[As adopted in Release No. 34-32231, April 28, 1993, 58 F.R. 26509]
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2004
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
For the transition period from to
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Commission file number 333-105008
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Rincon Resources, Inc.
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(Exact name of small business issuer as
specified in its charter)
Delaware 87-0700927
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2920 N Swan Road, Suite 206, Tucson, Arizona 85715
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(Address of principal executive offices)
(520) 991-3335
Issuer's telephone number
Twin Ventures, Ltd. 6418 NE Agate Beach Lane, Bainbridge Island, WA 98110
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(Former name, former address and former fiscal year, if changed since last
report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes ----- No -----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practical date: August 18, 2004 92,570,000
Transitional Small Business Disclosure Format (check one).
Yes ; No X
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PART I
ITEM 1. FINANCIAL STATEMENTS
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
BALANCE SHEETS
June 30, December 31,
------------------ -----------------
2004 2003
------------------ -----------------
ASSETS
Current Assets
Cash and cash equivalents $ - $ 76
------------------ -----------------
Total Assets $ - $ 76
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 5,774 $ 1,800
Accrued expenses & short term contract payable 4,825 4,825
------------------ -----------------
Total Current Liabilities 10,599 6,625
Long-Term Liabilities
Contract payable - the "Ritz Claim" 15,000 15,000
------------------ -----------------
Total Liabilities 25,599 21,625
------------------ -----------------
Stockholders' Equity
Preferred stock, $.0001 par value, authorized 10,000,000
shares, -0- issued - -
Common stock, $.0001 par value, authorized 500,000,000
shares, 92,570,000 issued at June 30, 2004 and
December 31, 2003 9,257 9,257
Additional paid-in capital 122,993 122,993
Deficit accumulated during exploration state (157,849) (153,799)
------------------ -----------------
Total Stockholders' Equity (25,599) (21,549)
------------------ -----------------
Total Liabilities and Stockholders' Equity $ - $ 76
================== =================
See accompanying notes.
3
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
STATEMENTS OF OPERATIONS
Accumulated
Since
November 21,
2002
For the Three Months For the Six Months Inception of
Ended June 30, Ended June 30, Exploration
-------------------------------- -------------------------------
2004 2003 2004 2003 State
------------- ------------- ------------- ------------- -------------
REVENUES
Revenues $ -- $ -- $ -- $ -- $ --
Cost of Services -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Gross Profit (Loss) -- -- -- -- --
EXPENSES
General and Administrative 3,176 2,134 4,050 2,814 124,349
General Exploration -- -- -- -- 33,500
------------- ------------- ------------- ------------- -------------
Total Expenses 3,176 2,134 4,050 2,814 157,849
------------- ------------- ------------- ------------- -------------
NET INCOME (LOSS) $ (3,176) $ (2,314) $ (4,050) $ (2,814) $ (157,849)
============= ============= ============= ============= =============
Weighted Average Shares 106,416,140 272,570,000 189,034,160 272,427,500
============= ============= ============= =============
Loss per Common Share $ -- $ -- $ -- $ --
============= ============= ============= =============
See accompanying notes.
4
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
STATEMENTS OF CASH FLOWS
Accumulated
Since
November 21,
2002
For the Six Months Inception of
Ended June 30, Exploration
------------------------------------
2004 2003 State
----------------- ------------------ ------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ (4,050)$ (2,814)$ (157,849)
Adjustments used to reconcile net loss to net
cash provided by (used in) operating activities
Depreciation - - 744
Compensation in the form of stock - - 102,000
Mineral rights expensed - 2,500 16,000
Increase (decrease) in accrued expenses - (9,750) 4,825
Increase (decrease) in contract payable - (2,500) 15,000
Increase (decrease) in accounts payable 3,974 700 5,774
----------------- ------------------ ------------------
Net cash used in operating activities (76) (11,864) (13,506)
----------------- ------------------ ------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Cash paid for website design - (744) (744)
Cash paid for mineral rights - (2,500) (16,000)
----------------- ------------------ ------------------
Net cash used by investing activities - (3,244) (16,744)
----------------- ------------------ ------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from stock issuance - 16,750 30,250
----------------- ------------------ ------------------
Net Cash Provided by Financing Activities - 16,750 30,250
----------------- ------------------ ------------------
Net Increase (Decrease) in
cash and cash equivalents (76) 1,642 -
Cash and cash equivalents at
beginning of the period 76 80 -
----------------- ------------------ ------------------
Cash and cash equivalents at end of the period $ - $ 1,722 $ -
================= ================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Interest $ - $ - $ -
Income Taxes $ - $ - $ -
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES: NONE
See accompanying notes.
