UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
EXCHANGE ACT OF 1934 FOR THE YEAR ENDED OCTOBER 31, 2008 |
Commission file number 333-147945
DARLINGTON MINES LTD.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
1019 Drayton Street
North Vancouver, British Columbia
Canada V7L 2V7
(Address of principal executive offices, including zip code.)
(604) 639-7757
(telephone number, including area code)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ¨ No¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act:
Yes ¨ No¨
Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 past 90 days.
Yes ¨ No¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.¨
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” and “smaller reporting company” in Rule 12b-2 if the Exchange Act.
Large Accelerated Filer | ¨ | Accelerated Filer | ¨ |
Non-accelerated Filer | ¨ | Smaller Reporting Company | x |
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes x No¨
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and askedprice of such common equity, as of January 27, 2009 - $101,500
TABLE OF CONTENTS | ||
Page | ||
PART I | ||
Item 1. | Business. | 3 |
Item 1A. | Risk Factors. | 12 |
Item 1B. | Unresolved Staff Comments. | 14 |
Item 2. | Properties. | 14 |
Item 3. | Legal Proceedings. | 15 |
Item 4. | Submission of Matters to a Vote of Security Holders. | 15 |
PART II | ||
Item 5. | Market Price for the Registrant’s Common Equity, Related Stockholders Matters and | 15 |
Issuer Purchases of Equity Securities. | ||
Item 6. | Selected Financial Data. | 17 |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of | 17 |
Operation. | ||
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. | 19 |
Item 8. | Financial Statements and Supplementary Data. | 20 |
Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial | |
Disclosure. | 35 | |
Item 9A. | Evaluation of Disclosure Controls and Procedures. | 35 |
Item 9B. | Other Information. | 37 |
PART III | ||
Item 10. | Directors and Executive Officers, Promoters and Corporate Governance. | 37 |
Item 11. | Executive Compensation. | 40 |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related | 42 |
Stockholder Matters. | ||
Item 13. | Certain Relationships and Related Transactions, and Director Independence. | 44 |
Item 14. | Principal Accounting Fees and Services. | 44 |
PART IV | ||
Item 15. | Exhibits and Financial Statement Schedules. | 46 |
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PART I.
ITEM 1. | BUSINESS. |
General
We were incorporated in the State of Nevada on August 23, 2006. We are an exploration stage corporation. An exploration stage corporation is one engaged in the search of mineral deposits or reserves which are not in either the development or production stage. We intend to conduct exploration activities on one property. We maintain our statutory registered agent's office at The Corporation Trust Company of Nevada, 6100 Neil Road, Suite 500, Reno, Nevada 89511 and our business office is located at 1019 Drayton Street, North Vancouver, British Columbia, Canada V7L 2V7. Our telephone number is (604) 639-7757. This is our mailing address as well.
There is no assurance that a commercially viable mineral deposit exists on the property and further exploration will be required before a final evaluation as to the economic feasibility is determined.
We have no plans to change our business activities or to combine with another business, and are not aware of any events or circumstances that might cause our plans to change.
We have no revenues, have achieved losses since inception, have no operations, have been issued a going concern opinion and rely upon our current cash to fund operations.
Background
In June 2007, Michelle Masich, our president and a member of the board of directors acquired one mineral property containing one claim comprised on twelve contiguous cells located in British Columbia. British Columbia allows a mineral explorer to claim a portion of available Crown lands as her exclusive area for exploration by registering the claim area on the British Columbia Mineral Titles Online system. The Mineral Titles Online system is the Internet-based British Columbia system used to register, maintain and manage the claims. A cell is an area which appears electronically on the British Columbia Internet Minerals Titles Online Grid and was formerly called a claim. A claim is a grant from the Crown of the available land within the cells to the holder to remove and sell minerals. The online grid is the geographical basis for the cell. Formerly, the claim was established by sticking stakes in the ground to define the area and then recording the staking information. The staking system is now antiquated in British Columbia and has been replaced with the online grid. The property was registered by James McLeod a non affiliated third party. James McLeod is a self-employed consulting geologist.
In June 2007, Ms. Masich executed a declaration of trust acknowledging that she holds the property in trust for us and he will not deal with the property in any way, except to transfer the property to us. In the event that Ms. Masich transfers title to a third party, the declaration of trust will be used as evidence that she breached her fiduciary duty to us. Ms. Masich has not provided us with a signed or executed bill of sale in our favor. Ms. Masich will issue a bill of sale to a subsidiary corporation to be
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formed by us should mineralized material be discovered on the property. Mineralized material is a mineralized body, which has been delineated by appropriate spaced drilling or underground sampling to support sufficient tonnage and average grade of metals to justify removal.
Under British Columbia law, title to British Columbia mining claims can only be held by British Columbia residents. In the case of corporations, title must be held by a British Columbia corporation. In order to comply with the law we would have to incorporate a British Columbia wholly-owned subsidiary corporation and obtain audited financial statements. We believe those costs would be a waste of our money at this time.
In the event that we find mineralized material and the mineralized material can be economically extracted, we will form a wholly owned British Columbia subsidiary corporation and Ms. Masich will convey title to the property to the wholly owned subsidiary corporation. Should Ms. Masich transfer title to another person and that deed is recorded before we record our documents, that other person will have superior title and we will have none. If that event occurs, we will have to cease or suspend operations. However, Ms. Masich will be liable to us for monetary damages for breaching the terms of her oral agreement with us to transfer her title to a subsidiary corporation we create. To date we have not performed any work on the property. All Canadian lands and minerals which have not been granted to private persons are owned by either the federal or provincial governments in the name of Her Majesty Elizabeth II. Ungranted minerals are commonly known as Crown minerals. Ownership rights to Crown minerals are vested by the Canadian Constitution in the province where the minerals are located. In the case of the Company property, that is the province of British Columbia.
In the 19thcentury the practice of reserving the minerals from fee simple Crown grants was established. Legislation now ensures that minerals are reserved from Crown land dispositions. The result is that the Crown is the largest mineral owner in Canada, both as the fee simple owner of Crown lands and through mineral reservations in Crown grants. Most privately held mineral titles are acquired directly from the Crown. The property is one such acquisition. Accordingly, fee simple title to the property resides with the Crown.
The property is comprised of mining leases issued pursuant to the British Columbia Mineral Act. The lessee has exclusive rights to mine and recover all of the minerals contained within the surface boundaries of the lease continued vertically downward. The Crown does not have the right to reclaim provided a minimum fee of CDN$100 is paid timely. The Crown could reclaim the property in an eminent domain proceeding, but would have to compensate the lessee for the value of the claim if it exercised the right of eminent domain. It is highly unlikely that the Crown will exercise the power of eminent domain. In general, where eminent domain has been exercised it has been in connection with incorporating the property into a provincial park.
The property is unencumbered and there are no competitive conditions which affect the property. Further, there is no insurance covering the property and we believe that no insurance is necessary since the property is unimproved and contains no buildings or improvements.
To date we have not performed any work on the property. We are presently in the exploration stage and we cannot guarantee that a commercially viable mineral deposit, a reserve, exists in the property until further exploration is done and a comprehensive evaluation concludes economic and legal feasibility.
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There are no native land claims that affect title to the property. We have no plans to try to interest other companies in the property if mineralization is found. If mineralization is found, we will try to develop the property ourselves.
Claims
The following is a list of tenure numbers, claim, and expiration date of our claims:
Number of | Date of | |||
Tenure No. | Document Description | Units or Cells | Expiration | |
568024 | Gem | 12 | October 16, 2009 |
In order to maintain these claims we must pay a fee of CND$100 per year per cell.
