Our auditors have issued a going concern opinion. This means that our auditors believe there is doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we begin removing and selling minerals. Accordingly, we must raise cash from sources other than the sale of minerals found on our property. That cash must be raised from other sources. Our only other source for cash at this time is investments by others in our company. We must raise cash to implement our project and stay in business.
To meet our need for cash we are attempting to raise money from this offering. We cannot guaranty that we will be able to raise enough money through this offering to stay in business and we do not know how long we can satisfy our cash requirements. What ever money we do raise will be applied to exploration. If we do not raise all of the money we need from this offering, we will have to find alternative sources, like a second public offering, a private placement of securities, or loans from our officers or others. We have discussed this matter with our officers, however, our officers are unwilling to make any commitment to loan us any money at this time. They are willing to review their decision in the future after they have had an opportunity to see how much money has been raised in this offering in order to determine if there is a need for additional commitments by them. Even if there is a need for additional money, there is no assurance that the officers and directors will loan additional money t o us. At the present time, we have not made any arrangements to raise additional cash, other than through this offering. If we need additional cash and can't raise it we will either have to suspend operations until we do raise the cash, or cease operations entirely. Other than as described in this section, we have no other financing plans.
A description of our plan of operations is located in the Business section of this prospectus. We will be conducting research in connection with the exploration of our property. The research we intend to conduct is explained Phase 1 of our proposed operations. We are not going to buy or sell any plant or significant equipment.
Currently, our only employees are our officers and directors. Our officers and directors are part-time employees devoting approximately 25% of their time to our operations. There duties will be handle the our day-to-day administration. We intend to hire third party independent contractors to for geology, engineering, actual surveying, excavating and mining the property. The third party independent contractors will be under our officers and directors supervision. As of today's date, we have not selected geologists, engineers, surveyors or excavators and we do not intend to do so until we have completed this offering.
There is no historical financial information about our company upon which to base an evaluation of our performance. We are an exploration stage company and have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.
To become profitable and competitive, we conduct into the research and exploration of our properties before we start production of any minerals we may find. We are seeking equity financing to provide for the capital required to implement our research and exploration phases.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.
Results of operations
From inception on October 5, 2000.
We just recently acquired our first property and are commencing the research and exploration stage of our mining operations on that property at this time.
Since inception, our officers and directors have advanced the cost of our organization. The cost of our organization are legal fees for incorporation and preparing this registration statement; fees paid to our auditors; and the cost of obtaining our property. The costs of organization from October 5, 2000 to December 31, 2001 was $33,011. This is comprised of $20,000 paid to our attorney, Conrad C. Lysiak to incorporate us and to begin preparation of this registration statement. We owe Mr. Lysiak an additional $15,000 which is due thirty days after SEC effectiveness. Other than the legal fees paid to Mr. Lysiak, no other legal fees have been incurred in connection with this registration statement. No shares of our stock have been issued to Mr. Lysiak or to anyone for legal services. In addition, we paid $10,003 to our auditor, Williams & Webster; we paid $2,968 for exploration expenses; and, we paid $40 for administrative expenses. Exploration expenses include filing fees for the claims, travel expenses related to claim staking and test sampling.
The costs are based upon our out-of-pocket cost, i.e. the amount of money we had to pay for the services. The costs of organization was paid by our officers and directors and have been accrued as a loan in the amount of $8,000 which must be repaid, however, the proceeds of this offering will not be used to repay the $8,000. Revenues generated from the operations will be used to repay the $8,000, if and when revenues are ever generated.
Liquidity and capital resources
As of the date of this registration statement, we have yet to generate any revenues from our business operations.
We issued 5,000,000 shares of common stock through a Section 4(2) offering in October 2000. This was accounted for as a compensation expense of $251,992 and advances and reimbursement by our officers and directors of expenses of $23,008. Since no quoted market price existed for the common stock at he time of transaction, management determined the price of the stock base upon the fair value of the services rendered and expenses reimbursed.
Since our inception, Messrs Brandys and Hopper have paid expenses for us in the total sum of $31,008, which included organizational and start-up costs and operating capital.
As of December 31, 2001 our total assets were $-0- and our total liabilities were $10,003.
