<PAGE>
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-K
Annual Report pursuant to Section 13 of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 1999
(Commission File No. 0-13029)
American Pacific Minerals Ltd.
(Exact name of registrant as specified in its charter)
British Columbia, Canada 68-0302381
(State of incorporation) (I.R.S. Employer Identification Number)
c/o Savage Capital Corporation
595 Burrard Street, 29th Floor
Vancouver, British Columbia, Canada V7X 1A2
(604) 925-2096
(Address of principal executive offices)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(42,006,040 shares outstanding on April 11, 1998)
Indicate by check mark whether the registrant (1) has filed all reports 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
---
Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [_]
The aggregate market value of the 9,244,646 shares of voting stock held by non-
affiliates of the Registrant as of April 10, 1999 was $277,339.38 (using the
last reported trade price of $0.03 on March 21, 1997).
================================================================================
EXECUTED ORIGINAL WITH EXHIBITS
<PAGE>
AMERICAN PACIFIC MINERALS LTD.
TABLE OF CONTENTS TO FORM 10-K
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I
Item 1. Business................................................................................ 3
Introduction....................................................................... 3
Future Plans....................................................................... 4
Item 3. Legal Proceedings....................................................................... 4
Item 4. Submission of Matters to a Vote of Security Holders..................................... 4
PART II
Item 5. Market for Registrant's Common Stock & Related Security Holder Matters.................. 5
Exchange Controls and Other Limitations Affecting Shareholders..................... 5
Certain Canadian Tax Considerations................................................ 6
Item 6. Selected Financial Data................................................................. 6
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations... 7
General............................................................................ 7
Income Taxes....................................................................... 8
Liquidity and Capital Resources.................................................... 8
New Accounting Pronouncements - SFAS 121........................................... 9
Item 8. Financial Statements and Supplementary Data............................................. 9
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.... 9
PART III
Item 10. Directors and Officers of the Registrant................................................ 10
Item 11. Executive Compensation.................................................................. 10
Item 12. Security Ownership of Certain Beneficial Owners and Management.......................... 11
Item 13. Certain Relationships and Related Transactions.......................................... 11
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K........................ 12
SIGNATURES & POWER OF ATTORNEY................................................................... 13
CONSOLIDATED FINANCIAL STATEMENTS................................................................ F-1
</TABLE>
<PAGE>
American Pacific Minerals Ltd.
PART I
Item 1. Business.
Introduction. American Pacific Minerals Ltd. ("APML" or the "Company) was
originally formed as Giant Exploration Limited on November 22, 1965. In October
1981, an amalgamation between Piper Petroleum Ltd. and Giant Explorations
Limited created Giant Piper Exploration, Inc., which was subsequently renamed
Giant Pacific Petroleum Inc., Red Rock Mining Corporation, and, in May 1994, as
American Pacific Minerals Ltd. APML has one wholly owned subsidiary, American
Pacific Minerals (U.S.A.), Inc. ("APML-USA"), a Nevada corporation formerly
known as Red Rock Mining (U.S.A.), Inc. The Company's common stock without par
value ("Shares") traded on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") SmallCap Market until December 21, 1995,
and may now be traded on the NASDAQ Electronic Bulletin Board. The Company's
principal executive offices are located in Vancouver, British Columbia, Canada.
The Company operated in the natural resources sector since its inception.
Between 1993 and 1995, the Company's sole business was gold mining operations
located near Goldfield, Nevada (the "Goldfield Project"), which the Company now
owns. In early 1995, the Company discovered that ore from the Goldfield Project
had mineralogical characteristics rendering it unresponsive to the Company's
processing techniques. With uneconomic gold recovery costs, reduced production
levels could not generate a positive cash flow. In July 1995, the Company
therefore stopped excavating new ore and began to wind-down the Goldfield
Project.
On December 29, 1995, American Resource Corporation, Inc. ("ARC") the Company's
former parent Company and controlling shareholder at that time, sold its entire
78% controlling ownership interest in APML as part of a restructuring of the
Company, consisting of 32,761,394 Shares, to Mr. Michael Savage and Ms. Dianne
Oslund (collectively "Purchasers"). Mr. Savage concurrently executed Share
Purchase Agreements with several other large Company Shareholders, pursuant to
which he may acquire an additional 7,050,500 Shares at 90 day intervals after
the Shares become qualified for trading on the NASDAQ SmallCap Market. In
January 1996, the Company's Board of Directors (the "Board") was replaced by
Purchasers' nominees and the new Board appointed new Executive Officers ("New
Management"). New Management intends to move APM into the technology sector and
is evaluating proposals for the Company's future.
ARC retained $15,701,242 in loans payable by the Company and secured solely by
all of the issued shares of APML-USA. ARC also maintained full control of the
Board of Directors and management of APML-USA. The new management of the Company
had no involvement into the operations of APML-USA from December 28, 1995
forward.
Since Purchasers' acquisition of APML (the "Acquisition") occurred in late 1995,
and New Management, appointed in 1996, does not have personal knowledge of the
Company's past operations. New Management is currently collecting and reviewing
information and materials concerning the Company's past activities but has not
completed this process. Accordingly, any discussion of events and activities
preceding the Acquisition relies on information and materials furnished by
APML's former ownership and management provided by ARC. Similarly, discussion of
the Reclamation relies on information and materials provided by ARC, which
manages the project pursuant to an Operator and Services Agreement executed
before the Acquisition.
As the Acquisition of APML by Mr. Savage and Ms. Oslund occurred on December
29th 1995 and New Management took office during 1996, the description and
analyses of events preceding the Acquisition rely on information and materials
furnished by the Company's former ownership and management, not New Management's
personal knowledge and experience. The shares of the former subsidiary were
seized in conjunction with the non-payment of the ARC loans. Year end figures of
1995 as reported on the Company's 10K were carried forward in order for the
Company to complete the financials requirements for the following three years.
The accounting position taken by the Company is that the new management of APML
had no management control over APML-USA and the Company is reporting on a non-
consolidated basis as though the subsidiary has not existed since December 28,
1995 forward.
In 1997 the new management of APML on behalf of the company and its minority
shareholders brought an action against ARC and other related parties. (see
attached Exhibit "A") From 1996 to 1999 the Company was strictly involved with
the legal action. During the course of the legal action commenced by the
Company, ARC, which merged with Rea Gold Ltd., declared bankruptcy under
Canadian Law in early 1997. The receiver for the bankruptcy was KPMG and to the
best of management's' knowledge and belief all assets including Goldfield have
been sold off with no excess funds available for payment to any shareholders of
the parent or any subsidiary companies. The directors/management of the Company
investigated every avenue available to it in order to solidify our position in
the bankruptcy proceedings,
3
<PAGE>
inclusive of the State of Texas, Nevada, California and the BC Supreme Court in
Vancouver, British Columbia, Canada. Our suit was dismissed in January 1999.
All expenses incurred by the company from January, 1996 to date have been the
direct result of maintaining the lawsuit. Expenses were paid directly by
directors and/or management of the Company.
With the dismissal of the lawsuit, the Company's management intends to change
the Company's business to the high technology sector and or an Internet based
business; however, no specific business plans have been adopted.
Future Plans.
While New Management intends to change the Company's business to the technology
sector, specific plans or proposals have not yet been adopted. Adoption of a new
business plan may involve a merger or future reorganization. New Management is
currently evaluating several opportunities in technology-related businesses, and
the Company may be unable to adopt any particular proposal.