Location and Access
The property is comprised of one claim containing twelve contiguous cells totaling 600 acres. The mineral claim area is located at latitude 51°12’ 7" North and longitude 121°6’ 42" West. The property is motor vehicle accessible from the village of 70 Mile House, British Columbia, by traveling seventeen miles east southeast along the Upper Loon Lake gravel ranch road to the mineral claim.
The property lies in the interior plateau of the province and within the Cariboo Parkland biotic or life zone of British Columbia. The area experiences about 20" to 30" of precipitation annually of which about 25% may occur as a snow equivalent. The summers can experience hot weather while the winters are generally more severe than the dry belt to the east and can last from November through March.
Much of this area of the interior plateau, with its rolling hills, hosts clusters of lodgepole pine with similar stands of aspen. Douglas fir and Engelmann spruce round out the other conifer cover, but in lesser abundance. The general area supports an active logging industry. Mining holds an historical and contemporary place in the development and economic well being of the area.
The Town of 100 Mile House and the City of Kamloops, British Columbia, lie 46 miles and 86 miles by road northwest and southeast of the property, respectively. Each offer much of the necessary infrastructure required to base and carry-out an exploration program such as accommodations, communications, equipment and supplies. Kamloops, British Columbia is highway accessible from Vancouver, B.C. in a few hours by traveling over the Coquihalla highway. Kamloops has a good airport and the overnight Greyhound bus service is a popular way to send samples and to receive additional equipment and supplies.
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Physiography
The property area ranges in elevation from 3,700 feet to 3,800 feet above sea level. The physiographic setting of the property can be described as rounded, open range pockets among the clusters of conifer (evergreens) and aspens in a plateau setting. The area has been surficially altered both by the erosional and the depositional (drift cover) effects of glaciation. Thickness of drift cover in the valleys may vary considerably. Fresh water lakes and small streams are abundant in the area.
Map 1
![](https://capedge.com/proxy/10-K/0001002014-09-000064/dml10k103108x6x1.jpg)
![](https://capedge.com/proxy/10-K/0001002014-09-000064/gml10k103108x7x1.jpg)
History
The property shows signs of previous exploration activities. No known mineralized material exists on the property.
Geology
Regional Geology
The area is seen to be underlain by rock units ranging in age from the Pennsylvanian to the Miocene and being mainly of volcanic origin, although some of the older units are of intrusive and sedimentary origin. The older units are only found along the deep incisions found along some of the deeper creek valleys, i.e. the Deadman River and Loon Creek. The younger Eocene - Miocene aged
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volcanic flow rock units are observed in the area and alkali basalt flows of Miocene age occur as cap rocks in the general area.
Local Geology
Local geology consists of extensive of the basalt flows even in this the southern part of the pervasive and widespread occurrences to the north, an area covering thousands of square miles. The olivine basalt occurrences along the Bonaparte River, Loon Creek and the Deadman River valleys have an estimated thickness of ~ 1,600 feet. They are thought to lie upon faulted bedrock of Pennsylvanian age and younger.
Property Geology
The geology of the property area may be described as being overlain by generally thick Tertiary basalt flows of Eocene - Miocene age. The olivine basalts of the Chasm Formation are the youngest rocks found on the property and throughout the local area. These flows have covered the next youngest units of the Deadman River Formation that hosts the ash and diatomaceous earth occurrences, as well as other water borne younger sediments, such as siltstone, shale, sandstone and conglomerate.
Mineralization
There is the appearance of general area pyrite-pyrrhotite-chalcopyrite mineralization as mesothermal replacements or vein-type of occurrences that lie peripheral to the porphyry-type occurrence in the volcanic tuffs (as volcanic skarn). These occurrences appear in the massive volcanic units and in medium grain-sized intrusive rock within steeply dipping to vertical fissure/fault zones with some dissemination in the adjacent wallrock. Alteration accompanying the pyritization is often observed as epidote-chlorite-calcite or as a propylitic assemblage.
Supplies
Competition and unforeseen limited sources of supplies in the industry could result in occasional spot shortages of supplies, such as dynamite, and certain equipment such as bulldozers and excavators that we might need to conduct exploration. We have not attempted to locate or negotiate with any suppliers of products, equipment or materials. We will attempt to locate products, equipment and materials in the spring of 2009. If we cannot find the products and equipment we need, we will have to suspend our exploration plans until we do find the products and equipment we need.
Our Proposed Exploration Program
Our exploration target is to find an ore body containing gold. Our success depends upon finding mineralized material. This includes a determination by our consultant if the property contains reserves. We have not selected a consultant as of the date of this report, but intend to do so this spring. Mineralized material is a mineralized body, which has been delineated by appropriate spaced drilling or underground sampling to support sufficient tonnage and average grade of metals to justify removal. If we do not find mineralized material or we cannot remove mineralized material, because we do not
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have the money to do it, we will cease operations and you will lose your investment.
In addition, we may not have enough money to complete our exploration of the property. If it turns out that we have not raised enough money to complete our exploration program, we will try to raise additional funds from a second public offering, a private placement or loans. At the present time, we have not made any plans to raise additional money and there is no assurance that we would be able to raise additional money in the future. If we need additional money and cannot raise it, we will have to suspend or cease operations.
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.
The property is undeveloped raw land. Exploration has not been initiated. That is because we have spent all of our time completing our public offering. We intend to initiate exploration in the Spring of 2009. To our knowledge, the property has never been mined. Before minerals retrieval can begin, we must explore for and find mineralized material. After that has occurred we have to determine if it is economically feasible to remove the mineralized material. Economically feasible means that the costs associated with the removal of the mineralized material will not exceed the price at which we can sell the mineralized material. We cannot predict what that will be until we find mineralized material.
We do not know if we will find mineralized material. We believe that activities occurring on adjoining properties are not material to our activities. The reason is that whatever is located under adjoining properties may or may not be located under our property.
We do not claim to have any minerals or reserves whatsoever at this time on any of the property.
We intend to implement an exploration program of surface sampling followed by an analysis of the samples. The samples will be tested to determine if mineralized material may be located on the property. Based upon the tests of the samples, we will determine if we will terminate operations or proceed with additional exploration of the property. We intend to take our samples to analytical chemists, geochemists and registered assayers located in Vancouver, British Columbia. We have not selected any of the foregoing as of the date of this report. We will only make the selections after we have obtained our samples.
We estimate the cost of surface sampling will be $10,000 and the cost of analyzing the samples to be $2,000. We will begin exploration activity this Spring, weather permitting.
The breakdowns were made in consultation with Mr. James McLeod.
We do not intend to interest other companies in the property if we find mineralized material. We intend to try to develop the reserves ourselves through the use of a consultant. We have no plans to interest other companies in the property if we do not find mineralized material.
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If we are unable to complete exploration because we do not have enough money, we will cease operations until we raise more money. If we cannot or do not raise more money, we will cease operations. If we cease operations, we do not know what we will do and we do not have any plans to do anything else.
We cannot provide you with a more detailed discussion of how our exploration program will work and what we expect will be our likelihood of success. That is because we have a piece of raw land and we intend to look for mineralized material. We may or may not find any mineralized material. We hope we do, but it is impossible to predict the likelihood of such an event.
We do not have any plan to make our company to revenue generation. That is because we have not found mineralized material yet and it is impossible to project revenue generation from nothing.
Competitive Factors
The gold mining industry is fragmented, that is there are many, many gold prospectors and producers, small and large. We do not compete with anyone. That is because there is no competition for the exploration or removal of minerals from the property. We will either find mineralized materials on the property or not. If we do not, we will cease or suspend operations. We are one of the smallest exploration companies in existence. We are an infinitely small participant in the gold mining market. Readily available gold markets exist in Canada and around the world for the sale of gold. Therefore, we will be able to sell any gold that we are able to recover.