- 26 -
MANAGEMENT
Officers and directors
Each of our directors is elected by the stockholders to a term of one year and serves until his or her successor is elected and qualified. Each of our officers is elected by the board of directors to a term of one year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. The board of directors has no nominating, auditing or compensation committees.
The names, addresses, ages and positions of our present officers and directors are set forth below:
Name and Address | Age | Positions |
Alan W. Brandys 6211 Boundary Dr. West Unit 16 Surrey, B.C. Canada V3X 3G7 |
45 |
president, treasurer, principal accounting officer and a member of the board of directors |
Douglas Hopper 203 - 828 W. Hastings St. Vancouver, B.C. Canada V6C 1C8 |
65 |
vice president, secretary and a member of the board of directors |
The persons named above have held their offices/positions since inception of our company and are expected to hold their offices/positions until the next annual meeting of our stockholders.
Background of officers and directors
Alan W. Brandys has been our president, treasurer, principal accounting officer and a member of our board of directors since inception. Since May 2001, Mr. Brandys has been president, treasurer and a director of Zeolite Exploration Company, an exploration company located in Vancouver, British Columbia. Since March 1994, Mr. Brandys has been self-employed as a financial consultant. Since October 1997, Mr. Brandys has been a director of Canica Mineral Development Inc., a British Columbia corporation located in Vancouver. Canica Mineral is engaged in the business of exploration. From April 1994 to April 1998, Mr. Brandys was a development consultant for Miranda Incorporated, an oil and gas corporation located in Independence, Kansas. Mr. Brandys was a co-founder and from March 1993 to May 1998, a director of Autotech Protection Systems Inc. located in Edmonton, Alberta, Canada. Autotech Protection was engaged in the business of car detailing for new car dealers. From June 1988 to July 1990, Mr. Brandys wa s vice president of marketing of Telesis Corporation Inc., Edmonton, Alberta, Canada. Telesis Corporation was engaged in the business of manufacturing environmental safe properties. From January 1983 to April 1988, Mr. Brandys was senior stockbroker at First Commonwealth Securities Corporation, Edmonton, Alberta, Canada. From January 1981 to January 1983, Mr. Brandys was Director of Technology at Caribou Hydrocarbon Products Ltd., Vancouver, British Columbia. Caribou Hydrocarbon Products was engaged in the extraction of byproducts from wood chips. Mr. Brandys holds a Master of Business Administration degree from the University of British Columbia and a Bachelor of Science degree in biology from the University of British Columbia. Mr. Brandys will devote 25% of his time to our operation.
- 27 -
Douglas H. Hopper has been our vice president, secretary and a member of our board of directors since inception. Since May 2001, Mr. Hopper has been secretary and a director of Zeolite Exploration Company, an exploration company located in Vancouver, British Columbia. Since January 1991, Mr. Hopper has been prospecting for zeolite, platinoids, copper and gold. Mr. Hopper will devote 25% of his time to our operation. Mr. Hopper was previously employed by Kennecot Mining in Houston, British Columbia from February 1969 to June 1971 and Falconbidge Mining, Sudbury, Ontario from March 1963 to April 1964. While at Kennecot, Mr. Hopper was employed as a mining technologist. His duties included logging core, soil sampling, surveying, and supervision of diamond drilling. While at Falconbridge, Mr. Hopper was employed as a mining technologist. His duties included logging and drilling core, taking metallurgical samples, and ore body calculation. Mr. Hopper holds a degree in Mining Technology from Hai leybury Mining School, Haileybury, Ontario, Canada (1966). Mr. Hopper's technical expertise is derived from his on-the-job experience. He has no formal training in the area of mineral exploration.
Conflicts of interest
We believe that Alan W. Brandys and Douglas H. Hopper will be subject to conflicts of interest because they will not be devoting full-time to our operations. Messrs Brandys and Hopper are officers and directors Zeolite Exploration Company which is engaged in the same business as us. Further, Mr. Brandys is a director of a Canica Mineral Development, an exploration company.
EXECUTIVE COMPENSATION
Messrs Brandys and Hopper, our officers and directors, were compensated in shares of common stock in the amount of $251,992 for their services and there are no plans to compensate them in the near future, unless and until we begin to realize revenues and become profitable in our business operations.
