UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURUTIES EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 2008
Commission file number 333-141328
Kitcher Resources, Inc.
(Exact Name of Registrant as Specified in Its Charter)
NEVADA 20-8107485
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Suite 138 - 1027 Davie Street
Vancouver, BC V6E 4L2
(Address of Principal Executive Offices) (Zip Code)
(604) 231-0074
(Telephone Number)
Karen Batcher
Batcher & Zarcone, LLP
4252 Bonita Road #151
Bonita, CA 91902
Phone (619) 475-7882 Fax (619) 789-6262
(Name, Address and Telephone Number of Agent for Service)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Non-accelerated filer [ ]
Accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting Smaller reporting
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
As of January 31, 2008, the registrant had 30,000,000 shares of common stock
issued and outstanding. No market value has been computed based upon the fact
that no active trading market had been established as of January 31, 2008.
KITCHER RESOURCES, INC.
TABLE OF CONTENTS
Page No.
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Part I
Item 1. Business 3
Item 1A. Risk Factors 8
Item 2. Properties 10
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Securities Holders 10
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 26
Item 9A. Controls and Procedures 26
Part III
Item 10. Directors and Executive Officers 26
Item 11. Executive Compensation 27
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 28
Item 13. Certain Relationships and Related Transactions 28
Item 14. Principal Accounting Fees and Services 29
Part IV
Item 15. Exhibits 29
Glossary of Mining Terms 30
Signatures 32
2
PART I
ITEM 1. BUSINESS
We are an exploration stage company with no revenues and a limited operating
history. Our independent auditor has issued an audit opinion for Kitcher
Resources which includes a statement expressing substantial doubt as to our
ability to continue as a going concern.
There is the likelihood of our mineral claim containing little or no economic
mineralization or reserves of gold, silver, copper and other minerals. The Marg
mineral property consists of a total of 5 M.T.O cells (totaling 5,446 acres) in
the Brenda Mines area of southern B.C located approximately 11 miles west of
Peachland British Columbia. There is the possibility that the property does not
contain any reserves and funds that we spend on exploration will be lost. Even
if we complete our current exploration program and are successful in identifying
a mineral deposit we will be required to expend substantial funds on further
drilling and engineering studies before we will know if we have a commercially
viable mineral deposit or reserve.
GENERAL INFORMATION
The Marg (Minfile Marg 082ENW108) property is located approximately 11 miles
west of Peachland or 7 miles south of the past producing Brenda Mine open pit
copper and molybdenum mine in southern British Columbia. The claims are most
easily accessed from Hwy 97 at Peachland with the Brenda Mine road taken for 6
miles northwest to the Peachland Forest Service Road (F.S.R) which is taken for
a further 4 miles west to the Glen Lake F.S.R which is then taken approximately
1 mile southwest to the main areas of interest within the claims.
The Marg property is situated in the southern Okanagan area of British Columbia.
The region has a relatively dry climate, and snow cover in winter is generally
moderate. The climate in the area is semi arid with moderately warm summers and
cold dry winters. Typical temperature ranges are from mid to upper 80's F in
summer and 15 to -5 F in winter. Within the Marg property elevations range from
3773 feet in the main valley bottom in the eastern portion of the claims to over
5577 feet in the western portion of the claims. Slopes are generally moderate
however small bluffs and steeper slopes do occur near the central portions of
the claims. For the most part vegetation consists of jackpine forest, some of
which has been infected with pine beetles.
At the current time the property is without known reserves and the proposed
program is exploratory in nature. We began Phase 1 of the exploration work on
the claim in mid-November 2007. The cost of exploration work on the property is
disclosed in detail in the Plan of Operation section of this report.
There is not a plant or any equipment currently located on the property. The
initial exploration phases will be supported by generators, however; hydro
electrical power lines are located in the area. Water required for exploration
and development of the claim is available from the major river drainages that
flow year round as well as many subsidiary creeks.
The initial phase of exploration consists of soil sampling along with some
initial geophysical test surveys, data evaluation and reporting. Following phase
one of the exploration program, if it proves successful in identifying mineral
deposits, and we are able to raise the necessary funds, of which there is no
guarantee, we intend to proceed with phase two of our exploration program which
will take approximately three months to complete.
3
We will require additional funding to proceed with any subsequent recommended
drilling work on the claim. We cannot provide investors with any assurance that
we will be able to raise sufficient funds to fund any work after the first phase
of the exploration program.
The discussions contained herein are management's estimates. Because we have
only recently commenced our exploration program we cannot provide a more
detailed discussion of our plans if we find a viable store of minerals on our
property, as there is no guarantee that exploitable mineralization will be
found, the quantity or type of minerals if they are found and the extraction
process that will be required. We are also unable to assure investors we will be
able to raise the additional funding to proceed with any subsequent work on the
claims if mineralization is found in Phase 1.
ACQUISITION OF THE MINERAL PROPERTY
CLAIM DETAILS
The Marg property consists of 5 Mineral Title Online (M.T.O) cells listed under
tenure numbers 550572-550576 and were acquired on January 29, 2007 (see
following table). The claims were staked to cover the Marg minfile occurrence as
highlighted in government records and website.
Tenure Number Tenure Type Claim Name Owner Map Number Good To Date Status Area
- ------------- ----------- ---------- ----- ---------- ------------ ------ ----
550572 Mineral MARG1A 207230 100% 082E 2009/jan/29 GOOD 521.36
550573 Mineral MARG1B 207230 100% 082E 2009/jan/29 GOOD 521.481
550574 Mineral MARG1C 207230 100% 082E 2009/jan/29 GOOD 521.607
550575 Mineral MARG1D 207230 100% 082E 2009/jan/29 GOOD 519.508
550576 Mineral MARG1E 207230 100% 082E 2009/jan/29 GOOD 119.93
REQUIREMENTS OR CONDITIONS FOR RETENTION OF TITLE
Title to the property has already been granted to our president and director,
Dr. Raminder Badyal, who holds the claim in trust for the Company. To obtain a
Free Miner's Certificate, which is required to hold a mining claim in British
Columbia, Section 8(1) of the B.C. Mineral Tenure Act (MTA) stipulates that a
corporation must be registered under the British Columbia Business Corporations
Act. Section 8(2) of the MTA stipulates that an individual applicant must either
be a resident of Canada or be authorized to work in Canada. As the corporation
is not registered in British Columbia the claim is held in trust for the Company
by Dr. Badyal, a Canadian citizen. The mineral title claim has been registered
with the Government of British Columbia and a title search has been done to
ensure there are no competing claims to the property.