Regulations
Our property is registered on British Columbia Mineral Titles Online system. We are also subject to the British Columbia Mineral Exploration Code which tells us how and where we can explore for minerals.
This act sets forth rules for
* | locating claims | |
* | posting claims | |
* | working claims | |
* | reporting work performed |
We can explore for minerals on the property and are in compliance with the Code rules and regulations. The Code rules and regulations will not adversely affect our operations.
Environmental Law
We are also subject to the Health, Safety and Reclamation Code for Mines in British Columbia (the “Code”). The Code deals with environmental matters relating to the exploration and development of mining properties. Its goals are to protect the environment through a series of regulations affecting:
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1. | Health and Safety | |
2. | Archaeological Sites | |
3. | Exploration Access |
We are responsible to provide a safe working environment, not disrupt archaeological sites, and conduct our activities to prevent unnecessary damage to the property.
We will secure all necessary permits for exploration and, if development is warranted on the property, will file final plans of operation before we start any mining operations. We anticipate no discharge of water into active stream, creek, river, lake or any other body of water regulated by environmental law or regulation. No endangered species will be disturbed. Restoration of the disturbed land will be completed according to law. All holes, pits and shafts will be sealed upon abandonment of the property. It is difficult to estimate the cost of compliance with the environmental law since the full nature and extent of our proposed activities cannot be determined until we start our operations and know what that will involve from an environmental standpoint.
We are in compliance with the Code and will continue to comply with the Code in the future. We believe that compliance with the Code will not adversely affect our business operations in the future.
Exploration stage companies have no need to discuss environmental matters, except as they relate to exploration activities. The only “cost and effect” of compliance with environmental regulations in British Columbia is returning the surface to its previous condition upon abandonment of the property. We cannot speculate on those costs in light of our ongoing plans for exploration. When we are ready to drill, we will notify the B.C. Inspector of Mines. He will require a bond to be put in place to assure that the property will be restored to its original condition. We have estimated the cost of restoring the property to be between $500 to $1,000.
Employees
We intend to use the services of subcontractors for manual labor exploration work on our properties.
Employees and Employment Agreements
At present, we have no employees, other than our officers and directors. Our officers and directors are part-time employees and will devote about 10% of their time to our operations. Our officers and directors do not have an employment agreement with us. We presently do not have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt plans in the future. There are presently no personal benefits available to our officers and directors. Our officers and directors will handle our administrative duties. Because our officers and directors are inexperienced with exploration, they will hire qualified persons to perform the surveying, exploration, and excavating of our property. As of today, we have not looked for or talked to any
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geologists or engineers who will perform work for us in the future. We do not intend to do so until we complete our public offering.
ITEM 1A. | RISK FACTORS. |
Please consider the following risk factors before deciding to invest in our common stock. We discuss all material risks in the risk factors.
1.Our auditors have issued a going concern opinion.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months.
2.Our plan of operation is limited to finding an ore body. As such we have no plans for revenue generation. Accordingly, you should not expect any revenues from operations.
Our plan of operation and the funds we raise from our public offering will be used for exploration of the property to determine if there is an ore body beneath the surface. Exploration does not contemplate removal of the ore. We have no plans or funds for ore removal. Accordingly, we will not generate any revenues as a result of your investment.
3.Because the probability of an individual prospect ever having reserves is extremely remote any funds spent on exploration will probably be lost.
The probability of an individual prospect ever having reserves is extremely remote. In all probability the property does not contain any reserves. As such, any funds spent on exploration will probably be lost which will result in a loss of your investment.
4.We lack an operating history and have losses which we expect to continue into the future. As a result, we may have to suspend or cease operations.
We were incorporated on August 23, 2006, and we have not started our proposed business operations or realized any revenues. We have no operating history upon which an evaluation of our future success or failure can be made. Our net loss since inception is $120,939. To achieve and maintain profitability and positive cash flow we are dependent upon:
* | our ability to locate a profitable mineral property | |
* | our ability to generate revenues | |
* | our ability to reduce exploration costs. |
Based upon current plans, we expect to incur operating losses in future periods. This will happen because there are expenses associated with the research and exploration of our mineral properties. As a result, we may not generate revenues in the future. Failure to generate revenues will cause us to suspend or cease operations.
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5. Because our management does not have technical training or experience in exploring for, starting, and operating an exploration program, we will have to hire qualified personnel. If we cannot locate qualified personnel, we may have to suspend or cease operations which will result in the loss of your investment.
Because our management is inexperienced with exploring for, starting, and operating an exploration program, we will have to hire qualified persons to perform surveying, exploration, and excavation of the property. Our management has no direct training or experience in these areas and as a result may not be fully aware of many of the specific requirements related to working within the industry. Management decisions and choices may not take into account standard engineering or managerial approaches that mineral exploration companies commonly use. Consequently our operations, earnings and ultimate financial success could suffer irreparable harm due to management’s lack of experience in this industry. As a result we may have to suspend or cease operations which will result in the loss of your investment.
6.Because title to the property is held in the name of one of our officers, if she transfers the property to someone other than us, we will cease operations.
Record title to the property upon which we intend to conduct exploration activities is not held in our name. Record title to the property is recorded in the name of Michelle Masich. If she transfers the property to a third person, the third person will obtain good title and we will have nothing. If that happens we will be harmed in that we will not own any property and we will have to cease operations. Under British Columbia law, title to British Columbia mining claims can only be held by British Columbia residents. In the case of corporations, title must be held by a British Columbia corporation. In order for us to own record title to the property, we would have to incorporate a British Columbia wholly owned subsidiary corporation and obtain audited financial statements. We believe those costs would be a waste of our money at this time because the legal costs of incorporating a subsidiary corporation, the accounting costs of audited financial statements for the subsidiary corporation, together with the legal and accounting costs of expanding this registration statement would be several thousands of dollars. Accordingly, we have elected not to create the subsidiary at this time, but will do so if mineralized material is discovered on the property.
7.Because we are small and do not have much capital, we may have to limit our exploration activity which may result in a loss of your investment.
Because we are small and do not have much capital, we must limit our exploration activity. As such we may not be able to complete an exploration program that is as thorough as we would like. In that event, an existing ore body may go undiscovered. Without an ore body, we cannot generate revenues and you will lose your investment.
8.Our geologist has been an officer, director or geologist for over twenty companies that most have not moved forward with exploration activities.
James McLeod, the geologist we hired to register our property, has been an officer, director or geologist for over twenty companies since 1999. Most of these companies have not moved forward
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with exploration activities, and five have changed businesses and completely abandoned exploration activities.
9.Weather interruptions in the province of British Columbia may affect and delay our proposed exploration operations and as a result, there may be delays in our operations.
Our proposed exploration work can only be performed approximately five to six months out the year. This is because rain and snow cause the roads leading to our claim to be impassible during to seven months of the year. When roads are impassible, our operations will be delayed.
10.Because Ms. Masich and Mr. Radbourne have other outside business activities, they will only be devoting 10% of their time, or four hours per week to our operations, our operations may be sporadic which may result in periodic interruptions or suspensions of exploration.
Because Ms. Masich and Mr. Radbourne, our officers and directors, have other outside business activities, they will only be devoting 10% of their time, or four hours per week, to our operations. As a result, our operations may be sporadic and occur at times which are convenient to Ms Masich and Mr. Radbourne. As a result, exploration of the property may be periodically interrupted suspended.
11.If our officers and directors resign or die without having found replacements our operations will be suspended or cease. If that should occur, you could lose your investment.
