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 |
Commission file number 000-50664
DRAVCO MINING INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
1909 Dufferin Avenue
Saskatoon, Saskatchewan
Canada S7J 1B6
(Address of principal executive offices, including zip code.)
1-888-437-5268
(telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.
YES [X] 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,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [X] NO [ ]
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 18,000,000 as of April 26, 2010.
PART I – FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
| | Balance Sheets (Unaudited) | F-1 |
| | Statements of Expenses (Unaudited) | F-2 |
| | Statements of Cash Flows (Unaudited) | F-3 |
| | Notes to Unaudited Financial Statements | F-4 |
Dravco Mining Inc.
(An Exploration Stage Company)
Balance Sheets (Unaudited)
| | | March 31, | | | December 31, | |
| | | 2010 | | | 2009 | |
| | | | | | | |
| | | | | | | |
| Assets | | | | | | |
| | | | | | | |
| Current Assets | | | | | | |
| Cash | | $ | 3,281 | | | $ | 14,739 | |
| Total Assets | | | 3,281 | | | | 14,739 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Liabilities and Stockholders’ Equity (Deficit) | | | | | | | | |
| | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable | | $ | 4,004 | | | $ | 3,550 | |
| Due to a stockholder | | | 23,127 | | | | 23,127 | |
| Total liabilities | | | 27,131 | | | | 26,677 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Stockholders’ (Deficit) | | | | | | | | |
| | | | | | | | | |
| Common Stock | | | | | | | | |
| 100,000,000 shares authorized, with a $0.00001 par value, | | | | | | | | |
| 18,000,000 shares issued and outstanding | | | 180 | | | | 180 | |
| Additional Paid-in Capital | | | 202,570 | | | | 202,270 | |
| Deficit Accumulated During the Exploration Stage | | | (226,600 | ) | | | (214,388 | ) |
| | | | | | | | | |
| Total Stockholders’ (Deficit) | | | (23,850 | ) | | | (11,938 | ) |
| | | | | | | | | |
| Total Liabilities and Stockholders’ (Deficit) | | $ | 3,281 | | | $ | 14,739 | |
| | | | | | | | | |
The accompanying notes are an integral part of these unaudited financial statements
F-1
Dravco Mining Inc.
(An Exploration Stage Company)
Statements of Expenses (Unaudited)
| | | Three Months Ended March 31, 2010 | | | Three Months Ended March 31, 2009 | | | September 20, 2000 (date of inception) to March 31, 2010 | |
| | | | | | | | | | |
| Expenses | | | | | | | | | |
| | | | | | | | | | |
| Consulting fees | | $ | – | | | $ | – | | | $ | 2,500 | |
| Mineral property costs | | | – | | | | – | | | | 8,370 | |
| Office and administrative | | | 1,614 | | | | 2,096 | | | | 46,589 | |
| Professional fees | | | 6,800 | | | | 8,614 | | | | 133,378 | |
| Transfer agent and filing fees | | | 3,798 | | | | 3,185 | | | | 32,944 | |
| Travel | | | – | | | | – | | | | 2,819 | |
Total Expenses | | | 12,212 | | | | 13,895 | | | | 226,600 | |
| | | | | | | | | | | | | |
Net Loss | | $ | (12,212 | ) | | $ | (13,895 | ) | | $ | (226,600 | ) |
| | | | | | | | | | | | | |
| Net Loss Per Common Share- Basic and Diluted | | $ | (0.00 | ) | | $ | (0.00 | ) | | | | |
| | | | | | | | | | | | | |
| Weighted Average Number of Common Shares Outstanding | | | 18,000,000 | | | | 18,000,000 | | | | | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these unaudited financial statements
F-2
(An Exploration Stage Company)
Statements of Cash Flows (Unaudited)
| | | Three Months Ended March 31, 2010 | | | Three Months Ended March 31, 2009 | | | September 20, 2000 (date of inception) to March 31, 2010 | |
| | | | | | | | | | |
| Operating Activities | | | | | | | | | |
| | | | | | | | | | |
| Net loss | | $ | (12,212 | ) | | $ | (13,895 | ) | | $ | (226,600 | ) |
| | | | | | | | | | | | | |
| Adjustment to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Donated rent | | | 300 | | | | 300 | | | | 2,700 | |
| | | | | | | | | | | | | |
| Changes in operating assets and liabilities | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Accounts payable | | | 454 | | | | 4,781 | | | | 4,004 | |
| | | | | | | | | | | | | |
| Net Cash Used in Operating Activities | | | (11,458 | ) | | | (8,814 | ) | | | (219,896 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Financing Activities | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Due to Stockholder | | | – | | | | – | | | | 23,127 | |