All claims staked in British Columbia require $4 per hectare worth of assessment
work to be undertaken in year 1 through 3, followed by $8 per hectare per year
thereafter. For the Marg mineral claim this would require $8,816 in exploration
costs for year 1 through 3, and $17,632 per year thereafter. In order to retain
title to the property exploration work costs must be recorded and filed with the
British Columbia Department of Energy Mines and Petroleum Resources ("BCDM").
4
LOCATION, ACCESS, LOCAL RESOURCES & INFRASTRUCTURE
The Marg (Minfile Marg 082ENW108) property is located approximately 11 miles
west of Peachland or 7 miles south of the past producing Brenda Mine open pit
copper and molybdenum mine in southern British Columbia. The claims are most
easily accessed from Hwy 97 at Peachland with the Brenda Mine road taken for 6
miles northwest to the Peachland Forest Service Road (F.S.R) which is taken for
a further 4 miles west to the Glen Lake F.S.R which is then taken approximately
1 mile southwest to the main areas of interest within the claims.
CLIMATE, TOPOGRAPHY AND PHYSIOGRAPHY
The Marg property is situated in the southern Okanagan area of British Columbia.
The region has a relatively dry climate, and snow cover in winter is generally
moderate. The climate in the area is semi arid with moderately warm summers and
cold dry winters. Typical temperature ranges are from mid to upper 80's F in
summer and 15 to -5 F in winter. Within the Marg property elevations range from
3773 feet in the main valley bottom in the eastern portion of the claims to over
5577 feet in the western portion of the claims. Slopes are generally moderate
however small bluffs and steeper slopes do occur near the central portions of
the claims. For the most part vegetation consists of jackpine forest, some of
which has been infected with pine beetles.
HISTORY AND PREVIOUS WORK
The earliest record of work in the area dates back to the late 1800's to the
north at the Silver King mineral occurrence, with a substantial increase in
modern exploration in the area resulting from the discovery of the Brenda Mine
in the late 1960's.
On the Marg property trenching was apparently carried out by Don Agur of
Summerland in the early 1960s to expose a potassic alteration zone.
Subsequently, percussion drilling was reportedly carried out by Juniper Mines
Ltd. and Maverick Mines. No reports exist of this work and some confusion lies
with the adjacent Decano mineral occurrence. Ian Sutherland completed a
geochemical survey in 1979 and did some prospecting in 1982.
The presence of reported trenches and percussion holes will have to be confirmed
during the recommended field program.
REGIONAL GEOLOGY
The property lies in the eastern parts of the Intermontane Belt of the
(southern) Canadian Cordillera. This area is dominated by two large granitoid
batholiths. In the north the `Triassic age Pennask batholith (orange) is
predominantly granodiorite, while to the south the younger Jurassic age Osprey
Lake batholith (pink) is more granitic. North of Kathleen Mountain and west of
Siwash Lake occur large areas underlain by Nicola Group (Late Triassic) volcanic
(green) and sedimentary rocks (pale yellow). All rocks are unconformably
overlain in places by Eocene aged Penticton Group andesitic volcanic rocks (pale
green).
The Marg property occurs at the southern end of the Pennask Batholith which
previous reports indicates is comprised of granodiorite with varying degree's of
potassic and sericite alteration.
5
LOCAL AND PROPERTY MINERALIZATION
Mineralization in the area is dominated by the past producing copper and
molybdenum porphyry deposit (Brenda Mine) located approximately 7 miles north of
the Marg Property.
Within the Marg claims trenching was apparently carried out by Don Agur of
Summerland in the early 1960s to expose a potassic alteration zone.
Subsequently, percussion drilling was reportedly carried out by Juniper Mines
Ltd. and Maverick Mines. No reports exist of this work; however references are
made to this work in later reports. Ian Sutherland completed a geochemical
survey in 1979 and did some prospecting in 1982. A strongly altered potassic
zone occurs in granodiorite and contains chalcopyrite in fractures. The area is
well fractured with major fractures trending northeast-southwest. Assessment
Report 7790 states that an average assay of 0.87 per cent copper came from a
125-metre trench from the early 1960s.
COMPETITION
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 Canada and around the world for
the sale of gold, silver, copper and other minerals. Therefore, we will likely
be able to sell any gold, copper 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. If we are unsuccessful in securing the products, equipment
and professional services we need we may have to suspend our exploration plans
until we are able to do so.
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 Canada generally, and in British Columbia specifically.
The initial steps of exploration can be carried out without permitting or
notification to any government body as it is deemed "low-disturbance/low-impact"
by the British Columbia Department of Energy Mines and Petroleum Resources
(BCDM).
6
With respect to the mechanized trenching or diamond drilling a plan of operation
will need to be filed with the BCDM. This plan will detail the extent, location
and amount of surface disturbance for the trenching and/or drilling. As the
amount of trenching and drilling (initially) will be limited, the permit should
be issued within 30 days. We will be required to obtain a refundable bond in the
amount of $3,000 - $5,000 (depending on the anticipated amount of disturbance).
The bond is to ensure that we reclaim or repair the disturbance caused by the
trenching and drilling. Usually this reclaiming work entails filling in and
smoothing the surface at trenching sites, clean up and removal of any work
material, and seeding native grass/plants at the site of any disturbance.
In the event that trees larger than 6 inches in diameter need to be cut down, a
permit will need to be obtained from the BC Ministry of Forests. This usually
takes less than 30 days to obtain. We will try to adjust the areas we work at
and trench around larger trees (initially) to avoid any disturbance to larger
trees. If the disturbance to larger trees is unavoidable then a permit to cut
will be obtained.
There are nominal costs involved in obtaining the BCDM or Forestry permits (less
than $100.00). The bond required by the BCDM is returned (with interest) upon
proper clean up of the site. There will be costs for the crew and equipment
required to fill in the trenches etc., but as heavy equipment is available
locally, and the amount of disturbance is expected to be minimal, the costs will
be most likely be less than $2,000. (1 day - crew & equipment)
All claims staked in British Columbia require $4 per hectare worth of assessment
work to be undertaken in year 1 through 3, followed by $8 per hectare per year
thereafter. In order to retain title to the property exploration work costs must
be recorded and filed with the British Columbia Department of Energy Mines and
Petroleum Resources ("BCDM"). The BCDM charges a filing fee, equal to 10% of the
value of the work recorded, to record the work.
