MADISON EXPLORATIONS INC.
NEVADA INCORPORATED DIAMOND EXPLORATION COMPANY
[Madison Exploration Logo Appears Here]
December 16, 2005
United States Securities and Exchange Commission
Washington, D.C. 20549
Attention:
Dear Sirs:
Re: Madison Explorations, Inc.
Registration Statement on form 10 SB
Commission File No. 0-51302
This letter is in reply to your letter of November 29, 2005.
Below is an explanation of our modifications to the original file, based on the
comments you have made. The numbering system in this letter corresponds to the
numbering system in your letters to us.
GENERAL:
1. With respect to our previous comment 1 of our letter dated June 9,
2005, we note your revisions. Please continue your revisions as there
are still various areas in the document where you discuss Canadian
dollars without providiing a translation to United States Dollars.
We have now revised the entire document. Anywhere we have discussed
Canadian dollars we have also provided a translation to United States
dollars.
Part I
ITEM 1. DESCRIPTION OF YOUR BUSINESS
2. Your attention is directed to the prior comment 1 of your June 21,
2005 letter. Please more fully identify Echo Resources, which was
granted an option in your "Bulls Eye" property. Advise how you became
familiar with Echo Resources with whom you have entered into two
significant agreements.
We have added a description of Echo Resources, Inc. Into our filing,
as follows:
Echo Resources, Inc., formerly known as TVE Corporation ("Echo") is a
Delaware corporation with its principle office located at 500
Austrailian Avenue, West Palm Beach, FL. It has approximately 200
shareholders, and is pubically traded on the Over the Counter Bulletin
Board under the symbol "ECHR." Echo is engaged as a pre-exploration
stage company with its business strategy focussing on the development
and exploration of diamond and gold mines in Canada. Echo became aware
of Madison through Madison's website and followup discussions
resulting therefrom.
3. In the fifth paragraph on page 3, you state you signed an acquisition
agreement on June 16, 2005. However, the agreement appears to have
been consummated in 2004. Also, in other areas of the document you
discuss an acquisition agreement dated June 16, 2004. Please revise
the document to provide consistent information throughout.
The date you refer of June 16, 2005 was in error. We signed the
acquisition agreement on June 16, 2004. The paragraph has now been
amended to reflect the correct date.
4. In the last paragraph on page three, you state "(i)f Echo Resources
Inc. pays the $44,000...." Based on the financial statements, it
appears that Echo has already paid the $44,000 as of December 31,
2004. Revise the disclosure or explain to us your accounting treatment
of $44,000.
Echo Resources paid the $44,000 as of December 31, 2004. We have
amended this paragraph to state the following:
"Echo Resources has paid the $44,000 due to us. If Echo funds half of
the proposed exploration, then it will earn a 20% interest in the
property."
5. In the second paragraph on page 4 you state that you recorded the
$50,000 received for the Bronco property interest as a deposit. Revise
to clarify that the deposit is reflected as a liability on the balance
sheet.
We have revised the paragraph by adding the following sentences: "The
deposit is reflected as a liability on the balance sheet in order to
better match the expenses to their related revenue source. As funds
are spent on this property, the company will bring the corresponding
revenue amount into income. If the Company decides to abandon the
property then any remaining deposit will be brought into income in
that year."
ACQUISITION AGREEMENT
6. Your attention is directed to prior comment 4 of our June 21, 2005
letter, as previously requested, disclose how much Mr. Fu and Dr.
Montgomery purchased the Scout Lake Property for and that the
Acquisition Agreement requires Madison to loan the mine development
costs to be borne by Dr. Montgomery and Mr. Fu.
We have added the following dislcosure:
Mr. Fu and Dr. Montgomery purchased the Scout Lake Property for CAD
$7,800 or approximately USD $6,610. The Acquisition Agreement does
require Madison to loan the mine development costs to be borne by Dr.
Montgomery and Mr. Fu.
7. In the second paragraph on page 5, you discuss certain properties that
were claimed in April 2002 and July of 2004. Revise to provide the
names of these properties.
