UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F/A
ANNUAL REPORT - AMENDMENT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: OCTOBER 31, 2002
Commission File Number: 000 -18343
WORLD VENTURES, INC.
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(formerly Nu-Dawn Resources, Inc.)
(Exact Name of Registrant as specified in its charter)
Not Applicable
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(Translation of Registrant's name into English)
Province of British Columbia
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(Jurisdiction of incorporation or organization)
102 Piper Crescent, Nanaimo, BC, Canada V9T 3G3
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(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b)of the Act.
None
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Securities registered or to be registered pursuant to Section 12(g)of the Act.
No Par Value Common Stock
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(Title of Class)
Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act.
None
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(Title of Class)
Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period
of this Registration Statement: 9,282,154
=========
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark which financial statement item the
registrant has elected to follow.
Item 17 [X] Item 18 [ ]
PAGE-1-
PART I
ITEM 1. BUSINESS
(a) General Development of Business
World Ventures, Inc. (the "Company") (formerly Nu-Dawn Resources, Inc.),
effected a name change June 28, 1999.
World Ventures, Inc. (formerly Nu-Dawn Resources, Inc.) was incorporated on
October 3, 1980 by registration of its Memorandum and Articles under the
Company Act of the Province of British Columbia. Since its formation, the
Company has been engaged in the acquisition and exploration of mineral
properties. In 1999, the Company changed its direction of business to pursue
real estate and land development.
In 1986 the Company completed the sale of 600,000 shares of common stock at
$0.50 per share in a public offering in Canada. In subsequent years, the
Company raised additional capital for the primary purpose of exploring
certain mineral properties through the private placement of common stock
in Canada.
By agreement dated November 21, 1986 the Company completed a private
placement of 248,000 "flow-through" common shares at a price of $0.3226 per
share to 14 private investors, together with warrants to purchase up to
248,000 additional shares at $0.40 per share during the ensuing 12 months.
No commissions were paid by the Company. Subsequently, warrants for the
purchase of an additional 105,614 shares were exercised by certain of the
investors for total proceeds to the Company of $42,245. "Flow-through" common
shares under applicable laws of Canada permit amounts paid by investors to be
expended by the issuer in exploration of mineral properties with the amounts
expended deductible, for purposes of reporting income under applicable
Canadian income tax laws, by the individual investor and not by the issuer.
Other than such characteristics, such shares are equivalent to all other
shares of common stock of the issuer.
In August 1987, the Company completed a private placement of 550,797
'flow-through' common shares at a price of $0.37 per share to 19 private
investors, together with warrants to purchase up to 550,797 additional
shares at $0.42 per share during the ensuing 12 months. Yorkton Securities
Inc. (a Canadian broker-dealer) received a commission of 10% of the gross
proceeds. None of the warrants were exercised and all have expired.
In 1988, the Company entered into an agreement to acquire an ore concentrating
and milling facility and small parcel of land located within a few miles of
the Company's two principal mining prospects in British Columbia near the town
of Salmo. The acquisition was completed in 1989 and as consideration for the
acquisition of the milling facility (referred to hereafter as the
"H.B. Mill"), the Company issued 7,200,000 shares of its common stock to
Nor-Quest Resources Ltd., a publicly-owned British Columbia corporation
("Nor-Quest").
PAGE-2-
For approximately 12 months through late 1989, the Company had an agreement
with Nor-Quest pursuant to which certain operating and other expenses of the
Company were advanced by Nor-Quest, which was then the majority shareholder of
the Company. In late 1989, Nor-Quest sold its stock ownership interest in the
Company in a private transaction and agreed with the purchaser that amounts
owed by the Company to Nor-Quest would be limited to $50,000 and would be
repaid only out of future operating profits from the H.B. Mill.
In 1989 the Company issued 120,000 shares of its common stock to Najcorp
Investments Inc., a British Columbia corporation, for the acquisition of a
0.5% working interest in four natural gas wells located in Atoka County,
Oklahoma, U.S.A.
Subsequent to the private sale of the Company's stock by Nor-Quest, as
described above, the purchaser of those shares, Dydar Resources Ltd.
('Dydar'), a British Columbia corporation owned by Raynerd B. Carson, who
became a director of the Company in November, 1989, made a private acquisition
from the Company of 2,000,000 shares of the Company's common stock and a stock
purchase warrant entitling Dydar to purchase an additional 2,000,000 shares of
common stock at $0.20 per share for a total purchase price of $300,000. The
shares and any shares acquired from exercise of the warrant are subject to a
12 month restriction from transfer expiring November 20, 1990. Dydar exercised
its stock purchase warrant to purchase an additional 2,000,000 shares of
common stock for $400,000 on October 30, 1990. In connection with the
acquisition of the Company shares from Nor-Quest and the private purchase from
the Company, three persons designated by Dydar were added to the Board of
Directors of the Company and two former directors resigned.
During the year ended October 31, 1991 the Company issued 476,388 shares, to a
company controlled by a director and officer, for consideration of $160,781
pursuant to a private placement. The consideration consisted of cash of
$30,000 and the assumption of accounts payable of $130,781 by the investor. In
addition, the investor received warrants to purchase an additional 476,388
shares at $0.3375 per share until May 22, 1992 and at $0.39 per share from May
23, 1992 to May 22, 1993.
During the year ended October 31,1992 the Company issued 1,494,217 shares.
1,400,000 shares were issued pursuant to a private placement of 1,400,000
units consisting of one share and a two year purchase warrant to purchase a
share at $0.15 in the first year and $0.20 in the second year. The warrants
expire on September 10,1993.During the period 94,217 shares were issued at
$0.29.9 to settle a debt totalling $28,265.00. Three directors resigned
during the period and one new director was appointed. The lease on the
Yankee Dundee mining property was terminated.
During the year ended October 31, 1993 the Company issued 784,470 shares
pursuant to exercise of warrants for debt. The Company sold the Jersey Emerald
mining claims for the consideration of twelve thousand dollars to be paid on
equal annual instalments over three years. The Company retains a one and one
half percent net smelter return royalty from any future production.
PAGE-3-
During the year ended October 31, 1994 the Company issued 1,000,000 units
pursuant to a private placement of $0.15 per unit, each unit consisting of one
common share and one non-transferable share purchase warrant exercisable for a
period of two years entitling the holders the right to purchase an additional
share at a price of $0.15 for the first year and at a price of $0.20 per share
if exercised between April 19, 1995 and April 18, 1996. October 31, 1994,
666,667 warrants were outstanding.
Issued 50,000 shares at a deemed price of $0.15 per share pursuant to a letter
agreement for exploration work.
None of the Company's mineral properties in Canada are in production. One
small interest in a producing oil and gas property in the United States,
acquired in 1989, provides no revenue.
During the year ended October 31, 1995 the Company:
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(i) issued 1,500,000 units at $0.15 per unit pursuant to a private placement
agreement dated July 7,1995, each unit consisting of one common share and
one non-transferable share purchase warrant entitling the holder to
purchase a further common share for a period of two years at a price of
$0.15 per share during the first year and $0.20 per share during the
second year. The Company issued 266,667 units as an exploration payment
on the Guanacaste property in Costa Rica and the balance for cash. A
further 150,000 common shares were issued as a finder's fee in connection
with this transaction.
As at October 31,1996, 1,055,334 of the share purchase warrants remained
unexercised.
(ii) issued 386,709 common shares at a deemed price of $0.15 per share
pursuant to a share for debt agreement.
During the year ended October 31, 1996 the Company:
(i) issued 329,338 common shares for debt settlement of $71,069 of which
196,000 of those shares were issued to an individual related to the
President of the Company for debt settlement of $29,400.
(ii) issued 700,000 units at $0.20 per unit pursuant to a private placement
agreement, each unit consisting of one flow-through common share and one
non-transferable share purchase warrant entitling the holder to purchase
either one flow-through common share or one common share, at a price of
$0.20 per share, for a period of one year. As at October 31, 1996 all the
share purchase warrants remain unexercised.
(iii) issued 500,000 units at $0.50 per unit pursuant to a private placement
to a company controlled by the President of the Company for cash proceeds
of $233,331 and debt settlement of $16,669. Each unit consisting of one
common share and one non-transferable share purchase warrant entitling
the holder to purchase an additional common share for a period of two
years at a price of $0.50 per share during the first year and $0.60 per
share during the second year. As at October 31, 1996, 115,495 of the
share purchase warrants had been exercised for debt settlement of
$57,748.
PAGE-4-
(iv) issued 444,666 common shares pursuant to a private placement for cash
proceeds of $50,000 and settlement of exploration payments of $14,000.
During the year ended October 31, 1997 the Company:
(i) issued 1,000,000 shares at $0.15 per share with non-transferable share
purchase warrants to purchase 1,000,000 shares at $0.15 per share for a
one year period and $0.18 per share in the second year. At October 31,
1997 696,499 of the share purchase warrants remained unexercised.
(ii) issued 325,000 units at $0.20 per share pursuant to a private placement
agreement dated November 1996 entitling the holder to purchase either one
flow-through common share or one common share at a price of $0.20 for a
period of one year.
(iii) issued 303,501 units at $0.15 per share on exercise of warrants for cash
proceeds of $45,526.
(iv) issued 1,054,610 units at $0.20 per share on exercise of warrants for
debt settlement of $210,922.
During the year ended October 31, 1998, the Company:
(i) Issued 330,166 common shares at $0.15 per share pursuant to exercise of
purchase warrants of private placement agreement dated April 29, 1997,
for cash proceeds of $49,525.
(ii) In advance of a Private Placement Agreement dated April 15, 1998, a loan
of $143,389 was advanced to the Company to be repaid upon completion of
the Agreement (proposed completion date November 1998) to issue 1,000,000
non-transferable shares at a price of $0.15 per share with
non-transferable share purchase warrants to purchase 1,000,000 shares at
$0.15 in the first year and $0.18 in the second year.
During the year ended October 31, 1999, the Company:
(i) Pursuant to a private placement dated November 13, 1998, 1,000,000 units
were issued at a price of $0.15 per unit consisting of one share and one
non-transferable share purchase warrant exercisable for a period of two
years, granting the holder the right to acquire one additional share at
$0.15 per share in the first year and at a price of $0.18 per share in
the second year.
During the year ended October 31, 2000, the Company:
(i) During 2000, a reverse stock split on a 5:1 basis occurred. The number of
shares have been adjusted to reflect this transaction.
PAGE-5-
(ii) Pursuant to a private placement dated April 5, 2000: 600,000 units were
issued at a price of $0.25 per unit for cash. Each unit consisting of one
share and one non-transferable share purchase warrant exercisable for a
period of two years, granting the holder the right to acquire one
additional share at a price of $0.25 per share in the first year and at a
price of $0.40 per share in the second year.
During the year ended October 31, 2001, the Company:
(i) Pursuant to a private placement dated November 13, 2000: 750,00 units
were issued at a price of $0.10 per unit. Each unit consists of one
common share and one non-transferable share purchase warrant exercisable
for a period of two years, granting the holder the right to acquire one
additional share at a price of $0.10 per share in the first year and at a
price of $0.15 per share in the second year. These warrants were
exercised during 2001 as settlement of loan payable.