PATENTS, TRADEMARKS, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS, OR LABOR
CONTRACTS
We have no current plans for any registrations such as patents, trademarks,
copyrights, franchises, concessions, royalty agreements or labor contracts. We
will assess the need for any copyright, trademark or patent applications on an
ongoing basis.
NEED FOR GOVERNMENT APPROVAL FOR ITS PRODUCTS OR SERVICES
We are not required to apply for or have any government approval for our
products or services.
RESEARCH AND DEVELOPMENT COSTS DURING THE LAST TWO YEARS
We have not expended funds for research and development costs since inception.
NUMBER OF EMPLOYEES
We currently have one employee, which is our executive officer, Raminder Badyal.
Dr. Badyal currently devotes 5 to 10 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 Dr. Badyal.
7
REPORTS TO SECURITIES HOLDERS
We provide an annual report that includes audited financial information to our
shareholders. We also 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 are subject to disclosure filing requirements including filing Form
10-K annually and Form 10-Q quarterly. In addition, we will file Form 8-K 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 (http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC.
ITEM 1A. RISK FACTORS
WE ARE AN EXPLORATION STAGE COMPANY BUT HAVE NOT YET COMMENCED EXPLORATION
ACTIVITIES ON OUR CLAIM. WE EXPECT TO INCUR OPERATING LOSSES FOR THE FORESEEABLE
FUTURE.
We commenced exploration on the Marg mineral property in mid-November 2007
but have not received a geological analysis. Accordingly, we have no way to
evaluate the likelihood that our business will be successful. We were
incorporated on December 26, 2006 and to date have been involved primarily
in organizational activities and the acquisition of our mineral claim. We
have not earned any revenues as of the date of this annual report.
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 we are
unable to generate significant revenues from development of the Marg
mineral property and the production of minerals from the claim, we will not
be able to earn profits or continue 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.
BECAUSE MANAGEMENT HAS NO TECHNICAL EXPERIENCE IN MINERAL EXPLORATION, OUR
BUSINESS HAS A HIGHER RISK OF FAILURE.
Our director has no professional training or technical credentials in the
field of geology and specifically in the areas of exploring, developing and
operating a mine. As a result, we may not be able to recognize and take
advantage of potential acquisition and exploration opportunities in the
8
sector without the aid of qualified geological consultants. 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 may
suffer irreparable harm as a result.
OUR INDEPENDENT AUDITOR HAS ISSUED AN AUDIT OPINION FOR KITCHER RESOURCES WHICH
INCLUDES A STATEMENT DESCRIBING OUR GOING CONCERN STATUS. OUR FINANCIAL STATUS
CREATES A DOUBT WHETHER WE WILL CONTINUE AS A GOING CONCERN.
As described in Note 1 of our accompanying financial statements, our
limited exploration stage and our lack of any guaranteed sources of future
capital create substantial doubt as to our ability to continue as a going
concern. If our business plan does not work, we could remain as a start-up
company with limited operations and revenues.
THERE IS THE RISK THAT OUR PROPERTY DOES NOT CONTAIN ANY KNOWN BODIES OF ORE
RESULTING IN ANY FUNDS SPENT ON EXPLORATION BEING LOST.
No known bodies of commercial ore or economic deposits have been
established on our properties. Even in the event commercial quantities of
minerals are discovered, the exploration property might not be brought into
a state of commercial production. Finding mineral deposits is dependent on
a number of factors, including the technical skill of exploration personnel
involved. The commercial viability of a mineral deposit once discovered is
also dependent on a number of factors, some of which are particular
attributes of the deposit, such as size, grade and proximity to
infrastructure, as well as metal prices.
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 presently available to us is through the sale of equity capital. Any
sale of share capital will result in dilution to existing 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 your investment in
this offering.
GOVERNMENT REGULATION OR OTHER LEGAL UNCERTAINTIES MAY INCREASE COSTS AND OUR
BUSINESS WILL BE NEGATIVELY AFFECTED.
There are several governmental regulations that materially restrict mineral
claim exploration and development. Under Canadian mining law, engaging in
certain types of exploration requires work permits, the posting of bonds,
and the performance of remediation work for any physical disturbance to the
land. While these current laws will not affect our initial exploration
phase, if we identify exploitable minerals and proceed to phase two which
includes drilling operations on the Marg mineral property, we will incur
regulatory compliance costs based upon the size and scope of our
operations. In addition, new regulations could increase our costs of doing
business and prevent us from exploring for and the exploitation of ore
deposits. In addition to new laws and regulations being adopted, existing
laws may be applied to mining that have not as yet been applied. These new
laws may increase our cost of doing business with the result that our
financial condition and operating results may be harmed.
9
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 continued success will be dependent on the growth of demand for ore. 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.
THE LOSS OF THE SERVICES OF RAMINDER BADYAL COULD SEVERELY IMPACT OUR BUSINESS
OPERATIONS AND FUTURE DEVELOPMENT.
Our performance is substantially dependent upon the professional expertise
of our officer Raminder Badyal. The loss of his services could have an
adverse effect on our business operations, financial condition and
operating results if we are unable to replace him with other individuals
qualified to develop our exploration business. This could result in a loss
of revenues, resulting in a reduction of the value of any shares you
purchase in this offering.
BECAUSE OUR CURRENT OFFICER HAS 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.
Dr. Badyal currently devotes approximately 5 to 10 hours per week providing
management services to us. While he presently possesses adequate time to
attend to our interests, it is possible that the demands on him from his
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.
