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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
COMMISSION FILE NUMBER 000-49664
OBAN MINING INC.
(Exact name of registrant as specified in its charter)
NEVADA 88-0467848
(State of other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
OBAN MINING INC.
11960 HAMMERSMITH WAY, SUITE 155
RICHMOND, BRITISH COLUMBIA
CANADA V7A 5C9
(Address of principal executive offices)
(604) 275-8994
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [x] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of OCTOBER 2, 2003: 21,000,000.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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OBAN MINING INC.
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEET
UNAUDITED
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SEPTEMBER DECEMBER 31,
30, 2002
2003
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$ $
ASSETS
CURRENT
Cash 20,773 70,810
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TOTAL ASSETS 20,773 70,810
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LIABILITIES
CURRENT
Accounts payable and accrued liabilities 9,660 2,550
Advances from a related party - 15,927
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TOTAL LIABILITIES 9,660 18,477
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STOCKHOLDERS' EQUITY
COMMON STOCK
Authorized: 100,000,000 shares, $0.00001 par value
Issued and outstanding: 21,000,000 shares
(December 31, 2002: 21,000,000 shares) 21 21
ADDITIONAL PAID-IN CAPITAL 100,029 100,029
DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE (88,937) (47,717)
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TOTAL STOCKHOLDERS' EQUITY 11,113 52,333
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 20,773 70,810
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SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
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OBAN MINING INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS
UNAUDITED
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CUMULATIVE
FROM INCEPTION
OF THE
DEVELOPMENT
FOR THE THREE FOR THE NINE STAGE ON
MONTHS MONTHS SEPTEMBER 20,
ENDED ENDED 2000 THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002 2003
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$ $ $ $ $
REVENUE - - - - -
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MINERAL PROPERTY COSTS 831 706 831 706 4,923
GENERAL AND ADMINISTRATIVE EXPENSES
Accounting and administration 6,150 1,150 7,050 4,150 11,650
Audit fees 777 130 1,682 1,143 8,074
Bank charges - - - 67 181
Filing fees 1,550 210 1,771 365 2,821
Legal fees 26,231 796 27,913 4,146 57,409
Office 367 - 422 386 1,184
Transfer agent 1,226 150 1,551 994 2,695
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37,132 3,142 41,220 11,957 88,937
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NET LOSS (37,132) (3,142) (41,220) (11,957) (88,937)
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BASIC LOSS PER SHARE 0.00 0.00 0.00 0.00
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WEIGHTED AVERAGE
NUMBER OF SHARES OUTSTANDING 21,000,000 21,000,000 21,000,000 19,246,914
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SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
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OBAN MINING INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
UNAUDITED
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FROM INCEPTION (SEPTEMBER 20, 2000) TO SEPTEMBER 30, 2003:
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DEFICIT
ACCUMULATED
ADDITIONAL DURING THE TOTAL
COMMON STOCK PAID-IN EXPLORATION STOCKHOLDERS'
SHARES AMOUNT CAPITAL STAGE EQUITY
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$ $ $ $
BALANCE, SEPTEMBER 20, 2000 - - - - -
Common stock issued for cash 15,000,000 15 35 - 50
Net loss for the period - - - (19,334) (19,334)
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BALANCE, DECEMBER 31, 2000 15,000,000 15 35 (19,334) (19,284)
Net loss for the year - - - (12,777) (12,777)
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BALANCE, DECEMBER 31, 2001 15,000,000 15 35 (32,111) (32,061)
Common stock issued for cash 6,000,000 6 99,994 - 100,000
Net loss for the year - - - (15,606) (15,606)
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BALANCE, DECEMBER 31, 2002 21,000,000 21 100,029 (47,717) 52,333
Net loss for the period - - - (41,220) (41,220)
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BALANCE, SEPTEMBER 30, 2003 21,000,000 21 100,029 (88,937) 11,113
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SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
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OBAN MINING INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS
UNAUDITED
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CUMULATIVE
FROM
INCEPTION ON
FOR THE NINE SEPTEMBER 20,
MONTHS ENDED 2000 THROUGH
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003
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$ $ $
CASH FLOWS PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Loss from operations (41,220) (11,957) (88,937)
Cash provided by (used in) changes in
operating assets and liabilities:
- Increase (decrease) in accounts payable 7,110 (2,830) 9,660
- Repayments to a related party (15,927) - -
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Net cash used in operating activities (50,037) (14,787) (79,277)
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FINANCING ACTIVITIES
Issuance of common stock for cash - 100,000 100,050
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Net cash provided by financing activities - 100,000 100,050
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(Decrease) increase in cash (50,037) 85,213 20,773
Cash at beginning of period 70,810 337 -
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CASH AT END OF PERIOD 20,773 85,550 20,773
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SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
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OBAN MINING INC.
