-concern and is dependent on its ability to obtain and maintain an
appropriate level of financing on a timely basis and to achieve sufficient
cash flows to cover obligations and expenses. The outcome of these matters
cannot be predicted. These financial statements do not give effect to any
adjustments to the amounts and classification of assets and liabilities
which might be necessary should the Company be unable to continue as a
going concern.
3. REALIZATION OF ASSETS
The investment in options on resource properties comprises a significant
portion of the Company's assets. Recovery of the carrying value of the
investment in resource properties is dependent upon the existence of
economically recoverable reserves, the ability of the Company to obtain
necessary financing to complete the exploration and development, the
attainment of future profitable production or the disposition of the
properties for proceeds in excess of their carrying value.
4. SIGNIFICANT ACCOUNTING POLICIES
(a) Exploration stage expenditures
The Company expenses all expenditures for exploration of properties as
they are incurred where the properties do not have proven mineral
reserves.
F-6
<PAGE>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended April 30, 2000 and 1999 and Period From April 3, 1998 (Inception)
Through April 30, 2000
(U.S. Dollars)
--------------------------------------------------------------------------------
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(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. Diluted loss per share has
not been presented separately as the outstanding warrants are
anti-dilutive for each of the periods presented.
(e) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates and would impact future results of
operations and cash flows.
(f) 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.
F-7
<PAGE>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended April 30, 2000 and 1999 and Period From April 3, 1998 (Inception)
Through April 30, 2000
(U.S. Dollars)
--------------------------------------------------------------------------------
5. 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 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 approximately $338,000 (Cdn.
$500,000) by May 31, 2000 as amended and an additional approximate
$1,712,000 (Cdn. $2,500,000) by December 31, 2002. The optioner can
earn back a 35% interest by incurring cumulative expenditures of not
less than approximately $2,054,000 (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"), 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, as amended. A total of approximately $339,000 (Cdn.
$498,250) was incurred as of April 30, 2000. 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-8
<PAGE>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended April 30, 2000 and 1999 and Period From April 3, 1998 (Inception)
Through April 30, 2000
(U.S. Dollars)
--------------------------------------------------------------------------------
5. PROPERTIES (Continued)
(c) Northern mining property
By agreement dated July 29, 1998 (subsequently extended to July 1,
1999) the Company acquired a 100% interest in a mining claim in
Northern Mining District, Saskatchewan by issuing 50,000 free trading
shares as a finder's fee to an unrelated party and paying $13,375 Cdn.
to the owner of the property. 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.
The transaction was accounted for valuing the shares issued at $25,000
plus the seller's historical cost of $9,141 ($13,375 Cdn.).
6. 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. Incentive 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.
7. WARRANTS
During the year ended April 30, 2000, the Company issued 600,000 warrants
each exercisable into one share of common stock at $0.50 per share. The
warrants expire October 7, 2001.
8. 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 year ended April 30, 2000 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.
F-9
<PAGE>
URANIUM POWER CORPORATION
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended April 30, 2000 and 1999 and Period From April 3, 1998 (Inception)
Through April 30, 2000
(U.S. Dollars)
--------------------------------------------------------------------------------
9. RELATED PARTY TRANSACTIONS
The following non-arm's length transactions occurred with parties who are
related by way of minority shares 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 5(a)) in
exchange for 6,000,000 common shares.
(b) Agreement with Pacific Amber Resources Ltd. (note 5(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 5(c)).
10. INCOME TAXES
A deferred tax asset stemming from the Company's net operating loss carry
forward, has been reduced by a valuation account to zero due to
uncertainties regarding the utilization of the deferred assets. At April
30, 2000, the Company has available a net operating loss carry forward of
approximately $175,000 which it may use to offset future United States
federal taxable income. The net operating loss carry forward if not
utilized, will begin to expire in 2017.
F-10
<PAGE>
EXHIBIT INDEX
3.1 Articles of Incorporation. (1)
3.2 Bylaws. (1)
4.1 Stock Option Plan. (1)
10.1 Letter Agreement with J.R. Billingsley dated July 29, 1998. (1)
10.2 Extensions to Letter Agreement with J.R. Billingsley. (1)
10.3 Joint Venture Agreement with Phelps Dodge Corporation of Canada, Ltd.,
dated December 16, 1998. (1)
10.4 Property Option Agreement with Pacific Amber Resources Ltd. dated
March 24, 1999. (1)
10.5. Amendment to Property Option Agreement with Pacific Amber Resources Ltd.
dated October 7, 1999. (1)
10.6 Asset Purchase Agreement from Athabasca dated April 13, 1998. (2)
10.7 Letter from Phelps Dodge Corporation extending deadline to May 31,
2000. (2)
10.8 Letter from Pacific Amber Terminating its Option. Filed Herewith.
27.1 Financial Data Schedule. Filed herewith.
---------------
(1) Incorporated by reference from the Company's Form 10-SB, filed October 14,
1999, File # 0-27659.
(2) Incorporated by reference from the Company's Form 10-SB/A No. 1, filed
January 20, 2000, File # 0-27659.
