UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Amendment No. 1)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the Quarter ended March 31, 2002 Commission File No.0-18026
European American Resources, Inc. (formerly Merlin Mining Co.)
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(Exact name of registrant as specified in its charter)
Delaware 87-0443214
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
91 South Main Street, Eureka, NV 89316
- ---------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (775) 237 - 7943
--- -------- ----------
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 shorter period that the registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes: X No:
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Transitional Small Business Disclosure Format:
Yes: No: X
--- ---
The number of shares outstanding of each of the registrant's classes of common
stock as of March 31, 2002 is 22,650,408 shares all of one class of $.0001 par
value common stock.
EUROPEAN AMERICAN RESOURCES, INC. AND SUBSIDIARIES
(FORMERLY MERLIN MINING CO.)
INDEX
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PAGE
PART I FINANCIAL INFORMATION
Balance Sheet - March 31, 2002 1
Statements of Operations - Three Months Ended
March 31, 2002 and 2001 2
Three Statement of Cash Flows -Three
Months Ended March 31, 2002 and 2001 3
Notes to Financial Statements 4-8
Management's Discussion and Analysis of financial
conditions and results of operations 9-10
PART II OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of
Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits on Reports on Form 8-K 11
Signature Page 12
Certifications 13-14
EUROPEAN AMERICAN RESOURCES, INC.
(AN EXPLORATORY STAGE COMPANY)
BALANCE SHEET
MARCH 31, 2002
(As Restated)
Assets
Current Assets
Cash and cash equivalents $ 507
------------
Total Current Assets 507
------------
Property and equipment, at cost, net of accumulated
depreciation of $9,843 2,677
Other Assets
Security Deposit 500
------------
Total Other Assets 500
------------
Total Assets $ 3,684
============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses 440,362
Due to related parties 50,197
------------
Total Current Liabilities 490,559
Commitments (Note D) --
Distribution rights agreement (Note D) 258,529
Other liabilities, related parties, expected to be
converted to equity 54,772
Stockholders' Equity (Deficit)
Preferred stock; $.0001 par value, 25,000,000 shares
authorized, no shares issued or outstanding --
Common stock; $.0001 par value, 250,000,000 shares
authorized, 22,650,508 shares issued
and outstanding 2,265
Additional paid in capital 12,536,009
Deficit accumulated since inception (13,338,450)
------------
Total Stockholders' Equity (800,176)
------------
Total Liabilities and Stockholders' Deficit $ 3,684
============
See notes to the financial statement.
1
EUROPEAN AMERICAN RESOURCES, INC.
(AN EXPLORATORY STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended
March 31,
2001 2002
------------ ------------
(As Restated)
Revenue
Sales $ -- $ --
------------ ------------
Operating Expenses
Operating costs -- --
General and administrative 208,466 93,837
Depreciation and amortization 1,205 217
------------ ------------
Total Operating Expenses 209,671 94,054
------------ ------------
Loss from operations before other
income and (expense) (209,671) (94,054)
Other Income (Expense)
Interest expense (15,550) (2,624)
------------ ------------
Total Other Income (Expense) (15,550) (2,624)
------------ ------------
Operating loss before income taxes (225,221) (96,678)
Income tax expense -- --
------------ ------------
Net Loss $ (225,221) $ (96,678)
============ ============
Basic Loss per share $ (.012) $ (.004)
============ ============
Average common shares outstanding 18,567,408 22,650,408
============ ============
See notes to the financial statement.
2
EUROPEAN AMERICAN RESOURCES, INC.
(AN EXPLORATORY STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended
March 31,
2001 2002
--------- ---------
(As Restated)
Cash Flows Operating Activities
Net Loss $(225,221) $ (96,678)
Adjustments to reconcile net loss to net cash
(used) by operating activities:
Depreciation 1,205 217
Issuance of common stock charged to expense 54,000 --
Changes in assets and liabilities:
(Decrease) increase in accounts payable
and accrued expenses 101,049 60,024
--------- ---------
Net Cash Used by Operating Activities (68,967) (36,437)
--------- ---------
Cash Flows From Financing Activities
Advances from (repayments to) related party 29,280 32,164
Cash received from note payable 100,000 --
Cash received from issuance of common stock 16,500 --
--------- ---------
Net Cash Provided By Financing Activities 145,780 32,164
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents 76,813 (4,273)
Cash and Cash Equivalents at Beginning of Period 147 4,780
--------- ---------
Cash and Cash Equivalents at End of Period $ 76,960 $ 507
========= =========
See notes to the financial statement.
