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Previous: PNC MORTGAGE SEC CORP MORT PASS THR CERT SER 2000-1, 8-K, 2000-10-02 |
Next: UMB SCOUT FUNDS, 40-17F2, 2000-10-02 |
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As filed with the Securities and Exchange Commission on October 2, 2000. |
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Registration No. 000-30570 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-SB/A
POST-EFFECTIVE AMENDMENT 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
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Phoenix Metals U.S.A. II, Inc. |
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Nevada |
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95-4571729 |
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801 South Rampart Boulevard, Suite 178 |
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Issuer's telephone number, |
(702) 947-2178 |
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Securities to be registered under Section 12(b) of the Act: |
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Title of each class |
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Name of each exchange on which |
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Securities to be registered under Section 12(g) of the Act: |
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Common Stock, Par Value $.0001 |
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(Title of class) |
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(Title of class) |
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This Post-Effective Amendment No. 2 (this "Amendment") is being filed for the purpose of amending the registration statement on Form 10-SB/A of Phoenix Metals U.S.A. II, Inc. filed with the Securities and Exchange Commission on May 24, 2000 effective on July 24, 2000. Specifically, this Amendment is being filed to amend Part II, Item 4 - Recent Sales of Unregistered Securities and Part F/S. All other items of the registration statement on Form 10-SB/A remain unchanged.
Item 4. Recent Sales of Unregistered Securities
In the past three years, the Company has issued unregistered securities in the following six instances:
(a) On January 3, 1998, the Company issued 5,000,000 shares of common stock to Ms. Flaherty, Chairperson of the Board, Secretary and Treasurer of the Company, in exchange for mineral and patent rights and mining claims. On the next trading day following the date of issuance, the price per share of the Company's common stock opened, reached a high and closed on the OTC BB at $1.375.
(b) On January 3, 1998, the Company issued 5,000,000 shares of common stock to Mr. Flaherty, a director and President of the Company, in exchange for patent rights and mining claims. On the next trading day following the date of issuance, the price per share of the Company's common stock opened, reached a high and closed on the OTC BB at $1.375.
(c) On or around November 12, 1999, the Company issued an aggregate of 55,000,000 shares of common stock to Robert F. & Diana L. Flaherty, Inc., in exchange for certain rights to existing third-party contracts. In February 2000, the Company rescinded the transaction and the issuance. Subsequently, 55,000,000 shares of common stock were transferred by the Flahertys to the Company and cancelled. On the date of issuance, the price per share of the Company's common stock opened, reached a high and closed on the OTC BB at $0.75.
(d) On November 15, 1999, the Company issued 3,000,000 shares of common stock to Robert F. & Diana L. Flaherty, Inc. in exchange for cash advances, plus accrued interest, to the Company totaling $3,262,891. While the Company was originally obligated to repay the advances in cash, pursuant to an amendment to the Advance Agreement, the Company was permitted to settle the debt and accrued interest at its option for equity securities of the Company. Accordingly, these obligations were settled for restricted shares of common stock with a 16% discount from the following trading day's closing price. On the next trading day following the date of issuance, the price per share of the Company's common stock opened on the OTC BB at $0.812, reached a high of $1.062 and closed at $1.031.
(e) On August 25, 1999, the Company issued 300,000 shares of common stock to Michael Gardiner for the aggregate consideration of $90,000. The shares were sold at a price of $0.30 per share. This was a negotiated transaction between the Company and Mr. Gardiner. On the date of issuance, the price per share of the Company's common stock opened, reached a high and closed on the OTC BB at $0.29.
(f) On January 24, 2000, the Company issued 2,000,000 shares of common stock to Arthur Porter to secure a letter of credit in the amount of $1,000,000. In March 2000, the Company rescinded the transaction and the issuance as it was made in error since it was intended to be a private transaction between the Flahertys and Mr. Porter not involving the Company in any manner whatsoever. The stock to secure the letter of credit was to come from the holdings of Robert F. & Diana L. Flaherty, Inc. and not an issuance by the Company. Subsequently, Mr. Porter returned the stock to the Company
- 1 -
for cancellation. On the date of issuance, the price per share of the Company's common stock opened, reached a high and closed on the OTC BB at $0.656.