5
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
NOTE 1 - OPERATIONS AND BASIS OF PRESENTATION
This summary of accounting policies for Rincon Resources, Inc.
(formerly Twin Ventures, Ltd.) (an exploration state company) is presented to
assist in understanding the Company's financial statements. The accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
The unaudited financial statements as of June 30, 2004 and for the
three and six months then ended reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and results of operations for the three and
six months. Operating results for interim periods are not necessarily indicative
of the results which can be expected for full years.
Rincon Resources, Inc. (formerly Twin Ventures, Ltd.) (the Company), an
exploration state company, was incorporated on November 6, 2002 in the State of
Delaware and is headquartered in Tucson, Arizona. The Company is an exploration
state mining and mineral company. On November 21, 2002 the Company became
actively engaged in acquiring mineral properties, raising capital, and preparing
properties for production. The Company did not have any significant mining
operations or activities from inception; accordingly, the Company is deemed to
be in the exploration state. For purposes of recording the Company's mineral
claims in Canada, the Company acquired New Heights Capital Corporation (a
Canadian corporation) and transferred the claims listed in the following
paragraph into the subsidiary in exchange for 100% of the subsidiary's
outstanding stock.
On November 21, 2002, the Company acquired mineral claims (the "Ritz
Claims") located in the Lillooet Lake Region of Southwest British Columbia,
Canada. The property consists twenty unpatented two post mineral claims and one
unpatented four post mineral claim representing forty units that have been
staked and recorded in the Lillooet mining division. The Company has not
commenced economic production and is therefore still considered to be in the
exploration stage.
The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of the mineral
properties and other assets and the satisfaction of liabilities in the normal
course of business. The Company has incurred losses of from inception to June
30, 2004. The Company has not realized economic production from its mineral
properties as of June 30, 2004. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management continues to
actively seek additional sources of capital to fund current and future
operations. There is no assurance that the Company will be successful in
continuing to raise additional capital, establishing probable or proven
reserves, or determining if the mineral properties can be mined economically.
These financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
6
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(continued)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue and Cost Recognition
The Company uses the accrual basis of accounting for financial
statement reporting. Revenues and expenses are recognized in accordance with
Generally Accepted Accounting Principles for the industry. Certain period
expenses are recorded when obligations are incurred.
Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities, and
disclosure of contingent liabilities at the date of the financial statements,
and the reported amount of revenues and expenses during the reporting period.
Actual results could differ from those results.
Accounts Receivable, Deposits, Accounts Payable and Accrued Expenses
Accounts receivable have historically been immaterial and therefore no
allowance for doubtful accounts has been established. Normal operating
refundable Company deposits are listed as Other Assets. Accounts payable and
accrued expenses consist of trade payables created from the normal course of
business.
Mineral Properties and Mining Equipment
Mineral properties and mining equipment include land and mining
equipment carried at cost. Mining equipment including mill facilities is
depreciated using the straight-line method over estimated useful lives of 5 to
15 years, or the units-of-production method based on estimated tons of ore
reserves if the equipment is located at a producing property with a shorter
economic life. Mining equipment not in service is not depreciated.