3
EUROPEAN AMERICAN RESOURCES, INC.
(AN EXPLORATORY STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(For three months ended March 31, 2002)
(Unaudited)
A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-QSB
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three month period ended March 31, 2002 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2002.
The Company follows FASB 128 to compute earnings per share. Basic EPS
excludes dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised
or converted into common stock or resulted in the issuance of common stock
that then shared in the earnings of the entity. Common equivalent shares
have been excluded from the computation of diluted EPS since their affect
is antidilutive. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Registrant
Company's annual report on form 10-KSB/A for the year ended December 31,
2001.
Supplemental schedule of cash flow from operations:
For the three
months ended
March 31,
2001 2002
-------- --------
Interest paid $ - $ -
======== =======
B. BASIS OF FINANCIAL STATEMENT PRESENTATION AND RESTATEMENT FOR ACCOUNTING
CHANGES
The Company was incorporated in the State of Delaware on July 6, 1987.
Since inception, the Company acquired mining rights to mine precious metals
to as many as approximately 6,700 claims; at December 31, 2001, the Company
controlled 62 patented and 47 unpatented claims in Nevada. Additionally,
the Company has been assigned the rights to an interest in 23 patented and
23 unpatented claims, in the same are of interest of its 109 claims now
controlled, which subject to due diligence, the Company plans on retaining.
The Company was also given an option to acquire approximately 100
additional claims, which subject to due diligence, the Company plans on
pursuing approximately 50 to 75 of such claims in the area of interest.
Since inception and since the acquisition of an interest in these
properties, the Company has not commenced planned principal operations, and
accordingly had initially been considered an exploratory stage company as
defined in SFAS No. 7, "Accounting and Reporting for Development Stage
Companies". The Company is also subject to Industry Guide 7, promulgated by
the U.S. Securities and Exchange Commission.
4
EUROPEAN AMERICAN RESOURCES, INC.
(AN EXPLORATORY STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(For three months ended March 31, 2002)
(Unaudited)
B. BASIS OF FINANCIAL STATEMENT PRESENTATION AND RESTATEMENT FOR ACCOUNTING
CHANGES (CONTINUED)
The Company has incurred material amounts for direct exploratory activity
costs since acquisition of the right to these mining properties. In
accounting for these costs the Company initially selected an accounting
policy which capitalizes exploratory costs rather than expensing them as
incurred. Effective for the 10KSB/A for 2001, the Company changed its
accounting method to expensing such costs as incurred and the Company also
changed the method of recording the settlement of debts with equity in
2002; and restated the prior years financial statements. As of March 31,
2002, the Company had recorded $2,549,665 in total exploration costs
pertaining to its claims now held which are classified as non-reserve
mineralized material.
The Company has been an exploratory stage company since inception,
initially incurring exploratory costs to determine whether the Company's
claims contain probable reserves, and if so, then proven reserves.
The following illustrates the effect of the restatement for the expensing
exploratory mining costs in the year incurred and the change for recording
the settlement of certain debt:
For The Three Months Ended
March 31,
2001
Net loss, as previously reported $ (225,224)
===========
Net loss - as restated $ (225,221)
===========
Shareholders' equity, as previously
reported $ 1,704,960
===========
Shareholders' equity (deficit) -
as restated $ (675,305)
===========
C. RELATED PARTY TRANSACTIONS
During the quarter ended March 31, 2002, the Company received $32,164 from
related parties, which were added to existing notes.
Amounts due to related parties at March 31, 2002 totaled $104,969 and bear
interest at rates from 10% to prime plus 1%. Interest expense on these
loans was $2,624 for the three months ended March 31, 2002. One of these
notes is expected to be converted to equity during 2002.
5
EUROPEAN AMERICAN RESOURCES, INC.
(AN EXPLORATORY STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(For three months ended March 31, 2002)
(Unaudited)
D. COMMITMENTS AND CONTINGENCIES
Royalty (Claim Rental) Commitment
On May 26, 1998, the Company acquired 62 patented claims and mill sites and
the rights to 47 unpatented claims on Prospect Mountain. In connection with
this purchase, the Company paid the seller $128,000 to buy out the
consulting commitment which is included in resource properties, and $19,300
for repayment of additional filing fees which may be subject to
reimbursement to the Company; this amount is included in other assets.
