REGISTRATION NO.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VALEMONT SUPPLY INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WASHINGTON 1499 912123475
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
6779 BLACKWELL RD
KAMLOOPS, BRITISH COLUMBIA V2C 6V7, CANADA
(604) 681 6599
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
AGENT FOR SERVICE: WITH A COPY TO:
MIKE FRANKENBERGER JAMES L. VANDEBERG
VALEMONT SUPPLY INC. OGDEN MURPHY WALLACE
6779 BLACKWELL RD #2100 - 1601 5TH AVENUE
KAMLOOPS, BRITISH COLUMBIA V2C 6V7, CANADA SEATTLE, WASHINGTON 98101
(250) 519 0553 (250) 519-0449 (206) 447-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box. [x]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, 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, 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, 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, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
TITLE OF EACH DOLLAR PROPOSED PROPOSED
CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO TO BE OFFERING PRICE AGGREGATE REGISTRATION
BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- ------------- ---------------- --------------- --------------- -------------
Common stock 1,000,000 shares $0.04 per share $ 40,000.00 $ 10.56
- ------------- ---------------- --------------- --------------- -------------
- --------------------------------------------------------------------------------
Note: Specific details relating to the fee calculation shall be furnished in
notes to the table, including references to provisions of Rule 457 (Section
230.457 of this chapter) relied upon, if the basis of the calculation is not
otherwise evident from the information presented in the table. If the filing fee
is calculated pursuant to Rule 457(o) under the Securities Act, only the title
of the class of securities to be registered, the proposed maximum aggregate
offering price for that class of securities and the amount of registration fee
needed to appear in the Calculation of Registration Fee table. Any difference
between the dollar amount of securities registered for such
offerings and the dollar amount of securities sold may be carried forward on a
future registration statement pursuant to Rule 429 under the Securities Act.
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 Securities and Exchange Commission, acting
pursuant to such section 8(a), may determine.
WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. ALTHOUGH WE ARE
PERMITTED BY US FEDERAL SECURITIES LAW TO OFFER THESE SECURITIES USING THIS
PROSPECTUS, WE MAY NOT SELL THEM OR ACCEPT YOUR OFFER TO BUY THEM UNTIL THE
DOCUMENTATION FILED WITH THE SEC RELATING TO THESE SECURITIES HAS BEEN DECLARED
EFFECTIVE BY THE SEC. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
OR OUR SOLICITATION OF YOUR OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THAT WOULD NOT BE PERMITTED OR LEGAL.
PROSPECTUS
JANUARY 16, 2002
VALEMONT SUPPLY INC.
6779 BLACKWELL RD
KAMLOOPS, BRITISH COLUMBIA V2C 6V7, CANADA
(250) 519 0553 (250) 519-0449
1,000,000 Shares of Common Stock
- - This is the initial public offering of common stock of Valemont Supply Inc.
- - No public market currently exists for shares of Valemont Supply Inc.'s
common stock.
- - The initial public offering price is $0.04 per share of common stock, which
was arbitrarily determined.
- - The offering is on a direct participation, no minimum basis.
- - Valemont Supply Inc. is selling its common stock directly.
- - There are no underwriters or broker-dealers involved in the selling
efforts. Valemont Supply Inc.'s stock is not listed on any national
securities exchange or the NASDAQ Stock Market.
- - There is no minimum purchase requirement and no arrangement to place funds
in an escrow, trust, or similar account.
- --------------- --------------- --------------------------- ---------------------
OFFERING PRICE UNDERWRITING DISCOUNTS AND PROCEEDS TO VALEMONT
COMMISSIONS SUPPLY INC.
- --------------- --------------- --------------------------- ---------------------
PER SHARE BASIS $0.04 per share $ 0.00 per share $ 0.04 per share
- --------------- --------------- --------------------------- ---------------------
TOTAL OFFERING $ 40,000.00 $ 0.00 $ 40,000.00
- --------------- --------------- --------------------------- ---------------------
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 1.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS.
NOR HAVE THEY MADE, NOR WILL THEY MAKE, ANY DETERMINATION AS TO WHETHER ANYONE
SHOULD BUY THESE SECURITIES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Table Of Contents
Risk Factors 1
Use of Proceeds 7
Determination of Offering Price 8
Dilution 8
Selling Shareholders 9
Plan of Distribution 9
Description of Capital Stock 10
Interests of Named Experts and Counsel 11
Description of Business 11
Description of Property 15
Legal Proceedings 16
Market Price of and Dividends on Capital Stock and Other Stockholder
Matters 16
Selected Financial Data 16
Management's Discussion and Analysis of Financial Condition and Results
Of Operations 17
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure 21
Directors and Executive Officers 21
Executive Compensation 21
Security Ownership of Certain Beneficial Owners and Management 22
Certain Relationships and Related Transactions 22
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities 23
Index to Financial Statements F-1
RISK FACTORS
You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing the common stock of
Valemont Supply Inc. Investing in Valemont Supply Inc.'s common stock involves a
high degree of risk.
YOU MAY BE UNABLE TO EFFECTIVELY EVALUATE VALEMONT SUPPLY INC. FOR INVESTMENT
PURPOSES, BECAUSE IT HAS NO OPERATING HISTORY AND ITS BUSINESS MODEL IS
UNPROVEN. VALEMONT SUPPLY INC. IS IN ITS EARLIEST STAGES OF DEVELOPMENT AND MAY
NEVER BECOME PROFITABLE
Valemont Supply Inc. is in the extreme early stages of development and could
fail before implementing its business plan. It must be regarded as a "start up"
venture that will incur net losses for the foreseeable future. As a result of
Valemont Supply Inc.'s limited operating history, it is difficult to accurately
forecast its potential revenue, and there is no meaningful historical financial
data upon which to base planned operating expenses. Valemont Supply Inc has no
current operations, employees, history of earnings or profits, its revenue and
income potential is unproved, and its business model is still emerging. In
addition it faces unforeseen costs, expenses, problems and difficulties that
could easily prevent it from ever becoming profitable.
FAILURE TO OBTAIN SUFFICIENT CUSTOMERS FOR ITS MICA WOULD PREVENT VALEMONT
SUPPLY INC. FROM IMPLEMENTING ITS BUSINESS PLAN, AND COULD CAUSE ITS STOCK TO BE
WORTHLESS.
Valemont Supply Inc.'s principal assets are certain mineral claims located in
the Cariboo Mining District of British Columbia, Canada. Collectively the
mineral claims make up a mineral deposit whose primary mineral is mica. The
mica owned by Valemont Supply Inc., has a number of end uses such as oil
drilling muds, building products, paint, plastics, rubber and other end uses.
Failure to obtain sufficient customers for the mica would prevent Valemont
Supply Inc. from implementing its business plan, and could cause its stock to be
worthless. Valemont Supply Inc.'s products compete against those of other
established companies, some of which have greater financial, marketing and other
resources than those of Valemont Supply Inc. These competitors may be able to
institute and sustain price wars, resulting in a reduction of Valemont Supply
Inc.'s share of the market and limiting or eliminating profitability.
INDUSTRIAL MINERALS LIKE MICA DO NOT HAVE A METALS EXCHANGE OR AN OPEN MARKET
UPON WHICH TO TRADE AND THEREFORE PRICES ARE DIFFICULT TO PREDICT. IF MANAGEMENT
OVERESTIMATES THE PRICE OF THE MICA, PROFITABILITY COULD BE REDUCED AND
ULTIMATELY RESULT IN BUSINESS FAILURE.
Industrial minerals like mica, as opposed to commodity minerals such as copper,
gold or silver, do not have a metals exchange or an open market upon which to
trade and therefore prices are not set in an open market or publicly traded
market. As prices are set with private buyers it is difficult to predict what
market prices may be at the time of sale of an industrial mineral like mica. If
management overestimates the price of the mica, profitability could be reduced
and ultimately result in business failure. Companies selling industrial minerals
must negotiate prices with individual buyers and therefore must convince the
buyers to purchase the Company's product over other products taking into
consideration quality, quantity, time sufficiency and longevity and therefore a
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company may have marketing problems unless it can convince buyers that its
products are equal or superior to other similar products. There can be no
guarantees that the Company will be able to sell its products in a profitable
manner.
VALEMONT SUPPLY INC. MAY DILUTE EXISTING SHAREHOLDERS BY COMPENSATING SERVICE
PROVIDERS BY ISSUING STOCK
Valemont Supply Inc. might seek to compensate providers of services by issuance
of stock in lieu of cash. Any such stock issuance would dilute ownership
interests of shareholders. For example, it is possible that Valemont Supply
Inc. would grant stock to compensate its marketing and sales personnel with
stock options. Irrespective of whether Valemont Supply Inc.'s cash assets prove
to be inadequate to meet its operational needs, Valemont Supply Inc. might seek
to compensate providers of services by issuance of stock in lieu of cash, which
again would dilute ownership interests of shareholders.
VALEMONT SUPPLY INC.'S SIGNIFICANT SHAREHOLDER COULD SELL HIS CONTROL BLOCK TO
AN OUTSIDE PARTY RESULTING IN A POSSIBLE CHANGE IN BUSINESS NOT CONSIDERED BY
OTHER SHAREHOLDERS
Valemont Supply Inc.'s significant shareholder, A.E. Daem, could sell his
control block to an outside party resulting in a majority of the voting power
being transferred to the purchaser(s). The result could be that new
shareholder(s) would control Valemont Supply Inc. and persons unknown could
replace Valemont Supply Inc.'s management. It is uncertain whether any such
replacements would continue to implement Valemont Supply Inc.'s current business
plan.
HEAVY DEPENDENCE ON ONE INDIVIDUAL WHO HAS LITTLE MARKETING EXPERIENCE COULD
RESULT IN DELAYS OR BUSINESS FAILURE
Because of lack of marketing experience, Valemont Supply Inc. may overestimate
the marketability of the Mica and may underestimate the costs and difficulties
associated with selling and distributing the Mica. Any such unanticipated costs
or difficulties could prevent Valemont Supply Inc. from implementing its
business plan, thereby limiting its profitability and decreasing the value of
its stock. Mr. Daem has no experience in implementing an extensive sales
campaign for the Mica.
