UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(AMENDMENT NO. )
STANFORD MANAGEMENT LTD.
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(Name of small business issuer in its charter)
Delaware 1099 (Applied For)
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(State or jurisdiction (Primary Standard Industrial (I.R.S. Employee
of incorporation or Classification Code Number) Identification No.)
organization)
420 - 625 Howe Street
Vancouver, B. C. Canada, V6C 2T6 420 - 625 Howe Street
(Tel: 604-608-0223) Vancouver, B. C., Canada, V6C 2T6
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(Address and telephone number of (Address of principal place of business
principal executive offices) or intended principal place of business
The Company Corporation, 1013 Centre Road, Wilmington, DE 19805,
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(Tel: 302-636-5440)
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(Name, address and telephone number of agent of service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box [x]
CALCULATION OF REGISTRATION FEE
TITLE OF EACH
CLASS OF SECURITIES NUMBER OF PROPOSED PROPOSED
TO BE SHARES TO MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
REGISTERED BE REGISTERED PRICE PER SHARE OFFERING PRICE REGISTRATION FEE
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Common Stock. . . . 1,000,000 $ 0.20 $ 200,000 $ 100
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(1) Estimated solely for the purpose of computing the amount of registration
fee in accordance with Rule 457 (o).
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THIS
PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES AND IT IS NOT SOLICITING AN OFFER
TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFERING OR SALE IS NOT
PERMITTED.
Preliminary prospectus subject to completion dated of November 30, 2003.
THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. THE
READER SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK
FACTORS" BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE
The date of this prospectus is , 2003
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TABLE OF CONTENTS
PART I - INFORMATION REQUIRED IN PROSPECTUS Page
Item 3. .Summary Information and Risk Factors 3
Item 4. .Use of Proceeds 18
Item 5. .Determination of Offering Price 19
Item 6. .Dilution 19
Item 7. .Selling Security Holders 20
Item 8. .Plan of Distribution 20
Item 9. .Legal Proceedings 22
Item 10 Directors, Executive Officers, Promoters and
.. . . . . .Control Persons 22
Item 11 .Security Ownership of Certain Beneficial
Owners and Management 26
Item 12 .Description of Securities 27
Item 13 .Interest of Named Experts and Counsel 28
Item 14 Disclosure of Commission Positions of
. . . . . Indemnification for Securities Act
Liabilities 28
Item 15 .Organization Within Last Five Years 30
Item 16 .Description of Business 31
Item 17 Management's Discussion and Analysis or
Plan of Operation 38
Item 18 .Description of Property 48
Item 19 .Certain Relationship and Related Party
Transactions 48
Item 20 Market for Common Equity and Related
. . . . . Stockholders Matters 49
Item 21 .Executive Compensation 50
Item 22 .Financial Statements 50
Item 23 Changes In and Disagreement with
Accountants on Accounting and Financial
Disclosure 69
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24 .Indemnification of Directors and Officers 70
Item 25 .Other Expenses of Issuance and Distribution 70
Item 26 .Recent Sales of Unregistered Securities 70
Item 27 .Exhibits 72
Item 28 .Undertakings 72
Signatures. . . . . . 74
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PART I - INFORMATION REQUIRED IN THE PROSPECTUS
PROSPECTUS SUMMARY AND RISK FACTORS
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STANFORD MANAGEMENT LTD.
("Stanford")
Stanford is offering (the "Offering") a minimum of 250,000 shares of its common
stock at a price of $0.20 per share for a total consideration of $50,000 and a
maximum of 1,000,000 shares of its common stock at a price of $0.20 per share
for a total consideration of $200,000.
Before this Offering, there has been no public market for Stanford's common
stock.
All dollar amounts referenced herein are in United States dollars.
Stanford is making this Offering of up to 1,000,000 shares of common stock on a
self-underwritten, minimum-maximum basis. Stanford will begin to sell the
shares once Stanford has responded to all comments made by the United States
Securities and Exchange Commission (the "SEC") regarding this Form SB-2 (the
"Effective Date"). The Offering period will be twelve (12) months from the
Effective Date. If during that time period, Stanford is unable to sell the
minimum number of shares under this Offering, Stanford will update this Form
SB-2 and continue the Offering for an additional 12 months from the date of the
updating of this Form SB-2. At such time that a minimum of $50,000 in shares
are sold, the proceeds will be distributed to Stanford for immediate use. If
the minimum $50,000 in shares is not sold at the end of the additional twelve
(12) months, Stanford will return all proceeds to the investors without
interest. During this continuous Offering period, the Stanford will sell
subscriptions for shares at $0.20 per share.
Stanford may terminate this Offering at any time.
If Stanford raises less than $50,000 in the Offering it may not be able to
continue its proposed operations as detailed elsewhere in this Form SB-2. If
this is the case, Stanford may consider conducting another public Offering or
borrow the funds necessary to continue its operation.
If Stanford raises $200,000 it will be able to undertake its proposed
exploration program as more fully described under Item 4 - Use of Proceeds on
page 18.
Stanford will accept all subscriptions under this Offering and deposit the funds
received into a separate bank account from the general bank account. This
account will be an "escrow account" specifically opened to hold the proceeds of
this Offering.
The proceeds from the sale of the shares will not be paid to Stanford until the
$50,000 minimum in subscriptions is received. Stanford may keep the proceeds in
its escrow bank account but will not use the proceeds until the minimum
requirements are met. Any interest earned will not be returned to the
investors. The minimum purchase is $200.
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It is Stanford's intention to seek a market maker to apply for trading on the
OTC Bulletin Board, following the effectiveness of this Form SB-2 but there is
no assurance its application will be approved.
Within 60 days of filing this Form SB-2, Stanford will become a "reporting
company" under the Securities Exchange Act of 1934, as amended (the "1934 Act").
Stanford intends to register the common stock under the 1934 Act as of the
effective date of the Form SB-2. Stanford is a "small business issuer" as
defined under Regulation S-B adopted under the Securities Act of 1933, as
amended, and will file reports with the SEC pursuant to the 1934 Act on forms
applicable to small business issuers.
Stanford intends to furnish annual reports to stockholders containing audited
financial statements, quarterly reports and such other periodic reports as it
may determine to be appropriate.
Stanford, a Delaware corporation, has ownership interest in the mineral rights
on the mining claim called the "SF" claim. During the next several years,
Stanford will explore the SF claim. Stanford's objectives are more fully
described elsewhere in the Form SB-2. Stanford is considered an "exploration
stage company" since there is no assurance that a commercially viable mineral
deposit, a reserve, exists on the SF claim until appropriate exploration work is
done and a comprehensive study based upon such work concluded legal and economic
feasibility.
Stanford was incorporated under the laws of the State of Delaware on September
28, 1998. Its executive office is located at 420 - 625 Howe Street, Vancouver,
British Columbia, Canada, V6C 2T6, (Tel: 604-608-0223), which is the business
address of Stanford's President. Currently, the Stanford has two directors,
Glen Macdonald and Vera McCullough but is planning to appoint a third director
at its First Annual General Meeting of Shareholders to be held on September 19,
2003 - refer to page 45.
Stanford did not have sufficient capital in 2000 and 2001 to pay the annual
costs to the State of Delaware and therefore on May 16, 2002 Stanford filed a
Certificate of Renewal and the Revival of the Certificate of Incorporation to
ensure it was in good standing in the State of Delaware (Exhibit 3.2).
Stanford originally considered the development of a software protocol program
for the restaurant industry, whereby a wireless menu system could be
implemented. The system would be designed to be compliant with Palm Pilots
which are currently readily available and widely used in the market for personal
hand-held devices. Such a software protocol program would eliminate the need
to develop a proprietary software program, which in turn would require design
and manufacture of specific special purpose hardware components. The concept of
this software program was dispensed with after several years due to a general
lack of interest on the part of restaurants. Stanford decided to obtain a
mineral property in British Columbia for development as more fully described
elsewhere in this Form SB-2.
Stanford acquired on January 21, 2001 a 100% interest in the mineral rights to
the "SF" claim, which will be explored for gold, platinum or other commercial
minerals such as zeolite and bentonite. The mineral rights to the SF claim will
expire on January 12, 2004 unless a minimum of $2,340 is spent on exploration
work or cash is paid in lieu of exploration work to the Ministry of Mines and
Energy for the Province of British Columbia.
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Stanford will begin an exploration program on its claim contingent on the
success of this Offering. The exploration program will cost Stanford $21,550
(refer to page 37) and if the exploration program is successful, Stanford will
undertake a further exploration program on the SF claim.
RISK FACTORS
Any potential investor should carefully consider the risks described below and
other information in this Form SB-2. If any of the following risks occur,
Stanford's business, results of operation and financial condition could
seriously be harmed. Stanford's common stock does not have any value until it
obtains a quotation on a recognized stock exchange. Stanford's share value
could decline below the offering price in this Prospectus even if it obtains a
quotation on a stock exchange due to the following risk factors.
RISKS ASSOCIATED WITH THIS OFFERING
1. STANFORD'S SHARE PRICE WILL BE SUBJECT TO THE PENNY STOCK RULE WHICH WILL
RESULT IN ANY BROKER-DEALER INVOLVED IN STANFORD'S SHARES HAVING INCREASED
ADMINISTRATIVE RESPONSIBILITIES WHICH WILL HAVE AN AFFECT ON STANFORD BEING
ABLE TO RAISE FUNDS AND AN INVESTOR PURCHASING OR SELLING HIS SHARES.
Stanford's common stock is considered to be a "penny stock" because it
meets one or more of the definitions in SEC Rule 3a51-1:
(i) it has a price of less than five dollars per share;
(ii) it is not traded on a recognized national exchange;
(iii) it is not quoted on the National Association of Security Dealers,
Inc. ("NASD") automated quotation system (NASDAQ), or even if so, has
a price less than five dollars per share; or
(iv) is issued by a company with net tangible assets of less than
$2,000,000, if in business more than three years continuously, or
$5,000,000, if in business less than a continuous three years, or with
average revenues of less than $6,000,000 for the past three years.
A broker-dealer will have to undertake certain administrative functions
required when dealing in a penny stock transaction. Disclosure forms detailing
the level of risk in acquiring Stanford's shares will have to be sent to an
interested investor, current bid and offer quotations will have to be provided
with an indication as to what compensation the broker-dealer and the salesperson
will be receiving from this transaction and a monthly statement showing the
closing month price of the shares being held by the investor. In addition, the
broker-dealer will have to receive from the investor a written agreement
consenting to the transaction. This additional administrative work might make
the broker-dealer reluctant to participate in the purchase and sale of
Stanford's shares.
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From Stanford's point of view, being subject to the Penny Stock Rule could make
it extremely difficult for it to attract new investors for future capital
requirements since many financial institutions are restricted under their
by-laws from investing in shares under a certain dollar amount. Ordinary
investors might not be willing to to subscribe to shares in the capital stock of
Stanford due to the uncertainty as to whether the share price will ever be able
to be high enough that the Penny Stock Rule is no longer a concern.
Any new investor purchasing shares under this Offering might consider
whether they will be able to sell their shares at the price of this Offering or
higher since if no broker-dealer becomes involved with Stanford and Stanford is
unable to raise future investment capital the price per share may deteriorate to
a point that an investor's entire investment could be lost.
2. THIS OFFERING IS BEING SELF-UNDERWRITTEN BY STANFORD WITH NO INDEPENDENT
DUE DILIGENCE UNDERTAKEN BY EITHER A QUALIFIED INDEPENDENT THIRD PARTY OR A
BROKER-DEALER TO DETERMINE IF THE ASSETS, FUTURE INCOME POTENTIAL AND
CAPABILITIES OF MANAGEMENT ARE PRESENT TO SUPPORT THE OFFERING PRICE UNDER
THIS PROSPECTUS.
Stanford has decided to self-underwrite this Offering and thereby has
eliminated any opportunity for a qualified independent third party such as a
broker-dealer's legal counsel or the broker-dealer itself to examine the records
of Stanford, discuss with management its future strategy and assess the assets
and future income potential before making a decision whether the price under
this Offering is reasonable. Without an independent review, Stanford might
find it difficult to attract investors for this Offering since investors might
be unsure whether the price per share is reasonable or not and if Stanford is
unable to raise capital it might hinder the exploration activities of the SF
claim. New investors are relying on Stanford's management to set a reasonable
share price under this Offering and without independent verification by a
broker-dealer or an independent third party there is no assurance that the price
set herein is reasonable.
3. THE PRESENT SHAREHOLDERS HAVE PAID $0.001 PER SHARE WHEREAS THE NEW
INVESTORS WILL BE PAYING $0.20 PER SHARE.
Originally all shares were sold for $0.001 per share; a price considerably
below the Offering price under this Form SB-2. With this type of discrepancy, it
might be difficult for Stanford to attract new investors who might not wish to
contribute the majority of the money to Stanford for a considerably lesser
number of shares (refer to Item 6 - Dilution). With this fact in mind, new
investors should consider that if, and when, Stanford's shares are quoted on an
exchange the existing shareholders could commence selling their shares at prices
substantial below the Offering price herein and still make a profit.
4. THERE IS NO PUBLIC MARKET FOR THE SHARES OF STANFORD AND THE SHARES MAY
NEVER BE QUOTED ON ANY EXCHANGE.
Prior to this Offering, there has been no public market for Stanford's shares
and there may never be an active trading market for Stanford's shares. A new
investor may not, once he or she has subscribed for the shares under this
Offering, be able to dispose of his shares when he wishes to and if he is able
to sell them privately he might not realize his original cost.
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5. A MARKET MAKER MIGHT NOT BE ABLE TO BE MAINTAINED TO OVERSEE TRANSACTIONS
IN THE TRADING OF STANFORD'S COMMON SHARES AND IF NO MARKET MAKER IS
MAINTAINED THE TRADING SHARES MIGHT BE IMPAIRED.
If Stanford is unable to maintain at least one NASD broker/dealer as a market
maker, the liquidity of the common shock could be impaired, not only in the
number of shares of common stock which could be bought or sold, but also through
possible delays in the timing of transactions, and lower prices than might
otherwise prevail. Furthermore, the lack of market makers could result in
Stanford's shareholders being unable to buy or sell shares of its common stock
on any secondary market. Stanford may not be able to maintain such market
makers and hence new investors might not be able to sell their shares.
6. PREEMPTIVE RIGHT AND CUMULATIVE VOTING RESTRICTIONS MIGHT AFFECT NEW
INVESTORS IN HAVING CONTROL IN THE DEVELOPMENT OF STANFORD.
In accordance with Stanford's Articles of Incorporation and By-laws, there are
no preemptive rights in connection with Stanford's common stock. This being the
case, Stanford's existing and new shareholders might have a dilution in their
percentage ownership of Stanford's stock in the event additional shares are
issued under this Form SB-2 or in subsequent financings. Moreover, cumulative
voting in electing directors is not provided for. Accordingly, the holder(s)
of a majority of Stanford's outstanding shares, present in person or by proxy,
will be able to elect all of its directors and thereby control Stanford. New
investors might never have the opportunity to have any voice in the activities
of Stanford and might eventually be deleted in ownership interest to a point
that they will never be able to effectively offer any opposition to the
activities of the control group.
RISKS ASSOCIATED WITH STANFORD
1. STANFORD HAS A LIMITED OPERATING HISTORY IN WHICH NEW INVESTORS CAN VALUE
THE PERFORMANCE OF STANFORD, ITS MANAGEMENT AND ITS FUTURE EXPECTATIONS.
Stanford commenced its operations in 1998 but only became involved in the
mineral exploration industry in January 2001. With no past operating
history, any meaningful evaluation of Stanford is difficult. Having been
mainly inactive since its inception, Stanford is basically a start-up
company and therefore there is no history available which will allow a new
investor to assess its business plan, its management and its future
operations. Without these three factors, a new investor cannot make a
meaningful decision as to whether or not the purchase of shares in Stanford
is a wise investment.
2. STANFORD HAS A LACK OF WORKING CAPITAL WHICH, UNLESS OBTAINED ON ACCEPTABLE
TERMS IN THE FUTURE, WILL INHIBIT ITS FUTURE GROWTH STRATEGY.
The only present source of working capital available to Stanford is through
the sale of common shares, incurring debt or other borrowing. At present,
Stanford does not have adequate funds to conduct operations and financing
may not be available when needed. Even if the financing is available, it
may be on terms Stanford deems unacceptable or are materially adverse to
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shareholders' interests with respect to dilution of book value, dividend
preferences, liquidation preferences, or other terms. Stanford's inability
to obtain financing would have a materially adverse effect on its ability
to implement its growth strategy, and as a result, could require it to
diminish or suspend its exploration program on the SF claim and possibly
cease its operations. An investor may be investing in a company that does
not have adequate funds to conduct its operations and, if so, an investor
might lose all of his investment.
3. STANFORD HAS INCURRED LOSSES SINCE ITS INCEPTION AND THEREFORE HAS AN
ACCUMULATED DEFICIT WHICH MIGHT AFFECT OBTAINING FUTURE CAPITAL.
Since inception, Stanford has incurred losses and has an accumulative
deficit of $86,416 as at May 31, 2003. Stanford's ultimate success in fully
implementing its mineral exploration program on the SF claim is dependent
on its ability to raise additional capital. Having never made a profit or
having had a cash flow will effect Stanford in being able to raise funds
from the public since there is no certainty Stanford will ever be able to
make a profit. New investors should carefully consider whether they wish to
invest in a company who has incurred continual losses since its inception
and may never be able to reverse this trend.
4. THE AUDITORS HAVE EXAMINED THE FINANCIAL STATEMENTS BASED ON STANFORD BEING
A GOING CONCERN BUT HAVE SUBSTANTIAL DOUBT THAT IT WILL BE ABLE TO CONTINUE
AS A GOING CONCERN.
Stanford's auditors, Amisano Hanson, in the audited financial statements
attached to this Form SB-2 for the nine months ended May 31, 2003, have
stated in their audit report the following:
"The accompanying financial statements referred to above have been prepared
assuming that the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company is in the pre-exploration
stage, and has no established source of revenue and is dependent on its
ability to raise capital from shareholders or other sources to sustain
operations. These factors, along with other matters as set forth in Note 1,
raise substantial doubt that the Company will be able to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty."