During 1997, the Securities and Exchange Commission (SEC) staff
reconsidered existing accounting practices for mineral expenditures by United
States junior mining companies. They now interpret generally accepted accounting
policy for junior mining companies to permit capitalization of acquisition and
exploration costs only after persuasive engineering evidence is obtained to
support recoverability of these costs (ideally upon determination of proven
and/or probable reserves based upon dense drilling samples and feasibility
studies by a recognized independent engineer). Although the Company has obtained
samples, and an independent engineer has deemed the properties may contain
platinum group metals, management has chosen to follow the more conservative
method of
7
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(continued)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
accounting by expending all mineral costs, for which there is no feasibility
study.
Land Options
As noted above, since the Company interprets generally accepted
accounting policies to permit capitalization of acquisition costs including
leases and land options only after persuasive engineering evidence has been
obtained to support recoverability of these costs, these costs will be expensed.
Non-Mining Property and Equipment
Property and equipment purchased by the Company are recorded at cost.
Depreciation is computed by the straight-line method based upon the estimated
useful lives of the respective assets. Expenditures for repairs and maintenance
are charged to expense as incurred as are any items purchased which are below
the Company's capitalization threshold of $1,000.
For assets sold or otherwise disposed of, the cost and related
accumulated depreciation are removed from accounts, and any related gain or loss
is reflected in income for the period.
Reclamation and Environmental Costs
Reclamation costs and related accruals are based on the Company's
interpretation of environmental and regulatory requirements. Minimum standards
for mine reclamation have been established by various governmental agencies.
Reclamation, site restoration, and closure costs for each producing mine are
accrued over the life of the mine using the units-of-production method. Ongoing
reclamation activities are expensed in the period incurred.
Income Taxes
The Company accounts for income taxes using the liability method which
requires recognition of deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Deferred tax assets and liabilities are determined
based on the difference between the financial statements and tax basis of assets
and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
The Company's management determines if a valuation allowance is
necessary to reduce any tax benefits when the available benefits are more likely
than not to expire before they can be used.
8
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(continued)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Inventory
Inventory is stated at net realizable value.
Stock Based Compensation
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," (SFAS 123), which is effective for periods beginning after
December 15, 1995. SFAS 123 requires that companies either recognize
compensation expense for grants of stock, stock options, and other equity
instruments based on fair value or provide pro-forma disclosure of the effect on
net income and earnings per share in the Notes to the Financial Statements. The
Company has adopted SFAS 123 in accounting for stock-based compensation.
Cash and Cash Equivalents, and Credit Risk
For purposes of reporting cash flows, the Company considers all cash
accounts with maturities of 90 days or less and which are not subject to
withdrawal restrictions or penalties, as cash and cash equivalents in the
accompanying balance sheet.
The portion of deposits in a financial institution that insures its
deposits with the FDIC up to $100,000 per depositor in excess of such insured
amounts are not subject to insurance and represent a credit risk to the Company.
Foreign Currency Translation and Transactions
The Company's functional currency is the US dollar. No material
translations or transactions have occurred. Upon the occurrence of such material
transactions or the need for translation adjustments, the Company will adopt
Financial Accounting Standard No. 52 and other methods in conformity with
Generally Accepted Accounting Principles.
Earnings Per Share
Basic earnings per common share were computed by dividing net loss by
the weighted average number of shares of common stock outstanding during the
year. Diluted loss per common share for the three and six months ended June 30,
2004 and 2003 are not presented as it would be anti-dilutive.
9
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(continued)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Leases
The Company accounts for leases in accordance with Generally Accepted
Accounting Principles which require operating leases to be expensed and capital
leases to be capitalized and amortized over the lease term. Leased mining
properties under capital leases are expensed until such time that an engineering
study has been completed showing proven mining reserves.
NOTE 3 - AFFILIATES AND RELATED PARTIES
Significant relationships with (1) companies affiliated through common
ownership and/or management, and (2) other related parties are as follows:
The Company has ownership of the "Ritz Claims" which was purchased from
a director of the Company. The purchase requires services to the Company from
the Director per the purchase agreement dated November 21, 2002. See Footnote #5
for a description of this Project.