PURCHASERS MUST RELY ON MR. DAEM'S ABILITIES FOR ALL DECISIONS AS HE CONTROLS
THE MAJORITY OF THE STOCK. VALEMONT SUPPLY INC. HAS NO EMPLOYMENT AGREEMENT WITH
MR. DAEM AND HE SPENDS ONLY PART-TIME ON ITS BUSINESS. HIS LEAVING MAY ADVERSELY
AFFECT VALEMONT SUPPLY INC.'S ABILITY TO OPERATE
Mr. Daem is serving as Valemont Supply Inc.'s sole officer and director.
Valemont Supply Inc. will be heavily dependent upon Mr. Daem's entrepreneurial
skills and experience to implement its business plan and may, from time to time,
find that his inability to devote full time and attention to its affairs will
result in delay(s) in progress towards the implementation of its business plan
or in a failure to implement its business plan. Moreover, Valemont Supply Inc.
does not have an employment agreement with Mr. Daem and as a result, he may not
continue to manage its affairs in the future. Nor has Valemont Supply Inc.
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obtained a key man life insurance policy on Mr. Daem. Valemont Supply Inc. could
lose the services of Mr. Daem, or Mr. Daem could decide to join a competitor or
otherwise compete directly or indirectly with Valemont Supply Inc., which would
have a significant adverse effect on its business and could cause the price of
its stock to be worthless. The services of Mr. Daem would be difficult to
replace.
VALEMONT SUPPLY INC. MAY CONSIDER BUSINESS COMBINATIONS RESULTING IN A POSSIBLE
CHANGE IN BUSINESS NOT CONSIDERED BY OTHER SHAREHOLDERS
Valemont Supply Inc. may make investments in or acquire complementary products,
technologies and businesses, or a business completely unrelated to Valemont
Supply Inc.'s current business plan. Acquisition of a completely unrelated
business would result in a change of business not contemplated by existing
shareholders. Valemont Supply Inc. may consider a future financing or business
combination that, because of the size of the related stock issuance, would
result in a majority of the voting power being transferred to the investor(s).
The result could be that new shareholder(s) would control Valemont Supply Inc.
and persons unknown could replace Valemont Supply Inc.'s management. It is
uncertain whether any such replacements would continue to implement Valemont
Supply Inc.'s current business plan and in any event may result in a new
management team not considered by existing shareholders. In such case, an
investor could not only lose its entire investment, but could lose its entire
investment on a business decision it did not get to evaluate at the time of
investing in Valemont Supply Inc. Valemont Supply Inc. has had no discussions
with third parties regarding business opportunities and there currently are no
business acquisitions that are probable.
POTENTIAL BUSINESS COMBINATIONS COULD BE DIFFICULT TO INTEGRATE AND DISRUPT
BUSINESS.
If Valemont Supply Inc. acquires a company; it could face difficulties in
assimilating that company's personnel and operations. Acquisitions also involve
the need for integration into existing administration, services marketing, and
support efforts. These acquisitions and investments could disrupt its ongoing
business, distract management and employees and increase its expenses. Valemont
Supply Inc. cannot predict the extent to which its liquidity and capital
resources will be diminished prior to consummation of a business combination or
whether its capital will be further depleted by the operation losses (if any) of
a business entity that is acquired. In addition, the key personnel of the
acquired company may decide not to work for Valemont Supply Inc. Any
amortization of goodwill or other assets, or other charges resulting from the
costs of these acquisitions, could increase Valemont Supply Inc.'s operating
costs.
IF VALEMONT SUPPLY INC. DOES ACHIEVE PROFITABILITY, IT CANNOT BE CERTAIN THAT IT
WILL SUSTAIN OR INCREASE IT
If Valemont Supply Inc. does achieve profitability, it cannot be certain that it
will sustain or increase it. An investor in Valemont Supply Inc.'s common stock
must consider the risks and difficulties frequently encountered by early stage
companies in new and rapidly evolving markets. Valemont Supply Inc.'s ability
to achieve and then sustain favorable operating results will depend on a number
of factors, including costs related to:
- - identifying prospective purchasers,
3
- - marketing to prospective purchasers, and
- - initial product discounts, if any.
SIGNIFICANT INCREASES IN OPERATION EXPENDITURES MAY PREVENT VALEMONT SUPPLY INC.
FROM ACHIEVING PROFITABILITY AND COULD RESULT IN BUSINESS FAILURE.
Valemont Supply Inc. expects to significantly increase its operating expenses in
order to market and distribute the Mica. As a result it may not generate enough
revenue to achieve profitability.
VALEMONT SUPPLY INC. MAY NOT BE ABLE TO RAISE ADDITIONAL FINANCING IF NEEDED FOR
ITS BUSINESS AND IN THE EVENT OF A BANKRUPTCY SHAREHOLDERS COULD LOSE THEIR
ENTIRE INVESTMENT
Valemont Supply Inc.'s ultimate success may depend on its ability to raise
additional capital. Failure to raise the necessary funds in a timely fashion
will severely limit Valemont Supply Inc.'s operations and it would be unable to
implement its business plan. If Valemont Supply Inc. raises additional funds
through the issuance of equity, equity-related or convertible debt securities,
these securities may have rights, preferences or privileges senior to those of
the rights of its common stock and its stockholders may experience additional
dilution. In the event of a bankruptcy in either case, shareholders could loose
their entire investments as a result of the senior preferences or privileges. No
commitments to provide additional funds have been made by management or other
shareholders. Valemont Supply Inc. has not investigated the availability,
source or terms that might govern the acquisition of additional financing. When
additional capital is needed, Valemont Supply Inc. may not able to source funds
that can be obtained on terms acceptable to it.
VALEMONT SUPPLY INC.'S AUDITORS HAVE EXPRESSED THAT THERE IS SUBSTANTIAL DOUBT
REGARDING VALEMONT SUPPLY INC.'S ABILITY TO CONTINUE AS A GOING CONCERN AND
THEREFORE INVESTORS COULD LOOSE THEIR ENTIRE INVESTMENT.
Valemont Supply Inc.'s auditors have expressed that there is substantial doubt
regarding Valemont Supply Inc.'s ability to continue as a going concern.
Valemont Supply Inc. has not generated any revenues or conducted any operations
since inception. The ability of Valemont Supply Inc. to achieve success with
respect to its planned principal business activity is dependent upon its
successful efforts to attain profitable operations. Valemont Supply Inc. may not
be able to sell any of its products at a profit. There is therefore substantial
doubt regarding Valemont Supply Inc.'s ability to continue as a going concern.
VALEMONT SUPPLY INC. COMMON STOCK HAS NO PRIOR MARKET AND STEPS HAVE NOT BEEN
TAKEN TO HAVE ITS COMMON STOCK LISTED ON THE NASD OVER-THE-COUNTER BULLETIN
BOARD. THERE ARE NO IMMEDIATE PLANS TO DO SO. FURTHERMORE VALEMONT SUPPLY INC.
MAY NEVER RECEIVE APPROVAL FOR LISTING AND ACCORDINGLY PRICES MAY DECLINE AFTER
THE OFFERING AND SHAREHOLDERS MAY HAVE DIFFICULTY SELLING THEIR SHARES
There is no public market for Valemont Supply Inc.'s common stock and no market
may develop that would allow any shareholder to be able to liquidate his
investment without considerable delay, if at all. Valemont Supply Inc. has not
4
taken any steps to have its shares listed on the NASD over-the-counter bulletin
board and has no immediate plans to do so. Although Valemont Supply Inc. intends
to apply to have its shares traded on the NASD over-the-counter bulletin board
shortly after it has a sufficient number of shareholders to interest a market
maker in making a market in its securities there is no guarantee that this will
occur. The trading market price of Valemont Supply Inc.'s common stock may
therefore decline below the offering price. If a market should develop, the
price may be highly volatile. In addition, an active public market for Valemont
Supply Inc.'s common stock may not develop or be sustained. All of Valemont
Supply Inc.'s outstanding shares, except for those of A.E. Daem, are being
registered for sale pursuant to this offering. If Valemont Supply Inc.'s
selling stockholders sell substantial amounts of common stock in the public
market, the market price of Valemont Supply Inc.'s common stock could fall.
Factors such as those discussed in this "Risk Factors" section may have a
significant impact on the market price of Valemont Supply Inc.'s securities.
Owing to the low price of the securities many brokerage firms may not be willing
to effect transactions in the securities. Even if a purchaser finds a broker
willing to effect a transaction in Valemont Supply Inc.'s common stock, the
combination of brokerage commissions, state transfer taxes, if any, and other
selling costs may exceed the selling price. Further, many lending institutions
will not permit the use of such securities as collateral for loans. Thus, a
purchaser may be unable to sell or otherwise realize the value invested in
Valemont Supply Inc. stock.
EVEN IF VALEMONT SUPPLY INC. IS APPROVED FOR QUOTATION BY A MARKET MAKER THROUGH
THE NASD OVER-THE-COUNTER BULLETIN BOARD, INVESTORS MAY FACE DIFFICULTY SELLING
THEIR SHARES.
Even if Valemont Supply Inc. is approved for quotation by a marketmaker through
the NASD over-the-counter bulletin board, stocks traded over this quotation
system are usually thinly traded, highly volatile and not followed by analysts.
Investors may therefore have difficulty selling their shares.
INVESTORS MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF VALEMONT SUPPLY
INC. STOCK DUE TO STATE BLUE SKY LAWS
Because Valemont Supply Inc.'s securities have not been registered for resale
under the blue sky laws of any state, the holders of such shares and those
persons desiring to purchase them in any trading market that may develop in the
future should be aware that there may be significant state blue sky law
restrictions on the ability of investors to sell and on purchasers to buy
Valemont Supply Inc.'s securities. Investors may be unable to sell their stock
in Valemont Supply Inc. Accordingly, investors should consider the secondary
market for Valemont Supply Inc.'s securities to be a limited one. Investors may
be unable to resell their stock without the significant expense of state
registration or qualification.
