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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 AND 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of January 2003
DESERT SUN MINING CORP.
(Name of Registrant)
65 Queen Street West, Suite 810, P.O. Box 67, Toronto ,Ontario, Canada M5H 2M5
Executive Offices
1. Form 51-901F Schedule B &C, Quarterly Report (Schedule A, Audited Financial Statements incorporated
by reference to Form 20F/A filed with the Securities Exchange Commission on January 23, 2004)
August 31, 2002
2. Form 51-901F Schedule A, Interim Financial Statements, and B &C, Quarterly Report
November 30, 2002
3. Form 51-901F Schedule A, Interim Financial Statements, and B &C, Quarterly Report
February 28, 2003
4. Form 51-901F Schedule A, Interim Financial Statements, and B &C, Quarterly Report
May 31, 2003
Indicate by check mark whether the Registrant files annual reports under cover of Form 20-F or Form 40-F. Form 20-F xxx Form 40-F ___
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Indicate by check mark whether the Registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under Securities Exchange Act of 1934. Yes ___ No xxx
SEC 1815 (11-2002)
Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.
DESERT SUN MINING CORP.
CONSOLIDATED BALANCE SHEETS
(PREPARED BY MANAGEMENT)
February 28,
August 31,
2003
2002
(Unaudited)
(Audited)
Assets
Current
Cash and cash equivalents (Note 2)
$
4,349,472
$
1,735,139
Funds in trust
425,000
-
Accounts receivable
38,151
6,652
Prepaid expenses
25,644
34,661
4,838,267
1,776,452
Capital assets
42,624
-
Resource property costs
840,592
35,836
$
5,721,483
$
1,812,288
Liabilities
Current
Accounts payable and accrued liabilities
$
29,454
$
15,970
Shareholders' Equity
Share capital (Note 3)
13,727,763
7,132,582
Special Warrants
-
1,872,475
Contributed surplus (Note 5)
348,000
-
Deficit
(8,383,734)
(7,208,739)
5,692,029
1,796,318
$
5,721,483
$
1,812,288
Responsibility for Financial Statements
The accompanying financial statements for Desert Sun Mining Corp. have been prepared by management in accordance with Canadian generally accepted accounting principles consistently applied. The most significant of these accounting principles have been set out in the August 31, 2002 audited financial statements. Only changes in accounting policies have been disclosed in these financial statements. These statements are presented on the accrual basis of accounting. Accordingly, a precise determination of many assets and liabilities is dependant upon future events. Therefore, estimates and approximations have been made using careful judgement. Recognizing that the Company is responsible for both the integrity and objectivity of the financial statements, management is satisfied that these financial statements have been fairly pr esented.
See notes to the consolidated financial statements
DESERT SUN MINING CORP.
(Prepared by Management) (Unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
Three Months Ended
Six Months Ended
February 28,
February 28,
2003
2002
2003
2002
Expenses
Management and administrative
services
$
250,050
$
(4,500)
$
404,148
$
-
Amortization
232
319
464
639
Investor relations and
shareholders' information
91,825
-
119,686
Compensation expense (Note 5)
306,000
-
348,000
-
Travel and promotion
69,669
4,748
134,402
4,748
Professional fees
22,176
(100)
32,109
900
Office expenses, setup and
general and administrative
47,842
-
145,003
76
Transfer agent fees
10,000
4,090
11,215
4,263
Total expenses
797,794
4,557
1,195,027
10,626
Other income
Interest and investment income
(9,046)
179
(19,311)
174
Foreign exchange (gain) loss
6,225
-
(721)
-
Net loss for the period
(794,973)
(4,736)
(1,174,995)
(10,800)
DEFICIT, beginning of period
(7,588,761)
(7,089,382)
(7,208,739)
(7,083,318)
DEFICIT, end of period
$
(8,383,734)
$
(7,094,118)
$
(8,383,734)
$
(7,094,118)
See notes to the consolidated financial statements
DESERT SUN MINING CORP.