The auditors are concerned that Stanford, without any established source of
revenue and being dependent on its ability to raise capital from its
shareholders or other sources might not be able to sustain operations. If
this is the case, Stanford, without adequate future funding, might not be
able to continue as a going concern. A new investor should give careful
consideration to this fact since the capital they contribute to Stanford
under this Offering may be the only capital which Stanford is able to
raise. This might result in the total loss of the investor's investment.
5. ABSENCE OF CASH DIVIDENDS MAY AFFECT A SHAREHOLDER'S RETURN ON INVESTMENT.
The Board of Directors does not anticipate paying cash dividends on the
outstanding shares, both now and in the future, and intends to retain any
future earnings to finance its exploration activities on the SF claim or to
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seek additional claims. Payment of dividends, if any, will depend, among
other factors, on earnings, capital requirements and the general operating
and financial condition of Stanford, and will be subject to legal
limitations on the payment of dividends out of paid-in capital. An investor
should be aware that a dividend, either in cash or shares, may never be
paid by Stanford and, therefore, the shares of Stanford should not be
purchased by an investor as an income producing security.
6. THERE IS AN ABSENCE OF RECENT EXPLORATION ACTIVITIES ON THE SF CLAIM OTHER
THAN SUFFICIENT EXPLORATION WORK TO MAINTAIN THE SF CLAIM IN GOOD STANDING
WHICH HAS NOT RESULTED IN AN ORE RESERVE BEING DISCOVERED OR ANY REVENUE
BEING DERIVED FROM THE SF CLAIM.
There has been no significant exploration activities on the SF claim in
recent years, except for limited exploration during 2002 by Stanford to
maintain the claim in good standing until 2004. Without a detailed work
program being undertaken on the SF claim, no ore reserve has been
identified, and may never be identified, and no other exploration company
or entity has made an offer to purchase, lease or engage in any other
transaction, such as a joint venture, with respect to the SF claim.
Although Stanford incurred only nominal expenses to preserve its ownership
and maintain the SF claim in good standing with the Ministry of Energy and
Mines for the Province of British Columbia, it has received no revenue or
other income from the SF claim. Investors should be aware the SF claim
might never prove to have a commercially viable ore reserve and therefore
will eventually lapse leaving Stanford with no mineral claim.
7. NO MATTER HOW MUCH MONEY IS SPENT ON EXPLORING THE SF CLAIM THERE MAY NEVER
BE AN ORE RESERVE FOUND.
No matter how much Stanford spends on exploration activities it may never
discover a commercially viable quantity of ore on the SF claim. Most
exploration activities do not result in the discovery of commercially
mineable deposits of ore. In fact, it is extremely remote that a mineral
property will become a producing mine. An investor should not consider, by
purchasing shares in Stanford under this Offering, that they are acquiring
an interest in a future mining company since it is extremely unlikely
Stanford will ever become a mining company.
8. THE UNCERTAINTY OF THE TOPOGRAPHY OF THE SF CLAIM WILL HAVE AN EFFECT ON
THE FUTURE COST OF ANY EXPLORATION ACTIVITIES.
The SF claim is located on a fairly rugged hill with ridge topography
ranging from 2,400 to 4,000 feet in elevation with a steep canyon at the
north part of the claim. The SF claim is covered by a thin layer of glacial
till. This ruggedness in the overlying area could affect during exploration
the location of drilling sites and trenches, as well as the construction of
any facilities. Platforms might have to be constructed to allow a drilling
rig to function properly due to the unevenness of the ground. This will
mean additional costs depending upon the drilling site selected by the
geologist in-charge with the exploration activities. This factor, at the
present time, is uncertain, and Stanford does not know if this factor will
have a material adverse effect on the ability of Stanford to conduct its
exploration activities. If the cost of exploration is prohibitive, Stanford
might have to cease its operations on the SF claim. New investors should
consider whether a more suitable investment for them would be a recognized
mining company with mineral claims already in operation and no longer in
the exploration stage.
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9. THERE MIGHT NOT BE CAPITAL AVAILABLE WHEN NEEDED FOR THE EXPLORATION OF THE
SF CLAIM DUE TO STOCK MARKET PRICES OR MINERAL PRICES AND, THEREFORE, THE
RIGHTS TO THE MINERALS ON THE SF CLAIM MIGHT LAPSE DUE TO NO WORK BEING
PERFORMED THEREON.
Traditionally, in the exploration industry, capital is available for
exploration when metal prices are higher and unavailable when lower or
investors' interest are directed to other industries; for example, oil and
gas or hi-tech. In situations such as these, Stanford will find it more
difficult to raise capital to carry on its exploration of the SF claim. If
either the market price of shares of quoted exploration companies or
mineral prices fall in the future, the capital received from new investors
under this Form SB-2 might be the only capital Stanford is able to raise
and therefore, if this is the case, the rights to the minerals on the SF
claim might lapse due to no work being performed on the claim. New
investors should give consideration to the vulnerability of a company which
is subject to declines in the stock market and mineral prices to such an
extent that it could lose the mineral rights to the SF claim.
10. TITLE TO THE SF CLAIM IS NOT HELD IN THE NAME OF STANFORD.
The title of the SF claim is held in trust by the staker of SF claim. Even
though the staker has signed a Bill of Sale Absolute, Stanford has not
recorded it with the Ministry of Mines and Energy for the Province of
British Columbia. Basically, Stanford, to record the Bill of Sale Absolute,
must have a Free Miner License. Due to its present lack of funds it has not
purchased this license. Therefore, the staker's creditors could lien the
rights to the minerals on the SF claim and offer these rights for sale to
another party. If this happens, Stanford will be without a mineral claim.
Until the rights to the minerals on the SF claim have been formerly
transferred to Stanford, a new investor might be wise to refrain from
investing in any shares being offered under this Form SB-2.
11. THE SF CLAIM HAS NEVER BEEN SURVEYED AND THE EXACT BOUNDARIES OF THE CLAIM
ARE UNCERTAIN.
The exact boundaries of the SF claim are uncertain since the claim has
never been professionally surveyed. At this time, Stanford does not intend
to undertake the cost of having the SF claim surveyed and therefore it may
never know the exact boundaries of the claim. The problem in the future, if
and when Stanford identifies an ore reserve, is that disputes could develop
with other companies or parties as to the exact boundaries of the SF claim.
If the ore reserve is partly or totally on another party's claim, Stanford
would lose either the majority or part ownership in the ore reserve. Unless
a mutually acceptable agreement can be reached, Stanford would have to
enter into legal action which might take years and a great deal of money to
settle. If Stanford was unsuccessful in its legal battle, it would lose the
ore reserve and might be left with nothing to put into production. A new
investor might consider this risk factor prior to making a decision in
investing in Stanford's shares since the loss of part or all of any future
ore reserve, if any, due to not undertaking an initial survey on the SF
claim could be very costly to Stanford and have a detrimental effect on its
share price.
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12. WEATHER WILL AFFECT THE EXPLORATION ACTIVITIES ON THE SF CLAIM.
The weather in the Princeton area of British Columbia is varied in that
during the months of November to early May the SF claim will be covered in
snow whereas during the summer months the weather is hot and dry. Stanford
might not be able to work during the winter months due to the snow
conditions not allowing any meaningful exploration activities on the SF
claim. Whereas, during the hot dry summer months, the Ministry of Forestry
might close the Princeton area for fear of forest fires and therefore
curtail any exploration activities on the SF claim. The weather might have
a limiting effect on the exploration activities on the SF claim resulting
in a longer period before Stanford will know if there is a viable
commercial ore reserve on the SF claim. New investors might want to
consider investing in a company where its mineral claims can be explored
year-round since Stanford's share price might experience wide fluctuations;
dropping during periods of inactivity on the SF claim and increasing in
value during exploration.
13. EVEN THOUGH STANFORD IS YEARS AWAY FROM MINING THE SF CLAIM, THERE ARE RISK
FACTORS INVOLVED WHICH WILL HAVE A DIRECT EFFECT ON WHETHER THE SF CLAIM
WILL EVER BECOME A PRODUCING MINE.
The SF claim might never be brought into production as a mine but in the
event that it did there are certain risk factors relating to mining which
Stanford will have to be aware of and a potential investor know before
making an investment decision.
a. The rugged terrain of the SF claim could result in additional costs of
protecting miners from personal injuries.
For example, the unevenness of the ground could lead to leg injuries
to workers, old and new mine workings might collapse due to the heavy
weight of humans or machinery, adits might cave-in when workers are
extracting the ore from them, facilities will have to be built with
heavy wood or concrete to ensure they do not collapse during the harsh
winter months and the construction of an adequate road to ensure
supplies and men can be transported safely at all times during the
year. Stanford does not know at this time what the actual cost will be
to protect workers while developing profitable operations.
b. The marketability of any minerals acquired or discovered may be
affected by factors beyond the control of the Stanford.
For example, zeolite and bentonite prices may fluctuate on the world
markets and depending upon the price per ton at any given time will
have a bearing whether Stanford can raise funds for extracting
minerals from its mining operations. In addition, other marketing
factors beyond the control of Stanford will be the supply of labor,
access to mill facilities and the varying costs of transporting either
broken rock or concentrate to refineries. Stanford had no way of
controlling these costs and any unusual increase might limit the
chances of extracting minerals profitably from the SF claim.
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c. Competition within the mining industry is very competitive as to
obtaining capital, seeking mineral properties of merit and obtaining
qualified staff to assist in the production of the SF claim.
Stanford faces competition from other junior mining companies in
connection with the acquisition of properties capable of producing
gold, silver, copper and other commercial minerals. However, Stanford
is unable to ascertain the exact number of competitor companies but
will have to compete against such companies to acquire the funds to
further explore the SF claim. There is no way Stanford can compete
against the larger mining companies such as Falconbridge Ltd., Cominco
Ltd., International Nickel Ltd., Placer Dome or Lac Minerals Ltd.
since they are well funded and have reputations of being successful in
the mining industry. Many of the other junior exploration companies
have historical records of developing mineral claims and raising
substantial funds from the investing public. Stanford has not yet
proven itself and therefore cannot compete against these other junior
companies. According, such competition, although customary in the
mining industry, might result in delays, increased costs or other
types of negative consequences affecting Stanford and the SF claim.
New investors might be wise to consider an investment in other junior
mining companies who have a proven track record before making an
investment in Stanford.
d. Environmental requirements prior to mining are difficult and expensive
since there are many different Acts in the Province of British
Columbia which Stanford will have to adhere to.
Prior to commencing mining operations on the SF claim, if it ever
does, Stanford must meet certain environmental requirements.
Compliance with these requirements may prove to be difficult and
expensive. Such environmental concerns will include such things as:
(i) surface impact - open pit or adit construction on the SF claim
might not be allowed under the Mineral Tenure Act without a
detailed study being performed on the environmental impact on
wild life in the area;
(ii) water usage - diversion of streams located on the SF claim might
not be allowed without special permission under the Mineral
Tenure Act since it will disrupt small fish living in the
streams;
(iii) cutting of timber - the Forest Act has provisions which require
Stanford to make a proposal to the Ministry of Forestry prior to
any timber being cut on the SF claim and might restrict certain
trees from being removed unless a specific reason is given; such
as safety; and
(iv) building of facilities - the actual type of facilities required
in a mining operation must be approved by the Ministry of Mines
and Energy under the Mining Act and when operations are ceased
they must be removed from the SF claim.
All these environmental concerns must be taken into consideration when
making a production decision on the SF claim. If Stanford does not adhere
to the requirements under various Acts passed by the Provincial Government
-12-
of British Columbia, it may be fined or its production program delayed
until it adheres to the various rules and regulations. Even though these
risk factors are in the future and may never be of concern if Stanford does
not go into production, a new investor should give careful consideration to
whether such risk factors will be onerous enough to prohibit the future
production of the SF claim.
14. STANFORD HAS NOT ENTERED INTO ANY CONTRACTUAL AGREEMENT WITH ITS OFFICERS
AND DIRECTORS AND THEREFORE ANY TERMINATION ON THEIR PART WILL HAVE A
DAMAGING EFFECT OF THE OPERATION OF STANFORD.
Stanford's directors and officers have varied business interests and are
working for other companies. No member of management has signed a written
employment agreement with Stanford and Stanford cannot afford to pay
management. In the event, Glen Macdonald or Vera McCullough decides to
resign as directors and officers of Stanford, Stanford may be unable to
attract other qualified officers and directors. An investor might have an
ownership interest in a company which is, in the future, controlled by a
Board of Directors who do not have the qualification to manage an
exploration company.
15. THE PRESIDENT OF STANFORD HAS CLIENTS AND IS A DIRECTOR OF OTHER COMPANIES
IN THE MINING INDUSTRY WHICH MIGHT RESULT IN A CONFLICT OF INTEREST.
Glen Macdonald is a professional geologist who has numerous clients in the
exploration and mining industry. These clients use a considerable amount of
his time thereby reducing the time he can spend on the activities of
Stanford. For example, Mr. Macdonald is a director of Starfield Resources
Inc., a mineral exploration company quoted on the TSX Exchange in Toronto,
Canada. A conflict of interest could develop in the event Mr. Macdonald
knows of a mineral property for either sale or staking since he would have
to offer it to both Starfield and Stanford. Stanford assumes Mr. Macdonald
will act fairly to both companies in such matters but has no way of knowing
if this will be the case. An investor might want to consider whether he is
interested in purchasing shares in a mining company where the President is
involved with other companies in the same business, unable to devote full
time to the activities of Stanford and may or may not give Stanford the
opportunity to acquire properties of merit of which he has knowledge.
16. WITH ONLY THE PRESIDENT OF STANFORD HAVING ANY MINING EXPERIENCE, STANFORD
MIGHT HAVE TO RELY UPON OUTSIDE CONSULTANTS TO ASSIST IN THE EXPLORATION OF
THE SF CLAIM.
Glen Macdonald is a professional geologist but Ms. McCullough has no
experience at all in the exploration and mining industry. Stanford will be
dependent on Mr. Macdonald's expertise in any exploration program on the SF
claim. Stanford will, if Glen Macdonald is unavailable, have to rely on
outside consultants who are familiar with the exploration industry in
British Columbia. Using consultants will be an expensive way to explore the
SF claims since consultant fees generally are higher than the use of full
or part time employees. Capital raised will quickly be spent if Stanford
has to rely on consultants and not the services of Mr. Macdonald. New
investors might wish to consider if this is the way that they want their
money, from the purchase of shares, to be spent.
-13-
17. THE DIRECTORS AND OFFICERS DO NOT WORK FULL TIME ON THE AFFAIRS OF STANFORD
AND THIS LIMITED TIME MIGHT HAVE AN ADVERSE EFFECT ON THE OPERATION OF
STANFORD.
Both Glen Macdonald and Vera McCullough work approximately 5 hours each
during a given month due to having other job commitments. Therefore,
Stanford does not have full time staff working for it which might have the
effect of lengthening the time it will take for the exploration on the SF
claim to either realize there is an ore reserve associated with it or that
Stanford should consider other properties. An investor might wish to
consider, before purchasing shares in Stanford, as to whether they wish to
be involved in a company where the directors and officers work only a few
hours a month on its activities.
18. STANFORD DOES NOT HAVE THE FUNDS AVAILABLE TO PURCHASE AN INSURANCE POLICY
TO PROTECT ITSELF IN THE EVENT ITS DIRECTORS AND OFFICERS DEPARTS.
Stanford does not have an insurance policy for loss of its directors and
officers since it is not prepared to currently pay the premiums for such a
policy. In the event Mr. Macdonald departs Stanford, there will be no
insurance proceeds to entice another geologist to become an officer and
director of Stanford and no other members of the present management team
have a geological background. This lack of insurance proceeds might result
in Stanford not being able to obtain an individual with the qualifications
it desires. With Stanford unwilling to pay the premiums of an insurance
policy due to its lack of capital, a new investor might wish to consider a
company where there is a larger management team, some of the members having
a professional geological designation, in the event that one departure will
not affect the future operations of the company.
19. STANFORD HAS ENTERED INTO INDEMNITY AGREEMENTS WITH ITS OFFICERS AND
DIRECTORS WHICH COULD RESULT IN SUBSTANTIAL EXPENDITURES AND MAYBE MONETARY
DAMAGES AS A RESULT OF THEIR ACTIONS.
Stanford's Articles of Incorporation provide that it may indemnify any
director, officer, agent or employee against certain liabilities. In
addition, on September 30, 2002, Stanford entered into an Indemnity
Agreement with both Glen Macdonald and Vera McCullough - refer to Exhibit
99.2. The foregoing indemnification could result in substantial
expenditures by Stanford and prevent any monetary recovery from them for
losses incurred by Stanford as a result of their actions. It is Stanford's
understanding that, in the opinion of the SEC, indemnification is against
public policy as expressed in the Security Act of 1933, as amended, and is,
therefore, unenforceable. Nevertheless, a new shareholder might not wish to
invest in a company who has indemnified its officers and directors for
their actions which could result in substantial legal costs and court
ordered penalties which might render Stanford insolvent.
-14-
GLOSSARY OF GEOLOGICAL AND TECHNICAL TERMS
BASE METAL - Any of the more common or chemically active metals
BENTONITE - A clay formed by the alternation of volcanic ash.
BRECCIA - A coarse-grained rock, composed of angular broken rock
fragments held together by a mineral
cement or in a fine-grained matrix.
COAL - A readily combustible rock containing more than 50% by weight
and more than 70% by volume of carbonaceous material,
including inherent moisture; formed from
compaction and induration of various altered plant
materials.
DEPOSIT - Anything laid down, includes mineral matter in any form that
Is precipitated by chemical or other agent, as the ores
In veins.
ESCARPMENT - A long, more or less continuous cliff or relatively steep slope
facing in one general direction, breaking the continuity
of the land by separating two level or gently sloping surfaces,
and produced by erosion or by faulting.
GEOCHEMICAL - Search for economic mineral deposits.
GLACIAL TILL - Dominantly unsorted and unstratified drift, generally
unconsolidated, deposited directly by and underneath a
glacier without subsequent reworking by meltwater,
and consisting of a mixture of clay, silt, sand gravel
and boulders ranging widely in size.
INTERSTITIAL - A mineral deposit in which the minerals fill the pores of the
host rock.