INVESTORS MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF VALEMONT SUPPLY
INC. STOCK DUE TO FEDERAL PENNY STOCK REGULATIONS
Because Valemont Supply Inc.'s securities will constitute "penny stock" within
the meaning of the rules, this may affect the ability of the owners of Valemont
5
Supply Inc. shares to resell their securities. The Securities and Exchange
Commission has adopted a number of rules to regulate "penny stocks." Such rules
include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9
under the Securities and Exchange Act of 1934. The rules require broker-dealers
to make certain disclosures regarding penny stocks to potential buyers, and make
a determination based upon information provided by the potential buyer about
such buyer's suitability for investing in penny stocks. Because Valemont Supply
Inc.'s securities will constitute "penny stock" within the meaning of the rules,
the rules would apply to Valemont Supply Inc. and its securities and there may
be a limited market for penny stocks, due to the regulatory burdens on
broker-dealers.
INVESTORS MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF VALEMONT SUPPLY
INC. STOCK DUE TO THE WAY IN WHICH STOCK TRADES ARE HANDLED BY BROKER-DEALERS
Because of large broker-dealer spreads, investors may be unable to sell the
stock immediately back to the broker-dealer at the same price the broker-dealer
sold the stock to the investor. In some cases, the stock may fall quickly in
value. Investors may be unable to reap any profit from any sale of the stock, if
they can sell it at all. The market among broker-dealers may not be active.
Investors in penny stock often are unable to sell stock back to the dealer that
sold them the stock. The mark ups or commissions charged by the broker-dealers
may be greater than any profit a seller may make.
THE MARKET FOR PENNY STOCKS HAS SUFFERED IN RECENT YEARS FROM PATTERNS OF FRAUD
AND ABUSE, WHICH MAY CAUSE INVESTORS TO LOSE THEIR INVESTMENT
Shareholders should be aware that, according to the Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse which could cause investors to
lose their entire investment. Such patterns include:
- - control of the market for the security by one or a few broker-dealers that
are often related to the promoter or issuer;
- - manipulation of prices through prearranged matching of purchases and sales
and false and misleading press releases;
- - "boiler room" practices involving high pressure sales tactics and
unrealistic price projections by inexperienced sales persons;
- - excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
- - the wholesale dumping of the same securities by promoters and
broker-dealers after prices have been manipulated to a desired level, along with
the inevitable collapse of those prices with consequent investor losses.
6
OTHER RISKS
YOU SHOULD NOT RELY ON FORWARD-LOOKING STATEMENTS BECAUSE THEY ARE INHERENTLY
UNCERTAIN
This prospectus contains forward-looking statements that involve risks and
uncertainties. Valemont Supply Inc.'s actual results could differ materially
from those anticipated in these forward-looking statements for many reasons,
including the risks faced by Valemont Supply Inc. described in "Risk Factors"
and elsewhere in this prospectus. We use words such as "anticipates",
"believes", "plans", "expects", "future", "intends" and similar expressions to
identify these forward-looking statements. Prospective investors should not
place undue reliance on these forward-looking statements, which apply only as of
the date of this prospectus.
USE OF PROCEEDS
The net proceeds to Valemont Supply Inc. from the sale of the 1,000,000 shares
of common stock offered by Valemont Supply Inc. hereby at an assumed initial
public offering price of $.04 per share are estimated to be $40,000. Valemont
Supply Inc. expects to use the net proceeds as follows:
Purpose Assuming Assuming Assuming Assuming
sale of sale of 25% sale of 50% sale of
10% of of stock of stock 100% of
stock being being stock being
being offered offered offered
offered
- --------------------------------------------------------------------------------------------------------
Site visit $ 3,000 $ 3,000 $ 3,000 $ 3,000
- Flag drill sites, clean
up and re-cut claim lines,
clean up previous trenching
Meet with local contactors $ 1,000 $ 1,000 $ 1,000 $ 1,000
(Valemont Area)
- Inspect equipment,
interview management and
check references
Offering expenses $ 6,000 $ 12,500 $ 12,500
Market Research $ 3,500 $ 4,000
- Review of various
trade shows to search for
applicability to Valemont
Supply Inc.
Meet with geologist with $ 2,500
regard to site expansion:
- Primary site location
- Mining
- Infrastructure-roads
Office Expenses $ 0 $ 0 $ 0 $ 5,000
Trade Shows $ 0 $ 0 $ 0 $ 7,000
Travel $ 0 $ 0 $ 0 $ 5,000
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Estimated offering expenses are as follows:
SEC registration fee $ 10
Printing and engraving expenses 5,000
Attorneys' fees and expenses 4,000
Accountants' fees and expenses 2,000
Transfer agent's and registrar's fees and expenses 500
Miscellaneous 990
---------
Total $ 12,500
---------
Valemont Supply Inc. continually evaluates other business opportunities that may
be available to it, whether in the form of assets acquisitions or business
combinations. Valemont Supply Inc. may use a portion of the proceeds for these
purposes. Valemont Supply Inc. is not currently a party to any contracts,
letters of intent, commitments or agreements and is not currently engaged in
active negotiations with respect to any acquisitions.
DETERMINATION OF OFFERING PRICE
Valemont Supply Inc. arbitrarily determined the price of the securities in this
Offering. The offering price is not an indication of and is not based upon the
actual value of Valemont Supply Inc. It bears no relationship to the book value,
assets or earnings of Valemont Supply Inc. or any other recognized criteria of
value. The offering price should not be regarded as an indicator of the future
market price of the securities.
DILUTION
No sale of Valemont Supply Inc.'s common stock has ever been sold from one
investor to another and the only issue of stock from treasury occurred on June
25, 2001 when a total of 8,000,000 shares of Valemont Supply Inc. common stock
were issued at a price of $0.0058 per share. All stock was issued based on a
valuation by the Board of Directors. The price of the securities in this
Offering is $0.04 per share or $0.0342 per share higher.
The net tangible book value of the Valemont Supply Inc. at October 31, 2001 was
$0.0014 per share. "Net tangible book value per share" represents the amount
of total tangible assets less total liabilities divided by the number of shares
of Common Stock outstanding.
After giving effect to the sale of all of the 1,000,000 shares offered pursuant
to this Registration Statement at a price of $0.04 per share, the net tangible
book value of the Valemont Supply Inc. as of October 31, 2001, after deducting
offering costs, would be $50,973 or $0.0064 per share. This represents
immediate dilution of $0.0336 per share to new investors and an immediate
increase in net tangible book value per share of $.0050 to existing
stockholders. The following illustrates the per share dilution in this case.
8
Share price: $0.0400
Net tangible book value before offering: $0.0014
Increase attributable to new investors: $0.0050
Net tangible book value after offering: $0.0064
Dilution to new investors: $0.0336
SELLING SHAREHOLDERS
There are no selling security holders.
PLAN OF DISTRIBUTION
This is not an underwritten offering and there are no broker dealers involved in
the selling efforts. This prospectus is part of a registration statement that
permits Valemont Supply Inc. to sell a maximum of 1,000,000 shares of its common
stock to the public on a direct participation basis.
In accordance with Regulation M under the Exchange Act, we may not bid for,
purchase or attempt to induce any person to bid for or purchase any of our
common stock while we are selling stock in this offering. We do not intend to
engage in any passive market making or undertake any stabilizing activity for
our common stock.
Valemont Supply Inc. will offer and sell its common stock through its sole
officer and director, A.E. Daem, under the exemption from registration as a
broker dealer under Rule 3a4-1 of the Exchange Act. All sales will be made in
compliance with the securities laws of local jurisdictions. Mr. Daem will offer
stock by delivering prospectuses to business associates with whom he has a
pre-existing relationship.
The gross proceeds to Valemont Supply Inc. will be $40,000 if all the shares
offered are sold. No commissions or other fees will be paid, directly or
indirectly, by Valemont Supply Inc., or any of its principals, to any person or
firm in connection with solicitation of sales of the shares. Mr. Daem will be
reimbursed for any expenses incurred in connection with this offering. Mr. Daem
will not be allowed to purchase shares in this offering.
While the registration statement is effective, new shareholders may sell their
shares directly to the public, without the aid of a broker or dealer, or they
may sell their shares through a broker or dealer if Valemont Supply Inc.'s stock
is authorized for inclusion on the NASD over-the-counter bulletin board. Any
commission, fee or other compensation of a broker or dealer would depend on the
brokers or dealers involved in the transaction.
No public market currently exists for shares of Valemont Supply Inc.'s common
stock. Valemont Supply Inc. intends to apply to have its shares traded on the
9
NASD over-the-counter bulletin board under the symbol "VALE". Valemont Supply
Inc. has not taken any actions to have its shares traded on the NASD
over-the-counter bulletin board. Valemont Supply Inc. intends to apply to have
its shares traded on the NASD over-the-counter bulletin board immediately after
it has met the listing standards for the NASD over-the-counter bulletin board as
set out by the National Association of Stock Dealers. In the case of Valemont
Supply Inc. these listing standards are:
- - An effective Registration Statement Under The Securities Act of 1933
- - To remain current with its quarterly and annual report filings with the
Securities and Exchange Commission
- - At least one market maker to make a market in its securities
Other than to remain current with its quarterly and annual report filings,
Valemont Supply Inc. needs to achieve a sufficient number of shareholders to
interest a market maker in making a market in its securities. There is no
minimum number of shareholders required for a stock to trade on the NASD
over-the-counter Bulleting Board. Valemont Supply Inc. anticipates that a
registered offering by its selling shareholders may result in its stock being
held by enough shareholders to interest a market maker to make a market in
trading Valemont Supply Inc.'s stock.
DESCRIPTION OF CAPITAL STOCK
Valemont Supply Inc.'s authorized capital consists of 100,000,000 shares of
common stock, par value $.0001 per share and 20,000,000 of preferred stock, par
value $.0001 per share. Immediately prior to this offering, 8,000,000 common
shares were issued and outstanding. Each record holder of common stock is
entitled to one vote for each share held on all matters properly submitted to
the shareholders for their vote. The articles of incorporation do not permit
cumulative voting for the election of directors, and shareholders do not have
any preemptive rights to purchase shares in any future issuance of Valemont
Supply Inc.'s common stock. Because the holders of shares of Valemont Supply
Inc.'s common stock do not have cumulative voting rights, the holders of more
than 50% of Valemont Supply Inc.'s outstanding shares, voting for the election
of directors, can elect all of the directors to be elected, if they so choose.
In such event, the holders of the remaining shares will not be able to elect any
of Valemont Supply Inc.'s directors.