(AN EXPLORATION STATE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
UNAUDITED
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NOTE 1 - BASIS OF PRESENTATION
These unaudited financial statements have been prepared in accordance with the
instructions to SEC Form 10-QSB. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such instructions. These unaudited financial statements should be
read in conjunction with the audited financial statements and notes thereto as
at December 31, 2002 filed with the Company's Form 10-KSB for the year then
ended.
In the opinion of the Company's management, all adjustments considered necessary
for a fair presentation of these unaudited financial statements have been
included and all such adjustments are of a normal recurring nature. Operating
results for the three month and nine month periods ended September 30, 2003 are
not necessarily indicative of the results that can be expected for the year
ended December 31, 2003.
During the three month period ended September 30, 2003, the Company increased
its number of issued and outstanding shares on a three new shares for one old
share basis. All share capital numbers have been restated retroactively to
reflect this stock split.
NOTE 2 - GOING CONCERN
The Company was incorporated in the State of Nevada on September 20, 2000.
Since inception, the Company has acquired 2 mineral claims in the Slocan Mining
Division, Province of British Columbia, Canada. To date, the Company has not
conducted any exploration on the claims. Management has raised funds for a
preliminary exploration program to assess the mineral potential of the claims,
and to finance the cost of general and administrative expenses, and projected
further losses from operations in the exploratory stage.
The ability of the Company to maintain its existence and further exploration of
its mineral claims is dependent upon its raising sufficient new equity
financing. The commencement of principal operations is dependent upon the
discovery of economically recoverable ore reserves, confirmation of the
Company's interest in the mineral claims, the ability of the Company to obtain
necessary financing to complete development, and future profitable production or
proceeds from the sale of all or an interest in the mineral claims. The likely
outcome of these future events is indeterminable. The financial statements do
not include any adjustments to reflect the possible future effect on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.
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OBAN MINING INC.
(AN EXPLORATION STATE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
UNAUDITED
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NOTE 3 - SUBSEQUENT EVENTS
After September 30, 2003 the following subsequent events occurred:
1) The Company completed a private placement for 314,000 shares at $0.50 per
share for total proceeds of $157,000.
2) The Company signed an Agreement and Plan of Reorganization, under which it
will acquire not less than 80% of the issued and outstanding shares of
common stock of Ikona Gear International, Inc. ("Ikona") from the
shareholders of Ikona. In consideration, the Company will issue 1.25 shares
of common stock for each share of Ikona common stock received. Effectively,
Oban will issue from 12,033,306 to 15,041,633 shares of its common stock to
acquire from 80% to 100% of Ikona's issued and outstanding shares of common
stock respectively. Pursuant to the agreement, the president of Oban shall
surrender for cancellation 14,500,000 shares of Oban's common stock. The
agreement is to close by October 31, 2003, unless extended with the mutual
consent of Oban and Ikona.
After the closing of the agreement, the Company will change its primary
focus to the Ikona business. Ikona, a Nevada development stage company, is
in the process of developing and commercializing its patented gear
technology.
3) The Company signed a loan agreement with Ikona, pursuant to which the
Company will advance $155,000 to Ikona at rate of 10% interest compounded
annually, with a term of one year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
This section of this report includes a number of forward-looking statements
that reflect our current views with respect to future events and financial
performance. Forward-looking statements are often identified by words like:
believe, expect, estimate, anticipate, intend, project and similar expressions,
or words which, by their nature, refer to future events. You should not place
undue certainty on these forward-looking statements, which apply only as of the
date of our report. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or our predictions.
Our company is engaged in exploration of our property. Our company's
principal resources have been acquired through issuance of common stock and from
shareholder loans.
We are a start-up, exploration stage corporation and have not yet generated
or realized any revenues from our business operations.
In our audited financial statements ended December 31, 2002, our auditors
issued a going concern opinion. This means that our auditors believe there is
doubt that we can continue as an on-going business unless we obtain additional
capital to maintain our existence and to commence exploration of our mineral
claims.
As at September 30, 2003, the Company had cash resources of $20,773. The
Company currently does not
have sufficient working capital to fund its operating requirements for the next
twelve months.
PLAN OF OPERATION
Our success has depended upon finding mineralized material. Mineralized
material is a mineralized body that has been delineated by appropriate spaced
drilling or underground sampling to support sufficient tonnage and average grade
of metals to justify removal.
During the year ended December 31, 2002, we began Phase 1 of our research
and exploration program. We began the research of available geologic
literature. We hired Locke Goldsmith to initiate an orientation program
consisting of geological mapping and collection of soil samples for geochemical
analysis on the Alta claims. The program commenced in early November 2002.
