Attached files
file | filename |
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EX-32.2 - URANIUM 308 CORP. | v185324_ex32-2.htm |
EX-31.2 - URANIUM 308 CORP. | v185324_ex31-2.htm |
EX-32.1 - URANIUM 308 CORP. | v185324_ex32-1.htm |
EX-31.1 - URANIUM 308 CORP. | v185324_ex31-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended March 31,
2010.
or
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from to to
Commission
File
Number: 000-52476
URANIUM 308
CORP.
(Exact
name of Registrant as specified in its charter)
Nevada
|
33-1173228
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification No.)
|
2808 Cowan Circle
|
|
Las Vegas, Nevada
(Address
of principal executive offices)
|
89102
(Zip
Code)
|
1-866-892-5232
(Registrant’s
telephone number, including area
code)
|
Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
x
Yes ¨
No
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
¨
Yes ¨
No
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer
|
¨
|
Accelerated
filer
|
¨
|
Non-accelerated
filer
|
¨ (Do not check if
a smaller reporting company)
|
Smaller
reporting company
|
x
|
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Act).
¨
Yes x
No
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate
by check mark whether the Registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
¨
Yes ¨
No
APPLICABLE
ONLY TO CORPORATE ISSUERS:
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
Class
|
Outstanding
as of May 5, 2010
|
Common
stock, $0.00001 par value
|
105,894,467
|
TABLE
OF CONTENTS
1
|
|
Forward-Looking
Statements
|
1
|
Part
I – Financial Information
|
F-1
|
Item
1. Financial Statements
|
F-1
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operation
|
3
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
7
|
Item
4T. Controls and Procedures
|
7
|
Part
II – Other Information
|
8
|
Item
1. Legal Proceedings
|
8
|
Item
1A. Risk Factors
|
8
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
9
|
Item
3. Defaults Upon Senior Securities
|
9
|
Item
4. Submission of Matters to a Vote of Security Holders
|
9
|
Item
5. Other Information
|
9
|
Item
6. Exhibits
|
9
|
USE
OF NAMES
In this
Quarterly Report, the terms “Uranium 308,” “Company,” “we,” or “our,” unless the
context otherwise requires, mean Uranium 308 Corp. and its subsidiaries, if
any.
FORWARD-LOOKING
STATEMENTS
This
Quarterly Report on Form 10-Q and other reports that we file with the SEC
contain statements that are considered forward-looking
statements. Forward-looking statements give the Company’s current
expectations, plans, objectives, assumptions or forecasts of future
events. All statements other than statements of current or historical
fact contained in this Quarterly Report, including statements regarding the
Company’s future financial position, business strategy, budgets, projected costs
and plans and objectives of management for future operations, are
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as “anticipate,” “estimate,”
“plans,” “potential,” “projects,” “ongoing,” “expects,” “management believes,”
“we believe,” “we intend,” and similar expressions. These statements
are based on the Company’s current plans and are subject to risks and
uncertainties, and as such the Company’s actual future activities and results of
operations may be materially different from those set forth in the
forward-looking statements. Any or all of the forward-looking
statements in this periodic report may turn out to be inaccurate and as such,
you should not place undue reliance on these forward-looking
statements. The Company has based these forward-looking statements
largely on its current expectations and projections about future events and
financial trends that it believes may affect its financial condition, results of
operations, business strategy and financial needs. The
forward-looking statements can be affected by inaccurate assumptions or by known
or unknown risks, uncertainties and assumptions due to a number of factors,
including:
·
|
risks
and uncertainties relating to the interpretation of drill results, the
geology, grade and continuity of mineral
deposits;
|
·
|
results
of initial feasibility, pre-feasibility and feasibility studies, and the
possibility that future exploration, development or mining results will
not be consistent with our
expectations;
|
·
|
mining
and development risks, including risks related to accidents, equipment
breakdowns, labor disputes or other unanticipated difficulties with or
interruptions in production;
|
·
|
the
potential for delays in exploration or development activities or the
completion of feasibility studies;
|
·
|
risks
related to the inherent uncertainty of production and cost estimates and
the potential for unexpected costs and
expenses;
|
·
|
risks
related to commodity price
fluctuations;
|
·
|
risks
related to failure to obtain adequate financing on a timely basis and on
acceptable terms for our planned exploration and development
projects;
|
·
|
risks
related to environmental regulation and
liability;
|
·
|
political
and regulatory risks associated with mining development and
exploration;
|
·
|
dependence
on key personnel;
|
·
|
competitive
factors;
|
·
|
general
economic conditions in the United States and Mongolia;
and
|
·
|
other
risks and uncertainties related to our prospects, properties and business
strategy.
|
1
This list
is not an exhaustive list of the factors that may affect any of our
forward-looking statements. These and other factors should be considered
carefully and readers should not place undue reliance on our forward-looking
statements.
These
forward-looking statements speak only as of the date on which they are made, and
except to the extent required by federal securities laws, we undertake no
obligation to update any forward-looking statements to reflect events or
circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. In addition, we cannot assess the
impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the cautionary
statements contained in this periodic report.
2
ITEM
1. FINANCIAL STATEMENTS
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
Consolidated
Financial Statements-
|
|
Consolidated
Balance Sheets as of March 31, 2010, and December 31, 2009
|
F-2
|
Consolidated
Statements of Operations and Comprehensive (Loss) for the Three Months
Ended March 31, 2010, and 2009, and Cumulative from
Inception
|
F-3
|
Consolidated
Statements of Cash Flows for the Three Months Ended March 31, 2010, and
2009, and Cumulative from Inception
|
F-4
|
Notes
to Consolidated Financial Statements March 31, 2010, and
2009
|
F-6
|
F-1
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
CONSOLIDATED
BALANCE SHEETS (NOTES 2 AND 3)
AS
OF MARCH 31, 2010, AND DECEMBER 31, 2009
(Unaudited)
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 588 | $ | 3,403 | ||||
Prepaid
expenses and deposit
|
57,882 | 57,882 | ||||||
Total
current assets
|
58,470 | 61,285 | ||||||
Property
and Equipment:
|
||||||||
Computer
and office equipment
|
9,290 | 9,290 | ||||||
Field
equipment
|
6,405 | 6,405 | ||||||
Vehicles
|
4,816 | 4,816 | ||||||
20,511 | 20,511 | |||||||
Less
- Accumulated depreciation
|
(19,285 | ) | (19,263 | ) | ||||
Net
property and equipment
|
1,226 | 1,248 | ||||||
Other
Assets:
|
||||||||
Mineral
property licenses
|
72,450,000 | 72,450,000 | ||||||
Investment
in affiliated company - 10% equity interest
|
14,400,000 | 14,400,000 | ||||||
Total
other assets
|
86,850,000 | 86,850,000 | ||||||
Total
Assets
|
$ | 86,909,696 | $ | 86,912,533 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable - Trade
|
$ | 1,129,023 | $ | 1,121,757 | ||||
Accrued
liabilities
|
114,988 | 125,294 | ||||||
Contract
payable - Mineral properties contract
|
14,200,000 | 14,200,000 | ||||||
Loans
from stockholders
|
2,126,099 | 2,109,599 | ||||||
Due
to related parties
|
654,730 | 600,730 | ||||||
Total
current liabilities
|
18,224,840 | 18,157,380 | ||||||
Total
liabilities
|
18,224,840 | 18,157,380 | ||||||
Commitments
and Contingencies
|
||||||||
Stockholders'
Equity:
|
||||||||
Preferred
stock, 100,000,000 shares authorized, $0.00001 par value; no shares issued
and outstanding
|
- | - | ||||||
Common
stock, par value $0.00001 per share, 3,750,000,000 shares authorized;
105,894,467 issued and outstanding
|
1,059 | 1,059 | ||||||
Additional
paid-in capital
|
83,042,515 | 83,042,515 | ||||||
Donated
capital
|
14,625 | 14,625 | ||||||
Other
accumulated comprehensive (loss)
|
(5,188 | ) | (2,240 | ) | ||||
(Deficit)
accumulated during the exploration stage
|
(14,368,155 | ) | (14,300,806 | ) | ||||
Total
stockholders' equity
|
68,684,856 | 68,755,153 | ||||||
Total
Liabilities and Stockholders' Equity
|
$ | 86,909,696 | $ | 86,912,533 |
The
accompanying notes to consolidated financial statements are
an
integral part of these consolidated balance sheets.