The Company has stock-based compensation agreements with an officer and
2 directors of the Company as disclosed in Footnote No. 7.
NOTE 4 - MINERAL PROPERTIES AND MINING EQUIPMENT
The Company's net investment in mineral properties and mining equipment
includes the "Ritz Claim" as described in footnote #1. All costs related to the
claim have been expended in accordance with Generally Accepted Accounting
Principles for the industry.
NOTE 5 - INCOME TAXES
The Company has available net operating loss carryforwards for
financial statement and federal income tax purposes for the years ending
December 31, 2002 and 2003. These loss carryforwards expire if not used by the
year 2022 and 2023. The Company's management has decided a valuation allowance
is necessary to reduce any tax benefits because the available benefits are more
likely than not to expire before they can be used. The value of these tax
benefits is $29,184 and $1,576, respectively.
10
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(continued)
NOTE 6 - LONG-TERM DEBT
On November 21, 2002, the Company entered into an agreement with Mr.
Garth Barton for the purchase of mining property, the "Ritz Claim", located in
the Lillooet Lake Region of Southwest British Columbia, Canada. The "Ritz Claim"
is title to forty (40) mineral claim units that are unpatented. The total
purchase price of the claim is $33,500 due per terms of the contract with
advance royalties of $25,000 to be paid annually commencing 36 months from the
date of signature of the agreement. The property is subject to a royalty
agreement.
The contract payment schedule calls for $13,500 to be paid upon
delivery of a summary geological report and transfer of property title. The
$13,500 was paid per the contract. On February 28, 2003 a payment of $2,500 was
made per contract schedule. Twelve months from the date of title registration,
$2,500 becomes due with another $2,500 due twenty four months from such date. No
later than thirty six months from the date of signature on the contract, the
balance of payment is due for a total purchase price of $33,500.
NOTE 7 - SHAREHOLDERS' EQUITY
Preferred Stock
The Company has authorized ten million (10,000,000) shares of preferred
stock with a par value of $.0001, none of which have been issued.
Common Stock
The Company has authorized five hundred million (500,000,000) shares of
common stock with a par value of $.0001.
Common Stock Subscribed and Issued for Cash
During December, 2002, the Company undertook an offering exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933 to raise
$16,000 in the issuance of 3,200,000 shares of common stock for the purpose of
the acquisition and exploration of mining properties. The Company's management
considers this offering to be exempt under the Securities Act of 1933. A
receivable for stock subscribed was recorded in the equity section of the
financial statements at December 31, 2002 for cash amounts that had not yet been
received by the Company. During the first quarter of 2003 the cash outstanding
from stock subscribed was received and the stock subscribed was converted by
memo to common stock and the stock certificates issued.
11
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(continued)
NOTE 7 - SHAREHOLDERS' EQUITY (continued)
During March 2003, the Company undertook a Regulation D Rule 506
private placement offering to raise $14,250 for the issuance of 57,000 shares of
common stock for the purpose of mineral exploration. The Company's management
considers this offering to be exempt under the Securities Act of 1933.
Common Stock Recorded as Compensation
The Company does not have an employee stock compensation package set up
at this time. The stock compensation that has been granted falls under Rule 144.
Compliance with Rule 144 is discussed in the following paragraph.
In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares of a company's common stock for at least one year is
entitled to sell within any three month period a number of shares that does not
exceed the greater of:
1. 1% of the number of shares of the company's common stock then
outstanding which, in our case, would equal approximately 280,380
shares as of the date of this prospectus; or
2. The average weekly trading volume of the company's common stock during
the four calendar weeks preceding the filing of a notice on form 144
with respect to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
the company.
The Company records stock issued for services and future services at
the fair value of the stock issued, if known, or the fair value of the services
if the fair value of the stock is not determined and no value is contemplated in
the contract. The stock is recorded as issued in the equity section of the
financial statements when a contract for services is entered into for stock
compensation.