Adoption of a new business plan may involve a merger or reorganization. The
Company expects that the implementation of any business plan will require at
least $5 million in start-up costs plus additional amounts for operating
expenses. Given the Company's capital deficit and negligible assets, the Company
must obtain financing from third parties in order to satisfy any funding
requirements. These include equity and debt financing, potential acquisitions or
mergers, venture capital funding and strategic partnerships. Such financing
methods, especially equity financing, probably will dilute the holdings of
current Company shareholders. New management is exploring various financing
sources and methods.
The Company's ultimate existence and ability to continue as a going concern is
dependent upon the successful implementation of management's business plans.
There can be no assurance that the Company can obtain the financing or
successfully implement these or any other business plans.
Item 3. Legal Proceedings
In August, 1997, American Pacific Minerals Ltd. Filed a lawsuit in the United
States District Court For The Southern District Of Texas Civil Action No. H-97-
2751, against American Resource Corporation, Inc., Rea Gold (U.S.) Corporation,
Rea Gold Corporation, the former officers and directors of American Pacific
Minerals Ltd., American Pacific Minerals - USA, Ian B. Smith, Bruce K. Thiessen,
Neil Woodyer, Michael W. Pickens, Gary Arca, Miles Alperstein, Price Waterhouse
L.L.P., Behre Dolbear & Company, Inc., and Paine Webber, Inc. The company
alleged it was a securities fraud and breach of fiduciary duties action arising
out of the "reorganization" of APML and the fraudulent acquisition of its assets
and corporate opportunities by its former "parent" corporation
The Company has not filed U.S. and Canadian tax returns for the period 1996
through 1999. The Company is now preparing its tax returns for those years and
hopes to file them in the near future. Due to the Company's taxable losses
during that period, the Company's tax liability is not expected to be material.
The Company currently is not involved in any administrative or judicial
proceedings concerning its tax obligations or the failure to file tax returns.
While the Company eventually may be penalized for these late filings, the amount
of such potential fines and penalties should not be material. Furthermore, ARC
has agreed to indemnify APML and the Purchasers for any amounts actually payable
due to the filing of any necessary or required tax returns prior to January 1,
1996.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its Annual General Meeting of Shareholders on Tuesday, June 26,
1996, in Vancouver, British Columbia. Proxies for this meeting were solicited by
prior management. At that meeting, the Company's shareholders:
1. Elected the following Directors for one, two and three year terms
as denoted.
<TABLE>
<CAPTION>
Name: Shares in Favor: Shares Against
---- ---------------- --------------
<S> <C> <C>
Michael J. Savage\\(3)\\ 32,761,394 0
Dianne Lee Oslund\\(3)\\ 32,761,394 0
Geoffrey E.D. Hughes\\(2)\\ 32,761,394 0
William Savage\\(1)\\ 32,761,394 0
Terrance U-Ming\\(1)\\ 32,761,394 0
</TABLE>
No proxies were solicited in opposition to management's nominees, who were
all elected unopposed.
4
<PAGE>
2. Cancelled all outstanding Directors' Stock Option Plans held by
previous officers, directors and management of the company prior to
January 15/th/, 1996 (32,761,394) Shares in favor.
PART II
Item 5. Market for Registrant's Common Stock & Related Security Holder
Matters.
The Company's shares currently trade on the NASDAQ electronic bulletin board in
the United States. Until December 21 1995, the Shares traded on the NASDAQ
SmallCap Market. During the third quarter of 1995, the NASDAQ notified the
Company about the failure of the Shares to meet the NASDAQ's minimum listing
requirements, and began formal proceedings to de-list the Shares from the
SmallCap Market. The Company was unable to prevent the de-listing, which became
effective on December 21, 1995. The Acquisition, which was proposed and
completed in late 1995, did not precipitate the de-listing, which had been
imminent since August 1995. The Shares can be traded on the NASDAQ electronic
bulletin board and New Management intends that the Shares eventually will
qualify for re-listing on the NASDAQ SmallCap Market. Since re-listing may
require a Share consolidation and will depend upon the Company's future business
operations, there can be no assurances that the Shares will be relisted. Since
the de-listing, there has been little trading activity in the Shares.
The following table sets forth the range of high and low closing prices in U.S.
dollars on NASDAQ for the years ending December 31, 1995and 1996. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.
Fiscal year ended December 31, 1995 High Low
----------------------------------- ----- ------
First Quarter........................ $0.63 $ 0.50
Second Quarter....................... $0.53 $ 0.16
Third Quarter........................ $0.34 $.0.13
Fourth Quarter....................... $0.19 $ 0.03
Fiscal year ended December 31, 1998 High Low
----------------------------------- ----- ------
First Quarter........................ $0.03 $ 0.03
Second Quarter....................... $0.03 $ 0.03
Third Quarter........................ $0.03 $ 0.03
Fourth Quarter....................... $0.03 $ 0.03
Fiscal year ended December 31, 1999 High Low
----------------------------------- ----- ------
Fourth Quarter....................... $0.03 $ 0.03
The last reported trade of the Shares, on December 1996, was executed at a price
of $0.03. On April 10, 1997, there were 42,006,040 Shares outstanding (9,244,646
held by non-affiliates) held by 1,670 record shareholders, 183 companies and
1487 individuals.
The Company has not paid any dividends on its Shares and does not intend to pay
any cash dividends in the foreseeable future. The Company currently intends to
retain any earnings to reduce outstanding financial commitments and to finance
its operations.
Exchange Controls and Other Limitations Affecting Shareholders. There are no
Canadian governmental laws, decrees or regulations that restrict the import or
export of capital or affect the remittance of interest, dividends or other
payments to non-resident holders of the Shares, other than tax withholding
requirements. See "-Certain Canadian Tax Considerations." There are no
limitations under the laws of Canada, the Province of British Columbia or in the
charter or any other constituent Company documents on the right of non-residents
to hold and/or vote Shares except as provided in the Investment Canada Act (the
"ICA").
The ICA requires a non-Canadian making an investment which acquires control of a
Canadian business, the gross assets of which exceed certain defined threshold
levels, to file an application for review with Investment Canada, a federal
agency created by the ICA. A Canadian business is defined in the ICA as a
business carried on in Canada that has a place of business in Canada, an
individual or individuals in Canada who are employed or self-employed in
connection with the business and assets in Canada used to carry on the business.
An investment in Shares by a non-Canadian would generally be reviewable under
the ICA if it was an investment to acquire direct control of the Company and the
value of the assets of the Company was $5.0 million (Canadian dollars
5
<PAGE>
"C$") or more, or indirect control of the Company and the value of the assets
was C$50.0 million or more and in some cases C$5.0 million or more if an order
for review is issued by the Canadian cabinet on the grounds that the investment
relates to Canada's cultural heritage or national identity. A non-Canadian would
acquire control of the Company for purposes of the ICA if he acquired a majority
of the Shares. The acquisition of less than a majority but more than one-third
of the Shares would be presumed to be an acquisition of control of the Company
unless it could be established that the Company was not controlled in fact by
the acquiror through ownership of Shares.
A non-Canadian may not implement an investment reviewable under the ICA unless
the investment has been reviewed and the minister responsible for ICA is
satisfied or is deemed to be satisfied that the investment is likely to be a net
benefit to Canada. If the minister is not satisfied that the investment is
likely to be a net benefit to Canada, the non-Canadian may not implement the
investment or, if the investment has been implemented, may divest himself of
control of the Canadian business that is the subject of the investment.