The holders of shares of common stock are entitled to dividends, out of funds
legally available therefor, when and as declared by the Board of Directors. The
Board of Directors has never declared a dividend and does not anticipate
declaring a dividend in the future. In the event of liquidation, dissolution or
winding up of the affairs of Valemont Supply Inc., holders are entitled to
receive, ratably, the net assets of Valemont Supply Inc. available to
shareholders after payment of all creditors.
To the extent that additional shares of Valemont Supply Inc.'s common stock are
issued, the relative interests of existing shareholders may be diluted.
10
INTERESTS OF NAMED EXPERTS AND COUNSEL
Neither Manning Elliott Chartered Accountants (Auditors) or Ogden Murphy Wallace
(Legal Counsel) was employed on a contingent basis in connection with the
registration or offering of Valemont Supply Inc.'s common stock.
DESCRIPTION OF BUSINESS
GENERAL
Valemont Supply Inc. was incorporated under the laws of the State of Washington
on June 25, 2001, and is in its early developmental and promotional stages. To
date, Valemont Supply Inc.'s only activities have been organizational, directed
at acquiring its principal asset, raising its initial capital and developing its
business plan. Valemont Supply Inc. has not commenced commercial operations.
Valemont Supply Inc. has no full time employees and owns no real estate.
Valemont Supply Inc. intends to complete exploration and development on its
property, attempt to sell known mica reserves, and to generally meet its future
corporate obligations.
PRODUCT DESCRIPTION
Valemont Supply Inc.'s principal assets are certain mineral claims located in
the Cariboo Mining District of British Columbia, Canada. Collectively the
mineral claims make up a mineral deposit whose primary mineral is mica. The
mica owned by Valemont Supply Inc., has a number of end uses such as oil
drilling muds, building products, paint, plastics, rubber and other end uses.
- - Drilling muds for the oil and gas industry.
Drilling muds are used to lubricate and seal drilling shafts when exploring
for oil and gas. The muds have a natural tendency to flow into and seal
cracks in the perimeter of the drill shaft preventing the influx of
unwanted fluid into the shaft while drilling and possible loss of oil well
control. The platy structure of mica added to drilling mud facilitates the
overlapping of particles to form a layer or wall on the outside of the
shaft, thereby preventing fluid influx. Low quality mica is consumed in oil
wells where purity and color are not important. Generally the rock
formations in North America are such that drilling mud is required to
effectively drill for oil and gas. This is not generally the case in other
oil drilling areas in the Middle East and the North Sea. Mica competes with
several other products used in drilling mud, particularly a substance
called bentonite. Bentonite is another mineral that is mined and has the
same pliability, viscosity and lubrication properties as Mica. Consumption
of mica in drilling muds is directly related to oil well drilling activity
and the availability and cost of substitute products. Consumption by the
oil and gas industry has grown substantially as a result of new drill
programs being initiated throughout North America. This has been a direct
result of high oil and gas prices and governments desire to become energy
sufficient.
11
- - Building Industry
The largest market for mica is in the building industry. Mica is used:
- In civil engineering applications including to strengthening and
rebuilding bridges, water systems and highways.
- As a filler and extender in joint cement, which is used to fill joints
in the erection of gypsum plasterboard. When mica is mixed into the
joint cement compound, it acts as a reinforcing agent and prevents
cracking and peeling and reduces shrinkage. Consumption of mica in
joint cement is closely related to the level of construction activity
and the use of gypsum plasterboard by the construction industry. Use
of plasterboard is common only in the North American construction
industry.
- - Insulating And Fireproofing
Mica is used in the production of insulating and fireproof wallboards,
particularly in the United Kingdom. Mica is used as an asbestos substitute
due to its similar insulating and fire-resistant physical properties.
Valemont Supply Inc. expects that the use of mica in wallboard will expand
throughout North America, Europe and Japan due to its fire resistant
properties.
THE PROPERTY
The mica is exposed in sparse outcrops and in trenches excavated by a mining
company in l981. Drilling has encountered three beds of mica striking
northeasterly and dipping shallowly northwestward into the moderately south
sloping hillside. The top bed varies from 15 m to 25 m thick (averaging 17 m)
and contains an average mica content of 60.6%. Continuity of the mica bed is
open to the southwest where, management feels that, future drilling could define
another 1,000,000 tons. The mica bed also continues to the northwest but
increasingly thick hard surface materials increase the waste produced when
mined, making it less economic and thus more expensive to mine.
The mica content is variable throughout the extent of the three beds of mica.
In order to confirm the mica content, six holes were drilled in January-February
1987 to provide more information. Analytical results indicate that the
percentage of mica averages 56.1%. The Analysis indicates that the total
percentage of mica appears to increase to the east.
BACKGROUND TO DEVELOPMENT OF THE MICA PROPERTY
The mica in this property was discovered in 1961. Prior to being acquired by
Valemont Supply Inc., much work was carried out in order to better understand
the exact nature and location of the mica found on the property. This work
included:
Surface exploration and geochemistry
- - Several trenches were dug and bulk samples taken. Results of testing
indicating a commercially acceptable grade of mica can be recovered for a
variety of markets
12
- - Several drill holes were made with assay results indicating the property
owned by Valemont Supply Inc. contains a drill indicated reserve of
2,286,000 tons of mica accessible to open pit recovery
- - Metallurgical test conducted in 1981 at Bacon, Donaldson laboratories in
Vancouver, with input from Kilborn engineering, on behalf of Brinco Mining
Ltd verified a commercially acceptable grade of mica
- - A small-scale mining project was carried out in 1987 by Beaty Geological
Ltd on behalf of Lico Resources Inc and Technigen Platinum Corporation
resulting in four 60-70 ton bulk samples and six diamond drill holes being
drilled which further outlined and exposed the deposit for the current
owners, Valemont Supply Ltd.
ABOUT THE PRODUCT
There is currently no mica production in British Columbia. The property owned
by Valemont Supply Inc. is one of only a few large high-grade deposits in
Canada. Valemont Supply Inc. feels that its mica gives them a competitive
advantage over other mica properties in other locations, for the following
reasons:
- - Accessibility to and location of the mica
o Access to the mica is by an all weather road that connects directly to
a highway. The road dissects Valemont Supply Inc.'s mica property and
is maintained by the British Columbia Department of Highways. The main
line of the Canadian National Railway is 2km East of the Mica deposit
located on the property. For power the Avola-Valemont transmission
line crosses the property. For water the Canoe River flows along the
South boundary of the property.
- - Relative ease of extraction
o A local contractor is considered by management to be the most cost
effective way to extract the mica from an open pit. This could be
accomplished easily by stripping off the top layer of dirt to expose
the mica below. The mica is of a grade and consistency soft enough to
be handled directly by small machinery such as a cat and excavator and
then loaded directly into a customer's dump truck for transport.
- - Ease of grade control
o The grade of mica sold can be easily controlled by mining the mica
from those areas that have already been drilled and have assay results
available. This would yield the average stated percentage of mica as
determined in those previous drilling scenarios.
Properties, like viscosity, pliability, and lubrication, make mica ideal for
drilling mud, which will be the initial focus of sales efforts. Its viscosity
and pliability allow the mica to flow and take on different forms thus keeping
the drill holes from collapsing and its lubricating properties allow the drill
to operate more freely and efficiently.
13
SHORT-TERM PLAN OF OPERATION FOR THE PERIOD ENDING OCTOBER 31, 2002
The initial step that Valemont Supply Inc. plans to take is to identify target
companies in need of drilling mud and develop a sales force to approach these
companies. It is anticipated that these companies will be the focus of selling
efforts. Once target companies are identified, Valemont Supply Inc. will begin
marketing the product. It will be difficult for a small entrant into this market
to gain market share given the size of the industry and potential competition,
however Valemont Supply Inc. believes that its mica can be successfully sold
into the marketplace. Valemont Supply Inc. feels that its general proximity to
customers and pricing will make its mica less expensive to acquire by potential
customers. Large oil and gas drilling programs are ongoing in Alberta, British
Columbia, Saskatuwan, Alaska, Yukon and North West Territories. Valemont Supply
Inc. believes that more drill programs will begin and thus the demand for
drilling mud should grow. Valemont Supply Inc. believes that based on its
properties location and transportation options there is an advantage over our
competitors. Valemont Supply Inc. believes that with a marketing budget and with
quality people it will be able to successfully compete with larger more
established companies and gain market share.
Although the mica will be competitively priced and may be closer in proximity to
its potential customers than its competitors there is no guarantee that the
marketplace will conclude that reduced costs are worth not dealing with
established companies already in the marketplace. Valemont Supply Inc.
recognizes this fact. To address this possibility, Valemont Supply Inc. does
not discount other business opportunities that may be available to it, whether
in the form of asset acquisitions or business combinations. Valemont Supply
Inc.'s officer and director, A.E. Daem, may devote a portion of the time he
devotes to Valemont Supply Inc. evaluating business opportunities that may be
available. Valemont Supply Inc. has had no discussions with any third parties
regarding business opportunities. Any asset acquisition or business combination
would likely include the issuance of a significant amount of Valemont Supply
Inc.'s common stock, which would dilute the ownership interest of holders of
existing shares of Valemont Supply Inc.'s common stock.
INDUSTRY CONDITIONS AND COMPETITION
Valemont Supply Inc. is currently aware of several products that compete
directly in its primary target market. It is possible that one of these
existing established competitors or another company discovers a similar mica
property and competes directly with Valemont Supply Inc.'s product. Valemont
Supply Inc. may therefore have to compete with new similar product offering in
the future. Valemont Supply Inc. believes that as a result of its competitive
cost advantages including, accessibility to the mica, and ease of grade control,
its mica can be offered at a lower price than its competitors. However
potential customers may not conclude that reduced costs are worth not dealing
with established companies already in the marketplace. Some of these established
competitors like Zemex Inc and CVC Mining are large and well capitalized.
Valemont Supply Inc. does not know what sort of market share its competitors
hold. Valemont Supply Inc. does not yet know whether the sale of the mica will
result in profitability.
