UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1999
Commission File Number: 000 -18343
WORLD VENTURES, INC.
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(formerly Nu-Dawn Resources, Inc.)
(Exact Name of Registrant as specified in its charter)
Not Applicable
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(Translation of Registrant's name into English)
Province of British Columbia
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(Jurisdiction of incorporation or organization)
102 Piper Crescent, Nanaimo, BC, Canada V9T 3G3
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(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the
Act. None
Securities registered or to be registered pursuant to Section 12(g) of the
Act.
No Par Value Common Stock
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(Title of Class)
Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act.
None
----
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period of this Registration
Statement: 28,410,770
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
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Indicate by check mark which financial statement item the registrant has
elected to follow.
Item 17 x Item 18
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Currencies: Monetary amounts in this Form 20-F are stated in Canadian dollars
- ----------- (Cdn $) except where specifically stated otherwise.
PART I
ITEM 1. BUSINESS
(a) General Development of Business
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World Ventures, Inc. (the "Company") ( formerly Nu-Dawn Resources, Inc.),
effected a name change June 28, 1999.
World Ventures, Inc. (formerly Nu-Dawn Resources, Inc.) was incorporated on
October 3, 1980 by registration of its Memorandum and Articles under the Company
Act of the Province of British Columbia. Since its formation, the Company has
been engaged in the acquisition and exploration of mineral properties. In 1999,
the Company changed its direction of business to pursue real estate and land
development.
In 1986 the Company completed the sale of 600,000 shares of common stock at
$0.50 per share in a public offering in Canada. In subsequent years, the Company
raised additional capital for the primary purpose of exploring certain mineral
properties through the private placement of common stock in Canada.
By agreement dated November 21, 1986 the Company completed a private placement
of 248,000 "flow-through" common shares at a price of $0.3226 per share to 14
private investors, together with warrants to purchase up to 248,000 additional
shares at $0.40 per share during the ensuing 12 months. No commissions were paid
by the Company. Subsequently, warrants for the purchase of an additional 105,614
shares were exercised by certain of the investors for total proceeds to the
Company of $42,245. "Flow- through" common shares under applicable laws of
Canada permit amounts paid by investors to be expended by the issuer in
exploration of mineral properties with the amounts expended deductible, for
purposes of reporting income under applicable Canadian income tax laws, by the
individual investor and not by the issuer. Other than such characteristics, such
shares are equivalent to all other shares of common stock of the issuer.
In August 1987, the Company completed a private placement of 550,797
'flow-through' common shares at a price of $0.37 per share to 19 private
investors, together with warrants to purchase up to 550,797 additional shares at
$0.42 per share during the ensuing 12 months. Yorkton Securities Inc. (a
Canadian broker-dealer) received a commission of 10% of the gross proceeds. None
of the warrants were exercised and all have expired.
In 1988, the Company entered into an agreement to acquire an ore concentrating
and milling facility and small parcel of land located within a few miles of the
Company's two principal mining prospects in British Columbia near the town of
Salmo. The acquisition was completed in 1989 and as consideration for the
acquisition of the milling facility (referred to hereafter as the "H.B. Mill"),
the Company issued 7,200,000 shares of its common stock to Nor-Quest Resources
Ltd., a publicly-owned British Columbia corporation ("Nor-Quest").
For approximately 12 months through late 1989, the Company had an agreement with
Nor-Quest pursuant to which certain operating and other expenses of the Company
were advanced by Nor-Quest, which was then the majority shareholder of the
Company. In late 1989, Nor-Quest sold its stock ownership interest in the
Company in a private transaction and agreed with the purchaser that amounts owed
by the Company to Nor-Quest would be limited to $50,000 and would be repaid only
out of future operating profits from the H.B. Mill.
In 1989 the Company issued 120,000 shares of its common stock to Najcorp
Investments Inc., a British Columbia corporation, for the acquisition of a 0.5%
working interest in four natural gas wells located in Atoka County, Oklahoma,
U.S.A.
Subsequent to the private sale of the Company's stock by Nor-Quest, as described
above, the purchaser of those shares, Dydar Resources Ltd. ('Dydar'), a British
Columbia corporation owned by Raynerd B. Carson, who became a director of the
Company in November, 1989, made a private acquisition from the Company of
2,000,000 shares of the Company's common stock and a stock purchase warrant
entitling Dydar to purchase an additional 2,000,000 shares of common stock at
$0.20 per share for a total purchase price of $300,000. The shares and any
shares acquired from exercise of the warrant are subject to a 12 month
restriction from transfer expiring November 20, 1990. Dydar exercised its stock
purchase warrant to purchase an additional 2,000,000 shares of common stock for
$400,000 on October 30, 1990. In connection with the acquisition of the Company
shares from Nor-Quest and the private purchase from the Company, three persons
designated by Dydar were added to the Board of Directors of the Company and two
former directors resigned.
During the year ended October 31, 1991 the Company issued 476,388 shares, to a
company controlled by a director and officer, for consideration of $160,781
pursuant to a private placement. The consideration consisted of cash of $30,000
and the assumption of accounts payable of $130,781 by the investor. In addition,
the investor received warrants to purchase an additional 476,388 shares at
$0.3375 per share until May 22, 1992 and at $0.39 per share from May 23, 1992 to
May 22, 1993.
During the year ended October 31,1992 the Company issued 1,494,217 shares.
1,400,000 shares were issued pursuant to a private placement of 1,400,000 units
consisting of one share and a two year purchase warrant to purchase a share at
$0.15 in the first year and $0.20 in the second year. The warrants expire on
September 10,1993.During the period 94,217 shares were issued at $0.29.9 to
settle a debt totalling $28,265.00. Three directors resigned during the period
and one new director was appointed. The lease on the Yankee Dundee mining
property was terminated.
During the year ended October 31, 1993 the Company issued 784,470 shares
pursuant to exercise of warrants for debt. The Company sold the Jersey Emerald
mining claims for the consideration of twelve thousand dollars to be paid on
equal annual instalments over three years. The Company retains a one and one
half percent net smelter return royalty from any future production.
2
During the year ended October 31, 1994 the Company issued 1,000,000 units
pursuant to a private placement of $0.15 per unit, each unit consisting of one
common share and one non-transferable share purchase warrant exercisable for a
period of two years entitling the holders the right to purchase an additional
share at a price of $0.15, if exercised before April 18, 1995 and at a price of
$0.20 per share if exercised between April 19, 1995 and April 18, 1996. As at
October 31, 1994, 666,667 warrants were outstanding.
Issued 50,000 shares at a deemed price of $0.15 per share pursuant to a letter
agreement for exploration work.
None of the Company's mineral properties in Canada are in production. One small
interest in a producing oil and gas property in the United States, acquired in
1989, provides no revenue.
During the year ended October 31, 1995 the Company:
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(i) issued 1,500,000 units at $0.15 per unit pursuant to a private placement
agreement dated July 7,1995, each unit consisting of one common share and
one non-transferable share purchase warrant entitling the holder to
purchase a further common share for a period of two years at a price of
$0.15 per share during the first year and $0.20 per share during the second
year. The Company issued 266,667 units as an exploration payment on the
Guanacaste property in Costa Rica and the balance for cash. A further
150,000 common shares were issued as a finder's fee in connection with this
transaction.
As at October 31,1996, 1,055,334 of the share purchase warrants remained
unexercised.
(ii) issued 386,709 common shares at a deemed price of $0.15 per share pursuant
to a share for debt agreement.
The Company employs one full-time officer. The Company relies on its
officers and directors to conduct its business affairs.
During the year ended October 31, 1996 the Company:
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(i) issued 329,338 common shares for debt settlement of $71,069 of which
196,000 of those shares were issued to an individual related to the
President of the Company for debt settlement of $29,400.
(ii) issued 700,000 units at $0.20 per unit pursuant to a private placement
agreement, each unit consisting of one flow-through common share and one
non-transferable share purchase warrant entitling the holder to purchase
either one flow-through common share or one common share, at a price of
$0.20 per share, for a period of one year. As at October 31, 1996 all the
share purchase warrants remain unexercised.
3
(iii) issued 500,000 units at $0.50 per unit pursuant to a private placement to
a company controlled by the President of the Company for cash proceeds of
$233,331 and debt settlement of $16,669. Each unit consisting of one common
share and one non-transferable share purchase warrant entitling the holder
to purchase an additional common share for a period of two years at a price
of $0.50 per share during the first year and $0.60 per share during the
second year. As at October 31, 1996, 115,495 of the share purchase warrants
had been exercised for debt settlement of $57,748.
(iv) issue 444,666 common shares pursuant to a private placement for cash
proceeds of $50,000 and settlement of exploration payments of $14,000.
During the year ended October 31, 1997 the Company:
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(i) issued 1,000,000 shares at $0.15 per share with non-transferable share
purchase warrants to purchase 1,000,000 shares at $0.15 per share for a one
year period and $0.18 per share in the second year. As at October 31, 1997
696,499 of the share purchase warrants remained unexercised.
(ii) issued 325,000 units at $0.20 per share pursuant to a private placement
agreement dated November 1996 entitling the holder to purchase either one
flow-through common share or one common share at a price of $0.20 for a
period of one year.
(iii) issued 303,501 units at $0.15 per share on exercise of warrants for cash
proceeds of $45,526.
(iv) issued 1,054,610 units at $0.20 per share on exercise of warrants for debt
settlement of $210,922.
During the year ended October 31, 1998, the Company:
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(i) Issued 330,166 common shares at $0.15 per share pursuant to exercise of
purchase warrants of private placement agreement dated April 29, 1997, for
cash proceeds of $49,525.