All funds received by the Company from the sales of the Company's common stock were used for working capital and overhead expenses including, without limitation, rent for the Company's office space, utilities, payroll and research and development activities. No underwriters, brokers or dealers were used in connection with the above sales.
All of the above sales of the Company's common stock were exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2).
- 2 -
INDEPENDENT AUDITORS' REPORT
Board of Directors
Phoenix Metals U.S.A. II, Inc.
Las Vegas, Nevada
We have audited the balance sheet of Phoenix Metals U.S.A. II, Inc. (a development stage enterprise) as of June 30, 1999, and the related statements of development stage operations, stockholders' equity (deficiency) and cash flows for each of the two years and for the cumulative period from July 1, 1993, then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Phoenix Metals U.S.A. II, Inc. as of June 30, 1999, and the results of its development stage operations and its cash flows for each of the two years and for the cumulative period from July 1, 1993, then ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 5, the Company's ability to commence operations is dependent upon the successful completion of its research and development and continued advances from stockholders or other financing or capital investments. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. Management's plans in regard to this matter are also described in Note 5. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Piercy, Bowler, Taylor & Kern
/s/ Piercy, Bowler, Taylor & Kern
November 19, 1999
Las Vegas, Nevada
- 3 -
PHOENIX METALS U.S.A. II, INC.
(A Development Stage Enterprise)
BALANCE SHEETS
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June 30, |
March 31, |
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ASSETS |
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Current assets: |
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Cash |
$ 89,629 |
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Inventories |
105,106 |
$ 101,053 |
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Prepaid expenses |
47,435 |
9,209 |
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242,170 |
110,262 |
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Property and equipment, net of accumulated depreciation |
1,063,725 |
1,116,946 |
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Mining claims and mineral ore rights |
1,712,144 |
1,712,144 |
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Other |
21,857 |
6,805 |
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$ 3,039,896 |
$ 2,946,157 |
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LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY) |
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Current liabilities: |
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Current portion of long-term debt |
$ 16,364 |
$ 18,077 |
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Notes payable |
32,368 |
25,544 |
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Accounts payable |
38,547 |
22,518 |
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Accrued expenses |
16,215 |
7,024 |
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103,494 |
73,163 |
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Long-term debt, net of current portion |
55,789 |
60,205 |
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Advances from stockholders, including accrued interest |
3,263,191 |
682,449 |
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Stockholder's equity (deficiency): |
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Preferred stock, (preferences to be determined by the Board |
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Common stock, $0.0001 par value, 300,000,000 and |
17,945 |
18,275 |
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Additional paid-in capital |
3,008,057 |
6,435,918 |
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Deficit accumulated in the development stage |
(3,407,080) |
(4,323,853) |
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Less stock subscription receivable |
(1,500) |
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(382,578) |
2,130,340 |
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$ 3,039,896 |
$ 2,946,157 |
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See Accompanying Notes to Financial Statements
- 4 -
PHOENIX METALS U.S.A. II, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
For the Years Ended June 30, 1999 and 1998,
the Nine-Month Periods Ended March 31, 2000 and 1999 and
the Cumulative Periods from July 1, 1993, through June 30, 1999 and March 31, 2000
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Unaudited |
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Cumulative |
Nine-month periods |
Cumulative |
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Year ended June 30, |
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1999 |
1998 |
2000 |
1999 |
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Research and development |
$ 617,169 |
$ 368,093 |
$ 1,757,660 |
$ 303,983 |
$ 469,024 |
$ 2,061,643 |
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Depreciation |
64,992 |
42,451 |
118,708 |
63,637 |
43,328 |
182,345 |
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General and administrative |
296,716 |
246,909 |
1,150,497 |
466,614 |
193,712 |
1,617,111 |
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978,877 |
657,453 |
3,026,865 |
834,234 |
706,064 |
3,861,099 |
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Other expense: |
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Interest |
143,165 |
78,247 |
380,215 |
82,539 |
118,026 |
462,754 |
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Net loss |
$ 1,122,042 |
$ 735,700 |
$ 3,407,080 |
$ 916,773 |
$ 824,090 |
$ 4,323,853 |
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Net loss per common share |
$ 0.006 |
$ 0.004 |
$ 0.024 |
$ 0.005 |
$ 0.005 |
$ 0.030 |
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Weighted average number of common shares outstanding |
179,446,168 |
174,446,168 |
141,257,432 |
181,037,473 |
179,446,168 |
145,677,437 |
See Accompanying Notes to Financial Statements
- 5 -
PHOENIX METALS U.S.A. II, INC.