14
EMPLOYEES
Valemont Supply Inc. is a development stage company and currently has no
employees. A.E. Daem, its only officer and director, currently manages Valemont
Supply Inc. Valemont Supply Inc. looks to Mr. Daem for his entrepreneurial and
mining skills and talents. He has extensive operating experience, covering a
broad spectrum of businesses. His experience includes working as president and
chief executive officer for a packaging company and most recently as the
president and chief executive officer of a mining exploration company.
Management plans to use consultants, attorneys and accountants as necessary and
other than commissioned sales people, does not plan to engage any full-time
employees in the near future. Valemont Supply Inc. would hire marketing
employees based on the projected size of the market and the compensation
necessary to retain qualified sales employees. A portion of any employee
compensation likely would include the right to acquire stock in Valemont Supply
Inc., which would dilute the ownership interest of holders of existing shares of
Valemont Supply Inc.'s common stock.
AVAILABLE INFORMATION
Valemont Supply Inc. has filed with the Securities and Exchange Commission a
registration statement on Form S-1 with respect to the common stock offered by
this prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the registration
statement or the exhibits and schedules which are parts of the registration
statement. For further information with respect to Valemont Supply Inc. and its
common stock, see the registration statement and the exhibits and schedules
thereto. Any document Valemont Supply Inc. files may be read and copied at the
Commission's Public Reference Room located at 450 Fifth Street N.W., Washington
D.C. 20549, and the public reference rooms in New York, New York, and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further information
about the public reference rooms. Valemont Supply Inc.'s filings with the
Commission are also available to the public from the Commission's website at
http://www.sec.gov.
Upon completion of this offering, Valemont Supply Inc. will become subject to
the information and periodic reporting requirements of the Securities Exchange
Act and, accordingly, will file periodic reports, proxy statements and other
information with the Commission. Such periodic reports, proxy statements and
other information will be available for inspection and copying at the
Commission's public reference rooms, and the website of the Commission referred
to above.
DESCRIPTION OF PROPERTY
Valemont Supply Inc. currently maintains limited office space, occupied by Mr.
Daem, for which it pays no rent. Its address is 6779 Blackwell Rd, Kamloops,
British Columbia V2C 6V7, Canada, and its phone number is ((604) 681 6599.
Valemont Supply Inc. does not believe that it will need to obtain additional
office space at any time in the foreseeable future until its business plan is
more fully implemented, at which time it may need office facilities.
15
LEGAL PROCEEDINGS
Valemont Supply Inc. is not a party to any material pending legal proceedings,
and none of its property is the subject of a pending legal proceeding. Further,
the officer and director knows of no legal proceedings against Valemont Supply
Inc. or its property contemplated by any governmental authority.
MARKET PRICE OF AND DIVIDENDS ON CAPITAL
STOCK AND OTHER SHAREHOLDER MATTERS
No established public trading market exists for Valemont Supply Inc.'s
securities. Valemont Supply Inc. has no common equity subject to outstanding
purchase options or warrants. Valemont Supply Inc. has no securities
convertible into its common equity. There is no common equity that could be sold
pursuant to Rule 144 under the Securities Act or that, except for this offering;
Valemont Supply Inc. has agreed to register under the Securities Act for sale by
shareholders. Except for this offering, there is no common equity that is being,
or has been publicly proposed to be, publicly offered by Valemont Supply Inc.
The principal operations of Valemont Supply Inc. have not yet commenced.
Valemont Supply Inc. has 8,000,000 shares of common stock issued and
outstanding, all of which were issued to Valemont Supply Inc.'s president and
sole director on June 25, 2001 at $0.0058 per share. All stock was issued based
on a valuation by the Board of Directors. No sale of Valemont Supply Inc.'s
common stock has ever been sold from one investor to another.
Upon effectiveness of the registration statement that includes this prospectus,
1.0 million shares of Valemont Supply Inc. will be eligible for sale from
Valemont Supply Inc.'s treasury.
To date Valemont Supply Inc. has not paid any dividends on its common stock and
does not expect to declare or pay any dividends on its common stock in the
foreseeable future. Payment of any dividends will depend upon Valemont Supply
Inc.'s future earnings, if any, its financial condition, and other factors as
deemed relevant by the Board of Directors.
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements appearing elsewhere in this prospectus.
The statement of operations data set forth below for the period from June 25,
2001, (inception) to the three months ended, and the balance sheet data at
October 31, 2001, are derived from Valemont Supply Inc.'s unaudited 1st quarter
2002 financial statements included elsewhere in this prospectus. The historical
results are not necessarily indicative of results to be expected for any future
period.
16
Inception to
October 31, 2001
-----------------
STATEMENT OF OPERATIONS DATA:
Net sales $ Nil
=================
Loss from continuing operations $ 10,027
=================
Loss per share from continuing operations $ Nil
=================
As of
October 31, 2001
BALANCE SHEET DATA:
Total assets $ 40,973
=================
Total liabilities $ Nil
=================
Valemont Supply Inc. is in its early developmental and promotional stages. To
date, Valemont Supply Inc.'s only activities have been organizational, directed
at acquiring its principal asset, raising its initial capital and developing its
business plan. Valemont Supply Inc. has not commenced commercial operations.
As a result, the selected financial data presented above bear no resemblance to
the results that Valemont Supply Inc. expects when it begins operations. See
"Risk Factors," "Description of Business" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
During the period from June 25, 2001, (inception) through the three months ended
October 31, 2001, Valemont Supply Inc. has engaged in no significant operations
other than organizational activities, acquisition of a Mica property and
preparation for registration of its securities under the Securities Act of 1933.
Valemont Supply Inc. received no revenues during this period. Valemont Supply
Inc. anticipates generating revenue around September 2002.
Valemont Supply Inc.'s operations in the upcoming twelve-month period will vary
based on the receipt of funding that is not assured to be received. Regardless
of whether funding is received in the upcoming twelve-month period Valemont
Supply Inc. anticipates incurring a loss as a result of organizational expenses,
expenses associated with registration under the Securities Act of 1933, and
expenses associated with setting up a company structure to begin implementing
its business plan. Valemont Supply Inc. expects that expenses such as state
annual report fees, qualifications to do business and the like, including
17
related attorney fees, will not exceed $1,000. The costs associated with filing
this registration statement, and Valemont Supply Inc.'s expenses associated with
applying for Valemont Supply Inc.'s shares to trade on the OTC bulletin board
are not expected to exceed $14,500 and will be expensed. The extent of these
costs will depend primarily on the states in which a market maker would want
Valemont Supply Inc.'s shares to be qualified. The following table illustrates
how Valemont Supply Inc. has budgeted its cash on hand over the upcoming
twelve-month period assuming either that funding is received from the offering
or that no funding is received, it does not reflect the uses of proceeds from
the offering, it only reflects cash on hand at October 31, 2001:
PURPOSE ASSUMING ASSUMING ASSUMING ASSUMING ASSUMING
NO SALE OF 10% SALE OF 25% SALE OF 50% SALE OF
FUNDING OF STOCK OF STOCK OF STOCK 100% OF
RECEIVED BEING BEING BEING STOCK BEING
OFFERED OFFERED OFFERED OFFERED
- ----------------------- -------- ----------- ----------- ----------- -----------
Cash on hand at
October 31, 2001 2,473 2,473 2,473 2,473 2,473
Prepaid Offering
Expenses at October
31, 2001 8,500 8,500 8,500 8,500 8,500
LESS OFFERING
EXPENSES
Printing expenses 5,000 5,000 0 0 0
Attorneys' fees and
expenses related to S-1
filing 2,500 0 0 0 0
Accountants' fees and
expenses 2,000 2,000 1,000 1,000 1,000
Transfer agent's fees
and expenses 500 500 500 500 500
Miscellaneous
offering expenses 0 1,000 1,000 1,000 1,000
- ----------------------- -------- ----------- ----------- ----------- -----------
WORKING CAPITAL TO
BE USED FOR
OPERATIONS 973 3,973 9,973 9,973 9,973
- ----------------------- -------- ----------- ----------- ----------- -----------
Valemont Supply Inc. anticipates that cash on hand will meet cash requirements
over the upcoming twelve-month period assuming no funding is received. If no
funding is received Valemont Supply Inc. will attempt to sell its products
through direct sales effort of Mr. Daem. Valemont Supply Inc. has budgeted its
working capital to be used for operations as follows:
18
PURPOSE ASSUMING ASSUMING ASSUMING ASSUMING ASSUMING
NO SALE OF 10% SALE OF 25% SALE OF 50% SALE OF
FUNDING OF STOCK OF STOCK OF STOCK 100% OF
RECEIVED BEING BEING BEING STOCK BEING
OFFERED OFFERED OFFERED OFFERED
- --------------------------- -------- ----------- ----------- ----------- -----------
Accounting fees 0 500 500 500 500
Printing expenses 0 0 1,000 1,000 1,000
Trade show attendance 0 1,823 3,000 3,000 3,000
Unallocated working
capital 973 1,650 5,473 5,473 5,473
Total 973 3,973 9,973 9,973 9,973
If no funding is received Valemont Supply Inc. operations will consist of:
- maintaining its reporting company status with the Securities and Exchange
Commission
- attending tradeshows in order to speak with potential customers
- attending or exhibiting at the shows with the goal of arranging product
sales
Unallocated working capital will be used at the discretion of management
Valemont Supply Inc. intends to complete exploration and development on its
property, attempt to sell known mica reserves, and to generally meet its future
corporate obligations. Valemont Supply Inc. anticipates that until these
procedures are completed it will not generate revenues, and may continue to
operate at a loss thereafter, depending upon the performance of the business.
Valemont Supply Inc. anticipates that the offering take about 3 months beginning
after the completion of this registration statement. The hiring of sales staff
and marketing of the mica beginning after that period.
The following table illustrates how Valemont Supply Inc. has budgeted its cash
on hand over the upcoming twelve-month period assuming that full funding is
received:
Printing $ 6,000
Attorneys' fees and expenses 4,000
Accountants' fees and expenses 2,500
Transfer agent's and registrar's fees and expenses 500
Miscellaneous offering expenses 1,000
Site visit 3,000
Meet with local contractors 1,000
Market research 4,000
Geologist's report 2,500
Office 5,000
Trade shows 10,000
Travel 5,000
Working capital 5,823
-------
Total cash on hand and prepaid expenses $50,323
-------
19
Sales staff will be commission based and will therefore be paid out of sales
proceeds. Valemont Supply Inc. therefore anticipates satisfying its cash
requirements over the next 12 months in both full funding and no funding
scenarios.