Certain Canadian Tax Considerations. The following discussion identifies certain
Canadian federal income tax considerations for non-residents of Canada relevant
to an investment in the Shares. This discussion is based upon the tax laws now
in effect, all of which are subject to change, and does not address the tax laws
of the various provinces or territories of Canada. This discussion is of a
general and summary nature only and is not intended to be, nor should it be
construed as legal or tax advice to any particular investor. Such summary does
not discuss aspects of Canadian federal income tax laws applicable to a
taxpayer's particular tax situation. Therefore, prospective investors should
consult with their own tax adviser with respect to the tax consequences of an
investment in the Shares.
The following discussion is limited to persons who, for purposes of the Income
Tax Act of Canada ("Canadian Act"), deal at arm's length with the Company, hold
Shares as capital property, are non-residents of Canada at any time when holding
Shares and do not use or hold Shares in, or in the course of, carrying on
business in Canada (a "Non-Resident Shareholder").
Because the Company's operating subsidiary is a U.S. corporation, any profits
produced by this subsidiary will not be distributable directly to shareholders.
Instead, for these profits to be distributed to shareholders, the Company's
operating subsidiary must declare a dividend to the Company, and the Company in
turn must declare a dividend to shareholders. This will subject the dividend to
two withholding taxes. First, the dividends from the subsidiary to the Company
will be subject to a 10% withholding tax imposed by the United States on the
gross amount of the dividends. Then, the subsequent dividends are subject to
Canadian withholding tax at the basic rate of 25% of the gross dividend,
although this rate may be reduced by the terms of any applicable tax treaty. For
residents of the United States whose shareholdings are not effectively connected
with a "permanent establishment" in Canada, the Treaty reduces the rate to 15%
of the gross dividend, although for U.S. corporations owning 10% of the voting
stock of the Company, the withholding tax is reduced to 10% of the gross
dividend.
A Non-Resident Shareholder will generally not be subject to tax in Canada on
capital gains realized from a disposition of Shares, unless such Shares are
"taxable Canadian property" within the meaning of the Canadian Act. Generally,
the Shares will not be considered "taxable Canadian property" unless the Non-
Resident Shareholder, persons with whom the Non-Resident Shareholder does not
deal at arm's length, or the Non-Resident Shareholder and non-arm's length
persons at any time during the five years prior to the disposition of the
Shares, owned not less than 25% of the issued shares of any class of the capital
stock of the Company. Residents of the United States whose Shares are considered
"taxable Canadian property" will be exempt under the Treaty from Canadian
capital gains taxes provided that the value of the Shares at the time of
disposition is not derived principally from real property located in Canada.
Item 6. Selected Financial Data
The selected historical financial data for the years ended December 31, 1995,
1996, 1997 and 1998 have been derived from the audited consolidated financial
statements of the Company. The information set forth below should be read in
conjunction with such consolidated financial statements of the Company, and the
notes thereto included elsewhere in this Report. Circumstances at the Goldfield
Project and the Company's February 1993 sale of its oil and gas operations
materially affect the comparability of data from one year to another. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
6
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<TABLE>
<CAPTION>
Statement of Operations Data:/1/ Year Ended December 31
- ----------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Revenue $ 3,842 -- -- $ 17,729 --
- ----------------------------------------------------------------------------------------------------------
Cost & Expenses 12,222 222,891 57,823 71,203 36,125
- ----------------------------------------------------------------------------------------------------------
Net income (losses)
- ----------------------------------------------------------------------------------------------------------
Continuing Losses (8,380) (22,891) (57,823) (53,474) (36,125)
- ----------------------------------------------------------------------------------------------------------
Discontinued operations -- 19,358,359 -- -- --
- ----------------------------------------------------------------------------------------------------------
Extraordinary gain -- -- 200,000 -- --
- ----------------------------------------------------------------------------------------------------------
Net loss $(8,380) $(19,581,250) $(142,177) $(53,474) $(36,125)
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Net Loss per Share $ (0.21) $ (0.47) $ (0.00) $ (0.00) $ (0.00)
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Weighted Average # of
shares 39,390 42,006 42,006 42,006 42,006
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Balance Sheet Data:/1/ Year Ended December 31
- ----------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash & equivalents $ 145 $ -- $ 48,195 $ --
- ----------------------------------------------------------------------------------------------------------
Total Assets 3,644 2,757 49,816 13,809 10,353
- ----------------------------------------------------------------------------------------------------------
Long term debt 1,199 100,000 -- -- --
- ----------------------------------------------------------------------------------------------------------
Shareholders' equity
(deficiency) (3,207) 19,581,250 142,177 53,474 $ 36,125
- ----------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Dollar and Share data in thousands.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General. The Company intends to change its business from mining to the
technology industry. The Company's business had been the natural resources
industry and, since 1993, exclusively the gold production operations at the
Goldfield Project. Based on mineralogical considerations and the corresponding
financial implications, the Company decided to shut down the Goldfield Project.
Thus, the Company's remaining mining activities principally consist of APML-
USA's reclamation of the Goldfield Project rather than gold production.
Moreover, the Purchasers acquired APML with the intention of transforming APML
into a technology-sector business. Given the Company's New Management, its
proposed activities, and the nature of the technology industry it expects to
enter, the Company's future performance will not be comparable to its former
operations. Accordingly, the following discussion of the Company's financial
condition and results of operations in the past has predominately historical
interest and cannot offer any insight into the Company's future performance.
Furthermore, the Acquisition occurred in late 1995 and New Management took
office during 1996, so description and analyses of events preceding the
Acquisition rely on information and materials furnished by the Company's former
ownership and management, not New Management's personal knowledge and
experience.
In December 1995, APM-USA hired ARC as an independent contractor to carry out
this reclamation project; therefore, any description of the Reclamation relies
on information and materials provided by ARC. The principal remaining activities
consist of removing all intermediate liners from the leach pads, leaching
remaining ore stockpiles, rinsing and neutralizing ore and restoring the
physical appearance of the project environs. ARC believes this Reclamation
should satisfy the Company's environmental responsibilities, utilizes standard
industry practices and presents no apparent complications. The Company has been
informed that the Reclamation will require approximately $3.6 million. APM-USA's
only revenue will come from limited leaching of the remaining ore, and the
Company expects to use all of the estimated $1.3 million revenue from gold
produced in such limited leaching operations to offset Reclamation costs. The
Company recorded a $1.6 million reclamation and closure accrual in the fourth
quarter of 1995, which increased this accrual, net of the estimated $1.3 million
revenue from current leaching operations, to $2.3 million at December 31, 1995.
These reclamation accruals consist of $1.1 million for current and $1.2 million
for long-term costs.
After preliminary discussions with state officials, ARC informed the Company
that the $2.3 million reclamation and closure accruals at December 31, 1995,
should be adequate for the Reclamation. On behalf of the Company, ARC deposited
a bond with the State of Nevada, in the form of a $973,000 certificate of
deposit; additional deposits may be required. This bond is redeemable as phases
of Reclamation work are completed and approved by state authorities. ARC will
advance APM-USA the funds necessary for the Reclamation. These advances are
secured by APM-USA's assets and
7
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by the pledge of all APM-USA stock. ARC has informed New Management that the
anticipated amount of ARC's loans to APM-USA may exceed the value of APM-USA's
assets and estimated revenue. Therefore APM-USA will probably dispose of all of
its assets in order to repay the loans from ARC. ARC will indemnify APM for
environmental liabilities resulting from the Goldfield Project.
