The accompanying condensed notes are an integral part of these financial statements.
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ZEOLITE MINING CORPORATION
(An Exploration Stage Company)
CONDENSED NOTES TO FINANCIAL STATEMENTS
March 31, 2003
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.
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with instructions to Form 10-QSB pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying financial statements should be read in conjunction with the audited consolidated financial statements of the Company included in the Company's June 30, 2002 Annual Report on Form 10-KSB.
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.
Recent Accounting Pronouncements
In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," ("SFAS No. 148"). SFAS 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. In addition, it also amends the disclosure provisions of SFAS No. 123 to require prominent disclosure about the effects on reported results of an entity's accounting policy decisions with respect to stock-based employee compensation. The provisions of the statement are effective for financial statements for fiscal years ending after December 15, 2002. The Company believes that SFAS No. 148 will not significantly affect its financial reporting.
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In November 2002, the Financial Accounting Standards Board issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees" ("FIN 45") which elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. FIN 45 does not prescribe a specific approach for subsequently measuring the guarantor's recognized liability over the term of the related guarantee. It also incorporates, without change, the guidance in FASB Interpretation No. 34, "Disclosure of Indirect Guarantees of Indebtedness of Others," which is being superseded. FIN 45 has had no impact on the Company's financial position or results of operations as the Company has not entered i nto any of the aforementioned transactions.
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 $31,639 for the period ended March 31, 2003, has an accumulated deficit of $334,710 and had no revenues. 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 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 prepaids, accounts payable and related party payable approximate their fair value.
Interim Financial Statements
The interim financial statements as of and for the nine months ended March 31, 2003 included herein have not been audited, at the request of the Company. 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, expenses of $3,008, and unproven mineral property claims. These shares were issued pursuant to exemption from registration contained in Section 4(2) of the Securities Act of 1933.
During June 2002, 1,138,000 shares of common stock were issued for $113,800 cash.
NOTE 4 - RELATED PARTY TRANSACTIONS
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.
In 2000, 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 $26,793, which has been reflected as a short-term uncollateralized loan, bearing no interest and having no specific due date.
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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.
Concentration of Risk
The Company maintains its cash account in one commercial bank in Canada. The Company's cash account is maintained in U.S. dollars, which totaled $79,533 as of March 31, 2003. This account is not insured.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this prospectus. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
We are a start-up, exploration stage company and have not yet generated or realized any revenues from our business operations.
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.
Our proposed exploration program
We must conduct exploration to determine what amount of minerals, if any, exist on our properties and if any minerals which are found can be economically extracted and profitably processed. Our exploration program is designed to economically explore and evaluate our properties. We intend to retain Timothy L. Sadlier-Brown, a consulting exploration geologist and partner in the firm of Nevin Sadlier-Brown Goodbrand Ltd., consulting geologist. We also intend to retain Larry Sookochoff, mining engineer and owner of Sookochoff Consultants Inc. While we intend to retain both, we have not entered into any formal agreement with them and will not do so until this offering is completed.
We do not claim to have any minerals or reserves whatsoever at this time on any of our properties. The assay report referred to in the business section is limited to one small sample and should not be considered an indication of the amount of zeolite on the property. At any phase, if we find that we do not have adequate funds to complete a phase, we will suspend our operations and attempt to raise more money so we can proceed. If we cannot raise the capital to proceed we will cease operations until we have sufficient capital.
We intend to implement an exploration program and intend to proceed in the following three phases:
Phase 1 will begin with research of the available geologic literature, personal interviews with geologists, mining engineers and others familiar with the prospect sites. We have recently begun this phase of the exploration process on our property.
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When the research is completed, our initial work will be augmented with geologic mapping, geophysical testing and geochemical testing of our claims. When available, existing workings, like trenches, prospect pits, shafts or tunnels will be examined. Based upon a physical examination of the property, no previous exploration activity has been conducted thereon. If an apparent mineralized zone is identified and narrowed down to a specific area by the studies, we will to begin trenching the area. We do not intend to survey the property until we determine if there is mineralized material on the property. We intend to rely upon our staking until then. The estimated fee for surveying will be approximately $2,000 - $2,500 for an area 100 yards by 50 yards.
Trenches are generally approximately 150 feet in length and 10-20 feet wide. These dimensions allow for a thorough examination of the property. They also allow easier restoration of the land to its pre-exploration condition when we conclude our operations, in the event that it is not economically feasible to remove mineralized material. Once excavation of a trench is completed, samples will taken and then analyzed for economically potential minerals that are known to have occurred in the area. Careful interpretation of this available data collected from the various tests aid in determining whether or not the claim has current economic potential and whether further exploration is warranted. Excavation will cost approximately $2,000 - $4,000 for area of 100 yards by 50 yards.
Phase 1 will take about 3 months and cost up to $20,000.