Over the upcoming twelve-month period Valemont Supply Inc.:
- does not intend to perform any product research and development;
- does not expect to purchase any significant plant or equipment; and
- other than new sales staff does not expect any significant changes in the
number of employees
LIQUIDITY AND CAPITAL RESOURCES
Valemont Supply Inc. remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
shareholders' equity. Consequently, Valemont Supply Inc.'s balance sheet as of
October 31, 2001, reflects total assets of $40,973 in the form of cash, prepaid
expenses and the its mica property.
Valemont Supply Inc. expects to carry out its plan of business discussed above.
In addition, Valemont Supply Inc. may engage in a combination with another
business. Valemont Supply Inc. cannot predict the extent to which its liquidity
and capital resources will be diminished prior to the consummation of a business
combination or whether its capital will be further depleted by the operating
losses (if any) of the business entity with which Valemont Supply Inc. may
eventually combine. Valemont Supply Inc. has not engaged in discussions
concerning potential business combinations and there currently are no business
acquisitions that are probable. The conditions or events that would cause
Valemont Supply Inc. to engage in business combination with another business
include:
Valemont Supply Inc. may not be successful in developing a viable market for its
products due to its limited financial resources, the only way Valemont Supply
Inc. will be able to diversify its activities, should its business plan prove to
be impractical, would be to enter into a business combination.
Valemont Supply Inc. will not expand its operations until sales have occurred
and management feels that budgeted sales can support expansion. Valemont Supply
Inc. therefore has no specific long-term capital requirements other than those
that vary with sales. It is expected that these future costs of sales including
product extraction costs and commissions are payable after the time that
Valemont Supply Inc. expects to be paid by its customer. Valemont Supply Inc.
therefore plans to generate sufficient cash flow from sales to meet its
long-term requirements. Although existing cash and cash flow from sales is
expected to fulfill future capital needs, if sales in the long term are
insufficient, Valemont Supply Inc. may need additional capital to carry out its
business plan or to engage in a business combination. In the event that
Valemont Supply Inc. requires more capital, no commitments to provide additional
funds have been made by management or other shareholders. Accordingly, there
can be no assurance that any additional funds will be available on terms
acceptable to Valemont Supply Inc. or at all.
20
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Manning Elliott Chartered Accountants has served as Valemont Supply Inc.'s
independent auditor since inception, and Valemont Supply Inc. has not had any
dispute with Manning Elliott Chartered Accountants over accounting or financial
disclosure.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position of each director and
executive officer of Valemont Supply Inc.:
- --------- --- -----------------------------------------
NAME AGE POSITION
- --------- --- -----------------------------------------
A.E. Daem 64 President, Secretary, Treasurer, Director
- --------- --- -----------------------------------------
Mr. Daem became a director and officer of Valemont Supply Inc. in June 2001. In
1960, Mr. Daem graduated from the University of British Columbia with a degree
in Science and Pharmacy. During the last 15 years, Mr. Daem has worked for
Circle Drugs Inc as director, president and chief executive officer, growing the
retail chain while maintaining profitability. Mr. Daem also worked for Air
packaging International for 3 years as director, president and chief operating
officer; a packaging company which has developed a number of packaging products.
Mr. Daem also worked for 8 years as president, director and chief executive
officer of International Tournigan Inc, a mining company operating in Western
Canada, Papua New Guinea and West Africa. Mr. Daem devotes approximately 40% of
his time to his position in Valemont Supply Inc., in the areas of finance,
administration and sales.
The director named above will serve until the first annual meeting of Valemont
Supply Inc.'s shareholders. Thereafter, directors will be elected for one-year
terms at the annual shareholders' meeting. Officers will hold their positions
at the pleasure of the board of directors. No employment agreements currently
exist or are being contemplated. There is no arrangement or understanding
between the director and officer of Valemont Supply Inc. and any other person
pursuant to which any director or officer is to be selected as a director or
officer.
The directors and officers of Valemont Supply Inc. will devote their time to
Valemont Supply Inc.'s affairs on an "as needed" basis. As a result, the actual
amount of time that they will devote to Valemont Supply Inc.'s affairs is not
consistent and is likely to vary substantially from month to month.
EXECUTIVE COMPENSATION
No officer or director has received any remuneration from Valemont Supply Inc.
Although there is no current plan in existence, it is possible that Valemont
Supply Inc. will adopt a plan to pay or accrue compensation to its officers and
directors for services related to the implementation of Valemont Supply Inc.'s
business plan. Valemont Supply Inc. has no stock option, retirement, incentive,
21
defined benefit, actuarial, pension or profit-sharing programs for the benefit
of directors, officers or other employees, but the Board of Directors may
recommend adoption of one or more such programs in the future. Valemont Supply
Inc. has no employment contract or compensatory plan or arrangement with any
executive officer of Valemont Supply Inc. The Director currently does not
receive any cash compensation from Valemont Supply Inc. for his service as
members of the board of directors. There is no compensation committee, and no
compensation policies have been adopted. See "Certain Relationships and Related
Transactions."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 31, 2001:
- - Valemont Supply Inc.'s outstanding common stock owned or beneficially owned
by each executive officer and director;
- - Valemont Supply Inc.'s outstanding common stock owned or beneficially owned
by each person who owned of record, or was known by Valemont Supply Inc. to
own beneficially, more than 5% of Valemont Supply Inc.'s common stock;
- - The shareholdings of all executive officers and directors as a group.
Percentage of
Name Shares Owned Outstanding
Shares Owned
- ------------------------------------------------------------ ------------ --------------
A.E. Daem, President, Secretary, Treasurer, and Director 8,000,000 100%
Kamloops, B.C. Canada
- ------------------------------------------------------------ ------------ --------------
All Executive Officers & Directors As A Group (1 Individual) 8,000,000 100%
- ------------------------------------------------------------ ------------ --------------
All shares are held of record and each record shareholder has sole voting and
investment power. Valemont Supply Inc. knows of no one who has the right to
acquire beneficial ownership in Valemont Supply Inc. common stock. Other than
the sale of Valemont Supply Inc. stock contemplated by this prospectus, there
are no arrangements known to Valemont Supply Inc. the operation of which may at
a subsequent date result in a change of control of Valemont Supply Inc.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No director, executive officer or nominee for election as a director of Valemont
Supply Inc., and no owner of five percent or more of Valemont Supply Inc.'s
outstanding shares or any member of their immediate family has entered into or
proposed any transaction in which the amount involved exceeds $60,000.
A.E. Daem is the only promoter of Valemont Supply Inc. Other than the 8,000,000
shares issued to Mr. Daem in exchange for $46,000 upon inception of Valemont
Supply Inc., there has been nothing of value (including money, property,
contracts, options, or rights of any kind) received or to be received by Mr.
Daem, directly or indirectly, from the Valemont Supply Inc. Valemont Supply
Inc. has not received any other assets, services or other consideration as a
result. Valemont Supply Inc. arbitrarily determined the price of the shares
issued to Mr. Daem.
22
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Valemont Supply Inc.'s bylaws provide that Valemont Supply Inc. will indemnify
its officers and directors for costs and expenses incurred in connection with
the defense of actions, suits, or proceedings against them on account of their
being or having been directors or officers of Valemont Supply Inc., absent a
finding of negligence or misconduct in the performance of duty.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling Valemont
Supply Inc. pursuant to the forgoing provisions, Valemont Supply Inc. has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable.
23
INDEX TO FINANCIAL STATEMENTS
Valemont Supply Inc.
(A Development Stage Company)
THREE MONTHS ENDED OCTOBER 31, 2001 (UNAUDITED) AND
JUNE 25, 2001 (DATE OF INCEPTION) TO OCTOBER 31, 2001
Interim Balance Sheet F-2
Interim Statement of Operations F-3
Interim Statement of Cash Flows F-4
Notes to the Interim Financial Statements F-5 to F-6
JUNE 25, 2001 (DATE OF INCEPTION) TO JULY 31, 2001
Independent Auditor's Report F-7
Balance Sheet F-8
Statement of Operations F-9
Statement of Stockholders' Equity F-10
Statement of Cash Flows F-11
Notes to the Financial Statements F-12 to F-14
F-1
Valemont Supply Inc.
(A Development Stage Company)
Interim Balance Sheets
(expressed in U.S. dollars)
October 31, July 31,
2001 2001
$ $
(unaudited) (audited)
ASSETS
Current Assets
Cash 2,473 2,823
Prepaid expenses 8,500 10,000
- ----------------------------------------------------------------------------------------------
Total Current Assets 10,973 12,823
- ----------------------------------------------------------------------------------------------
Mineral Properties (Note 3) 30,000 30,000
- ----------------------------------------------------------------------------------------------
Total Assets 40,973 42,823
==============================================================================================
LIABILITIES
Current Liabilities - -
- ----------------------------------------------------------------------------------------------
Contingency (Note 1)
STOCKHOLDERS' EQUITY
Stockholders' Equity
Common Stock: 100,000,000 common shares authorized with a par 800 800
value of $0.0001; 8,000,000 issued and outstanding
Additional Paid-in Capital 45,200 45,200
Donated Capital (Note 4) 5,000 1,250
- ----------------------------------------------------------------------------------------------
51,000 47,250
- ----------------------------------------------------------------------------------------------
Preferred Stock: 20,000,000 preferred shares authorized with a par - -
value of $.0001; none issued
- ----------------------------------------------------------------------------------------------
Deficit Accumulated During the Development Stage (10,027) (4,427)
- ----------------------------------------------------------------------------------------------
Total Stockholders' Equity 40,973 42,823
- ----------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity 40,973 42,823
==============================================================================================
The accompanying notes are an integral part of these financial statements.
F-2
Valemont Supply Inc.