(ii) In advance of a Private Placement Agreement dated April 15, 1998, a loan of
$143,389 was advanced to the Company to be repaid upon completion of the
Agreement (proposed completion date November 1998) to issue 1,000,000
non-transferable shares at a price of $0.15 per share with non-transferable
share purchase warrants to purchase 1,000,000 shares at $0.15 in the first
year and $0.18 in the second year.
During the year ended October 31, 1999, the Company:
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(i) Pursuant to a private placement dated November 13, 1998, 1,000,000 units
were issued at a price of $0.15 per unit consisting of one share and one
non-transferable share purchase warrant exercisable for a period of two
years, granting the holder the right to acquire one additional share at
$0.15 per share in the first year and at a price of $0.18 per share in the
second year.
4
(b) Industry Segments
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The Company presently operates in one industry and two geographic segments, the
mineral exploration and development business in Canada and Costa Rica, and the
Company is in the development stage, never having received material revenues
from such operations. During the fiscal year, 1991, the Company received $8,416
for the sale of timber cut on Company land. During the fiscal year ended October
31,1993 the Company received $152,005 for the sale of timber cut on Company
land. During the year ended October 31, 1994 the Company received $10,155 for
the sale of equipment. During the year ended October 31, 1995, the Company
received $4,284 from operations. The Company received $14,379 from operations
during the year ended October 31, 1996. During the year ended October 31, 1997,
the only revenue received by the Company was interest from investment and sale
of spare equipment parts from the HB Mill, totalling $3,201. During the year
ended October 31,1998, revenue from the sale of equipment from the HB Mill
totalled $78,648. The sale of the Ymir property as per the settlement with
Premanco was applied to pay in full the taxes on the property and pay out the
account payable for legal fees to Siddall & Co.
In the future, the Company contemplates selling the land, and equipment of its
H.B. Mill in Salmo, British Columbia or if the opportunity presents its self
bringing the H.B. Mill and Concentrator into operation either for its own
account or in custom processing of mineral ores for others and in such event,
such activities may constitute a separate industry segment.
The Company will continue to maintain some of its mineral holdings with the
intent to recruit buyers or joint venture partners for their projects.
The Company will pursue real estate and land development projects in North and
Central America.
(c) Narrative Description of Business
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Upon organization the Company's organizers caused two non-producing mineral
properties located near Salmo, British Columbia, Canada, to be transferred to
the Company. Subsequently, the Company acquired interest in two other
non-producing mineral properties located in Ontario and British Columbia,
Canada. (ITEM 2)
The Company's principal activities through the end of 1994 have consisted
principally of financing activities for the purpose of raising capital to
explore Company properties and the exploration of the properties using the funds
raised. The Company intends to continue to explore its properties to determine
whether commercially extractable minerals exist and, if funding is available,
may engage in the development of mineralized zones and the production of
minerals. Through 1994/95 substantially all of the Company's available capital
has been expended for mineral property acquisition exploration and upgrading the
H.B. Mill. No mining operations have been conducted and no operation of the
Company's H.B. Mill, acquired in 1989, has been attempted.
5
(d) Plan of Operation
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The Company's planned mine operations, as soon as funds are available, are to
complete the exploration of existing properties in the Salmo, British Columbia
area and either develop or acquire a source of mineral bearing ore sufficient to
justify the commencement of operations at the Company's H.B. Mill, either alone
or under a joint venture type arrangement with one or more other mining
companies.
The Company's planned real estate activities are focused on an Arizona
mountain-top, property which may have development possibilities. Feasibility
studies and permitting approvals are required in the future phase of the
project.
The Company may sell all or part of its mining and milling equipment in Salmo,
BC. The Company may sell all or any part of its land holdings in Salmo, BC. The
Company may develop alone or with others all or any part of its land holdings in
Salmo, BC into residential and recreational lots.
Since its initial public offering in Canada in 1986, the Company has had
insufficient capital available to complete the exploration of its existing
properties or to develop any mining reserves. Due to the significant capital
investment involved in production mining operations and the operation of an ore
processing mill, it is likely that the Company may not make any final
determination as to the value or presence of any commercial mining reserves in
its existing properties for up to several years. Therefore, the Company will
continue to consider alternative sources of capital which may include
arrangements under which the Company would enter into joint venture arrangements
or undertake mineral property management on behalf of others. However, due to
uncertainties involved it cannot be ascertained whether sufficient capital will
be available for any such activities.
Since the Fall of 1999, the Company has concentrated on real estate and resort
projects. The Company's investigations are at the early feasibility stages and
there is no assurance that permitting or financing for these projects will be
available.
(i) Products
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Because the Company has been in the development stage in the mining business and
is not engaged in the business of extracting minerals from any of its properties
or operating its ore processing mill, the Company does not have any principal
products. The only revenues received were from spare machinery and parts that
the Company owned.
(ii) Status of Product
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There has been no public announcement of, nor has the Company otherwise made
public information about, any new product or industry segment of the Company
requiring the investment by the Company of a material amount of its total
assets, or which is otherwise material to the Company's operations. However,
should the Company determine to commence operations of its H.B. Mill or the
Company's real estate development, as to which there has been no determination,
the commencement of such operations would require a large expenditure of funds
prior to commencement of operations and the commitment of future operating
capital, neither of which are presently available to the Company.
6
(iii) Raw Materials
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The sources and availability of raw materials essential to the Company's
business are limited in the context that mineral bearing ore of a high enough
commercial grade to justify development must be discovered or otherwise acquired
and explored before a production decision can be made and implemented. Because
the Company's processing mill is already in existence, the Company intends to
focus early efforts in developing a source of ore for processing in the vicinity
of Salmo, British Columbia, and area in which mineral exploration, mining and
processing has been conducted for over 100 years and therefore, many of the
available properties may have been mined out or acquired by others. Any raw
materials essential to mineral exploration or mine and mill operations are
limited only to the extent that major mineral supply firms may be unable to
provide the Company with required supplies as the need therefore arises in the
future. No shortages are anticipated.
Real estate resort projects are dependent on permitting, public demand, water
supply, utilities and roads. The Company anticipates no lack of materials and
supplies.
(iv) Patents, Trademarks and Licenses
--------------------------------
The Company has no material patents, trademarks, licenses, franchises or
concessions except insofar as the Company depends upon mining claims or
properties acquired from the Canadian and the Costa Rican government. The
Company believes that it is in compliance with all applicable obligations
regarding such titles.
(v) Seasonality
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The Company's business is seasonal only to the extent that severe winter
conditions may limit the Company's exploratory activities or future mill
operating activities or real estate development.
(vi) Working Capital Items
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The Company is in the development state and thus has no material revenues from
activities. As a result, most of the Company's activities have been and are
likely in the future to be conducted using available capital resources, the lack
of which could restrict the Company's future activities.
(vii) Customer Dependence
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The Company is not dependent upon a single or few customers for revenues.
(viii) Backlog of Orders
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The nature of the Company's business precludes a backlog of orders.
7
(ix) Government Contracts
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No portion of the Company's business is subject to renegotiation of profits or
termination of contracts or subcontracts at the election of the government.
(x) Competition
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The mining industry in which the Company is engaged is in general, highly
competitive. Competitors include well-capitalized mining companies, independent
mining companies and other companies having financial and other resources far
greater than those of the Company. The Company encounters strong competition in
attempting to acquire additional mineral properties and interest in commercially
mineable ore reserves in the Salmo, British Columbia area. In general,
properties with a higher grade of recoverable mineral and/or which are more
readily mineable afford the owners a competitive advantage in that the cost of
production of the final mineral product is lower. Thus, a degree of competition
exists between those engaged in the mining industry to acquire the most valuable
properties. The Company's competitive position in the mining business in
general, and in the Salmo, British Columbia area in particular, is
insignificant.
The real estate and land development business in which the Company is engaged
is, in general, highly competitive. Competitors include well-capitalized real
estate and land development companies and individuals having financial and other
resources far greater than those of the Company. In general, a degree of
competition exists between those engaged in the real estate industry to acquire
the most desirable properties. The Company's competitive position in the real
estate and land development business in general is insignificant.
(xi) Research and Development
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The Company has not engaged in any material research and development activities
during its last three fiscal years except to the extent that it conducted
mineral exploration activities.
(xii) Environmental Regulation
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Mining
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The Company, like any business involved in the extraction or processing of
mineral properties, may be required to make extensive capital expenditures in
the future to protect the environment and to comply with applicable
environmental regulations in connection with any exploration, development,
mining or milling activities. As of the end of 1997, the Company was engaged in
no such activities. However, such capital expenditures or requirements could
effect the Company's competitive position in the business and, conceivably,
could limit the Company's availability to enter into some projects. No capital
expenditures for environmental control facilities have been made and the Company
does not expect to make any such expenditures during the current or coming
fiscal year.
Real Estate and Resort Development
- ----------------------------------
The Company, like any business involved in land development, may be required to
make extensive capital expenditures in the future to protect the environment and
to comply with applicable environment regulations in connection with real estate
8
development. However, such capital expenditures or requirements could effect the
Company's competitive position in the real estate and resort development
business and, conceivably, could limit the Company's availability to enter into
some real estate and resort projects. No capital expenditures for environmental
control facilities have been made and the Company does not expect to make any
such expenditures during the current or coming fiscal year.
(xiii) Employees
---------
During its fiscal year ended October 31, 1999, the Company employed one
part-time office manager, and a computer systems consultant provided services to
the Company on a contract basis. Most Company operations will be conducted by
the officers on a part time basis or by outside contractors. If the H.B. Mill is
placed into operation by the Company, or a real estate/resort project is
developed, full-time employees would be expected to be hired. Presently, a Mill
Superintendent is employed on a part-time basis.