ITEM 2. PROPERTIES
We lease shared office facilities at Suite 138 - 1027 Davie Street, Vancouver,
BC and currently pay approximately $20 per month. The facilities include
answering services, fax services, secretarial services, reception area and
shared office and boardroom meeting facilities which are all available on a pay
per use basis. We intend to use these facilities for the time being until we
feel we have outgrown them. We currently have no investment policies as they
pertain to real estate, real estate interests or real estate mortgages.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings and we are not aware of
any pending or potential legal actions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the security holders during the
year ended January 31, 2008.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our shares are quoted on the Over-the-Counter Electronic Bulletin Board (OTCBB)
under the symbol KTCH. The OTCBB is a regulated quotation service that displays
real-time quotes, last sale prices and volume information in over-the-counter
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
10
for quotation on the OTCBB issuers must remain current in their filings with the
SEC or applicable regulatory authority. Market Makers are not permitted to begin
quotation of a security whose issuer does not meet this filing requirement.
Securities already quoted on the OTCBB that become delinquent in their required
filings will be removed following a 30 or 60 day grace period if they do not
make their required filing during that time. We cannot guarantee that we will
continue to have the funds required to remain in compliance with our reporting
obligations.
There has been no active trading of our securities, and, therefore, no high and
low bid pricing. As of the date of this report Kitcher Resources had 26
shareholders of record. We have paid no cash dividends and have no outstanding
options.
PENNY STOCK RULES
The Securities and Exchange Commission has also 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
system).
A purchaser is purchasing penny stock which limits the ability to sell the
stock. Our shares constitute penny stock under the Securities and Exchange Act.
The shares will remain penny stocks for the foreseeable future. The
classification of penny stock makes it more difficult for a broker-dealer to
sell the stock into a secondary market, which makes it more difficult for a
purchaser to liquidate his/her investment. Any broker-dealer engaged by the
purchaser for the purpose of selling his or her shares in us will be subject to
Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than
creating a need to comply with those rules, some broker-dealers will refuse to
attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, to deliver a standardized risk
disclosure document, which:
- contains a description of the nature and level of risk in the market
for penny stock in both public offerings and secondary trading;
- 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 of such duties or other requirements of the
Securities Act of 1934, as amended;
- contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" price for the penny stock and the
significance of the spread between the bid and ask price;
- contains a toll-free telephone number for inquiries on disciplinary
actions;
- defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and
- contains such other information and is in such form (including
language, type, size and format) as the Securities and Exchange
Commission shall require by rule or regulation;
The broker-dealer also must provide, prior to effecting any transaction in a
penny stock, to the customer:
- the bid and offer quotations for the penny stock;
- the compensation of the broker-dealer and its salesperson in the
transaction;
- 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
- monthly account statements showing the market value of each penny
stock held in the customer's account.
11
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
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 written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
their securities.
REPORTS
We are subject to certain filing requirements and will furnish annual financial
reports to our stockholders, certified by our independent accountant, and will
furnish un-audited quarterly financial reports in our quarterly reports filed
electronically with the SEC. All reports and information filed by us can be
found at the SEC website, www.sec.gov.
TRANSFER AGENT
The company has retained Holladay Stock Transfer, Inc. of 2939 North 67th Place,
Suite C, Scottsdale, Arizona as transfer agent.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
We are still in our exploration stage and have not generated any revenue.
We incurred operating expenses of $16,970 and $8,088 for the years ended January
31, 2008 and 2007, respectively. These expenses consisted of general operating
expenses incurred in connection with the day to day operation of our business
and the preparation and filing of our periodic reports and registration
statement.
Our net loss from inception (December 26, 2006) through January 31, 2008 was
$25,058.
Our auditors expressed their doubt about our ability to continue as a going
concern unless we are able to raise additional capital and ultimately to
generate profitable operations. We cannot continually incur operating losses in
the future and may decide that we can no longer continue with our business
operations as detailed in our original business plan because of a lack of
exploration and financial results and available financial resources. We may need
to look for other potential business opportunities that might be available.
There can be no assurances that any other business opportunities will be
available nor can there be any certainties of the business industry of the
opportunity that might be available nor any indication of the financial
resources required.
LIQUIDITY AND CAPITAL RESOURCES
Our cash in the bank at January 31, 2008 was $46,148 and our liabilities were
$1,206. We have sold $70,000 in equity securities since inception, $20,000 from
the sale of 20,000,000 shares of stock to our officer and director and $50,000
from the sale of 10,000,000 shares registered pursuant to our SB-2 Registration
Statement which became effective on June 4, 2007. The offering was completed on
June 25, 2007.
12
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
BUSINESS OPERATIONS OVERVIEW
Our plan of operation for the next twelve months is to complete the first phase
of exploration programs on the Marg mineral property consisting of soil sampling
and prospecting, geochemical analyses; data evaluation and reporting. On October
31, 2007, the Company forwarded $5,000 to commence work on the Phase I
exploration program. In addition to the remaining $10,000 we anticipate spending
for Phase I of the exploration program as outlined below, we anticipate spending
an additional $13,000 on professional fees, including fees payable in connection
with compliance with ongoing reporting obligations, general administrative
costs, and lease option payments. Total expenditures over the next 12 months are
therefore expected to be $23,000.
MARG COST PROPOSAL
PHASE 1 COST
------- ----
Soil sampling and prospecting (14 mandays) 7,000
Geochemical Analyses (150 soils, 50 rocks) 5,000
Data evaluation and reporting 2,000
Contingency 1,000
------
Subtotal 15,000
------
PHASE 2
Geophysical Surveys ( 35 km Mag-VLF) 35,000
Trenching- excavator (100 hours @ $125/hr) 12,500
Trenching-sampling (500 rocks) 12,500
Geological supervision 5,000
Data evaluation and reporting 5,000
Contingency 5,000
Subtotal 75,000
------
GRAND TOTAL 90,000
======
The above program costs are management's estimates based upon the
recommendations of the professional geologist's report and the actual project
costs may exceed our estimates.
Phase one of the exploration program on the Marg claim began in mid November
2007 and we have not received any geological analysis of the work. Following
phase one of the exploration program, if it proves successful in identifying
mineral deposits and we are able to raise the necessary funds, of which there is
no guarantee, we intend to proceed with phase two of our exploration program.
The estimated cost of this program is $75,000.
Subject to the success of phase one of the exploration program and financing, we
anticipate commencing the second phase of our exploration program in Summer/Fall
2008. We will require additional funding to proceed with any subsequent
recommended drilling work on the claim. We cannot provide investors with any
assurance that we will be able to raise sufficient funds to fund any work after
the first phase of the exploration program.
13
ITEM 8. FINANCIAL STATEMENTS
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
To the Board of Directors
Kitcher Resources Inc.