INTRUSION - A body of igneous rock which has formed itself into pre-
Existing rocks either along some definite structural
feature or by deformation and cross-cutting of the
invaded rocks.
JURASSIC - A specific geologic time period from 208.0 million years to
145.6 million years before present.
KIMBERLITE - A mineral which occurs in vertical pipes, dikes and sills and
is the principal original environment of diamonds but only a
small percentage of the known kimberlite occurrences are
diamondiferous.
LAPILLI - Pyroclastics that may be either essential, or accidental
in origin.
LAVA - Fluid rock such as that which issues from a volcano; also, such
rock solidified.
-15-
LIMB - That area of a fold between adjacent fold hinges. It generally
has a greater radius of curvature than the hinge region
and may be planar.
MUDSTONE - An indurated mud having the texture and composition of shale; a
massive, fine grained sedimentary rock in which the proportions
of clay and silt are approximate.
ORE - Any material containing valuable metallic constituents for the
sake of which it is mined or worked.
OUTCROP - The part of a rock formation that appears at the surface of
the ground.
PLATINUM - A malleable and ductible silvery-white metal, when pure. Used
in jewelery, wire, vessels for laboratory use, and in many
valuable instruments including thermocouple elements.
PLUTON - A body of medium-to coarse-grained igneous rock that formed
Beneath the surface by crystallization of a magma.
QUARTZ - A general term for a variety of cryptocrystalline varieties
Of SiO2.
RESERVE - That part of a mineral deposit which could be economically
and legally extracted or produced at the time of the
reserve determination. Reserves are customarily stated in
terms of "ore" when dealing with metalliferous minerals.
RIDGE - A long narrow elevation of the Earth's surface, generally
Sharp crested with steep sides, either independently or as
part of a larger mountain or hill.
SEDIMENTARY
ROCK - A rock resulting from the consolidation of loose sediment
that has accumulated in layers.
SHALE - A fine grained sedimentary rock formed by consolidation of
clay, silt or mud.
SHEAR ZONE - A tabular zone of rock that has been crushed and brecciated by
many parallel fractures due to shear strain.
SILICEOUS - Relating to silica.
STAKING - "Staking" of a claim is the method used by the Ministry of
Mines for the Province of British Columbia in verifying title
to the minerals on Crown property. The individual staking a
claim, known as the "staker" prepares a post on the unstaked
property and defines this post as the corner post or
"identification" post. A serial pre-numbered tag,
purchased from the Gold Commissioner's office (a department
of the Ministry of Mines of British Columbia), is affixed
to the post and the date and time of preparing the post is
-16-
recorded on it as well as the name of the claim. The
staker is required to define the perimeter of the claim with
a clearly marked line. Upon completion of marking the
perimeter the staker records the number of units being staked
upon the metal tag on the corner post. This information
is recorded on a "4 Post Mineral Claim" form and filed
with the Gold Commissioner's Office.
SYNCLINAL - An obsolete form of syncline.
TREND - A general term for the direction or bearing of the outcrop
of a geological feature of any dimension, such as a
vein.
TUFF - The general name for the unconsolidated material is ash,
which on consolidation is called a tuff.
ULTRABASIC - Said of an igneous rock having a silica content lower than
that of a basic rock.
VEIN - A mineral filling of a fault or other fracture in a host rock,
often associated with the replacement of the host rock.
VOLCANIC
ROCK - A generally finely crystalline or glassy igneous rock
resulting from volcanic action at or near the Earth's
surface, either ejected explosively or extruded as lava.
ZEOLITE - A generic term for class of hydrated silicates of aluminum
and either sodium or calcium or both.
-17-
FORWARD LOOKING STATEMENTS
This Form SB-2 contains certain forward-looking statements within the meaning of
Section 27A of the 1933 Act and Section 21E of the 1934 Act. Such
forward-looking statements include, but are not limited to, statements regarding
Stanford's future development plans regarding the exploration of the SF claim
and the planned use of proceeds. Actual results could differ from those
projected in any forward-looking statement. The forward-looking statements are
made as of the date of this Form SB-2 and Stanford assumes no obligation to
update such forward-looking statements, or to update the reasons why actual
results may differ from those projected in the forward-looking statements.
Numerous factors, including without limitation those factors mentioned in the
above Risk Section of this Form SB-2, could cause future results to differ
substantially from those contemplated in such forward-looking statements. A
number of the factors that may influence future results of operations are
outside Stanford's control.
ITEM 4. USE OF PROCEEDS
The primary purpose of this Offering is to provide additional capital required
to support Stanford's continued exploration of the SF mineral claim. While
Stanford cannot predict with certainty how the proceeds will be used in the
exploration process of the SF mineral claim, Stanford currently intends to use
them approximately as follows:
($50,000) ($200,000)
Minimum Maximum
Dollar Percentage Dollar Percentage
---------- ------------ ---------- -----------
Offering Expense
(Item 25) . . . . . . . . . . . $ 11,500 23.00 $ 12,200 6.10
Estimated exploration
program (page 37). . . . . 21,550 43.10 21,550 10.78
Estimated Phase 11 (i) . . . . . . . . . . . . . - - 50,000 25.00
Payment to creditors
other than related
parties. 10,000 20.00 15,000 7.50
Working capital (ii) . . . . . . . . . . . . . . 6,950 13.90 101,250 50.62
------------ ---------- ----------- ------
$ 50,000 100.00 $ 200,000 100.00
============ ========== =========== ======
(i) Depending upon the results of prospecting the SF claim and the soil sample
results obtained, as recommend by John Jenks on page 36, a secondary
exploration program might be warranted. Further prospecting and soil
sampling might be considered to identify an area of interest whereby a
drilling program will be contemplated. At this time, Stanford is unable to
accurately budget the cost of a further exploration program and therefore
has assumed a cost of approximately $50,000.
(ii) The net proceeds of the Offering remaining in working capital will be
invested in short-term, interest bearing-investments or accounts.
-18-
The foregoing represents Stanford's best estimate of its use of the proceeds
derived from this Offering based on its present plans, the state of its business
operations and current conditions in the mining industry which Stanford
operates. Stanford reserves the right to change the use of proceeds if
unanticipated regulatory or competitive conditions adversely affect Stanford.
The cost, timing and amount of funds Stanford needs cannot be precisely
determined at this time and will be based on numerous factors. The Board of
Directors has broad discretion in determining how the proceeds of this Offering
will be applied.
Other than indicated above, the proceeds from this Offering will not be used to
discharge debts to related parties. In addition, it is anticipated that the
proceeds will not be used to acquire assets or finance the acquisition of other
businesses.
As noted under Item 17 - Management's Discussion and Analysis or Plan of
Operations, if the minimum Offering is subscribed for there will not be adequate
funds available to meet the cash requirements over the next twelve months. If
this is the situation the directors will have to advance funds to Stanford to
maintain it in good standing for the twelve-month period. Glen Macdonald has
indicated he will provide sufficient capital to ensure Stanford does not lose
the rights to the SF claim and become a blank check company. No agreement or
written commitment has been entered into between Glen Macdonald and Stanford.
Upon the effective date of this Form SB-2 filed under the Securities Act by
Stanford, Stanford shall report the use of proceeds on its first periodic report
filed pursuant to sections 13(a) and 15(b) of the Exchange Act (15 U.S.C. 78m(a)
and 78o(d)) after effectiveness of its Form SB-2, and thereafter on each of its
subsequent periodic reports filed pursuant to sections 13(a) and 15(d) of the
Exchange Act through the latter of disclosure of the application of all the
Offering proceeds, or disclosure of the termination of the Offering.
ITEM 5. DETERMINATION OF OFFERING PRICE
Since Stanford's shares of common stock are not listed or quoted on any exchange
or quotation system, the offering price of the shares of its common stock was
arbitrarily determined. The facts considered in determining the Offering price
were Stanford's financial condition and prospects, its limited operating history
and the general condition of the securities market. The Offering price is not
an indication of and is not based upon the actual value of Stanford. The
Offering price bears no relationship to Stanford's book value, assets or
earnings or any other recognized criteria of value. The Offering price should
not be regarded as an indicator of the future market price of Stanford's
securities.
ITEM 6. DILUTION
As at May 31, 2003, Stanford had a negative net tangible book value of $21,116
or a negative $0.01 per share based on the existing outstanding shares of
2,358,500.
If the minimum number of shares is subscribed for under this Offering, the net
tangible book value will increase by $50,000 to a positive amount of $28,884 or
$0.01 per share based on 2,608,500 shares outstanding. The effect to the
existing shareholders would be an increase of nearly $0.01 for the shareholders
who purchased shares at $0.001 per
-19-
share and the remainder of the original shareholders at no change whereas the
new shareholders acquiring shares under this Offering would suffer an immediate
loss per share of $0.19. In addition, after the minimum Offering the new
shareholders would only have 9.6 percent of the issued and outstanding shares
whereas the original shareholders would have 90.4 percent.
If the maximum number of shares is subscribed for under this Offering, the net
tangible book value will increase by $200,000 to a positive amount of $178,884
or $0.05 per share based on 3,358,500 shares outstanding. The effect to the
existing shareholders who purchased their shares at $0.001 per share would have
an increase of approximately $0.05 per share and the original shareholders
acquiring their shares at $0.01 per share would have an immediate increase of
$0.04 per share whereas the new shareholders acquiring shares under this
Offering would suffer an immediate loss per share of $0.15. In addition, after
the maximum Offering the new shareholders would only have 29 percent of the
issued and outstanding shares whereas the original shareholders would have 71
percent.
The following table summarizes the effect of issuing the maximum number of
shares under this Offering and its effect upon the existing new investors.
Shares Purchased Total Consideration
----------------- --------------------
Number Percent Amount Percent
------ ------- ------ -------
Existing Shareholders 2,358,500 ` 70.2 $ 5,450 2.7
New Investors 1,000,000 29.8 200,000 97.3
--------- ---- ------- ----
3,358,500 100.0 205,450 100.0
========= ===== ======= =====
There are no outstanding stock options, warrants or rights which, if
outstanding, would have caused further dilution to the new investors.
All shares to be issued under this Form SB-2 will be for cash consideration
only. No shares will be issued in consideration of amounts owed by Stanford to
either third or related parties. Vera McCullough will purchase 25,000 shares
under this Offering for cash consideration only.
ITEM 7. SELLING SECURITY HOLDERS
There are no selling securities holders under this Form SB-2.
ITEM 8. PLAN OF DISTRIBUTION
Up to 1,000,000 shares of common stock of Stanford will be sold under this Form
SB-2 if all shares offered are subscribed for. Stanford is not using the
services of an underwriter and therefore is under no underwriting obligations
since it will self-underwrite this Offering. No compensation, in either cash
or shares, will be paid to any director, officer, finder or another third party
for assisting in selling any securities under this Offering.
The directors and officers will not be registered as a broker-dealer pursuant to
Section 15 of the Securities Act of 1934 in reliance upon Rule 3(a) 4-1. Rule
3(a) 4-1 sets forth those conditions under which a person associated with
Stanford may participate in the Offering of Stanford's securities and not be
-20-
deemed to be a broker-dealer. The conditions are that:
1. None of such persons are subject to a statutory disqualification, as
that term is defined in Section 3(a)(39) of the Act, at the time of
his participation;
2. None of such persons are compensated in connection with his or her
participation by the payment of commissions or other remuneration
based either directly or indirectly on transactions in securities;
3. None of such persons are, at the time of his participation, an
associated person of a broker-dealer; and
4. All of such persons meet the conditions of Paragraph (a)(4)(ii) of
Rule 3a4-1 of the Exchange Act, in that they (a) primarily perform, or
are intended primarily to perform at connection with transactions in
securities; and (b) are not a broker or dealer, or an associated
person of a broker or dealer, within the preceding twelve months; and
(c) do not participate in selling and offering of securities for
Stanford more than once every twelve months other than in reliance on
Paragraphs (a)(4)(i) or (a)(4)(iii).
This Offering will commence once the SEC has no further comments on this Form
SB-2 and continue for a 12-month period thereafter. If Stanford is unable to
sell the minimum number of shares under this Offering, it will update this Form
SB-2 and continue the Offering for an additional 12 months from the date of the
updating of this Form SB-2. The procedure for purchasing shares is as follows:
1. The investor will execute and deliver a Share Subscription Agreement (the
"Agreement") in the format as indicated in Exhibit 99.1. The Agreement is
the investor's acceptance of Stanford's offer to sell him or her shares of
common stock. Stanford will review the executed Agreement and decide if it
will accept the offer to buy its common shares. If Stanford accepts, the
Agreement will be signed by an authorized signatory of Stanford and a copy
will be returned to the subscriber.
2. The investor will deliver a check or certified funds to Stanford for the
acceptance or rejection.
All checks for the purchase of shares must be made payable to "Stanford
Management Ltd."
Stanford has the right to accept or reject subscriptions in whole or in part,
for any reason or for no reason. All funds received from rejected Agreements
will be returned immediately to the subscriber, without interest or deductions.
Subscriptions for securities will be accepted or rejected within 48 hours after
Stanford receives the Agreements.
The estimated fees and expenses, which will be paid by Stanford, associated with
the issuance and distribution of the securities being registered are more fully
described under Item 25 - Other Expenses of Issuance and Distribution.
-21-
ITEM 9. LEGAL PROCEEDINGS
Stanford is not aware of any pending legal proceeding contemplated by a
governmental authority, or concerning its business or the SF claim, that
involves primarily a claim for damages in excess of ten percent of current
assets excluding interest and costs. As of the date of this filing, Stanford is
not a party to any legal proceeding, either as plaintiff or defendant. Thus,
the financial statements have not been adjusted to reflect any material
uncertainty regarding exposure to liability in legal proceedings.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
DIRECTORS, EXECUTIVE OFFICERS AND PROMOTERS
The name, municipality of residence, position held within Stanford, principal
occupation of each of the directors and officers and the date the individual was
first elected or appointed are set forth in the following table. Each director
is to serve until the Annual Meeting of Shareholders or until his or her
successor is elected or appointed. Unless otherwise indicated, each director
and officer has been engaged for the past five years in the specified principal
occupations or in other executive capacities with the companies or firms
referred to, or with affiliates or predecessors thereof.
NAME AND POSITION OR PRINCIPAL OCCUPATION YEAR VOTING SHARES
MUNICIPALITY OF OFFICE WITHIN FOR THE BECAME A BENEFICIALLY
RESIDENCE STANFORD PAST FIVE YEARS DIRECTOR OWNED (1)
Glen Macdonald. . . . . . . President, Professional Geologist 2002 (3) 400,000
Vancouver . . . . . . . . . and Consultant for various
British Columbia. . . . . . Director (2) major and junior mining
Canada. . . . . . . . . . . companies
Vera McCullough . . . . . . Secretary- Comptroller of electrical 2001 (4) NIL
Vancouver, Treasurer and company since 1972
British Columbia . . . . Director (2)
Canada
(1) The information as to shares beneficially owned, not being within the
knowledge of Stanford, has been furnished by the respective nominees.
(2) Directors who are members of the Audit Committee.
(3) Glen Macdonald was appointed a Director on October 23, 2002, President on
October 24, 2003 and Chief Executive Officer on August 8, 2003.
(4) Vera McCullough was appointed a Director and Secretary Treasurer on May 21,
2001 and Chief Accounting Officer on August 8, 2003.
Audit Committee
The Audit Committee of Stanford currently consists of Glen Macdonald and Vera
McCullough. The Audit Committee has received and discussed the audited
Financial statements. Glen Macdonald, on behalf of the Audit Committee, has
-22-
discussed with the independent auditors the matters required to be discussed by
SAS 61 and has received the written disclosures and the letters from the
Independent accountants required by Independence Standards Board Standard No. 1.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Stanford's Form SB-2.
The overall general function of the audit committee is to review the overall
audit plan and Stanford's system of internal control, to review the results of
the external audit, and to resolve any potential dispute with Stanford's
auditors. The percentage of common shares beneficially owned, directly or
indirectly, or even which control or direction is exercised by all directors and
officers of Stanford, collectively, is approximately 17 percent of the total
issued and outstanding shares. The directors will be appointing 2 independent
members of the Audit Committee; each one being a non-director and non-officer of
Stanford. These individuals have not yet been identified.
The following are biographies of the directors and officers of Stanford.
GLEN MACDONALD, 55, attended the University of British Columbia and obtained
degrees in economics and geology in 1972 and 1973 respectively. He attended the
Masters Program for Artic engineering at the University of Alaska for a year but
did not graduate with his Masters Degree due to family matters. He is a member
of the Alberta Professional Engineers, Geologists and Geophysicists Association
and a member of the British Columbia Association of Professional Engineers and
Geoscientists. He has experience in grade control and ore reserve definition at
2000 plus underground mine and has been a project manager for exploration
programs with budgets that exceed $2,000,000. Between 1973 and 1974, Mr.
Macdonald worked for Whitehorse Copper Mines Ltd. in the Yukon where his duties
involved exploration activities around the mine as well as grade control
underground. In 1975, Mr. Macdonald was employed as District Manager with
Noranda Mines Ltd in the Yukon and parts of the North West Territories in
Canada. Noranda Mines is involved in base metal exploration such as copper and
zinc and to a much lesser extent in gold and silver. As District Manager, Mr.
Macdonald was responsible for identifying mineral properties of merit for either
joint venture with other companies or the outright purchase of the mineral claim
in question. Mr. Macdonald was also responsible for a project which included
design and management of a placer mine which was a 2 to 3 year project employing
up to 10 professional staff plus ancillary personnel. In addition, he was
responsible for the identification, design and management of a joint venture
project between Noranda Mines and Westinghouse to look for tungsten in the North
West Territories and Alaska. In 1983, Mr. Macdonald left his position with
Noranda and became an independent consultant. Since 1983, he has worked as a
consultant for a number of junior and major mining companies; some of which
include AGIP, Tenajon Resources, Ashton Mines and American Express Leasing. As a
consultant his duties included the design, implications and management of core
drilling projects either in British Columbia, North West Territories or the
Yukon. In the designing, implicating and managing of the various exploration
programs for his clients he was responsible for the prospecting, mapping,
undertaking various geochemcial surveys which would lead to the eventual
acquisition of the mineral claim under examination. In addition, his
responsibilities included mine resources definition for extraction, project
results analysis, project design and management, government liason, report
writing for professional corporate purposes and general corporate direction.
