As filed with the Securities and Exchange Commission on June 21, 2002
Registration No. _______________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Shimoda Resources Holdings, Inc.
(Name of small business issuer in its charter)
Nevada 55112 75-2843787
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
15 River Road, Suite 230, Wilton, Connecticut 06897
(203) 563-9430
(Address and telephone number of principal executive offices)
David J. Mapley, President
15 River Road, Suite 230, Wilton, Connecticut 06897
(203) 563-9430
(Name, address and telephone number of agent for service)
Copies to:
William B. Barnett, Esq.
Sylvia R. Esquivel, Esq.
Law Offices of William B. Barnett
15233 Ventura Boulevard, Suite 410
Sherman Oaks, California 90403
(818) 789-2688
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this registration statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434 under
the Securities Act of 1933, check the following box. [ ]
If any of the securities being registered in this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
CALCULATION OF REGISTRATION FEE
========================================================================================================
Tile of each Proposed Proposed
class of securities Amount to maximum offering maximum aggregate Amount of
to be registered be registered price per share offering price(2) registration fee
========================================================================================================
Common Stock, par value $0.001 5,374,215(1) $12.00 $64,464,000 $5,931
========================================================================================================
(1) Includes 374,215 shares of Common Stock that may be offered for sale by a
Selling Shareholder.
(2) Estimate solely for the purpose of calculating the registration fee pursuant
to Rule 457(c).
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
2
SHIMODA RESOURCES HOLDINGS, INC.
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY.......................................................... 5
RISK FACTORS................................................................ 8
USE OF PROCEEDS............................................................. 13
CAPITALIZATION.............................................................. 14
DILUTION.................................................................... 14
SELLING SHAREHOLDERS........................................................ 15
DETERMINATION OF OFFERING PRICE............................................. 15
PLAN OF DISTRIBUTION........................................................ 16
MANAGEMENT'S................................................................ 19
DISCUSSION AND ANALYSIS OF PLAN OF OPERATION................................ 20
DESCRIPTION OF BUSINESS..................................................... 24
MANAGEMENT.................................................................. 29
EXECUTIVE COMPENSATION...................................................... 33
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............. 34
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................. 35
DESCRIPTION OF SECURITIES................................................... 35
LEGAL MATTERS............................................................... 36
EXPERTS..................................................................... 36
GLOSSARY.................................................................... 37
ADDITIONAL INFORMATION...................................................... 37
INDEX TO FINANCIAL STATEMENTS............................................... 39
SUBSCRIPTION AGREEMENT...................................................... S-1
3
The information contained in this preliminary Prospectus is not complete and may
be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This preliminary
Prospectus is not an offer to sell nor does it seek an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion, Dated June 21, 2002
PROSPECTUS
Shimoda Resources Holdings, Inc.
5,374,215 shares of Common Stock
Of the 5,374,215 shares of Common Stock offered hereby, we are selling,
5,000,000 shares and 374,215 shares may be sold from time-to-time by Selling
Shareholders. We will not receive any part of the proceeds from the sale of the
shares by the Selling Shareholders.
Although our Common Stock is quoted on the Over-the-Counter Bulletin ("OTC")
Board under the symbol "SHRH", there has been no trading and no active market
currently exists.
The offering price is $12.00 per share, and an investor must purchase a minimum
of 4,167 shares ($50,004 minimum investment). There is no minimum number of
shares that we have to sell. There will be no escrow account. We will use all
money as received from the offering.
investing in our common stock involves a high degree of risk. you should
carefully consider the matters described in "risk factors" beginning on Page 8.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Shimoda Resources Holdings, Inc.
15 River Road, Suite 230
Wilton, Connecticut 06897
4
PROSPECTUS SUMMARY INFORMATION
This summary highlights important information about our business and about
this offering. Since it is a summary, it does not contain all the information
you should consider before purchasing our Common Stock. You should read this
entire Prospectus carefully, especially "Risk Factors" and the financial
statements and related notes included elsewhere in this Prospectus, before
deciding to invest in shares of our Common Stock. In this Prospectus, unless the
context requires otherwise, "we", "us" and "Shimoda" refer to Shimoda Resources
Holdings, Inc.
Our Company
Shimoda Resources Holdings, Inc. ("Shimoda") is a resources-focused
business, incorporated in Nevada, formed in September 1973 and previously named
El Plata Mining Corp. and ElPlata Corporation. The Company changed its name to
Shimoda Resources Holdings, Inc. on April 17, 2001. Shimoda's Common Stock is
quoted on the OTC Bulletin Board under the trading symbol "SHRH". Shimoda will
use the net proceeds of this offering to purchase assets to be identified that
are consistent with its business objective.
Shimoda's business objective is to achieve an above-average return for its
shareholders through capital appreciation by acquiring a diversified portfolio
of assets, business operations and/or interests in resource companies and
resource licenses of "Emerging Europe", namely the Russian Federation
("Russia"), other former Soviet Union republics or Newly Independent States
("NIS"), and Central & Eastern Europe. The NIS is comprised of the following
countries: Armenia, Azerbaijan, Belarus, Estonia, Georgia, Kazakhstan,
Kyrgyzstan, Latvia, Lithuania, Moldova, Tajikistan, Turkmenistan, Ukraine, and
Uzbekistan. Armenia, Azerbaijan and Georgia make up the Caucasus republics.
Albania, Bulgaria, Czech Republic, Greece, Hungary, Poland, Romania, Slovakia,
Slovenia, Turkey and countries of Former Yugoslavia make up "Central & Eastern
Europe". In order to achieve an above average long-term return, we will be
guided by the following business principles:
o To concentrate on companies engaged in the production, processing or
distribution of natural resources.
o To seek low-cost producers in order to protect against lower market
prices and maximize profits in rising price environments.
o To diversify geographically within regions and by industry sectors.
o To avoid speculating in commodities.
o To create sector clusters, e.g. Platinum Group metals, Nickel, etc.
We will concentrate on four resources sectors: energy, precious metals,
non-ferrous metals and industrial, paper and forest products. The relative
weighting of each resource sector and each region will be selected according to
its attractiveness at any given time. Acquisitions may be made through wholly
owned subsidiaries formed in other jurisdictions that benefit from the double
tax treaty currently in force between many Emerging European countries and such
jurisdictions.
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We may, for cash management purposes, invest in U.S. Dollar quoted
securities issued by non-US entities such as obligations of national
governments, their agencies and instrumentalities, bank obligations, securities
issued by international development agencies and shares of money market funds,
as well as the listed equities or fixed-income instruments of resource companies
operating in Emerging Europe. Purchases of listed equities also will be for the
purpose of obtaining information or the forming of strategic relationships that
advance Shimoda's business objective.
We intend to have a significant influence on the management and operation
of our acquisition targets. Influence may be enforced through participation in
our target's credit committees, in joint venture agreements, off-take
agreements, or other commercial instruments.
Conducting business in the Emerging Europe region involves a high degree of
risk and special considerations not typically associated with conducting
business in other more established economies, such as political, economic and
legal uncertainties, social unrest, currency fluctuations, delays in settling
securities transactions and risks of loss arising out of share registration.
No assurance can be given that our business objective will be achieved. See
"RISK FACTORS."
The Offering
Common Stock outstanding prior to the offering.... 541,108 shares
Common Stock offered by Shimoda 5,000,000 shares
Common Stock offered by Selling Shareholders...... 374,215 shares
Minimum purchase.................................. 4,167 shares of Common Stock
($50,004)
Investor Suitability Standards.................... $100,000 annual income or
$500,000 net worth
(inclusive of home)
Common stock outstanding after
the offering(1)................................... 5,541,108 shares
Use of Proceeds................................... We would receive a maximum
of $60,000,000 of capital
from the sale of the Common
Stock. Proceeds from the
sale of Common Stock will be
used for acquiring resource
licenses and interests in
resource companies in
Emerging Europe.
6
OTC Symbol........................................ SHRH
Risk Factors...................................... An investment in our Common
Stock involves a high degree
of risk. See "Risk Factors"
on page 8.
(1) Assumes that the maximum number of shares of Common Stock is sold in this
offering.
Summary Financial Data
Shimoda Resources Holdings, Inc.
(A Development Stage Company)
Historical February 28, 2002 After Effective
ASSETS (Unaudited) Adjustments Pro Forma Adjustments Offering
------------ ------------ ------------ ------------ ------------
Cash $ 556 $ 130,034 $ 130,590 $ 58,600,000 $ 58,730,590
Investments
European Nickel PLC 0 1,571,441 1,571,441 1,571,441
Gulf International Minerals Ltd 00 760,000 760,000 760,000
------------ ------------ ------------
Other assets 16,349 16,349 16,349
------------ ------------ ------------
Total assets $ 16,905 $ 2,478,380 $ 61,078,380
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 802 $ 802 $ 802
Stockholders equity
Common stock 5,022 372 5,394 5,000 10,394
Additional paid in capital 78,261 2,461,103 2,539,364 58,595,000 61,134,364
Retained earnings (deficit) (67,180) (67,180) (67,180)
------------ ------------ ------------
Shareholders equity 16,103 2,477,578 61,077,578
------------ ------------ ------------
Total liabilities and equity $ 16,905 $ 2,478,380 $ 61,078,380
============ ============ ============
* For details and explanation, see the Financial Statements which accompany and
are part of this Prospectus.
7
RISK FACTORS
The purchase of Shimoda shares is speculative and involves a high degree of
risk. Prospective investors should carefully consider all of the information
contained in this Prospectus and, in particular, the following factors which
could adversely affect the operation and prospects of the Company, before making
a decision to purchase our shares. Conducting business in resources companies
and licenses of Emerging Europe involves a high degree of risk and special
considerations not typically associated with conducting business in the United
States, and is considered highly speculative.
Cautionary Statements
The following cautionary statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 in order for us to avail ourselves of
the "safe harbor" provisions of that Act. The discussions and information in
this Prospectus may contain both historical and forward-looking statements. To
the extent that this Prospectus contains forward-looking statements regarding
the financial condition, operating results, business prospects, or any other
aspect of Shimoda, investors should note that our actual financial condition,
operating results and business performance may differ materially from that
projected or estimated by us in forward-looking statements. We have attempted to
identify, in context, factors we currently believe may cause actual, future
experience and results to differ from our current expectations. The differences
may be caused by a variety of factors, including but not limited to the
following:
(a) the risk of a global recession and consequent decline in demand and
prices;
(b) the risk of nationalization or expropriation total loss;
(c) greater social, economic and political uncertainty including regional
conflict, the risk of war and terrorist activities;
(d) delays in settling securities transactions and risk of loss arising
out of Emerging Europe's systems of share registration and custody;
(e) risks in connection with the maintenance of Shimoda's portfolio of
securities and cash with foreign sub-custodians and securities
depositories, including the risk that appropriate sub-custody
arrangements will not be available to it;
(f) the risk that it may be impossible or more difficult than in other
countries to obtain and/or enforce a judgment;
(g) pervasiveness of corruption and crime in the economic systems;
(h) greater price volatility, substantially less liquidity and
significantly smaller market capitalization of companies' shares in
the markets in which Shimoda acquires such companies;
(i) currency exchange rate volatility and the lack of available currency
hedging instruments;
(j) higher rates of inflation (including the risk of social unrest
associated with periods of hyperinflation);
(k) controls on foreign investment and local practices disfavoring foreign
investors and limitations on repatriation of invested capital, profits
and dividends, and on Shimoda's ability to exchange local currencies
for U.S. dollars;
(l) the risk that Emerging European governments or other executive or
legislative bodies in Emerging Europe may decide not to continue to
support the economic reform programs implemented since the dissolution
of the Soviet Union and could follow radically different political
and/or economic policies to the detriment of investors, including
non-market-oriented policies such as the support of certain industries
at the expense of other sectors of investors or a return to the
completely centrally planned economy that existed prior to the
dissolution of the Soviet Union;
(m) the risk that dividends will be withheld at the source;
(n) the difference in, or lack of, auditing and financial reporting
standards, which may result in unavailability of material information
about the acquisitions;
(o) the risk that the tax systems will not be reformed to prevent
inconsistent, retroactive and/or exorbitant taxation;
(p) the fact that statistical information regarding the Emerging European
economies may be inaccurate or not comparable to statistical
information regarding the U.S. or other economies;
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(q) less extensive regulation of the securities markets; and
(r) the risks associated with the difficulties that may occur in pricing
Shimoda's acquisitions at the time of initial participation or at
disposition.
Specific Risk Factors
1. We Have Limited Operating History. We have limited operating history in
the businesses that we plan to conduct. There can be no assurance at this time
that we can operate profitably or that we will have adequate working capital.
While our management has experience in making business acquisitions and
investing in Emerging Europe, as a company we do not have a historical operating
track record on which to base a judgment on our business prospects and our
future financial condition and operating results.
2. We Can Make No Assurances of Profitability. Our business is speculative
and dependent upon the financial condition and operating results of the resource
companies and resource licenses that we acquire. There can be no assurance that
we will be successful or that our acquisitions will earn any revenues or profit
or that investors will not lose their entire investment.
3. Our Type of Business Is More Speculative Than Others. Countries in which
we conduct business may be subject to a greater degree of economic, political
and social instability than is the case in the United States and Western
European countries. Such instability may result from, among other things, the
following: (i) authoritarian government or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means, such as force; (ii) popular unrest associated with
demands for improved political, economic and social conditions; (iii) internal
insurgencies, such as civil disobedience or civil war; (iv) hostile relations
with neighboring countries; and (v) ethnic, religious and racial disaffection.
We may allocate our total assets to direct acquisitions that we expect to
eventually dispose of, either through the listing or sale of the securities back
to the company we invested in or to another investor. Acquisitions consist of
(i) the purchase from an enterprise of an equity interest in partnerships, joint
ventures or similar enterprises, and (ii) the purchase of such an equity
interest in a company from an investor in the company. Such acquisitions may
involve a high degree of business and financial risk. Due to the absence of a
public trading market for most of our potential acquisition candidates, they
will be less liquid than listed and actively traded securities. Although such
acquisitions may, in some cases, be resold in privately negotiated transactions,
the prices realized from their sales could be less than those originally paid by
us or less than what may be considered their fair value and in some cases it may
not be possible to identify a buyer. If the securities in such acquisitions are
required to be registered under the securities laws of one or more jurisdictions
before being resold, we may be required to bear the expenses of registration. In
addition, we may be unable to dispose of such acquisitions at current market
prices and may have to dispose of them over extended periods of time. Because of
the possible absence of any trading market for such acquisitions, it may take
longer to liquidate those positions than it would for listed securities delaying
or decreasing our expected returns.
4. There Are Political and Economic Risks Inherent In Emerging Europe. Our
acquisitions will be subject to numerous factors related to conducting business
in a foreign country, any of which could have a significant impact on the
securities markets and on the businesses in which we acquire an interest. There
can be no assurance that political, economic, social, or other developments in
the region will not have a material adverse effect on us, including our ability
to develop a sufficient number of suitable acquisition opportunities, realize
adequate returns and repatriate our assets. Our value may therefore be affected
by uncertainties such as political or diplomatic developments, social and
religious instability, changes in government policies, taxation and interest
rates, currency repatriation restrictions and other political and economic
developments in the law or regulations in Emerging Europe and, in particular,
the risks of expropriation, nationalization and confiscation of assets and
changes in legislation relating to the level of foreign ownership. The
political, economic and social upheaval experienced by the region since the
collapse of the Soviet Union at the end of 1991 cannot be overstated. Although
the transition from centrally planned, command systems to
9
market orientated, democratic models is currently taking place, the terms on
which these occur are not yet fully established. The consequences, however,
could be profound and investors should take into account the unpredictability of
their eventual outcome. The business opportunities being targeted by Shimoda
depend to a large extent on the continuation and further development of the
reform process. A stable basis for reform may not yet be in place and there can
be no assurance that the reforms will continue or that they will not erode. The
failure of the reforms to continue and to develop would adversely affect our
performance.
