Filed Pursuant to Rule 424(b)(3)
Registration No. 333-145898
RED SUN MINING, INC.
PROSPECTUS
1,000,000 SHARES
COMMON STOCK AT $.025 PER SHARE
This is the initial offering of common stock of Red Sun Mining, Inc. and no
public market currently exists for the securities being offered. We are offering
for sale a total of 1,000,000 shares of common stock at a price of $.025 per
share. The offering is being conducted on a self-underwritten, best effort,
all-or-none basis, which means our officer and/or director, Matthew Taylor will
attempt to sell the shares. This Prospectus will permit our officer and/or
director to sell the shares directly to the public, with no commission or other
remuneration payable to him for any shares he may sell. Mr. Taylor will sell the
shares and intends to offer them to friends, family members and business
acquaintances. In offering the securities on our behalf, he will rely on the
safe harbor from broker-dealer registration set out in Rule 3a4-1 under the
Securities and Exchange Act of 1934. We intend to open a standard, non-interest
bearing, bank checking account to be used only for the deposit of funds received
from the sale of the shares in this offering. If all the shares are not sold and
the total offering amount is not deposited by the expiration date of the
offering, the funds will be promptly returned to the investors, without interest
or deduction. The shares will be offered at a price of $.025 per share for a
period of one hundred and eighty (180) days from the effective date of this
prospectus, unless extended by our board of director for an additional 90 days.
The offering will end on April 16, 2008.
Offering Price Proceeds to Company
Per Share Commissions Befoe Expenses
--------- ----------- --------------
Common Stock $0.025 Not Applicable $25,000
Total $0.025 Not Applicable $25,000
Red Sun Mining, Inc. is an exploration stage company and currently has no
operations. Any investment in the shares offered herein involves a high degree
of risk. You should only purchase shares if you can afford a loss of your
investment. Our independent auditor has issued an audit opinion for Red Sun
Mining, Inc. which includes a statement expressing substantial doubt as to our
ability to continue as a going concern.
As of the date of this prospectus, our stock is presently not traded on any
market or securities exchange and there is no assurance that a trading market
for our securities will ever develop.
THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. YOU SHOULD CAREFULLY READ AND CONSIDER THE SECTION OF THIS
PROSPECTUS ENTITLED "RISK FACTORS" ON PAGES 5 THROUGH 11 BEFORE BUYING ANY
SHARES OF RED SUN MINING, INC.'S COMMON STOCK.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS DATED OCTOBER 19, 2007
PROSPECTUS
RED SUN MINING, INC.
1,000,000 SHARES
COMMON STOCK
TABLE OF CONTENTS
Page
----
Summary 3
The Offering 3
Glossary of Technical Geological Terms 4
Risk Factors 5
Use of Proceeds 11
Determination of Offering Price 12
Dilution 12
Plan of Distribution 13
Legal Proceedings 14
Director, Executive Officers, Promoters and Control Persons 14
Security Ownership of Certain Beneficial Owners and Management 15
Description of Securities 16
Interest of Named Experts and Counsel 17
Experts 17
Disclosure of Commission Position of Indemnification for Securities
Act Liabilities 17
Organization Within Last Five Years 17
Description of Business 18
Management's Discussion and Analysis or Plan of Operation 28
Description of Property 32
Certain Relationships and Related Transactions 32
Market for Common Equity and Related Stockholder Matters 32
Executive Compensation 33
Financial Statements 34
Changes in and Disagreements with Accountants and Financial Disclosure 34
Until ninety days after the date this registration statement is declared
effective, all dealers that effect transactions in these securities whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealer's obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions
2
SUMMARY
AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, "WE," "US,"
"OUR," AND "RED SUN" REFERS TO RED SUN MINING, INC. THE FOLLOWING SUMMARY IS NOT
COMPLETE AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO
YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION
TO PURCHASE OUR COMMON STOCK.
RED SUN MINING, INC.
We are an exploration stage company engaged in the acquisition and exploration
of mineral properties. Red Sun Mining, Inc. was incorporated in the State of
Delaware on June 28, 2007. We intend to use the net proceeds from this offering
to develop our business operations (See "Description of Business" and "Use of
Proceeds"). We are an exploration stage company with no revenues or operating
history. The principal executive offices are located at 11045 La Maida Street,
Suite 201, North Hollywood, CA 91601.
We received our initial funding of $12,500 through the sale of common stock to
our director who purchased 2,000,000 shares of common stock at $.00625 per share
on July 11, 2007. From inception until the date of this filing, we have had no
operating activities. Our financial statement from inception (June 28, 2007)
through the year ended July 31, 2007 report no revenues and a net loss of
$8,088. Our independent auditor has issued an audit opinion for Red Sun Mining,
Inc. which includes a statement expressing substantial doubt as to our ability
to continue as a going concern.
We currently own a 100% undivided interest in a mineral property, the Nob 1-4
Mineral Claims located in the State of Nevada that we call the "Nob Property."
The Nob Property consists of an area of approximately 82.64 acres located in the
Monte Cristo Range Area, Esmeralda County, Nevada. Title to the Nob Property is
held by Red Sun Mining, Inc. Our plan of operation is to conduct mineral
exploration activities on the Nob Property in order to assess whether it possess
deposits of minerals capable of commercial extraction.
We have not earned any revenues to date. We do not anticipate earning revenues
until such time as we enter into commercial production of our mineral
properties. We are presently in the exploration stage of our business and we can
provide no assurance that we will discover commercially exploitable levels of
mineral resources on our property, or if such deposits are discovered, that we
will enter into further substantial exploration programs.
As of the date of this prospectus, there is no public trading market for our
common stock and no assurance that a trading market for our securities will ever
develop.
THE OFFERING
The Issuer: Red Sun Mining, Inc.
Securities Being Offered: 1,000,000 shares of common stock
Price Per Share: $0.025
Duration of Offering: The shares are offered for a period not to exceed
180 days, unless extended by our Board of
Directors for an additional 90 days.
Net Proceeds: $25,000
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Securities Issued and
Outstanding: 2,000,000 shares of common stock were issued and
outstanding as of the date of this prospectus.
Registration Costs: We estimate our total offering registration costs
to be $5,000.
Risk Factors: See "Risk Factors" and the other information in
this prospectus for a discussion of the factors
you should consider before deciding to invest in
shares of our common stock.
GLOSSARY OF TECHNICAL GEOLOGICAL TERMS
The following defined technical terms are used in our prospectus:
Aeromagnetic survey A magnetic survey conducted from the air normally
using a helicopter or fixed-wing aircraft to carry
the detection instrument and the recorder.
Alluvial Consolidated sediments that are carried and hence
deposited by a stream or river. In the southwest
USA most in filled valleys often between mountain
ranges were deposited with alluvium.
Andesitic to basaltic
composition A range of rock description using the chemical
make-up or mineral norms of the same.
Aphanitic Fine grained crystalline texture.
Blind-Basin A basin practically closed off by enveloping rock
exposures making the central portion of
unconsolidated alluvial basin isolated.
Colluvium Loose, unconsolidated material usually derived by
gravitational means, such as falling from a cliff
or scarp-face and often due to a sort of benign
erosion such as heating and cooling in a desert
environment.
Desert Wash Out-wash in dry (desert) or arid areas of
colluvium or alluvial material accumulated on the
sides of valleys or basin channels by often
irregular and violent water flow, i.e. flash
floods.
Elongate Basin A longer than wide depression that could be
favorable to in-filling by material from adjacent
eroding mountains.
Eugeosyncline A structurally formed depression or basin that
usually is considerably longer than wide that
exhibits a predominance of plutonic and/or
volcanic fill.
Formation The fundamental unit of similar rock assemblages
used in stratigraphy.
Hydrothermal A process(es) related to the actions of water
heated by igneous or intrusive activity that may
alter, mineralize or generally change the
enclosing host.
Intermontane Belt Between mountains (ranges), a usually longer than
wide depression occurring between enclosing
mountain ranges that supply the erosional material
to infill the basin.
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Lode Mineral Claim (Nevada) With a maximum area contained within 1500' long by
600' wide = 20.66 acres.
Nuees Ardante or Ladu An extremely hot, gaseous, somewhat horizontally
ejected lava, often from near the summit that
accentuates the downward flow or "glowing
avalanche" because of its mobility.
Overburden or Drift Cover Any loose material which overlies bedrock.
Paleozoic Era The first major geological time period after the
Precambrian whose rock units may exhibit an
abundance of fossil life forms.
Plagioclase feldspar A specific range of chemical composition of common
or abundant rock forming silicate minerals.
Playa The lowest part of an intermontane basin which is
frequently flooded by run-off from the adjacent
highlands or by local rainfall.
Plutonic, Igneous or
Intrusive Rock Usually a medium to coarser grain sized
crystalline rock that generally is derived from a
sub-surface magma and then consolidated, such as
in dykes, plugs, stocks or batholiths, form
smallest to largest.
Porphyritic in Augite
Pyroxene Large prophyroblasts or crystals of a specific
rock-forming mineral, i.e. augite occurring within
a matrix of finer grained rock-forming minerals.
Quarternary The youngest period of the Cenozoic era.
Snow equivalent Approximately 1" of precipitation (rain) = 1'
snow.
Syenite Coarse grained, alkalic, low in quartz intrusive
rock.
Tertiary Era The oldest or earlier of the two geological
periods comprising the Cenozoic era
Trachyte Fine grained or glassy equivalent of a syenite.
Volcaniclastic Angular to rounded particles of a wide range of
size within (a welded) finer grain-sized matrix of
volcanic origin.
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. The trading price of our common stock, when and if we trade at
a later date, could decline due to any of these risks, and you may lose all or
part of your investment.
RISKS ASSOCIATED WITH OUR COMPANY:
WE ARE AN EXPLORATION STAGE COMPANY BUT HAVE NOT YET COMMENCED EXPLORATION
ACTIVITIES ON OUR CLAIMS. WE EXPECT TO INCUR OPERATING LOSSES FOR THE
FORESEEABLE FUTURE.
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We have not yet commenced exploration on the Nob 1-4 Mineral Claims.
Accordingly, we have no way to evaluate the likelihood that our business will be
successful. We were incorporated on June 28, 2007 and to date have been involved
primarily in organizational activities and the acquisition of the mineral
claims. We have not earned any revenues as of the date of this prospectus.
Potential investors should be aware of the difficulties normally encountered by
new mineral exploration companies and the high rate of failure of such
enterprises. The likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates. Prior to completion of our
exploration stage, we anticipate that we will incur increased operating expenses
without realizing any revenues. We expect to incur significant losses into the
foreseeable future. We recognize that if production of minerals from the claims
are not forthcoming, we will not be able to continue business operations. There
is no history upon which to base any assumption as to the likelihood that we
will prove successful, and it is doubtful that we will generate any operating
revenues or ever achieve profitable operations. If we are unsuccessful in
addressing these risks, our business will most likely fail.