Indemnification
Under our Articles of Incorporation and Bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.
- 28 -
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the date of this prospectus, the total number of shares owned beneficially by each of our directors, officers and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The table also reflects what their ownership will be assuming completion of the sale of all shares in this offering. The stockholders listed below have direct ownership of their shares and possesses sole voting and dispositive power with respect to the shares.
Name and address of beneficial owner
|
Number of shares before offering
| Number of shares after offering assuming 100% of the shares are sold
| Percentage of ownership after offering assuming 100% of the shares are sold |
Alan W. Brandys 6211 Boundary Dr. W. Unit 16 Surrey, B.C. Canada V3X 3G7 |
2,500,000 |
2,500,000 |
35.71% |
Douglas H. Hopper 72727 Kingsway Ave. Suite 907 Burnaby, British Columbia Canada V5E 1G4 |
2,500,000 |
2,500,000 |
35.71% |
All officers and directors as a group (2 persons) |
5,000,000 |
5,000,000 |
71.42% |
[1] Messrs Brandy and Hopper are our only promoters.
Because Messrs Brandys and Hopper will control us after the offering, regardless of the number of shares sold, your ability to cause a change in the course of our operations is eliminated. As such, the value attributable to the right to vote is gone. This could result in a reduction in value to the shares you own because of the ineffective voting power.
Future sales by existing stockholders
A total of 5,000,000 shares of common stock were issued to the existing stockholders, all of which are restricted securities, as defined in Rule 144 of the Rules and Regulations of the SEC promulgated under the Securities Act. Under Rule 144, the shares can be publicly sold, subject to volume restrictions and restrictions on the manner of sale, commencing one year after their acquisition.
Shares purchased in this offering, which will be immediately resalable, and sales of all of our other shares after applicable restrictions expire, could have a depressive effect on the market price, if any, of our common stock and the shares we are offering.
- 29 -
A total of 5,000,000 shares of stock were issued to our two officers and directors. The average price of $0.05 was a result of services performed and repayment of advances. They will likely sell a portion of their stock if the market price goes above $0.05. If they do sell there stock into the market, the sales may cause the market price of the stock to drop.
DESCRIPTION OF SECURITIES
Common stock
Our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.00001 per share. The holders of our common stock:
* have equal ratable rights to dividends from funds legally available if and when declared by our board of directors;
* are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;
* do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and
* are entitled to one non-cumulative vote per share on all matters on which stockholders may vote.
All shares of common stock now outstanding are fully paid for and non-assessable and all shares of common stock which are the subject of this offering, when issued, will be fully paid for and non-assessable. We refer you to our articles of incorporation, bylaws and the applicable statutes of the state of Nevada for a more complete description of the rights and liabilities of holders of our securities.
Non-cumulative voting
Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors. After this offering is completed, the present stockholders will own approximately 71.42% of our outstanding shares.
Cash dividends
As of the date of this prospectus, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our board of directors and will depend upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
- 30 -
Nevada anti-takeover provisions
There are no Nevada anti-take over provisions that may have the affect of delaying or preventing a change in control.
Reports
After we complete this offering, we will not be required to furnish you with an annual report. Further, we will not voluntarily send you an annual report. We will be required to file reports with the SEC under section 15(d) of the Securities Act. The reports will be filed electronically. The reports we will be required to file are Forms 10-KSB, 10-QSB, and 8-K. You may read copies of any materials we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that will contain copies of the reports we file electronically. The address for the Internet site is www.sec.gov.
Stock transfer agent
Our stock transfer agent for our securities is Securities Transfer Corporation, 2591 Dallas Parkway, Suite 102, Frisco, Texas 75034 and its telephone number is (469) 633-0101.
CERTAIN TRANSACTIONS
In October 2000, we issued a total of 5,000,000 shares of restricted common stock to Alan W. Brandys and Douglas H. Hopper, officers and directors of our company. This was accounted for as a compensation expense of $251,992 and advances and reimbursement expenses of $23,008.