During the year ended October 31, 2002, the Company:
(i) Issued 1,500,000 shares at a price of $0.10 per share for settlement of
$150,000 loan.
The Company relies on its officers and directors to conduct its business
affairs.
(b) Industry Segments
The Company presently operates in two industries and four geographic segments:
(1) the mineral exploration and development business in Canada, Panama and
Costa Rica. The Company is in the development stage, never having received
material revenues from such operations. (2) The Company is in the process of
acquiring resort real estate projects in North and Central America, one in
Arizona, U.S.A. and one in Costa Rica. During the fiscal year, 1991, the
Company received $8,416 for the sale of timber cut on Company land. During
the fiscal year ended October 31,1993 the Company received $152,005 for the
sale of timber cut on Company land. During the year ended October 31, 1994
the Company received $10,155 for the sale of equipment. During the year ended
October 31, 1995, the Company received $4,284 from operations. The Company
received $14,379 from operations during the year ended October 31, 1996.
During the year ended October 31, 1997, the only revenue received by the
Company was interest from investment and sale of spare equipment parts from
the HB Mill, totalling $3,201. During the year ended October 31,1998, revenue
from the sale of equipment from the HB Mill totalled $78,648. The sale of the
Ymir property as per the settlement with Premanco was applied to pay in full
the taxes on the property and pay out the account payable for legal fees to
Siddall & Co.
In the future, the Company contemplates selling the land, and equipment of its
H.B. Mill in Salmo, British Columbia or if the opportunity presents itself
bringing the H.B. Mill and Concentrator into operation either for its own
account or in custom processing of mineral ores for others and in such event,
such activities may constitute a separate industry segment.
PAGE-6-
The Company will continue to maintain some of its mineral holdings with the
intent to recruit buyers or joint venture partners for their projects. The
Company will continue to pursue mining projects in North and Central America.
(c) Narrative Description of Business
Upon organization the Company's organizers caused two non-producing mineral
properties located near Salmo, British Columbia, Canada, to be transferred to
the Company. Subsequently, the Company acquired interest in two other
non-producing mineral properties located in Ontario and British Columbia,
Canada. (ITEM 2)
The Company's principal activities through the end of 1999 have consisted
principally of financing activities for the purpose of raising capital to
explore Company properties and the exploration of the properties using the
funds raised. The Company intends to continue to explore its properties to
determine whether commercially extractable minerals exist and, if funding is
available, may engage in the development of mineralized zones and the
production of minerals. Through 1994/95 substantially all of the Company's
available capital has been expended for mineral property acquisition
exploration and upgrading the H.B. Mill. No mining operations have been
conducted and no operation of the Company's H.B. Mill, acquired in 1989,
has been attempted.
In 1999, the Company put its mining projects on hold and changed its course
of business to include the resort development and real estate business. The
Company entered into an agreement to acquire 180 acres in Arizona, USA. No
development of the project has occurred, feasibility studies are ongoing.
In 2002, the Company cancelled its real estate project. In June 2002, the
Company entered into an agreement to explore and develop a mineral property
in Mineral County, Nevada, USA.
(d) Plan of Operation
The Company's planned mine operations, as soon as funds are available, are to
complete the exploration of existing properties in the Salmo, British Columbia
area and either develop or acquire a source of mineral bearing ore sufficient
to justify the commencement of operations at the Company's H.B. Mill, either
alone or under a joint venture type arrangement with one or more other mining
companies.
The Company's planned real estate activities are focused on an Arizona
mountain-top, property which may have development possibilities. Feasibility
studies and permitting approvals are required in the future phase of the
project.
The Company may sell all or part of its mining and milling equipment in Salmo,
BC. The Company may sell all or any part of its land holdings in Salmo, BC.
The Company may develop alone or with others all or any part of its land
holdings in Salmo, BC into residential and recreational lots.
PAGE-7-
Since its initial public offering in Canada in 1986, the Company has had
insufficient capital available to complete the exploration of its existing
properties or to develop any mining reserves. Due to the significant capital
investment involved in production mining operations and the operation of an
ore processing mill, it is likely that the Company may not make any final
determination as to the value or presence of any commercial mining reserves in
its existing properties for up to several years. Therefore, the Company will
continue to consider alternative sources of capital which may include
arrangements under which the Company would enter into joint venture
arrangements or undertake mineral property management on behalf of others.
However, due to uncertainties involved it cannot be ascertained whether
sufficient capital will be available for any such activities.
Since the Fall of 1999, the Company has concentrated on real estate and resort
projects. In 2002, the Company cancelled its real estate project.
Since March 2002, the Company has concentrated on the Mineral County, Nevada
Project. Exploration and feasibility work is required to ascertain if the
project is viable. The Company's investigations are at the early stage and
there is no assurance that permitting or financing for this project will be
available.
(i) Products
Because the Company has been in the development stage in the mining business
and is not engaged in the business of extracting minerals from any of its
properties or operating its ore processing mill, the Company does not have any
principal products. The only revenues received were from spare machinery and
parts that the Company owned.
(ii) Status of Product
There has been no public announcement of, nor has the Company otherwise made
public information about, any new product or industry segment of the Company
requiring the investment by the Company of a material amount of its total
assets, or which is otherwise material to the Company's operations. Should the
Company determine to commence operations of its H.B. Mill or the Company's
real estate development, as to which there has been no determination, the
commencement of such operations would require a large expenditure of funds
prior to commencement of operations and the commitment of future operating
capital, neither of which are presently available to the Company. The Company
has cancelled its real estate projects and has embarked on an exploration
program on a mineral property in Nevada.
(iii) Raw Materials
The sources and availability of raw materials essential to the Company's
business are limited in the context that mineral bearing ore of a high enough
commercial grade to justify development must be discovered or otherwise
acquired and explored before a production decision can be made and
implemented. Because the Company's processing mill is already in existence,
the Company intends to focus early efforts in developing a source of ore for
processing in the vicinity of Salmo, British Columbia, and area in which
mineral exploration, mining and processing has been conducted for over 100
years and therefore, many of the available properties may have been mined out
or acquired by others. Any raw materials essential to mineral exploration or
mine and mill operations are limited only to the extent that major mineral
supply firms may be unable to provide the Company with required supplies as
the need therefore arises in the future. No shortages are anticipated.
PAGE-8-
(iv) Patents, Trademarks and Licenses
The Company has no material patents, trademarks, licenses, franchises or
concessions except insofar as mining claims or properties acquired from the
Canadian & Costa Rican governments. The Company believes it is in compliance
with all applicable obligations regarding such titles.
(v) Seasonality
The Company's business is seasonal only to the extent that severe winter
conditions may limit the Company's exploratory activities or future mill
operating activities or real estate development.
(vi) Working Capital Items
The Company is in the development state and thus has no material revenues from
activities. As a result, most of the Company's activities have been and are
likely in the future to be conducted using available capital resources, the
lack of which could restrict the Company's future activities.
(vii) Customer Dependence
The Company is not dependent upon a single or few customers for revenues.
(viii) Backlog of Orders
The nature of the Company's business precludes a backlog of orders.
(ix) Government Contracts
No portion of the Company's business is subject to renegotiation of profits or
termination of contracts or subcontracts at the election of the government.
(x) Competition
The mining industry in which the Company is engaged is in general, highly
competitive. Competitors include well-capitalized mining companies,
independent mining companies and other companies having financial and other
resources far greater than those of the Company. The Company encounters strong
competition in attempting to acquire additional mineral properties and
interest in commercially mineable ore reserves in the Salmo, British Columbia
area. In general, properties with a higher grade of recoverable mineral and/or
which are more readily mineable afford the owners a competitive advantage in
that the cost of production is lower. Thus, a degree of competition exists
between those engaged in the mining industry to acquire the most valuable
properties. The Company's competitive position in the mining business in
general, and in the State of Nevada in particular, is insignificant.
PAGE-9-
(xi) Research and Development
The Company has not engaged in any material research and development
activities during its last three fiscal years except to the extent that it
conducted mineral exploration activities.
(xii) Environmental Regulation
Mining
The Company, like any business involved in the extraction or processing of
mineral properties, may be required to make extensive capital expenditures in
the future to protect the environment and to comply with applicable
environmental regulations in connection with any exploration, development,
mining or milling activities. As of the end of 1997, the Company was engaged
in no such activities. However, such capital expenditures or requirements
could effect the Company's competitive position in the business and,
conceivably, could limit the Company's availability to enter into some
projects. No capital expenditures for environmental control facilities have
been made and the Company does not expect to make any such expenditures during
the current or coming fiscal year.
Real Estate and Resort Development
The Company, like any business involved in land development, may be required
to make extensive capital expenditures in the future to protect the
environment and to comply with applicable environment regulations in
connection with real estate development. However, such capital expenditures
or requirements could effect the Company's competitive position in the real
estate and resort development business and, conceivably, could limit the
Company's availability to enter into some real estate and resort projects.
No capital expenditures for environmental control facilities have been made
and the Company does not expect to make any such expenditures during the
current or coming fiscal year. In 2002, the Company cancelled its real estate
project.
(xiii) Employees
During fiscal year ended October 31, 2002, the Company employed one part-time
office manager who provided services to the company on a contract basis. Most
Company operations will be conducted by the officers on a part time basis or by
outside contractors. If the H.B. Mill is placed into operation by the Company,
or a real estate/resort project is developed, full-time employees would be
expected to be hired.
PAGE-10-
(d) Financial Information About Foreign and Domestic Operations and Export
Sales
The Company does not foresee that there is any risk to the conduct of its
business in Canada, United States of America or Costa Rica.
ITEM 2. DESCRIPTION OF PROPERTY
Ymir Properties
As of October 31, 1998 the Company sold all of its interest in the Ymir
properties.
Triton Property
The Company has a 50% interest in a joint-venture basis with Greater Temagami
Mines Ltd., an unaffiliated corporation, in five unsurveyed mining claims in
the Shiningtree area of the Larder Lake mining division, Ontario, Canada. The
Triton Property is accessible from both the east (New Liskeard, Elk Lake and
Gowganda) and from the west (Sudbury, Grogama) via highway 560. A 4- mile
gravel road connects the property to the highway. The Shiningtree region is
underlain mainly by basic to intermediate volcanic rocks which occur within a
wide trending belt. The main historic gold occurrence near the Triton Property
is the Kingston Vein, though only limited production has been recorded. A
number of other gold deposits in the Siningtree region occur to the northwest,
along the strike of the volcanos.
In November 1978, a brief geological mapping project which encompassed the
Triton Property, was conducted which determined that sparse outcrops in the
area consisted of basalt. In late 1986 and early 1987 the joint venture
established a grid on the property, including the 1978 baseline, and carried
out surveys and 862 metres of diamond drilling in six holes.
