ASSETS
|
||||
(Unaudited)
|
||||
CURRENT
ASSETS
|
||||
Cash
and cash equivalents
|
$
|
56,169
|
||
Prepaid
expenses and other current assets
|
9
|
|||
Due
from Novastar Resources Ltd.
|
505,824
|
|||
Total
Current Assets
|
562,002
|
|||
PROPERTY,
PLANT AND EQUIPMENT
|
||||
Property,
plant and equipment
|
47,057
|
|||
Accumulated
depreciation
|
(21,420
|
)
|
||
Total
Property, Plant and Equipment
|
25,637
|
|||
OTHER
ASSETS
|
||||
Patent
costs - net of accumulated amortization of $206,839
|
204,830
|
|||
Security
deposits
|
7,567
|
|||
Total
Other Assets
|
212,397
|
|||
TOTAL
ASSETS
|
$
|
800,037
|
||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||
CURRENT
LIABILITIES
|
||||
Current
portion of long-term debt
|
3,217
|
|||
Accrued
expenses and accounts payable
|
600,665
|
|||
Note
payable
|
-
|
|||
Other
current liabilities
|
101
|
|||
Total
Current Liabilities
|
603,982
|
|||
LONG-TERM
LIABILITIES
|
||||
Note
payable
|
12,657
|
|||
Total
Liabilities
|
616,640
|
|||
STOCKHOLDERS'
EQUITY
|
||||
Common
Stock-$.05 par value-authorized 20,000,000 shares; issued and outstanding
4,535,566 shares
|
226,778
|
|||
Common
stock and warrants - Additonal paid-in capital
|
16,797,554
|
|||
Deficit
accumulated during the development stage
|
(16,840,935
|
)
|
||
Total
Stockholders' Equity
|
183,397
|
|||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
800,037
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||
Cumulative
|
||||||||||
From
|
||||||||||
For the nine
|
For the three
|
Inception
|
||||||||
months
ended
|
months
ended
|
Through
|
||||||||
September 30,
|
September 30,
|
September 30,
|
||||||||
2006
|
2006
|
2006
|
||||||||
Revenue
|
||||||||||
License
revenue
|
$
|
-
|
-
|
$
|
624,985
|
|||||
Total
Revenue
|
-
|
-
|
624,985
|
|||||||
Costs
and expenses
|
||||||||||
Research
and development
|
10,000
|
0
|
3,902,158
|
|||||||
Salaries
|
221,100
|
73,700
|
3,726,114
|
|||||||
Professional
fees
|
694,531
|
509,682
|
2,757,656
|
|||||||
Allocated
expenses - Thorium Power, Ltd.
|
(505,824
|
)
|
(505,824
|
)
|
(505,824
|
)
|
||||
Other
selling, general and administrative expenses
|
287,658
|
124,591
|
4,723,838
|
|||||||
Total
operating expenses
|
707,465
|
202,149
|
14,603,942
|
|||||||
Loss
from operations
|
707,465
|
202,149
|
13,978,957
|
|||||||
Other
(income) expenses
|
||||||||||
Interest
(income) expense - net
|
4,508
|
4,508
|
(103,634
|
)
|
||||||
Other
(income) expense
|
(200
|
)
|
0
|
(359
|
)
|
|||||
Foreign
currency translation
|
4,500
|
4,500
|
4,500
|
|||||||
Stock
based compensation
|
105,000
|
105,000
|
2,334,871
|
|||||||
Settlement
costs
|
-
|
0
|
76,600
|
|||||||
Contributions
|
550,000
|
0
|
550,000
|
|||||||
Net
Loss
|
$
|
1,371,273
|
316,157
|
$
|
16,840,935
|
|||||
Basic
and diluted net loss per share
|
0.01
|
0.00
|
||||||||
Number
of equivalent shares used to compute per share data
|
98,818,395
|
98,818,395
|
(Unaudited)
|
(Unaudited)
|
||||||
Cumulative
|
|||||||
From
|
|||||||
For the nine
|
Inception
|
||||||
months ended
|
Through
|
||||||
September 30,
|
September 30,
|
||||||
2006
|
2006
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
(loss)
|
$
|
(1,371,273
|
)
|
$
|
(16,840,935
|
)
|
|
Adjustments
to reconcile net (loss) to net cash
|
|||||||
provided
by (used by) operating activities:
|
|||||||
Write-off
of foreign patent, including amortization
|
-
|
75,000
|
|||||
Depreciation
and amortization
|
19,584
|
290,909
|
|||||
(Gain)
loss on disposition of fixed assets
|
-
|
86,855
|
|||||
Issuance
of stock in exchange for technology and services
|
-
|
88,250
|
|||||
Due
from Novastar Resources, Ltd.