Possible Business Proposals. New Management is currently evaluating several
opportunities in technology-related businesses; two potential opportunities are
in high technology and the other is an Internet based technology. See Business-
Future Plans. However, other proposals are under consideration. Management
expects to adopt and initiate its business plans during the coming year. The
Company's ability to implement any business plan will depend upon a number of
factors, especially the availability of financing. Creation and development of
APML's new business probably will require initial capital as well as operating
funds while the business gets established. Implementation of any technology
business proposal will entail significant start-up and operating costs so
obtaining financing is vital. New Management accordingly is exploring various
financing sources and methods. The Company's ultimate existence and its ability
to continue as a going concern are dependent upon the successful implementation
of New Management's business plans. There can be no assurance that the Company
can obtain the necessary financing or successfully implement these or any other
business plans.
Net Losses. The Company's net loss for 1996 was $19.58 million or $0.47 per
share, compared to net losses of $8.4 million or $0.21per share in 1995. These
losses primarily result from negative operating results for all periods and from
large write-downs of property, plant and equipment in 1995 and 1996. The
Company's inability to achieve economic production levels contributed to poor
operating results in each year. Write-downs result from reduction of the
recoverable investment in the Goldfield Project.
Revenue. The Company generated no revenue of any kind in 1999.
Write-downs of property, plant and equipment. As previously described, ore
mineralogical characteristics required the Company to reduce its assessment of
recoverable mineral reserves. The $12.0 million 1994 write-down was based on
estimated net future cash flows using revised ore reserve estimates and current
sales prices, metallurgical recoveries and operating costs. The $1.8 million
1995 write-down was based on projected costs of the Goldfield Project
reclamation and results of Kennecott's 1995 exploration activities and
reflecting ARC's best estimate of net realizable value of the remaining mineral
properties, plant and equipment.
Income Taxes. At December 31, 1995, the Company had deferred tax assets of $13.1
million, including $7.5 million of net operating losses. A full valuation
allowance has been recorded since it is more likely than not that these deferred
tax assets will not be realized.
Liquidity and Capital Resources. The following table summarizes other financial
data about the Company's liquidity and financial condition:
<TABLE>
<CAPTION>
At December 31, 1995 1996 1997 1998 1999
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Cash $ 145,329 $ -- $ 48,195 $ -- $ --
Current liabilities
(including current portion of long-term debt) $5,652,839 $225,648 $130,530 $147,997 $147,997
Long-term liabilities $1,198,994 $ -- $ -- $ -- $ --
</TABLE>
Operating activities. The Company's net working capital deficiency deficiencies
were primarily represented by its obligation to maintain and proceed with the
pending legal action.
Investing activities. There has been no investment opportunity for the Company
due to the past legal action.
Notes and Accounts Payable to Affiliated Party. Existing intercompany advances
owed to ARC and $2.0 in APM secured notes were converted into $4.3 million non-
recourse notes issued by APM-USA to ARC. The $2.0 million note bears interest at
11% and is due on demand by ARC anytime after December 30, 1996, but before
January 1, 1999. The remaining $2.3 million non-recourse note is a loan
agreement with ARC pursuant to which ARC also will advance APM-USA necessary
funds for costs of the Reclamation. Amounts owing under this loan agreement bear
interest at the prime rate plus 4% and are due December 31, 1996. At December
31, 1995, the outstanding balance on these non-recourse notes included
approximately $0.33 million in accrued interest. These non-recourse notes are
secured by APM-USA's assets and stock and ARC has agreed to indemnify APM
against any liability beyond this collateral. These non-recourse notes replaced
short-term borrowings from ARC that funded operating losses and additions to
property,
8
<PAGE>
plant and equipment and $2.0 of APM convertible secured notes issued to an
unaffiliated party. These loans were acted upon during the bankruptcy
proceedings involving Rea Gold Corporation. The shares of the former subsidiary
were seized in conjunction with the non-payment of the ARC loans.
Future Operations. The Company's proposed future operations will require
significant capital expenditures and resources. ARC has agreed to indemnify APM
for environmental liabilities resulting from the Goldfield Project. Second, to
implement New Management's plans to change the business, the Company must obtain
significant financing. Implementation of any technology business proposal will
entail significant start-up and operating costs, estimated at least $2.5 million
for initial capital and up to $30 million for operations. Since financing is
vital to the Company's future prospects, New Management is exploring various
financing sources and methods. The Company's ultimate existence and its ability
to continue as a going concern are dependent upon the successful implementation
of New Management's business plans. There can be no assurance that the Company
can obtain the necessary financing or successfully implement these or any other
business plans.
New Accounting Pronouncements - SFAS 121. Statement of Financial Accounting
Standards Number 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of (ASFAS 121) was issued by the Financial
Accounting Standards Board in March 1995. SFAS 121 requires, for fiscal years
beginning after December 15, 1995, that an entity review long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable and that an impairment loss
be recognized as the amount by which the carrying amount of the asset exceeds
the fair value of the asset. The Company will adopt SFAS 121 effective January
1, 1996. The adoption is not expected to have a material effect on the Company's
financial position or results of operations.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements of the Company are filed under this Item,
beginning on page F-1 of this Report. No financial statement schedules are
required under Regulation S-X and no Selected Quarterly Financial Data is
required because the Company does not meet the requirements of Regulation S-K
Item 302(a)(5)(C)(2)(v). The Shares do not have a market value of at least $2.5
million, the minimum representative bid price of the Shares is less than $5 per
Share and the Company did not have $2.5 million of capital, surplus and
undivided profits.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
The Company engaged Price Waterhouse LLP as its new independent accountants as
of September 6, 1995. During the two most recent fiscal years and through August
31, 1995, the Company had not consulted with Price Waterhouse LLP on items which
(i) were or should have been subject to SAS 50 or (ii) concerned with the
subject matter of a disagreement or reportable event with the former auditor (as
defined in Regulation S-K Item 304(a)(2)). In mid 1996 Price Waterhouse withdrew
as auditors for the company due to the threat of litigation. In the lawsuit
filed in August 1997 the firm of Price Waterhouse was one of the defendants
named.
On September 9, 1999, the Company engaged Sadovnick Telford + Skov as its new
independent accountants. The firm has prepared the year end financial
information with the assistance of the new management on all documents
available. Year end figures of 1995 as reported on the Company's 10K were
carried forward in order for the auditing firm to complete the financials
requirements for the following three years. The accounting stance taken by the
Company is that the new management of APML had no management control over APML-
USA and the Company is reporting on a non-consolidated basis as though the
subsidiary has not existed since December 31, 1995.
PART III
Item 10. Directors and Officers of the Registrant.
Under the British Columbia Company Act ("BC Act"), a majority of the Company's
Board of Directors ("Board") must be Canadian residents, with at least one
Director residing in British Columbia, Canada. Each Company Director will hold
office until the next annual meeting of shareholders and until their successors
have been elected and qualified or until their death, resignation or removal.
The Company's Officers are appointed by, and serve at the pleasure of, the
Directors. No arrangement or understanding exists between any Executive Officer
or Director and any other person under which the Executive Officer or Director
was selected.
As described in Item 1, a change of control in the Company's ownership occurred
on December 29, 1995. On January 3, 1996, the Company distributed to its
shareholders an Information Statement describing proposed changes to its Board,
whereby the entire existing Board of Directors (Messrs. Neil Woodyer, Michael
Wayne Pickens and Gary Arca) would resign, to be replaced by Mr. Michael J.
Savage, Ms. Dianne L. Oslund and Mr. Geoffrey E.D. Hughes. At the
9
<PAGE>
January 15, 1996, Board meeting, these changes were implemented and the newly
constituted Board appointed new Officers. Mr. William Savage was appointed to
the Board in February 1996.