| Proceeds from sale of Stock | | | – | | | | – | | | | 200,050 | |
| | | | | | | | | | | | | |
| Net Cash Provided By Financing Activities | | | – | | | | – | | | | 3,281 | |
| | | | | | | | | | | | | |
| Change in Cash | | | (11,458 | ) | | | (8,814 | ) | | | 3,281 | |
| | | | | | | | | | | | | |
| Cash - Beginning of Period | | | 14,739 | | | | 41,181 | | | | - | |
| | | | | | | | | | | | | |
| Cash- End of Period | | $ | 3,281 | | | $ | 32,367 | | | $ | 3,281 | |
| | | | | | | | | | | | | |
| Supplemental Disclosures | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Interest paid | | $ | – | | | $ | – | | | $ | – | |
| Income taxes paid | | $ | – | | | $ | – | | | $ | – | |
| | | | | | | | | | | | | |
The accompanying notes are an integral part of these unaudited financial statements
Dravco Mining Inc.
(An Exploration Stage Company)
Notes to the Unaudited Financial Statements
March 31, 2010
1. Basis of Financial Statement Presentation
The accompanying unaudited interim financial statements of Dravco Mining Inc. have been prepared in accordance with the accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Dravco’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent year, 2009, as reported in Form 10-K, have been omitted. Operating results for the three months ended March 31, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.
2. Going Concern
As at March 31, 2010, the Company has never generated any revenues, and has accumulated losses since inception. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon the ability of the Company to meet financial requirements, raise additional capital; which will likely involve the issuance of debt and/or equity securities, and to identify any new business opportunities.
3. Related Party Transactions
As of March 31, 2010, the President of the Company is owed $23,127 for expenses paid on behalf of the Company. The amount due is unsecured, non-interest bearing and due on demand.
During the three month period ending March 31, 2010, the President has provided office space to the Company for $300 which was recorded as donated capital.
4. Subsequent Events
The Company evaluated events up through April 26, 2010 and determined that there are none to disclose.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”, or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to “common shares” refer to the common shares in our capital stock.
As used in this quarter report the terms “we”, “us”, “our”, and the “Company” means Dravco Mining Inc., unless otherwise indicated.
General
We were incorporated in the State of Nevada on September 20, 2000 as Dundee Mining Inc. On October 2, 2002 the Company changed its name to Dravco Mining Inc. To date, our only activities have been directed at raising our initial capital and developing our business plan.
We are a start-up, exploration stage corporation and have not yet generated or realized any revenues from our business operations. Our auditors have issued a going concern opinion. This is because we have not generated any revenues from our business operations and we expect to generate operating losses during some or all of our planned development stages, which raises substantial doubt about our ability to continue as a going concern. Accordingly, we will need to raise cash from sources other than internal revenues.
Our original plan of operation was to prospect for gold. In July 2000, Rodney L. Lozinski, our sole officer and director, entered into an oral agreement with Locke Goldsmith, an unrelated third party, to stake one property containing ten unpatented mining claims in the Nickel Plate Mountain area of Hedley, Osoyoos Mining Division, British Columbia, Canada.
During the year ended December 31, 2007, we renewed five of the ten mineral claims with the Ministry of Energy and Mines in British Columbia and the claims remained valid until September 23, 2008. During the year ended December 31, 2008 we continued to hold the property, but at the time of renewal decided that it was in our best interest to forfeit the remaining five mineral claims due to the costs associated with maintaining title to the claims. Due to our failure to commence our exploration work on a timely basis our original geologist was available to do work for us. Our continued search for a new geologist was not successful and as a result, we have been exploring alternative business opportunities.