On November 8, 2002, the Company entered into a service agreement with
Mr. David Deering, the President of the Company, for a 12 month term which is
renewable by both parties after the twelve month term. The agreement called for
the issuance of twenty million (20,000,000) common shares of stock for the value
of such services, $85,000. The value of the shares was established by the fair
value of the services to be provided as a fair trading value of the stock had
not been established. The number of shares issued was based on the price the
shares were sold in the Company's first private placement with a 15% discount
since such shares were restricted in accordance with Rule 144 of the Securities
Act of 1933. Due to the uncertainty of the Company's
12
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(continued)
NOTE 7 - SHAREHOLDERS' EQUITY (continued)
ability to continue as a going concern, the amounts were recorded as an expense
when the shares were issued.
On November 8, 2002, the Company entered into a service agreement with
Mr. Brian Bisset, a Director of the Company, for a 12 month term which is
renewable by both parties after the twelve month term. The agreement called for
the issuance of two million (2,000,000) common shares of stock for the value of
such services, $8,500. The value of the shares was established by the fair value
of the services to be provided as a fair trading value of the stock had not been
established. The number of shares issued was based on the price the shares were
sold in the Company's first private placement with a 15% discount since such
shares were restricted in accordance with Rule 144 of the Securities Act of
1933. Due to the uncertainty of the Company's ability to continue as a going
concern, the amounts were recorded as an expense when the shares were issued.
On November 8, 2002, the Company entered into a service agreement with
Mr. Andrew Norins, a Director of the Company, for a 12 month term which is
renewable by both parties after the twelve month term. The agreement called for
the issuance of two million (2,000,000) common shares of stock for the value of
such services, $8,500. The number of shares issued was based on the price the
shares were sold in the Company's first private placement with a 15% discount
since such shares were restricted in accordance with Rule 144 of the Securities
Act of 1933. Due to the uncertainty of the Company's ability to continue as a
going concern, the amounts were recorded as an expense when the shares were
issued.
The value of the shares was established by the fair value of the
services to be provided as a fair trading value of the stock had not been
established.
NOTE 8 - ACQUISITIONS
On November 21, 2002, the Company entered into an agreement with Mr.
Garth Barton for the purchase of mining property, the "Ritz Claim", located in
the Lillooet Lake Region of Southwest British Columbia, Canada. The "Ritz Claim"
is title to forty (40) mineral claim units that are unpatented. The total
purchase price of the claim is $33,500 due per terms of the contract with
advance royalties of $25,000 to be paid annually commencing 36 months from the
date of signature of the agreement. Failure to pay the advance royalties will
cause a reversion of the property within 10 days of such failure. The property
is subject to a 2 1/2% Net Smelter Royalty (NSR) and a 7 1/2% Gross Rock Royalty
(GRR). 1 1/2% of the NSR can be acquired for $1.0 million within 12 months from
the commencement of commercial production. Mr. Barton is required to keep the
claims in good standing for at least 18 months from the date of the agreement.
In addition, Mr. Barton will
13
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(continued)
NOTE 8 - ACQUISITIONS (continued)
provide geological consulting services for the claims and will maintain the
claims in good standing for a period of 36 months with fees advanced by the
Company prior to the anniversary dates from signature of the agreement. Said
fees are to be deducted from the total cost.
On April 22, 2003, the Company acquired the outstanding common share
(one common share) of New Heights Capital Corporation, an inactive Canadian
corporation, for the purpose of recording the Company's Canadian "Ritz Claim" in
a Canadian corporation as required. The "Ritz Claim" was transferred to the
subsidiary in exchange for the subsidiary's outstanding common share of stock.
New Heights Capital Corporation is a wholly owned Canadian subsidiary of the
Company.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The Company's "Ritz Claims" will revert back to the seller within no
less than a 10 day period if the Company fails to make the $25,000 annual
advance royalty payments per the sales contract commencing 36 months from the
date of the contract.