On December 29, 1996 the following directors Ms. Dianne L. Oslund, Mr. Geoffrey
E.D. Hughes, Terrance U-Ming and William Savage resigned due to the threat of
personal litigation by ARC. Set forth below are the names, the dates of initial
appointment or election as officer or director, ages, and current positions of
the current Directors and Executive Officers:
Name Initially Selected Age Positions
- ---- ------------------ --- ---------
Michael J. Savage January 1996 39 Chairman of the Board, Chief
Executive Officer, & President
Michael J. Savage (Chairman, CEO and President), age 38, has 16 years of
international business leadership experience. A specialist in investment
management and start-up strategies, Michael has directed a number of companies
in various arenas. In 1991, Michael served as President and CEO of STC
Corporation, a high-tech multimedia software development company focused on the
digital medical imaging field. Prior to this, he was co-founder and Vice-
President of Operations for Hydro-Cut Technologies, a high tech manufacturing
and distribution company. In 1995 Michael was appointed to the Board of
Directors of American Pacific Minerals Limited (APML), a NASDAQ listed Small
Capital Market Company. In 1996 he was named President, CEO and Chairman of the
Board. After three and a half years of successfully concluding mining operations
for APML, Michael has returned to the high technology sector, which has always
been his passion.
Compliance with Section 16(a) of the Exchange Act. Section 16(a) of the Exchange
Act requires the Company's directors, executive officers and holders of more
than 10% of the Company's Shares to file initial reports of ownership and
reports of changes in ownership with the SEC. The Company believes that during
1995, its Executive Officers, Directors and holders of more than 10% of the
Company's Shares complied with all Section 16(a) filing requirements.
Item 11. Executive Compensation.
Compensation of Directors/Officers/Employees. From the change of control of
December 29/th/, 1995 to date no compensation has been received by the director
and or any managers and/or employees. Any and all previous options issued or
held by past management, officers, directors and "non executive directors" have
been cancelled. During the course of the legal action there was no additional
business to be reported by the Company other than the management of the lawsuit.
Executive Officer Compensation. The Company's current Executive Officers (who
are also the principal shareholders) do not receive any compensation. After the
Company formulates and begins implementing its business plans, the Compensation
Committee will address executive compensation. As there was no compensation paid
the Company will enable directors and employees to purchase options up to the
maximum amounts as allowable under SEC Rules.
Executive Employment Contracts. There are no employment agreements between the
Company and any of its current or former officers.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table set forth as of April 10, 1996, the number of Shares owned
by (i) each executive officer and director, (ii) executive officers and
directors as a group, and (iii) each person who owned of record, or was known to
own beneficially, more than five percent (5%) of the Company's outstanding
Shares.
Name and Address of Beneficial Owner Shares Percent/1/
- ------------------------------------ ------ -------
Michael J. Savage. 26,211,768/2/ 62.4%
Chairman, CEO and President
2797 Grant Street, Vancouver, BC V5K 3H1
Dianne L. Oslund 6,549,626 15.6%
#101 - 110 East Kings Road,
North Vancouver, BC V7N 1H5
* Less than one percent of outstanding Shares.
/1/ Based on 42,006,040 Shares issued and outstanding on April 10, 1997.
/2/ Excludes an additional 7,050,500 Company Shares that Mr. Savage may
acquire, pursuant to separate agreements with other current Company
shareholders, at 90-day intervals following the Company's relisting, if
any, on the NASDAQ SmallCap Market.
10
<PAGE>
Item 13. Certain Relationships and Related Transactions.
In May 1995, ARC received an additional 6,956,522 Shares in exchange for
reducing the Company's payables to ARC by $3 million.
The Company's former controlling shareholder, ARC, managed the Goldfield Project
pursuant to a 1994 Goldfield Joint Venture Operator Agreement. Under that
agreement, ARC charged a fee equal to 2% of the expenditures by the Goldfield
Joint Venture. ARC charged management fees of $102,060 and $82,617 for 1995 and
1994, respectively. Furthermore, ARC charged a $3,177 monthly fee to manage the
Company's corporate operations.
In the Operator and Service Agreement executed December 28, 1995, APM-USA hired
ARC to provide management, clerical, administrative, accounting and support
services. ARC will charge APM-USA for all direct costs incurred by ARC plus an
operator and service fee equal to 25% of such direct costs. These direct costs
and fees are payable on December 31, 1996.
Existing intercompany advances owed to ARC and $2.0 in APML secured notes were
converted into $4.3 million non-recourse notes issued by APML-USA to ARC. The
$2.0 million note bears interest at 11% and is due on demand by ARC after
December 30, 1996, but before January 1, 1999. The remaining $2.3 million non-
recourse note is a loan agreement with ARC pursuant to which ARC also will
advance APML-USA necessary funds for costs of the Reclamation. Amounts owing
under this loan agreement bear interest at the prime rate plus 4% and are due
December 31, 1996. At December 31, 1995, the outstanding balance on these non-
recourse notes included approximately $0.33 million in accrued interest. These
non-recourse notes are secured by APML-USA's assets and stock and ARC has agreed
to indemnify APML against any liability beyond this collateral. These non-
recourse notes replaced short-term borrowings from ARC that funded operating
losses and additions to property, plant and equipment and $2.0 of APML
convertible secured notes issued to an unaffiliated party. The interest expense
related to notes and accounts payable to ARC was $273,762 in 1995.
Certain officers and directors of ARC simultaneously served as officers and
directors of APM and its subsidiaries.
11
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) Financial Statements.
The following financial statements are included in Part II Item 8.
Report of Independent Accountants - Sadovnick Telford + Skov
Consolidated Balance Sheets at December 31, 1999
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules. Not Applicable.
(3) List of Exhibits.
(1) Underwriting Agreement. Not Applicable.
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or
Succession. None.
(3) Corporate Organization. None.
(4) Instruments defining the rights of security holders. None.
(5) Letter regarding Legality. Not Applicable.
(6) Opinion regarding Discount on Capital Shares. None.
(7) Opinion regarding Liquidation Preference. None.
(8) Opinion regarding Tax Matters. Not Applicable.
(9) Voting Trust Agreement. None.
(10) Material Contracts. None.
(11) Statement regarding Computation of Per Share Earnings. None.
(12) Statement regarding Computation of Ratios. None.
(13) Annual Report to Security Holders. Not Applicable.
(14) Material Foreign Patents. None.
(15) Letter regarding Unaudited Interim Financial Information. Not
Applicable.
(18) Letter regarding Change in Accounting Principles. Not Applicable.
(19) Report furnished to Security Holders. Not Applicable.
(20) Other Documents or Statements to Security Holders. Not
Applicable.
(21) Subsidiaries of Registrant. None.
(22) Published Report regarding Matters Submitted to Vote of Security
Holders. Not Applicable.
(23) Consents. Not Applicable.
(24) Power of Attorney. Included with Signatures.
(25) Statement of Eligibility of Trustee. Not Applicable.
(26) Invitation for Competitive Bids. Not Applicable.
(27) Financial Data Schedule.
(28) Information from Reports Furnished to State Insurance Regulatory
Authorities. None.
(99) Other Exhibits.
12
<PAGE>
POWER OF ATTORNEY
The Registrant and each person whose signature to this Annual Report on Form 10-
K appears below hereby authorizes Michael J. Savage, with full power of
substitution, to file one or more amendments, which amendments may make such
changes he deems appropriate, and the Registrant and each such person hereby
appoints Michael J. Savage as attorney-in-fact with full power to act alone, to
execute, in the name and on behalf of the Registrant and each such person,
individually and in such capacity stated below, and any such amendments.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
March 29, 2000 AMERICAN PACIFIC MINERALS LTD.