All of the claims discussed in the second paragraph on page five are
part of the "Scout Lake Property." The claims recorded in April 2002
under numbers S-135705, S-135706, and S-135707 are the original land
claims comprising the Scout Lake Property on which drilling activity
occurred. These have been allowed to lapse. The claim numbers relating
to the Scout Lake property are S-137962 and S-137963, were claimed by
Scout Resources in July 2004.
EXPLORATION PROGRAM
8. Please put the references to Fort a la Corne District and the Wood
Mountain District in context. We understand that your focus will now
be on the Wood Mountain District, specifically the Val Marie area.
The following area descriptions have been added to our document in the
section named "Exploration Program":
"Two areas in Saskatchewan have been designated as having diamond
discovery potential. They are the Fort a la Corne District and the
Wood Mountain District.
The Fort a la Corne District is the area surrounding Prince Albert in
North-Central Saskatchewan Canada. The Fort a la Corne area of
Saskatchewan hosts one of the most extensive kimberlite fields in the
world. Over 70 kimberlites exist in the Fort a la Corne area and over
70 percent of these have been shown to contain diamonds. Shore Gold
Inc has discovered a diamond bearing kimberlite within the Fort a la
Corne area, and is currently conducting a Pre-Feasibility Study to
determine the commercial viability of their find.
The Wood Mountain area an area in which high occurances of diamond
indicator minerals have been found, similar to those at Fort a la
Corne. The Wood Mountain area is in South-West Saskatchewan
The Company's focus will be on properties that are in or near the Wood
Mountain area, near the towns of Val Marie and Wideview. It is noted
that both of these towns lie in defined Wood Mountain area."
A Mineral Resouce Occurance Map of Saskatchewan has been included as
supplemental information to this filing that graphically illustrates
each of the named diamond potential areas.
ITEM 2. PLAN OF OPERATION
9. As previously requested by our prior comment 12 of our June 21, 2005
letter, please discuss the costs associated with being a publicly
traded company. We note your disclosure that your officers and
directors have agreed to pay all the costs associated with being a
public company. We note that these costs are in addition to the
significant costs associated with your exploration projects. As
previously requested, please discuss the consequences to investors if
you fail to satisfy your reporting obligations.
We have revised our disclosure to state the following:
"The officers and directors have agreed to pay all costs and expenses
of having us comply with the federal securities laws (and being a
public company). We estimate that these costs will be approximately
$20,000 per year. Our officers and directors have also agreed to pay
the other expenses of the Company, excluding those direct costs and
expenses of data gathering and mineral exploration, should the Company
be unable to do so. To implement our business plan, we will need to
secure financing for our business development. We have no source for
funding at this time.
If we are unable to raise additional funds to satisfy our reporting
obligations, investors will no longer have access to current financial
and other information about our business affairs."
10. With respect to your geological report furnished supplementally,
please advise why the report is dated July 2005, a date after the
filing of the Form 10-SB filing.
The Geological report has a date of July 2005 as that is date in which
the most up to date changes had been to that version of the report.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTER AND CONTROL PERSONS
11. Provide supplement support for the statements that Mr. Stunder was
awarded "International honors for technology projects under his
direction" and that Dr. Montgomery is a recognized diamond specialist
having worked on several diamond and mining projects around the World"
Identify the Swiss firm for which Mr. Haskins worked as the CFO and
Executive director.
The following descriptions of the key directors have been modfied to
include the following:
"Mr. Stunder was awarded "Best Integrated Customer Relationship
Management/Ebusiness Solution" from the Microsoft Industry Solutions
Awards in 2000 and Internet World's "Best Canadian Recreational
Website" in 1998. Both of these awards were achieved while Mr. Stunder
was employed by Intrawest Corporation as the Director of Ecommerce.
Dr. Montgomery received his Ph.D. in Geology from Queen's University
(Ontario) and University of British Columbia in 1967. In 1968, he
founded Montgomery consultants consulting firm engaged in mining
exploration, property evaluation, property development, syndicate
management, ore reserve estimates and computer application in the
mining industry. Clients have included many major and junior mining
companies, Canadian federal and provincial governments and United
Nations. In 1994, Dr. Montgomery presented "Diamond Exploration in
Canada" - An Update, for the Canadian Institute of Gemology." We have
removed the reference to Dr. Montgomery as a recognized diamond
specialist.