WITHOUT THE FUNDING FROM THIS OFFERING WE WILL BE UNABLE TO IMPLEMENT OUR
BUSINESS PLAN.
Our current operating funds are less than necessary to complete the intended
exploration program on our mineral claim. We will need the funds from this
offering to complete our business plan. As of July 31, 2007, we had cash in the
amount of $4,687. We currently do not have any operations and we have no income.
WE HAVE YET TO EARN REVENUE AND OUR ABILITY TO SUSTAIN OUR OPERATIONS IS
DEPENDENT ON OUR ABILITY TO RAISE FINANCING. AS A RESULT, OUR ACCOUNTANT
BELIEVES THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN.
We have accrued net losses of $8,088 for the period from our inception on June
28, 2007 to July 31, 2007, and have no revenues to date. Our future is dependent
upon our ability to obtain financing and upon future profitable operations from
the development of our mineral claims. These factors raise substantial doubt
that we will be able to continue as a going concern. George Stewart, our
independent auditor, has expressed substantial doubt about our ability to
continue as a going concern. This opinion could materially limit our ability to
raise additional funds by issuing new debt or equity securities or otherwise. If
we fail to raise sufficient capital when needed, we will not be able to complete
our business plan. As a result we may have to liquidate our business and you may
lose your investment. You should consider our auditor's comments when
determining if an investment in Red Sun is suitable.
BECAUSE OF THE UNIQUE DIFFICULTIES AND UNCERTAINTIES INHERENT IN MINERAL
EXPLORATION VENTURES, WE FACE A HIGH RISK OF BUSINESS FAILURE.
You should be aware of the difficulties normally encountered by new mineral
exploration companies and the high rate of failure of such enterprises. The
likelihood of success must be considered in light of the problems, expenses,
difficulties, complications and delays encountered in connection with the
exploration of the mineral properties that we plan to undertake. These potential
problems include, but are not limited to, unanticipated problems relating to
exploration, and additional costs and expenses that may exceed current
estimates. The Nob Property does not contain a known body of any commercial
minerals and, therefore, any program conducted on the Nob Property would be an
exploratory search of any minerals There is no certainty that any expenditures
made in the exploration of the Nob Property will result in discoveries of any
commercial quantities of minerals. Most exploration projects do not result in
the discovery of commercially mineable mineral deposits. Problems such as
unusual or unexpected formations and other conditions are common to mineral
exploration activities and often result in unsuccessful exploration efforts. If
the results of our exploration program do not reveal viable commercial
mineralization, we may decide to abandon our claim and acquire new claims for
new exploration. Our ability to acquire additional claims will be dependent upon
our possessing adequate capital resources when needed. If no funding is
available, we may be forced to abandon our operations.
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WE HAVE NO KNOWN MINERAL RESERVES AND IF WE CANNOT FIND ANY, WE MAY HAVE TO
CEASE OPERATIONS.
We have no mineral reserves. If we do not find any commercially exploitable
mineral reserves or if we cannot complete the exploration of any mineral
reserves, either because we do not have the money to do so or because it is not
economically feasible to do so, we may have to cease operations and you may lose
your investment. Mineral exploration is highly speculative. It involves many
risks and is often non-productive. Even if we are able to find mineral reserves
on our property our production capability will be subject to further risks
including:
- The costs of bringing the property into production including
exploration work, preparation of production feasibility studies, and
construction of production facilities, all of which we have not
budgeted for;
- The availability and costs of financing;
- The ongoing costs of production; and
- Risks related to environmental compliance regulations and restraints.
The marketability of any minerals acquired or discovered may be affected by
numerous factors which are beyond our control and which cannot be accurately
predicted, such as market fluctuations, the lack of milling facilities and
processing equipment near the Nob Property, and other factors such as government
regulations, including regulations relating to allowable production, the
importing and exporting of minerals, and environmental protection.
Given the above noted risks, the chances of our finding and commercially
exploiting reserves on our mineral properties are remote and funds expended on
exploration will likely be lost.
BECAUSE OF THE INHERENT DANGERS INVOLVED IN MINERAL EXPLORATION, THERE IS A RISK
THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS.
The search for valuable minerals involves numerous hazards. As a result, we may
become subject to liability for such hazards, including pollution, cave-ins and
other hazards against which we cannot insure or against which we may elect not
to insure. At the present time we have no insurance to cover against these
hazards. The payment of such liabilities may result in our inability to complete
our planned exploration program and/or obtain additional financing to fund our
exploration program.
AS WE UNDERTAKE EXPLORATION OF OUR MINERAL CLAIMS, WE WILL BE SUBJECT TO
COMPLIANCE WITH GOVERNMENT REGULATION THAT MAY INCREASE THE ANTICIPATED COST OF
OUR EXPLORATION PROGRAM.
There are several governmental regulations that materially restrict mineral
exploration. We will be subject to the laws of the State of Nevada as we carry
out our exploration program. We may be required to obtain work permits, post
bonds and perform remediation work for any physical disturbance to the land in
order to comply with these laws. If we enter the production phase, the cost of
complying with permit and regulatory environment laws will be greater because
the impact on the project area is greater. Permits and regulations will control
all aspects of the production program if the project continues to that stage.
Examples of regulatory requirements include:
(a) Water discharge will have to meet drinking water standards;
(b) Dust generation will have to be minimal or otherwise re-mediated;
(c) Dumping of material on the surface will have to be re-contoured and
re-vegetated with natural vegetation;
(d) An assessment of all material to be left on the surface will need to
be environmentally benign;
(e) Ground water will have to be monitored for any potential contaminants;
(f) The socio-economic impact of the project will have to be evaluated and
if deemed negative, will have to be remediated; and
(g) There will have to be an impact report of the work on the local fauna
and flora including a study of potentially endangered species.
7
There is a risk that new regulations could increase our costs of doing business
and prevent us from carrying out our exploration program. We will also have to
sustain the cost of reclamation and environmental remediation for all
exploration work undertaken. Both reclamation and environmental remediation
refer to putting disturbed ground back as close to its original state as
possible. Other potential pollution or damage must be cleaned-up and renewed
along standard guidelines outlined in the usual permits. Reclamation is the
process of bringing the land back to its natural state after completion of
exploration activities. Environmental remediation refers to the physical
activity of taking steps to remediate, or remedy, any environmental damage
caused. The amount of these costs is not known at this time as we do not know
the extent of the exploration program that will be undertaken beyond completion
of the recommended work program. If remediation costs exceed our cash reserves
we may be unable to complete our exploration program and have to abandon our
operations.
BECAUSE OUR SOLE OFFICER AND/OR DIRECTOR DOES NOT HAVE ANY PRIOR BUSINESS
MANAGERIAL EXPERIENCE OR FORMAL TRAINING SPECIFIC TO THE TECHNICALITIES OF
MINERAL EXPLORATION, THERE IS A HIGHER RISK OUR BUSINESS WILL FAIL.
Our sole officer and director is Matthew Taylor. Mr. Taylor has no prior
business managerial experience, and he has no formal training as a geologist or
in the technical aspects of management of a mineral exploration company. His
prior business experiences have primarily been within the legal field and not in
the mineral exploration business. With no direct training or experience in these
areas, our management may not be fully aware of the specific requirements
related to working within this industry. Our management's decisions and choices
may not take into account standard engineering or managerial approaches mineral
exploration companies commonly use. Consequently, our operations, earnings, and
ultimate financial success could suffer irreparable harm due to management's
lack of experience in this industry.
THERE IS A RISK THAT OUR PROPERTY DOES NOT CONTAIN ANY KNOWN BODIES OF ORE
RESULTING IN ANY FUNDS SPENT ON EXPLORATION BEING LOST.
There is the likelihood of our mineral claim containing little or no economic
mineralization or reserves. We have a geological report detailing previous
exploration in the area, and the claim has been staked per Nevada regulations.
However, there is the possibility that previous work conducted was not carried
out properly and our claim does not contain any reserves, resulting in any funds
spent on exploration being lost.
BECAUSE WE HAVE NOT SURVEYED THE NOB 1-4 CLAIMS, WE MAY DISCOVER MINERALIZATION
ON THE CLAIMS THAT IS NOT WITHIN OUR CLAIM BOUNDARIES.
While we have conducted a mineral claim title search, this should not be
construed as a guarantee of claim boundaries. Until the claim is surveyed, the
precise location of the boundaries of the claim may be in doubt. If we discover
mineralization that is close to the claim boundaries, it is possible that some
or all of the mineralization may occur outside the boundaries. In such a case we
would not have the right to extract those minerals.
IF WE DISCOVER COMMERCIAL RESERVES OF PRECIOUS METALS ON OUR MINERAL PROPERTY,
WE CAN PROVIDE NO ASSURANCE THAT WE WILL BE ABLE TO SUCCESSFULLY ADVANCE THE
MINERAL CLAIMS INTO COMMERCIAL PRODUCTION.
If our exploration program is successful in establishing ore of commercial
tonnage and grade, we will require additional funds in order to advance the
claim into commercial production. Obtaining additional financing would be
subject to a number of factors, including the market price for the minerals,
investor acceptance of our claims and general market conditions. These factors
may make the timing, amount, terms or conditions of additional financing
unavailable to us. The most likely source of future funds is through the sale of
equity capital. Any sale of share capital will result in dilution to existing
8
shareholders. We may be unable to obtain any such funds, or to obtain such funds
on terms that we consider economically feasible and you may lose any investment
you make in this offering.
IF ACCESS TO OUR MINERAL CLAIMS IS RESTRICTED BY INCLEMENT WEATHER, WE MAY BE
DELAYED IN OUR EXPLORATION AND ANY FUTURE MINING EFFORTS.
It is possible that snow or rain could cause the mining roads providing access
to our claims to become impassable. If the roads are impassable we would be
delayed in our exploration timetable.
BASED ON CONSUMER DEMAND, THE GROWTH AND DEMAND FOR ANY ORE WE MAY RECOVER FROM
OUR CLAIMS MAY BE SLOWED, RESULTING IN REDUCED REVENUES TO THE COMPANY.
Our success will be dependent on the growth of demand for ores. If consumer
demand slows our revenues may be significantly affected. This could limit our
ability to generate revenues and our financial condition and operating results
may be harmed.
BECAUSE OUR CURRENT OFFICER AND/OR DIRECTOR HAVE OTHER BUSINESS INTERESTS, HE
MAY NOT BE ABLE OR WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS
OPERATIONS, CAUSING OUR BUSINESS TO FAIL.
Mr. Matthew Taylor, our officer and director, currently devotes approximately 7
hours per week providing management services to us. While he presently possesses
adequate time to attend to our interest, it is possible that the demands on him
from other obligations could increase, with the result that he would no longer
be able to devote sufficient time to the management of our business. This could
negatively impact our business development.