During August 1987, the joint venture conducted a mapping and prospecting
program on the Triton Property which included trenching and stripping the
bedrock in two different locations. Several old trenches and pits were
discovered during mapping. From October through mid-November 1987, a diamond
drilling program, Phase 1, was carried out on the Triton Property for the
purpose of investigating the depth and extent of the Kingston Vein and to
extend the known mineralized zone. The program consisted of five drill holes
totalling 492 metres.
From mid-January to March 1988, the Phase 2 diamond drilling program was
carried out on the Triton Property for the purpose of investigating the extent
of the Kingston Vein in and around the Kingston shaft and testing the area
around the Western Shaft and the trenches in the northeast portion of the
grid. The program consisted of 12 holes totalling 1,349 metres. The
exploration program has established several gold bearing quartz veins on the
Triton Property, with anomalous gold values obtained ranging from .035 oz.
gold per ton in one test hole to as high as .694 oz. of gold per ton in one
hole. Additional drilling to further test the areas where encouraging results
were found has been recommended. The Company and its join venture partners
have made no determination about what further exploration will be undertaken.
The Company's expenditures in the joint venture have totalled $250,000.
PAGE-11-
As of October 31, 2000 The Company has a 50% interest in certain mineral
claims located in MacMurchy Township of the Larder Lake Mining Division,
Ontario. A third party has agreed to maintain the good standing of the mineral
claims. During the year ended October 31, 1997, the Company wrote down the
balance of its interest in this property.
H.B. Mill Property
In 1989 the Company acquired the H.B. Mill in Salmo, British Columbia, by the
issuance of 7,200,000 shares to Nor-Quest Resources Ltd. The H.B. millsite
occupies a small parcel of land and was originally constructed in the 1950s to
process ore produced at the H.B. Mine in Salmo. Ultimately, the mine was
depleted and the mill was used for custom processing intermittently for a
number of years, last in 1983. Thereafter, regular maintenance was conducted
by various owners. In the mid-1980s the cyanide processing portion of the
plant was rehabilitated and modernized in anticipation of placing the mill
into operation. However, the mill has not been operated. In 1990 an
unaffiliated mining engineering firm provided a report concerning the mill
which indicated that its present fair market value, based on its size,
condition and replacement costs, and considering that in excess of $517,000
in expenditures would be required before operations could commence, would be
in excess of $11,200,000. Replacement value is estimated at $45,287,000. The
Company considers that its ownership of the H.B. Mill will place it in a
position during the coming years to acquire ownership or operating interests
in various mineral properties in the area as no other operable or processing
mill of comparable size presently exists and numerous other individuals and
companies maintain properties from which minerals may be developed and mined.
The Company does not have any proven or probable mineral reserves on any of
its properties and none of the exploratory activities previously conducted by
the Company have established any such reserves, although the Company continues
to believe that further exploration of its properties could lead to
establishment of commercial quantities of extractable ore.
In 1998, H.B. Mill and land was written down by $350,055 In 1999, H.B. Mill
and land was written down by $872,371 to reflect management's best estimate of
the asset value.
On December 1, 2001, the Company forfeited the H.B. Mill property to the Crown
of British Columbia for non-payment of property taxes. Although the Company no
longer owns the property, the Company may regain ownership by paying all
delinquent taxes, penalties, interest, fees and costs incurred by the Province
in administering the property. The Company has until November 30, 2002 to
redeem the ownership of the property.
As of March 16, 2003, the Company had not and have no intention to redeem
ownership of the property. As a result, H.B. Mill and land was written down to
nil, due to complete forfeiture of the property to the Crown.
PAGE-12-
Jersey Emerald Property
The Company sold the Jersey Emerald mining claims in 1993 for the
consideration of $12,000 to be paid in three equal annual payments and the
Company retains a one and one half percent net smelter return royalty. All
property payments have been made and the Company retains one and one-half
percent net smelter return royalty. Sultan Minerals Inc., a public company
unrelated to Nu-Dawn Resources Inc., is carrying out an exploration program,
including core drilling, in 1996/97 on the property.
Saskatchewan Properties
During February and March of 1994 the Company acquired mining concessions in
the Fort a La Corne and White Swan Lake areas of Saskatchewan from the
Saskatchewan Department of Mineral Resources with an estimate of 50,000 acres.
An airborne maganetometer was carried out over the area required a cost of
$67,638.98. Ground geophysical surveys, plus 2 drilling holes, were competed
in 1996 with inconclusive results. The Company issued 50,000 shares of its
common stock from treasury to Dave McGowan (prospector) for acquiring the
White Swan Lake property. The combined costs of acquisition and exploration
of all of the Saskatchewan properties totalled an expenditure of $242,160.00.
The Company also entered into an option agreement to acquire a 100% interest,
subject to a 5% net profits royalty, in certain mineral claims in the Prince
Albert Mining District, Saskatchewan. To maintain this interest, the Company
is required to pay $2,000 annually for ten years to July 2003.
As of October 31, 1998 The Company had a 100% interest in certain mineral
exploration permits issued by Saskatchewan Energy and Mines in the Southern
Mining District in Saskatchewan. During the year, the Company allowed the
permits to lapse and wrote off the investment in those permits. The remaining
balance of $57,788 represents the Company's interest in the option in the
Prince Albert Mining District.
During 1999, the Company decided to abandon its interest and wrote off its
investment in this property.
Panama, Pan-Oro
During the year 1995, the Company entered into a letter of agreement with
Grande Portage Resources Ltd to enter into a joint-venture agreement to
develop mineral concessions in Panama. The agreement has not yet been
concluded and regulatory approval remains outstanding. During 1996, the
Company entered into a letter of agreement with Grande Portage Resources Ltd.
to enter into a joint venture agreement to develop mineral concessions in
Panama The agreements have not been concluded and regulatory approval remains
outstanding. Resource properties include $21,000 in costs charged by Pan-Oro
S.A. During 2001, the Company decided to write-down its investment in this
property to a nominal carrying value. The Company still retains the right to
resume exploration in this property. The Company has 90% ownership interest
in Pan-Oro, S.A., a Panamanian corporation.
PAGE-13-
Costa Rica, Guanacaste
Pursuant to an option agreement dated October 23, 1995 between the Company and
Minera Oceanica, S.A., the Company acquired an option for the mineral and
surface rights in Concession 6622 situated in the Juntas de Abangores, District
of Guanacaste, Costa Rica, subject to a 10% royalty in favor of Minera
Oceanica, S.A. on operating profits derived from the property, or US $100,000
per year, whichever is the greater. This royalty has been waived indefinitely
until the commencement of production.
In order to exercise the option, the Company must obtain an independent
feasibility study prior to June 30, 1997, and thereafter put the property into
production. Finders fees in the amount of $22,500 have been included in
resource properties.
Geological and geochemical surveys were carried out in 1996, and a core drill
hole was drilled to test for gold. Results to date have been inconclusive.
Sukut, Costa Rica
The Company entered into an option agreement dated April 24, 1996 for the
mineral exploration permit (ID#6200) over an area of eighteen square
kilometres within the Bribri Indian Reservation situated in the Province of
Limon, County of Talamanca, District of Bratsi. There has been a moratorium
placed on any mining activity by the Asamblea Legislativa de Costa Rica.
In order to exercise this option, the Company must comply with the following:
(1) pay the optionor $10,000 within eight days of the signing of the agreement
(paid); and (2) pay the optionor $10,000 upon the anniversary date of the
agreement; and
(3) spend a minimum amount of $100,000 in lobbying and perform the necessary
efforts to obtain the approval of the exploration permit by the Asamblea
Legislativa de Costa Rica; and
(4) once the exploration permit becomes fully legal and enforceable, pay the
optionor $15,000 within three months, $50,000 one year after approval,
$75,000 two years after the approval and subsequently $75,000 per year
upon each anniversary date.
Once the exploration phase is completed, the Company has the option to apply
for the exploitation (mining) permit. In order to exercise this option, the
Company must, once the exploitation permit is granted, pay the optionor the
greater of 3% of the net smelter return and $75,000 per year. The Company has
the option to purchase outright 50% of the vendor's net smelter return for
US$1,500,000 and the right of first refusal to purchase the remaining balance.
During the year ended October 31, 1997, the permit was withdrawn from the
optionor by the Costa Rican authorities. Therefore, the Company has written
down its interest in this property.
During the year ended October 31, 1997, Minera Oceanica S.A., a Nu-Dawn
associate Costa Rican company, entered into an agreement with an Indian Mining
Cooperative. Whereby, Minera Oceanica S.A. can earn a 75% working interest in
three mining concessions on the Indian Reserve. One of these concessions
(18 sq km) covers the Sukut prospect, and other two (40 sq km) cover an area
approximately 20 km west of the Sukut, referred to as the Rio Dueri. Minera
Oceanica S.A. has assigned to Nu-Dawn the rights to its contract.
PAGE-14-
During the year ended October 31, 1998, The Indian Mining Co-op applied for
exploration permits on the project from the Costa Rican government. As of
October 31,1998, the permits had not been issued.
Asbestos Claims, Quebec, Canada
The Company entered into an option agreement dated October 8, 1997, with Vant
Resources Inc. for the Asbestos "A" claims in Maizerets, Quebec and the
Exploration Claims in Soissons, Quebec. In order to exercise the option, the
Company must pay the optionor an aggregate of $1,070,000.
After the Company has recovered all its pre-production expenditures on the
property, it shall pay to the optionor a royalty equal to 5% of the net
profits arising from commercial production. At any time after the commencement
of commercial production, the optionor can surrender its royalty to the
Company in consideration of shares of the Company with a market value of
$500,000 at the date of surrender.
As of October 31, 1998, the Agreement was put on hold. Nu-Dawn paid the
property taxes and Vant Resources Inc. extended the agreement until further
notice.
As of October 31, 1999, the Company has not made a $50,000 payment due
September 15, 1998 nor a $1,000,000 payment due September 15, 1999. During
1999, the Company decided to abandon its interest and wrote off its investment
in this property.
Gladiator, Arizona, USA
The Company entered into an option agreement with Curitiba S.A., a Costa Rican
corporation to acquire 100% of the issued and outstanding shares of Nor-Quest
Arizona Inc., an Arizona Corporation. Nor-Quest Arizona Inc. has title to one
hundred and seventy acres within the Prescott National Forest in the State of
Arizona. The option is exercisable until January 14, 2002 for consideration of
four million common shares. As part of the agreement, the Company has agreed
to pay any property tax balance outstanding at the time the option is
exercised, not to exceed $4,000 US dollars. During 2001, the Company decided
to abandon its interest and wrote-off its investment in this property.
Lapon Canyon, Nevada
The Company entered into a Lease Purchase Agreement dated June 6, 2002 with
Mr. Donald B. Potts ("Potts") to acquire the right to explore, develop and
mine the property located in Mineral County, Nevada, USA (the "Property").
The initial lease term is five years but can be extended for an additional
five years, and for so long thereafter as minerals are mined and produced
from the Property. Upon commencing production of valuable minerals from the
property, the Company shall pay Potts a royalty on production equal to 4% of
net smelter returns.