We have two officers and directors. We are entirely dependent upon them to conduct our operations. If they should resign or die there will be no one to run us. Further, we do not have key person insurance. If that should occur, until we find another person to run us, our operations will be suspended or cease entirely. In that event it is possible you could lose your entire investment.
12.Because there is no public trading market for our common stock, you may not be able to resell your stock and as a result your investment is illiquid.
There is currently no public trading market for our common stock. Therefore there is no central place, such as stock exchange or electronic trading system, to resell your shares. If you do want to resell your shares, you will have to locate a buyer and negotiate your own sale, of which there is no assurance. As a result, your investment is illiquid.
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
None.
ITEM 2. | PROPERTIES. |
We currently do not own any property. We have the right to conduct exploration activities on one mineral claim. The following is a list of tenure numbers, claim, and expiration date of our claims:
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Number of | Date of | |||
Tenure No. | Document Description | Units or Cells | Expiration | |
568024 | Gem | 12 | October 16, 2009 |
In order to maintain these claims we must pay a fee of CND$100 per year per cell.
The property is comprised of one claim containing twelve contiguous cells totaling 600 acres. The mineral claim area may is located at latitude 51°12’ 7" North and longitude 121°6’ 42" West. The property is motor vehicle accessible from the village of 70 Mile House, British Columbia, by traveling seventeen miles east southeast along the Upper Loon Lake gravel ranch road to the mineral claim. The property lies in the interior plateau of the province and within the Cariboo Parkland biotic or life zone of British Columbia.
ITEM 3. | LEGAL PROCEEDINGS. |
We are not presently a party to any litigation.
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
During the fourth quarter, there were no matters submitted to a vote of our shareholders.
PART II
ITEM 5. | MARKET PRICE FOR THE REGISTRANT’S COMMON EQUITY, RELATED |
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY | |
SECURITIES. |
Currently, our shares of commons stock are not traded anywhere. We intend to seek a listing for our shares of common stock on the Bulletin Board operated by the Federal Industry Regulatory Authority. There is no assurance our shares of common stock will ever be listed for trading anywhere.
Holders
There are 21 holders of record for our common stock.
Status of our public offering
On December 21, 2007, the Securities and Exchange Commission declared our Form SB-2 Registration Statement effective (File number 333-147945) permitting us to offer up to 2,000,000 shares of common stock at $0.10 per share. There is no underwriter involved in our public offering. On October 1, 2008, we completed our public offering by selling 1,010,000 shares of common stock to 18 persons and raised $101,000. Since that time we have spent the proceeds from the public offering as follows:
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Accounts Payable | $ | 25,605 |
Related party loans, notes and expenses | $ | 33,308 |
Geologist | $ | 4,045 |
Professional fees | $ | 27,550 |
Office expenses | $ | 1,855 |
Dividends
We have not declared any cash dividends, nor do we intend to do so. We are not subject to any legal restrictions respecting the payment of dividends, except that they may not be paid to render us insolvent. Dividend policy will be based on our cash resources and needs and it is anticipated that all available cash will be needed for our operations in the foreseeable future.
Section 15(g) of the Securities Exchange Act of 1934
Our shares are covered by section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser's written agreement to the transaction prior to the sale. Consequently, the foregoing may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as “bid” and “offer” quotes, a dealers “spread” and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the FINRA’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated p ersons.
Securities authorized for issuance under equity compensation plans
We do not have any equity compensation plans and accordingly we have no securities authorized for issuance thereunder.
Unregistered Sale of Equity Securities Not Previously Reported
On October 2, 2008, we issued 5,000 restricted shares of common stock to one person in consideration of $500. The shares were sold pursuant to the exemption from registration contained in Section 4(2) of the Securities Act of 1933 in that the sale of the shares was to a sophisticated investor and the investor was furnished with the same information that could be found in a Form S-1 registration statement. The foregoing transaction was not reported in Item 3.02 of Form 8-K.
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ITEM 6. | SELECTED FINANCIAL DATA. |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL |
CONDITION AND RESULTS OF OPERATIONS. |
This section of this report 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 report. 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.
Plan of Operation
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 means that there is substantial 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. There is no assurance we will ever reach this point. Accordingly, we must raise cash from sources other than the sale of minerals found on the property. That cash must be raised from other sources. Our only other source for cash at this time is investments by others. We have sufficient funds to maintain our operations for the next 12 months.
We will be conducting research in the form of exploration on one property. Our exploration program is explained in as much detail as possible in Item 1 of this report. We are not going to buy or sell any plant or significant equipment during the next twelve months.
Our success depends upon finding mineralized material. This includes a determination by our consultant if the property contains reserves. We have not selected a consultant as of the date of this report and will not do so until the Spring of 2009. Mineralized material is a mineralized body, which has been delineated by appropriate spaced drilling or underground sampling to support sufficient tonnage and average grade of metals to justify removal. If we don’t find mineralized material or we cannot remove mineralized material, we will cease operations and you will lose your investment.
We must conduct exploration to determine what amount of minerals, if any, exist on property and if any minerals which are found can be economically extracted and profitably processed.
We intend to implement an exploration program which consists of surface sampling. The samples will be tested to determine if mineralized material may be located on the property. Based upon the tests of the samples, we will determine if we will terminate operations or proceed with additional
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exploration of the property. We intend to take our samples to analytical chemists, geochemists and registered assayers located in British Columbia. We have not selected any of the foregoing as of the date of this report.
We estimate the cost of collecting samples and analyzing the same will not be more than $12,000.
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 through the use of consultants. We have no plans to interest other companies in the property if we find mineralized material. To pay the consultant and develop the reserves, we will have to raise additional funds through a second public offering, a private placement or through loans. As of the date of this report, we have no plans to raise additional funds.
We do not intend to hire additional employees at this time. All of the work on the property will be conducted by unaffiliated independent contractors that we will hire. The independent contractors will be responsible for surveying, geology, engineering, exploration, and excavation. The geologists will evaluate the information derived from the exploration and excavation and the engineers will advise us on the economic feasibility of removing the mineralized material.
Results of Operations
Since our inception and through October 31, 2008, we were incorporated and we completed our public offering. We have not conducted any other operations as of the date of this report.
Milestones
The following are our milestones: |
1. | 0-180 days from the date of this report. - Retain our consultant and obtain surface samples. Cost - $10,000. | |
2. | 180-365 days from the date of this report. - Have an independent third party analyze the samples. Determine if mineralized material may be below the ground. We estimate that it will cost $2,000 to analyze the samples and will take 30 days. | |
All funds for the foregoing activities will be obtained from our public offering. |
Limited Operating History; Need for Additional Capital
There is no historical financial information about us 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, 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 research and exploration of the property before we start production of any minerals we may find. We believe that the funds raised from our public offering will allow us to operate for one year.
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 our existing shareholders.
Liquidity and Capital Resources
To meet our need for cash we raised money from our public offering. We cannot guarantee that we raised enough money through our public offering to stay in business. If we find mineralized material and it is economically feasible to remove the mineralized material, we will attempt to raise additional money through a subsequent private placement, public offering or through loans.
At the present time, we have not made any arrangements to raise additional cash. If we need additional cash and cannot raise it we will either have to suspend operations until we do raise the cash, or cease operations entirely.
We acquired the right to conduct exploration activity one property which consists of one claim containing twelve contiguous cells. The property is registered in the name of our president, Michelle Masich. We will begin our exploration plan in the spring of 2009. As of the date of this report, we have not begun exploration activities and therefore we have yet to generate any revenues.
In April 2007, we issued 5,000,000 shares of common stock to our officers and directors pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1993. The purchase price of the shares was $50. This was accounted for as an acquisition of shares.
On October 1, 2008, we completed our public offering by selling 1,010,000 shares of common stock to 18 persons and raised $101,000.