Phase 2 involves an initial examination of the trenching identified by Phase 1 of exploration. Phase 2 is aimed at identifying any mineral deposits of potential economic importance. The methods employed are
* more extensive trenching
* more advanced geophysical work
The geophysical work gives a general understanding of the location and extent of mineralization at depths that are unreachable by surface excavations and provides a target for more extensive trenching and core drilling. Trenching identifies the continuity and extent of mineralization, if any, below the surface. After a thorough analysis of the data collected in Phase 2, we will decide if the property warrants a Phase 3 study.
Phase 2 will take about 3 months and cost up to $40,000.
Phase 3 is aimed at precisely defining the depth, the width, the length, the tonnage and the value per ton of any mineral body. This is accomplished through extensive digging extensive pits on the property. Phase 3 will take about 6 months and cost up to $80,000.
Based upon our plan of operations, we believe it will take one year to complete our plan of exploration at a cost not exceeding $140,000. The time allocated for each phase considers the terrain of the property, ability to access the property with equipment, and the fact that our officers and directors will only be devoting 25% of their time to our operations.
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We do not intend to interest other companies in the property if we find mineralized materials. We intend to try to develop the reserves ourselves. We do not have any plans to take our operations from Phase 3 to revenue generation and no consideration will be given to development until we find mineralized material which is profitably recoverable.
No further disclosure has been made regarding the phases of exploration. We believe that to do so would be to introduce speculative unsupportable predictions that we believe would be materially misleading because our property is an unexplored, undeveloped piece of land. We don't know what we will find, if anything, and because we have not even begun exploration we cannot possibly predict what we will find. We are an exploration company. If we find economically recoverable mineralized material, we will have to raise additional funds to extract the same. Then we will become a development stage company.
To meet our need for cash we are attempting to raise money from a public 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 the public 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 wi ll loan additional money to us. At the present time, we have not made any arrangements to raise additional cash, other than through our public 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.
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 our public offering.
Limited operating history; need for additional capital
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.
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To become profitable and competitive, we must 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 have acquired one 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 our 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, 2002 was $76,643. This is comprised of $35,000 paid to our attorney, Conrad C. Lysiak to incorporate us and to prepare of our registration statement. Other than the legal fees paid to Mr. Lysiak, no other legal fees have been incurred in connection with our registration statement. No shares of our stock have been issued to Mr. Lysiak or to anyone for legal services. In addition, we paid $17,543 to our auditor, Williams & Webster; we paid $22,968 for exploration expenses; and, we paid $1,132 for administrative expenses. Exploration expenses include filing fees for the claims, travel expenses related to claim staking and test sampling.
Liquidity and capital resources
As of the date hereof, 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 the 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, 2002, our total assets were $88,796 and our total liabilities were $28,630.
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ITEM 3. CONTROLS AND PROCEDURES
Alan Brandys, principal executive officer and principal financial officer of Zeolite Mining Corporation, has established and is currently maintaining disclosure controls and procedures for our company. The disclosure controls and procedures have been designed to ensure that material information relating to our company is made known to them as soon as it is known by others within our company.
Our principal executive officer and principal financial officer conducts an update and a review and evaluation of the effectiveness of our company's disclosure controls and procedures and have concluded, based on their evaluation within 90 days of the filing of this report, that our disclosure controls and procedures are effective for gathering, analyzing and disclosing the information we are required to disclose in our reports filed under the Securities Exchange Act of 1934. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the previously mentioned evaluation.
PART II
ITEM 5. OTHER MATTERS
On April 9, 2002, the Securities and Exchange Commission declared our Form SB-2 Registration Statement effective, file number is 333-56686, permitting us to offer up to 2,000,000 shares of common stock at $0.10 per share.
On June 15, 2002, we completed our public offering by raising $113,800, and sold 1,138,000 shares of our common stock at an offering price of $0.10 per share. There was no underwriter.
From the effective date of the registration statement to the ending date of the reporting period, September 30, 2002, no underwriting discounts nor commissions, finders' fees and similar expenses (direct or indirect) were paid. The net proceeds of the offering were $113,800.
From the effective date of the registration statement to the ending date of the reporting period, September 30, 2002, no funds were used for the construction of plant, buildings or facilities, no funds were used for purchases of real estate or acquisition of other business or temporary investments other than bank accounts.
To date we have spent $10,000 on exploration expenses and $1,277 on accounting.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 13th day of May, 2003.
| ZEOLITE MINING CORPORATION (Registrant) |
| BY: | /s/ Alan Brandys |
| | Alan Brandys President, Principal Executive Officer, Treasurer, Principal Financial Officer and a member of the Board of Directors. |
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CERTIFICATION
I, Alan Brandys, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Zeolite Mining Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Dated this 13th day of May, 2003.
| /s/ Alan Brandys Alan Brandys Principal Executive Officer and Principal Financial Officer |
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CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Zeolite Mining Corporation (the "Company") on Form 10-QSB for the period ended March 31, 2003 as filed with the Securities and Exchange Commission on the date here of (the "report"), I, Alan Brandys, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated this 13th day of May, 2003.
| /s/ Alan Brandys Alan Brandys Chief Executive Officer and Chief Financial Officer |
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