During 2002 and 2003, he acted as exploration manager for New Shoshoni Ventures
Ltd where he negotiated the acquisition of Drybones Bay Kimberlite Ltd which had
been inactive for the past five years. Within this company was a property
-23-
containing diamondbearing kimberlite and Mr. Macdonald designed the program
required to further the geophysical and other exploration techniques to allow a
decision to be made to commence a winter drill program on the property. This has
lead to the discovery of a new diamond bearing kimberlite.
VERA McCULLOUGH, 55, graduated from New Westminister Senior Secondary in 1965
and was subsequently employed with BC Telephone where she became Supervisor of
Operations responsible for scheduling and hiring. In 1972 she left her position
at BC Telephone and started work for Brothers Electric Ltd. of Vancouver,
British Columbia; an electrical contracting company doing work in both the
commercial and residential housing area. Her position in Brothers Electric Ltd
was as Comptroller in which her responsibilities included overseeing the
estimating of various commercial and residential jobs, setting up budgets for
over all review by management, accounting for accounts receivable and answering
any complaints from customers, ensuring adequate controls were established over
accounts payable and ensuring timely payment of all outstanding invoices,
control over payroll including remittances to the various governmental agencies,
reviewing complaints from staff members and assisting, where possible, in the
annual evaluation of personnel, and overseeing the daily operations of the
office and warehouse facilities. In 2001, she retired from her position and
has not obtained further employment since she has decided for the present time
to remain at home.
Glen Macdonald holds a directorship on the following reporting companies:
Starfield Resources Inc. (OTC.BB - SRFDF and TSX - SRU)
Thelon Ventures Ltd. (TSX - THV)
Otish Mountain Ventures Inc. (TSX - OTS)
Golden Caribou Resources Ltd. (TSV - GCC)
Solitaire Minerals Corporation (TSV - SLT)
Vera McCullough does not hold a directorship position on any other reporting
companies.
Family Relationships
There are no family relationships among directors, executive officers, or
persons nominated or chosen by Stanford to become directors or executive
officers.
Significant Employees, Full and Part time and Hours Worked
Other than the two directors of Stanford, Glen Macdonald and Vera McCullough,
Stanford has no other employees. If Glen Macdonald is not available during the
exploration of the SF claim, Stanford will have to consider hiring consultants
to oversee the exploration activities. The consultants would only be hired for
the duration of the exploration program and once it has been completed they will
no longer be engaged in any activities of Stanford. Stanford does not wish, at
the present time due to lack of capital, to retain employees during periods when
the SF claim is not being explored.
Glen Macdonald and Vera McCullough do not work full time for Stanford. They may
each spend up to 5 hours a month on administrative work for Stanford - refer to
Risk Factor #17 on page 14. During the exploration program, it is anticipated
Glen Macdonald will spend approximately 20 hours a week on supervising the
program. Mr. John Jenks, whose exploration budget is shown on page 37, has no
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agreement with Stanford to serve as a consultant or to work for Stanford in any
other capacity.
Involvement in Certain Legal Proceedings
To the knowledge of management, during the past five years, no present or former
director, executive officer or person nominated to become a director or an
executive officer of Stanford:
(1) filed a petition under the federal bankruptcy laws or any state insolvency
law, nor had a receiver, fiscal agent or similar officer appointed by the
court for the business or property of such person, or any partnership in
which he was a general partner at or within two years before the time of
such filings;
(2) was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from or otherwise limiting, the
following activities:
(i) acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, associated person of any of the foregoing, or as
an investment advisor, underwriter, broker or dealer in securities, or
as an affiliate person, director or employee of any investment
company, or engaging in or continuing any conduct or practice in
connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activities in connection with the purchase or sale of
any security or commodity or in connection with any violation of
federal or state securities laws or federal commodities laws;
(4) was the subject of any order, judgment, or decree, not subsequently
reversed, suspended, or vacated, of any federal or state authority barring,
suspending or otherwise limiting for more than 60 days the right of such
person to engage in any activity described above under this Item, or to be
associated with persons engaged in any such activities;
(5) was found by a court of competent jurisdiction in a civil action or by the
Securities and Exchange Commission to have violated any federal or state
securities law, and the judgment in such civil action or finding by the
Securities and Exchange Commission has not been subsequently reversed,
suspended, or vacated.
(6) was found by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT AND BENEFICIAL OWNERS
The following table sets forth information regarding the beneficial ownership of
shares of Stanford's common stock as of July 31, 2003 (2,358,500 shares issued
and outstanding) by all directors, executive officers and beneficial owners.
TITLE OR NAME AND ADDRESS OF AMOUNT OF PERCENT OF
CLASS BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP (2) CLASS
- ----------------------- ---------------------------- ------------------------ ----------
Common Glen Macdonald
Stock 420 - 625 Howe Street
. . . . . . . . Vancouver,British Columbia
. . . . . . Canada, V6C 2T6 400,000 (3) 17
Common Vera McCullough
Stock 40 Sweetwater Place
. . . . . . . . Lions Bay, British Columbia
. . . . . . Canada, V0N 2E0 Nil (4) Nil
Common. . . . . . . . Ownership of all Directors and
Stock . . . . . . Officers as a group 400,000 17
(1) Mr. Macdonald has sole voting power and sole dispositive power as to all of
the shares shown as beneficially owned by him.
(2) Under Rule 13-d of the Exchange Act, shares not outstanding but subject to
options, warrants, rights and conversion privileges pursuant to which such
shares may be required in the next 60 days are deemed to be outstanding for
the purpose of computing the percentage of outstanding shares owned by the
person having such rights, but are not deemed outstanding for the purpose
of computing the percentage for such other persons. None of the directors
or officers of Stanford have any options, warrants, rights or conversion
privileges outstanding.
(3) The shares held by Glen Macdonald are restricted since they were issued to
a former director in compliance with an exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended. After
these shares have been held for one year, Mr. Macdonald could sell a
percentage of his shares based on one percent of the issued and outstanding
shares of the Stanford. In other words, Mr. Macdonald's shares can be sold
after the expiration of one year in compliance with the provisions of Rule
144. The share certificate bears a 'stop transfer' legend on it.
(4) Vera McCullough presently does not own any shares in Stanford but is
planning to acquire for cash 25,000 shares under this Offering. When issued
these shares will be restricted from trading in compliance with an
exemption from registration provided by Section 4(2) of the Securities Act
of 1933, as amended. After these shares have been held for one year, Mrs.
McCullough could sell a percentage of her shares based on one percent of
the issued and outstanding shares of Stanford. In other words, Mrs.
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McCullough's shares can be sold after the expiration of one year in
compliance with the provisions of Rule 144. The share certificate will have
a 'stop transfer' legend stamped on it.
Presently the escrow position is the 400,000 shares held by Glen Macdonald which
represents 17% of the issued shares. With the purchase of 25,000 shares by Vera
McCullough, the new escrow percentage in relationship to the issued shares will
decrease to 12.7% if the maximum shares are subscribed for and 16.3% if the
minimum shares are subscribed for.
ITEM 12. DESCRIPTION OF SECURITIES
The securities being offered are shares of common stock. The authorized capital
of Stanford consists of 25,000,000 common shares with a par value of one tenth
of a cent ($0.001) per share, amounting to twenty five thousand dollars
($25,000). The holders of common stock shall:
- - have equal ratable rights to dividends from funds legally available
therefore, when, as, and if declared by the Board of Directors of Stanford;
- - are entitled to share ratably in all of the assets of Stanford available
for distribution upon winding up of the affairs of Stanford; and
- - are entitled to one non-cumulative vote per share on all matters on which
shareholders may vote at all meetings of shareholders.
The shares of common stock do not have any of the following rights:
- - preference as to dividends or interest;
- - preemptive rights to purchase in new issues of shares;
- - preference upon liquidation; or
- - any other special rights or preferences.
In addition, the shares are not convertible into any other securities. There
are no restrictions on dividends under any loan agreements.
Non-Cumulative Voting.
The holders of shares of common stock of Stanford do not have cumulative voting
rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose. In such event, the holders of the remaining
shares will not be able to elect any of Stanford's directors.
Dividends
Stanford has not declared or paid any dividends on its common stock. It does
not currently anticipate paying any cash dividends in the foreseeable future on
its common stock, when issued pursuant to this Offering. Although Stanford
intends to retain its earnings, if any, to finance the exploration and growth of
the SF claim, its Board of Directors will have the discretion to declare and pay
dividends in the future. Payment of dividends in the future will depend upon
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Stanford's earnings, capital requirements, and other factors, which its Board
of Directors may deem relevant.
Because Stanford does not intend to make cash distribution by way of dividends,
potential shareholders would need to sell their shares to realize a return on
their investment. There can be no assurance that the Offering price of $0.20
per share as indicated in this Form SB-2 will be able to be realized by any
shareholder liquidating their share position in the future. A distribution of
revenues will be made only when, in the judgment of Stanford's Board of
Directors, it is in the best interest of Stanford's stockholders to do so.
Change in Control of Stanford
Stanford does not know of any arrangements which might result in a change in
control.
Registered Office
Stanford has engaged the service of Chennell Mowbray, The Company Corporation,
1013 Centre Road, Wilmington, DE 19805, to act as registrar.
Transfer Agent
Stanford has engaged the services of Nevada Agency & Trust Company, Suite 880,
50 West Liberty Street, Reno, Nevada, 89501 to act as transfer agent.
Debt Securities and Other Securities
There are no debt securities outstanding or any other form of securities.
ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL
Other than as set forth below, no named expert or counsel was hired on a
contingent basis, will receive a direct or indirect interest in Stanford, or was
a promoter, underwriter, voting trustee, director, officer, or employee of
Stanford.
Stanford's auditors are Amisano Hanson, Chartered Accountants, 604-750 West
Pender Street, Vancouver, British Columbia, Canada, who examined the financial
statements of Stanford for the four years ended August 31, 2002 and for the nine
months ended May 31, 2003 in conformity with accounting principles generally
accepted in the United States. The fee paid to Amisano Hanson was $5,100; no
other fees were paid for non-audit services.
ITEM 14. DISCLOSURE OF COMMISSION POSITIONS ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers, and controlling persons of Stanford
pursuant to the following provisions or otherwise, Stanford has been advised
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in such act, and is
therefore unenforceable.
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Section 102(b)(7) of the Delaware General Corporation Law ("DGCL") enables a
corporation in its original certificate of incorporation or an amendment thereto
to eliminate or limit the personal liability of a director to a corporation or
its stockholders for violations of the director's fiduciary duty, except:
- for any breach of a director's duty of loyalty to the corporation or
its stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payment of dividends or unlawful stock
purchases or redemptions); or
- for any transaction from which a director derived an improper personal
help
Section 145 of the DGCL provides, in summary, that directors and officers of a
Delaware corporation are entitled, under certain circumstances, to be
indemnified against all expenses and liabilities (including attorney's fees)
incurred by them as a result of suits brought against them in their capacity as
a director or officer, if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if they had
no reasonable cause to believe their conduct was unlawful; provided, that no
indemnification may be made against expenses in respect of any claim, issue or
matter as to which they shall have been adjudged to be liable to the
corporation, unless and only to the extent that the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, they
are fairly and reasonably entitled to indemnity for such expenses which the
court shall deem proper. Any such indemnification may be made by the
corporation only as authorized in each specific case upon a determination by the
stockholders or disinterested directors that indemnification is proper because
the indemnity has met the applicable standard of conduct.
The Articles of Incorporation contain provisions which, in substance, eliminate
the personal liability of the Board of Directors and officers of Stanford and
its shareholders from monetary damages for breach of fiduciary duties as
directors to the extent permitted by Delaware law. By virtue of these
provisions, and under current Delaware law, a director of Stanford will not be
personally liable for monetary damages for breach of fiduciary duty, except
liability for:
a. breach of his duties of loyalty to Stanford or to its shareholders;
b. acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
c. dividends or stock repurchase or redemptions that are unlawful under
Delaware law; and
d. any transactions from which he or she receives an improper personal
benefit.
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These provisions pertain only to breaches of duty by individuals solely in the
capacity as directors, and not in any other corporate capacity, such as an
officer, and limit liability only for breaches of fiduciary duties under
Delaware law and not for violations of other laws (such as Federal securities
laws). As a result of these indemnification provisions, shareholders may be
unable to recover monetary damages against directors for actions taken by them
that constitute negligence or gross negligence or that are in violation of their
duties, although it may be possible to obtain injunctive or other equitable
relief with respect to such actions.
The inclusion of these indemnification provisions in Stanford's By-laws may have
the effect of reducing the likelihood of derivation litigation against
directors, and may discourage or deter shareholders or management from bringing
lawsuit action, which if successful, might otherwise benefit Stanford or its
shareholders.
Stanford has entered into separate Indemnification Agreements with Glen
Macdonald and Vera McCullough containing provisions that provide for the maximum
indemnification allowed to directors and officers under Delaware law - refer to
Exhibit 99.2. Stanford, among other obligations, will indemnify such directors
and officers against certain liabilities that may arise by reason of their
status as directors and officers, other than liabilities arising from willful
misconduct of a culpable nature, provided that such persons acted in good faith
and in a manner that they reasonably believed to be in or not opposed to the
best interest of Stanford and, in the case of criminal proceeding, had no
reasonable cause to believe that his or her conduct was unlawful. In addition,
the indemnification agreement provides generally that Stanford will, subject to
certain exceptions, advance the expenses incurred by directors and officers as a
result of any proceedings against them as to which they may be entitled to
indemnifications. Stanford believes these arrangements are necessary to
attract and retain qualified persons as directors and officers.
ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS
Stanford has not yet been in existence for a period of five years but has during
the time since its inception accomplished the following:
1. The incorporating director was Philip Yee of Vancouver, British
Columbia who organized Stanford and raised the initial seed capital
from the existing shareholders.
2. During his time as the sole officer and director of Stanford, Mr. Yee
identified a software protocol program for the restaurant industry
whereby a wireless menu system could be implicated. Unfortunately the
demand for such a program was not present and the project was
abandoned in 2001. Subsequently in January 2001 the SF Claim was
staked for Stanford.
3. Stanford engaged the services of John Jenks, Professional Geologist to
prepare a report on the SF mineral claim and to recommend a program of
exploration (as more fully detailed on page 36)
4. During the last two years, the directors have provided funds for a
preliminary exploration program on the SF claim.
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5. Stanford appointed two additional directors, Doug Symonds and Vera
McCullough, on May 21, 2001. Soon afterwards, Philip Yee resigned as
President and Director on May 21, 2001 and Doug Symonds was appointed
as the new President of Stanford.
6. Mr. Symonds resigned on October 15, 2002 and was replaced by Glen
Macdonald on October 23, 2002. On October 24, 2002, Glen Macdonald was
appointed President of Stanford.
Holders of Common Equity
As of the date of this Form SB-2, Stanford has 59 shareholders, which include
the President, Glen Macdonald.
Exploration Activities
Stanford undertook exploration work on the SF claim in 2002 and 2003. The
directors will undertake further exploration work on the SF claim from the
proceeds of the sale of common stock registered under this Form SB-2 as outlined
by John Jenk's geological report.
Additional Mineral Properties
Stanford may seek out additional mineral properties in the Princeton region
either by way of purchase, staking or joint venturing. No properties have been
identified to date.
Acquisition of Assets from Promoters, Founders or Organizers of Stanford
Stanford has not received or acquired any assets or other consideration from any
promoter, founder or organizer of Stanford since its inception.
ITEM 16. DESCRIPTION OF BUSINESS
Business Development
Stanford does not have any subsidiary, affiliated companies or joint venture
partners. Stanford has not declared bankruptcy, been under receivership or
similar proceedings. In addition, Stanford does not have any material
reclassification, merger, consolidation or purchase or sale of a significant
amount of assets not in the ordinary course of business.
Stanford's area of interest is in the mining industry, whereby it will explore
its SF claim ("Exploration of the SF Claim"). Stanford does not have an ore
reserve at the present time and the likelihood of finding an ore body is remote
(see "Risk Factor - 7" page 9). Nevertheless, management feels that its SF
claim is worth the time and money to explore in order to determine if an ore
reserve does exist. Since it is in the exploration stage, Stanford is not
distributing any products, nor has it announced any new products or services.
One of the main reasons Stanford is filing this Form SB-2 is to qualify its
shares for a quotation on the OTC Bulletin Board. There is the chance Stanford's
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shares may never be qualified for trading on OTC Bulletin Board and therefore
the shareholders might never be able to sell their shares to recoup a percentage
of their original investment.
Presently Stanford has ownership interest in the mineral rights to one mineral
claim: the SF claim. As is custom in the Province of British Columbia, Stanford
does not actually own the land itself; only the mineral rights thereto. The
ownership interest in the land is held by the Province of British Columbia.
Having "staked" the mineral claim in January 2001, Stanford has the rights to
the minerals thereon for a period of one year from the date of staking (refer to
Exploration of the "SF Claim" for a description of staking). The actual cost of
staking the SF was $1,513 which maintained the mineral claim in good standing
until January 12, 2002. In January 2002, the Stanford spent $2,927 and a
further $1,188 in June 2002 to maintain the claim in good standing until January
12, 2004.
To date Stanford has realized no revenue from the SF claim and it will take an
unknown number of years of exploration to be able to identify a commercially
viable ore reserve, if any. An exploration program of any size will require
additional capital which presently Stanford does not have. Its ability to raise
funds might be limited as more fully described under "Risk Factor - 9" on page
10.
Stanford's main product
Stanford's main products will be the sale of gold, silver, platinum, bentonite
or zeolite if Stanford is successful in its exploration activities. Since the
SF claim has yet to be fully explored by Stanford there is no guarantee any ore
reserve will ever be found and therefore no revenue will be derived from it.
Competitive business conditions
There are vast areas of British Columbia and the Pacific Northwest Coast, which
includes Washington, Oregon and California states, which have been explored and
in some cases staked through mineral exploration programs. Competition to
identify, locate, explore and develop mineral claims is intense. Exploration
companies such as Stanford must compete for various resources, including
consultants and other human resources, equipment and capital - refer to Risk
Factor - 13, page 11.