By: /s/ MICHAEL J. SAVAGE
------------------------------------------
Michael J. Savage, Chief Executive Officer
By: /s/ DIANNE L. OSLUND
------------------------------------------
Dianne L. Oslund, Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report on Form 10-K has been signed by the following persons in the capacities
and on the dates indicated.
Signature Date
--------- ----
/s/ MICHAEL J. SAVAGE March 29, 2000
---------------------------
Michael J. Savage, Chairman of the Board of Directors,
Chief Executive Officer and President
/s/ DIANNE L. OSLUND
--------------------------
Dianne L. Oslund, Director
13
<PAGE>
AMERICAN PACIFIC MINERALS LTD.
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants - Sodovnick Telford + Skov............ F-2
Consolidated Balance Sheets at December 31, 1996, 1997, 1998, and 1999.. F-3
Notes to Consolidated Financial Statements.............................. F-7
</TABLE>
14
<PAGE>
[LETTERHEAD OF SADOVNICK TELFORD + SKOV]
AUDITORS' REPORT
To the Board of Directors and Shareholders of American Pacific Minerals Ltd.
We have audited the accompanying balance sheets of American Pacific Minerals
Ltd., a development stage enterprise, as at December 31, 1999, 1998, 1997 and
1996 and the related statements of operations, cash flows and changes in
stockholders' deficiency for the years ended December 31, 1999, 1998, 1997 and
1996. 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 the 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. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Pacific Minerals Ltd.,
a development stage enterprise, as of December 31, 1999, 1998, 1997 and 1996,
and the results of its operations and its cash flows for the years ended
December 31, 1999, 1998, 1997 and 1996 in conformity with generally accepted
accounting principles in the United States which, also conforms in all material
respects with generally accepted accounting principles in Canada. As required by
the Company Act (British Columbia), we report that, in our opinion, these
principles have been applied on a consistent basis.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 the Company has
been looking for a business and the operations have been financed by certain
principal stockholders. The Company has suffered recurring losses from
operations and has a net capital deficiency that raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 3 to the financial statements. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Sadovnick Telford + Skov
CHARTERED ACCOUNTANTS
Vancouver, British Columbia
Canada
March 14, 2000
<PAGE>
===============================================================================
AMERICAN PACIFIC MINERALS LTD.
(A Development Stage Enterprise)
Balance Sheets
Expressed in United States Dollars
===============================================================================
<TABLE>
<CAPTION>
As of December 31
-----------------------------------------------------------------------
1999 1998 1997 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Current
Cash $ 7,772 $ - $ 48,195 $ -
Due from stockholders (Note 6) - 9,089 - -
- --------------------------------------------------------------------------------------------------------------------
7,772 9,089 48,195 -
Fixed assets (Note 4) 2,581 4,720 1,621 2,757
- --------------------------------------------------------------------------------------------------------------------
Total Assets $ 10,353 $ 13,809 $ 49,816 $ 2,757
====================================================================================================================
Liabilities
Current
Accounts payable and accrued liabilities
(Note 6) $ 179,344 $ 147,997 $ 124,877 $ 124,257
Due to stockholders (Note 6) 1,322 - 5,653 1,391
Loan payable (Note 5) - - - 100,000
- --------------------------------------------------------------------------------------------------------------------
Total Liabilities 180,666 147,997 130,530 225,648
- --------------------------------------------------------------------------------------------------------------------
Stockholders' Deficiency (Note 7)
Preferred stock with par value of $1
(Canadian)
25,000,000 preferred shares authorized
No preferred shares issued and
outstanding
Common stock, no par value
100,000,000 common shares authorized
42,006,040 common shares issued
and outstanding 29,815,841 29,815,841 29,815,841 29,815,841
Accumulated deficit (29,815,841) (29,815,841) (29,815,841) (29,815,841)
Deficit accumulated during development stage (170,313) (134,188) (80,714) (222,891)
- --------------------------------------------------------------------------------------------------------------------
Total Stockholders' Deficiency (170,313) (134,188) (80,714) (222,891)
- --------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders'
Deficiency $ 10,353 $ 13,809 $ 49,816 $ 2,757
====================================================================================================================
</TABLE>
<PAGE>
================================================================================
AMERICAN PACIFIC MINERALS LTD.
(A Development Stage Enterprise)
Statements of Operations
Expressed in United States Dollars
================================================================================
<TABLE>
<CAPTION>
Cumulative
For the Development Stage
Year Ended Stage
December 31, January 1,
--------------------------------------------
1996
1999 1998 1997 1996 to
December 31,
1999
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue $ - $ 17,729 $ - $ - $ -
- --------------------------------------------------------------------------------------------------------------
Expenses
Depreciation 2,139 1,975 1,312 1,036 6,462
Goldfield expenses - - - 47,945 47,945
Office and miscellaneous 3,396 16,154 2,109 6,598 28,257
Professional fees 30,590 19,520 52,805 146,324 249,239
Rent - 13,964 - - 13,964
Travel - 19,590 1,597 20,988 42,175
- --------------------------------------------------------------------------------------------------------------
36,125 71,203 57,823 222,891 388,042
- --------------------------------------------------------------------------------------------------------------
Loss from continuing operations (36,125) (53,474) (57,823) (222,891) (370,313)
Gain from settlement of lawsuit (Note 8) - - 200,000 - 200,000
Loss from discontinued operations - - - (19,358,359) -
- --------------------------------------------------------------------------------------------------------------
(Loss) income for the year $(36,125) $(53,474) $142,177 $(19,581,250) $(170,313)
===============================================================================================================
Basic (loss) income per share (Note 9) $ (0.00) $ (0.00) $ (0.00) $ (0.47) $ (0.00)
===============================================================================================================
</TABLE>
<PAGE>
================================================================================
AMERICAN PACIFIC MINERALS LTD.
(A Development Stage Enterprise)
Statements of Changes in Stockholders' Deficiency
Expressed in United States Dollars
================================================================================
<TABLE>
<CAPTION>
Common Shares Deficit
-------------------------
Accumulated
During Total
Accumulated Development Stockholders'
Shares Amount Deficit Stage Deficiency
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1995 42,006,040 $29,815,841 $(10,457,482) $ - $ 19,358,359
Net loss for 1996 - - (19,358,359) (222,891) (19,581,250)
- --------------------------------------------------------------------------------------------------------
Balance at
December 31, 1996 42,006,040 29,815,841 (29,815,841) (222,891) (222,891)
Net income for 1997 - - - 142,177 142,177
- --------------------------------------------------------------------------------------------------------
Balance at
December 31, 1997 42,006,040 29,815,841 (29,815,841) (80,714) (80,714)
Net loss for 1998 - - - (53,474) (53,474)
- --------------------------------------------------------------------------------------------------------
Balance at
December 31, 1998 42,006,040 29,815,841 (29,815,841) (134,188) (134,188)
Net loss for 1999 - - - (36,125) (36,125)
- --------------------------------------------------------------------------------------------------------
Balance at
December 31, 1999 42,006,040 $29,815,841 $(29,815,841) $ (170,313) $ (170,313)
========================================================================================================
</TABLE>
<PAGE>
================================================================================
AMERICAN PACIFIC MINERALS LTD.