F-2
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) (NOTES 2 AND 3)
FOR
THE THREE MONTHS ENDED MARCH 31, 2010, AND 2009, AND
CUMULATIVE
FROM INCEPTION (NOVEMBER 18, 2005)
THROUGH
MARCH 31, 2010
(Unaudited)
Cumulative
|
||||||||||||
Three
months Ended
|
From
Inception
|
|||||||||||
March 31,
|
Through
|
|||||||||||
2010
|
2009
|
March 31, 2010
|
||||||||||
Revenues
|
$ | - | $ | - | $ | - | ||||||
Expenses:
|
||||||||||||
Stock-based
compensation
|
- | 1,232,053 | 9,171,947 | |||||||||
Geological
exploration
|
- | - | 2,457,216 | |||||||||
General
and administrative
|
58,492 | 106,378 | 2,103,747 | |||||||||
Professional
fees
|
8,835 | 6,500 | 565,615 | |||||||||
Depreciation
|
22 | 23 | 19,285 | |||||||||
Donated
services
|
- | - | 9,750 | |||||||||
Donated
rent
|
- | - | 4,875 | |||||||||
Impairment
of mineral property costs
|
- | - | 3,542 | |||||||||
Total
general and administrative expenses
|
67,349 | 1,344,954 | 14,335,977 | |||||||||
(Loss)
from Operations
|
(67,349 | ) | (1,344,954 | ) | (14,335,977 | ) | ||||||
Other
Income
|
- | - | (32,178 | ) | ||||||||
Provision
for income taxes
|
- | - | - | |||||||||
Net
(Loss)
|
$ | (67,349 | ) | $ | (1,344,954 | ) | $ | (14,368,155 | ) | |||
Comprehensive
(Loss):
|
||||||||||||
Foreign
currency translation
|
(2,948 | ) | (8,630 | ) | (5,188 | ) | ||||||
Total
Comprehensive (Loss)
|
$ | (70,297 | ) | $ | (1,353,584 | ) | $ | (14,373,343 | ) | |||
(Loss)
Per Common Share:
|
||||||||||||
(Loss)
per common share - Basic and Diluted
|
$ | (0.00 | ) | $ | (0.01 | ) | ||||||
Weighted
Average Number of Common Shares Outstanding - Basic and
Diluted
|
105,894,467 | 105,894,467 |
The
accompanying notes to consolidated financial statements are
an
integral part of these consolidated statements.
F-3
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
CONSOLIDATED
STATEMENTS OF CASH FLOWS (NOTES 2 AND 3)
FOR
THE THREE MONTHS ENDED MARCH 31, 2010, AND 2009, AND
CUMULATIVE
FROM INCEPTION (NOVEMBER 18, 2005)
THROUGH
MARCH 31, 2010
(Unaudited)
Cumulative
|
||||||||||||
Three
Months Ended
|
From
Inception
|
|||||||||||
March 31,
|
Through
|
|||||||||||
2010
|
2009
|
March 31, 2010
|
||||||||||
Operating
Activities:
|
||||||||||||
Net
(loss)
|
$ | (67,349 | ) | $ | (1,344,954 | ) | $ | (14,368,155 | ) | |||
Adjustments
to reconcile net (loss) to net cash (used in) provided by operating
activities:
|
||||||||||||
Depreciation
|
22 | 23 | 39,927 | |||||||||
Donated
services and rent
|
- | - | 14,625 | |||||||||
Impairment
of mineral properties
|
- | - | (3,400 | ) | ||||||||
Stock-based
compensation
|
- | 1,232,053 | 7,996,262 | |||||||||
Loss
on disposition of fixed assets
|
- | - | 42,100 | |||||||||
Changes
in net liabilities-
|
||||||||||||
Prepaid
expenses and deposit
|
- | 10,076 | (57,882 | ) | ||||||||
Accounts
payable and accrued liabilities
|
(3,040 | ) | 675 | 1,244,011 | ||||||||
Net
Cash (Used in) Operating Activities
|
(70,367 | ) | (102,127 | ) | (5,092,512 | ) | ||||||
Investing
Activities:
|
||||||||||||
Purchases
of property and equipment
|
- | - | (79,710 | ) | ||||||||
Acquisition
of 10 percent interest in affiliated company
|
- | - | (1,450,000 | ) | ||||||||
Acquisition
of mineral licenses
|
- | - | (4,550,142 | ) | ||||||||
Net
Cash (Used in) Investing Activities
|
- | - | (6,079,852 | ) | ||||||||
Financing
Activities:
|
||||||||||||
Issuance
of common stock for cash
|
- | - | 7,362,061 | |||||||||
Issuance
of common stock for finder's fee
|
- | - | (144,750 | ) | ||||||||
Issuance
of common stock for ownership interest
|
- | - | 1,180,000 | |||||||||
Loans
from stockholders
|
16,500 | 30,549 | 2,126,099 | |||||||||
Due
to related parties
|
54,000 | 54,000 | 654,730 | |||||||||
Net
Cash Provided by Financing Activities
|
70,500 | 84,549 | 11,178,140 | |||||||||
Effect
of Other Comprehensive Income on Cash and Cash Equivalents
|
(2,948 | ) | (8,630 | ) | (5,188 | ) | ||||||
Net
(Decrease) Increase in Cash and Cash Equivalents
|
(2,815 | ) | (26,208 | ) | 588 | |||||||
Cash
and Cash Equivalents - Beginning of Period
|
3,403 | 28,997 | - | |||||||||
Cash
and Cash Equivalents - End of Period
|
$ | 588 | $ | 2,789 | $ | 588 | ||||||
Supplemental
Disclosure of Cash Flow Information:
|
||||||||||||
Cash
paid during the period for:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
Income
taxes
|
$ | - | $ | - | $ | - |
The
accompanying notes to consolidated financial statements are
an
integral part of these consolidated statements.
F-4
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
CONSOLIDATED
STATEMENTS OF CASH FLOWS (NOTES 2 AND 3)
FOR
THE THREE MONTHS ENDED MARCH 31, 2010, AND 2009, AND
CUMULATIVE
FROM INCEPTION (NOVEMBER 18, 2005)
THROUGH
MARCH 31, 2010
(Unaudited)
Supplemental
Disclosure of Cash Flow Information:
On
September 27, 2007, the Company issued 20,000,000 shares of common stock
pursuant to the Share Purchase Agreement entered into for the acquisition of two
mineral exploration licenses (See Note 5). The 20,000,000 shares of common stock
were valued at $44,600,000.00
On
November 28, 2007, the Company granted 7,300,000 stock options to acquire alike
number of shared of common stock to its Directors, consultants, and an officers
with the excerise price of $1.60 per share. The fair value of the stock option
is $1.53 base on Black-Scholes Option Pricing Model on the grant date, and will
be vested equally over 19 months from the initial vesting
date. During the year ended December 31, 2008, 2,200,000 stock
options were cancelled.
On
January 22, 2008, the Company issued 5,000,000 shares of common stock pursuant
to the Asset Purchase Agreement entered into for the acquisition of two mineral
exploration licenses (See Note 5). The 5,000,000 shares of common stock were
valued at $7,650,000.00
On
January 31, 2008, the Company issued 12,000,000 shares of common stock pursuant
to the Share Purchase Agreement entered into for a 10% investment in Hong Kong
Mongolia Metals Limited. The 12,000,000 shares of common stock were valued
at
On June
5, 2008, the Company issued 680,000 units (each a “Unit”) to seven individuals
due to the closing of the Company’s private placement at $1.00 per Unit for
total gross proceeds of $680,000. Each Unit consists of one share of common
stock of the Company and one-half of one share purchase warrant, with each whole
warrant entitling the holder to purchase one additional share of common stock of
the Company at $2.00 per warrant share until June 5, 2010.
On June
5, 2008, the Company issued 500,000 shares to one individual due to the closing
of the Company’s private placement at $1.00 per share for total gross proceeds
of $500,000.
The
accompanying notes to consolidated financial statements are
an
integral part of these consolidated statements.
F-5
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
1. Summary
of Significant Accounting Policies
Uranium
308 Corp. (“Uranium 308” or “the Company”) was incorporated in the State of
Nevada on November 18, 2005, and is in the exploration stage. On July
2, 2007, the Company completed a merger with its wholly owned subsidiary,
Uranium 308 Corp., which was incorporated in the State of Nevada on June 12,
2007, solely to effect a name change. As a result, Uranium 308
changed its name from Montagu Resources Corp. to Uranium 308
Corp. Uranium 308 initially acquired a mineral property located in
the province of British Columbia, Canada, which was registered in the name of
the former President of Uranium 308, who agreed to hold the claim in trust on
behalf of the Company. As of November 23, 2007, Uranium 308 forfeited
its claim on such property. On September 27, 2007, Uranium 308
completed a Share Purchase Agreement entered into between the Company, Mongolia
Energy Limited (“MEL”), and all of the stockholders of MEL. MEL is
the sole stockholder/registered capital owner of Tooroibandi Limited, a company
organized under the laws of Mongolia. As a result of the Share
Purchase Agreement, Uranium 308 has indirectly acquired two exploration licenses
identified by license numbers 12207X effective to November 14, 2009, and 11317X
effective to February 19, 2009, (the “Exploration Licenses”) which are owned by
Tooroibandi Limited. License number 12207X covers 4,017 hectares of
mineral property named Jargalant, and license number 11317X covers 15,621
hectares of mineral property named Elstiin Uul, which are both located in the
Territory of Erdene soum, Tuv Province, Mongolia. The Exploration
Licenses comprise the 196.38 sq. km Janchivlan Property, which is located
approximately 70 km southeast of Ulaanbaatar, the capital of
Mongolia. Uranium 308's common shares are listed for trading on the
OTC Bulletin Board under the symbol “URCO.”