PAGE-15-
Pursuant to a Letter Agreement with Potts dated May 2, 2002, the Company has
paid to Potts the sum of $US 11,000 which includes the royalty payment due on
June 6, 2002. Commencing July 6, 2002, royalty payments are payable as
follows:
Payment Period Amount Monthly $ US
-------------- -------------------
(i) July 6, 2002 through February 6, 2003 $ 1,000
(ii) March 6, 2003 through November 6, 2003 1,500
(iii) December 6, 2003 through August 6, 2004 2,000
(iv) September 6, 2004 through May 4, 2005 2,500
(v) June 6, 2005 through February 6, 2006 3,000
(vi) March 6, 2006 through November 6, 2007 3,500
(vii) December 6, 2007 through August 6, 2008 4,000
(viii) September 6, 2008 through the 6th day of
each month thereafter 4,500
Potts granted the Company the exclusive right and option to purchase the
Property for $US 1,250,000 or 50% of the unpaid balance at any time during the
initial or extended terms of the lease. Upon exercise of this option by the
Company, Potts shall transfer the property to the Company with a reserved
royalty on production equal to 0.5% of net smelter returns.
ITEM 3. LEGAL PROCEEDINGS
As of October 31, 1995, there are two legal actions to which the Company is a
party or of which any of its property is the subject as of the date of this
Registration Statement.
(a) During 1995, Premanco Industries Ltd. (Premanco) an unrelated party,
has brought an action against the Company and others in the Supreme
Court of British Columbia claiming that the Company and others logged
or caused to be logged without the permission of Premanco
approximately 20,000 cubic meters or more of timber from certain
properties. The claim has been defended by the Company and they have
stated that if any logging was done any liability for these actions
must rest with the Company's solicitor who acted on the Company's
behalf in connection with an application to the Nelson land title
office to release Premanco's timber rights. As of October 31, 1997,
this action is ongoing with no new developments to report.
During the year ended October 31, 1998: A civil action in which the
defendants also included some of the directors of Nu-Dawn, an
attorney who acted for the Company, and the Province of British
Columbia was finally settled out of court in September 1998. Nu-Dawn
was able to pledge its Salmo land and mill machinery to secure its
share of the settlement of $450,000. Nu-Dawn has no further
obligation in this matter.
(b) A damage action has commenced in Ontario, Canada against the Company,
R.B. Carson, and Dydar Resources Ltd. Dydar and Carson are vehemently
defending themselves against this action. The Company's counsel
advises that the Company should not be a defendant and counsel has
made a plea to the court to effectively have Nu-Dawn removed from
this action. The 1,000,000 shares referred to in Item 4:Note 2, are
the subject of the legal action.
PAGE-16-
During 1996 the action discussed in Item 3 (b) has been dismissed at no
cost to the Company, except for Nu-Dawn's legal fees.
ITEM 4. CONTROL OF REGISTRANT
The following table sets forth the person(s) known to the Company to own
beneficially more that ten percent (10%) of any class of the Company's voting
securities and the total amount of any class of the Company's voting
securities owned by the officers and directors as a group:
Title of Class Identity of Amount and Nature of Beneficial Percent
Person or Group Ownership of Class
( Note 1 )
- ------------------------- ------------------------------------------ ------------------------------------- ----------------------
Common Curitiba S.A.
2742, 1 Avenida. Calles 27 & 29
San Jose, Costa Rica 2,117,688 22.8%
- ------------------------- ------------------------------------------ ------------------------------------- ----------------------
Common Investors First S.A. 3,8066,233 41.3%
c/o Arias, Aleman & Mora
Calle 50 Edif Tower 1ER Piso
Apartado 8799
Panama 5, Panama
- ------------------------- ------------------------------------------ ------------------------------------- ----------------------
Common Officers & Directors Collectively 34,600 0.3%
- ------------------------- ------------------------------------------ ------------------------------------- ----------------------
Note 1: Beneficial owners listed have sole voting and investment
power with respect to the shares shown unless otherwise
indicated.
ITEM 5. NATURE OF TRADING MARKET
The common stock of the Company are listed on the OTC Electronic Bulletin
Board in New York. The following table sets forth the high and the low sales
prices for shares of common stock on the OTC:BB for each quarter of the
Company's last two fiscal years. Brokers in the United States can make a
market on the NASD electronic bulletin board by submitting a Form 211 with
the NASD.
PRICE RANGE High Low
- ----------- ---- ----
2002 1st Quarter 0.07 0.02
2002 2nd Quarter 0.27 0.07
2002 3rd Quarter 0.19 0.04
2002 4th Quarter 0.19 0.05
2001 1st Quarter 0.15 0.05
2001 2nd Quarter 0.04 0.05
2001 3rd Quarter 0.20 0.04
2001 4th Quarter 0.22 0.03
PAGE-17-
As of October 31, 2002 the Company had approximately 212 registered
shareholders on record of its no par value common stock. Based on
representations received by the Company from certain record holders,
the Company believes that there are in excess of 1,000 non-registered
beneficial owners of its common stock bringing the total number of
shareholders in excess of 1,200.
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
Canada has no system of exchange controls. There are no restrictions on the
repatriation of capital or earnings of a Canadian public company to
non-resident investors. There are no laws of Canada or exchange restrictions
affecting the remittance of dividends, profits, interest, royalties and other
payments to non-resident holders of the Company's securities, except as
discussed in Item 7 below.
There are no limitations under the laws of Canada or in the charter of the
Company on the right of foreigners to hold or vote securities of the Company,
except that the Investment Canada Act may require review and approval by the
agency operated thereunder of acquisition of "control" of the Company's
securities by a "non-Canadian". Control for such purpose is classed as
one-third or more of the issued voting securities. "Non-Canadian" generally
means a person not ordinarily resident in Canada.
ITEM 7. TAXATION
A brief description of certain provision of the tax treaty between Canada and
the United States is included below, together with a brief outline of certain
taxes, including withholding provisions, to which United States security
holders are subject under existing laws and regulations of Canada and the
United States. The consequences, if any, of state, provincial and local taxes
are not considered.
The information below necessarily is general and security holder should seek
the advice of their own tax advisors, tax counsel or accountants with respect
to the applicability or effect of the matters discussed to their own
individual circumstances and also with respect to any state and local taxes.
Under the tax convention between Canada and the United States, with limited
exceptions, security holders who are residents of the United States (other
than United States corporations holding 10% or more of the voting securities
of the Company) are subject to a 15% withholding tax on the gross amount of
any dividends paid by the Company. the non-resident tax withheld is
nonrefundable. The tax withheld will not reduce the amount of dividends
reportable for United States income tax purposes, but security holders will
have the election to either (a) deduct the tax withheld from adjusted gross
income, if they itemized deductions, or (b) offset the tax withheld as a
credit against United States income tax liability, subject to the applicable
limitations on the use of the foregoing tax credit.
PAGE-18-
United States corporate security holders will not be able to avail themselves
of the 80% dividends received deduction to any extent unless the foreign
corporation is subject to United States income tax, has for an uninterrupted
period of 36 months or such shorter period of its existence been engaged in a
trade or business in the United States, and 50% or more of its gross income
over the 36 month period is effectively connected with its United States
business. (These conditions have not been satisfied in the past and likely
will not be in the future).
United States corporations owning 10% or more of the voting securities of the
Company are subject to a 10% withholding tax on the gross amount of any
dividends paid by the Company. For United States income tax purposes, such
corporations are deemed to have paid the Canadian or other non-United States
income taxes paid by the Company attributable to that dividend under a formula
that takes into account the dividend and both the Company's undistributed
earnings and the Canadian or other non-United States taxes paid by the Company
with respect to such earnings.
ITEM 8. SELECTED FINANCIAL DATA
The following selected financial information concerning the Company is
presented in Canadian currency in accordance with U.S. generally accepted
accounting principles as reconciled from the Company's financial statements
which are presented in accordance with Canadian generally accepted accounting
principles. This information should be read in conjunction with the financial
statements appearing elsewhere herein.
The rate of exchange between U.S. dollars (U.S.$) and Canadian dollars (Cdn$)
for each of the Company's last five fiscal years was as follows:
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Rate at October 31,2002 0.66 0.64 0.64 0.66 0.62
Average Rate for the Calendar Year 0.63 0.64 0.62 0.64 0.63
---- ---- ---- ---- ----
PAGE-19-
FOR THE YEAR ENDED OCTOBER 31, 2002:
2002 2001 2000
---------- ----------- ----------
CONSOLIDATED STATEMENT OF OPERATIONS
- ------------------------------------
Revenue $ 0 $ 0 $ 0
Costs and Expenses (134,454) (243,561) (186,709)
Write Down of Resource Property 0 (44,095) 0
Write Down of Capital Assets & Deferred Costs (509,136) 0 0
Net (-Loss) (643,590) (287,656) (186,709)
Net (Loss) Per Share (0.08) (0.04) (0.04)
CONSOLIDATED BALANCE SHEETS
- ---------------------------
Total Assets 425,113 890,622 957,251
Resource Properties 419,857 393,281 436,263
Total Liabilities 1,039,530 951,449 880,422
Accumulated Deficit (7,319,290) (6,675,700) (6,388,044)
Working Capital (-Deficit) (643,590) (287,656) (186,709)
Shareholder's Equity (614,417) (60,827) 76,829
Cash Dividends per Share 0 0 0
ITEM 9. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
All of the Company's capital resources from inception have come from the sale
of stock to investors. Available cash has been expended by the Company to
explore its non-producing mineral properties in British Columbia and Ontario.
Operating without full-time employees for most of the last six years and
depending on the part-time services of its officers and directors, the Company
has been able to direct most of its cash resources directly to property
acquisition, exploration and to upgrade the H.B. Mill facility. Resource
properties reflect the acquisition cost and direct exploration and development
expenditures on the Company's non-producing properties. During 1995/96 the
Company expended $32,214 on the mill in maintenance and upgrading the
facility.
PAGE-20-
Results of Operations
The Company has never received revenue from operations and has only minimal
amounts of interest and related income since inception. As acquisition,
exploration and development expenses are capitalized, annual losses reflect
primarily general and administrative expenses. Total expenses have increased
most years. The increases in 1990 and 1989 reflect an increase relating to
activities at the H.B. Mill. From acquisition of the H.B. Mill until September
1989, Nor-Quest Resources Ltd., from which the mill was acquired, advanced
most expenses on behalf of the Company subject to the Company's agreement to
repay the expenses. In September 1989, as part of an agreement between
Nor-Quest and Dydar, Nor-Quest agreed to limit the amount of liability of the
Company to $50,000 and that amounts owed would be paid only out of future
operating profits of the H.B. Mill. The acquisition cost of the H.B. Mill,
$2,160,000, was paid in Company stock. The cost was capitalized and resulted
in the large increase in total assets from 1988 to 1989. Expenditures on the
mill during 1995 and 1996 have been capitalized and increased the assets.
October 31, 1997 Costs capitalized to the H.B. Mill totalled $15,759
(1996 - $14,013) for the year. Costs capitalized include property taxes and
general maintenance costs, net of equipment sales. The Company recorded a
write down of $860,439 for the year ended October 31, 1997; $350,055 for the
year ended October 31, 1998; and $881,279 for the year ended October 31,
1999, to adjust the carrying value of this asset to management's best
estimate of the net recoverable amount.