(A Development Stage Enterprise)
Statements of Cash Flows
Expressed in United States Dollars
================================================================================
<TABLE>
<CAPTION>
For the Cumulative
Year Ended Development Stage
December 31, January 1, 1996
-------------------------------------------------------- to
December 31,
1999 1998 1997 1996 1999
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Activities
(Loss) income for the year $ (36,125) $ (53,474) $ 142,177 $ (19,581,250) $ (170,313)
Adjustments to reconcile net loss to cash
applied to operating activities:
Depreciation 2,139 1,975 1,312 1,036 6,462
Loss from discontinued operations - - - 19,358,359 -
Changes in non-cash working capital:
Increase (decrease) in due to stockholders 10,411 (14,742) 4,262 1,391 1,322
Accounts payable and accrued liabilities 31,347 23,120 620 124,257 179,344
- -------------------------------------------------------------------------------------------------------------------
Net cash from (used in) operating activities 7,772 (43,121) 148,371 (96,207) 16,815
- -------------------------------------------------------------------------------------------------------------------
Financing Activity
(Decrease) increase in loan payable - - (100,000) 100,000 -
- -------------------------------------------------------------------------------------------------------------------
Net cash (used in) from financing activity - - (100,000) 100,000 -
- -------------------------------------------------------------------------------------------------------------------
Investing Activity
Purchase of fixed assets - (5,074) (176) (3,793) (9,043)
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activity - (5,074) (176) (3,793) (9,043)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 7,772 (48,195) 48,195 - 7,772
Cash position - Beginning of year - 48,195 - - -
===================================================================================================================
Cash position - End of year $ 7,772 $ - $ 48,195 $ - $ 7,772
===================================================================================================================
</TABLE>
Supplemental Information
No interest or income taxes have been paid during the years ended December 31,
1999, 1998, 1997 and 1996.
<PAGE>
================================================================================
AMERICAN PACIFIC MINERALS LTD.
(A Development Stage Enterprise)
Notes to the Financial Statements
Expressed in United States Dollars
================================================================================
For the Years Ended December 31, 1999, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
NOTE 1 - NATURE OF OPERATIONS
American Pacific Minerals Ltd. (the "Company"), formerly known as Red Rock
Mining Corporation, was formed in October 1981, under the laws of the Province
of British Columbia through an amalgamation of Piper Petroleums Ltd. and Giant
Exploration Limited. The Company's principal business was the Goldfield mining
project ("Goldfield") in Goldfield, Nevada, USA which was operated through a
wholly-owned subsidiary, American Pacific Minerals (USA) Ltd. ("APM-USA") until
1995.
On December 28, 1995, American Resource Corporation, Inc. ("ARC"), the Company's
former parent company, sold its controlling interest in the Company as part of a
restructuring of the Company. ARC retained $15,701,242 in loans payable by the
Company and secured solely by all of the issued shares of APM-USA. ARC also
maintained full control of the Board of Directors and management of APM-USA.
The new management of the Company had no involvement into the operations of APM-
USA from December 28, 1995 forward. ARC formally seized all of the issued
shares of APM-USA in 1997 due to non-payment of the debt owing.
These financial statements are presented on a non-consolidated basis as the
Company effectively surrendered control of its subsidiary on December 28, 1995.
In 1996, the Company commenced a lawsuit on behalf of itself and its minority
shareholders against ARC, its officers and directors and certain other parties.
This lawsuit was settled in part in 1997 (Note 8) with the remainder of the case
being dismissed in early 1999. From 1996 to 1999 the activities of the Company
were initially trying to get access to the records of the Company and APM-USA,
looking for new acquisitions and the litigation as described above. The
operations have been financed by proceeds from a loan, the settlement of a
lawsuit (Notes 5 and 8) and cash contributions from the principal stockholders.
The Company has been in the development stage since January 1, 1996 (inception
date).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Accounting Principles and 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 amounts 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 fiscal year. Actual
results may differ from those estimates.
<PAGE>
===============================================================================
AMERICAN PACIFIC MINERALS LTD.
(A Development Stage Enterprise)
Notes to the Financial Statements
Expressed in United States Dollars
================================================================================
For the Years Ended December 31, 1999, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
b) Translation of Foreign Currencies
The Company's foreign operations are of an integrated nature and accordingly,
the re-measurement method of foreign currency translation is used for conversion
into United States dollars, as follows:
Revenues and expenses arising from foreign currency translations are
translated into United States dollars at the average rate for the
year. Monetary assets and liabilities are translated into United
States dollars at the rates prevailing on the balance sheet date.
Other assets and liabilities are translated into United States dollars
at the rates prevailing on the translation dates. Exchange gains and
losses are recorded as income or expense in the year in which they
occur.
c) Fixed Assets
Fixed assets are recorded at cost and amortized over their estimated useful
lives on a declining-balance basis as following:
Computer equipment 30%
Computer software 100%
Furniture and fixture 20%
For each fiscal year in which fixed assets are acquired, management deems each
acquisition to occur midway through the fiscal period and accordingly, the
depreciation recorded is restricted to one-half of the normal rate. Depreciation
is not recorded in the period of disposal.
d) Fair Value of Financial Instruments
The fair value of financial instruments, which consisted of cash and cash
equivalents, receivables, accounts payable and accrued liabilities, approximated
their carrying values at December 31, 1999, 1998, 1997 and 1996.
e) Income Taxes
The Company accounts for income taxes under an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in the Company's
financial statements or tax returns. In estimating future tax consequences, all
expected future events other than enactment of changes in the tax laws or rates
are considered.
<PAGE>
================================================================================
AMERICAN PACIFIC MINERALS LTD.
(A Development Stage Enterprise)
Notes to the Financial Statements
Expressed in United States Dollars
================================================================================
For the Years Ended December 31, 1999, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has not established revenues to cover its operating costs
and allow it to continue as a going concern. Management intends to change the
Company's business to the high technology sector or internet based business,
however, no specific business plans have been adopted. Given the Company's
capital deficit and negligible assets, the Company must obtain financing from
third parties in order to satisfy any funding requirements. Management is
exploring various financing sources and methods.
The Company's ultimate existence and ability to continue as a going concern is
dependent upon the successful implementation of management's business plans.
There can be no assurance that the Company can obtain a specific business plan
or the necessary financing or successfully implement these or any other business
plans.
NOTE 4 - FIXED ASSETS
Fixed assets consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------------------
1999 1998 1997 1996
<S> <C> <C> <C> <C>
Computer equipment $ 5,175 $ 5,175 $ 2,458 $ 2,458
Computer software 3,488 3,488 1,335 1,335
Furniture and fixture 380 380 176 -
-------------------------------------------------------------------------
9,043 9,043 3,969 3,793
Less: Accumulated depreciation (6,462) (4,323) (2,348) (1,036)
-------------------------------------------------------------------------
$ 2,581 $ 4,720 $ 1,621 $ 2,757
=========================================================================
</TABLE>
NOTE 5 - LOAN PAYABLE
Loan payable consists of:
<TABLE>
<CAPTION>
December 31,
--------------------------------
1999 1998 1997 1996
<S> <C> <C> <C> <C>
Advance from Theorema Ltd. and
Paine Webber Incorporated as part of
future financing (Note 8) $ - $ - $ - $100,000
================================
</TABLE>
<PAGE>
================================================================================
AMERICAN PACIFIC MINERALS LTD.