Unaudited
Interim Consolidated Financial Statements
The
consolidated interim financial statements of Uranium 308 as of March 31, 2010,
and December 31, 2009, and for the three months ended March 31, 2010, and 2009,
and cumulative from inception, are unaudited. However, in the opinion of
management, the interim consolidated financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial position of the Company as of March 31, 2010, and
December 31, 2009, and the results of its operations and its cash flows for the
three months ended March 31, 2010, and 2009, and cumulative from
inception. These results are not necessarily indicative of the results
expected for the calendar year ending December 31, 2010. The accompanying
consolidated financial statements and notes thereto do not reflect all
disclosures required under accounting principles generally accepted in the
United States of America. Refer to the Company’s audited financial
statements as of December 31, 2009, filed with the SEC for additional
information, including significant accounting policies. The accompanying
consolidated financial statements have been prepared from the books of accounts
of the Company and its subsidiaries under the accrual method of
accounting.
Basis
of Presentation and Principles of Consolidation
The
accompanying consolidated financial statements and related notes are presented
in accordance with accounting principles generally accepted in the United States
of America, and are expressed in United States dollars. In addition,
the accompanying consolidated financial statements include the accounts of
Uranium 308 and its wholly owned subsidiaries. Intercompany balances
and transactions have been eliminated in consolidation.
Cash
and Cash Equivalents
Uranium
308 considers cash on hand, cash in banks, and all highly liquid instruments
with maturity of three months or less at the time of issuance to be cash and
cash equivalents.
F-6
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
Revenue
Recognition
Uranium
308 is in the exploration stage and has yet to realize revenues from
operations. Once the Company has commenced operations, it will
recognize revenues when delivery of its product has occurred provided there is
persuasive evidence of an agreement, acceptance has been approved by its
customers, the fee is fixed or determinable based on the completion of stated
terms and conditions, and collection of any related receivable is
probable.
Basic
and Diluted Net Income (Loss) Per Share
Uranium
308 computes net income (loss) per share in accordance with FASB ASC 260, “Earnings per Share” (“SFAS
No. 128”). FASB ASC 260 requires presentation of both basic and
diluted earnings per share (“EPS”) on the face of the income
statement. Basic EPS is computed by dividing net income (loss)
available to common stockholders (numerator) by the weighted average number of
shares outstanding (denominator) during the period. Diluted EPS gives
effect to all dilutive potential common shares outstanding during the period
using the treasury stock method and convertible preferred stock using the
if-converted method. In computing diluted EPS, the average stock
price for the period is used in determining the number of shares assumed to be
purchased from the exercise of stock options or warrants. Diluted EPS
excludes all dilutive potential shares if their effect is
anti-dilutive.
Income
Taxes
Uranium
308 accounts for income taxes pursuant to FASB ASC 740, “Accounting for Income
Taxes.” Under FASB ASC 740-10-25, deferred tax assets and
liabilities are determined based on temporary differences between the bases of
certain assets and liabilities for income tax and financial reporting
purposes. The deferred tax assets and liabilities are classified
according to the financial statement classification of the assets and
liabilities generating the differences.
Uranium
308 maintains a valuation allowance with respect to deferred tax
assets. Uranium 308 establishes a valuation allowance based upon the
potential likelihood of realizing the deferred tax asset and taking into
consideration the Company’s financial position and results of operations for the
current period. Future realization of the deferred tax benefit
depends on the existence of sufficient taxable income within the carryforward
period under the Federal tax laws.
Changes
in circumstances, such as Uranium 308 generating taxable income, could cause a
change in judgment about the realizability of the related deferred tax
asset. Any change in the valuation allowance will be included in
income in the year of the change in estimate.
F-7
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
Fair
Value of Financial Instruments
Uranium
308 estimates the fair value of financial instruments using the available market
information and valuation methods. Considerable judgment is required
in estimating fair value. Accordingly, the estimates of fair value
may not be indicative of the amounts Uranium 308 could realize in a current
market exchange. As of March 31, 2010, and December 31, 2009, the
Company’s financial instruments approximated fair value to do the nature and
short-term maturity of such instruments.
Concentration
of Risk
Financial
instruments which potentially subject Uranium 308 to concentrations of credit
risk consist principally of cash. Uranium 308 places its temporary
cash investments in reputable financial institutions which are fully insured by
the government in which they are located. Financial instruments that
potentially subject Uranium 308 to concentrations of credit risk consist
primarily of cash in excess of federally insured amounts. For the
three months ended March 31, 2010, and 2009, and cumulative from inception,
Uranium 308 has not incurred a loss relating to this concentration of credit
risk.
Mineral
Properties and Exploration Expenses
Uranium
308 has been in the exploration stage since its formation on November 18, 2005,
and has not yet realized any revenues from its planned operations. It
is primarily engaged in the acquisition and exploration of mining
properties. Mineral property exploration costs are expensed as
incurred. Mineral property acquisition and licensing costs are
initially capitalized when incurred. The Company assesses the
carrying costs for impairment under FASB ASC 360 “Accounting for Impairment or
Disposal of Long Lived Assets,” at each fiscal quarter
end. When it has been determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves,
the costs then incurred to develop such property, are
capitalized. Such costs will be amortized for depletion purposes
using the units-of-production method over the estimated life of the probable
reserves. If mineral properties are subsequently abandoned or
impaired, any capitalized costs will be charged to operations.
Property
and Equipment
The
components of property and equipment are stated at cost. Property and
equipment costs are depreciated or amortized for financial reporting purposes
over the useful lives of the related assets by the straight-line
method. Useful lives utilized for calculating depreciation or
amortizations are as follows:
Computer and office equipment
|
3 to 5 years
|
|
Field
equipment
|
5
years
|
|
Vehicles
|
5
years
|
F-8
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
Upon
disposition of an asset, its cost and related accumulated depreciation or
amortization is removed from the accounts, and any resulting gain or loss is
recognized.
Lease
Obligations
All
non-cancelable leases with an initial term greater than one year are categorized
as either capital or operating leases. Assets recorded under capital
leases are amortized according to the same methods employed for property and
equipment or over the term of the related lease, if shorter.
Long-lived
Assets
In
accordance with FASB ASC 360, Uranium 308 tests long-lived assets or asset
groups for recoverability when events or changes in circumstances indicate that
their carrying amount may not be recoverable. Circumstances which
could trigger a review include, but are not limited to: significant decreases in
the market price of the asset; significant adverse changes in the business
climate or legal factors; accumulation of costs significantly in excess of the
amount originally expected for the acquisition or construction of the asset;
current period cash flow or operating losses combined with a history of losses
or a forecast of continuing losses associated with the use of the asset; and
current expectation that the asset will more likely than not be sold or disposed
significantly before the end of its estimated useful life.
Recoverability
is assessed based on the carrying amount of the asset and its fair value which
is generally determined based on the sum of the undiscounted cash flows expected
to result from the use and the eventual disposal of the asset, as well as
specific appraisal in certain instances. An impairment loss is
recognized when the carrying amount is not recoverable and exceeds fair
value.
For the
three months ended March 31, 2010, and 2009, and cumulative from inception, no
events requiring an impairment loss occurred.
Use
of Estimates
The
preparation of consolidated 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 reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates. Uranium 308 regularly evaluates estimates and
assumptions related to useful life and recoverability of long-lived assets and
deferred income tax asset valuation allowances. Uranium 308 bases its
estimates and assumptions on current facts, historical experience, and various
other factors that it believes to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities and the accrual of costs and expenses that are not
readily apparent from other sources. The actual results experienced
by Uranium 308 may differ materially and adversely from the Company’s
estimates. To the extent there are material differences between the
estimates and the actual results, future results of operations will be
affected.
F-9
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
Comprehensive
Income
Uranium
308 has adopted Statement of FASB ASC 220 “Reporting Comprehensive
Income” (“SFAS No. 130”). Comprehensive income includes net income and
all changes in equity during a period that arises from non-owner sources, such
as foreign currency items and unrealized gains and losses on certain investments
in equity securities.
Foreign
Currency Translation
Uranium
308's functional and reporting currency is the United States
dollar. Monetary assets and liabilities denominated in foreign
currencies are translated in accordance with FASB ASC 830, “Foreign Currency
Translation,” using the exchange rate prevailing at the balance sheet
date. Operating costs are translated using the average exchange rate
prevailing during the period. Gains and losses arising on settlement
of foreign currency denominated transactions or balances are included in the
determination of income. Foreign currency transactions are primarily
undertaken in Canadian dollars. Uranium 308 has not entered into
derivative instrument transactions to offset the impact of foreign currency
fluctuations. Translation gains or losses related to such
transactions are recognized for each reporting period in the related statement
of operations and comprehensive income (loss).
Stock-based
Compensation
Uranium
308 records stock based compensation in accordance with FASB ASC 718, “Share-Based Payments.” which
requires the measurement and recognition of compensation expense based on
estimated fair values for all share-based awards made to employees and
Directors, including stock options. The Company has issued a total of
4,600,000 stock options to its Directors and consultants through March 31,
2010.
During
the period from inception through March 31, 2010, and subsequent thereto, the
Company continued its mineral property acquisition, exploration programs, and
capital formation activities through the issuance of equity, debt and other
contract obligations, and loans from stockholders and other related
parties.
F-10
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
The
accompanying consolidated financial statements have been prepared on a going
concern basis, which implies that Uranium 308 will continue to realize its
assets and discharge its liabilities in the normal course of
business. Uranium 308 has not generated revenues since inception and
has never paid any dividends, and it is unlikely that the Company will pay
dividends or generate earnings in the immediate or foreseeable
future. The continuation of Uranium 308 as a going concern is
dependent upon the continued financial support from its stockholders, the
ability of Uranium 308 to obtain necessary equity financing to continue
operations, and the attainment of profitable operations.