Sources and availability of raw materials
Stanford does not have available to it any sources of raw materials since it is
in the exploration stage and does not require any raw materials from outside
suppliers. In the future, it might require raw materials such as cement, wood
and sand to commence production of its SF claims. Such raw materials are easily
obtainable by Stanford from local suppliers in Princeton, British Columbia. If
no ore reserve is found on the SF claim, there will be no requirements for raw
materials.
Dependence on a few major customers
To date Stanford has no customers and may not have any customers if there is no
ore reserve on the SF claim.
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Patents, trademarks, licenses, franchises, concessions, royalty agreements or
labor contracts
Stanford has no patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts to date. Stanford has not entered into any joint
venture agreements with any parties relating to the SF claim.
Government Approval
Until Stanford actual makes a production division it is not required to receive
governmental approvals for its exploration activities unless such activities
required the removal of trees, extensive drilling, transportation of water to
reduce heat during drilling or the building of facilities. At the stage that a
mining decision is made, Stanford would be required to obtain the necessary
governmental approvals which costs would be factored into the technical and
viability studies in advance of a decision being made to proceed with the
development of an ore reserve.
Mining Regulations
Stanford must adhere to the Mines Act of British Columbia. The President of
Stanford, Glen Macdonald, has extensive mining experience and is familiar with
the regulations respecting the initial acquisition and early exploration of
mining claims in British Columbia, Canada. Stanford does expect there to be
costs associated with adhering to government mining regulations. However, until
Stanford begins operations, it will not know the amount of these costs.
Research and Development
Stanford has not spent any money on research and development since its
inception.
Cost of compliance with Environmental Regulations
Stanford is subject to the Health, Safety and Reclamation Code for Mines in
British Columbia, Canada. This code deals with environmental matters relating
to the exploration mineral properties. The Code is meant to protect the
environment through a series of regulations affecting:
1. Health and Safety
2. Archeological Sites
3. Exploration Access
Stanford is responsible to provide a safe work environment, no disruption of
archeological sites and conduct its activities in a manner as to not cause any
unnecessary damage to the SF claim.
Stanford will secure all necessary permits for exploration, if required, and
will file final plans of operation prior to the commencement of any mining
operations. It is anticipated no endangered species will be disturbed.
Re-contouring and re-vegetation of disturbed surface areas will be completed
pursuant to the law. There will be no discharge of water into active streams,
creeks, rivers or lakes and any other body of water regulated by the
environmental law, or regulation. Any portals, adits or shafts will be sealed.
The cost of compliance with environmental regulations is difficult to access
since the nature and
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extent of Stanford's proposed activities cannot be determined until it commences
operations to a larger extent and then Stanford will be able to access the cost.
Exploration of the "SF Claim"
Stanford retained John Jenks, Professional Geologist and Geoscientist, of Salmon
Arm, British Columbia, Canada, to summarize the geology and mineral potential on
its SF claim near Coalmont, British Columbia. His report is dated May 27, 2001
and is contained, in part, within this Form SB-2. The SF was "staked" by a
professional staker on behalf of Stanford.
Stanford has not identified any other mineral properties for staking and,
therefore, has title to the mineral rights only on the SF claim.
LOCATION AND ACCESS
The SF claim is situated 2.5 miles west-north-west of the hamlet of Coalmont,
BC, itself located 11 miles by paved road north-west of Princeton, British
Columbia. From Coalmont the SF claim may be accessed by a series of dirt/gravel
logging and recreational trails - a road distance of approximately 3 miles to
the eastern claim boundary.
While portions of the road system are driveable by four-wheel drive pick-up they
are best accessed by the four-wheeler/quad/all terrain vehicle type of vehicle
as was used during the initial property examination by John Jenks.
LAND TENURE
Consisting of an 18 unit four-post claim extending 1.8 miles in the north-south
direction by 0.9 miles east-west and totaling 1,109 acres the SF mineral claim
was staked January 12, 2001. The claim tenure number is 383391, tag number
240871 and the anniversary date is January 12, 2004. It should be noted the SF
claim confers the right to explore for precious and base metals in lode form and
certain industrial minerals. Coal, as well as placer minerals, are issued under
separate licences and therefore are not owned by Stanford.
PHYSIOGRAPHY AND CLIMATE
The claim area is characterized by fairly rugged hill and ridge topography
ranging from 2,400 to 4,000 feet in elevation. The most predominant feature is
the steep canyon of the north-north-east trending Collins Gulch Creek which
bisects the claim area and empties into the Tulameen River at the northern
extremity. Outcrop is exposed primarily along ridges and escarpment areas.
Most of the claim area is covered by a thin layer of glacial till.
Tree cover is moderate to very thick consisting primarily of lodgepole pine and
Douglas fir with subordinate poplar and deciduous species. Most of the timber
is mature second-growth as much of the claim area has been previously logged.
Timber rights are held by Tolko Industries Ltd., a company unrelated to
Stanford.
Summers are hot with moderate precipitation. Up to 4.5 feet of snow may
accumulate anytime after late October and remain until early May.
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REGIONAL GEOLOGY
The Tulameen and Princeton areas, in which the SF claim is located, were
geologically mapped in 1960. Located within the southern portion of the
Intermontane Belt the map area is dominated by the magmatic area sequence Upper
Triassic Nicola Group. This consists of a north-trending belt of volcanic and
sedimentary rocks intruded by Late Triassic and Early Jurassic comagmatic
plutons. The sequence is unconformably overlain by Cretaceous and Tertiary
volcanics and clastic sediments of the Spences Bridge, Kingsvale and Princeton
Groups.
PROPERTY GEOLOGY/AIR PHOTO INTERPRETATION
Approximately 60% of the SF claim is underlain by the northeast limb of the
Eocene-aged Tulameen Basin, a synclinal structure trending northwesterly. The
northern third is covered by older upper Triassic rock of the Nicola Group
consisting of basic lavas and sediments. Intrusive rock of the coast Intrusions
occupies the northeastern 10% of the claim.
The northeastern synclinal limb dips at -45 degrees to the southwest. A
prominent shale/mudstone member forms a northwesterly-trending series of ridges.
The prevalent schistosity trend of 55 degrees dipping minus 60 degrees to the
southeast may parallel a possible late fault structure coinciding with Collins
Gulch. Higher in the section a siliceous lapilli tuff contains interstitial
zeolite. Within the above interval, coal seams and bentonite horizons occur,
however, more surface examination is required to define their exact position.
DISCUSSION
Within the SF claim bloc the most prospective mineral is coal, title of which is
separate to that of a mineral claim. All coal licenses in the basin are
currently held by Pacific West Coal Ltd., a company unrelated to Stanford. In
addition to coal, the Tulameen Basin portion of the claim does contain the
industrial minerals zeolite and bentonite, both of which are included in the
mineral title. Despite their presence and possible resource potential, like
most industrial minerals, the marketing aspect is of prime consideration. Any
decision to explore for these materials must therefore coincide with corporate
objectives.
The Nicola Group comprising the northern third of the claim is prospective for
both base and precious metals in veins and disseminated form within the area.
Accordingly, this portion could be subject for further investigation with these
metals in mind.
It is conceivable that satellite bodies of the ultrabasic could be distributed
exterior to the main body - in fact the northern third of the SF claim underlain
by the Nicola Group could host ultrabasic satellite intrusives with
platinum/gold potential.
Much of the claim is covered by a thin layer of glacial till implying that any
potential deposit is easily masked. Accordingly, careful prospecting, stream
geochemistry (including panning) and soil geochemistry would be employed in a
subsequent search for precious and platinum-group metal mineralization,
particularly within the northern third of the claim.
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Based upon a single day's examination of the property and subsequent literature
research by John Jenks, the following conclusions are indicated by him:
- The southern 60% of the SF claim area underlain by Eocene Tulameen
basin metasediments has significant potential for coal resources
(rights not covered by the mineral claim) as well as the industrial
minerals zeolite and bentonite, both of which pose a marketing
challenge. A corporate decision to explore for these minerals would be
required prior to directing further efforts in this area.
- The northern 30% of the claim underlain by Nicola Group metavolcanics
and metasediments has potential for high grade base and precious metal
vein, shear zone hosted, breccia and disseminated deposits. Particular
attention should be directed to this claim portion.
- Within the same group the possible presence of smaller satellite
intrusives of the zoned Alaska-type Tulameen Ultrabasic Complex could
imply potential for platinum group mineralization.
- The northeastern claim portion comprising 10% of the claim area
underlain by Coast Intrusive rock has a limited potential for
disseminated base metal deposits.
- As 80% of the claim area is covered by a thin layer of glacial till,
surface prospecting would be best directed to ridge, escarpment and
exposed stream banks. Soil geochemistry could be applied in an effort
to gain insight into the possible presence of sub-surface
mineralization.
It is recommended that efforts be directed in the following areas:
- The northern 30% of the claim underlain by the Nicola Group. This area
could be surface prospected and soil sampled on a reconnaissance
scale. Particular attention should be made to the possible presence of
ultrabasic rock.
- If corporate objectives include the industrial minerals zeolite and
bentonite then the potential for these minerals should be examined,
inventoried and later followed up by surface trenching. Old trenches
should be located and re-examined.
- A cursory surface examination should be made of the small area
underlain by Coast Intrusive rock to ascertain its potential for
mineralization and subsequent follow-up detailed prospecting and soil
geochemistry.
ESTIMATED PROGRAMME COSTS
- ---------------------------
Geologist/prospector 15 days @ $200/per day $ 3,000
Data compilation/report
writing 3,000
Supervision 1,300
Establishment of recon.Grid 10 days @ $130/per day 1,300
Sampling 10 days @ $130/per day 1,300
Geochemical analyses 600 samples @ $8/sample 4,800
Vehicle expense 50 days @ $35/day 1,750
Gasoline 500
Food & accommodation 50 days @ $45/per day 2,250
Materials and supplies 350
-------
-36-
Subtotal 19,550
Contingency @ 10% 2,000
------
Total $21,550
=======
Success in the initial phase would entail a follow-up program and subsequent
budgeting. At the present time the cost of a follow-up program is not known to
Stanford but an estimated $50,000 has been determined to be the minimum amount
required.
Stanford's Exploration Facilities
Stanford has no plans to construct a mill or smelter on the SF claim until an
ore reserve of reasonable worth is found, if ever.
While in the exploration phase, the crew of Stanford will be living in the town
of Coalmont due to its close proximity to SF claim.
RECENT WORK ON THE SF CLAIM IN 2002
January 2002
Grid sample stations were set up and marked every 33 feet on the baseline and
grid sample lines in January 2002. The grid was set up as follows:
Baseline:
Stn. 0 + 000 N to Stn. 1 + 200 N 3,600 feet
Stn. 2 + 800 N to Stn. 3 + 000 N 600 feet
------
4,200 feet
------
Grid Sample lines:
Stn. 0 + 000 N to Stn. 0 + 300 W 900 feet
Stn. 0 + 090 N to Stn. 0 + 300 W 900 feet
Stn. 0 + 810 N to Stn. 0 + 250 W 750 feet
Stn. 0 + 990 N to Stn. 0 + 350 W 1,050 feet
Stn. 1 + 200 N to Stn. 0 + 250 W 750 feet
Stn. 2 + 800 N to Stn. 1 + 500 W 4,500 feet
Stn. 3 + 000 N to Stn. 1 + 500 W 4,500 feet
-----
13,350 feet
------
Total base and grid sample lines 17,550 feet
======
In June 2002, Stanford undertook a soil sampling program as mentioned below
based on the above grid system.
June 2002
Stanford continued its exploratory work on the SF claim by extending Grid line
station 0 + 000 N to 675 W. Soil samples were collected every 80 feet for
geochemical analysis.
Grid line station 0 + 090 N was entended to 0 + 0625 W every 75 plus feet and
soil samples were collected for geochemical analysis.
-37-
These soil samples were obtained following the accepted geological soil sampling
techniques. All 49 samples tested the "B" horizon, in soils, just below the
humus contact. These samples were all analyzed by Acme Laboratories Ltd.,
Vancouver, British Columbia, Canada, using the ME - ICP +1 method.
The soil sample geochemical assay results did not define any copper, lead or
zinc anomalies. Further exploration will extend the soil sampling to the
southern claim segment.
Even though John Jenks is the professional geologist who prepared the geological
report included in this Form SB-2, he will not be the geologist assigned to the
exploration of the SF claim. Mr. Macdonald, being a geologist himself, will
direct and supervise the exploration program, based on the recommendations of
John Jenks as noted above, and will determine at that time the staff he will
require to facilitate it.
Reports to Security Holders
Stanford does not currently file reports with the Securities and Exchange
Commission ("SEC"). It is the intention of Stanford that it will file the
required financial reports: 10-KSB and 10-QSB. The directors and beneficial
owners of Stanford will file their Form 3s once it is a reporting company.
In the future, the public may read and copy any material with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
The public may obtain information on the operations of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The Company will file electronically on
Edgar and the public may view these filings on the SEC's Internet site that
contains all reports, proxy and information statements, and other information
regarding the Company by using (http://www.sec.gov). At the present time,
Stanford does not have an Internet address.
ITEM 17. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(A) PLAN OF OPERATION
While management believes the SF claim has value and opportunity for further
exploration, management advises that Stanford is in the exploration stage and
has not yet generated or realized any revenues from its SF claim.
Stanford is attempting to raise the funds necessary for the exploration of the
SF claim - refer to "Use of Proceeds" on page 18. Stanford has not made any
additional arrangements to raise additional cash, other than through the current
Offering under this Form SB-2.
(1) The next twelve months cash requirements
Stanford will require, as a minimum, the following cash requirements within the
next twelve months. Stanford does not have the cash necessary to pay its
creditors; if capital is not raised by Stanford, it will be unable to satisfy
its current liabilities. The following represents the minimum funds required
to maintain Stanford over the next year to meet various financial requirements
assuming no funds are raised under this Offering.
-38-
Audit and accounting fees $4,750 (i)
Bank charges . . . . . . . . . . . . . . . . . . . 100 (ii)
Exploration and maintenance of SF claim. . .. . . . 2,340 (iii)
Filing fees
State of Delaware $50
Registration fees 175
Edgar filings 1,350. . 1,575 (iv)
-------
Miscellaneous expenses . . . . . . . . . . . . . . 1,000 (v)
Offering expenses - Item 25. . . . . . . . . . . . 12,200 (vi)
Transfer agent's fees. . . . . . . . . . . . . . . 1,200 (vii)
Account payable - third parties -
as at May 31, 2003 9,779 (viii)
-------
$32,944
=======
(i) Accounting and audit fees are for the preparation, examination and review
of the various Forms 10-KSB and 10-QSB required during the forthcoming
year.
(ii) Normally monthly charges incurred with operating a checking account over
the year.
(iii)In the event Stanford does not raise any funds under this Form SB-2, it
will be required to maintain the SF claim in good standing. Under the
mining laws of British Columbia, Stanford will have to pay either cash to
the Ministry of Mines & Energy or undertake assessment work in the form of
exploration work on the SF claim. The amount required to be spent in any
given year is based on the number of units comprising the SF claim. In this
case, there are 18 units. During the first two years Stanford is required
to spend either $65 per unit in payment directly to the Ministry or
undertake exploration work on the SF claim in a similar amount. During the
third year, and each year thereafter, the amount required is doubled to
$130. Since Stanford has had ownership to the mineral rights on the SF
Claim since January 12, 2001 it will be required to spend the latter
amount. Fortunately Stanford has undertaken sufficient exploration
activities to maintain the claim in good standing until January 12, 2004.
Nevertheless, management feels that some form of exploration activity
should be undertaken during the next season even if no funds are raised
under this Form SB-2 and therefore has budgeted a minimum of $2,340.
(iv) Filing fees to the State of Delaware are the annual franchise fees based on
the number of shares issued. This amount payable to the State of Delaware
does not assume any penalties or interest for late filing. Registration
fees represent the cost of having a registered office in Delaware and the
Edgar filing fees are the cost of filing this Form SB-2 and subsequently,
when Stanford is deemed to be a reporting company, the fees for filing the
various Forms 10-KSB and 10-QSB over the next fiscal year.
(v) Miscellaneous expenses represent various expenses which might be incurred
by Stanford which at the present time are unknown to it. For example,
miscellaneous expenses will include photocopying, fax, printing, delivery
charges and other expenses normally associated the administration of a
company.
(vi) The Offering expenses are detailed under Item 25 - Other Expenses of
Issuance and Distribution. Regardless whether or not Stanford is able to
raise any funds under this Offering these costs will be incurred. The only
cost which might not be incurred if no funds are raised is the $1,000 for
the cost of printing share certificates which has been estimated under Item
25 - Other Expenses of Issuance and Distribution.
-39-
(viii) The annual fee to the transfer agent is $1,200.
(viii) As at May 31, 2003, the following accounts payable were due to third
parties:
Creditor Amount
-------- ------
Accountant $ 6,250
Auditors 3,220
Miscellaneous (*) 209
Office (**) 662
Transfer agent fees and interest 4,438
------
Total accounts payable - May 31,
2003 14,779
Deduct: audit and accounting under
Offering Costs (***) (5,000)
--------
Adjusted Accounts payable as per
above $ 9,779
=======
(*) Represents monies owed to the individual taking the soil samples on the SF
claim.
(**) Various office expenses such as photocopying, fax and delivery not paid for
over the last year.
(***) The cost of preparing the financial statements included in this Form SB-2
has been taken into consideration in Item 25 - Other Expenses of Issuance
and Distribution and therefore has been eliminated from the accounts
payable figure to avoid duplication.
The above estimated cash requirements for the next twelve months does not
reflect an outlay of funds for management fees, rent and telephone. As in the
past, management has taken no fees for their services and will continue with
this policy until such time as Stanford has sufficient funds on hand to warrant
such an expenditure or a decision is made to cease exploration activities on the
SF claim and proceed to develop a proven ore reserve, if ever.
When comparing the above cash requirements over the next twelve months with the
Use of Proceeds shown under Item 4, there will not be sufficient funds available
under the minimum Offering to maintain Stanford for the next twelve month period
unless exploration activities are reduced. Management does not wish to consider
this approach and will find other ways to raise funds, if required, to maintain
the SF claim in good standing and meet its financial obligations. No definite
decision by management has yet been made as to what approach to raise additional
funds will be used.