5. We Are Dependant on Global Macroeconomic Trends, Especially in Emerging
Europe. A sustained global economic recession would have an adverse impact on
Shimoda because of the decline in demand and prices for the products produced by
Shimoda's businesses. With respect to Emerging Europe, the planned economy of
the former Soviet Union was run with qualitatively different objectives and
assumptions to those prevalent in a market system. Much of the industrialization
took place during the communist period and the level of centralization and
monopolism in such a large country was commensurate. Similarly in its economic
relations the Soviet economy was orientated overwhelmingly towards other
communist states whose needs have now changed. Significant macro-economic
obligations also arise as a result of the non-viability in certain cases of
entire cities established in remote regions around one principal economic
activity. The domestic tax burden is high and the discretion of local
authorities to create new forms of taxation has resulted in a proliferation of
taxes, in some cases imposed or interpreted retrospectively. Instability has
resulted in a short-term approach, for instance, in relation to bank lending.
There are limited means for channelling what domestic savings exist through
institutionalized and rational means. Businesses can experience difficulty in
obtaining working capital. Inter-enterprise debt has now become a macro-economic
issue. Banks and financial systems are not well developed and
telecommunications, as well as other forms of infrastructure, are often of low
standards. High crime levels, including extortion and fraud, have now caught the
attention of bodies outside Russia/NIS. The performance of Shimoda's portfolio
of businesses and acquisitions will be affected by the performance of the
Emerging European economies. The high inflation, wage inflation and substantial
international indebtedness of these economies illustrate the extent to which
they have struggled to transform themselves into market-oriented models. The
transition to a more market-oriented economy is difficult. Managers and workers
face the prospect of considerable changes in their working practice and there
are inevitably problems of adjustment, compounded in many cases by years of
under-investment. Many businesses may be unable to adapt to the demands of a
market economy and increased international competition. A great deal will depend
upon the extent to which efficiencies can be introduced, and management and
human resources developed, in order for enterprises to compete effectively
against better-established Western competitors. Many resource projects currently
offered for sale in the region have been recently restructured. The mass
offering of such projects may lead to procedural errors in some cases, and it is
possible that participation in such projects will be subject to challenges, and
potentially to reversal, in the courts. Furthermore, both the source of supply
and the nature of demand have fundamentally changed since the break-up of the
Soviet Union. The ultimate extent and success of the transition to the market
economies will be influenced by both internal and external political factors
such as the degree of Western cooperation and the development of suitable
markets in neighboring regions. While it is this period of change that Shimoda
believes may offer investors the greatest opportunities, it is possible that the
emerging market economies will not achieve their intended economic goals.
6. There Are Legal Risks in Emerging Europe. Because of the recent
formation of the securities markets as well as the underdeveloped state of the
banking and telecommunications systems in Emerging Europe, settlement, clearing
and registration of securities are subject to significant risks. Ownership of
shares is defined according to entries in the corporation's share register and
normally evidenced by extracts from the registrar or by formal share
certificates. However, there is no central registration system for shareholders
and these services are often carried out by the companies themselves or by
registrars located throughout the region. These registrars are not necessarily
subject to effective state supervision and it is possible for Shimoda to lose
its registration through fraud, negligence or even mere oversight. While Shimoda
will endeavor to ensure that its interests continue to be appropriately
recorded, by itself or through a custodian or other agent inspecting the share
register and by obtaining extracts of share registers through regular
confirmations, these extracts have no legal enforceability and it is possible
that subsequent illegal amendment or other fraudulent act may deprive Shimoda of
its ownership rights or improperly dilute its interests.
10
Legislation governing commercial relationships, ownership of property and
taxation in Emerging Europe continues to evolve and develop. Most existing
legislation is relatively new and subject to amendment and judicial
interpretation. It is not possible to know precisely what the legal environment
will be through the course of Shimoda's activity in the region. It is possible,
therefore, that Shimoda could be subject to regulations which are not
anticipated today or at the dates that acquisitions by Shimoda are made. None of
Shimoda, its Board of Directors, nor any of their agents, make any
representation or warranty in respect of, or any guarantee of, the licensing or
registration process concerning acquisitions of resource licenses and companies
transacted by Shimoda.
7. There Is Risk In Acquiring Un-rated Debt Securities. Shimoda may acquire
un-rated debt securities as well as debt securities that are rated in any
category by recognized statistical rating organizations when consistent with its
business objectives and policies. Lower-rated debt securities (which are
commonly referred to as "high-yield bonds") generally involved greater
volatility of price and risk of loss of principal and income than higher rated
securities. Un-rated debt securities that Shimoda may acquire generally involve
risks equivalent to those of lower-rated debt securities. A debt security rated
"D" by Standard & Poor's Corporation means that the issuer is in payment
default.
8. We May Have Higher Operating Expenses Than Some Of Our Competitors. Our
operating expense ratio can be expected to be higher than that of other
companies operating in more developed regions.
9. We May Have To Register Under the Investment Company Act of 1940.
Shimoda is not currently registered under the United States Investment Company
Act of 1940, as amended (the "1940 Act"). Consequently, it currently does not
have the benefit of the special restrictions imposed by the 1940 Act, including
but not limited to rules relating to independent oversight, disclosure, and
mitigation of inherent conflicts of interest. Presently, our plan is to manage
our business so that we doe not have to register as an investment company.
Nevertheless, there is no assurance that we will not be required to register
under the 1940 Act. Registration under the 1940 Act is expected to increase our
operating expenses and regulatory compliance costs.
10. The Public Trading Price Of Our shares May Be Discounted From Our Book
Value. Shares of companies similar to us frequently trade at a discount to their
book value. This characteristic is a risk separate and distinct from the risk
that our book value may decrease as a result of our acquisition activities and
may be greater risk for investors expecting to sell their shares in a relatively
short period of time following completion of this offering.
11. There May Be Fluctuations in Our Operating Results. Our revenues and
results of operations are significantly dependent upon the timing and success of
the acquisitions that we expect to make, which timing and success cannot be
predicated with certainty. We may experience significant quarterly variations in
our operations, and results in any particular quarter may not be indicative of
results in subsequent periods.
12. Our Offering Price Is Arbitrary. The offering price of the shares of
Common Stock has been determined by us and bears no relationship to our assets,
book value, potential earnings, net worth or any other recognized determinant of
value.
13. Management Has Full Discretion In The Use Of Proceeds Of This Offering.
Management will have broad discretion as to the application of the net proceeds
from the sale of these shares.
14. We Have No Minimum Offering. We do not have a minimum offering, and we
may use the proceeds from the issuance of our shares once the corresponding
subscription agreements are accepted. If we only raise a minimum of capital, it
might leave us with insufficient capital to implement our business plan,
11
resulting in a complete loss of an investors' investment, unless we are able to
raise the required capital from alternative sources which have not been
explored. There is no assurance that alternative capital or financing would be
available.
15. Management Fees to Affiliate. Our Board of Directors has retained
Shimoda Capital Advisors Limited to manage our day-to-day operations. Because
Shimoda Capital Advisors Limited is an affiliate of our CEO, the management and
performance fees we agreed to pay Shimoda Capital may be deemed to have not been
negotiated at "arms-length".
16. Conflicts of Interest. Shimoda Capital Advisors Limited, the Business
Manager, and its subsidiaries, affiliates, employees and agents may become
involved with the promotion of, may provide advice to, or manage other
businesses that are similar to Shimoda. Accordingly, conflicts of interest may
arise. Any such party will have regard to Shimoda's interests, also having
regard to such party's other clients and, where potential conflicts of interest
arise, will at all times endeavor to ensure that any such conflict is resolved
fairly. Any such party may hold shares and shall not be prevented from dealing
with Shimoda, as agent, provided that any such dealings are on terms no less
favorable to Shimoda than could reasonably have been obtained had the dealing
been effected with an independent party. In addition, Shimoda's Board of
Directors and the management of Shimoda Capital, through its managing directors,
are in many cases the same individuals. Conflicts of interest may arise in
allocating management time, services or functions among Shimoda and Shimoda
Capital or other similar entities that may be formed by Shimoda Capital in the
future. The Board of Directors and David J. Mapley, CEO and President, will
devote such time and attention to Shimoda's affairs as they determine to be
necessary for the conduct of Shimoda's business.
17. There Is No Assurance That Dividends Will Be Paid. Shimoda does not
currently anticipate declaring and paying dividends to its Shareholders in the
near future. It is Shimoda's current intention to apply net earnings, if any, in
the foreseeable future to increasing its capital base. Prospective investors
seeking or needing dividend income or liquidity should therefore not purchase
the shares. There can be no assurance that Shimoda will have sufficient earnings
to declare and pay dividends to the holders of its Common Stock, and in any
event, a decision to declare and pay dividends is at the sole discretion of
Shimoda's Board of Directors.
18. We Depend On Certain Key Personnel. Our success is substantially
dependent on the performance of Shimoda Capital's executive officers and key
employees. Given Shimoda's early stage of development, it is dependent on its
ability to retain and motivate high quality personnel. Although we believe it
will be able to engage qualified personnel for such purposes, an inability to do
so could materially adversely affect its ability to market, sell, and enhance
its products. While David J. Mapley, our CEO and President, plans to devote no
less than 50% of his full time to Shimoda, certain other Shimoda employees may
only be available to it on a part-time basis. The loss of one or more key
employees or the inability to hire and retain other qualified employees by
Shimoda Capital could have a material adverse effect on Shimoda's business.
19. The Quality of Geological Information Available To Shimoda May Be
Unreliable. Published economic and geological information for Emerging Europe is
not necessarily reliable since this kind of data has only recently become
available and the Western techniques of data collection, analysis, confirmation
and presentation are not, as yet, prevalent. This problem extends to both
official data and geological information at the project level. Geological
surveys and assay sampling standards in Emerging Europe may not be equivalent to
those applicable in more developed market economies. The quality and reliability
of available information will therefore be less than in respect of resource
projects in Western countries. Due to the relative quality of information and
lack of availability of historical data, this applies even where supplementary
surveys have been prepared or carried out to international standards.
Obligations on Emerging Europe geological committees to publish information have
also been relatively limited in the past, thus further restricting opportunities
for Shimoda to carry out due diligence. At present, Shimoda will be obliged to
make acquisition decisions and valuations on the basis of geological information
that will be less complete and reliable than that customarily available in the
West.
12
20. Shimoda Will Be Exposed To Currency Risk. Shimoda may hold a proportion
of its assets in local currency-denominated securities. For example, the Ruble
has in recent years substantially depreciated against the US dollar and Western
European currencies. In addition, investors should be aware that the Ruble is
not convertible outside Russia into other currencies. It is possible that
further depreciation, volatility, limited convertibility and changes in both
exchange control regulations and tax laws may adversely affect the value of
Shimoda's assets . Shimoda may attempt to mitigate the currency risks by use of
a suitable hedging instrument to the extent such instruments are available on
terms acceptable to it.
21. Emerging Europe Lacks A Market Economy. Emerging European businesses do
not have any recent history of operating within a market-oriented economy. In
general, relative to companies operating in Western economies, such companies
are characterized by a lack of (i) management with experience of operating in a
market economy, (ii) modern technology and (iii) a sufficient capital base with
which to develop and expand their operations. It is unclear what will be the
effects on these companies, if any, as they attempt to move toward a more
market-oriented economy.
22. Official Data May Be Unreliable. The quality and reliability of
official data published by the governments and government agencies of the
Emerging Europe region is generally not equivalent to that of more developed
Western countries.
23. Shimoda May Encounter Repatriation Restrictions. Regional foreign
investment legislation currently provides general assurances of the rights of
foreign investors to remit profits and dividends from their investments in
Emerging Europe. In some cases, however, these rights are subject to currency,
tax and export restrictions, and no guarantee can be given that all profits will
be capable of being remitted from domestic investments.
24. Shimoda May Become Subject To Unexpected Local Taxation. For a summary
of Shimoda's understanding of current tax law and practice as it affects
Shimoda, see "TAX CONSIDERATIONS." Regional tax law and practice is not as
clearly established as that of the Western nations. It is possible therefore
that the current interpretation of the law or understanding of practice may
change or, indeed, that the law may be changed with retrospective effect.
Accordingly, it is possible that Shimoda could become subject to taxation that
is not anticipated either at the date of this Prospectus or when acquisitions
are made, valued or sold.
25. Shimoda Indemnifies Its Management. Shimoda's Bylaws provide that it
will indemnify and hold harmless its officers and directors against claims
arising from its activities, to the maximum extent permitted by Nevada law. If
Shimoda were called upon to perform under its Bylaw indemnification provisions,
then the portion of its assets expended for such purpose would reduce the amount
otherwise available for its business.
26. There Will Be A Limited Market for Shimoda Shares. There is no
assurance that a public market for the Shimoda's stock will develop. There is no
assurance that Shimoda's stock will eventually be accepted for trading on any
stock exchange other than the OTC Bulletin Board, where it now trades under the
symbol SHRH. Shareholders may not be able to liquidate their investments in the
event of emergency or for any other reason. Shimoda shares may not be acceptable
as collateral for a loan. A purchase of Shimoda shares should be considered only
as a long-term investment.
USE OF PROCEEDS
The maximum gross proceeds from the sale of the shares are $60,000,000. The
net proceeds from the maximum offering are expected to be approximately
$58,600,000 after the payment of placement fees and offering and listing costs,
including printing, mailing, legal, and accounting costs. The net proceeds from
the offering of the shares are expected to be utilized to acquire a diversified
portfolio of resource companies and resource licenses in Emerging European
markets, including but not limited to the Russian Federation, other former
Soviet Union republics or Newly Independent States, and Central and Eastern
Europe. See "BUSINESS."
13
Should Shimoda receive net proceeds in an amount less than $58,600,000, it
will reduce the projected scale of its business and acquisition plan. In such
circumstance, Shimoda will execute its plan to acquire assets, business
operations and/or interests in resource companies and resource licenses of
"Emerging Europe" on a smaller scale than if the entire amount of the offering
had been subscribed.
CAPITALIZATION
The following table sets forth as of February 28, 2002 (i) the
capitalization of Shimoda and (ii) the capitalization of Shimoda as adjusted to
reflect the sale of 111,000 shares of Common Stock pursuant to an offering under
Regulation S of the Securities Act of 1933 in April 2002, the issuance of
261,000 shares of Common Stock in a like exchange to acquire certain mining
assets in April 2002 and the sale of 5,000,000 shares of Common Stock at a price
of $12.00 per share as of June 21, 2002, and the application of the estimated
net proceeds from the sale of those shares.
As of February 28, 2002 As Adjusted
(Unaudited) (Unaudited)
------------ ------------
Indebtedness:
Long-term indebtedness Nil Nil
Stockholders' Equity:
Common Stock, par value $0.001 per share,
100,000,000 shares authorized, 166,893 issued $ 5,022 $ 10,394
and outstanding, 5,538,893 as adjusted
Additional Paid-in Capital 78,261 61,134,364
Accumulated Deficit (67,180) (67,180)
Total Capitalization 16,103 61,077,578
============ ============
DILUTION
The difference between the public offering price per share of Common Stock
and the as adjusted pro forma net tangible book value per share of Common Stock
after this offering constitutes the dilution to investors in this offering. Net
tangible book value per share is determined by dividing the net tangible book
value (total assets less intangible assets and total liabilities) by the number
of outstanding shares of Common Stock.