The orientation geochemical survey was initiated on one line along part of
the southern sector of Alta 2 claim. Seventeen samples were collected from
approximately 30 cm below the humus layer corresponding approximately to the "C"
horizon. Transported valley fill consisting of large boulders at several sites
forced the collection of samples from shallower horizons. Samples were placed
in wet strength paper envelopes and taken to ALS Chemex labs of North Vancouver,
British Columbia, Canada, where they were dried, screen to -180 um and the fine
fraction analyzed for silver, lead and zinc. The statistical data as summarized
in Mr. Goldsmith's report to us dated December 7, 2002 indicated four samples
contained anomalous silver and lead values, and one sample contained an
anomalous zinc value. Field notes taken at the time of sample collection
described the nature of the rock fragments as rounded, indicating that the rock
and sole had been moved along distances by stream transport and not derived from
bedrock sources nearby.
Prospecting throughout the eastern section of the property also did not
locate mineralization. The report concluded that the transported components and
nature of soils in the southern part of the Alta claims were not suitable for
development of geochemical patterns that could lead to concealed mineralization
in bedrock. Prospecting did not discover any potential sites for additional
exploration.
It was recommended that no further work be planned for the property.
The Company's two mineral claims, Alta 1 and Alta 2 were renewed to
September 26, 2004. While Oban Mining will continue to hold its mining claims,
the Company will no longer be devoting substantial efforts to the exploitation
of these claims. Should the Company be able to sell or assign these claims in
the future, the Company will use any proceeds received from the sale or
assignment of these claims to satisfy the Company's working capital needs.
During the quarter just ended, the Company entered into a Letter of Intent
with Ikona Gear International Inc. ("Ikona"), and effective October 10, 2003, we
entered into a definitive Agreement and Plan of Reorganization (the
"Reorganization Agreement") with Ikona to effect a business combination between
the companies. Ikona Gear International Inc. is currently a private company
that is commercializing and further developing its unique, patented gear
technology (the "Ikona Gearing System").
Under the terms of the proposed transaction, the Company will offer up to a
total of 15,041,633 shares of Oban Mining common stock to the shareholders of
Ikona in exchange for all of the outstanding shares of common stock of Ikona.
Upon successful conclusion of the Share Exchange Agreements, Oban Mining will
change its name to Ikona Gear International Inc. If consummated, the
Reorganization Agreement will result in a change in control of the Company.
On August 18, 2003, the Company's Board of Directors approved a resolution
to forward split its capital on a 3:1 basis. The Record Date for the forward
split was August 28, 2003. After the forward split, there were
21,000,000 shares of common stock outstanding.
Closing of the transaction requires that a minimum of 80% of the Ikona
shares be surrendered for exchange on closing. On closing, Richard Achron,
Oban's current sole director and senior officer, will surrender 14,500,000
shares of common stock to Oban's treasury for cancellation. Also on closing,
the board of directors will be changed such that control of Oban's board will
change from Richard Achron to the current directors and controlling shareholders
of Ikona being Laith Nosh, Dal Brynelsen, Barrie Freeke and Simon Anderson. The
closing is to occur on or before October 31, 2003 unless another date is agreed
to between the parties. There is no assurance that the transaction with Ikona
will close.
Also subsequent to the end of the quarter, on October 17, 2003, the Company
completed a private placement of 314,000 shares of common stock at $0.50 per
share for total cash consideration of $157,000. Oban has agreed to provide
Ikona with bridge financing in the amount of $155,000 for a one-year term at an
interest rate of 10% compounded annually. If the Plan of Reorganization is not
closed, then Ikona has agreed to enter into a general security agreement to
provide Oban with a first charge against Ikona's assets including the patents
for the gearing system.
LIMITED OPERATING HISTORY; NEED FOR ADDITIONAL CAPITAL
There is no historical financial information about Oban Mining upon which
to base an evaluation of our performance. We are an exploration stage
corporation and have not generated any revenues from operations. We cannot
guarantee we will be successful in our business operations. Our business is
subject to risks inherent in the establishment of a new business enterprise,
including limited capital resources, possible delays in the exploration of our
properties, and possible cost overruns due to price and cost increases in
services.
If the Agreement and Plan of Reorganization with Ikona is closed, the
Company will become subject to all of the risks associated with Ikona's
business. Upon completion of the Agreement and Plan of Reorganization, the
Company will timely file with the Securities and Exchange Commission a Current
Report on Form 8-K disclosing the terms thereof.
If the Agreement and Plan of Reorganization with Ikona is closed, the
Company expects that it will need to raise substantial additional funding to
further Ikona's business plan. If the Company is unable to raise such funding,
its ability to proceed with its business plan may be adversely affected.
RESULTS OF OPERATIONS
FROM INCEPTION ON SEPTEMBER 20, 2000 TO SEPTEMBER 30, 2003
From September 20, 2000 to present, we have engaged in no significant
operations other than organizational activities, acquiring and staking our first
property, preparation for registration of our securities, completing our public
offering, and beginning Phase 1 of our exploration plan.