The Company does not expect to be carrying out mining exploration and
development work on properties held under agreement. The Company expects to be
carrying out feasibility and development work on its real estate resort
projects in Arizona (USA) and Costa Rica. Operating losses approximating
losses for previous years are expected.
Liquidity and Capital Resources
The Company's capital, and therefore its liquidity, has always depended upon
amounts raised from investors from the sale of stock, either privately or
publicly. The Company took over the position, " little cash available" in 1989
and Nor-Quest paid a large portion of the Company's expenses. During 1992
Dydar purchased 1,066,436 shares of common stock for $160,000 and an investor
subscribed for 333,333,($50,000) units (private placement one share plus one
two year purchase warrant exercisable at $0.15 in first year and $0.20 in
second year) which amount will provide some liquidity for 1992. During 1993
Dydar exercised part of its option at $0.20 to provide the Company $156,894.
During 1994 the Company issued 1,333,333 shares @ $0.15 per share pursuant to
a private placement of 1,000,000 units @ $0.15 per unit. 333,333 shares were
issued pursuant to the exercise of warrants @ $0.15 per share. 666,667
warrants remain outstanding and may be exercised @ at rate of $0.15 per share
up until April 19, 1995 or @ $0.20 per share up until April 19, 1996. The
Company issued 266,667 units as an exploration payment on the Guanacaste
property in Costa Rica and the balance for cash. A further 150,000 common
shares were issued as a finder's fee in connection with this transaction. As
at October 31, 1996, 1,055,334 of the share purchase warrants remain
unexercised. During the year ended October 31, 1997, operating capital for
the Company was raised by a private placement of 1,000,000 shares at $0.15
per share; issuance of 325,000 flow-through shares at $0.20; exercise of
warrants of 303,512 shares at $0.15 per share for cash proceeds; and the
issuance of 1,054,610 at $0.20 per share on exercise of warrants for debt
settlement of $210,922. During the year ended October 31, 1998, 330,166
warrants were exercised for cash in the amount of $49,524. As of October 31,
1998, 366,333 share purchase warrants remained unexercised. During the year
ended October 31, 1999, the Company entered into a private placement agreement
in which 1,000,000 units were issued for proceeds of $150,000 . Each unit is
comprised of one common share and one share purchase warrant. Each share
purchase warrant enables the holder to acquire one additional common share at
$0.15 during the first year and at $0.18 during the second year. During the
year
PAGE-21-
ended October 31, 2000, a reverse stock split on a 5:1 basis occurred and the
number of shares were adjusted to reflect this transaction. On March 1, 2000
an account payable valued at year-end of approximately $95,000, was settled by
issuance of 380,000 common shares at a price of $0.25 per share. Pursuant to a
private placement agreement 600,000 units were issued at a price of $0.25 per
unit for cash $150,000. Each unit consists of one share and one
non-transferable share purchase warrant exercisable for a period of two years,
granting the holder the right to acquire one additional share at a price of
$0.25 per share in the first year and at a price of $0.40 in the second year.
Pursuant to a private placement dated November 13, 2000: 750,00 units were
issued at a price of $0.10 per unit. Each unit consists of one common share
and one non-transferable share purchase warrant exercisable for a period of
two years, granting the holder the right to acquire one additional share at a
price of $0.10 per share in the first year and at a price of $0.15 per share
in the second year. These warrants were exercised during 2001 as settlement of
debt. During 2002, the Company issued 1,500,000 shares at a price of $0.10
per share for settlement of $150,000 loan.
The Company will concentrate its efforts on mining holdings arrangements with
others in the mining business under which cash expenditures would be paid in
large part by the other entity. The Company presently lacks the cash required
to place its H.B. Mill into operation. The Company presently lacks the cash
required to develop its real estate projects. The Company will concentrate its
efforts on researching, developing and selling real estate, resort properties.
The Company does intend to raise outside capital for that purpose, although no
decisions on the sources or means of raising such capital have been made. The
Company intends to pursue in 2000 / 2001 its option to sell equipment and land
that it owns.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The present term of office of each director will expire at the next Annual
Meeting of Shareholders. The executive officers of the Company are elected
annually at the first meeting of the Company's Board of Directors held after
each Annual Meeting of Shareholders. Each executive officer shall hold office
until his successor duly is elected and qualified or until his resignation or
until he shall be removed in the manner provided by the Company's Bylaws.
The name, position with the Company, the age of each director and executive
officer, and the period during which each has served are as follows:
Name and Position in the Company Age Director of Officer Since
- ------------------------------------------------------------- ----------- -------------------------------
Raynerd B. Carson 69 Director since November 1989
President and Director President since 1990
Gary Van Norman 64 Director since February 1996
Vice President and Director
Dr. Stewart A. Jackson 62 June 1997
Vice-President, Explorations and Director
James Wadsworth 65 Director since August 1992
Director
PAGE-22-
The following is a brief account of the business experience during the past
five years of each director and executive officer:
Director / Officer Principal Occupation During the Last Five Years
Raynerd B. Carson Began his career working in the Uranium mines in the
Northwest Territories. From 1958 to 1966 he worked as a
prospector in Northern Quebec and Ontario where he found
one of the largest asbestos deposits the world. In 1966 he
organized Abitibi Asbestos Mining Co. Ltd. He worked in
all facets of the mining industry up until the present
time.
Gary Van Norman Businessman/Land Developer, has over 30 years
expertise with land development, project management, and
marketing industry, both in Canada and the USA. Mr. Van
Norman was instrumental in the development of two of
Whistler, BC's largest residential and recreational
developments. He is currently actively involved in senior
capacities with a similar project in BC.
Dr. Stewart A. Jackson Experienced professional with 38 years
in the mineral industry. Involved in exploration and
development of both base and precious metal deposits in a
wide range of environments for both large and small
companies. Responsible for the discovery and development
of several major mineral discoveries.
James Wadsworth Mill Superintendent in the Company's employ
since 1990. He has over thirty years experience in the
mineral extraction business. During this time he has
worked in many capacities from foreman to manager for a
number of mining companies in British Columbia.
One of the officers or directors of the Company are directors of any entities
the securities of which are registered under the Securities Exchange Act of
1934 or the Securities Exchange Act of 1933:
Dr. Stewart Jackson Monument Resources Inc., Director,
V.P. Exploration Little Squaw Gold Mining Company,
Director, V.P. Exploration
PAGE-23-
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS
During the fiscal year ended October 31, 2002, there was no compensation to
directors and officers of the Company for services because of Canadian
allowance standards.
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
The following is a summary of the employee and director stock options
outstanding as of October 31, 2002 and a summary of all such Options exercised
in 2001 and 2000.
Stock options granted as at October 31, 2002 were as follows:
Directors Number of shares Price Expiration Date
- ----------------- ---------------- ----- ---------------
Stewart Jackson 250,000 $0.25 May 8, 2005
Gary Van Norman 250,000 $0.25 May 8, 2005
Employees and/or Consultants
Ferne Nowlan 50,000 $0.25 May 8, 2005
Total outstanding director and employee stock options....................550,000
No stock options exercised by directors or employees during the years 2001 and 2002.
Under applicable regulations of the British Columbia Securities Commission,
the Company is not authorized to issue options to directors, employees or
affiliates constituting more than 10% of the outstanding common stock. There
are no other plans.
The Company pays other incidental compensation to executive officers from time
to time, consisting primarily of reimbursement for business related activities
on behalf of the Company. However, the aggregate of all such other
compensation did not exceed 10% of cash compensation reported for the fiscal
year ended October 31, 2002.
No cash compensation is currently being paid to members of the Board of
Directors for their services as directors. The Company paid $5,960 to one
director for consulting and related services rendered to the Company during
the year ended 1998. No cash compensation was paid to directors during the
years ended 2000, 2001 and 2002.
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
In September 1989, subject to the approval of the Vancouver Stock Exchange,
Raynerd B. Carson and Dydar Resources Ltd. (Dydar), a corporation owned by
Raynerd B. Carson and members of his family, agreed to settle certain
litigation with Nor-Quest Resources Ltd. (Nor-Quest), then the
majority shareholder of the Company. Included in the terms of such settlement
was the agreement by Dydar to acquire the 7,200,000 shares of common stock of
the Company owned by Nor-Quest. Upon the approval of the transaction by the
Vancouver Stock Exchange, Dydar acquired the shares (and subsequently
transferred beneficial ownership of 1,000,000 of such shares to an
unaffiliated third party). Subsequently, two members of the Board of Directors
of the Company resigned and were replaced by Raynerd B. Carson and two other
nominees of Dydar.
PAGE-24-
In November 1989, upon approval by the Vancouver Stock Exchange, Dydar
subscribed to purchase, by way of private placement, 2,000,000 Units of the
Company's securities, consisting of 2,000,000 shares of common stock and a
stock purchase warrant to acquire an additional 2,000,000 shares for a
purchase price of $300,000. Dydar subscribed for the private placement of
which Raynerd B. Carson is the President, a director and substantial
stockholder. Dydar exercised its warrant October 30, 1990 bringing its
holdings to 10,200,000 shares.
During the year ended October 31, 1991, the Company issued 476,388 shares, to
Dydar (a company controlled by a director and officer), for consideration of
$160,781 pursuant to a private placement. The consideration consisted of cash
of $30,000 and the assumption of accounts payable of $130,781 by the investor.
In addition, the investor received warrants to purchase an additional 476,388
shares at $0.3375 per share until May 22, 1992 and at $0.39 per share from May
23, 1992 to May 22, 1993. As at October 31, 1991, no warrants have been
exercised. The 476,388 shares issued to Dydar brings its holdings to
10,676,388 shares. 425,901 shares were sold during the fiscal period via
private sale or market sales.
During 1992, Dydar purchased 1,066,667 shares of common stock for $160,000.
During 1992 Dydar sold during the fiscal period via private sale or market
sales 1,138,667 shares to bring its total to 10,178,487 shares.
During 1993 fiscal period Dydar exercised part of its option for a total of
784,470 shares and during 1993 sold 784,958 to hold 10,177,999 shares.
During 1994 Dydar sold 1,400,000 shares and purchased 666,666 from treasury
through the take-down of units and warrants at $0.15 per share and Dydar held
9,444,665 shares.
During the year 1995, Dydar purchased 56,500 shares $0.14 average per share
bringing the total to 9,501,165.
During 1996, Curitiba S.A. purchased from Dydar Resources Ltd. 7,813,665
shares of Nu-Dawn Resources Inc. for investment purposes. As of October 31,
1996 Dydar held 2,115,495 shares of Nu-Dawn Resources Inc.
As of October 31, 2001, 100,000 shares of World Ventures Inc. were held by
Dydar Resources Inc. in trust for Curitiba S.A.
PAGE-25-
PART II
ITEM 14. DESCRIPTION OF SECURITIES
(a) Capital Stock
The Company's authorized capital stock consists of 50,000,000 shares of common
stock, no par value. The following is a summary and is qualified in its
entirety by reference to the Company's Articles and Special Resolution and
Altered Memorandum, copies of which are exhibits to the Company's Registration
Statement.