As of February 28, 2002, the net tangible book value of Shimoda was $16,905
or approximately $0.10 per share of Common Stock. Net tangible book value per
share consists of total assets less intangible assets and liabilities, divided
by the total number of shares of Common Stock outstanding. Giving effect to the
issuance of shares in a private placement and in acquisition of shares of
European Nickel plc and Gulf International Minerals in April 2002, the pro forma
net tangible book value per share was $4.60. After giving effect to these
changes and the issuance of 5,000,000 shares of Common Stock, the pro forma net
tangible book value at February 28, 2002, would have been $61,077,578 or
approximately $11.03 per share. As of February 28, 2002, the net tangible book
value per share of Common Stock owned by Shimoda's current stockholders would
have increased by approximately $6.43 without any additional investment on their
part and the purchasers of Common Stock will incur a blended average immediate
dilution of approximately $0.97 per share from the purchase price. "Dilution"
means the difference between the offering price and the pro forma net tangible
book value per share after giving effect to the offering. Holders of Common
Stock may be subjected to additional dilution if any additional securities are
issued as compensation or to obtain additional financing. The following table
illustrates the dilution that investors participating in this offering will
incur and the benefit to current shareholders as a result of this offering:
14
Exercise price per share(1)...............................................$12.00
Pro forma net tangible book value per share as of February 28, 2002.......$ 0.10
Pro forma effect of issuance of securities in private placement
and for acquisition of Shares of European Nickel plc
and Gulf International Minerals...........................................$ 4.50
Pro forma net tangible book value per share as of February 28, 2002 ...... 4.60
Increase per share attributable to new investors.......................... 6.43
Pro forma net tangible book value after this offering.....................$11.03
Dilution per share to new investors.......................................$ 0.97
- -----------------------------
(1) Before deduction of estimated offering expenses. Assumes that all
5,000,000 shares are sold.
SELLING SHAREHOLDERS
The following table provides certain information with respect to the Selling
Shareholders' beneficial ownership of Common Stock as of April 30, 2002 and as
adjusted to give effect to the sale of all of the shares in the offering.
Lombard Odier is not an affiliate of Shimoda, and it does not have and has not
had a material relationship with Shimoda during the past three years. See "Plan
of Distribution." The Selling Shareholders possess sole voting and investment
power with respect to the securities shown.
NUMBER OF SHARES BENEFICIALLY
NUMBER OF SHARES OWNED AFTER OFFERING(1)
BENEFICIALLY OWNED NUMBER OF SHARES -----------------------------
NAME BEFORE OFFERING BEING OFFERED NUMBER OF SHARES PERCENTAGE
- ----------------------------- ------------------ ---------------- ---------------- ----------
Lombard Odier Invest- 111,000 111,000 111,000 2.0%
Eastern Europe Fund
Shimoda Resources, Ltd. 261,000 261,000 261,000 4.7%
Shimoda Capital Advisors Ltd.(2) 1,421 1,421 1,421 0.002%
Shimoda Capital (USA) Inc.(2) 794 794 794 0.001%
(1) Assumes that all shares being offered pursuant to this Prospectus will be
resold by the Selling Shareholders and none will be held by the Selling
Shareholders for their own account.
(2) David Mapley, CEO and President, is an Officer, Director and principal
shareholder of Shimoda Capital (U.S.A.), Inc. and Shimoda Capital Advisors, Ltd.
DETERMINATION OF OFFERING PRICE
OFFERING BY SHIMODA:
There is a limited established public market for the Common Stock being
offered under this Prospectus. We are currently registered on the
Over-the-Counter Bulletin Board system, and we intend to trade on the OTC
Bulletin Board system. However, we are unable to determine the price at which
the stock will trade.
We determined the offering price of the Common Stock based on several
factors: (1) potential investor interest, (2) our current capital needs, and (3)
our ability to pay future dividends, although no dividends are contemplated at
this time. The offering price should not be considered to bear any relationship
to our assets, book value or net worth and should not be considered to be an
indication of our value.
15
OFFERING BY SELLING SHAREHOLDER:
The Selling Shareholders are free to offer and sell their Common Stock at
such times, in such manner and at such prices as each may determine. The types
of transactions in which the Common Stock is sold may include transactions in
the over-the-counter market, if or when it develops, negotiated transactions,
the settlement of short sales of Common Stock through the writing and exercise
of options or a combination of such methods of sale. The sales will be at market
prices prevailing at the time of sale or at negotiated prices. Such transactions
may or may not involve brokers or dealers. Each Selling Shareholder has advised
us that it has not entered into agreements, understandings or arrangements with
any underwriters or broker-dealers regarding the sale of its shares. Each
Selling Shareholder does not have an underwriter or coordinating broker acting
in connection with the proposed sale of the Common Stock. The shares being
offered by the Selling Shareholders are being registered to permit public
secondary trading, and each Shareholder may offer all or part of its registered
shares for resale from time-to-time. However, each Selling Shareholder is under
no obligation to sell all or any portion of its shares.
PLAN OF DISTRIBUTION
Offering By Shimoda
We are offering up to 5,000,000 shares of our Common Stock at a price of
$12.00 per share to be sold directly by our CEO and President, David J. Mapley,
on behalf of Shimoda. Our offering is a self-underwritten, best efforts
offering. However, Shimoda Capital Advisors Limited, an affiliate, may refer
prospective investors to us, and Shimoda Capital would receive fees equal to 2
percent of the proceeds from the sale of shares to those persons referred by
Shimoda Capital.
We may retain a placement agent and/or use the services of NASD member
broker-dealer to assist us in the sale of the shares. We may pay broker-dealers
or placement agents fees of 2 percent of the gross offering proceeds received
from their efforts. As of the date of this Prospectus, we have not retained a
broker for the sale of securities being offered. In the event that we retain a
broker dealer who may be deemed an underwriter, an amendment to our registration
statement will be filed.
The minimum purchase is 4,167 shares ($50,004).
There is currently a limited market for our shares and no assurances can be
given that a more liquid public market for such securities will develop after
the closing of this offering or that such market would be sustained if
developed. While we intend to procure or encourage one or more broker or dealers
to act as a market maker for our securities following this offering, no such
efforts have yet been undertaken and we cannot assure you that any such efforts
will prove successful.
The offering will remain open for a period of nine months, unless the
entire maximum offering has been sold prior to that time, or we decide, in our
sole discretion, to cease all selling efforts. We have no plans to extend the
period of the offering beyond nine months. Our officers, directors and
stockholders and their affiliates may purchase shares in this offering.
There is no escrow for any of the proceeds of this offering. Accordingly,
we will have use of any proceeds received once a subscription agreement is
received and accepted by us and funds have cleared. The proceeds shall be
non-refundable except as may be required by applicable law.
Subject to the requirements of the Securities Act and applicable state
securities laws, we plan to offer and sell the shares in New York and
California; however, we may consider accepting subscriptions from interested
investors in other states if it is not unreasonably burdensome to comply with
applicable securities law requirements in such states. We plan to promote the
offering by issuing press releases and advertising in newspapers and on the
radio, and we may distribute request cards and mail copies of our press
releases, advertisements and this Prospectus to prospective investors in those
states. Any radio or television broadcasts and written materials used in
connection with the offering, and not accompanied or preceded by a Prospectus,
will include only such limited information as is permitted under federal and
applicable state law
16
We are selling the shares through the efforts of our CEO and President, Mr.
David J. Mapley, possibly with the use of a registered broker-dealer. If no
registered broker-dealer is retained, there may be less due diligence performed
in conjunction with this offering than would be performed in an underwritten
offering. We consider Mr. Mapley not to be a broker under the Securities
Exchange Act of 1934 because he has not been, and will not be, in the business
of effecting transactions in securities for the accounts of others.
SUBSCRIPTION PROCEDURES
How To Subscribe
If you desire to purchase our shares of Common Stock you should:
1. Complete, date and sign the subscription agreement you received with this
Prospectus, and the form of which is attached as an exhibit to this
document;
2. Make a check, bank draft or money order payable to "Shimoda Resources
Holdings, Inc." in an amount equal to the subscription price of $12.00
times the number of shares you wish to purchase (the minimum purchase is
4,167 shares = $50,004); and
3. Deliver the completed subscription and payment to Shimoda Resources
Holdings, Inc. at the following address:
David J. Mapley, CEO and President
15 River Road, Suite 230
Wilton, Connecticut 06897
(203) 563-9430
You will not be able to revoke your subscription after you have delivered
your executed subscription agreement and payment to us. However, we reserve the
right, in our sole discretion, to accept or reject any subscription, in whole or
in part for any reason whatsoever, and no subscription agreement is binding on
us until accepted. We reserve the right to accept subscriptions on a first-come,
first-serve basis or on a prorated basis if we receive subscriptions for more
than 5,000,000 shares. If we do not accept all or a portion of a subscription,
we will return the unaccepted portion of your subscription funds without
interest.
We will notify you promptly whether your subscription has been accepted. If
we reject your subscription, we will promptly return your subscription agreement
and payment, without interest. If we accept your subscription, your check will
be deposited in our general account and will become immediately available for
use by us for the purposes described in our "Use of Proceeds" discussion.
The sale of the shares to subscribers is subject to our determination to
terminate the offering, which is subject to our sole discretion, and we will
return your investment, without any interest, should we decide to terminate the
offering prior to acceptance of any subscription.
We will deliver a certificate or certificates representing your ownership
of our Common Stock within 60 days of the acceptance of your subscription. Our
officers and directors and their affiliates may purchase shares in this offering
on the same terms as other investors. There is no limit to the amount of
securities our officers and directors and their affiliates may purchase in this
offering, and any such purchases will be for investment purposes only and not
with the intent of resale. At this time there are no known arrangements with our
officers, directors or affiliates to purchase shares in this offering
17
If you have any questions about the offering or how to subscribe, please
call Mr. Peter Lazaro, our Chief Financial Officer, at (203) 563-9430. You
should retain a copy of the completed subscription agreement for your records.
You must pay the subscription price at the time you deliver your subscription
agreement.
Investor Suitability Standards
The Company has imposed certain standards to which prospective investors
must conform in order to be eligible to receive an offer and/or to purchase the
Shares of the Company.
A potential investor must be a resident of a state approved by the Company
for sale of the Shares therein.
Each potential investor will be required to represent that he meets the
standards set forth below:
(1) His annual income is at least $100,000; or
(2) His net worth (inclusive of home) is $500,000 or more; or
(3) The potential investor satisfies the general standards described below
in the next paragraph.
The Company, in its sole discretion, may also extend the opportunity to
purchase Shares to a potential investor that (a) is able to bear the economic
risk of the potential investor's investment in the Shares; and (b) has such
knowledge and experience (including prior investment experience) in financial
and business matters so as to have the capacity to protect the potential
investor's own interests in connection with a purchase of the Shares and is
capable of evaluating the merits and risks of the prospective purchase of the
Shares.
The Shares may also be sold to potential investors who are purchasing in a
fiduciary capacity for a person or entity satisfying the above suitability
standards.
The Company will (i) require potential investors to complete a Subscription
Agreement, (ii) make or cause to be made such further inquiry as it deems
appropriate, and (iii) in its sole discretion, determine which potential
investors' subscriptions may be accepted by the Company.
If the Company is incorrect in its assumptions as to the suitability of a
particular potential investor, as such suitability is set forth in the
representations described above, then the delivery of this Prospectus to such
potential investor shall not be deemed to be an offer or the solicitation of an
offer, and this Prospectus shall be immediately returned to the Company.
The Company reserves the right to review the suitability of any person
desiring to purchase the Shares and in connection with such review to waive such
suitability standards as to such person as the Company, in its sole discretion,
deems appropriate under applicable law. The foregoing suitability standards are
minimum suitability requirements for a potential investor and the Company
reserves the right to reject subscriptions for the Shares by potential investors
notwithstanding compliance with such standards.
18
Offering By Selling Shareholders
Each Selling Shareholder may sell its shares directly to purchasers or to
or through broker-dealers, which may act as agents or principals. These
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders. They may also receive compensation
from the purchasers of the Common Shares for whom such broker-dealers may act as
agents or to whom they sell as principal, or both. The current offering price is
$12.00 per share; however, once our Common Stock is listed on the OTC Bulletin
Board and there is a market for the shares, each Selling Shareholder may wish to
sell its shares in the open market at prevailing market prices or in privately
negotiated transactions.
Regulation M
Shimoda has informed the Selling Shareholders that Regulation M promulgated
under the Securities Exchange Act of 1934 may be applicable to them with respect
to any purchase or sale of Shimoda's Common Stock. In general, Rule 102 under
Regulation M prohibits any person connected with a distribution of Shimoda's
Common Stock from directly or indirectly bidding for, or purchasing for any
account in which it has a beneficial interest, any of the Common Stock or any
right to purchase this stock, for a period of one business day before and after
completion of its participation in the distribution.
During any distribution period, Regulation M prohibits the Selling
Shareholders and any other persons engaged in the distribution from engaging in
any stabilizing bid or purchasing Shimoda's Common Stock except for the purpose
of preventing or retarding a decline in the open market price of the Common
Stock. None of these persons may effect any stabilizing transaction to
facilitate any offering at the market. As the Selling Shareholders will be
re-offering and reselling Shimoda's Common Stock at the market, Regulation M
will prohibit them from effecting any stabilizing transaction in contravention
of Regulation M with respect to this stock.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contains forward-looking statements that involve
risks and uncertainties. Shimoda's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth under "Risk Factors" beginning on page __ and
elsewhere in this Prospectus.
Current Overview
Shimoda's management intends to actively seek additional financing and to
pursue the acquisition of resource licenses and resource companies that are
based in Emerging Europe. The proceeds of this offering will be used to acquire
interests in a variety of resource licenses and resources companies. Shimoda's
business plan is focused on acquiring near production assets in need of
financial and management support.
o The proceeds of Shimoda's April private equity financing, which
amounted to $999,000 have been invested in two Eastern European mining
companies, European Nickel plc and Gulf International Minerals (see
below).
Shimoda has identified a number of additional resource licenses and
resource companies that it is interested in acquiring. Shimoda expects to use
the proceeds of this offering in a similar manner, following its proposed
operating methodology and business principles to make those acquisitions.
19
Current Holdings
European Nickel plc - In April 2002, we acquired 350,000 shares of common
stock in European Nickel plc ("EN"), a limited liability company registered in
England. We acquired the shares for cash and in exchange for shares of our
Common Stock. In the first transaction, we exchanged a total of 250,000 shares
of our Common Stock (at a price of US$10 per share) for 201,650 shares and
148,350 options for shares of the common stock of EN at a strike price of GBP1
plus other intangible rights. Shortly thereafter, we exercised the options at a
cost of GBP148,350 (US$218,965.95). EN is engaged in nickel mining and
processing in Albania, Turkey, and the rest of the Balkan region.
Background - The Ophiolite deposits through South Eastern Europe have
numerous identified deposits of nickel laterites in countries including Turkey,
Greece, Macedonia, Albania, Bosnia and Serbia. The deposits' status range from
Mineable Resource through to Inferred Resources. The nickel laterites of South
East Europe have not been "available" for development due to the regional
politics. The nickel laterites of the region are also unique in their geological
formation, which enables them to be amenable to a heap leach process that
European Nickel has developed. This ability to turn known, developed deposits
from sub-economic to economic projects in a region with diversified political
and economic risk and to develop a large nickel production operation in the
region will have significant financial benefits.