|
(505,824
|
)
|
(505,824
|
)
|
|||
Stock
based compensation
|
105,000
|
2,334,870
|
|||||
(Increase)
decrease in prepaid and other expenses
|
6,271
|
(9
|
)
|
||||
Increase
(decrease) in accrued and other expenses
|
(338,010
|
)
|
600,767
|
||||
Net
cash used by operating activities
|
(2,084,252
|
)
|
(13,870,117
|
)
|
|||
Cash
flows from investing activities:
|
|||||||
Patent
costs
|
(6,664
|
)
|
(411,669
|
)
|
|||
Security
deposits
|
-
|
(7,567
|
)
|
||||
Fixed
assets
|
(10,961
|
)
|
(285,145
|
)
|
|||
Loans
granted - related parties
|
-
|
(160,365
|
)
|
||||
Repayment
of loans - related parties
|
-
|
160,365
|
|||||
Proceeds
from sale of fixed assets
|
-
|
13,583
|
|||||
Net
cash used by investing activities
|
(17,626
|
)
|
(690,799
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Proceeds
from issuance of stock
|
2,202,673
|
14,498,011
|
|||||
Proceeds
from loans – related parties
|
4,100
|
388,790
|
|||||
Repayment
of loans – related parties
|
(45,931
|
)
|
(285,590
|
)
|
|||
Proceeds
from loan from payroll service
|
-
|
42,663
|
|||||
Repayment
of loan from payroll service
|
-
|
(42,663
|
)
|
||||
Net
changes in current portion of long-term debt
|
(918
|
)
|
3,217
|
||||
Proceeds
from issuance of long-term debt
|
-
|
18,082
|
|||||
Principal
repayments of long-term debt
|
(2,161
|
)
|
(5,426
|
)
|
|||
Net
cash provided by financing activities
|
2,157,763
|
14,617,084
|
|||||
Net
increase in cash and cash equivalents
|
55,886
|
56,169
|
|||||
|
|||||||
Cash
and cash equivalents - beginning of period
|
283
|
-
|
|||||
Cash
and cash equivalents - end of period
|
$
|
56,169
|
$
|
56,169
|
|||
Supplemental
disclosures
|
|||||||
Cash
paid - interest
|
$
|
687
|
$
|
5,497
|
|||
Non-Cash
Transactions:
|
|||||||
Conversion
of debt to equity
|
4,100
|
103,200
|
Thorium
Power, Inc.
(A
Development Stage Enterprise)
Notes
to Financial Statements
|
Exhibit
99.1
|
1.
|
The
Company and Business
Operations
|
Thorium
Power, Inc.
(A
Development Stage Enterprise)
Notes
to Financial Statements
|
Exhibit
99.1
|
2.
|
Summary
of Significant Accounting
policies
|
a. |
Revenue
Recognition
-
|
a).
|
Patent
Costs - Patent
costs represent legal fees and filing costs capitalized and amortized
over
their estimated useful lives of 20 years. Amortization expense
for Patents
was $13,055 and $13,022 for the nine month periods ended September
30,
2006 and 2005 and $206,839 for the cumulative period from January
8, 1992
(Inception) to September 30, 2006.
|
b).
|
Cash
Equivalents - Cash
equivalents consist of cash and cash investments with maturities
of three
months or less at the time of
purchase.
|
c).
|
Start-Up
Costs -
The Company, in accordance with the provisions of the American
Institute
of Certified Public Accountants' Statement of Position (SOP) 98-5,
"Reporting on the Costs of Start-up Activities”, expenses all start-up and
organizational costs as they are
incurred.
|
d).
|
Property,
Plant and Equipment - Property,
Plant and Equipment is comprised of leasehold improvements, an
automobile,
and office equipment and is stated at cost less accumulated depreciation.
Depreciation of furniture, computer and office equipment is computed
over
the estimated useful life of the asset, generally five and seven
years
respectively, utilizing the double declining balance methodology.
Depreciation for the leasehold improvements is computed using the
straight-line method over the 5 year term of the lease. Upon disposition
of assets, the related cost and accumulated depreciation are eliminated
and any gain or loss is included in the statement of income. Expenditures
for major improvements are capitalized. Maintenance and repairs
are
expensed as incurred.
|
e).
|
Long-Lived
Assets -
Long-lived assets are reviewed for impairment whenever events or
changes
in circumstances indicate that the carrying amount of the assets
might not
be recoverable. Conditions that would necessitate an impairment
assessment
include a significant decline in the observable market value of
an asset,
a significant change in the extent or manner in which an asset
is used, or
any other significant adverse change that would indicate that the
carrying
amount of an asset or group of assets is not
recoverable.
|
Thorium
Power, Inc.