RISKS ASSOCIATED WITH THIS OFFERING
THE TRADING IN OUR SHARES WILL BE REGULATED BY THE SECURITIES AND EXCHANGE
COMMISSION RULE 15G-9 WHICH ESTABLISHED THE DEFINITION OF A "PENNY STOCK."
The shares being offered are defined as a penny stock under the Securities and
Exchange Act of 1934, and rules of the Commission. The Exchange Act and such
penny stock rules generally impose additional sales practice and disclosure
requirements on broker-dealers who sell our securities to persons other than
certain accredited investors who are, generally, institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or
annual income exceeding $200,000 ($300,000 jointly with spouse), or in
transactions not recommended by the broker-dealer. For transactions covered by
the penny stock rules, a broker dealer must make certain mandated disclosures in
penny stock transactions, including the actual sale or purchase price and actual
bid and offer quotations, the compensation to be received by the broker-dealer
and certain associated persons, and deliver certain disclosures required by the
Commission. Consequently, the penny stock rules may make it difficult for you to
resell any shares you may purchase, if at all.
WE ARE SELLING THIS OFFERING WITHOUT AN UNDERWRITER AND MAY BE UNABLE TO SELL
ANY SHARES.
This offering is self-underwritten, that is, we are not going to engage the
services of an underwriter to sell the shares; we intend to sell our shares
through our officer and/or director, who will receive no commissions. He will
offer the shares to friends, family members, and business associates, however,
there is no guarantee that he will be able to sell any of the shares. Unless he
is successful in selling all of the shares and we receive the proceeds from this
offering, we may have to seek alternative financing to implement our business
plan.
DUE TO THE LACK OF A TRADING MARKET FOR OUR SECURITIES, YOU MAY HAVE DIFFICULTY
SELLING ANY SHARES YOU PURCHASE IN THIS OFFERING.
9
We are not registered on any public stock exchange. There is presently no demand
for our common stock and no public market exists for the shares being offered in
this prospectus. We plan to contact a market maker immediately following the
completion of the offering and apply to have the shares quoted on the OTC
Electronic Bulletin Board (OTCBB). The OTCBB is a regulated quotation service
that displays real-time quotes, last sale prices and volume information in
over-the-counter (OTC) securities. The OTCBB is not an issuer listing service,
market or exchange. Although the OTCBB does not have any listing requirements
per se, to be eligible for quotation on the OTCBB, issuers must remain current
in their filing with the SEC or applicable regulatory authority. Market makers
are not permitted to begin quotation of a security whose issuer does not meet
his filing requirement. Securities already quoted on the OTCBB that become
delinquent in their required filings will be removed following a 30 to 60 day
grace period if they do not make their required filing during that time. We
cannot guarantee that our application will be accepted or approved and our stock
listed and quoted for sale. As of the date of this filing, there have been no
discussions or understandings between Red Sun Mining, Inc. or anyone acting on
our behalf, with any market maker regarding participation in a future trading
market for our securities. If no market is ever developed for our common stock,
it will be difficult for you to sell any shares you purchase in this offering.
In such a case, you may find that you are unable to achieve any benefit from
your investment or liquidate your shares without considerable delay, if at all.
In addition, if we fail to have our common stock quoted on a public trading
market, your common stock will not have a quantifiable value and it may be
difficult, if not impossible, to ever resell your shares, resulting in an
inability to realize any value from your investment.
YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION OF THE PRICE YOU PAY FOR YOUR
SHARES.
Our existing stockholder acquired his shares at a cost of $.00625 per share, a
cost per share substantially less than that which you will pay for the shares
you purchase in this offering. Upon completion of this offering the net tangible
book value of the shares held by our existing stockholder (2,000,000 shares)
will be increased by $.012 per share without any additional investment on his
part. The purchasers of shares in this offering will incur immediate dilution (a
reduction in the net tangible book value per share from the offering price of
$.025 (per share) of $.013 per share. As a result, after completion of the
offering, the net tangible book value of the shares held by purchasers in this
offering would be $.012 per share, reflecting an immediate reduction in the
$.025 per share he paid for their shares.
WE WILL BE HOLDING ALL THE PROCEEDS FROM THE OFFERING IN A STANDARD BANK
CHECKING ACCOUNT UNTIL ALL SHARES ARE SOLD. BECAUSE THE SHARES ARE NOT HELD IN
AN ESCROW OR TRUST ACCOUNT THERE IS A RISK YOUR MONEY WILL NOT BE RETURNED IF
ALL THE SHARES ARE NOT SOLD.
All funds received from the sale of shares in this offering will be deposited
into a standard bank checking account until all shares are sold and the offering
is closed, at which time, the proceeds will be transferred to our business
operating account. In the event all shares are not sold we have committed to
promptly return all funds to the original purchasers. However since the funds
will not be placed into an escrow, trust or other similar account, there can be
no guarantee that any third party creditor who may obtain a judgment or lien
against us would not satisfy the judgment or lien by executing on the bank
account where the offering proceeds are being held, resulting in a loss of any
investment you make in our securities.
WE WILL INCUR ONGOING COSTS AND EXPENSES FOR SEC REPORTING AND COMPLIANCE.
WITHOUT REVENUE WE MAY NOT BE ABLE TO REMAIN IN COMPLIANCE, MAKING IT DIFFICULT
FOR INVESTORS TO SELL THEIR SHARES, IF AT ALL.
Our business plan allows for the payment of the estimated $5,000 cost of this
registration statement to be paid from existing cash on hand. If necessary, Mr.
Taylor, our director, has verbally agreed to loan the company funds to complete
the registration process. We plan to contact a market maker immediately
following the close of the offering and apply to have the shares quoted on the
OTC Electronic Bulletin Board. To be eligible for quotation, issuers must remain
current in their filings with the SEC. In order for us to remain in compliance
we will require future revenues to cover the cost of these filings, which could
comprise a substantial portion of our available cash resources. If we are unable
to generate sufficient revenues to remain in compliance it may be difficult for
you to resell any shares you may purchase, if at all.
10
MR. TAYLOR, A DIRECTOR OF THE COMPANY, BENEFICIALLY OWNS 100% OF THE OUTSTANDING
SHARES OF OUR COMMON STOCK. AFTER THE COMPLETION OF THIS OFFERING HE WILL OWN
66.7% OF THE OUTSTANDING SHARES. IF HE CHOOSES TO SELL HIS SHARES IN THE FUTURE,
IT MIGHT HAVE AN ADVERSE EFFECT ON THE PRICE OF OUR STOCK.
Due to the amount of Mr. Taylor's share ownership in our company, if he chooses
to sell his shares in the public market, the market price of our stock could
decrease and all shareholders suffer a dilution of the value of their stock. If
he does sell any of his common stock, he will be subject to Rule 144 under the
1933 Securities Act. Rule 144 restricts the ability of our director to sell
shares by limiting the sales of securities during any three-month period to the
greater of (1) 1% of the outstanding common stock of the issuer; or (2) the
average weekly reported trading volume in the outstanding common stock reported
on all securities exchanges during the four calendar weeks preceding the filing
of the required notice of the sale under Rule 144 with the SEC.
FORWARD LOOKING STATEMENT
This prospectus contains forward-looking statements that involve risk and
uncertainties. We use words such as "anticipate", "believe", "plan", "expect",
"future", "intend", and similar expressions to identify such forward-looking
statements. Investors should be aware that all forward-looking statements
contained within this filing are good faith estimates of management as of the
date of this filing. Our actual results could differ materially from those
anticipated in these forward-looking statements for many reasons, including the
risks faced by us as described in the "Risk Factors" section and elsewhere in
this prospectus.
USE OF PROCEEDS
Assuming sale of all of the shares offered herein, of which there is no
assurance, the net proceeds from this offering will be $25,000. The proceeds are
expected to be disbursed, in the priority set forth below, during the first
twelve (12) months after the successful completion of the offering:
Planned Expenditures Over
Category The Next 12 Months
-------- ------------------
Phase 1 Exploration Program $ 9,500
Phase 2 Exploration Program $10,500
Legal and Accounting $ 5,000
TOTAL PROCEEDS TO COMPANY $25,000
We will establish a separate bank account and all proceeds will be deposited
into that account until the total amount of the offering is received and all
shares are sold, at which time the funds will be released to us for use in our
operations. In the event we do not sell all of the shares before the expiration
date of the offering, all funds will be returned promptly to the subscribers,
without interest or deduction. If necessary, Mr. Taylor, our director, has
verbally agreed to loan the company funds to complete the registration process
but we will require full funding to implement our complete business plan.
DETERMINATION OF OFFERING PRICE
The offering price of the share has been determined arbitrarily by us. The price
does not bear any relationship to our assets, book value, earnings, or other
established criteria for valuing a privately held company. In determining the
number of shares to be offered and the offering price, we took into
consideration our cash on hand and the amount of money we would need to
implement our business plans. Accordingly, the offering price should not be
considered an indication of the actual value of the securities.
11
DILUTION
Dilution represents the difference between the offering price and the net
tangible book value per share immediately after completion of this offering. Net
tangible book value is the amount that results from subtracting total
liabilities and intangible assets from total assets. Dilution arises mainly as a
result of our arbitrary determination of the offering price of the shares being
offered. Dilution of the value of the shares you purchase is also a result of
the lower book value of the shares held by our existing shareholders.
As of July 31, 2007, the net tangible book value of our shares was $4,412 or
$.002 per share, based upon 2,000,000 shares outstanding.
Upon completion of this offering, but without taking into account any change in
the net tangible book value after completion of this offering other than that
resulting from the sale of the shares and receipt of the total proceeds of
$25,000, the net tangible book value of the 3,000,000 shares to be outstanding
will be $29,412, or approximately $.010 per share. Accordingly, the net tangible
book value of the shares held by our existing stockholder (2,000,000 shares)
will be increased by $.012 per share without any additional investment on his
part. The purchasers of shares in this offering will incur immediate dilution (a
reduction in the net tangible book value per share from the offering price of
$.025 (per share) or $.013 per share. As a result, after completion of the
offering, the net tangible book value of the shares held by purchasers in this
offering would be $.012 per share, reflecting an immediate reduction in the
$.025 price per share he paid for their shares. After completion of the
offering, the existing shareholder will own 66.7% of the total number of shares
then outstanding, for which he will have made an investment of $12,500 or
$.00625 per share. Upon completion of the offering, the purchasers of these
shares offered hereby will own 33.3% of the total number of shares then
outstanding, for which they will have made a cash investment of $25,000, or
$.025 per share.