(Prepared by Management) (Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
Six Months Ended
February 28,
February 28,
2003
2002
2003
2002
Cash Provided by (Used in):
OPERATING ACTIVITIES
Loss for the period
$
(794,973)
$
(4,736)
$
(1,174,995)
$
(10,800)
Adjustment for items not involving cash:
Compensation expense (Note 5)
306,000
-
348,000
-
Amortization
232
319
464
639
Changes in non-cash working
capital relating to operations
(21,786)
5,979
(8,998)
11,736
(510,527)
1,562
(835,529)
1,575
INVESTING ACTIVITIES
Resource property costs
(366,681)
-
(804,756)
-
Acquisition of capital assets
(33,798)
-
(43,088)
-
(400,479)
-
(847,844)
-
FINANCING ACTIVITIES
Funds in trust
(425,000)
-
(425,000)
-
Issuance of common shares
4,608,991
-
4,722,706
-
4,183,991
-
4,297,706
-
CHANGE IN CASH AND
CASH EQUIVALENTS
3,272,985
1,562
2,614,333
1,575
CASH AND CASH EQUIVALENTS,
beginning of period
1,076,487
6
1,735,139
(7)
CASH AND CASH EQUIVALENTS,
end of period
$
4,349,472
$
1,568
$
4,349,472
$
1,568
See notes to the consolidated financial statements
DESERT SUN MINING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management - Unaudited)
SIX MONTHS ENDED FEBRUARY 28, 2003
1.
ACCOUNTING POLICIES
The management of Desert Sun Mining Corp. (the "Company") have prepared these consolidated financial statements in accordance with Canadian generally accepted accounting principles.
In the opinion of management, all adjustments considered necessary for fair presentation have been included in these unaudited consolidated financial statements. Operating results for the six months ended February 28, 2003 may not be indicative of the results that may be expected for the full year ending August 31, 2003.
These statements follow the same methods and policies used in the audited financial statements for the year ended August 31, 2002, except for the following:
STOCK BASED COMPENSATION
Effective September 1, 2002, the Company adopted the recommendations of the Canadian Institute of Chartered Accountants Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments. This Section defines recognition, measurement and disclosure standards for stock-based compensation to non-employees and employees. Under these new standards, all stock-based payments
made to non-employees must be systematically accounted for in the enterprise's financial statements. These standards also define a fair value-based method of accounting for the stock-based employee compensation plans. Under this method, compensation cost should be measured at the grant date based on the fair value of the award and should be recognized over the related service period. An entity that does not adopt the fair value method of accounting for its awards granted to employees is required to include in its financial statements pro forma disclosures of net earnings and earnings per share as if the fair value method of accounting had been applied. The Company has chosen the latter alternative and the required pro forma information is presented in Note 4.
2.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprised cash on hand and short-term investments generally which mature within 90 days from date of acquisition. The investments are held in a Canadian chartered bank or a financial institution controlled by a Canadian chartered bank.
3.
SHARE CAPITAL
a)
Authorized - unlimited common shares without par value
b)
Issued
Number of Shares
Amount
====================================================================================
Beginning balance, August 31, 2002 (audited)
16,825,108
$
7,132,582
Adjustment
66
-
Exercise of stock options for cash
114,290
13,714
Private placement
4,701,065
4,548,992
Exercise of warrants
120,000
60,000
Conversion of special warrants
5,000,000
1,972,475
====================================================================================
Ending balance, February 28, 2003 (unaudited)
26,760,529
$
13,727,763
====================================================================================
DESERT SUN MINING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management - Unaudited)
SIX MONTHS ENDED FEBRUARY 28, 2003
4.