While
management of the Company believes that the Company will be successful in
providing cash resources from debt and equity transactions, there can be no
assurance that the Company will be able to generate the resources required under
its business plan, or be successful in its capital formation activities to allow
the Company to commence and sustain its operations, and achieve
profitability. As of March 31, 2010, Uranium 308 had accumulated
losses since inception of $14,368,155. These and other factors raise
substantial doubt regarding Uranium 308's ability to continue as a going
concern. The accompanying consolidated financial statements do not
include any adjustments as to the recoverability and classification of recorded
asset amounts and classification of liabilities that might be necessary should
Uranium 308 be unable to continue as a going concern.
3. Restatement
Subsequent
to December 31, 2008, management of the Company determine that the fair value of
12,000,000 shares of common stock that were issued in connection with a Share
Purchase Agreement between the Company and Mongolia Metals Limited (“MML”) for
the acquisition of a 10 percent interest in MML, was understated by
$14,384,928. (See Note 7 for additional information). The
Company corrected the error by increasing the investment in said affiliated
company by $14,384,928 to the amount of $14,400,000 (the determined fair value
of the common stock issued), and increased additional paid-in capital by the
same amount as presented in the accompanying consolidated financial
statements. The impact of the adjustment increased the investment in
said affiliated company and additional paid-in capital by the same amount,
$14,384,928, and had no impact on net (loss) and comprehensive (loss) for the
periods ended March 31, 2010, and 2009. (Loss) per share – basic and
diluted for the period remained unchanged.
4. Related
Party Transactions
For the
period ended June 30, 2007, Uranium 308 recognized a total of $3,000 (2006 -
$6,000) for donated services at $500 per month and $1,500 (2006 - $3,000) for
donated rent at $250 per month provided by the former President of Uranium
308. The donated services and rent were terminated as of July 1,
2007.
As of
March 31, 2010, Uranium 308 was indebted to a related-party company in the
amount of $654,730 (December 31, 2009 - $600,730), which is non-interest
bearing, unsecured, and due upon demand.
F-11
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
For the
three months ended March 31, 2010, the Company paid Mr. Dennis Tan, the
president and CEO of Uranium 308, $60,000, and as of December 31, 2009, owed him
$260,000, as consulting fees payable (included in accounts payable-trade in the
accompanying consolidated balance sheets) in accordance with the Consulting
Agreement between Dennis Tan and Uranium 308, dated July 24, 2007.
For the
three months ended March 31, 2010, the Company paid Mr. Michael Tan, the brother
of the president and CEO of Uranium 308, $48,000, and as of March 31, 2010, owed
him $208,000, as consulting fees payable (included in accounts payable-trade in
the accompanying consolidated balance sheets) in accordance with the
Consulting Agreement between Michael Tan and Uranium 308, dated July 24,
2007.
5. Loans
from Stockholders
As of
March 31, 2010, Uranium 308 had received a total of $2,126,099 (December 31,
2009 – $2,109,599) as loans from three stockholders. The loans from
stockholders are unsecured, non-interest bearing, and have no stated terms of
repayment.
6. Mineral
Properties and Licenses
In
November 2005, Uranium 308, through its former president and Director, acquired
100 percent of the rights, title, and interest in a mining claim representing 20
units in the Kamloops Mining Division in the Province of British Columbia,
Canada. Payment of $3,400 was required to record this mining claim
and was paid by a company controlled by the president of Uranium
308. The claim is registered in the name of the former president of
Uranium 308, who has agreed to hold the claim in trust on behalf of Uranium
308. On November 23, 2006, the mineral claim lapsed and the former
president of Uranium 308 re-staked the mineral claim in trust for Uranium 308 at
a cost of $142. However, as of November 23, 2007, Uranium 308
forfeited its claim on this property.
On
September 27, 2007, Uranium 308 completed the Share Purchase Agreement entered
into between Uranium 308, MEL, and all the stockholders of MEL. MEL
is the sole stockholder/registered capital owner of Tooroibandi Limited, a
company organized under the laws of Mongolia. As a result of the
Share Purchase Agreement, Uranium 308 indirectly acquired the Exploration
Licenses (identified by license numbers 12207X effective to November 14, 2009,
and 11317X effective to February 19, 2009), which are owned by Tooroibandi
Limited. License number 12207X covers 4,017 hectares named Jargalant
and License number 11317X covers 15,621 hectares named Elstiin Uul, which are
both located in the Territory of Erdene soum, Tuv Province,
Mongolia. The Exploration Licenses comprise the 196.38 sq. km
Janchivlan Property, which is located approximately 70 km southeast of
Ulaanbaatar, the capital of Mongolia. The cash and stock value of the
Share Purchase Agreement was $49,150,000, and was attributable to the
acquisition of the mineral property licenses described above.
F-12
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
On
January 15, 2008, Uranium 308 entered into an asset purchase agreement (the
“Asset Purchase Agreement”) with Success Start Energy Investment Co. (“Success
Start”), a Hong Kong corporation, and the Company’s subsidiary, Tooroibandi
Limited (the “Subsidiary”), whereby Uranium 308 has agreed to provide the
consideration on behalf of the Subsidiary for the acquisition of two uranium
exploration licenses from Success Start referenced as license number 10256X
covering 1540 hectares (15.40 sq. km) (known as the Tsagaan Chuluut property),
and license number 13060X covering 3116 hectares (31.15 sq. km) (known as the
Khar Balgast property) (collectively, the “Licenses”), which Licenses are
located 385 km east from the city of Ulaanbaatar, Mongolia and 75 km northwest
from Undurkhaan, a town on the border of Umnudelger, Kherien, and Binder Sum of
Khentii Province of Mongolia in exchange for 10,000,000 shares of common stock
of Uranium 308, and $8,000,000 in cash in accordance with the terms and
conditions of the Asset Purchase Agreement. On January 22, 2008,
Uranium 308 issued 5,000,000 shares of common stock to Success Start Energy
Investment Co. (“Success Start”), a Hong Kong Corporation, in accordance with
the Asset Purchase Agreement, entered into on January 15, 2008, between Uranium
308, Success Start, and Uranium 308’s subsidiary, Tooroibandi
Limited. The cash and stock value of the Share Purchase Agreement
were $8,000,000, and $15,300,000, respectively, and were attributable to the
acquisition of the mineral property licenses described above. As of
March 31, 2010, the Company owed $14,200,000 (consisting of $7,650,000 as the
value related to 5,000,000 shares of common stock remaining to be issued, and
$6,550,000 in cash due) to Success Start in connection with the Asset Purchase
Agreement.
7. Purchase
of 10 Percent Interest in Affiliated Company
On
January 28, 2008, Uranium 308 entered into a share purchase agreement (the
“Share Purchase Agreement”) with Mongolia Energy Limited (“MEL”), a subsidiary
of Uranium 308, Tooroibandi Limited (“Tooroibandi”), a subsidiary of Uranium
308, Mongolia Metals Limited (“MML”), a company organized under the laws of the
British Virgin Islands, and Hong Kong Mongolia Metals Limited (“HKMML”), a
company organized under the laws of Mongolia and a wholly owned subsidiary of
MML, whereby Uranium 308 agreed to issue 12,000,000 shares of common stock of
Uranium 308 with a value of $14,400,000 to MML in exchange for MEL receiving a
10 percent ownership interest in MML; and Tooroibandi has agreed to allow HKMML
the use of the Exploration Licenses controlled by Tooroibandi for HKMML’s
exploration and development of four tin exploration licenses referenced as
license numbers 13061X, 13062X, 13063X, and 13064X covering 4658 hectares
(collectively, the ‘Tin Exploration Licenses”), which are located approximately
70 km southeast of Ulaanbaatar, the capital of Mongolia, in exchange for
Tooroibandi receiving a 1 percent ownership interest in HKMML, all in accordance
with the terms and conditions of the Share Purchase Agreement.
F-13
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
On
January 31, 2008, Uranium 308 completed the Share Purchase Agreement, entered
into between Uranium 308, MEL, Tooroibandi, MML, and HKMML whereby MEL acquired
a 10 percent ownership interest in MML in exchange for the issuance of
12,000,000 shares of common stock of Uranium 308, which had already been issued
to MML. In addition, HKMML is in the process of having Tooroibandi
registered as a 1 percent owner of the registered capital in HKMML, which is
expected to be finalized in the near term, and Tooroibandi has already had the
Exploration Licenses registered on behalf of HKMML for use under the Tin
Exploration Licenses registered to HKMML.
8. Common
Stock
On March
15, 2007, Uranium 308 affected a 25:1 forward stock split of the authorized,
issued, and outstanding common stock. As a result, the authorized
share capital increased from 100,000,000 shares of common stock to 2,500,000,000
shares of common stock with no change in par value. All share amounts
have been retroactively adjusted for all periods presented.