During the fiscal year ended December 31, 2006, we entered into Letter of Intents with two different companies. Negotiations with both companies were terminated and no further negotiations are planned.
On March 6, 2008 the Company entered into a Letter of Intent to acquire 100% of Zoomnation Inc., a corporation formed in the State of Washington. Zoomnation is a social network community with a software utility program that allows users to manage and organize multiple social networks, blogs, video and voice messages, favorite media websites and chat memberships simultaneously. On July 28, 2008, Dravco Mining Inc. terminated negotiations with Zoomnation Inc. and no further negotiations between the parties are ongoing and none are expected to take place.
We had cash resources of $3,281 as at March 31, 2010. We do not believe we have sufficient funds to meet our cash requirements for the next twelve months. As we will continue to incur administrative and professional charges associated with preparing, reviewing, auditing and filing our financial statements and our periodic and other disclosure documents we will need to raise additional capital. We intend to raise the capital by issuing debt and/or equity securities. At the present time, we have not made any plans to raise additional money and there is no assurance that we will be able to raise additional money in the future.
Plan of Operations
Our original plan of operation was to prospect for gold. Due to our failure to commence our exploration work on a timely basis our original geologist was no longer available to do work for us. Our search for a new geologist was not successful and as a result, we decided to explore alternative business opportunities.
We intend to continue to explore other business opportunities although we have not identified any new business opportunities and have no agreements related to such opportunities. Our plan of operation for the next three months will be to : (i) consider guidelines of industries in which the Company may have an interest; (ii) adopt a business plan regarding engaging in business in any selected industry; and (iii) to commence such operations through funding and/or the acquisition of a “going concern” engaged in any industry selected.
Any new business opportunities will likely require additional capital. We do not believe we have sufficient funds to meet our cash requirements for the next twelve months. As we will continue to incur administrative and professional charges associated with preparing, reviewing, auditing and filing our financial statements and our periodic and other disclosure documents we will need to raise additional capital. We intend to raise the capital by issuing debt and/or equity securities. At the present time, we have not made any plans to raise additional money and there is no assurance that we will be able to raise additional money in the future. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations.
| Limited Operating History; Need for Additional Capital |
There is limited historical financial information about Dravco Mining Inc. 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 and possible delays in the exploitation of the business opportunities. Any new business opportunities will likely require additional capital.
If additional capital is required we will raise funds by issuing debt and/or equity securities although we have no current arrangements or agreements to such financings at this time. 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.
Results of Activities
From Inception on September 20, 2000 to March 31, 2010 and for the Three months ended March 31, 2010 Compared to March 31, 2009
We acquired the right to conduct exploration activity on ten mineral claims in British Columbia. We completed our public offering on March 10, 2004. During the year ended December 31, 2008, we decided that it was in our best interest to forfeit the remaining five mineral claims due to the costs associated with maintaining title to the claims.
Due to our inability to commence exploration on our mining property in British Columbia, Canada, we have considered other types of business opportunities.
During the fiscal year ended December 31, 2006, we entered into Letter of Intents with two potential merger candidates. Negotiations with both candidates were unsuccessful and negotiations were terminated. No definitive agreements were entered into with either parties and no further negotiations are ongoing.
On March 6, 2008 the Company entered into a Letter of Intent to acquire 100% of Zoomnation Inc., a corporation formed in the State of Washington. Zoomnation is a social network community with a software utility program that allows users to manage and organize multiple social networks, blogs, video and voice messages, favorite media websites and chat memberships simultaneously. On July 28, 2008 all negotiations between the parties were terminated and none are expected to take place.
For the three months ended March 31, 2010 and 2009: We had a net loss of $12,212 for the three months ended March 31, 2010 compared to a net loss of $13,895 for the three months ended March 31, 2009. The decrease of $1,683 was primarily due to a decrease in professional fees.