(An Exploration Stage Company)
We have audited the accompanying balance sheets of Kitcher Resources Inc. (An
Exploration Stage Company) as of January 31 , 2008 and January 31 . 2007, and
the related statements of operations, stockholders' equity and cash flows for
the years ended January 31, 2008 and January 31, 2007 and since inception on
December 26, 2006 through January 31 , 2008 These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kitcher Resources Inc. (A
Development Stage. Company) as of January 31 , 2008 and January 31 , 2007, and
the related statements of operations, stockholders' equity and cash flows for
the years ended January 31 , 2008 and January 31, 2007 and since inception on
December 26, 2006 through January 31, 2008, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred a net loss of $25,058, which
raises substantial doubt about its ability to continue as a going concern
Management s plans concerning these matters are also described in Note I . The
financial statements do not include any
/s/ Moore & Associates, chartered
- ----------------------------------------
Moore & Associates Chartered
Las Vegas, Nevada
April 22, 2008
14
KITCHER RESOURCES INC.
(An Exploration Stage Company)
Balance Sheets
(Audited)
January 31, January 31,
2008 2007
-------- --------
A S S E T S
CURRENT ASSETS
Cash $ 46,148 $ 20,000
-------- --------
Total Assets $ 46,148 $ 20,000
======== ========
L I A B I L I T I E S
CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities $ 1,206 $ 6,750
Payable to Director -- 1,338
-------- --------
Total Current Liabilities 1,206 8,088
-------- --------
S T O C K H O L D E R S ' E Q U I T Y
Common Stock
75,000,000 authorized shares, par value $.001
70,000,000 shares issued and outstanding
January 31, 2008 - 30,000,000 (2007 - 20,000,000) 30,000 20,000
Additional paid in capital 40,000 --
Deficit accumulated during exploration stage (25,058) (8,088)
-------- --------
Total Stockholders' Equity 44,942 11,912
-------- --------
Total Liabilities and Stockholders' Equity $ 46,148 $ 20,000
======== ========
See accompanying notes to financial statements
15
KITCHER RESOURCES INC
(An Exploration Stage Company)
Statement of Operations
(Audited)
Period from Period from
December 26, 2006 December 26, 2006
Year Ended (Date of inception) to (Date of inception) to
January 31, January 31, January 31,
2008 2007 2008
----------- ----------- -----------
Revenues:
Revenues $ -- $ -- $ --
----------- ----------- -----------
Total Revenues -- -- --
----------- ----------- -----------
EXPENSES:
Operating Expenses
Exploration Expenses 5,000 5,000 10,000
Impairment of Mineral Property -- 748 748
General and Adminstrative 1,428 840 2,268
Professional Fees 5,600 1,500 7,100
Transfer Agent/Regulatory/Filing 4,942 -- 4,942
----------- ----------- -----------
Total Expenses 16,970 8,088 25,058
----------- ----------- -----------
Net loss from Operations (16,970) (8,088) (25,058)
PROVISION FOR INCOME TAXES:
Net Income (Loss) for the period $ (16,970) $ (8,088) $ (25,058)
=========== =========== ===========
Basic and Diluted Earnings Per Common Share (0.00) (0.00) (0.00)
----------- ----------- -----------
Weighted Average number of Common Shares 25,643,836 20,000,000 25,175,879
=========== =========== ===========
See accompanying notes to financial statements
16
KITCHER RESOURCES INC.
(An Exploration Stage Company)
Statement of Stockholders' Equity
For the period from December 26, 2006 (inception) to January 31, 2008
(Audited)
Deficit
Accumulated
Additional During Total
$0.001 Paid-In Exploration Stockholders'
Shares Par Value Capital Stage Equity
------ --------- ------- ----- ------
Balance, December 26, 2006 (Date of Inception) -- $ -- $ -- $ -- $ --
Stock Issued for cash at $0.001 per share
on December 29, 2006 20,000,000 20,000 -- -- 20,000
Net loss for the period -- -- -- (8,088) (8,088)
---------- ------- ------- -------- --------
Balance, January 31, 2007 20,000,000 20,000 -- (8,088) 11,912
Stock Issued for cash at $0.005 per share 10,000,000 10,000 40,000 -- 50,000
on July 9, 2007
Net loss for the year -- -- -- (16,970) (16,970)
---------- ------- ------- -------- --------
Balance, January 31, 2008 30,000,000 $30,000 $40,000 $(25,058) $ 44,942
========== ======= ======= ======== ========
See accompanying notes to financial statements
17
KITCHER RESOURCES INC
(An Exploration Stage Company)
Statement of Operations
(Audited)
Period from Period from
December 26, 2006 December 29, 2006
Year Ended (Date of inception) to (Date of inception) to
January 31, January 31, February 3,
2008 2007 2008
-------- -------- --------
OPERATING ACTIVITIES:
Net (Loss) $(16,970) $ (8,088) $(25,058)
Adjustments to reconcile net loss
to net cash used in operating activities:
Impairment of mineral property -- 748 748
Accounts Payable (5,544) 6,750 1,206
-------- -------- --------
Net Cash Used in from Operating Activities (22,514) (590) (23,104)
-------- -------- --------
INVESTING ACTIVITIES:
Mineral Property Acquisition -- (748) (748)
-------- -------- --------
Net Cash Used in Investing Activities -- (748) (748)
-------- -------- --------
FINANCING ACTIVITIES:
Common Stock issued for cash 50,000 20,000 70,000
Advance from Related Party (1,338) 1,338 --
-------- -------- --------
Net Cash Provided by Financing Activities 48,662 21,338 70,000
-------- -------- --------
Net Increase in Cash 26,148 20,000 46,148
Cash Balance, Begin Period 20,000 -- --
-------- -------- --------
Cash Balance, End Period $ 46,148 $ 20,000 $ 46,148
======== ======== ========
Supplemental Information:
Tax -- --
-------- --------
Interest -- --
-------- --------
See accompanying notes to financial statements
18
KITCHER RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
DESCRIPTION OF BUSINESS AND HISTORY - Kitcher Resources Inc., a Nevada
corporation, (hereinafter referred to as the "Company" or "Kitcher Resources ")
was incorporated in the State of Nevada on December 26, 2006. The Company was
formed to engage in the acquisition, exploration and development of natural
resource properties. The Company acquired mineral claims during the initial
period ending January 31, 2007 for $748.