On July
2, 2007, Uranium 308 affected a 1.5:1 forward stock split of the authorized,
issued, and outstanding common stock. As a result, the authorized
share capital increased from 2,500,000,000 shares of common stock with a par
value of $0.00001 to 3,750,000,000 shares of common stock with no change in par
value. All share amounts have been retroactively adjusted for all
periods presented. Total issued and outstanding share capital has
increased from 150,275,000 shares of common stock to 225,412,500 shares of
common stock.
On July
27, 2007, Mr. Dennis Tan, the President, CEO, and Director, and Mr. Ka Yu, the
former Secretary, Treasurer, and Director, who held in the aggregate 187,500,000
post forward stock split shares of common stock of Uranium 308, voluntarily
agreed to surrender for cancellation in the aggregate 166,500,000 shares of
common stock in order to encourage equity investment in the
Company. Mr. Dennis Tan voluntarily agreed to surrender for
cancellation 96,500,000 of the 112,500,000 post forward stock split shares
registered in his name, and Mr. Ka Yu voluntarily agreed to surrender for
cancellation 70,000,000 of the 75,000,000 post forward stock split shares
registered in his name. The cancellation of the 166,500,000 shares
reduced the issued and outstanding shares at the time from 225,412,500 shares to
58,912,500 shares.
On
September 7, 2007, Uranium 308 received common stock subscriptions for 1,360,000
units at $0.50 per unit for proceeds of $680,000. Each unit is
comprised of one share of common stock and a one-share purchase
warrant. Each share purchase warrant entitles the holder to purchase
one share of common stock at $0.75 per share with an expiration date two years
from the date of issuance.
From July
1, 2007, to September 11, 2007, Uranium 308 received common stock subscriptions
for 6,297,501 units at $0.75 per unit for proceeds of
$4,723,126. Each unit is comprised of one share of common stock and a
one-half share purchase warrant. Each whole share purchase warrant
entitles the holder to purchase one share of common stock at $1.50 per share
with an expiration date two years from the date of issuance.
F-14
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
On
September 27, 2007, Uranium 308 completed the Share Purchase Agreement, entered
into between Uranium 308, MEL, and all the stockholders of MEL, whereby Uranium
308 acquired 100 percent of the issued and outstanding shares in the capital of
MEL through the payment of $4,550,000 in cash, the issuance of 5,000,000 shares
of common stock of Uranium 308 in aggregate to the stockholders of MEL on a pro
rata basis in accordance with each MEL stockholders’ percentage of ownership in
MEL, and the issuance of 15,000,000 shares of common stock of Uranium 308 to Mr.
Lin Dong Hong (the vendor of Tooroibandi Limited). Under the terms of the Share
Purchase Agreement, additional shares of common stock (up to 5,000,000 shares)
are required to be issued to Mr. Lin Dong Hong based on the uranium reserves
determined from the property in Mongolia covered by the two exploration licenses
described above. The cash and stock value of the Share Purchase
Agreement was $49,150,000, and was attributable to the acquisition of the
mineral property licenses described above.
In
relation to Uranium 308’s private placement offering at $0.75 per Unit entered
into with the offshore investors only, Uranium 308 has or will be paying: (i) a
cash finder’s fee in the amount of $72,000 to an entity in Singapore; (ii) a
cash finder’s fee in the amount of $26,250 to an individual in Hong Kong; (iii)
a finder’s fee of 66,666 shares of common stock to an individual in Singapore;
(iv) a finder’s fee of 45,000 share of common stock to an individual in
Singapore; and (v) a finder’s fee of 320,000 shares of common stock to an
individual.
On
November 29, 2007, Uranium 308 issued 588,500 units (each a “Unit”) to 17
individuals/entities due to the closing of the Company’s private placement at
$1.00 per Unit for total gross proceeds of $588,500. Each Unit
consists of one share of common stock of Uranium 308 and one-half of one share
purchase warrant, with each whole warrant entitling the holder to purchase one
additional share of common stock of the Company at $2.00 per warrant share until
November 29, 2009.
In
relation to Uranium 308’s private placement offering at $1.00 per Unit entered
into with the offshore investors only, the Company has or will be paying: (i) a
cash finder’s fee in the amount of $31,500 to an individual in Singapore; (ii) a
finder’s fee of 10,000 shares of common stock to Rita Chou of Singapore; and
(iii) a finder’s fee of 4,300 Shares of common stock to Hsien Loong Wong of
Singapore.
On
January 22, 2008, Uranium 308 issued 5,000,000 shares of common stock, valued at
$1.53 per share, to Success Start Energy Investment Co. (“Success Start”), a
Hong Kong Corporation, in accordance with the Asset Purchase Agreement, entered
into on January 15, 2008, between Uranium 308, Success Start, and Uranium 308’s
subsidiary, Tooroibandi Limited.
F-15
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
On
January 31, 2008, Uranium 308 completed the Share Purchase Agreement, entered
into between Uranium 308, MEL, Tooroibandi, MML, and HKMML whereby MEL acquired
a 10 percent ownership interest in MML in exchange for the issuance of
12,000,000 shares of common stock of Uranium 308. The value of the
transaction was $14,400,000, which has been classified as an investment in an
affiliated company in the accompanying consolidated balance sheets.
On June
5, 2008, the Company issued 680,000 units (each a “Unit”) to seven individuals
due to the closing of the Company’s private placement at $1.00 per Unit for
total gross proceeds of $680,000. Each Unit consists of one share of
common stock of the Company and one-half of one share purchase warrant, with
each whole warrant entitling the holder to purchase one additional share of
common stock of the Company at $2.00 per warrant share until June 5,
2010.
In
relation to the closing of the Company’s private placement offering at $1.00 per
Unit entered into with the offshore investors, the Company will be paying: (i)
cash finder’s fees in the amount of $3,000 to an individual in Singapore and
(ii) cash finder’s fee in the amount of $12,000 to an entity in
Singapore.
On June
5, 2008, the Company issued 500,000 shares to one individual due to the closing
of the Company’s private placement at $1.00 per share for total gross proceeds
of $500,000.
On
December 1, 2008, the Company issued 110,000 shares to three individuals due to
the closing of the Company’s private placement at $0.75 per share for total
gross proceeds of $82,500.
As of
March 31, 2010, total issued and outstanding shares of common stock increased to
105,894,467 shares.
9. Stock-based
Compensation
For the
three months ended March 31, 2010 and 2009, the amounts of $2,053,421 and
$5,942,842, respectively, of stock option compensation expense were
recognized under the Stock-based Compensation Plan.
During
the year ended December 31, 2007, 7,300,000 stock options were granted under the
Stock-based Compensation Plan with the exercise price of $1.60 per share, being
the market price at the time of the grant. Of these options, 6,500,000
were issued to Directors and 800,000 were issued to consultants and an
officer. The Optionee shall have the initial vested right to purchase
an aggregate of up to five percent of the Option Shares on November 28, 2007,
and the Optionee’s remaining right to purchase an aggregate of up to the
remaining 95 percent of the Option Shares under the Option shall only vest in
equal monthly proportions over a period of 19 months from the Initial Vesting
Date. During the year ended December 31, 2008, 2,200,000 stock
options were cancelled because one director resigned and one consultant
terminated his contract with the Company. During the year ended
December 31, 2009, 250,000 stock options were cancelled because one director
resigned. During the three months ended March 31, 2010, 250,000 stock
options were cancelled because one director resigned.
F-16
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
A summary
of Uranium 308’s stock option activities is presented below:
Options Outstanding
|
Directors
|
Consultants
|
Total
|
Option
Price
|
Value
|
|||||||||||||||
Balance
- December 31, 2007
|
6,500,000 | 800,000 | 7,300,000 | $ | 1.6 | $ | 1.53 | |||||||||||||
Stock
Options Cancelled
|
(2,000,000 | ) | (200,000 | ) | (2,200,000 | ) | 1.6 | 1.53 | ||||||||||||
Balance
- December 31, 2008
|
4,500,000 | 600,000 | 5,100,000 | $ | 1.6 | $ | 1.53 | |||||||||||||
Stock
Option Issued
|
- | - | - | 1.6 | 1.53 | |||||||||||||||
Stock
Option Cancelled
|
(250,000 | ) | - | (250,000 | ) | 1.6 | 1.53 | |||||||||||||
Balance
- December 31, 2009
|
4,250,000 | 600,000 | 4,850,000 | $ | 1.6 | $ | 1.53 | |||||||||||||
Stock
Option Cancelled
|
(250,000 | ) | - | (250,000 | ) | 1.6 | $ | 1.53 | ||||||||||||
Balance
- March 31, 2010
|
4,000,000 | 600,000 | 4,600,000 | $ | 1.6 | $ | 1.53 |
Compensation
costs related to options that vest in the future will be recognized as the
related options vest.
The fair
value of the options granted during the three months ended December 31, 2007,
were estimated at $1.53 per using the Black-Scholes Option Pricing Model with
the following weighted average assumptions:
F-17
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
Volatility:
|
263.3 | % | ||
Risk-free
interest rate:
|
3.50 | % | ||
Dividend
yield:
|
— | |||
Expected
lives (months):
|
19 |
Option-pricing
models require the use of highly subjective estimates and assumptions including
the expected stock price volatility. Changes in the underlying assumptions
can materially affect the fair value estimates and therefore, in management’s
opinion, existing models do not necessarily provide reliable measure of the fair
value of Uranium 308’s stock options.