The Company also issued 106,000 shares to the seller and a company he
controls, which were valued at $90,100 or $.85 per share, and a like amount
was recorded as an addition to resource properties. 56 of the 62 patented
claims and the 47 unpatented claims were contributed by the Company to the
joint venture and it is expected that this commitment will be satisfied
from the exploration of the joint venture properties. Additionally, the
Company agreed to pay advance minimum royalties of up to $100,000,000 as
follows:
1) $15,000 on the closing date
2) $50,000 on or before the first anniversary
3) $90,000 on or before the second anniversary
4) $120,000 on or before the third anniversary
5) $150,000 on or before the fourth anniversary
6) $200,000 on or before the fifth anniversary and $200,000 each year
thereafter.
This commitment ends when a total of $100,000,000 has been paid, including
net smelting returns, or should the Company pay the seller, at the
Company's discretion, $27,000,000 prior to May 26, 2003. The above advance
on minimum royalties will be accelerated when the Company begins to produce
extraction revenues from these properties and the net smelting returns,
which are 4% in the case when the average price of gold (London quote) in
each production quarter exceeds $400 per ounce and 3% in the case when the
average price is less than $400 per ounce; exceeds the annual minimum. In
connection with the earn-in and joint venture agreement, the Company
assigned those claims to the seller with the same commitment as the royalty
commitment in the form of a rental commitment.
Reserved Shares
In February 2000 in connection with the earn-in joint venture agreement the
Company pledged 1,000,000 shares as collateral to the holder of the
royalty/rental commitment. In December, 2001, upon the mutual release of
the Company and its joint venture partner, Homestake Mining, the Company
agreed in principle to reserve these shares to effectuate new agreements;
440,000 shares were reserved for the holder of the rental commitment,
60,000 shares were reserved for the counter party to the distribution
rights agreement. Additionally 500,000 shares were reserved to issue for
proceeds to fund these agreements.
Distribution Agreements
During 2001, the Company entered into a distribution agreement whereby it
assigned 5.8% interest in the Company's share of net earnings, as defined
in the agreement, in the mining claims controlled by the Company as of
December 31, 2001. The holder of this distribution agreement, FAE Holdings,
Inc. is the same related party that was issued 2,800,000 shares of common
stock for the cancellation of certain notes during 2001. This agreement was
extended through July 31, 2002, and again until September 30, 2002..
6
EUROPEAN AMERICAN RESOURCES, INC.
(AN EXPLORATORY STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(For three months ended March 31, 2002)
(Unaudited)
E. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board, ("FASB") issued
SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other
Intangible Assets". SFAS No. 141 requires all business combinations
initiated after June 30, 2001 to be accounted for using the purchase
method. Under SFAS No. 142, goodwill and intangible assets with indefinite
lives are no longer amortized but are reviewed annually (or more frequently
if impairment indicators arise) for impairment. Separable intangible assets
that are not deemed to have indefinite lives will continue to be amortized
over their useful lives (but with no maximum life). The amortization
provisions of SFAS No. 142 apply to goodwill and intangible assets acquired
after June 30, 2001. With respect to goodwill and intangible assets
acquired prior to July 1, 2001, the Company is required to adopt SFAS No.
142 effective July 1, 2002. Adoption of SFAS No. 141 will have no effect on
the Company's results of operations or financial position. Management does
not expect that adoption of SFAS No. 142 will have a material effect on the
Company's results of operations or financial position.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". This statement addresses
financial accounting and reporting for the impairment or disposal of
long-lived assets. SFAS No. 144 supersedes SFAS No 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of", and provides guidance on classification and accounting for such assets
when held for sale or abandonment. SFAS No. 144 is effective for fiscal
years beginning after December 15, 2001. Management does not expect that
adoption of SFAS No. 144 will have a material effect on the Company's
results of operations or financial position.
F. SUBSEQUENT EVENTS
In December, 2001 the Company and the former joint venture partner
(Homestake Mining) entered into releases pertaining to the termination of
the joint venture agreement of February 18, 2000 and the joint venture
partner re-assigned to the Company all its rights in the 103 claims the
Company had contributed to the joint venture, in addition to the rights to
approximately 23 patented and 23 unpatented claims in the area of interest
previously held by Homestake. Concurrently the Company and its counter
parties to these claims agreed in principle to stand-still on existing
agreements and effective April 22, 2002 initiated a stand-still reserve
agreement, significant terms of which include:
The 1,000,000 shares previously reserved to secure the claim rental/royalty
contract with the claim owner have been reserved to secure the stand-still
reserve agreement; 60,000 shares to secure the extension of the existing
terms of the distribution rights agreement until July 31, 2002, and again
until September 30, 2002 440,000 shares to secure the claim rental/ royalty
contract, which includes 62 potential claims and 47 unpatented claims,
through July 31, 2002 and which were extended indefinitely and 500,000
shares have been reserved for the warrant discussed below.