The Company's operations have been limited to general administrative operations,
and initial property staking and investigation, and is considered to be an
Exploration Stage Company in accordance with Statement of Financial Accounting
Standards No. 7.
The Company will review and further develop the accounting policies as the
business plan is implemented.
The Company's SB-2 registration statement that was initially filed on March 25,
2007 with the Securities and Exchange Commission (SEC) in order to raise an
aggregate amount of $50,000 from the sale of 10,000,000 common shares at $0.005
per share, was declared effective by the SEC on June 4, 2007. The Company
completed the offering as of July 9 2007 and raised $50,000 from the sale of
10,000,000 common shares at $0.005 per share.
GOING CONCERN - The Company incurred net losses of approximately $25,058 for the
period from December 26, 2006 (Date of Inception) through January 31, 2008 and
has commenced limited operations, raising substantial doubt about the Company's
ability to continue as a going concern. The Company will seek additional sources
of capital through the issuance of debt or equity financing, but there can be no
assurance the Company will be successful in accomplishing its objectives.
The ability of the Company to continue as a going concern is dependent on
additional sources of capital and the success of the Company's plan. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
YEAR END - The Company's year end is January 31.
USE OF ESTIMATES - The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
19
KITCHER RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
INCOME TAXES - The Company accounts for its income taxes in accordance with
Financial Accounting Standards Board ("FASB") Statement of Financial Accounting
Standards ("SFAS") No. 109, which requires recognition of deferred tax assets
and liabilities for future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax basis and tax credit carry forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in operations in the period that includes the
enactment date.
The Company has net operating loss carryovers available to be used for reducing
future years taxable income. The Company has recorded a valuation allowance for
the full potential tax benefit of the operating loss carryovers due to the
uncertainty regarding realization.
NET LOSS PER COMMON SHARE - The Company computes net loss per share in
accordance with SFAS No. 128, Earnings per Share (SFAS 128) and SEC Staff
Accounting Bulletin No. 98 (SAB 98). Under the provisions of SFAS 128 and SAB
98, basic net loss per share is computed by dividing the net loss available to
common stockholders for the period by the weighted average number of shares of
common stock outstanding during the period. The calculation of diluted net loss
per share gives effect to common stock equivalents; however, potential common
shares are excluded if their effect is anti-dilutive. For the period from
December 26, 2006 (Date of Inception) through January 31, 2008, the Company had
no potentially dilutive securities.
STOCK-BASED COMPENSATION - The Company has not adopted a stock option plan and
has not granted any stock options. Accordingly no stock-based compensation has
been recorded to date.
LONG-LIVED ASSETS - In accordance with FASB SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", the carrying value of intangible
assets and other long-lived assets is reviewed on a regular basis for the
existence of facts or circumstances that may suggest impairment. The Company
recognizes impairment when the sum of the expected undiscounted future cash
flows is less than the carrying amount of the asset. Impairment losses, if any,
are measured as the excess of the carrying amount of the asset over its
estimated fair value.
20
KITCHER RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
MINERAL PROPERTY COSTS - The Company has been in the exploration stage since its
inception on December 26, 2006 and has not yet realized any revenues from its
planned operations, being the acquisition and exploration of mining properties.
Mineral property exploration costs are expensed as incurred. Mineral property
acquisition costs are initially capitalized when incurred using the guidance in
EITF 04-02, "Whether Mineral Rights Are Tangible or Intangible Assets". The
Company assesses the carrying costs for impairment under SFAS No. 144,
"Accounting for Impairment or Disposal of Long Lived Assets" at each fiscal
quarter end. When it has been determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves,
the costs then incurred to develop such property, are capitalized. Such costs
will be amortized using the units-of-production method over the estimated life
of the probable reserve. If mineral properties are subsequently abandoned or
impaired, any capitalized costs will be charged to operations.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities - Including an amendment of FASB Statement No.
115 ("SFAS No. 159"). This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings cause by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. This Statement is expected to expand the use of fair value
measurement, which is consistent with the Board's long-term measurement
objectives for accounting for financial instruments. This statement is effective
as of the beginning of the Company's first fiscal year that begins after
November 15, 2007, although earlier adoption is permitted. As of January 31,
2008, the Company has not adopted this statement and management has not
determined the effect that adopting this statement would have on the Company's
financial position or results of operations.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interest in
Consolidated Financial Statements, an amendment of ARB No. 51 ("SFAS No. 160"),
which will change the accounting and reporting for minority interests, which
will be recharacterized as noncontrolling interests and classified as a
component of equity within the consolidated balance sheets. SFAS No. 160 is
effective as of the beginning of an entity's first fiscal year beginning on or
after December 15, 2008. Earlier adoption is prohibited. Management has not
determined the effect that adopting this statement would have on the Company's
financial position or results of operations.
21
KITCHER RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
RECENT ACCOUNTING PRONOUNCEMENTS (continued)
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
Combinations ("SFAS No. 141R"). SFAS No. 141R will change the accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
entity's first annual reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations completed by the Company prior to
February 1, 2009 will be recorded and disclosed following existing GAAP.
Management has not determined the effect that adopting this statement would have
on the Company's financial position or results of operations.
In September 2006, FASB issued SFAS No. 157, Fair Value Measure" ("SFAS No.
157"). This Statement defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles (GAAP), expands
disclosures about fair value measurements, and applies under other accounting
pronouncements that require or permit fair value measurements. SFAS No. 157 does
not require any new fair value measurements. However, the FASB anticipates that
for some entities, the application of SFAS No. 157 will change current practice.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, which for the Company is the fiscal year
beginning February 1, 2008. The Company is currently evaluating the impact of
adopting SFAS No. 157 but does not expect that it will have a significant effect
on its financial position or results of operations.
In June 2006, FASB issued Interpretation 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 an enterprise's financial statements in accordance with FASB No.
109, "Accounting for Income Taxes." This Interpretation prescribes a recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return.
This Interpretation also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure and
transition. This Interpretation is effective for fiscal years beginning after
December 15, 2006. The Company has determined that the adoption of Statement No.
158 did not have any material impact on the Company's results of operations or
financial position.
