Mail Stop 0308
February 24, 2005
Terry Cook, President
Mustang Resources, Inc.
1574 Gulf Road # 1505
Point Roberts, Washington 98281
Re: Mustang Resources, Inc.
Registration Statement on Form 10-SB filed January 27,
2005
Amendment No. 1 to Form 10-SB filed January 31, 2005
File No. 0-51135
Dear Mr. Cook:
We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation
as to why our comment is inapplicable or a revision is
unnecessary.
Please be as detailed as necessary in your explanation. In some of
our comments, we may ask you to provide us with supplemental
information so we may better understand your disclosure. After
reviewing this information, we may or may not raise addition
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We
look forward to working with you in these respects. We welcome any
questions you may have about our comments or on any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. Please note that your filing will become effective by
operation
of law on March 27, 2005, and that you will be responsible for
periodic and other reports from that date. Please also note the
provisions of Rule 13a-13. If our comments are not addressed
within
this 60-day time period, you should consider withdrawing the Form
10-
SB prior to effectiveness and re-filing a new Form 10-SB,
including
changes responsive to our comments.
Part I
Item 1. Description of Business - page 3
2. At the outset of this section, please revise to convey
clearly
that you are not the same Mustang Resource Inc. whose shares are
traded on the Toronto Stock Exchange. Generally, provide
information
to eliminate any possible confusion with that other company.
Please
make similar revisions in the overview of the Management`s
Discussion
and Analysis section and the Market Price and Dividends section.
3. Address clearly the fact that the likelihood of an individual
prospect ever having "reserves" that meet the requirements of
Industry Guide 7 is extremely remote, and that in all probability
your properties do not contain any reserves, and that any funds
spent
on exploration will probably be lost.
4. We note the reference in this section to Phase I of your
exploration program, without further description. To enhance
clarity,
we suggest a cross-reference to the later sub-section "Our
Proposed
Exploration Program" to explain to the reader more readily both
the
intended nature of the program and the expected needs for
additional
capital in each phase.
5. The fourth paragraph on page 4 of your printed text largely
duplicates information given in the second paragraph of that page.
Please revise to eliminate such duplication.
6. Unless you can substantiate significant technical training
and/or experience in minerals exploration or mining by members of
your management, you should include prominent disclosure in this
section that your management lacks technical training and
experience
with exploring for, starting, and/or operating a mine. Please
explain
that, with no direct training or experience in these areas, your
management may not be fully aware of many of the specific
requirements related to working within this industry. Explain also
that their decisions and choices may not take into account
standard
engineering or managerial approaches that mineral exploration
companies commonly use and that, consequently, your operations,
earnings, and ultimate financial success could suffer irreparable
harm due to management`s lack of experience in this industry.
7. In an appropriate location in the narrative, please discuss
the
phased nature of the exploration process, and the place in this
process that your current exploration activities occupy. Disclose
that you will not make a decision whether to proceed with each
successive phase of the exploration program until completion of
the
previous phase and upon analysis of the results of that program.
Please also make it clear to readers that, even if you complete
your
current exploration program and it is successful in identifying a
mineral deposit, you will have to spend substantial funds on
further
drilling and engineering studies before you will know if you have
a
commercially viable deposit, a reserve.
8. Please expand your disclosure about your exploration plans
for
your properties. Include a brief geological justification for each
of
your exploration projects written in non-technical language, and
describe the types of mineralization for which you will be
looking.
9. Please update in any amendment the current status of the
leases
due to expire on February 19, 2005.
10. Please disclose what contractual arrangements you may have
with
Mr. William Lumley, or any other geologist you may consult, with
regard to the scope and cost of his services in connection with
your
exploration program or for assistance in connection with this
registration statement. In view of the apparent materiality of any
such contract(s) to the registrant, it should be filed as an
exhibit.
Mustang`s Properties - page 5
11. Please revise to describe more clearly Mr. Cook`s interests
as
both a trustee in the claims and as your principal shareholder.
The
existing disclosure is confusing.
Property History - page 7
12. We note in this section the use of several technical terms,
such
as Crone E.M. survey, metasedimentary and metavolcanic rocks, UTEM
survey, and plutons, which are
not defined in the glossary. Please revise appropriately.
13. Please support supplementally the statements in the last
paragraph of this sub-section regarding past productivity of
mining
and gold production in the Kootenay Arc, or delete.
Property Geology - page 7
14. Explain what is meant by the reference to "Detailed
geological
mapping ....." in the vicinity of the JC claims. Specify the
area(s)
referred to and the nature and extent of the mapping.
Item 2. Management`s Discussion and Analysis or Plan of Operation
- -
page 11
15. We note at the outset of this section that it "is current as
of
December 28, 2004." This registration statement should contain
current information. Please update and revise accordingly.
Please also update your filing to include audited financial
statements for the year ended December 31, 2004, in accordance
with
Item 310 (g)(2) of Regulation S-B.