(d) Financial Information About Foreign and Domestic Operations and Export Sales
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The Company does not foresee that there is any risk to the conduct of its
business in Canada or Costa Rica.
ITEM 2. DESCRIPTION OF PROPERTY
Ymir Properties
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As of October 31, 1998 the Company sold all of its interest in the Ymir
properties.
Triton Property
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The Company has a 50% interest in a joint-venture basis with Greater Temagami
Mines Ltd., an unaffiliated corporation, in five unsurveyed mining claims in the
Shiningtree area of the Larder Lake mining division, Ontario, Canada. The Triton
Property is accessible from both the east (New Liskeard, Elk Lake and Gowganda)
and from the west (Sudbury, Grogama) via highway 560. A 4- mile gravel road
connects the property to the highway. The Shiningtree region is underlain mainly
by basic to intermediate volcanic rocks which occur within a wide trending belt.
The main historic gold occurrence near the Triton Property is the Kingston Vein,
though only limited production has been recorded. A number of other gold
deposits in the Siningtree region occur to the northwest, along the strike of
the volcanos.
In November 1978, a brief geological mapping project which encompassed the
Triton Property, was conducted which determined that sparse outcrops in the area
consisted of basalt. In late 1986 and early 1987 the joint venture established a
grid on the property, including the 1978 baseline, and carried out surveys and
862 metres of diamond drilling in six holes.
9
During August 1987, the joint venture conducted a mapping and prospecting
program on the Triton Property which included trenching and stripping the
bedrock in two different locations. Several old trenches and pits were
discovered during mapping. From October through mid-November 1987, a diamond
drilling program, Phase 1, was carried out on the Triton Property for the
purpose of investigating the depth and extent of the Kingston Vein and to extend
the known mineralized zone. The program consisted of five drill holes totalling
492 metres.
From mid-January to March 1988, the Phase 2 diamond drilling program was carried
out on the Triton Property for the purpose of investigating the extent of the
Kingston Vein in and around the Kingston shaft and testing the area around the
Western Shaft and the trenches in the northeast portion of the grid. The program
consisted of 12 holes totalling 1,349 metres. The exploration program has
established several gold bearing quartz veins on the Triton Property, with
anomalous gold values obtained ranging from .035 oz. gold per ton in one test
hole to as high as .694 oz. of gold per ton in one hole. Additional drilling to
further test the areas where encouraging results were found has been
recommended. The Company and its join venture partners have made no
determination about what further exploration will be undertaken. The Company's
expenditures in the joint venture have totalled $250,000.
As of October 31, 1998 The Company has a 50% interest in certain mineral claims
located in MacMurchy Township of the Larder Lake Mining Division, Ontario. A
third party has agreed to maintain the good standing of the mineral claims.
During the year ended October 31, 1997, the Company wrote down the balance of
its interest in this property.
H.B. Mill Property
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In 1989 the Company acquired the H.B. Mill in Salmo, British Columbia, by the
issuance of 7,200,000 shares to Nor-Quest Resources Ltd. The H.B. millsite
occupies a small parcel of land and was originally constructed in the 1950s to
process ore produced at the H.B. Mine in Salmo. Ultimately, the mine was
depleted and the mill was used for custom processing intermittently for a number
of years, last in 1983. Thereafter, regular maintenance was conducted by various
owners. In the mid-1980s the cyanide processing portion of the plant was
rehabilitated and modernized in anticipation of placing the mill into operation.
However, the mill has not been operated. In 1990 an unaffiliated mining
engineering firm provided a report concerning the mill which indicated that its
present fair market value, based on its size, condition and replacement costs,
and considering that in excess of $517,000 in expenditures would be required
before operations could commence, would be in excess of $11,200,000. Replacement
value is estimated at $45,287,000. The Company considers that its ownership of
the H.B. Mill will place it in a position during the coming years to acquire
ownership or operating interests in various mineral properties in the area as no
other operable or processing mill of comparable size presently exists and
numerous other individuals and companies maintain properties from which minerals
may be developed and mined.
The Company does not have any proven or probable mineral reserves on any of its
properties and none of the exploratory activities previously conducted by the
Company have established any such reserves, although the Company continues to
believe that further exploration of its properties could lead to establishment
of commercial quantities of extractable ore.
10
Jersey Emerald Property
- -----------------------
The Company sold the Jersey Emerald mining claims in 1993 for the consideration
of $12,000 to be paid in three equal annual payments and the Company retains a
one and one half percent net smelter return royalty. All property payments have
been made and the Company retains one and one-half percent net smelter return
royalty. Sultan Minerals Inc., a public company unrelated to Nu-Dawn Resources
Inc., is carrying out an exploration program, including core drilling, in
1996/97 on the property.
Saskatchewan Properties
- -----------------------
During February and March of 1994 the Company acquired mining concessions in the
Fort a La Corne and White Swan Lake areas of Saskatchewan from the Saskatchewan
Department of Mineral Resources with an estimate of 50,000 acres. An airborne
maganetometer was carried out over the area required a cost of $67,638.98.
Ground geophysical surveys, plus 2 drilling holes, were competed in 1996 with
inconclusive results. The Company issued 50,000 shares of its common stock from
treasury to Dave McGowan (prospector) for acquiring the White Swan Lake
property. The combined costs of acquisition and exploration of all of the
Saskatchewan properties totalled an expenditure of $242,160.00.
The Company also entered into an option agreement to acquire a 100% interest,
subject to a 5% net profits royalty, in certain mineral claims in the Prince
Albert Mining District, Saskatchewan. To maintain this interest, the Company is
required to pay $2,000 annually for ten years to July 2003.
As of October 31, 1998 The Company had a 100% interest in certain mineral
exploration permits issued by Saskatchewan Energy and Mines in the Southern
Mining District in Saskatchewan. During the year, the Company allowed the
permits to lapse and wrote off the investment in those permits. The remaining
balance of $57,788 represents the Company's interest in the option in the Prince
Albert Mining District.
During 1999, the Company decided to abandon its interest and wrote off its
investment in this property.
Panama, Pan-Oro
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During the year 1995, the Company entered into a letter of agreement with Grande
Portage Resources Ltd to enter into a joint-venture agreement to develop mineral
concessions in Panama. The agreement has not yet been concluded and regulatory
approval remains outstanding. The Company has 90% ownership interest in Pan-Oro,
S.A., a Panamanian corporation. During 1996, the Company entered into a letter
of agreement with Grande Portage Resources Ltd. to enter into a joint venture
agreement to develop mineral concessions in Panama. The Company has a 90%
ownership interest in Pan-Oro S.A., a Panamanian corporation. The agreements
have not been concluded and regulatory approval remains outstanding. Resource
properties include $21,000 in costs charged by Pan-Oro S.A.
11
Costa Rica, Guanacaste
- ----------------------
Pursuant to an option agreement dated October 23, 1995 between the Company and
Minera Oceanica, S.A., the Company acquired an option for the mineral and
surface rights in Concession 6622 situated in the Juntas de Abangores, District
of Guanacaste, Costa Rica, subject to a 10% royalty in favor of Minera Oceanica,
S.A. on operating profits derived from the property, or US $100,000 per year,
whichever is the greater. This royalty has been waived indefinitely until the
commencement of production.
In order to exercise the option, the Company must obtain an independent
feasibility study prior to June 30, 1997, and thereafter put the property into
production. Finders fees in the amount of $22,500 have been included in resource
properties.
Geological and geochemical surveys were carried out in 1996, and a core drill
hole was drilled to test for gold. Results to date have been inconclusive.
Sukut, Costa Rica
- -----------------
The Company entered into an option agreement dated April 24, 1996 for the
mineral exploration permit (ID#6200) over an area of eighteen square kilometres
within the Bribri Indian Reservation situated in the Province of Limon, County
of Talamanca, District of Bratsi. There has been a moratorium placed on any
mining activity by the Asamblea Legislativa de Costa Rica.
In order to exercise this option, the Company must comply with the following:
(1) pay the optionor $10,000 within eight days of the signing of the agreement
(paid); and
(2) pay the optionor $10,000 upon the anniversary date of the agreement; and
(3) spend a minimum amount of $100,000 in lobbying and perform the necessary
efforts to obtain the approval of the exploration permit by the Asamblea
Legislativa de Costa Rica; and
(4) once the exploration permit becomes fully legal and enforceable, pay the
optionor $15,000 within three months, $50,000 one year after approval,
$75,000 two years after the approval and subsequently $75,000 per year upon
each anniversary date.
Once the exploration phase is completed, the Company has the option to apply for
the exploitation (mining) permit. In order to exercise this option, the Company
must, once the exploitation permit is granted, pay the optionor the greater of
3% of the net smelter return and $75,000 per year. The Company has the option to
purchase outright 50% of the vendor's net smelter return for US$1,500,000 and
the right of first refusal to purchase the remaining balance.
During the year ended October 31, 1997, the permit was withdrawn from the
optionor by the Costa Rican authorities. Therefore, the Company has written down
its interest in this property.
During the year ended October 31, 1997, Minera Oceanica S.A., a Nu-Dawn
associate Costa Rican company, entered into an agreement with an Indian Mining
Cooperative. Whereby, Minera Oceanica S.A. can earn a 75% working interest in
three mining concessions on the Indian Reserve. One of these concessions (18 sq
km) covers the Sukut prospect, and other two (40 sq km) cover an area
approximately 20 km west of the Sukut, referred to as the Rio Dueri. Minera
Oceanica S.A. has assigned to Nu-Dawn the rights to its contract.