The following table illustrates the per share dilution to the new investors:
Public Offering Price Per Share $.025
Net Tangible Book Value Prior to this Offering $.002
Net Tangible Book Value After Offering $.012
Immediate Dilution per Share to New Investors $.013
The following table summarizes the number and percentages of shares purchased,
the amount and percentage of consideration paid and the average price per share
paid by our existing stockholder and by new investors in this offering:
Total
Price Number of Percent of Consideration
Per Share Shares Held Ownership Paid
--------- ----------- --------- ----
Existing Shareholder $.00625 2,000,000 66.7 $12,500
Investors in this
Offering $ .025 1,000,000 33.3 $25,000
PLAN OF DISTRIBUTION
OFFERING WILL BE SOLD BY OUR OFFICER AND/OR DIRECTOR
This is a self-underwritten offering. This prospectus permits our officer and/or
director to sell the shares directly to the public, with no commission or other
remuneration payable to him for any shares he may sell. There are no plans or
arrangement to enter into any contracts or agreements to sell the shares with a
broker or dealer. Our officer and/or director, Mr. Matthew Taylor, will sell the
shares and intends to offer them to friends, family members and business
acquaintances. In offering the securities on our behalf, he will rely on the
12
safe harbor from broker dealer registration set out in Rule 3a4-1 under the
Securities Exchange Act of 1934.
Our officer and/or director will not register as a broker-dealer pursuant to
Section 15 of the Securities Exchange Act of 1934, in reliance upon Rule 3a4-1,
which sets forth those conditions under which a person associated with an Issuer
may participate in the offering of the Issuer's securities and not be deemed to
be a broker-dealer.
a. Our officer and/or director is not subject to a statutory
disqualification, as that term is defined in Section 3(a)(39) of the
Act, at the time of their participation; and,
b. Our officer and/or director will not be compensated in connection with
his participation by the payment of commissions or other remuneration
based either directly or indirectly on transaction in securities; and
c. Our officer and/or director is not, nor will he be at the time of
their participation in the offering, an associated person of a
broker-dealer; and
d. Our officer and/or director meets the conditions of paragraph
(a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that he (A) primarily
performs or is intended primarily to perform at the end of the
offering, substantial duties for or on behalf of our company, other
than in connection with transactions in securities; and (B) is not a
broker or dealer, or been an associated person of a broker or dealer,
within the preceding twelve months; and (C) has not participated in
selling and offering securities for any Issuer more than once every
twelve months other than in reliance on Paragraphs (a)(4)(i) or (a)
(4)(iii).
Our officer and/or director, control persons and affiliates of same do not
intend to purchase any shares in this offering.
TERMS OF THE OFFERING
The shares will be sold at the fixed price of $.025 per share until the
completion of this offering. There is no minimum amount of subscription required
per investor, and subscriptions, once received, are irrevocable.
This offering will commence on the date of this prospectus and will continue for
a period of 180 days (the "Expiration Date"), unless extended by our Board of
Directors for an additional 90 days.
DEPOSIT OF OFFERING PROCEEDS
This is a "best efforts", "all or none" offering and, as such, we will not be
able to spend any of the proceeds unless all the shares are sold and all
proceeds are received. We intend to hold all funds collected from subscriptions
in a separate bank account until the total amount of $25,000 has been received.
At that time, the funds will be transferred to our business account for use in
implementation of our business plan. In the event the offering is not sold out
prior to the Expiration Date, all money will be promptly returned to the
investors, without interest or deduction. We determined the use of the standard
bank account was the most efficient use of our current limited funds. Please see
the "Risk Factors" section to read the related risk to you as a purchaser of any
shares.
PROCEDURES AND REQUIREMENTS FOR SUBSCRIPTION
If you decide to subscribe to any shares in this offering, you will be required
to execute a Subscription Agreement and tender it, together with a check or bank
money order made payable to Red Sun Mining, Inc. Subscriptions, once received by
the company, are irrevocable.
13
LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings, and we are not aware of
any pending or potential legal actions.
DIRECTOR, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The names, ages and titles of our executive officers and director are as
follows:
Name and Address of Executive
Officer and/or Director Age Position
----------------------- --- --------
Matthew Taylor 29 President, Secretary, Treasurer and
11045 La Maida Street, Suite 201 Director
North Hollywood, CA 91601
Mr. Matthew Taylor is the promoter of Red Sun Mining, Inc., as that term is
defined in the rules and regulations promulgated under the Securities and
Exchange Act of 1933.
Mr. Taylor has no prior business managerial experience, and he has no formal
training as a geologist or in the technical or managerial aspects of management
of a mineral exploration company. His prior business experiences have primarily
been within the legal field and not in the mineral exploration industry.
Accordingly, we will have to rely on the technical services of others to advise
us on the managerial aspects specifically associated with a mineral exploration
company. We do not have any employees who have professional training or
experience in the mining industry. We rely on independent geological consultants
to make recommendations to us on work programs on our property, to hire
appropriately skilled persons on a contract basis to complete work programs and
to supervise, review, and report on such programs to us.
TERM OF OFFICE
Our director is appointed to hold office until the next annual meeting of our
stockholders or until his successor is elected and qualified, or until he
resigns or is removed in accordance with the provisions of the Delaware Revised
Statutes. Our officer is appointed by our Board of Directors and holds office
until removed by the Board.
SIGNIFICANT EMPLOYEES
We have no significant employees other than our officer and/or director, Mr.
Matthew Taylor. Mr. Taylor currently devotes approximately 7 hours per week to
company matters. After receiving funding per our business plan Mr. Taylor
intends to devote as much time as the Board of Directors deem necessary to mange
the affairs of the company.
Mr. Taylor has not been the subject of any order, judgment, or decree of any
court of competent jurisdiction, or any regulatory agency permanently or
temporarily enjoining, barring, suspending or otherwise limited him or her from
acting as an investment advisor, underwriter, broker or dealer in the securities
industry, or as an affiliated person, director or employee of an investment
company, bank, savings and loan association, or insurance company or from
engaging in or continuing any conduct or practice in connection with any such
activity or in connection with he purchase or sale of any securities.
Mr. Taylor has not been convicted in any criminal proceeding (excluding traffic
violations) nor is he subject of any currently pending criminal proceeding.
14
We conduct our business through agreements with consultants and arms-length
third parties. Currently, we have no formal consulting agreements in place. We
have a verbal arrangement with the consulting geologist currently conducting the
exploratory work on the Nob Property. We pay the consulting geologist the usual
and customary rates received by geologists performing similar consulting
services.
RESUMES
MATTHEW TAYLOR serves as President, Secretary and Treasurer of Red Sun Mining,
Inc. since June 28, 2007 (inception). From June 2006 to current date, Mr. Taylor
is employed at The Guerrini Law Firm, Pasadena, CA as an Associate Attorney
specializing in business and real estate litigation. From April, 2006 to June,
2006, he was employed as a contract attorney in litigation discovery at the Law
Offices of Michael Sundstedt, Irvine, CA. From December, 2005 to March, 2006,
Mr. Taylor was employed as a contract attorney at Alan Burton Newman PLC, Marina
Del Ray, CA, and from May, 2004 to August, 2004, he served as a law clerk to
general counsel at Arbitech, LLC, Laguna Beach, CA. From January, 2004 to April,
2004, Mr. Taylor served as a judicial extern to Honorable James N. Barr, U.S.
Bankruptcy Court, Santa Ana, CA. From August 2002 to May, 2005, he studied law
at Chapman University School of Law, Orange, CA and received a J.D. in 2005.
From October, 2001 through July, 2002, Mr. Taylor was employed at JDI
Technologies, Inc., Calabasas, CA. Mr. Taylor graduated with a B.A. in American
Literature and Culture from University of California, Los Angeles in 2000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the number of
shares of our common stock owned beneficially as of October 3, 2007 by: (i) each
person (including any group) known to us to own more than five percent (5%) of
any class of our voting securities, (ii) our director, and or (iii) our officer.
Unless otherwise indicated, the stockholder listed possesses sole voting and
investment power with respect to the shares shown.
Amount and Nature Percentage of
of Beneficial Common
Title of Class Name and Address of Beneficial Owner Ownership Stock(1)
- -------------- ------------------------------------ --------- --------
Common Stock Matthew Taylor, Director 2,000,000 100%
11045 La Maida Street, Suite 201 Direct
North Hollywood, CA 91601
Common Stock Officer and/or director as a Group 2,000,000 100%
Holders of More than 5% of Our Common Stock
Common Stock Matthew Taylor, Director
11045 La Maida Street, Suite 201 2,000,000 100%
North Hollywood, CA 91601 Direct
- ----------
(1) A beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship,
or otherwise has or shares: (i) voting power, which includes the power to
vote, or to direct the voting of shares; and (ii) investment power, which
includes the power to dispose or direct the disposition of shares. Certain
shares may be deemed to be beneficially owned by more than one person (if,
for example, persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by a
person if the person has the right to acquire the shares (for example, upon
exercise of an option) within 60 days of the date as of which the
information is provided. In computing the percentage ownership of any
person, the amount of shares outstanding is deemed to include the amount of
shares beneficially owned by such person (and only such person) by reason
of these acquisition rights. As a result, the percentage of outstanding
15
shares of any person as shown in this table does not necessarily reflect
the person's actual ownership or voting power with respect to the number of
shares of common stock actually outstanding on October 3, 2007. As of
October 3, 2007, there were 2,000,000 shares of our common stock issued and
outstanding.
DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock consists of 100,000,000 shares of common stock,
with a par value of $0.0001 per share. As of October 3, 2007, there were
2,000,000 shares of our common stock of our common stock issued and outstanding
that was held of record by one (1) registered stockholder.
COMMON STOCK
The following is a summary of the material rights and restrictions associated
with our common stock. This description does not purport to be a complete
description of all of the rights of our stockholders and is subject to, and
qualified in its entirety by, the provisions of our most current Articles of
Incorporation and Bylaws, which are included as exhibits to this Registration
Statement.
The holders of our common stock currently have (i) equal ratable rights to
dividends from funds legally available therefore, when, as and if declared by
the Board of Directors of the Company; (ii) are entitled to share ratably in all
of the assets of the Company available for distribution to holders of common
stock upon liquidation, dissolution or winding up of the affairs of the Company
(iii) do not have preemptive, subscription or conversion rights and there are no
redemption or sinking fund provisions or rights applicable thereto; and (iv) are
entitled to one non-cumulative vote per share on all matters on which stock
holders may vote. All shares of common stock now outstanding are fully paid for
and non-assessable and all shares of common stock which are the subject of this
offering, when issued, will be fully paid for and non-assessable. Please refer
to the Company's Articles of Incorporation, By-Laws and the applicable statutes
of the State of Delaware for a more complete description of the rights and
liabilities of holders of the Company's securities.