Management is not aware of any contingent matters that could have a
material adverse effect on the Company's financial condition, results of
operations, or liquidity.
On June 1, 2004, the Company entered into a consulting agreement with
Mr. Robert McIntosh. Mr. McIntosh will provide geological and administrative
services to the Company for $3,000 per month.
NOTE 10 - LITIGATION, CLAIMS AND ASSESSMENTS
From time to time in the normal course of business the Company will be
involved in litigation. The Company's management has determined any asserted or
unasserted claims to be immaterial to the financial statements.
NOTE 11 - GOING CONCERN
The accompanying financial statements have been prepared assuming that
the company will continue as a going concern. As discussed in the notes to the
financial statements, the Company has experienced losses from inception. The
Company's financial position and operating results raise substantial doubt about
its ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
14
RINCON RESOURCES, INC.
(Formerly Twin Ventures, Ltd.)
(An Exploration State Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(continued)
NOTE 12 - SUBSEQUENT EVENTS
On July 26, 2004, the Company executed an agreement and made a deposit
of $55,000 to acquire a 75% interest in the Tudor Gold Property. The Tudor Gold
Property is located in Tudor and Grimsthorpe Townships in the Madoc-Bancroft
region of the Providence of Ontario and is located approximately 100 miles
northeast of Toronto, Canada. The property consists of twenty-two contiguous
unpatented mining claims containing sixty units covering approximately 2,965
acres of land. The Company intends to launch a comprehensive, property wide,
surface exploration program immediately. Once further funding is acquired and
the agreement can be fully executed, the Company intends to follow-up with drill
testing of the mineralized zones of the property. The data derived from the
drill testing of the various zones should enable the Company to identify and
assess gold bearing structures to ultimately establish the size and grade of the
gold resource.
On July 6, 2004, the Company amended its articles of incorporation to
change the authorized capital from 50,000,000 shares of common stock to
500,000,000 shares of common stock.
On July 23, 2004, the Company did a 10 to 1 forward stock split of its
issued and outstanding shares of common stock from 9,257,000 shares to
92,570,000 shares. All references to common stock have been adjusted to reflect
the stock split.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of our
results of operations and financial condition. The discussion should be read in
conjunction with our financial statements and notes thereto appearing in this
prospectus.
The accompanying financial statements have been prepared assuming that
we will continue as a going concern. As discussed in the notes to the financial
statements, we have experienced losses from inception. Our financial position
and operating results raise substantial doubt about its ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
The following discussion and analysis contains forward-looking
statements, which involve risks and uncertainties. Our actual results may differ
significantly from the results, expectations and plans discussed in these
forward-looking statements.
15
Overview
Since our inception, our operations have been devoted primarily to
identifying, purchasing and completing the initial exploration work on a mineral
property. We intend to grow through exploration and of the Lillooet Lake
property and the identification and acquisition of other properties with mineral
exploration.
This property does not have any known reserves and our proposed program
is exploratory in nature. Because of uncertainties surrounding our exploration,
we anticipate incurring exploration stage losses in the foreseeable future. Our
ability to achieve our business objectives is contingent upon our success in
raising additional capital until adequate revenues are realized from operations.
We are an exploration stage company and there is no assurance that a
commercially viable mineral deposit exists on any of our property. The property
is without any known reserves and the proposed program is exploratory in nature
and therefore further exploration will be required before a final evaluation as
to the economic and legal feasibility is determined. Reserves are measurable
zones of minerals over a certain area and mineral deposits are reserves that can
be economically exploited.
Exploration state expenses from inception through June 30, 2004 were
$33,500 for general exploration costs related to the mineral rights of the
exploration property and $124,349 of general and administrative costs related
mainly to stock compensation for services of $102,000, bank charges, accounting
charges of $2,500, legal charges of $7,500, consulting charges of $3,000 and
office/web site costs for a total expense of $157,849 as captioned in the
financial statement's statement of operations. Included in the exploration
expense was $16,000 of cash paid on the initial payment for the property and no
money was spent on further evaluation of the property. These fees were in
furtherance of Phase I to purchase and evaluate a property. Fees were incurred
in the start-up costs of our company as well as the fees to prepare our audited
financial statements and this registration statement. These fees were included
in the general and administrative expense as discussed earlier in this
paragraph.