(A Development Stage Enterprise)
Notes to the Financial Statements
Expressed in United Dollars
================================================================================
For the Years Ended December 31, 1999, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company has transacted business with stockholders, directors and officers of
the Company and a company with common directors, officers and principal
stockholders. These transactions are recorded at fair market values as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1999 1998 1997 1996
<S> <C> <C> <C> <C>
Accounts payable and accrued liabilities $10,260 $ - $ - $ -
Due to (from) stockholders 1,322 (9,089) 5,653 (1,391)
----------------------------------------
$11,582 $(9,089) $5,653 $(1,391)
========================================
</TABLE>
The Company entered into contracts with its President/Chief Executive Officer
and Chief Operating Officer effective as of January 1, 1996. These contracts
called for annual salaries of $250,000 and $200,000 respectively. The contracts
also called for the issuance of stock options for 2,000,000 shares and 500,000
shares respectively. The Chief Operating Officer resigned from the Company on
December 29, 1996. By an agreement with the President/Chief Executive Officer
and former Chief Operating Officer, all salaries for the period from January 1,
1996 forward have been cancelled and the employment contracts have been voided.
All stock options have been cancelled.
NOTE 7 - SHARE CAPITAL AND STOCK OPTIONS
The Company is authorized to issue 25,000,000 shares of preferred stock with a
par value of $1 (Canadian) and 100,000,000 common shares with no par value.
There are no outstanding preferred shares as December 31, 1999, 1998, 1997 and
1996. At December 31, 1999, 1998, 1997 and 1996, there were 42,006,040 common
shares outstanding.
The Company has two stock option plans under which options may be granted for
the purchase of the Company's common stock. The 1994 Long Term Incentive Plan
(the "LTIP Plan") was approved by the stockholders in 1994 and provides for the
issuance of options, stock appreciation rights and stock bonuses to directors,
officers and employees of the Company, and to certain professional and other
advisors and consultants to the Company, to purchase shares of the Company's
common stock. The LTIP Plan authorizes the granting of non-qualified or
incentive stock options with terms which are approved by the Board of Directors.
The LTIP Plan limits the number of shares of common stock available for issuance
based on the overall number of shares of common stock available pursuant to
incentive stock options to 4,000,000. At December 31, 1999, 1998, 1997 and 1996
all stock previously granted options had been forfeited.
<PAGE>
===============================================================================
AMERICAN PACIFIC MINERALS LTD.
(A Development Stage Enterprise)
Notes to the Financial Statements
Expressed in United Dollars
================================================================================
For the Years Ended December 31, 1999, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
NOTE 7 - SHARE CAPITAL AND STOCK OPTIONS (Cont'd)
The 1994 Directors' Stock Option Plan (the "Directors' Plan") was approved by
the Board of Directors in 1994 and the shareholders in 1995 and provides for the
issuance of stock options to directors of the Company to purchase shares of the
Company's common stock. The Directors' Plan authorizes the granting of non-
qualified stock options to directors of the Company on December 9 of every year
and allows for all options to be exercised upon grant. Options terminate the
earlier of five years from the date of grant or one year from the date upon
which a participant ceases to be a director. Each director who is also an
employee of the Company and all other directors are granted options to purchase
100,000 shares and 20,000 shares, respectively, of the Company's common stock at
an exercise price equal to the market price at the date of grant. The number of
shares of common stock available for issuance is dependent upon the number of
directors of the Company. At December 31, 1999, 1998, 1997 and 1996 all stock
options previously granted had been forfeited.
Changes in stock options during the period of the financial statements are as
follows:
<TABLE>
<CAPTION>
Options Available Options Price Per
for Grant Share
--------------------------------------------------
<S> <C> <C>
Balance, December 31, 1995 260,000 $0.35 - $0.51
Forfeited (260,000) -
--------------------------------------------------
Balance, December 31, 1999, 1998, 1997 and 1996 - -
==================================================
</TABLE>
NOTE 8 - GAIN FROM SETTLEMENT FROM LAWSUIT
During the 1997 fiscal year the Company settled part of the lawsuit (Note 1) for
$100,000 cash and forgiveness of the loan payable of $100,000 (Note 5).
NOTE 9 - LOSS (INCOME) PER SHARE
The number of shares used to calculate per share information for the years
presented are based on the weighted average number of common shares and common
shares equivalents outstanding during each year. The weighted average number of
shares outstanding during the year of the financial statements is 42,006,040.
<PAGE>
================================================================================
AMERICAN PACIFIC MINERALS LTD.
(A Development Stage Enterprise)
Notes to the Financial Statements
Expressed in United Dollars
================================================================================
For the Years Ended December 31, 1999, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
NOTE 10 - INCOME TAXES
At December 31, 1999, the Company had net operating loss carryforwards for U.S.
federal and Canadian income taxes of approximately $370,000 available to offset
future taxable income. Due to ownership changes in 1994 and 1995 and changes in
the business purpose, both the U.S. federal and Canadian net operating loss
carryforwards as these dates, of approximately $19.2 million of U.S. and $2.6
million of Canadian, are subject to restrictions under laws and any tax benefit
is expected to be minimal.
A summary of the net operating loss carryforwards incurred since 1995 and years
of expiration are as follows:
Canada U.S. Federal
----------------------------------
2003 $222,891 $ -
2004 57,823 -
2005 53,474 -
2006 36,125 -
2011-2015 - 370,313
----------------------------------
$370,313 $370,313
==================================
The tax benefit of the cumulative loss carry forwards has been offset by a
valuation allowance of the same amount.
NOTE 11 - UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1999 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. Although the change in date has occurred, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect the entity, including
those related to customers, suppliers, or other third parties, have been fully
resolved.
<PAGE>
AMERICAN PACIFIC MINERALS LTD.
(Commission File No. 0-13029)
INDEX TO EXHIBITS
(1) Underwriting Agreement. Not Applicable.
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or
Succession. None.
(3) Corporate Organization [All documents previously filed].
(4) Instruments defining the rights of security holders. None
(5) Letter regarding Legality. Not Applicable.
(6) Opinion regarding Discount on Capital Shares. None.
(7) Opinion regarding Liquidation Preference. None.
(8) Opinion regarding Tax Matters. Not Applicable.
(9) Voting Trust Agreement. None
(10) Material Contracts [Other documents previously filed].
(11) Statement regarding Computation of Per Share Earnings. None.
(12) Statement regarding Computation of Ratios. None.
(13) Annual Report to Security Holders. Not Applicable
(14) Material Foreign Patents. None.
(15) Letter regarding Unaudited Interim Financial Information. Not Applicable
(16) Letter regarding Change in Certifying Accountant [Document previously
filed].
(17) Letter regarding Director Resignation. Included with Signatures.
(18) Letter regarding Change in Accounting Principles. Not Applicable
(19) Report furnished to Security Holders. Not Applicable
(20) Other Documents or Statements to Security Holders. Not Applicable
(21) Subsidiaries of Registrant: None.
(22) Published Report regarding Matters Submitted to Vote of Security Holders.
Not Applicable
(23) Consents. Not Applicable.
(24) Power of Attorney. Included with Signatures.
(25) Statement of Eligibility of Trustee. Not Applicable.
(26) Invitation for Competitive Bids. Not Applicable.
(27) Financial Data Schedule.
(28) Information from Reports furnished to State Insurance Regulatory
Authorities. None.
(99) Other Exhibits:
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 7,772
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 9,043
<DEPRECIATION> (6,462)
<TOTAL-ASSETS> 10,353
<CURRENT-LIABILITIES> 180,666
<BONDS> 0
0
0
<COMMON> 29,815,841
<OTHER-SE> (29,986,154)
<TOTAL-LIABILITY-AND-EQUITY> 10,353
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 36,125
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (36,125)
<INCOME-TAX> 0
<INCOME-CONTINUING> (36,125)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36,125)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