10. Appointment
of Additional Directors and Officers
On
November 7, 2007, Uranium 308 appointed Mr. David Lorge as Vice President of
Exploration.
On
November 28, 2007, Uranium 308 increased the Board of Directors by two, and
appointed Mr. Chris Metcalf and Mr. Martin Shen as Directors.
On
February 20, 2008, Uranium 308 increased the Board of Directors by one, and
appointed Mr. Earl Abbott as a Director of Uranium 308.
Effective
July 18, 2008, Mr. Lin Dong Hong resigned as a Director of the
Company. On August 13, 2008, the Board of Directors of the Company
accepted the resignation of Mr. Lin Dong Hong.
On July
17, 2009, Mr. Chris Metcalf resigned as a Director of Uranium 308
Corp.
On
November 12, 2009, Mr. Martin Shen resigned as a Director of Uranium 308
Corp.
11. Income
Taxes
Potential
benefits of income tax losses are not recognized by the Company until
realization is more likely than not. Uranium 308 has net operating
losses of $14,368,155 which begin to expire in
2025. Pursuant to FASB ASC 740, Uranium 308 is required to compute
deferred tax asset benefits for net operating losses carried
forward. The potential benefit of net operating losses has not been
recognized in these financial statements because Uranium 308 cannot be assured
it is more likely than not it will utilize the net operating losses carried
forward to future years.
For the
three months ended March 31, 2010, and 2009, the provision for income taxes
consisted of the following (assuming an effective tax rate of 15
percent):
F-18
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
Three Months Ended
|
||||||||
March 31,
|
||||||||
2009
|
2008
|
|||||||
Current
Tax Provision:
|
||||||||
Federal
and state-
|
||||||||
Taxable
income
|
$ | - | $ | - | ||||
Total
current tax provision
|
$ | - | $ | - | ||||
Deferred
Tax Provision:
|
||||||||
Federal
and state-
|
||||||||
Loss
carryforwards
|
$ | 10,102 | $ | 201,743 | ||||
Change
in valuation allowance
|
(10,102 | ) | (201,743 | ) | ||||
Total
deferred tax provision
|
$ | - | $ | - |
As of
March 31, 2010, and December 31, 2009, deferred tax assets consisted of the
following:
2010
|
2009
|
|||||||
Loss
carryforwards
|
$ | (2,155,223 | ) | $ | (2,145,121 | ) | ||
Less
- Valuation allowance
|
2,155,223 | 2,145,121 | ||||||
Total
net deferred tax assets
|
$ | - | $ | - |
12. Commitments
and Contingencies
On
September 4, 2007, Uranium 308 entered into an operating lease for office space
in Beijing, China. The term of the lease was for two
years. The rent for the office space was payable quarterly in the
amount of $9,318. Future minimum rental amounts under the lease
amount to $37,272 in 2008, and $24,848 in 2009, respectively. At the
beginning of July 2008, Uranium 308 terminated the office lease
agreement.
On
September 26, 2008, Uranium 308 Entered into an operating lease for office space
in Beijing, China. The operating lease was effective on November 7,
2008. The term of the lease is for two years. The rent for
the office space is payable quarterly in the amount of
$12,780. Future minimum rental amounts under the lease amount to
$51,120 in 2009 and $38,340 in 2010, respectively. At the end of
February 2009, Uranium 308 terminated the office lease
agreement.
F-19
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
In late
August 2008, MEL discovered that Lin Dong Hong, a former Director of the
Company, engaged in alleged self-dealing and fraudulent transfer of 20.53
percent of the ownership of Tooroibandi to Xinjiang Ridong Mining Investment Co.
Ltd, a Chinese company that is owned by Lin Dong Hong, under Mongolia’s Foreign
Investment and Foreign Trade Authority Resolution A-2783.
In early
September 2008, MEL discovered that Lin Dong Hong allegedly fraudulently
transferred an additional 22 percent ownership of Tooroibandi to Mr. Mo Oihua, a
business associate of Lin Dong Hong, under Mongolia’s Foreign Investment and
Foreign Trade Authority Resolution A-3769.
On August
7, 2008, the Company, under MEL, wrote letters to the State Registration Office
of Mongolia (“SRO”) and to the Foreign Investment and Foreign Trade Authority of
Mongolia (“FIFTA”) to have the share registrations reversed and is awaiting the
decision of these offices. In addition, MEL filed a claim under a
Civil Case with the Capital City Administrative Court against the alleged
illegal registrations with SRO and FIFTA. The Civil Case has been
suspended pending the outcome of a civil case related to a claim filed by Lin
Dong Hong’s authorized representative, Mrs. N. Enkhtuya, against MEL’s
authorized representative, Mr. D. Enkhtur.
The Civil
Case was also delayed while the Chief Justice of Mongolia considered issues and
challenges relating to relevance of evidence, acceptance of counterclaim, change
of venue, and removal of Judge T. Tuya. The Chief Justice of Mongolia
has denied the request to have Judge T. Tuya removed, and the Civil Case is
expected to proceed in the near future. The management of the Company
believes that outcome of the Civil Case will take several months to be
determined.
Subsequent
to September 30, 2008, the Board of Directors of the Company learned that the
four Tin Exploration Licensees (License Numbers 13061X, 13062X, 13063X, and
13064X) received by HKMML through the Share Purchase Agreement transaction
between the Company, MEL, Tooroibandi, MML, and HKMML, were not contiguous or
somewhat overlapping with the Exploration Licenses (License Numbers 11317X,
12207X) held by Tooroibandi, which was represented to the Company and MEL and
was a major reason and inducement for Uranium 308 and MEL to enter into such
Share Purchase Agreement. The Tin Exploration Licenses were
determined to be located completely within the boundaries of the two Exploration
Licenses held by Tooroibandi. The Board of Directors is currently
evaluating the position of the Company under the terms of the Share Purchase
Agreement between the Company, MEL, Tooroibandi, MML and HKMML, and may elect to
rescind the transaction, cancel the 12,000,000 shares of common stock issued to
MML, and make application to the have the Tin Exploration Licenses reassigned to
Tooroibandi instead of HKMML. As of March 31, 2010, the matter is
still pending before the Board of Directors of the Company.
F-20
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
13. Recently
Issued Accounting Pronouncements
On May
22, 2009, the FASB issued FASB Statement No. 164, (FASB ASC 958) “Not-for-Profit Entities: Mergers and
Acquisitions”. SFAS No. 164 (FASB ASC 958) is intended to
improve the relevance, representational faithfulness, and comparability of the
information that a not-for-profit entity provides in its financial reports about
a combination with one or more other not-for-profit entities, businesses, or
nonprofit activities. To accomplish that, this Statement establishes
principles and requirements for how a not-for-profit entity:
a.
|
Determines
whether a combination is a merger or an acquisition.
|
|
b.
|
Applies
the carryover method in accounting for a merger.
|
|
c.
|
Applies
the acquisition method in accounting for an acquisition, including
determining which of the combining entities is the
acquirer.
|
|
d.
|
Determines
what information to disclose to enable users of financial statements to
evaluate the nature and financial effects of a merger or an
acquisition.
|
This
Statement also improves the information a not-for-profit entity provides about
goodwill and other intangible assets after an acquisition by amending FASB
Statement No. 142, Goodwill
and Other Intangible Assets, to make it fully applicable to
not-for-profit entities.
SFAS No.
164 (FASB ASC 958) is effective for mergers occurring on or after December 15,
2009, and acquisitions for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2009. Early application is prohibited. The management
of Company does not expect the adoption of this pronouncement to have material
impact on its financial statements.
On May
28, 2009, the FASB issued FASB Statement No. 165, (FASB ASC 855) “Subsequent
Events.” SFAS No. 165 (FASB ASC 855) establishes
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued. Specifically, Statement 165 (FASB ASC 855)
provides:
F-21
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
1.
|
The
period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements.
|
|
2.
|
The
circumstances under which an entity should recognize events or
transactions occurring after the balance sheet date in its financial
statements.
|
|
3.
|
The
disclosures that an entity should make about events or transactions that
occurred after the balance sheet
date.
|
In
accordance with this Statement, an entity should apply the requirements to
interim or annual financial periods ending after June 15, 2009. The
adoption of this pronouncement did not have a material impact on the financial
statements of the Company.
In June
2009, the FASB issued FASB Statement No. 166, (FASB ASC 860) “Accounting for Transfers of
Financial Assets- an amendment of FASB Statement No,
140.” SFAS No. 166 (FASB ASC 860) is a revision to SFAS
No. 140 “Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities” and will require more information about transfers of
financial assets, including securitization transactions, and where companies
have continuing exposure to the risks related to transferred financial
assets. It eliminates the concept of a “qualifying special-purpose
entity,” changes the requirements for derecognizing financial assets, and
requires additional disclosures.
This
statement is effective for financial asset transfers occurring after the
beginning of an entity's first fiscal year that begins after November 15,
2009. The management of the Company does not expect the adoption of
this pronouncement to have material impact on its financial
statements.