On October 2, 2008, we issued 5,000 restricted shares of common stock to one person in consideration of $500.
As of October 31, 2008, our total assets were $14,366 consisting entirely of cash and our total liabilities were $1,255.
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET |
RISK. |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
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ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. | |
DARLINGTON MINES LTD. | ||
TABLE OF CONTENTS | ||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | F-1 | |
FINANCIAL STATEMENTS | ||
Balance Sheet | F-2 | |
Statements of Operations | F-3 | |
Statements of Cash Flows | F-4 | |
Statement of Stockholders’ Equity (Deficit) | F-5 | |
NOTES TO FINANCIAL STATEMENTS | F-6 |
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Darlington Mines, Ltd. (A Developmental Stage Company)
We have audited the accompanying balance sheet of Darlington Mines, Ltd. of October 31, 2008 and 2007 and the related statements of operations, shareholders’ deficit, and cash flows for the years ending October 31, 2008 and 2007. 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 audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatements. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. 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 us ed and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide 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 Darlington Mines, Ltd. as of October 31, 2008 and 2007 and the results of its operations and cash flows for the years ending October 31, 2008 and 2007 in conformity with U.S. generally accepted accounting principles
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and is dependent upon obtaining debt financing for funds to meet its cash requirements. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
WEAVER & MARTIN, LLC
Weaver & Martin, LLC
Kansas City Missouri
January 27, 2009
F-1
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Darlington Mines Ltd. | |||
(A Development Stage Company) | |||
Balance Sheets | |||
(Expressed in U.S. dollars) | |||
October 31, | October 31, | ||
2008 | 2007 | ||
$ | $ | ||
ASSETS | |||
Current Assets | |||
Cash | 10,321 | 3,518 | |
Prepaid expenses | 4,045 | 17,000 | |
Total Assets | 14,366 | 20,518 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||
Current Liabilities | |||
Accounts payable | 1,255 | - | |
Due to related party (Note 3(a)) | - | 1,185 | |
Note payable (Note 3(d)) | - | 25,000 | |
Total Liabilities | 1,255 | 26,185 | |
Contingencies (Note 1) | |||
Stockholders’ Equity (Deficit) | |||
Common Stock, 100,000,000 shares authorized, $0.00001 par value, 6,015,000 | |||
and 5,000,000 issued and outstanding, respectively | 60 | 50 | |
Additional Paid In Capital | 101,490 | - | |
Donated Capital (Note 3(b)) | 32,500 | 17,500 | |
Deficit Accumulated During the Development Stage | (120,939) | (23,217) | |
Total Stockholders’ Equity (Deficit) | 13,111 | (5,667) | |
Total Liabilities and Stockholders’ Equity (Deficit) | 14,366 | 20,518 | |
(The accompanying notes are an integral part of these financial statements.)
F-2
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Darlington Mines Ltd. | |||||
(A Development Stage Company) | |||||
Statements of Operations | |||||
(Expressed in U.S. dollars) | |||||
Accumulated from | For the | For the | |||
August 23, 2006 | Year | Year | |||
(Date of Inception) | Ended | Ended | |||
to October 31, | October 31, | October 31, | |||
2008 | 2008 | 2007 | |||
$ | $ | $ | |||
Revenue | - | - | - | ||
Expenses | |||||
Donated rent (Note 3(b)) | 6,500 | 3,000 | 3,000 | ||
Donated services (Note 3(b)) | 26,000 | 12,000 | 12,000 | ||
General and administrative | 4,785 | 3,568 | 524 | ||
Interest expenses | 3,616 | 3,616 | - | ||
Impairment loss on mineral properties | 2,000 | - | 2,000 | ||
Professional fees | 78,038 | 75,538 | 2,500 | ||
Total Expenses | 120,939 | 97,722 | 20,024 | ||
Net Loss | (120,939 | ) | (97,722) | (20,024) | |
Net Loss Per Share – Basic and Diluted | (0.02) | (0.00) | |||
Weighted Average Shares Outstanding | 5,086,000 | 5,000,000 |
(The accompanying notes are an integral part of these financial statements.)
F-3
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Darlington Mines Ltd. | ||||||
(A Development Stage Company) | ||||||
Statements of Cash Flows | ||||||
(Expressed in U.S. dollars) | ||||||
Accumulated from | For the | For the | ||||
August 23, 2006 | Year | Year | ||||
(Date of Inception) | Ended | Ended | ||||
to October 31, | October 31, | October 31, | ||||
2008 | 2008 | 2007 | ||||
$ | $ | $ | ||||
Operating Activities | ||||||
Net loss | (120,939) | (97,722) | (20,024) | |||
Adjustments to reconcile net loss to net cash used in | ||||||
operating activities: | ||||||
Donated services and rent | 32,500 | 15,000 | 15,000 | |||
Impairment loss on mineral property costs | 2,000 | - | 2,000 | |||
Changes in operating assets and liabilities: | ||||||
Prepaid expenses | (4,045) | 12,955 | (17,000) | |||
Accounts payable | 1,255 | 1,255 | - | |||
Due to related party | (282) | (1,418) | 443 | |||
Net Cash Used In Operating Activities | (89,511) | (69,930) | (19,581) | |||
Investing Activity | ||||||
Acquisition of mineral properties | (2,000) | - | (2,000) | |||
Net Cash Provided Used In Investing Activities | (2,000) | - | (2,000) | |||
Financing Activities | ||||||
Advances from related party | 282 | 233 | 49 | |||
Proceeds from note payable | 25,000 | - | 25,000 | |||
Repayment of note payable | (25,000) | (25,000) | - | |||
Proceeds from issuance of common stock | 101,550 | 101,500 | 50 | |||
Net Cash Provided By Financing Activities | 101,832 | 76,733 | 25,099 | |||
Increase in Cash | 10,321 | 6,803 | 3,518 | |||
Cash - Beginning of Period | - | 3,518 | - | |||
Cash - End of Period | 10,321 | 10,321 | 3,518 | |||
Supplemental Disclosures | ||||||
Interest Paid | 3,616 | 3,616 | - | |||
Income Taxes Paid | - | - | - |
(The accompanying notes are an integral part of these financial statements.)
F-4
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Darlington Mines Ltd. | |||||||||
(A Development Stage Company) | |||||||||
Statement of Stockholders’ Equity (Deficit) | |||||||||
For the Period from August 23, 2006 (Date of Inception) to October 31, 2008 | |||||||||
(Expressed in US dollars) | |||||||||
Deficit | |||||||||
Accumulated | |||||||||
Additional | During the | ||||||||
Paid-in | Donated | Exploration | |||||||
Shares | Amount | Capital | Capital | Stage | Total | ||||
# | $ | $ | $ | $ | $ | ||||
Balance – August 23, 2006 (Date of | |||||||||
Inception) | 1 | - | - | - | - | - | |||
Common stock subscribed for cash at | |||||||||
$0.00001 per share | 5,000,000 | 50 | (50) | - | - | - | |||
Donated rent and services | - | - | - | 2,500 | - | 2,500 | |||
Net loss for the period | - | - | - | - | (3,193) | (3,193) | |||
Balance – October 31, 2006 | 5,000,000 | 50 | (50) | 2,500 | (3,193) | (693) | |||
Stock subscription received | - | - | 50 | - | - | 50 | |||
Donated rent and services | - | - | - | 15,000 | - | 15,000 | |||
Net loss for the year | - | - | - | - | (20,024) | (20,024) | |||
Balance – October 31, 2007 | 5,000,000 | 50 | - | 17,500 | (23,217) | (5,667) | |||
Common stock issued for cash at $0.10 | |||||||||
per share | 1,015,000 | 10 | 101,490 | - | - | 101,500 | |||
Donated rent and services | - | - | - | 15,000 | - | 15,000 | |||
Net loss for the period | - | - | - | - | (97,722) | (97,722) | |||
Balance – October 31, 2008 | 6,015,000 | 60 | 101,490 | 32,500 | (120,939) | 13,111 |
(The accompanying notes are an integral part of these financial statements.)