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIENCY)
For the Years Ended June 30, 1999 and 1998,
the Nine-Month Period Ended March 31, 2000 (Unaudited),
and the Cumulative Period from July 1, 1993 through June 30, 1997
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Common Stock |
Additional |
Deficit |
Stock |
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Shares |
Par value |
capital |
stage |
receivable |
Total |
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From July 1, 1993, through June 30, 1997 |
962,288 |
$ 96 |
$ 547,717 |
$ (999,608) |
$ (451,795) |
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Stock issuances in connection with change in control and restructuring |
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Issuance of common stock to new principal stockholders in |
24,532,712 |
2,453 |
1,772,547 |
1,775,000 |
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Quasi-reorganization |
(999,608) |
999,608 |
- |
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Other issuances of common stock to principal stockholders in |
137,754,232 |
13,776 |
(13,776) |
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Issuances of common stock to former controlling stockholder in |
200,000 |
20 |
484,827 |
484,847 |
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Stock sales to unrelated parties for cash and subscriptions receivable |
5,996,936 |
600 |
617,350 |
(11,700) |
606,250 |
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Contributed services, officer/shareholders |
400,000 |
400,000 |
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Net loss |
(1,549,338) |
(1,549,338) |
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Stock subscription payments received |
-------------- |
----------------- |
----------------- |
----------------- |
5,400 |
5,400 |
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Balances, June 30, 1997 |
169,446,168 |
16,945 |
2,809,057 |
(1,549,338) |
(6,300) |
1,270,364 |
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Issuances of common stock to principal stockholders for patents and |
10,000,000 |
1,000 |
(1,000) |
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Contributed services, officer/shareholders |
100,000 |
100,000 |
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Net loss |
(735,700) |
(735,700) |
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Stock subscription payments received |
-------------- |
----------------- |
----------------- |
----------------- |
2,400 |
2,400 |
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Balances, June 30, 1998 |
179,446,168 |
17,945 |
2,908,057 |
(2,285,038) |
(3,900) |
637,064 |
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Contributed services, officer/shareholders |
100,000 |
100,000 |
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Net loss |
(1,122,042) |
(1,122,042) |
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Stock subscription payments received |
-------------- |
----------------- |
----------------- |
----------------- |
2,400 |
2,400 |
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Balances, June 30, 1999 |
179,446,168 |
17,945 |
3,008,057 |
(3,407,080) |
(1,500) |
(382,578) |
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Issuances of common stock in payment of stockholders' advances |
3,000,000 |
300 |
3,262,891 |
3,263,191 |
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Stock sale to unrelated party for subscription receivable |
300,000 |
30 |
89,970 |
(90,000) |
- |
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Contributed services, officer/shareholders |
75,000 |
75,000 |
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Net loss |
(916,773) |
(916,773) |
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Stock subscription payments received |
------------- |
----------------- |
----------------- |
----------------- |
91,500 |
91,500 |
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Balances, March 31, 2000 |
182,746,168 |
$ 18,275 |
$ 6,435,918 |
$ (4,323,853) |
$ - |
$ 2,130,340 |
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See Accompanying Notes to Financial Statements
- 6 -
PHOENIX METALS U.S.A. II, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
For the Years Ended June 30, 1999 and 1998,
the Nine-Month Periods Ended March 31, 2000 and 1999, and
the Cumulative Periods from July 1, 1993, through June 30, 1999 and March 31, 2000 (Unaudited)
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Unaudited |
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Cumulative |
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July 1, 1993 |
Cumulative |
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through |
Nine-month periods |
July 1, 1993, |
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Year ended June 30, |
June 30, |
ended March 31, |
through |
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1999 |
1998 |
1999 |
2000 |
1999 |
March 31, 2000 |
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Operating activities: |
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Net cash used in operating activities |
$ (910,120) |
$ (561,325) |
$ (2,508,399) |
$ (663,486) |
