FBC Holding, Inc. - Annual Report: 2008 (Form 10-K)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-KSB
(Mark
One)
xAnnual Report Pursuant to
Section 13 or 15(d) of the Securities and Exchange Act of
1934
For the fiscal year ended July
31, 2008
o Transition Report Pursuant
to Section 13 or 15(d) of the Securities and Exchange Act of
1934
For the transition
period from __________ to _________
Commission file number: 333-137613
WAVE
URANIUM HOLDING
(Name of
small business issuer in its charter)
|
Nevada
|
71-1026782
|
|
|
(State or other jurisdiction of incorporation
or organization)
|
(IRS Employer
Identification No).
|
|
|
5348 Vegas Drive, Suite 228,
Las Vegas, NV
|
89108
|
|
|
(Address of
principal executive offices)
|
(Zip
Code)
|
Issuer's telephone number: (702)
939-8029
Securities registered pursuant to Section 12(b) of
the Exchange Act: None
Securities registered pursuant to Section 12(g) of
the Exchange Act: Common
Shares
Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act Yes o Nox
Check whether the
issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Exchange Act during
the past 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 o
Check if there is
no disclosure of delinquent filers in response to Item 405 of Regulation S-B is
not contained in this
form, and no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or
information statements incorporated by reference in part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
x
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange
Act). Yes o No x
State
issuer's revenues for its most recent fiscal year: $0
The
number of shares outstanding of the issuer's classes of Common Stock as of
October 27, 2008 is 75,037,810
shares
Transitional Small Business
Disclosure Format Yes o No x
Table
of Contents
| 3 | |
| 3 | |
| 11 | |
| 14 | |
| 14 | |
| 15 | |
| 15 | |
| 17 | |
| 22 | |
| 22 | |
| 22 | |
| 22 | |
| 23 | |
| 23 | |
| 26 | |
| 28 | |
| 28 | |
| PART IV | 29 |
| 29 | |
| 30 |
2
Item
1. DESCRIPTION OF BUSINESS
In this Annual
Report, when we say “we”, “us”, “our” we are referring to Wave Uranium Holding
and our wholly owned subsidiary, Wave Uranium.
We were originally
organized under the name Iron Link Ltd. on May 31, 2006 to test and develop IPTV
based ethnic media services. We raised $48,192 in a registered public offering
from the sale of 30,120,000 shares of common stock, but expended these funds
without being able to attain revenues. In June 2007 we lacked the cash to
further develop our business and had negative stockholders’ equity. Management
agreed to sell its 75,000,000 shares of common stock to Norman Meier on June 18,
2007, and the IPTV assets were disposed of. Concurrently with the sale of
shares, and immediately prior to the disposal of the IPTV assets, we issued
40,000,005 shares of common stock to Norman Meier to acquire Wave Uranium, a
Nevada corporation. On June 22, 2007 we amended our Articles of Incorporation to
change our name to Wave Uranium Holding.
We are engaged in
the acquisition of mineral rights on properties that our management believes
hold potential for significant uranium deposits. Our current geographic focus is
the Utah - Arizona region.
Cautionary
Statement
When used in this
Form 10-KSB the words "expects," "anticipates," "estimates", “plans” and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to risks and uncertainties, including those set forth below under
"Risks and Uncertainties," that could cause actual results to differ materially
from those projected. These forward-looking statements speak only as of the date
hereof. We expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained herein to
reflect any change in our expectations with regard thereto or any change in
events, conditions or circumstances on which any statement is based. This
discussion should be read together with the financial statements and other
financial information included in this Form 10-KSB.
Currency
All currency
references in this Report are in US dollars unless otherwise noted
Risk
Factors
The shares are a
speculative investment and very risky. You should especially consider the
following risk factors.
1.
We are still in the development stage, and we may never obtain the capital we
require to carry out our business, which could prevent us from being able to pay
our obligations.
Our activities have
been limited. We have not received any revenues or income related to our
business through July 31, 2008. There can be no assurance that we will be able
to acquire valuable mineral properties, or explore, or develop such properties.
We are in need of approximately $1,000,000 in funding to carry out our business
plan over the next 12 months, beginning August 2008. We intend to seek equity
financing following the effectiveness of our reverse stock split on November 20,
2008. There is no assurance such financing will be available on terms acceptable
to the Company, or at all. Failure to obtain such financing or to raise
additional capital or borrow additional funds may result in the Company
depleting its available funds and not being able to pay its
obligations.
3
2.
Because we do not have any revenues and we expect to incur operating losses for
the foreseeable future, our business may fail.
We have never
earned revenues and we have never been profitable. Prior to completing
exploration on the property, we anticipate that we will incur increased
operating expenses without realizing any revenues. We therefore expect to incur
significant losses into the foreseeable future. If we are unable to generate
financing to continue the exploration of our mineral claim, we will fail and any
investment in us will be worthless.
3.
Our planned mineral exploration efforts are highly speculative and we may no be
able to complete our exploration activities, which could prevent us from
generating revenues.
Mineral exploration
is highly speculative. It involves many risks and is often non-productive. Even
if we believe we have found a valuable mineral deposit, it may be several years
before production is possible. During that time, it may become no longer
feasible to produce those minerals for economic, regulatory, political, or other
reasons. Additionally, we may be required to make substantial capital
expenditures and to construct mining and processing facilities. As a result of
these costs and uncertainties, we may be unable complete our exploration
activities which could prevent us from ever generating revenues.
4.
Mining exploration operations in general involve a high degree of risk,
difficulties and expenditure, and we may be unable, or may choose not to insure
against such risks, which could increase our operating expenses.
Our operations are
subject to all of the hazards and risks normally encountered in the exploration
of minerals which even a combination of experience, knowledge and careful
evaluation may not be able to overcome. These include unusual and unexpected
geological formations, rock falls, cave-ins, pollution, flooding and other
conditions involved in the drilling and removal of material, any of which could
result in work stoppages and damage to, or destruction of, mines and other
producing facilities, damage to life or property, environmental damage and
possible legal liability. Although we plan to take adequate precautions to
minimize these risks, and risks associated with equipment failure or failure of
retaining dams which may result in environmental pollution, there can be no
assurance that even with our precautions, damage or loss will not occur and that
we will not be subject to liability which could increase our operating expenses
and prevent us from being profitable
5.
Competition may prevent us from carrying out our exploration plan, which could
cause our business to fail.
The mineral
resources industry is intensely competitive and we compete with many companies
that have greater financial resources and technical facilities than ourselves.
Significant competition exists for the limited number of mineral acquisition
opportunities available in our sphere of operation. As a result of this
competition, our ability to acquire additional attractive mining properties on
terms that we consider acceptable may be adversely affected.
4
We plan to complete
an exploration program for which we will need field equipment, contract
geologists, and possibly drilling crews. We have not yet entered into any
agreements to provide us access to drilling or logging services. We face
competition from other mining companies for access to mining equipment, crews
and geologists. Currently, in North America, there are large numbers of
companies competing to obtain the services of rigs and crews. There are
inadequate rigs to meet the demand and the owners of the rigs often give
preference to larger drilling programs than that which we plan to carry out. If
we are unable to obtain mining equipment and labor on commercially reasonable
terms, this could increase our operating costs. If we are unable to obtain
mining equipment or labor we will not be able to complete our exploration
program and we may not be able to achieve revenues.
We may, in the
future, be unable to meet our share of costs incurred under agreements to which
we are a party and we may have our interests in any properties that we own which
are subject to such agreements, reduced as a result. Furthermore, if other
parties to such agreements do not meet their share of such costs, we may be
unable to finance the costs required to complete the recommended programs and
our business could fail.
6.
Fluctuating mineral prices could prevent us from obtaining financing and we may
have to cease operations.
The mining industry
in general is intensely competitive and there is no assurance that, even if
commercial quantities of mineral resources are developed, a profitable market
will exist for the sale of same. Factors beyond our control may affect the
marketability of any minerals discovered. The prices of gold, uranium, nickel,
copper, cobalt and palladium have varied considerably over the past few years,
and no assurance can be given that prices will remain at their current levels;
significant price movements over short periods of time may be affected by
numerous factors beyond our control, including international economic and
political trends, expectations of inflation, currency exchange fluctuations
(specifically, the U.S. dollar relative to other currencies), interest rates and
global or regional consumption patterns, speculative activities and increased
production due to improved mining and production methods. The effect of these
factors on the price minerals and therefore the economic viability of any of our
exploration projects cannot accurately be predicted. As we are in the
exploration stage, the above factors have had no material impact on operations
or income to date.
The price of
uranium has risen dramatically over the past 4 years, from $10.10 per pound in
2003 to over $78 per pound as of October 15, 2007 ( www.quoteuranium.com/
; and www.investmentu.net/ppc/t4uranium.cfm?kw=X300G533). This is a rise of
approximately 770% in four years. There is no assurance that this upward trend
will continue. A drop in uranium prices could prevent us from obtaining
financing as a result of which we may have to cease operations.
7.
Environmental regulation may increase the anticipated time and cost of our
exploration program, which could increase our expenses.
All phases of our
operations are subject to environmental regulations. Environmental legislation
is evolving in a manner which will require stricter standards and enforcement,
increased fines and penalties for non-compliance, more stringent environmental
assessments of proposed projects and a heightened degree of responsibility for
companies and their officers, directors and employees. While our planned
exploration program budgets for regulatory compliance, there is a risk that new
regulations could increase our time and costs of doing business and prevent us
from carrying out our exploration program. These factors could prevent us from
becoming profitable.
5
8.
Our auditors have rendered a going concern emphasis opinion on our financial
statements.
Our auditors have
expressed concern as to the uncertainties in our business which raises
substantial doubt about our ability to continue as a going concern. If our
business is ultimately unsuccessful, the assets on our balance sheet could be
worth significantly less than their carrying value and the amount available for
distribution to stockholders on liquidation would likely be
insignificant.
9. Because
the SEC imposes additional sales practice requirements on brokers who deal in
our shares which are penny stocks, some brokers may be unwilling to trade them.
This means that you may have difficulty reselling your shares and this may cause
the price of the shares to decline.
Our shares are
classified as penny stocks and are covered by Section 15(g) of the Securities
Exchange Act of 1934 (the “Exchange Act”) which impose additional sales practice
requirements on brokers-dealers who sell our securities in this offering or in
the aftermarket. For sales of our securities, the broker-dealer must make a
special suitability determination and receive from you a written agreement prior
to making a sale for you. Because of the imposition of the foregoing additional
sales practices, it is possible that brokers will not want to make a market in
our shares. This could prevent you from reselling your shares and may cause the
price of the shares to decline.
10. The
price and trading volume of our common stock has been highly volatile and could
adversely affect your ability to sell your shares and the available price for
the shares when sold.
Our common stock is
quoted on the OTC Bulletin Board under the trading symbol “WAVU.OB”. The market
for our stock is highly volatile. We cannot guarantee you that there will be a
market in the future for our common stock. Trading of securities on the OTC
Bulletin Board is often sporadic and investors may have difficulty buying and
selling or obtaining market quotations, which may have a depressive effect on
the market price for our common stock. You may not be able to sell your shares
at your purchase price or at any price at all. Accordingly, you may have
difficulty reselling any shares your purchase from the selling
shareholders.
Introduction
We
were originally organized under the name Iron Link Ltd. on May 31, 2006 to test
and develop IPTV based ethnic media services. We raised $48,192 in a registered
public offering from the sale of 30,120,000 shares of common stock, but expended
these funds without being able to attain revenues. In June 2007 we lacked the
cash to further develop our business and had negative stockholders’ equity.
Management agreed to sell its 75,000,000 shares of common stock to Norman Meier
on June 18, 2007, and the IPTV assets were disposed of. Concurrently with the
sale of shares, and immediately prior to the disposal of the IPTV assets, we
issued 40,000,005 shares of common stock to Norman Meier to acquire Wave
Uranium, a Nevada corporation (“Wave Sub”). On June 22, 2007 we amended our
Articles of Incorporation to change our name to Wave Uranium Holding. On July
13, 2007 the Articles of Incorporation were further amended to increase the
number of authorized shares of common stock from 75 million to 145 million and
to authorize the issuance of 5 million shares of preferred stock. On July 31,
2007 our Board approved resolutions to increase our authorized common stock to
150 million and we effected a 15 for 1 forward split of our common
stock. On September 26, 2007, Mr. Meier cancelled the 75,000,000
shares he had acquired from former management, resulting in 70,120,005 shares
outstanding.
Since June 2007 we
have been developing our business plan and have acquired numerous uranium claims
in Utah and Arizona and State mineral leases in Utah.
At
the time of the reorganization and restructuring, Wave Sub had never engaged in
business and had no business at that time, but intended to enter the uranium
exploration and development business.
Our long term aim
is to identify and either purchase or option mineral interests in various
uranium prospects with a view to exploring them, and if a commercially viable
ore body is found, extracting uranium from the same and generating a profit
either alone or by forming joint ventures with other companies who have greater
resources than our own.
6
Overview
We
are engaged in the acquisition of mineral rights on properties that our
management believes hold potential for significant uranium deposits. Our current
geographic focus is southeastern Utah and certain areas in Arizona. On September
20, 2007 we signed an agreement with Handley Minerals, Inc. whereby we acquired
an option to purchase a 100% interest in the mineral rights to the Wilson Creek
project which consists of ten claims situated in the county of Gila, Arizona
(the “Wilson Creek Property”). In September of 2007 we acquired 1337 mining
claims in the Mineral Canyon District of Utah and 153 additional claims in
eastern Arizona for costs to us of $330,000. Property evaluations on both claims
areas were conducted during 2008, resulting in preliminary exploration models
that favor a subset of the original claims. As a result, 500 claims
in Utah (the “Utah Claims”) and 11 claims in Arizona (Fairview Claims)
were renewed in September of 2008, and the Option Agreement with Handley
Minerals was cancelled. Six leases in Utah will also be renewed.
Our twelve-month
plan of operation for the Utah property beginning October 2008 is to
continue exploration of the Federal claims and State leases, and to purchase a
contiguous block of 700 claims from Future Energy, LLC that contains proven
uranium resources based on drilling records acquired and analyzed in 2008.
Validation of the exploration model developed in 2008 will involve additional
geologic mapping, supported by a modest Phase I drilling effort to depths of up
to 1,500 feet, if funding permits.