NON-CUMULATIVE VOTING
The holders of shares of common stock of the Company do not have cumulative
voting rights, which means that the holder of more than 50% of such outstanding
shares, voting for the election of director, can elect all of the directors to
be elected, if he so chooses, and, in such event, the holders of the remaining
shares will not be able to elect any of the Company's directors. After this
Offering is completed, the present stockholder will own 66.7% of the outstanding
shares. (See "Dilution").
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in our company or any of its parents or
subsidiaries. Nor was any such person connected with our company or any of its
16
parents or subsidiaries as a promoter, managing or principal underwriter, voting
trustee, director, officer, or employee.
EXPERTS
The law firm of Joseph I. Emas, 1224 Washington Avenue, Miami Beach, FL 33139
has passed upon the validity of the shares being offered and certain other legal
matters and is representing us in connection with this offering. Mr. Emas'
consent is attached to this prospectus as an exhibit.
George Stewart, CPA, our independent registered public accountant, has audited
our financial statements included in this prospectus and registration statement
to the extent and for the periods set forth in their audit report. George
Stewart has presented its report with respect to our audited financial
statements. The report of George Stewart is included in reliance upon their
authority as experts in accounting and auditing, and his consent is attached to
this prospectus as an exhibit.
James McLeod, P. Geo., is our consulting geologist. Mr. McLeod is a consulting
professional geologist in the Geological Section and is a member in good
standing of the Association of Professional Engineers and Geoscientists in
British Columbia, Canada and a Fellow of the Geological Association of Canada.
Mr. McLeod's consent is attached to this prospectus as an exhibit.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation provide that we will indemnify an officer,
director, or former officer or director, to the full extent permitted by law. We
have been advised that, in the opinion of the SEC, indemnification for
liabilities arising under the Securities Act is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment of expenses incurred or paid by a director, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by one of our director, officers, or controlling persons in connection with the
securities being registered, we will, unless in the opinion of our legal counsel
the matter has been settled by controlling precedent, submit the question of
whether such indemnification is against public policy to a court of appropriate
jurisdiction. We will then be governed by the court's decision.
ORGANIZATION WITHIN LAST FIVE YEARS
Red Sun Mining, Inc. was incorporated on June 28, 2007 under the laws of the
State of Delaware. We are engaged in the business of acquisition, exploration
and development of natural resource properties.
Matthew Taylor serves as officer and director of our company from inception
(June, 2007) to current date. No other person other than Mr. Taylor has acted as
a promoter of Red Sun Mining, Inc. since our inception. Other than Mr. Taylor's
purchase of 2,000,000 shares of our common stock on July 11, 2007, Mr. Taylor
has not entered into any agreement with us in which he is to receive from us or
provide to us anything of value. Mr. Taylor purchased the 2,000,000 shares of
our common stock at a price of $.00625 per share for a total of $12,500.
DESCRIPTION OF BUSINESS
IN GENERAL
We are an exploration stage company engaged in the acquisition and exploration
of mineral properties. We currently own a 100% undivided interest in a mineral
property located in Esmeralda County, State of Nevada that we call the "Nob
Property." We are currently conducting mineral exploration activities on the Nob
17
Property in order to assess whether it contains any commercially exploitable
mineral reserves. Currently there are no known mineral reserves on the Nob
Property.
We have not earned any revenues to date. Our independent auditor has issued an
audit opinion which includes a statement expressing substantial doubt as to our
ability to continue as a going concern. The source of information contained in
this discussion is our geology report that has been included as Exhibit 99.2 to
our SB-2 registration statement.
There is the likelihood of our mineral claim containing little or no economic
mineralization or reserves of silver and other minerals. We are presently in the
exploration stage of our business and we can provide no assurance that any
commercially viable mineral deposits exist on our mineral claims, that we will
discover commercially exploitable levels of mineral resources on our property,
or, if such deposits are discovered, that we will enter into further substantial
exploration programs. Further exploration is required before a final
determination can be made as to whether our mineral claims possess commercially
exploitable mineral deposits. If our claim does not contain any reserves all
funds that we spend on exploration will be lost.
ACQUISITION OF THE NOB PROPERTY
In July, 2007, we purchased a 100% undivided interest in a mineral claim known
as the Nob 1-4 Mineral Claims for a price of $7,000. The claims are staked and
recorded in the name of Red Sun Mining, Inc. and are in good standing until
September 1, 2008.
18
[MAP SHOWING THE PROPERTY LOCATION]
19
We engaged James McLeod, P.Geo., to prepare a geological evaluation report on
the Nob Property. Mr. McLeod is a consulting professional geologist in the
Geological Section of the Association of Professional Engineers and
Geoscientists of British Columbia and a Fellow of the Geological Association of
Canada. Mr. McLeod attended the University of British Columbia and holds a
Bachelor of Science degree in geology.
The work completed by Mr. McLeod in preparing the geological report consisted of
a review of geological data from previous exploration within the region. The
acquisition of this data involved the research and investigation of historical
files to locate and retrieve data information acquired by previous exploration
companies in the area of the mineral claims.
We received the geological evaluation report on the Nob Property entitled
"Review and Recommendations Nob 1-4 Mineral Claims, Monte Cristo Range Area,
"Gilbert" 7 1/2' Map, Esmeralda County, Nevada, USA" prepared by Mr. McLeod on
July, 30, 2007. The geological report summarizes the results of the history of
the exploration of the mineral claims, the regional and local geology of the
mineral claims and the mineralization and the geological formations identified
as a result of the prior exploration. The geological report also gives
conclusions regarding potential mineralization of the mineral claims and
recommends a further geological exploration program on the mineral claims. The
description of the Nob Property provided below is based on Mr. McLeod's report.
DESCRIPTION OF PROPERTY
The property owned by Red Sun Mining, Inc., on which the net proceeds of the
offering will be spent, is the Nob 1-4 Mineral Claims which is comprised of four
located mineral claims in one contiguous, 2 x 2 group that are listed as
follows:
Name Area Good to Date
---- ---- ------------
Nob 1 20.66 ac. Sept. 1, 2008
Nob 2 20.66 ac. Sept. 1, 2008
Nob 3 20.66 ac. Sept. 1, 2008
Nob 4 20.66 ac. Sept. 1, 2008
The Nob Property lies in the west central part of the State of Nevada northwest
of the town of Tonopah and is accessible from Highway 95 by traveling north of
the Town of Tonopah, Nevada for 21 miles and then generally to the northwest for
approximately 14.5 miles to the property.
The claims were recorded with the County and the Bureau of Land Management.
20
[MAP SHOWING THE CLAIM LOCATION]
21
CLIMATE AND GENERAL PHYSIOGRAPHY
The area experiences about 4" to 8" of precipitation annually of which about 30%
(in a cold year) may occur as a snow equivalent. This amount of precipitation
suggests a climatic classification of arid to semi-arid. The summers can
experience hot weather, middle 60's to 70's F (degrees) average with high spells
of 100+ F (degrees) while the winters are generally more severe than the dry
belt to the west and can last from December through February. Temperatures
experienced during mid-winter average for January of from the high 20's to the
low 40's F (degrees) with low spells down to -20F (degrees). Generally speaking
the highness of the area allows for somewhat cooler conditions than the lower
areas.
The claim area ranges in elevation from 6,600' to 6,700' mean sea level. The
physiographic setting of the property can be described as arid desert hillside
within a mosaic of moderately rounded mountains in an interior plateau setting.
The area has been surficially altered both by some fluvial and wind erosion and
some depositional (drift cover) effects of in-filling and in situ or residual
erosion. Thickness of drift cover in some valleys may vary considerably, but in
the proximity of the Nob property it is not thought to be very deep. Surface
water occurrences are rare, springs are sparse and subsurface aquifers are
accessed when needed by drilling wells where allowed.
The physiography of the Nob Property is fairly steep northwest sloping
mountainous terrain bounded on the southeast, south and east by the arcuate
Monte Cristo Range that reaches elevations in excess of 7,000 feet. Much of this
area with many broad open valleys hosts sagebrush, juniper, pinon and some
Joshua trees.
INFRASTRUCTURE
The town of Tonopah offers much of the necessary infrastructure required to base
and carry-out an exploration program (accommodations, communications, equipment
and supplies). Larger or specialized equipment can likely be acquired in the Las
Vegas, NV, area lying 209 miles by paved road (Highway 95) to the southeast or
in Reno lying 236 miles to the northwest.
PROPERTY HISTORY
The recorded mining history of the general area dates from the 1860's when
prospectors passed through heading north and west. The many significant lode
gold, silver and other mineral product deposits developed in the area was that
of the Goldfield Camp, 1905; Coaldale Coal Field, 1913; Divide Silver Mining
District, 1921 and the Candalaria silver-gold mine which operated as an
underground lode gold deposit in 1922 and again in the 1990's as an open cut,
cyanide heap leach operation. Many occurrences of industrial, semi-previous gem
material, coal and radioactive matter are found in the general area.
The mineral claims lie within a local area seen to contain gold and silver
prospects. Although the author of the report is unaware of any such mineral
occurrences actually known to occur on the mineral claims, it is thought to be a
good area in which to conduct a mineral exploration program.
REGIONAL GEOLOGY
The regional geology of Nevada is depicted as being underlain by all types of
rock units. These appear to range from oldest to youngest in an east to west
direction, respectively. Many of the oldest units are found to occur in the
southeast corner of the State along the Colorado River. The bedrock units
exhibit a north-south fabric of alternating east-west ranges and valleys. This
feature may suggest E-W compression that may have expression as low angle thrust
faults (see Figure 3a). Various types of faulting are recognized in many areas
of Nevada and it often plays a large part in the emplacement of mineral
occurrences and ore bodies.
22
[MAP SHOWING THE REGIONAL GEOLOGY]
23
[LEGEND GRAPHIC FOR REGIONAL GEOLOGY MAP]
24
LOCAL GEOLOGY
The local geology about the Nob Property which is situated approximately 25 air
miles to the west-northwest of Tonopah, NV reveals a north-south trending,
elongate assemblage of Tertiary volcanic and lesser sedimentary units.
Throughout this raised basin-like feature and interspersed with the Tertiary
units occur older Paleozoic rocks.
Throughout this local area are a number of northwest-southeast trending high
angle faults and some possibly lower angle southeasterly trending faults that
could have set the stage for mineralizing fluids to have affected the underlying
rock units.
PROPERTY GEOLOGY, DEPOSIT TYPE AND MINERALIZATION
The geology of the Nob Property area may be described as being partially covered
by Quaternary collovium deposits. The rock exposures evident within the Nob
mineral claim area appear to be mainly volcanic units. This mineral claim area
within a larger surrounding area of rock exposure and known mineral occurrences
exhibits a good geological setting and could be considered a good target area in
which to conduct mineral exploration.
The outcrops partially surrounding or flanking the alluvial covered valley
underlying the mineral claim area suggests mineral occurrences or structurally
prepared covered bedrock could be south after in those areas.