12
During the year ended October 31, 1998, The Indian Mining Co-op applied for
exploration permits on the project from the Costa Rican government. As of
October 31,1998, the permits had not been issued.
Asbestos Claims, Quebec, Canada
- -------------------------------
The Company entered into an option agreement dated October 8, 1997, with Vant
Resources Inc. for the Asbestos "A" claims in Maizerets, Quebec and the
Exploration Claims in Soissons, Quebec.
In order to exercise the option, the Company must pay the optionor an aggregate
of $1,070,000 as follows:
1. $10,000 on execution of this Agreement (paid);
2. $10,000 on or before March 15, 1998;
3. $50,000 on or before September 15, 1998; and
4. $1,000,000 on or before September 15, 1999.
After the Company has recovered all its pre-production expenditures on the
property, it shall pay to the optionor a royalty equal to 5% of the net profits
arising from commercial production. At any time after the commencement of
commercial production, the optionor can surrender its royalty to the Company in
consideration of shares of the Company with a market value of $500,000 at the
date of surrender.
As of October 31, 1998, the Agreement was put on hold. Nu-Dawn paid the property
taxes and Vant Resources Inc. extended the agreement until further notice.
As of October 31, 1999, the Company has not made a $50,000 payment due September
15, 1998 nor a $1,000,000 payment due September 15, 1999. During 1999, the
Company decided to abandon its interest and wrote off its investment in this
property.
ITEM 3. LEGAL PROCEEDINGS
As of October 31, 1995, there are two legal actions to which the Company is a
party or of which any of its property is the subject as of the date of this
Registration Statement.
(a) During 1995, Premanco Industries Ltd. (Premanco) an unrelated party, has
brought an action against the Company and others in the Supreme Court of
British Columbia claiming that the Company and others logged or caused to
be logged without the permission of Premanco approximately 20,000 cubic
meters or more of timber from certain properties. The claim has been
defended by the Company and they have stated that if any logging was done
any liability for these actions must rest with the Company's solicitor who
acted on the Company's behalf in connection with an application to the
13
Nelson land title office to release Premanco's timber rights. As of October
31, 1997, this action is ongoing with no new developments to report.
During the year ended October 31, 1998: A civil action in which the
defendants also included some of the directors of Nu-Dawn, an attorney who
acted for the Company, and the Province of British Columbia was finally
settled out of court in September 1998. Nu-Dawn was able to pledge its
Salmo land and mill machinery to secure its share of the settlement of
$450,000. Nu-Dawn has no further obligation in this matter.
(b) A damage action has commenced in Ontario, Canada against the Company, R.B.
Carson, and Dydar Resources Ltd. Dydar and Carson are vehemently defending
themselves against this action. The Company's counsel advises that the
Company should not be a defendant and counsel has made a plea to the court
to effectively have Nu-Dawn removed from this action. The 1,000,000 shares
referred to in Item 4:Note 2, are the subject of the legal action.
During 1996 the action discussed in Item 3 (b) has been dismissed at no
cost to the Company, except for Nu-Dawn's legal fees.
ITEM 4. CONTROL OF REGISTRANT
The following table sets forth the person(s) known to the Company to own
beneficially more that ten percent (10%) of any class of the Company's voting
securities and the total amount of any class of the Company's voting securities
owned by the officers and directors as a group:
Title of Class Identity of Amount and Nature Percent
Person or Group of Beneficial Ownership( Note 1 ) of Class
- -------------------------------------------------------------------------------------------------------------
Common Curitiba S.A.
2742 First Ave. St 27 & 29
San Jose, Costa Rica 2,117,688 37.3%
Common Investors First S.A. 526,733 9.3%
c/o Arias, Aleman & Mora
Calle 50 Edif Tower 1ER Piso
Apartado 8799
Panama 5, Panama
- -------------------------------------------------------------------------------------------------------------
Common Officers and Directors Collectively 1,499,600 5.2%
- -------------------------------------------------------------------------------------------------------------
Note 1: Beneficial owners listed have sole voting and investment power with
respect to the shares shown unless otherwise indicated.
14
ITEM 5. NATUE OF TRADING MARKET
The common stock of the Company are listd on the Vancouver Stock Exchange of
Canada. There is no trading market called in the United States. The following
table sets forth the high and the low ____________________________________
of common stock on the Vancouver Stock Exchange for each quarter of the
Company's last two fiscal years. Brokers in the United States can make a
market on the NASD electronic bulletin board by submitting a Form 211 with the
NASD.
PRICE RANGE High Low
- --------------------------------------------------------------------------------
1998 1st Quarter 0.15 0.06
1998 2nd Quarter 0.19 0.11
1998 3rd Quarter 0.16 0.06
1998 4th Quarter 0.14 0.04
1999 1st Quarter 0.14 0.05
1999 2nd Quarter 0.10 0.05
1999 3rd Quarter 0.10 0.02
1999 4th Quarter 0.10 0.05
- --------------------------------------------------------------------------------
As of October 31, 1999 the Company had approximately 190 registered shareholders
on record of its no par value common stock. Based on representations received by
the Company from certain record holders, the Company believes that there are in
excess of 1,000 non-registered beneficial owners of its common stock bringing
the total number of shareholders in excess of 1,200.
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
Canada has no system of exchange controls. There are no restrictions on the
repatriation of capital or earnings of a Canadian public company to non-resident
investors. There are no laws of Canada or exchange restrictions affecting the
remittance of dividends, profits, interest, royalties and other payments to
non-resident holders of the Company's securities, except as discussed in Item 7
below.
There are no limitations under the laws of Canada or in the charter of the
Company on the right of foreigners to hold or vote securities of the Company,
except that the Investment Canada Act may require review and approval by the
agency operated thereunder of acquisition of "control" of the Company's
securities by a "non-Canadian". Control for such purpose is classed as one-third
or more of the issued voting securities. "Non-Canadian" generally means a person
not ordinarily resident in Canada.
15
ITEM 7. TAXATION
A brief description of certain provision of the tax treaty between Canada and
the United States is included below, together with a brief outline of certain
taxes, including withholding provisions, to which United States security holders
are subject under existing laws and regulations of Canada and the United States.
The consequences, if any, of state, provincial and local taxes are not
considered.
The information below necessarily is general and security holder should seek the
advice of their own tax advisors, tax counsel or accountants with respect to the
applicability or effect of the matters discussed to their own individual
circumstances and also with respect to any state and local taxes.
Under the tax convention between Canada and the United States, with limited
exceptions, security holders who are residents of the United States (other than
United States corporations holding 10% or more of the voting securities of the
Company) are subject to a 15% withholding tax on the gross amount of any
dividends paid by the Company. the non-resident tax withheld is nonrefundable.
The tax withheld will not reduce the amount of dividends reportable for United
States income tax purposes, but security holders will have the election to
either (a) deduct the tax withheld from adjusted gross income, if they itemized
deductions, or (b) offset the tax withheld as a credit against United States
income tax liability, subject to the applicable limitations on the use of the
foregoing tax credit.
United States corporate security holders will not be able to avail themselves of
the 80% dividends received deduction to any extent unless the foreign
corporation is subject to United States income tax, has for an uninterrupted
period of 36 months or such shorter period of its existence been engaged in a
trade or business in the United States, and 50% or more of its gross income over
the 36 month period is effectively connected with its United States business.
(These conditions have not been satisfied in the past and likely will not be in
the future).
United States corporations owning 10% or more of the voting securities of the
Company are subject to a 10% withholding tax on the gross amount of any
dividends paid by the Company. For United States income tax purposes, such
corporations are deemed to have paid the Canadian or other non-United States
income taxes paid by the Company attributable to that dividend under a formula
that takes into account the dividend and both the Company's undistributed
earnings and the Canadian or other non-United States taxes paid by the Company
with respect to such earnings.
ITEM 8. SELECTED FINANCIAL DATA
The following selected financial information concerning the Company is presented
in Canadian currency in accordance with U.S. generally accepted accounting
principles as reconciled from the Company's financial statements which are
presented in accordance with Canadian generally accepted accounting principles.
This information should be read in conjunction with the financial statements
appearing elsewhere herein.
16
The rate of exchange between U.S. dollars (U.S.$) and Canadian dollars (Cdn$)
for each of the Company's last five fiscal years was as follows:
1999 1998 1997 1996 1995
---------------------------------------------------------------
Rate at October 31,1999 0.66 0.62 0.66 0.769 0.739
Average Rate for the Calendar Year 0.64 0.63 0.71 0.762 0.740
---------------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31, 1999:
1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS $ $ $
- ------------------------------------
Revenue 7,233 84,138 3,201
Costs and Expenses (167,065) (189,466) (327,487)
Write Down of Resource Property (86,264) 0 (654,179)
Write Down of Capital Assets & Deferred Costs (881,279) (10,000) (860,439)
Net (-Loss) (1,127,375) (115,328) (1,838,904)
Net (Loss) Per Share (0.04) (0.00) (0.07)
CONSOLIDATED BALANCE SHEETS
- ---------------------------
Total Assets 943,812 2,293,676 2,227,249
Resource Properties 424,127 482,898 431,803
Total Liabilities 830,274 389,864 257,634
Accumulated Deficit (6,201,335) (4,261,062) (4,145,734)
Working Capital (-Deficit) (1,127,375) (115,328) (1,838,904)
Shareholder's Equity (Note 1) 113,538 1,903,812 1,969,915
Cash Dividends per Share 0 0 0
- ------------------------------------------------------------------------------------------------------------------
Note 1: During the year ended October 31,1996, the Company issued 329,338
common shares for debt settlement of $71,069 of which 196,000 of those
shares were issued to an individual related to the President of the
Company for debt settlement of $29,400.