Since our inception, Messrs. Brandys and Hopper, advanced loans to us and paid expenses on our behalf in the total sum of $31,008, which were used for organizational and start-up costs and operating capital. The advances in the amount of $23,008 were repaid as a portion of the stock issuance, with the balance of $8,000 still owing at December 31, 2001. The loans do not bear interest and have not been paid as of the date hereof. There are no documents reflecting the loans and they are not due on a specific date. Messrs Brandy and Hopper have agreed that the loans will not be repaid from the proceeds of this offering and will only be repaid from revenues generated from operations.
LITIGATION
We are not a party to any pending litigation and none is contemplated or threatened.
- 31 -
EXPERTS
Our financial statements, included in this prospectus, for the period from inception to June 30, 2001 have been audited and from inception to December 31, 2001 have been reviewed, by Williams & Webster, P.S., Independent Certified Public Accountants, 601 West Riverside Avenue, Suite 1940, Spokane, Washington 99201, as set forth in their reports included in this prospectus.
LEGAL MATTERS
Conrad C. Lysiak, Attorney at Law, 601 West First Avenue, Suite 503, Spokane, Washington 99201, telephone (509) 624-1475 has acted as legal counsel for our company.
FINANCIAL STATEMENTS
Our fiscal year end is June 30. We will provide audited financial statements to our stockholders on an annual basis; the statements will be audited by an Independent Certified Public Accountant.
Our reviewed financial statement from inception to December 31, 2001 immediately follows:
ACCOUNTANT'S REVIEW REPORT | F-1 |
INDEPENDENT AUDITOR'S REPORT | F-2 |
FINANCIAL STATEMENTS Balance Sheet Statement of Operations Statement of Stockholders' Equity Statement of Cash Flows | F-3 F-4 F-5 F-6 |
NOTES TO THE FINANCIAL STATEMENTS | F-7 |
- 32 -
Board of Directors
Zeolite Mining Corporation
Vancouver, BC
CANADA
ACCOUNTANT'S REVIEW REPORT
We have reviewed the accompanying balance sheet of Zeolite Mining Corporation (an exploration stage enterprise) as of December 31, 2001 and the related statements of operations, stockholders' deficit and cash flows for the six months then ended, and for the periods from October 5, 2000 (inception) through December 31, 2001 and 2000. These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
The financial statements for the period ended June 30, 2001 were audited by us and we expressed an unqualified opinion on them in our report dated September 25, 2001. We have not performed any auditing procedures since that date.
As discussed in Note 2, the Company has been in the exploration stage since its inception and has no revenues or assets. The Company's continued viability is dependent upon the Company's ability to meet its future financing requirements and the success of future operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding those matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
February 6, 2002
F-1
- 33 -
Board of Directors
Zeolite Mining Corporation
Vancouver, BC
CANADA
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Zeolite Mining Corporation (an exploration stage company) as of June 30, 2001, and the related statements of operations, stockholders' deficit, and cash flows from inception (October 5, 2000) through June 30, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Zeolite Mining Corporation as of June 30, 2001, and the results of its operations and cash flows from inception (October 5, 2000) through June 30, 2001 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company's significant operating loss raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
September 25, 2001
F-2
- 34 -
ZEOLITE MINING CORPORATION (An Exploration Stage Enterprise) BALANCE SHEETS |
| | December 31, 2001 (unaudited)
| |
June 30, 2001
|
ASSETS | $ | - =========== | $ | - ========== |
| | | | |
LIABILITIES & STOCKHOLDERS' DEFICIT CURRENT LIABILITIES | | | | |
|
| Accounts payable | $ | 2,003 | $ | - |
| Related party payable | | 8,000
| | 5,500
|
| Total Current Liabilities | | 10,003
| | 5,500
|
| | | | |
| COMMITMENTS AND CONTINGENCIES | | -
| | -
|
| | | | |
| STOCKHOLDERS' DEFICIT | | | | |
| Common stock, 100,000,000 shares authorized; $0.00001 par value, 5,000,000 shares issued and outstanding | |
|
50
|
| 50
| Additional paid-in capital | | 274,950 | | 274,950 |
| Accumulated deficit during exploration stage | | (285,003)
| | (280,500)
|
| TOTAL STOCKHOLDERS' DEFICIT | | (10,003)
| | (5,500)
|
| | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
$ |
- =========== | |
$
- =========== | The accompanying notes are an integral part of these financial statements.