The deposit types that are found occurring in the regional area and the more
localized areas vary considerably. Silver and gold quartz veins predominate at
Tonopah. Some of the most productive veins represent the silicification and
replacement of sheeted zones of trachyte that was originally marked by close-set
parallel fractures, but not faulting. The two hosts of mineralized quartz veins
are 1) older pre-Tertiary volcanic rocks, i.e. Silver Peak (mineral Ridge area),
Weepah and Hornsilver or 2) Tertiary rhyolite host rocks that occur at Tonopah
and other younger volcanic rocks, i.e. Goldfield and Divide. Base metal deposits
are more commonly of interest now than in the past and many prospects occur in
the general area. The industrial mineral barite that is observed to occur either
in vein or bedded types have been recognized in the general area. Also
radioactive rock occurrences are known of in the general vicinity of the claims
and should not be overlooked if and when exploration fieldwork is undertaken.
The precious metal deposit types that historically predominate in the general
area are as gold or silver vein-type of occurrences.
Ground geophysical techniques may be most effective in the covered areas as a
follow-up to prospecting and soil sampling of the Phase 1 program.
By far the largest production in the County comes from the vein-type of gold and
silver occurrences in quartz fissures in either pre-Tertiary volcanic or
Tertiary volcanic host rocks.
CONCLUSIONS OF GEOLOGICAL REPORT
The geological evaluation report we obtained on the Nob Property states the
property is favorably located for the possible discovery of a large, probably
low grade mineral deposit of base and/or precious metals or other minerals of
soft economic consideration that have open pit and/or underground mining
potential. If such a deposit exists, it may occur under the drift or overburden
covered areas of the Nob 1-4 Mineral Claims.
25
RECOMMENDATIONS OF GEOLOGICAL REPORT AND THE GEOLOGICAL EXPLORATION PROGRAM
Mr. McLeod states, in his geology report, that the known mineralization
encountered to date in neighboring areas is possibly indicative of a larger
mineralized system in the general area. The drift covered parts of the property
offer good exploration areas because of the possibility of mineralization, good
geological setting and generally a lack of exploration testing. Also, remote
sensing such as aero and follow-up ground magnetic programs may indicate
possible exploration areas of interest within the Nob 1-4 mineral claims.
Detailed prospecting, mapping and reconnaissance geochemical surveys of the
claim area should be undertaken if and when the Company is in a position to do
so. The following three phase exploration proposal and cost estimate is offered
with the understanding that consecutive phases are contingent upon positive and
encouraging results being obtained from each preceding phase:
Phase Exploration Program Cost Status
- ----- ------------------- ---- ------
Phase 1 Detailed Prospecting, mapping and soil $ 9,500 Expected to be completed in Fall, 2007
geochemistry. (dependent on consulting geologist's
schedule).
Phase 2 Magnetometer and VLF electromagnetic, $10,500 Expected to be completed in Winter, 2007
grid controlled surveys over the areas of (depending on the results of Phase 1, and
interest determined by the Phase 1 consulting geologist's schedule).
survey. Estimated cost is
transportation, travel, accommodation,
board, grid installation, two geophysical
surveys, maps and report
Phase 3 Induced polarization survey over grid $40,000 Expected to be completed in 2008 (depending
controlled anomalous area of interest on the results of Phase 2, and consulting
outlined by Phase 1 and 2 programs. Hoe geologist's schedule.)
or bulldozer trenching, mapping and
sampling of bedrock anomalies. Includes
assays, detailed maps and reports.
TOTAL ESTIMATED COST $60,000
COMPETITION
We are an explorations stage company. We do not compete directly with anyone for
the exploration or removal of minerals from our property as we hold all interest
and rights to the claim. Readily available commodities markets exist in the U.S.
and around the world for the sale of gold, silver and other minerals. Therefore,
we will likely be able to sell any gold, silver or other minerals that we are
able to recover.
We will be subject to competition and unforeseen limited sources of supplies in
the industry in the event spot shortages arise for supplies such as dynamite,
and certain equipment such as bulldozers and excavators that we will need to
conduct exploration. We have not yet attempted to locate or negotiate with any
suppliers or products, equipment or services and will not do so until funds are
received from this offering. If we are unsuccessful in securing the products,
equipment and services we need we may have to suspend our exploration plans
until we are able to do so.
We compete with other mineral resource exploration and development companies for
financing and for the acquisition of new mineral properties. Many of the mineral
resource exploration and development companies with whom we compete have greater
financial and technical resources than us. Accordingly, these competitors may be
able to spend greater amounts on acquisitions of mineral properties of merit, on
exploration of their mineral properties and on development of their mineral
properties. In addition, they may be able to afford greater geological expertise
in the targeting and exploration of mineral properties. This competition could
result in competitors having mineral properties of greater quality and interest
26
to prospective investors who may finance additional exploration and development.
This competition could adversely impact on our ability to finance further
exploration and to achieve the financing necessary for us to develop our mineral
properties.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
We have no employees other than our officer and director as of the date of this
prospectus. Mr. Taylor currently devotes approximately 7 hours per week to
company matters and after receiving funding, he plans to devote as much time as
the Board of Directors determines is necessary to manage the affairs of the
company. There are no formal employment agreements between the company and our
current employees. We conduct our business largely through consultants.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any research expenditures since our incorporation.
BANKRUPTCY OR SIMILAR PROCEEDINGS
There has been no bankruptcy, receivership or similar proceeding.
REORGANIZATIONS, PURCHASE OR SALE OF ASSETS
There have been no material reclassifications, mergers, consolidations, or
purchase or sale of a significant amount of assets not in the ordinary course of
business.
COMPLIANCE WITH GOVERNMENT REGULATION
We will be required to comply with all regulations, rules and directives of
governmental authorities and agencies applicable to the exploration of minerals
in the United States generally, and in the state of Nevada specifically. We will
also be subject to the regulations of the Bureau of Land Management, Department
of the Interior.
PATENTS AND TRADEMARKS
We do not own, either legally or beneficially, any patents or trademarks.
NEED FOR GOVERNMENT APPROVAL FOR ITS PRODUCTS OR SERVICES
We are not required to apply for or have any government approval for our product
or services.
REPORTS TO SECURITIES HOLDERS
We provide an annual report that includes audited financial information to our
shareholders. We will make our financial information equally available to any
interested parties or investors through compliance with the disclosure rules of
Regulation S-B for a small business issuer under the Securities Exchange Act of
1934. We will become subject to disclosure filing requirements once our SB-2
registration statement becomes effective, including filing Form 10K-SB annually
and Form 10Q-SB quarterly. In addition, we will file Form 8K and other proxy and
information statements from time to time as required. We do not intend to
voluntarily file the above reports in the event that our obligation to file such
reports is suspended under the Exchange Act. The public may read and copy any
materials that we file with the Securities and Exchange Commission, ("SEC"), at
the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
27
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PLAN OF OPERATION
Our cash balance is $4,687 as of July 31, 2007. We believe our cash balance is
sufficient to fund our limited levels of operations until November, 2007. If we
experience a shortage of funds prior to funding we may utilize funds from our
director, who has informally agreed to advance funds to allow us to pay for
offering costs, filing fees, and professional fees, however he has no formal
commitment, arrangement or legal obligation to advance or loan funds to the
company. In order to achieve our business plan goals, we will need the funding
from this offering. We are an exploration stage company and have generated no
revenue to date. We have sold $12,500 in equity securities to pay for our
minimum level of operations.
Our auditor has issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is
because we have not generated revenues and no revenues are anticipated until we
begin removing and selling minerals. There is no assurance we will ever reach
that stage.
Our plan of operation is to conduct mineral exploration activities on the Nob
Property in order to assess whether the property contains mineral reserves
capable of commercial extraction. Our exploration program is designed to explore
for commercially viable deposits of silver, gold and other minerals. We have
not, nor has any predecessor, identified any commercially exploitable reserves
of these minerals on the Nob Property.
Our plan of operation for the twelve months following the date of this
prospectus is to complete the first phase of the exploration program on our
claim consisting of geological mapping, soil sampling and rock sampling. In
addition to the $20,000 we anticipate spending for Phase 1 and 2 for the
exploration program as outlined below, we anticipate spending an additional
$9,000 on professional fees, including fees payable in connection with the
filing of this registration statement and complying with reporting obligations.
Total expenditures over the next 12 months are therefore expected to be
approximately $29,000, which is the amount to be raised in this offering and our
cash on hand. If we experience a shortage of funds prior to funding during the
next 12 months, we may utilize funds from our director, who has informally
agreed to advance funds to allow us to pay for professional fees, including fees
payable in connection with the filing of this registration statement and
operation expenses, however he has no formal commitment, arrangement or legal
obligation to advance or loan funds to the company. We will require the funds
from this offering to proceed.
We engaged James McLeod, P. Geo., to prepare a geological evaluation report on
the Nob Property. Mr. McLeod's report summarizes the results of the history of
the exploration of the mineral claims, the regional and local geology of the
mineral claims and the mineralization and the geological formations identified
as a result of the prior exploration in the claim areas. The geological report
also gives conclusions regarding potential mineralization of the mineral claims
and recommends a further geological exploration program on the mineral claims.
The exploration program recommended by Mr. McLeod is as follows:
28
Phase Exploration Program Cost Status
- ----- ------------------- ---- ------
Phase 1 Detailed Prospecting, mapping and soil $ 9,500 Expected to be completed in Fall, 2007
geochemistry. (dependent on consulting geologist's
schedule).
Phase 2 Magnetometer and VLF electromagnetic, $10,500 Expected to be completed in Winter, 2007
grid controlled surveys over the areas of (depending on the results of Phase 1, and
interest determined by the Phase 1 consulting geologist's schedule).
survey. Estimated cost is
transportation, travel, accommodation,
board, grid installation, two geophysical
surveys, maps and report
Phase 3 Induced polarization survey over grid $40,000 Expected to be completed in 2008 (depending
controlled anomalous area of interest on the results of Phase 2, and consulting
outlined by Phase 1 and 2 programs. Hoe geologist's schedule.)
or bulldozer trenching, mapping and
sampling of bedrock anomalies. Includes
assays, detailed maps and reports.
TOTAL ESTIMATED COST $60,000
If we are successful in raising the funds from this offering, we plan to
commence Phase 1 of the exploration program on the claim in Fall of 2007. We
expect this phase to take 15 days to complete and an additional two months for
the consulting geologist to receive the results of the assay lab and prepare his
report.
The above program costs are management's estimates based upon the
recommendations of the professional consulting geologist's report and the actual
project costs may exceed our estimates. To date, we have not commenced
exploration.
Following Phase 1 of the exploration program, if it proves successful in
identifying mineral deposits, we intend to proceed with Phase 2 of our
exploration program. The estimated cost of this program is $10,500 and will take
approximately 10 days to complete and an additional two months for the
consulting geologist to receive the results from the assay lab and prepare his
report.