The Caldag deposit in Western Turkey is a high-grade nickel laterite ore
body that will be mined and exported through the port of Izmir to Northern
Greece. The ore will then be transported to a ferronickel smelter in Macedonia
and toll treated to a ferronickel product. The Caldag deposit was discovered by
the Turkish Government Mining and Exploration Service, MTA (Maden Tetkik Arama).
Exploration began in 1974 and was completed in 1979. The geological resource of
56 million tones at 1.28% nickel will be exploited, with a current market value
in excess of US$8 billion.
In total, the geological resource of European Nickel is 350 million tones
at average grade 1.21% nickel, which will be exploited (over 50% greater than
1.4% nickel).
Nickel production is set to start before approximately in August 2002 from
Turkey.
Gulf International Minerals - In April 2002, we acquired 450,000 shares and
450,000 warrants (18 months / C$D0.60 strike price) of shares of common stock of
Gulf International Minerals ("GIM"), a Vancouver, British Colombia, Canada
listed public company, in exchange for 110,000 shares of our Common Stock (at a
price of US$10 per share). Also in April 2002, we acquired an additional
3,460,166 shares of common stock of GIM with warrants attached for 3,460,166
additional shares of common stock of GIM for C$1,038,050 (US$650,000), at a
price per share of C$0.30 (US$0.25). GIM is engaged in gold mining and
processing in Tajikistan.
Background: Gulf International Minerals signed a Joint Venture Agreement in
1993 with the State Committee of Industrial Affairs of the Republic of
Tajikistan. The agreement was negotiated to cover several known precious metal
deposits in Northern Tajikistan and the concentrating facility at Kansai. All
the deposits are located within the gold bearing ore fields of the Tian Shan
Fold, one of the world's most prolific gold bearing rock belts running from
Kyrgystan to the east, across Northern Tajikistan and west into Uzbekistan.
Gulf's geological research of the former Russian archives is revealing positive
indications of 60 gold deposits, some of which are sizeable.
GIM is currently focusing its energies on the re-commissioning of the
Aprelevka deposit. Having just completed massive works necessary to put the pit
into full production, the Russians only had time to extract approximately 30,000
oz of gold (after removing 9 million tons of rock overburden). This was achieved
at a grade of 6gms of gold per ton of ore. They left behind a dynamic open pit
gold deposit, which overnight became one of many Tajik businesses to close. It
remained closed until Gulf International commenced the present work to
re-commission the mine. It is calculated that with a mining cost of
approximately $123 per ounce of gold recovered, this mine will be one the lowest
cost gold producers in the world.
The Burgunda / Ikkizhilon deposits are in the company's focus in Phase II
of the Joint Venture partnership in Tajikistan. Early geological reports
indicated a very exciting opportunity to prove up many millions oz. of gold. The
Karamazar Region makes up the "Blue Sky" for Gulf International, representing a
land holding of approximately 2,000 sq kilometers.
20
Gold production is set to start approximately in August 2002.
Operations of Shimoda
Shimoda's business objective is to achieve an above-average long-term
return for its investors by acquiring a diversified portfolio of resource
companies and resource licenses of "Emerging Europe", namely the Russian
Federation ("Russia"), other former Soviet Union republics or Newly Independent
States ("NIS"), and Central & Eastern Europe. The NIS is comprised of the
following countries: Armenia, Azerbaijan, Belarus, Estonia, Georgia, Kazakhstan,
Kyrgyzstan, Latvia, Lithuania, Moldova, Tajikistan, Turkmenistan, Ukraine, and
Uzbekistan. The Caucasus republics are defined as Armenia, Azerbaijan and
Georgia. "Central & Eastern Europe" is defined as the region that includes
Albania, Bulgaria, Czech Republic, Greece, Hungary, Poland, Romania, Slovakia,
Slovenia, Turkey and countries of Former Yugoslavia. In order to achieve an
above average long-term return, Shimoda will be guided by the following business
principles:
o To concentrate on companies engaged in the production, processing or
distribution of natural resources.
o To seek low-cost producers to mitigate against lower product prices
and maximize profits on rising prices.
o To diversify geographically within the region and by industry sectors.
o To avoid dealing directly in commodities.
o To create sector clusters, e.g. energy, precious metals, non-ferrous
metals, etc.
Shimoda will concentrate on four resources sectors: energy, precious
metals, non-ferrous metals as well as industrial, paper and forest products. The
relative weighting of each resource sector and region is carefully selected
according to its attractiveness at any given time. Shimoda's acquisitions may be
made through wholly owned subsidiaries formed in other jurisdictions that
benefit from tax treaties currently in force between such jurisdictions and
Emerging Europe countries. Shimoda may also invest in U.S. Dollar quoted
securities issued by non-US entities, such as obligations of national
governments, their agencies and instrumentalities, bank obligations, securities
issued by international development agencies and shares of money market funds,
as well as the listed equities or fixed-income instruments of resource companies
operating in Emerging Europe. Purchases of listed equities also will be for the
purpose of obtaining information or the forming of strategic relationships that
advance Shimoda's business objectives.
Selection of Opportunities
Shimoda's business strategy is to focus on the acquisition of resource
licenses and resource companies, which are at or near-production, in Emerging
Europe. More specifically, its strategy entails the following elements:
o Selectively acquiring high quality, resource rich, low-cost mineral
licenses and production companies.
o Providing where necessary high quality, experienced management for
project start-up and development.
o Providing strategic financial and capital markets advice in order to
increase the valuation of its holdings.
In making decisions regarding acquisitions Shimoda proposes to apply a set
of criteria to determine if a potential acquisition is suitable for it,
including but not limited to, the following:
o Is the project / corporation located in a country / region with a favorable
or attractive business environment?
o Is the acquisition located in a country or region with a developed /
developing regulatory and compliance environment?
o Does the project or corporation have significant upside potential?
21
o Does the acquisition have favorable entry and exit terms?
o Does the acquisition have the potential to attract future foreign capital?
Form of Acquisition
Shimoda may acquire regional projects through one or more wholly owned
special purpose subsidiaries, which it may form in one or more jurisdictions and
may lend such subsidiaries funds to finance the approved acquisitions. Shimoda
will set-up such special purpose companies if it is advised that the use of such
subsidiaries is required by or desirable under local laws or regulations
governing foreign investments in the region. Shimoda's use of such subsidiaries
will be transparent for purposes of the limitations and restrictions set forth
in paragraphs (a) and (b) above. Any acquisitions made through such subsidiaries
will be consolidated with those of Shimoda, in order to determine the enterprise
value for the purposes of calculating any management and or performance fees
payable by Shimoda.
Changes in the holdings of resource licenses and companies do not have to
be made due to appreciation or depreciation in value after acquisition and or
subsequent reduced diversification, or by reason of the receipt of, or
subscription for, any rights, bonuses, or benefits in the nature of capital or
of any acquisition or merger or arrangement for amalgamation, reconstruction or
conversion or exchange or of any repayment or redemption or other reason outside
Shimoda's control.
The approach to selecting potential acquisitions emphasizes fundamental
analysis of each acquisition target (rather than broader analyses of specific
industries or sectors of the economy). Although Shimoda will consider historical
value measures, such as price/earnings ratios, operating profit margins and
liquidation values, the primary factor in selecting acquisitions will be the
target's current price relative to its long-term earnings potential, or book
value, whichever is appropriate. In addition, Shimoda will consider overall
growth prospects, competitive positions in export markets, technologies,
research and development, productivity, labor costs, raw material costs and
sources, profit margins, returns on capital, capital resources, state
regulation, management and other factors in comparison to other companies around
the world which it believes are comparable. Selection methods are subject to
change from time to time based on Shimoda's research.
Due to the general absence of a trading market for their shares, Shimoda's
acquisitions will generally be illiquid. Although these acquisitions may, in
some cases, be resold in privately negotiated transactions, the prices realized
from their sales could be less than those originally paid by Shimoda or less
than what may be considered the fair value of their underlying securities. In
addition, Shimoda may be unable to dispose of its acquisitions at current market
prices and may have to dispose of them over extended periods of time.
Furthermore, companies in the region in which Shimoda intends to make
acquisitions, and particularly those that are not publicly traded, are not
subject to the disclosure and other investor protection requirements that are
generally accepted as necessary in countries with developed securities laws. If
the registration of any such acquisitions are required under the securities laws
of one or more jurisdictions before being resold, Shimoda may be required to
bear the expenses of registration.
Not an "Investment Advisor"
Shimoda is not an "investment advisor" under the Federal Investment
Advisers Act of 1940, which classification could involve a number of negative
considerations. Accordingly, Shimoda will not furnish or distribute advise,
counsel, publications, writings, analysis or reports to anyone relating to the
purchase or sale of any securities within the language, meaning and intent of
Section 2(a)(11) of the Investment Advisers Act of 1940, 15USC 80b2(a)(11).
Not an "Investment Company"
Shimoda may become involved in a business opportunity through purchasing or
exchanging the securities of such business. Shimoda does not intend to engage
22
primarily in such activities and is not registered as an "investment company"
under the Investment Company Act of 1940. Shimoda believes such registration is
not required.
Shimoda intends to conduct its activities to avoid becoming inadvertently
classified as a transient "investment company" under the Investment Company Act
of 1940, which classification would affect it adversely in a number of respects.
Section 3(a) of the Investment Company Act provides the definition of an
"investment company" which excludes an entity which does not engage primarily in
the business of investing, reinvesting or trading in securities, or which does
not engage in the business of investing, owning, holding or trading "investment
securities" (defined as "all securities other than United States government
securities or securities of majority-owned subsidiaries") the value of which
exceeds 40.0 percent of the value of its total assets (excluding government
securities, cash or cash items). Shimoda intends to implement its business plan
in a manner that will result in the availability of this exemption from the
definition of "investment company." Shimoda proposes to engage solely in seeking
an interest in one or more business opportunities or ventures.
Effective January 14, 1981, the U.S. Securities and Exchange Commission
adopted Rule 3a-2 which deems that an issuer is not engaged in the business of
investing, re-investing, owning, holding or trading in securities for purposes
of Section 3(a)(1), cited above, if, during a period of time not exceeding one
year, the issuer has a bona fide intent to be engaged primarily, or as soon as
reasonably possible (in any event by the termination of a one year period of
time), in a business other that of investing, re-investing, owning, holding or
trading in securities and such intent is evidenced by its business activities
and appropriate resolution of its Board of Directors duly adopted and duly
recorded in its the minute book. The Rule 3a-2 "safe harbor" may not be relied
on more than a single time. Shimoda expects to have invested or committed all,
or substantially all, of the proceeds of this public offering in the
investigation and / or acquisition of a business opportunity acquisition within
two years after completion of the offering and thereafter to not encounter the
possibility of being classified as a transient investment company.
Results of Operations for the Six Month Period Ended February 28, 2002 as
Compared to the Six Month Period Ended February 28, 2001
Shimoda earned no revenues during its first six months ending February 28,
2002 and 2001. General and administrative expenses increased to $1,603 during
the period ending February 28, 2002, compared to $0 during the six months ended
February 28, 2001. The increase in operating expenses in 2002 as compared to
2001 primarily reflects the costs associated with ongoing reporting to the SEC
and the costs associated with a private equity financing. Operating costs are
expected to exceed revenue in the foreseeable future as a result of our SEC
reporting obligations and our efforts to finance and rollout our business plan.
For the six months ended February 28, 2002, our consolidated net loss was $1,653
as compared to a consolidated net gain of $0 for the six months ended February
28, 2001.
Liquidity and Capital Resources
We had net cash of $531 at February 28, 2002 as compared to net cash of
$6,629 as of February 28, 2001. We had a net working capital deficit (i.e. the
difference between current assets and current liabilities) of ($246) at February
28, 2002 as compared to a working capital surplus of $6,629 at February 28,
2001. Cash flow utilized for operating activities was $875 for the six months
ended February 28, 2002 as compared to cash utilized for operating activities of
$729 during the six months ended February 28, 2001. The increase of cash
utilized in operating activities is due to the costs associated with maintaining
our status with the SEC and the costs associated with a private financing. Cash
provided by financing activities was $17,738 during the six months ended
February 28, 2002 as compared to cash provided by financing activities of $0
during the six months ended February 28, 2001. For the six months ended February
28, 2002, our capital needs have primarily been met from Additional Paid-in
Capital provided by two affiliated companies, Shimoda Capital Advisors Limited
and Shimoda Capital (USA), Inc.
Subsequent Event: In April 2002, Shimoda issued 111,000 shares of its
Common Stock pursuant to an offering under Regulation S of the Securities Act of
1933 at a price of $9.00 per share.
23
Shimoda will need to obtain an additional $1,000,000 in operating capital
to permit continuing operations through its Fiscal Year-end of August 31, 2002.
We cannot assure that we will obtain the additional working capital that we
need.
Shimoda will have additional capital requirements during Fiscal-Year 2002
as it develops the business model. We cannot assure that we will have sufficient
capital to finance our growth and business operations or that such capital will
be available on terms that are favorable to us or at all. We currently continue
to incur operating deficits, which are expected to continue until our business
model is fully developed. We are currently incurring operating deficits, which
are expected to continue until Fiscal 2003.
Results of Operations for Fiscal Year Ended August 31, 2001 as Compared to
Fiscal Year Ended August 31, 2000
Shimoda had no Revenue during Fiscal Years 2001 and 2000. Operating and
administrative expenses increased by $8,260 during the twelve months ended
August 31, 2001 to $11,086 from $2,466 in the prior year. The substantial
increase in operating expenses in 2001 as compared to 2000 primarily reflects
the costs of maintaining Shimoda's status with the SEC. Operating costs are
expected to exceed revenue in the foreseeable future as we (1) raise capital and
(2) execute the business plan. For the twelve months ended August 31, 2001, our
consolidated net loss was $10,971 as compared to a consolidated net loss of
$2,253 for the twelve months ended August 31, 2000.
Liquidity and Capital Resources
We had net cash of $15 at August 31, 2001 as compared to net cash of $7,359
as of August 31, 2000. We had a net working capital surplus (i.e. the difference
between current assets and current liabilities) of $15 at August 31, 2001 as
compared to a working capital surplus of $6,571 at August 31, 2000. Cash flow
used for operating activities increased from $2,641 during the twelve months
ended August 31, 2000 to $11,759 during the twelve months ended August 31, 2001.
The substantial increase in cash flow utilized for operating activities in 2001
as compared to 2000 is due to costs associated with our SEC reporting
obligations. Cash provided by financing activities decreased from $10,000 during
the twelve months ended August 31, 2000 to $4,415 during the twelve months ended
August 31, 2001. Since 1989, our capital needs have primarily been met from
management and / or significant shareholders.
We will have additional capital requirements during Fiscal-Year 2002 if we
continue with our plan of acquisition and incubation of new companies and
projects. We cannot assure that we will have sufficient capital to finance our
growth and business operations or that such capital will be available on terms
that are favorable to us or at all.