Radon and
geochemical data from the Fairview claims suggest multiple exploration targets;
establishing the geologic context for these targets and filing a Notice of
Intent (NOI) for preliminary drilling to depths of 100 feet will be priorities
for the next year.
Screening
activities to identify additional uranium properties for acquisition will
continue, emphasizing prospects in the Salt Wash Member of the Morrison
Formation, and breccia pipes in the Arizona Strip region. A promising
exploration strategy for the Arizona Strip is in place, incorporating a variety
of geologic and environmental factors.
We
are an exploration stage company. There is no assurance that either of our land
positions contains a commercially viable ore body. Further exploration beyond
the scope of our planned exploration activities will be required before a final
evaluation as to the economic and legal feasibility of mining is determined. We
plan to undertake such further exploration, however it is anticipated that
significant additional financing will be required in order to do so, and there
is no assurance that the necessary financing will be obtainable in the future.
Even if the financing is obtained, there is no assurance that further
exploration will result in a final evaluation that a commercially viable uranium
or other mineral deposit exists at Mineral Canyon or Fairview.
7
Exploration
and Growth Strategy
Our objectives are
to acquire land positions in areas of significant uranium resource potential by
a systematic and rational screening process, then explore and develop those
properties to produce uranium ore. We recognize two key components to a
productive exploration program, 1)
geologic models that can be tested by drilling and developed into predictive
tools, and 2) effective database management. Geologic models (of sandstone-type
deposits, for example) involve a combination of sedimentology (study of
sediments) of the host rock, mineralogic indicators of alteration history,
paleohydrologic constraints, and much more. Our management believes that these
models, or guiding concepts, must be grounded in actual data and fact, and we
plan to seek feedback from an appropriately structured information management
system to apply them on a regional basis. Sound decisions on land acquisitions,
disposition of held properties, and subsurface targeting are fundamentally
dependent on the vision of the exploration geologist and his or her ability to
process essential information that can be massive in scope and content. We seek
to minimize the financial burden of land acquisitions from external parties,
choosing instead to develop exploration plays in-house.
Our management’s
research indicates that most radioactive mineral discoveries have been made at
outcrops of mineralized rock units by prospectors using Geiger counters or
similar gamma- or beta-ray detectors. Numerous uranium occurrences have been
explored by small-scale mining beginning at the point of discovery and guided by
ore grade only. Because of the inherently higher risk and cost associated with
exploratory drilling, we plan to use a conceptual
model for favorability as the basis for targeting decisions.
Just as petroleum
geologists have historically targeted reservoir rocks in structurally favorable
locations, uranium geologists have long known that favorable
environments can be systematically explored. However, unlike petroleum
accumulation, uranium enrichment is most commonly the result of geochemical
processes unrelated to present-day structure or hydrology. Petroleum geologists
minimize risk associated with drilling a “wildcat” well using a variety of
geophysical techniques. Because robust conceptual models have not been available
to uranium geologists, the risks associated with exploratory drilling for
uranium have historically been far greater. Our geoscience team intends to use
sound, robust conceptual genetic models to evaluate targets, thereby minimizing
risk.
Our competitive
advantage lies in our unique ability to integrate mappable data from fluvial
sedimentology, groundwater models and instrumental methods to guide the
discovery of new Colorado Plateau type ores. Our technical team is structured to
systematically process and interpret natural tracers and environmental
indicators in a rational
approach to locating intersections of favorable host rocks with favorable
hydrologic settings.
Our long-term
strategic vision is to develop sufficient reserves of mineable uranium to ensure
our long-term profitability, and to balance exploration costs with lower-risk
sources of revenue so the exploration component can be sustained
indefinitely.
A study of the most
successful companies operating in the 21st-Century uranium boom shows that all
of them share two qualities: they are aggressive and focused. Companies that
have succeeded in this competitive environment have chosen to focus on
particular deposit types, mining methods, or geographic areas. Once companies
have developed their unique, proprietary exploration models for the deposit
types of choice, they pursue property positions aggressively through
acquisitions from other companies or by conducting primary exploration of their
own. In the near term, we have chosen to focus on sandstone-type uranium
deposits in the Colorado Plateau. Although many ages of rock host small or
subeconomic quantities of uranium, the major producers in the Colorado Plateau
have been the Salt Wash Member of the Morrison Formation and the Moss Back
Member of the Chinle Formation. We have assembled an experienced team of
geoscientists to explore for deposits of these types: a geochemist, a
hydrogeologist (a groundwater professional), and a sedimentologist. The Salt
Wash has been studied for over 100 years. Reams of geological and geochemical
information have been compiled over the years; the most current theories for
origin of Salt Wash type deposits seem to point to a two-solution model that
requires a very specific hydrologic regime in order to form uranium deposits.
However, although the current models depend strongly on the hydrologic
relationships of the source and host rocks, none of the current models have been
tested and refined by hydrogeologists. We propose to calibrate and refine
existing models for the formation of Salt Wash and other sandstone ores by
defining the specific hydrologic regimes in which they occur. Then, we will find
analogs to those hydrologic regimes in other Colorado Plateau sedimentary
environments that may have been overlooked by other explorationists. That will
enable us to develop unique prospects that might be missed by other companies
whose models use geology and geochemistry alone.
8
The deeper
channel-controlled rocks at the base of the Chinle Formation host numerous ore
bodies in the region, and others probably exist in the huge Cottonwood
paleovalley system between Lisbon Valley and the San Rafael Swell. The Chinle is
a second "favorable environment" that we are planning to concentrate on,
although we expect that other favorable environments and areas will present
themselves as the exploration program evolves. We will acquire properties as
opportunities present themselves, and conduct primary exploration in and around
known deposit trends or extensions of known trends. Our plan is to have our
geoscience team evaluate properties quickly and effectively, allowing us to
stake and acquire properties quickly and to quickly reject marginal or
unfavorable properties, thereby providing the most efficient use of our
resources.
Breccia pipes of
the Arizona Strip are associated with areas where overlying rocks have collapsed
into sinkholes developed in the Redwall Limestone of Mississippian
age. These paleokarst features are associated with fracture systems
that were enlarged by groundwater dissolving the carbonate minerals in the
limestone, leading to eventual collapse into the underground openings and
formation of rubble chimneys that were later mineralized by
groundwater. An authoritative resource estimate by the U.S.
Geological Survey (Circular 1051, 1990) indicates that the odds are 9 to 1 that
the true endowment in the Arizona – Utah breccia-pipe environment is between
338,740 and 2,757,200 tons U3O8.
Exploration for
uranium in breccia pipes is guided by the locations of solution-enlarged
ground-water flow pathways in the Redwall, which are known to follow regional
fracture patterns. Many of these fractures discharge groundwater into
the Grand Canyon and its tributary drainages, so there is great incentive to
understand the environmental consequences of developing the uranium resources of
the Arizona Strip. We predict that many mining claims will be
forfeited by companies who lack the hydrologic expertise to support permitting
of their development goals; we believe we are well positioned to make the
necessary hydrologic assessments and thereby reduce the risk of entry into this
potentially rewarding but environmentally-sensitive area.
We expect to
continuously revise our exploration models as we analyze data and acquire or
dispose of mineral properties.
Mineral
Property
Mineral
Canyon, Grand County, Utah
Our original land
position of 1337 mining claims and seven State leases has been modified to
include 500 claims and six leases based on property evaluation during the first
year of operation. A substantial data package, including records from
roughly 500 boreholes in the Mineral Canyon District, was purchased from Future
Energy, LLC, which holds an adjacent block of 700 claims east of Mineral
Canyon. Field investigations and review of geophysical logs from the
boreholes have revealed a prominent, channel-controlled enrichment trend
underlying our renewed claims and those of Future Energy. The
westward extent of the channel has not been determined, and a parallel trend may
exist to the north of the demonstrated channel. We restructured our
land position to allow for acquisition of the Future Energy claim block, which
will provide us with a contiguous block of 1200 claims plus interspersed State
leases in an area that has been successfully explored by large entities
including Exxon and the Tennessee Valley Authority. Our goal is to
develop estimates of proven, probable, and speculative uranium resources based
on continued field investigations and analysis of assay data.
9
Fairview
Claims, Gila County, Arizona
Holdings in Gila
County, Arizona have been reduced to 11 claims in the Fairview Block, based on a
radon survey, soil geochemistry, and historical information from the Atomic
Energy Commission (AEC), which conducted limited drilling on the property in the
1950’s. Development of Fairview may be problematic because it is
within the Tonto National Forest and proximal to the Salome Wilderness, but
exploration targets within the Block are relatively well-defined and shallow,
and U3O8
grades reported by the AEC exceed 0.5%. Geologic mapping and sampling
of subunits of the Dripping Spring Quartzite exposed within the Fairview Block
will conclude surface-based studies at that locality and support decisions of
how best to continue exploration and development activities there.
Employees
As
of September 30, 2008, we employed a total of 3 employees in the following
capacities: President, Exploration Manager, Senior Geologist. We believe that we
have a good working relationship with our employees. We are not a party to any
collective bargaining agreements, no employees are represented by a labor union,
and we believe we have good relations with our employees. At present, we intend
to hire one senior geologist and one computer technical / land
specialist.
Environmental
laws:
U.S.
Federal Laws
The U.S. Forest
Service requires that mining operations on lands subject to its regulation
obtain an approved plan of operations subject to environmental impact evaluation
under the National
Environmental Policy Act . Any significant modifications to the plan of
operations may require the completion of an environmental assessment or
Environmental Impact Statement prior to approval. Mining companies must post a
bond or other surety to guarantee the cost of post-mining reclamation. These
requirements could add significant additional cost and delays to any mining
project undertaken by us.
Under the U.S.
Resource
Conservation and Recovery Act , mining companies may incur costs for
generating, transporting, treating, storing, or disposing of hazardous waste, as
well as for closure and post-closure maintenance once they have completed mining
activities on a property. Any future mining operations at the Wilson Creek
property may produce air emissions, including fugitive dust and other air
pollutants, from stationary equipment, storage facilities, and the use of mobile
sources such as trucks and heavy construction equipment which are subject to
review, monitoring and/or control requirements under the Federal Clean Air Act
and state air quality laws. Permitting rules may impose limitations on our
production levels or create additional capital expenditures for pollution
control in order to comply with the rules.
The U.S. Comprehensive
Environmental Response Compensation and Liability Act of 1980 , as
amended, ("CERCLA") imposes strict joint and several liability on parties
associated with releases or threats of releases of hazardous substances. Those
liable groups include, among others, the current owners and operators of
facilities which release hazardous substances into the environment and past
owners and operators of properties who owned such properties at the time the
disposal of the hazardous substances occurred. This liability could include the
cost of removal or remediation of the release and damages for injury to the
surrounding property. We cannot predict the potential for future CERCLA
liability with respect to any of our mineral claims or surrounding
areas.
Failure to comply
with applicable laws, regulations and permitting requirements may result in
enforcement actions there under, including orders issued by regulatory or
judicial authorities causing operations to cease or be curtailed, and may
include corrective measures requiring capital expenditures, installation of
additional equipment or remedial actions. Parties engaged in mining operations
or in the exploration or development of mineral properties may be required to
compensate those suffering loss or damage by reason of the mining activities and
may have civil or criminal fines or penalties imposed for violations or
applicable laws or regulations.
Amendments to
current laws and regulations governing operations or more stringent
implementation thereof could have a substantial impact on us and cause increases
in exploration expenses and capital expenditures or require abandonment or
delays in development of new mining properties.
As
we do not know the exact extent of the exploration program that we will be
undertaking, we cannot estimate accurately the cost of the remediation and
reclamation that will be required. Hence, it is impossible at this time to
assess the impact of any capital expenditures on earnings or our competitive
position in the event a potentially economic deposit is discovered.
10
Upon entry into
commercial production, due to the increased environmental impact, the cost of
complying with permit and environmental laws will be greater than in the
previous phases. At this stage, permits and regulations will regulate much of
our production program to limit environmental impact. Some examples of
regulatory requirements that may be encountered include but are not limited
to:
|
|
·
|
an impact
report on the local flora and
fauna;
|
|
|
·
|
any water
discharged will have to meet water
standards;
|
|
|
·
|
monitoring of
ground water to ensure no/minimal
contamination;
|
|
|
·
|
all material
to be left on the surface will need to be environmentally benign;
and
|
|
|
·
|
the
socio-economic impact will have to be evaluated and re-mediated if deemed
negative.
|
Before we can
commence the production phase we would need to submit an application to commence
mining operations. This application is the subject to a lengthy review process
which ultimately decides whether our application should be approved or rejected.
This process may involve steps such as consulting public and other interested
parties for comments or the request of additional information from us. The
length of time and cost of this process is dependent upon the size of the
proposed mining operation, among other factors.
Intellectual
Property
We
have not filed for any protection of our trademark. We own the copyright in our
website www.waveuranium.com.
Research
and Development
We
have not spent any amounts on research and development activities since our
inception. Our planned expenditures on our exploration programs are summarized
under the section of this prospectus entitled “Description of
Properties.”
Our principal
executive offices are located at 5348 Vegas Drive, #226, Las Vegas, NV 89108. We
also carry on business at various locations where our key officers
reside.
We
hold mineral properties in Grand and Emery Counties, Utah, and Gila County,
Arizona, as described below.
Mineral
Canyon Property
1.
Location and Access
The Mineral Canyon
project area is located in western Grand County and eastern Emery County, Utah,
nearest to the town of Moab. The claims are east of the Green River and north of
Canyonlands National Park. Additional Utah state leases are scattered on the
east and west sides of the Green River within Grand and Emery counties. The
claims and leases are located within Townships 25 and 26 south and Ranges 16,
17, 17&1/2, and 18 east.
Access to the
claims is very good. Paved roads lead from Moab almost to the claims area. Wide
and graded dirt roads cut through the claims in several locations. All canyons
can be reached by truck or all-terrain vehicle. There is a web-like network of
roads on the mesas above the canyons. Historical drilling for oil and gas, in
addition to uranium exploration, resulted in hundreds of miles of unimproved
dirt roads and trails.