In June
2009, the FASB issued FASB Statement No. 167, (FASB ASC 810) "Amendments to FASB Interpretation
No. 46(R).” SFAS No. 167 (FASB ASC 810) amends certain
requirements of FASB Interpretation No. 46(R), “Consolidation of Variable
Interest Entities” and changes how a company determines when an entity that is
insufficiently capitalized or is not controlled through voting (or similar
rights) should be consolidated. The determination of whether a
company is required to consolidate an entity is based on, among other things, an
entity’s purpose and design and a company’s ability to direct the activities of
the entity that most significantly impact the entity’s economic
performance.
This
statement is effective as of the beginning of each reporting entity’s first
annual reporting period that begins after November 15, 2009. The
management of the Company does not expect the adoption of this pronouncement to
have material impact on its financial statements.
In June
2009, the FASB issued FASB Statement No. 168, (FASB ASC 105) "The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles - a
replacement of FASB Statement No. 162.” SFAS No. 168 (FASB ASC
105) establishes the FASB Accounting Standards Codification (the "Codification")
to become the single official source of authoritative, nongovernmental U.S.
generally accepted accounting principles (“GAAP”). The Codification
did not change GAAP but reorganizes the literature.
F-22
URANIUM
308 CORP. AND SUBSIDIARIES
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010, AND 2009
(Unaudited)
SFAS No.
168 (FASB ASC 105) is effective for interim and annual periods ending after
September 15, 2009. The adoption of this pronouncement did not have a
material impact on the financial statements of the Company.
F-23
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
You
should read the following plan of operation together with our consolidated
financial statements and related notes appearing elsewhere in this Quarterly
Report. This plan of operation contains forward-looking statements
that involve risks, uncertainties, and assumptions. The actual
results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors
Overview
Our
Company, Uranium 308 Corp., was incorporated in the State of Nevada on November
18, 2005, under the name Montagu Resources Corp. On July 2, 2007, we
completed a merger with our wholly owned subsidiary and changed our name to
“Uranium 308 Corp.” following a change in our
business
direction from gold exploration to uranium exploration.
In
addition, effective July 2, 2007, we affected a one and one-half of one (1.5)
for one (1) forward stock split of our authorized, issued, and outstanding
common stock. As a result, our authorized capital has increased from
2,500,000,000 shares of common stock with a par value of $0.00001 and
100,000,000 shares of preferred stock with a par value of $0.00001 to
3,750,000,000 shares of common stock with a par value of $0.00001 and
100,000,000 shares of preferred stock with a par value of
$0.00001. Our issued and outstanding share capital has increased from
150,275,000 shares of common stock to 225,412,500 shares of common
stock. However, effective July 27, 2007, Mr. Dennis Tan, our
President, CEO, and a Director, and Mr. Ka Yu, our then Secretary, Treasurer,
and a Director, who held in aggregate 187,500,000 post forward stock split
shares of common stock of the Company, voluntarily agreed to surrendered for
cancellation in aggregate 166,500,000 shares of common stock in order to
encourage equity investment into the Company. Mr. Dennis Tan
voluntarily agreed to surrender for cancellation 96,500,000 of the 112,500,000
post forward stock split shares of common stock registered in his name and Mr.
Ka Yu voluntarily agreed to surrender for cancellation 70,000,000 of the
75,000,000 post forward stock split shares of common stock registered in his
name. The cancellation of these 166,500,000 shares of common stock
reduced the issued and outstanding shares of common stock from 225,412,500 to
58,912,500 as of July 27, 2007.
Business
of the Company
On
September 21, 2007, the Company signed a share purchase agreement with Mongolia
Energy Limited (“MEL”), a corporation organized under the laws of BVI, and all
the stockholders of MEL (the “Share Purchase Agreement”). Under the
terms of the Share Purchase Agreement, the Company acquired 100% of the issued
and outstanding shares in the capital of MEL (the “MEL Capital”), in exchange
for issuing up to a maximum of 25,000,000 shares of common stock of the Company
as follows:
(1)
|
5,000,000
shares to the stockholders of MEL on a pro rata basis in accordance with
each MEL stockholders’ percentage ownership in MEL;
and
|
(2)
|
up
to 20,000,000 shares to the vendor of Tooroibandi Limited (“Tooroibandi”),
pursuant to and at the time required by the terms of the share purchase
agreement between MEL and Tooroibandi completed on September 12,
2007.
|
3
On
September 27, 2007, the Company closed the Share Purchase Agreement, whereby the
Company indirectly acquired two exploration licenses identified by license
numbers 12207X effective through November 14, 2009, and 11317X effective through
February 19, 2009, which has been renewed to February 19, 2012, and which are
owned by Tooroibandi. The two licenses comprise the 196.38 sq.
kilometers Janchivlan Property, which is located approximately 70 kilometers
southeast of Ulaanbaatar, the capital of Mongolia. Due to the actions
taken by Mr. Lin Dong Hong, a former director of the Company, MEL is no longer
the registered owner of 100% of Tooroibandi and currently only holds 57.47%
ownership of Tooroibandi as registered with the State Registration Office in
Mongolia. Please see Legal Proceedings for more
details about the actions taken by Mr. Lin Dong Hong and the legal proceedings
that have transpired.
On
January 15, 2008, the Company entered into an asset purchase agreement (the
“Asset Purchase Agreement”) with Success Start Energy Investment Co. (“Success
Start”), a Hong Kong corporation, and the Company’s subsidiary, Tooroibandi,
whereby the Company has agreed to provide the consideration on behalf of
Tooroibandi for the acquisition of two uranium exploration licenses from Success
Start referenced as license number 10256X covering 1540 hectares (15.40 sq.
kilometers) (known as the Tsagaan Chuluut property) and license number 13060X
covering 3116 hectares (31.15 sq. kilometers) (known as the Khar Balgast
property), which licenses are located 385 kilometers east from the city of
Ulaanbaatar, Mongolia and 75 kilometers northwest from Undurkhaan, a town on the
border of Umnudelger, Kherien and Binder Sum of Khentii Province of
Mongolia. Exploration work has not begun on these two
properties. The Company has not complied with all of the obligations
under the Asset Purchase Agreement due to financial circumstances and is
considering cancelling this agreement. To date, the Company has paid
US$1,450,000 to Success Start and issued 5,000,000 shares of common stock of the
Company to Success Start. The Company has not completed the
exploration program on the Tsagaan Chuluut property or the Khar Balgast property
as required by September 30, 2008, and therefore, the final remaining 5,000,000
shares of common stock of the Company that are to be issued to Success Start
have not been issued as the Company has not been able to determine if the
exploration results confirm the uranium mineralization calculations and survey
results of the properties covering the licenses that were prepared by a certain
Russian geologists in 1951 and 1954, which was a precondition to issuing the
final 5,000,000 shares. Should this Asset Purchase Agreement be
cancelled or terminated, then the Company would have to transfer the licenses
back to Success Start, have the initial 5,000,000 shares issued to Success Start
cancelled and possibly risk not being able to have the initial US$1,450,000 paid
to Success Start returned to the Company.
On
January 28, 2008, the Company entered into a share purchase agreement with MEL,
Tooroibandi, Mongolia Metals Limited (“MML”), a company organized under the laws
of the British Virgin Islands, and Hong Kong Mongolia Metals Limited (“HKMML”),
a company organized under the laws of Mongolia and a wholly-owned subsidiary of
MML, whereby MEL received a 10% ownership interest in MML in exchange for
12,000,000 shares of common stock of the Company; and Tooroibandi has agreed to
allow HKMML the use of certain land holdings controlled by Tooroibandi for
HKMML’s exploration and development of four tin exploration licenses referenced
as license numbers 13061X, 13062X, 13063X, and 13064X covering 4658 hectares
(the “Tin Exploration Licenses”), which licenses are located approximately 70
kilometers southeast of Ulaanbaatar, the capital of Mongolia, in exchange for
Tooroibandi receiving a 1% ownership interest in HKMML.
Subsequent
to September 30, 2008, the Board of Directors of the Company learned that the
Tin Exploration Licenses received by HKMML through the share purchase agreement
transaction between the Company, MEL, Tooroibandi, MML, and HKMML, were not
contiguous or somewhat overlapping with the exploration licenses (license
numbers 11317X, 12207X) held by Tooroibandi, which was represented to the
Company and MEL and was a major reason and inducement for the Company and MEL to
enter into such share purchase agreement. In fact, the Tin
Exploration Licenses were determined to be located completely within the
boundaries of the two exploration licenses held by Tooroibandi. The
Board of Directors is currently evaluating the position of the Company under the
terms of the share purchase agreement between the Company, MEL, Tooroibandi, MML
and HKMML, and may elect to rescind the transaction, cancel the 12,000,000
shares of common stock issued to MML, and make application to the have the Tin
Exploration Licenses reassigned to Tooroibandi instead of HKMML. As
of the date of this Quarterly Report, the matter is still pending before the
Board of Directors of the Company.
4
We are an
exploration stage corporation. An exploration stage corporation is
one engaged in the search for mineral deposits or reserves which are not in
either the development or production stage. We intend to focus our
exploration activities on mineral properties in Mongolia and other regions,
which may result in the acquisition of other entities that own certain mineral
rights or licenses.
There is
no assurance that commercially viable mineral deposits exist on our properties
and further exploration will be required before a final evaluation as to the
economic feasibility is determined.
Plan
of Operations
We are a
start-up, exploration stage corporation, and have not yet generated or realized
any revenues from our business operations.