F-3
- 35 -
ZEOLITE MINING CORPORATION (An Exploration Stage Enterprise) STATEMENT OF OPERATIONS |
|
| |
Six Months Ended December 31, 2001 (unaudited)
| | Period from October 5, 2000 (Inception) to December 31, 2000 (unaudited)
| | Period from October 5, 2000 (Inception) to December 31, 2001 (unaudited)
|
|
REVENUES | $ | -
| $ | -
| $ | -
|
| | | | | | |
EXPENSES | | | | | | |
| Consulting services provided by officers | | - | | 251,992 | | 251,992 |
| Legal and professional fees | | 4,503 | | 20,000 | | 30,003 |
| Mining exploration | | - | | 2,468 | | 2,968 |
| General and administrative expenses | | -
| | 40
| | 40
|
| TOTAL EXPENSES | | 4,503
| | 274,500
| | 285,003
|
| | | | | | |
LOSS BEFORE INCOME TAXES | | (4,503) | | (274,500) | | (285,003) |
| | | | | | |
INCOME TAXES | | -
| | -
| | -
|
| | | | | | |
NET LOSS | $ | (4,503) =========== | $ | (274,500) =========== | $ | (285,003) ========== |
| | | | | | |
NET LOSS PER COMMON SHARE BASIC AND DILUTED | |
$
|
nil
===========
|
$
(0.05) =========== | | | | | | | | | |
WEIGHTED AVERAGE NUMBER OF COMMON STOCK SHARESOUTSTANDING BASIC AND DILUTED | |
5,000,000 =========== | |
5,000,000 =========== | | |
The accompanying notes are an integral part of these financial statements.
F-4
- 36 -
ZEOLITE MINING CORPORATION (An Exploration Stage Enterprise) STATEMENT OF STOCKHOLDERS' DEFICIT For the Period from October 5, 2000 (Inception) to September 30, 2001 |
|
Common Stock
|
Amount
| |
Additional Paid-in Capital
| | Deficit Accumulated During Exploration Stage
| |
Total
|
Number of Shares
|
Issuance of common stock for mining claims and officers' compensation at $0.055 per share | |
5,000,000
$ |
50 |
$ |
274,950 |
$ |
- |
$ |
275,000 | | | | | | | | | | |
Net loss for the period ended June 30, 2001 | -
| |
-
| |
-
| |
(280,500)
| |
(280,500)
|
| | | | | | | | | |
Balance, June 30, 2001 | 5,000,000 | | 50 | | 274,950 | | (280,500) | | (5,500) |
| | | | | | | | | |
Net loss for the six months ended December 31, 2001 |
-
| |
-
| |
-
| |
(4,503)
| |
(4,503)
|
| | | | | | | | | |
Balance, December 31, 2001 (unaudited) |
5,000,000 ========== |
$ |
50 ======= |
$ |
274,950 ========== |
$ |
(285,003) ========== |
$ |
(10,003) =========== |
The accompanying notes are an integral part of these financial statements.
F-5
- 37 -
ZEOLITE MINING CORPORATION (An Exploration Stage Enterprise) STATEMENT OF CASH FLOWS |
| |
Six Months Ended December 31, 2001 (unaudited)
| | Period from October 5, 2000 (Inception) to December 31, 2000 (unaudited)
| | Period from October 5, 2000 (Inception) to December 31, 2001 (unaudited)
|
|
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
| Net loss | $ | (4,503) | $ | (274,500) | $ | (285,003) |
| Adjustments to reconcile net loss to net cash used by operating activities: | | | | | | |
| | | | | | |
| Stock issued for services | | - | | 274,500 | | 274,500 |
| Stock issued for expenses | | - | | - | | 500 |
| Increase in accounts payable | | 2,003 | | - | | 2,003 |
| Expenses paid by related party | | 2,500
| | -
| | 8,000
|
Net cash used by operating activities | | -
| | -
| | -
|
| | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | |
-
| |
-
| |
-
|
| | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | |
-
| |
-
| |
-
|
| | | | | | |
Increase in cash | | - | | - | | - |
Cash, beginning of period | | -
| | -
| | -
|
Cash, end of period | $ | - =========== | $ | - =========== | $ | - ========== |
| | | | | | |
SUPPLEMENTAL DISCLOSURES: | | | | | | |
| Interest paid | $ | - =========== | $ | - =========== | $ | - ========== |
| Income taxes paid | $ | - =========== | $ | - =========== | $ | - ========== |
| | | | | | |
NON-CASH FINANCING AND | | | | | | |
| INVESTING TRANSACTIONS: | | | | | | |
| Stock issued in payment of services | $ | - | $ | 274,500 | $ | 274,500 |
| Stock issued in payment of expenses | $ | - | $ | - | $ | 500 |
The accompanying notes are an integral part of these financial statements.