Stanford does not plan to convert $10,069 owed to related parties as at May 31,
2003 to shares being offered under this Form SB-2. If any of the directors or
officers acquire shares under this Form SB-2, it will be for cash consideration
only and not a conversion of debts owed to them. Therefore, only cash will be
paid for any shares subscribed to under this Offering and the cash received will
not be used to reduce debts to related parties.
Stanford has received no interim financing during the last several months except
from advances from its officers and directors - refer to page 42. Presently,
management does not contemplate arranging any interim financing unless Stanford
is unable to sell any shares under this Form SB-2.
-40-
At the present time, and in the foreseeable future, management does not wish to
acquire office space since it finds the present accommodations are adequate.
Management realizes that as its activities develop it will require its own
telephone number but for the intermediate period it will continue to use the
business telephone number of Glen Macdonald, its President.
(2) Purchase of plant and significant equipment.
Stanford will not buy any plant or significant equipment in the immediate
future.
(B) ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
(1) Full Fiscal Year of August 31, 1999, 2000, 2001 and 2002 and the nine
months ended May 31, 2003
The changes in the balance sheet positions over the prior four years ending
August 31 and for May 31, 2003 are shown as follows:
May 31 August 31 August 31 August 31 August 31
2003 2002 2001 2000 1999
---------- --------------- ----------- ----------- -----------
Assets
Current assets:
Bank. . . . . . . . . . . . . . . $ 3,732 $ - $ 1,045 $ 1,111 $ 2,561
---------- --------------- ----------- ----------- -----------
Total. . . . . . . . . . . . . . . . . $ 3,732 $ - $ 1,045 $ 1,111 $ 2,561
========== =============== =========== =========== ===========
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable . . . . . . . . . $ 14,779 $ 9,707 $ 6,175 $ 3,338 $ 1,805
Due to related parties . . . . . . 10,069 3,895 2,912 - -
---------- --------------- ----------- ----------- -----------
Total accounts payable . . . . . . . 24,848 13,602 9,087 3,338 1,805
---------- --------------- ----------- ----------- -----------
Stockholders' deficit:
Common stock. . . . . . . . . . . 2,358 2,358 2,358 2,358 2,358
Paid in Capital . . . . . . . . . 3,092 3,092 3,092 3,092 3,092
Contributed Surplus . . . . . . . 59,850 50,400 37,800 25,200 12,266
Deficit . . . . . . . . . . . . . (86,416) (69,452) (51,292) (32,877) (17,294)
---------- --------------- ----------- ----------- -----------
Total stockholders' deficit. . . . . . (21,116) (13,602) (8,042) (2,227) 756
---------- --------------- ----------- ----------- -----------
Total. . . . . . . . . . . . . . . . . $ 3,732 $ - $ 1,045 $ 1,111 $ 2,561
========== =============== =========== =========== ===========
-41-
August 31, 1999:
During Stanford's first year of operation, it raised the initial seed capital
from investors and engaged the services of Nevada Agency & Trust Company to act
as transfer agent. The number and price per share subscribed for was as
follows:
400,000 shares issued to its director at a price of $0.001 per share;
1,615,000 shares issued to 18 shareholders at a price of $0.001 per
share; and
343,500 shares issued to 40 shareholders at a price of $0.01 per share.
Since the initial raising of the seed capital, Stanford has not issued any more
shares in its capital stock.
August 31, 2000
During this fiscal period, Stanford considered the development of a software
program for the restaurant industry as mentioned on page 4.
August 31, 2001
During January 2001, Stanford identified, staked and recorded the SF claim.
Management had John Jenks prepare a geological report setting forth the
geological aspects of the claim and recommending a work program on the SF claim.
No work was undertaken during this fiscal year on the claim. John Jenks'
report, in part, is described under Item 16 - Description of Business on page
34.
August 31, 2002
Stanford undertook two separate geological programs on the SF claim during the
beginning and middle of this calendar year. These programs are described on
page 37.
May 31, 2003
Management has been preparing this Form SB-2 to raise capital to further explore
the SF claim and to proceed with its objective of becoming a reporting company
and eventually listed on the OTC Bulletin Board. No documents have been filed
to date with the OTC Bulletin Board and none will be filed until Stanford has
responded to all comments from the SEC associated with this Form SB-2.
For an analysis of the accounts payable as at May 31, 2003 refer to Item 17,
"Management's Discussion and Analysis or Plan of Operation" (a) - Plan of
Operations, part (viii) on page 40.
The amount of capital contributed since inception by related parties is as
follows:
Glen Macdonald $ 6,174
Vera McCullough 3,895
-------
$10,069
======
-42-
The amounts due to related parties are unsecured, do not bear interest and have
no fixed repayment terms.
(2) Results of Operations
An overall analysis of the operations for Stanford for the four years ended
August 31, 2002 and the nine months ended May 31, 2003 is shown below:
Statements of Operations:
Nine Year Year Year Year From
months ended ended ended ended Sept. 24,
ended August August August August 1998 to
May 31 31 31 31 31 May 31,
2003 2002 2001 2000 1999 2003
------- ------- ------- ------- -------- ----------
Accounting, audit and legal (i) $ 5,340 $ 1,750 $ 1,500 $ 1,550 $ 1,500 $ 11,640
Bank charges and
interest (ii). . . . . . . . 423 426 84 70 38 1,041
Exploration
expenses (iii). . . . . . . 500 1,282 2,912 - - 4,694
Filing fees (iv). . . . . . . . - 502 120 100 430 1,152
Management fees (v) . . . . . . 4,500 6,000 6,000 6,000 6,000 28,500
Office (vi) . . . . . . . . . . - 385 - 63 115 563
Rent (vii). . . . . . . . . . . 3,150 4,200 4,200 4,200 4,200 19,950
Telephone (ix). . . . . . . . . 1,800 2,400 2,400 2,400 2,400 11,400
Transfer agent's
fees (x). . . . . . . . . . 1,251 1,215 1,200 1,200 2,610 7,476
------- ------- ------- ------- -------- ----------
Net loss for the period . . . . $16,964 $18,160 $18,416 $15,583 $ 17,293 $ 86,416
======= ======= ======= ======= ======== ==========
(i) Accounting and audit
Stanford has engaged the services of Amisano Hanson, Chartered Accountants, to
examine the financial statements for the four years ended August 31, 2002 and
the nine months ended May 31, 2003; which are reproduced under Item 22 -
Financial Statements.
The audit fees incurred to date have been approximately $5,100. Stanford has
engaged the services of an accountant to prepare the accounting records in
advance of the examination by the auditors. The cost associated with this
service for the four years and nine months ended May 31, 2003 was $6,250.
(ii) Bank charges and interest
This expense represents the monthly charges imposed by Stanford's bank for
maintaining and servicing transactions within the account. Included in the
amount for August 30, 2003, is interest charged by Nevada Agency & Trust Company
-43-
for late payment of it charges. Due to the lack of funds, the bank account was
closed but can be re-opened upon receipt of any proceeds of funds obtained under
this Form SB-2.
(iii) Exploration expenses
The cost of staking the SF mineral claim was $1,381 and the cost for the
preparation of the geological report commissioned by Stanford was $1,531. The
cost of the physical work program on the SF mineral claim in January and June
2002 was $1,282. The cost of assaying the soil samples taken during the work
program was $500. Exploration expenses were not capitalized and amortized over
the life of the mineral claim but were treated as a period cost and written off
in the year incurred. Stanford will expense all costs in the future relating
to the SF claim or any other future claim obtained by it until such time as a
production decision is made.
(iv) Filing fees
Filing fees are paid to The Company Corporation Inc. in the State of Delaware
and to the State of Delaware for franchise taxes. The Company Corporation Inc.
assisted in the incorporation of Stanford and acts as the registered office in
Delaware. The following represents an analysis of filing fees incurred since
inception.
May August August August August
2003 2002 2001 2000 1999
-------- ------- ------- ------- -------
Incorporation costs . . . . . $ - $ - $ - $ - $ 255
Basic franchise tax . . . . . - 30 30 30 30
Filing fee for franchise tax. - 20 20 20 20
Interest and penalty (a). . - 75 70 50 -
Registration fee (b). . . . . - 150 - - 125
Reinstatement fee I. . . . . - 227 - - -
-------- ------- ------- ------- -------
$ - $ 502 $ 120 $ 100 $ 430
======== ======= ======= ======= =======
(a) Interest and penalties is charged by the State of Delaware on late filing
of the franchise fees.
(b) For the years 2000 and 2001, Stanford was late in paying its registered
agent fee. Stanford has re-instated itself with The Company Corporation and
will maintain itself in good standing with its registered agent in the
future.
(c) In re-instating itself in the State of Delaware, Stanford paid the
following additional fees besides the registered agent fee of $150 and the
annual payment to the State of Delaware:
State fee $ 95
Recording fee 24
Service fee 90
Federal Express charges 18
----
$227
===
(v) Management fee
The directors and officers of Stanford have never received anything of value for
their services nor have they received any compensation for the time they have
spent on the business of Stanford. Nevertheless, recognition should be given
for this service.
-44-
Therefore, a charge of $500 per month has been determined as reasonable in the
light of the inactively of Stanford in prior years. This amount has been
expensed in each period with an offsetting entry to Contributed Surplus.
Basically, the accrual for management fees is a bookkeeping entry which will
never have to be settled by Stanford in either cash or shares either now or in
the future.
(vi) Office
Office expenses over the periods have related to photocopying, fax and delivery
charges. Office expenses were higher in August 2002 due to photocopying
charges for various documents and working papers being submitted to the
auditors.
(vii) Rent
Stanford uses the premises of its President without having the liability to pay
rent. A normal rent for a one room office located in a second class building
in Vancouver would be approximately $350. The accounting treatment for rent is
the same as for management fees above and telephone below.
(viii) Telephone
Stanford, at this time, does not have its own telephone number but rather uses
as its business telephone number that of its President. Therefore, no charge
has been incurred by Stanford but Stanford recognizes that there is a cost
associated with a telephone and has accrued $200 per month as a reasonable
charge. Similar to management fees and rent, the expense has been recognized
in the periods noted above. It is the intention of Stanford to eventually seek
its own office and install its own telephone system once it has the funds
available to do so.
(ix) Transfer agent's fees
The transfer agent for Stanford is Nevada Agency & Trust Company in Reno,
Nevada. During 1999 Stanford paid a total of $2,610 in fees to the transfer
agent consisting of $1,200 for Nevada Agency to be the registered transfer
agent, $175 for obtaining a CUCIP number and $1,235 for the issuance of the
share certificates to the shareholders. In 2000 to 2003, Stanford paid the
annual fee to Nevada Agency to act as the transfer agent. No shares were
required to be issued in years 2000 to 2003 other than a transfer from a
previous director to a current director.
First Annual General Meeting to Shareholders
Stanford will be holding its First Annual General Meeting of Shareholders (the
"Meeting") on September 19, 2003 in Vancouver, British Columbia Canada to
approve various resolutions recommended by the Board of Directors to Stanford's
shareholders. The following resolutions will be put forth at the Meeting:
1. the approval of the audited financial statements for the fiscal year ended
August 31, 2002;
2. the election of the Board of Directors comprising Glen Macdonald, Vera
McCullough and William Nielsen ;
-45-
3. the appointment of Amisano Hanson as auditors for the ensuing year;
4. the approval of the issuance of a maximum 1,000,000 common shares at a
price of $0.20 per share as indicated under this Form SB-2; and
5. to transact any other business matters which are brought forth at the
Meeting.
The directors are recommending the shareholders vote in favor of each of the
above noted resolutions. They do not know of any other business matters which
will be brought forth at the Meeting.
(a) A biography work history of Mr. William S. Nielsen is as follows:
WILLIAM SCHELL NIELSEN, (age), obtained a degree as an Registered Industrial
Accountant while attending the University of Alberta in Calgary, Alberta. In
(year) he received a degree in Business Administration and Accounting while
living in Hamilton, Bermuda. In 1964 Mr. Nielsen worked as General Manager for
Major Supplies Ltd. in Sechelt, British Columbia, Canada which was a company
retailing and wholesaling lumber, tools, hardware, electrical and automotive
supplies. He was responsible for sales, installation and servicing of major
domestic and commercial appliances for Inglis/Whirlpool and Sears Canada Ltd.
In 1984, he became Branch Manager for Inglis Limited in Surrey, British Columbia
where he was responsible for starting up the new Inglis service branch by
establishing inventory requirements, determining staff levels and overall
responsibility for service technicians and the customer service center. During
this period, Mr. Nielsen was responsible for accounting for all branch profits
and computerizing the entire operations. In 1992, he was transferred by
Inglis/Whirlpool Corporation to Mississauga, Ontario as District Manager and
Accountant where he was responsible for the management of parts inventory and
sales distribution for 32 Inglis Service Depots throughout British Columbia.
In addition, he was responsible for the development of new sales areas and the
accounting for all assets under his control. In 1997, he became Chief
Accountant and Administrator for Zarcan Minerals Inc. of Vancouver, British
Columbia where he was responsible for managing all company financial
transactions, including budgeting, preparation of all financial information for
distribution to Directors and shareholders, income tax preparation and payroll.
In 2002 he left this position to work full time with a business consulting
company, Nielsen-Popek & Associates, Certified Public Accountants, which he had
originally established in 1980. This firm is an established consulting business
offering ongoing evaluations, assessments, management development programs,
accounting and income tax preparation to small and medium sized companies.
Other factors and trends to be considered:
(i) Short and long-term trend liabilities
Stanford is unaware of any known trends, events or uncertainties that have or
are reasonably likely to have a material impact on its business either in the
long-term or long-term liquidity which have not been disclosed under Risk
Factors - Page 5.
-46-
(ii) Internal and external sources of liquidity
There are no material internal and external sources of liquidity.
(iii) Commitments for capital expenditures
Stanford has no commitments for any capital expenditures of a significant amount
and has not budgeted any funds from this Offering to purchase any assets of any
nature.
(iv) Known trends, events or uncertainties having an impact on income.
Since Stanford is in the start-up stage and the SF claims have not produced any
income, and there is a chance that they never will, management does not know of
any trends, events or uncertainties that are reasonably expected to have a
material impact on income in the future - refer to Risk Factor - 13 - page 11.
(v) Income from other sources.
Stanford knows of no significant elements of income or losses that do not arise
from Stanford's continuing operations. Until such time as Stanford has defined
a mineable ore reserve it will not realize any income.
(vi) Changes in the financial statements.
Stanford does not know of any cause for any material changes from period to
period in one or more line items of its financial statements as shown in this
Form SB-2. These audited financial statements adhere with accounting principles
generally accepted in the United States of America.
(vii) Seasonal aspects affecting the financial condition.
The only seasonal aspect known to Stanford which will affect its financial
condition or results of operations is the weather. During the initial
exploration stage, Stanford will only be able to explore the SF claim during the
late spring, summer and early fall months due to the possibility of snow in
winter. Winter weather conditions makes it difficult to obtain soil and rock
samples, prospecting, trenching and removal of overburden.
(2) Interim Periods
Stanford has no historical financial information upon which to base an
evaluation of its performance other than the audited financial statements filed
with this Form SB-2. It is in the exploration stage and has not generated any
revenues from operations to date. There is no guarantee that Stanford will have
successful business operations. It is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources,
possible delays in the exploration of the SF claim, and possible cost overruns
due to price and cost increases in services required during its exploration
work.
To date Stanford has concentrated on the SF claim. In the future, Stanford will
investigate other mining properties to determine which ones are of merit and are
of interest to Stanford. Subject to the availability of financing, Stanford
-47-
will seek to increase its inventory of mineral properties and, if acceptable to
management, enter into joint
venture agreements to develop various other mineral properties of merit. No
mineral properties or joint venture situations have been identified to date.
ITEM 18. DESCRIPTION OF PROPERTY
SF Claim
The description of the SF claim is more fully described under "Location and
Access" and "Land Tenure" on page 34.
Advantage of incorporation in Delaware
Stanford was incorporated in the State of Delaware. Had it been incorporated in
the Province of British Columbia it would be subject to both Provincial and
Federal Taxes on its net income earned during the fiscal year. In addition, the
Province of British Columbia has a capital tax over and above its corporate tax.
Taking into consideration the Federal/Provincial corporate tax and the capital
tax could result in Stanford paying half of its net income in taxes. Being a
Delaware incorporated entity will result in Stanford paying only 15% tax in
Canada which becomes a credit when filing a corporate tax return in the United
States. To take advantage of this situation, Stanford will have to become an
ex-provincially incorporated company in British Columbia. It has not yet taken
the steps to do this and will not ex-provincially incorporate until such time as
it has proven to have a viable ore reserve.
Investment Policy
Stanford is not limited on the percentage of assets which it may invest in and
therefore can purchase other mineral claims in the future. A disposal of a
major asset would result in the Board of Directors seeking shareholders'
approval since this would ensure no subsequent shareholder action could be
brought against Stanford and its directors and officers. Stanford's policy is
to acquire assets, being mineral properties, primarily for income in the future
rather than capital gains. It is the intention of Stanford to explore the SF
claim in hopes of eventually developing it into becoming a producing mineral
based property. In the interim period, management will invest idle funds into
income bearing securities such as term deposits, interest bearing notes, etc.
ITEM 19. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Stanford has never before filed a prospectus specified under Section 10(a) of
the Securities Act of 1933. Stanford raised funds from its director's
relatives, friends and business associates as more fully described below.
A former director, Philip Yee, acquired 400,000 shares at $0.001 per share for
cash consideration on February 24, 1999. Philip Yee is deemed to be a founder,
organizer and initial shareholder of Stanford. Other than the shares he
purchased, he received nothing of value from Stanford.
Douglas Symonds, a former President and director of Stanford, was transferred
Mr. Yee's shares for becoming a director and President of Stanford.
After the resignation of Mr. Symonds, Glen Macdonald acquired the 400,000 shares
noted above from Mr. Symonds and he became the President of Stanford.
-48-
Vera McCullough, Secretary Treasurer and Director, has no shares in Stanford but
is planning to acquire 25,000 shares under this Offering. Vera McCullough has
not entered into any agreement to purchase these shares and when they are
available for sale she will pay cash as will all investors under this Offering.