To
drive to Mineral Bottom (location shown on Figure 2) from Moab, travel north on
US 191 for 11 miles (17.7 km). Turn west on UT 313, following the signs for
Canyonlands National Park. After traveling for 12.3 miles (19.8), turn right
(west) on Mineral Bottom Road. The Mineral Bottom boat launch and air strip is
13.7 miles (22 km) further, half of which is unpaved but graded. Countless other
two-tracks and 4WD trails also access the claims area.
Access to the state
leases on the west side of the Green River may be more difficult. No employee of
ours has scouted the area. 7.5” USGS quadrangle maps show 4WD roads within ½
mile (0.8 km) of all but the smallest state lease.
11
2.
Ownership Interest
The Mineral Canyon
claims and leases encompass a total area of over 15,490 acres (6,196 hectares;
Figure 2). The project totals 500 United States federal lode mining claims
(10,330 acres, 4,132 hectares) and 5101 acres (2,064 hectares) of Utah state
mining leases. All claims and leases are held exclusively by Wave Uranium
Holding.
There are no
royalties associated with the federal mining claims. Annual holding costs paid
to the U.S. Bureau of Land Management are $125 per claim, due September 1. Our
total holding costs are $62,500 per year.
Utah state leases
have an 8% gross value royalty. Annual holding costs paid to the State of Utah
are $1 per acre, or $5,161 per year.
3.
History of Operations
There are numerous
known uranium occurrences in and near the Mineral Canyon claims. There are 11
historical mines/prospects within the claims and an additional 3 occurrences in
the state leases. Furthermore, there are at least 32 historical mines/prospects
within 1 mile of the claims boundary. Most historical occurrences are visible as
surface mines on air photos and from field observations.
4.
Present Condition of the Property and Current State of Exploration
Other than ongoing
activities by us, there is no known exploration or production activity underway
in the Mineral Canyon District. Condition of the historic mines and
prospects is highly variable; some openings have been intentionally collapsed to
prevent entry hazards, while some adits are open and appear stable.
We
are not aware of any exploratory uranium work on the property since 1982.
Geologic mapping information is available from 1:100,000 Utah Geological Survey
maps of the Moab, San Rafael Desert, and La Sal Quadrangles (Doelling, 2001,
2002, 3004). Work has been carried out on the Chinle Formation within the claims
area by Gubitosa (1981), Blakey and Gubitosa (1983) and Hazel (1991, 1994). Our
employees have conducted fieldwork within the exposed canyons, but we have
conducted no exploratory drilling on the property.
The uranium geology
and stratigraphy of the region were extensively studied by USGS geologists as
part of the National Uranium Resource Evaluation (NURE) program of the late
1970’s. This study concluded that the Chinle Formation is favorable for the
occurrence of uranium deposits in the Mineral Canyon area, as evidenced by known
mineralization and characteristics of the host rocks (Campbell and others 1980;
Lupe and others, 1982).
Post-NURE
investigations of sedimentary environments of the Moss Back member of the Chinle
Formation by Gubitosa (1981), Huber (1981), Blakey and Gubitosa (1983), and Beer
(2005) have clarified many aspects of the depositional environment of the host
rock, but did not focus on uranium mineralization.
One year of
intermittent field mapping and detailed review of the well logs referenced above
(Item 3) are the basis of a Technical Report on the Mineral Canyon property,
that was released in preliminary form in August of 2008. The Report
presents an exploration model that significantly improves our ability to predict
where mineralization occurs and the geologic conditions responsible for uranium
enrichment. As a result of this work, our land position in the
Mineral Canyon District was adjusted to include only the most favorable 500
claims of the original 1337, while targeting and additional 700 claims east of
the original land position that meet our favorability criteria.
5.
Geology
Mineral Canyon and
the surrounding area are located within the central Colorado Plateau region. The
Chinle Formation was deposited across much of this region into the inherited
topographic low of the Pennsylvanian Paradox Evaporite (salt) Basin. The Paradox
Basin was an elongate northwest-trending basin covering nearly 11,000 mi2
(28,000 km2) in southwestern Colorado and southeastern Utah. Into this basin
salts were deposited to a maximum thickness of 5,000 to 7,000 feet (1,500 to
2,100 meters), thinning to the southwest toward the Mineral Canyon area.
Movement of the salt since deposition produced a series of northwest-trending
anticlines that parallel the southwestern flank of the Uncompaghre uplift. In
places where the salt was thickest, these anticlines were breached, but where
the salt is thinner on the southwest side of the basin the anticlines exhibit a
normal stratigraphic sequence. Salt movement occurred from the time of
deposition, continued sporadically through the Mesozoic (Chinle time), and
locally into the Cretaceous (Hazel, 1994).
The closest
breached anticline to the Mineral Canyon area is the Moab Valley Anticline,
which is bounded on the southwest by the Moab Fault. To the southwest of the
Moab Fault are the Kings Bottom Syncline and the subsequent (unbreached) Cane
Creek Anticline. Variations in the thickness of the Triassic Chinle Formation in
Mineral Canyon, as discussed later in this report, are due largely to the salt
movement that formed the Cane Creek Anticline.
The stratigraphic
units exposed within the Mineral Canyon claims area include the Triassic
Moenkopi Formation, Triassic Chinle Formation, and Lower Jurassic Wingate
Sandstone, Kayenta Formation, and Navajo Sandstone (Figure 8; Doelling, 2001).
This entire section is roughly 1400 feet (427 meters) thick.
12
The prevailing
structural features in and near the area of interest include the Kings Bottom
Syncline to the northeast and the Cane Creek Anticline, which plunges northwest
directly through the study area. This anticline, formed by salt flow, was not
breached like the Moab Valley Anticline and therefore exhibits the normal
stratigraphic sequence. Field data and formation depths obtained from over 150
logs suggest that Doelling’s (2001) placement of the Cane Creek Anticline is
somewhat incorrect.
A
regional trend of uranium enrichment associated with the “carbonate zone” of the
basal Chinle Formation, as described by Gubitosa (1981) extends from Lisbon
Valley, through the Mineral Canyon area, and northwest to the San Rafael Swell.
Other researchers (Johnson and Thordarson, 1966) associate this regional trend
with a change in character of the basal Chinle. Southwest of the
trend, the Moss Back member (older nomenclature) is a more or less thick and
continuous sand unit. Within the trend, the “Moss Back” is thin, discontinuous
sands interbedded with mudstones.
Stewart et al.
(1959) recognized the strong correlation between basal Chinle sandstones and
uranium deposits. Although the basal unit of the Chinle varies in name and age
across Western Colorado, northern Arizona, and southeastern Utah, uranium
deposits usually occur in the basal sandstone where it is incised into the
Moenkopi Formation, or in other formations where the Moenkopi is absent. The
basal unit might be Shinarump (as at the Happy Jack mine), Monitor Butte (as at
the Hidden Splendor mine), Moss Back (as in Lisbon Valley), or undifferentiated
Chinle (as in the Sevenmile Canyon district northwest of Moab). Where uranium
deposits are found higher in the section, they occur in a depositional setting
that is similar to the basal Chinle members (i.e. fluvial conglomerate incised
into finer-grained overbank material).
The Chinle
Formation is the uranium-bearing unit within the claims area. The sandstone at
the base of the Chinle has historically been the major uranium producer.
Gubitosa (1981) measured several stratigraphic sections within our properties.
Gubitosa (1981) and Blakey and Gubitosa (1983) interpreted the lowest portion of
the Chinle Formation in this area to have been deposited in a braided plain that
may have drained into a lake at the northwest end. They called the paleovalley
in which this braided stream system flowed, the same paleovalley that hosts the
Lisbon Valley deposits, the Cottonwood Paleovalley. Between the northeast and
southwest edges of this paleovalley there is a facies change in the basal sand
and conglomerate units. The area to the northeast, which includes our claims and
Lisbon Valley, contains predominantly carbonate clasts; the area to the
southwest, which contains fewer mapped uranium occurrences, contains
predominantly chert clasts and is otherwise referred to as the Moss Back member
of the Chinle Formation.
Previous workers
noted the presence of these intraformational carbonate clasts and informally
designated the basal sandstone Kane Springs 1 (Blakey and Gubitosa, 1983; Hazel,
1991, 1994). Kane Springs 1 is presumably younger than typical Moss Back.
Furthermore, every worker who has studied the Chinle Formation has proposed a
different internal stratigraphy. These differences are due to the variability of
the Chinle Formation over large distances, and the fluvial (i.e. discontinuous)
nature of the members. For Wave Uranium’s purposes, a simplified stratigraphic
model, based on work by Stewart (1957) and Hazel (1991, 1994), seems best. This
model includes six internal members. From the base (at the Tr-3 Unconformity) to
the top, the members include the Mottled Zone, Kane Springs 1, Kane Springs 2,
Kane Springs 3, Black Ledge, and Upper Chinle (including middle Church Rock and
Hite Beds). Kane Springs 1-3 and the Black Ledge are more fully described by
Hazel (1994).
Mottled
Zone: This member is a distinct purplish to gray and yellow mottled
zone, termed the Temple Mountain member by Stewart (1957). Some workers (e.g.,
Tanner and Lucas, 2006) refer to it as a paleosol, containing abundant root
casts and crayfish burrows. In places the mottling continues down into the
Moenkopi Formation. The base and/or the top of this zone is not always distinct.
The Mottled Zone is not present in all locations. Marzolf (2007, pers. comm.)
suggests this mottled unit is older than the Chinle Formation but younger than
the Moenkopi Formation.
Kane Springs 1-3:
Kane Springs 1 has an unconformable base, is sandy to gravelly, and generally
fines upward. This member is resistant in outcrop. Hazel (1994) considers Kane
Springs 1 the product of sinuous streams. Kane Springs 1 is often termed the
Moss Back within the study area. In the Mineral Canyon area, Kane Springs 1 is
different than the Moss Back in that it contains intraformational clasts
(carbonates and not chert) and has been interpreted by Blakey and Gubitosa
(1983) as younger than the Moss Back. Kane Springs 2 is a slope-forming
siltstone to sandstone. It is often green and reduced. The interpretation is
that it is the product of stream deposition, lakes, and small lake deltas. Kane
Springs 3 is a resistant fine to coarse-grained sandstone. This member contains
large-scale cross stratification, interpreted as fluvial barforms. The Kane
Springs members can vary dramatically over a short distance, and are best
grouped together as one member when the three sub-members cannot be
distinguished.
Black Ledge: The
Black Ledge member was named for its distinctive manganese-stained dark brown to
black appearance. It is a resistant ledge-forming sandstone. Hazel (1994)
interprets the Black Ledge as the product of low-sinuosity streams. As with Kane
Springs 1 and 3, it contains large-scale accretionary sets and is often gravelly
at the base.
Upper Chinle: The
Upper Chinle member comprises all units above the Black Ledge and below the
overlying Wingate Sandstone. This includes a slope-forming unit (Church Rock)
directly above the Black Ledge which is overlain by the eolian Hite Beds. Unlike
the eolian Wingate Sandstone, the Hite Beds contain minor siltstone to mudstone
interbeds. The contact between the Upper Chinle and Wingate Sandstone is clear
and distinct in most locations, defined as the J-0 unconformity.
Mineralization in
the project area is always spatially associated with macroscopic or microscopic
organic material. Uranium minerals such as uraninite, coffinite, or sooty
pitchblende coat sand grains, replace plant remains, or occur as replacements or
reaction rims around clasts of older rock contained in
conglomerates. Sulfide minerals are common in the reduced
sandstone that host mineralization. Under a binocular microscope, pyrite
was common; chalcopyrite, chalcocite, and sphalerite were also
noted. Uranium and copper mineralization are intimately associated in
deposits in the southern end of the project area, in and near Mineral Canyon.
Secondary copper minerals such as malachite and azurite are nearly ubiquitous in
Mineral Canyon mineralized samples. Further north, at the Hey Joe mine, an
association with copper is less obvious. The mineralization in the
project area appears to be chemically and mineralogically similar to
mineralization in the nearby Sevenmile Canyon district (Finch, 1954), and to
other ore deposits typical of basal Chinle uranium deposits such as the Monument
Valley and White Canyon districts (Austin and D’Andrea, 1978; Johnson and
Thordarson, 1966).
13
Fairview
Property
1.
Location and Access
The Fairview
Property consists of eleven claims situated in Sections 11,12, and 13, T.6 N.,
R. 12E, Gila County, Arizona. Access is by a series of unimproved Tonto National
Forest roads that are seasonally impeded by high flows in Tonto Creek (to the
west) and snow on the north side of Pine Mountain (to the east). Access from the
west via Forest Road 71 (Greenback Road) from State Route 188 requires a 4x4
vehicle with tires, brakes, and clearance suitable for a stream
crossing followed by steep, rocky conditions; access from the east via Forest
Road 609 from State Route 288 requires an all-terrain vehicle and good off-road
skills to prevent a rollover on washed-out trails or difficulties in mud and
snow.
2.
Ownership Interest
The Fairview claims
encompass a total area of 227.3 acres (90.9 hectares). The project area contains
11 United States federal lode mining claims. All claims and leases
are held exclusively by Wave Uranium Holding.
There are no
royalties associated with the federal mining claims. Annual holding costs paid
to the U.S. Bureau of Land Management are $125 per claim, due September 1. Wave
Uranium’s total holding costs are $1,375 per year.
3.
History of Operations
The eleven claims
comprising the Fairview Property were explored by the Atomic Energy Commission
(AEC) in cooperation with a previous claimholder who reportedly drilled 8,000
feet of hole in the area. The AEC conducted an airborne radiometric survey in
the region and drilled one borehole on the property that identified three ore
zones.
Uranium was first
discovered in the region in 1950 and was first mined in 1953. The true areal
extent of the uranium deposits in the region was first discovered by a Manhattan
Project-era airborne radiometric survey (Magleby and Mead, 1955).
4.
Present Condition of the Property and Current State of Exploration
One drill hole is
in evidence on a bench west of the shallow trench where radon, radiometric, and
geochemical anomalies were documented in our property evaluation. This is not
the borehole referenced in the AEC report. No other information on
production or drilling results has been located to date.
5.