STOCK OPTIONS
Under the Company's Stock Option Plan (the "Plan") established in 2002 and approved by shareholders on February 12, 2003, the Company may grant to directors, officers, employees and consultants options to purchase common shares of the Company. The aggregate number of shares reserved for issuance under the Plan shall not exceed four million common shares. The total number of shares which may be reserved for issuance to any one individual under the Plan shall not exceed 5% of the total number of issued and outstanding shares (on a non-diluted basis) in any 12 month period. Options granted under the Plan have a five-year term and are priced at the TSX-V closing price of the Company's common shares on the day immediately prior to the date granting. Vesting provisions vary according to the terms of the individual granting and in accordance with the TSX-V exc hange regulations.
The following summarizes the stock option activity during the six months ended February 28, 2003:
Number of
Weighted Average
options
Exercise Price
====================================================================================
Opening balance, August 31, 2002 (audited)
1,809,290
$
0.33
Granted
2,335,997
0.82
Exercised
(114,290)
0.12
Cancelled
(150,000)
0.38
====================================================================================
Balance, February 28, 2003 (unaudited)
3,880,997
$
0.62
====================================================================================
The remaining weighted average life of the stock options is 4.62 years.
As of February 28, 2003, the following options to acquire common shares were outstanding:
Expiry Date
Number of Options
Exercisable
Unexercisable
Exercise Price
Options
Options
====================================================================================
May 21, 2007
650,000
650,000
-
$0.28
July 11, 2007
895,000
447,500
447,500
0.38
September 16, 2007
332,000
83,000
249,000
0.40
September 16, 2007
132,000
33,000
99,000
0.60
September 16, 2007
132,000
33,000
99,000
0.80
October 15, 2007
300,000
75,000
225,000
0.55
February 4, 2008
1,439,997
359,997
1,080,000
1.00
====================================================================================
3,880,997
1,681,497
2,199,500
====================================================================================
DESERT SUN MINING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management - Unaudited)
SIX MONTHS ENDED FEBRUARY 28, 2003
5.
STOCK OPTION COMPENSATION ADJUSTMENT
The Company applies the intrinsic value based method of accounting for stock-based compensation awards to employees and accordingly no compensation cost is recognized. Had stock-based compensation for 1,835,997options granted to employees under the Plan since September 1, 2002 been determined on the basis of fair value at the date of grant in accordance with the fair value method of accounting for stock-based compensation, the Company's pro forma net loss and loss per share for the six months ended February 28,2003 would have been as follows:
Loss Per
Loss
Share
====================================================================================
As reported
(1,174,995)
(0.05)
Pro forma
(2,297,293)
(0.11)
====================================================================================
The Company also applied the fair value method of accounting for stock based compensation awards to non-employees, and accordingly $348,000 was recorded as consulting expense and contributed surplus for the 100,000 options granted to non-employees in October 2002 and 400,000 options granted in February
2003.
For purposes of calculating the the fair-value method of accounting for stock options (as mentioned above) , the fair value of each option was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions used: dividend yield of 0%, expected volatility of 100%, a risk-free interest rate that ranges from 4.4% to 4.5% and an expected life of 5 years.
6.
Warrants
Each warrant is convertible into one common share.
Expiry Date
Number of Warrants
Price
====================================================================================
May 21, 2004
500,000
$0.25 (Prior to May
21, 2003) or $0.28
August 3, 2004
2,880,000
$0.50
August 28, 2004
2,350,533
$1.25
====================================================================================
7.
INCOME TAXES
The estimated taxable income for the period is nil. Based upon the level of historical taxable income it cannot be reasonably estimated at this time if it is more likely than not the Company will realize the benefits from future income tax assets or the amounts owing from future income tax liabilities. Consequently, the future recovery or loss arising from differences in tax values and accounting values have been reduced by an equivalent estimated taxable temporary difference valuation allowance. The estimated taxable temporary difference valuation allowance will be adjusted in the period that it is determined that it is more likely than not that some portion or all of the future tax assets or future tax liabilities will be realized.
For further information on the Company's actual losses for tax purposes, refer to the August 31, 2002 audited financial statements. The benefit of these losses and the estimated loss for the period ended have not been recognized in these unaudited consolidated financial statements.