The shares registered to Glen Macdonald and the proposed shares to be purchased
under this Offering by Vera McCullough are and will be restricted since they
were and will be issued in compliance with the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended. After this
stock has been held for one year, the holders of these shares could sell a
percentage of their shares every three months based on 1% of the outstanding
stock in Stanford. Therefore, this stock can be sold after the expiration of
one year in compliance with the provisions of Rule 144. There are "stop
transfer" instructions placed against the stock of Glen Macdonald and a legend
is imprinted on the stock certificate. This will be the same case for the
future shares being purchased by Vera McCullough.
As of May 31, 2003, Glen Macdonald has the only shares restricted under Rule 144
totalling 400,000 shares.
Stanford did not use the services of an underwriter for the issuance of the
above- mentioned shares and therefore no discounts or commissions were paid to
anyone. All shares purchased were for cash consideration only.
Other than as set forth above, since inception there have not been any
transactions that have occurred between Stanford and its officers, directors,
promoters and five percent or greater shareholders.
ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
Market Information
Stanford's stock is not presently traded or listed on any public market and
therefore there is no established market price for the shares. Upon
effectiveness of Stanford's registration statement under the Securities Exchange
Act of 1934, it is anticipated one or more broker dealers may make a market in
its securities over-the-counter, with quotations carried on the National
Association of Securities Dealers, Inc.'s "OTC Bulletin Board". There is no
assurance Stanford will ever be quoted on the OTC Bulletin Board or any other
exchange.
Stanford has no proposed symbol for the OTC Bulletin Board and there is no
market maker for Stanford's shares.
There are no common shares subject to outstanding options, warrants or
securities convertible into common equity of Stanford. The number of shares
presently subject to Rule 144 is 400,000 shares. The share certificate has the
appropriate legend affixed thereto. There are no shares being offered pursuant
to an employee benefit plan or dividend reinvestment plan. In addition, there
are no outstanding options or warrants to purchase common shares or shares
convertible into common shares of Stanford.
-49-
Equity Compensation Plans
There are no securities authorized for issuance under equity compensation plans
or individual compensation arrangements.
ITEM 21. EXECUTIVE COMPENSATION
There has been no compensation given to any of the directors or officers since
inception. There are no stock options outstanding as at July 31, 2003 and no
options have been granted in 2002 or 2003, but it is contemplated that Stanford
may issue stock options in the future to officers, directors, advisers and
future employees.
Stanford has accrued $500 per month since its inception as management fees to
give recognition to services provided by the directors and officers for which
they are not paid. The directors and officers have agreed not to accept shares
or cash in the future for the management fees accrued to date. Therefore,
management fees have been expensed during the period they were recognized and
credited to Contributed Surplus. The total amount of management fees so
credited since inception is $28,500.
Stanford does not consider the above noted management fees as compensation to
the directors and officers because they received nothing personally, and the
expenses were accrued to accurately reflect the value of services provided to
Stanford, even though Stanford did not actually pay anything for such services.
There are no employment contracts or termination of employment agreements in
effect.
Initially Stanford will use independent workers and consultants on a part time
basis. This will enable Stanford to not incur long-term contracts with any
employee and will
assist Stanford to utilize funds raised by way of this Form SB-2 in the
exploration of the SF claim and not the retention of employees during idle
times.
Directors are not paid for meetings attended and there are no fees for telephone
meetings. Nevertheless, Stanford has accrued telephone charges for each period
since inception and credited a similar amount to Contributed Surplus. All
travel and lodging expenses associated with directors' meeting(s) are reimbursed
by Stanford when incurred.
ITEM 22. FINANCIAL STATEMENTS
The following represents the audited financial statements for the year ended
August 31, 2002.
-50-
INDEPENDENT AUDITORS' REPORT
To the Stockholders,
Stanford Management Ltd.
We have audited the accompanying balance sheets of Stanford Management Ltd. (A
Pre-exploration Stage Company) as of August 31, 2002 and 2001 and the related
statements of operations, stockholders' equity and cash flows for the years
ended August 31, 2002, 2001 and 2000 and for the period September 24, 1998 (Date
of Incorporation) to August 31, 2002. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, these financial statements referred to above present fairly, in
all material respects, the financial position of Stanford Management Ltd. as of
August 31, 2002 and 2001 and the results of its operations and its cash flows
for the years ended August 31, 2002, 2001 and 2000 and for the period from
September 24, 1998 (Date of Incorporation) to August 31, 2002, in conformity
with accounting principles generally accepted in the United States of America.
The accompanying financial statements referred to above have been prepared
assuming that the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company is in the pre-exploration stage,
and has no established source of revenue and is dependent on its ability to
raise capital from shareholders or other sources to sustain operations. These
factors, along with other matters as set forth in Note 1, raise substantial
doubt that the Company will be able to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Vancouver, Canada
September 23, 2002 Chartered Accountants
-51-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
BALANCE SHEETS
August 31, 2002 and 2001
(Stated in US Dollars)
--------------------
ASSETS 2002 2001
-------------- ---------
Current
Cash. . . . . . . . . . . . . . . . . . . . . . . $ - $ 1,045
============== =========
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities . . . . $ 9,707 $ 6,175
Due to related parties - Note 4. . . . . . . . . 3,895 2,912
-------------- ---------
13,602 9,087
-------------- ---------
STOCKHOLDERS' DEFICIENCY
Common stock $0.001 par value
25,000,000 authorized
2,358,500 outstanding. . . . . . . . . . . . . . . . 2,358 2,358
Paid-in Capital. . . . . . . . . . . . . . . . . . . 3,092 3,092
Contributed surplus - Note 8 . . . . . . . . . . . . 50,400 37,800
Deficit accumulated during the pre-exploration stage (69,452) (51,292)
-------------- ---------
(13,602) (8,042)
-------------- ---------
$ - $ 1,045
============== =========
Nature and Continuance of Operations - Note 1
Subsequent Event - Note 9
APPROVED BY THE BOARD:
/s/"Glen Macdonald" , Director /s/"Vera McCullough" , Director
- ------------------------- - -----------------------
SEE ACCOMPANYING NOTES
-52-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
STATEMENT OF OPERATIONS
For the years ended August 31, 2002, 2001 and 2000 and the period
September 24, 1998 (Date of Incorporation) to August 31, 2002
(Stated in US Dollars)
--------------------
SEPTEMBER 24,
YEAR ENDED YEAR ENDED YEAR ENDED 1998 (DATE OF
AUGUST 31 AUGUST 31 AUGUST 31 INCORPORATION)
2002 2001 2000 AUGUST 31, 2002
--------------- ------------ --------------- -------------------
Expenses
Accounting . . . . . . . . . . . $ 1,750 $ 1,500 $ 1,550 $ 6,300
Bank charges and interest. . . . 426 84 70 618
Exploration expenses . . . . . . 1,282 2,912 - 4,194
Filing fees. . . . . . . . . . . 502 120 100 1,152
Management fees. . . . . . . . . 6,000 6,000 6,000 24,000
Office . . . . . . . . . . . . . 385 - 63 563
Rent - Note 8. . . . . . . . . . 4,200 4,200 4,200 16,800
Telephone - Note 8 . . . . . . . 2,400 2,400 2,400 9,600
Transfer agent's fees. . . . . . 1,215 1,200 1,200 6,225
--------------- ------------ --------------- -------------------
$ 18,160 $ 18,416 $ 15,583 $ 69,452
--------------- ------------ --------------- -------------------
Net loss for the period . . . . . . $ 18,160 $ 18,416 $ 15,583 $ 69,452
=============== ============ =============== ===================
Basic and diluted loss per share. . $ ( 0.001) $ ( 0.001) $ ( 0.001)
=============== ============ ===============
Weighted average shares outstanding 2,358,500 2,358,500 2,358,500
=============== ============ ===============
SEE ACCOMPANYING NOTES
-53-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
STATEMENT OF CASH FLOWS
For the years ended August 31, 2002, 2001 and 2000 and for the period
September 24, 1998 (Date of Incorporation) to August 31, 2002
(Stated in US Dollars)
--------------------
SEPTEMBER 24,
1998 (DATE OF
YEAR ENDED YEAR ENDED YEAR ENDED INCORPORATION)
AUGUST 31 AUGUST 31 AUGUST 31 TO AUGUST 31
2002 2001 2000 2002
--------------- ------------ ------------------- -----------
Cash flows from Operating Activities
Net loss for the period. . . . . $ (18,160) $ (18,416) $ (15,583) $ (69,452)
Non-cash administrative expenses 12,600 12,600 12,600 50,400
Changes in non-cash working capital
item
Accounts payable and accrued
liabilities . . . . . . . . . . 3,532 2,939 1,533 9,707
--------------- ------------ ------------------- -----------
Cash used in operating activities (2,028) (2,978) (1,450) (9,345)
--------------- ------------ ------------------- -----------
Cash flows from Financing Activities
Capital stock issued. . . . . . . - - - 5,450
Due to related party. . . . . . . 983 2,912 - 3,895
--------------- ------------ ------------------- -----------
Cash provided by financing activities 983 2,912 - 9,345
--------------- ------------ ------------------- -----------
Net increase in cash. . . . . . . . . (1,045) ( 66) ( 1,450) -
Cash, beginning of the period . . . . 1,045 1,111 2,561 -
--------------- ------------ ------------------- -----------
Cash, end of period . . . . . . . . . $ - $ 1,045 $ 1,111 $ -
=============== ============ =================== ===========
Supplemental disclosure of cash flow
information:
Cash paid for:
Interest. . . . . . . . . . . $ - $ - $ -
=============== ============ ===================
Income taxes. . . . . . . . . - - -
=============== ============ ===================
Non-cash transaction - Note 8
SEE ACCOMPANYING NOTES
-54-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIENCY
August 31, 2002
(Stated in US Dollars)
--------------------
DEFICIT
ACCUMULATED
DURING THE PRE-
PAID-IN CONTRIBUTED EXPLORATION
NUMBER PAR VALUE CAPITAL SURPLUS STAGE TOTAL
----------- ------------ ---------------- -------- ------------- ------
Capital stock issued
For cash - at $0.001. . . 2,015,000 $ 2,015 $ - $ - $ - $ 2,015
- at $0.01 343,500 343 3,092 - - 3,435
Capital contribution. . . . . . . . . . - - - 12,600 - 12,600
Net loss for the period . . . . . . . . - - - - (17,293) (17,293)
----------- ------------ ------------- -------- ---------- ---------
Balance, August 31, 1999. . . . . . . . 2,358,500 2,358 3,092 12,600 (17,293) 757
Capital contribution. . . . . . . . . . - - - 12,600 - 12,600
Net loss for the period . . . . . . . . - - - - (15,583) (15,583)
----------- ------------ ------------ -------- ---------- ---------
Balance, August 31, 2000. . . . . . . . 2,358,500 2,358 3,092 25,200 (32,876) (2,226)
Capital contribution. . . . . . . . . . - - - 12,600 - 12,600
Net loss for the period . . . . . . . . - - - - (18,416) (18,416)
----------- ------------ ---------- -------- ---------- ---------
Balance, August 31, 2001. . . . . . . . 2,358,500 2,358 3,092 37,800 (51,292) ( 8,042)
Capital contribution. . . . . . . . . . - - - 12,600 - -
Net loss for the period . . . . . . . . - - - - (18,160) (18,160)
----------- ------------ ---------- -------- ---------- ---------
BALANCE, AUGUST 31, 2002. . . . . . . . 2,358,500 $ 2,358 $ 3,092 $ 50,400 $ (69,452) $(13,602)
=========== ============ =========== ======== ========== =========
SEE ACCOMPANYING NOTES
-55-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
For the years ended August 31, 2002, 2001 and 2000
(Stated in US Dollars)
--------------------
NOTE 1 NATURE AND CONTINUANCE OF OPERATIONS
----------------------------------------
The Company was incorporated under the laws of the State of Delaware on
September 24, 1998.
The Company is in the pre-exploration stage. The Company has staked a
mineral claim and has not yet determined whether this property contains
reserves that are economically recoverable. The recoverability of amount
from the property will be dependent upon the discovery of economically
recoverable reserves, confirmation of the Company's interest in the
underlying property, the ability of the Company to obtain necessary
financing to explore and complete and development of the property and upon
future profitable production or proceeds for the sale thereof.
These financial statements have been prepared on a going concern basis. The
Company has accumulated a deficit of $69,452 since inception and at August
31, 2002 has a working capital deficiency totaling $13,602. Its ability to
continue as a going concern is dependent upon the ability of the Company to
generate profitability operations in the future and/or to obtain the
necessary financing to meet its obligations and repay its liabilities
arising from normal business operations when they come due.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------
The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles in the United States of
America. Because a precise determination of many assets and liabilities is
dependent upon future events, the preparation of financial statements for a
period necessarily involves the use of estimates which have been made using
careful judgement. Actual results may vary from these estimates.
The financial statements have, in management's opinion, been properly
prepared within reasonable limits of materiality and within the framework
of the significant accounting policies summarized below:
Pre-exploration Stage Company
-------------------------------
The Company complies with Financial Accounting Standard Board Statement No.
7, and Securities and Exchange Commission Act Guide 7 for its
characterization of the Company as pre-exploration stage.
Exploration Expenses
---------------------
Cost of lease, acquisition, exploration, carrying and retaining unproven
mineral properties are expenses as incurred.
-56-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
For the years ended August 31, 2002, 2001 and 2000
(Stated in US Dollars) - Page 2
--------------------
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)
-----------------------------------------------------------
Environmental Costs
--------------------
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations, and which do not contribute to current
or future revenue generation, are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable, and the
cost can be reasonably estimated. Generally, the timing of these accruals
coincides with the earlier of completion of a feasibility study or the
Company's commitments to plan of action based on the then known facts.
Income Taxes
-------------
The Company uses the liability method of accounting for income taxes
pursuant to Statement of Financial Accounting Standards, No. 109
"Accounting for Income Taxes."
Basic Loss Per Share
-----------------------
The Company reports basic loss per share in accordance with the Statement
of Financial Accounting Standards No. 128, "Earnings Per Share". Basic loss
per share is computed using the weighted average number of shares
outstanding during the period. Diluted loss per share has not been provided
as it would be antidilutive.
Fair Value of Financial Instrument
--------------------------------------
The carrying value of each accounts payable and accrued liabilities and due
to related parties approximates fair value because of the short maturity of
these instruments. Unless otherwise noted, it is management's opinion that
the Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments.
NOTE 3 MINERAL CLAIMS
---------------
The Company has a 100% interest in a 18 unit metric mineral claim known as
the SF claims located in the Tulameen Mining Division located 11 miles
northwest of Princeton, British Columbia, Canada. The claims have not been
proven to have a commercially mineable reserve and therefore all costs for
exploration and retaining the properties have been expensed.
NOTE 4 DUE TO RELATED PARTIES
-------------------------
Amounts due to related parties are due to a director of the Company and are
unsecured, do not bear interest and have no fixed repayment terms.
-57-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
For the years ended August 31, 2002, 2001 and 2000
(Stated in US Dollars) - Page 3
--------------------
NOTE 5 DEFERRED TAX ASSETS
---------------------
The Financial Accounting Standards Board issued Statement Number 109 in
Accounting for Income Taxes ("FAS 109") which is effective for fiscal years
beginning after December 15, 1992. FAS 109 requires the use of the asset
and liability method of accounting of income taxes. Under the assets and
liability method of FAS 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to temporary
differences between the financial statements carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled.
The following table summarizes the significant components of the Company's
deferred tax assets:
Total
-----------------
Deferred tax assets
Non-capital loss carryforward $ 10,500
Less: valuation allowance . . (10,500)
-----------------
$ -
=================
The amount taken into income as deferred tax assets must reflect that
portion of the income tax loss carry forwards that is likely to be realized
from future operations. The Company has chosen to provide an allowance of
100% against all available income tax loss carryforwards, regardless of
their time of expiry.
NOTE 6 INCOME TAXES
-------------
No provision for income taxes has been provided in these financial
statements due to the net loss. At August 31, 2002 the Company has net
operating loss carryforwards, which expire commencing in 2019, totaling
approximately $69,452, the benefit of which has not been recorded in the
financial statements.
NOTE 7 NEW ACCOUNTING STANDARDS
--------------------------
Management does not believe that any recently issued, but not yet effective
accounting standards if currently adopted could have a material effect on
the accompanying financial statements.
-58-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
For the years ended August 31, 2002, 2001 and 2000
(Stated in US Dollars) - Page 4
--------------------
NOTE 8 NON-CASH TRANSACTION
---------------------
Investing and financing activities that do not have a direct impact on
current cash flows are excluded from the statement of cash flows. Directors
and officers of the Company have provided certain administrative services
at no charge. The deemed fair value of these services has been recorded as
contributed surplus as follows:
SEPTEMBER 24
1998 (DATE OF
INCORPORATION)
TO AUGUST 31,
2002 2001 2000 2002
------------- -------------- ------------- --------------
Management fees. $ 6,000 $ 6,000 $ 6,000 $ 24,000
Rent . . . . . . 4,200 4,200 4,200 16,800
Telephone. . . . 2,400 2,400 2,400 9,600
------------- -------------- ------------- --------------
$ 12,600 $ 12,600 $ 12,600 $ 50,400
============= ============== ============= ==============
These transactions were excluded from the statement of cash flows.
NOTE 9 SUBSEQUENT EVENT
-----------------
The Company intends to file a SB-2 registration statement, which includes
an initial public offering of 1,000,000 common shares at $0.20 per share.
-59-
The following represents the audited financial statements for the nine
months ended May 31, 2003:
INDEPENDENT AUDITORS' REPORT
To the Stockholders,
Stanford Management Ltd.