(b) Common Stock
The outstanding shares of common stock are fully paid and non-assessable. As
of the date of this Statement, 9,282,154 shares of common stock were issued
and outstanding.
Holders of shares of common stock are entitled to participate equally as to
dividends, voting powers and participation in assets. No shares have been
issued subject to call or assessment. There are no pre-emptive rights,
conversion rights, provisions for redemption or purchase for either
cancellation or surrender or provisions for sinking or purchase funds.
Provisions as to the modifications, amendments or variations of such rights
or such provisions are contained in the Company Act of the Province of
British Columbia.
PART II
ITEM 18. FINANCIAL STATEMENTS AND EXHIBITS
(b) Exhibits
99.1 Certificate of Principal Executive Officer
99.2 Certificate of Principal Financial Officer
PART III
ITEM 15. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
SECURITIES
None
PART IV
ITEM 17. FINANCIAL STATEMENTS
PAGE-26-
Report to Shareholders..........................................................F1
Balance Sheet as at October 31, 2002........................................... F2
Statements of Loss and Deficit .................................................F3
for the period from November 01, 2001 to October 31, 2002
Statement of Changes in Financial Position..................................... F4
for the period from November 01, 2001 to October 31, 2002
Schedule of Changes in Resource Properties F8
Notes to Financial Statements.................................................. F5 - F17
ITEM 18. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
See Item 17 for a list of financial statements and schedules incorporated as:
pages F-1 to F-17
(b) Exhibits
None
PAGE-27-
Pannell Kerr Forster
WORLD VENTURES INC.
Financial Statements
October 31, 2002 and 2001
INDEX Page
------ ----
Independent Auditors' Report to the Shareholders 1
Financial Statements
Balance Sheets 2
Statements of Loss and Deficit 3
Statements of Cash Flows 4
Notes to Financial Statements 5-17
PAGE-28-
F1
Pannell Kerr Forster
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF WORLD VENTURES INC.
We have audited the balance sheets of World Ventures Inc. as at October 31,
2002 and 2001 and the statements of loss and deficit and cash flows for the
three years in the period ended October 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 whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of World Ventures Inc. as at October 31, 2002
and 2001 and the results of its operations and its cash flows for the three
years in the period ended October 31, 2002 in accordance with Canadian
generally accepted accounting principles. Accounting principles generally
accepted in Canada differ in certain significant respects from accounting
principles generally accepted in the United States of America and are
discussed in note 15 to the financial statements.
In the United States of America, reporting standards for auditors require the
addition of an explanatory paragraph (as included following the opinion
paragraph) when the financial statements are affected by the Company's ability
to continue as a going concern. Our report to the shareholders dated March 16,
2003 is also expressed in accordance with Canadian reporting standards which
do not permit a reference to such an uncertainty in the auditors' report when
the uncertainty is adequately disclosed in the financial statements.
"Pannell Kerr Forster"
Chartered Accountants
- --------------------
Vancouver, Canada
March 16, 2003
COMMENTS BY AUDITORS FOR CANADIAN READERS
ON CANADA - US REPORTING CONFLICT
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in note 2 to the financial
statements, the Company has insufficient cash resources and significant
amounts owing to suppliers and debt holders. These matters raise substantial
doubt about the Company's ability to continue as a going concern. The
financial statements do not include any adjustment that might result from the
outcome of this uncertainty.
"Pannell Kerr Forster"
Chartered Accountants
- --------------------
Vancouver, Canada
March 16, 2003
PAGE-1-
F2
WORLD VENTURES INC.
Balance Sheets (note 2)
October 31
2002 2001
---------- ----------
Assets (notes 4 and 10)
Current
Cash $800 $7,976
Accounts receivable 1,078 4,579
Total Current Assets 1,878 12,555
Fixed (notes 6, 7 and 10) 3,378 484,786
Resource Properties (notes 6 and 8) 419,857 393,281
Total Assets $425,113 $890,622
Liabilities
Current
Accounts payable (note 9) $353,599 $250,027
Loan payable to Premanco Industries Ltd. (note 10) 635,931 599,732
Current portion of obligation under capital lease 0 2,014
Total Current Liabilities 989,530 851,773
Obligation Under Capital Lease 0
Long-Term Debt (note 11) 50,000 50,000
Due to Shareholder 0 49,640
Total Liabilities 1,039,530 951,449
Capital Stock and Deficit
Capital Stock (note 12) 6,704,873 6,614,873
Deficit (7,319,290) (6,675,700)
Total Shareholders' Deficit (614,417) (60,827)
Total Liabilities and Shareholders' Equity $425,113 $890,622
------------- -------------
Approved on behalf of the Board:
"Raynerd B. Carson" (signed) Director
"Gary Van Norman" (signed) Director
PAGE-2-
F3
WORLD VENTURES INC.
Statements of Loss and Deficit
Years Ended October 31
2002 2001 2000
---- ---- ----
Expenses
Interest and bank charges $60,231 $73,109 $81,947
Professional fees 29,017 30,578 12,630
Rent 12,000 12,000 12,000
Accounting and administration 11,500 16,854 18,724
Travel and promotion 7,915 10,790 14,589
Transfer agent, filing fees and printing 6,035 6,947 9,082
Telephone and fax 3,020 4,941 4,774
Corporation capital tax 2,530 0 1,030
Office and sundry 1,101 11,391 18,598
Consulting and management fees 204 75,000 2,348
Vehicle and fuel 56 937 1,766
Mineral and property tax 0 0 7,995
Depreciation 845 1,014 1,226
Loss Before Other Items (134,454) (243,561) (186,709)
Other Items
Write-down of other assets (note 13(d)) (28,573) 0 0
Write-down of fixed assets (note 7) (480,563) 0 0
Write-down of resource properties (note 8) 0 (44,095) 0
(509,136) (44,095) 0
Net Loss for Year (643,590) (287,656) (186,709)
Deficit, Beginning of Year (6,675,700) (6,388,044) (6,201,335)
Deficit, End of Year $(7,319,290) $(6,675,700) $(6,388,044)
Basic Loss Per Share $ (0.08) $ (0.04) $ (0.03)
Weighted Average Number of
Shares Outstanding 7,722,889 6,935,957 6,024,072
PAGE-3-
F4
WORLD VENTURES INC.
Statements of Cash Flows
Years Ended October 31
2002 2001 2000
---- ---- ----
Operating Activities
Net loss $(643,590) $(287,656) $(186,709)
Items not involving cash
Consulting expense 0 75,000 0
Accrued interest on loan payable 33,669 54,956 64,212
Write-down of resource properties 0 44,095 0
Write-down of fixed assets 480,563 0 0
Write-down of other assets 28,573 0 0
Depreciation 845 1,014 1,226
Operating Cash Flow (Deficit) (99,940) (112,591) (121,271)
Changes in Non-Cash Working Capital
Accounts receivable 1,001 (353) 147
Accounts payable 193,572 118,022 (12,836)
Total Changes in Non-Cash Working Capital 194,573 117,669 (12,689)
Cash Provided by (Used in) Operating Activities 94,633 5,078 (133,960)
Investing Activities
Additions to fixed assets and deferred costs 0 (334) 0
Expenditures relating to resource
properties, net of recoveries (26,576) (1,113) (12,136)
Cash Used in Investing Activities (26,576) (1,447) (12,136)
Financing Activities
Repayments to shareholder (49,640) 0 0
Advances to related parties (26,073) (1,173) (3,155)
Repayment of lease obligation (2,050) (1,591) (1,229)
Capital stock issued 0 0 150,000
Proceeds from loan 2,530 0 0
Cash Provided by (Used in) Financing Activities (75,233) (2,764) 145,616
Inflow (Outflow) of Cash (7,176) 867 (480)
Cash, Beginning of Year 7,976 7,109 7,589
Cash, End of Year $800 $7,976 $7,109
Supplemental Cash Flow Information
Interest Paid During Year $264 $716 $1,077
Supplemental Information for Investing and Financing Activities
Shares issued as settlement of debt $150,000 $150,000 $0
PAGE-4-
F5
WORLD VENTURES INC.
Notes to Financial Statements
Years Ended October 31
1. OPERATIONS
The Company was incorporated under the laws of the province of British
Columbia and its principal business activities include exploration of
natural resource properties.
2. GOING CONCERN
These financial statements have been prepared by management in
accordance with Canadian generally accepted accounting principles on a
going concern basis which assumes that the Company will realize its
assets and discharge its liabilities in the normal course of business.
During 2002, the Company incurred a net loss of $643,590 (2001 -
$287,656; 2000 - $186,709) (accumulated losses from inception of the
Company total $7,319,290) and at October 31, 2002 had a working capital
deficiency (an excess of current liabilities over current assets) of
$987,652. The Company's ability to continue as a going concern is in
substantial doubt and is dependent upon its ability to secure
additional financing on a timely basis, receive co-operation from its
creditors and achieve sufficient cash flows to cover obligations and
expenses. The outcome of these matters cannot be predicted at this
time. These financial statements do not give effect to any adjustments
to the amounts and classification of assets and liabilities which might
be necessary should the Company be unable to continue its operations as
a going concern.
3. BASIS OF PRESENTATION
These financial statements are prepared in accordance with Canadian
generally accepted accounting principles ("GAAP") and all figures are
in Canadian dollars. Canadian GAAP differs in certain respects from
accounting principles generally accepted in the United States of
America. The significant differences and the approximate related effect
on the financial statements are set forth in Note 15.
4. CHARGE ON ASSETS
A charge has been placed over all the assets of the Company as security
for unpaid corporation capital tax amounting to approximately $69,000,
including interest at October 31, 2002.
5. SIGNIFICANT ACCOUNTING POLICIES
(a) Use of estimates
The preparation of financial statements in conformity with
Canadian generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
estimates and would impact future results of operations and
cash flows.
PAGE-5-
F6
WORLD VENTURES INC.
Notes to Financial Statements
Years Ended October 31
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Fixed assets
H.B. Mill and land are recorded at original cost less
writedowns to a net amount of $0 (2001 - $480,563) based on
management's best estimate of the net recoverable amount,
which reflects the value of the first charge against the
property (notes 7 and 10). Direct net expenditures incurred on
the H.B. Mill are deferred in the accounts. No depreciation
has been charged on H.B. Mill as the asset is not in
production.
Other fixed assets are recorded at cost.
Depreciation of machinery, equipment and automobiles is
calculated at 20% per annum using the declining-balance
method.
(c) Investments in and expenditures on resource properties
Acquisition costs of resource properties together with direct
exploration and development expenditures thereon, including
interest, are deferred in the accounts. When production is
attained these costs will be amortized. When deferred
expenditures on individual producing properties exceed the
estimated net realizable value, the properties are written
down to the estimated net realizable value. Costs relating to
properties abandoned are written-off when the decision to
abandon is made.
(d) Financial instruments
(i) Fair value
The carrying value of cash, accounts receivable,
accounts payable and loan payable to Premanco
Industries Ltd. approximate their fair value because
of the short maturity of these financial instruments.