F-6
- 38 -
ZEOLITE MINING CORPORATION
(An Exploration Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2001
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Zeolite Mining Corporation (hereinafter "the Company") filed for incorporation on October 5, 2000 under the laws of the state of Nevada primarily for the purpose of acquiring, exploring, and developing mineral properties. The Company's fiscal year-end is June 30.
The Company is actively seeking additional capital and management believes that the Company can develop mining claims, which it has acquired in British Columbia. However, there are inherent uncertainties in mining operations and management cannot provide assurances that it will be successful in this endeavor. Furthermore, the Company is in the exploration stage, as it has not realized any significant revenues from its planned operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.
Accounting Method
The Company uses the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
Use of Estimates
The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
Exploration Stage Activities
The Company has been in the exploration stage since its formation in October 2000 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition, exploration and development of mining properties. At December 31, 2001, the Company held six claims in British Columbia, Canada. The Company has assigned no value to these claims, as there is no evidence showing proven and probable reserves. Upon location of a commercial minable reserve, the Company expects to actively prepare the site for its extraction and enter a development stage.
F-7
- 39 -
ZEOLITE MINING CORPORATION
(An Exploration Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2001
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents.
Derivative Instruments
The Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB No. 133", and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities", which is effective for the Company as of January 1, 2001. This standard establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.
If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.
Historically, the Company has not entered into derivatives contracts to hedge existing risks or for speculative purposes.
At December 31, 2001, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities.
Compensated Absences
Currently, the Company has no employees; therefore, no policy regarding compensated absences has been established. The Company will establish a policy to recognize the costs of compensated absences at the point in time that it has employees.
Exploration Costs
In accordance with accounting principles generally accepted in the United States of America, the Company expenses exploration costs as incurred.
F-8
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ZEOLITE MINING CORPORATION
(An Exploration Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2001
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounting Pronouncements
In September 2000, the FASB issued SFAS No. 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities." This statement provides accounting and reporting standards for transfers and servicing of financial assets and extinguishment of liabilities and also provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. SFAS No. 140 is effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000, and is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. The Company believes that the adoption of this standard will not have a material effect on the Company's results of operations or financial position.
In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 provides for the elimination of the pooling-of-interests method of accounting for business combinations with an acquisition date of July 1, 2001 or later. SFAS No. 142 prohibits the amortization of goodwill and other intangible assets with indefinite lives and requires periodic reassessment of the underlying value of such assets for impairment. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001. An early adoption provision exists for companies with fiscal years beginning after March 15, 2001. On September 1, 2001, the Company adopted SFAS No. 142. Application of the nonamortization provision of SFAS No. 142 will have no effect on the Company's financial statements as they do not currently have amortizable assets.
In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" (SFAS No. 143). SFAS No. 143 establishes guidelines related to the retirement of tangible long-lived assets of the Company and the associated retirement costs. This statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived assets. This statement is effective for financial statements issued for the fiscal years beginning after June 15, 2002 and with earlier application encouraged. The Company adopted SFAS No. 143 and the adoption has no effect on the financial statements of the Company at December 31, 2001, as the Company has no long-lived assets.
F-9
- 41 -
ZEOLITE MINING CORPORATION
(An Exploration Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2001
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounting Pronouncements (continued)
In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144). SFAS 144 replaces SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This new standard establishes a single accounting model for long-lived assets to be disposed of by sale, including discontinued operations. Statement 144 requires that these long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or discontinued operations. This statement is effective beginning for fiscal years after December 15, 2001, with earlier application encouraged. The Company adopted SFAS 144 and the adoption has no effect on the financial statements of the Company at December 31, 2001, as the Company has no long-lived assets.