DESERT SUN MINING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management - Unaudited)
SIX MONTHS ENDED FEBRUARY 28, 2003
8.
BASIC AND FULLY DILUTED LOSS PER SHARE
Basic loss per share is computed by dividing the loss for the period by the weighted average number of common shares outstanding during the period. Fully diluted loss per share reflects the maximum possible dilution from the potential exercise of stock options and warrants. Fully diluted loss per share is the same as basic loss per share since the conversion of stock options and warrants would be anti-dilutive.
The following tables sets forth the computation of basic and diluted earnings per share:
February 28,
2003
2002
====================================================================================
Basic loss per share
$
(0.05)
$
0.00
Fully diluted loss per share
$
(0.05)
$
0.00
Numerator for basic and fully diluted loss per share:
Net loss for the period
$
(1,174,995)
$
(10,800)
Denominator:
Weighted average of common shares
21,792,818
15,535,818
Weighted average number of fully
diluted shares
21,792,818
15,535,818
====================================================================================
9.
RELATED PARTY TRANSACTIONS
The Company paid a private company controlled by the president an aggregate of $45,000 for rent, administrative services, and expense reimbursements.
The Company paid compensation of $366,656 to officers and directors of the Company.
All transactions with related parties were measured at the exchange amount, which is the amount of consideration established and agreed to by both parties.
DESERT SUN MINING CORP.
SUPPLEMENT TO CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management - Unaudited)
SIX MONTHS ENDED FEBRUARY 28, 2003
As of March 28, 2003 the following items were outstanding:
1)
26,760,529 common shares
2)
Warrants
Expiry Date
Number of Warrants
Price
======================================================================================
May 21, 2004
500,000
$0.25 (Prior to May
21, 2003) or $0.28
August 3, 2004
2,880,000
$0.50
August 28, 2004
2,350,533
$1.25
======================================================================================
3)
Stock Options
Expiry Date
Number of Options
Exercise Price
======================================================================================
May 21, 2007
650,000
$0.28
July 11, 2007
895,000
0.38
September 16, 2007
332,000
0.40
September 16, 2007
132,000
0.60
September 16, 2007
132,000
0.80
October 15, 2007
300,000
0.55
February 4, 2008
1,439,997
1.00
======================================================================================
3,880,997
======================================================================================
DESERT SUN MINING CORP.
CONSOLIDATED BALANCE SHEETS
(PREPARED BY MANAGEMENT)
May 31,
August 31,
2003
2002
(Unaudited)
(Audited)
Assets
Current
Cash and cash equivalents (Note 2)
$
3,565,282
$
1,735,139
Accounts receivable
72,340
6,652
Prepaid expenses
4,614
34,661
3,642,236
1,776,452
Capital assets
19,157
-
Resource property costs
1,606,729
35,836
$
5,268,122
$
1,812,288
Liabilities
Current
Accounts payable and accrued liabilities
$
39,212
$
15,970
Shareholders' Equity
Share capital (Note 3)
13,687,304
7,132,582
Special Warrants
-
1,872,475
Contributed surplus (Note 5)
367,125
-
Deficit
(8,825,519)
(7,208,739)
5,228,910
1,796,318
$
5,268,122
$
1,812,288
Responsibility for Financial Statements
The accompanying financial statements for Desert Sun Mining Corp. have been prepared by management in accordance with Canadian generally accepted accounting principles consistently applied. The most significant of these accounting principles have been set out in the August 31, 2002 audited financial statements. Only changes in accounting policies have been disclosed in these financial statements. These statements are presented on the accrual basis of accounting. Accordingly, a precise determination of many assets and liabilities is dependent upon future events. Therefore, estimates and approximations have been made using careful judgement. Recognizing that the Company is responsible for both the integrity and objectivity of the financial statements, management is satisfied that these financial statements have been fairly pr esented.
See notes to the consolidated financial statements
DESERT SUN MINING CORP.