(A
Development Stage Enterprise)
Notes
to Financial Statements
|
Exhibit
99.1
|
f).
|
Estimates
and Assumptions - The
preparation of financial statements in conformity with generally
accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and
disclosure of contingent
assets and liabilities at the date of the financial statements
and
reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those
estimates.
|
g).
|
Stock-based
Compensation - Employees.
When stock based compensation is issued to employees and directors,
in
connection with their services as directors, the revised Statement
of
Financial Accounting Standards No. 123 ‘Accounting for Stock Based
Compensation’ (“SFAS 123(R)”) requires companies to record compensation
cost for stock based employee compensation plans at fair value.
From
inception through 2003, the Company accounted for stock based compensation
using the intrinsic value method prescribed in Accounting Principles
Board
Opinion No. 25, ‘Accounting for Stock Issued to Employees’ (“APB No. 25”).
APB No. 25 requires no recognition of compensation expense for
the stock
based compensation arrangements provided by the Company where the
exercise
price is equal to the market price at the date of the grants.
|
h).
|
Income
Taxes - Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective
tax bases.
Deferred tax assets, including tax loss and credit carry-forwards,
and
liabilities are measured using enacted tax rates expected to apply
to
taxable income in the years in which those temporary differences
are
expected to be recovered or settled. The effect on deferred tax
assets and
liabilities of a change in tax rates is recognized in income in
the period
that includes the enactment date. Deferred income tax expense represents
the change during the period in the deferred tax assets and deferred
tax
liabilities. The components of the deferred tax assets and liabilities
are
individually classified as current and non-current based on their
characteristics. 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.
|
Thorium
Power, Inc.
(A
Development Stage Enterprise)
Notes
to Financial Statements
|
Exhibit
99.1
|
j.
|
Earnings
per Share - Basic
net earnings (loss) per common share is computed by dividing net
earnings
(loss) applicable to common shareholders by the weighted-average
number of
common shares outstanding during the period. Diluted net earnings
(loss)
per common share is determined using the weighted-average number
of common
shares outstanding during the period, adjusted for the dilutive
effect of
common stock equivalents. In periods where losses are reported,
the
weighted-average number of common shares outstanding excludes common
stock
equivalents because their inclusion would be
anti-dilutive.
|
k.
|
New
Accounting Pronouncements - In
December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 29”. SFAS
153 is effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005, with earlier application
permitted.
The adoption of SFAS 153 is not expected to have a material impact
on our
results of operations or financial
position.
|
Thorium
Power, Inc.
(A
Development Stage Enterprise)
Notes
to Financial Statements
|
Exhibit
99.1
|
3.
|
Status
of the Company
|
4. |
Research
and Development Costs
|
5.
|
Property
Plant and Equipment
|
Original
|
Accumulated
|
Net
Book
|
||||||
Cost
|
Depreciation
|
Value
|
||||||
Furniture,
computer and office equipment
|
$
|
24,840
|
$
|
12,645
|
$
|
12,195
|
||
Automobile
|
22,217
|
8,775
|
13,442
|
|||||
$
|
47,057
|
$
|
21,420
|
$
|
25,637
|
6.
|
Stock
Options and Warrants
|
2002
and prior
|
2003
|
2004-2005
|
|||
Expected
life of options
|
Actual
life
|
Actual
life
|
Actual
life
|
||
Risk-free
interest rate
|
5%
|
4%
|
4%
|
||
Volatility
of stock
|
100%
|
100%
|
32%
|
||
Expected
dividend yield
|
-
|
-
|
-
|
Thorium
Power, Inc.