DESCRIPTION OF BUSINESS
General
Shimoda Resources Holdings, Inc. (the "Shimoda"), is a resources-focused
business that was formed in the State of Nevada on February 23, 1973, (formerly
El Plata Mining Corporation and ElPlata Corporation), and is currently quoted on
the OTC Bulletin Board in the USA (Ticker symbol "SHRH"). Shimoda. intends to
acquire a diversified portfolio of interests in resource companies and resource
licenses of "Emerging Europe", namely the Russian Federation ("Russia"), other
former Soviet Union republics or Newly Independent States ("NIS), and Central &
Eastern Europe. Acquisitions by Shimoda may be made through wholly owned
subsidiaries formed in other jurisdictions that benefit from the double tax
treaty currently in force between many "Emerging Europe" countries and such
jurisdictions.
24
Shimoda History
El Plata Mining Corporation ("El Plata Mining") was incorporated under the
laws of the State of Nevada on February 23, 1973 and restated its Articles of
Incorporation on September 30, 1999, changing its name to ElPlata Corporation
("ElPlata"). Its original authorized share capital consisted of 20,000,000
shares of Common Stock of $0.05 par value per share. El Plata Mining originally
issued 20,000 shares of Common Stock for $0.05 per share. The September 30, 1999
restatement changed its authorized number of shares from 20,000,000 to
100,000,000 and changed the stated par value per share from $0.05 per share to
$0.001 per share.
El Plata Mining's initial activities were to have quiet and exclusive
possession of the un-patented lode mining claims on certain property located in
Elko County, Nevada, together with a right to examine, sample, drill, develop,
mine, export, process and market from the claims all of the metal ores, minerals
and materials of whatever nature or sort, except oil and gas. These efforts were
unsuccessful and were abandoned prior to August 31, 1989, at which time El Plata
Mining became dormant.
El Plata Mining has had no operations, assets or liabilities since its
fiscal year ended August 31, 1990. In September 1999, ElPlata sold 4,000,000
shares of Common Stock to Mr. Glenn A. Little, its then new President pursuant
to an exemption from registration under Section 4(2) of the Securities Act of
1933, as amended, for US$10,000 cash. These funds were used to pay various
administrative operating expenses of ElPlata through the period ended November
2000.
Effective March 16, 2001, Mr. Glenn A. Little resigned as President of
ElPlata Corporation. Mr. David J. Mapley assumed Mr. Little's duties as
President. In addition, effective March 16, 2001, Mr. David J. Mapley and Mr.
John Vornle were appointed to the Board of Directors of ElPlata Corporation.
ElPlata Corporation changed its name to Shimoda Resources Holdings, Inc.
effective April 17th. 2001 and was granted a new ticker symbol "SHDA" by the
NASD. Mr. David Mapley subsequently purchased 4,000,000 shares of Common Stock
from Mr. Glenn Little in August 2001, pursuant to an exemption from registration
under Section 4(2) of the Securities Act of 1933. Effective September 4, 2001,
the issued share capital was reverse split 1 for 30 into 166,893 shares of
Common Stock, and was granted a new ticker symbol "SHRH" by the NASD. 133,334
shares of Common Stock are owned by Mr. David J. Mapley, Director and President
of Shimoda, in Trust. Effective August 10, 2001, Mr. Jonathan Morley-Kirk and
Mr. Graham Johnson were appointed to the Board of Directors of Shimoda Resources
Holdings, Inc., and Mr. Peter Lazaro was appointed Secretary and Treasurer. Mr.
Glenn Little resigned from the Board of Directors at that time. Ron Beveridge
was appointed to the Board on May 15, 2002.
On September 1, 2001, Shimoda Capital (USA), Inc. ("SCUSA") was appointed
as Administrative Services provider. As such, SCUSA will provide all necessary
administrative services including accounting and office space.
On April 13, 2002, we acquired shareholdings in European Nickel plc and
Gulf International Minerals for cash and exchange for shares of our Common
Stock.
Business Objectives
Our business objective is to achieve an above-average return for its
shareholders through capital appreciation by actively acquiring and managing a
portfolio of resource licenses and companies located in Emerging Europe, namely
the Russian Federation, other former Soviet Union republics or Newly Independent
States (NIS), and countries of Central & Eastern Europe. The NIS is comprised of
the following countries: Armenia, Azerbaijan, Belarus, Estonia, Georgia,
Kazakstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Tajikistan, Turkmenistan,
Ukraine, and Uzbekistan. Armenia, Azerbaijan and Georgia make up the Caucasus
republics. Albania, Bulgaria, Czech Republic, Greece, Hungary, Poland, Romania,
Slovakia, Slovenia, Turkey and countries of Former Yugoslavia make up "Central &
Eastern Europe".
Business Strategy and Policies
Our policy, under normal market circumstances, is to allocate substantially
part or all of our assets in Emerging Europe resource licenses and resource
companies, whether unlisted, or listed on a recognized securities exchange,
whether in the country where such securities were issued or elsewhere. Shimoda
25
may also, for cash management purposes, invest in US Dollar and local-currency
denominated instruments issued by non-US entities, such as the obligations of
national governments, their agencies, and shares of money market funds, as well
as the listed equities or fixed-income instruments of resource companies
operating in Emerging Europe. Such purchases of listed equities will be for the
purpose of obtaining information or the forming of strategic relationships that
advance Shimoda's business objective.
Our business strategy is to focus on the acquisition of licenses and
companies, which are at or near-production, in Emerging Europe. More
specifically, Shimoda's strategy entails the following elements:
o Selectively acquiring high quality, resource rich, low-cost mineral
licenses and production companies.
o Providing where necessary high quality, experienced management for
project start-up and development.
o Providing strategic financial and capital markets advice in order to
increase the valuation of its holdings.
In making decisions regarding acquisitions Shimoda will apply a set of
criteria to determine if a potential acquisition is suitable, including but not
limited to, the following:
o Is the project or corporation located in a country or region with a
favorable economic and business environment?
o Is the project located in a country or region with a developed
regulatory and compliance environment?
o Does the project or corporation have significant upside potential?
o Does the project have favorable entry and exit terms?
o Does the project have the potential to attract future foreign
capital?
With the approval of the Board of Directors, Shimoda will be authorized to
modify any of the foregoing business policies at any time and from time to time
in response to changes in the market and economic conditions in the Emerging
Europe region.
Business Opportunities
We believe that the Emerging Europe region has a favorable risk/return
profile, particularly over the medium to long term. Assets in the region are
perceived by management to be undervalued in part because of misunderstood risk,
in part because of depressed world commodity prices, and in part because foreign
investment in the region has until now focused almost exclusively on the oil and
gas sector. Foreign direct investment in the region has been relatively modest
to date. The global playing field for natural resources producers is more
favorable than it has ever been since the booming 1970's due to the following
factors:
o Commodities recovering from record low levels (in real terms) reached
in 1993.
o World in a long-term phase of economic recovery and growth aided by
pent-up demand from regional recessions.
o Technical advances and improved management techniques have
significantly lowered the cost of production.
o Increased demand for natural resources is building due to the widening
industrialization and infrastructure development of emerging
economies.
In sum, the Emerging Europe region provides vast opportunities to deploy
the strategy described above: acquiring licenses of inactive state-owned
resource companies; developing the many known and explored deposits into
start-up mines; renovating and upgrading production facilities.
26
Business Restrictions
We may acquire regional projects through one or more wholly-owned special
purpose subsidiaries, which it may form in one or more jurisdictions and may
lend such subsidiaries funds to finance said acquisitions. Shimoda will set-up
such special purpose companies if it considers that the use of such subsidiaries
is required by or desirable under local laws or regulations governing foreign
investments in the region. Shimoda's use of such subsidiaries will be
transparent for purposes of the limitations and restrictions set forth in
paragraphs (a) and (b) above. Any acquisitions made through such subsidiaries
will be consolidated with those of Shimoda, in order to determine the enterprise
value for the purposes of calculating any management and or performance fees
payable by Shimoda.
Changes in the holdings of resource licenses and companies do not have to
be made due to appreciation or depreciation in value after acquisition and or
subsequent reduced diversification, or by reason of the receipt of, or
subscription for, any rights, bonuses, or benefits in the nature of capital or
of any acquisition or merger or arrangement for amalgamation, reconstruction or
conversion or exchange or of any repayment or redemption or other reason outside
Shimoda's control.
Our approach to selecting potential acquisitions will emphasize fundamental
corporation-by-corporation analysis (rather than broader analyses of specific
industries or sectors of the economy). Although Shimoda will consider historical
value measures, such as price/earnings ratios, operating profit margins and
liquidation values, the primary factor in selecting acquisitions for Shimoda
will be the target's current price or value relative to its long-term earnings
potential, or real book value, whichever is appropriate. In addition, Shimoda
will consider overall growth prospects, competitive positions in export markets,
technologies, research and development, productivity, labor costs, raw material
costs and sources, profit margins, returns, capital resources, state regulation,
management and other factors in comparison to other companies around the world
which it believes are comparable. Selection methods are subject to change from
time to time based on Shimoda's research and external market factors.
Due to the general absence of a trading market for the shares of Shimoda's
potential acquisitions, such shares could be less liquid than other publicly
traded securities. Although the shares of acquisitions may, in some cases, be
resold in privately negotiated transactions, the prices realized from their
sales could be less than those originally paid by Shimoda or less than what may
be considered the fair value of said securities. In addition, Shimoda may be
unable to dispose of its acquisitions at current market prices and may have to
dispose of such securities over extended periods of time. Further, companies in
the region, and particularly those that are not publicly traded, are not subject
to the disclosure and other investor protection requirements that are generally
accepted as necessary in countries with developed securities laws. If such
acquisitions are required to be registered under the securities laws of one or
more jurisdictions before being resold, Shimoda may be required to bear the
expenses of registration.
Licensing and Registration
Currently, evidence of legal title of acquisitions in Emerging Europe is
generally maintained in "book-entry" form. In order to be recognized as the
registered owner of a license or a corporation's shares, a licensee, purchaser
or a licensee/purchaser's representative must often physically travel to such
licensor's office, or corporation's registrar and open an account with the
registrar (which, in certain cases, requires the payment of an account opening
fee). For corporation shares, each time thereafter that the purchaser purchases
additional shares of the subject corporation, the purchaser's representative
must present to the registrar powers of attorney from the purchaser and the
seller of such shares, along with evidence of such purchase, at which time the
registrar will debit such purchased shares from the seller's account maintained
on the register and credit such purchased shares to the purchaser's account
maintained on the register.
The role of a corporation's registrar in the registration process is
crucial. Registrars are not subject to effective government supervision and it
may be possible for Shimoda to lose its registration through fraud, negligence
or mere oversight. Furthermore, while companies with more than 1,000
shareholders are required (under Russian law) to maintain independent registrars
that meet certain statutory criteria, in practice, this regulation has not been
strictly enforced. Because of this lack of independence, management of a subject
corporation can potentially exert significant influence over the make-up of such
27
corporation's shareholders. If a registrar were to suffer a fire or other
catastrophe the consequences of which were to be the destruction or mutilation
of the register, the corporation's holdings of the relevant shares of the
related corporation could be substantially impaired or, in certain cases,
erased. The registrars do not maintain insurance against such occurrences, nor
are they likely to have assets sufficient to compensate Shimoda as a result
thereof. While the registrar and the subject corporation may be legally
obligated to remedy such loss, there is no guarantee that either of them would
do so, nor is there any guarantee that Shimoda would be able to successfully
bring a claim against them as a result of such loss.
Borrowing
We will generally not employ leverage to purchase assets. However, Shimoda
may borrow money for temporary or emergency purposes (including, for example,
clearance of transactions, acquisition of holdings in other companies) in an
amount not exceeding 15 percent of the value of its total assets (including the
amount borrowed), and may borrow money in connection with repurchases of its
shares or tender offers or to pay dividends or distributions required for tax
purposes in an amount up to one-third of the value of its total assets
(including the amount borrowed). Shimoda will not purchase assets during any
period when borrowings exceed 15 percent of its total assets.
Description Of Property
We have no property and currently maintains a resident agent at CHQ
Incorporated, 1555 Flamingo Road, Suite 155, Las Vegas, Nevada 89119 and
maintains a mailing address at the offices of its Administrative Services
provider, Shimoda Capital (USA), Inc. at 15 River Road, Suite 230, Wilton,
Connecticut 06897. Shimoda's telephone number there is (203) 563-9430 and its
fax number is 203-563-9832. Other than its Resident Agent's office and the
mailing address, Shimoda does not maintain any other office facilities at
present. The Administrative Services Agreement, which was signed on October 1,
2001, calls for Shimoda Capital (USA), Inc. to provide general management and
administrative services to Shimoda, including a mailing address and accounting
support.
Employees
One. See "Executive Compensation".
Legal Proceedings
We are not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.
28
MANAGEMENT
Directors, Executive Officers And Key Consultants
The following lists Shimoda's executive officers and directors.
Name Age Position
---- --- --------
David J. Mapley 42 Chief Executive Officer &
President, Director (member
of the Audit, Finance, and
Mergers and Acquisitions
Committees)
Peter Lazaro 47 Chief Financial Officer,
Secretary and Treasurer
Graham Johnson 42 Director (member of the
Compensation Committee)
Jonathan C.R. Morley-Kirk 40 Director (member of the
Audit, Compensation, and
Mergers and Acquisitions
Committees)
John Vornle 43 Chairman of the Board of
Directors (member of the
Audit, Finance,
Compensation, and Mergers
and Acquisitions Committees)
Ron Beveridge 64 Director
David J. Mapley - Mr. Mapley has been the Chief Executive Officer,
President, and a director of Shimoda since March 16, 2001. Mr. Mapley is also a
director and co-founder of Shimoda Capital Advisors Limited, the Business
Manager, and the Managing Director of the Shimoda Group, a business management
group based in the Cayman Islands. The Shimoda Group has been active in Emerging
Europe since the early 1990's, and manages Shimoda Resources Limited, a
Cyprus-listed Emerging European resources company. Previously (1990-95) Mr.
Mapley was Head of Capital Markets -Trading, then -Sales, for National
Westminster Bank (Tokyo and Hong Kong). From 1986 to 1989, Mr. Mapley was Head
of Derivatives for Canadian Imperial Bank of Commerce in Sydney, London and
Tokyo. He holds a Masters of Business Administration degree from the University
of Chicago, a M.Sc. and B.Sc. (Econ.) from the London School of Economics, and
is a past author of Swaps Chapters in the Euromoney International Finance
Yearbook.
Peter Lazaro - Mr. Lazaro has been the Cief Financial Officer, Secretary
and Treasurer of Shimoda since August 7, 2001. He is also Secretary of American
Safehouse, Inc., a private Nevada security technology corporation. He has held
successive senior positions in large U.S. finance houses, as well as in
entrepreneurial ventures. He is a former Managing Director of a Moscow based
brokerage and fund management company, and was formerly the Treasurer of a
prominent Russian Bank. Mr. Lazaro holds a BS in Business Administration form
California State University and a Master of International Management from the
American Graduate School for International Management.
Graham Johnson - Mr. Johnson has been a director of Shimoda since August
10, 2001. Mr. Johnson is Managing Director and founder of Continental Capital
Markets S.A., a leading Polish, Russian and Hungarian debt brokerage house based
in Switzerland. Prior to running Continental Capital Markets S.A., Mr. Johnson
was a director/manager of several financial intermediaries were he was active in
arranging interest-rate and currency derivative hedge instruments. Mr. Johnson
was previously an Institutional Salesman and Trader in UK Gilts at several UK
stockbrokers in the late 1970's to late 1980's.