7
EUROPEAN AMERICAN RESOURCES, INC.
(AN EXPLORATORY STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(For three months ended March 31, 2002)
(Unaudited)
In consideration for the extension of the distribution agreement, and a
firm commitment to raise or provide the Company with a minimum of $240,000
of financing, via the obtainment of new private equity or direct funding,
including an increase in the distribution agreement to a possible total of
$758,000, or approximately to 17.4% from the present 5.8% interest in the
Company's share of net earnings, as defined in the agreement, in the mining
claims controlled by the Company as of December 31, 2001; and a best effort
commitment to raise a total of $500,000, inclusive of the firm commitment,
the Company provided a grant of warrants to FAE Holdings, Inc., the basic
terms of the warrant include immediate vesting, to purchase up to 500,000
shares of the Company's common stock at $.20 per share through July 31,
2002 and again extended to September 30, 2002, and $.40 through April 30,
2003 (valued at $18,500 ). The fair value of the warrants on the date of
the grant was based upon the Black-Scholes stock option pricing model using
the following weighted average assumptions: annual expected rate of return
of 0%, annual volatility of 108.8%, risk free interest rate of 5.0% and
expected option life of one year.
Effective April 22, 2002 the board agreed to issue 180,000 shares to its
current directors for them to serve through the completion of the
stand-still reserve, 45,000 shares each, and agreed to issue another
180,000 shares again 45,000 shares each, by the sooner of July 31, 2002 or
the effective date of the Company entering into any material contract which
was extended to September 30, 2002, with respect to its rights to the
claims including but not limited to:
1. The contribution of these claims to a joint venture agreement with a
senior mining company for purposes of ultimately mining these claims,
2. The outright sale of the Company's interest in these claims or
3. Other such arrangement with respect to the claims which is considered
in the best interest of the Company.
Additionally the directors agreed to nominate and appoint two engineering
advisors to the board, without voting rights, for the purpose of presenting
the board with its various alternatives with respect to these claims until
the completion and release of the stand-still reserve agreement.
In July 2002, the Company issued 820,000 shares to a consultant, and in
August 2002, the Company issued 580,000 shares to consultants for services.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying condensed financial
statements, as well as information relating to the plans of the Company's
current management.
RESULTS OF OPERATIONS AND CURRENT METHOD OF OPERATION
Three Months Ended March 31, 2002 vs. March 31, 2001
The Company's results of operations for the three months ended March 31, 2002
consisted of a loss of $96,678 as compared to March 31, 2001 which consisted of
a loss of $225,221 This represents a loss per share of $(.004) for the three
months ended March 31, 2002 vs. $(.012) for March, 2001.
The primary decrease in expenses were general and administrative, which were
$93,837 in 2002 vs. $208,466 in 2001. These include $54,000 of consulting fees
paid in stock during 2001 compared to none for 2002. Interest expense was $2,624
for the three months ended March 31, 2002 vs. $15,550 for the three months ended
March 31, 2001.
Plan of Operations
In early November 2001, the Company was notified by its joint venture partner,
Homestake Mining Co. they would not be proceeding with the joint venture under
the same terms and conditions which had been set forth, more specifically,
Homestake Mining senior officials informed the Company that due to the merger
with American Barrick and uncertainty of the direction new management would take
in reference to the Ruby Hill Mine and the Archimedes Pit re-assessment, the
existing budget for the joint venture was suspended. In a mutual release
Homestake mining and EPAR agreed in late December 2001 to return all the claims
and related properties back to EPAR.
Since that development, various confidential communications have been ongoing
between the Company and a major mining company that has expressed a serious
interest in pursuing EPAR's mining interest in the Prospect Mountain Claims.