Geology
Uranium
mineralization, occurring throughout much of Gila County and hosted by the
Precambrian-age Dripping Springs Quartzite Formation, is typically found within
potassium rich siltstone and sandy siltstone. Stratabound mineralization, almost
without exception, occurs within 1tens of feet of massive diabase sills
underlying the quartzite. Ideas about the source of the uranium enriched fluids
vary, however, it is clear that the intruding, younger diabase served to
mobilize and concentrate mineralization within the quartzite along bedding
planes and vertical fractures. Host rocks of typical uranium deposits are well
indurated, brittle fractured and dark grey to black due to finely divided
carbonaceous material and pyrite. Reducing conditions presented by sulfides and
organic rich zones were favorable for precipitation of the mobilized
uranium.
Geologic evaluation
of the Fairview Property has consisted of a radon survey, accompanied by
radiometric measurements and soil sampling. Exposures below and west of the
historic prospects have not been mapped, and thickness and lateral extent of
mineralization has yet to be studied. The host rock is a grey to black, sulfide
rich shale (?) stained by various iron oxides.
Recent
investigation of exposed outcrop was more extensive several miles to the east in
Wilson Creek and Cherry Creek Canyon. 1977 geologic mapping of this area,
included in the Westinghouse database, had identified a number of pyretic,
carbonaceous zones which apparently had been targeted for exploration drilling.
Evaluation of these zones revealed 40 to 60 thick sections of very thin bedded
to locally varied silty sandstone containing abundant fine black organics and
significant fine grained sulfides. In several areas, diabase can be observed
underlying the quartzite. Adjacent to these pyretic horizons, are broad areas of
bleaching and conspicuous solution fracture hematite and limonite marking
closely spaced bedding breaks and vertical fracture sets. Clear evidence of
ascending fluids along vertical fractures can be observed in a number of
areas.
Geologic units
exposed at Fairview consist of several hundred feet of Dripping Springs
Quartzine. A prominent diabase plug intrudes the quartzite adjacent to the
mineralized area. It is at these carbonate/diabase contacts where
numerous, widely scattered prospects expose serpentinized
material including veinets of fibrous chrysotile, local soapstone and a variety
of yellow-green waxy serpentine related minerals where the overlying Mescal
Limestone is intruded.
We are not aware of any pending legal proceedings
which involve us or any of our properties or subsidiaries.
Item
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security
holders during the three months ended July 31, 2008.
14
PART II
Item
5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND COMMON STOCK REPURCHASES
Market
Information and Sales of Unregistered Securities.
There is a limited
public market for our common shares. Our common shares are quoted for trading on
the FINRA regulated OTC Bulletin Board under the symbol “WAVU”.
Our shares became
eligible for trading on the OTC Bulletin under our previous symbol IRLK.OB. On
July 19, 2007, our symbol changed to WAVU.OB, in line with our name change and
change of business direction.
The following table
shows the high and low prices of our common shares on the FINRA regulated OTC
Bulletin Board since we became eligible for trading through the fiscal year
ended July 31, 2008. The following quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions:
|
Period
|
High
|
Low
|
|
First Quarter
Fiscal Year 2008
|
$1.80
|
$1.05
|
|
Second
Quarter Fiscal Year 2008
|
$2.10
|
$0.75
|
|
Third Quarter
Fiscal Year 2008
|
$1.50
|
$0.23
|
|
Fourth
Quarter Fiscal Year 2008
|
$0.48
|
$0.01
|
As of October 28,
2008, there were 75,037,810 common shares outstanding, held by approximately 30
shareholders of record.
To date, we have
not paid any cash dividends on our common shares and do not expect to declare or
pay any cash dividends on our common shares in the foreseeable future. Payment
of any cash dividends will depend upon future earnings, if any, our financial
condition, and other factors as deemed relevant by our Board of
Directors.
15
Company
repurchases of common stock during the year ended July 31,
2008.
We did not
repurchase any common stock during the year ended July 31, 2008.
Equity
Compensation Plans
As of July 31,
2008, we have not adopted any equity compensation plans.
Securities
and Exchange Commission Rule 15g
Our shares are
covered by Rule 15g of the Securities and Exchange Act of 1934, as amended,
which imposes additional sales practice requirements on broker/dealers who sell
such securities to persons other than established customers and accredited
investors (generally institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with their spouses). For transactions covered by
the Rule, the broker/dealer must make a special suitability determination for
the purchase and have received the purchaser’s written agreement to the
transaction prior to the sale. Consequently, the Rule may affect the ability of
broker/dealers to sell our securities and also may affect your ability to sell
your shares in the secondary market.
Section 15(g) of
the Exchange Act also imposes additional sales practice requirements on
broker/dealers who sell penny securities. These rules require a one-page summary
of certain essential items. The items include the risk of investing in penny
stocks in both public offerings and secondary marketing; terms important to in
understanding of the function of the penny stock market, such as “bid” and
“offer” quotes, a dealers “spread” and broker/dealer compensation; the
broker/dealer compensation, the broker/dealers duties to its customers,
including the disclosures required by any other penny stock disclosure rules;
the customers rights and remedies
in causes of fraud in penny stock transactions; and, the NASD’s toll free
telephone number and the central number of the North American Administrators
Association, for information on the disciplinary history of broker/dealers and
their associated persons.”
16
Item 6. MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATIONS
We are a start-up stage corporation with limited
operations and no revenues from our business operations. Our auditors have
issued a going concern opinion. This means that our auditors believe there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital. Our only source for cash at
this time is investments by others in our company. We must raise cash to
implement our plan of operation.
Results
of Operations
Our results of operations are presented
below:
|
For
the year ended
July
31, 2008 ($)
|
For
the year ended
July
31, 2007 ($)
|
Period
from May 30,
2006
(inception) to
July
31, 2008 ($)
|
|
|
Costs and
Expenses:
|
|||
|
General and
Administrative
|
1,204,842
|
62,648
|
1,270,840
|
|
Depreciation
|
354
|
-
|
427
|
|
Warrant
Expense
|
861,694
|
-
|
861,694
|
|
Bank
Charges
|
602
|
295
|
958
|
|
Land Claim
Fees
|
534,082
|
-
|
534,082
|
|
Non Cash
Compensation
|
855,000
|
-
|
855,000
|
|
Amortization
of Deferred Finance Charges
|
25,000
|
-
|
25,000
|
|
Impairment of
Goodwill
|
-
|
266,667
|
266,667
|
|
Other
Expenses
|
1,450
|
1,450
|
|
|
Loss on
Operations
|
3,481,574
|
331,060
|
3,861,118
|
|
Net
Loss
|
3,980,287
|
310,032
|
4,300,200
|
|
Loss per
common share (basic
and assuming
dilution)
|
(0.05)
|
(0.00)
|
-
|
Lack
of Revenues
Since our inception
on May 30, 2006 to July 31, 2008, we had not yet earned any revenues. As of July
31, 2008, we have incurred total liabilities including stockholders deficiency
of $3,439,053. At this time, our ability to generate any significant revenues
continues to be uncertain. The auditor's report on our July 31, 2008 financial
statements contains an additional explanatory paragraph which identifies issues
that raise substantial doubt about our ability to continue as a going concern.
Our financial statements do not include any adjustment that might result from
the outcome of this uncertainty.
17
Expenses
From May 30, 2006
(date of inception) to July 31, 2008, our total expenses were $4,315,973; our
total expenses for the year ending July 31, 2008 were $3,481,574 compared with
$331,060 for the year ended July 31, 2007. The major components of our expenses
consist of a) general and administrative expenses ($1,204,842 for the year ended
July 31, 2008, compared to $62,648 for year ending July 31, 2007), b) warrant
expense of $861,694 for the year ending July 31, 2008 compared to $0 for the
year ending July 31, 2007, c) land claim fee of $534,082 compared to $0 for the
year ending July 31, 2007, and d) non cash compensation of $855,000 for the year
ending July 31, 2008 compared to $0 for the year ending July 31,
2007.
For the year ending
July 31, 2008 our total operating expenses were $3,481,574 compared to $331,060
for the year ended July 31, 2007. We attribute the increase to costs of land
acquisition (federal mining claims and state lease lands) and geologic
evaluations of those properties. Our general and administrative expenses
consisted of the following: salaries, filing fees, bank charges and interest,
professional fees (accounting and legal), telephone and other associated office
fees, management and consulting fees (including investor relation fees),
marketing, and mineral property expenses.
Net
Loss
For the year ended
July 31, 2008 we incurred net loss of $3,980,287, compared to a net loss of
$310,032 for the year ending July 31, 2007. From May 30, 2006 (date of
inception) to July 31, 2008, we incurred an overall net loss of $4,300,200. The
loss was primarily due to increased legal fees, consulting fees, general and
administrative costs, warrant expense and non cash compensation. We expect to
continue to incur losses for at least the next two years.
Plan
of Operations
Our twelve-month
plan of operation for the Utah property beginning October 2008 is to continue
exploration of the Federal claims and State leases, and to purchase a contiguous
block of 700 claims from Future Energy, LLC that contains proven uranium
resources based on drilling records acquired and analyzed in 2008. Validation of
the exploration model developed in 2008 will involve additional geologic
mapping, supported by a modest Phase I drilling effort to depths of up to 1,500
feet, if funding permits.
Radon and
geochemical data from the Fairview claims suggest multiple exploration targets;
establishing the geologic context for these targets and filing a Notice of
Intent (NOI) for preliminary drilling to depths of 100 feet will be priorities
for the next year.
Screening
activities to identify additional uranium properties for acquisition will
continue, emphasizing prospects in the Salt Wash Member of the Morrison
Formation, and breccia pipes in the Arizona Strip region. A promising
exploration strategy for the Arizona Strip is in place, incorporating a variety
of geologic and environmental factors.
18
We had available
cash in the amount of $234,189 and a working capital of $220,694 as of July 31,
2008. Based on the planned expenditures of our plan of operation over the next
12 months beginning August 2008, we require a minimum of approximately
$1,000,000 to proceed with our plan of operations. If we achieve less than the
full amount of financing that we require, we will scale back our exploration
programs on our mineral properties and will proceed with scaled back exploration
plans based on our available financial resources.
From the date of
this annual report for at least the following 30 months, we anticipate that we
will not generate any revenue. Accordingly, we will be required to obtain
additional financing in order to continue our plan of operations. It may be
difficult to secure debt financing on acceptable terms as we do not have
tangible assets to secure any debt financing. We anticipate that additional
funding will be in the form of equity financing from the sale of our common
stock. However, we do not have any financing arranged and we cannot provide
investors with any assurance that we will be able to raise sufficient funding
from the sale of our common stock to fund our exploration programs. In the
absence of such financing, we will not be able to continue exploration of our
mineral claims and we may be forced to abandon our plan of
operations.
Our exploration plans will be continually evaluated
and modified as exploration results become available. Modifications to our plans
will be based on many factors, including: results of exploration, assessment of
data, weather conditions, exploration costs, and the price of uranium and
available capital. Further, the extent of the exploration programs that we
undertake will be dependent upon the amount of financing available to
us.
Liquidity
and Capital Resources
As at July 31, 2008
we had cash in the amount of $234,189 and a working capital of $220,694. This is
in contrast to our cash position at the same time last year, July 31, 2007 when
we had $16,849 of cash in the bank. As at July 31, 2008 our total assets were
$285,251 and our total liabilities were $1,862,152. Our net loss per share was
$0.
Our net loss of
$4,300,200 from inception on May 30, 2006 until July 31, 2008 was funded by a
combination of equity and debt financing. From inception on May 30, 2006 until
July 31, 2008 we have raised approximately $55,200 from the sale of our common
stock.
19
In terms of debt
financing, we have been funded from the proceeds of notes from shareholders or
other lenders, as set out below.
|
|
·
|
In October
2007 we received a loan of $100,000, which is currently
outstanding.
|
|
|
·
|
We borrowed
$300,000 from three lenders on September 25, 2007 to finalize acquisition
of control from the former management. We borrowed an additional $90,000
from one of these lenders on the same terms. The loans and accrued
interest thereon were converted to 1,068,805 shares of common stock in
March 2008
|
In addition, on
March 20, 2008, pursuant to a purchase agreement (the “March 2008 Purchase
Agreement”) between the Company and accredited investors we issued and sold to
accredited investors (the “Investors”) an aggregate face amount of $1,562,500 of
8% Original Issue Discount Secured Convertible Debentures for an aggregate
purchase price of $1,250,000 (the “March 2008 Debentures”). The March 2008
Debentures bear interest at 8% and mature twenty-four months from the date of
issuance. The Debentures are convertible, at the option of the Investors, into
an aggregate 6,250,000 shares of common stock at the initial conversion price
(based on the face amount of the Debentures) of $0.25 per share. Accordingly,
the implied conversion price, based on the aggregate purchase price of
$1,250,000, is $0.20 per share.
In connection with
the March 2008 Purchase Agreement, each Investor received a warrant to purchase
such number of shares of common stock equal to the face amount of the March 2008
Debenture issued to such Investor divided by the initial conversion price of
$0.25 (“March 2008 Warrants”). Accordingly, we issued an aggregate of 6,250,000
March 2008 Warrants to the Investors. Each March 2008 Warrant is exercisable for
a period of five years from the date of issuance at an initial exercise price of
$0.30. The Investors may exercise the March 2008 Warrants on a cashless basis if
the shares of common stock underlying the March 2008 Warrants are not then
registered pursuant to an effective registration statement. In the event the
Investors exercise the March 2008 Warrants on a cashless basis, then we will not
receive any proceeds.
The conversion
price of the March 2008 Debentures and the exercise price of the March 2008
Warrants are subject to full ratchet and anti-dilution adjustment for subsequent
lower price issuances by the Company, as well as customary adjustments
provisions for stock splits, stock dividends, recapitalizations and the
like.
For the year ending
July 31, 2008 we used net cash of $1,768,059 in continuing operating activities
and spent net cash of $1,416 in investing activities. For the year ending July
31, 2008 we received net cash of $1,999,667 from financing activities. As at
July 31, 2008 we had cash of $234,189.
This compares to
our financial results for the year ended July 31, 2007 when we had cash of
$16,849 and a working capital deficit of $4,245. We had total assets of $3,997
as at July 31, 2007, comprised entirely of cash.
We used net cash of
$61,848 in operations for the year ended July 31, 2007, and net cash of $173 in
investing activities. We received net cash of $41,653 from financing activities
for the year ended July 31, 2007.