17
ITEM 9. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AN
RESULTS OF OPERATIONS
All of the Company's capital resources from inception have come from the sale of
stock to investors. Available cash has been expended by the Company to explore
its non-producing mineral properties in British Columbia and Ontario. Operating
without full-time employees for most of the last six years and depending on the
part-time services of its officers and directors, the Company has been able to
direct most of its cash resources directly to property acquisition, exploration
and to upgrade the H.B. Mill facility. Resource properties reflect the
acquisition cost and direct exploration and development expenditures on the
Company's non-producing properties. During 1995/96 the Company expended $32,214
on the mill in maintenance and upgrading the facility.
Results of Operations
- ---------------------
The Company has never received revenue from operations and has only minimal
amounts of interest and related income since inception. As acquisition,
exploration and development expenses are capitalized, annual losses reflect
primarily general and administrative expenses. Total expenses have increased
most years. The increases in 1990 and 1989 reflect an increase relating to
activities at the H.B. Mill. From acquisition of the H.B. Mill until September
1989, Nor-Quest Resources Ltd., from which the mill was acquired, advanced most
expenses on behalf of the Company subject to the Company's agreement to repay
the expenses. In September 1989, as part of an agreement between Nor-Quest and
Dydar, Nor-Quest agreed to limit the amount of liability of the Company to
$50,000 and that amounts owed would be paid only out of future operating profits
of the H.B. Mill. The acquisition cost of the H.B. Mill, $2,160,000, was paid in
Company stock. The cost was capitalized and resulted in the large increase in
total assets from 1988 to 1989. Expenditures on the mill during 1995 and 1996
have been capitalized and increased the assets. October 31, 1997 Costs
capitalized to the H.B. Mill totalled $15,759 (1996 - $14,013) for the year.
Costs capitalized include property taxes and general maintenance costs, net of
equipment sales. During the year ended October 31, 1997 the Company recorded a
write down of $860,439 to adjust the carrying value of this asset to
management's best estimate of the net recoverable amount.
The Company expects to be carrying out exploration and development work on
properties held under agreement. The result of this work could bring in revenues
from Company managed mining operations. Operating losses approximating losses
for previous years are expected if no operations of the H.B. Mill are
undertaken.
Liquidity and Capital Resources
- -------------------------------
The Company's capital, and therefore its liquidity, has always depended upon
amounts raised from investors from the sale of stock, either privately or
publicly. The Company took over the position, " little cash available" in 1989
and Nor-Quest paid a large portion of the Company's expenses. During 1992 Dydar
purchased 1,066,436 shares of common stock for $160,000 and an investor
subscribed for 333,333,($50,000) units (private placement one share plus one two
year purchase warrant exercisable at $0.15 in first year and $0.20 in second
year) which amount will provide some liquidity for 1992. During 1993 Dydar
exercised part of its option at $0.20 to provide the Company $156,894. During
18
1994 the Company issued 1,333,333 shares @ $0.15 per share pursuant to a private
placement of 1,000,000 units @ $0.15 per unit. 333,333 shares were issued
pursuant to the exercise of warrants @ $0.15 per share. 666,667 warrants remain
outstanding and may be exercised @ at rate of $0.15 per share up until April 19,
1995 or @ $0.20 per share up until April 19, 1996. The Company issued 266,667
units as an exploration payment on the Guanacaste property in Costa Rica and the
balance for cash. A further 150,000 common shares were issued as a finder's fee
in connection with this transaction. As at October 31, 1996, 1,055,334 of the
share purchase warrants remain unexercised. During the year ended October 31,
1997, operating capital for the Company was raised by a private placement of
1,000,000 shares at $0.15 per share; issuance of 325,000 flow-through shares at
$0.20; exercise of warrants of 303,512 shares at $0.15 per share for cash
proceeds; and the issuance of 1,054,610 at $0.20 per share on exercise of
warrants for debt settlement of $210,922.
The Company will concentrate its efforts on arrangements with others in the
mining business under which cash expenditures would be paid in large part by the
other entity. The Company presently lacks the cash required (approximately
$700,000) to place its H.B. Mill into operation. The Company does intend to
raise outside capital for that purpose, although no decisions on the sources or
means of raising such capital have been made. The Company intends to pursue in
1999 / 2000 its option to sell equipment and land that it owns.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The present term of office of each director will expire at the next Annual
Meeting of Shareholders. The executive officers of the Company are elected
annually at the first meeting of the Company's Board of Directors held after
each Annual Meeting of Shareholders. Each executive officer shall hold office
until his successor duly is elected and qualified or until his resignation or
until he shall be removed in the manner provided by the Company's Bylaws. The
name, position with the Company, the age of each director and executive officer,
and the period during which each has served are as follows:
Name and Position in the Company Age Director or Officer Since
- --------------------------------------------------------------------------------
Raynerd B. Carson 66 Director since November
President and Director 1989President since 1990
James Wadsworth 61 Director since August 1992
Vice-President and Director
Dr. Stewart Jackson 59 Appointed Director -
Vice-President Explorations and Director June 24, 1997
Geoffrey A. Vantreight 78 Director since June 1994
Director
Gary Van Norman 61 Director since February
Director 1996
19
The following is a brief account of the business experience during the past five
years of each director and executive officer:
Director / Officer Principal Occupation During the Last Five Years
- ------------------ -----------------------------------------------
Raynerd B. Carson Began his career working in the Uranium mines in the
Northwest Territories. From 1958 to 1966 he worked as a
prospector in Northern Quebec and Ontario where he
found one of the largest asbestos deposits the world.
In 1966 he organized Abitibi Asbestos Mining Co. Ltd.
He worked in all facets of the mining industry up until
the present time.
Dr. Stewart Jackson Experienced professional with 37 years in the mineral
industry. Involved in exploration and development of
both base and precious metal deposits in a wide range
of environments for both large and small companies.
Responsible for the discovery and development of
several major mineral discoveries.
James Wadsworth Mill Superintendent in the Company's employ since 1990.
He has over thirty years of experience in the mineral
extraction business and during this time he has worked
in many capacities from foreman to mill superintendent
for a number of mining companies in British Columbia.
Geoff Vantreight A business man and farmer, Mr. Vantreight developed
Vantreight & Sons Ltd over a period of 50 years.
Vantreight & Sons Ltd is one of the largest growers and
suppliers of cut flowers in North America. He has many
years experience in land development in British
Columbia.
Gary Van Norman Businessman/Land Developer, has over 30 years expertise
with land development, project management, and
marketing industry, both in Canada and the USA. Mr. Van
Norman was instrumental in the development of two of
Whistler, BC's largest residential and recreational
developments. He is currently actively involved in
senior capacities with a similar project in BC.
One of the officers or directors of the Company are directors of any entities
the securities of which are registered under the Securities Exchange Act of 1934
or the Securities Exchange Act of 1933.
Dr. Stewart Jack Monument Resources Inc., Director, V.P. Exploration
Little Squaw Gold Mining Company, Director, V.P. Exploration
20
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS
During the fiscal year ended October 31, 1999, there was no compensation to
directors and officers of the Company for services because of Canadian allowance
standards.
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
The following is a summary of the employee and director stock options
outstanding as of October 31, 1999 and a summary of all such Options exercised
in 1998 and 1999.
Stock options granted as at October 31, 1999 were as follows:
- ----------------------------------------------------------------------------------------------------
Directors Number of shares Price Expiration Date
- ----------------------------------------------------------------------------------------------------
Stewart Jackson 1,000,000 $0.15 August 20, 2002
- ----------------------------------------------------------------------------------------------------
James Wadsworth 100,000 $0.15 August 20, 2002
- ----------------------------------------------------------------------------------------------------
Gary Van Norman 100,000 $0.15 August 20, 2002
- ----------------------------------------------------------------------------------------------------
Employees and/or Consultants
- ----------------------------------------------------------------------------------------------------
Blair Carson 100,000 $0.15 July 15, 2001
- ----------------------------------------------------------------------------------------------------
Ferne Nowlan 100,000 $0.15 September 27, 2002
- ----------------------------------------------------------------------------------------------------
Total outstanding director and employee stock options..................1,400,000
Under applicable regulations of the British Columbia Securities Commission, the
Company is not authorized to issue options to directors, employees or affiliates
constituting more than 10% of the outstanding common stock. There are no other
plans.
The Company pays other incidental compensation to executive officers from time
to time, consisting primarily of reimbursement for business related activities
on behalf of the Company. However, the aggregate of all such other compensation
did not exceed 10% of cash compensation reported for the fiscal year ended
October 31, 1999.
No cash compensation is currently being paid to members of the Board of
Directors for their services as directors. The Company paid $5,960 to one
director for consulting and related services rendered to the Company during the
year ended 1998. No cash compensation was paid to directors during the year
ended 1999.
21
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
In September 1989 subject to the approval of the Vancouver Stock Exchange,
Raynerd B. Carson and Dydar Resources Ltd. (Dydar), a corporation owned by
Raynerd B. Carson and members of his family, agreed to settle certain litigation
with Nor-Quest Resources Ltd. (Nor-Quest), then the majority shareholder of the
Company. Included in the terms of such settlement was the agreement by Dydar to
acquire the 7,200,000 shares of common stock of the Company owned by Nor-Quest.
Upon the approval of the transaction by the Vancouver Stock Exchange, Dydar
acquired the shares (and subsequently transferred beneficial ownership of
1,000,000 of such shares to an unaffiliated third party). Subsequently, two
members of the Board of Directors of the Company resigned and were replaced by
Raynerd B. Carson and two other nominees of Dydar.