Effective December 1, 2001, the Company had entered into a agreement with ASDI,
LLC. a California holding company, and Western Mine Development, Inc., (WMD) a
Nevada corporation, whereby the Company could acquire the entire interest of
ASDI's Relief Canyon Project, and a 50% interest in the future gold production
of the Victorine project from WMD. The transaction was tentatively valued at up
to $8 million in convertible preferred stock of the Company to be issued based
on performance clauses, all of which were subject to due diligence, and was
extended through June 2002. On June 28, 2002, the Company notified WMD that it
had terminated its interest in the letter of intent and would not proceed
further with WMD at this time.
In April, the Company claim holder of the material patented claims and the
holder of the distribution rights agreement agreed to stand-still on existing
agreements until July 31, 2002, and in July this agreement was extended
indefinitely until the Company completed existing negotiations and due diligence
with WMP and determined the next course of action with respect to all these
properties.
9
Liquidity and Capital Resources
As of March 31, 2002, the Company had a working capital deficit of $490,053 as
compared to December 31, 2001 when the Company had a working capital deficit of
$419,745.
As a result of anticipated capital expenditures, including a Claim Royalty
payment of up to $150,000 to the claim holder under the existing contract,
unless restructured, and operating losses, we may raise additional working
capital through either the expansion of the distribution rights agreement for up
to an additional $500,000, or a total of approximately $758,000 which represents
approximately 17.5% of the Company's interest in net earnings from the mining
claims existing on December 31, 2001, exclusive of the potential acquisition of
the Western Mine Development; or the issuance of common stock to sophisticated
investors in a transaction exempt from registration pursuant to Rule 506 of
Regulation D promulgated by the Securities and Exchange Commission under the
Securities Act of 1933. As a result of existing Financing Arrangement and
potential private offerings, we anticipate having sufficient working capital
through the end of fiscal year ending 2002 and beyond.
Forward looking and other statements
We have made statements in this document that are forward-looking statements
that involve substantial risks and uncertainties. You can identify these
statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," and "continue" or similar words. You should
read statements that contain these words carefully because they: (1) discuss our
future expectations; (2) contain projections of our future results of operations
or of our fiscal condition; or (3) state other "forward looking" information.
We believe it is important to communicate our expectations to our investors.
However, there may be events in the future that we are not able to accurately
predict or which we do not fully control. Important factors that could cause
actual results to differ materially from these expressed; or implied by our
forward-looking statements, include, but are not limited to those risks,
uncertainties and other factors discussed in this document.
For further information visit the Company's website at: WWW.EPAR-NV.COM.
10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
The Company is from time to time involved in various claims, legal proceedings
and complaints arising in the ordinary course of its business. It does not
believe that any pending or threatened proceeding related or other matters, or
any amount which it may be required to pay by reason thereof, will have a
material adverse effect on the financial condition or future results of
operations of the Company.
During 2001, the Company has initiated two lawsuits against its prior president,
Mr. Martin Sportschuetz, for unspecified damages, the first suit asserts breach
of fiduciary duties, diversion of corporate opportunity as well as other claims
and was instituted in Nevada of the U.S. District Court, district of Nevada. The
second suit was filed against Mr. Sportshuetz and German American Investors,
LTD, asserting various claims including Fraud and Conversion, in U.S. District
Court, New York, Southern District. At this time there can be no assurance as to
the amount or likelihood of recovery.
Item 2. Changes in Securities
- -----------------------------
NONE
Item 3. Defaults Upon Senior Securities
- ---------------------------------------
NONE
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
NONE
Item 5. Other Information
- -------------------------
NONE
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
NONE
11
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant, caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EUROPEAN AMERICAN RESOURCES, INC.
(FORMERLY MERLIN MINING CO.)
Dated: September 16, 2002 By: /s/Evangelos Kechayan
-------------------------
Evangelos Kechayans, CEO
Dated: September 16, 2002 By: /s/Richard Cokl
-------------------------
Richard Cokl, CFO
12
Certification of Procedures Followed in Connection with Sarbanes-Oxley Act
Certification
The undersigned, the Chief Executive Officer of European American
Resources, Inc., a Delaware Corporation (the "Company") do hereby certify, for
purposes of documenting the steps followed by the officer in connection with the
execution and delivery to the Securities and Exchange Commission of the attached
certification, as follows:
(1) I reviewed in detail the amended Annual Report on Form 10KSB for 2001
which includes restatements for the periods ending December 31, 1997, December
31, 1998, December 31, 1999, December 31, 2000 and December 31, 2001, and the
amended Quarterly Reports on form 10QSB for March 31, 2002 (the "Report")
shortly before the certification was provided.