Plan of Operation - page 12
16. We note that you estimate your total cash requirement
over
the next twelve months to be approximately $48,000, of which
approximately $13,000 of general and administrative expense will
be
incurred regardless of whether the company initiates Phase I of
its
exploration activities. Please disclose how you expect to fund
your
operations over the next twelve months in the event that you are
unable to attract equity capital from unrelated third parties or
secure other sources of external financing, such as loans. In
particular, disclose the amount of funding you expect to receive
from
related party advances under this scenario and whether these
advances
will be sufficient to cover your anticipated general and
administrative expenses.
Item 4. Security Ownership of Certain Beneficial Owners and
Management - page 19
17. Please aggregate the share ownership of Terry and Nancy
Cook.
Unless particular facts indicate otherwise, married persons are
deemed to be the beneficial owner of the other spouse`s shares. As
a
result, it appears that Terry Cook`s share ownership should
reflect
100%. You may provide a footnote to indicate the number of shares
owned of record by Nancy Cook. Please revise or advise.
Item 5. Directors and Executive Officers, Promoters and Control
Persons
Conflicts of Interest - page 21
18. You indicate that your directors would abstain from
negotiating and voting upon any opportunity that was sought after
by
both you and any other company in which your directors are also
affiliated. Given that you currently have only two directors, both
of
whom are also directors of Cougar Holdings Inc., which also
operates
in the extractive industry in British Columbia, Canada, the stated
conflict of interest provision, absent an increase or change in
directors, appears to have the effect of automatically precluding
you
from ever pursuing an opportunity, to the extent that Cougar
Holdings
Inc. was also interested in that opportunity. If our understanding
is
correct, please revise your disclosure to clarify the practical
effect of your conflict of interest provision.
Financial Statements
19. The net loss for the year ended December 31, 2001
presented
on your statement of operations does not agree with the net loss
amount on your statement of changes in stockholders` deficiency or
the statement of cash flows. Please revise. Please also correct
the
mathematical error in the net cash used for operating activities
section of your 2001 statement of cash flows.
Balance Sheets - page 2
20. Based on your Item 8 disclosure, we note that your
authorized capital stock consists of 40,000,000 shares of
preferred
stock. Please present a preferred stock line item on the face of
each
balance sheet presented in your filing. Also change the number of
common shares authorized from 200,000,000 to 160,000,000.
Note 1. Nature of Business - page 6
21. Your Note 1 disclosure includes your policy on assessing
long-
lived assets for impairment. We note, however, that you do not
have
any long-lived assets shown on the face of your balance sheet.
Please remove this disclosure from Note 1, or tell us why your
disclosure is necessary.
Note 2. Summary of Significant Accounting Policies - page 6
22. You disclose that translation adjustments and
transaction
gains and losses are reflected in net income (loss). We do not
understand why you include translation adjustments in net income
as
opposed to a component of other comprehensive income. Please
advise.
If material, please also disclose on the face of the financial
statements or in the footnotes the aggregate foreign currency
transaction gain or loss included in determining net income (loss)
in
each period for which a statement of operations is presented. See
paragraph 30 of SFAS 52.
Note 3. Income Taxes - page 9
23. Please disclose the expiration dates of your operating
loss
carryforwards. See paragraph 48 of SFAS 109.
Unaudited Financial Statements as of and for the Period Ended
November 30, 2004
Statements of Changes in Stockholders` Deficiency - page 3
24. Please update the $1 and $0.005 per share figures of your
common stock issuances to reflect the two-for-one forward stock
split.
* * * * *
Please file an amendment in response to these comments. You
may
wish to provide us with marked copies of the amendment to expedite
our review. Please furnish a cover letter with your amendment that
keys your responses to our comments and provides any requested
supplemental information. Detailed cover letters greatly
facilitate
our review. Please understand that we may have additional comments
after reviewing your amendment and responses to our comments. We
may
have further comments after reviewing this material.
Notwithstanding the statutory provision for automatic
effectiveness of the registration statement, if after completion
of
our review process, you should request acceleration of the
statement
prior to this statutory effective date, you should submit a letter
at
the time of the request, acknowledging that:
the action of the Commission or the staff, acting
pursuant
to delegated authority in declaring the registration
statement effective, does not foreclose the
Commission from taking any action with
respect to the registration statement;
the action of the Commission or the staff, pursuant to
delegated authority, in
declaring the registration statement effective, does not
relieve the company from
its full responsibility for the accuracy and adequacy of
the disclosure in the
registration statement;
the company may not assert this action as a defense in any
proceeding
initiated by the Commission or any person under the federal
securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information that you provide to the
staff of the Division of Corporate Finance in connection with our
review of your filing.
Please address questions on accounting comments to Andrew
Blume
at (202) 942-5455, or to George Ohsiek, Accounting Branch Chief,
at
(202) 942- 2905. Please address questions on engineering comments
to
Roger Baer, Mining Engineer, at (202) 942-2965. Address questions
on
other matters to Albert Yarashus at (202) 942-1899, to David
Mittelman, Branch Chief, at (202) 942-1921, or to me, at (202)
942-
1900.
Sincerely,
H. Christopher Owings
Assistant Director
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Mustang Resources, Inc.
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1934 Act Legal Examination Report
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