22
KITCHER RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
2. PROPERTY AND EQUIPMENT
As of January 31, 2008, the Company does not own any property and/or equipment.
3. STOCKHOLDER'S EQUITY
The Company has 75,000,000 common shares authorized with a par value of $0.001
per share.
A total of 30,000,000 shares of the Company's common stock have been issued.
On December 29, 2006, 20,000,00 shares were issued to the founding and sole
director of the Company pursuant to a stock subscription agreement at $0.001 per
share for total proceeds of $20,000.
On July 9, 2007 10,000,000 shares of the Company's common stock were issued at a
price of $0.005 per share for gross proceeds of $50,000.
4. RELATED PARTY TRANSACTIONS
The Company's sole director was not paid for any underwriting services that he
performed on behalf of the Company with respect to the Company's SB-2 prospectus
offering.
During the period ended January 31, 2008, the sole director and officer of the
Company incurred $1,338 of expenses on behalf of the Company. These amounts were
repaid during the year ended January 31, 2008. Accordingly, as of January 31,
2008 $Nil (2007 - $1,338) is owing to this director and officer.
For all periods presented, there have been no other related party transactions
other than those mentioned above.
5. STOCK OPTIONS
As of January 31, 2008, the Company does not have any stock options outstanding,
nor does it have any written or verbal agreements for the issuance or
distribution of stock options at any point in the future.
23
KITCHER RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
6. INCOME TAXES
The Company accounts for income taxes using the liability method, under which
deferred tax liabilities and assets are determined based on the difference
between the financial statement carrying amounts and the tax basis of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse.
As of January 31, 2008, the Company had net operating loss carryforwards of
approximately $25,100 which expire in varying amounts between 2027 and 2028.
Realization of this potential future tax benefit is dependent on generating
sufficient taxable income prior to expiration of the loss carryforward. The
deferred tax asset related to this potential future tax benefit has been offset
by a valuation allowance in the same amount. The amount of the deferred tax
asset ultimately realizable could be increased in the near term if estimates of
future taxable income during the carryforward period are revised.
Deferred income tax assets of approximately $3,759 and $1,213 at January 31,
2008 and 2007, respectively were offset in full by a valuation allowance. The
valuation allowance was increased by $2,546 during the year ended January 31,
2008.
The components of the Company's net deferred tax assets, including a valuation
allowance, are as follows:
As of January 31,
2008 2007
------- -------
Deferred tax assets:
Net operating loss carryforwards $ 3,759 $ 1,213
------- -------
Total deferred tax assets 3,759 1,213
------- -------
Net deferred tax assets before valuation allowance 3,759 1,213
Less: Valuation allowance (3,759) (1,213)
------- -------
Net deferred tax assets $ -- $ --
======= =======
24
KITCHER RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
6. INCOME TAXES (continued)
The Company's actual income tax provisions differ from the expected amounts
determined by applying the appropriate combined effective tax rate to the
Company's net income before taxes. The significant components of these
differences are as follows:
Year ended January 31,
2008 2007
-------- --------
Income before income taxes $ 16,970 $ 8,088
Combined corporate tax rate 15.0% 15.0%
-------- --------
Expected corporate tax expense (2,546) (1,213)
(Increase) decrease resulting from:
Change in valuation allowance 2,546 1,213
-------- --------
Provision for income taxes $ -- $ --
======== ========
25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
our principal executive officer and the principal financial officer, we have
conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities and Exchange Act of 1934, as of the end of the period
covered by this report. Based on this evaluation, our principal executive
officer and principal financial officer concluded as of the evaluation date that
our disclosure controls and procedures were effective such that the material
information required to be included in our Securities and Exchange Commission
reports is recorded, processed, summarized and reported within the time periods
specified in SEC rules and forms relating to our company, particularly during
the period when this report was being prepared.
Additionally, there were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
evaluation date. We have not identified any significant deficiencies or material
weaknesses in our internal controls, and therefore there were no corrective
actions taken.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The directors and officers of Kitcher Resources Inc., whose one year terms will
expire 10/01/08, or at such a time as their successor(s) shall be elected and
qualified are as follows:
Name & Address Age Position Date First Elected Term Expires
- -------------- --- -------- ------------------ ------------
Raminder Badyal 37 President, 12/26/06 12/31/08
Suite 138 - 1027 Davie St. Treasurer,
Vancouver, BC CFO, CEO &
Canada V6E 4L2 Director
The foregoing person is a promoter of Kitcher Resources, as that term is defined
in the rules and regulations promulgated under the Securities and Exchange Act
of 1933.
Directors are elected to serve until the next annual meeting of stockholders and
until their successor has been elected and qualified. Officers are appointed to
serve until the meeting of the board of directors following the next annual
meeting of stockholders and until their successors have been elected and
qualified. Dr. Badyal currently devotes 5 to 10 hours per week to company
matters. He intends to devote as much time as the board of directors deems
necessary to manage the affairs of the company.
No executive officer or director of the corporation has 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 limiting 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
26
association, or insurance company or from engaging in or continuing any conduct
or practice in connection with any such activity or in connection with the
purchase or sale of any securities.
No executive officer or director of the corporation has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding which is currently pending.
RESUME
Dr. Raminder Badyal has been our President, Secretary, Treasurer and sole
Director since inception. He completed his undergraduate studies at the
University of British Columbia in 1992 with a Bachelor of Science
(Biopsychology) and subsequently from the Canadian Memorial Chiropractic College
with a Doctor of Chiropractic designation in 1997. Since 1997 he has developed
extensive experience in a diverse range of health care paradigms including his
private family practice in Vancouver. He has also been involved as an associate
practitioner at two multi-disciplinary health care settings namely the Main &
Marine Medical Clinic (from 1997 to 2003) and at the Burnaby Square Orthopedic &
Sports Clinic (2004 - present). Presently he has also taken on a part time
teaching position at The Vancouver School of Bodywork and Massage as a Health
Sciences Instructor. In addition, he is also involved with the community at
large in Vancouver as Co-chair of the Chief Constable's Diversity Advisory
Committee with the Vancouver Police Department (2003 - present).