We have not been
able to reach the break-even point since our inception on May 30, 2006 and have
had to rely on outside capital resources. We do not anticipate making any
revenues for the next year.
We anticipate that
we will incur substantial losses over the next 30 months. Total cash
requirements over the next 12 months are approximately $1,000,000, less whatever
cash we have in the bank at that time.
20
We plan to raise
capital through private placements, a direct offering or related party loans.
Our board of directors and majority shareholder have approved a 300-to-1 reverse
stock split, which will be effective November 20, 2008. Following the
effectiveness of the reverse split, we intend to seek equity financing of
approximately $300,000 to $500,000, for which we have an immediate need. We have
no formal or informal agreement or understanding with respect to any financing,
and there is no assurance any such financing will be available on terms
acceptable to the Company, or at all. Failure to secure such financing or to
raise additional capital or borrow additional funds may result in the Company
depleting its available funds and not being able pay its
obligations.
Product
Research and Development
We do not
anticipate spending any material amounts in connection with product research and
development activities during the next twelve months.
Acquisition
of Plant and Equipment and Other Assets
Apart from our
stated plan to acquire mineral concessions or land parcels, as described in our
plan of operations above, we do not anticipate the sale or acquisition of any
material property, plant or equipment during the next twelve months. Any
acquisitions are subject to obtaining additional financing.
Off-Balance
Sheet Arrangements
We have no
significant off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to stockholders.
Critical
Accounting Policies
Our financial
statements are impacted by the accounting policies used and the estimates and
assumptions made by management during their preparation. A complete summary of
these policies is included in the notes to our consolidated financial
statements. We have identified below the accounting policies that are of
particular importance in the presentation of our financial position, results of
operations and cash flows and which require the application of significant
judgment by management.
Net
Income (Loss) per Common Share
We calculate net
income (loss) per share as required by Statement of Financial Accounting
Standards ("SFAS") 128, "Earnings per Share." Basic earnings (loss) per share is
calculated by dividing net income (loss) by the weighted average number of
common shares outstanding for the
period. Diluted earnings (loss) per share is calculated by dividing net income
(loss) by the weighted average number of common shares and dilutive common stock
equivalents outstanding. During the periods when they would be anti-dilutive,
common stock equivalents, if any, are not considered in the
computation.
21
Cash
and Cash Equivalents
We consider all
highly liquid investments with an original maturity of three months or less to
be cash equivalents.
Property,
Equipment and Depreciation
Our property and equipment are stated at cost.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the assets of three to seven years.
Our audited financial statements as of July 31, 2008
follow, together with the Report of Independent Registered Public Accounting
Firm thereon, are included in this report commencing on page
F-1.
Item
8. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
Item
8A. CONTROLS AND PROCEDURES.
Evaluation
of Disclosure Controls and Procedures
As required by Rule
13a-15 under the Exchange Act, we carried out an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures as of July
31, 2008, being the date of our fiscal year end covered by this Annual Report.
This evaluation was carried out under the supervision and with the participation
of our Chief Executive Officer and Chief Financial Officer. Upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective in timely alerting
management to material information relating to us required to be included in our
periodic SEC filings.
Disclosure controls
and procedures are controls and other procedures that are designed to ensure
that information required to be disclosed in our reports filed or submitted
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the SEC's rules and forms.
Management’s
Report on Internal Control over Financial Reporting
We are responsible
for establishing and maintaining adequate internal control over financial
reporting in accordance with Exchange Act Rule 13a-15. With the participation of
our chief executive officer and chief financial officer, our management
conducted an evaluation of the effectiveness of our internal control over
financial reporting as of July 31, 2008 based on the criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, management
concluded that our internal control over financial reporting was effective as of
July 31, 2008, based on those criteria. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within the Company have been detected.
This annual report
does not include an attestation report of the Company’s registered accounting
firm regarding internal control over financial reporting. Management’s report
was not subject to attestation by the Company’s registered public accounting
firm pursuant to temporary rules of the Securities and Exchange
Commission.
Changes
in Internal Control over Financial Reporting
During our fiscal
year ended July 31, 2008, there were no changes in our internal control over
financial reporting that have materially affected, or are reasonably likely to
affect, our internal control over financial reporting.
|
(1)
|
Pertain to
the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the
registrant;
|
|
|
|
|
(2)
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
registrant are being made only in accordance with authorizations of
management and directors of the registrant; and
|
|
(3)
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the registrant's assets
that could have a material effect on the financial
statements.
|
Item 8B. OTHER
INFORMATION
None.
22
RONALD R. CHADWICK, P.C.
Certified Public
Accountant
2851 South Parker
Road, Suite 720
Aurora,
Colorado 80014
Telephone
(303)306-1967
Fax
(303)306-1944
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of
Directors
Wave Uranium
Holding
Las Vegas,
Nevada
I have audited the
accompanying consolidated balance sheets of Wave Uranium Holding (a development
stage company), formerly Iron Link Ltd., as of July 31, 2008 and 2007 and the
related statements of operations, stockholders' equity and cash flows for the
years ended July 31, 2008 and 2007, and for the period from May 30, 2006
(inception) through July 31, 2008. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my
audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Wave Uranium Holding
as of July 31, 2008 and 2007 and the related statements of operations,
stockholders' equity and cash flows for the years ended July 31, 2008 and 2007,
and for the period from May 30, 2006 (inception) through July 31, 2008 in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying
consolidated financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 4 to the financial
statements the Company has suffered recurring losses from operations that raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 4. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
| Aurora, Colorado |
Ronald
R. Chadwick, P.C.
|
| October 25, 2008 |
RONALD
R. CHADWICK, P.C.
|
F-1
Wave
Uranium Holings
(A
Development Stage Company)
CONSOLIDATED
BALANCE SHEETS
|
July
31, 2008
|
July
31, 2007
|
|||||||
|
ASSETS
|
||||||||
|
Current
Assets
|
||||||||
|
Cash
|
$ | 234,189 | $ | 3,997 | ||||
|
Deferred
Finance Charge
|
50,000 | - | ||||||
|
Total
Current Assets
|
284,189 | 3,997 | ||||||
|
Capital
Assets - Net
|
1,062 | - | ||||||
| - | 0 | |||||||
|
Total
Assets
|
$ | 285,251 | $ | 3,997 | ||||
|
LIABILITIES
AND STOCKHOLDERS EQUITY
|
||||||||
|
Current
Liabilities
|
||||||||
|
Accounts
Payable
|
$ | 6,510 | $ | 2,043 | ||||
|
Accrued
Interest
|
53,212 | - | ||||||
|
Current
Portion of Debt Discount
|
(961,167 | ) | ||||||
|
Current
Portion of Notes Payable
|
964,940 | - | ||||||
|
Total
Current Liabilities
|
63,495 | 2,043 | ||||||
|
Long
Term Liabilities
|
||||||||
|
Debt
Discount
|
(168,403 | ) | ||||||
|
Long
Term Debt
|
717,560 | |||||||
|
Equity
Obligations
|
1,249,500 | |||||||
|
Total
Long Term Debt
|
1,798,657 | - | ||||||
|
Total
Liabilities
|
1,862,152 | 2,043 | ||||||
|
Stockholders
Equity
|
||||||||
|
Common
Stock .001 Par Value; 150,000,000 authorized 75,037,810 (2008) and
145,120,005 (2007) Shares issued and outstanding
|
75,038 | 145,120 | ||||||
|
Preferred
Stock .001 Par Value; 5,000,000
authorized 0
issued and outstanding
|
||||||||
|
Additional
paid in capital
|
2,648,261 | 176,747 | ||||||
|
Defitcit
Accumlated during the development stage
|
(4,300,200 | ) | (319,913 | ) | ||||
|
Total
Stockholders Equity
|
(1,576,901 | ) | 1,954 | |||||
|
Total
Liabilities and Stockholders Equity
|
$ | 285,251 | $ | 3,997 | ||||
See
accompanying notes to the consolidated financial
statements
F-2
Wave
Uranium Holings
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
Year
|
Year
|
May
30, 2006
|
||||||||||
|
Ended
|
Ended
|
(Inception)
through
|
||||||||||
|
July
31, 2008
|
July
31, 2007
|
July
31, 2008
|
||||||||||
|
Revenue
|
$ | - | $ | - | $ | - | ||||||
|
Expenses
|
||||||||||||
|
General
Selling and Adminstrative
|
1,204,842 | 62,648 | 1,270,840 | |||||||||
|
Depreciation
|
354 | 427 | ||||||||||
|
Warrant
Expense
|
861,694 | 861,694 | ||||||||||
|
Bank
Charges
|
602 | 295 | 958 | |||||||||
|
Land
Claim Fees
|
534,082 | 534,082 | ||||||||||
|
Non
Cash Compensation
|
855,000 | 855,000 | ||||||||||
|
Amortization
of Deferred Finance Charges
|
25,000 | 25,000 | ||||||||||
|
Impairment
of Goodwill
|
266,667 | 266,667 | ||||||||||
|
Other
Expenses
|
1,450 | 1,450 | ||||||||||
| 3,481,574 | 331,060 | 3,816,118 | ||||||||||
|
Gain(Loss)
on Operations
|
(3,481,574 | ) | (331,060 | ) | (3,816,118 | ) | ||||||
|
Other
Income (expense)
|
||||||||||||
|
Amortization
of Debt Discount
|
(432,930 | ) | (432,930 | ) | ||||||||
|
Interest
Expense
|
(65,783 | ) | (953 | ) | (66,745 | ) | ||||||
| (498,713 | ) | (953 | ) | (499,675 | ) | |||||||
|
Net
Income (Loss) before provision for income tax
|
(3,980,287 | ) | (332,013 | ) | (4,315,793 | ) | ||||||
|
Provision
for income tax
|
- | - | - | |||||||||
|
Net
Income(Loss) from Continuing Operations
|
(3,980,287 | ) | (332,013 | ) | (4,315,793 | ) | ||||||
|
Discontinued
Operations: Gain (Loss) from discontinued operations (including
gain on disposal in 2007 of $28,553) - net of
tax
|
21,981 | 15,593 | ||||||||||
|
Net
Income (Loss)
|
$ | (3,980,287 | ) | $ | (310,032 | ) | $ | (4,300,200 | ) | |||
|
Net
Income(Loss) per share
|
||||||||||||
|
Basic
and Fully Diluted, From:
|
||||||||||||
|
Continuing
operations
|
$ | (0.05 | ) | $ | (0.00 | ) | ||||||
|
Discontinuted
operations
|
- | 0.00 | ||||||||||
|
Combined
|
$ | (0.05 | ) | $ | (0.00 | ) | ||||||
|
Weighted
Average Number of Common Shares
|
84,400,090 | 95,766,175 | ||||||||||
See
accompanying notes to the consolidated financial
statements
F-3
Wave
Uranium Holings
(A Development
Stage Company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
Year
Ended
July
31, 2008
|
Year
Ended
July
31, 2007
|
May
30, 2006
(Inception)
through
July
31, 2008
|
||||||||||
|
Cash
flow from operating Activity:
|
||||||||||||
|
Operating
activity from continuing operations
|
||||||||||||
|
Net
Loss
|
$ | (3,980,287 | ) | $ | (310,032 | ) | $ | (4,300,200 | ) | |||
|
Less:
(Income) loss from discontinued
|
||||||||||||
|
Operations
|
- | (21,981 | ) | (15,657 | ) | |||||||
|
Net
loss from continuing operations
|
(3,980,287 | ) | (332,013 | ) | (4,315,857 | ) | ||||||
|
Adjustments:
|
||||||||||||
|
Compensatory
stock and warrant issuances
|
1,759,194 | 1,759,194 | ||||||||||
|
Impairment
of goodwill
|
- | 266,667 | 266,667 | |||||||||
|
Amortization
- debt discount
|
432,930 | - | 432,930 | |||||||||
|
Depreciation
|
354 | 354 | ||||||||||
|
Changes
in assets & liabilities from
|
||||||||||||
|
continuing
operations
|
||||||||||||
|
Deferred
Financing Fees
|
(50,000 | ) | (50,000 | ) | ||||||||
|
Deposits
|
450 | |||||||||||
|
Prepaids
|
- | 214 | ||||||||||
|
Accounts
Payable
|
4,467 | 2,043 | 6,510 | |||||||||
|
Accrued
Expenses
|
65,783 | 65,783 | ||||||||||
|
Other
|
(500 | ) | (500 | ) | ||||||||
|
Due
Related Parties
|
- | 791 | 2,128 | |||||||||
|
Cash
flow from operating activities by continuing
operations
|
(1,768,059 | ) | (61,848 | ) | (1,832,791 | ) | ||||||
|
Cash
Flow from investing activities
|
||||||||||||
|
Purchase
of fixed assets
|
(1,416 | ) | (173 | ) | (1,589 | ) | ||||||
|
Net
cash provided by (used for) from investing
activities
|
(1,416 | ) | (173 | ) | (1,589 | ) | ||||||
|
Cash
Flow from Financing activities
|
||||||||||||
|
Notes
payable - borrowings
|
1,744,082 | 1,764,091 | ||||||||||
|
Notes
payable - payments
|
(8,547 | ) | (8,547 | ) | ||||||||
|
Issuance
of stock
|
255,585 | 50,200 | 310,785 | |||||||||
|
Net
cash provided by (used for) from financing
activities
|
1,999,667 | 41,653 | 2,066,329 | |||||||||
|
Net
cash used in continuing operations
|
230,192 | (20,368 | ) | 231,949 | ||||||||
|
Cash
Flow from discontinued operations
|
- | 7,516 | 2,240 | |||||||||
|
Net
change in cash
|
230,192 | (12,852 | ) | 234,189 | ||||||||
|
Beginning
cash
|
3,997 | 16,849 | - | |||||||||
|
Ending
cash
|
$ | 234,189 | $ | 3,997 | $ | 234,189 | ||||||
Schedule
of Non-Cash Investing and Financing Activities
In
2007 the Company issued 40,000,005 shares for all the shares in a private
corporation valued at $266,667.
In
2008 lenders to the Company converted $386,653 of notes payable and accrued
interest into 1,068,805 shares of common stock.