(Prepared by Management) (Unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
Three Months Ended
Nine Months Ended
May 31,
May 31,
2003
2002
2003
2002
Expenses
Management and administrative
services
$
122,547
$
400
$
526,695
$
400
Amortization
3,307
320
3,771
959
Investor relations and
shareholders' information
171,419
-
291,105
Compensation expense (Note 5)
19,125
-
367,125
-
Travel and promotion
77,346
-
211,748
4,748
General exploration expenses
833
-
833
-
Professional fees
24,658
2,549
56,767
3,449
Office expenses, setup and
general and administrative
36,711
5,943
181,714
6,193
Transfer agent fees
4,946
1,667
16,161
5,930
Total expenses
460,892
10,879
1,655,919
21,679
Other (income) loss
Interest and investment income
(21,052)
-
(40,363)
-
Foreign exchange loss
1,945
-
1,224
-
Net loss for the period
(10,879)
(1,616,780)
(21,679)
DEFICIT, beginning of period
(8,383,734)
(7,094,118)
(7,208,739)
(7,083,318)
DEFICIT, end of period
$
(8,825,519)
$
(7,104,997)
$
(8,825,519)
$
(7,104,997)
See notes to the consolidated financial statements
DESERT SUN MINING CORP.
(Prepared by Management) (Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
Nine Months Ended
May 31,
May 31,
2003
2002
2003
2002
Cash Provided by (Used in):
OPERATING ACTIVITIES
Loss for the period
$
$
(10,879)
$
(1,616,780)
$
(21,679)
Adjustment for items not involving cash:
Compensation expense (Note 5)
19,125
-
367,125
-
Amortization
3,307
320
3,771
959
Changes in non-cash working
capital relating to operations
(3,401)
(22,350)
(12,399)
(10,614)
(422,754)
(32,909)
(1,258,283)
(31,334)
INVESTING ACTIVITIES
Resource property costs
(25,000)
(1,570,893)
(25,000)
Acquisition of capital assets
20,160
-
(22,928)
-
(745,977)
(25,000)
(1,593,821)
(25,000)
FINANCING ACTIVITIES
Funds in trust
425,000
-
-
-
Issuance of common shares
-
100,000
4,868,674
100,000
Shares issue costs
(40,459)
(2,500)
(186,427)
(2,500)
384,541
97,500
4,682,247
97,500
CHANGE IN CASH AND
CASH EQUIVALENTS
(784,190)
39,591
1,830,143
41,166
CASH AND CASH EQUIVALENTS,
beginning of period
4,349,472
1,568
1,735,139
(7)
CASH AND CASH EQUIVALENTS,
end of period
$
3,565,282
$
41,159
$
3,565,282
$
41,159
See notes to the consolidated financial statements
DESERT SUN MINING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management - Unaudited)
NINE MONTHS ENDED MAY 31, 2003
1.
ACCOUNTING POLICIES
The management of Desert Sun Mining Corp. (the "Company") have prepared these consolidated financial statements in accordance with Canadian generally accepted accounting principles.
In the opinion of management, all adjustments considered necessary for fair presentation have been included in these unaudited consolidated financial statements. Operating results for the nine months ended May 31, 2003 may not be indicative of the results that may be expected for the full year ending August 31, 2003.
These statements follow the same methods and policies used in the audited financial statements for the year ended August 31, 2002, except for the following:
STOCK BASED COMPENSATION
Effective September 1, 2002, the Company adopted the recommendations of the Canadian Institute of Chartered Accountants Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments. This Section defines recognition, measurement and disclosure standards for stock-based compensation to non-employees and employees. Under these new standards, all stock-based payments made to non-employees must be systematically accounted for in the enterprise's financial statements. These standards also define a fair value-based method of accounting for the stock-based employee compensation plans. Under this method, compensation cost should be measured at the grant date based on the fair value of the award and should be recognized over the related service period. An entity that does not adopt the fair value method of accounting for its awards granted to employees is required to include in its financial statements pro forma disclosures of net earnings and earnings per share as if the fair value method of accounting had been applied. The Company has chosen the latter alternative and the required pro forma information is presented in Note 5.