In November 1989, upon approval by the Vancouver Stock Exchange, Dydar
subscribed to purchase, by way of private placement, 2,000,000 Units of the
Company's securities, consisting of 2,000,000 shares of common stock and a stock
purchase warrant to acquire an additional 2,000,000 shares for a purchase price
of $300,000. Dydar subscribed for the private placement of which Raynerd B.
Carson is the President, a director and substantial stockholder. Dydar exercised
its warrant October 30, 1990 bringing its holdings to 10,200,000 shares. During
the year ended October 31, 1991, the Company issued 476,388 shares, to Dydar (a
company controlled by a director and officer), for consideration of $160,781
pursuant to a private placement. The consideration consisted of cash of $30,000
and the assumption of accounts payable of $130,781 by the investor. In addition,
the investor received warrants to purchase an additional 476,388 shares at
$0.3375 per share until May 22, 1992 and at $0.39 per share from May 23, 1992 to
May 22, 1993. As at October 31, 1991, no warrants have been exercised. The
476,388 shares issued to Dydar brings its holdings to 10,676,388 shares. 425,901
shares were sold during the fiscal period via private sale or market sales.
During 1992 Dydar purchased 1,066,667 shares of common stock for $160,000.
During 1992 Dydar sold during the fiscal period via private sale or market sales
1,138,667 shares to bring its total to 10,178,487 shares. During 1993 fiscal
period Dydar exercised part of its option for a total of 784,470 shares and
during 1993 sold 784,958 to hold 10,177,999 shares. During 1994 Dydar sold
1,400,000 shares and purchased 666,666 from treasury through the take-down of
units and warrants at $0.15 per share and Dydar held 9,444,665 shares. During
the year 1995, Dydar purchased 56,500 shares $0.14 average per share bringing
the total to 9,501,165. During 1996, Curitiba S.A. purchased from Dydar
Resources Ltd. 7,813,665 shares of Nu-Dawn Resources Inc. for investment
purposes. As of October 31, 1996 Dydar held 2,115,495 shares of Nu-Dawn
Resources Inc.
As of October 31, 1999, 500,000 shares of Nu-Dawn Resources Inc. were held by
Dydar Resources Inc. in trust for Curitiba S.A.
22
PART II
ITEM 14. DESCRIPTION OF SECURITIES
(a) Capital Stock
-------------
The Company's authorized capital stock consists of 50,000,000 shares of common
stock, no par value. The following is a summary and is qualified in its entirety
by reference to the Company's Articles and Special Resolution and Altered
Memorandum, copies of which are exhibits to the Company's Registration
Statement.
(b) Common Stock
------------
The outstanding shares of common stock are fully paid and non-assessable. As of
the date of this Statement, 28,410,770 shares of common stock were issued and
outstanding.
Holders of shares of common stock are entitled to participate equally as to
dividends, voting powers and participation in assets. No shares have been issued
subject to call or assessment. There are no pre-emptive rights, conversion
rights, provisions for redemption or purchase for either cancellation or
surrender or provisions for sinking or purchase funds. Provisions as to the
modifications, amendments or variations of such rights or such provisions are
contained in the Company Act of the Province of British Columbia. -
PART III
ITEM 15. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES
None.
23
PART IV
ITEM 17. FINANCIAL STATEMENTS
Report to Shareholders............................................... F1
Balance Sheets as at October, 1999................................... F2
Statements of Loss and Deficit ...................................... F3
for the period from November 01, 1998 to October 31, 1999
Statement of Changes in Financial Position........................... F4
for the period from November 01, 1998 to October 31, 1999
Schedule of Changes in Resource Properties .......................... F5
Notes to Financial Statements........................................ F6 - F10
ITEM 18. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
--------------------
See Item 17 for a list of financial statements and schedules incorporated as:
pages F-1 to F-10.
(b) Exhibits
--------
None
24
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant certifies that it meets all of the requirements for filing
a Forms 20-F and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
WORLD VENTURES INC.
/s/ Raynerd B. Carson April 24, 2000
- -------------------------------- ------------------------
Raynerd B. Carson Date
WORLD VENTURES INC.
Financial Statements
October 31, 1999 and 1998
INDEX Page
----- ----
Auditors' Report to the Shareholders F-1
Financial Statements
Balance Sheets F-2
Statements of Loss and Deficit F-3
Statements of Cash Flows F-4
Notes to Financial Statements F-5-F-13
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the balance sheets of World Ventures Inc. as at October 31, 1999
and 1998 and the statements of loss and deficit and cash flows for the years
then ended. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at October 31, 1999 and 1998
and the results of its operations and its cash flows for the years then ended in
accordance with generally accepted accounting principles.
The financial statements for the year ended October 31, 1997 were audited by
other auditors who expressed an opinion without reservation on those financial
statements in their report dated February 13, 1998.
"Smythe Ratcliffe"
Chartered Accountants
Vancouver, British Columbia
February 29, 2000
COMMENTS BY AUDITORS FOR U.S. READERS ON
CANADA-U.S. REPORTING CONFLICT
In the U.S., reporting standards for auditors require the addition of an
explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by significant uncertainties such as that referred to in
the attached balance sheets as at October 31, 1999 and 1998 and described in
notes 1 and 5 to the financial statements. Our report to the shareholders dated
February 29, 2000 is expressed in accordance with Canadian reporting standards
which do not permit a reference to such an uncertainty in the auditors' report
when the uncertainty is adequately disclosed in the financial statements.
"Smythe Ratcliffe"
Chartered Accountants
Vancouver, British Columbia
February 29, 2000
F-1
WORLD VENTURES INC.
Balance Sheets (note 1)
October 31
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
Assets (notes 3 and 9)
Current
Cash $ 7,589 $ 43,633
Accounts receivable 4,373 4,595
Due from related company (note 13(d)) 21,032 16,919
- --------------------------------------------------------------------------------
32,994 65,147
Fixed (notes 5, 7 and 9) 486,691 1,358,045
Resource Properties (notes 5 and 8) 424,127 482,258
- --------------------------------------------------------------------------------
$ 943,812 $ 1,905,450
================================================================================
Liabilities
Current
Accounts payable $ 294,841 $ 169,510
Subscriptions received 0 150,000
Loan payable to Premanco
Industries Ltd. (note 9) 480,563 445,027
Current portion of obligation
under capital lease (note 10) 1,204 0
- --------------------------------------------------------------------------------
776,608 764,537
Obligation Under Capital Lease (note 10) 3,666 0
Long-Term Debt (note 11) 50,000 50,000
- --------------------------------------------------------------------------------
830,274 814,537
- --------------------------------------------------------------------------------
Shareholders' Equity
Capital Stock (note 12) 6,314,873 6,164,873
Deficit (6,201,335) (5,073,960)
- --------------------------------------------------------------------------------
113,538 1,090,913
- --------------------------------------------------------------------------------
$ 943,812 $ 1,905,450
- --------------------------------------------------------------------------------
Approved by the Directors
"Raynerd B. Carson"
............................................................ Director
"Gary Van Norman"
............................................................ Director
F-2
WORLD VENTURES INC. F3
Statements of Loss and Deficit
Years Ended October 31
- -------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
(note 6)
Expenses
Interest and bank charges $ 57,467 $ 24,063 $ 7,068
Accounting and administration 17,655 22,613 42,254
Travel and promotion 17,517 19,629 11,869
Consulting and management fees 16,600 44,910 30,200
Office and sundry 14,553 13,665 21,692
Rent 12,000 12,000 16,160
Transfer agent, filing fees and printing 9,047 11,878 17,430
Telephone and fax 8,742 9,266 11,690
Professional fees 8,272 12,321 97,524
Vehicle and fuel 2,325 14,826 24,972
Exploration 1,000 65 32,601
Corporation capital tax 0 1,000 9,229
Depreciation 1,887 1,277 1,597
- -------------------------------------------------------------------------------------------------------------------
Loss Before Other Items 167,065 187,513 324,286
- -------------------------------------------------------------------------------------------------------------------
Other Items
Write-down of fixed assets 881,279 350,055 860,439
Gain on sale of fixed assets (7,233) 0 0
Write-down of (recovery from) resource properties 86,264 (59,342) 654,179
Loss on lawsuit (note 8) 0 450,000 0
- -------------------------------------------------------------------------------------------------------------------
960,310 740,713 1,514,618
- -------------------------------------------------------------------------------------------------------------------
Net Loss for Year 1,127,375 928,226 1,838,904
Deficit, Beginning of Year 5,073,960 4,145,734 2,306,830
- -------------------------------------------------------------------------------------------------------------------
Deficit, End of Year $ 6,201,335 $ 5,073,960 $ 4,145,734
===================================================================================================================
Net Loss Per Share $ (0.04) $ (0.03) $ (0.07)
===================================================================================================================
Weighted Average Number of Shares Outstanding 28,375,154 27,661,811 26,097,719
===================================================================================================================
F-3
WORLD VENTURES INC. F4
Statements of Cash Flows
Years Ended October 31
- -------------------------------------------------------------------------------------------------------------
1999 1998 1997
- -------------------------------------------------------------------------------------------------------------
(note 6)
Cash Flows from Operating Activities
Net loss $(1,127,375) $ (928,226) $(1,838,904)
Items not involving cash
Accrued interest 35,535 0 0
Depreciation 1,887 1,277 1,597
Write-down of fixed assets 881,278 350,055 860,439
Gain on sale of fixed assets (7,233) 0 0
Write-down of resource properties 86,264 0 654,179
Loss on lawsuit 0 445,027 0
- -------------------------------------------------------------------------------------------------------------
(129,644) (131,867) (322,689)
- -------------------------------------------------------------------------------------------------------------
Changes in Non-Cash Working Capital
Accounts receivable 222 85 79
Accounts payable 135,331 (33,172) 43,877
Subscriptions received (150,000) 150,000 0
Deferred revenue 0 (4,952) 0
- -------------------------------------------------------------------------------------------------------------
(14,447) 111,961 43,956
- -------------------------------------------------------------------------------------------------------------
(144,091) (19,906) (278,733)
- -------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Additions to fixed assets and deferred costs (8,907) (20,625) (25,759)
Proceeds on sale of fixed assets 0 75,491 0
Expenditures relating to resource properties,
net of recoveries (28,133) (50,455) (165,967)
- -------------------------------------------------------------------------------------------------------------
(37,040) 4,411 (191,726)
- -------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Advances to related parties (4,113) (6,271) (7,362)
Repayment of lease obligation (800) 0 0
Capital stock issued 150,000 49,524 471,448
- -------------------------------------------------------------------------------------------------------------
145,087 43,253 464,086
- -------------------------------------------------------------------------------------------------------------
Inflow (Outflow) of Cash (36,044) 27,758 (6,373)
Cash, Beginning of Year 43,633 15,875 22,248
- -------------------------------------------------------------------------------------------------------------
Cash, End of Year $ 7,589 $ 43,633 $ 15,875
=============================================================================================================
Supplemental Disclosure of Cash Flow Information
Interest Paid During Year $ 0 $ 13,281 $ 10,269
=============================================================================================================
F-4
WORLD VENTURES INC.