(A Development Stage Company)
Interim Statement of Operations
(expressed in U.S. dollars)
(unaudited)
Accumulated from Three Months
June 25, 2001 Ended
(Date of Inception) October 31,
to October 31, 2001 2001
$ $
Revenue
- --------------------------------------------------------------------------------
Expenses
Consulting 4,000 3,000
Professional fees 5,027 1,850
Rent 1,000 750
- --------------------------------------------------------------------------------
10,027 5,600
- --------------------------------------------------------------------------------
Net Loss for the Period (10,027) (5,600)
Deficit - Beginning of Period - (4,427)
- --------------------------------------------------------------------------------
Deficit - End of Period (10,027) (10,027)
================================================================================
Net Loss Per Share - Basic (0.01)
================================================================================
Weighted Average Shares Outstanding 8,000,000
================================================================================
The accompanying notes are an integral part of these financial statements.
F-3
Valemont Supply Inc.
(A Development Stage Company)
Interim Statement of Cash Flows
(expressed in U.S. dollars)
(unaudited)
Three Months
Ended
October 31,
2001
$
Cash Flows To Operating Activities
Net loss (5,600)
Non-cash items
Donated consulting services 3,000
Donated rent 750
Adjustments to reconcile net loss to cash
Prepaid expenses (1,500)
- ----------------------------------------------------------------
Net Cash Used In Operating Activities (350)
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Net Decrease in Cash (350)
Cash - Beginning of Period 2,823
- ----------------------------------------------------------------
Cash - End of Period 2,473
================================================================
Non-Cash Financing Activities -
================================================================
Supplemental Disclosures
Interest paid -
Income taxes paid -
================================================================
The accompanying notes are an integral part of these financial statements
F-4
VALEMONT SUPPLY, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Interim Financial Statements
(Expressed in U.S. dollars)
OCTOBER 31, 2001
1. Development Stage Company
The Company was incorporated in the state of Washington on June 25, 2001.
On June 26, 2001 the Company purchased Mica Mineral Claims, situated in the
Cariboo Mining Division in the Province of British Columbia, Canada. Mica
is mainly used in the oil and gas industry, in the form of oil drilling
mud, to lubricate the shafts of drilling rigs.
The Company's principal business plan is to seek immediate earnings by
exploiting mica available from the mineral claims.
The Company currently has yet to generate any revenues and in accordance
with SFAS No. 7, is considered a development stage company. At present,
management devotes most of its activities in becoming a public company
which will allow the Company to raise sufficient funds to begin extracting
the Mica. Planned principal activities have not yet begun. The ability of
the Company to emerge from the development stage with respect to any
planned principal business activity is dependent upon its successful
efforts to raise additional equity financing and/or attain profitable
operations. There is no guarantee that the Company will be able to raise
any equity financing or extract and sell Mica at a profit. These factors
raise substantial doubt regarding the Company's ability to continue as a
going concern.
2. Summary of Significant Accounting Principles
a) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
b) Basic Earnings (Loss) Per Share
Basic earnings (loss) per share have been calculated in conformity
with Financial Accounting Standards Board Statement No. 128 "Earnings
per Share". The Company has a simple capital structure without
potential common shares. Basic earnings (loss) per share is calculated
on the weighted average number of common shares outstanding each year.
c) Mineral Properties
All costs related to mineral properties with development potential,
including mineral claim acquisition costs and exploration and
development expenditures are deferred until the related mineral claims
are abandoned, sold or achieve commercial production. At that time,
the costs will be either amortized against income from future mining
operations or written off. All grassroots exploration costs, which are
costs incurred while probing for prospective development sites, are
charged to expense as incurred.
During 1997, the Securities and Exchange Commission staff reconsidered
existing accounting practices for mineral expenditures by United
States junior mining companies. They now interpret generally accepted
accounting policy for junior mining companies to permit capitalization
of acquisition, exploration and development costs only after
persuasive engineering evidence is obtained to support recoverability
of these costs. An independent engineer has deemed the properties to
contain profitable reserves of base metals in excess of property costs
incurred.
F-5
VALEMONT SUPPLY, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Interim Financial Statements
(Expressed in U.S. dollars)
OCTOBER 31, 2001
2. Summary of Significant Accounting Principles (continued)
c) Mineral Properties (continued)
The amount shown for mineral properties and development represents
costs to date and does not necessarily reflect present or future
values. The full recovery of the above mentioned costs depends on a
combination of different factors, including:
(i) future metal prices;
(ii) the results of future exploration, and further discovery and
development of reserves; and
(iii) to the extent necessary, the procurement of additional capital
and financing to carry out future activities. The carrying amount
of mineral properties, proved and unproved, is evaluated at least
annually and reduced if these properties are impaired.
d) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of
three months or less at the time of issuance to be cash equivalents.
e) Revenue
Revenue from sales of the mica will be recognized when product has
been shipped and collectibility is reasonably certain.
3. Mineral Properties
Pursuant to a sales agreement dated June 26, 2001, the Company acquired 12
mineral claims, namely Mica Mineral Claims, situated in the Cariboo Mining
Division in the Province of British Columbia for $30,000. The Vendor has
the sole and exclusive right to a Royalty on the Mica produced from the
Mica Claims in the amount of $2.00 US per ton of pit run of Mica containing
ore extracted from the Mica Claims, this payment constitutes a net royalty
payment to the vendor. This payment is to be made within 30 days of the pit
run Mica leaving the Mica Claims. The price per ton will be negotiated
every five years.
4. Related Party Transactions
The President of the Company has donated services valued at $1,000 per
month and rent valued at $250 per month. These amounts have been charged to
operations and classified as "donated capital" in shareholders' equity.
F-6
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Valemont Supply Limited
(A Development Stage Company)
We have audited the accompanying balance sheet of Valemont Supply Limited (A
Development Stage Company) as of July 31, 2001 and the related statements of
operations, stockholders' equity and cash flows for the period from June 25,
2001 (Date of Inception) to July 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with U.S. generally accepted auditing
standards. 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 aforementioned financial statements present fairly, in all
material respects, the financial position of Valemont Supply Limited (A
Development Stage Company), as of July 31, 2001, and the results of its
operations and its cash flows for the period from June 25, 2001 (Date of
Inception) July 31, 2001, in conformity with U.S. generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has not generated any revenues or conducted any
operations since inception. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also discussed in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ "Manning Elliott"
CHARTERED ACCOUNTANTS
Vancouver, Canada
September 21, 2001
F-7
Valemont Supply Limited
(A Development Stage Company)
Balance Sheet
(expressed in U.S. dollars)
July 31,
2001
$
ASSETS
Current Assets
Cash 2,823
Prepaids 10,000
- ---------------------------------------------------------------------------------------------------
Total Current Assets 12,823
Mineral Properties (Note 3) 30,000
- ---------------------------------------------------------------------------------------------------
Total Assets 42,823
===================================================================================================
LIABILITIES
Current Liabilities -
- ---------------------------------------------------------------------------------------------------
Contingency (Note 1)
STOCKHOLDERS' EQUITY
Stockholders' Equity
Common Stock, par value $0.0001; 100,000,000 shares authorized; 8,000,000 shares issued 800
and outstanding
Additional Paid-in Capital 45,200
Donated Capital (Note 4) 1,250
- ---------------------------------------------------------------------------------------------------
47,250
- ---------------------------------------------------------------------------------------------------
Preferred Stock, par value of $0.0001; 20,000,000 shares authorized; none issued -
- ---------------------------------------------------------------------------------------------------
Deficit Accumulated During the Development Stage (4,427)
- ---------------------------------------------------------------------------------------------------
Total Stockholders' Equity 42,823
- ---------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity 42,823
===================================================================================================
The accompanying notes are an integral part of these financial statements.
F-8
Valemont Supply Limited
(A Development Stage Company
Statement of Operations
(expressed in U.S. dollars)
Accumulated from
June 25, 2001
(Date of Inception)
to July 31, 2001
$
Revenue -
- ---------------------------------------------------------
Expenses
Consulting 1,000
Professional fees 3,177
Rent 250
- ---------------------------------------------------------
4,427
- ---------------------------------------------------------
Net Loss for the Period (4,427)
=========================================================
Net Loss Per Share - Basic (0.01)
=========================================================
Weighted Average Shares Outstanding 8,000,000
=========================================================
The accompanying notes are an integral part of these financial statements.
F-9
Valemont Supply Limited
(A Development Stage Company
Statement of Cash Flows
(expressed in U.S. dollars)
Accumulated from
June 25, 2001
(Date of Inception)
to July 31, 2001
$
Cash Flows To Operating Activities
Net loss (4,427)
Non-cash items
Donated consulting services 1,000
Donated rent 250
Adjustment to reconcile net loss to cash
Prepaids (10,000)
- ---------------------------------------------------------------
Net Cash Used In Operating Activities (13,177)
- ---------------------------------------------------------------
Cash Flows From Financing Activities
Sale of capital stock 46,000
- ---------------------------------------------------------------
Net Cash Provided By Financing Activities 46,000
- ---------------------------------------------------------------
Cash Flows To Investing Activities
Purchase of mineral properties (30,000)
- ---------------------------------------------------------------
Cash Flows To Investing Activities (30,000)
- ---------------------------------------------------------------
Net Increase in Cash 2,823
Cash - Beginning of Period -
- ---------------------------------------------------------------
Cash - End of Period 2,823
===============================================================
Non-Cash Financing Activities -
===============================================================
Supplemental Disclosures
Interest paid -
Income taxes paid -
===============================================================
The accompanying notes are an integral part of these financial statements.
F-10
Valemont Supply Limited
(A Development Stage Company)
Statement of Stockholders' Equity
From June 25, 2001 (Date of Inception) to July 31, 2001
(expressed in U.S. dollars)
Deficit
Accumulated
Additional During the
Paid-in Donated Development
Shares Amount Capital Capital Total Stage
# $ $ $ $ $
Balance - June 25, 2001 (Date - - - - - -
of Inception)
Stock issued on June 25, 2001
for cash 8,000,000 800 45,200 - 46,000 -
Value of rent donated by related
party - - - 250 250 -
Value of services donated by
related party - - - 1,000 1,000 -
Net loss for the period - - - - - (4,427)
- -------------------------------------------------------------------------------------------------------------
Balance - July 31, 2001 8,000,000 800 45,200 1,250 47,250 (4,427)
==============================================================================================================
The accompanying notes are an integral part of these financial statements.
F-11
Valemont Supply Limited
(A Development Stage Company)
Notes to Financial Statements
(expressed in U.S. dollars)
March 31, 2001
1. Development Stage Company
The Company was incorporated in the state of Washington on June 25, 2001.