$ (655,694) |
$ (3,171,885) |
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Investing activities: |
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Purchase of property and equipment |
(343,164) |
(112,145) |
(1,093,581) |
(116,858) |
(270,813) |
(1,210,439) |
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Financing activities: |
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Advances from stockholders |
1,281,982 |
730,447 |
2,961,993 |
599,910 |
949,421 |
3,561,903 |
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Proceeds from notes payable |
34,105 |
5,116 |
39,221 |
39,221 |
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Repayments of notes payable |
(5,757) |
(5,801) |
(11,558) |
(6,824) |
(4,020) |
(18,382) |
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Proceeds from long-term debt |
57,899 |
202,074 |
20,000 |
17,899 |
222,074 |
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Repayments of long-term debt |
(45,663) |
(49,683) |
(116,571) |
(13,871) |
(37,989) |
(130,442) |
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Stock subscription payments received |
2,400 |
2,400 |
10,200 |
91,500 |
1,400 |
101,700 |
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Cash proceeds from sale of common stock |
------------------ |
------------------ |
606,250 |
------------------ |
----------------- |
606,250 |
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Net cash provided by financing activities |
1,324,966 |
682,479 |
3,691,609 |
690,715 |
926,711 |
4,382,324 |
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Net increase (decrease) in cash |
71,682 |
9,009 |
89,629 |
(89,629) |
204 |
-- |
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Cash, beginning |
17,947 |
8,938 |
-- |
89,629 |
17,947 |
-- |
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Cash, ending |
$ 89,629 |
$ 17,947 |
$ 89,629 |
$ -- |
$ 18,151 |
$ -- |
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See Accompanying Notes to Financial Statements
- 7 -
PHOENIX METALS U.S.A. II, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
Information for the periods ended March 31, 2000 and 1999, is unaudited
Note 1. Nature of activities and history:
Phoenix Metals U.S.A. II, Inc. (the Company) is engaged in research and development activities in connection with proprietary processes, fabrication of equipment, in securing all operating permits, and obtaining licenses for patents and technology relating to concentrating, smelting and separating complex refractory ores into pure refined precious and noble metals. In that regard, the Company has operated a pilot and testing facility on five acres in Nevada to mill, smelt and separate gold, silver, platinum, palladium, rhodium, osmium and iridium commercially. In this phase, the Company has developed employee and management training manuals and related procedures, formulas for processing head ore to pure metals, and engineering, fabricating and putting into operation environmentally compatible ore processing systems and facilities. The amount of ore that has been removed from the Company's ore reserves to date is insignificant and without measurable cost.
Since the Company's activities to date have involved principally the development or improvement of processes and techniques to be employed in extraction, rather than mining activities, the costs thereof are accounted for and expensed as provided for in Financial Accounting Standards Board (FASB) Statement No. 2, Research and Development Costs. In addition, pursuant to the American Institute of Certified Public Accountants' Statement of Position 98-5, Start-up Costs, the costs of all other start-up activities are expensed as incurred.
The Company is not in the exploration stage and, except to the extent described above, it is not and has not engaged, nor has it incurred any costs, in "exploration" and "development" activities, as those terms are commonly used in the mining industry (for example for prospecting, geophysical analysis, drilling or removing overburden). Accordingly, the accompanying financial statements include no capitalized costs or related amortization of such costs that might otherwise be amortizable over estimated production. Only the costs of acquiring or building physical facilities, equipment and mineral ore reserves and mining rights have been capitalized (Note 2).
The Company commenced its development stage activities during the year ended June 30, 1994, as a result of a series of transactions early in that year involving the acquisition of a controlling interest in the Company (then engaged unsuccessfully in an unrelated business and known as Imagenét Systems, Inc.) and the related transfer to the Company by its present principal officer/stockholders*of rights to certain mineral ore reserves and land use and mining rights (Note 7) in exchange for common stock. In connection with the change in control and related transactions, the Company discontinued its unrelated business and adopted "quasi-reoganization" accounting as of July 1, 1993, eliminating its then accumulated deficit of approximately $1,000,000. No revaluations of assets or liabilities were deemed necessary at the time.