Notes to Financial Statements
Years Ended October 31
- --------------------------------------------------------------------------------
1. GOING CONCERN
These financial statements have been prepared by management in accordance
with generally accepted accounting principles on a going concern basis
which assumes that the Company will realize its assets and discharge its
liabilities in the normal course of business.
During 1999, the Company incurred a net loss of $1,127,375 (1998 -
$928,226; 1997 - $1,838,904) (accumulated losses from inception of the
Company total $6,201,335) and at October 31, 1999 had a working capital
deficiency (an excess of current liabilities over current assets) of
$743,614. The Company's ability to continue as a going concern is in
substantial doubt and is dependent upon its ability to secure additional
financing on a timely basis, receive co-operation from its creditors and
achieve sufficient cash flows to cover obligations and expenses. The
outcome of these matters cannot be predicted at this time. These financial
statements do not give effect to any adjustments to the amounts and
classification of assets and liabilities which might be necessary should
the Company be unable to continue its operations as a going concern.
The Company's ability to meet its obligations and maintain its operations
is contingent upon successful completion of additional financing
arrangements and the continuing support of its creditors.
2. BASIS OF PRESENTATION
These financial statements are prepared in accordance with Canadian
generally accepted accounting principles ("GAAP") and all figures are in
Canadian dollars. Canadian GAAP differs in certain respects from accounting
principles generally accepted in the United States. The significant
differences and the approximate related effect on the financial statements
are set forth in Note 17.
3. CHARGE ON ASSETS
A charge has been placed over all the assets of the Company as security for
unpaid corporate capital tax amounting to $56,000.
4. SIGNIFICANT ACCOUNTING POLICIES
(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 disclosures 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 estimates and would impact future results of operations and cash
flows.
(b) Fixed assets
H.B. Mill and land are recorded at original cost less writedowns to a
net amount of $480,563 (1998 - $1,352,934) based on management's best
estimate of the net recoverable amount, which reflects the value of the
first charge against the property (note 9). Direct net expenditures
incurred on the H.B. Mill are deferred in the accounts. No depreciation
has been charged on H.B. Mill as the asset is not in production.
Other fixed assets are recorded at cost.
Depreciation of office equipment, machinery and automobiles is
calculated at 20% per annum using the declining-balance method.
F-5
WORLD VENTURES INC.
Notes to Financial Statements
Years Ended October 31
- --------------------------------------------------------------------------------
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(c) Resource properties
Acquisition costs of resource properties together with direct
exploration and development expenditures thereon, including interest,
are deferred in the accounts. When production is attained these costs
will be amortized. When deferred expenditures on individual producing
properties exceed the estimated net realizable value, the properties
are written down to the estimated net realizable value. Costs relating
to properties abandoned are written-off when the decision to abandon is
made.
(d) Financial instruments
The Company's financial instruments include cash, accounts receivable,
due from related company, accounts payable, loan payable to Premanco
Industries Ltd., and long-term debt. It is management's opinion that
the Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments. The fair value of these
financial statements approximate their carrying values.
(e) Net loss per share
Net loss per share computations are based on the weighted average
number of common shares outstanding during the year.
5. REALIZATION OF ASSETS
The investment in and expenditures on the H.B. Mill and land and resource
properties comprise substantially all of the Company's assets. Recovery of
the carrying value of the investment in these assets is dependent upon the
existence of economically recoverable reserves, establishing legal
ownership of the resource properties, the ability of the Company to obtain
necessary financing to complete the exploration and development, the
attainment of future profitable production or the disposition of these
assets for proceeds in excess of their carrying values.
6. COMPARATIVE FIGURES
The comparative figures for the year ended October 31, 1997 were reported
on by another firm of chartered accountants. Certain of the comparative
figures are reclassified to conform with the current year's presentation.
7. FIXED ASSETS
- -------------------------------------------------------------------------------------------------------------
1999 1998
- -------------------------------------------------------------------------------------------------------------
Accumulated
Cost Depreciation Net Net
- -------------------------------------------------------------------------------------------------------------
H.B. Mill and land (note 9) $ 480,563 $ 0 $ 480,563 $1,352,934
Office equipment 0 0 0 2,767
Machinery 5,670 1,417 4,253 0
Automobiles 17,219 15,344 1,875 2,344
- -------------------------------------------------------------------------------------------------------------
$ 503,452 $ 16,761 $ 486,691 $1,358,04
- ------------------------------------------------------------------------------------------------------------
Included in machinery is a leased asset with a net book value of $4,253 (1998 -
$0).
F-6
WORLD VENTURES INC.
Notes to Financial Statements
Years Ended October 31
- -----------------------------------------------------------------------------------------------------------------------
8. RESOURCE PROPERTIES
- -----------------------------------------------------------------------------------------------------------------------
Prince
Guanacaste Pan-Oro Albert Asbestos Totals
- -----------------------------------------------------------------------------------------------------------------------
Balance, October, 1997 (note 6) $ 328,475 $ 37,517 $ 55,788 $ 10,023 $ 431,803
- -----------------------------------------------------------------------------------------------------------------------
Option payments 0 0 2,000 10,000 12,000
Travel 10,795 282 0 291 11,368
Legal and management 7,748 0 0 0 7,748
Permits 7,748 0 0 0 7,748
Rent 5,165 0 0 0 5,165
Vehicle expense 5,165 0 0 0 5,165
Miscellaneous 822 238 0 0 1,060
Geological consultants 39 0 0 162 201
Expenditures for year 37,482 520 2,000 10,453 50,455
- -----------------------------------------------------------------------------------------------------------------------
Balance, October 31, 1998 365,957 38,037 57,788 20,476 482,258
- -----------------------------------------------------------------------------------------------------------------------
Rent 3,058 0 0 0 3,058
Geological consultants 16 0 0 0 16
Legal and management 5,522 0 0 0 5,522
Travel 2,406 1,033 0 0 3,439
Option payments 0 0 0 8,000 8,000
Vehicle expense 3,511 0 0 0 3,511
Permits 4,587 0 0 0 4,587
- -----------------------------------------------------------------------------------------------------------------------
Expenditures for year 19,100 1,033 0 8,000 28,133
Write-down on resource properties 0 0 (57,788) (28,476) (86,264)
- -----------------------------------------------------------------------------------------------------------------------
19,100 1,033 (57,788) (20,476) (58,131)
- -----------------------------------------------------------------------------------------------------------------------
Balance, October 31, 1999 $ 385,057 $ 39,070 $ 0 $ 0 $ 424,127
- -----------------------------------------------------------------------------------------------------------------------
F-7
WORLD VENTURES INC.
- --------------------------------------------------------------------------------
8. RESOURCE PROPERTIES
(a) Guanacaste, Costa Rica
Pursuant to an option agreement dated October 23, 1995 and amended
February 27, 1996 between the Company and Minera Oceanica S.A., the
Company acquired an option for the mineral and surface rights in
Concession 6622 situated in the Juntas de Abangares, District of
Guanacaste, Costa Rica, subject to a 10% royalty in favour of Minera
Oceanica S.A. on operating profits derived from the property, or
US$100,000 per year, whichever is greater. This royalty has been
waived indefinitely until the commencement of production.
Finders fees of $22,500 have been included in the cost of resource
properties.
(b) Pan-Oro, Panama
During 1995, the Company entered into a Letter of Agreement with
Grande Portage Resources Ltd. to enter into a joint venture agreement
to develop mineral concessions in Panama. The agreement has not yet
been concluded and regulatory approval remains outstanding. The
Company has a 90% ownership interest in Pan-Oro S.A., a Panamanian
corporation. Resource property costs include $21,000 charged by
Pan-Oro S.A.
(c) Prince Albert, Saskatchewan
The Company has entered into an option agreement to acquire a 100%
interest, subject to a 5% net profit royalty, in certain mineral
claims in the Prince Albert Mining District, Saskatchewan. To maintain
its interest in the agreement, the Company is required to pay $2,000
annually for ten years to July 2003. During 1999, the Company decided
to abandon its interest and wrote off its investment in this property.
(d) Asbestos claims, Quebec
The Company entered into an option agreement dated October 8, 1997
with Vant Resources Inc. for the Asbestos "A" claims in Maizerets,
Quebec and the Exploration Claims in Soissons, Quebec. In order to
exercise the option, the Company must pay the optionor an aggregate of
$1,070,000.