(A
Development Stage Enterprise)
Notes
to Financial Statements
|
Exhibit
99.1
|
Thorium Power, Inc. |
Exhibit
99.1
|
(A Development Stage Enterprise) | |
Notes to Financial Statements |
In Connection
|
Issued
|
Converted
|
|||||||||||||||||||||||
Beginning
|
In Exchange
|
with purchase
|
as
|
to stock/
|
Ending
|
||||||||||||||||||||
Balance
|
for
Services
|
of
stock
|
Incentive
|
Exercised
|
Expired
|
Repriced
|
Balance
|
||||||||||||||||||
1/1/1993
|
12/31/1993
|
||||||||||||||||||||||||
$1
per share
|
0
|
1,040,000
|
35,000
|
15,000
|
(10,000
|
)
|
1,080,000
|
||||||||||||||||||
$5
per share
|
0
|
220,000
|
220,000
|
||||||||||||||||||||||
$10 per share
|
0
|
0
|
|||||||||||||||||||||||
1,300,000
|
|||||||||||||||||||||||||
1/1/1994
|
12/31/1994
|
||||||||||||||||||||||||
$1
per share
|
1,080,000
|
95,000
|
1,175,000
|
||||||||||||||||||||||
$5
per share
|
220,000
|
50,000
|
25,000
|
295,000
|
|||||||||||||||||||||
$10
per share
|
0
|
55,000
|
36,100
|
91,100
|
|||||||||||||||||||||
1,561,100
|
|||||||||||||||||||||||||
1/1/1995
|
12/31/1995
|
||||||||||||||||||||||||
$1
per share
|
1,175,000
|
(10,000
|
)
|
25,000
|
1,190,000
|
||||||||||||||||||||
$5
per share
|
295,000
|
155,000
|
(25,000
|
)
|
425,000
|
||||||||||||||||||||
$10
per share
|
91,100
|
30,000
|
41,500
|
5,000
|
167,600
|
||||||||||||||||||||
1,782,600
|
|||||||||||||||||||||||||
1/1/1996
|
12/31/1996
|
||||||||||||||||||||||||
$1
per share
|
1,190,000
|
(34,000
|
)
|
100,000
|
1,256,000
|
||||||||||||||||||||
$5
per share
|
425,000
|
60,000
|
(82,500
|
)
|
402,500
|
||||||||||||||||||||
$10
per share
|
167,600
|
25,000
|
30,300
|
14,000
|
(17,500
|
)
|
219,400
|
||||||||||||||||||
1,877,900
|
|||||||||||||||||||||||||
1/1/1997
|
12/31/1997
|
||||||||||||||||||||||||
$1
per share
|
1,256,000
|
(47,500
|
)
|
81,000
|
1,289,500
|
||||||||||||||||||||
$5
per share
|
402,500
|
(42,500
|
)
|
360,000
|
|||||||||||||||||||||
$10
per share
|
219,400
|
118,000
|
56,700
|
(3,500
|
)
|
(38,500
|
)
|
352,100
|
|||||||||||||||||
2,001,600
|
Thorium Power, Inc. |
Exhibit
99.1
|
(A Development Stage Enterprise) | |
Notes to Financial Statements |
In Connection
|
Issued
|
Converted
|
|||||||||||||||||||||||
Beginning
|
In Exchange
|
with purchase
|
as
|
to stock/
|
Ending
|
||||||||||||||||||||
Balance
|
for Services
|
of
stock
|
Incentive
|
Exercised
|
Expired
|
Repriced
|
Balance
|
||||||||||||||||||
01/01/1998
|
12/31/1998
|
||||||||||||||||||||||||
$1
per share
|
1,289,500
|
(232,500
|
)
|
(95,000
|
)
|
55,000
|
1,017,000
|
||||||||||||||||||
$5
per share
|
360,000
|
(47,500
|
)
|
(172,500
|
)
|
(50,000
|
)
|
90,000
|
|||||||||||||||||
$10
per share
|
352,100
|
2,500
|
9,500
|
(5,000
|
)
|
359,100
|
|||||||||||||||||||
1,466,100
|
|||||||||||||||||||||||||
01/01/1999
|
12/31/1999
|
||||||||||||||||||||||||
$1
per share
|
1,017,000
|
(5,000
|
)
|
(20,000
|
)
|
992,000
|
|||||||||||||||||||
$5
per share
|
90,000
|
(25,000
|
)
|
65,000
|
|||||||||||||||||||||
$10
per share
|
359,100
|
(5,250
|
)
|
(26,850
|
)
|
327,000
|
|||||||||||||||||||
1,384,000
|
|||||||||||||||||||||||||
01/01/2000
|
12/31/2000
|
||||||||||||||||||||||||
$1
per share
|
992,000
|
(60,000
|
)
|
932,000
|
|||||||||||||||||||||
$5
per share
|
65,000
|