Our
registered independent auditors have issued a going concern
opinion. This means that there is substantial doubt that we can
continue as an on-going business for the next 12 months unless we obtain
additional capital to pay our bills. This is because we have not
generated any revenues and no revenues are anticipated until we locate mineral
deposits and begin removing and selling minerals. There is no
assurance we will ever reach this point. Accordingly, we must raise
cash from sources other than the sale of minerals found on the property and any
other acquired properties. Thus, cash must be raised from other
sources. Our only other source for cash at this time is investments
by others in the Company. We must raise cash to implement our
projects and stay in business.
We intend
to acquire additional properties or exploration rights in Mongolia and other
regions and to conduct research in the form of exploration on such
properties.
Our
exploration target is to find mineral bodies containing uranium. Our
success depends upon finding mineralized material. This will require
a determination by a geological consultant as to whether any of our mineral
properties currently owned and intended to be acquired contains
reserves. Mineralized material is a mineralized body, which has been
delineated by appropriate spaced drilling or underground sampling to support
sufficient tonnage and average grade of minerals to justify
removal. If we do not find mineralized material or we cannot remove
mineralized material, either because we do not have the money to do it or
because it is not economically feasible to do it, we will cease operations and
you will lose your investment.
In
addition, we may not have enough money to complete our exploration of our
Janchivlan Property in Mongolia, or any newly acquired properties. If
it turns out that we have not raised enough money to complete our anticipated
exploration program, we will try to raise additional funds from a private
placement or loans. At the present time, we are in the process of
attempting to raise additional money through a private placement and there is no
assurance that we will raise additional money in the future. If we
require additional money and are unable to raise it, we will have to suspend or
cease operations.
We must
conduct exploration to determine what amount of minerals, if any, exist on our
current or any newly acquired properties and if any minerals which are found can
be economically extracted and profitably processed.
Before
mineral retrieval can begin, we must explore for and find mineralized
material. After that has occurred we have to determine if it is
economically feasible to remove the mineralized
material. Economically feasible means that the costs associated with
the removal of the mineralized material will not exceed the price at which we
can sell the mineralized material. We cannot predict what that will
be until we find mineralized material.
5
We do not
claim to have any minerals or reserves whatsoever at this time on any of our
current properties.
If we are
unable to complete any phase of exploration because we do not have enough money,
we will cease operations until we raise more money. If we cannot or
do not raise more money, we will cease operations. If we are required
to cease operations, we will investigate all other opportunities to maintain
shareholder value.
We do not
intend to hire additional employees at this time. All of the work to
be conducted on any newly acquired properties will be conducted by unaffiliated
independent contractors that we will hire. The independent
contractors will be responsible for surveying, geology, engineering,
exploration, and excavation. The geologists will evaluate the
information derived from the exploration and excavation and the engineers will
advise us on the economic feasibility of removing the mineralized
material.
Limited
Operating History; Need for Additional Capital
There is
limited historical financial information about us upon which to base an
evaluation of our performance. We are an exploration stage
corporation and have not generated any revenues from operations. We
cannot guarantee we will be successful in our business
operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources,
possible delays in the exploration of our properties, and possible cost overruns
due to price and cost increases in services.
To become
profitable and competitive, we conduct research and exploration of our
properties before we start production of any minerals we may find. We
are seeking equity financing to provide for the capital required to implement
our research and exploration plans.
We have
no assurance that future financings will be available to us on acceptable
terms. If financing is not available on satisfactory terms, we may be
unable to continue, develop, or expand our operations. Equity financing could
result in additional dilution to existing shareholders.
Liquidity
and Capital Resources
To meet
our need for cash, we intend to raise money from private placement
offerings. We cannot guarantee that we will be able to raise enough
money to stay in business. If we find mineralized material and it is
economically feasible to remove the mineralized material, we will attempt to
raise additional money through a subsequent private placement, public offering,
or through loans. If we do not raise all of the money we need to
complete our exploration plans, we will have to find alternative sources, like
further public offerings, a private placement of securities, or loans from our
officers or others.
As of the
date of this Quarterly Report, we have yet to generate any
revenues.
As of
March 31, 2010, our total assets were $86,909,696 compared to $86,912,533 as of
December 31, 2009; our total liabilities were $18,224,840 compared to
$18,157,380 as of December 31, 2009; and, we had cash resources of $588 compared
to $3,403 as of December 31, 2009.
6
Results
of Operation
Three
Month Period Ended March 31, 2010
Stock based
compensation: Stock based compensation expenses were $nil and
$1,232,053 for the three months ended March 31, 2010 and 2009, respectively, as
the Company did not provide any stock-based compensation for the three month
period ended March 31, 2010.
Geological
exploration: Geological exploration expenses were $nil and
$nil for the three months ended March 31, 2010 and 2009, respectively, as the
Company did not undertake any geological exploration during the three month
periods ended March 31, 2010 and 2009.
General and administrative
fees: General and administrative expenses were $58,492 and
$106,378 for the three months ended March 31, 2010 and 2009,
respectively. This decrease was due to decreased activity in the
Company during the three months ended March 31, 2010, due to the lack of
financial resources.
Professional
fees: Professional fees were $8,835 and $6,500 for the three
months ended March 31, 2010 and 2009, respectively. This increase was
due to the additional regulatory filings for the Company during the three months
ended March 31, 2010.
Depreciation: Depreciation
was $22 and $23 for the three months ended March 31, 2010 and 2009,
respectively.
Net
Loss: Net loss was $67,349 and $1,344,954 for the three months
ended March 31, 2010 and 2009, respectively. This decrease in net
loss of $1,277,605 resulted primarily from a decrease in stock-based
compensation expenses and general and administrative expenses of the Company
during the three months ended March 31, 2010.
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.
As a
“smaller reporting company (as defined by §229.10(f)(1)), we are not required to
provide the information required by this Item.
ITEM
4T. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Our
management is responsible for establishing and maintaining a system of
disclosure controls and procedures (as defined in Rule 13a-15(e)) under the
Exchange Act) that is designed to ensure that information required to be
disclosed by the Company in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
specified in the Commission's rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the issuer's management, including its principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.
7
As
required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end
of the period covered by this report, we have carried out an evaluation of the
effectiveness of the design and operation of our company’s disclosure controls
and procedures. Under the direction of our Chief Executive Officer,
we evaluated our disclosure controls and procedures and internal control over
financial reporting and concluded that (i) there continue to be material
weaknesses in the Company’s internal controls over financial reporting, that the
weaknesses constitute a “deficiency” and that this deficiency could result in
misstatements of the foregoing accounts and disclosures that could result in a
material misstatement to the financial statements for the current period that
would not be detected, and (ii) accordingly, our disclosure controls and
procedures were not effective as of March 31, 2010.
Changes
in Internal Control Over Financial Reporting
There
have been no changes in our internal control over financial reporting that
occurred during our fiscal quarter of the period covered by this quarterly
report on Form 10-Q that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
PART
II – OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
Other
than as described below, we know of no material, active, or pending legal
proceedings against our Company, nor are we involved as a plaintiff in any
material proceeding or pending litigation. Except as described below,
there are no proceedings in which any of our Directors, officers, or affiliates,
or any registered or beneficial shareholder, is an adverse party or has a
material interest adverse to our interest.
Proceedings
Involving Lin Dong Hong
There
have been no material developments in our wholly owned subsidiary, Mongolia
Energy Limited (“MEL”), claim filed in the Capital City Administrative Court of
Mongolia to reverse certain registrations made by Foreign Investment and Foreign
Trade Agency of Mongolia (“FIFTA”) and the State Registration Office of Mongolia
(“SRO”) at the request of Lin Dong Hong to dilute MEL’s registered ownership in
Tooroibandi. MEL’s claim was suspended and has not been continued as
of the date of this Form 10-Q.
A copy of
MEL’s claim filed with the Capital City Administrative Court of Mongolia was
attached as Exhibit 99.3 to the Company’s Form 8-K filed on August 27, 2008, and
is incorporated herein by reference. The affidavit of Mr. Anthony Tam
was filed in support of the MEL’s claim and a copy of his affidavit was attached
as Exhibit 99.4 to the Company’s Form 8-K filed on August 27, 2008, and is
incorporated herein by reference. A discussion of MEL’s claim was
previously disclosed in the Company’s amended Form 10-K filed on March 3, 2010
under the heading “ITEM 3. LEGAL PROCEEDINGS” and is incorporated herein by
reference.
ITEM
1A. RISK FACTORS
As a
“smaller reporting company” (as defined by §229.10(f)(1)), we are not required
to provide the information required by this Item.
8
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.
[REMOVED AND
RESERVED]
ITEM
5. OTHER INFORMATION
None.
ITEM
6. EXHIBITS
(a) Exhibit
List
31.1 Certificate
pursuant to Rule 13a-14(a)
31.2 Certificate
pursuant to Rule 13a-14(a)
32.1 Certificate
pursuant to 18 U.S.C. §1350
32.2 Certificate
pursuant to 18 U.S.C. §1350
9
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
URANIUM
308 CORP.
(Registrant)
|
|
Date: May
17, 2010
|
By: /s/ Dennis Tan
|
Dennis
Tan
|
|
President,
Chief Executive Officer and
Director
(Principal
Executive Officer and
Principal
Financial Officer)
|
10