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary Bonus Awards Awards sation Earnings sation Totals
- ------------ ---- ------ ----- ------ ------ ------ -------- ------ ------
Raminder 2007 0 0 0 0 0 0 0 0
Badyal CEO & 2006 0 0 0 0 0 0 0 0
President
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
Option Awards Stock Awards
----------------------------------------------------------------- ----------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options (#) Options (#) Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable Unexercisable Options (#) Price Date Vested(#) Vested Vested Vested
- ---- ----------- ------------- ----------- ----- ---- --------- ------ ------ ------
Raminder 0 0 0 0 0 0 0 0 0
Badyal
27
DIRECTOR COMPENSATION
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash Awards Awards Compensation Earnings Compensation Total
---- ---- ------ ------ ------------ -------- ------------ -----
Raminder Badyal 0 0 0 0 0 0 0
There are no current employment agreements between the company and its executive
officer.
On December 26, 2006, a total of 20,000,000 shares of Common Stock were issued
to Dr. Badyal in exchange for cash in the amount of $20,000 U.S., or $.001 per
share. The terms of this stock issuance was as fair to the company, in the
opinion of the Board of Directors, as could have been made with an unaffiliated
third party. In making this determination they relied upon the fact that the
20,000,000 shares were valued at par ($0.001) and purchased for $20,000 in cash.
Dr. Badyal currently devotes approximately 5 to 10 hours per week to company
matters. 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, management 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
officers, directors 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.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information on the ownership of Kitcher
Resources' voting securities by officers, directors and major shareholders as
well as those who own beneficially more than five percent of our common stock as
of the date of this annual report:
Name & Address No. of Percentage
Of Beneficial Owner (1) Shares of Ownership:
----------------------- ------ -------------
Raminder Badyal 20,000,000 66%
Suite 138 - 1027 Davie St.
Vancouver, BC V6E 4L2
All Officers and
Directors as a Group 20,000,000 66%
- ----------
(1) The person named above may be deemed to be a "parent" and "promoter" of the
Company, within the meaning of such terms under the Securities Act of 1933,
as amended, by virtue of his direct holdings in the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The principal executive office and telephone number are provided by Dr. Badyal,
the officer and a director of the corporation, on a rent-free basis.
28
On December 26, 2006, a total of 20,000,000 shares of Common Stock were issued
to Dr. Badyal in exchange for $20,000 US, or $.001 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 an officer and director of the Company. (See
"Principal Stockholders".)
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The total fees charged to the company for audit services were $3000, for tax
services were $Nil and for other services were $Nil during the year ended
January 31, 2008.
The total fees charged to the company for audit services were $3000, for tax
services were $Nil and for other services were $Nil during the year ended
January 31, 2007.
ITEM 15. EXHIBITS
The following exhibits are included with this filing:
Exhibit
Number Description
------ -----------
*3(i) Articles of Incorporation
*3(ii) Bylaws
31.1 Sec. 302 Certification of CEO
31.2 Sec. 302 Certification of CFO
32 Sec. 906 Certification of CEO/CFO
29
GLOSSARY OF MINING TERMS
"Basalt" An extrusive volcanic rock
"BCDM" British Columbia Department of Mines
"Chalcopyrite" A sulphide mineral of copper and iron; the most
important ore mineral in copper
"Copper" or "Cu" A reddish or salmon-pink isometric mineral, the native
metallic element of copper. It is ductile and
malleable, a good conductor of heat and electricity,
usually dull and tarnished
"Diamond drill" A rotary type of rock drill that cuts a core of rock
that is recovered in long cylindrical sections
"Fault" A fracture dividing a rock into two sections that have
visibly moved relative to each other
"Feldspar" silicate minerals which occur in igneous rocks -
plagioclase contains calcium and sodium
"Flows" Volcanic rock formed from lava that flowed out onto the
earth's surface
"Geological mapping" The process of observing and measuring geological
features in a given area and plotting these features,
to scale, onto a map
"Geophysical survey" A method of exploration that measures the physical
properties of rock formations including magnetism,
specific gravity, electrical conductivity and
resistance
"Gold" or "Au" A heavy, soft, yellow, ductile, malleable, metallic
element. Gold is a critical element in computer and
communications technologies
"Limestone" A sedimentary rock composed primarily of calcium
carbonate
"Massive sulphide Mineralization that contains a variety of different
mineralization" sulphide minerals - usually includes - sphalerite,
chalcopyrite, pyrite and pyrrhotite.
"Metamorphic" A rock that has undergone chemical or structural
changes (heat, pressure, or a chemical reaction) that
causes changes to its original state - High-grade
metamorphic is a large amount of change
"Mineral claim" A portion of land held either by a prospector or a
mining company, in British Columbia each claim is 500m
x 500m (1,640 ft2)
"Ore" A mixture of mineralized rock from which at least one
of the metals can be extracted at a profit
"Precious metal" Any of several metals, including gold and platinum,
that have high economic value - metals that are often
used to make coins or jewelry
"Pyrite" A yellow iron sulphide mineral - sometimes referred to
as "fools gold"
"Quartz" Common rock forming mineral consisting of silicon and
oxygen
"Sedimentary rocks" Secondary rocks formed from material derived from other
rocks and laid down underwater.
30
"Silver" or "Ag" A white metallic element that is ductile, very
malleable and capable of a high polish. This precious
metal has major industrial applications in photography,
x-rays, electronics and electrical contacts, batteries,
brazing alloys, catalysts, mirrors, jewelry and
sterlingware
"Soil sampling" The collecting of samples of soil, usually 2 pounds per
sample, from soil thought to be covering mineralized
rock. The samples are submitted to a laboratory that
will analyze them for mineral content
"Trenching" The digging of long, narrow excavation through soil, or
rock, to expose mineralization
"Vein" A crack in the rock that has been filled by minerals
that have traveled upwards from a deeper source
"Volcanic rocks" Igneous rocks formed from magma that has flowed out or
has been violently ejected from a volcano
31
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe it meets all of
the requirements for filing Form 10-K and authorized this registration statement
to be signed on its behalf by the undersigned, in the city of Vancouver BC, on
April 28, 2008.
Kitcher Resources, Inc.
/s/ Raminder Badyal
-------------------------------------
By: Raminder Badyal
Principal Executive Officer & Director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following person in the capacities and
date stated.
/s/ Raminder Badyal April 28, 2008
- ----------------------------------------------- --------------
Raminder Badyal, President & Director Date
(Principal Executive Officer, Principal Financial Officer,
Principal Accounting Officer)
32