29
Jonathan C.R. Morley-Kirk - Mr. Morley-Kirk has been a director of Shimoda
since August 10, 2001. Mr. Morley-Kirk is a director of Continental Capital
Management Limited, a Jersey-based investment management corporation,
specializing in emerging market investments. Mr. Morley-Kirk holds a number of
non-executive directorships that include Obelisk International Trust Corporation
(Guernsey) Ltd., which provides trust and corporate administration services, and
Financial Trading and Consultancy Ltd., which is an institutional brokerage
corporation with branches in London, New York, and Zurich. Prior to moving to
Jersey in 1995, Mr. Morley-Kirk was a director of SG Warburg Securities Ltd. in
London where he was in charge of emerging markets bond trading. Previously Mr.
Morley-Kirk was a director of the Midland Bank Plc Developing Countries
Division, which managed the Group's exposure of GBP13 billion to emerging
countries.
John Vornle - Mr. Vornle has been the Chairman of the Board of Directors of
Shimoda since March 16, 2001. Mr. Vornle is a Director of Long Term Capital
Company (since 1992), Grupo NM, S.A. (since 1995), and Strategic Monitored
Services, Inc. (since 1996). He is the former Chief Underwriter for Continental
Insurance's financial guarantee program. Mr. Vornle managed several different
insurance products and new product development at Continental Insurance (1985 -
1992), and was a director of several insurance companies and insurance and
investment related organizations. He was previously a commercial banker at
European American Bank. He received his Bachelor of Arts from Colgate University
and a Master of Business Administration degree from New York University's
Graduate School of Business. Mr. Vornle is fluent in French and German.
Ron Beveridge - Mr. Beveridge was appointed a Director of Shimoda on May
15, 2002. He brings to the Board a solid background and significant experience
in the steel sector. After working with Japanese trading companies in the early
1960's, Mr. Beveridge has held successively senior positions in the steel
industry, principally at BHP and its affiliate companies. He has been
responsible for sales, marketing and trading of steel imports and steel making
raw materials through Europe and Asia and is currently serving as a consultant
in the Black Sea Economic Region. Mr. Beveridge attended Wellington College,
Wellington, New Zealand and Victoria University in Australia. He was recently
made a Freeman of The City of London, as a member of the Ancient Order of
Fuellers.
Key Consultants
We have certain consultants who are listed below:
Nigel Harper - Mr. Harper is a Senior Advisor, based in London. He is a
Managing Director of Eco-Tec (Int'l.) Limited, specializing in oil & gas
production and export out of the region. He is an OPEC-registered trader and
transporter of oil, with extensive experience of Russian and Azeri
transshipment. Mr. Harper is also and advisor to the Shimoda-Beta Oil Fund, a
Crude Oil futures investment fund.
George Mgaloblishvili - Mr. Mgaloblishvilli is a Project Advisor, based in
Tbilisi. He is a former advisor to various Ministries of the Georgian
Government. Previously, he was Manager & Investor, Bolnisi Gold NL. in Republic
of Georgia (listed on the Australian Stock Exchange) and Business Development
Manager in Armenia for Georgian oil & natural resources company.
Tim Peara - Mr. Peara is a Business Developer and Energy Financier who has
contributed significantly to the growth and strategy of major players in finance
and industry (Lehman Brothers, GE Capital, Bechtel, United Technologies). He has
hands-on expertise in investment and trading across a wide range of financial
instruments and has been active in Central and Eastern Europe since 1995.
Focused on developing oil, gas and power infrastructure. Mr. Peara served as
Senior Vice President of UT Energy Holdings International - a pipeline and power
plant development company - where he was responsible for business development in
Europe, Middle East and Africa (EMEA). He also completed a 7-month posting to
UTEHI's California peaking power plant project - CalPeak - where he was
responsible for risk assessment, structuring and analytics. Previously, Mr.
Peara served the GE Capital/Bechtel joint venture pipeline company PSG
International as Vice President and Director of Acquisitions from 1998-2000. In
1997/98 Mr. Peara worked for Koch Industries, focusing on oil & gas acquisition
30
opportunities in the Former Soviet Union. He was previously at Lehman Brothers
for six years as fixed income strategist and emerging markets debt trader. Mr.
Peara started his career at Prudential Securities filling a number of roles,
including that of mortgage- and asset-backed security strategist. Mr. Peara
earned an MBA from the University of Chicago and a BA from Wesleyan University.
George Curtis - Mr. Curtis the Chief Geological Advisor to the Corporation,
with over 30 years experience. He was previously chief senior geologist
overseeing planning, implementation and interpretation of exploration programs
in Africa, South America and Micronesia with a number of major mining companies.
He has had major involvement with volcanic gold-skarn projects.
Bruce Barnfield - Mr. Barnfield is a director of Shimoda Capital Advisors
[UK] Ltd. and runs Shimoda's London representative office. Mr. Barnfield is
currently focused on Eastern Europe listings on the London stock market. He
trained as an investment analyst, and specialized in engineering and aerospace
stocks for 8 years before moving to international sales and fund management. He
later bought control of a London-based specialist dealing and research broker.
He expanded the firm's operations and returned it to profitability, before
successfully merging its operations with a larger European broking firm. More
recently Mr. Barnfield has represented a German financial consultancy in the UK
and advised on the establishing and financing of a London investment bank, for
whom he has traveled in the Balkans and Central Asia.
Board of Directors and Committees
Our Bylaws provides for no less than two and not more than ten members on
the Board of Directors. By resolution, the current number is set at five.
Also, under our Bylaws, the Board of Directors may appoint an Executive
Committee (of at least two and no more than seven members, with the President
required as one of the members). Our Board may also create other committees from
time to time consisting of at least two members and be charged with powers and
duties prescribed by the Board. Board resolutions have been adopted creating the
following committees: Audit Committee, Compensation Committee, Finance Committee
and a Mergers and Acquisition Committee. Except for specific matters outlined in
our Bylaws that need Board approval, the Executive Committee may exercise all
other Board powers.
The Compensation Committee considers and recommends payroll expenditures,
salaries, stock options, stock incentive and bonus proposals for our employees,
subject to approval of the full Board of Directors. The Audit Committee is
authorized by the Board of Directors to review, with Shimoda's independent
accountants, the annual financial statements of Shimoda prior to publication,
and to review the work of, and approve non-audit services performed by, such
independent accountants. The Audit Committee makes annual recommendations to the
Board for the appointment of independent public accountants for the ensuing
year. The Audit Committee also reviews the effectiveness of the financial and
accounting functions and the organization, operation and management of Shimoda.
The Finance Committee has responsibility for Shimoda's capital structure and its
cost of capital. It is responsible for all debt and equity financing activities
and for monitoring compliance with all contractual financing covenants. The
Mergers & Acquisitions Committee is responsible for all activities that involver
mergers, acquisitions or other business combinations, including oversight of the
activities of the Business Manager.
Limitation of Liability and Indemnification
Shimoda intends to amend its Articles of Incorporation in the future to
eliminate a director's personal liability to us and our stockholders for
monetary damages incurred as the result of the breach or alleged breach by a
director of his "duty of care" as allowed by the Nevada General Corporation Law.
This provision will not apply to the directors' (i) acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law, (ii)
acts or omissions that a director believes to be contrary to the best interests
of the corporation or its shareholders or that involve the absence of good faith
on the part of the director, (iii) approval of any transaction from which a
director derives an improper personal benefit, (iv) acts or omissions that show
31
a reckless disregard for the director's duty to the corporation or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duties, of a risk
of serious injury to the corporation or its shareholders, (v) acts or omissions
that constituted an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the corporation or its shareholders, or
(vi) approval of an unlawful dividend, distribution, stock repurchase or
redemption. This provision would generally absolve directors of personal
liability for negligence in the performance of duties, including gross
negligence.
The effect of this provision in Shimoda's Articles of Incorporation is to
eliminate the rights of Shimoda and its stockholders (through stockholder's
derivative suits on behalf of Shimoda) to recover monetary damages against a
director for breach of his fiduciary duty of care as a director (including
breaches resulting from negligent or grossly negligent behavior) except in the
situations described in clauses (i) through (vi) above. This provision does not
limit nor eliminate the rights of Shimoda or any stockholder to seek
non-monetary relief such as an injunction or rescission in the event of a breach
of a director's duty of care. In addition, Shimoda's Articles of Incorporation
provide that if Nevada law is amended to authorize the future elimination or
limitation of the liability of a director, then the liability of the directors
will be eliminated or limited to the fullest extent permitted by the law, as
amended. The Nevada General Corporation Law grants corporations the right to
indemnify their directors, officers, employees and agents in accordance with
applicable law. Shimoda's Bylaws provide for indemnification of such persons to
the full extent allowable under applicable law. These provisions will not alter
the liability of the directors under federal securities laws.
Shimoda intends to enter into agreements to indemnify its directors and
officers, in addition to the indemnification provided for in our Bylaws. These
agreements, among other things, indemnify Shimoda's directors and officers for
certain expenses (including attorneys' fees), judgments, fines, and settlement
amounts incurred by any such person in any action or proceeding, including any
action by or in the right of Shimoda, arising out of such person's services as a
director or officer of Shimoda, any subsidiary of Shimoda or any other company
or enterprise to which the person provides services at the request of Shimoda.
Shimoda believes that these provisions and agreements are necessary to attract
and retain qualified directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or persons
controlling Shimoda pursuant to the foregoing provisions, Shimoda has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
Director Fees
Board members will be paid a $12,000 annual fee for their services as
Directors. They will also be reimbursed for out of pockets expenses that result
from them attending Board meetings.
32
EXECUTIVE COMPENSATION
Under our Bylaws, our Board may employ a General Manager ("Manager") who
serves as the Chief Operating Officer to manage Shimoda's day-to-day business
affairs and operations under Board direction.
On February 27, 2002, we retained Shimoda Capital Advisors Limited as the
Business Manager, a limited liability company organized under the laws of the
Cayman Islands by David J. Mapley, our CEO and President. In discharging its
responsibilities to us, the Business Manager is obligated to use its best
efforts, judgment and facilities.
Under our agreement with the Business Manager, the Business Manager is
responsible for the management of our operations including the acquisition of
business opportunities and assets within our business objectives and that fall
within our acquisition policies and guidelines. The Business Manager is also
empowered to dispose of business interests and assets consistent with Shimoda's
business objectives, policies and guidelines.
Except for the President and the Chief Financial Officer, executive and
other human resources (including key employees, industry analysts and
professional advisors) necessary to conduct our operations will be furnished by
or through the Business Manager.
Our agreement with the Business Manager ends on February 23, 2007, and
renews automatically for additional consecutive five-year extensions. Either we
or the Business Manager could end the agreement before it is extended. To do so,
either we or the Business Manager is required to give to the other party written
notice of the agreement's termination at least 90 days before February 23, 2007.
For services rendered, we will pay the Business Manager the following
compensation annually in US dollars:
o A management fee equal to 1.5 percent of our company's net asset value;
o A performance fee equal to 15 percent of the appreciation of the company's
net asset value; and
o Reimbursement of out of pocket expenses reasonably incurred in the
performance of the management services.
The management fee will be paid monthly in advance. The performance fee
will be paid quarterly, in arrears, and only to the extent there has been
appreciation over the prior quarter's valuation of Shimoda's net assets.
We will also pay professional fees and costs of industry analysts and other
professionals supplied by or through the Business Manager to provide services to
Shimoda.
No compensation was paid to any executive officer in 1999, 2000 and 2001.
Mr. Little resigned as President on March 16, 2001 and as Director on August 10,
2001. Mr. Mapley was elected as President and Director on March 16, 2001. Mr.
Lazaro was appointed CFO, Treasurer and Secretary on August 7, 2001.
Mr. Mapley will be devoting more than 50% of his full time to the affairs
and business of our company. For his services as President, he will be paid a
base salary of up to $120,000 annually beginning at the successful closing of
this offering. Mr. Lazaro will devote substantially all of his time to the
affairs and operations of Shimoda. For his services he will be paid a base
salary of up to $120,000 annually by Shimoda, beginning at the successful
closing of this offering.
The Board has not adopted any stock option or purchase plan, and may do so
in the future pursuant to which officers, directors, key employees and
consultants may be eligible participants.
33
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
General
The following table lists the security ownership of management and
stockholders of Shimoda who beneficially own 5 percent or more of the
outstanding stock of Shimoda and their respective holdings of Common Stock in
Shimoda as of June 21, 2002.
Percentage of Ownership
-----------------------
Name and Address Number of Before After
of Stockholder Shares Owned Offering(1) Offering(2)
- --------------------------------------------------------------------------------
David J. Mapley, in Trust 135,549 25.0% 2.5%
c/o Ueda Capital Limited,
69 Jennet Street, George Town,
Grand Cayman, BWI
Peter Lazaro - 0 - - 0 - - 0 -
15 River Road, Suit 230
Wilton, Connecticut 06877
Graham Johnson - 0 - - 0 - - 0 -
8 Avenue Reverdil
Nyon, Switzerland
Jonathan C.R. Morley-Kirk - 0 - - 0 - - 0 -
Pigneaux Farmhouse, Princes Tower
Road, St. Saviour, Jersey, Channel
Islands
John Vornle - 0 - - 0 - - 0 -
2 Mystic Lane
Westport, Connecticut
Ron Beveridge - 0 - - 0 - - 0 -
3 Merewood Close
Bromley, Kent BR1 2AN.
ENGLAND.
Shimoda Resources Limitd.(3) 261,000 48.4 2.0%
206 Makarios Avenue
Limassol
Cyprus
Lombard Odier Invest-Eastern 111,000 20.6 4.7%
Europe Fund
39 Allee Scheffer
L-250 Luxembourg
All directors and officers as a
group (6) 135,549 25.0% 2.5%
34
(1) 111,000 shares were sold by Shimoda pursuant to a private placement under
Regulation S of the Securities Act of 1933, as amended, dated October 29,
2001.
(2) Assumes the issuance of 5,000,000 shares of the Shimoda's Common Stock
pursuant to this offering.
(3) Includes 1.421 common shares and 974 common shares owned by Shimoda Capital
Advisors, Ltd. and Shimoda Capital (U.S.A.), Inc., both of which Mr. Mapley
is an Officer, Director and Principal shareholder.
(4) David J. Mapley, CEO and President of Shimoda, is the founder and manager
of Shimoda Resources Limited.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 as amended (the
"Exchange Act") requires Shimoda's officers and directors, and persons who own
more than ten percent of its Common Stock to file reports of ownership and
changes of ownership with the Securities and Exchange Commission. Such persons
are also required to furnish Shimoda with copies of all Section 16(a) forms they
file. Due to the recent change in management of the Company, the initial forms
required were not filed in a timely manner.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective March 16, 2001, Mr. Glenn A. Little resigned as President of
Elplata Corporation. Mr. David J. Mapley assumed Mr. Little's duties as
President. Mr. Little remained as a Director and Treasurer until his resignation
on August 10, 2001. In August 2001, Mr. David J. Mapley, Director and President
of Shimoda, acquired 4,000,000 shares of Common Stock, in Trust, representing 80
percent of its then outstanding shares, from Mr. Glenn A. Little.
In April 2002, Shimoda acquired interests in the two resource companies
from Shimoda Resources, Ltd. ("SRL"). SRL is a Cyprus-based investment company
of which David J. Mapley, Chief Executive Officer and President of Shimoda, is
the founder and manager. The purchases were as follows:
(a) Shimoda purchased from SRL 201,750 ordinary 1 pence shares and
warrants to purchase 148,350 ordinary 1 pence shares of European
Nickel plc ("EN") at GBP1 per share.