Following Phase 2 of the exploration program, if it proves successful in
identifying mineral deposits, we intend to proceed with Phase 3 of our
exploration program if we are able to raise the funds necessary. The estimated
cost of this program is $40,000 and will take approximately 2 weeks to complete
and an additional two months for the consulting geologist to receive the results
from the assay lab and prepare his report.
We anticipate commencing Phase 2 of our exploration program in Winter of 2007,
depending on whether the Phase 1 program proves successful in identifying
mineral deposits. Subject to financing, we anticipate commencing Phase 3 of our
exploration program in 2008, depending on whether Phase 2 program proves
successful in identifying mineral deposits. We have a verbal agreement with
James McLeod, the consulting geologist who prepared the geology report on our
claim, to retain his services for our planned exploration program. We will
require additional funding to proceed with Phase 3 and any subsequent work on
the claim, we have no current plans on how to raise the additional funding. We
cannot provide investors with any assurance that we will be able to raise
sufficient funds to proceed with any work after the first two phases of the
exploration program.
29
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources.
LIMITED OPERATING HISTORY; NEED FOR ADDITIONAL CAPITAL
There is no historical financial information about us on which to base an
evaluation of our performance. We are an exploration stage company and have not
generated revenues from operations. We cannot guarantee we will be successful in
our business operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources,
possible delays in the exploration of our property, and possible cost overruns
due to increases in the cost of services.
To become profitable and competitive, we must conduct the exploration of our
properties before we start into production of any minerals we may find. We are
seeking funding from this offering to provide the capital required for the first
two phases of our exploration program. We believe that the funds from this
offering will allow us to operate for one year.
We have no assurance that future financing will materialize. If that financing
is not available to use for the third phase of our exploration program we may be
unable to continue.
LIQUIDITY AND CAPITAL RESOURCES
To meet our need for cash we are attempting to raise money from this offering.
We cannot guarantee that we will be able to sell all the shares required. If we
are successful, any money raised will be applied to the items set forth in the
Use of Proceeds section of this prospectus. If the first two phases of our
exploration program are successful in identifying mineral deposits we will
attempt to raise the necessary funds to proceed with phase three, and any
subsequent drilling and extraction. The sources of funding we may consider to
fund this work include a public offering, a private placement of our securities
or loans from our director or others.
Our director has agreed to advance funds as needed until the offering is
completed or failed and has agreed to pay the cost of reclamation of the
property should exploitable minerals not be found and we abandon the third phase
of our exploration program and there are no remaining funds in the company.
While he has agreed to advance the funds, the agreement is verbal and is
unenforceable as a matter of law.
The one property in the Company's portfolio, on which the net proceeds of the
offering will be spent, is the Nob 1-4 Mineral Claims consisting of four
contiguous, located mineral claims comprising a total of approximately 82.64
acres. We have not carried out any exploration work on the claims and have
incurred no exploration costs.
We received our initial funding of $12,500 through the sale of common stock to
Mr. Taylor, our director, who purchased 2,000,000 shares of our common stock at
$.00625 per share on July 11, 2007. From inception until the date of this filing
we have had no operating activities. Our financial statements from inception
(June 28, 2007) through the year ended July 31, 2007 report no revenues and a
net loss of $8,088.
30
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company reports revenues and expenses using the accrual method of accounting
for financial and tax reporting purposes.
USE OF ESTIMATES
Management uses estimates and assumption in preparing these financial statements
in accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses.
MINERAL PROPERTY ACQUISITION AND EXPLORATION COSTS
The Company expenses all costs related to the acquisition and exploration of
mineral properties in which it has secured exploration rights prior to
establishment of proven and probable reserves. To date, the Company has not
established the commercial feasibility of any exploration prospects; therefore,
all costs are being expensed.
DEPRECIATION, AMORTIZATION AND CAPITALIZATION
The Company records depreciation and amortization when appropriate using both
straight-line and declining balance methods over the estimated useful life of
the assets (five to seven years). Expenditures for maintenance and repairs are
charged to expense as incurred. Additions, major renewals and replacements that
increase the property's useful life are capitalized. Property sold or retired,
together with the related accumulated depreciation is removed from the
appropriated accounts and the resultant gain or loss is included in net income.
INCOME TAXES
The Company accounts for its income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under
Statement 109, a liability method is used whereby deferred tax assets and
liabilities are determined based on temporary differences between basis used of
financial reporting and income tax reporting purposes. Income taxes are provided
based on tax rates in effect at the time such temporary differences are expected
to reverse. A valuation allowance is provided for certain deferred tax assets if
it is more likely than not, that the Company will not realize the tax assets
through future operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial Accounting Standards statements No. 107, "Disclosures About Fair Value
of Financial Instruments", requires the Company to disclose, when reasonably
attainable, the fair market values of its assets and liabilities which are
deemed to be financial instruments. The Company's financial instruments consist
primarily of cash and certain investments.
PER SHARE INFORMATION
The Company computes per share information by dividing the net loss for the
period presented by the weighted average number of shares outstanding during
such period.
31
DESCRIPTION OF PROPERTY
We currently do not own any physical property or own any real property. We
purchased the Nob Property at a cost of $7,000. Title to the Nob Property
mineral claims is held by Red Sun Mining, Inc.
We currently utilize space provided to us on a rent free basis from our officer
and director, Matthew Taylor at 11045 La Maida Street, Suite 201, North
Hollywood, CA 91601. Management believes the current premises are sufficient for
its needs at this time.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Taylor will not be paid for any underwriting services that he performs on
our behalf with respect to this offering. He will also not receive any interest
on any funds that he may advance to us for expenses incurred prior to the
offering being closed. Any funds loaned will be repaid from the proceeds of the
offering.
On July 11, 2007, a total of 2,000,000 shares of Common Stock was issued to Mr.
Taylor in exchange for $12,500, or $.0.00625 per share. All of such shares are
"restricted" securities, as that term is defined by the Securities act of 1933,
as amended, and are held by a director of the Company. (See "Dilution".)
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
NO PUBLIC MARKET FOR COMMON STOCK
There is currently no public market for our common stock. There has been no
public trading of our securities, and, therefore, no high and low bid pricing.
As of the date of this prospectus, Red Sun Mining, Inc. has one shareholder of
record. We have paid no cash dividends and have no outstanding options. We have
no securities authorized for issuance under equity compensation plans.
The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in penny stocks. Penny stocks are generally equity securities
with a price of less than $5.00, other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or quotation system. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock, to
deliver a standardized risk disclosure document prepared by the SEC, that: (a)
contains a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading; (b) contains a
description of the broker's or dealer's duties to the customer and of the rights
and remedies available to the customer with respect to a violation to such
duties or other requirements of Securities' laws; (c) contains a brief, clear,
narrative description of a dealer market, including bid and ask prices for penny
stocks and the significance of the spread between the bid and ask price; (d)
contains a toll-free telephone number for inquiries on disciplinary actions; (e)
defines significant terms in the disclosure document or in the conduct of
trading in penny stocks; and (f) contains such other information and is in such
form, including language, type, size and format, as the SEC shall require by
rule or regulation. The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
32
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a suitably written statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our stock if it becomes subject to these
penny stock rules. Therefore, if our common stock becomes subject to the penny
stock rules, stockholders may have difficulty selling those securities.
REGULATION M
Our officer and/or director, who will sell the shares, is aware that he is
required to comply with the provisions of Regulation M, promulgated under the
Securities and Exchange Act of 1934, as amended. With certain exceptions,
Regulation M precludes the officer and/or director, sales agent, any
broker-dealer or other person who participate in the distribution of shares in
this offering from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete.
EXECUTIVE COMPENSATION
MANAGEMENT COMPENSATION
Our current director and officer is Matthew Taylor.
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the period from our inception through to July 31, 2007:
Annual Compensation Long Term Compensation
--------------------------------- ---------------------------------
Restricted
Other Annual Stock Options/* LTIP All Other
Name Title Year Salary($) Bonus Compensation Awarded SARs (#) payouts($) Compensation
- ---- ----- ---- --------- ----- ------------ ------- -------- ---------- ------------
<c>
Matthew President, 2007 $0 $0 $0 $0 $0 $0 $0
Taylor Secretary,
Treasurer,
and
Director
There are no current employment agreements between the company and its
officer/director.
On July 11, 2007, a total of 2,000,000 shares of common stock were issued to Mr.
Matthew Taylor in exchange for cash in the amount of $12,500 or $.00625 per
share. The terms of this stock issuance was as fair to the company, in the
opinion of the board of director, as if it could have been made with an
unaffiliated third party.
Mr. Taylor currently devotes approximately 7 hours per week to manage the
affairs of the company. He has agreed to work with no remuneration until such
time as the company receives sufficient revenues necessary to provide management
salaries. At this time, we cannot accurately estimate when sufficient revenues
will occur to implement this compensation, or what the amount of the
compensation will be.
There are no annuity, pension or retirement benefits proposed to be paid to the
officer or director or employees in the event of retirement at normal retirement
date pursuant to any presently existing plan provided or contributed to by the
company or any of its subsidiaries, if any.
33
FINANCIAL STATEMENTS
The financial statements of Red Sun Mining, Inc. for the year ended July 31,
2007, and related notes, included in this prospectus have been audited by George
Stewart, CPA, and have been so included in reliance upon the opinion of such
accountants given upon their authority as an expert in auditing and accounting.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
We have had no changes in or disagreements with our accountants.
34
RED SUN MINING, INC.
INDEX
Report of Independent Registered Public Accounting Firm F-2
Financial Statements:
Balance Sheet - July 31, 2007 F-3
Statement of Operations - June 28, 2007 through July 31, 2007 F-4
Statement of Stockholders' Equity - June 28, 2007 through
July 31, 2007 F-5
Statement of Cash Flows - June 28, 2007 through July 31, 2007 F-6
Notes to Financial Statements F-7
F-1
GEORGE STEWART, CPA
2301 SOUTH JACKSON STREET, SUITE 101-G
SEATTLE, WASHINGTON 98144
(206) 328-8554 FAX(206) 328-0383
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Red Sun Mining, Inc.
I have audited the accompanying balance sheet of Red Sun Mining, Inc. (An
Exploration Stage Company) as of July 31, 2007, and the related statement of
operations, stockholders' equity and cash flows for the period from June 28,
2007 (inception), to July 31, 2007. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Red Sun Mining, Inc., (An
Exploration Stage Company) as of July 31, 2007, and the results of its
operations and cash flows from June 28, 2007 (inception), to July 31, 2007 in
conformity with generally accepted accounting principles in the United States of
America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note # 6 to the financial
statements, the Company has had no operations and has no established source of
revenue. This raises substantial doubt about its ability to continue as a going
concern. Management's plan in regard to these matters is also described in Note
# 6. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ George Stewart, CPA
- -----------------------------
North Hollywood, CA
August 31, 2007
F-2
Red Sun Mining, Inc.