__________________________
*All references to the principal officer/stockholder are intended to encompass all other entities controlled by these individuals.
- 8 -
PHOENIX METALS U.S.A. II, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (continued)
Information for the periods ended March 31, 2000 and 1999, is unaudited
Note 2. Summary of significant accounting policies:
Inventories
In-process inventories are stated at the lower of cost (Note 7) or net realizable value.
Property and Equipment
Property and equipment (Note 3) are stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets.
Use of Estimates
Timely preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures, some of which may require revision in future periods
Interim Period Financial Information
The interim period financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of results of development stage operations and cash flows for the interim periods. The results of development stage operations for the nine-month periods ended March 31, 2000 and 1999, are not necessarily indicative of the results to be expected for a full year.
Note 3. Property and equipment:
Property and equipment at June 30, 1999, and their estimated useful lives, consisted of:
|
|
Cost |
Lives |
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Land use and mining rights (Note 7) |
$583,380 |
|
Note 4. Long-term debt:
Long-term debt at June 30, 1999, consisted of:
- 9 -
PHOENIX METALS U.S.A. II, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (continued)
Information for the periods ended March 31, 2000 and 1999, is unaudited
|
Notes payable at 11.5-8.5%, collateralized by vehicles, payable at $1,200 monthly, due May 2000 to June 2003 |
$33,126 |
|
Note payable at 18.9%, collateralized by equipment, payable at $1,019 monthly, due April 2004 |
|
|
|
72,153 |
At June 30, 1999, maturities of long-term debt were:
|
Year ending June 30, |
|
|
2000 |
$16,364 |
|
2001 |
15,099 |
|
2002 |
17,285 |
|
2003 |
14,009 |
|
2004 |
9,396 |
|
|
$72,153 |
Note 5. Commitments and contingencies:
Operating Leases
The Company has noncancelable operating lease agreements for administrative offices, vehicles and telephone equipment. Rental expense is included in general and administrative expenses and is not material in all periods presented
The Company's minimum future lease payments under noncancelable operating leases are as follows as of June 30, 1999:
|
Year ending June 30, |
|
|
2000 |
$ 99,289 |
|
2001 |
101,226 |
|
2002 |
85,531 |
|
2003 |
86,012 |
|
2004 |
65,411 |
Legal Proceedings
On February 24, 1999, a default judgment was entered against the Company in the amount of $597,913. The judgment stems from a disputed transaction in the period prior to July 1, 1997. On November 29, 1999, the court entered an order increasing judgment against the Company for additional interest to $609,912. On April 24, 2000, the court entered an order granting the Company's motion for an interlocutory appeal of the default judgment. The Company plans to continue to litigate the matter fully, and, based upon the opinion of counsel, management expects the judgment will be reversed. However, since the ultimate outcome of this matter cannot be determined at this time, no provision has been made in the financial statements in its regard.
- 10 -
PHOENIX METALS U.S.A. II, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (continued)
Information for the periods ended March 31, 2000 and 1999, is unaudited
The Company is also engaged in a dispute with the United States Department of Interior, Bureau of Land Management (BLM) over its rights of occupancy with respect to its millsite on certain public lands under the Mining Act of 1872. A hearing has been set for May 23-24, 2000, and the Company intends to vigorously defend its rights in the matter. Management cannot determine at this time the ultimate effect of this dispute on its future operations or financial condition, if any.
The Company is also party to other legal proceedings, most of which relate to routine matters incidental to its business. Management does not believe that the outcome of such proceedings will have a material adverse effect on the Company's financial position or future operations.
Environmental Obligations
The Company is obligated under federal and state legislation to perform environmental reclamation at its refinery and testing facility. Management's estimate of the costs of meeting such obligations, as approved by the state, is not material
Going Concern
The Company has accumulated a development stage deficit of $2,807,080 as of June 30, and $3,648,853 as of March 31, 2000. To protect its rights to occupy the property pending resolution of its dispute with the BLM, the Company expects to conduct only a modest level of increased processing over the next 12 months. In addition, regardless of the outcome of this matter, even if it is ultimately required or decides to move its equipment and relocate its millsite processing facilities to private land, the Company plans relatively modest capital expenditures during that time. Moreover, it does not plan to conduct significant further product research and development to transition into commercial application during the next 12 months (because it believes it is unnecessary) unless required to comply with the terms of a specific customer contract that may arise. In such event, the Company would expect to fund such activity with customer prepayments to be required under the contract. Accordingly, in all other respects the Company plans to continue to adequately fund its limited operations as may be necessary, with additional advances from its principal stockholders, who are both able and committed to provide such funding.