(b) Shimoda purchased from SRL 450,000 shares and 450,000 warrants (18
months/exercise price CD 0.60 per share) of Gulf International
Minerals, Ltd. ("GIM") Common Stock
(c) Also in April, Shimoda purchased from SRL entitlements to 3,460,166
units of GIM (@CD 0.30). Each unit consists of one share of GIM and
one warrant (24 month / exercise price CD 0.40 per share) of GIM
In exchange for a), b) and c) above, Shimoda issued 261,000 shares of
Common Stock to SRL.
(d) Also in April 2002, Shimoda exercised the entitlements to 3,460,166
units of GIM for US$650,000 and exercised 148,350 options in EN for
US$218,965.95.
DESCRIPTION OF SECURITIES
General
Shimoda's authorized capital stock consists of 100,000,000 shares of Common
Stock, par value $.001 per share, of which 541,108 shares are presently issued
and outstanding.
35
Common Stock
All outstanding shares of Common Stock are, and the shares to be issued as
contemplated herein will be, fully paid and non-assessable. As a class, holders
of the Common Stock are entitled to one vote per share in all matters to be
voted upon by the stockholders. Holders of Common Stock are entitled to receive
such dividends when and as declared by the Board of Directors out of the surplus
or net profits of the Company legally available therefore, equally, on a share
for share basis. Shimoda does not anticipate paying dividends in the near
future. In the event of a liquidation, dissolution or winding-up of Shimoda, the
holders of Common Stock are entitled to share equally, on a share for share
basis, in all assets remaining after payment of liabilities, subject to the
prior distribution rights of any other classes or series of capital stock then
outstanding. The Common Stock has no preemptive rights and is neither redeemable
nor convertible, and there are no sinking fund provisions. As of May 31, 2002
Shimoda's 541,108 shares of Common Stock outstanding were held by approximately
436 stockholders of record.
Prior to the offering, there has been no public market for Shimoda's
shares.
Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase, in addition to the offering price set forth on the cover page hereof.
Dividend Policy
Shimoda has not declared or paid any cash dividends and does not intend to
pay cash dividends in the near future on the shares of Common Stock. Cash
dividends, if any, that may be paid in the future to holders of Common Stock
will be payable when, as and if declared by our Board of Directors, based upon
the Board's assessment of our financial condition, its earnings, its need for
funds, whether any Preferred Stock is outstanding, to the extent the Preferred
Stock has a prior claim to dividends, and other factors including any applicable
laws. We are not currently a party to any agreement restricting the payment of
dividends.
Transfer Agent and Registrar
General Securities Transfer Agency, Inc. in Albuquerque, New Mexico is our
Transfer Agent and Registrar.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered by this
Prospectus will be passed upon for us by the Law Offices of William B. Barnett,
Sherman Oaks, California.
EXPERTS
The financial statements as of and for the twelve month periods ending
August 31, 2001 and August 31, 2000 are included in this Prospectus and
Registration Statement in reliance on the report of Stonefield Josephson, Inc.
independent certified accountants, given on the authority of said firm as
experts in auditing and accounting.
36
GLOSSARY
Commission The Securities and Exchange Commission
FCC The Federal Communications Commission
GATT General Agreement on Trade and Tariffs Treaty
NASD The National Association of Securities Dealers
NASDAQ he National Automated Dealer Quotation System operated by
the NASDAQ Stock Market, Inc.
NASDAQ Small An interdealer quotation system for smaller companies
Cap Market operated by NASDAQ
Offering The offering of shares by Shimoda and the Selling
Shareholder under this Prospectus and registered under our
Registration Statement
Prospectus This document
Registration Our registration statement on the Form SB-2 filed with the
Statement SEC as of the date of this Prospectus, which includes
exhibits and other information that is not included in this
Prospectus
SEC The Securities and Exchange Commission
Securities Act The Securities Act of 1933, as amended
Transfer Agent General Securities Transfer Agency, Inc.
USPTO The United States Patent and Trademark Office
"We", "Us", "Our" Shimoda Resources Holdings, Inc.
ADDITIONAL INFORMATION
Shimoda has filed a registration statement on Form SB-2 (the "Registration
Statement") with the Commission under the Securities Act in respect of the
Common Stock offered hereby. This Prospectus omits certain information contained
in the Registration Statement as permitted by the rules and regulations of the
Commission. For further information with respect to Shimoda and the Common Stock
offered hereby, reference is made to the Registration Statement, including the
exhibits thereto, and Financial Statements and Notes thereto filed as a part
thereof. All material provisions of all documents are summarized in this
Prospectus. Copies of the Registration Statement, including all exhibits and
schedules thereto, may be inspected without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and copies of such material can be obtained from the Public
Reference Section of the Commission upon payment of certain fees prescribed by
the Commission. The Commission's Internet address is www.sec.gov.
We intend to furnish our stockholders with annual reports containing
audited financial statements certified by our independent accountants and
quarterly reports for the first three quarters of each fiscal year containing
unaudited financial information.
37
No person is authorized to give any information or
to make any representation other than those
contained in this prospectus, and if made such
information or representation must not be relied
upon as having been given or authorized. This
prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any securities 5,372,000
other than the Securities offered by this Shares of Common Stock
prospectus or an offer to sell or a solicitation
of an offer to buy the Securities in any
jurisdiction to any person to whom it is unlawful
to make such offer or solicitation in such
jurisdiction.
The delivery of this prospectus shall not, under SHIMODA
any circumstances, create any implication that RESOURCES HOLDINGS,
there have been no changes in the affairs of the INC.
Company since the date of this prospectus.
However, in the event of a material change, this
prospectus will be amended or supplemented
accordingly.
- --------------------------------------------------
----------
TABLE OF CONTENTS PROSPECTUS
----------
Page
PROSPECTUS SUMMARY
RISK FACTORS
USE OF PROCEEDS
CAPITALIZATION DILUTION
SELLING SHAREHOLDERS
DETERMINATION OF OFFERING PRICE 15 River Road, Suite 230
PLAN OF DISTRIBUTION Wilton, Connecticut 06897
MANAGEMENT'S DISCUSSION AND ANALYSIS (203) 563-9430
OF PLAN OF OPERATION
DESCRIPTION OF BUSINESS
MANAGEMENT
EXECUTIVE COMPENSATION
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN RELATIONSHIPS AND RELATED June 21, 2002
TRANSACTIONS
DESCRIPTION OF SECURITIES
LEGAL MATTERS
EXPERTS
ADDITIONAL
INFORMATION
GLOSSARY
INDEX TO FINANCIAL STATEMENTS
SUBSCRIPTION AGREEMENT
38
FINANCIAL STATEMENTS
SHIMODA RESOURCES HOLDINGS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
Page
----
Report of Stonefield Josephson, Inc. F-1
Balance Sheet at August 31, 2001 and February 28, 2002 (unaudited) F-2
Statement of Operations for the fiscal years ended August 31, 2001
and 2000 and the six month periods ended February 28, 2002
and 2001 (unaudited) F-3
Statement of Shareholders' Equity for the fiscal years ended
August 31, 2001 and 2000 and the six month period ended February
28, 2002 F-4
Statements of Cash Flows for the fiscal years ended August 31, 200
1and 2000 and the six month periods ended February 28, 2002
and 2001 (unaudited) F-5
Notes to Financial Statements F-6
39
INDEPENDENT AUDITORS' REPORT
Board of Directors
Shimoda Resources Holdings, Inc. (formerly
ElPlata Corporation)
Wilton, Connecticut
We have audited the accompanying balance sheet of Shimoda Resources Holdings,
Inc. (formerly ElPlata Corporation) as of August 31, 2001 and the related
statements of operations, stockholders' equity and cash flows for the two years
then ended. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
of the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Shimoda Resources Holdings,
Inc. as of August 31, 2001 and the results of its operations and its cash flows
for the two years then ended in conformity with generally accepted accounting
principles of the United States of America.
The accompanying financial statements have been prepared assuming that the
Corporation will continue as a going concern. The Corporation has incurred net
losses from operations, which raises substantial doubt about the Corporation's
ability to continue as a going concern. Management's plan in regard to these
matters is also described in Note 1. These financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Stonefield Josephson, Inc.
CERTIFIED PUBLIC ACCOUNTANTS
Santa Monica, California
December 22, 2001
F-1
SHIMODA RESOURCES HOLDINGS, INC.
(FORMERLY ELPLATA CORPORATION)
BALANCE SHEETS
August 31, February 28,
2001 2002
------------ ------------
(Unaudited)
ASSETS
Current assets -
Cash $ 15 $ 531
Advances 25
------------ ------------
Subscription Receivable -- --
Total Current Assets 15 556
------------ ------------
Other Assets
Deferred Registration Costs -- 16,349
------------ ------------
Total Other Assets -- 16,349
------------ ------------
Total Assets $ 15 $ 16,905
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ -- $ 802
------------ ------------
Stockholders' equity:
Common stock; $0.001 par value, 5,000,000 shares
authorized, 166,893 and 169,108 shares issued and
outstanding 5,000 5,022
Additional paid-in capital 60,560 78,261
Accumulated deficit (65,545) (65,527)
Net Income (Loss) -- (1,653)
Total Shareholders' Equity 15 16,103
------------ ------------
Total Liabilities & Shareholders Equity $ 15 $ 16,905
============ ============
See accompanying independent auditors' report and notes to financial statements.
F-2
SHIMODA RESOURCES HOLDINGS, INC.
(FORMERLY ELPLATA CORPORATION)
STATEMENTS OF OPERATIONS
Year ended Six months ended
-------------------------------------- --------------------------------------
August 31, 2001 August 31, 2000 February 28, 2002 February 28, 2001
----------------- ----------------- ----------------- -----------------
(Unaudited) (Unaudited)
Revenues $ -- $ -- $ -- $ --
General and administrative expenses 35 2,466 1,603 --
Operating expenses 11,051 -- -- --
----------------- ----------------- ----------------- -----------------
Loss from operations (11,086) (2,466) (1,603) --
Interest income 115 213 -- 112
----------------- ----------------- ----------------- -----------------
Interest Expense -- -- 50 --
Income / (Loss)
before provision for income taxes (10,971) (2,253) (1,653) 112
Provision for income taxes -- -- -- --
----------------- ----------------- ----------------- -----------------
Net Income / (Loss) $ (10,971) $ (2,253) $ (1,653) $ 112
================= ================= ================= =================
Comprehensive Income / (Loss) $ (10,971) $ (2,253) $ (1,653) $ 112
================= ================= -========-------- =================
Weighted average number of shares
outstanding - basic and fully diluted 166,667 156,433 169,010 166,893
================= ================= ================= =================
Net loss per share, basic and diluted $ (.06) $ (.01) ($ 0.01) - 0 -
================= ================= ================= =================
See accompanying independent auditors' report and notes to financial statements.
F-3
SHIMODA RESOURCES HOLDINGS, INC.
(FORMERLY ELPLATA CORPORATION)
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED AUGUST 31, 2001 AND 2000
AND SIX MONTHS ENDED FEBRUARY 28, 2002
Deficit
accumulated
Common stock Additional during Total
---------------------------- paid-in development stockholders'
Shares Amount capital stage equity
------------ ------------ ------------ ------------ ------------
Balance at August 31, 1999 (restated
for 30:1 reverse stock split) 33,333 $ 1,000 $ 49,000 $ (52,321) $ (2,321)
Private placement of shares of
common stock 133,560 4,000 6,000 10,000
Capital contributed to support
operations 1,145 1,145
Net loss for the year ended
August 31, 2000 (2,253) (2,253)
------------ ------------ ------------ ------------ ------------
Balance at August 31, 2000 166,893 5,000 56,145 (54,574) 6,571
Capital contributions 4,415 4,415
Net loss for the year ended
August 31, 2001 (10,971) (10,971)
------------ ------------ ------------ ------------ ------------
Balance at August 31, 2001 166,893 5,000 60,560 (65,545) 15
Capital contributions 2,215 22 17,701 17,723
Net loss for six months ended
February 28, 2002 (1,635) (1,635)
------------ ------------ ------------ ------------ ------------
Balance at February 28, 2002 169,108 $ 5,022 $ 78,261 $ (67,180) $ (16,103)
============ ============ ============ ============ ============
F-4
SHIMODA RESOURCES HOLDINGS, INC.
(FORMERLY ELPLATA CORPORATION)
STATEMENTS OF CASH FLOWS
Year ended Six months ended
---------------------------------- --------------------------------------
August 31, 2001 August 31, 2000 February 28, 2002 February 28, 2001
--------------- --------------- ----------------- -----------------
(Unaudited) (Unaudited)
Operating Activities:
Net Income / (Loss) $ (10,971) $ (2,253) $ (1,653) $ 112
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Contributed capital to support operations -- 1,145 -- --
Changes in assets and liabilities:
Increase (decrease) in liabilities:
Advances -- -- (25) --
Accounts payable (788) (1,533) 803 (841)
--------------- --------------- ----------------- -----------------
Net cash used for operating activities (11,759) (2,641) (875) (729)
--------------- --------------- ----------------- -----------------
Investing Activities
Deferred Registration Costs -- -- (16,349) --
--------------- --------------- ----------------- -----------------
Net cash provided by investing activities -- -- (16,349) --
--------------- --------------- ----------------- -----------------
Financing Activities:
Proceeds from private placement of common stock -- 10,000 17,738 --
Capital contributions 749 -- -- --
Capital contributions - Shimoda Capital (USA), Inc. 2,435 -- -- --
Capital contributions - Shimoda Capital Advisors Ltd 1,231 -- -- --
--------------- --------------- ----------------- -----------------
Net cash provided by financing activities 4,415 10,000 17,738 --
--------------- --------------- ----------------- -----------------
Net increase (decrease) in cash (7,344) 7,359 514 (729)
Cash, beginning of year 7,359 -- 18 7,358
--------------- --------------- ----------------- -----------------
Cash, end of year $ 15 $ 7,359 $ 532 $ 6,629
=============== =============== ================= =================
Supplemental disclosure of cash flow information:
Interest paid $ -- $ -- $ -- $ --
=============== =============== ================= =================
Income taxes paid $ -- $ -- $ -- $ --
=============== =============== ================= =================
See accompanying independent auditors' report and notes to financial statements.
F-5
SHIMODA RESOURCES HOLDINGS, INC.
(FORMERLY ELPLATA CORPORATION)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 2001 AND 2000
(1) Organization and Description of Business
Shimoda Resources Holdings, Inc. (formerly known as ElPlata Corporation)
(the "Corporation") was incorporated under the laws of the State of Nevada
on February 23, 1973 and restated its Articles of Incorporation on
September 30, 1999. The September 30, 1999 restatement changed the
Corporation's name to El Plata Corporation and the authorized number of
shares from 20,000,000 to 100,000,000 and changed the stated par value per
share from $0.05 per share to $0.001 per share. On April 5, 2001, the
Articles of Incorporation were amended, changing the name to Shimoda
Resources Holdings, Inc. and the number of authorized shares to 5,000,000.
The Corporation's initial activities were to have quiet and exclusive
possession of the un patented lode mining claims on certain property
located in Elko County, Nevada, together with a right to examine, sample,
drill, develop, mine, extort, process and market from the claims all of the
metal ores, minerals and materials of whatsoever nature or sort, except oil
and gas. These efforts were unsuccessful and were abandoned prior to August
31, 1989, at which time the Corporation became dormant.