600,000
|
(5,000
|
)
|
660,000
|
||||||||||||||||||||
$10
per share
|
327,000
|
(37,000
|
)
|
(13,500
|
)
|
276,500
|
|||||||||||||||||||
1,868,500
|
|||||||||||||||||||||||||
01/01/2001
|
12/31/2001
|
||||||||||||||||||||||||
$1
per share
|
932,000
|
(5,000
|
)
|
927,000
|
|||||||||||||||||||||
$5
per share
|
660,000
|
(20,000
|
)
|
640,000
|
|||||||||||||||||||||
$10
per share
|
276,500
|
223,000
|
700,000
|
625,000
|
(3,600
|
)
|
(51,200
|
)
|
1,769,700
|
||||||||||||||||
3,336,700
|
|||||||||||||||||||||||||
01/01/2002
|
12/31/2002
|
||||||||||||||||||||||||
$1
per share
|
927,000
|
-
|
-
|
-
|
(3,000
|
)
|
(7,000
|
)
|
-
|
917,000
|
|||||||||||||||
$5
per share
|
640,000
|
-
|
-
|
-
|
-
|
-
|
-
|
640,000
|
|||||||||||||||||
$10 per share
|
1,769,700
|
-
|
10,000
|
(625,000
|
)
|
(2,000
|
)
|
(97,700
|
)
|
-
|
1,055,000
|
||||||||||||||
2,612,000
|
Thorium Power, Inc. |
Exhibit
99.1
|
(A Development Stage Enterprise) | |
Notes to Financial Statements |
1/1/2003
|
12/31/2003
|
||||||||||||||||||||||||
$1
per share
|
917,000
|
-
|
-
|
-
|
(100,000
|
)
|
-
|
1,200,000
|
2,017,000
|
||||||||||||||||
$5
per share
|
640,000
|
-
|
40,000
|
-
|
-
|
-
|
(600,000
|
)
|
80,000
|
||||||||||||||||
$10 per share
|
1,055,000
|
-
|
20,000
|
1,590
|
(1,300
|
)
|
(62,795
|
)
|
(600,000
|
)
|
412,495
|
||||||||||||||
2,509,495
|
In Connection
|
Issued
|
Converted
|
|||||||||||||||||||||||
Beginning
|
In Exchange
|
with purchase
|
as
|
to
stock/
|
Ending
|
||||||||||||||||||||
Balance
|
for Services
|
of
stock
|
Incentive
|
Exercised
|
Expired
|
Repriced
|
Balance
|
||||||||||||||||||
01/01/2004
|
12/31/2004
|
||||||||||||||||||||||||
$1
per share
|
2,017,000
|
-
|
-
|
-
|
-
|
-
|
-
|
2,017,000
|
|||||||||||||||||
$4
per share
|
0
|
250,000
|
-
|
-
|
-
|
-
|
-
|
250,000
|
|||||||||||||||||
$5
per share
|
80,000
|
-
|
-
|
-
|
-
|
-
|
-
|
80,000
|
|||||||||||||||||
$9.73-$10
per share
|
412,495
|
-
|
-
|
600
|
-
|
-
|
-
|
413,095
|
|||||||||||||||||
2,760,095
|
|||||||||||||||||||||||||
01/01/2005
|
12/31/2005
& 9/30/2006
|
||||||||||||||||||||||||
$1
per share
|
2,017,000
|
-
|
-
|
-
|
(820,000
|
)
|
-
|
-
|
1,197,000
|
||||||||||||||||
$4
per share
|
250,000
|
225,000
|
-
|
-
|
-
|
-
|
-
|
475,000
|
|||||||||||||||||
$5
per share
|
80,000
|
-
|
-
|
-
|
-
|
-
|
-
|
80,000
|
|||||||||||||||||
$9.60-$10
per share
|
413,095
|
-
|
-
|
705
|
-
|
-
|
-
|
413,800
|
|||||||||||||||||
2,165,800
|
Thorium Power, Inc. |
Exhibit
99.1
|
(A Development Stage Enterprise) | |
Notes to Financial Statements |
September 30, 2006
|
Number
|
Weighted
average Remaining Life
|
Weighted-
average
exercise price
|
|||
Range
of Prices
|
||||||
$1.00
|
1,197,000
|
1.8
years
|
$1.00
|
|||
$4.00
|
475,000
|
4.3
years
|
$4.00
|
|||
$5.00
|
80,000
|
1.7
years
|
$5.00
|
|||
$9.60-10.00
|
413,800
|
1.1
years
|
$9.95
|
|||
2,165,800
|
$2.83
|
7. |
Income
Taxes
|
Assets
|
||||
Approximate
net operating loss
|
6,736,374
|
|||
Less:
valuation allowance
|
(6,736,374
|
)
|
||
$
|
-
|
Thorium Power, Inc. |
Exhibit
99.1
|
(A Development Stage Enterprise) | |
Notes to Financial Statements |
8. |
Profit
Sharing Plan
|
9. |
Research
Agreement
|
10. |
Commitments
and Contingencies
|
11.
|
Related
Parties
|
12. |
Capital
Stock Transactions
|