We have disclosed that the Swiss firm for which Mr. Haskins worked as
CFO and Executive Director was Vontobel Private Equity Management
(Cayman) Ltd.
Financial Statements
NOTE 3 - MINERAL CLAIMS
12. In this footnote, you state that the company must spend certain
amounts on exploration work by October 1, 2005 and by July 1, 2006.
These dates do note agree to the dates of May 31, 2006 and May 31,
2007 as disclosure in "Acquisition Agreement" on page 4 (and per the
amended agreement dated September 1, 2005.) Please revise the footnote
to include the most current information practicable.
We have amended the financial statement notes to reflect the amended
dates of May 31, 2006 and May 31, 2007.
HERBERT ANOMALY (AKA BULLS-EYE TARGET), PAGE F-10
13. You State, "(a)fter six months, Echo will be required to fund 50% of
any exporation work." Revise to disclose the date by which Echo must
fund the exploraiton work, as noted in "Description of Business" on
page 4. Revise to clarify if the company must refund the $44,000
payment by Echo if they did not fund the exploration. Revise to
disclose all material terns and conditions of the agreement in the
notes to the financial statements.
We have added the phrase ,,non-refundable" in front of the word
,,consideration" in order to clarify the nature of the payment. We
have also included the date (February 28th) after which Echo will be
required to fund 50% of any additional exploration.
The amended note now reads:
Pursuant to an agreement consummated on September 19, 2004, the
Company sold an option for 20% interest in revenue from the mineral
claims the Company has in the Herbert Anomaly in Saskatchewan to Echo
Resources, Inc. ("Echo") in non-refundable consideration of $44,000.
This is treated as a deferred income on the financial statements to be
recognized when the expenses of the exploration occur to match
revenues to the associated expenses.
After February 28, 2006, Echo will be required to fund 50% any
additional exploration work on the property to maintain its 20%
interest. If the Company decides not to continue work on the property,
Echo will have the first right of refusal to continue development of
the site.
NOTE 4 - RELATED PARTY TRANSACTIONS, PAGE F-11
14. In "Exploration Program" on page 5, we note your discussion of the
fees paid to Montgomery Consultants Ltd., a related party. Revise to
disclose the dollar amounts of all related party transactions for each
of the periods for which statement of operations are presented, where
material. Refer to SFAS 57.
We have added a paragraph to Related Party notes for the financial
statements as at December 31, 2004, June 30, 2005 and September 30,
2005. The December 31, 2004 note now reads:
For the year ended December 31, 2004, $12,186 of exploration and
development expenses was paid to Montgomery Consultants, Ltd., a
related party controlled by a director of the Company.
INTERIM FINANCIAL STATEMENTS, PAGE F-1
15. Revise the Interim Financial statements and notes thereto to conform
to any applicable changes to the annual financial statements. Also,
revise the Forms 10-QSB as of June 30, 2005 and September 30, 2005 and
the notes thereto to conform to the applicable changes to the annual
and interim financial statements as applicable.
As requested we will re-edgarize and re-file all documents you have
mentioned above as a part of this amended filing.
STATEMENT OF OPERATIONS, PAGE F-2
16. You need only present interim financial statements for the
year-to-date periods in a registration statement. Revise to delete the
quarterly statements of operations for the three months ended June 30,
2005 and 2004 and reference to the three month period in the notes to
the financial statements. Refer to Item 310 (b) of Regulation S-B.
These columns have now been removed in our Statement of Operations.
STATEMENT OF CASH FLOWS, PAGE F-3
17. You provide statement of cash flow information for the period of
"Decemeber 3, 1998 (inception) to June 30, 2005". Revise to present
cash flow information for the period of June 15, 1998 to June 30,
2005, as June 15, 1998 appears to be the correct inception date.
The column now reflects the correct date of June 15, 1998, the
previous was an error.