Note 6. Income taxes:
Because the Company has not generated any revenues or otherwise commenced operations, and has engaged in extensive development stage activities over a period of almost seven years, it has incurred substantial losses for income tax reporting purposes, the realization of benefits of which cannot be viewed at this time as more likely than not and, accordingly, have been effectively offset by a valuation allowance.
The significant components of the Company's deferred tax assets and liabilities are as follows:
- 11 -
PHOENIX METALS U.S.A. II, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (continued)
Information for the periods ended March 31, 2000 and 1999, is unaudited
|
|
June 30, |
March 31, |
|
|
||
|
|
|
(Unaudited) |
|
Assets: |
|
|
|
Net operating losses carried forward* |
$761,652 |
$1,023,655 |
|
Nondeductible asset valuation adjustments |
112,504 |
112,504 |
|
Accrued interest to principal shareholders |
102,407 |
28,063 |
|
|
976,563 |
1,164,222 |
|
Less valuation allowance |
(951,875) |
(1,131,374) |
|
|
24,688 |
32,848 |
|
Liabilities: |
|
|
|
Depreciation |
24,688 |
32,848 |
|
|
|
|
|
Net tax assets |
$-0- |
$-0- |
_______________
* As of March 31, 2000, the Company has net operating loss carryforwards ($3,010,749) for federal income tax purposes that will expire if not used during the period beginning 2010 through 2020.
Note 7. Related party transactions:
Advances from Stockholders
The Company's most significant source of financing has been and continues to be advances from its majority stockholders. Under a related agreement, the funds borrowed are payable on demand and accrue interest at variable rates, currently 6%, aggregating, respectively, $301,198 and $82,539 at June 30, and March 31, 2000. However, effective on November 19, 1999, the agreement relative to advances from the principal officer/stockholders was amended to provide that the obligation could be settled with the Company's equity securities. Accordingly, the total advances as of June 30, 1999, including accrued interest, were settled in full for 3,000,000 unregistered shares of the Company's common stock valued at $1.09 per share, which shares were issued on November 19, 1999. Therefore, pursuant to FASB Statement No. 6, Classification of Short-Term Obligations Expected to Be Refinanced, this obligation was retroactively reclassified as long-term as of June 30, 1999, in the accompanying balance sheet. This fair value estimate represents a 16% discount from the closing market price of the stock on the date of issue because of the size of the block and the fact that the stock is thinly traded, and because the stock is restricted. The shares are restricted in that they cannot be freely traded. For the shares to be re-sold, they must be either registered under the Securities Act of 1933, as amended, and applicable state securities laws, or satisfy the requirements for an exemption from such registration.
The Company's principal officer/stockholders and directors have served the Company in their respective roles for all periods presented without compensation. Accordingly, the financial statements include a contribution of capital and compensation expense in all periods equal to the estimated value of such donated services.
Other Issuances of Common Stock
In the fiscal year ended June 30, 1994, the principal officer/stockholders transferred to the Company, in a series of exchange transactions, various land use and mining rights, including ore reserves in Arizona and Nevada, in exchange for an aggregate of 162,286,944 shares of common stock of the Company. The
- 12 -
PHOENIX METALS U.S.A. II, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (continued)
Information for the periods ended March 31, 2000 and 1999, is unaudited
costs assigned to these assets, and the value of the common stock issued in exchange, consist of the costs incurred by the principal officer/stockholders (transferors' historical cost basis).