F-5
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1. | Nature of Operations and Continuance of Business | ||
The Company was incorporated in the State of Nevada on August 23, 2006. The Company is a development stage company, as defined by Statement of Financial Accounting Standard (“SFAS”) No.7 “Accounting and Reporting by Development Stage Enterprises”. The Company’s principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable. | |||
These financial statementshave been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, confirmation of the Company’s interests in the underlying properties, and the attainment of profitable operations. As of October 31, 2008, the Company had working capital of $13,111 and has accumulated losses of $120,939 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might benecessary should the Company be unable to continue as a going concern. | |||
OnDecember 7, 2007, the Company filed an SB-2 Registration Statement with the United States Securities and Exchange Commission that was declared effective on December 21, 2007, to register up to 2,000,000 shares of common stock in a direct public offering at $0.10 per share for maximum proceeds of $200,000 to the Company, before issue costs. On October 1, 2008 the Company issued 1,015,000 commonshares at $0.10 per share for total proceeds of $101,500 pursuant to subscriptions received during the year. | |||
2. | Summary of Significant Accounting Policies | ||
a) | Basis of Presentation | ||
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is October 31. |
F-6
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b) | Use of Estimates |
The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to donated services and expenses, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely fr om the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. | |
c) | Basic and Diluted Net Income (Loss) Per Share |
The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. | |
d) | Cash and Cash Equivalents |
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. | |
e) | Comprehensive Loss |
SFAS No. 130, “Reporting Comprehensive Income,” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements.As at October 31, 2008 and 2007, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements. |
F-7
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f) | Mineral Property Costs |
The Company is primarily engaged in the acquisition, exploration and development of mineral properties. | |
Mineral property acquisition costs are capitalized in accordance with EITF 04-2 “Whether Mineral Rights Are Tangible or Intangible Assets” when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met. In the event that a mineral property is acquired through the issuance of the Company’s shares, the mineral property will be recorded at the fair value of the respective property or the fair value of common shares, whi chever is more readily determinable. Mineral property exploration costs are expensed as incurred. | |
When mineral properties are acquired under option agreements with future acquisition payments to be made at the sole discretion of the Company, those future payments, whether in cash or shares, are recorded only when the Company has made or is obliged to make the payment or issue the shares. Because option payments do not meet the definition of tangible property under EITF 04-2, all option payments are expensed as incurred. | |
When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and pre feasibility, the costs incurred to develop such property are capitalized. | |
Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred. | |
As of the date of these financial statements, the Company has incurred only acquisition and exploration costs which have been expensed. To date the Company has not established any proven or probable reserves on its mineral properties. |
F-8
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g) | Long-lived Assets |
In accordance with SFAS No. 144,“Accounting for the Impairment or Disposal of Long- Lived Assets”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the ass et will more likely than not be sold or disposed significantly before the end of its estimated useful life. | |
Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. | |
h) | Income Taxes |
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted SFAS No. 109 “Accounting for Income Taxes” as of its inception. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. | |
i) | Financial Instruments |
The fair values of financial instruments, which include cash, note payable and due to related party were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. Foreign currency transactions are primarily undertaken in Canadian dollars. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk. |
F-9
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j) | Foreign Currency Translation |
The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 “Foreign Currency Translation”, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations. | |
k) | Recently Issued Accounting Pronouncements |
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts – An interpretation of FASB Statement No. 60”. SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. It also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities, and requires expanded disclosures about financial guarantee insurance contracts. It is effective for financial statements issued for fiscal years beginning after December 15, 2008, ex cept for some disclosures about the insurance enterprise’s risk-management activities. SFAS 163 requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period beginning after issuance. Except for those disclosures, earlier application is not permitted. The adoption of this statement is not expected to have a material effect on the Company’s financial statements. | |
l) | In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. It is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The adoption of this statement is not expected to have a material effect on the Company’s financial statements. |
F-10
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2. Summary of Significant Accounting Policies (continued)
Recently Issued Accounting Pronouncements (continued)
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment to FASB Statement No. 133”. SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial p osition, financial performance, and cash flows. It is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.
In December 2007, the FASB issued SFAS No. 141R, “Business Combinations”. This statement replaces SFAS 141 and defines the acquirer in a business combination as the entity that obtains control of one or more businesses in a business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fairvalues as of that date. SFAS 141R also requires the acquirer to recognize contingent consideration at the acquisition date, measured at its fair value at that date. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements Liabilities –an Amendment of ARB No. 51”. This statement amends ARB 51 to establish accounting and reporting standards for the Noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.
F-11
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2. Summary of Significant Accounting Policies (continued)
Recently Issued Accounting Pronouncements (continued)
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.
SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities” applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the begi nning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157, “Fair Value Measurements”.The adoption of this statement is not expected to have a material effect on the Company's financial statements.
In June 2006, the FASB issued FASB Interpretation No. 48,“Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statements No. 109”(“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes by prescribing a two-step method of first evaluating whether a tax position has met a more likely than not recognition threshold and second, measuring that tax position to determine the amount of benefit to be recognized in the financial statements. FIN 48 provides guidance on the presentation of such positions within a classified statement of financial position as well as on derecognition, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The adoption of this statement did not have a material effect on the Company's future reported financial position or results of operations.
F-12
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3. | Related Party Transactions | |
a) | As at October 31, 2008, the Company is indebted to the President of the Company for $nil (October 31, 2007 – $1,185), of which $nil (October 31, 2007 - $49) representing advances provided to the Company, $nil (October 31, 2007 - $883) representing expenditures paid on behalf of the Company and $nil (October 31, 2007 - $253) representing interest on a promissory note issued to the President. The advances provided to the Company and expenditures paid on behalf of the Company by the President were unsecured, non-interest bearing, and were due on demand. During the year ended October 31, 2008 the President of the Company loaned $1,000 and paid expenses on behalf of the Company totalling $3,979 to increase the indebtedness owed to $6,164. This amount was repaid on September 26, 2008. | |
b) | The Company recognizes donated rent at $250 per month, donated services provided by the Secretary of the Company at $500 per month and donated services provided by the President of the Company at $500 per month. During the year ended October 31, 2008, the Company recognized $3,000 (2007 – $3,000) in donated rent and $12,000 (2007 – $12,000) in donated services. | |
c) | On April 30, 2007, the Company issued an aggregate of 5,000,000 shares of common stock at a price of $0.00001 per share to the President and Secretary of the Company for proceeds of $50. | |
d) | During the year ended October 31, 2007, the Company received $25,000 from the President of the Company and issued a promissory note bearing interest at 10% per annum, unsecured and due on demand. Interest of $2,475 accrued during the year. On September 24, 2008 this note was repaid including interest. | |
4. | Mineral Properties | |
The Company acquired a gem mineral claim located in the South Cariboo Region, British Columbia, Canada, in consideration for $2,000. The claim is registered in the name of the President of the Company, who has executed a trust agreement whereby the President agreed to hold the claim in trust on behalf of the Company. The cost of the mineral property was initially capitalized. As at October 31, 2007, the Company recognized an impairment loss of $2,000, as it has not yet been determined whether there are proven or probable reserves on the property. | ||
F-13
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5. | Common Stock | |
a) | On April 30, 2007, the Company issued an aggregate of 5,000,000 shares of common stock at a price of $0.00001 per share to the President and Secretary of the Company for proceeds of $50. | |
b) | During the year ended October 31, 2008, the Company received stock subscriptions for 1,015,000 shares at $0.10 per share and issued 1,015,000 shares pursuant to the SB-2 offering for cash proceeds of $101,500. | |
6. | Income Taxes | |
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has net operating losses of $88,000 which commence expiring in 2027. Pursuant to SFAS No. 109, the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. | ||
The components of the net deferred tax asset at October 31, 2008 and 2007 and the statutory tax rate, the effective tax rate and the elected amount of the valuation allowance are scheduled below: | ||
October 31, | October 31, | ||
2008 | 2007 | ||
$ | $ | ||
Cumulative Net Operating Losses | 88,000 | 6,000 | |
Statutory Tax Rate | 34% | 35% | |
Effective Tax Rate | – | – | |
Deferred Tax Asset | 30,000 | 2,000 | |
Valuation Allowance | (30,000) | (2,000) | |
Net Deferred Tax Asset | – | – |
F-14
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ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON |
ACCOUNTING AND FINANCIAL DISCLOSURE. |
Our financial statements for the period from inception to October 31, 2008 included in this report have been audited by Weaver & Martin LLC, 411 Valentine Rd., Suite 300, Kansas City, MO 64111 as set forth in their report included in herein. We have no disagreement with Weaver & Martin LLC on accounting and financial disclosure.