The Company has not made a $50,000 payment due September 15, 1998, nor
a $1,000,000 payment due September 15, 1999. During 1999, the Company
decided to abandon its interest and wrote off its investment in this
property.
F-8
WORLD VENTURES INC.
Notes to Financial Statements
Years Ended October 31
- --------------------------------------------------------------------------------
9. LOAN PAYABLE TO PREMANCO INDUSTRIES LTD. AND LOSS ON LAWSUIT
Premanco Industries Ltd. ("Premanco"), an unrelated party, brought an
action against the Company and others in the Supreme Court of British
Columbia claiming that the Company and others logged or caused to be
logged, without the permission of Premanco, approximately 20,000 cubic
meters or more of timber from certain properties. The claim has been
defended by the Company and they have stated that if any logging was done,
any liability for these actions must rest with the Company's solicitor who
acted on the Company's behalf in connection with an application to the
Nelson land title office to release Premanco's timber rights.
The lawsuit was settled during 1998. The Company is liable for unjust
enrichment of $450,000. Premanco has accepted as settlement a promissory
note for $450,000, secured by a mortgage on the H.B. Mill property (note 7)
and a security agreement over all equipment and chattels, with interest at
prime plus 2%, due September 30, 1999. The loan is now in default as the
balance has not been paid pursuant to the terms of the settlement. Interest
has been accrued on the loan up to September 30, 1999.
Premanco shall have no right to enforce any judgement obtained against the
Company under this promissory note against any assets or properties of the
Company other than those specified in the settlement agreement made between
Premanco and the Company. It is the Company's intention to abandon those
specified assets to Premanco as settlement for the loan.
10. OBLIGATION UNDER CAPITAL LEASE
The following is a schedule of future minimum lease payments under capital
lease
- -------------------------------------------------------------------------------
2000 $2,306
2001 2,306
2002 2,295
- -------------------------------------------------------------------------------
Total minimum lease payments 6,907
Less: Amount representing interest (2,037)
- -------------------------------------------------------------------------------
Present value of net minimum lease payments 4,870
Less: Current portion (1,204)
- -------------------------------------------------------------------------------
$3,666
================================================================================
11. LONG-TERM DEBT
This amount is unsecured, non-interest bearing and will be repaid at a rate
of 10% of the net profits of the H.B. Mill if and when it goes into
production (note 9). Page 9
F-9
WORLD VENTURES INC.
Notes to Financial Statements
Years Ended October 31
- --------------------------------------------------------------------------------
12. CAPITAL STOCK
(a) Authorized
50,000,000 Common shares without par value
(b) Issued
- --------------------------------------------------------------------------------
Number
of Shares Amount
- --------------------------------------------------------------------------------
Balance, October 31, 1997 (note 6) 27,493,104 $ 6,115,349
Issued for cash on exercise of warrants 330,166 49,524
Escrow shares cancelled and returned to treasury (412,500) 0
- --------------------------------------------------------------------------------
Balance, October 31, 1998 27,410,770 6,164,873
Issued for cash pursuant to private placement 1,000,000 150,000
- --------------------------------------------------------------------------------
Balance, October 31, 1999 28,410,770 $ 6,314,873
================================================================================
(c) Stock options outstanding to directors and employees as at October 31,
1999 and 1998 were as follows
- --------------------------------------------------------------------------------
Number of Shares
Expiry Date Exercise Price 1999 1998
- --------------------------------------------------------------------------------
July 15, 2001 $ 0.15 100,000 100,000
August 20, 2002 $ 0.15 1,200,000 1,200,000
October 7, 2002 $ 0.15 100,000 100,000
- --------------------------------------------------------------------------------
(d) Share purchase warrants outstanding as at October 31, 1999 and 1998
were as follows
- --------------------------------------------------------------------------------
Number of Shares
Expiry Date Exercise Price 1999 1998
- --------------------------------------------------------------------------------
(i) May 29, 1998 (expired) $ 0.50 0 384,505
(ii) April 28, 1999 (expired) $ 0.18 0 366,333
(iii) April 28, 2000 $ 0.15 1,000,000 0
April 28, 2001 $ 0.18
- --------------------------------------------------------------------------------
F-10
WORLD VENTURES INC.
Years Ended October 31
- --------------------------------------------------------------------------------
13. RELATED PARTY TRANSACTIONS
(a) Services provided by directors or parties related to directors
- --------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
Consulting and management $22,800 $39,910 $0
Rent 12,000 12,000 16,160
Accounting and administration 0 0 3,320
- --------------------------------------------------------------------------------
(b) Accounts receivable includes $3,165 due from a director (1998 -
$2,988).
(c) Accounts payable includes $33,000 (1998 - $31,000) due to an
individual related to the President of the Company.
(d) The amount receivable from a related Company is non-interest bearing,
due on demand and is receivable from Dydar Resources Inc., a Company
controlled by the President of the Company.
14. INCOME TAX LOSSES
The Company has operating losses which may be carried forward to apply
against future years income for Canadian income tax purposes. The benefits
of these losses have not been recorded in the financial statements. These
losses expire as follows:
- --------------------------------------------------------------------------------
Available to Amount
- --------------------------------------------------------------------------------
2000 $ 25,000
2001 24,000
2002 18,000
2003 14,000
2004 323,000
2005 636,000
2006 165,000
- --------------------------------------------------------------------------------
$1,205,000
================================================================================
15. SUBSEQUENT EVENTS
(a) On January 14, 2000, the Company entered into an option agreement with
Curitiba S.A., a Costa Rican corporation, to acquire 100% of the
issued and outstanding shares of Nor-Quest Arizona Inc., an Arizona
Corporation. Nor-Quest Arizona Inc. has title to one hundred and
seventy acres within the Prescott National Forest in the State of
Arizona.
The option is exercisable until January 14, 2001 for consideration of
four million common shares. As part of the agreement, the Company has
agreed to pay any property tax balance outstanding at the time the
option is exercised, not to exceed four thousand U.S. dollars.
(b) On March 1, 2000, an account payable valued at year-end at
approximately $95,000, was settled by issuance of 380,000 common
shares at a price of $0.25 per share.
F-11
WORLD VENTURES INC.
- --------------------------------------------------------------------------------
16. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. Although the change in date has
occurred, it is not possible to conclude that all aspects of the Year 2000
Issue that may affect the Company, including those related to customers,
suppliers, or other third parties, have been fully resolved.
17. DIFFERENCE BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CANADIAN GAAP AND U.S. GAAP)
(a) Recent accounting pronouncements
(i) Earnings per share
In February 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No.
128, (SFAS 128) "Earnings per Share". The statement is effective
for financial statements for periods ending after December 15,
1997, and changes the method in which earnings per share will be
determined. The Company's adoption of SFAS 128 for U.S. GAAP
purposes results in no difference in net loss per share
disclosure.
(ii) Income tax
Under Canadian GAAP, the future tax benefit related to
non-capital loss carry forwards has not been recorded in the
accounts. Under U.S. GAAP, companies must follow the requirements
of Statement of Financial Accounting Standards No. 109 (SFAS 109)
which requires the use of the asset/liability method of
measurement of tax liabilities, wherein deferred tax assets are
recognized as well as deferred tax liabilities.
The Company has significant non-capital losses available to be
carried forward (note 14). SFAS 109 would require the recognition
of a long-term tax asset for the future benefit expected from the
application of these carry forwards to future profitable years.
If it is expected that the entire amount of non-capital loss
carry forwards will not be utilized, then a valuation allowance
is applied to the asset to reasonably state the asset at its
expected value. Under SFAS 109, disclosure of the amount of the
valuation allowance is required. As at October 31, 1999, the
valuation allowance is equal to 100% of the deferred tax asset.
Changes in the value of the deferred asset are recognized each
year as income tax expense.
F-12
WORLD VENTURES INC.
Notes to Financial Statements
Years Ended October 31
- --------------------------------------------------------------------------------
17. DIFFERENCE BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CANADIAN GAAP AND U.S. GAAP) (Continued)
(b) Stock options
The Company has granted directors and certain employees stock
options. Stock option activity is summarized as follows
- --------------------------------------------------------------------------------
Number of Exercise
Shares Price
- --------------------------------------------------------------------------------
Balance, October 31, 1995 150,000 $ 0.17
1996 - Granted 50,000 $ 0.35
1996 - Granted 200,000 $ 0.33
1996 - Granted 50,000 $ 0.38
1996 - Exercised (50,000) $ 0.15
- --------------------------------------------------------------------------------
Balance, October 31, 1996 400,000 $ 0.30
1997 - Cancelled (50,000) $ 0.35
1997 - Cancelled (200,000) $ 0.33
1997 - Cancelled (50,000) $ 0.38
1997 - Expired (100,000) $ 0.18
1997 - Granted 1,400,000 $ 0.15
- --------------------------------------------------------------------------------
Balance, October 31, 1997,1998, and 1999 1,400,000 $ 0.15
- --------------------------------------------------------------------------------
In 1995 the FASB issued SFAS No. 123 "Accounting for Stock-Based
Compensation", which contains a fair value-based method for valuing
stock-based compensation that entities may use. This measures compensation
cost at the grant date based on the fair value for the award. Compensation
is then recognized over the service period, which is usually the vesting
period. For U.S. GAAP purposes, management accounts for options under APB
Opinion No. 25. As option exercise prices approximate market price on the
dates of grants, no compensation expense has been recognized. If the
alternative accounting-related provisions of SFAS No. 123 had been adopted,
the effect on 1999, 1998 and 1997 U.S. GAAP net loss per share would have
been immaterial.