Supplemental
Disclosures
|
Cash
Paid For:
|
||||||||||||
|
Interest
|
$ | - | $ | - | $ | - | ||||||
|
Income
Taxes
|
$ | - | $ | - | $ | - | ||||||
See
accompanying notes to the consolidated financial
statements
F-4
Wave Uranium Holings
A
Development Stage Company
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
|
Deficit
Accum.
|
|
|
||||||||||||||||||||||
|
Common
Stock
|
Paid
In
|
During
the
|
Accum.
Other Compre.
|
Stock-holders'
|
||||||||||||||||||||
|
Shares
(1)
|
Amount
|
Capital
|
Development
Stage
|
Income/(Loss)
|
Equity
|
|||||||||||||||||||
|
Balance
at May 30, 2006
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
|
Issuance
of stock for cash
|
5 000 000 | 5 000 | - | 5 000 | ||||||||||||||||||||
|
Foreign
currency Gain(Loss)
|
(64 | ) | (64 | ) | ||||||||||||||||||||
|
Net
Gain (Loss) for period ending July 31st, 2006
|
(9 881 | ) | (9 881 | ) | ||||||||||||||||||||
|
Balance
at July 31, 2006
|
5 000 000 | $ | 5 000 | $ | - | $ | (9 881 | ) | $ | (64 | ) | $ | (4 945 | ) | ||||||||||
|
Balance
July 31, 2006
|
75 000 000 | 75 000 | 0 | (9 881 | ) | (64 | ) | 65 055 | ||||||||||||||||
|
Issuance
of stock for cash
|
30 120 000 | 30 120 | 48 192 | 78 312 | ||||||||||||||||||||
|
Issuance
of shares for acquisition
|
40 000 005 | 40 000 | 128 555 | 168 555 | ||||||||||||||||||||
|
Discontinued
Operations
|
64 | 64 | ||||||||||||||||||||||
|
Net
loss for period ended 7/31/07
|
(310 032 | ) | (310 032 | ) | ||||||||||||||||||||
|
Balance
at July 31, 2007
|
145 120 005 | $ | 145 120 | $ | 176 747 | $ | (319 913 | ) | $ | - | $ | 1 954 | ||||||||||||
|
Share
Cancellation
|
(75 000 000 | ) | (75 000 | ) | 75 000 | - | ||||||||||||||||||
|
Shares
Issued for cash, net of offering costs of
$64,315
|
914 000 | 914 | 254 671 | 255 585 | ||||||||||||||||||||
|
Shares
Issued for Services
|
2 850 000 | 2 850 | 852 150 | 855 000 | ||||||||||||||||||||
|
Conversion
of Debt
|
1 068 805 | 1 069 | 385 584 | 386 653 | ||||||||||||||||||||
|
Shares
Issued for Land Claims
|
85 000 | 85 | 42 415 | 42 500 | ||||||||||||||||||||
|
Issuance
of Warrants
|
861 694 | 861 694 | ||||||||||||||||||||||
|
Net
Loss for the Period Ended 7/31/08
|
(3 980 287 | ) | (3 980 287 | ) | ||||||||||||||||||||
|
Balance
at July 31, 2008
|
75 037 810 | $ | 75 038 | $ | 2 648 261 | $ | (4 300 200 | ) | $ | - | $ | (1 576 901 | ) | |||||||||||
(1) As restated
for a 15 for 1 forward stock split on July 30, 2007
See
accompanying notes to the consolidated financial
statements
F-5
WAVE
URANIUM HOLDING
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
July
31, 2008 AND 2007
Note
1. Summary of Significant Accounting Policies
Nature of
Operations
The overarching
objectives of Wave Uranium Holdings (“Wave”, the “Company”) are to acquire land
positions in areas of significant uranium resource potential by a systematic and
rational screening process, then explore and develop those properties to produce
uranium ore. Wave recognizes two key components to a productive exploration
program, 1) geologic models that can be tested by drilling and developed into
predictive tools, and 2) effective database management. Geologic models (of
sandstone-type deposits, for example) involve a combination of sedimentology of
the host rock, mineralogic indicators of alteration history, paleohydrologic
constraints, and much more. These models, or guiding concepts, must be grounded
in actual data and fact, requiring effective feedback from an appropriately
structured information management system if they are to be applied on a regional
basis. Sound decisions on land acquisitions, disposition of held properties, and
subsurface targeting are fundamentally dependent on the vision of the
exploration geologist and his/her ability to process essential information that
can be massive in scope and content. Wave seeks to minimize the financial burden
of land acquisitions from external parties, choosing instead to develop
exploration plays in-house.
Development
Stage Company
The
Company is in the development stage and has not yet realized any revenues from
its planned operations. The Company's business plan is to evaluate structure and
complete a merger with, or acquisition of, prospects consisting of private
companies, partnerships or sole proprietorships.
Based
upon the Company's business plan, it is a development stage enterprise.
Accordingly, the Company presents its financial statements in conformity with
the accounting principles generally accepted in the United States of America
that apply in establishing operating enterprises. As a development stage
enterprise, the Company discloses the deficit accumulated during the development
stage and the cumulative statements of operations and cash flows from inception
to the current balance sheet date.
Consolidation
The consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiaries. All intercompany accounts and balances have been eliminated in
consolidation.
Cash and Cash
Equivalents
The Company
considers all highly liquid investments with an original maturity of three
months or less to be cash equivalents.
F-6
Property,
Equipment and Depreciation
Property and
equipment are stated at cost. Depreciation is calculated using the straight-line
method over the estimated useful lives of the assets of three to seven
years.
Net Income (Loss)
per Common Share
The Company
calculates net income (loss) per share as required by Statement of Financial
Accounting Standards ("SFAS") 128, "Earnings per Share." Basic earnings (loss)
per share is calculated by dividing net income (loss) by the weighted average
number of common shares outstanding for the period. Diluted earnings (loss) per
share is calculated by dividing net income (loss) by the weighted average number
of common shares and dilutive common stock equivalents outstanding. During the
periods when they would be anti-dilutive, common stock equivalents, if any, are
not considered in the computation.
Fair Value of Financial
Instruments
SFAS 107,
"Disclosures About Fair Value of Financial Instruments," requires disclosure of
fair value information about financial instruments. Fair value estimates
discussed herein are based upon certain market assumptions and pertinent
information available to management.
The respective
carrying value of certain on-balance-sheet financial instruments approximate
their fair values. These financial instruments include cash, restricted cash,
trade accounts receivables, accounts payable, accrued expenses, notes payable
and due to investors. Fair values were assumed to approximate carrying values
for these financial instruments since they are short term in nature and
their carrying amounts approximate fair value or they are receivable or payable
on demand. The carrying value of the Company's long-term debt, notes payable and
due to investors approximates fair values of similar debt
instruments.
Use of
Estimates
The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those
estimates.
F-7
Income
tax
The Company
accounts for income taxes under Statement of Financial Accounting Standards No.
109 (“SFAS 109”). Under SFAS 109 deferred taxes are provided on a liability
method whereby deferred tax assets are recognized for deductible temporary
differences and operating loss carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.
At July 31, 2007
and 2008 the Company had net operating loss carryforwards of approximately
$317,000 and $3,800,000 which begin to expire in 2026. The deferred tax asset of
approximately $47,000 and $515,000 in 2007 and 2008 created by the net operating
losses have been offset by a 100% valuation allowance. The change in the
valuation allowance in 2007 and 2008 was $46,500 and $468,000.
Note 2.
Stock-Based Compensation
The Company
accounts for stock based compensation in accordance with SFAS 123, "Accounting
for Stock-Based Compensation." The provisions of SFAS 123 allow companies to
either expense the estimated fair value of stock options or to continue to
follow the intrinsic value method set forth in Accounting Principles Board
Opinion 25, "Accounting for Stock Issued to Employees" ("APB 25") but disclose
the pro forma effects on net income (loss) had the fair value of the options
been expensed.
In
December 2004, the FASB issued SFAS 123 (revised 2004) “Share-Based Payment”.
This Statement requires that the cost resulting from all share-based
transactions be recorded in the financial statements. The Statement establishes
fair value as the measurement objective in accounting for share-based payment
arrangements and requires all entities to apply a fair-value-based measurement
in accounting for share-based payment transactions with employees. The Statement
also establishes fair value as the measurement objective for transactions in
which an entity acquires goods or services from non-employees in share-based
payment transactions. The Statement replaces SFAS 123 “Accounting for
Stock-Based Compensation” and supersedes APB Opinion No. 25 “Accounting for
Stock Issued to Employees”. The provisions of this Statement were effective for
the Company beginning with its fiscal year ended July 31, 2007. Stock-based
awards to non-employees are accounted for whichever is more reliably measurable
in accordance with the provisions of the FASB issued SFAS 123 (revised 2004)
“Share-Based Payment” and Emerging Issues Task Force (“EITF”) Issue No. 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods and Services.
F-8
Forward Stock Split
On
July 30th,
2007 the Company’s board of directors authorized a 15 for 1 forward stock
split.
The total
authorized shares was increased to 150,000,000 and the authorized preferred
stock was increased to 5,000,000. The financial statements were cast with the
forward stock split included.
All references to
the number of shares and per share amounts in the financial statements are
presented on a post- split basis.
Reclassifications
Certain items
previously reported in the prior year have been reclassified to conform to
current year presentation.
F-9
Note 3: New Pronouncements
SFAS 155 -
"Accounting for Certain Hybrid Financial Instruments--an amendment of FASB
Statements No. 133 and 140" This Statement, issued in February 2006, amends FASB
Statements No. 133, "Accounting for Derivative Instruments and Hedging
Activities", and No. 140, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities". This Statement resolves issues
addressed in Statement 133 Implementation Issue No. D1, "Application of
Statement 133 to Beneficial Interests in Securitized Financial
Assets."
This
Statement:
a.
Permits fair value remeasurement for any hybrid financial instrument that
contains an embedded derivative that otherwise would require
bifurcation
b.
Clarifies which interest-only strips and principal-only strips are not subject
to the requirements of Statement 133
c.
Establishes a requirement to evaluate interests in securitized financial assets
to identify interests that are freestanding derivatives or that are hybrid
financial instruments that contain an embedded derivative requiring
bifurcation
d.
Clarifies that concentrations of credit risk in the form of subordination are
not embedded derivatives
e.
Amends Statement 140 to eliminate the prohibition on a qualifying
special-purpose entity from holding a derivative financial instrument that
pertains to a beneficial interest other than another derivative financial
instrument.
This Statement is
effective for the Company for all financial instruments acquired or issued after
the beginning of our fiscal year beginning August 1, 2007.
The fair value
election provided for in paragraph 4(c) of this Statement may also be applied
upon adoption of this Statement for hybrid financial instruments that had been
bifurcated under paragraph 12 of Statement 133 prior to the adoption of this
Statement. Earlier adoption is permitted as of the beginning of our fiscal year,
provided we have not yet issued financial statements, including financial
statements for any interim period, for that fiscal year. Provisions of this
Statement may be applied to instruments that we hold at the date of adoption on
an instrument-by-instrument basis.
The Company is
currently reviewing the effects of adoption of this statement but it is not
expected to have a material impact on our financial statements.
SFAS 156 -
"Accounting for Servicing of Financial Assets--an amendment of FASB Statement
No. 140"
F-10
This Statement, issued in March 2006, amends FASB
Statement No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities", with respect to the accounting for
separately recognized servicing assets and servicing liabilities. This
Statement:
1. Requires an
entity to recognize a servicing asset or servicing liability each time it
undertakes an obligation to service a financial asset by entering into a
servicing contract in certain situations.
2.
Requires all separately recognized servicing assets and servicing liabilities to
be initially measured at fair value, if practicable.
3. Permits an
entity to choose either the amortization method or the fair value measurement
method for each class of separately recognized servicing assets and servicing
liabilities.
4.
At its initial adoption, permits a one-time reclassification of
available-for-sale securities to trading securities by entities with recognized
servicing rights, without calling into question the treatment of other
available-for-sale securities under Statement 115, provided that the
available-for-sale securities are identified in some manner as offsetting the
entity's exposure to changes in fair value of servicing assets or servicing
liabilities that a servicer elects to subsequently measure at fair
value.
5.
Requires separate presentation of servicing assets and servicing liabilities
subsequently measured at fair value in the statement of financial position and
additional disclosures for all separately recognized servicing assets and
servicing liabilities.
Adoption of this
Statement is required as of the beginning of the first fiscal year that begins
after September 15, 2006. The adoption of this statement is not expected to have
a material impact on our financial statements.
In
July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109." This
Interpretation prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. This Interpretation also provides guidance
on derecognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. The Interpretation is effective for fiscal
years beginning after December 15, 2006 and the Company is currently evaluating
the impact, if any, that FASB No. 48 may have on the Company's results of
operations or financial position.
F-11
In
September 2006, the United States Securities and Exchange Commission ("SEC") SAB
No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements." This SAB provides guidance
on the consideration of the effects of prior year misstatements in quantifying
current year misstatements for the purpose of a materiality assessment. SAB 108
establishes an approach that requires quantification of financial statement
errors based on the effects of each of the company's balance sheet and statement
of operations financial statements and the related financial statement
disclosures. The SAB permits existing public companies to record the cumulative
effect of initially applying this approach in the first year ending after
November 15, 2006 by recording the necessary correcting adjustments to the
carrying values of assets and liabilities as of the beginning of that year with
the offsetting adjustment recorded to the opening balance of retained earnings.
Additionally, the use of the cumulative effect transition method requires
detailed disclosure of the nature and amount of each individual error being
corrected through the cumulative adjustment and how and when it arose. The
provisions of this Statement were effective for the Company beginning with its
fiscal year ended July 31, 2007.
In
September 2006, the FASB issued Statement No. 157, "Fair Value Measurements".
This Statement defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and expands disclosure about
fair value measurement. The implementation of this guidance is not expected to
have any impact on the Company's financial statements.
In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 158, "Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements
No. 87, 106, and 132(R)" ("SFAS No. 158"). SFAS No. 158 requires companies to
recognize a net liability or asset and an offsetting adjustment to accumulated
other comprehensive income to report the funded status of defined benefit
pension and other postretirement benefit plans. SFAS No. 158 requires
prospective application, recognition and disclosure requirements effective for
the Company's fiscal year ending December 31, 2007. Additionally, SFAS No. 158
requires companies to measure plan assets and obligations at their year-end
balance sheet date. This requirement is effective for the Company's fiscal year
ending December 31, 2009. The Company does not expect that it will have a
material impact on its financial statements.