Provision for Taxes
Income taxes are provided based upon the liability method of accounting pursuant to SFAS No. 109 "Accounting for Income Taxes." Under this approach, deferred income taxes are recorded to reflect the tax consequences on future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the "more likely than not" standard imposed by SFAS No. 109 to allow recognition of such an asset.
At December 31, 2001, the Company had net deferred tax assets of approximately $6,700, principally arising from net operating loss carryforwards for income tax purposes. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been established at December 31, 2001.
At December 31, 2001, the Company has net operating loss carryforwards of approximately $33,500, which expire in years 2020 through 2021. The Company recognized approximately $250,000 of losses for the issuance of common stock for services in 2001, which were not deductible for tax purposes, and are not included in the above calculation of deferred tax assets.
Basic and Diluted Loss Per Share
Loss per share was computed by dividing the net loss by the weighted average number of shares outstanding during the period. The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Basic and diluted loss per share were the same, as there were no common stock equivalents outstanding.
F-10
- 42 -
ZEOLITE MINING CORPORATION
(An Exploration Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2001
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Going Concern
The Company's financial statements have been presented on a going concern basis that contemplates the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company incurred a net loss of $4,503 for the six months ended December 31, 2001, has an accumulated deficit of $285,003 and had no sales. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the amounts and classifications of liabilities that might be necessary in the event the Company cannot continue in existence.
Fair Value of Financial Instruments
The carrying amount for accrued liabilities approximate their fair value.
Interim Financial Statements
The interim financial statements as of and for the six months ended December 31, 2001 included herein have been prepared for the Company, without audit. They reflect all adjustments, which are, in the opinion of management, necessary to present fairly the results of operations for the period. All such adjustments are normal recurring adjustments. The results of operations for the period presented are not necessarily indicative of the results to be expected for the full fiscal year.
NOTE 3 - COMMON STOCK
On October 5, 2000, 5,000,000 shares of common stock were issued to officers and directors only. There was no public offering of any securities. The aforementioned shares were issued in payment of consulting services in the amount of $251,992, legal fees advanced in the amount of $20,000, and expenses of $3,008. These shares were issued pursuant to exemption from registration contained in Section 4(2) of the Securities Act of 1933.
NOTE 4 - RELATED PARTIES
The Company occupies office space provided by an officer of the Company at no charge. The value of this space is not considered materially significant for financial reporting purposes.
The shareholders of the Company provided services, paid expenses and advanced funds in the amount of $275,000 on behalf of the Company, and were repaid by the issuance of common stock. See Note 3. An officer and shareholder of the Company paid additional expenses on behalf of the Company in the amount of $8,000, which has been reflected as a short-term uncollateralized loan, bearing no interest and having no specific due date.
F-11
- 43 -
ZEOLITE MINING CORPORATION
(An Exploration Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2001
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Mining Industry
The Company is engaged in the exploration and development of mineral properties. At present there are no feasibility studies establishing proven and probable reserves.
Although the minerals exploration and mining industries are inherently speculative and subject to complex environmental regulations, the Company is unaware of any pending litigation or of any specific past or prospective matters which could impair the value of its mining claims.
Registration with the Securities and Exchange Commission
The Company is presently undertaking the required steps to register as a publicly traded company. In this regard, the Company has signed a contract with a securities attorney. The total fees to be paid to the attorney amount to $35,000 of which $20,000 has been paid and is reflected in the net loss for the period ending June 30, 2001. The remaining $15,000 is due thirty days after the Company's registration statement is declared effective by the Securities and Exchange Commission.