In addition, on several occasions, the Company's principal officer/stockholders assigned to the Company nonexclusive limited use licenses to certain patents and related intellectual property developed over a number of years for the extraction of gold, silver and platinum group metals from igneous rocks in exchange for 10,000,000 shares of common stock of the Company issued in January 1998. Neither the shares nor the assets so acquired have been valued in the balance sheet (although the shares are included as outstanding) because the costs incurred by the stockholders in developing such assets were primarily in the nature of research and development and, therefore, would have been expensed. There are no continuing royalty obligations in connection with these licenses.
In November 1999, the Company issued a total of 55,000,000 shares to its principal stockholders, which transactions were retroactively rescinded and reversed in February 2000. Accordingly, these shares were not considered in the weighted average number of shares outstanding for purposes of computing loss per share in the period ended March 31, 2000.
In connection with the 1993 change in control of the Company, obligations to the former principal stockholder were settled in full with the issuance of 200,000 shares valued at the carrying amount of these obligations.
None of the foregoing stock transactions involved any compensation for any services.
Note 8. Financial instruments:
The carrying amounts of advances from stockholders and other financial instruments approximate their fair value because of their short maturities or because the debt bears variable or fixed interest rates that approximate current rates available on similar borrowings.
Note 9. Supplemental cash flow information:
In connection with the change in control of the Company in 1993, the Company obtained land use rights, mining claims and mineral ores valued at $1,775,000. Other non-cash investing and financing activities consisted of acquisition of land by seller financing of $100,000 prior to July 1, 1997, and of the settlement of $3,263,191 of advances including accrued interest at June 30, 1999 from stockholders by issuing 3,000,000 shares of common stock on November 19, 1999.
Cash paid for interest during each of the periods presented was not material.
The following reconciles net loss to cash provided by operating activities:
- 13 -
PHOENIX METALS U.S.A. II, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (continued)
Information for the periods ended March 31, 2000 and 1999, is unaudited
|
|
Year Ended June 30, |
Cumulative |
Nine-month periods |
Cumulative |
||||
|
|
||||||||
|
|
||||||||
|
|
||||||||
|
|
1999 |
|
1998 |
2000 |
|
1999 |
||
|
Net loss |
$(1,122,042) |
|
$(735,700) |
$ (3,407,080) |
$ (916,773) |
|
$ (824,090) |
$ (4,323,853) |
|
Depreciation |
64,992 |
|
42,451 |
127,188 |
63,637 |
|
43,328 |
190,825 |
|
Contributed services |
100,000 |
|
100,000 |
600,000 |
75,000 |
|
75,000 |
675,000 |
|
(Increase) decrease in operating assets: |
|
|
|
|
|
|
|
|
|
Inventories |
(53,670) |
|
(51,436) |
(105,106) |
4,053 |
|
(30,237) |
(101,053) |
|
Prepaid expenses |
(37,768) |
|
(2,553) |
(47,435) |
38,226 |
|
(40,452) |
(9,209) |
|
Other assets |
(21,857) |
|
|
(21,857) |
15,052 |
|
(7,184) |
(6,805) |
|
Increase (decrease) in operating liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
19,820 |
|
(1,061) |
28,478 |
(16,029) |
|
21,267 |
12,449 |
|
Accrued expenses |
2,364 |
|
12,228 |
16,215 |
(9,191) |
|
(11,352) |
7,024 |
|
Accrued interest to stockholders |
138,041 |
|
74,746 |
301,198 |
82,539 |
|
118,026 |
383,737 |
|
|
$ (910,120) |
|
$(561,325) |
$(2,508,399) |
$(663,486) |
|
$(655,694) |
$(3,171,885) |
- 14 -
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, as amended, the Company caused this Post-Effective Amendment No. 2 to its registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
Phoenix Metals U.S.A. II, Inc. |
|
|
|
|
Dated: October 2, 2000 |
By: /s/ Diana Lee Flaherty |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this amendment to the registration statement has been signed by the following persons in the capacities and on the dates indicated below.
|
/s/ Diana Lee Flaherty |
Chairperson of the Board of Directors, |
October 2, 2000 |
||
|
|
|
|
||
|
*/s/ Robert F. Flaherty |
President and Director |
October 2, 2000 |
||
|
|
|
|
||
|
By: /s/ Diana Lee Flaherty |
Attorney-in-fact |
October 2, 2000 |
||
- 15 -
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|