It is not practicable to determine the fair value of
the long-term debt as long-term debt is non-interest
bearing.
(ii) Interest risk
The Company is exposed to interest risk to the extent
of fluctuations in prime rate.
(iii) Credit risk
The Company is exposed to credit risk that arises
from the possibility that the debtors may experience
financial difficulty and be unable to fulfil their
obligations.
(iv) Translation risk
The Company is exposed to foreign currency
fluctuations to the extent expenditures incurred by
the Company are not denominated in Canadian dollars.
PAGE-6-
WORLD VENTURES INC. F7
Notes to Financial Statements
Years Ended October 31
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(e) Net loss per share
Net loss per share computations are based on the weighted
average number of common shares outstanding during the year.
Common share equivalents consisting of stock options are not
considered in the computation because their effect would be
anti-dilutive.
(f) Foreign currency transactions
Foreign currency transactions are translated into Canadian
dollars at the rate of exchange on the transaction date. Gains
and losses arising from translation of foreign currency are
included in net loss together with different expenses.
(g) Income taxes
Income taxes are provided, at current rates, for all items
included in the statement of loss and deficit regardless of
the period in which such items are reported for income tax
purposes. The principal items which results in temporary
differences between financial and tax reporting purposes are
depreciation and non-capital loss carry-forwards. Future
income taxes are adjusted for current changes in the income
tax rate.
6. REALIZATION OF ASSETS
The investment in and expenditures on resource properties comprise
substantially all of the Company's assets. Recovery of the carrying
value of the investment in these assets is dependent upon the existence
of economically recoverable reserves, establishing legal ownership of
the resource properties, the ability of the Company to obtain necessary
financing to complete the exploration and development, the attainment
of future profitable production or the disposition of these assets for
proceeds in excess of their carrying values.
7. FIXED ASSETS
2002
Accumulated
Cost Depreciation Net
-------- -------- -------
H.B. Mill and land (note 10) $0 $0 $0
Automobiles 17,219 16,259 960
Machinery 5,671 3,493 2,178
Equipment 334 94 240
-------- ------- ------
$23,224 $19,846 $3,378
PAGE-7-
WORLD VENTURES INC. F8
Notes to Financial Statements
Years Ended October 31
7. FIXED ASSETS (Continued)
2001
Accumulated
Cost Depreciation Net
---- ------------ --------
H.B. Mill and land (note 10) $480,563 $0 $480,563
Automobiles 17,219 16,019 1,200
Machinery 5,671 2,949 2,722
Equipment 334 33 301
-------- ------- ------
$503,787 $19,001 $484,786
Included in machinery is a leased asset with a net book value of
$2,178 (2001 - $2,722).
On December 1, 2001, the Company forfeited the H.B. Mill property to
the Crown of British Columbia for non-payment of property taxes.
Although the Company no longer owns the property, the Company may
regain ownership by paying all delinquent taxes, penalties, interest,
fees and costs incurred by the Province in administering the property.
The Company has until November 30, 2002 to redeem the ownership of the
property. As of March 16, 2003, the Company had not and have no
intention to redeem ownership of the property. As a result, H.B. Mill
and land was written down to nil due to complete forfeiture of the
property to the Crown.
8. RESOURCE PROPERTIES
Guanacaste Pan-Oro Gladiator Lapon Totals
---------- --------- --------- ----- ---------
Balance, October 31, 2000 $392,167 $39,070 $5,026 $0 $436,263
Legal and management 988 0 0 0 988
Travel 125 0 0 0 125
Write down of
resource properties 0 (39,069) (5,026) 0 (44,095)
1,113 (39,069) (5,026) 0 (42,982)
Balance, October 31, 2001 393,280 1 0 0 393,281
Legal 0 0 0 1,047 1,047
Lease and supplies 0 0 0 24,483 24,483
Geological 0 0 0 1,046 1,046
0 0 0 26,576 26,576
Balance, October 31, 2002 $393,280 $1 $0 $26,576 $419,857
PAGE-8-
F9
WORLD VENTURES INC.
Notes to Financial Statements
Years Ended October 31
8. RESOURCE PROPERTIES (Continued)
(a) Guanacaste, Costa Rica
Pursuant to an option agreement dated October 23, 1995 and
amended February 27, 1996 between the Company and Minera
Oceanica S.A., the Company acquired an option for the mineral
and surface rights in Concession 6622 situated in the Juntas
de Abangares, District of Guanacaste, Costa Rica, subject to a
10% royalty in favour of Minera Oceanica S.A. on operating
profits derived from the property, or US$100,000 per year,
whichever is greater. This royalty has been waived
indefinitely until the commencement of production.
Finders fees of $22,500 have been included in the cost of
resource properties.
(b) Lapon Canyon, Nevada
The Company entered into a Lease Purchase Agreement dated June
6, 2002 with Mr. Donald B. Potts ("Potts") to acquire the
right to explore, develop and mine the property located in
Mineral County, Nevada, USA (the "Property"). The initial
lease term is five years but can be extended for an additional
five years, and for so long thereafter as minerals are mined
and produced from the Property. Upon commencing production of
valuable minerals from the property, the Company shall pay
Potts a royalty on production equal to 4% of net smelter
returns.
Pursuant to a Letter Agreement with Potts dated May 2, 2002,
the Company has paid to Potts the sum of $US 11,000 which
includes the royalty payment due on June 6, 2002. Commencing
July 6, 2002, royalty payments are payable as follows:
Payment Period Amount of Monthly
-------------- $ US
------------------
(i) July 6, 2002 through February 6, 2003 $ 1,000
(ii) March 6, 2003 through November 6, 2003 1,500
(iii) December 6, 2003 through August 6, 2004 2,000
(iv) September 6, 2004 through May 4, 2005 2,500
(v) June 6, 2005 through February 6, 2006 3,000
(vi) March 6, 2006 through November 6, 2007 3,500
(vii) December 6, 2007 through August 6, 2008 4,000
(viii) September 6, 2008 through the 6th day of
each month thereafter 4,500
Potts granted the Company the exclusive right and option to
purchase the Property for $US 1,250,000 or 50% of the unpaid
balance at any time during the initial or extended terms of
the lease. Upon exercise of this option by the Company, Potts
shall transfer the property to the Company with a reserved
royalty on production equal to 0.5% of net smelter returns.
PAGE-9-
F10
WORLD VENTURES INC.
Notes to Financial Statements
Years Ended October 31
8. RESOURCE PROPERTIES (Continued)
(c) Pan-Oro, Panama
During 1995, the Company entered into a Letter of
Agreement with Grande Portage Resources Ltd. to enter
into a joint venture agreement to develop mineral
concessions in Panama. The agreement has not yet been
concluded and regulatory approval remains
outstanding. During 2001, the Company decided to
write-down its investment in this property to a
nominal carrying value. The Company still retains the
right to resume exploration in this property. The
Company has a 90% ownership interest in Pan-Oro S.A.,
an inactive Panamanian corporation.
(d) Gladiator, Arizona
The Company entered into an option agreement with
Curitiba S.A., a Costa Rican corporation, to
acquire 100% of the issued and outstanding shares of
Nor-Quest Arizona Inc., an Arizona Corporation.
Nor-Quest Arizona Inc. has title to one hundred and
seventy acres within the Prescott National Forest in
the State of Arizona.
The option is exercisable until January 14, 2002 for
consideration of four million common shares. As part
of the agreement, the Company has agreed to pay any
property tax balance outstanding at the time the
option is exercised, not to exceed $4,000 US dollars.
During 2001, the Company decided to abandon its
interest and wrote-off its investment in this
property.
(e) Triton, Ontario
The Company has a 50% interest in certain mineral
claims located in MacMurchy Township of the Lardev
Lake Mining Division, Ontario. A third party has
agreed to maintain the good standing of the mineral
claims. During 1997, the Company wrote off the cost
of its interest in this property.
PAGE-10-
WORLD VENTURES INC. F11
Notes to Financial Statements
Years Ended October 31
9. ACCOUNTS PAYABLE
2002 2001
---- ----
Trade payables $271,896 $124,104
Capital taxes payable 68,703 63,923
Rent due to related parties 3,000 52,000
Accrued liabilities 10,000 10,000
$353,599 $250,027
10. LOAN PAYABLE TO PREMANCO INDUSTRIES LTD. AND LOSS ON LAWSUIT
Premanco Industries Ltd. ("Premanco"), an unrelated party, brought an
action against the Company and others in the Supreme Court of British
Columbia claiming that the Company and others logged or caused to be
logged, without the permission of Premanco, approximately 20,000 cubic
meters or more of timber from certain properties. The claim has been
defended by the Company and they have stated that if any logging was
done, any liability for these actions must rest with the Company's
solicitor who acted on the Company's behalf in connection with an
application to the Nelson land title office to release Premanco's
timber rights.
The lawsuit was settled during 1998. The Company is liable for unjust
enrichment of $450,000. Premanco has accepted as settlement a
promissory note for $450,000, secured by a mortgage on the H.B. Mill
property (note 7) and a security agreement over all equipment and
chattels at the H.B. Mill Program, with interest at prime plus 2%, due
October 31, 2000. The loan is now in default as the balance has not
been paid pursuant to the terms of the settlement. Interest has been
accrued on the loan up to October 31, 2002.
Premanco shall have no right to enforce any judgement obtained against
the Company under this promissory note against any assets or properties
of the Company other than those specified in the settlement agreement
made between Premanco and the Company. It is management's opinion that
the Company no longer owes money to Premanco.
11. LONG-TERM DEBT
This amount is unsecured, non-interest bearing and is to be repaid at a
rate of 10% of the net profits of the H.B. Mill, if and when it goes
into production (note 10).
PAGE-11-
WORLD VENTURES INC. F12
Notes to Financial Statements
Years Ended October 31
12. CAPITAL STOCK
(a) Authorized
50,000,000 Common shares without par value
(b) Issued
Number
of Shares Amount
--------- ----------
Balance, October 31, 2000 6,282,154 $6,464,873
Issued as settlement of debt 750,000 75,000
Exercised warrants as settlement of debt 750,000 75,000
Balance, October 31, 2001 7,782,154 6,614,873
Issued as settlement of debt 1,500,000 150,000
Shares to be redeemed (note 12(f)) (300,000) (60,000)
Balance, October 31, 2002 8,982,154 $6,704,873
During 2001, the Company issued 750,000 units at a price of
$0.10 per unit as settlement of debt to a related party. Each
unit consists of one common share and one non-transferable
share purchase warrant exercisable for a period of two years,
granting the holder the right to acquire one additional share
at a price of $0.10 per share in the first year and at a price
of $0.15 per share in the second year. These warrants were
exercised during 2001 as settlement of debt.
During 2002, the Company issued 1,500,000 shares at a price of
$0.10 per share to settle $150,000 of debt to a related party.