EITF 00-19-2,
"Accounting for Registration Payment Arrangements".
In
December 2006, the FASB issued Staff Position FSP EITF 00-19-2, "Accounting for
Registration Payment Arrangements". This statement is effective for existing
registration payment arrangements as of January 1, 2007, with earlier
application permitted in previously-unissued financial statements. As discussed
in Note 9 and as permitted by the FSP, we adopted the provisions of this FSP in
our fourth quarter of 2006.
SFAS 159 - ‘The
Fair Value Option for Financial Assets and Financial Liabilities—Including an
amendment of FASB Statement No. 115’
In
February 2007, the FASB issued Financial
Accounting Standard No. 159 'The Fair Value
Option for Financial Assets and Financial Liabilities—Including an amendment of
FASB Statement No. 115' or SFAS 159. This Statement permits entities to
choose to measure many financial instruments and certain other items at fair
value. Most of the provisions of this Statement apply only to entities that
elect the fair value option.
F-12
The following are eligible items for the measurement option established by this
Statement:
1.
Recognized financial assets and financial liabilities except:
|
a.
|
An investment
in a subsidiary that the entity is required to
consolidate
|
|
b.
|
An interest
in a variable interest entity that the entity is required to
consolidate
|
|
c.
|
Employers’
and plans’ obligations (or assets representing net overfunded positions)
for pension benefits,
other postretirement benefits (including health care and life insurance
benefits), post employment benefits, employee stock option and stock
purchase plans, and other forms of deferred compensation
arrangements.
|
|
d.
|
Financial assets and financial liabilities
recognized under leases as defined in FASB Statement No. 13, 'Accounting
for Leases.'
|
|
e.
|
Deposit
liabilities, withdrawable on demand, of banks, savings and loan
associations, credit unions, and other similar depository
institutions
|
|
f.
|
Financial
instruments that are, in whole or in part, classified by the issuer as a
component of shareholder’s equity (including “temporary equity”). An
example is a convertible debt security with a noncontingent beneficial
conversion feature.
|
2.
Firm commitments that would otherwise not be recognized at inception and that
involve only financial instruments
3.
Nonfinancial insurance contracts and warranties that the insurer can settle by
paying a third party to provide those goods or services
4.
Host financial instruments resulting from separation of an embedded nonfinancial
derivative instrument from a nonfinancial hybrid instrument.
The fair value option:
1. May be applied
instrument by instrument, with a few exceptions, such as investments otherwise
accounted for by the equity method
2.
Is irrevocable (unless a new election date occurs)
3.
Is applied only to entire instruments and not to portions of
instruments.
The Statement is
effective as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provisions of FASB Statement No. 157, 'Fair Value
Measurements'. We have not yet determined what effect, if any, adoption
of this Statement will have on our financial position or results of
operations.
F-13
Note
4. Basis of Reporting
The Company's
financial statements are presented on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of
business.
The Company has
experienced a significant loss from operations as a result of its investment
necessary to achieve its operating plan, which is long-range in nature. For the
year ended July 31, 2008, the Company incurred a net loss of $
3,980,287.
The Company's
ability to continue as a going concern is contingent upon its ability to attain
profitable operations and secure financing. In addition, the Company's ability
to continue as a going concern must be considered in light of the problems,
expenses and complications frequently encountered by entrance into established markets
and the competitive environment in which the Company operates.
The Company is
pursuing equity financing for its operations. Failure to secure such financing or
to raise additional capital or borrow additional funds may result in the
Company depleting its available funds and not being able pay its obligations.
The financial
statements do not include any adjustments to reflect the possible future effects on
the recoverability and classification of assets or the amounts and classification
of liabilities that may result from the possible inability of the Company to
continue as a going concern
F-14
Note
5. Notes Payable
At
July 31, 2008 the Company had $1,682,500 in notes payable outstanding, more
fully described below.
The Company has
$120,000 in notes outstanding, with a stated maturity date due in full from
October 2008 through January 2009, unsecured and non-interest bearing, but
accruing compound interest at 8% if not paid when due. As the Company has
obtained equity financing, according to the terms of the notes the notes are now
due on demand. During the year ended July 31, 2008 the Company converted a
total of $374,082 plus accrued interest in notes payable to common
stock. The Company converted the notes at approximately $0.35, as
such the Company issued 1,068,805 shares of its common stock.
On
March 20, 2008, Wave Uranium Holding (the “Company”) entered into a securities
purchase agreement (the “Agreement”) with accredited investors (the “Investors”)
pursuant to which the Investors purchased an aggregate face amount of $1,562,500
of 8% Original Issue Discount Senior Secured Convertible Debentures for an
aggregate purchase price of $1,250,000 (the “Debentures”). The Debentures bear
interest at 8% and mature twenty-four months from the date of issuance. The
Debentures are convertible at the option of the holder at any time into shares
of common stock, at an initial conversion price (based on the face amount of the
Debentures) equal to $0.25. Accordingly, the implied conversion price, based on
the aggregate purchase price of $1,250,000, is $0.20 per share.
In
connection with the Agreement, each Investor received a warrant to purchase such
number of shares of common stock equal to their subscription amount divided by
the Initial Conversion Price (“Warrants”). 6,250,000 of these warrants were
issued. Each Warrant is exercisable for a period of five years from the date of
issuance at an initial exercise price of $0.30. The investors may exercise the
Warrants on a cashless basis if the shares of common stock underlying the
Warrants are not then registered pursuant to an effective registration
statement. In the event the Investors exercise the Warrants on a cashless basis,
then the Company will not receive any proceeds.
The conversion
price of the Debentures and the exercise price of the Warrants are subject to
full ratchet and anti-dilution adjustment for subsequent lower price issuances
by the Company, as well as customary adjustments provisions for stock splits,
stock dividends, recapitalizations and the like.
The full face
amount of the Debentures is due upon default under the terms of the Debentures.
Beginning on the seven (7) month anniversary of the closing of the Debentures
and continuing on the same day of each successive month thereafter, until the
face amount of the Debentures is paid in full (the “Monthly Redemption Date”),
the Company must repay 1/18th
of the original face amount of the Debentures. Interest on the Debentures
is payable on each Monthly Redemption Date. The Company may make payments of
principal and interest on the Debentureseither in cash or in common stock, at
the option of the Company. If principal or interest is paid on the
Debentures is paid in shares of common stock, the conversion price of such
shares shall be equal to the lesser of (i) the conversion price then in effect
and (ii) 80% of the average of the three (3) closing bid prices for the 20
consecutive trading days ending on the trading day that is immediately prior to
the applicable redemption date. Notwithstanding the foregoing, the Company’s
right to make payments of principal and interest on the Debentures in shares of
common stock on each prepayment date is subject to, among other things, the
following conditions: (i) that a registration statement must be effective on
such prepayment date and available for use by the Investors (ii) the shares to
be issued are registered with the Securities and Exchange Commission and (iii)
the aggregate number of shares to be issued under any monthly redemption amount
is less than 20% of the total dollar trading volume of the Company’s common
stock for the 20 trading days prior to the applicable monthly redemption
date.
At
any time after the effectiveness of the registration statement described below,
the Company may, upon written notice, redeem the Debentures in cash at 115% of
the then outstanding face amount of the Debentures provided, among other things,
that (i) the volume weighted average price (“VWAP”) for any 20 consecutive
trading days exceeds $0.50, (ii) a registration statement must be effective on
such redemption date and available for use by the Investors and (iii) the
Company has satisfied all conditions under the transaction
documents.
Each of the
Investors have contractually agreed to restrict their ability to exercise the
Warrants and convert the Debentures such that the number of shares of the
Company common stock held by each of them and their affiliates after such
conversion or exercise does not exceed 4.99% of the Company’s then issued and
outstanding shares of common stock.
The Company is
obligated to file a registration statement registering the resale of shares of
(i) the Common Stock issuable upon conversion of the Debentures, (ii) the Common
Stock issuable upon exercise of the Warrants, and (iii) the shares of common
stock issuable as payment of interest on the Debenture. If the registration
statement is not filed within 45 days from the final closing, or declared
effective within 105 days thereafter (120 days if the registration statement
receives a review by the SEC), the Company is obligated to pay the investors
certain fees in the amount of 2% of the total purchase price of the Debentures,
per month, and the obligations may be deemed to be in default.
F-15
The Company has
discounted the Debentures under the interest method, and the original issue
discount on the Debentures of $312,500 plus the additional calculated debt
discount of $1,250,000 derived from the calculated cost of the conversion
feature and attached warrants as limited by the face amount of the Debentures
($1,562,500 total) is being amortized over the life of the loan. The
effective amortization rate is 96%. During the year ended July 31, 2008 the
Company amortized $432,930 of the debt discount, leaving a remaining balance of
$1,129,570. The Company’s potential equity cost from the conversion feature and
attached warrants of $1,249,500 has been recorded as an equity obligation
liability. The effective discount rate on the Debentures over the two year
maturity term is approximately 96%.
The future
principal payments due under all notes payable are for fiscal year end July 31:
2009 $964,940, 2010 $717,560,
Total $1,682,500.
Note
6. Related Party Transactions
In
2008 the Company paid the balance due of approximately $15,000 on a vehicle
owned by an officer.
The Company makes
payments of $1,500 per month plus costs on a building lease held in the name of
an entity under common control. The lease runs through July 2009, is
noncancellable and contains a renewal option for two (1) year
terms. Required minimum future payments under the lease in fiscal
year 2009 and total is $16,500.
Note
7. Stockholders' Equity
During the Year
ended July 31, 2008, the Company issued 4,003, 805 shares of common stock for
consulting services and conversions of the notes payable (see notes
payable). On September 28, 2007 the Company received
75,000,000 shares of common stock from two shareholders. The board of directors
of the Company met and subsequently cancelled the shares. As of July
31, 2008 there are 75,037,810 shares of common stock issued and
outstanding.
Stock options and
warrants
At July 31, 2008
the Company had stock options and warrants outstanding as described
below.
Non-employee stock
options and warrants
The Company
accounts for non-employee stock options and warrants under SFAS 123(r), whereby
option and warrant costs are recorded based on the fair value of the
consideration received or the fair value of the equity instruments issued,
whichever is more reliably measurable. Unless otherwise provided for, the
Company covers option and warrant exercises by issuing new shares.
During fiscal year
2008 the Company granted 6,250,000 common stock warrants in connection
with debenture borrowings as more fully described in Note 5. In addition
the Company issued 548,400 warrants to various individuals and entities for
compensation, allowing the holder to purchase one share of common stock per
warrant, exercisable immediately at $0.50 per share with the warrant terms
expiring in November and December of 2009. The fair value of these warrant
grants were estimated on the date of grant using the Black-Scholes option
pricing model with the following assumptions: risk free interest rate of 3.2%,
dividend yield of 0%, expected life of 2 years, volatility of 26%. The
Company recorded total compensation expense under these warrant issuances of
$861,694 in fiscal year 2008.
As
of July 30, 2008, all of the 2008 warrant grants of 6,798,400 remained
outstanding.
F-16
PART III
Item
9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT.
Our current
directors and officers are as follows:
|
Name
|
Age
|
Position
|
|
Cady
Johnson
|
57
|
Director,
President, Chief Executive Officer
|
|
Christopher
J. LeClerc
|
34
|
Chief
Financial Officer and Director
|
Our directors serve
until our next shareholder meeting or until a successor is elected who accepts
the position. Officers hold their positions at the will of the Board of
Directors. There are no arrangements, agreements or understandings between
non-management shareholders and management under which non-management
shareholders may directly or indirectly participate in or influence the
management of our affairs.
Dr.
Cady Johnson, Director, President and Chief Executive Officer
Cady L. Johnson has
been a director and our Chief Executive Officer and President since June 18,
2007. Since 2003 Dr. Johnson has been, and continues to be, Principal of
GeoLogic VR LLC, an Arizona company. He maintains an active
consulting practice, specializing in groundwater models and uranium-resource
investigations. Dr. Johnson is also an experienced professional pilot, rotary
wing flight instructor and licensed airframe and powerplant mechanic. From 1998
to 2003 he was a pilot for Petroleum Helicopters, providing offshore and
emergeny medical services. In 1997 he was a tour pilot for Papillon Grand Canyon
Helicopters. Dr. Johnson was Senior Project Hydrogeologist for Woodward-Clyde
Federal Services from 1991 to 1997. From 1990 to 1991 Dr. Johnson was
Pilot/Mechanic for Helicopter Services of Nevada, and Associate/Hydrogeologist
for Mifflin & Associates from 1986 to 1989. Dr. Johnson was Assistant
Research Professor at the Desert Research Institute from 1985 to 1986, Senior
Hydrogeologist/Geochemist for Coffey & Partners Pty. Ltd. in 1984, a staff
consultant for Intera Environmental Consultants in 1983, and a Geologist and
Research Geoscientist for Bendix Field Engineering Corp. from 1979 to
1982.
Dr. Johnson received a bachelor’s
degree in Geology from Oregon State University in 1976 and a Ph.D. in Geology
and Hydrology/Hydrogeology from the University of Nevada, Reno in 1982. He is a
certified infrared thermographer and certified nuclear testing equipment
operator.
23
Christopher
J. LeClerc, Chief Financial Officer and Director
Christopher J.
LeClerc was appointed our Chief Financial Officer on June 18, 2007. Mr.
LeClerc was elected a director in December 2007. He has also been the President,
Chief Financial Officer and Director of Liska Biometry, Inc. since June 2006.
Prior to his employment with Liska biometry, Mr. LeClerc was employed by Andover
Brokerage LLC (commencing May 2001), where he was responsible for a 12-member
proprietary trading desk specializing in a wide range of investment strategies.
Mr. LeClerc also worked at Mercer Partners L.P. (commencing February 1999).
Mercer Partners L.P. is a New York-based investment bank and securities
underwriter. Mr. LeClerc was a Director of Business Development and Head of OTC
trading at Mercer Partners L.P. Previously, he has served as financial
consultant and equities trader for Merrill Lynch, M.H. Meyerson and ETG
LLC.
Other than as
disclosed above, our directors and officers do not currently serve on the board
of other public companies.
Family
Relationships
There are no family
relationships among our officers or directors.