2.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprised cash on hand and short-term investments generally which mature within 90 days from date of acquisition. The investments are held in a Canadian chartered bank or a financial institution controlled by a Canadian chartered bank.
3.
SHARE CAPITAL
a)
Authorized - unlimited common shares without par value
b)
Issued
Number of Shares
Amount
===================================================================================
Beginning balance, August 31, 2002 (audited)
16,825,108
$
7,132,582
Adjustment
66
-
Exercise of stock options for cash
114,290
13,714
Private placement
4,701,065
4,508,533
Exercise of warrants
120,000
60,000
Conversion of special warrants
5,000,000
1,972,475
====================================================================================
Ending balance, May 31, 2003 (unaudited)
26,760,529
$
13,687,304
====================================================================================
DESERT SUN MINING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management - Unaudited)
NINE MONTHS ENDED MAY 31, 2003
4.
STOCK OPTIONS
Under the Company's Stock Option Plan (the "Plan") established in 2002 and approved by shareholders on February 12, 2003, the Company may grant to directors, officers, employees and consultants options to purchase common shares of the Company. The aggregate number of shares reserved for issuance under the Plan shall not exceed four million common shares. The total number of shares which may be reserved for issuance to any one individual under the Plan shall not exceed 5% of the total number of issued and outstanding shares (on a non-diluted basis) in any 12 month period. Options granted under the Plan have a five-year term and are priced at the TSX-V closing price of the Company's common shares on the day immediately prior to the date of granting. Vesting provisions vary according to the terms of the individual grant and in accordance with the TSX-V exc hange regulations.
The following summarizes the stock option activity during the nine months ended May 31, 2003:
Number of
Weighted Average
options
Exercise Price
===================================================================================
Opening balance, August 31, 2002 (audited)
1,809,290
$
0.33
Granted
2,610,997
0.84
Exercised
(114,290)
0.12
Cancelled
(500,000)
0.45
===================================================================================
Balance, May 31, 2003 (unaudited)
3,805,997
$
0.66
===================================================================================
The remaining weighted average life of the stock options is 4.37 years.
As of May 31, 2003, the following options to acquire common shares were outstanding:
Expiry Date
Number of Options
Exercisable
Unexercisable
Exercise Price
Options
Options
===================================================================================
May 21, 2007
650,000
650,000
-
$0.28
July 11, 2007
895,000
447,500
447,500
0.38
September 16, 2007
232,000
116,000
116,000
0.40
September 16, 2007
132,000
66,000
66,000
0.60
September 16, 2007
132,000
66,000
66,000
0.80
October 15, 2007
100,000
50,000
50,000
0.55
February 4, 2008
1,389,997
347,499
1,042,498
1.00
April 23, 2008
275,000
31,250
243,750
1.00
===================================================================================
3,805,997
1,774,249
2,031,748
===================================================================================
DESERT SUN MINING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management - Unaudited)
NINE MONTHS ENDED MAY 31, 2003
5.
STOCK OPTION COMPENSATION ADJUSTMENT
The Company applies the intrinsic value based method of accounting for stock-based compensation awards to employees and accordingly no compensation cost is recognized. Had stock-based compensation for 2,085,997 options granted to employees under the Plan since September 1, 2002 been determined on the basis of fair value at the date of grant in accordance with the fair value method of accounting for stock-based compensation, the Company's pro forma net loss and loss per share for the nine months ended May 31, 2003 would have been as follows:
Loss Per
Share
==================================================================================
As reported
(1,616,780)
(0.07)
Pro forma
(2,930,328)
(0.13)
==================================================================================
The Company also applied the fair value method of accounting for stock based compensation awards to non-employees, and accordingly $367,125 was recorded as consulting expense and contributed surplus for the 525,000 options granted to non-employees during the nine months ended May 31, 2003.