Basis of Presentation:
The accompanying financial statements have been prepared assuming that the
Corporation will continue as a going concern. As shown in the accompanying
financial statements, the Corporation has incurred net losses from
operations, which raises substantial doubt about the Corporation's ability
to continue as a going concern. Accordingly, the Corporation is dependent
upon management and/or significant shareholders to provide sufficient
working capital to preserve the integrity of the corporate entity at this
time. It is the intent of management and significant shareholders to
provide sufficient working capital necessary to support and preserve the
Corporation as a going concern.
The financial statements do not include any adjustments, relating to the
recoverability and reclassification of recorded asset amounts and
classifications of liabilities that might necessary should the Corporation
be unable to continue its existence.
(2) Summary of Significant Accounting Policies:
Use of Estimates:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
See accompanying independent auditors' report.
F-6
SHIMODA RESOURCES HOLDINGS, INC.
(FORMERLY ELPLATA CORPORATION)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED AUGUST 31, 2001 AND 2000
(2) Summary of Significant Accounting Policies:
Cash and Cash Equivalents:
For statement of cash flows purposes, the Corporation considers all cash on
hand and in banks, including accounts in book overdraft positions,
certificates of deposit and other highly-liquid investments with maturities
of three months or less, when purchased, to be cash and cash equivalents.
Income Taxes:
The Corporation accounts for taxes under SFAS No. 109, which requires
recognition of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in financial statements
or tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement 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 principal
temporary difference is the net operating loss carry-forward of
approximately $65,545 at August 31, 2001. Due to a change in control in
fiscal 2000, there are significant limitations on its utilization. A
deferred asset has been provided and completely offset by a valuation
allowance, because its utilization does not appear to be reasonably
assured. Federal net operating loss carry-forward starts to expire on
August 31, 2020.
The Corporation is liable for and has provided for corporate state taxes.
Loss Per Share:
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilative effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilative effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of August 31, 2001 and 2000, the
Corporation has no outstanding warrants and options issued and outstanding.
Interim Financial Statements
During interim periods, the Company follows the accounting policies set
forth in its annual audited financial statements filed with the U. S.
Securities and Exchange Commission on its Annual Report on Form 10-KSB for
the year ended August 31, 2001. The information presented within these
interim financial statements may not include all disclosures required by
generally accepted accounting principles and the users of financial
information provided for interim periods should refer to the annual
financial information and footnotes when reviewing the interim financial
results presented herein.
In the opinion of management, the accompanying interim financial
statements, prepared in accordance with the U.S. Securities and Exchange
Commission's instructions for Form 10-QSB, are unaudited and contain all
material adjustments, consisting only of normal recurring adjustments
necessary to present fairly the financial condition, results of operations
and cash flows of the Company for the respective interim periods presented.
The current period results of operations are not necessarily indicative of
results that ultimately will be reported for the full fiscal year ending
August 31, 2002.
F-7
(3) Common Stock Transactions:
On September 29, 1999, the Corporation sold 4,000,000 shares of common
stock to the Corporation's President pursuant to an exemption from
registration pursuant to Section 4(2) of The Securities Act of 1933, as
amended, for $10,000 cash.
On September 5, 2001, the Corporation affected a 30 to 1 reverse stock
split. The retroactive effect of this split has been reflected for all
periods presented.
(4) Pro Forma Financial Statements (Unaudited)
In April 2002, the Company, in exchange for shares held by Shimoda
Resources Ltd, an affiliated entity, (a) issued 250,000 common shares in
exchange for (i) 201,650 ordinary (pound)0.01 shares and (ii) warrants to
purchase 148,350 Ordinary (pound)0.01 shares at (pound)1 per share, (b)
paid $650,000 and issued 11,000 common shares in exchange for 3,470,166
units of Gulf International Minerals Ltd., each unit consisting of one
common share and one share purchase warrant at CDN$.040 per unit, and (c)
in a transaction with an unaffiliated entity sold 110,000 shares of its
common shares for $999,000 in a private placement.
The purchase of the shares of European Nickel plc were recorded at the
historical cost basis of the transferor, Shimoda Resources Ltd, in
accordance with Staff Accounting Bulletin No. 48 ("SAB 48) of the U. S.
Securities and Exchange Commission -- "Transfers of Non-Monetary Assets by
Promoters or Shareholders". SAB 48 requires that exchanges of non-monetary
assets by promoters or shareholders be recorded at carryover basis. The
Gulf International shares were recorded at the cash consideration paid,
which exceeded the basis of Shimoda Resources Ltd.
The accompanying condensed pro forma financial statements should be read in
connection with the historical statements of Shimoda Resources Holdings,
Inc.
February 28, 2002
Historical Adjustments Pro Forma
ASSETS ----------- ----------- -----------
Cash $ 556 (a)(b)(d) 130,034 $ 130,590
Investments
European Nickel PLC -- (a) 1,571,441 1,571,441
Gulf International Minerals Ltd -- (b)(c) 760,000 760,000
----------- -----------
Other assets 16,349 16,349
----------- -----------
Total assets $ 16,905 $ 2,478,380
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 802 $ 802
Stockholders equity
Common stock 5,022 (a)(b) 372 5,394
Additional paid in capital 78,261 (a)(b) 2,461,103 2,539,364
Retained earnings (deficit) (67,180) (67,180)
----------- -----------
Shareholders equity 16,103 2,477,578
----------- -----------
Total liabilities and equity $ 16,905 $ 2,478,380
=========== ===========
F-8
Notes to Pro Forma Condensed Balance Sheet
(a) The issuance of 250,000 shares had, in management's opinion, a fair
value of $10 per share, which was the approximate amount at which the
shares sold in transactions with unaffiliated entities. Although the total
value of the shares issued by Shimoda in the exchange was $2,500,000, the
company was limited to recording of the transaction at the basis of Shimoda
Resources Ltd. Per SAB 48, the company is limited by the accounting rules
of the U.S. Securities and Exchange Commission in recording the acquisition
at the historical cost basis in the hands of the transferor, as follows
Basis of shares to Shimoda Resources Ltd.
Number of shares 201,650
Original cost per share ((pound)3) $ 4.50 907,425
----------
Entitlement to subscribe (warrants) 148,350
Difference between exercise price ((pound)1) and fair
value ((pound)3) of underlying shares $ 3.0 445,050
----------
Cash payment for exercise of entitlement
to purchase 148,350 shares @(pound)1 ($1.48) 218,966
----------
$1,571,441
==========
(b) Reflects purchase of 3,460,166 units of Gulf International Minerals,
Ltd for consideration of $650,000 cash.
(c) Reflects the purchase of 450,000 shares of Gulf International Minerals,
Ltd for 11,000 common shares valued at $10 per share, for a total purchase
price of $110,000. In management's opinion the value of the Gulf
International position, based upon the publicly traded value on April 30,
2002 on Canadian Venture Exchange was approximately $1,400,000.
(d) Reflects the sale of 111,000 shares at U.S.$9 per share, in a private
placement transaction through an unaffiliated entity.
See accompanying independent auditors' report.
F-9
SHIMODA RESOURCES HOLDINGS, INC.
SUBSCRIPTION AGREEMENT
Investment
I desire to purchase ____________ shares of Shimoda Resources Holdings, Inc.
("Shares") at $12.00 per share for a total of $_______________ ($12.00
multiplied by the total number of shares you desire to purchase). Minimum
purchase is 4167 shares (or $50,004.00).
Payment of Purchase Price
Make check(s) payable to: Shimoda Resources Holdings, Inc.
Subscriber Information
Please clearly print name(s) in which the Shares are to be acquired. All
correspondence will go to the Investor Residence Address.
Investor 1 (first, middle and last name):
-----------------------------------------
Investor 2 (first, middle and last name):
-----------------------------------------
Form of Ownership (How should the investment be held/titled):
-------------------------------------------------------------
Investor 1 Residence Address:
-----------------------------
_____________________________________________
_____________________________________________
_____________________________________________
Telephone Number: ___________________________
CHECK ONE OF THE FOLLOWING:
______US CITIZEN
______RESIDENT ALIEN
______US CITIZEN RESIDING OUTSIDE THE US
______NON-RESIDENT ALIEN
S-1
Investor 2 Residence Address:
-----------------------------
_____________________________________________
_____________________________________________
_____________________________________________
Telephone Number: ___________________________
CHECK ONE OF THE FOLLOWING:
______US CITIZEN
______RESIDENT ALIEN
______US CITIZEN RESIDING OUTSIDE THE US
______NON-RESIDENT ALIEN
Enter your taxpayer identification number below. For most individual taxpayers,
it is your Social Security Number. If the purchase is in more than one name, the
number should be that of the first person listed.
SOCIAL SECURITY NUMBER TAXPAYER IDENTIFICATION NUMBER
(if applicable)
Investor No. 1
______________________ ______________________________
Investor No. 2
______________________ ______________________________
Subscriber(s) Representations:
1. I/we have received and read the Prospectus for the Shares, and
understand the risks associated with my/our purchase of the Shares.
2. I/we satisfy the suitability requirements for the purchase of the
Shares checked below:
[ ] my/our annual income is $100,000 or more, or
[ ] my/our net worth (inclusive of home) is $500,000 or more, or
[ ] I/we are able to bear the economic risk of my/our investment in
the Shares and I/we have such knowledge and experience in financial
and business matters so as to have a capacity to protect my/our own
interests in connection with the purchase of the Shares and I/we are
capable of evaluating the merits and risks of the investment in the
Shares.
S-2
I/we understand that Shimodo may make further inquiry of me/us as
Shimoda may deem appropriate to establish in itself a reasonable
belief that I/we meet the suitability standards.
3. I/we understand that my/our subscription for the Shares is not subject
to an escrow or impound account or to the Company's receipt of
subscriptions for any minimum or maximum number of Shares. Once my/our
subscription is accepted, the Company may apply my/our funds for the
uses stated in the Prospectus.
4. The Company may, in its sole discretion, reject my/our subscription in
whole or in part. If the Company does reject my/our subscription, it
will not charge me/us a cancellation fee.
I/we have signed this subscription agreement on ___________________, 200___, at
______________________ (city, _______________________ (state).
Investor No. 1 Investor No. 2
_______________________________ _______________________________
Print Name Print Name
_______________________________ _______________________________
Signature Signature
S-3
PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Shimoda intends to amend its Articles of Incorporation in the future to
eliminate a director's personal liability to us and our stockholders for
monetary damages incurred as the result of the breach or alleged breach by a
director of his "duty of care" as allowed by the Nevada General Corporation Law.
This provision will not apply to the directors' (i) acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law, (ii)
acts or omissions that a director believes to be contrary to the best interests
of the corporation or its shareholders or that involve the absence of good faith
on the part of the director, (iii) approval of any transaction from which a
director derives an improper personal benefit, (iv) acts or omissions that show
a reckless disregard for the director's duty to the corporation or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duties, of a risk
of serious injury to the corporation or its shareholders, (v) acts or omissions
that constituted an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the corporation or its shareholders, or
(vi) approval of an unlawful dividend, distribution, stock repurchase or
redemption. This provision would generally absolve directors of personal
liability for negligence in the performance of duties, including gross
negligence.
Insofar as an indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted for directors, officers or persons
controlling the Company pursuant to the foregoing provisions, we have been
informed that in the opinion of the Securities and Exchange Commission each
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
Item 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all approximate costs and expenses, other
than underwriting discounts and commissions, payable by the Registrant in
connection with the sale of the shares being registered hereby. All of the
amounts shown are estimates except for the Securities and Exchange Commission
(the "Commission") registration fee and the National Association of Securities
Dealers ("NASD") filing fee.
Commission Registration Fee $ 4,876
Accounting Fees and Expenses $ 25,000
Legal Fees and Expenses $ 40,000
Printing and Engraving Expenses $ 15,000
Transfer Agent Fees $ 5,000
Miscellaneous and Placement Expenses $ 1,340,000
TOTAL $ 1,429,876
2-1
Item 26. RECENT SALES OF UNREGISTERED SECURITIES
In April 2002, Shimoda sold 111,000 shares of Common Stock to one investor
for $999,999. The sale was made without registration pursuant to a Regulation S
exemption. The offer and sale was made outside the United States to a
non-resident of the United States. The investor is a sophisticated person and
had access to the books and records of the Company. All stock certificates
issued to the investor have been affixed with a legend restricting sales and
transfers.
Further, in April 2002, Shimoda acquired interests in the two resource
companies from Shimoda Resources, Ltd. ("SRL"). SRL is an island of Cyprus
investment company of which David J. Mapley, Chief Executive Officer and
President of Shimoda, is the founder and manager. The purchases were as follows:
(a) We purchased from SRL 201,750 ordinary 1 pence shares and warrants to
purchase 148,250 ordinary 1 pence shares of European Nickel plc ("EN")
at GBP1 per share.
(b) We purchased from SRL 450,000 shares and 450,000 warrants (18
months/exercise price CD .60 per share) of Gulf International
Minerals, Ltd. ("GIN") Common Stock
(c) Also in April, we purchased from SRL entitlements to 3,460,166 shares
(@CD 0.30) and 3,460,166 warrants (24 month/exercise price CD 0.40 per
share) of GIM.
(d) Also in April 2002, we exercised the entitlements to 3,460,166 shares
in GIM for US $650,000 and exercised 148,350 options in EN for US
$218,965.95.
The exchanges set forth above were made in accordance with Regulation S
under the Securities Act of 1933. SRL is not a resident of the United States,
and the exchange offers were made outside of the United States.
Item 27. EXHIBITS
3.1 Articles of Incorporation
3.2 Amendments to Articles of Incorporation
3.3 Bylaws
4.1 Specimen Certificate for Common Stock
5.1 Opinion of Law Offices of William B. Barnett.
10.1 Administrative Services Agreement by and between The Registrant and
Shimoda Capital (USA), Inc., dated October 1, 2001.
10.2 Business Management Agreement by and between Registrant and Shimoda
Capital Advisors Limited dated February 27, 2002.
23.1 Consent of Law Offices of William B. Barnett (included as part of
Exhibit 5.1).
23.2 Consent of Stonefield Josephson, Inc., Independent Certified Public
Accountants.
24.1 Power of Attorney (contained on page 11-3 hereof).
2-2
Item 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the Prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
Provided, however, that paragraphs (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
15(d) of the Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered herein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers, and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
2-3
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
finial adjudication of such issue.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David J. Mapley, his true and lawful
attorney-in-fact and agent with full power of substitution and re-substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming that said attorney-in-fact and agent or the substitute or substitutes
of him, may lawfully do or cause to be done by virtue hereof.
2-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and has duly caused his Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wilton, State of Connecticut, on June 21, 2002
SHIMODA RESOURCES HOLDINGS, INC.
By: /s/ David J. Mapley
----------------------------
David J. Mapley, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ DAVID J. MAPLEY Chief Executive Officer, June 21, 2002
- ------------------------ President, Chief Executive
DAVID J. MAPLEY Officer, and Director
/s/ JONATHAN MORLEY-KIRK Director June 21, 2002
- ------------------------
JONATHAN MORLEY-KIRK
/s/ JOHN VORNLE Chairman of the Board June 21, 2002
- ------------------------ of Directors
JOHN VORNLE
/s/ GRAHAM JOHNSON Director June 21, 2002
- ------------------------
GRAHAM JOHNSON
/s/ PETER J. LAZARO Chief Financial Officer, June 21, 2002
- ------------------------ Secretary and Treasurer
PETER J. LAZARO
/s/ RON BEVERIDGE Director June 21, 2002
- ------------------------
RON BEVERIDGE