(An Exploration Stage Company)
Balance Sheet
- --------------------------------------------------------------------------------
As of
July 31,
2007
--------
ASSETS
CURRENT ASSETS
Cash $ 4,687
--------
TOTAL CURRENT ASSETS 4,687
OTHER ASSETS --
--------
TOTAL OTHER ASSETS --
TOTAL ASSETS $ 4,687
========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 275
--------
TOTAL CURRENT LIABILITIES 275
--------
TOTAL LIABILITIES 275
--------
STOCKHOLDERS' EQUITY
Common stock, ($0.0001 par value, 100,000,000 shares
authorized; 2,000,000 shares issued and outstanding
as of July 31, 2007 200
Additional paid-in capital 12,300
Deficit accumulated during exploration stage (8,088)
--------
TOTAL STOCKHOLDERS' EQUITY 4,412
--------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 4,687
========
See Notes to Financial Statements
F-3
Red Sun Mining Inc.
(An Exploration Stage Company)
Statement of Operations
- --------------------------------------------------------------------------------
June 28, 2007
(inception)
through
July 31,
2007
-----------
REVENUES
Revenues $ --
-----------
TOTAL REVENUES --
GENERAL & ADMINISTRATIVE EXPENSES 8,088
-----------
TOTAL GENERAL & ADMINISTRATIVE EXPENSES (8,088)
-----------
NET INCOME (LOSS) $ (8,088)
===========
BASIC EARNING (LOSS) PER SHARE $ (0.00)
===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 2,000,000
===========
See Notes to Financial Statements
F-4
Red Sun Mining Inc.
(An Exploration Stage Company)
Statement of Changes in Stockholders' Equity
From June 28, 2007 (Inception) through July 31, 2007
- --------------------------------------------------------------------------------
Deficit
Accumulated
Common Additional During
Common Stock Paid-in Exploration
Stock Amount Capital Stage Total
----- ------ ------- ----- -----
BALANCE, JUNE 28, 2007 -- $ -- $ -- $ -- $ --
Stock issued for cash on July 11, 2007
@ $0.00625 per share 2,000,000 $ 200 $ 12,300 $ 12,500
---------- ------ -------- -------- --------
Net loss, July 31, 2007 (8,088) (8,088)
BALANCE, JULY 31, 2007 2,000,000 $ 200 $ 12,300 $ (8,088) $ 4,412
========== ====== ======== ======== ========
See Notes to Financial Statements
F-5
Red Sun Mining Inc.
(An Exploration Stage Company)
Statement of Cash Flows
- --------------------------------------------------------------------------------
June 28, 2007
(inception)
through
July 31,
2007
--------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (8,088)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Changes in operating assets and liabilities:
(Increase) Decrease in Accounts payable and accrued liabilities 275
--------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (7,813)
CASH FLOWS FROM INVESTING ACTIVITIES
--------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES --
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 200
Additional paid-in capital 12,300
--------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 12,500
--------
NET INCREASE (DECREASE) IN CASH 4,687
CASH AT BEGINNING OF PERIOD --
--------
CASH AT END OF YEAR $ 4,687
========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during year for:
Interest $ --
========
Income Taxes $ --
========
See Notes to Financial Statements
F-6
RED SUN MINING, INC.
(AN EXPLORTION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2007
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Red Sun Mining, Inc. (the Company) was incorporated on June 28, 2007 under the
laws of the State of Delaware. The Company is beneficial owner of Nob 1-4
Mineral Claims, Monte Cristo Range Area, "Gilbert" 7-1/2' Map, Esmeralda County,
Nevada. The Company is primarily engaged in the acquisition and exploration of
mining properties.
The Company has been in the exploration stage since its formation and has not
yet realized any revenues from its planned operations. Upon the location of
commercially mineable reserves, the Company plans to prepare for mineral
extraction and enter the development stage.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company reports revenues and expenses using the accrual method of accounting
for financial and tax reporting purposes.
USE OF ESTIMATES
Management uses estimates and assumptions in preparing these financial
Statements in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported revenues
and expenses.
PRO FORMA COMPENSATION EXPENSE
No stock options have been issued by Red Sun Mining, Inc. Accordingly, no pro
forma compensation expense is reported in these financial statements.
MINERAL PROPERTY ACQUISITION AND EXPLORATION COSTS
The company expenses all costs related to the acquisition and exploration of
mineral properties in which it has secured exploration rights prior to
establishment of proven and probable reserves. To date, the Company has not
established the commercial feasibility of any exploration prospects; therefore,
all costs are being expensed.
DEPRECIATION, AMORTIZATION AND CAPITALIZATION
The Company records depreciation and amortization when appropriate using both
straight-line and declining balance methods over the estimated useful life of
the assets (five to seven years). Expenditures for maintenance and repairs are
charged to expense as incurred. Additions, major renewals and replacements that
F-7
RED SUN MINING, INC.
(AN EXPLORTION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2007
increase the property's useful life are capitalized. Property sold or retired,
together with the related accumulated depreciation is removed from the
appropriated accounts and the resultant gain or loss is included in net income.
INCOME TAXES
The Company accounts for its income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". Under
Statement 109, a liability method is used whereby deferred tax assets and
liabilities are determined based on temporary differences between basis used for
financial reporting and income tax reporting purposes. Income taxes are provided
based on tax rates in effect at the time such temporary differences are expected
to reverse. A valuation allowance is provided for certain deferred tax assets if
it is more likely than not, that the Company will not realize the tax assets
through future operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial accounting Standards statements No. 107, "Disclosures About Fair Value
of Financial Instruments", requires the Company to disclose, when reasonably
attainable, the fair market values of its assets and liabilities which are
deemed to be financial instruments. The Company's financial instruments consist
primarily of cash and certain investments.
INVESTMENTS
Investments that are purchased in other companies are valued at cost less any
impairment in the value that is other that temporary in nature.
PER SHARE INFORMATION
The Company computes per share information by dividing the net loss for the
period presented by the weighted average number of shares outstanding during
such period.
NOTE 3 - PROVISION FOR INCOME TAXES
The provision for income taxes for the period ended July 31, 2007 represents the
minimum state income tax expense of the Company, which is not considered
significant.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is not presently involved in any litigation.
F-8
RED SUN MINING, INC.
(AN EXPLORTION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2007
NOTE 5 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In July 2006, the FASB issued FASB Interpretation (FIN) No. 48, "Accounting for
Uncertainty in Income Taxes--An Interpretation of FASB Statement No. 109" (FIN
48). This Interpretation clarifies the accounting for uncertainty in income
taxes recognized in a company's financial statements. FIN 48 requires companies
to determine whether it is "more likely than not" that a tax position will be
sustained upon examination by the appropriate taxing authorities before any part
of the benefit can be recorded in the financial statements. It also provides
guidance on the recognition, measurement and classification of income tax
uncertainties, along with any related interest and penalties. FIN 48 will also
require significant additional disclosures. This Interpretation will be
effective for fiscal years beginning after December 15, 2006. We will implement
this Interpretation in the first quarter of 2007 on a prospective basis. We are
currently evaluating the potential impact this Interpretation will have on our
financial position and results of operations.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
157), which provides guidance on how to measure assets and liabilities that use
fair value. SFAS 157 will apply whenever another US GAAP standard requires (or
permits) assets or liabilities to be measured at fair value but does not expand
the use of fair value to any new circumstances. This standard also will require
additional disclosures in both annual and quarterly reports. SFAS 157 will be
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and will be adopted by us beginning in the first quarter of
2008. We are currently evaluating the potential impact this standard may have on
our financial position and results of operations, but do not believe the impact
of the adoption will be material.
In September 2006, the SEC staff issued Staff Accounting Bulletin (SAB) No. 108,
"Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements" (SAB 108). SAB 108 was
issued in order to eliminate the diversity of practice in how public companies
quantify misstatements of financial statements, including misstatements that
were not material to prior years' financial statements. We will initially apply
the provisions of SAB 108 in connection with the preparation of our annual
financial statements for the year ending December 31, 2006. We have evaluated
the potential impact SAB 108 may have on our financial position and results of
operations and do not believe the impact of the application of this guidance
will be material.
F-9
RED SUN MINING, INC.
(AN EXPLORTION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2007
NOTE 6 - GOING CONCERN
Future issuances of the company's equity or debt securities will be required in
order for the company to continue to finance its operations and continue as a
going concern. The Company's present revenues are insufficient to meet operating
expenses.
The financial statements of the Company have been prepared assuming that the
Company will continue as a going concern, which contemplates, among other
things, the realization of assets and the satisfaction of liabilities in the
normal course of business. The Company has incurred cumulative net losses of
$8,088 since its inception and requires capital for its contemplated operational
and marketing activities to take place. The Company's ability to raise
additional capital through the future issuances of common stock is unknown. The
obtainment of additional financing, the successful development of the Company's
contemplated plan of operations, and its transition, ultimately, to the
attainment of profitable operations are necessary for the Company to continue
operations. The ability to successfully resolve these factors raise substantial
doubt about the Company's ability to continue as a going concern.
The financial statements of the Company do not include any adjustments that may
result from the outcome of these aforementioned uncertainties.
NOTE 7 - RELATED PARTY TRANSACTIONS
Matthew Taylor, President of the Company, may in the future become involved in
other business opportunities as they become available, thus he may face a
conflict in selecting between the Company and his other business opportunities.
The company has not formulated a policy for the resolution of such conflicts.
Matthew Taylor, President of the Company, will not be paid for any underwriting
services that he performs on behalf of the Company with respect to the Company's
upcoming SB-2 offering. He will also not receive any interest on any funds that
he may advance to the Company for offering expenses prior to the offering being
closed which will be repaid from the proceeds of the offering.
NOTE 8 - STOCK TRANSACTIONS
Transactions, other than employees' stock issuance, are in accordance with
paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair
value of the consideration received. Transactions with employees' stock issuance
are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be
accounted for based on the fair value of the consideration received or the fair
value of the equity instruments issued, or whichever is more readily
determinable.
F-10
RED SUN MINING, INC.
(AN EXPLORTION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2007
On July 11, 2007, the Company issued a total of 2,000,000 shares of common stock
to Mr. Taylor, the sole shareholder of the company, for cash in the amount of
$0.00625 per share for a total of $12,500.
As of July 31, 2007 the Company had 2,000,000 shares of common stock issued and
outstanding.
NOTE 9 - STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following classes
of capital stock as of July 31, 2007:
Common stock, $0.0001 par value: 100,000,000 shares authorized; 2,000,000 shares
issued and outstanding.
F-11