NOTE 3 - ACCOUNTING PRONOUNCEMENTS, PAGE F-7
18. Revise your footnotes to disclose the impact the SFAS 153 will have on
your financial position and results of operations when such standard
is adopted. Refer to SAB Topic 11.M.
We have added a paragraph to note 3 to read:
In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets, an amendment of APB Opinion No. 29" ("SFAS No.
153"). SFAS No. 153 is based on the principle that exchanges of
nonmonetary assets should be measured based on the fair value of the
assets exchanged. APB Opinion No. 29, "Accounting for Nonmonetary
Transactions," provided an exception to its basic measurement
principle (fair value) for exchanges of similar productive assets.
Under APB Opinion No. 29, an exchange of a productive asset for a
similar productive asset was based on the recorded amount of the asset
relinquished. SFAS No. 153 eliminates this exception and replaces it
with an exception of exchanges of nonmonetary assets that do not have
commercial substance. SFAS No. 153 became effective for our Company as
of July 1, 2005. The Company will apply the requirements of SFAS No.
153 on any future nonmonetary exchange transactions and does not
believe it will have a material impact on our consolidated financial
statements.
FORM 10-QSB AS OF SEPTEMBER 30, 2005
GENERAL
19. Explain why you have included a management certification of Mr.
Haskins, your Treasurer.
We have removed the management certification from the Form 10QSB as of
September 30, 2005 and June 30, 2005.
STATEMENT OF OPERATIONS, PAGE F-2
20. It appears that the statement of operations for the three months and
six months ending September 30, 2004 include the activity for the
three months and six months, ended September 30, 2005 and vice versa.
Please revise the statements so they reflect the transactions from the
appropriate periods.
The statements have now been corrected with the correct period.
PLAN OF OPERATION
21. Explain why you included the disclosure of new shell company rules.
The disclosure of new shell company rules has been removed from our
filing.
ITEM 4. CONTROLS AND PROCEDURES
22. Your disclosure must conform to the requirements of Item 307 of
Regulation S-B. Please ensure that you either include the definition
of controls and procedures in 13a-15(b). Clarify that Mr. Haskins is
your Chief Financial Officer.
We have disclosed the following in our amended quarterly report on
Form 10-QSB for the period ended September 30, 2005:
EVALUATION OF DISCLOSURE ON CONTROLS AND PROCEDURES
We evaluated the effectiveness of our disclosure controls and
procedures as of September 30, 2005. This evaluation was conducted by
Kevin Stunder, our chief executive officer and Joel Haskins, our
chief financial officer.
Disclosure controls are controls and other procedures that are
designed to ensure that information that we are required to disclose
in the reports we file pursuant to the Securities Exchange Act of 1934
is recorded, processed, summarized and reported.
LIMITATIONS ON THE EFFECTIVE OF CONTROLS
Our management does not expect that our disclosure controls or our
internal controls over financial reporting will prevent all error and
fraud. A control system, no matter how well conceived and operated,
can provide only reasonable, but no absolute, assurance that the
objectives of a control system are met. Further, any control system
reflects limitations on resources, and the benefits of a control
system must be considered relative to its costs. These limitations
also include the realities that judgments in decision-making can be
faulty and that breakdowns can occur because of simple error or
mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by
management override of a control. A design of a control system is also
based upon certain assumptions about potential future conditions; over
time, controls may become inadequate because of changes in conditions,
or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective
control system, misstatements due to error or fraud may occur and may
not be detected.
CONCLUSIONS
Based upon their evaluation of our controls, our chief executive
officer and chief financial officer have concluded that, subject
to the limitations noted above, the disclosure controls are effective
providing reasonable assurance that material information relating to
us is made known to management on a timely basis during the period
when our reports are being prepared. There were no changes in our
internal controls that occurred during the quarter covered by this
report that have materially affected, or are reasonably likely to
materially affect our internal controls.
We confirm that Mr. Haskins is our Chief Financial Officer.
Regards,
/s/ KEVIN STUNDER
__________________________
Kevin Stunder
Chief Executive Officer
Madison Explorations, Inc.