Plan of Operation
We have completed phase one of a four step plan to evaluate our initial
minerals prospect for exploration. Even if we complete all four phases, all we
can hope to have accomplished is to be able to identify targets for further
exploration which will consist of trenching, drilling and feasibility studies
which will be the most expensive parts of the exploration process. Phase one
consisted of identifying an area with promising geological properties,
purchasing the initial 60 units of the Ritz property, securing a geological
report on the property and completing the initial rock and silt samples on the
prospect. We plan to complete phase two and three during the next 12 months. If
we get positive results in phase two and three we will be required to seek
additional capital as recommended by the consultant's report. We will attempt to
raise capital from sale of our common stock, loans from investors, shareholders
or management, and/or joint venture partners. However, there are currently no
negotiations or arrangements for future financing at this point in time.
Management will use its best efforts to raise the additional funds to carry out
the planned exploration program but there is significant risk that we may not
secure the necessary funding. The following table details the remaining 3 steps
to our initial exploration of the Ritz property:
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Phase II: Geological Traverses
Senior Geologist 3 day @ $300 per day $900.00
Filing Fee $300.00
1 Geo-technician 3 days at $150.00 $450.00
(a Geo-technician is a person trained in the
methods and procedures to collect geological,
geochemical and geophysical data under the
supervision of a qualified degree accredited
geologist)
Equipment Rental 4 wheel drive @ $50.00 per day $150.00
Assays 60 @ $10.00 each $600.00
Food, Fuel etc. $200.00
Report $600.00
-------
TOTAL $3,200.00
Phase III
Follow-up Geochemical sampling and detailed
geological mapping $5,000.00
---------
TOTAL $5,000.00
Phase IV Airborne EM Survey
Airborne EM Survey 100 line kilometers @ $150 $15,000.00
per km
Follow-up geological surveys $25,000.00
----------
TOTAL $40,000.00
If we are successful in completing the 3 additional steps of
exploration, management will access the results to determine the advisability of
exploration of the property. If management determines the results merit further
exploration the plan is to raise additional capital, and/or seek an industry
partner to pay the further costs of operations. There is no assurance we will be
successful in raising the funds or finding a joint venture partner in order to
complete further exploration. We could be forced to abandon the property of sell
it for a significant loss if we are unable to secure the necessary capital.
If mineralization if not found on the property or if we can not recover
the metals profitably, then we intend to pursue other properties for
exploration. The purchase and explorations of such properties will depend on our
ability to raise additional capital. If we are unable to raise additional
capital, then we may need to cease operations if there is no mineral found on
the property or if the metals can not be recovered profitably.
17
Capital Resources and Liquidity.
As of June 30, 2004, the Company had no cash. The planned exploration
expenditures of phase two and three are estimated to cost $8,200 and an
additional $2,500 payment was due on the Lake Lillooet Property pursuant to the
Mineral Claims Agreement on May 15, 2004 which is 12 months from the title
registration on such claims. We have no plans to pay salaries to our officers or
employees during the next 12 months. We do not believe we will have sufficient
cash to meet our minimum exploration, including phase two and phase three, and
operating costs for the next 12 months unless we are successful in raising
additional capital. In addition, we will need to raise additional capital to
continue or operations past 12 months, and there is no assurance we will be
successful in raising the needed capital.