We have audited the accompanying balance sheets of Stanford Management Ltd. (A
Pre-exploration Stage Company) as of May 31, 2003 and August 31, 2002 and the
related statements of operations, stockholders' equity and cash flows for the
nine months ended May 31, 2003 and for the period September 24, 1998 (Date of
Incorporation) to May 31, 2003. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, these financial statements referred to above present fairly, in
all material respects, the financial position of Stanford Management Ltd. as of
May 31, 2003 and August 31, 2002 and the results of its operations and its cash
flows for the nine months ended May 31, 2003 and for the period from September
24, 1998 (Date of Incorporation) to May 31, 2003, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements referred to above have been prepared
assuming that the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company is in the pre-exploration stage,
and has no established source of revenue and is dependent on its ability to
raise capital from shareholders or other sources to sustain operations. These
factors, along with other matters as set forth in Note 1, raise substantial
doubt that the Company will be able to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Vancouver, Canada
July 15, 2003 Chartered Accountants
-60-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
BALANCE SHEETS
May 31, 2003 and August 31, 2002
(Stated in US Dollars)
--------------------
MAY 31 August 31
2003 2002
----------- --------------
ASSETS
------
Current
Prepaid expenses . . . . . . . . . . . . . . . . . $ 3,732 $ -
=========== ==============
LIABILITIES
-----------
Current Liabilities
Accounts payable and accrued liabilities . . . . $ 14,779 $ 9,707
Due to related parties - Note 4. . . . . . . . . 10,069 3,895
----------- --------------
24,848 13,602
----------- --------------
STOCKHOLDERS' DEFICIENCY
------------------------
Common stock $0.001 par value
25,000,000 authorized
2,358,500 outstanding. . . . . . . . . . . . . . . . 2,358 2,358
Paid-in Capital. . . . . . . . . . . . . . . . . . . 3,092 3,092
Contributed surplus - Note 8 . . . . . . . . . . . . 59,850 50,400
Deficit accumulated during the pre-exploration stage (86,416) (69,452)
----------- --------------
(21,116) (13,602)
----------- --------------
$ 3,732 $ -
=========== ==============
Nature and Continuance of Operations - Note 1
Subsequent Event - Note 9
APPROVED BY THE BOARD:
/s/ "Glen Macdonald", Director /s/"Vera McCullough", Director
- ------------------------------ ----------------------
SEE ACCOMPANYING NOTES
-61-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
STATEMENT OF OPERATIONS
For the three and nine months ended May 2003 and 2002 and the period
September 24, 1998 (Date of Incorporation) to May 31, 2003
(Stated in US Dollars)
--------------------
(Audited)
Sept. 24
(Unaudited) (Audited) (Unaudited) 1998, (Date of
Three months ended Nine months ended (Incorporation)
May 31 May 31 to May 31,
2003 2002 2003 2002 2003
---- ---- ---- ---- ----
Expenses
Accounting, audit and
legal. . . . . . . . . $ 5,390 $ - $ 5,340 $ - $11,640
Bank charges and
interest. . . . . . . 295 116 423 263 1,041
Exploration expenses . - - 500 - 4,694
Filing fees . . . . . - 125 - 502 1,152
Management fees -
Note 8 . . . . . . . . 1,500 1,500 4,500 4,500 28,500
Office . . . . . . . . - 153 - 153 563
Rent - Note 8. . . . . 1,050 1,050 3,150 3,150 19,950
Telephone - Note 8 . . 600 600 1,800 1,800 11,400
Transfer agent's fees. 1,200 1,200 1,251 1,215 7,476
---------------- ------- ------- -------
Net loss for the period$10,035 $ 4,744 $16,964 $11,583 $86,416
=========== ======= ======== ======= =======
Basic and diluted loss
per share $ (0.00) $ (0.00) $ ( 0.01) $( 0.00)
======= ======= ======== ========
Weighted average
shares outstanding . 2,358,500 2,358,500 2,358,500 2,358,500
=========== ========= ========= =========
SEE ACCOMPANYING NOTES
-62-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
STATEMENT OF CASH FLOWS
For the nine months ended May 31, 2003 and 2002 and for the period
September 24, 1998 (Date of Incorporation) to May 31, 2003
(Stated in US Dollars)
--------------------
(Audited)
September 24,
(Audited) (Unaudited) 1998 (Date of
Nine months ended Incorporation)
May 31 to May 31
2003 2002 2003
---- ---- ----
Operating Activities
Net loss for the period . . . . . . $ (16,964) $ (11,583) $ (86,416)
Non-cash administrative expenses. . 9,450 9,450 59,850
Changes in non-cash working capital
item
Prepaid expenses . . . . . . . . . . (3,732) - (3,732)
Accounts payable and accrued liabilities 5,072 1,399 14,779
----------- ----------- -----------
Cash used in operating activities. . . . (6,174) (734) (15,519)
----------- ----------- -----------
Cash flows from Financing Activities
Capital stock issued . . . . . . . . - - 5,450
Due to related party . . . . . . . . 6,174 - 10,069
----------- ----------- -----------
Cash provided by financing activities. . - - 15,519
----------- ----------- -----------
Net decrease in cash for the period. . . - (734) -
Cash, beginning of the period. . . . . . - 1,045 -
----------- ----------- -----------
Cash, end of period. . . . . . . . . . . $ - $ 311 $ -
=========== =========== ===========
Supplemental disclosure of cash flow
information:
Cash paid for:
Interest . . . . . . . . . . . . $ - $ - $ -
=========== =========== ===========
Income taxes . . . . . . . . . . $ - $ - $ -
=========== =========== ===========
Non-cash transaction - Note 8
SEE ACCOMPANYING NOTES
-63-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIENCY
for the period September 24, 1998 (Date of Incorporation) to May 31, 2003
(Stated in US Dollars)
--------------------
DEFICIT
ACCUMULATED
DURING THE PRE-
PAR PAID-IN CONTRIBUTED EXPLORATION
NUMBER VALUE CAPITAL SURPLUS STAGE TOTAL
----------- --------- ------------ ---------------- --------- -------
Capital stock issued
For cash - at $0.001. . . 2,015,000 $ 2,015 $ - $ - $ - $ 2,015
- at $0.01 343,500 343 3,092 - - 3,435
Capital contribution. . . . . . . . . . - - - 12,600 - 12,600
Net loss for the period . . . . . . . . - - - - (17,294) (17,294)
----------- --------- ---------- ---------------- --------- ---------
Balance, August 31, 1999. . . . . . . . 2,358,500 2,358 3,092 12,600 (17,294) 756
Capital contribution. . . . . . . . . . - - - 12,600 - 12,600
Net loss for the period . . . . . . . . - - - - (15,583) (15,583)
----------- --------- ---------- ---------------- --------- ---------
Balance, August 31, 2000. . . . . . . . 2,358,500 2,358 3,092 25,200 (32,877) (2,227)
Capital contribution. . . . . . . . . . - - - 12,600 - 12,600
Net loss for the period . . . . . . . . - - - - (18,415) (18,415)
----------- --------- ---------- ---------------- --------- ---------
Balance, August 31, 2001. . . . . . . . 2,358,500 2,358 3,092 37,800 (51,292) ( 8,042)
Capital contribution. . . . . . . . . . - - - 12,600 - 12,600
Net loss for the period . . . . . . . . - - - - (18,160) (18,160)
----------- --------- ---------- ---------------- --------- ---------
Balance, August 31, 2002. . . . . . . . 2,358,500 2,358 3,092 50,400 (69,452) (13,602)
Capital contribution. . . . . . . . . . - - - 9,450 - 9,450
Net loss for the period . . . . . . . . - - - - (16,964) (16,964)
----------- --------- ---------- ---------------- --------- ---------
BALANCE, MAY 31, 2003 . . . . . . . . . 2,358,500 $ 2,358 $ 3,092 $ 59,850 $(86,416) $(21,116)
=========== ========= ========== ================ ========= =========
SEE ACCOMPANYING NOTES
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STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2003
(Stated in US Dollars)
--------------------
NOTE 1 NATURE AND CONTINUANCE OF OPERATIONS
----------------------------------------
The Company was incorporated under the laws of the State of Delaware on
September 24, 1998.
The Company is in the pre-exploration stage. The Company has staked a
mineral claim and has not yet determined whether this property contains
reserves that are economically recoverable. The recoverability of amount
from the property will be dependent upon the discovery of economically
recoverable reserves, confirmation of the Company's interest in the
underlying property, the ability of the Company to obtain necessary
financing to explore and complete and develop the property and upon future
profitable production or proceeds for the sale thereof.
These financial statements have been prepared on a going concern basis. The
Company has accumulated a deficit of $86,416 since inception and at May 31,
2003 has a working capital deficiency totaling $21,116. Its ability to
continue as a going concern is dependent upon the ability of the Company to
generate profitable operations in the future and/or to obtain the necessary
financing to meet its obligations and repay its liabilities arising from
normal business operations when they come due.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------
The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles in the United States of
America. Because a precise determination of many assets and liabilities is
dependent upon future events, the preparation of financial statements for a
period necessarily involves the use of estimates, which have been made
using careful judgment. Actual results may vary from these estimates.
The financial statements have, in management's opinion, been properly
prepared within reasonable limits of materiality and within the framework
of the significant accounting policies summarized below:
Pre-exploration Stage Company
-------------------------------
The Company complies with Financial Accounting Standard Board Statement No.
7, and Securities and Exchange Commission Act Guide 7 for its
characterization of the Company as pre-exploration stage.
Exploration Expenses
---------------------
Cost of lease, acquisition, exploration, carrying and retaining unproven
mineral properties are expensed as incurred.
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STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2003
(Stated in US Dollars) - Page 2
--------------------
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)
-----------------------------------------------------------
Environmental Costs
--------------------
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations, and which do not contribute to current
or future revenue generation, are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable, and the
cost can be reasonably estimated. Generally, the timing of these accruals
coincides with the earlier of completion of a feasibility study or the
Company's commitments to plan of action based on the then known facts.
Income Taxes
-------------
The Company uses the liability method of accounting for income taxes
pursuant to Statement of Financial Accounting Standards, No. 109
"Accounting for Income Taxes."
Basic Loss Per Share
-----------------------
The Company reports basic loss per share in accordance with the Statement
of Financial Accounting Standards No. 128, "Earnings Per Share". Basic loss
per share is computed using the weighted average number of shares
outstanding during the period. Diluted loss per share has not been provided
as it would be antidilutive.
Fair Value of Financial Instrument
--------------------------------------
The carrying value of each accounts payable and accrued liabilities and due
to related parties approximates fair value because of the short maturity of
these instruments. Unless otherwise noted, it is management's opinion that
the Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments.
NOTE 3 MINERAL CLAIMS
---------------
The Company has a 100% interest in a 18 unit metric mineral claim known as
the SF claims located in the Similkameen Mining Division located 11 miles
northwest of Princeton, British Columbia, Canada. The claims have not been
proven to have a commercially mineable reserve and therefore all costs for
exploration and retaining the properties have been expensed.
NOTE 4 DUE TO RELATED PARTIES
-------------------------
Amounts due to related parties are due to a director of the Company and are
unsecured, do not bear interest and have no fixed repayment terms.
-66-
STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2003
(Stated in US Dollars) - Page 3
--------------------
NOTE 5 DEFERRED TAX ASSETS
---------------------
The Financial Accounting Standards Board issued Statement Number 109 in
Accounting for Income Taxes ("FAS 109") which is effective for fiscal years
beginning after December 15, 1992. FAS 109 requires the use of the asset
and liability method of accounting of income taxes. Under the assets and
liability method of FAS 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to temporary
differences between the financial statements carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled.
The following table summarizes the significant components of the Company's
deferred tax assets:
Total
-----------------
Deferred tax assets
Non-capital loss carry-forward $ 12,400
Less: valuation allowance. . . (12,400)
-----------------
$ -
=================
The amount taken into income as deferred tax assets must reflect that
portion of the income tax loss carry forwards that is likely to be realized
from future operations. The Company has chosen to provide an allowance of
100% against all available income tax loss carry-forwards, regardless of
their time of expiry.
NOTE 6 INCOME TAXES
-------------
No provision for income taxes has been provided in these financial
statements due to the net loss. At August 31, 2002 the Company has net
operating loss carry-forwards, which expire commencing in 2019, totaling
approximately $69,452, the benefit of which has not been recorded in the
financial statements.
NOTE 7 NEW ACCOUNTING STANDARDS
--------------------------
Management does not believe that any recently issued, but not yet effective
accounting standards if currently adopted could have a material effect on
the accompanying financial statements.
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STANFORD MANAGEMENT LTD.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
May 31, 2003
(Stated in US Dollars) - Page 4
--------------------
NOTE 8 NON-CASH TRANSACTION
---------------------
Investing and financing activities that do not have a direct impact on
current cash flows are excluded from the statement of cash flows. Directors
and officers of the Company have provided certain administrative services
at no charge. The deemed fair value of these services has been recorded as
contributed surplus as follows:
(Audited)
Sept. 24,
(Unaudited) (Audited) (Unaudited) 1998 (Date of
Three months ended Nine months ended Incorporation)
May 31 May 31 to May 31
2003 2002 2003 2002 2003
---- ---- ---- ---- ----
Management fees $1,500 $1,500 $4,500 $4,500 $28,500
Rent. . . . . . 1,050 1,050 3,150 3,150 19,950
Telephone . . . 600 600 1,800 1,800 11,400
------- ------ ------ - ----- --------
$ 3,150 $3,150 $9,450 $9,450 $ 59,850
======= ====== ====== ====== ========
These transactions were excluded from the statement of cash flows.
NOTE 9 SUBSEQUENT EVENT
-----------------
The Company intends to file a SB-2 registration statement, which includes
an initial public offering of 1,000,000 common shares at $0.20 per share.
-68-
ITEM 23. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNT
AND FINANCIAL DISCLOSURE
The principal accountant's report, rendered by Amisano Hanson, Chartered
Accountants, on the financial statements did not contain adverse opinion or
disclaimer of opinion, or was modified as to uncertainty, audit scope, or
accounting principles. No decision has been made by the shareholders of the
Stanford to change accountants. There has been no disagreement with the auditors
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures.
-69-
PART II
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Information on this item is set forth in the prospectus under the heading Item
14 - "Disclosure of Commission Position on Indemnification for Securities Act
Liabilities" on page 28.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated fees and expenses in connection
with the issuance and distribution of the securities being registered hereunder,
all of which are being paid by Stanford:
Minimum Maximum
Subscription Subscription
------------- -------------
Audit and accounting . . . . . . . . . . . . . $ 5,000 $ 5,000
Legal. . . . . . . . . . . . . . . . . . . . . 5,000 5,000
Office and miscellaneous . . . . . . . . . . . 500 700
Transfer agent's fees - new issuance of shares 1,000 1,500
------------- -------------
Estimated Expenses of issuance . . . . . . . . $ 11,500 $ 12,200
============= =============
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
From inception through to July 31, 2003, Stanford has issued and sold the
following unregistered shares of its common stock (the aggregated value of all
such offerings did not exceed $1,000,000):
(i) Subscription for shares by a Director and Officer of Stanford
(a) Subscription for shares by a former director and officer
On February 24, 1999 Stanford issued to its former President, Philip
Yee, 400,000 common shares at .001 per share.
Douglas Symonds, a former President, acquired the 400,000 common
shares previously held by Mr. Yee for becoming Stanford's President.
(b) Subscription for shares by current directors and officers
Stanford's new President Glen Macdonald, was transferred the 400,000
common shares previously held by Mr. Symonds for becoming the
President of Stanford on October 24, 2002.
These shares are restricted since they were issued in compliance with
the exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended. After this stock has been held for
one year, Glen Macdonald could sell within a three month period a
percentage of his shares based on 1% of the outstanding stock in the
-70-
Stanford. Therefore, this stock can be sold after the expiration of
one year in compliance with the provisions of Rule 144. There are
"stop transfer" instructions placed against this certificate and a
legend has been imprinted on the stock certificate itself.
(ii) Subscription for 1,615,000 shares
On February 24, 1999, Stanford accepted subscriptions from 18
investors in the amount of 1,615,000 shares at a price of $0.001 per
share. In all cases, the consideration was cash. These shares were
issued in accordance with the exemption from registration provided by
Rule 504 of Regulation D of the Securities Act of 1933, as amended,
and an appropriate Form D was filed in connection with the issuance of
these shares.
(iii) Subscription for 343,500 shares
On March 3, 1999, Stanford accepted subscriptions from 40 investors in
the amount of 343,500 shares at a price of $0.01 per share. In all
cases the consideration was cash. These shares were issued in
accordance with the exemption from registration provided by Rule 504
of Regulation D of the Securities Act of 1933, as amended, and an
appropriate Form D was filed in connection with the issuance of these
shares.
-71-
ITEM 27. EXHIBITS
EXHIBIT
NO. DESCRIPTION PAGE
- ----------------------------------------------- ---------------------------- ----
3.i . . Certificate of Incorporation 75
3.i-I Certificate of Renewal and the Revival of the
. . . . . .Certificate Of Incorporation 76
3 .ii . By-laws 78
4.1 Stock Specimen 86
5.1 Opinion re. Legality 87
10.1 Material Contracts
Transfer Agent and Registrar Agreement 89
11.1 Statement re: Computation of Per Share
Earnings 92
23.1 Consent of Experts and Counsel
Amisano Hanson . . . . . . . . . 93
John Jenks, P. Geo. 94
99 99.1 Share Subscription Agreement 95
99.2 Indemnification Agreement . . . . . . 98
ITEM 28. UNDERTAKINGS
Stanford hereby undertakes to:
(a)
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10 (a) (3) of the Securities Act
of 1933;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement.
(iii) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act of 1933, Stanford will
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time will be
deemed to be the initial bona fide offering.
(3) Stanford will file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
-72-
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions,
or otherwise, the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officers or controlling person of
the small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the small business issuer
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, Stanford
certifies that it has reasonable grounds to believe that it meets all the
requirements of filing on Form SB-2 and authorized this registration to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Vancouver, British Columbia, Canada on August 25, 2003.
STANFORD MANAGEMENT LTD.
(Registrant)
/s/ "Glen Macdonald"
----------------------
Glen Macdonald
Chief Executive Officer
President, and Director
SPECIAL POWER OF ATTORNEY
The undersigned constitute and appoint Glen Macdonald their true and lawful
attorney-in-fact and agent with full power of substitution, for him and in his
name, place, and stead, in any and all capacities, to sign any and all
amendments, including post-effective amendments, to this Form SB-2 registration
the U.S. Securities and Exchange Commission, granting such attorney-in-fact the
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorney-in-fact may lawfully do or cause to be done by
virtue hereof. Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the
capacities and on the date indicated.
Dated: August 25, 2003
/s/ "Glen Macdonald"
- ----------------------
Glen Macdonald
Chief Executive Officer
President and Director
/s/ "Vera McCullough"
- -----------------------
Vera McCullough
Chief Accounting Officer
Secretary Treasurer and Director
-73-