Since inception, we have used our common stock to raise money for the
property acquisition, for corporate expenses and to repay outstanding
indebtedness. Net cash provided by the sale of shares from inception on
September 20, 2000 to September 30, 2003 was $100,050. Subsequent to the end of
the period, an additional $157,000 was raised through a private placement of
314,000 common shares at $0.50 per share. $155,000 will be advanced to Ikona as
a bridge financing.
From inception we have spent $4,923 on our property. This includes $826
for the initial cost of the staking, $2,297 for assessment work to maintain the
property, and $1,800 for the orientation program consisting of geological
mapping and collection of soil samples for geochemical analysis on the Alta
claims.
We have spent a total of $57,409 for legal fees of which $25,000 was for
the preparation and filing of the registration statement, $5,432 was for the
preparation and filing of quarterly and annual financial statements, $746 was
for Canadian legal advice and services and $26,231 was in connection with the
proposed acquisition of Ikona.
We have spent a total of $8,074 for audit fees of which $3,000 was related
to the filing of the registration statement, and $5,074 was for the review of
the Company's 10QSBs and 10KSBs.
From inception, $2,821 was spent on filing fees, $2,695 for transfer agent
fees, $6,000 for administration fees relating to the proposed acquisition and
$7,015 was spent for office administration and general office costs.
We have repaid the loan advanced from a related party of $15,927.
During the quarter just ended, on July 30, 2003, the Company entered into a
Letter of Intent with Ikona Gear International Inc. ("Ikona") to enter into a
Definitive Voluntary Share Exchange Agreement to effect a business combination
between the companies. Ikona Gear International Inc. is currently a private
company that is commercializing and further developing its unique, patented gear
technology (the "Ikona Gearing System").
Under the terms of the proposed transaction, the Company will effect a
forward split of its capital on a 3:1 basis and then will offer a up to a total
of 16,000,000 shares of Oban Mining common stock to the shareholders of Ikona in
exchange for all of the outstanding shares of common stock of Ikona. Upon
successful conclusion of the Share Exchange Agreements, (the "Share Exchange"),
Oban Mining will change its name to Ikona Gear International Inc.
LIQUIDITY AND CAPITAL RESOURCES
As of the date of this report, we have yet to generate any revenues from
our business operations.
As of September 30, 2003 we had cash resources of $20,773. We had total
liabilities of $9,660 for a working capital position of $11,113.
On July 30, 2003, the Company entered into a Letter of Intent with Ikona
Gear International Inc. ("Ikona") to enter into a Definitive Voluntary Share
Exchange Agreement to effect a business combination between the companies.
On October 10,2003, the Company signed an Agreement and Plan of
Reorganization to acquire all of the issued and outstanding shares of Ikona Gear
International, Inc. If the Agreement and Plan of Reorganization with Ikona is
closed, the Company expects that it will need to raise substantial additional
funding to further Ikona's business plan. If the Company is unable to raise
such funding, its ability to proceed with its business plan may be adversely
affected.
If the Company does not close the Agreement and Plan of Reorganization with
Ikona, the Company currently does not have sufficient funds to meet its cash
requirements for the next twelve months. The Company will need to raise the
capital required to fund its cash requirements and future business opportunities
by issuing debt and/or equity securities, although the Company has no current
arrangements or agreements related to such financings. The Company's management
will need to explore a variety of options to meet the Company's cash
requirements and future capital requirements including the possibility of equity
offerings, debt financing, and business combinations. There can be no assurance
financing will be available or accessible on reasonable terms.
ITEM 3. CONTROLS AND PROCEDURES
The Company maintain disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's Securities
Exchange Act of 1934 reports is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to the Company's management,
including its Chief Executive and Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure.
The Company's management carried out an evaluation, under the supervision
and with the participation of the Company's management, including the Company's
Chief Executive and Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon the foregoing, the Company's Chief
Executive and Financial Officer concluded that the Company's disclosure controls
and procedures are effective in connection with the filing of the Quarterly
Report on Form 10-QSB for the quarter ended September 30, 2003.
There were no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation, including any significant deficiencies or material
weaknesses of internal controls that would require corrective action.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Reports on Form 8-K
- Form 8-K filed August 19, 2003 announcing the 3:1 forward split
of the Company's capital stock;
- Form 8-K filed August 12, 2003 announcing the signing of the
Letter of Intent on July 30, 2003 with Ikona Gear International
Inc.
(b) Exhibits
10.1 Agreement and Plan of Reorganization dated October 10, 2003 with
Ikona Gear International, Inc.
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 - Chief Executive and Financial Officer
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief
Executive and Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on this 22 day of October 2003.
OBAN MINING INC.
BY: /s/ Richard Achron
--------------------------------
Richard A. Achron,
Principal Executive Officer and
Principal Financial Officer