On June 26, 2001 the Company purchased Mica Mineral Claims, situated in the
Cariboo Mining Division in the Province of British Columbia, Canada. Mica
is mainly used in the oil and gas industry, in the form of oil drilling
mud, to lubricate the shafts of drilling rigs.
The Company's principal business plan is to seek immediate earnings by
exploiting mica available from the mineral claims.
The Company currently has yet to generate any revenues and in accordance
with SFAS No. 7, is considered a development stage company. At present,
management devotes most of its activities in becoming a public company
which will allow the Company to raise sufficient funds to begin extracting
the Mica. Planned principal activities have not yet begun. The ability of
the Company to emerge from the development stage with respect to any
planned principal business activity is dependent upon its successful
efforts to raise additional equity financing and/or attain profitable
operations. There is no guarantee that the Company will be able to raise
any equity financing or extract and sell Mica at a profit. These factors
raise substantial doubt regarding the Company's ability to continue as a
going concern.
2. Summary of Significant Accounting Principles
a) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
b) Basic Earnings (Loss) Per Share
Basic earnings (loss) per share have been calculated in conformity
with Financial Accounting Standards Board Statement No. 128 "Earnings
per Share". The Company has a simple capital structure without
potential common shares. Basic earnings (loss) per share is calculated
on the weighted average number of common shares outstanding each year.
c) Mineral Properties
All costs related to mineral properties with development potential,
including mineral claim acquisition costs and exploration and
development expenditures are deferred until the related mineral claims
are abandoned, sold or achieve commercial production. At that time,
the costs will be either amortized against income from future mining
operations or written off. All grassroots exploration costs, which are
costs incurred while probing for prospective development sites, are
charged to expense as incurred.
During 1997, the Securities and Exchange Commission staff reconsidered
existing accounting practices for mineral expenditures by United
States junior mining companies. They now interpret generally accepted
accounting policy for junior mining companies to permit capitalization
of acquisition, exploration and development costs only after
persuasive engineering evidence is obtained to support recoverability
of these costs. An independent engineer has deemed the properties to
contain profitable reserves of base metals in excess of property costs
incurred.
Valemont Supply Limited
(A Development Stage Company)
Notes to Financial Statements
(expressed in U.S. dollars)
March 31, 2001
2. Summary of Significant Accounting Principles (continued)
c) Mineral Properties (continued)
The amount shown for mineral properties and development represents
costs to date and does not necessarily reflect present or future
values. The full recovery of the above mentioned costs depends on a
combination of different factors, including:
(i) future metal prices;
(ii) the results of future exploration, and further discovery and
development of reserves; and
(iii) to the extent necessary, the procurement of additional capital
and financing to carry out future activities. The carrying amount
of mineral properties, proved and unproved, is evaluated at least
annually and reduced if these properties are impaired.
d) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of
three months or less at the time of issuance to be cash equivalents.
e) Revenue
Revenue from sales of the mica will be recognized when product has
been shipped and collectibility is reasonably certain.
f) Income Taxes
The Company has adopted the provisions of Financial Accounting
Standards Board Statement No. 109 (SFAS 109), Accounting for Income
Taxes.
Pursuant to SFAS 109 the Company is required to compute tax asset
benefits for net operating loss carry forwards. Potential benefit of
net operating losses has not been recognized in the financial
statements because the Company cannot be assured that it is more
likely than not that it will utilize the net operating loss carry
forwards in future years.
The Company has a tax loss of $4,427 to offset future years taxable
income expiring in fiscal 2016.
The components of the net deferred tax asset, the statutory tax rate,
the effective tax rate and the elected amount of the valuation
allowance are scheduled below:
2001
$
Net Operating Losses 4,427
Statutory Tax Rate 34%
Effective Tax Rate -
Deferred Tax Asset 1,505
Valuation Allowance (1,505)
--------------------------------------
Net Deferred Tax Asset -
======================================
F-13
VALEMONT SUPPLY, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
(Expressed in U.S. dollars)
March 31, 2001
3. Mineral Properties
Pursuant to a sales agreement dated June 26, 2001, the Company acquired 12
mineral claims, namely Mica Mineral Claims, situated in the Cariboo Mining
Division in the Province of British Columbia for $30,000. The Vendor has
the sole and exclusive right to a Royalty on the Mica produced from the
Mica Claims in the amount of $2.00 US per ton of pit run of Mica containing
ore extracted from the Mica Claims, this payment constitutes a net royalty
payment to the vendor. This payment is to be made within 30 days of the pit
run Mica leaving the Mica Claims. The price per ton will be negotiated
every five years.
4. Related Party Transactions
The President of the Company has donated services valued at $1,000 per
month and rent valued at $250 per month. These amounts have been charged to
operations and classified as "donated capital" in shareholders' equity.
F-14
PROSPECTUS
JANUARY 16, 2002
VALEMONT SUPPLY INC.
6779 BLACKWELL RD
KAMLOOPS, BRITISH COLUMBIA V2C 6V7, CANADA
(250) 519 0553 (250) 519-0449
1,000,000 Shares of Common Stock
to be sold by current shareholders
Valemont Supply Inc. has not authorized any dealer, salesperson or other person
to give you written information other than this prospectus or to make
representations as to matters not stated in this prospectus. You must not rely
on unauthorized information. This prospectus is not an offer to sell these
securities or a solicitation of your offer to buy the securities in any
jurisdiction where that would not be permitted or legal. Neither the delivery of
this prospectus nor any sales made hereunder after the date of this prospectus
shall create an implication that the information contained herein or the affairs
of Valemont Supply Inc. have not changed since the date hereof.
Until April 7, 2002 (90 days after the date of this prospectus), all dealers
that effect transactions in these shares of common stock may be required to
deliver a prospectus. This is in addition to the dealer's obligation to deliver
a prospectus when acting as an underwriter and with respect to their unsold
allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The securities are being registered for the account of selling shareholders.
All of the following expenses will be borne by Valemont Supply Inc. The amounts
set forth are estimates except for the SEC registration fee:
SEC registration fee $ 10
Printing and engraving expenses 5,000
Attorneys' fees and expenses 4,000
Accountants' fees and expenses 2,000
Transfer agent's and registrar's fees and expenses 500
Miscellaneous 990
-------
Total $12,500
-------
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to Washington State law, a corporation may indemnify an individual made
a party to a proceeding because the individual is or was a director against
liability incurred in the proceeding if the individual acted in good faith; and
he or she reasonably believed that, in the case of conduct in the individual's
official capacity with the corporation, his or her conduct was in its best
interests; in cases not involving his or her official capacity, his or her
conduct was at least not opposed to its best interests; and in the case of any
criminal proceeding, he or she had no reasonable cause to believe the conduct
was unlawful. A corporation is prohibited from indemnifying a director in
connection with a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation, in connection with any other
proceeding charging improper personal benefit to the director, whether or not
involving action in the director's official capacity, in which the director was
adjudged liable on the basis that personal benefit was improperly received by
the director.
The articles of Valemont Supply Inc., filed as Exhibit 3.1, provide that
Valemont Supply Inc. will indemnify its directors to the full extent permitted
under Washington state law. The bylaws of Valemont Supply Inc., filed as
Exhibit 3.2, provide that Valemont Supply Inc. will indemnify and hold harmless
each person who was, is or is threatened to be made a party to or is otherwise
involved in any threatened proceedings by reason of the fact that he or she is
or was a Director or officer of the corporation or is or was serving at the
request of the corporation as a Director, officer, partner, trustee, employee or
agent of another entity, against all losses, claims, damages, liabilities and
expenses actually and reasonably incurred or suffered in connection with such
proceeding.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
II-1
Set forth below is information regarding the issuance and sales of Valemont
Supply Inc.'s securities without registration since its formation. No such
sales involved the use of an underwriter and no commissions were paid in
connection with the sale of any securities.
a. On June 25, 2001 Valemont Supply Inc. issued a total of 8,000,000
shares of common stock to A.E. Daem. The issuance of the common stock was exempt
from registration under Regulation S. A.E. Daem was not a resident or citizen of
the U.S. at the time it received the offer to purchase and at the closing of the
purchase of the stock, and did not acquire the stock for the account or benefit
of any U.S. person. A.E. Daem agreed to resell such securities only in
accordance with the provisions of Regulation S, pursuant to registration, or
pursuant to an available exemption from registration. The stock contains a
legend to the effect that transfer is prohibited except in accordance with the
provisions of Regulation S, pursuant to registration, or pursuant to an
available exemption from registration. Valemont Supply Inc. will refuse to
register any transfer of the Stock not made in accordance with the provisions of
Regulation S, pursuant to registration, or pursuant to an available exemption
from registration. The issuance of the shares was also exempt from registration
under Rule 506 of Regulation D, and sections 3(b) and 4(2) of the Securities Act
of 1933, as amended, due to Mr. Daem's status as the founder and initial
management of Valemont Supply Inc., his status as an accredited investor and the
limited number of investors (one).
Item 16(a). Exhibits.
Exhibit Name Page
Number
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Share of Common Stock
5.1 Opinion re: Legality
10.1 Sale Agreement
10.2 Subscription Agreement and Investment
Letter re: A.E. Daem
23.1 Consent of Independent Auditors.
23.2 Consent of Counsel (see Exhibit 5.1)
*Previously filed
ITEM 16(B). FINANCIAL STATEMENT SCHEDULES.
As of October 31, 2001, Valemont Supply Inc.:
- - has no valuation or qualifying accounts
- - does not have a substantial portion of its business devoted to acquiring
and holding for investment real estate or interests therein
- - has no subsidiaries
- - has no investments in mortgage loans on real estate.
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ITEM 17. 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:
(a) To include any prospectus required by section 10(a)(3) of the Securities
Act of 1933;
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, 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.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 indemnification is against public policy as
expressed in the 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 whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Kamloops, Province of
British Columbia, Canada, on January 16, 2002.
Valemont Supply Inc.
/s/ A.E. Daem
--------------------
By A.E. Daem
Its President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
/s/ A.E. Daem President, Secretary, Treasurer, and Director
- -------------- January 16, 2002
A.E. Daem
/s/ A.E. Daem Principal Accounting Officer
- -------------- January 16, 2002
A.E. Daem
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