F-12
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The only statute, charter provision, bylaw, contract, or other arrangement under which any controlling person, director or officer of the registrant is insured or indemnified in any manner against any liability which he may incur in his capacity as such, is as follows:
1. Article XII of the articles of incorporation of the company, filed as Exhibit 3.1 to the Registration Statement.
2. Article IX of the bylaws of the company, filed as Exhibit 3.2 to the registration statement.
3. Nevada Revised Statutes, Chapter 78.
The general effect of the foregoing is to indemnify a control person, officer or director from liability, thereby making the company responsible for any expenses or damages incurred by such control person, officer or director in any action brought against them based on their conduct in such capacity, provided they did not engage in fraud or criminal activity.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the offering (assuming all shares are sold), all of which are to be paid by the registrant, are as follows:
SEC Registration Fee Printing Expenses Accounting Fees and Expenses Legal Fees and Expenses Federal Taxes State Taxes and Fees Listing Fees Engineering Fees Blue Sky Fees/Expenses Trustee and Transfer Agent Fee | $ $ $ $ $ $ $ $ $ $ | 100.00 1,500.00 10,000.00 35,000.00 0.00 0.00 0.00 0.00 2,400.00 1,000.00 |
TOTAL | $ | 50,000.00 |
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the registrant has sold the following securities which were not registered under the Securities Act of 1933, as amended.
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Name and Address | Date | Shares | Consideration |
Alan W. Brandys 6211 Boundary Dr. W. Unit 16 Surrey, British Columbia Canada V3X 3G7 |
10/7/00 |
2,500,000 |
Services valued at $125,996 and advances of $11,504 |
Douglas H. Hopper 203 - 828 W. Hastings. St. Vancouver, British Columbia Canada V6C 1C8 |
10/7/00 |
2,500,000 |
Services valued at $125,996 and advances of $11,504 |
We issued the foregoing restricted shares of common stock to Messrs Brandys and Hopper pursuant to Section 4(2) of the Securities Act of 1933. Messrs Brandys and Hopper are sophisticated investors, are officers and directors of the company, and were in possession of all material information relating to the company. Further, no commissions were paid to anyone in connection with the sale of the shares and no general solicitation was made to anyone.
Services include locating and causing the staking of the property, organizing and forming Zeolite Mining,hiring an attorney, hiring an auditor, preparing financial statements, preparing the plan of operations, financing the initial pre-exploration activities, and responding to the SEC comments.The value of the services was arbitrarily determined by our officers and directors and upon paragraph 10 of APB 25 which require us to value the shares issued to our officers and directors in close proximity to a public offering, at the offering price of the shares being offered to the public.
ITEM 27. EXHIBITS.
The following Exhibits are filed as part of this Registration Statement, pursuant to Item 601 of Regulation K.
Exhibit No. | Document Description |
3.1* 3.2* 4.1* 5.1*
10.1* 10.2* 10.3* 15.3 23.9 23.10 99.1* | Articles of Incorporation. Bylaws. Specimen Stock Certificate. Opinion of Conrad C. Lysiak, Esq. regarding the legality of the securities being registered. Cash 1 Claim. Cash 3 Claim. Conveyance by Hopper to the Company Consent of Williams & Webster, P.S., Certified Public Accountants. Consent of Williams & Webster, P.S., Certified Public Accountants. Consent of Conrad C. Lysiak, Esq. Subscription Agreement. |
* previously filed
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ITEM 28. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public po licy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
a. To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
b. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement;
c. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any change to such information in the registration statement.
2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing of this amended Form SB-2 Registration Statement and has duly caused this amended Form SB-2 Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Vancouver, British Columbia, Canada on this 8th day of April, 2002.
| ZEOLITE MINING CORPORATION |
| BY: | /s/ Alan Brandys Alan W. Brandys President, Chief Executive Officer, Principal Accounting Officer, Principal Financial Officer and a member of the Board of Directors |
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears below constitutes and appoints Alan W. Brandys, as true and lawful attorney-in-fact and agent, with full power of substitution, for his and in his name, place and stead, in any and all capacities, to sign any and all amendment (including post-effective amendments) to this registration statement, and to file the same, therewith, with the Securities and Exchange Commission, and to make any and all state securities law or blue sky filings, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying the confirming all that said attorney-in-fact and agent or any substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this amended Form SB-2 Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
Signature | Title | Date |
/s/ Alan Brandys Alan W. Brandys | President, Chief Executive Officer, Treasurer, Principal Accounting Officer, Principal Financial Officer and a member of the Board of Directors | April 8, 2002 |
/s/ Douglas Hopper Douglas H. Hopper |
Vice President, Secretary and a member of the Board of Directors |
April 8, 2002 |