(2) I discussed the substance of the Report with each of the Company's
outside auditors, audit committee members, and contract accounting manager.
These discussions took place at various times and covered principally the
financial statement portions of the reports (including the notes which are an
integral part of the financial statements) and related financial disclosures.
These discussions included my verifying that the financial statements included
in the report are accurate and complete, and are properly prepared and
consolidated. I confirmed that each of the outside auditors, audit committee
members and the contract accounting manager were satisfied that the notes to the
financial statements read clearly and that the notes fairly explain the
company's significant accounting principles and significant estimates, as well
as disclose all material contingencies and "off balance sheet" transactions and
commitments known to them. In addition, my discussions with outside and internal
auditors included a discussion of any material issues that came up in their
review of the financial statements and the resolution of those issues. I also
verified with the outside auditors, controller and inside auditors that internal
controls are in place and operating to warrant reliance upon the financial and
business information provided to me by management.
(3) I confirmed that the consolidated financial statements included in the
Report are accurate and complete in all material respects, reflect all
transactions of the Company during and for the statement period following
accounting principles consistent with those applied in prior periods, and that
all period end adjustments have been made in a manner consistent with the
accounting principles in prior periods (other than usual and customary year end
adjustments in the case of interim statements).
(4) I informed the heads of the Company's primary business units and
divisions, as well as any officers of those business units or divisions who have
the primary financial reporting responsibility, that I would be providing a
certification regarding the accuracy of the Report and confirmed orally and in
writing with each such head and financial officer that insofar as they knew, the
Report did not include any untrue statement of a material fact or omit to state
a material fact.
(5) As a result of the foregoing procedures, I concluded that, to the best
of my knowledge, I was able to provide the certification without exception.
In witness whereof, I have executed this certification as of the 16th day
of September, 2002.
Name:Evan Kechyans
---------------------------
Chief Executive Officer
13
Certification of Procedures Followed in Connection with Sarbanes-Oxley Act
Certification
The undersigned, the Chief Financial Officer of European American
Resources, Inc., a Delaware Corporation (the "Company") do hereby certify, for
purposes of documenting the steps followed by the officer in connection with the
execution and delivery to the Securities and Exchange Commission of the attached
certification, as follows:
(1) I reviewed in detail the amended Annual Report on Form 10KSB for 2001
which includes restatements for the periods ending December 31, 1997, December
31, 1998, December 31, 1999, December 31, 2000 and December 31, 2001, and the
amended Quarterly Reports on form 10QSB for March 31, 2002 (the "Report")
shortly before the certification was provided.
(2) I discussed the substance of the Report with each of the Company's
outside auditors, audit committee members, and contract accounting manager.
These discussions took place at various times and covered principally the
financial statement portions of the reports (including the notes which are an
integral part of the financial statements) and related financial disclosures.
These discussions included my verifying that the financial statements included
in the report are accurate and complete, and are properly prepared and
consolidated. I confirmed that each of the outside auditors, audit committee
members and the contract accounting manager were satisfied that the notes to the
financial statements read clearly and that the notes fairly explain the
company's significant accounting principles and significant estimates, as well
as disclose all material contingencies and "off balance sheet" transactions and
commitments known to them. In addition, my discussions with outside and internal
auditors included a discussion of any material issues that came up in their
review of the financial statements and the resolution of those issues. I also
verified with the outside auditors, controller and inside auditors that internal
controls are in place and operating to warrant reliance upon the financial and
business information provided to me by management.
(3) I confirmed that the consolidated financial statements included in the
Report are accurate and complete in all material respects, reflect all
transactions of the Company during and for the statement period following
accounting principles consistent with those applied in prior periods, and that
all period end adjustments have been made in a manner consistent with the
accounting principles in prior periods (other than usual and customary year end
adjustments in the case of interim statements).
(4) I informed the heads of the Company's primary business units and
divisions, as well as any officers of those business units or divisions who have
the primary financial reporting responsibility, that I would be providing a
certification regarding the accuracy of the Report and confirmed orally and in
writing with each such head and financial officer that insofar as they knew, the
Report did not include any untrue statement of a material fact or omit to state
a material fact.
(5) As a result of the foregoing procedures, I concluded that, to the best
of my knowledge, I was able to provide the certification without exception.
In witness whereof, I have executed this certification as of the 16th day
of September, 2002.
Name: Richard Cokl
-----------------------
Financial Officer
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