ITEM 3. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer have
concluded, based on an evaluation conducted within 90 days prior to the filing
date of this Quarterly Report on Form 10-QSB, that the Company's disclosure
controls and procedures have functioned effectively so as to provide those
officers the information necessary to evaluate whether:
(i) this Quarterly Report on Form 10-QSB contains any untrue statement
of a material fact or omits to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this Quarterly Report on Form 10-QSB, and
(ii) the financial statements, and other financial information included
in this Quarterly Report on Form 10-QSB, fairly present in all material
respects the financial condition, results of operations and cash flows
of the Company as of, and for, the periods presented in this Quarterly
Report on Form 10-QSB.
There have been no significant changes in the Company's internal
controls or in other factors since the date of the Chief Executive Officer's and
Chief Financial Officer's evaluation that could significantly affect these
internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
On July 6, 2004, the Company amended its articles of incorporation to
change the authorized capital from 50,000,000 shares of common stock to
500,000,000 shares of common stock.
On July 23, 2004, the Company did a 10 to 1 forward stock split of its
issued and outstanding
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shares of common stock from 9,257,000 shares to 92,570,000 shares. All
references to common stock have been adjusted to reflect the stock split.
On July 23, 2004, the Company changed its stock symbol to RIRI.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION
On July 26, 2004, the Company executed an agreement and made a deposit
of $55,000 to acquire a 75% interest in the Tudor Gold Property. The Tudor Gold
Property is located in Tudor and Grimsthorpe Townships in the Madoc-Bancroft
region of the Providence of Ontario and is located approximately 100 miles
northeast of Toronto, Canada. The property consists of twenty-two contiguous
unpatented mining claims containing sixty units covering approximately 2,965
acres of land. The Company intends to launch a comprehensive, property wide,
surface exploration program immediately. Once further funding is acquired and
the agreement can be fully executed, the Company intends to follow-up with drill
testing of the mineralized zones of the property. The data derived from the
drill testing of the various zones should enable the Company to identify and
assess gold bearing structures to ultimately establish the size and grade of the
gold resource.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit
Number Title of Document
10.1 Property Option Agreement between Louvicourt Gold Mines, Inc., a Quebec
corporation, and Rincon Resources, Inc., a Delaware corporation, dated
July 8, 2004.
31 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
(b) Reports on Form 8-K filed.
On April 13, 2004, the Company filed on Form 8-K under Item 1, Changes
in Control of Registrant.
On April 30, 2004, the Company filed on Form 8-K under Item 1, Changes
in Control of Registrant.
19
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Rincon Resources, Inc.
(Registrant)
DATE: August 19, 2004
---------------------------------
By: /s/ Graeme Scott
Graeme Scott
President, C.E.O., C.F.O. and Director
(Principal Executive and Financial Officer)
20
EXHIBIT 31
SECTION 302 CERTIFICATIONS
I, Graeme Scott, certify that:
1. I have reviewed this quarterly report on form 10-QSB of Rincon
Resources, Inc.
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report.
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the small business issuer as of, and for, the periods presented in
this report.
4. The small business issuer's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in exchange act rules 13a-15(e) and 15d-15(e)
for the small business issuer and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the small
business issuer, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period
in which this report is being prepared;
b) evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report on such
evaluation; and
c) disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small business
issuer's fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect,
the small business issuer's internal control over financial reporting;
and
5. The small business issuer's other certifying officers and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the
audit committee of small business issuer's board of directors (or
persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer's
ability to record, process, summarize and report financial information;
and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business
issuer's internal control over financial reporting.
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of my most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: August 19, 2004
/s/ Graeme Scott
Graeme Scott
President, C.E.O., C.F.O. and Director
(Principal Executive and Financial Officer)
22
EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Rincon Resources, Inc. on
Form 10-QSB for the period ending June 30, 2004, as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Graeme Scott,
Principal Executive and Financial Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of my knowledge and belief:
(1) the Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in
all material respects, the financial condition and result of
operations of the Company.
/s/ Graeme Scott
Graeme Scott
President, C.E.O., C.F.O. and Director
(Principal Executive and Financial Officer)
August 19, 2004
A signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
has been provided to the Company and will be retained by the Company and
furnished to the Securities and Exchange Commission or its staff upon request.
23