(c) The following table summarizes the Company's stock option
activity for the years ended October 31, 2002, 2001 and 2000:
Weighted
Exercise Average
Number Price Exercise
of Shares Per Share Price
------------ --------- --------
Balance, October 31, 1999 1,400,000 $ 0.15 $ 0.15
Cancelled (1,400,000) $ 0.15 $ 0.15
Granted during 2000 550,000 $ 0.25 $ 0.25
Balance, October 31, 2000,
2001 and 2002 550,000 $ 0.25 $ 0.25
PAGE-12-
WORLD VENTURES INC. F13
Notes to Financial Statements
Years Ended October 31
12. CAPITAL STOCK (Continued)
(d) Stock options outstanding to directors and employees as at
October 31, 2002 and 2001 were as follows:
Exercise Number of Shares
Expiry Date Price 2002 2001
----------- --------- ---- ----
May 8, 2005 $ 0.25 550,000 550,000
(e) Share purchase warrants outstanding as at October 31, 2002
and 2001 were as follows:
Exercise Number of Shares
Expiry Date Price 2002 2001
----------- --------- ---- ----
April 5, 2002 $ 0.40 0 600,000
(f) Pursuant to a court judgement dated November 8, 2002, the
Company is required to redeem 300,000 shares at a price of
$0.20 per share from a creditor. Interest is to be charged at
4% per annum. As of March 16, 2003, the 300,000 shares have
not been redeemed.
13. RELATED PARTY TRANSACTIONS
(a) Services provided by directors or parties related to directors:
2002 2001 2000
---- ---- ----
Rent $12,000 $12,000 $12,000
Consulting and management 0 0 2,348
(b) Accounts receivable includes $665 due from a director (2001
- $3,165; 2000 - $33,000).
(c) Accounts payable includes $3,000 (2001 - $5,200; 2000 -
$40,000) due to an individual related to the President of the
Company and $4,900 (2001 - $4,900) to a Company owned by a
director.
(d) Write-down of other assets includes $26,073 due from a company
controlled by the president of the Company.
(e) Accounts payable includes $41,935 (2001 - $943) due to a
shareholder.
PAGE-13-
WORLD VENTURES INC. F14
Notes to Financial Statements
Years Ended October 31
14. INCOME TAX LOSSES
The Company has operating losses which may be carried forward to apply
against future years income for Canadian income tax purposes. These
losses expire as follows:
Available to Amount
------------ ------
2003 $14,000
2004 323,000
2005 636,000
2006 165,000
2007 177,000
2008 282,000
2009 1,885,000
$3,482,000
Effective January 1, 2000 the Company adopted the new recommendations
of the Canadian Institute of Chartered Accountants with respect to
accounting for income taxes. Under the new recommendations, the
liability method of tax allocation is used, based on the difference
between financial reporting and the tax bases of assets and
liabilities. Previously, the deferral method was used, based on
differences in the timing of reporting income and expenses in financial
statements and tax returns. The new method was applied retroactively
without restatement of prior years' figures.
There is no effect of the new recommendations on the financial
statements of the Company.
Future income taxes reflect the tax effects of the temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amount used for tax purposes. The
components of future income tax assets at December 31, 2002, 2001 and
2000 are as follows:
Available to 2002 2001 2000
------------ ---- ---- ----
Future income tax assets
Tax over book value of
resource properties $1,095,893 $1,244,704 $1,224,861
Tax over book value of
fixed assets 11,747 587,023 586,567
Non-capital loss carry-forwards 1,379,463 726,750 610,650
2,487,103 2,558,477 2,422,078
Less: Valuation allowance (2,487,103) (2,558,477) (2,422,078)
Net future income tax asset $0 $0 $0
The valuation allowance reflects the Company's estimate that the tax assets
likely will not be realized.
PAGE-14-
WORLD VENTURES INC. F15
Notes to Financial Statements
Years Ended October 31
15.DIFFERENCE BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CANADIAN GAAP AND US GAAP)
(a) US accounting pronouncements
(i) In October 2001, the FASB issued Statement of
Financial Accounting Standards FAS 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets."
FAS 144 addresses significant issues relating to the
implementation of FAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," and develops a single
accounting model, based on the framework established
in FAS 121 for long-lived assets to be disposed of by
sale, whether such assets are or are not deemed to be
a business. FAS 144 also modifies the accounting and
disclosure rules for discounted operations. The
standard was adopted on January 1, 2002, and did not
have any impact on the financial statements.
(ii) SFAS 130 "Reporting Comprehensive Income" became
effective in 1999, expand or modify disclosures, and
accordingly, have no effect on the Corporation's
financial position, results of operations or cash
flows. Under US GAAP, the Company would have reported
comprehensive loss of $1,220,382, $812,409 and
$721,372 for 2002, 2001 and 2000.
(b) Stock options
In 1995 the FASB issued SFAS No. 123 "Accounting for
Stock-Based Compensation", which contains a fair value-based
method for valuing stock-based compensation that entities may
use. This measures compensation cost at the grant date based
on the fair value for the award. Compensation is then
recognized over the service period, which is usually the
vesting period. For US GAAP purposes, management accounts for
options under APB Opinion No. 25. As option exercise prices
approximate market price on the dates of grants, no
compensation expense has been recognized.
The Company applies APB Opinion No. 25 and related
interpretations in accounting for its stock options granted to
employees, and accordingly, compensation expense of $0 (2001 -
$0; 2000 - $0) was recognized as salaries expense. Had
compensation expense been determined as provided in SFAS 123
using the Black-Scholes option - pricing model, the pro-forma
effect on the Company's net loss and per share amounts would
have been as follows:
2002 2001
---- ----
Net loss, as reported $(643,590) $(287,656)
Net loss, pro-forma (643,590) (287,656)
Net loss per share, as reported $ (0.08) $ (0.04)
Net loss per share, pro-forma $ (0.08) $ (0.04)
The fair value of each grant is calculated using the following weighted
average assumptions:
2002 2001
----- -----
Expected life (years) 3 4
Interest rate 3% 3%
Volatility 259.02% 259.02%
Dividend yield 0 0
PAGE-15-
WORLD VENTURES INC. F16
Notes to Financial Statements
Years Ended October 31
15.DIFFERENCE BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CANADIAN GAAP AND US GAAP)
(Continued)
(c) Exploration expenditures
Under Canadian GAAP acquisition costs and exploration
expenditures are capitalized (note 5(c)).
Under US GAAP, exploration costs incurred in locating areas of
potential mineralization are expensed as incurred. Commercial
feasibility is established in compliance with Industry Guide 7
which consists of identifying that part of a mineral deposit
that could be economically and legally extracted or produced
at the time of the reserve determination. After an area of
interest has been assessed as commercially feasible,
expenditures specific to the area of interest for further
development are capitalized. In deciding when an area of
interest is likely to be commercially feasible, management may
consider, among other factors, the results of prefeasibility
studies, detailed analysis of drilling results, the supply and
cost of required labour and equipment, and whether necessary
mining and environmental permits can be obtained.
Under US GAAP, mining projects and properties are reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying amount of these assets may not be
recoverable. If estimated future cash flows expected to result
from the use of the mining project or property and its
eventual disposition are less than the carrying amount of the
mining project or property, an impairment is recognized based
upon the estimated fair value of the mining project or
property. Fair value generally is based on the present value
of estimated future net cash flows for each mining project or
property, calculated using estimated mineable reserves and
mineral resources based on engineering reports, projected
rates of production over the estimated mine life, recovery
rates, capital requirements, remediation costs and future
prices considering the Company's hedging and marketing plans.
(d) Reconciliation of total assets, liabilities and shareholders'
equity (deficit):
2002 2001
---- ----
Total assets for Canadian GAAP $425,113 $890,622
Adjustments to U.S. GAAP (419,857) (393,281)
Total assets for U.S. GAAP $5,256 $497,341
Total liabilities per Canadian GAAP $1,039,530 $951,449
Adjustments to U.S. GAAP 0 0
Total liabilities for U.S. GAAP 1,039,530 951,449
Total equity (deficit) for Canadian GAAP (614,417) (60,827)
Adjustment to U.S. GAAP (419,857) (393,281)
Total equity (deficit) for U.S. GAAP (1,034,274) (454,108)
Total equity (deficit) and liabilities
for U.S. GAAP $5,256 $497,341
PAGE-16-
WORLD VENTURES INC. F17
Notes to Financial Statements
Years Ended October 31
15.DIFFERENCE BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CANADIAN GAAP AND US GAAP)
(Continued)
(e) Reconciliation of loss reported in accordance with Canadian GAAP
and U.S. GAAP:
2002 2001 2000
---- ---- ----
Net loss
Canadian GAAP $(643,590) $(287,656) $(186,709)
Adjustments to net loss
Write-off of exploration
expenditures (26,576) (1,113) (12,136)
Net loss U.S. GAAP $(670,166) $(288,769) $(198,845)
Net loss per common share
Canadian GAAP - Basic $ (0.08) $ (0.04) $ (0.03)
U.S. GAAP - Basic $ (0.09) $ (0.04) $ (0.03)
Weighted average number of share
of shares outstanding 7,722,889 6,935,957 6,024,072
Weighted average number of shares does not include the 300,000
shares to be redeemed per court judgement (note 12(f)).
PAGE-17- (PAGE-44-)
SIGNATURES
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the Registrant
certifies that it meets all of the requirements
for filing a Form 20-F and has duly caused this
Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
WORLD VENTURES INC.
By: /s/ Raynerd B. Carson
---------------------
Raynerd B. Carson
President (Chief Executive Officer)
By: /s/ Stewart A. Jackson
-----------------------
Stewart A. Jackson
Vice President (Chief Financial Officer)
Date: May 5, 2003
PAGE-45-
CERTIFICATIONS
I, Raynerd B. Carson, certify that:
1. I have reviewed this annual report on Form 20-F of World
Ventures Inc. ("Registrant")
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, no
misleading with respect tot the period covered by this annual
report:
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the Registrant as of, and for,
the periods presented in this annual report;
4. The Registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the Registrant and we have;
a) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this annual report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
Registrant's auditors and the audit committee of Registrant's
board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors and material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Registrant's internal controls; and
6. The Registrant's other certifying officer and I have indicated
in this annual report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: May 5, 2003
/s/ Raynerd B. Carson
------------------------
Raynerd B. Carson
President (Chief Executive Officer)
PAGE-46-
I, Stewart A. Jackson, certify that:
1. I have reviewed this annual report on Form 20-F of World
Ventures Inc. ("Registrant")
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, no
misleading with respect tot the period covered by this annual
report:
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the Registrant as of, and for,
the periods presented in this annual report;
4. The Registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the Registrant and we have;
a) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this annual report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
Registrant's auditors and the audit committee of Registrant's
board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors and material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Registrant's internal controls; and
6. The Registrant's other certifying officer and I have indicated
in this annual report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: May 5, 2003
/s/ Stewart A. Jackson
-----------------------
Stewart A. Jackson
Vice President (Chief Financial Officer)
PAGE-47-
Exhibits
99.1 Certificate of Principal Executive Officer pursuant to 18
U.S.C.1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
99.2 Certificate of Principal Financial Officer pursuant to
18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of
2002)
PAGE-48-