No
Legal Proceedings
None of our
directors, executive officers, promoters or control persons has been involved in
any of the following events during the past five years:
|
|
·
|
any
bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that
time;
|
|
|
·
|
any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor
offenses);
|
|
|
·
|
being subject
to any order, judgment, or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities;
or
|
|
|
·
|
being found
by a court of competent jurisdiction (in a civil action), the Commission
or the Commodity Futures Trading Commission to have violated a federal or
state securities or commodities law, and the judgment has not been
reversed, suspended, or
vacated.
|
24
Compliance
with Section 16(a) of the Exchange Act
Section 16(a) of
the Securities Exchange Act of 1934 requires that our officers and directors,
and persons who own more that ten percent of a registered class of our equity
securities, file reports of ownership and changes in ownership with the
Securities and Exchange Commission and with any exchange on which the Company's
securities are traded. Officers, directors and persons owning more than ten
percent of such securities are required by Commission regulation to file with
the Commission and furnish the Company with copies of all reports required under
Section 16(a) of the Exchange Act. Based solely upon our review, during the
fiscal year ended July 31, 2008, all Section 16(a) filing requirements
applicable to our officers, directors and greater than 10% beneficial owners
were complied with, except that Form 3’s and Form 4’s have not been filed for
Cady Johnson and Christopher LeClerc.
Code
of Ethics
We have not yet
adopted a written code of ethics, although we aim to adopt one within the next
12 months.
Audit
Committee
The functions of
the Audit Committee are currently carried out by our Board of Directors. Our
Board of Directors has determined that we do not presently need an audit
committee financial expert on our Board of Directors carrying out the duties of
the Audit Committee. Our Board of Directors has determined that the cost of
hiring a financial expert to act as a director of us and to be a member of the
Audit Committee or otherwise perform Audit Committee functions outweighs the
benefits of having a financial expert on the Audit Committee.
Director
Nominees
We do not have a
nominating committee. The Board of Directors, sitting as a Board, selects those
individuals to stand for election as members of our Board. Since the Board of
Directors does not include a majority of independent directors, the decision of
the Board as to director nominees is made by persons who have an interest in the
outcome of the determination. The Board will consider candidates for directors
proposed by security holders, although no formal procedures for submitting
candidates have been adopted. Until otherwise determined, not less than 90 days
prior to the next annual Board of Directors' meeting at which the slate of Board
nominees is adopted, the Board accepts written submissions that include the
name, address and telephone number of the proposed nominee, along with a brief
statement of the candidate's qualifications to serve as a director and a
statement of why the shareholder submitting the name of the proposed nominee
believes that the nomination would be in the best interests of shareholders. If
the proposed nominee is not the security holder submitting the name of the
candidate, a letter from the candidate agreeing to the submission of his or her
name for consideration should be provided at the time of submission. The letter
should be accompanied by a résumé supporting the nominee's qualifications to
serve on the Board of Directors, as well as a list of references.
The Board intends
to identify director nominees through a combination of referrals, including by
management, existing Board members and security holders, where warranted. Once a
candidate has been identified, the Board reviews the individual's experience and
background and may discuss the proposed nominee with the source of the
recommendation. If the Board believes it to be appropriate, Board members may
meet with the proposed nominee before making a final determination whether to
include the proposed nominee as a member of management's slate of director
nominees submitted to shareholders for election to the Board.
Among the factors
that the Board considers when evaluating proposed nominees are their knowledge
of and experience with and knowledge of and experience in business matters,
finance, capital markets and mergers and acquisitions. The Board may request
additional information from the candidate prior to reaching a determination. The
Board is under no obligation to formally respond to all recommendations,
although as a matter of practice, it will endeavor to do so.
25
Item
10. EXECUTIVE
COMPENSATION
Prior to the
acquisition of Wave Uranium on June 18, 2007, whilst we were still doing
business as Iron Link Ltd, Alexandre Routkovski was our President, CEO,
Treasurer, CFO, Principal Accounting Officer, Principal Financial Officer and
Director; and Viktor Krukov was the Secretary and a director. A change of
control took place on June 18, 2007 as a result of the acquisition of Wave
Nevada and Messrs. Routkovski and Krukov resigned as officers and directors. On
June 18, 2007 Dr. Cady L. Johnson was elected as the sole director and as
President, and Christopher LeClerc was appointed Chief Financial Officer and
Secretary. In December 2007 Mr. LeClerc was elected a director.
The following Summary Compensation Table sets forth
the total annual compensation paid or accrued by us to or for the account of our
Chief Executive Officers who held this position during the last two fiscal years
and any other executive officer who received total annual compensation greater
than $100,000 for last two fiscal years.
Summary
Compensation Table
|
Name
and principal position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Nonqualified
Deferred Compensation Earnings ($)
|
All
other compensation($)
|
Total
($)
|
|
Cady Johnson,
Chief
Executive Officer (1)
|
2008
|
45,000
|
0
|
300,000
|
0
|
0
|
0
|
0
|
345,000
|
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
|
Alexandre
Routkovski, Chief
Executive Officer (2)
|
2007
|
2,500
|
0
|
0
|
0
|
0
|
0
|
0
|
2,500
|
|
Christopher
LeClerc, Chief Financial Officer (3)
|
2008
|
0
|
0
|
450,000
|
0
|
0
|
0
|
0
|
450,000
|
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0 |
(1) Cady Johnson
has been our chief executive officer since June 2007.
(2) Alexandre
Routkovski was our chief executive officer from June 2006 to June
2007.
(3) Christopher
LeClerc was appointed Chief Financial Officer in June 2007.
26
Executive
Officer Employment Agreements
On June 15, 2007,
we entered into an employment contract with Christopher J. LeClerc pursuant to
which Mr. LeClerc agrees to act as our Chief Financial Officer in exchange for
compensation of $24,000 per year. The agreement is at will. Pursuant to the
employment agreement, we issued Mr. LeClerc 1,500,000 shares of our common stock
in May 2008.
On May 1, 2007 we
entered into an employment contract with Cady Johnson, pursuant to which Dr.
Johnson agrees to act as our President and Chief Executive Officer in exchange
for compensation of $60,000 per year. The agreement is at will. Pursuant to the
employment agreement, we issued Dr. Johnson 1,000,000 shares of our common stock
in May 2008 and will issue him another 1,000,000 shares on each anniversary as
President of the Company.
Outstanding
Equity Awards at Fiscal Year End
There were no
outstanding equity awards as of July 31, 2008.
Director
Compensation
None of our
directors received compensation for their service as directors during the fiscal
year ended July 31, 2008.
Termination
of Employment and Change of Control Arrangement
There is no compensatory plan or arrangement with
respect to any individual named above which results or will result from the
resignation, retirement or any other termination of employment with us, or from
a change in our control.
27
Item
11. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table
sets forth information relating to the beneficial ownership of our common stock
as of October 28, 2008 by (i) each person known by us to be the beneficial owner
of more than 5% of the outstanding shares of common stock (ii) each of our
directors and executive officers, and (iii) all officers and directors as a
group. Unless otherwise noted below, we believe that all persons named in the
table have sole voting and investment power with respect to all shares of common
stock beneficially owned by them. For purposes hereof, a person is deemed to be the beneficial owner
of securities that can be acquired by such person within 60 days from October
28, 2008 upon the exercise of warrants or options or the conversion of
convertible securities. Each beneficial owner's percentage ownership is
determined by assuming that any warrants, options or convertible securities that
are held by such person (but not those held by any other person) and which are
exercisable within 60 days from October 28, 2008, have been
exercised.
|
Title of
Class
|
Name
and
Address
|
Office
|
Amount
and
Nature of Beneficial
Ownership
(1)
|
Percentage
of
Class
|
|
Common
|
Cady L.
Johnson
5348 Vegas
Dr. Suite
228
Las Vegas, NV
89108
|
President,
Chief
Executive
Officer,
Director
|
1,000,000
(2)
|
1.3%
|
|
Common
|
Christopher
LeClerc
5348 Vegas
Drive Suite
228
Las Vegas, NV
89108
|
Chief
Financial Officer,
Director
|
1,500,000
(2)
|
2.0%
|
|
|
All
officers and directors
as a group
(2
persons)
|
2,500,000
(2)
|
3.3%
|
|
|
Common
|
Norman
Meier
Bettlistrasse
35
8600
Dübendorf Switzerland
|
None
|
40,000,005
(3)
|
53.3%
|
|
Common
|
Adripaul,
Inc.
Apatado 038202770
Panama Rep De Panama
|
None
|
4,972,000 |
6.6%
|
|
(1)
|
Except as
otherwise noted, shares are owned beneficially and of record, and such
record shareholder has sole voting, investment, and dispositive
power.
|
|
(2)
|
Represents
shares due to be issued under such individual’s employment contract but
not yet issued.
|
|
(3)
|
These shares
were pledged to secure a loan to
us.
|
Enable Growth
Partners LP, Enable Opportunity Partners LP and Pierce Diversified Strategy
Master Fund LLC, which are affiliates of each other, collectively own debentures
and warrants which, if fully converted and exercised, would result in the
ownership of more than 5% of our outstanding Common Stock. However, the
debentures may not be converted, and the warrants may not be exercised if such
conversion or exercise would result in the holder and its affiliates owning more
than 4.99% of our outstanding Common Stock. Mitch Levine has voting and
dispositive power with respect to the shares of Common Stock issuable to Enable
Growth Partners LP, Enable Opportunity Partners LP, and Pierce Diversified
Strategy Master Fund LLC.
Changes
in Control
There are currently
no arrangements which would result in a change in control of us.
Equity
Compensation Plan
As at July 31, 2008 we have no existing equity
compensation plans.
Item
12. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Certain Relationships and Related
Transactions
We have not entered into any transactions with our
officers, directors, persons nominated for these positions, beneficial owners of
5% or more of our common stock, or family members of these persons wherein the
amount involved in the transaction or a series of similar transactions exceeded
$120,000 or 1% of our total assets for the last fiscal year.
Director
Independence
Neither of our
directors is independent as defined under the Nasdaq Marketplace
Rules.
28
PART IV
|
Exhibit
Number
|
Exhibit
Description
|
|
2.1
|
Agreement and
Plan of Reorganization between Wave Uranium and the
Registrant.(2)
|
|
2.2
|
Agreement of
Sale between the Registrant and Alexandre Routkovski
(2)
|
|
3.1
|
Articles of
Incorporation (1)
|
|
3.2
|
Bylaws
(1)
|
|
3.3
|
Certificate
of Amendment to Articles of Incorporation changing name to Wave Uranium
Holding (2)
|
|
3.4
|
Certificate of Amendment to Articles of
Incorporation increasing authorized stock (4)
|
|
10.1
|
Software
Development and Consulting Agreement (1)
|
|
10.2
|
Employment
Agreement with Dr. Johnson (2)
|
|
10.3
|
Employment
Agreement with Mr. LeClerc(2)
|
|
10.4
|
Wilson Creek
Agreement (3)
|
|
10.5
|
Form of
Debenture related to March 2008 financing (5)
|
|
10.6
|
Form of
Warrant related to March 2008 financing (5)
|
|
10.7
|
Securities
Purchase Agreement, dated March 20, 2008 by and between Wave Uranium
Holding and the Purchasers signatory thereto (5)
|
|
10.8
|
Registration
Right Agreement, dated March 20, 2008 by and between Wave Uranium Holding
and the Purchasers signatory thereto (5)
|
|
10.9
|
Security
Agreement, dated March 20, 2008 by and between Wave Uranium Holding and
the Purchasers signatory thereto (5)
|
|
10.10
|
Pledge and
Security Agreement, dated March 20, 2008 by and between Wave Uranium
Holding and the Purchasers signatory thereto (5)
|
|
10.11
|
Subsidiary
Guarantee, dated March 20, 2008 of Wave Uranium (5)
|
|
10.12
|
Form of
Lock-Up Agreement (5)
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
(1)
|
Filed with
the Registration Statement on Form SB-2 on September 27, 2006, file number
333-137,613 and incorporated by reference to this Annual
Report.
|
|
(2)
|
Filed with
the Current Report on Form 8-K dated June 18, 2007 and incorporated by
reference to this Annual Report.
|
|
(3)
|
Filed with
the Current Report on Form 8-K dated October 9, 2007 and incorporated by
reference to this Annual Report.
|
|
(4)
|
Filed with
our Annual Report on Form 10-K for the fiscal year ended July 31, 2007,
filed November 13, 2007, and incorporated by reference to this Annual
Report.
|
|
(5)
|
Filed with
Current Report on Form 8-K dated March 20, 2008 and incorporated by
reference to this Annual Report.
|
29
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit
and Non-Audit Fees
The aggregate fees
billed for the most recently completed fiscal years ended July 31 for
professional services rendered by the principal accountant for the audit of our
company's annual financial statements and review of the financial statements
included in our Annual Report on Form 10-KSB and services that are normally
provided by the accountant in connection with statutory and regulatory filings
or engagements for these fiscal periods were as follows:
|
Year
Ended
|
Year
Ended
|
|||||||
|
July
31, 2008 (1)
|
July
31, 2007
|
|||||||
|
Audit Related
Fees
|
$ | 7,500 | $ | 7,500 | ||||
|
Tax
Fees
|
0 | 0 | ||||||
|
All Other
Fees
|
0 | 0 | ||||||
|
Total
|
7,500 | 7,500 | ||||||
(1)
estimated
Since our
inception, our Board of Directors, performing the duties of the Audit Committee,
reviews all audit and non-audit related fees at least annually. The Board of
Directors as the Audit Committee pre-approved all audit related services in
Fiscal 2008.
30
SIGNATURES
Pursuant to the
requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on November 12, 2008.
|
WAVE
URANIUM HOLDING
|
|
|
Date:
November 12, 2008
|
By: /s/
Cady
L. Johnson
Cady
Johnson
President,
Chief Executive Officer and Director (Principal
Executive Officer)
|
In accordance with
the Exchange Act, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated on November 12,
2008.
|
Date: November
12, 2008
|
By: /s/
Cady
L. Johnson
Cady
Johnson
President,
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
Date: November
12, 2008
|
By: /s/
Christopher J. LeClerc
Christopher
J. LeClerc
Chief Financial Officer and Director
(Principal Financial Officer and Principal Accounting
Officer)
|