ITEM 9A. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and proced ures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our President has concluded that the Company’s disclosure controls and procedures were not effective because of the identification of a material weakness in our internal control over financial reporting which is identified below, which we view as an integral part of our disclosure controls and procedures.
Changes in Internal Control
We have also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls as of October 31, 2008.
Limitations on the Effectiveness of Controls
Our management, including our CEO and CFO, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the indivi dual acts of some persons, by collusion of two or more people, or by management or board override of the control.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its
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stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
CEO and CFO Certifications
Appearing immediately following the Signatures section of this report there are Certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of management and our directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of October 31, 2008. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control-Integrated Framework. Based on its evaluation, our management concluded that there is a material weakness, as described below, in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial
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statements will not be prevented or detected on a timely basis.
Currently we believe we have no material weaknesses regarding our internal control over financial reporting.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
ITEM 9B. OTHER INFORMATION.
None.
PART III | |
ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE |
GOVERNANCE. |
Officers and Directors
Each of our directors 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 (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office.
The name, address, age and position of our present officers and directors are set forth below:
Name and Address | Age | Position(s) | |
Michelle Masich | 45 | president, principal executive officer, treasurer, principal | |
15-2885 Packard Ave. | financial officer, principal accounting officer, and a | ||
Coquitlam, British Columbia | director | ||
Canada V3B 6G4 | |||
W. David Radbourne | 67 | secretary and a director | |
1019 Drayton Street | |||
North Vancouver, British Columbia | |||
Canada V7L 2V7 |
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
Michelle Masich has been our president, principal executive officer, treasurer, principal financial officer, principal accounting officer and a director since August 23, 2006. Since April 1984, Ms. Masich was the founder and President of Jewellery Centre, a retail and wholesale gemstone and
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gold business. From July 1984, to February 2005, Ms. Masich was the President/CEO of Grey and Sons Diamonds, a wholesale loose diamond company in Vancouver, B.C. From September 1981 to January 1984, Ms. Masich held various positions with Gold and Gem Inc. including diamond grading and sorting, colored gemstone grading and sorting and appraising. Ms. Masich has taken extensive geology and land form identification with the addition of gemology, both colored stone and diamond at the Gemological Institute of America, Santa Monica campus. She is a member of GIA and in good standing. From September 1974 to December, 1981 Ms. Masich worked in the retail and wholesale jewelry field.
Mr. David Radbourne has been our secretary and a director since August 23, 2006. For the last forty years Mr. Radbourne has been a Chartered Accountant located in North Burnaby, British Columbia.
During the past five years, Ms. Masich and Mr. Radbourne have not been the subject of the following events:
1. Any bankruptcy petition filed by or against any business of which Mrs. Masich and Mr. Radbourne were a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.
2. Any conviction in a criminal proceeding or being subject to a pending criminal proceeding.
3. An order, judgment, or decree, not subsequently reversed, suspended or vacated, or anycourt of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting Ms. Masich’s and Mr. Radbourne’s involvement in any type of business, securities or banking activities.
4. Found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Conflicts of Interest
We believe that Ms. Masich and Mr. Radbourne are not subject to conflicts of interest. No policy has been implemented or will be implemented to address conflicts of interest.
Involvement in Certain Legal Proceedings
Other than as described in this section, to our knowledge, during the past five years, no present or former director or executive officer of our company: (1) filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or present of such a person, or any partnership in which he was a general partner at or within two yeas before the time of such filing, or any corporation or business association of which he or she was an executive officer within two years before the time of such filing; (2) was convicted in a
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criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from or otherwise limiting the following activities: (i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director of any investment company, or engaging in or continuing any conduct or practice in connection with such activity; (ii) engaging in any type of business practice; (iii) engaging in any activity in connection with the purchase or sale of any security or commodity o r in connection with any violation of federal or state securities laws or federal commodity laws; (4) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law and the judgment in subsequently reversed, suspended or vacate; (6) was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.
Audit Committee and Charter
We have a separately designated, independent audit committee comprised of all of our directors. The audit committee was established in the last thirty days and has not met. A copy of the audit committee charter is filed with this report. Audit committee functions are performed by our board of directors, none of whom are deemed independent. All directors also hold positions as our officers. Audit committee responsibilities that the board currently fulfills are: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by future employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditors and any outside advisors engagem ent by the audit committee.
Audit Committee Financial Expert
None of our directors or officers has the qualifications or experience to be considered a financial expert. Because of our limited operations, we believe the services of a financial expert are not warranted at this time.
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of our Code of Ethics is filed as an exhibit to this report.
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Disclosure Committee and Charter
We have a disclosure committee and disclosure committee charter. A copy of the disclosure committee charter is filed as an exhibit to this report. Our disclosure committee is comprised of all of our officers and directors. The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports.
Section 16(a) of the Securities Exchange Act of 1934
As of the date of this report we are not subject to Section 16(a) of the Securities Exchange Actof 1934.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth the compensation paid by us from inception on August 23, 2006 through October 31, 2008, for each or our officers. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to named executive officers.
SUMMARY COMPENSATION TABLE | |||||||||
Non- | Nonqualified | ||||||||
Equity | Deferred | All | |||||||
Name | Incentive | Compensa- | Other | ||||||
and | Stock | Option | Plan | tion | Compen- | ||||
Principal | Salary | Bonus | Awards | Awards | Compensation | Earnings | sation | Total | |
Position | Year | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
Michelle Masich | 2008 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
President | 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
2006 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
W. David Radbourne | 2008 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Secretary | 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
2006 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
We have not paid any salaries in 2009 and we do not anticipate paying any salaries at any time in 2009. We will not begin paying salaries until we have adequate funds to do so.
The following table sets forth compensation paid to each of directors during the fiscal year ended October 31, 2008.
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DIRECTOR COMPENSATION | |||||||
Fees | |||||||
Earned | Nonqualified | ||||||
or | Non-Equity | Deferred | |||||
Paid in | Stock | Option | Incentive Plan | Compensation | All Other | ||
Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | |
Name | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) | (US$) |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) |
Michelle Masich | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
W. David Radbourne | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Our directors do not receive any compensation for serving as members of the board ofdirectors.
There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers and directors other than as described herein.
Long-Term Incentive Plan Awards
We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.