For purposes of calculating the the fair-value method of accounting for stock options (as mentioned above) , the fair value of each option was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions used: dividend yield of 0%, expected volatility of 100%, a risk-free interest rate that ranges from 4.4% to 4.5% and an expected life of 5 years.
6.
WARRANTS
Each warrant is convertible into one common share.
Expiry Date
Number of Warrants
Price
============================================================================
April 17, 2004
500,000
$0.28
August 3, 2004
2,880,000
$0.50
August 28, 2004
2,350,533
$1.25
=============================================================================
7.
INCOME TAXES
The estimated taxable income for the period is nil. Based upon the level of historical taxable income it cannot be reasonably estimated at this time if it is more likely than not the Company will realize the benefits from future income tax assets or the amounts owing from future income tax liabilities. Consequently, the future recovery or loss arising from differences in tax values and accounting values have been reduced by an equivalent estimated taxable temporary difference valuation allowance. The estimated taxable temporary difference valuation allowance will be adjusted in the period that it is determined that it is more likely than not that some portion or all of the future tax assets or future tax liabilities will be realized.
For further information on the Company's actual losses for tax purposes, refer to the August 31, 2002 audited financial statements. The benefit of these losses and the estimated loss for the period ended have not been recognized in these unaudited consolidated financial statements.
DESERT SUN MINING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management - Unaudited)
NINE MONTHS ENDED MAY 31, 2003
8.
BASIC AND FULLY DILUTED LOSS PER SHARE
Basic loss per share is computed by dividing the loss for the period by the weighted average number of common shares outstanding during the period. Fully diluted loss per share reflects the maximum possible dilution from the potential exercise of stock options and warrants. Fully diluted loss per share is the same as basic loss per share since the conversion of stock options and warrants would be anti-dilutive.
The following tables sets forth the computation of basic and diluted earnings per share:
May 31,
2003
2002
==================================================================================
Basic loss per share
$
(0.07)
$
0.00
Fully diluted loss per share
$
(0.07)
$
0.00
Numerator for basic and fully diluted loss per share:
Net loss for the period
$
(1,616,780)
$
(21,679)
Denominator:
Weighted average of common shares
21,792,818
15,535,818
Weighted average number of fully
diluted shares
21,792,818
15,535,818
==================================================================================
9.
RELATED PARTY TRANSACTIONS
The Company paid a private company (controlled by the Company's president) an aggregate of $67,500 for rent, administrative services, and expense reimbursements.
The Company paid compensation of $459,195 to officers and directors of the Company.
All transactions with related parties were measured at the exchange amount, which is the amount of consideration established and agreed to by both parties.
DESERT SUN MINING CORP.
SUPPLEMENT TO CONSOLIDATED FINANCIAL STATEMENTS
(Prepared by Management - Unaudited)
NINE MONTHS ENDED MAY 31, 2003
As of June 20, 2003 the following items were outstanding:
1)
26,760,529 common shares
2)
Warrants
Expiry Date
Number of Warrants
Price
===================================================================================
April 17, 2004
500,000
$0.28
August 3, 2004
2,880,000
$0.50
August 28, 2004
2,350,533
$1.25
===================================================================================
3)
Stock Options
Expiry Date
Number of Options
Exercise Price
===================================================================================
May 21, 2007
650,000
$0.28
July 11, 2007
895,000
0.38
September 16, 2007
232,000
0.40
September 16, 2007
132,000
0.60
September 16, 2007
132,000
0.80
October 15, 2007
100,000
0.55
February 4, 2008
1,389,997
1.00
April 23, 2008
275,000
1.00
===================================================================================
3,805,997
===================================================================================
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 6-K to be signed on its behalf by the undersigned, thereunto duly authorized.
Desert Sun Mining Corp. -- SEC File No. 000-29610
(Registrant)
Date: January 29, 2004 By /s/Stan Bharti_______________________________
Stan Bharti, President/CEO/Director