The Company had no revenues for the three month period ended March 31, 2010 and 2009 and does not expect to recognize revenue in the foreseeable future. Since inception, we have used our common stock to raise money for the property acquisition, for corporate expenses and to repay outstanding indebtedness. Net cash provided by the sale of shares from inception is $200,050. In addition, Mr. Lozinski has advanced a total of $23,127 to us. The balance of the $23,127 will be repaid once additional funds become available.
Liquidity and Capital Resources
As of the date of this report, we have yet to generate any revenues from our business operations. We issued 10,000,000 shares of common stock through a Section 4(2) offering in September 2000 to Rodney L. Lozinski, our sole officer and director. This was accounted for as a cash shares purchase of $50.
On March 10, 2004 we issued an additional 8,000,000 shares of common stock for proceeds of $200,000 pursuant to our public offering.
Since our inception, Mr. Lozinski, has advanced the total sum of $43,127 to us to pay for the initial start up costs, $20,000 of this amount has been repaid by the Company. The outstanding amount of $23,127 does not bear interest and is not due on a specific date. There are no documents reflecting the loan and Mr. Lozinski has indicated that he will accept repayment from us when money is available.
As of March 31, 2010 we had $3,281 in total current assets and total current liabilities of $27,131 for a working capital deficit of $23,850. Total liabilities were comprised of general administrative costs, transfer agent and EDGAR filing fees and the loan payable to Mr. Lozinski.
We do not believe we have sufficient funds to meet our cash requirements for the next twelve months, as we have yet to commence operations, have not generated any revenues. The Company's management is exploring a variety of options to meet the Company's cash requirements and future capital requirements, including the possibility of equity offerings, debt financing, and business combinations. There can be no assurance that the Company will be able to raise additional capital, and if the Company is unable to raise additional capital, it will unlikely be able to continue as a going concern.
The Company’s failure to generate revenues and conduct operations since its inception raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements included in this quarterly report have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its obligations in the normal course of business. If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Principal Executive Officer
and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures are not effective since the following material weaknesses exist:
| (i) | The Company’s management is relying on external consultants for purposes of preparing its financial reporting package; the company’s sole officer may not be able to identify errors and irregularities in the financial reporting package before its release as a continuous disclosure document. |
| (ii) | As the Company is governed by one officer who is also the only director, there is an inherent lack of segregation of duties and lack of independent governing board. |
| (iii) | The Company does not have standard procedures in place to ensure that the financial statements agree to the underlying source documents and accounting records, that all of its transactions are completely reflected in the financial statements. |
| (iv) | There are no controls in place to ensure that expenses are recorded when incurred, as opposed to when invoices are presented by suppliers, increasing the risk of incomplete expenses and accrued liabilities. |
The foregoing material weaknesses identified in our disclosure controls and procedures were identified in August 2009, by our external auditing firm, who were of the opinion that if the internal control over financial reporting design has material weaknesses and is concluded to be ineffective than the disclosure controls and procedures are ineffective as well. The aforementioned material weaknesses did not impact our financial reporting or result in a material misstatement of our financial statements.
Once the Company is engaged in a business of merit and has sufficient personnel available, our Board of Directors will nominate an audit committee and audit committee financial expert and we will appoint additional personnel to assist with the preparation of our financial statements; which will allow for proper segregation of duties as well as additional manpower for proper documentation.
| Changes in Internal Controls |
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2010 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
We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceedings or pending litigation. 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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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.
The following documents are included herein:
| Exhibit No. | Document Description |
| | |
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-15(e) and 15d-15(e), promulgated under the Securities and Exchange Act of 1934, as amended. |
| |
| 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer). |
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on behalf by the undersigned, thereto duly authorized on this 26th day of April 2010.
| | DRAVCO MINING INC. (Registrant) |
| | BY: | RODNEY LOZINSKI Rodney Lozinski President, Principal Executive and Principal Financial Officer, Treasurer/Secretary, Principal Accounting Officer, and sole member of the Board of Directors |
| | | |
EXHIBIT INDEX
| Exhibit No. | Document Description |
| | |
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-15(e) and 15d-15(e), promulgated under the Securities and Exchange Act of 1934, as amended. |
| |
| 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer). |