As of the date hereof, we have not entered into employment contracts with any of our officers and do not intend to enter into any employment contracts until such time as is profitable to do so.
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 or her position, if he or she acted in good faith and in a manner he or she 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 or she is to be indemnified, we must indemnify him or her 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.
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ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND |
MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
The following table sets forth, as of the date of this report, the total number of shares owned beneficially by each of our directors, officers, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The stockholders listed below have direct ownership of his/her shares and possess voting and dispositive power with respect to the shares.
Name and Address | Number of | Percentage of |
Beneficial Ownership [1] | Shares | Ownership |
Michelle Masich | 2,500,000 | 41.56% |
15-2885 Packard Ave. | ||
Coquitlam, BC | ||
Canada V3B 6G4 | ||
W. David Radbourne | 2,500,000 | 41.56% |
1019 Drayton Street | ||
North Vancouver, BC | ||
Canada V7L 2V7 | ||
All Officers and Directors | 5,000,000 | 83.12% |
as a Group (2 persons) |
[1] The persons named above are "promoters" as defined in the Securities Exchange Act of 1934. Mr. Radbourne and Ms. Masich are the only "promoters" of our company.
Future Sales by Existing Stockholders
In April 2007, 2,500,000 shares of common stock were issued to Michelle Masich, one of our officers and directors, and 2,500,000 shares of common stock were issued to W. David Radbourne, one of our officers and directors. On October 2, 2008, we issued 5,000 restricted shares of common stock to one person. The foregoing 5,005,000 shares of common stock 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 six months after their acquisition. Rule 144 provides that a person may not sell more than 1% of the total outstanding shares in any three month period and the sales must be sold either in a brokers transaction or in a transaction directly with a market maker. Currently, Rule 144 is unavailable for the res ale of the foregoing shares since we are considered a “shell company” as that term is defined in Rule 405 of the Securities Act of 1933.
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The remaining 1,010,000 shares of common stock held by 18 persons may be resold at anytime pursuant to the exemption from registration contained in Section 4(1) of the Securities Act of 1933.
DESCRIPTION OF OUR 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. |
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.
Cash Dividends
As of the date of this report, 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.
Anti-Takeover Provisions
There are no Nevada anti-takeover provisions that may have the affect of delaying or preventing a change in control. 78.378 through 78.3793 of the Nevada Revised Statutes relates to control share acquisitions that may delay to make more difficult acquisitions or changes in our control, however, they only apply when we have 200 or more stockholders of record, at least 100 of whom have addresses in the state of Nevada appearing on our stock ledger and we do business in this state directly or through an affiliated corporation. Neither of the foregoing events seems likely to occur. Currently, we have no Nevada shareholders. Further, we do not do business in Nevada directly or through an affiliate corporation and we do not intend to do business in the state of Nevada in the future.
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Accordingly, there are no anti-takeover provisions that have the affect of delaying or preventing a change in our control.
Reports
We are required to file Forms 10-K, 10-Q, and 8-K. You may read copies of any materials we file with the SEC at the SEC Public Reference Room at 100 F Street, N.E., 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. The address for the Internet site iswww.sec.gov.
Stock Transfer Agent
Our stock transfer agent and registrar is Transhare Corporation located at 5105 DTC Parkway, Suite 325, Greenwood Village, CO 80111. Its phone number is (303) 662-1112.
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND |
DIRECTOR INDEPENDENCE. |
In April 2007, we issued a total of 2,500,000 shares of restricted common stock to Michelle Masich, our president and a member of the board of directors. This was accounted for as an acquisition of shares of common stock in the amount of $25. We also issued a total of 2,500,000 shares of restricted common stock to W. David Radbourne, our secretary and a member of the board of directors. This was accounted for as an acquisition of shares of common stock in the amount of $25.
Ms. Masich also caused the property, comprised of one claim, to be registered at a cost of $100. The claim was registered by Ms. Masich for the $100. Ms. Masich will transfer the claim to us if mineralized material is found on the claim. Ms. Masich will not receive anything of value for the transfer and we will not pay any consideration of any kind for the transfer of the claim.
Ms. Masich and Mr. Radbourne are our only promoters. They have not received or will they receive anything of value from us, directly or indirectly in their capacities as promoters.
Currently, we have no independent directors.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
(1) Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included in our Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:
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2008 | $ | 4,500 | Weaver & Martin LLC | |
2007 | $ | 0 | Weaver & Martin LLC |
(2) Audit-Related Fees
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:
2008 | $ | 0 | Weaver & Martin LLC | |
2007 | $ | 0 | Weaver & Martin LLC |
(3) Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:
2008 | $ | 0 | Weaver & Martin LLC | |
2007 | $ | 0 | Weaver & Martin LLC |
(4) All Other Fees
The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:
2008 | $ | 0 | Weaver & Martin LLC | |
2007 | $ | 0 | Weaver & Martin LLC |
(5) Our pre-approval policies and procedures for the board, acting in lieu of a separately designated, independent audit committee, described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.
(6) The percentage of hours expended on the principal accountant’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full time, permanent employees was 0%.
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PART IV. OTHER INFORMATION
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following is a complete list of exhibits filed as part of this annual report:
Incorporated by reference | |||||
Exhibit | Filed | ||||
Number | Document Description | Form | Date | Number | herewith |
3.1 | Articles of Incorporation. | SB-2 | 12/07/2007 | 3.1 | |
3.2 | Bylaws. | SB-2 | 12/07/2007 | 3.2 | |
4.1 | Specimen Stock Certificate. | SB-2 | 12/07/2007 | 4.1 | |
14.1 | Code of Ethics. | X | |||
31.1 | Certification of Principal Executive Officer and | X | |||
Principal Financial Officer pursuant to Section 302 | |||||
of the Sarbanes-Oxley Act of 2002. | |||||
32.1 | Certification pursuant to Section 906 of the | X | |||
Sarbanes-Oxley Act of 2002 for the Chief | |||||
Executive Officer and Chief Financial Officer. | |||||
99.1 | Audit Committee Charter. | X | |||
99.2 | Disclosure Committee Charter. | X |
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities and Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 29th day of January 2009.
DARLINGTON MINES LTD.
BY: MICHELLE MASICH
Michelle Masich, President, Principal
Executive Officer, Treasurer, Principal
Financial Officer and Principal Accounting
Officer
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dated indicated.
Signature | Title | Date |
MICHELLE MASICH | President, Chief Executive Officer, Treasurer, Chief | January 29, 2009 |
Michelle Masich | Financial Officer, Principal Accounting Officer and a | |
member of the Board of Directors | ||
W. DAVID RADBOURNE | Secretary, and a member of the Board of Directors | January 29, 2009 |
W. David Radbourne |
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EXHIBIT INDEX | |||||
Incorporated by reference | |||||
Exhibit | Filed | ||||
Number | Document Description | Form | Date | Number | herewith |
3.1 | Articles of Incorporation. | SB-2 | 12/07/2007 | 3.1 | |
3.2 | Bylaws. | SB-2 | 12/07/2007 | 3.2 | |
4.1 | Specimen Stock Certificate. | SB-2 | 12/07/2007 | 4.1 | |
14.1 | Code of Ethics. | X | |||
31.1 | Certification of Principal Executive Officer and | X | |||
Principal Financial Officer pursuant to Section 302 | |||||
of the Sarbanes-Oxley Act of 2002. | |||||
32.1 | Certification pursuant to Section 906 of the | �� | X | ||
Sarbanes-Oxley Act of 2002 for the Chief | |||||
Executive Officer and Chief Financial Officer. | |||||
99.1 | Audit Committee Charter. | X | |||
99.2 | Disclosure Committee Charter. | X |
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